Information Planning CO.,LTD. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥3.84B
• Operating Income: ¥1.54B
• Net Income: ¥1.05B
• EPS: ¥356.21

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Verdict: A solid, margin-led finish to FY2025 with double-digit ROE, healthy cash generation, and a fortress balance sheet. Revenue rose 6.4% YoY to 38.43, and operating income grew 7.6% YoY to 15.36, indicating modest operating leverage. Net income increased 6.4% to 10.77, keeping the net margin at a very strong 28.0%. Gross profit reached 25.38 for a gross margin of 66.1%, underscoring the high-value software/service mix. Operating margin was approximately 40.0% (15.36/38.43), improving by about 43 bps versus the prior year (estimated prior margin ~39.5%). Net margin was essentially flat YoY, up only a few basis points, reflecting a stable tax rate of 29.9% and minimal non-operating items. Ordinary income of 15.37 (up 6.2% YoY) mirrors the operating trajectory, with negligible financial income/expenses impact. Cash generation stayed in step with accounting profit as OCF/NI was 1.06x, and FCF was a positive 4.61 despite capex of 6.98, supporting reinvestment while maintaining payouts. Liquidity is very strong: cash and deposits of 28.47 and current assets of 40.28 versus current liabilities of 13.06 produce a current ratio of 308%. The balance sheet is conservatively capitalized with total equity of 69.51 (equity ratio ~82.6% by calculation) and a low D/E of 0.21x. ROE was 15.5% on a DuPont basis, driven by a 28.0% net margin, modest asset turnover (0.457x), and low leverage (1.21x), which is attractive quality for a cash-rich software provider. SG&A was 10.02 (26.1% of sales), with notable components in salaries and allowances (2.27), directors' compensation (1.39), and rent (1.31), implying controlled overhead given the margin uptick. Earnings quality looks sound with OCF matching NI and limited reliance on non-operating income (0.6% of sales). The payout ratio is a manageable 39.9% and FCF coverage of dividends is 1.07x (dividend amount not disclosed but inferred), suggesting sustainability. Forward-looking, management’s ability to sustain high-60s gross margin and ~40% operating margin, while investing nearly 7.0 in capex, positions the company to maintain mid-single to high-single-digit top-line growth with stable profitability. Risks include wage inflation pressure, timing of large projects, and potential deceleration in new license demand, but the strong cash position and low leverage provide ample buffer.

Profitability Analysis

ROE decomposition (DuPont): ROE 15.5% = Net Profit Margin 28.0% × Asset Turnover 0.457 × Financial Leverage 1.21x. The dominant driver of ROE is the exceptionally high net margin inherent to the business model (software/license and maintenance with limited COGS), rather than leverage or asset turnover. Versus the prior year, we estimate operating margin expanded by ~43 bps (from ~39.5% to ~40.0%), while net margin was essentially flat, implying small operating efficiency gains more than tax or non-operating effects. The business reason is disciplined SG&A spending relative to revenue growth and limited cost of sales increases, consistent with a mature, sticky maintenance/upgrade base. Sustainability appears good given recurring revenue characteristics, though wage inflation and hiring for growth could compress SG&A efficiency. Watch for SG&A growth outpacing revenue; with SG&A at 26.1% of sales and revenue up 6.4%, any acceleration in personnel costs or rent could reverse the margin gain. Asset turnover remains subdued at 0.457x due to sizable cash holdings; improvements here are unlikely unless excess cash is redeployed or revenue scales faster than assets. Leverage is intentionally low (1.21x), limiting ROE volatility and downside but also capping upside from financial leverage.

Growth Assessment

Top-line growth of 6.4% YoY to 38.43 is consistent with steady demand from core financial-institution customers. Operating income grew 7.6% YoY to 15.36, evidencing mild operating leverage as SG&A was contained relative to revenue. Net income growth of 6.4% kept pace with sales, implying limited impact from non-operating items and a stable effective tax rate (29.9%). Non-operating contributions were immaterial (0.06 income, 0.05 expense), so profit quality is primarily operating-driven. The current gross margin of 66.1% and EBITDA margin of 42.8% support the view of a resilient, high-value software/services mix. Investment for growth is visible in capex of 6.98 (well above D&A of 1.09), likely tied to product development infrastructure and capacity; this temporarily weighs on FCF but should support medium-term growth. Outlook hinges on maintaining renewal/maintenance momentum, cross-sell into the installed base, and new project wins; continued mid-single-digit to high-single-digit growth seems achievable if client budgets remain stable. Absent disclosed R&D and detailed segment data, we assume organic growth is the main engine, with limited M&A contribution (goodwill only 0.48).

Financial Health

Liquidity is robust: current ratio 308.4% and quick ratio 308.4%, with cash and deposits of 28.47 covering more than 2x current liabilities of 13.06. No warning flags: Current Ratio is well above 1.0 and D/E at 0.21x is far below the 2.0 threshold. Solvency is strong with total equity of 69.51 against total assets of 84.16, implying an equity ratio of roughly 82.6% (calculated). Maturity mismatch risk is low: current assets of 40.28 comfortably exceed current liabilities by 27.22 of working capital. Interest-bearing debt is not disclosed, but overall liabilities are modest and interest expense is unreported, suggesting minimal financial burden. No off-balance sheet obligations are disclosed in the provided data; absent footnote details, we assume no material commitments beyond normal operations.

Cash Flow Quality

OCF of 11.45 versus net income of 10.77 yields OCF/NI = 1.06x, indicating good earnings-to-cash conversion. FCF was positive at 4.61 after capex of 6.98, supporting both reinvestment and shareholder returns. The gap between capex (6.98) and D&A (1.09) implies growth or renewal investments rather than pure maintenance; near-term FCF could fluctuate with project timing. Working capital specifics are limited (ending AR 8.82 disclosed without change amounts), so we cannot conclusively assess working capital optimization or pull-forwards; however, OCF exceeding NI suggests no aggressive working capital build this period. Financing CF of -3.32 likely reflects dividends (amount undisclosed) and negligible buybacks (-0.00), consistent with a conservative capital policy. Overall, cash generation quality is sound with low reliance on non-operating items.

Dividend Sustainability

The calculated payout ratio is 39.9%, comfortably below the 60% benchmark for sustainability. FCF coverage is 1.07x, implying dividends are funded by organic cash after capex, though headroom is modest in a year of elevated investment. With cash and deposits of 28.47 and minimal leverage, liquidity buffers add further resilience to dividends. The company appears to prioritize sustainable payouts aligned with earnings stability; explicit dividend policy details and total dividends paid are not disclosed here. Assuming a ~40% payout on NI of 10.77 implies dividends around 4.3, which is broadly covered by FCF of 4.61. Barring a significant step-up in capex or profit volatility, dividend sustainability looks intact.

Risk Assessment

Business Risks:

• Client concentration in financial institutions could expose results to synchronized budget tightening.
• Project timing and acceptance risk can shift revenue and cash flows across quarters.
• Competitive pressure from fintech and larger software vendors may compress pricing or increase required investment.
• Wage inflation and talent retention pressure could lift SG&A (salaries and directors’ compensation already notable).
• Product obsolescence risk without sustained R&D (R&D not disclosed) and ongoing capex.

Financial Risks:

• Limited: low leverage (D/E 0.21x) and substantial cash holdings reduce balance sheet risk.
• Interest rate risk on cash yields and potential reinvestment risk for excess liquidity.
• Working capital swings if receivables collection delays occur (AR 8.82, changes not disclosed).

Key Concerns:

• Margin sustainability if personnel costs accelerate faster than revenue.
• Capex intensity (6.98 vs D&A 1.09) could pressure FCF in the near term if growth underperforms.
• Lack of detailed disclosure on dividends, R&D, and interest-bearing debt limits full assessment.

Investment Implications

Key Takeaways:

• High-quality earnings: OCF/NI 1.06x with ~40% operating margin and 28% net margin.
• ROE 15.5% achieved with minimal leverage, highlighting strong economic profitability.
• Balance sheet strength: equity ratio ~82.6%, current ratio 308%, ample cash of 28.47.
• Steady growth: revenue +6.4% YoY and OP +7.6% YoY; modest operating leverage evident.
• Capex elevated at 6.98 to support future growth; near-term FCF still positive at 4.61.
• Dividend likely sustainable with ~40% payout and FCF coverage ~1.07x.

Metrics to Watch:

• SG&A growth vs revenue growth (to preserve ~40% operating margin).
• Capex trajectory vs D&A and impact on FCF.
• Renewal and maintenance revenue mix to sustain 66%+ gross margin.
• Receivables trends and OCF/NI ratio for cash conversion health.
• Hiring plans and wage inflation impact on cost base.

Relative Positioning: Within Japan small/mid-cap software peers, the company exhibits above-average profitability (GPM ~66%, OP margin ~40%), strong ROE without leverage, and superior balance sheet health; growth is steady rather than hyper-growth, with disciplined capital returns and measured reinvestment.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis