GMO GlobalSign Holdings K.K. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥15.11B
• Operating Income: ¥983M
• Net Income: ¥532M
• EPS: ¥61.24

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

GMO GlobalSign Holdings (TSE:3788) delivered steady top-line growth and stronger profit momentum in FY2025 Q3 (cumulative) under JGAAP, with revenue of ¥15.11bn (+7.4% YoY) and operating income of ¥0.98bn (+20.6% YoY). Ordinary income was ¥0.96bn and net income rose 33.1% YoY to ¥0.70bn, indicating positive operating leverage and improved cost discipline. Gross profit of ¥8.44bn implies a robust gross margin of 55.9%, consistent with a software/security and internet services mix. Operating margin improved to about 6.5%, up YoY given operating income outpaced revenue growth. Net margin of 4.65% aligns with the DuPont inputs provided and reflects some non-operating and tax headwinds but improving bottom-line conversion. The DuPont decomposition shows ROE of 7.24% driven by a 4.65% net margin, 0.83x asset turnover, and 1.88x financial leverage—solid but not yet high for a software-leaning model. Balance sheet strength is notable: total assets ¥18.20bn and equity ¥9.71bn imply an equity ratio of roughly 53.3% (the reported 0.0% appears undisclosed), and liabilities/equity stands at 0.88x. Liquidity looks ample with current assets of ¥11.95bn versus current liabilities of ¥5.60bn (current ratio ~213%). Interest expense is modest at ¥23.8m with strong coverage (~41x), underscoring low financial risk from debt service. The reported effective tax rate of 0.0% is clearly non-representative; based on taxes of ¥275m and pre-tax of roughly ¥978m, the effective tax rate approximates 28%. Cash flow statements and cash/equivalents were not disclosed in this dataset (shown as zero), limiting direct assessment of cash generation and FCF; however, healthy working capital (¥6.35bn) supports liquidity. EPS is ¥61.24; by inference, average shares outstanding are roughly 11.5 million (based on net income/EPS), though official share counts were undisclosed here. No dividend was reported in this extract; policy insights are therefore limited without additional disclosures. Overall, fundamentals indicate resilient growth, improving profitability, conservative leverage, and strong liquidity, but the absence of cash flow data and dividend details narrows visibility on cash conversion and capital allocation. Key monitoring items include operating leverage sustainability, gross margin resilience, and cash flow recovery as reported in full filings. Outlook-wise, mid-single to high-single digit revenue growth paired with disciplined costs could sustain gradual ROE improvement, contingent on maintaining pricing power and stable tax/FX environments.

Profitability Analysis

ROE_decomposition: ROE 7.24% = Net margin 4.65% × Asset turnover 0.83× × Financial leverage 1.88×. Net margin 4.65% (¥703m/¥15,108m) reflects improved bottom-line efficiency. Asset turnover of 0.83× suggests moderate efficiency for a software/security/services mix. Leverage (Assets/Equity) of ~1.88× indicates prudent balance sheet usage supporting ROE without excessive risk. margin_quality: Gross margin 55.9% (¥8,444.9m/¥15,108m) is strong, consistent with high-value digital certificate/security and internet services. Operating margin ~6.5% (¥983m/¥15,108m) improved YoY as operating income grew faster than sales. Ordinary margin ~6.3% and net margin 4.65% reflect manageable non-operating costs and a normalized tax burden (~28% by calculation). SG&A intensity remains high (SG&A ≈ ¥7,462m; gross profit minus operating income), but cost discipline improved versus last year. operating_leverage: Revenue +7.4% YoY vs operating income +20.6% YoY points to positive operating leverage from scale and/or mix, likely from higher-margin services and controlled OPEX growth. Sustaining leverage will depend on maintaining gross margin and curbing fixed cost growth (notably personnel and development expenses).

Growth Assessment

revenue_sustainability: Top-line growth of 7.4% YoY suggests steady demand in authentication/security and related services. The gross margin profile indicates pricing power and value-add, supportive of recurring and subscription-like revenue components. profit_quality: Net income growth of 33.1% YoY outpaced sales, implying efficiency gains and favorable mix. Interest burden is low, and tax rate appears normalizing around the high-20% range. Lack of depreciation data in this extract limits clarity on EBIT vs EBITDA dynamics (amortization likely exists but was undisclosed). outlook: If the company maintains high gross margins and disciplined SG&A, mid-to-high single-digit revenue growth could translate into double-digit operating profit growth. External factors to watch include enterprise IT spending, certificate standards/regulatory shifts, FX (for overseas sales/costs), and competitive pricing in SSL/TLS and digital identity.

Financial Health

liquidity: Current assets ¥11,948m vs current liabilities ¥5,603m; current ratio ~213% and quick ratio ~213% (inventories undisclosed) indicate strong short-term liquidity. Working capital is ¥6,345m. solvency: Total liabilities ¥8,540m and equity ¥9,705m yield liabilities/equity of ~0.88x and an implied equity ratio ~53.3%. Interest coverage ~41x (operating income ¥983m/interest expense ¥23.8m) is robust, pointing to low solvency risk. capital_structure: Moderate leverage (assets/equity ~1.88×) reflects a conservative capital structure with capacity for investment. Interest-bearing debt split is not disclosed here; however, modest interest expense suggests limited reliance on costly debt.

Cash Flow Quality

earnings_quality: Cash flow statements were not disclosed in this dataset (OCF/FCF shown as zero placeholders), so direct earnings-to-cash conversion cannot be assessed. Nevertheless, strong gross margins and improving operating margins are supportive of underlying cash generation, subject to working capital dynamics. FCF_analysis: Free cash flow not available in this extract. Capital expenditure and software development capitalization (and related amortization) were not reported here, constraining FCF assessment. working_capital: Working capital of ¥6,345m indicates a comfortable buffer for operations. Without details on receivables, payables, and contract liabilities (deferred revenue), we cannot gauge intra-period cash timing effects typical of subscription/security businesses.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio were not disclosed (zeros are placeholders). Based on EPS of ¥61.24 and net income of ¥703m, capacity for dividends exists in principle, but actual policy and distribution are unknown from this dataset. FCF_coverage: FCF data are unavailable, preventing coverage analysis. Sustainable dividends would require confirmation of stable OCF and modest reinvestment needs. policy_outlook: Given the growth-oriented profile and improving profitability, management may prioritize reinvestment; however, actual policy must be verified in official guidance and past distributions outside this extract.

Risk Assessment

Business Risks:

• Pricing pressure and commoditization in SSL/TLS and digital certificate markets
• Regulatory and standards changes (e.g., CA/B Forum, eIDAS) impacting product requirements and compliance costs
• Cybersecurity incidents or outages affecting brand trust and customer retention
• Competition from global identity/security vendors and cloud hyperscalers
• Customer churn or contract renegotiations in subscription/usage-based services
• FX volatility affecting overseas revenues/costs

Financial Risks:

• Limited visibility on cash generation due to undisclosed OCF/FCF in this extract
• Potential working capital swings from billing cycles and deferred revenue
• Intangible asset amortization and R&D capitalization policies impacting reported margins
• Interest rate risk is modest but present; refinancing terms unknown given undisclosed debt mix

Key Concerns:

• Absence of cash flow disclosures here prevents validating earnings quality
• High SG&A intensity requires continued discipline to sustain operating leverage
• Need to monitor compliance landscape for digital identity and certificate issuance

Investment Implications

Key Takeaways:

• Revenue grew 7.4% YoY to ¥15.11bn with operating income +20.6% YoY, demonstrating positive operating leverage
• Gross margin is strong at 55.9%, supporting a scalable model
• ROE at 7.24% is moderate; scope for improvement via margin expansion and asset efficiency
• Balance sheet is solid with an implied equity ratio ~53% and liabilities/equity ~0.88x
• Interest coverage ~41x indicates low debt service risk
• Cash flow and dividend data were not disclosed in this extract, limiting capital allocation insight

Metrics to Watch:

• Operating margin and SG&A/revenue ratio
• Gross margin stability and product mix (certificate vs. other services)
• Contract liabilities/deferred revenue and OCF to verify cash conversion
• Churn, renewal rates, and ARPU/ARR in security and identity segments
• Tax rate normalization and non-operating items
• FX impact on overseas revenue and costs

Relative Positioning: Within Japanese IT/security peers, the company exhibits high gross margins, improving operating leverage, and conservative leverage, though ROE is mid-single digit and cash flow disclosure in this extract limits direct comparability on cash conversion.

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