FISCO Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥655M
• Operating Income: ¥19M
• Net Income: ¥15M
• EPS: ¥0.33

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

Fisco Co., Ltd. (single-entity, JGAAP) reported FY2025 Q3 revenue of ¥655.0 million, up 5.2% year over year, demonstrating modest top-line momentum. Gross profit was ¥309.96 million, implying a solid gross margin of 47.3%, which suggests the core service mix retains pricing power and/or favorable cost of sales dynamics. Operating income was ¥19.0 million, essentially flat YoY, indicating that higher SG&A offset the gross profit uplift from revenue growth. Ordinary income was ¥20.0 million, reflecting limited non-operating impacts; interest expense was modest at ¥0.289 million, consistent with an ample interest coverage of 65.7x. Net income was ¥15.0 million (flat YoY; EPS ¥0.33), underscoring subdued bottom-line scalability despite revenue growth. The DuPont decomposition shows net margin of 2.29%, asset turnover of 0.216x, and financial leverage of 2.03x, yielding an ROE of 1.0%, which is low for a listed entity and points to modest profitability and conservative asset utilization. Implied equity ratio based on reported equity (¥1,493.0 million) and assets (¥3,036.0 million) is roughly 49.2%, indicating a moderately leveraged balance sheet despite the reported equity ratio line showing 0.0% (likely undisclosed in XBRL). Liquidity appears strong with a current and quick ratio of 3.43x and working capital of ¥272.55 million, suggesting adequate near-term funding capacity. Debt-to-equity of 1.03x (liabilities/equity) is manageable, consistent with the 2.03x financial leverage used in DuPont. The reported negative income tax amount (¥-158.5 million) indicates a sizable tax credit or deferred tax effect; however, net income remains low, implying the presence of other below-ordinary items not disclosed in the provided summary. Cash flow statements are undisclosed (zeros represent unreported items), limiting evaluation of cash conversion and free cash flow quality. EBITDA is shown as zero due to non-disclosure of depreciation/amortization; economically, EBITDA would likely approximate operating income in the absence of material D&A. The company paid no dividend (DPS ¥0), maintaining financial flexibility while profitability remains modest. Overall, the quarter shows steady revenue growth and healthy gross margins but constrained operating leverage, resulting in low ROE and a cautious earnings profile. Data limitations (notably cash flows, D&A, per-share base) restrict deeper quality-of-earnings analysis and dividend capacity assessment. Near-term focus should be on SG&A discipline, monetization of gross profit into operating income, and clarity on tax effects and cash generation.

Profitability Analysis

ROE_decomposition: ROE 1.0% = Net margin 2.29% × Asset turnover 0.216 × Financial leverage 2.03. Low ROE is driven primarily by thin net margin and slow asset turnover rather than excessive leverage. margin_quality: Gross margin of 47.3% is healthy for information/services, but operating margin is only ~2.9% (¥19.0m / ¥655.0m), implying elevated SG&A absorption. Ordinary income margin is ~3.1% (¥20.0m / ¥655.0m). A large negative tax line (¥-158.5m) suggests non-recurring tax effects; adjusted profitability at the operating/ordinary level is a better indicator of core performance. operating_leverage: Revenue rose 5.2% YoY while operating income was flat, indicating limited operating leverage and suggesting rising fixed costs or increased commercial investments offsetting gross profit gains.

Growth Assessment

revenue_sustainability: Top-line growth of 5.2% YoY indicates steady demand, likely from stable subscription/information services and/or project work. Sustainability will depend on client retention, pricing, and pipeline visibility. profit_quality: Core profitability (operating/ordinary income) is positive but slim; the negative tax line points to possible one-offs, making net income less indicative of recurring earnings power. Gross margin stability is a positive sign for product/service economics. outlook: Absent disclosure of order backlog or segment mix, a cautious outlook is warranted: continuation of mid-single-digit revenue growth with focus on cost control could incrementally improve operating margin; clearer tax normalization would aid net profit visibility.

Financial Health

liquidity: Current ratio 3.43x and quick ratio 3.43x with working capital of ¥272.55m indicate strong near-term liquidity. Cash and equivalents are undisclosed, so absolute liquidity cannot be quantified from provided data. solvency: Total liabilities ¥1,544.24m vs. equity ¥1,493.0m yield debt-to-equity of 1.03x. Implied equity ratio ≈49.2% (¥1,493.0m / ¥3,036.0m), indicating moderate leverage. capital_structure: Financial leverage (assets/equity) at 2.03x is moderate. Interest burden is light with interest coverage of 65.7x, suggesting ample headroom on financing costs.

Cash Flow Quality

earnings_quality: Cash flow data are undisclosed (OCF/FCF shown as zero due to non-reporting), preventing assessment of cash conversion or accrual intensity. Given low operating margin, cash generation likely hinges on disciplined working-capital management. FCF_analysis: Free cash flow is not disclosed; with EBITDA not reported and D&A shown as zero, FCF cannot be inferred from the provided data. working_capital: Working capital stands at ¥272.55m, supported by high current and quick ratios. Without receivables/payables breakdowns, turnover efficiency cannot be evaluated.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio is 0%. With net income at ¥15.0m and modest ROE (1.0%), retaining earnings aligns with strengthening the balance sheet and funding operations. FCF_coverage: FCF coverage cannot be evaluated due to undisclosed cash flows; the reported 0.00x is not informative in this context. policy_outlook: Given low profitability and the focus on operational improvement, a conservative dividend stance appears likely until recurring earnings and cash generation improve and management provides clearer guidance.

Risk Assessment

Business Risks:

• Revenue concentration in financial information/services with sensitivity to market activity and client budgets
• Pricing pressure or churn in subscription/enterprise contracts
• Execution risk in new service launches or project-based revenues affecting utilization
• Dependence on key personnel and proprietary content/data quality
• Regulatory and compliance changes impacting financial information businesses

Financial Risks:

• Low operating margin (~2.9%) leaving limited buffer against revenue volatility
• Visibility on cash generation is limited due to undisclosed cash flow statements
• Potential earnings volatility from tax effects or non-recurring items under JGAAP
• Moderate leverage (D/E ~1.03x) though interest burden is currently low

Key Concerns:

• Sustained SG&A discipline needed to translate gross margin into higher operating income
• Clarification on large negative tax amount and its recurrence
• Limited disclosure (cash flow, D&A, per-share base) constrains assessment of earnings quality and capital allocation capacity

Investment Implications

Key Takeaways:

• Steady revenue growth (+5.2% YoY) but muted operating leverage keeps operating income flat
• Gross margin strong at 47.3%, indicating healthy unit economics
• ROE of 1.0% reflects thin margins and slow asset turnover rather than excessive leverage
• Liquidity appears strong (current ratio 3.43x), with moderate balance sheet leverage (implied equity ratio ~49%)
• Net income affected by significant negative tax expense; core profitability better gauged at operating/ordinary levels
• Cash flow non-disclosure limits confidence in dividend capacity and reinvestment flexibility

Metrics to Watch:

• Operating margin trajectory and SG&A as a percentage of sales
• Asset turnover (revenue to total assets) and working-capital efficiency
• Disclosure of operating cash flow and free cash flow
• Gross margin stability and pricing power
• Tax normalization and recurrence of one-off items
• Ordinary income growth versus revenue growth

Relative Positioning: Within Japanese small-cap information/services peers, Fisco shows competitive gross margins but lags on operating margin and ROE; balance sheet leverage is moderate and liquidity sound, suggesting room to pursue efficiency improvements to close the profitability gap.

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