CrowdWorks Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥22.66B
• Operating Income: ¥1.76B
• Net Income: ¥-396M
• Earnings per Unit (EPU): ¥-16.28

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Unit Information

Distribution 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: Strong topline and operating execution, but net loss due to large below-ordinary items and an unusually high tax burden; cash flow remained healthy. Revenue rose 32.4% YoY to 226.57, with gross profit of 95.67 and operating income up 31.2% YoY to 17.59. Calculated operating margin was approximately 7.8%, essentially flat YoY (about 7 bps compression versus last year’s ~7.83%). Gross margin printed at 42.2%, indicating continued take-rate and cost discipline at the gross level. Ordinary income matched operating income at 17.59, but profit before tax fell sharply to 6.24, implying approximately 11.35 of extraordinary losses under JGAAP. Net income turned to a loss of -2.57 as the effective tax rate spiked to 134.2%, suggesting non-deductible items and/or valuation allowance changes. Cash generation remained solid: operating cash flow was 17.38, comfortably exceeding operating income on a cash basis and contrasting with the accounting net loss. Free cash flow was 6.77 after -10.61 of investing outflows, supporting balance sheet flexibility. Liquidity is strong with a current ratio of 205% and cash/deposits of 80.90; debt is moderate with D/E at 1.33x and excellent interest coverage of 32.9x. Intangibles are sizable (goodwill 32.32, total intangible assets 32.34), indicating potential impairment sensitivity. DuPont shows ROE at -3.8% driven by a negative net margin (-1.1%), despite decent asset turnover (1.44x) and leverage (2.33x). Equity-method contributions were slightly negative (-0.22) and not a key driver. Earnings quality flags are present: OCF/NI is -6.76x (by formula, due to negative NI), but underlying OCF is positive and robust. Forward-looking, the business seems operationally sound, yet visibility on the recurrence of extraordinary losses and tax normalization will determine the speed of EPS recovery. The balance sheet and FCF provide resilience to invest and absorb volatility, but high intangibles raise impairment risk if growth underperforms.

Profitability Analysis

ROE decomposition (DuPont): ROE (-3.8%) = Net Profit Margin (-1.1%) × Asset Turnover (1.444x) × Financial Leverage (2.33x). The largest swing factor was net profit margin, which fell into negative territory due to a material extraordinary loss (~11.35) and a 134% effective tax rate, despite solid operating profitability. Business rationale: below-ordinary items under JGAAP (special/extraordinary losses) and non-deductible tax effects or DTA valuation allowance likely drove the disconnect between operating and net. Sustainability: operating margin appears stable (~7.8%) and should be repeatable near-term, while the extraordinary/tax items look one-off or at least non-recurring at the same magnitude; normalization would mechanically lift ROE. Concerning trends: SG&A was not itemized, but operating income growth (+31.2%) roughly tracked revenue growth (+32.4%), implying limited operating leverage this period; watch whether SG&A growth outpaces revenue in subsequent quarters.

Growth Assessment

Topline growth of 32.4% YoY indicates strong demand and/or improved monetization on the platform. Operating profit rose 31.2% YoY, suggesting that growth is not purely volume-driven but supported by cost control at COGS and steady contribution margins. Gross margin at 42.2% remains healthy for a marketplace/service model. Ordinary income matched operating income, indicating core operations were the main driver before extraordinary items. The net loss this period is not reflective of core momentum but rather special items and tax effects; removing the extraordinary loss and normalizing tax would likely restore positive EPS. Equity-method income was slightly negative (-0.22) and not central to the story. Outlook hinges on sustaining revenue momentum while expanding operating leverage; with stable gross margin, incremental SG&A efficiency could translate growth into higher operating margin. Key watchpoints are the recurrence (or reversal) of extraordinary losses and a return to a normal tax rate to convert operating momentum into net profit growth.

Financial Health

Liquidity is solid: current assets 114.86 vs current liabilities 55.93 yields a current ratio of 205.4% (no warning). Quick ratio mirrors current ratio given low inventories (not reported), reinforcing near-term coverage. Cash and deposits of 80.90 cover short-term loans of 5.97 multiple times, minimizing maturity mismatch risk. Total liabilities are 89.45 against equity of 67.46; reported D/E of 1.33x is moderate. Interest-bearing debt consists primarily of long-term loans (33.15) plus short-term (5.97); interest coverage is strong at 32.87x. There are no disclosed off-balance sheet obligations in the provided data. Intangible assets (goodwill 32.32; total intangibles 32.34) are sizable versus equity (about 51% of equity), implying sensitivity to any downturns that could trigger impairment. Overall solvency is adequate with ample liquidity buffers.

Cash Flow Quality

OCF of 17.38 versus net income of -2.57 yields an OCF/NI of -6.76x, which flags under the benchmark but is largely a function of the negative NI from extraordinary and tax items rather than weak cash generation. Free cash flow of 6.77 (OCF 17.38 less investing CF -10.61) is positive and supported by healthy operating cash conversion. With positive FCF and strong cash on hand, the company can fund capex and absorb working capital swings. No granular working capital components were provided; therefore, no specific indications of manipulation (e.g., aggressive payables stretch or receivables build) can be assessed. Financing CF of 14.90 suggests incremental funding (likely debt) was raised, further bolstering liquidity; sustainability will depend on maintaining strong interest coverage.

Dividend Sustainability

Dividend data were unreported; payout metrics are not reliable with a net loss (calculated payout ratio -110.6% is not meaningful, reported 0.3% lacks context). From a capacity standpoint, positive FCF (6.77) and strong cash position indicate room for modest shareholder returns if desired. However, given negative net income and the presence of extraordinary losses and high tax expense this period, a conservative dividend stance would be consistent with preserving flexibility. Policy outlook cannot be inferred from the provided data; monitor management guidance and capital allocation statements.

Risk Assessment

Business Risks:

• Execution risk in sustaining >30% YoY revenue growth while maintaining gross margin at ~42%.
• Platform competition and pricing pressure that could compress take-rate and operating margin.
• High intangible asset base (goodwill 32.32; intangibles 32.34) exposes the business to impairment risk if growth slows.

Financial Risks:

• Extraordinary loss of ~11.35 this period indicates potential exposure to one-off charges (e.g., impairments, restructuring), which can recur unpredictably.
• Tax volatility (effective tax rate 134.2%) could persist if driven by non-deductible items or DTA valuation allowances.
• Moderate leverage (D/E 1.33x) creates some sensitivity to funding costs, though current interest coverage is strong.

Key Concerns:

• Disconnect between strong operating profit and negative net income due to below-ordinary items and taxes.
• Earnings quality flag: OCF/NI ratio < 0.8 (mechanically negative); while OCF is solid, reported NI volatility can pressure equity valuation.
• Potential maturity and refinancing considerations over time despite ample cash, given total loans of ~39.1.

Investment Implications

Key Takeaways:

• Core operations are healthy: operating margin ~7.8% on 32% revenue growth.
• Net loss was driven by extraordinary losses (~11.35) and a >100% effective tax rate, masking underlying strength.
• Cash generation is solid with positive OCF (17.38) and FCF (6.77), supporting balance sheet resilience.
• Intangibles are high relative to equity, elevating impairment sensitivity.
• Moderate leverage with strong interest coverage provides funding flexibility.

Metrics to Watch:

• Recurrence/size of extraordinary gains/losses (bridge from ordinary income 17.59 to PBT 6.24).
• Normalization of effective tax rate toward statutory levels.
• Operating margin trajectory and SG&A efficiency vs revenue growth.
• Cash conversion (OCF vs operating income) and FCF consistency.
• Goodwill impairment tests and any changes in intangible asset carrying values.

Relative Positioning: Within Japan-listed digital platforms/HR-tech marketplaces, CrowdWorks exhibits above-peer revenue growth and solid operating discipline, but higher earnings volatility below the operating line due to special items and tax effects; liquidity is strong, with moderate leverage and elevated intangible asset exposure.

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