CrowdWorks Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥22.66B
• Operating Income: ¥1.76B
• Net Income: ¥-396M
• EPS: ¥-16.28

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

CrowdWorks (TSE:3900) delivered strong top-line momentum in FY2025 Q4 with revenue of ¥22,657 million, up 32.4% YoY, evidencing robust platform activity and likely improved monetization. Gross profit reached ¥7,846.8 million, translating to a gross margin of 34.6%, which is healthy for a marketplace/services model and indicates pricing discipline and/or take-rate support. Operating income was ¥1,759 million (+31.2% YoY), yielding an operating margin of 7.8%, broadly consistent with revenue growth and suggesting operating leverage is steady but not expanding materially this period. Ordinary income matched operating income at ¥1,759 million, implying limited net non-operating gains/losses excluding interest and other below-the-line items. Despite solid operating performance, the company reported a net loss of ¥257 million (EPS -¥16.28), indicating sizable extraordinary losses and/or adjustments below ordinary income and after taxes—items not disclosed in the dataset. The DuPont bridge shows a net margin of -1.13%, asset turnover of 1.444x, and financial leverage of 2.33x, resulting in an ROE of -3.81%; the negative ROE is driven entirely by the below-the-line net loss. Cash generation remained strong: operating cash flow was ¥1,738 million, and free cash flow was positive at ¥677 million, highlighting good cash conversion relative to operating earnings. Liquidity looks sound with a current ratio of 159.5% and working capital of ¥3,293 million, offering ample buffer for operations. Reported equity ratio is shown as 0.0% in the feed (unreported), but based on the balance sheet, equity/asset ratio is approximately 43.0% (¥6,746m/¥15,690m), indicating a solid equity cushion. Leverage appears moderate with debt-to-equity at 0.92x (definition per provided metric; interest-bearing breakdown not disclosed), and interest coverage is very strong at 174.5x, reflecting limited financial strain from interest. Investing cash outflows of ¥1,061 million suggest continued growth investment (likely in software development, product, or potential M&A), funded by both internal cash generation and ¥1,490 million of positive financing cash flow. The effective tax rate is reported as 0.0% in the metrics; however, income tax expense of ¥446 million alongside a net loss indicates significant below-the-line items, which obscures the normalized tax profile under JGAAP. Dividend distributions remain absent (DPS ¥0), aligning with a reinvestment stance given growth and the net loss. Overall, the operating franchise appears to be strengthening with scale benefits, while one-off or extraordinary factors depressed bottom-line profitability. Data limitations remain—several items are unreported (e.g., cash and equivalents, equity ratio, shares outstanding)—so conclusions are based on available non-zero items and inferred relationships. Near-term priorities include clarifying the drivers of the net loss, validating the sustainability of revenue growth, and monitoring working capital dynamics that supported cash flow this period.

Profitability Analysis

ROE decomposition (DuPont): Net margin (-1.13%) × Asset turnover (1.444x) × Financial leverage (2.33x) yields a calculated ROE of -3.81%, matching the reported figure. The negative ROE stems from below-the-line items turning a solid operating profit into a net loss; operating ROE on a pre-extraordinary basis would be positive. Margin quality: Gross margin at 34.6% and operating margin at 7.8% indicate a healthy unit economics profile for a platform/services mix, with limited dilution from cost of sales and disciplined operating cost control. The near match between revenue growth (+32.4%) and operating income growth (+31.2%) suggests stable operating leverage—costs scaled roughly in line with revenue, with no meaningful margin expansion this period. EBITDA of ¥1,795.7 million implies modest non-cash charges (D&A ¥36.7 million), consistent with an asset-light model; depreciation intensity appears low. Ordinary income equals operating income, indicating limited recurring non-operating effects; the swing to net loss points to extraordinary items and/or non-controlling interests not detailed. Interest expense is minimal (¥10.1 million) relative to EBIT, supporting a high interest coverage ratio (174.5x) and underscoring that financing costs are not a profitability headwind. Effective tax optics are distorted: tax expense of ¥446.4 million combined with a net loss implies significant extraordinary losses after tax or other below-the-line adjustments. Overall, core profitability is sound, but headline net margin is temporarily depressed by undisclosed non-recurring charges.

Growth Assessment

Revenue growth of 32.4% YoY to ¥22,657 million is strong and likely driven by higher gross merchandise value on the platform, improved take-rates, and/or expansion in enterprise solutions and managed services. Operating income growth of 31.2% kept pace with sales, indicating that growth is not bought at the expense of operating discipline. Gross margin stability at 34.6% suggests no adverse pricing or mix shocks; monetization appears stable to slightly improving. Profit quality mixed: operating profit is solid, but bottom-line loss indicates non-recurring headwinds that mask underlying growth economics; normalization depends on the nature and recurrence of the extraordinary items. Cash flow growth quality is favorable—OCF was ¥1,738 million despite the net loss, implying strong collections and working capital management; however, sustainability depends on receivables/payables timing not disclosed here. Investing outflows of ¥1,061 million point to ongoing product development and platform enhancement that should support medium-term growth. Outlook hinges on sustaining double-digit revenue growth while containing below-the-line volatility; if extraordinary losses normalize, earnings trajectory should converge toward operating trends. Key watchpoints: user/GMV growth, take-rate/mix, enterprise client adoption, and cost scaling in S&M and G&A.

Financial Health

Liquidity: Current assets of ¥8,827.6 million vs. current liabilities of ¥5,534.5 million produce a current ratio of 159.5% (quick ratio same given no inventory disclosure), and working capital of ¥3,293.2 million—healthy buffers for near-term obligations. Solvency: Based on the balance sheet, equity/asset ratio is approximately 43.0% (¥6,746m/¥15,690m), despite the reported 0.0% (unreported figure); this indicates a solid capitalization. Leverage: Debt-to-equity is 0.92x per provided metric (definition likely interest-bearing debt/ equity, though the breakdown is not disclosed), implying moderate leverage. Interest burden is low with interest expense of ¥10.1 million and interest coverage of 174.5x, indicating ample capacity to service debt. Financing CF was +¥1,490 million, suggesting incremental borrowings or equity-related inflows; capital structure is being actively managed to support growth. Overall balance sheet strength is adequate for continued investment and operational scaling, subject to clarity on the nature of financing inflows and any off-balance sheet commitments not disclosed.

Cash Flow Quality

Earnings-to-cash conversion appears strong: OCF of ¥1,738 million versus a net loss of ¥257 million yields an OCF/NI ratio of -6.76 (negative due to loss), signaling that cash generation is being driven by working capital inflows and non-cash charges. EBITDA of ¥1,795.7 million vs. OCF suggests limited cash leakage to interest and taxes in cash terms during the period, though taxes accrued were ¥446.4 million. Free cash flow positive at ¥677 million (OCF ¥1,738m minus investing CF ¥1,061m) indicates internal funding of growth capex/investments with surplus retained. Investing CF likely includes capitalized development and possibly small acquisitions; precise mix is not available, so maintenance vs. growth split cannot be assessed. Working capital: While detailed components are not disclosed, the positive OCF alongside strong revenue growth suggests efficient collections and/or favorable payables timing; sustainability should be monitored to ensure no reversal risk. Overall, cash flow quality is good relative to operating performance, but the mismatch between net loss and OCF highlights the impact of non-recurring items and working capital timing.

Dividend Sustainability

The company paid no dividend (DPS ¥0; payout ratio 0.0%) and generated positive FCF of ¥677 million. Given the current net loss and focus on growth investments (investing CF outflow ¥1,061 million), internal capital allocation appears geared toward reinvestment rather than distributions. FCF coverage of dividends is therefore not applicable this period, but capacity exists to fund growth without tapping distributions. Policy outlook likely remains conservative on dividends until net income normalizes and retained earnings strengthen; no guidance is available in the provided data.

Risk Assessment

Business Risks:

• Exposure to macro-driven demand for freelance/outsourced work and corporate procurement cycles
• Competition from domestic and global talent platforms potentially pressuring take-rates and acquisition costs
• Execution risk in scaling enterprise solutions and maintaining service quality at higher volumes
• Regulatory and labor classification changes affecting the gig/freelance economy in Japan
• Platform safety, compliance, and credit/counterparty risks in payments and collections

Financial Risks:

• Earnings volatility due to extraordinary items not disclosed in detail, creating unpredictability in net profit
• Working capital reversal risk after a period of strong collection-driven OCF
• Moderate leverage (D/E 0.92x per provided metric) amid continued investment needs
• Limited disclosure on cash and equivalents (unreported), constraining visibility on liquidity runway
• Potential need for continued external financing (financing CF +¥1,490m) if growth investments accelerate

Key Concerns:

• Net loss (¥257m) despite strong operating profit, implying significant below-the-line charges
• Lack of disclosure on extraordinary items and cash balance complicates assessment of recurring earnings and liquidity
• Tax expense (¥446m) with a bottom-line loss suggests atypical period effects and/or deferred tax movements

Investment Implications

Key Takeaways:

• Revenue growth robust at +32.4% YoY to ¥22.7bn with stable gross margin (34.6%)
• Operating leverage steady: OPM ~7.8% with operating income up +31.2% YoY
• Net loss (-¥257m) driven by below-the-line factors; core operations profitable
• Strong cash generation (OCF ¥1.74bn; FCF ¥0.68bn) supports reinvestment
• Solid balance sheet with inferred equity ratio ~43% and high interest coverage (174.5x)

Metrics to Watch:

• GMV and take-rate trends to validate revenue sustainability
• Operating margin trajectory and cost scaling in S&M and G&A
• Extraordinary items and reconciliation from ordinary income to net income
• Working capital days (DSO/DPO) and any OCF reversal
• Composition of investing CF (capex vs. capitalized development vs. M&A)
• Cash and equivalents balance and net debt evolution

Relative Positioning: Within Japanese online talent/outsourcing platforms, CrowdWorks shows above-peer top-line momentum and solid operating margins for a growth phase, but exhibits greater bottom-line volatility due to extraordinary items; balance sheet strength and cash generation compare favorably, pending confirmation of liquidity details.

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