Internetworking and Broadband Consulting Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥2.40B
• Operating Income: ¥565M
• Net Income: ¥410M
• EPS: ¥74.07

Income Statement

Balance Sheet

Cash Flow Statement

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

IBC Co., Ltd. (TSE:39200) reported solid FY2025 Q4 results on a standalone JGAAP basis, with revenue of ¥2,404 million, up 15.0% year over year, indicating healthy demand for its offerings. Operating income rose 46.9% YoY to ¥565 million, demonstrating strong operating leverage and effective cost management. Net income surged 78.5% YoY to ¥410 million, aided by margin expansion and disciplined spending. The company’s DuPont-calculated ROE is 18.0%, supported by a 17.1% net margin, 0.643x asset turnover, and modest leverage of 1.64x. Gross profit margin is cited at 64.7%, implying a high value-add model; however, reported gross profit (¥1,554 million) does not reconcile arithmetically with the listed cost of sales (¥536.7 million), suggesting classification differences within cost categories. EBITDA of ¥602 million (25.1% margin) and an interest coverage ratio of 145x affirm robust operating performance and negligible financial strain. Operating cash flow of ¥701 million exceeded net income by 71%, indicating high earnings quality and favorable working capital dynamics. Free cash flow was strong at ¥576 million after ¥125 million of investing outflows, providing ample internal funding capacity. The balance sheet is conservative with a current ratio of 200% and debt-to-equity of 0.59x, supporting liquidity and solvency. Total assets were ¥3,739 million and equity ¥2,273 million, positioning leverage at prudent levels. There appears to be a gap between ordinary income (¥574 million) and pre-tax profit implied by net income and tax, indicating likely non-operating or extraordinary items that reduced pre-tax income; this merits monitoring in future disclosures. The reported effective tax rate metric (0.0%) is not consistent with the disclosed income tax expense (¥39 million), suggesting that the tax rate metric was not updated or is derived differently; based on net income and taxes, an implied tax rate materially above 0% is more realistic. Dividend payout is currently zero (DPS ¥0.00), preserving cash for growth or balance sheet strength; FCF coverage would be ample if a payout were introduced. Several data points (e.g., equity ratio, cash and equivalents, shares outstanding, BVPS) are shown as zero, which should be interpreted as not disclosed rather than true zeros. Overall, the company exhibits improving profitability, strong cash conversion, and a solid financial footing, with positive momentum into the next period. Outlook hinges on sustaining double-digit revenue growth and maintaining high gross margins while managing potential one-off items below the operating line.

Profitability Analysis

ROE_decomposition: ROE 18.04% = Net margin 17.05% × Asset turnover 0.643 × Financial leverage 1.64. This profile reflects a margin-driven ROE with moderate asset efficiency and conservative leverage. margin_quality: Gross margin reported at 64.7% (gross profit ¥1,554m on revenue ¥2,404m) suggests strong pricing power and a software/services-heavy mix. Operating margin is approximately 23.5% (¥565m/¥2,404m), indicating disciplined SG&A. Net margin at 17.1% is healthy, though the gap between ordinary income (¥574m) and implied pre-tax profit indicates non-operating/extraordinary effects impacting the bottom line. operating_leverage: Revenue grew 15.0% YoY while operating income grew 46.9% YoY, evidencing meaningful operating leverage from a largely fixed-cost base. EBITDA margin at 25.1% vs operating margin near 23.5% shows limited non-cash D&A drag (D&A ¥37.3m), consistent with an asset-light model.

Growth Assessment

revenue_sustainability: Top-line growth of 15.0% YoY points to solid demand and likely expansion of installed base and/or recurring revenues. Sustainability will depend on retention, upsell, and new logo acquisition, particularly in enterprise IT monitoring/analytics segments. profit_quality: Operating income growth outpaced revenue, and OCF/NI of 1.71 indicates that earnings are backed by cash. High gross margin supports structural profitability; however, the ordinary-to-pre-tax gap suggests one-off or non-operating items that could introduce volatility at the net level. outlook: Assuming continued demand and stable pricing, mid-teens revenue growth with steady-to-improving margins is plausible. Key swing factors include sales mix (license/subscription vs services), timing of large projects, and any recurrence of below-the-line losses.

Financial Health

liquidity: Current assets ¥2,668.8m vs current liabilities ¥1,333.3m yield a current ratio of 200% and a quick ratio of 197.6%, indicating a strong short-term liquidity buffer. solvency: Debt-to-equity is 0.59x (total liabilities ¥1,334.8m vs equity ¥2,273.0m), reflecting modest leverage. Interest expense is low at ¥3.9m with EBIT coverage of 145x, suggesting minimal financial risk. capital_structure: Assets ¥3,739m funded 61% by equity and 36% by liabilities (implied), with leverage of 1.64x (Assets/Equity). The undisclosed equity ratio figure (displayed as 0.0%) should not be interpreted as zero; based on the balance sheet, the implied equity ratio is roughly 60.8%.

Cash Flow Quality

earnings_quality: OCF of ¥701m vs net income of ¥410m (OCF/NI 1.71) indicates strong cash conversion and limited accrual risk. Depreciation is modest (¥37.3m), consistent with an asset-light model. FCF_analysis: FCF was ¥576m (OCF ¥701m minus investing CF ¥125m), comfortably positive and sufficient to fund organic investments and maintain balance sheet flexibility. working_capital: Working capital of ¥1,335.5m supports growth. Inventories are minimal at ¥34.1m, indicating low inventory risk; cash generation likely benefited from receivables collection and disciplined payables management.

Dividend Sustainability

payout_ratio_assessment: No dividend declared (DPS ¥0.00; payout ratio 0%). With net income of ¥410m and robust FCF of ¥576m, the capacity to initiate or increase dividends exists if policy allows. FCF_coverage: If a dividend were introduced, current FCF provides ample coverage. Presently, FCF coverage is not applicable given zero payouts. policy_outlook: Given strong cash generation and conservative leverage, the company could pursue a balanced policy including reinvestment, potential buybacks, or future dividends. Clarity on capital allocation priorities would be a positive catalyst.

Risk Assessment

Business Risks:

• Revenue concentration risk from large projects or key customers affecting quarterly volatility.
• Competitive pressure in network monitoring/APM/security analytics that could compress margins.
• Dependence on skilled engineers and potential wage inflation impacting cost base.
• Product obsolescence risk given rapid technology cycles.
• Execution risk in scaling recurring revenue and services mix.

Financial Risks:

• Potential non-operating or extraordinary losses affecting net income volatility (gap between ordinary and implied pre-tax).
• Working capital timing, particularly receivables collection in larger enterprise deals.
• Exposure to interest rate normalization is limited but present via small interest expense.
• Limited disclosure on cash and equivalents (shown as 0) reduces visibility into liquidity composition.

Key Concerns:

• Inconsistencies between reported cost of sales and gross profit suggest classification differences that warrant disclosure clarity.
• Apparent discrepancy between ordinary income and implied pre-tax profit indicates below-the-line items.
• Reported effective tax rate of 0.0% conflicts with disclosed income tax expense, requiring reconciliation in future reports.

Investment Implications

Key Takeaways:

• Strong topline growth (+15% YoY) with significant operating leverage (+46.9% YoY OI).
• High-quality earnings: OCF/NI 1.71 and FCF ¥576m.
• Healthy balance sheet: current ratio ~200%, D/E ~0.59x, interest coverage ~145x.
• ROE 18% driven mainly by robust margins with conservative leverage.
• Potential below-the-line volatility indicated by ordinary-to-pre-tax gap.

Metrics to Watch:

• Order intake/Backlog and recurring revenue ratio to assess growth durability.
• Gross margin trend and cost classification disclosures.
• Ordinary income vs pre-tax bridge (extraordinary and non-operating items).
• Receivables days and OCF sustainability.
• Capital allocation updates (dividend/buyback policy) and capex/opex needs.

Relative Positioning: The company exhibits above-average margin profile and cash conversion relative to many domestic small-cap software/IT service peers, with conservative leverage and improving ROE; sustained growth and transparency on below-the-line items will be important for maintaining this relative strength.

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