TEMONA.inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥1.83B
• Operating Income: ¥155M
• Net Income: ¥-393M
• EPS: ¥6.88

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

Temona Co., Ltd. (3985) reported FY2025 Q4 (full-year) results under JGAAP on a consolidated basis, showing stable but subdued top-line momentum and steady profitability. Revenue was ¥1,832 million, up a modest 0.4% YoY, indicating essentially flat growth. Gross profit was ¥937 million, implying a robust gross margin of 51.2%, consistent with a software/service model. Operating income was ¥155 million, effectively flat YoY, yielding an operating margin of 8.5%, demonstrating disciplined cost control but limited operating leverage given muted growth. Ordinary income came in at ¥153 million, broadly aligned with operating income, reflecting minimal non-operating drag. Net income was ¥73 million, also flat YoY, translating to a net margin of 4.0%, which remains modest versus gross margin and indicates meaningful SG&A burden and tax effects. Depreciation and amortization of ¥146 million is sizable relative to operating income, but cash flow remained strong. The DuPont-based ROE is 9.52%, decomposed into a 3.98% net margin, 1.04x asset turnover, and 2.30x financial leverage, suggesting return profile driven more by leverage and asset efficiency than margin expansion. Liquidity appears sound with a current ratio of 218% and quick ratio the same (no inventories), supported by working capital of ¥637 million. Solvency is reasonable with total liabilities of ¥841 million against equity of ¥767 million, translating to debt-to-equity of 1.10x and an inferred equity ratio of roughly 43% (equity/total assets), despite the reported equity ratio field showing 0.0% (likely undisclosed in that metric). Cash generation was strong: operating cash flow of ¥223 million equals 3.05x net income, and free cash flow of ¥229 million was positive, aided by limited investing cash outflows. Interest coverage is comfortable at 35.4x given modest interest expense (¥4.4 million). The company paid no dividend (DPS ¥0), consistent with a reinvestment stance given scale and growth ambitions. While revenue growth is tepid, margin stability and cash conversion are supportive for ongoing investment in product and go-to-market. Financing cash inflow of ¥90 million suggests modest balance sheet flexibility, though detailed cash balance was not disclosed. Several items such as cash and cash equivalents, shares outstanding, and equity ratio appear undisclosed (represented as zeros), which constrains precision on per-share and capital allocation analysis.

Profitability Analysis

ROE_decomposition: ROE 9.52% = Net margin 3.98% × Asset turnover 1.037 × Financial leverage 2.30. This indicates returns are balanced across efficiency and leverage rather than high net profitability. margin_quality: Gross margin is strong at 51.2%, typical of subscription/recurring revenue businesses. Operating margin at 8.5% reflects substantial SG&A (¥782 million; ~42.7% of revenue), implying room for operating leverage if growth re-accelerates. Ordinary margin (8.35%) closely tracks operating margin, indicating limited non-operating volatility. operating_leverage: YoY revenue growth (+0.4%) was too low to unlock incremental operating margin; operating income was flat YoY. With D&A at ¥146 million (EBITDA margin ~16.4%), incremental revenue should convert at high contribution margins if sales growth resumes, offering potential leverage on a largely fixed cost base.

Growth Assessment

revenue_sustainability: Revenue rose slightly to ¥1,832 million (+0.4% YoY), signaling stable customer activity but limited expansion. High gross margin suggests retention and pricing remain intact, but new bookings or upsell growth likely lagged. profit_quality: Operating income (¥155 million) and net income (¥73 million) were flat YoY, reflecting controlled costs amid low growth. The OCF/NI ratio of 3.05x indicates strong cash realization of earnings, underpinned by non-cash charges and favorable working capital. outlook: Absent acceleration in top-line drivers (new logos, ARPU uplift, cross-sell), near-term operating leverage will be constrained. However, the high gross margin and disciplined cost structure provide a base for profitability if demand improves. Watch for signs of re-acceleration in subscription metrics and sales pipeline conversion.

Financial Health

liquidity: Current assets ¥1,177 million vs. current liabilities ¥540 million yields a current and quick ratio of 218%. Working capital is ¥637 million, indicating ample near-term liquidity. Cash and equivalents were not disclosed (reported as 0), but liquidity appears adequate based on current assets composition. solvency: Total liabilities ¥841 million vs. equity ¥767 million implies debt-to-equity of 1.10x. Interest expense is low (¥4.4 million) with interest coverage at 35.4x, suggesting low financial risk from servicing obligations. capital_structure: Total assets ¥1,766 million vs. equity ¥767 million implies an inferred equity ratio of ~43.4% (notwithstanding the reported 0.0% field), and financial leverage of 2.30x. Financing cash inflow of ¥90 million adds flexibility, though the source (debt or equity) is not specified.

Cash Flow Quality

earnings_quality: OCF of ¥223 million vs. net income of ¥73 million (3.05x) signals strong earnings quality, driven by non-cash D&A (¥146 million) and likely favorable working capital timing. FCF_analysis: Free cash flow was ¥229 million (OCF ¥223 million + investing CF ¥6 million). Investing CF being a net inflow suggests limited capex or possible asset disposals/subsidies; capex intensity appears low this period. working_capital: With no inventories and strong current ratios, the working capital profile is light. The scale of OCF relative to NI suggests either collections improved or payables/deferred revenue supported cash; monitoring DSO, DPO, and deferred revenue would clarify sustainability.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio 0.0%, indicating earnings retention. Given net income of ¥73 million and positive FCF, dividends would be technically fundable, but management appears to prioritize reinvestment. FCF_coverage: FCF of ¥229 million would cover any modest dividend if introduced; current DPS of ¥0 implies full coverage by default. policy_outlook: For a smaller-scale, software-oriented business with flat growth, maintaining balance sheet flexibility and investing in growth/retention is rational. Dividend initiation likely hinges on clearer growth visibility and sustained free cash generation.

Risk Assessment

Business Risks:

• Subdued top-line growth (+0.4% YoY) indicating demand softness or competitive pressure
• Customer churn or slower new logo acquisition impacting ARR and net revenue retention
• Pricing pressure in subscription commerce enablement and SME IT budgets
• Execution risk in scaling sales and marketing efficiency (high SG&A ratio)
• Product roadmap and innovation pace versus competitors
• Potential concentration in specific verticals or top customers
• Cybersecurity, data privacy, and service uptime risks affecting brand and retention

Financial Risks:

• Limited disclosed cash balance (cash reported as 0) reduces visibility on liquidity buffers
• Reliance on working capital timing to support OCF; potential normalization drag
• Tax rate variability; income tax expense suggests a high effective rate versus reported 0.0% metric
• Moderate leverage (D/E ~1.10x); any step-up in borrowing costs could pressure net income
• Potential volatility in non-cash charges (software capitalization/amortization under JGAAP)

Key Concerns:

• Flat revenue and operating income limiting operating leverage
• Visibility on cash/cash equivalents and per-share metrics is constrained by undisclosed items
• Need for re-acceleration in bookings/ARR to sustain ROE near ~10%

Investment Implications

Key Takeaways:

• Revenue essentially flat at ¥1,832 million; growth re-acceleration is the key swing factor
• Healthy gross margin (51.2%) and stable operating margin (8.5%) underscore resilient unit economics
• ROE 9.52% achieved via balanced efficiency and leverage rather than high net margins
• Strong cash conversion (OCF/NI 3.05x) and positive FCF (¥229 million)
• Robust liquidity (current ratio 218%) and strong interest coverage (35.4x)
• Dividend on hold (DPS ¥0); capital retained for reinvestment and flexibility

Metrics to Watch:

• ARR, net revenue retention, churn, and ARPA trends
• Bookings, backlog, and deferred revenue as leading indicators
• SG&A ratio vs. growth (sales productivity, CAC payback)
• OCF/NI conversion and working capital movements (DSO/DPO)
• Operating margin trajectory and D&A intensity
• Effective tax rate normalization and its impact on net margin

Relative Positioning: Within Japan small-cap SaaS/recurring revenue peers, Temona shows solid gross margins, modest but positive operating margins, strong cash conversion, and moderate leverage; however, it currently lags higher-growth peers on top-line expansion and operating leverage realization.

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