SHARINGTECHNOLOGY.INC FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥8.58B
• Operating Income: ¥2.07B
• Net Income: ¥1.44B
• EPS: ¥60.30

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

Verdict: FY2025 Q4 was a solid operational quarter with double-digit topline and operating profit growth, though bottom-line declined slightly due to below-the-line factors and a higher effective tax burden. Revenue rose 14.4% YoY to 85.79, supported by a very high gross margin of 91.5% and disciplined SG&A, lifting operating income 15.9% YoY to 20.74. Operating margin expanded modestly to 24.2%, up roughly 32 bps from an estimated 23.9% in the prior year. Net income declined 3.7% YoY to 14.13, compressing net margin by about 309 bps to 16.5%, primarily reflecting a 30.6% effective tax rate and non-operating items that were not disclosed. Earnings quality was strong: operating cash flow of 19.81 exceeded net income (OCF/NI = 1.40x), and free cash flow was a healthy 16.15. Balance sheet strength is notable with an equity ratio of 69.3% and a low debt-to-equity ratio of 0.43x; cash and equivalents stood at 54.31. SG&A ratio was 68.5% of revenue, indicating ongoing investment needs, but operating leverage still materialized. Dividend sustainability appears sound with a calculated payout ratio of 25.9% and FCF coverage of approximately 4.4x. Shareholder returns were active, with dividends (3.49) and buybacks (5.04) collectively covered by FCF. Reported XBRL ratios (e.g., operating margin 0.2%, ROE 0.3%) appear inconsistent with the financial statements; the calculated operating margin is 24.2% and DuPont ROE 27.2%, which better fit the reported P&L and equity base. Liquidity looks ample given large current assets (63.97) versus modest total liabilities (22.37), although current liabilities were not disclosed. The company’s asset-light model (low inventories 0.41, modest intangibles) supports high gross margin but places emphasis on SG&A efficiency for scalability. Forward-looking, the combination of cash-rich balance sheet, positive operating leverage, and intact FCF supports continued investment and shareholder returns. Key watchpoints are tax rate normalization, non-operating income/expense volatility, and SG&A productivity. Overall, the quarter demonstrates resilient core operations with strong cash conversion despite a softer bottom line.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 16.5% × 1.154 × 1.43 ≈ 27.2%. The largest YoY change was in Net Profit Margin, which declined from an estimated ~19.6% to 16.5% (about -309 bps), despite operating margin expanding ~32 bps to 24.2%. Business drivers: operating profit benefited from revenue growth and a stable gross margin (91.5%), but below-the-line factors—particularly a higher effective tax rate (30.6%) and undisclosed non-operating items—compressed the net margin. Asset turnover at 1.154 and financial leverage at 1.43x reflect efficient use of a relatively light asset base and conservative leverage; changes versus last year are not observable given limited disclosures. Sustainability: the modest expansion in operating margin appears sustainable if SG&A scales slower than revenue; however, the net margin headwind may persist if tax and non-operating items remain elevated. Concerning trends: SG&A grew to 68.5% of revenue (absolute SG&A 58.74), and while we cannot compare YoY due to missing history, the level underscores the need for ongoing productivity gains. Overall, operating-level profitability is healthy; the pressure is mainly below the operating line.

Growth Assessment

Revenue growth of +14.4% YoY to 85.79 indicates solid demand momentum. Operating income grew +15.9% to 20.74, marginally outpacing revenue on operating leverage. Net income declined -3.7% to 14.13, driven by a higher effective tax rate (30.6%) and unspecified non-operating effects. Gross margin at 91.5% suggests a platform- or service-centric model with limited COGS sensitivity. Sustainability hinges on SG&A efficiency; with SG&A at 68.5% of revenue, further growth can translate to margin expansion if customer acquisition and overhead scale improve. The strong cash generation (OCF 19.81; FCF 16.15) provides capacity to reinvest for growth without compromising the balance sheet. Near-term outlook is constructive at the operating level, with watchpoints on tax rate normalization and any volatility from non-operating items that could continue to weigh on net profit growth.

Financial Health

Liquidity: Current ratio and quick ratio are not calculable due to missing current liabilities data; however, current assets (63.97) are sizable relative to total liabilities (22.37) and accounts payable (10.25), implying ample near-term liquidity. No warning on Current Ratio <1.0 can be made given limited disclosure, but indicators point to a comfortable cushion. Solvency: Equity ratio is 69.3% and debt-to-equity is 0.43x, indicating a conservative capital structure; D/E is well below the 1.5x benchmark. Maturity mismatch risk cannot be fully assessed without short- vs long-term debt splits, but high cash and low reported liabilities reduce refinancing risk. Off-balance sheet obligations were not reported, so no assessment could be made.

Cash Flow Quality

OCF/Net Income is 1.40x, indicating high-quality earnings with cash backing. Free cash flow was 16.15 after capex of 3.43, leaving ample coverage for shareholder returns and growth investments. Dividends (3.49) and buybacks (5.04) totaled 8.53, covered 1.9x by FCF. Working capital details are limited; AR is 8.54 and AP is 10.25, but without detailed changes we cannot assess timing effects. No signs of aggressive working capital management are evident from the annual aggregates; cash increased to a substantial 54.31, reinforcing liquidity. Overall, cash generation appears sustainable given the asset-light profile.

Dividend Sustainability

Calculated payout ratio is 25.9%, comfortably below the 60% benchmark. FCF coverage of dividends is strong at 4.41x, and even including buybacks, coverage is about 1.9x. With low leverage (D/E 0.43x) and robust OCF, the company has capacity to maintain or gradually increase shareholder returns, assuming operating trends persist. Reported payout ratio (0.2%) appears inconsistent with the financial statements; we rely on the calculated figure. No annual DPS data was disclosed; policy clarity would help assess future distributions.

Risk Assessment

Business Risks:

• SG&A intensity (68.5% of revenue) requires ongoing efficiency gains; slower scaling could cap operating leverage.
• Dependence on below-the-line items (non-operating income/expense not disclosed) creates visibility risk for net profit.
• Potential customer acquisition cost volatility that can swing margins in a high-gross-margin, marketing-driven model.
• Execution risk in maintaining high gross margins (91.5%) as the business scales.

Financial Risks:

• Limited disclosure of current liabilities and interest-bearing debt hinders precise liquidity and coverage analysis.
• Tax rate volatility (30.6% this period) can materially impact net income and ROE.
• Interest coverage not calculable; while leverage is low, future rate changes could affect financing costs if debt rises.

Key Concerns:

• Net margin contraction of ~309 bps YoY despite stronger operating profit, driven by tax and non-operating items.
• Reliance on cash generative quarters to fund both growth and shareholder returns; any OCF softness would pressure FCF.
• Data gaps in non-operating breakdown and current liability structure reduce transparency.

Investment Implications

Key Takeaways:

• Core operations are strong: revenue +14.4% and operating income +15.9% with operating margin expanding ~32 bps to 24.2%.
• Earnings quality is high (OCF/NI 1.40x) and FCF is robust (16.15), supporting reinvestment and returns.
• Balance sheet is conservative with equity ratio 69.3% and D/E 0.43x; cash 54.31 provides strategic flexibility.
• Net profit softness (-3.7% YoY) stems mainly from tax/non-operating impacts rather than core operations.
• Calculated ROE of ~27.2% (vs. reported 0.3%) highlights strong capital efficiency; reported XBRL ratios appear misclassified.

Metrics to Watch:

• SG&A-to-sales ratio and CAC efficiency to gauge operating leverage trajectory.
• Effective tax rate normalization and any disclosure on non-operating items.
• OCF/NI ratio stability and working capital swings (AR and AP days).
• Capital allocation split between growth capex and shareholder returns.
• Cash balance utilization and any changes in leverage or interest-bearing debt.

Relative Positioning: Within Japan’s asset-light, platform-oriented peers, the company exhibits superior gross margins and strong cash conversion with conservative leverage. The key differentiator will be SG&A scalability; sustained revenue growth with flat-to-declining SG&A intensity would support continued operating margin expansion and robust ROE.

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