Stmn,Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥2.74B
• Operating Income: ¥153M
• Net Income: ¥51M
• EPS: ¥11.77

Income Statement

Balance Sheet

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 Q3 was a top-line-strong but margin-compressed quarter, with net profit doubling on a low base while operating income declined. Revenue rose 41.2% YoY to 27.38, demonstrating robust demand and successful client acquisition/expansion. Gross profit reached 15.06 with a gross margin of 55.0%, indicating solid unit economics for a SaaS-centric model. Operating income decreased 6.7% YoY to 1.53, implying operating margin compression to 5.6%. We estimate operating margin compressed by roughly 285–290 bps YoY (from about 8.5% to 5.6%), reflecting heavier SG&A investment ahead of revenue recognition. Ordinary income declined modestly to 1.60 (−2.7% YoY), as non-operating items were minor (income 0.04, expenses 0.03). Net income rose 101.6% YoY to 1.03, lifting net margin to 3.8% (up ~110–115 bps YoY), helped by a benign non-operating balance and a low prior-year base, despite a high effective tax rate of 69.1% this quarter. DuPont-calculated ROE stands at 7.2% (Net margin 3.8% × Asset turnover 1.145 × Leverage 1.68x), close to many small-cap cost-of-equity estimates but with room for improvement. Liquidity remains healthy with a current ratio of 172.6% and cash and deposits of 10.82, providing ample buffer against 0.50 in short-term and 0.60 in long-term loans. Interest coverage is extremely strong at 927x, and D/E of 0.68x is conservative for a growing SaaS company. Cash flow quality cannot be assessed due to unreported OCF/FCF, which is a key limitation for dividend and reinvestment sustainability analysis. Working capital appears manageable with accounts receivable at 2.85 and no inventory exposure reported. Equity increased to 14.27, yielding a calculated BVPS of 162.64 JPY. The payout ratio is indicated at 34.1%, which would be conservative if supported by positive FCF, but cash flow disclosures are missing. Forward-looking, sustaining rapid revenue growth while stabilizing operating margin will be critical to lift ROE above 10% and support any shareholder returns. Overall, momentum is strong on growth, but operating efficiency needs to catch up and cash flow evidence is required to confirm earnings quality.

Profitability Analysis

ROE decomposition: 7.2% = 3.8% Net profit margin × 1.145 Asset turnover × 1.68x Financial leverage. The largest driver of the YoY change in profitability appears to be margin dynamics: operating margin fell from roughly 8.5% to 5.6% (−~290 bps), even as net margin improved to 3.8% (+~110 bps YoY) due to a lower prior-year net base and minor support from non-operating items. Business reason: SG&A investment (salesforce, marketing, product, customer success) likely grew faster than gross profit to fuel scale, compressing operating margin despite strong top-line expansion. Sustainability: The SG&A intensity looks investment-driven (growth phase) rather than structurally dilutive; with revenue scale and cohort maturation, operating margin should have room to normalize upward, but near-term pressure can persist while acquiring growth. Watch for any SG&A growth outpacing revenue again; given operating income declined despite +41% revenue, SG&A growth likely exceeded gross profit growth this period, signaling near-term operating deleverage. Asset turnover at 1.145 indicates decent efficiency for a SaaS business; further scale should support higher turnover with modest asset additions. Leverage at 1.68x is modest; ROE upside will predominantly come from margin expansion and turnover, not leverage.

Growth Assessment

Revenue growth of +41.2% YoY to 27.38 is strong and suggests solid new bookings/expansion, consistent with a scaling subscription model. Gross margin at 55.0% confirms healthy unit economics, although not in the ultra-high SaaS band, implying some services mix or delivery costs. Operating income declined 6.7% YoY to 1.53, indicating investment ahead of revenue and possible cost inflation in sales and R&D. Net income doubled (+101.6% YoY) to 1.03 on a low base, but the quarter’s high effective tax rate (69.1%) dampened flow-through; sustainability of net profit growth will hinge on margin normalization. Outlook: If revenue momentum sustains near 30%+ and SG&A growth moderates below revenue growth, operating leverage should re-emerge in coming quarters. Near-term, expect continued trade-off between growth and margins as the company prioritizes scale; focus on sales efficiency (LTV/CAC, payback) and retention to underpin recurring revenue durability. Given limited disclosure on product mix and churn, we assume growth is primarily organic with limited one-offs.

Financial Health

Liquidity is healthy: current ratio 172.6% and quick ratio 172.6% (no inventories reported), with cash and deposits of 10.82 versus current liabilities of 8.75. No warning on current ratio (<1.0) or D/E (>2.0); D/E is 0.68x, conservative. Maturity mismatch risk appears low: short-term loans 0.50 are well-covered by cash, and total current assets exceed current liabilities by 6.36 in working capital. Interest-bearing debt is modest (short-term 0.50, long-term 0.60), and interest expense is negligible, reflected in an interest coverage ratio of 927x. No off-balance sheet obligations were disclosed in the provided data. Balance sheet flexibility is adequate to support continued growth investment.

Cash Flow Quality

OCF/Net Income is not calculable due to unreported cash flows, so we cannot confirm earnings cash conversion; this is a key limitation. With cash of 10.82 and modest debt, near-term liquidity is sound, but the sustainability of FCF to fund both growth capex and potential dividends is unassessable. No signs of working capital manipulation are evident from the limited data: receivables at 2.85 appear reasonable versus YTD revenue scale, and no inventory-based swings exist. Until OCF and FCF are disclosed, we cannot rate earnings quality; if OCF/NI < 0.8 upon disclosure, quality would be a concern for dividend sustainability.

Dividend Sustainability

The indicated payout ratio is 34.1%, which is conservative on paper and typically sustainable for a profitable, growing SaaS company. However, dividends, OCF, and FCF are unreported, preventing verification of cash coverage. If FCF is positive and not fully absorbed by growth investments, the payout looks affordable; if OCF is weak due to working capital or elevated customer acquisition spend, coverage could be tight. Policy outlook likely favors reinvestment while maintaining a modest shareholder return, but confirmation requires management guidance and cash flow disclosure.

Risk Assessment

Business Risks:

• Operating margin pressure from SG&A investment outpacing gross profit growth
• Customer acquisition efficiency risk (higher CAC, longer payback) in a competitive SaaS market
• Churn/retention risk impacting recurring revenue base and LTV
• Execution risk in scaling sales and customer success while maintaining service quality

Financial Risks:

• Earnings quality uncertainty due to unreported OCF/FCF
• High effective tax rate (69.1%) reducing net profitability and potentially volatile quarter to quarter
• Dependence on continued equity-funded growth rather than leverage; limited financial leverage to boost ROE

Key Concerns:

• Operating margin compressed by ~290 bps YoY despite +41% revenue growth
• Limited disclosure on SG&A breakdown and cash flows, obscuring cost structure and cash conversion
• Potential sensitivity to macro slowdown affecting new bookings and upsells

Investment Implications

Key Takeaways:

• Strong top-line momentum (+41.2% YoY) but operating deleverage this quarter
• Net margin improved to 3.8% and ROE is 7.2%, leaving room for margin-led ROE uplift
• Healthy liquidity (current ratio 172.6%) and low leverage (D/E 0.68x) support continued growth investment
• Cash flow disclosure gap is the main hurdle to assess earnings quality and dividend coverage

Metrics to Watch:

• Operating margin trajectory and SG&A growth vs revenue growth
• OCF and FCF (target OCF/NI > 1.0) once disclosed
• Revenue retention (NRR/GRR), churn, and LTV/CAC (if disclosed)
• Effective tax rate normalization
• AR days and billings growth as leading indicators of revenue

Relative Positioning: Within Japan small-cap SaaS peers, the company exhibits above-average revenue growth and solid liquidity, but trails best-in-class on operating margin consistency; demonstrating operating leverage and positive cash conversion would improve its quality profile.

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