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

Stamen Co., Ltd. (TSE: 40190) reported FY2025 Q3 (cumulative) revenue of ¥2,738 million, up a robust 41.2% YoY, demonstrating strong topline momentum. Despite this growth, operating income declined 6.7% YoY to ¥153 million, indicating margin compression likely stemming from increased SG&A and growth investments. Net income more than doubled to ¥103 million (+101.6% YoY), supported by modest non-operating balance and possibly tax/timing effects, yielding a net margin of 3.76%. DuPont analysis shows ROE of 7.22%, decomposed into a 3.76% net margin, 1.145x asset turnover, and 1.68x financial leverage—suggesting ROE is driven more by efficiency and moderate leverage than by high profitability. Gross profit margin is indicated at 55.0%, pointing to solid unit economics; however, there is an internal inconsistency between the reported cost of sales (¥433 million) and the reported gross profit (¥1,506 million), as these do not reconcile with revenue—so we rely on the provided gross margin and DuPont set where consistent. Operating margin stands at roughly 5.6% (¥153m/¥2,738m), implying meaningful SG&A intensity. Liquidity appears sound with a current ratio of 168.9% and working capital of ¥540 million, supporting near-term obligations. The balance sheet is conservatively structured: total liabilities of ¥820 million versus equity of ¥1,427 million implies a debt-to-equity of 0.57x and an implied equity ratio of ~59.7% (based on assets and equity), even though the reported equity ratio field shows 0.0% (likely undisclosed in that tag). Interest expense is negligible at ¥0.165 million, and interest coverage is very high at 927x, indicating minimal financial risk from borrowing costs. Ordinary income (¥160m) modestly exceeds operating income, suggesting small non-operating gains. The reported effective tax rate field is 0.0%, but using the provided income tax of ¥114.2 million and ordinary income as a proxy for pre-tax income implies a high effective tax rate in this period; this may reflect timing, prior-period adjustments, or non-deductible items under JGAAP. Cash flow statements are not disclosed in this dataset (zeros denote undisclosed), limiting direct assessment of operating cash flow quality and free cash flow sustainability. The company paid no dividends (DPS ¥0), consistent with a reinvestment phase. Overall, the quarter shows strong revenue expansion with pressure on profitability, a sturdy balance sheet, and limited financial risk, but incomplete cash flow disclosure constrains the evaluation of earnings quality and dividend capacity.

Profitability Analysis

ROE is 7.22%, driven by a 3.76% net margin, 1.145x asset turnover, and 1.68x financial leverage (DuPont). Gross margin is indicated at 55.0%, highlighting attractive unit economics; however, reported cost of sales (¥433m) does not reconcile with revenue and gross profit, so we anchor on the stated gross margin metric. Operating margin is approximately 5.6% (¥153m/¥2,738m), indicating notable SG&A absorption despite strong sales growth. The decline in operating income (-6.7% YoY) alongside +41.2% revenue growth points to negative operating leverage this period, likely from increased headcount, R&D/product investments, marketing, or customer acquisition costs. Ordinary income (¥160m) slightly above operating income suggests minor non-operating gains, while interest expense is de minimis (¥0.165m), contributing little drag. Net margin at 3.76% is modest relative to gross margin, underscoring the weight of fixed/semi-fixed costs or growth spending. The implied effective tax burden appears high when calculated from available figures, dampening bottom-line conversion. Profitability quality is mixed: strong gross economics offset by compressed operating and net margins amid expansion spending.

Growth Assessment

Revenue grew 41.2% YoY to ¥2,738 million, indicating strong demand and/or successful expansion initiatives. Given the magnitude of growth, a mix of new customer acquisition and upsell/cross-sell is plausible for a subscription- or platform-like model, though not confirmed. The contraction in operating income (-6.7% YoY) despite strong sales implies that current growth is investment-led, with near-term profitability trade-offs. Net income growth (+101.6% YoY) likely reflects non-operating/tax timing factors in addition to scale, as operating income declined. Sustainability of the topline will hinge on retention, cohort economics, and sales pipeline quality; gross margin at 55% supports scalability if SG&A normalizes. With asset turnover at 1.145x, efficiency appears healthy and consistent with a light-asset or software-oriented business. Near-term outlook likely features continued revenue growth but with careful monitoring of operating expense discipline to restore operating leverage. Absent cash flow data, confirmation of recurring revenue cash conversion and customer prepayments cannot be made. Overall, growth is strong but requires margin recovery for higher-quality earnings.

Financial Health

Total assets are ¥2,392 million and total equity ¥1,427 million; implied equity ratio is ~59.7% (despite a reported field of 0.0%), indicating a solid capital base. Total liabilities are ¥820 million, yielding a debt-to-equity ratio of 0.57x—moderate leverage. Current assets are ¥1,323 million versus current liabilities of ¥784 million, producing a current ratio of 168.9% and working capital of ¥540 million, demonstrating good liquidity. Quick ratio equals current ratio due to no inventories reported, consistent with a services or software profile. Interest expense is minimal (¥0.165m), and interest coverage is very strong at 927x, implying limited solvency risk from debt service. The ordinary-to-operating income gap is small, suggesting limited reliance on non-core items. Absence of reported cash and cash equivalents in this dataset prevents a precise liquidity buffer assessment, but the balance sheet structure appears conservative. No significant refinancing risk is evident from the provided figures.

Cash Flow Quality

Operating, investing, and financing cash flows are undisclosed here (zeros denote unreported), so OCF quality and FCF cannot be directly assessed. Consequently, metrics like OCF/Net Income and FCF coverage should not be interpreted from the zeros. Given positive earnings and strong current liquidity, cash generation is likely positive over time, but timing effects (e.g., receivables growth, deferred revenue movements) cannot be verified. Working capital shows a healthy surplus (¥540m), which supports operations; however, without cash flow statements, we cannot judge whether growth is consuming or releasing cash. Depreciation and amortization are undisclosed, preventing EBITDA reconstruction and accruals analysis. Overall, earnings quality cannot be confirmed via cash conversion in this dataset; monitoring future OCF disclosures is essential.

Dividend Sustainability

DPS is ¥0 with a payout ratio of 0%, consistent with a reinvestment phase prioritizing growth. Without OCF and FCF data, coverage analysis cannot be completed; the presented FCF coverage of 0.00x reflects non-disclosure rather than actual insufficiency. Balance sheet strength (implied equity ratio ~59.7%, low interest burden) provides flexibility, but recurring free cash flow visibility is needed before assessing dividend capacity under a stable policy. Given strong revenue growth and current margin investment, internal financing may be directed to scaling rather than distributions. Future dividend outlook will depend on restoring operating leverage, cash conversion, and capital allocation priorities.

Risk Assessment

Business Risks:

• Margin compression risk from elevated SG&A as the company scales
• Execution risk in converting strong revenue growth into sustainable operating profit
• Customer acquisition cost inflation and potential deterioration of cohort economics
• Potential revenue volatility if growth is concentrated in a few large customers or channels
• Competitive intensity in software/services markets pressuring pricing and retention
• Dependence on key personnel and product roadmap delivery

Financial Risks:

• Limited visibility on cash generation due to undisclosed cash flow statements
• Potential working capital build (receivables) during rapid growth affecting cash conversion
• High implied tax burden in the period reducing net profit conversion
• Concentration of liabilities in the short term (current liabilities ¥784m) despite good liquidity

Key Concerns:

• Operating income decline (-6.7% YoY) despite +41.2% revenue growth indicates negative operating leverage
• Inconsistency between reported cost of sales and gross profit figures; reliance on the provided gross margin metric
• Cash flow data unreported, limiting assessment of earnings quality and dividend capacity

Investment Implications

Key Takeaways:

• Topline growth is strong at +41.2% YoY, but operating income declined, signaling near-term margin pressure
• ROE of 7.22% is primarily driven by asset efficiency and moderate leverage rather than high net margins
• Liquidity and solvency appear solid with a current ratio of 168.9% and debt-to-equity of 0.57x
• Interest expense is negligible; interest coverage is exceptionally high at 927x
• Cash flow disclosure is absent in this dataset; cash conversion and FCF remain key unknowns

Metrics to Watch:

• Operating margin trend and SG&A as a percent of sales
• Deferred revenue, receivables turnover, and OCF once disclosed
• Net retention rate and new ARR (if applicable) to gauge growth quality
• Effective tax rate normalization and drivers of tax expense
• Customer acquisition cost (CAC) payback and LTV/CAC (if disclosed)
• Equity ratio and D/E to monitor balance sheet resilience during expansion

Relative Positioning: Based on the provided metrics, the company exhibits faster-than-peer topline growth and strong gross economics but lags on operating margin resilience, positioning it as a growth-oriented name with a conservative balance sheet yet needing improved operating leverage to elevate returns.

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