Plus Alpha Consulting Co.,LTD. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥17.08B
• Operating Income: ¥6.38B
• Net Income: ¥3.55B
• EPS: ¥78.60

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

FY2025 Q4 (full-year) results were strong on the top and operating lines, with notable margin expansion at the operating level but a muted bottom line due to a higher tax burden. Revenue rose 22.8% YoY to 170.84, demonstrating solid demand across the portfolio. Gross profit reached 123.27, implying a high gross margin of 72.2%. Operating income surged 40.8% YoY to 63.78, materially outpacing sales growth. Ordinary income grew 39.5% YoY to 63.20, with minimal non-operating items (non-operating income 0.14 vs expenses 0.72). Net income increased 5.4% YoY to 32.58, held back by a 37.0% effective tax rate. Operating margin expanded to 37.3%; we estimate operating margin widened by roughly 477 bps YoY (from ~32.6% to ~37.3%). Net margin printed at 19.1%, implying an estimated compression of about 314 bps YoY (from ~22.2% to 19.1%), driven chiefly by tax rate effects rather than weaker operations. Earnings quality was strong: operating cash flow of 51.54 was 1.58x net income, and free cash flow of 49.90 was robust. The balance sheet is conservative with cash of 146.65 and total liabilities of 38.20, indicating a substantial net cash position. Liquidity is ample (current ratio 461.1%, quick ratio 461.1%) and leverage low (D/E 0.26x). Working capital looks healthy with accounts receivable of 16.02 (DSO ~34 days) and no inventory build. Capital allocation was shareholder-friendly, with share repurchases of 30.62 funded by internally generated cash. Dividend data are unreported, but a calculated payout ratio of 21% and FCF coverage of 7.28x indicate high sustainability. Looking forward, the structurally high gross margin and operating leverage suggest continued profit scalability, while tax normalization is the key swing factor for EPS growth translation.

Profitability Analysis

ROE decomposition (DuPont): ROE 22.0% = Net Profit Margin 19.1% × Asset Turnover 0.917 × Financial Leverage 1.26x. The largest change component vs last year is operating profitability (operating margin expansion), while the net margin contracted due to a higher effective tax rate (37%). Business drivers: revenue scale benefits and cost discipline lifted operating leverage (SG&A growth appears below revenue growth), while below-the-line items (taxes) diluted net margin. Sustainability: operating margin gains look more sustainable than the tax-rate headwind, given the high gross margin profile (72.2%) and modest D&A (2.41), though wage inflation and hiring for growth could pressure SG&A. Watch for any SG&A acceleration outpacing revenue; for now, operating income growth (+40.8%) outstripped sales growth (+22.8%), indicating positive operating leverage rather than a concerning cost trend.

Growth Assessment

Top-line growth of 22.8% YoY is robust and likely driven by expanding demand for analytics/consulting solutions, supported by recurring-like characteristics typical in data/analytics services. Operating income growth of 40.8% demonstrates healthy scalability at current volume, aided by a high gross margin base. Net income growth (5.4%) lagged due to a high tax rate; absent this, underlying profit growth would be closer to ordinary income trends. Revenue sustainability appears solid given the lack of inventory dependence and manageable receivables (DSO ~34 days). Near-term outlook hinges on continued client acquisition/upsell and maintaining cost discipline; key sensitivities include hiring costs and potential normalization of utilization. With minimal non-operating contributions (non-operating income ratio 0.4%), earnings are driven predominantly by core operations, implying higher quality growth.

Financial Health

Liquidity is very strong: current ratio 461.1% and quick ratio 461.1% (no inventory), with working capital of 132.08. No warning flags (Current Ratio well > 1.0). Solvency profile is conservative: total liabilities 38.20 vs total equity 148.09 (D/E 0.26x, far below any concern threshold of 2.0x). Cash and deposits of 146.65 comfortably exceed total liabilities, implying net cash. No explicit interest-bearing debt was disclosed; interest coverage not calculable but effectively strong given the net cash position. Maturity mismatch risk is low: current assets 168.66 vs current liabilities 36.58. No off-balance sheet obligations were reported in the provided data.

Cash Flow Quality

OCF/Net Income is 1.58x, indicating strong cash conversion and low accrual risk. Free cash flow of 49.90 was solid and readily covered share repurchases (30.62) and would comfortably cover ordinary dividends (payout ratio calculated 21%), implying ample residual capacity. Working capital quality looks healthy: accounts receivable of 16.02 vs revenue implies DSO around 34 days, with no inventory exposure. No signs of end-period working capital manipulation are evident from the disclosed figures; OCF growth is consistent with operating profit strength. Capex was modest at 0.57, aligning with an asset-light model.

Dividend Sustainability

Dividend specifics are unreported, but the calculated payout ratio stands at 21%, comfortably below the 60% benchmark. FCF coverage is strong at 7.28x for dividends (based on provided metric), suggesting high sustainability even under moderate stress. Cash generation also funded buybacks of 30.62 without pressuring liquidity. Given the net cash balance and stable cash generation, the company appears well-positioned to maintain or incrementally raise shareholder returns, subject to investment needs and potential tax normalization.

Risk Assessment

Business Risks:

• Client concentration or contract renewal risk typical of analytics/consulting models
• Wage inflation and tight labor market for data/AI talent, pressuring SG&A
• Execution risk in scaling platforms while sustaining high gross margins
• Potential slowdown in discretionary IT/analytics spending in a softer macro environment

Financial Risks:

• Tax rate volatility (effective tax 37%) dampening net margin and EPS growth translation
• Limited disclosure on interest-bearing debt details (though balance indicates net cash)
• Potential FX exposure if overseas sales/costs expand (not disclosed)

Key Concerns:

• Net margin compression despite strong operating performance due to higher taxes
• Dependence on continued operating leverage to sustain ROE at 20%+ with low financial leverage
• Any step-up in SG&A growth outpacing revenue could erode margin gains

Investment Implications

Key Takeaways:

• Core operations are the growth engine: operating income +40.8% on revenue +22.8% with operating margin ~37%
• Cash generation is strong (OCF/NI 1.58x; FCF 49.90) and balance sheet is net cash
• ROE of 22% is driven by high margins and decent asset turnover, not leverage
• Bottom-line growth lagged due to a 37% tax rate; normalization would be an upside lever
• Capital returns (buybacks 30.62) are funded by internal cash flows, leaving ample liquidity

Metrics to Watch:

• Operating margin trajectory and SG&A growth vs revenue
• Effective tax rate and any guidance on its normalization
• OCF/NI ratio and DSO trends as indicators of cash conversion quality
• Headcount and personnel cost trends (proxy for capacity and cost pressure)
• Pipeline/recurring revenue indicators and retention metrics (if disclosed)

Relative Positioning: Within Japan-listed analytics/IT services peers, the company exhibits above-average margins, strong cash conversion, and a conservative balance sheet, positioning it favorably on quality and profitability while relying less on financial leverage.

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