Yappli,Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥4.46B
• Operating Income: ¥723M
• Net Income: ¥715M
• EPS: ¥55.81

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: A strong quarter with accelerating operating leverage, robust profitability, and ample liquidity, albeit with some earnings-quality caveats due to a negative effective tax rate and a mismatch between ordinary income and profit before tax. Revenue rose 9.1% YoY to 44.55, led by continued expansion of the subscription base and disciplined cost control. Operating income grew 50.7% YoY to 7.23, lifting the operating margin to about 16.2%. Gross profit reached 27.37 with a gross margin of 61.4%, underscoring the scalability typical of a SaaS model. Ordinary income was 7.20, essentially in line with operating income, indicating minimal reliance on non-operating items. Net income printed at 7.15 (+9.6% YoY), but this sits alongside a negative effective tax rate of -36.5%, implying tax benefits that may not recur. Based on growth rates, we estimate operating margin expanded by roughly 440 bps YoY (from ~11.8% to ~16.2%), evidencing material operating leverage. ROE was a robust 26.3%, driven by a healthy net margin (16.1%), about 1.0x asset turnover, and modest financial leverage (1.63x). Liquidity is very strong with a current ratio of 378% and cash of 19.60 versus long-term loans of 11.35, leaving net cash of roughly 8.25. Interest coverage is exceptionally high at 158.48x, so solvency risk appears low. The divergence between ordinary income (7.20) and profit before tax (4.78) suggests the presence of extraordinary items; combined with the tax benefit, this raises sustainability questions for bottom-line growth. Cash flow statements were not disclosed, limiting assessment of operating cash conversion and free cash flow durability. No dividends were reported, consistent with a growth-oriented capital allocation stance for a SaaS company. Forward-looking, sustaining the ~16% operating margin will hinge on maintaining sales efficiency and churn control while keeping SG&A growth contained. Overall, execution is solid, balance sheet is resilient, and momentum in operating profit is favorable, but investors should normalize earnings for tax effects and monitor cash generation once disclosed.

Profitability Analysis

DuPont ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 16.1% × 1.004 × 1.63 = 26.3%. The biggest change QoQ/YoY appears to be margin expansion, as operating income grew 50.7% on 9.1% revenue growth, implying improved operating leverage. Business driver: stronger gross margin retention (61.4%) combined with slower growth in SG&A relative to gross profit, likely reflecting improved sales productivity and scale efficiencies in a SaaS model. Sustainability: core operating leverage from scale can persist, but the negative effective tax rate (-36.5%) and the gap between ordinary income (7.20) and PBT (4.78) indicate non-recurring items that may inflate net margin temporarily; normalize for taxes and extraordinary items when projecting ROE. Concerning trends: while SG&A level is high at 50.7% of sales, the absolute OP growth suggests SG&A did not outpace revenue; however, lack of SG&A breakdown limits visibility into sales & marketing versus R&D mix and the durability of sales efficiency gains.

Growth Assessment

Top line grew 9.1% YoY to 44.55, a solid but not hyper-growth pace for SaaS, suggesting steady net expansion of ARR and controlled churn. Operating profit surged 50.7% YoY to 7.23, indicating strong operating leverage. Using growth back-solve, the operating margin likely expanded ~440 bps YoY to ~16.2%. Net income increased 9.6% to 7.15, but the negative effective tax rate suggests bottom-line growth includes tax benefits; underlying profit growth ex-tax likely trails operating income growth. Non-operating items are immaterial (0.03 income, 0.05 expense), but the ordinary income to PBT gap implies extraordinary items affected pre-tax results. With cash at 19.60 and ample working capital, the company is positioned to invest in growth without near-term financing. Outlook: continued mid-to-high single-digit revenue growth with potential for incremental margin expansion if sales efficiency persists; however, sustaining a ~16%+ OP margin will depend on controlling customer acquisition costs and maintaining retention. Absence of cash flow disclosure is a constraint on assessing the durability of growth funding via internal cash generation.

Financial Health

Liquidity is very strong: current ratio 377.9% and quick ratio 377.9%, with working capital of 20.68. No warning triggers (Current Ratio >> 1.0). Solvency is conservative: D/E 0.69x and interest coverage 158.48x; no warning (D/E < 2.0). Debt profile shows noncurrent loans of 11.35 against cash of 19.60, implying net cash and low maturity mismatch risk; current liabilities are only 7.44 versus current assets of 28.12. The balance sheet composition indicates ample capacity to absorb shocks or fund growth. No off-balance sheet obligations were disclosed; we cannot assess leases or contingent liabilities due to data gaps.

Cash Flow Quality

Operating CF, investing CF, and financing CF were not disclosed, so OCF/Net Income and free cash flow cannot be calculated. As such, we cannot validate earnings-to-cash conversion; OCF/NI quality checks (threshold 0.8x) are not assessable. Positive indicators include large cash balance (19.60) and low short-term obligations, which reduce liquidity pressure even if cash conversion were volatile. Working capital conditions appear healthy with receivables of 6.67 and limited payables (0.33), but we cannot determine whether working capital release/consumption contributed to earnings. No signs of working capital manipulation can be inferred without cash flow detail.

Dividend Sustainability

Dividends were unreported; payout ratios and FCF coverage are not calculable. Given the growth profile and net cash position, the company has the financial flexibility to consider shareholder returns in the future, but current policy appears reinvestment-focused. Without OCF/FCF data and with potential one-off tax benefits in earnings, assessing sustainable distributable cash is not possible this quarter.

Risk Assessment

Business Risks:

• SaaS-specific churn and retention risk impacting ARR sustainability
• Customer acquisition cost inflation that could erode operating leverage
• Competitive intensity in app-platform and no-code markets pressuring pricing and win rates
• Dependence on continued IT/digital transformation budgets amid macro uncertainty
• Potential revenue concentration in key enterprise customers (not disclosed)

Financial Risks:

• Earnings quality risk from negative effective tax rate (-36.5%) and extraordinary-item impact (ordinary income vs PBT mismatch)
• Lack of cash flow disclosure prevents validation of cash conversion and FCF sufficiency
• Interest rate risk on 11.35 of long-term loans, albeit mitigated by net cash position
• Potential need for incremental investment in sales capacity that could raise SG&A temporarily

Key Concerns:

• Sustainability of current net margin and ROE if tax benefits reverse
• Visibility on OCF/FCF to support continued growth investments without external funding
• Limited SG&A breakdown obscures drivers of sales efficiency and R&D intensity
• Data limitations on intangible assets and capitalized software that could affect ROIC and depreciation profiles

Investment Implications

Key Takeaways:

• Strong operating leverage: +50.7% YoY operating income on +9.1% revenue
• Operating margin around 16.2%, up an estimated ~440 bps YoY
• High ROE at 26.3% driven by healthy margins and modest leverage
• Robust liquidity with current ratio ~3.8x and net cash despite long-term loans
• Earnings quality caveat: negative effective tax rate and extraordinary-item signals
• Cash flow unreported, constraining assessment of durability of margin gains

Metrics to Watch:

• ARR growth, net revenue retention, and churn (not disclosed)
• Sales efficiency (LTV/CAC, payback period) and SG&A growth vs revenue
• OCF/Net income and FCF once disclosed (target >1.0x OCF/NI)
• Gross margin trajectory and upsell/cross-sell contribution
• Effective tax rate normalization and any extraordinary gains/losses
• Debt terms (rate and tenor) vs cash balance to maintain net cash

Relative Positioning: Versus domestic SaaS peers, Yappli shows above-average profitability (OP margin ~16% and ROE ~26%) and a strong balance sheet with net cash, while top-line growth (~9%) is moderate relative to high-growth peers; the key differentiator is operating discipline, but validation through cash flow disclosure and sustained retention metrics is needed.

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