uSonar Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥5.39B
• Operating Income: ¥1.18B
• Net Income: ¥684M
• EPS: ¥87.60

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

FY2025 Q3 was a clear beat on profitability with disciplined cost control and solid top-line growth. Revenue grew 13.3% YoY to 53.95, while operating income rose 38.5% YoY to 11.80, driving operating margin expansion to roughly 21.9%. Net income increased 21.3% YoY to 6.84, translating to a net profit margin of 12.7%. Gross margin remained strong at 63.3%, indicating healthy pricing/mix and/or a largely fixed cost of revenue structure. Operating margin expanded by approximately 400 bps YoY (from ~17.9% to ~21.9%), reflecting operating leverage as SG&A grew slower than gross profit. Ordinary income (11.75) was broadly in line with operating income, with only modest net non-operating expenses (-0.05), underscoring a core-operations-led earnings profile. The effective tax rate printed at 35.1%, a drag on net profitability versus peers operating at lower normalized rates. Balance sheet quality is strong with cash and deposits of 32.23 far exceeding interest-bearing loans (short-term 1.45, long-term 0.62), implying net cash of roughly 30.2. Liquidity is ample: current ratio at 194.6% and quick ratio of 194.6% with AR of 3.79 supporting near-term coverage. Financial leverage is conservative with equity/asset ratio at ~52.1% and debt-to-equity at 0.68x (as reported), supporting resilience. ROE is robust at 20.5%, driven mainly by a healthy net margin (12.7%) and moderate asset turnover (0.841) at 1.92x financial leverage. Interest coverage is exceptionally strong at 506.7x, reflecting minimal financing strain. Earnings quality assessment is constrained because operating cash flow and capex were not disclosed this quarter; OCF/NI and FCF cannot be evaluated. Dividend metrics (DPS, payout, total dividends) were not reported, limiting visibility on capital return, but balance sheet capacity suggests flexibility. Overall, the quarter demonstrates healthy demand, improved profitability, and low financial risk, with the main caveat being limited cash flow and dividend disclosure. Looking ahead, sustaining the expanded operating margin while navigating a relatively high tax rate will be key for maintaining >20% ROE.

Profitability Analysis

ROE (20.5%) = Net Profit Margin (12.7%) × Asset Turnover (0.841) × Financial Leverage (1.92x). The biggest driver of ROE strength this quarter is the margin component: operating income rose 38.5% vs revenue +13.3%, lifting operating margin by ~400 bps YoY to ~21.9%. Asset turnover at 0.841 is steady/moderate for a software/data-like model with sizable cash holdings; leverage at 1.92x is not excessive given a ~52% equity ratio. The business driver behind margin expansion appears to be operating leverage—gross profit increased on higher revenue while SG&A rose more slowly than gross profit (SG&A to sales at ~41.5%). Non-operating items were small (-0.05 net), so the improvement is operational, not financial. Sustainability: margin gains should be partially sustainable if revenue growth continues and SG&A discipline holds; however, normalization of hiring, marketing, or higher cloud/input costs could cap further expansion. Watch for signals of SG&A re-acceleration above revenue growth, which would erode leverage. The 35.1% effective tax rate also caps net margin vs operating margin, so any tax normalization would add incremental net ROE. No evidence of equity-method income or one-off gains; profit quality looks recurring at the operating level.

Growth Assessment

Top-line growth of 13.3% YoY to 53.95 indicates solid demand. Operating income grew 38.5% YoY to 11.80, reflecting strong operating leverage. Net income rose 21.3% YoY (6.84), lagging operating income growth due to a relatively high tax rate and small net non-operating expense. Revenue quality appears sound given the high gross margin (63.3%), consistent with data/software value-add; however, lack of segment or contract-type disclosure (subscription vs project) limits assessment of recurrence. The ~400 bps YoY operating margin expansion suggests improved cost efficiency and/or mix, but further expansion may moderate as the company reinvests for growth. With cash of 32.23 and minimal debt, the company has capacity to fund sales capacity, R&D, and product enhancements to sustain mid-teens growth. Outlook hinges on maintaining pipeline momentum and retention metrics; absent those disclosures, we assume steady growth with margin holding above 20% near-term if cost discipline persists. Tax rate normalization could be a latent EPS tailwind; conversely, wage inflation or higher cloud/data costs are risks to margins.

Financial Health

Liquidity is strong: current assets 38.71 vs current liabilities 19.90 imply a current ratio of 194.6% and ample working capital (18.81). Quick ratio equals current ratio (no inventories reported), reinforcing immediate liquidity strength. Net cash position is robust: cash and deposits 32.23 vs total interest-bearing loans of ~2.07 (1.45 short-term, 0.62 long-term), implying ~30.2 of net cash. Solvency is healthy: equity of 33.43 against total assets of 64.17 implies an equity ratio of ~52.1%, and reported D/E of 0.68x remains conservative. Interest coverage at 506.7x signals negligible refinancing risk. No warning triggers: Current Ratio well above 1.0, D/E comfortably below 2.0. Maturity mismatch risk is low given cash significantly exceeds short-term loans and payables (2.30). Some balance sheet line items are unreported (e.g., investments and other assets), so total asset breakdown does not sum to the headline; this reflects disclosure scope rather than inconsistency. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

Operating cash flow, investing cash flow, and capex were not reported, so OCF/Net Income and FCF cannot be assessed. Consequently, we cannot validate whether earnings are cash-convertible this quarter nor gauge working capital effects (e.g., whether AR increased faster than sales). With AR at 3.79 and strong net cash, short-term liquidity risk is low even if OCF were temporarily weak. Dividend and buyback cash outflows are also unreported, limiting assessment of total cash commitments. Absent OCF, we cannot rule out working capital pulls (e.g., longer receivable cycles) or timing effects; monitor OCF/NI > 1.0 over multiple quarters for comfort.

Dividend Sustainability

Dividend per share, payout ratio, and total dividends were not disclosed for the period, so direct sustainability analysis is not possible. From a capacity standpoint, net cash of ~30.2 and strong profitability (NI 6.84) indicate room to fund ordinary dividends and growth investments concurrently. Without FCF, we cannot confirm coverage of dividends plus capex. If the company targets a payout ratio below 60% (general benchmark), current earnings power appears adequate, but confirmation awaits OCF and capex disclosure. Policy clarity (target payout/DOE) is not available in the provided data.

Risk Assessment

Business Risks:

• Demand volatility for software/data solutions could slow revenue growth from the current +13.3% YoY pace.
• Cost inflation (personnel, cloud/data acquisition) could compress the 63.3% gross margin and 21.9% operating margin.
• Customer concentration and churn risk (not disclosed) could impact revenue stability given likely subscription/project mix.
• Execution risk in scaling sales capacity while maintaining SG&A efficiency.

Financial Risks:

• High effective tax rate (35.1%) reduces net margin; tax policy or mix shifts may create earnings volatility.
• Cash flow visibility risk due to unreported OCF/FCF; potential working capital swings cannot be assessed.
• Interest rate risk is limited given net cash, but investment income on cash may fluctuate with rates.

Key Concerns:

• Lack of cash flow disclosure prevents validation of earnings quality (OCF/NI) and FCF coverage.
• Dividend policy and payout are unreported, limiting clarity on capital return cadence.
• Partial asset breakdown (missing investments/other assets) reduces transparency into asset composition.

Investment Implications

Key Takeaways:

• Profits outpaced revenue with operating income +38.5% YoY on revenue +13.3%, lifting operating margin by ~400 bps YoY to ~21.9%.
• ROE is strong at 20.5%, primarily margin-driven with moderate leverage (1.92x) and asset turnover (0.841).
• Balance sheet is robust: ~30.2 net cash, current ratio ~195%, and interest coverage >500x.
• Non-operating items are minimal; earnings are driven by core operations.
• Visibility on cash conversion and capital returns is limited due to unreported OCF/FCF/DPS.

Metrics to Watch:

• Operating cash flow to net income (>1.0 target) and free cash flow trajectory
• SG&A growth vs revenue growth to gauge operating leverage durability
• Gross margin trend and input cost pressures
• Effective tax rate normalization path
• Accounts receivable trends and DSO
• Any disclosure on dividend policy or share repurchases

Relative Positioning: Within Japan small/mid-cap software/data peers, the company shows above-average profitability (GPM ~63%, OPM ~22%) and strong ROE (20%+), underpinned by a net cash balance sheet. The principal gap vs best-in-class is disclosure depth on cash flows and capital return policy.

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