NEXYZ.Group Corporation FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥28.43B
• Operating Income: ¥1.82B
• Net Income: ¥105M
• EPS: ¥70.94

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

NEXYZ.Group (TSE:43460) delivered solid FY2025 Q4 results under JGAAP on a consolidated basis, with clear operating leverage and strong cash generation. Revenue rose 16.1% year over year to ¥28.4bn, while operating income increased 53.1% to ¥1.82bn, indicating expanding margins and efficient cost scaling. Reported net income was ¥0.92bn (+50.8% YoY), translating to an EPS of ¥70.94. DuPont analysis shows ROE of 11.39%, driven by a 3.24% net margin, asset turnover of 1.162x, and financial leverage of 3.02x, a healthy mix for a mid-sized services-oriented business. Gross profit was reported at ¥12.75bn, implying a gross margin of 44.8%; this supports the view that the company’s value-add remains strong. Operating margin approximates 6.4%, consistent with the notable YoY operating income growth outpacing revenue growth. Ordinary income of ¥1.74bn is modestly below operating income, suggesting small non-operating costs despite low interest expense (¥31m), with ample interest coverage of 58.7x. Cash generation was robust: operating cash flow reached ¥1.74bn (OCF/Net Income of 1.89x), and free cash flow was ¥2.02bn due to positive investing cash flows. The balance sheet shows total assets of ¥24.46bn, liabilities of ¥13.12bn, and equity of ¥8.10bn; by our calculation, the equity ratio is roughly 33.1% (equity/assets), even though a reported equity ratio metric was not available. Liquidity is adequate with a current ratio of 120% and working capital of ¥2.11bn, though the absence of disclosed cash and inventory data limits precision in short-term liquidity assessment. Leverage is moderate with debt-to-equity of 1.62x, supported by strong coverage. Dividend payments were nil, resulting in a payout ratio of 0%, and FCF fully retained; this enhances financial flexibility for reinvestment or deleveraging. Despite solid fundamentals, some line-item disclosures are missing or mapped under different tags (e.g., depreciation, cash and equivalents, inventory), which constrains certain ratio and quality checks (e.g., EBITDA). There is also a mismatch between reported cost of sales and gross profit; we rely on the provided gross profit and margin for analysis. Overall, profitability improved, cash conversion is strong, and capital structure is balanced, but continued monitoring of working capital dynamics and the sustainability of margin gains is warranted. The outlook hinges on maintaining revenue momentum and protecting gross margins amid cost and competitive pressures.

Profitability Analysis

ROE is 11.39% on a DuPont basis: net margin 3.24% × asset turnover 1.162 × financial leverage 3.02. Operating margin is approximately 6.4% (¥1.82bn/¥28.43bn), reflecting strong operating leverage as operating income growth (+53.1% YoY) outpaced revenue growth (+16.1% YoY). Gross margin of 44.8% (¥12.75bn/¥28.43bn) indicates healthy value capture; we base margin assessment on the reported gross profit figure. The spread between operating and net margin (6.4% to 3.24%) reflects taxes and minor non-operating items; interest expense is small (¥31m), and ordinary income is close to operating income, implying limited financial drag. With depreciation undisclosed, EBITDA cannot be assessed; however, high interest coverage (58.7x) implies earnings quality sufficient to service obligations. Overall, margin quality is improving, supported by cost discipline and scale benefits.

Growth Assessment

Top-line growth of 16.1% YoY to ¥28.43bn suggests healthy demand across core offerings. Profit growth outpaced revenue: operating income +53.1% YoY and net income +50.8% YoY, evidencing operating leverage and likely better mix or cost efficiencies. The net margin at 3.24% expanded alongside operating gains, which supports improved profit quality. Sustainability will depend on maintaining gross margin near the current 45% area and controlling SG&A growth to preserve mid-single-digit operating margins. The proximity of ordinary income to operating income indicates growth is primarily operational, not driven by one-offs in non-operating items. While we lack segment detail, the cash conversion (OCF/NI 1.89x) supports the durability of earnings. Outlook is cautiously constructive provided demand remains firm and working capital stays contained; key sensitivities are customer acquisition costs, churn/retention, and pricing power.

Financial Health

Total assets were ¥24.46bn, liabilities ¥13.12bn, and equity ¥8.10bn, implying a computed equity ratio of ~33.1% (equity/assets), notwithstanding the unreported equity ratio metric. Liquidity is adequate: current assets ¥12.58bn versus current liabilities ¥10.46bn yields a current ratio of 1.20x and working capital of ¥2.11bn. Quick ratio equals current ratio due to undisclosed inventories; thus, true quick liquidity may differ. Leverage is moderate with debt-to-equity of 1.62x; strong interest coverage (58.7x) mitigates refinancing risk under current earnings power. Ordinary income closely tracks operating income, suggesting limited non-operating volatility. The absence of disclosed cash balances and debt breakdown (short vs. long) limits a fuller solvency stress test, but present metrics indicate a balanced capital structure with headroom.

Cash Flow Quality

Operating cash flow of ¥1.74bn exceeds net income of ¥0.92bn (OCF/NI 1.89x), signaling solid earnings quality and effective working capital management in the period. Free cash flow was ¥2.02bn, boosted by positive investing cash flows (+¥0.28bn), which may include asset disposals or collection of investment-related receivables; sustainability of this component should be monitored. Financing cash flow was an inflow of ¥0.37bn, indicating net borrowings or equity-related inflow, though details are undisclosed. With depreciation and cash balances not reported, EBITDA-based cash conversion and liquidity buffers cannot be precisely assessed. Working capital appears a contributor to cash generation given the strong OCF relative to earnings, but receivables/payables/inventory details are not available to quantify turnover or potential reversals. Overall, cash flow quality is favorable, but reliance on non-recurring investing inflows would reduce repeatability of FCF at this level.

Dividend Sustainability

The company paid no dividends (DPS ¥0.00; payout ratio 0%), retaining all earnings and free cash flow. Given FCF of ¥2.02bn and net income of ¥0.92bn, internal funding capacity is strong for debt reduction or reinvestment. Withholding dividends enhances balance sheet flexibility, which is prudent given moderate leverage (D/E 1.62x) and some disclosure gaps in liquidity. Future distributions would be supportable if OCF consistently covers earnings and growth capex needs; however, policy intent is not disclosed. FCF coverage of dividends is not meaningful with DPS at zero. We will monitor whether management signals a payout framework as earnings and cash flow remain resilient.

Risk Assessment

Business Risks:

• Margin compression risk if input costs rise or pricing power weakens, pressuring the 44.8% gross margin.
• Revenue volatility given reliance on continued demand growth (+16.1% YoY achieved this period).
• Operating leverage cuts both ways; a slowdown could disproportionately impact operating income.
• Customer concentration or churn risk (not disclosed) could affect topline stability.
• Competitive intensity in core markets may require higher selling costs, reducing operating margin.

Financial Risks:

• Moderate leverage (D/E 1.62x) could magnify earnings volatility in downturns.
• Liquidity visibility is limited due to undisclosed cash and inventory balances.
• Positive investing cash flow may be non-recurring; FCF could normalize lower if investment needs rise.
• Potential working capital reversals could dampen OCF, given limited disclosure of receivables/payables.
• Interest rate risk is low currently (coverage 58.7x) but could rise if borrowing increases.

Key Concerns:

• Data limitations: several zero-reported items are undisclosed (cash, depreciation, EBITDA, inventories, equity ratio), constraining certain analyses.
• Inconsistency between reported cost of sales and gross profit; analysis relies on the provided gross profit and margin.
• Sustainability of margin gains and cash conversion absent detailed segment and working capital disclosures.

Investment Implications

Key Takeaways:

• ROE of 11.39% underpinned by improved operating margin and healthy asset turnover.
• Strong cash conversion (OCF/NI 1.89x) and positive FCF of ¥2.02bn bolster financial flexibility.
• Moderate leverage (D/E 1.62x) with high interest coverage (58.7x) indicates manageable solvency risk.
• Liquidity is adequate (current ratio 1.20x), but lack of cash and inventory disclosure tempers confidence.
• Operating leverage is evident (OI +53% vs. revenue +16%), supporting margin expansion if growth persists.

Metrics to Watch:

• Revenue growth rate and order backlog/pipeline indicators (when disclosed).
• Gross and operating margins, especially SG&A efficiency.
• OCF/Net income ratio and free cash flow sustainability excluding investing one-offs.
• Working capital trends (receivable days, payable days, inventory when disclosed).
• Leverage (D/E) and interest coverage as capital allocation decisions evolve.
• Disclosure improvements (cash balance, depreciation/EBITDA, segment detail) for more granular assessment.

Relative Positioning: Versus TSE small/mid-cap service peers, NEXYZ.Group exhibits above-average gross margins, mid-single-digit operating margins with improving trajectory, solid ROE around low double-digits, strong cash conversion, and moderate leverage; disclosure depth is thinner in certain areas, which modestly elevates analytical uncertainty.

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