sinops Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.47B
• Operating Income: ¥207M
• Net Income: ¥127M
• EPS: ¥20.52

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

Synops Inc. (44280) reported solid FY2025 Q3 year-to-date performance under JGAAP (non-consolidated), highlighted by double-digit top-line growth and a sharp rebound in profitability. Revenue reached ¥1,468 million, up 15.2% YoY, indicating healthy demand momentum. Operating income surged to ¥207 million (+223.0% YoY), demonstrating strong operating leverage as fixed costs were held in check relative to revenue growth. Ordinary income of ¥209 million broadly tracked operating profit, suggesting limited non-operating drag. Net income was ¥127 million, up 204.5% YoY, translating to a net margin of 8.65%. DuPont analysis yields an ROE of 7.04%, driven by a net margin of 8.65%, asset turnover of 0.653x, and low financial leverage of 1.25x. Gross margin is reported at 33.4%, while operating margin is approximately 14.1% (¥207m/¥1,468m), indicating effective SG&A control. Liquidity appears strong, with a current ratio of 246.9% and working capital of ¥580.9 million, consistent with a conservative balance sheet. Total liabilities are ¥400.0 million against equity of ¥1,805.0 million, implying a low debt-to-equity ratio of 0.22x and limited solvency risk. The reported equity ratio of 0.0% is not meaningful given the disclosed equity and assets; the implied equity ratio is approximately 80.3% (¥1,805m/¥2,248m). Cash flow statement items are not disclosed (zeros indicate unreported), so operating cash flow and free cash flow quality cannot be assessed from this dataset. The company reported an EPS of ¥20.52, though share count data are not disclosed here. The tax charge of ¥22.5 million alongside net income of ¥127 million implies a pre-tax profit of roughly ¥149.5 million and an effective tax rate around 15%, suggesting the possible impact of tax credits or loss carryforwards, though extraordinary items also likely influenced the gap between ordinary and pre-tax profit. One inconsistency is noted between revenue minus cost of sales and the reported gross profit; we rely on the reported gross profit and gross margin for analysis. Dividend payments are not disclosed for the period (DPS 0), consistent with a conservative capital allocation stance or the absence of a declared interim payout. Overall, the company exhibits improving profitability on a solid balance sheet, but limited cash flow disclosure constrains evaluation of earnings quality and dividend sustainability.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 8.65%
• asset_turnover: 0.653x
• financial_leverage: 1.25x
• calculated_ROE: 7.04%
• interpretation: ROE of 7.04% is primarily driven by improving margins rather than leverage; low financial gearing limits ROE amplification but reduces risk. margin_quality:
• gross_margin: 33.4% (based on reported gross profit of ¥490.4m)
• operating_margin: 14.1% (¥207m/¥1,468m)
• ordinary_margin: 14.2% (¥209m/¥1,468m)
• net_margin: 8.65%
• comments: Material YoY expansion in operating profit (+223%) on +15.2% revenue indicates cost discipline and operating leverage. Note the discrepancy between revenue minus cost of sales and reported gross profit; analysis relies on reported gross profit/margin. operating_leverage: High in the period: +15.2% revenue vs. +223% operating income implies strong incremental margins, likely from fixed-cost absorption and/or improved pricing/mix. Monitoring sustainability into FY4Q is key.

Growth Assessment

revenue_sustainability: Revenue growth of +15.2% YoY suggests healthy demand, likely underpinned by recurring software/maintenance and new implementations. Persistence depends on retention, upsell, and new customer wins. profit_quality: Profit growth substantially outpaced sales, indicating margin expansion. With limited cash flow disclosure, confirmation via OCF is pending; however, low non-operating impact (ordinary ≈ operating) supports earnings quality. outlook: If current cost discipline holds and topline momentum persists, mid-teens revenue growth with double-digit operating margin appears achievable near term. Watch for seasonality and potential 4Q project timing that could affect mix and margins.

Financial Health

liquidity:

• current_ratio: 246.9%
• quick_ratio: 246.9% (inventories not disclosed)
• working_capital: ¥580,955,000
• comment: Ample short-term liquidity; balance sheet can support ongoing operations and moderate investment without external funding. solvency:
• total_assets: ¥2,248,000,000
• total_liabilities: ¥400,036,000
• total_equity: ¥1,805,000,000
• debt_to_equity: 0.22x
• equity_ratio_implied: ≈80.3% (reported 0.0% is not meaningful)
• comment: Low leverage and strong equity base reduce solvency risk; capacity exists to absorb volatility. capital_structure: Predominantly equity-financed with modest liabilities; minimal financial leverage (1.25x) aligns with a conservative profile.

Cash Flow Quality

earnings_quality: Indeterminable from this dataset due to unreported operating cash flow and depreciation; accrual intensity cannot be assessed. FCF_analysis: Free cash flow not disclosed; capex and working capital movements unavailable. The reported OCF/Net Income ratio of 0.00 reflects non-disclosure, not performance. working_capital: Current assets ¥976.3m vs. current liabilities ¥395.4m suggests a cushion; without receivables/payables detail, collection and payment discipline cannot be evaluated.

Dividend Sustainability

payout_ratio_assessment: Payout ratio reported at 0.0% with DPS 0.00; no assessment possible without cash flow data or stated policy. FCF_coverage: Not assessable; FCF not disclosed. policy_outlook: Given strong liquidity and improving earnings, capacity for distributions may exist, but clarity requires disclosure of cash generation, capex needs, and stated capital policy.

Risk Assessment

Business Risks:

• Revenue concentration risk with key customers or verticals common in enterprise software niches.
• Project timing/acceptance risk that can create quarter-to-quarter volatility in revenue and margins.
• Competitive pressure from larger software vendors or new entrants affecting pricing and win rates.
• Retention and churn risk for recurring revenues; upsell cadence may slow in weak macro environments.
• Implementation capacity constraints that could limit growth if hiring lags demand.

Financial Risks:

• Limited cash flow disclosure prevents assessment of earnings-to-cash conversion.
• Potential receivables concentration and collection risk typical of B2B contracts.
• Sensitivity of profitability to SG&A leverage; a step-up in hiring or marketing could compress margins.
• Non-consolidated basis may obscure risks from affiliates or partners.

Key Concerns:

• Cash flow data (OCF/FCF) unreported; dividend capacity and earnings quality remain opaque.
• Discrepancy between reported gross profit and revenue minus cost of sales requires clarification.
• Reported equity ratio of 0.0% conflicts with disclosed balance sheet; reliance on implied ratio is necessary.

Investment Implications

Key Takeaways:

• Top line grew 15.2% YoY to ¥1,468m, indicating solid demand.
• Operating leverage was significant: operating income +223% YoY to ¥207m; operating margin ~14.1%.
• ROE at 7.04% is driven by margin improvement with low leverage (1.25x).
• Balance sheet is strong: implied equity ratio ~80%, D/E 0.22x, current ratio 247%.
• Cash flow non-disclosure limits assessment of earnings quality and capital return capacity.
• Net margin 8.65% and ordinary ≈ operating suggest limited non-operating drag.
• Implied effective tax rate ~15% suggests tax benefits and/or extraordinary impacts.

Metrics to Watch:

• Operating cash flow and free cash flow conversion vs. net income
• Recurring revenue (ARR), churn, and net retention
• Gross margin stability and SG&A ratio (as % of sales)
• Order backlog and implementation pipeline
• Receivables days and billing mix (subscription vs. project)
• Headcount and cost base trajectory impacting operating leverage

Relative Positioning: Appears to be an asset-light, low-leverage software player with improving profitability and strong liquidity; sustained growth and confirmation of cash generation would strengthen its standing versus domestic small/mid-cap software peers.

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