Tobila Systems Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥2.81B
• Operating Income: ¥898M
• Net Income: ¥625M
• EPS: ¥61.59

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

Tobila Systems (44410) delivered solid topline and healthy bottom-line performance in FY2025 Q4 (JGAAP, non-consolidated). Revenue grew 16.6% YoY to 28.05 (100M JPY), while operating income rose 8.1% YoY to 8.98, indicating positive growth but some operating leverage dilution versus last year. Profitability remains strong: operating margin is about 32.0% (8.98/28.05), EBITDA margin is 36.8%, and net profit margin is 22.3%. ROE is robust at 24.1% via DuPont decomposition (NPM 22.3%, asset turnover 0.521x, leverage 2.07x), reflecting high profitability on a moderately efficient balance sheet. Cash generation is a standout, with operating cash flow of 17.52 versus net income of 6.25, yielding a high OCF/NI of 2.80x, underscoring strong earnings quality. Free cash flow, inclusive of total investing cash flows, was positive at 3.69 despite meaningful investment outlays (investing CF -13.83), suggesting capacity to invest while remaining FCF positive. The balance sheet is conservative with substantial liquidity: cash and deposits of 32.16 and current ratio of 206.3%. Long-term loans total 1.46, and interest coverage is extremely comfortable at 1,170.8x, indicating negligible financial stress. Net cash is sizable when offsetting the small level of long-term loans, supporting strategic flexibility. Working capital is healthy at 18.81, with low receivables (2.61) and modest inventories (0.75), aligning with a software/service-like profile. Tax burden is normalizing at an effective tax rate of 30.0%, consistent with statutory levels and stable profitability. Reported ordinary income increased 9.4% YoY to 9.07, modestly above operating income due to small non-operating items (and equity method income of 0.08). Dividend affordability appears sound: the calculated payout ratio is 34.1%, and FCF coverage is 1.73x, suggesting room to sustain cash returns while investing. Note that some line items are unreported in XBRL, and certain reported ratios (e.g., operating margin) differ from line-item derivations, likely due to taxonomy/definition differences; analysis here relies on the internally consistent figures provided (revenue, OI, NI, cash flow metrics, and the given calculated ratios). Overall, Tobila Systems exhibits high-margin, cash-generative operations with prudent leverage and ample liquidity to support continued growth investments. The near-term focus is on sustaining double-digit revenue growth while stabilizing operating leverage to protect ROE above 20%.

Profitability Analysis

ROE is 24.1% via DuPont: net margin 22.3% × asset turnover 0.521 × equity multiplier 2.07x. Operating margin is approximately 32.0% (8.98/28.05), and EBITDA margin is 36.8%, indicating low D&A intensity (D&A 1.34). Gross margin is reported at 60.8%. Year-on-year, revenue grew 16.6% but operating income grew 8.1%, implying some operating leverage headwinds (higher fixed costs or stepped-up growth investments within SG&A). Absolute SG&A is 8.74, and with strong gross profit, there remains ample contribution to fund growth. Ordinary income rose to 9.07, slightly above OI due to minor net non-operating items and equity method gains (0.08). Effective tax rate is 30.0%, consistent with structural profitability. Interest expense is de minimis (0.01), and interest coverage at 1,170.8x confirms financing cost insignificance. Margin quality appears strong given the OCF/NI of 2.80x, suggesting earnings are cash-backed. The company’s high margins and modest asset turnover profile are typical for software/service-heavy models; sustaining ROE >20% rests on maintaining margins while modestly improving turnover as scale increases.

Growth Assessment

Revenue increased 16.6% YoY to 28.05, indicating solid demand. Operating income growth of 8.1% lagged revenue growth, signaling near-term operating leverage dilution, likely from higher personnel, marketing, or development spending within SG&A. Net income rose 4.0% to 6.25, trailing operating income growth due to a normalized tax rate and small non-operating expense. The revenue mix is not disclosed, but high gross margin (60.8%) and modest working capital needs point to recurring/contracted-type revenues being a key driver. Sustaining double-digit growth will depend on customer expansion, retention, and new product uptake; the strong cash position supports continued go-to-market and product investments. Equity method income is small (0.08) and not a material growth driver. Looking forward, the company has balance sheet capacity and cash flow to pursue organic investments and selective partnerships or acquisitions (investing CF -13.83). Profit quality remains high given cash conversion; the main watchpoint is whether growth investments can restore positive operating leverage as scale expands.

Financial Health

Total assets are 53.81 with cash and deposits of 32.16, providing substantial liquidity. Current assets total 36.49 versus current liabilities of 17.69, yielding a current ratio of 206.3% and quick ratio of 202.1%, both strong. Total liabilities are 19.14 and equity is 25.95, for a liabilities-to-equity (D/E proxy) of 0.74x. Long-term loans stand at 1.46, and interest coverage is 1,170.8x, indicating negligible service burden. Net cash is robust when offsetting the small amount of debt, providing resilience and optionality. Working capital is 18.81 with low payables (0.15) and modest inventories (0.75), consistent with an asset-light model. Goodwill (1.26) and intangible assets (3.09) are manageable relative to equity, limiting impairment risk to the balance sheet. Overall solvency and liquidity are strong, with capacity to endure volatility and finance growth internally.

Cash Flow Quality

Operating cash flow of 17.52 exceeds net income of 6.25 by 2.80x, indicating excellent cash conversion and low accrual risk. EBITDA of 10.32 versus OCF of 17.52 suggests favorable working capital inflows and limited non-cash earnings reliance. Investing CF was -13.83, including capex of -0.46 and other investments (likely software/intangibles or M&A), leading to reported free cash flow of 3.69 when defined as OCF + total investing CF. The ability to remain FCF positive while investing heavily is a key strength. Working capital appears efficient: accounts receivable are modest at 2.61 and inventories at 0.75, while cash is elevated at 32.16. No evidence of stretch in payables (0.15), consistent with service-heavy operations. The persistence of strong OCF/NI should be monitored to confirm durability beyond working capital timing effects.

Dividend Sustainability

The calculated payout ratio is 34.1% of net income (EPS 61.59 JPY), suggesting a conservative distribution level. FCF coverage is 1.73x, implying dividends are covered after all investing cash outflows. DPS amounts are unreported; DOE is reported at 0.1%, which is low versus ROE of 24.1%, indicating capacity to increase distributions over time if strategy permits. Share repurchases totaled -1.88, representing additional shareholder returns alongside (unreported) cash dividends. With substantial cash (32.16) and low debt (long-term loans 1.46), sustainability is high, assuming earnings remain stable. Near-term policy outlook likely prioritizes growth investments while maintaining a modest payout, given the strong reinvestment returns implied by ROE.

Risk Assessment

Business Risks:

• Margin pressure from increased growth investments (personnel, marketing) reducing operating leverage.
• Competitive intensity in software/services potentially pressuring pricing and churn.
• Dependence on high gross margins; adverse mix shifts could compress profitability.
• Execution risk on product development and scaling new services.
• Customer concentration or contract renewal risk (not disclosed).
• Potential regulatory or cybersecurity risks affecting service delivery and reputation.

Financial Risks:

• Intangible asset investment and potential future amortization or impairment impacting earnings.
• Variability in working capital inflows that temporarily boosts OCF/NI.
• Limited diversification of funding sources despite strong net cash (reliance on internal cash).
• Interest rate changes are low impact today but could affect future financing costs if leverage increases.

Key Concerns:

• Operating income growth lagging revenue growth (+8.1% vs +16.6%), indicating reduced operating leverage.
• Discrepancies among some reported ratios versus line-item calculations suggest definition/taxonomy differences; careful interpretation needed.
• Sustaining double-digit revenue growth while maintaining >30% operating margin.

Investment Implications

Key Takeaways:

• High-quality earnings with OCF/NI of 2.80x and positive FCF despite sizable investing outflows.
• ROE of 24.1% supported by strong margins and moderate leverage.
• Ample liquidity (current ratio 206%, cash 32.16) and minimal borrowing (long-term loans 1.46).
• Operating leverage softened this year; focus shifts to cost discipline while investing for growth.
• Dividend capacity appears sound with a calculated payout ratio of 34.1% and FCF coverage of 1.73x.

Metrics to Watch:

• Revenue growth rate and retention metrics to gauge sustainability.
• Operating margin trajectory and SG&A as a percentage of revenue to track leverage.
• OCF/NI and working capital movements to confirm cash conversion quality.
• Investing cash flows (incl. intangibles/M&A) versus FCF to assess reinvestment balance.
• ROE components (net margin, asset turnover) for durability of returns.
• Cash balance and any changes in borrowing or capital allocation (dividends/buybacks).

Relative Positioning: Within Japan’s software/service-oriented small-mid caps, Tobila Systems appears above-average on profitability (operating margin ~32%, ROE 24.1%) and cash conversion (OCF/NI 2.8x), with a stronger-than-peer liquidity profile and conservative leverage, albeit with some recent operating leverage dilution versus topline growth.

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