Living Technologies Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥3.59B
• Operating Income: ¥503M
• Net Income: ¥114M
• EPS: ¥235.94

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

Livin Technologies (44450) delivered a mixed FY2025 Q4 picture marked by muted top-line growth and strong profitability and cash generation. Revenue rose 0.6% YoY to ¥3,592m, indicating a near-flat demand environment or deliberate portfolio rationalization. Despite this, operating income surged 143.2% YoY to ¥503m, evidencing substantial operating leverage and cost discipline. Ordinary income was ¥473m, slightly below operating income, implying modest net non-operating losses. Net income increased 175.9% YoY to ¥314m, with EPS of ¥235.94. The DuPont decomposition shows an ROE of 18.3%, driven by an 8.74% net margin, 1.079x asset turnover, and 1.94x financial leverage. Operating margin was approximately 14.0%, supported by low D&A of ¥14m, underscoring an asset-light model. Interest expense was a modest ¥3.8m, and interest coverage was a very strong 131.8x, suggesting low financial risk from interest-bearing debt. Liquidity appears robust with a current ratio of 315% and working capital of approximately ¥1,825m. Cash generation was solid: operating cash flow of ¥452m and positive investing cash flow of ¥80m produced free cash flow of ¥532m. Financing cash flow was an outflow of ¥492m, likely reflecting debt repayment or other financing-related uses rather than shareholder distributions, as DPS was reported at ¥0. The equity ratio was reported as 0.0% and cash and equivalents as 0, which we treat as undisclosed rather than actual values; analysis focuses on disclosed non-zero items. The effective tax rate shown as 0.0% likely reflects data limitations; using disclosed income tax of ¥111m and profit figures implies a normalized tax rate in the low-to-mid 20s. Overall, the quarter showcases improved profitability quality and strong cash conversion against a backdrop of subdued revenue growth. The sustainability of margin gains will hinge on maintaining cost efficiency and mix shift toward higher-margin services. Balance sheet strength and ample liquidity provide flexibility to invest for growth while managing risk. We acknowledge data limitations (notably equity ratio, cash balance, and share details), but the available figures indicate healthy financial performance and solid financial health.

Profitability Analysis

ROE of 18.3% is underpinned by net margin 8.74%, asset turnover 1.079x, and financial leverage 1.94x (assets/equity). Operating income of ¥503m on ¥3,592m sales implies an operating margin of roughly 14.0%, a sharp YoY improvement given operating income growth of +143.2% against revenue growth of +0.6%. This points to strong operating leverage, with fixed costs well-contained and likely efficiency gains in SG&A. EBITDA of ¥517m and EBITDA margin of 14.4% reflect minimal D&A (¥14m), supporting an asset-light, high-return profile. Ordinary income (¥473m) being below operating income suggests small net non-operating losses (~¥30m). Net income of ¥314m yields a healthy gap from operating profit after tax, consistent with manageable non-operating items and taxes. Interest expense is very low (¥3.8m), while interest coverage of 131.8x indicates limited pressure from financing costs. Overall, margin quality appears improved, with evidence of cost control and favorable mix; the key question is sustainability amid flattish revenue.

Growth Assessment

Top-line growth was modest at +0.6% YoY (revenue ¥3,592m), suggesting stabilization rather than acceleration. The dramatic profit expansion (+143% operating income, +176% net income) indicates that earnings growth was primarily cost- and mix-driven rather than volume-led. With D&A at just ¥14m, incremental margins are likely high in the near term if revenues reaccelerate. Ordinary income (¥473m) below operating income signals slight non-operating drag, but not enough to impede profit growth. The implied effective tax rate, using disclosed tax, appears in the low-to-mid 20% range, so tax normalization should not be a major headwind. Sustainability of earnings will depend on maintaining SG&A efficiency, scaling higher-margin services, and avoiding non-recurring supports embedded in positive investing CF. Near-term outlook hinges on re-accelerating revenue through customer acquisition, ARPU uplift, and retention, while preserving operating discipline. If revenue remains flat, profit growth could plateau as the cost base right-sizes. Conversely, any reacceleration would likely translate disproportionately into profit given demonstrated operating leverage.

Financial Health

Liquidity is strong: current assets ¥2,672.9m vs. current liabilities ¥848.0m yields a current ratio of 315% and working capital of ~¥1,824.9m. Quick ratio equals current ratio due to undisclosed inventories, implying ample liquid resources. Total liabilities of ¥1,850.7m against equity of ¥1,716.0m results in a debt-to-equity ratio of 1.08x (note: this uses total liabilities, not just interest-bearing debt). Interest expense of ¥3.8m and coverage at 131.8x indicate modest financial risk from leverage. The reported equity ratio of 0.0% is not usable (treated as undisclosed), but assets of ¥3,329m vs. equity of ¥1,716m imply an equity ratio around 51.6% if computed mechanically. Financing CF of -¥492m suggests deleveraging or other financing uses, improving resilience. Overall solvency appears adequate with a balanced capital structure and strong liquidity buffer.

Cash Flow Quality

Operating cash flow of ¥452m vs. net income of ¥314m (OCF/NI 1.44x) signals good earnings quality and cash conversion. Free cash flow of ¥532m reflects OCF plus positive investing CF of ¥80m, which likely includes proceeds from asset sales or investment redemptions; this may be non-recurring and should be monitored. Low D&A (¥14m) implies limited non-cash earnings inflation. Working capital appears well-managed given strong liquidity and no sign of OCF drag; however, detailed receivables/payables breakdowns were not disclosed. Financing CF of -¥492m suggests repayments or other outflows, not shareholder returns (DPS is ¥0). Overall, cash generation comfortably covered investment needs and would have supported distributions if policy allowed.

Dividend Sustainability

DPS was ¥0 with a payout ratio of 0%, indicating retained earnings priority. With free cash flow at ¥532m, prospective coverage for any future dividend would be ample, assuming maintenance of current cash generation. Interest coverage of 131.8x and strong liquidity further support potential distribution capacity. However, positive investing CF may reflect one-off inflows, so sustainable FCF should be evaluated on a normalized basis (i.e., OCF less maintenance capex when disclosed). Given growth investments and deleveraging (financing CF outflow), management may be prioritizing reinvestment over distributions. Policy outlook appears conservative near term pending clearer revenue acceleration.

Risk Assessment

Business Risks:

• Subdued top-line growth (+0.6% YoY) risks limiting operating leverage benefits if cost reductions are largely realized
• Exposure to digital platform/prop-tech demand cycles and advertising/client acquisition volatility
• Competitive intensity in online real estate and related services, pressuring pricing and ARPU
• Regulatory changes in real estate, data privacy, and digital advertising
• Dependence on talent and technology; potential system downtime or cybersecurity incidents
• Potential customer concentration risk (undisclosed) affecting revenue stability

Financial Risks:

• Positive investing cash flow suggests potential non-recurring asset sale proceeds supporting FCF
• Debt-to-equity at 1.08x (total liabilities basis) despite low interest burden; refinancing terms undisclosed
• Limited disclosure on cash and equivalents and equity ratio (reported as 0.0%), constraining full balance sheet assessment
• Working capital swings could impact OCF in slower growth periods
• Tax rate variability versus implied normalized rate in low-to-mid 20s

Key Concerns:

• Revenue growth inertia despite strong profit gains
• Sustainability of margin expansion without clearer top-line acceleration
• Reliance on cost discipline and mix shift; risk of reversal if growth investments ramp
• Potential non-recurring elements in investing cash flows inflating FCF

Investment Implications

Key Takeaways:

• Strong profit and ROE improvement (18.3%) with minimal revenue growth points to significant operating leverage
• Healthy cash conversion (OCF/NI 1.44x) and robust FCF (¥532m) provide strategic flexibility
• Balance sheet liquidity is strong (current ratio 315%, working capital ~¥1.825bn)
• Interest burden is minimal (interest expense ¥3.8m; coverage 131.8x), mitigating solvency risk
• Ordinary income below operating income suggests manageable non-operating headwinds
• Dividend policy remains conservative (DPS ¥0) despite capacity, likely prioritizing reinvestment

Metrics to Watch:

• Revenue growth reacceleration (YoY and QoQ) and client/ARPU trends
• Operating margin sustainability and SG&A-to-sales trajectory
• OCF/NI ratio and cash conversion cycle components (DSO/DPO) when disclosed
• Normalized FCF (OCF less maintenance capex) versus current FCF including investing inflows
• Non-operating gains/losses and effective tax rate normalization
• Net cash/(debt) and equity ratio once cash balances are disclosed

Relative Positioning: Within domestic prop-tech/digital platform peers, Livin Technologies exhibits above-peer recent profitability improvement, solid ROE, and strong cash conversion, offset by below-peer revenue momentum; balance sheet liquidity compares favorably, while disclosure gaps (cash, equity ratio) temper comparability.

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