Waqoo Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥1.96B
• Operating Income: ¥150M
• Net Income: ¥-44M
• EPS: ¥12.32

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

Waqoo (49370) reported FY2025 Q4 consolidated results under JGAAP showing modest top-line growth with significant operating profit recovery. Revenue increased 0.9% YoY to ¥1,960 million, while operating income surged 169% YoY to ¥150 million, indicating strong operating leverage from SG&A discipline. Gross profit was ¥1,549 million, implying a very high gross margin of 79.1%, consistent with a brand-driven, asset-light consumer model. Ordinary income reached ¥152 million, and net income was ¥44 million (EPS ¥12.32), with net margin at 2.24%. DuPont analysis indicates ROE of 2.10%, driven by a modest net margin, asset turnover of 0.613x, and low-to-moderate financial leverage of 1.53x. Cash generation was stronger than accounting profit: operating cash flow (OCF) was ¥136 million, 3.09x net income, signaling positive earnings quality. Free cash flow (FCF) was negative at -¥52 million due to ¥188 million investing outflows, suggesting reinvestment in growth or capability build-out. The balance sheet appears conservative: total liabilities were ¥993 million against equity of ¥2,091 million (debt-to-equity 0.47x), and liquidity metrics are strong with a current ratio of 310% and ample working capital of ¥1,257 million. Interest coverage is robust at 29.6x, reflecting low interest burden relative to operating profits. The company did not pay a dividend, consistent with a reinvestment stance amid negative FCF. Reported equity ratio is shown as 0.0%, which is clearly an unreported metric rather than a true value given the disclosed equity base; similarly, cash and inventories are shown as 0 due to non-disclosure in these line items. The effective tax rate metric is indicated as 0.0%, which may reflect timing differences or data limitations, despite reported income tax expense. Overall profitability is improving off a low base, but net margins remain thin, leaving sensitivity to marketing efficiency and customer acquisition costs. The sustainability of the operating profit rebound will hinge on maintaining gross margin strength and disciplined SG&A while reigniting revenue growth above low single digits. Data limitations (notably cash balance, inventories, share count) constrain precision in several ratio analyses, but the available non-zero figures support a view of strengthening operations and adequate financial flexibility.

Profitability Analysis

ROE_decomposition: ROE 2.10% = Net margin 2.24% × Asset turnover 0.613 × Financial leverage 1.53. The primary drag is the thin net margin, while asset efficiency and leverage are moderate. margin_quality: Gross margin of 79.1% is very high, indicative of premium branding/pricing and/or an asset-light model. Operating margin is 7.6% (¥150m/¥1,960m), up sharply YoY due to SG&A control. Ordinary income margin is 7.8%, and net margin is 2.24%, reflecting below-the-line charges and taxes. The step-down from operating to net margin suggests tax and/or non-operating items weighing on the bottom line. operating_leverage: With revenue up 0.9% YoY and operating income up 169% YoY, incremental margins were strong, reflecting significant fixed-cost leverage and SG&A optimization. Sustaining this will require maintaining advertising efficiency and repeat purchase dynamics.

Growth Assessment

revenue_sustainability: Top-line grew 0.9% YoY to ¥1,960m, essentially flat. High gross margin suggests pricing power, but growth momentum appears subdued, likely dependent on marketing spend and customer acquisition effectiveness. profit_quality: Operating income improved to ¥150m with a 7.6% margin, indicating better cost discipline. OCF/NI of 3.09x supports the quality of earnings, implying limited accrual dependence. outlook: Near-term growth hinges on balancing marketing investment with profitability, leveraging high gross margins while aiming to reignite volume growth. Investments (¥188m outflows) suggest ongoing initiatives that could support future growth if returns are attractive.

Financial Health

liquidity: Current assets ¥1,855m vs current liabilities ¥598m yields a current ratio of 310% and ample working capital of ¥1,257m. Quick ratio equals current ratio due to inventories being unreported (shown as 0). Cash balance is unreported (shown as 0), so absolute liquidity cannot be precisely assessed, but near-term coverage appears strong. solvency: Total liabilities ¥993m vs equity ¥2,091m implies a debt-to-equity of 0.47x and financial leverage of 1.53x, indicating a conservative capital structure. Interest coverage is strong at 29.6x, limiting refinancing risk at current earnings levels. capital_structure: Low leverage with substantial equity buffer. Reported equity ratio of 0.0% is a non-disclosure artifact; based on assets ¥3,199m and equity ¥2,091m, the implied equity ratio would be roughly 65% if measured as equity/assets.

Cash Flow Quality

earnings_quality: OCF of ¥136m versus net income of ¥44m (OCF/NI 3.09x) indicates positive earnings quality, likely aided by favorable working capital movements or non-cash charges (¥13m D&A). FCF_analysis: FCF of -¥52m (OCF ¥136m minus investing CF -¥188m) reflects reinvestment outpacing operating cash generation. If investments are growth/capacity enhancing, FCF could improve as returns materialize. working_capital: Working capital stands at ¥1,257m, providing cushion. Inventory and cash line items are unreported, limiting deeper analysis of turnover and cash conversion cycle. Nonetheless, the strong current ratio suggests manageable operational liquidity.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0 with a payout ratio of 0.0%, consistent with a reinvestment phase and the need to strengthen profitability. FCF_coverage: With FCF at -¥52m, dividends would not be covered by internally generated cash this period. policy_outlook: Given modest ROE (2.10%), thin net margins, and negative FCF due to investment, a conservative dividend stance appears likely until earnings scale and FCF turns sustainably positive.

Risk Assessment

Business Risks:

• Reliance on marketing efficiency and customer acquisition in a competitive beauty/personal care market
• Brand concentration risk and potential demand volatility
• Channel concentration and platform algorithm changes impacting traffic and conversion
• Product cycle and innovation risk affecting repeat purchase rates
• Regulatory and quality compliance in cosmetics and personal care

Financial Risks:

• Thin net margin (2.24%) leaves limited buffer against cost shocks
• Negative FCF due to elevated investing outflows
• Unreported cash and inventory balances limit visibility on immediate liquidity and supply risk
• Potential working capital swings affecting OCF sustainability

Key Concerns:

• Sustaining operating leverage with flat revenue growth
• Visibility on cash reserves and inventory adequacy (data not disclosed)
• Execution risk on investments driving near-term FCF negativity

Investment Implications

Key Takeaways:

• High gross margin (79.1%) underscores strong unit economics
• Operating income rebounded sharply (+169% YoY) despite modest revenue growth
• ROE remains low at 2.10%, constrained by thin net margins
• OCF outpaced net income (3.09x), indicating solid earnings quality
• FCF negative (-¥52m) due to investment outlays, consistent with reinvestment phase
• Balance sheet conservative (D/E 0.47x) with strong liquidity (current ratio 310%)

Metrics to Watch:

• Revenue growth reacceleration and LTV/CAC dynamics
• SG&A-to-sales ratio and advertising efficiency
• Gross margin stability amid input cost and channel mix changes
• OCF/NI ratio and cash conversion cycle (once working capital details are available)
• Capex/strategic investment returns and FCF trajectory
• ROE and operating margin progression

Relative Positioning: Within small-cap Japanese beauty/consumer brands, Waqoo appears asset-light with superior gross margins but currently lower ROE and net margins; improving cost discipline is evident, and financial flexibility is stronger than peers with higher leverage.

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