POPER Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥1.39B
• Operating Income: ¥174M
• Net Income: ¥138M
• EPS: ¥35.25

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

POPER (5134) reported FY2025 Q4 (full-year) single-entity results under JGAAP showing strong topline expansion and marked profitability improvement. Revenue reached 13.89 (100M JPY), up 29.7% YoY, indicating solid demand and scaling of its subscription/recurring revenue model. Gross profit of 7.98 (100M JPY) implies a high gross margin of 57.4%, consistent with a software-centric cost structure. Operating income increased 138.2% YoY to 1.74 (100M JPY), demonstrating significant operating leverage as revenue growth outpaced cost escalation. Ordinary income was 1.72 (100M JPY), and net income was 1.38 (100M JPY), translating to a 9.9% net margin. The effective tax rate was -19.0%, suggesting recognition of tax loss carryforwards or deferred tax benefits, which supported bottom-line results. Cash generation was robust: operating cash flow (OCF) of 2.13 (100M JPY) exceeded net income, yielding an OCF/NI ratio of 1.54x and free cash flow (FCF) of 1.92 (100M JPY). The balance sheet is conservative with total assets of 12.42 (100M JPY), equity of 8.75 (100M JPY), and an estimated equity ratio of roughly 70% (equity/assets), despite negative retained earnings of -0.67 (100M JPY). Cash and deposits of 7.06 (100M JPY) and modest loans (short-term 0.23, long-term 1.06) result in a sizable net cash position of approximately 5.77 (100M JPY). Liquidity appears ample with a current ratio of 354% and quick ratio similarly strong, supported by low inventories and high cash. DuPont analysis yields ROE of 15.8%, driven by a 9.9% net margin, asset turnover of 1.118x, and moderate financial leverage of 1.42x. EBITDA of 1.83 (100M JPY) and an EBITDA margin of 13.2% corroborate improving operating efficiency. Working capital is healthy with 6.12 (100M JPY), and receivables are manageable at 1.21 (100M JPY), implying roughly 32 days sales outstanding. Some line items are unreported (e.g., SG&A details, dividends), which limits granularity in expense diagnostics and capital allocation assessment. Overall, results reflect a transition toward sustainable profitability with strong cash conversion, while the accumulated deficit and the reliance on deferred tax benefits warrant monitoring. The company’s small scale and sector dynamics (likely SaaS to education/childcare institutions) may introduce volatility, but the current financial profile is robust for growth.

Profitability Analysis

ROE decomposition: Net margin 9.9% x Asset turnover 1.118 x Financial leverage 1.42x = c.15.8% ROE, all consistent with reported. The primary ROE driver is margin expansion rather than leverage; leverage remains modest. Operating margin is approximately 12.5% (1.74 / 13.89), reflecting strong gross profitability (57.4%) and improved SG&A efficiency. The 138.2% YoY increase in operating income versus 29.7% revenue growth signals strong operating leverage, likely from scaling R&D/sales spend and fixed-cost absorption. EBITDA margin of 13.2% suggests room for further improvement as the business scales, typical for software-like models. Ordinary income margin (c.12.4%) is close to operating margin given negligible net non-operating items (non-op income near zero, non-op expenses 0.03). Profit before tax (0.70) is below ordinary income (1.72), implying extraordinary items or adjustments not itemized; nevertheless, net margin remains healthy due to a negative tax rate (-19%). Interest burden is minimal; interest expense is 0.02 with interest coverage of 85.2x, indicating financing costs are not a constraint. Margin quality appears high given cash conversion (OCF/NI 1.54x) and limited dependence on financial income. As scale increases, we would expect further SG&A ratio improvement and expanding operating margin, barring step-up investments.

Growth Assessment

Revenue growth of 29.7% YoY to 13.89 (100M JPY) indicates sustained demand and successful customer acquisition/upsell. Given the high gross margin and recurring-revenue characteristics implied by low cost of sales, growth appears structurally supported rather than one-off. Operating income growth of 138.2% YoY shows the business moving through an inflection in operating leverage as fixed costs are spread over a larger base. Net income up 65.9% YoY, despite below-ordinary pretax income, confirms improved profit quality; however, the negative effective tax rate contributed to bottom-line growth and may not be repeatable. Asset turnover of 1.118x is reasonable for a software-oriented balance sheet with significant cash; further deployment of cash into growth initiatives could enhance turnover. Receivable levels (1.21) relative to revenue suggest stable collections, supporting sustainable growth. Intangible assets of 0.85 imply ongoing product development and capitalization; future amortization could temper earnings growth if capitalization remains high. Outlook: with strong liquidity and net cash, POPER can fund customer acquisition and product expansion internally; key will be maintaining low churn and improving ARPU. Near-term growth trajectory appears favorable, but scale and sector competition could introduce volatility.

Financial Health

Liquidity is strong: current assets 8.53 vs current liabilities 2.41 yields a current ratio of 354%, with a near-identical quick ratio due to negligible inventories. Cash and deposits of 7.06 cover all current liabilities nearly 3x, providing substantial buffer. Solvency is robust: total liabilities 3.47 vs equity 8.75 implies a liabilities-to-equity ratio of ~0.40x and an equity ratio around 70%. Interest-bearing loans total about 1.29 (0.23 short-term + 1.06 long-term), leaving net cash around 5.77. Interest coverage at 85.2x indicates minimal financial risk from debt service. Negative retained earnings (-0.67) reflect accumulated deficits from earlier stages; continued profitability should repair equity and may influence dividend policy and banking covenants. Capital structure is conservative, with ample capacity to invest without external financing in the near term.

Cash Flow Quality

Earnings quality is strong: OCF of 2.13 exceeds net income of 1.38 (OCF/NI 1.54x), indicating profits are cash-backed. FCF of 1.92 (OCF 2.13 minus capex approximately 0.21 including investing CF mix; reported capex cash outflow is -0.01, with the remainder likely software/intangible investments) is positive and substantial relative to net income. Working capital appears well-managed: receivables of 1.21 imply roughly 32 DSO on annual sales, and high cash suggests no liquidity strain. Limited non-operating income and low interest expense reduce the risk of earnings inflation from financial items. The negative effective tax rate boosted net income; excluding this tailwind, cash conversion still looks solid given the OCF strength. Intangibles of 0.85 on the balance sheet suggest capitalization of development; monitor for elevated capitalized development costs as they affect both OCF/FCF and future amortization.

Dividend Sustainability

Dividend data are unreported; with negative retained earnings (-0.67) and the apparent focus on growth, ongoing or near-term dividends are unlikely to be a priority. Payout ratio and FCF coverage cannot be calculated from disclosed data. From a capacity standpoint, positive FCF, net cash of ~5.77, and strong liquidity could support distributions if policy permitted; however, legal and policy constraints tied to retained earnings under Japanese corporate law may limit dividends until deficits are eliminated. The prudent stance is to assume reinvestment of cash into growth and balance-sheet reinforcement before initiating or increasing dividends.

Risk Assessment

Business Risks:

• Customer concentration and budget sensitivity in the education/childcare domain could affect renewal rates and pricing power.
• Competitive pressure from larger SaaS vendors may require sustained sales and product investment, pressuring margins.
• Regulatory or subsidy changes impacting childcare/education institutions could influence customer demand and payment cycles.
• Product execution risk, including feature delivery and uptime/security reliability for mission-critical workflows.
• Dependence on continued ARR growth and low churn to realize operating leverage.

Financial Risks:

• Negative retained earnings indicate accumulated deficits; sustained profitability is required to restore distributable amounts.
• Recognition of deferred tax assets contributed to a negative effective tax rate; reversal or non-recurrence could reduce net income.
• Capitalized development (intangible assets 0.85) may increase amortization and depress future operating profit if capitalization remains elevated.
• Small scale heightens earnings volatility and sensitivity to cost step-ups in hiring or marketing.
• Potential dilution from equity-based compensation, implied by a gap between basic and diluted EPS.

Key Concerns:

• Sustainability of operating margin expansion as the company scales sales and R&D.
• Visibility on extraordinary items causing PBT to trail ordinary income.
• Durability of cash conversion if working capital normalizes or growth accelerates.
• Clarity on dividend policy and timeline to eliminate accumulated deficits.

Investment Implications

Key Takeaways:

• Strong topline growth (+29.7% YoY) with improving operating leverage (OP up +138.2% YoY).
• High gross margin (57.4%) and rising operating margin (~12.5%) consistent with a scalable software model.
• Robust cash generation (OCF/NI 1.54x) and positive FCF (1.92).
• Very healthy balance sheet: net cash ~5.77 and equity ratio ~70%.
• ROE of 15.8% driven mainly by margins, not leverage.
• Negative retained earnings (-0.67) remain a constraint for dividends despite improving profitability.
• Tax benefit (-19% ETR) boosted net income; may normalize and reduce EPS growth momentum.
• Intangible investment is meaningful; future amortization could moderate earnings growth.

Metrics to Watch:

• ARR growth, net revenue retention, and churn rates.
• SG&A ratio to sales and sales efficiency (e.g., payback period).
• OCF/NI conversion and FCF margin.
• DSO and receivables trends (currently ~32 days).
• Intangible additions and amortization; R&D capitalization policy.
• Operating margin trajectory and any extraordinary items impacting PBT.
• Headcount growth versus revenue growth to gauge operating leverage durability.

Relative Positioning: Financially conservative, net-cash SaaS-like operator with improving profitability and strong cash conversion, positioned to reinvest for growth while maintaining low balance-sheet risk; scale remains smaller than larger domestic SaaS peers, implying higher potential volatility but ample balance-sheet capacity.

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