Monstarlab Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥5.83B
• Operating Income: ¥613M
• Net Income: ¥280M
• EPS: ¥5.56

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

For FY2025 Q3 (IFRS, consolidated), モンスターラボ reported revenue of 58.30, down 26.6% YoY, indicating a sharp contraction in top-line activity. Despite the revenue decline, the company posted net income of 3.00 and EPS of 5.56 yen, supported by a reported net profit margin of 5.2% and a calculated ROE of 20.1% via DuPont. Operating income is disclosed at 6.13 and EBITDA at 8.72 (15.0% margin), suggesting partial profitability at the operating level, although some line-item relationships appear inconsistent across the disclosed income statement components. Gross profit is stated at 8.13 (gross margin 13.9%), but the reported cost of sales of 71.30 exceeds revenue, which is likely a classification or disclosure gap rather than an economic reality; we rely on the gross margin provided. Cash generation is weak: operating cash flow (OCF) was -31.91 and free cash flow (FCF) was -35.28, implying earnings quality pressure and prospective liquidity management challenges. Financing inflows of 30.27 plugged most of the cash burn, raising concerns about dependence on external capital. The balance sheet shows total assets of 99.59 and total equity of 14.96 (equity ratio 15.5%), indicating thin capitalization and high leverage (debt-to-equity 8.27x), with a sizeable accumulated deficit (retained earnings -185.06) offset by large capital surplus (108.97). There is an apparent mismatch between total assets (99.59) and total liabilities (123.66) versus equity (14.96), which likely reflects presentation/classification differences in the snapshot rather than true negative net assets; we anchor on the provided equity and equity ratio. The negative effective tax rate (-16.7%) implies recognition of tax credits or deferred tax effects, contributing to bottom-line support in the quarter. Working capital disclosures are limited, but accounts receivable are 7.34, and current assets total 27.23; current and quick ratios cannot be calculated from available data. Interest expense is not disclosed, and interest coverage cannot be computed, raising visibility risk on debt service capacity. Total comprehensive income of 3.49 exceeds net income, suggesting favorable OCI movements. Book value per share is a low 23.14 yen, consistent with the thin equity base and leverage. No dividends are disclosed, and payout metrics are not calculable; given negative FCF and high leverage, capital allocation appears prudently defensive. Overall, the quarter reflects ongoing revenue pressure, accounting-driven support to earnings, reliance on financing to bridge cash burn, and a leveraged capital structure, warranting close monitoring of liquidity and cash conversion.

Profitability Analysis

roe_decomposition: DuPont shows ROE 20.1% = Net margin 5.2% x Asset turnover 0.585 x Financial leverage 6.66x. The ROE is being driven predominantly by high leverage rather than robust margins or asset productivity. margin_quality: Gross margin is stated at 13.9% and EBITDA margin at 15.0%, while net margin is 5.2%. The negative effective tax rate (-16.7%) indicates non-recurring or deferred tax effects supporting net income, reducing the quality of bottom-line profitability. Inconsistencies among revenue, cost of sales, gross profit, and SG&A point to disclosure gaps; we rely on the provided margins but treat them cautiously. operating_leverage: Revenue contracted 26.6% YoY, yet operating income of 6.13 is reported. Given EBITDA of 8.72 relative to revenue 58.30, implied fixed cost absorption risk remains high; negative OCF suggests that operating leverage is adverse in cash terms despite reported operating profit.

Growth Assessment

revenue_sustainability: Revenue of 58.30 declined 26.6% YoY, implying either demand softness, project delays, or portfolio pruning; sustainability is uncertain without segment detail. profit_quality: Profitability is supported by accounting items (negative tax rate, potential OCI tailwinds). OCF/Net Income at -10.64x signals weak earnings-to-cash conversion, undermining profit quality. outlook: With leverage elevated and FCF negative, growth will likely depend on continued access to financing and improved cash collection. Near-term recovery hinges on stabilizing order intake and converting backlog to cash; without better cash conversion, growth investments may be constrained.

Financial Health

liquidity: Operating CF -31.91 and cash & equivalents 15.51 highlight liquidity pressure; current and quick ratios are not calculable due to missing current liability data. Financing inflow of 30.27 indicates reliance on external funding to sustain operations. solvency: Debt-to-equity is 8.27x and equity ratio 15.5%, indicating thin capitalization and high financial leverage. Retained earnings are -185.06, partially offset by capital surplus of 108.97, reflecting accumulated losses. capital_structure: Total equity is 14.96 against assets of 99.59, implying leverage-driven ROE. Interest-bearing debt is unreported; however, the high D/E ratio and external financing inflow suggest significant borrowings or quasi-debt instruments. Interest coverage cannot be assessed due to missing interest expense.

Cash Flow Quality

earnings_quality: OCF/Net Income at -10.64x indicates poor conversion of earnings into cash, suggesting working capital build, timing differences, or recognition of non-cash gains (e.g., deferred tax). fcf_analysis: FCF is -35.28 (OCF -31.91 less capex -0.27 and other investing outflows), a substantial cash burn relative to net income (3.00). working_capital: Accounts receivable are 7.34, inventories are minimal at 0.04, but current liabilities are undisclosed, limiting visibility. The negative OCF implies that receivables collection and/or other current asset movements likely weighed on cash.

Dividend Sustainability

payout_ratio_assessment: Dividend data are unreported; payout ratios are not calculable. Given negative FCF and high leverage, room for cash distributions appears limited. fcf_coverage: With FCF at -35.28, any hypothetical dividend would not be covered by internally generated cash. policy_outlook: Absent disclosure, we assume a conservative stance with priority on liquidity restoration and balance sheet reinforcement over distributions.

Risk Assessment

Business Risks:

• Revenue volatility evidenced by -26.6% YoY decline
• Execution risk on project delivery and receivables collection
• Potential margin compression from adverse operating leverage

Financial Risks:

• High leverage (D/E 8.27x; equity ratio 15.5%)
• Negative OCF and FCF requiring continued external financing
• Visibility risk on debt service due to undisclosed interest expense and maturities
• Thin equity cushion and accumulated deficit (-185.06)

Key Concerns:

• Sustainability of reported ROE given leverage-driven profile
• Earnings quality given negative effective tax rate and negative cash conversion
• Liquidity runway given OCF burn and dependence on financing inflows

Investment Implications

Key Takeaways:

• Top-line contraction of 26.6% YoY with limited visibility on recovery trajectory
• Reported profitability (EBITDA margin 15.0%, net margin 5.2%) contrasted by weak cash conversion (OCF/NI -10.64x)
• High leverage (D/E 8.27x) underpins a 20.1% ROE but elevates solvency risk
• Negative FCF (-35.28) funded by financing inflows (30.27), indicating reliance on capital markets or lenders
• Equity base is thin (equity ratio 15.5%; BVPS 23.14 yen) with significant accumulated losses

Metrics to Watch:

• Order intake, backlog conversion, and revenue stabilization
• OCF trajectory and DSO/working capital movements
• Leverage and liquidity (cash balance vs. debt maturities; interest coverage when disclosed)
• Margin resilience (gross and EBITDA) amid volume pressure
• Tax effects and the sustainability of net income drivers

Relative Positioning: Within Japan-listed digital/IT services and consulting peers, the company appears more leveraged with weaker cash conversion and a thinner equity buffer, making it more sensitive to demand volatility and financing conditions.

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