Laboro.AI Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥1.90B
• Operating Income: ¥191M
• Net Income: ¥200M
• EPS: ¥9.23

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

Laboro.AI delivered solid FY2025 Q4 results with clear evidence of positive operating leverage and strong cash generation. Revenue grew 24.9% year over year to ¥1,900 million, while operating income rose 36.6% to ¥191 million, indicating costs grew slower than sales. Gross profit of ¥1,272 million implies a high gross margin of 67.0%, suggesting strong pricing power and a value-added service mix in AI/ML system development and consulting. Operating margin expanded to roughly 10.0%, and ordinary income of ¥166 million indicates limited non-operating drag. Net income increased 36.9% to ¥146 million with a net margin of 7.68%, highlighting good cost control and modest below-the-line items. Asset efficiency appears reasonable with asset turnover of 0.675, typical for a human-capital-intensive services model. Financial leverage is very low at 1.10x (assets/equity), corresponding to an equity ratio near 90% when inferred from the balance sheet, pointing to a conservative capital structure. Cash generation quality is robust: operating cash flow of ¥215 million represents 1.47x net income, implying accruals are not inflating earnings. Free cash flow of ¥515 million is strong relative to profitability and supports future reinvestment. Liquidity is abundant with a current ratio of roughly 9.9x and working capital of ¥2,358 million, providing ample buffer for growth initiatives and contract timing volatility. Interest expense is negligible (¥18 thousand) and interest coverage is effectively unconstrained, consistent with minimal debt. Depreciation and amortization of ¥32.8 million are modest, underscoring an asset-light model and manageable maintenance capex. No dividend was paid (DPS ¥0), which aligns with a growth orientation and early-stage capital allocation discipline. Reported equity ratio and certain cash metrics show as zero due to non-disclosure classifications; however, underlying balance sheet figures allow reasonable inference of strong solvency. The combination of double-digit revenue growth, margin expansion, and high OCF conversion indicates improving earnings quality. Key uncertainties remain around cash and equivalents disclosure, investing cash flow sign convention, and share count data, but the available non-zero data points depict a financially resilient, low-leverage AI services business with positive momentum.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.68% (¥146m / ¥1,900m)
• asset_turnover: 0.675x (¥1,900m / ¥2,813m)
• financial_leverage: 1.10x (Assets/Equity inferred: ¥2,813m/¥2,547m)
• calculated_ROE: 5.73%, consistent with reported
• commentary: ROE is modest given very low leverage; margin expansion and improved asset turnover are the primary levers for future ROE uplift. margin_quality:
• gross_margin: 67.0% (¥1,272m/¥1,900m) indicates strong value-add and pricing power
• operating_margin: 10.1% (¥191m/¥1,900m), up faster than revenue YoY, evidencing cost discipline
• ordinary_margin: 8.7% (¥166m/¥1,900m), limited non-operating headwinds
• net_margin: 7.68%, aligns with efficient tax and interest burden assumptions
• ebitda_margin: 11.8% (¥223.8m/¥1,900m), modest D&A reflective of asset-light model operating_leverage: Revenue grew 24.9% while operating income rose 36.6%, indicating positive operating leverage from fixed-cost absorption and scale benefits in delivery and SG&A.

Growth Assessment

revenue_sustainability: 24.9% YoY growth suggests healthy demand for AI solutioning and custom ML projects; sustainability will depend on backlog visibility, repeat engagements, and mix of subscription/recurring components. profit_quality: Margin expansion alongside growth, plus OCF/NI of 1.47x, implies earnings quality is improving and not reliant on aggressive accruals. outlook: With high gross margins and ample liquidity, the company appears positioned to invest in talent and productization; watch for the balance between bespoke projects and scalable offerings to maintain growth without eroding margins.

Financial Health

liquidity: Current assets ¥2,624m vs current liabilities ¥265m yields a current ratio of ~9.9x; quick ratio is similar due to no inventories reported. Working capital is ¥2,358m, providing significant operational runway. solvency: Equity ¥2,547m vs assets ¥2,813m implies an inferred equity ratio near 90.5% and leverage of ~0.10x D/E, indicating very low balance sheet risk. capital_structure: Interest expense is negligible (¥0.018m) with interest coverage >10,000x. The structure is effectively equity-financed, offering resilience but limiting ROE enhancement from leverage.

Cash Flow Quality

earnings_quality: OCF/NI of 1.47 indicates strong conversion; limited D&A (¥32.8m) suggests earnings are not materially inflated by non-cash items. FCF_analysis: Free cash flow reported at ¥515m is robust relative to net income (3.5x); sign conventions in investing CF (¥300m) appear ambiguous, but the derived FCF suggests net cash generation after investment. working_capital: High current asset base vs liabilities and positive OCF imply manageable receivables and project billing; monitor DSO and unbilled receivables given the project-heavy model.

Dividend Sustainability

payout_ratio_assessment: No dividend (DPS ¥0; payout 0.0%). With net income of ¥146m and strong FCF, capacity exists, but policy appears focused on reinvestment. FCF_coverage: Not applicable for FY given no dividend; hypothetically, current FCF would comfortably cover a moderate payout if policy changes. policy_outlook: Given growth stage, high liquidity, and low leverage, management may prioritize hiring, R&D/productization, and selective M&A over near-term distributions; a future dividend could be considered once scale and recurring revenue visibility increase.

Risk Assessment

Business Risks:

• Project timing and revenue recognition volatility in bespoke AI/ML engagements
• Customer concentration risk common in early-stage enterprise AI services
• Talent acquisition and retention in a tight AI engineering labor market
• Pricing pressure and competitive intensity from global hyperscalers and larger SIers
• Execution risk in scaling from project-based to recurring/solution revenue
• Technology obsolescence and rapid model/tool evolution requiring continuous investment

Financial Risks:

• Receivables and unbilled exposure affecting cash conversion in periods of rapid growth
• Potential lumpy capex or capitalization of development costs impacting FCF timing
• Limited leverage reduces ROE but cushions downside; access to external funding may hinge on continued growth
• Disclosure gaps (cash balance, share count) complicate full ratio analysis

Key Concerns:

• Sustainability of 67% gross margin as scale increases and delivery mix evolves
• Visibility into backlog and recurring revenue to support 20%+ growth trajectory
• Data limitations (cash & equivalents, equity ratio, share data) creating uncertainty in per-share and liquidity analyses

Investment Implications

Key Takeaways:

• Solid top-line growth (+24.9% YoY) with faster operating income growth (+36.6%) evidences operating leverage
• High gross margin (67.0%) and expanding operating margin (~10%) indicate strong value-add and cost control
• Robust cash generation: OCF/NI 1.47x and FCF ¥515m support reinvestment capacity
• Very conservative balance sheet: inferred equity ratio ~90% and de minimis interest expense
• No dividend; capital allocation appears growth-oriented
• Data gaps exist (cash balance, equity ratio field, share count) but inferred metrics suggest strong solvency

Metrics to Watch:

• Backlog and book-to-bill for revenue visibility
• Recurring revenue/ARR mix and retention
• Utilization rate and headcount growth vs revenue per employee
• Gross margin trajectory and project mix
• DSO and working capital changes
• R&D and productization spend vs revenue
• Capex and capitalization policies affecting FCF
• Customer concentration metrics (top-5/10 share)

Relative Positioning: Positioned as a high-margin, low-leverage AI solutions provider within Japan, with stronger cash conversion and liquidity than many small-cap peers but with typical service-model risks around project cyclicality and talent scalability.

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