Rococo Co.Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥6.55B
• Operating Income: ¥406M
• Net Income: ¥157M
• EPS: ¥77.30

Income Statement

Balance Sheet

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 (consolidated, JGAAP), 株式会社ロココ reported revenue of ¥6,553,000,000, up 14.8% YoY, demonstrating solid top-line momentum. Gross profit was ¥2,040,926,000, translating to a gross margin of 31.1%, indicative of healthy pricing and/or mix in a services-oriented cost structure. Operating income rose sharply to ¥406,000,000 (+72.4% YoY), lifting the operating margin to approximately 6.2% and evidencing strong operating leverage as expenses grew slower than revenue. Ordinary income reached ¥423,000,000, suggesting a net positive contribution from non-operating items of roughly ¥17,000,000. Net income was ¥287,000,000 (+83.9% YoY), with a net margin of 4.38%, highlighting improved cost discipline and scale benefits. DuPont analysis shows ROE of 9.83%, composed of a 4.38% net margin, 1.362x asset turnover, and 1.65x financial leverage. The balance sheet appears sound: total assets of ¥4,813,000,000 against total equity of ¥2,919,000,000 implies an equity ratio of about 60.6% (the reported 0.0% is a non-disclosure placeholder), and liabilities are moderate at ¥1,591,277,000. Liquidity is strong with a current ratio of 303.1% and working capital of ¥2,306,823,000, although inventories are undisclosed and quick ratio equals current ratio solely due to missing inventory disclosure. Debt-to-equity is 0.55x (using total liabilities), consistent with modest balance sheet risk. While the calculated “effective tax rate: 0.0%” in the provided metrics reflects non-disclosure, the implied tax rate from reported tax expense (¥91,901,000) and net income suggests roughly 24% on a back-of-the-envelope basis. Cash flow statements (OCF/ICF/FCF) and cash balances are undisclosed (shown as zero), limiting assessment of earnings-to-cash conversion; this is a key caveat. EPS is ¥77.30; using net income implies c. 3.71 million weighted-average shares outstanding, as share count was not disclosed. Dividends (DPS, payout, FCF coverage) were not disclosed; thus dividend policy and sustainability cannot be inferred from this release. Overall, results reflect robust revenue growth, expanding margins, and improving profitability, supported by a conservative capital structure and ample short-term liquidity. The main analytical limitation is the absence of cash flow and several supporting disclosures (D&A, interest, cash), which constrains assessment of cash conversion and capital intensity. In the near term, sustaining margin gains will hinge on utilization, pricing, and SG&A discipline. The balance of evidence points to improved earnings quality at the P/L level, with cash flow validation pending.

Profitability Analysis

ROE_decomposition: ROE 9.83% = Net margin 4.38% × Asset turnover 1.362 × Financial leverage 1.65. The ROE profile is driven more by efficient asset use and low leverage than by very high margins. margin_quality: Gross margin is 31.1% and operating margin about 6.2%, implying an operating spread of ~5.1 percentage points below gross margin for SG&A and other operating costs. Ordinary margin is 6.46%, showing modest non-operating tailwinds (¥17m). Net margin at 4.38% is consistent with an implied tax rate in the mid-20% range, though tax details are not fully disclosed. operating_leverage: Revenue grew 14.8% YoY while operating income rose 72.4% YoY, indicating strong operating leverage and cost scaling benefits. This suggests fixed-cost absorption and/or improved utilization and pricing. The sustainability of this leverage will depend on maintaining growth and controlling SG&A.

Growth Assessment

revenue_sustainability: Top-line growth of +14.8% YoY is robust for a services-centric business model, likely reflecting healthy demand and/or successful project delivery. Visibility into order backlog and client concentration is not provided, limiting medium-term sustainability assessment. profit_quality: The step-up in operating income outpaced revenue, pointing to improved mix and expense control. Non-operating income modestly lifted ordinary income relative to operating income, and the implied tax burden appears normal. Absence of D&A and OCF data constrains validation of underlying cash earnings. outlook: If mid-teens growth persists, margins could remain in the mid-single digits or expand modestly, provided utilization and pricing hold. Key swing factors include wage inflation, subcontracting rates, and project execution. Further disclosure on pipeline/backlog and hiring plans would refine the outlook.

Financial Health

liquidity: Current assets ¥3,442,592,000 vs. current liabilities ¥1,135,769,000 yields a current ratio of 303.1%. Quick ratio equals the current ratio only because inventories were not disclosed; underlying cash and receivables composition is unknown. solvency: Total liabilities of ¥1,591,277,000 against equity of ¥2,919,000,000 implies a liabilities-to-equity ratio of ~0.55x. Equity ratio is approximately 60.6% (vs. reported 0.0% due to non-disclosure). This indicates a conservative balance sheet with ample solvency headroom. capital_structure: Leverage (assets/equity) is 1.65x. Interest expense is undisclosed, but ordinary income exceeded operating income, suggesting non-operating items are not a drag. Refinancing risk appears limited given low leverage, subject to confirmation once debt details are disclosed.

Cash Flow Quality

earnings_quality: OCF and FCF are undisclosed; therefore, earnings-to-cash conversion cannot be assessed. The implied effective tax rate (~24%) and modest non-operating contribution support P/L quality, but cash validation is pending. FCF_analysis: Free cash flow is not available (reported as zero due to non-disclosure). Capex and D&A are also undisclosed, so capital intensity cannot be determined. working_capital: Working capital is strong at ¥2,306,823,000. Receivables and payables composition, DSO/DPO trends, and contract liabilities are not disclosed, which limits insight into potential cash absorption from growth.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are not disclosed (zeros are placeholders). With EPS at ¥77.30, an assessment of payout discipline is not possible without policy guidance or historical distributions. FCF_coverage: FCF is undisclosed; therefore, coverage of any potential dividends by free cash flow cannot be evaluated. policy_outlook: No information on dividend policy (e.g., payout target or DOE) is provided. Future policy clarity would benefit from disclosure on OCF stability, capex, and balance sheet priorities.

Risk Assessment

Business Risks:

• Project execution risk and potential cost overruns in multi-phase service engagements
• Utilization rate volatility and wage inflation pressures affecting margins
• Client concentration and budget cyclicality (IT/digital investment sensitivity) though not disclosed
• Competitive pricing pressure in systems integration and outsourcing markets
• Talent recruitment and retention in a tight labor market

Financial Risks:

• Lack of cash flow disclosure impedes assessment of cash conversion and liquidity buffers
• Potential working capital swings from receivables timing as revenue grows
• Non-operating income reliance (small but positive) could reverse
• Tax rate variability due to credits/adjustments not fully disclosed

Key Concerns:

• Absence of OCF/FCF and cash balance data (reported zeros reflect non-disclosure)
• Missing D&A and interest expense details limit EBITDA and interest coverage analysis
• Equity ratio reported as 0.0% despite a calculable ~60.6%, highlighting disclosure gaps

Investment Implications

Key Takeaways:

• Revenue growth +14.8% YoY with operating income +72.4% YoY indicates strong operating leverage
• Gross margin 31.1% and operating margin ~6.2% reflect improved margin structure
• ROE 9.83% underpinned by 1.362x asset turnover and modest leverage (1.65x)
• Conservative balance sheet with equity ratio ~60.6% and current ratio 303.1%
• Cash flow and D&A non-disclosure is the principal analytical limitation

Metrics to Watch:

• Order backlog, book-to-bill, and client concentration
• Utilization rate, average billing rate, and subcontractor cost ratio
• SG&A as a percentage of revenue and operating margin progression
• Receivables days (DSO) and contract liabilities to gauge cash conversion
• Disclosure of OCF/FCF, capex, D&A, and cash balances
• Any dividend policy announcements or capital allocation updates

Relative Positioning: Profitability (OP margin ~6.2%, ROE ~9.8%) appears around the lower-to-middle range of TSE-listed IT/services small-mid caps, with better-than-average balance sheet strength; precise benchmarking is tentative due to disclosure gaps.

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