AirTrip Corp. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥28.10B
• Operating Income: ¥3.10B
• Net Income: ¥1.95B
• EPS: ¥79.47

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

Verdict: A mixed quarter with solid operating execution and cash generation, offset by a heavier tax burden and weaker below-the-line items that pulled net profit down year over year. Revenue rose 5.8% YoY to 281.0, with gross profit of 161.2 implying a healthy gross margin of 57.4%. Operating income increased 30.8% YoY to 31.0, lifting the operating margin to roughly 11.0%. This represents an operating margin expansion of about 212 bps versus the prior period’s ~8.9%. Net income declined 11.6% YoY to 17.8, compressing net margin by ~125 bps to 6.3% from ~7.6% a year ago. The divergence—higher operating profit but lower net profit—was driven by a heavier tax burden and weaker non-operating/equity-method contributions (equity-method income was -0.23). Earnings quality was strong: operating cash flow of 45.5 exceeded net income by 2.56x and free cash flow was a solid 32.0. Leverage is moderate (D/E 0.95x) and equity ratio stands at 47.4%, providing balance sheet flexibility. ROE calculated via DuPont was 10.8%, squarely in the “good” range, underpinned by a 6.3% net margin, 0.874x asset turnover, and 1.95x leverage. However, the quality alert highlights a high tax burden (tax burden 0.59), which weighed on bottom-line conversion. Ordinary income fell 5.3% YoY, indicating pressure from non-operating items despite stronger operations. Cash and equivalents of 121.1 and positive free cash flow comfortably support the year-end dividend (DPS ¥10), with a low payout ratio of ~12.6% and FCF coverage of ~14x. Working capital looks manageable given accounts receivable of 28.3 versus revenue scale, though full current liability disclosure is unavailable. Forward-looking, sustaining the 11% operating margin while normalizing the effective tax rate and stabilizing affiliate results would unlock net profit growth. Near term, focus should be on maintaining cost discipline within SG&A and improving equity-method performance to translate operating gains into EPS growth.

Profitability Analysis

ROE decomposition (DuPont 3-factor): ROE ≈ Net Profit Margin (6.3%) × Asset Turnover (0.874x) × Financial Leverage (1.95x) = ~10.8%. The largest YoY swing came from net profit margin, which declined ~125 bps despite improved operating margin, due to higher tax burden and weaker non-operating/affiliate results. Business drivers: strong demand recovery and/or better take rates/supporting cost control improved operating income, but negative equity-method income (-0.23) and a low tax burden factor (0.59) reduced the translation to net. Sustainability: operating margin improvements seem more sustainable given revenue growth and cost control, while the tax rate impact looks partly non-recurring/cyclical and subject to mix and loss utilization; equity-method volatility can normalize but remains inherently variable. Watch for SG&A trends versus revenue; while SG&A detail is undisclosed, operating leverage was positive (OI +30.8% vs revenue +5.8%), suggesting SG&A grew slower than revenue, a favorable dynamic to maintain.

Growth Assessment

Top-line growth of 5.8% YoY indicates steady recovery, likely driven by travel demand normalization and platform volumes. Operating income growth of 30.8% reflects improved operating leverage and gross margin resilience (57.4%). However, ordinary income declined 5.3% YoY and net income fell 11.6% due to heavier taxes and weaker non-operating/affiliate contributions. Profit quality is supported by high OCF/NI (2.56x) and negative accruals ratio (-8.6%), indicating cash-realized earnings. Outlook hinges on sustaining 11% operating margins and alleviating the tax burden; a stable to improving equity-method line would be a clear positive for EPS. Given modest capex (1.56) and strong FCF, management has room to invest selectively in growth initiatives or M&A without stressing the balance sheet. Revenue sustainability appears reasonable with travel activity trends, but competition and commission pressure may cap pricing power. Near-term, we expect continued focus on cost discipline and monetization, with net profit growth resuming if the effective tax rate normalizes.

Financial Health

Liquidity: Current ratio is not calculable due to missing current liabilities, but current assets are 236.8 and accounts payable 53.0, suggesting near-term coverage capacity; cash and equivalents are 121.1. No explicit warning on Current Ratio < 1.0 can be made due to data gaps. Solvency: D/E of 0.95x is at the conservative threshold; equity ratio 47.4% is comfortable. No explicit disclosure on interest-bearing debt breakdown or maturities, limiting assessment of maturity mismatch; however, strong cash and OCF mitigate near-term refinancing risk. Off-balance sheet obligations: None disclosed in the provided data. Overall, balance sheet appears balanced with moderate leverage and ample liquidity buffers.

Cash Flow Quality

OCF/Net Income is 2.56x, well above the 1.0 benchmark, indicating high-quality earnings. Free cash flow of 32.0 is strong versus capex of 1.56, implying low capital intensity. The accruals ratio of -8.6% supports the view that earnings are cash-backed. Working capital: AR of 28.3 equals ~10% of revenue (≈37 days), reasonable for the business; full working capital dynamics (inventories minimal at 1.19; AP 53.0) look healthy though current liabilities are not fully disclosed. No signs of aggressive working capital pull-forward are evident from the limited data. FCF sustainability appears strong given modest capex and robust OCF.

Dividend Sustainability

Year-end DPS is ¥10 with no interim dividend, implying a payout ratio of ~12.6%, well below the 60% sustainability threshold. FCF coverage is ~14.2x, indicating ample headroom to sustain and potentially increase dividends. With cash of 121.1 and low capex needs, the dividend is well covered even if earnings volatility persists. Policy outlook: Absent explicit guidance, the current low payout suggests flexibility to balance shareholder returns with reinvestment/M&A.

Risk Assessment

Business Risks:

• Competitive pressure in online travel/OTA space could compress take rates and margins
• Demand volatility tied to macro conditions and travel trends
• Supplier terms (airlines, hotels) can shift economics and working capital
• Execution risk in scaling non-travel or ancillary businesses to diversify earnings

Financial Risks:

• Tax burden volatility reducing net profit conversion
• Equity-method income variability (currently -0.23) impacting below-the-line profitability
• Moderate leverage (D/E 0.95x) could rise with acquisitions or downturns
• Limited visibility on debt maturities and interest coverage due to unreported items

Key Concerns:

• Net income decline (-11.6% YoY) despite stronger operations points to below-the-line headwinds
• High effective tax burden (tax burden factor 0.59) suppresses ROE and EPS growth
• Ordinary income down 5.3% YoY suggests non-operating drag amid equity-method loss

Investment Implications

Key Takeaways:

• Core operations strengthened: operating margin expanded ~212 bps to ~11.0%
• Net margin compressed ~125 bps to 6.3% on higher taxes and non-operating drag
• ROE of ~10.8% is solid, driven by improved operations and moderate leverage
• Earnings quality is high (OCF/NI 2.56x; accruals -8.6%) and FCF robust (32.0)
• Balance sheet is sound with equity ratio 47.4% and cash 121.1
• Dividend is conservative (12.6% payout) and well covered (~14x FCF coverage)

Metrics to Watch:

• Effective tax rate and tax burden factor normalization
• Equity-method income trajectory and affiliate performance
• Operating margin sustainability around ~11%
• Working capital trends (AR days, AP levels) and OCF conversion
• Leverage (D/E) and any new debt for growth initiatives
• Revenue growth vs. SG&A growth to preserve operating leverage

Relative Positioning: Within Japan internet/travel peers, Airtrip shows improving operating efficiency and strong cash conversion but lags on consistency of net profit due to tax and affiliate variability; balance sheet and dividend flexibility are competitive positives.

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