Atrae,Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥7.63B
• Operating Income: ¥1.85B
• Net Income: ¥1.17B
• EPS: ¥49.34

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

Atrae (6194) reported FY2025 Q4 (JGAAP, non-consolidated) results showing resilient profitability despite essentially flat top-line performance. Revenue was ¥7,634m, down a modest 0.1% YoY, indicating stable demand across core HR-tech/engagement services. Operating income increased 11.7% YoY to ¥1,853m, evidencing operating leverage from disciplined cost control and an asset-light model. Net income rose 66.3% YoY to ¥1,171m, aided by strong operating performance and a normalized tax burden relative to the prior year. DuPont analysis highlights a healthy ROE of 22.53%, driven by a 15.34% net margin, 1.06x asset turnover, and conservative financial leverage of 1.39x. Gross margin was an exceptional 99.0%, consistent with the low cost-of-sales structure of digital platforms (recruiting media/engagement SaaS), though this level may not be fully representative of normalized costs due to classification under JGAAP. EBITDA was ¥1,887m with a 24.7% margin, underscoring solid operating efficiency and low depreciation intensity (D&A ¥34m). Cash generation was robust: operating cash flow (OCF) of ¥1,868m equated to 1.60x net income, and free cash flow (FCF) was ¥1,411m after ¥457m of investing cash outflows. Liquidity appears strong with a current ratio of 277.8% and working capital of ¥3,395m, while solvency is conservative with total liabilities of ¥1,909m versus equity of ¥5,197m (D/E 0.37x). Interest coverage of 969x indicates negligible financial risk from interest-bearing debt. Reported “Effective Tax Rate: 0.0%” is not consistent with the disclosed income tax expense of ¥442m and net income; the implied effective tax rate is approximately the high‑20s percent, suggesting the metric field is not populated rather than tax being zero. Several key items are not disclosed or show as zero in the XBRL (e.g., equity ratio, cash and equivalents, shares outstanding, BVPS); these should be treated as unreported rather than actual zeros. Despite data gaps, the available figures point to high earnings quality, strong cash conversion, and ample financial flexibility. Revenue stability alongside profit expansion implies cost discipline and possibly favorable mix effects (e.g., subscription growth). The absence of cash balance reporting limits precision on net cash, but liquidity and coverage ratios indicate a conservative balance sheet. Dividend remains nil (DPS ¥0) despite strong FCF, suggesting ongoing reinvestment and/or shareholder returns via non-dividend methods (financing CF outflow hints at buybacks or repayments). Overall, Atrae’s fundamentals appear solid with defensible margins, strong ROE, and high cash generation, though sustained growth will depend on user/recruiter activity trends and subscription expansion amid a mixed hiring environment.

Profitability Analysis

ROE decomposition (DuPont): ROE 22.53% = Net margin 15.34% × Asset turnover 1.058× × Financial leverage 1.39×. The net margin of 15.34% is strong for HR-tech/platform models and improved YoY versus flat revenue, reflecting effective SG&A discipline and mix. Asset turnover at ~1.06x indicates efficient utilization of an asset-light base. Leverage is modest (1.39x), so ROE is largely driven by operating profitability rather than balance sheet risk. Margin quality: a reported 99.0% gross margin stems from minimal cost of sales; while typical for ad/marketplace/SaaS, part of operating costs may be in SG&A under JGAAP, so operating margin (24.3%) and EBITDA margin (24.7%) are better indicators of economic profitability. Operating leverage: revenue fell 0.1% YoY, but operating income rose 11.7%, indicating positive fixed-cost leverage and cost control. Non-operating items were small (ordinary income ¥1,812m slightly below operating income due to modest interest expense of ¥1.9m), implying core operations drove earnings.

Growth Assessment

Revenue declined slightly by 0.1% YoY to ¥7,634m, signaling a plateau versus prior growth cycles; this likely reflects a cautious hiring environment and maturing monetization in core platforms. Profit growth outpaced revenue, with operating income up 11.7% and net income up 66.3%, suggesting improved efficiency, pricing/mix benefits, or moderation in growth investments. The sustainability of profit growth will hinge on reacceleration of top-line drivers: job posting volumes on Green, subscription expansion and ARPU for Wevox, and cross-platform engagement (e.g., yenta). Given the asset-light model and low D&A, incremental revenue should translate to high flow-through, but sensitivity to macro hiring cycles and competition remains. The quality of profits is high: EBITDA margin at 24.7% and OCF/NI at 1.60x reflect strong cash conversion and limited accrual build. Outlook considerations include maintaining customer retention/churn at Wevox, expanding enterprise penetration, and stabilizing advertiser/recruiter demand. Absent a clear reacceleration, mid-term profitability may remain solid even on low single-digit revenue growth due to disciplined cost structure, but sustained double-digit profit growth likely requires renewed top-line momentum. Data are limited to headline figures (no segment or KPI breakdown), constraining a deeper growth attribution.

Financial Health

Liquidity is strong: current assets ¥5,304m vs. current liabilities ¥1,909m yield a current (and quick) ratio of 277.8%, with working capital of ¥3,394.8m. Solvency is conservative: total liabilities ¥1,909m vs. equity ¥5,197m imply a D/E of 0.37x, and interest coverage is 969x, indicating negligible interest burden. The reported equity ratio of 0.0% appears unreported; based on provided totals, an implied equity ratio is approximately 72% (¥5,197m/¥7,217m). Capital structure is largely equity-funded with limited financial leverage, providing resilience against revenue variability. While cash and equivalents are shown as zero, this is treated as undisclosed rather than actual zero; nevertheless, the strong liquidity ratios and positive OCF/FCF suggest ample cash resources. No inventory is reported (typical for a services/platform model). Overall, the balance sheet supports ongoing investment and potential shareholder returns without stressing solvency metrics.

Cash Flow Quality

Earnings quality is high with OCF of ¥1,868m representing 1.60x net income (¥1,171m), indicating positive working capital dynamics and strong cash realization of earnings. Free cash flow was ¥1,411m after ¥457m of investing outflows, consistent with the asset-light nature and low D&A (¥34m). The gap between OCF and EBITDA (¥1,887m) is small, reinforcing quality of earnings and limited non-cash add-backs. Working capital: details are not disclosed, but the OCF > NI suggests favorable collections and/or payables timing; sustainability should be monitored in subsequent periods for reversals. Financing cash outflow of ¥1,613m likely reflects share buybacks and/or debt repayments rather than dividends (DPS ¥0), consistent with capital return flexibility and conservative leverage. With cash balances undisclosed, we cannot quantify net cash; however, strong recurring FCF provides a buffer for investment and returns.

Dividend Sustainability

Atrae paid no dividend in the period (DPS ¥0; payout ratio 0%). From a capacity perspective, FCF of ¥1,411m comfortably exceeds any plausible dividend requirement, implying high coverage if dividends were to be introduced or reinstated. Given financing CF outflows (−¥1,613m) amid DPS 0, capital returns may be primarily via buybacks or internal reinvestment rather than cash dividends. Sustainability of future payouts (if any) would be underpinned by the company’s robust OCF/NI (1.60x) and low leverage. Policy outlook likely favors reinvestment in product and user growth, with opportunistic buybacks depending on valuation and cash levels; formal dividend guidance is not provided in the dataset. We treat share count and BVPS fields as undisclosed, so per-share payout analysis is not possible from the provided data.

Risk Assessment

Business Risks:

• Macro sensitivity of recruiting demand impacting job postings and advertiser budgets (revenue cyclicality).
• Competition from large domestic/international recruiting platforms and HR SaaS vendors exerting pricing pressure.
• Dependence on a few core services (e.g., Green, Wevox, yenta) leading to concentration risk.
• Churn risk in subscription businesses; retention and ARPU expansion are critical to sustain growth.
• Regulatory or policy changes in labor markets and data privacy that could alter business practices or costs.
• User acquisition efficiency risk (LTV/CAC volatility) amid digital advertising cost fluctuations.
• Talent attraction and retention for engineering/product teams in a competitive labor market.

Financial Risks:

• Potential working capital reversals given OCF materially above net income this period.
• Limited tangible asset base reduces collateral value if external financing were needed.
• Share repurchases (if ongoing) could reduce cash buffers if growth slows unexpectedly.
• Tax rate normalization variability; prior-year comparisons of net income are sensitive to tax effects.
• Customer concentration risk if large clients contribute meaningfully to revenue (not disclosed).

Key Concerns:

• Flat revenue trajectory (-0.1% YoY) while profits grow via cost discipline; durability of this trend depends on reacceleration of top-line KPIs.
• Data limitations: cash balance, share count, and equity ratio are undisclosed, complicating per-share and net cash analysis.
• Extraordinary gross margin (99%) underscores classification dynamics; operating margin is a better anchor for comparability.

Investment Implications

Key Takeaways:

• ROE of 22.53% is driven primarily by strong margins and efficient asset use rather than leverage.
• Operating income grew 11.7% YoY despite flat revenue, indicating effective cost control and operating leverage.
• Cash generation is robust (OCF/NI 1.60; FCF ¥1.41bn), supporting reinvestment and potential buybacks.
• Balance sheet is conservative (D/E 0.37x; interest coverage 969x), providing resilience.
• Dividend remains nil; capital returns likely skew to buybacks or internal investment.
• Reported metrics showing zero (equity ratio, cash, shares) should be treated as undisclosed; implied equity ratio is ~72%.

Metrics to Watch:

• Platform KPIs: job postings, active companies/candidates, MRR/ARPU for Wevox, churn/retention.
• Top-line reacceleration: quarterly revenue growth and mix between advertising and subscriptions.
• Operating margin trajectory and expense discipline (particularly personnel and marketing).
• OCF/NI ratio sustainability and working capital movements (receivables, payables).
• Capital allocation: size/timing of buybacks, capex and product investment levels.
• Effective tax rate normalization and non-operating items affecting net income.

Relative Positioning: Within TSE Growth HR-tech/platform peers, Atrae exhibits above-average profitability, high cash conversion, and a conservative balance sheet, albeit with currently subdued revenue growth; execution on product and user metrics will be key to sustaining its premium margin profile.

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