Insource Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥14.51B
• Operating Income: ¥5.98B
• Net Income: ¥3.36B
• EPS: ¥49.20

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.

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AI Financial Analysis

Executive Summary

Insource Co., Ltd. delivered strong FY2025 Q4 consolidated results under JGAAP, highlighted by broad-based revenue growth and margin expansion. Revenue rose 16.3% YoY to ¥14.51bn, while operating income increased 21.1% YoY to ¥5.98bn, indicating positive operating leverage. Net income advanced 23.1% YoY to ¥4.13bn, with EPS at ¥49.20, reflecting robust bottom-line execution. Profitability was notably high, with a gross margin of 66.3% and an operating margin of approximately 41.2%, underscoring effective pricing, scalable content/assets, and cost discipline. DuPont analysis indicates a strong ROE of 33.07%, driven primarily by an elevated net margin of 28.46%, healthy asset turnover of 0.899x, and modest financial leverage of 1.29x. Ordinary income of ¥5.997bn slightly exceeded operating income, suggesting limited but positive non-operating contributions and minimal financing burden. Cash generation was solid, with operating cash flow (OCF) of ¥4.395bn and an OCF/Net Income ratio of 1.06, supporting the quality of earnings. Free cash flow (FCF) of ¥4.164bn was robust, with only modest investing outflows of ¥0.231bn and disciplined financing cash flows of -¥1.678bn. The balance sheet is conservative: total assets were ¥16.149bn and total equity ¥12.487bn, implying a derived equity ratio of roughly 77.3% despite the equity ratio field showing 0.0% (unreported). Liquidity appears strong, with a current ratio of 231.5% and working capital of ¥4.206bn, indicating ample short-term coverage. Leverage is low, with total liabilities/equity around 0.26x and no reported interest expense, implying negligible debt financing. The effective tax rate reported as 0% in the metrics is clearly an undisclosed placeholder; based on income tax of ¥1.431bn and pre-tax income approximation, the effective tax rate is closer to ~25.7%. Dividend data were not disclosed (DPS and payout shown as 0 are placeholders), so dividend policy and cash returns cannot be assessed from the provided fields. Overall, the company exhibits strong growth, high-margin operations, solid cash conversion, and a conservative capital structure, albeit with some disclosure gaps (cash balance, equity ratio, dividends). The outlook appears favorable given the operating momentum and balance sheet strength, but monitoring revenue mix, pricing resiliency, and working capital dynamics remains important. Data limitations (zeros as unreported) warrant caution in interpreting certain ratios (e.g., interest coverage, equity ratio, cash balance).

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 28.46%
• asset_turnover: 0.899
• financial_leverage: 1.29
• calculated_ROE: 33.07%
• interpretation: ROE is primarily margin-driven with supportive but not aggressive leverage; asset efficiency is healthy for a training/content platform model. margin_quality:
• gross_margin: 66.3%
• operating_margin: 41.2%
• EBITDA_margin: 42.4%
• ordinary_margin: 41.3%
• net_margin: 28.46%
• commentary: High structural margins suggest scalable content, efficient delivery, and disciplined SG&A. Ordinary income slightly above operating income indicates minimal non-operating drag. operating_leverage:
• revenue_growth_YoY: 16.3%
• operating_income_growth_YoY: 21.1%
• assessment: Operating profit grew faster than revenue, evidencing positive operating leverage and cost efficiency gains.

Growth Assessment

revenue_sustainability: Top-line grew double digits, implying healthy demand for services; sustainability will depend on client retention, repeat training cycles, and upselling digital/recurring offerings. profit_quality: Expansion in operating margin alongside revenue growth points to quality growth rather than one-off gains; limited non-operating items reinforce core-driven profit. outlook: With strong ROE and cash generation, the company is well-positioned to invest in content, technology, and distribution. Key to sustaining growth: maintain pricing power, expand enterprise accounts, and deepen recurring revenue streams.

Financial Health

liquidity:

• current_ratio: 231.5%
• quick_ratio: 231.5%
• working_capital_jpy: 4206312000
• assessment: Ample short-term liquidity and buffer to support operations and growth initiatives. solvency:
• total_assets_jpy: 16149000000
• total_liabilities_jpy: 3242368000
• total_equity_jpy: 12487000000
• derived_equity_ratio: 77.3%
• debt_to_equity_ratio: 0.26x
• interest_burden: No reported interest expense; effective interest coverage is not meaningful but indicates negligible debt.
• assessment: Low leverage and high equity buffer provide strong solvency. capital_structure: Balance sheet is equity-heavy with limited financial liabilities; capacity remains for incremental investment or shareholder returns if policy permits.

Cash Flow Quality

earnings_quality:

• OCF: 4395000000
• net_income: 4130000000
• OCF_to_NI: 1.06
• assessment: Cash conversion is solid, supporting the reliability of earnings. FCF_analysis:
• investing_CF: -231000000
• free_cash_flow: 4164000000
• assessment: Strong FCF driven by high margins and modest capital intensity. working_capital:
• current_assets: 7405642000
• current_liabilities: 3199330000
• commentary: Healthy net working capital; monitoring receivables and unearned revenue (not disclosed) is important given the service model.

Dividend Sustainability

payout_ratio_assessment: Payout ratio and DPS are shown as 0 due to non-disclosure; cannot infer dividend stance from provided data. FCF_coverage: Not assessable due to undisclosed DPS; theoretically, strong FCF could support distributions if policy allows. policy_outlook: With high ROE and excess liquidity, the company has optionality for dividends or buybacks, but explicit policy is not provided in the data.

Risk Assessment

Business Risks:

• Demand cyclicality in corporate/public-sector training budgets
• Pricing pressure from competitors and e-learning alternatives
• Execution risk in developing and refreshing content library
• Dependence on large clients or specific sectors (customer concentration risk)
• Talent acquisition and instructor capacity constraints
• Technology platform reliability and cybersecurity for digital delivery
• Regulatory or policy changes affecting public-sector spending

Financial Risks:

• Disclosure gaps (cash balance, equity ratio, dividend details) complicate assessment
• Potential receivables buildup or timing differences in cash collection
• Limited visibility on lease obligations or off-balance-sheet commitments
• Tax rate variability (derived ~25.7% vs. unreported field values)
• Potential M&A integration or investment execution risks (though current investing CF is modest)

Key Concerns:

• Sustaining high margins amid competition and wage inflation
• Maintaining cash conversion as scale increases
• Clarity on capital allocation and shareholder return policy

Investment Implications

Key Takeaways:

• High-quality growth with expanding margins and strong ROE (33.07%)
• Robust cash generation (OCF/NI 1.06; FCF ¥4.16bn) and low leverage
• Healthy liquidity (current ratio 231.5%) and strong equity buffer (~77% of assets)
• Earnings driven by core operations with minimal non-operating noise
• Some disclosure items unreported (cash, equity ratio, dividends) warrant monitoring

Metrics to Watch:

• Bookings and revenue growth trajectory by segment/delivery mode
• Operating margin and gross margin resilience
• OCF/NI and working capital turns (DSO/DPO) for cash conversion
• Asset turnover and ROE sustainability
• Effective tax rate normalization
• Shareholder return policy (DPS/buybacks) and capital allocation

Relative Positioning: Versus TSE-listed business services/training peers, Insource exhibits superior margins, high ROE, and conservative leverage, positioning it as an efficiency and profitability leader with strong cash generation.

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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