SPRIX Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥35.13B
• Operating Income: ¥2.17B
• Net Income: ¥1.09B
• EPS: ¥61.73

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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: Strong quarter with robust top-line growth, sharp margin expansion, and high-quality cash generation, albeit with thin short-term liquidity and a high effective tax rate. Revenue rose 10.3% YoY to 351.27, while operating income nearly doubled (+98.5% YoY) to 21.70, highlighting meaningful operating leverage. Ordinary income increased 95.6% YoY to 22.18, and net income jumped 117.4% YoY to 10.87. Gross profit reached 110.15, implying a gross margin of 31.4%. Operating margin improved to 6.2%, up roughly 275 bps from an estimated 3.4% in the prior year period. Net margin expanded to 3.1%, up approximately 153 bps from an estimated 1.6% last year. Earnings quality is strong: operating cash flow of 35.80 was 3.29x net income, yielding positive FCF of 19.72 even after 7.01 of capex. Interest coverage was extremely robust at 166.9x, and leverage remains moderate with D/E at 1.25x. Liquidity is tight: the current ratio is 1.01 and the quick ratio is 0.98, indicating minimal buffer against short-term obligations. The effective tax rate was high at 41.8%, dampening net profitability versus operating gains. Balance sheet shows notable goodwill (20.38) and other intangibles (30.14), suggesting some impairment sensitivity if performance fades. Dividend data are largely unreported; based on available figures, the calculated payout ratio is 62.8% with FCF coverage of 2.89x, which appears serviceable but near the benchmark threshold. Equity-method income was small (0.17), confirming results were driven by core operations. Forward-looking, the strong OCF and improved margin profile support ongoing investment and potential shareholder returns, but close monitoring of liquidity, tax normalization, and SG&A discipline is warranted. Overall, the quarter signals positive operational momentum with balanced, manageable risks.

Profitability Analysis

Step 1 (ROE decomposition): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 3.1% × 1.562 × 2.25 ≈ 10.9% (aligns with reported 10.9%). Step 2 (component change): The largest inferred change is Net Profit Margin, given revenue grew 10.3% while operating income nearly doubled, implying substantial margin expansion. Step 3 (business reason): Operating leverage from revenue growth and SG&A discipline (SG&A 88.45 against a higher gross profit base) lifted operating margin from an estimated 3.4% to 6.2%; lower non-operating drag also aided ordinary income. Step 4 (sustainability): Margin gains appear partly sustainable if cost control and utilization remain strong; however, education services can face seasonality and wage inflation for instructors, and the high effective tax rate could cap net margin unless normalized. Step 5 (flags): Watch SG&A growth versus revenue; while detailed SG&A line items are unreported, the near-doubling of operating income versus 10% revenue growth suggests favorable operating leverage this period that may normalize.

Growth Assessment

Revenue growth of 10.3% YoY to 351.27 reflects healthy demand and/or network expansion. Operating income increased 98.5% YoY to 21.70, pointing to strong incremental margins. Ordinary income rose 95.6% YoY to 22.18, and net income rose 117.4% YoY to 10.87, suggesting improved profitability throughout the P&L. Operating margin expanded by roughly 275 bps to 6.2%, and net margin by ~153 bps to 3.1%. EBITDA was 27.95 (8.0% margin), supporting improved cash conversion. Equity-method income was minimal (0.17), indicating growth was primarily organic/operational rather than from affiliates. Sustainability hinges on enrollment trends, pricing power, and SG&A control; the high effective tax rate (41.8%) could moderate EPS growth unless lowered. Given positive OCF (35.80) and FCF (19.72), the company appears able to fund growth capex (7.01) while maintaining financial flexibility. Outlook: Continued mid-single to low-double-digit revenue growth with moderate margin expansion is plausible if cost discipline holds and demand remains resilient.

Financial Health

Liquidity: Current ratio 1.01 and quick ratio 0.98 indicate tight short-term liquidity; explicit warning threshold (CR < 1.0) is not breached, but the buffer is thin. Solvency: D/E 1.25x (within conservative benchmark <1.5x) and interest coverage 166.9x indicate low financial risk. Maturity mismatch: Current liabilities (111.48) nearly equal current assets (112.76); short-term loans (7.30) are comfortably covered by cash (64.60), but working capital headroom is minimal (working capital 1.28). Off-balance sheet: Lease/rental commitments are likely in this business model, but specific amounts are unreported. Asset quality: Goodwill (20.38) and intangibles (30.14) together equal ~50.5 of assets, implying potential impairment risk if performance weakens.

Cash Flow Quality

OCF/Net Income is 3.29x (>1.0), signaling high earnings quality. Free cash flow of 19.72 after capex (7.01) is solid and supports capital allocation flexibility. No clear signs of working capital manipulation; AR (3.43) and inventory (3.57) are small relative to revenue, consistent with the cash-centric nature of education services, though detailed working capital components are not provided. Investing CF (-16.08) reflects capex and possibly content/IT investments; financing CF (-10.11) suggests debt reduction and/or shareholder returns; exact dividend and buyback cash flows are unreported. Overall, cash generation comfortably exceeds accounting earnings this period.

Dividend Sustainability

Dividend disclosures (DPS, total dividends paid) are largely unreported. The calculated payout ratio is 62.8%, slightly above the <60% benchmark, while the reported payout ratio of 1.3% appears inconsistent with other data and may reflect definitional or reporting differences. FCF coverage of dividends is strong at 2.89x based on available figures, implying adequate headroom. With positive FCF (19.72) and strong interest coverage, dividends appear fundable; however, the tight current ratio and high effective tax rate argue for a prudent stance. Policy outlook: If margin gains persist and liquidity buffers improve, there is room to maintain or modestly grow dividends; clarity on DPS and policy targets would improve assessment confidence.

Risk Assessment

Business Risks:

• Enrollment and retention variability in education services affecting utilization and pricing.
• Wage inflation and instructor availability pressures impacting SG&A and margins.
• Seasonality of education demand potentially causing quarterly volatility.
• Regulatory or curriculum changes impacting product competitiveness and costs.

Financial Risks:

• Tight liquidity (current ratio 1.01, quick ratio 0.98) leaves limited cushion for shocks.
• High effective tax rate (41.8%) depresses net margins and cash available for returns.
• Intangible asset concentration (goodwill 20.38; other intangibles 30.14) raises impairment sensitivity.
• Some reliance on short-term borrowings (7.30) requires rollover discipline despite strong cash.

Key Concerns:

• Sustainability of recent operating margin expansion given potential normalization of SG&A leverage.
• Limited disclosure on dividend cash outflows and SG&A line items.
• Potential off-balance sheet lease obligations not disclosed in detail.

Investment Implications

Key Takeaways:

• Strong revenue growth (+10.3% YoY) and outsized operating profit growth (+98.5% YoY) drove notable margin expansion.
• OCF strength (35.80) and FCF (19.72) indicate high earnings quality and funding capacity.
• Liquidity is tight (CR 1.01, QR 0.98) despite ample cash, warranting close monitoring.
• Leverage moderate (D/E 1.25x) with exceptional interest coverage (166.9x).
• High tax rate (41.8%) limits flow-through to net income; potential upside if normalized.
• Intangibles are sizable, elevating impairment risk if growth slows.

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio trajectory.
• Enrollment growth, same-center sales, and capacity utilization.
• Effective tax rate and any guidance on normalization.
• Current ratio and working capital movements (deferred revenue, payables).
• Capex intensity versus FCF and growth outcomes.
• Any disclosures on dividend policy and DPS trajectory.

Relative Positioning: Within Japan's education services peers, the company demonstrates solid growth and improving operating leverage, strong cash generation, and moderate leverage, partially offset by thin liquidity and a high effective tax rate; results rely primarily on core operations rather than affiliate income.

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