CUBE CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥3.60B
• Operating Income: ¥17M
• Net Income: ¥1M
• EPS: ¥0.30

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 (JGAAP, non-consolidated), 株式会社キューブ delivered modest top-line growth but a pronounced deterioration in profitability. Revenue rose 1.0% YoY to ¥3,604m, while operating income fell 88.9% YoY to ¥17m, indicating significant operating deleverage. Gross profit was ¥2,071.7m, implying a high gross margin of 57.5%, but SG&A pressure appears to have absorbed almost all gross profit, leaving a very thin operating margin of c.0.5%. Ordinary income of ¥21m exceeded operating income, suggesting small net non-operating gains or lower non-operating costs. Net income collapsed to ¥1m (YoY −98.0%), driving a net margin of only 0.03%. DuPont analysis shows ROE of 0.02%, with the primary drag coming from margin compression rather than asset turnover (0.74x) or leverage (assets/equity ≈1.21x). Balance sheet strength is a notable offset: total equity is ¥4,009m versus total assets of ¥4,868m, implying an equity ratio around 82% (despite the reported equity ratio field showing 0.0% which we treat as undisclosed), and liabilities remain modest at ¥809m (D/E ~0.20x). Liquidity appears ample with current assets of ¥3,882m and current liabilities of ¥667m (current ratio ~582%). Working capital is substantial at ¥3,215m, supporting operational resilience. Tax expense of ¥60m versus very low reported profit implies material tax timing effects or non-recurring items, contributing to a disconnect between ordinary income and bottom-line profit. Cash flow statements are not disclosed (zeros indicate unreported), limiting assessment of earnings-to-cash conversion and capex needs. Dividend is currently nil (DPS ¥0), and payout is 0%, which is consistent with preserving cash in a low-profit period. With high gross margins but compressing operating income, the business appears sensitive to SG&A intensity and revenue mix. Near-term priority is restoring operating efficiency while sustaining the strong balance sheet. Overall, the company remains liquid and underlevered, but the sharp profit compression and opaque cash flow data warrant close monitoring.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 0.03% (Net income ¥1m / Revenue ¥3,604m)
• asset_turnover: 0.740x (Revenue ¥3,604m / Assets ¥4,868m)
• financial_leverage: 1.21x (Assets ¥4,868m / Equity ¥4,009m)
• calculated_ROE: ≈0.02% (matches provided) margin_quality:
• gross_margin: 57.5% (¥2,071.7m / ¥3,604m) – strong and indicative of a service/fee-heavy model
• operating_margin: ≈0.47% (¥17m / ¥3,604m) – severely compressed by SG&A
• ordinary_margin: ≈0.58% (¥21m / ¥3,604m)
• net_margin: 0.03% – impacted by tax and/or below-the-line effects operating_leverage: Revenue grew +1.0% YoY while operating income fell −88.9% YoY, implying high negative operating leverage this quarter due to elevated SG&A or one-off costs. The spread between gross margin and operating margin (~57pp) highlights significant fixed/semifixed cost absorption.

Growth Assessment

revenue_sustainability: Top-line expanded modestly (+1.0% YoY), suggesting stable demand but limited growth acceleration. High gross margin indicates value-add services, but growth appears dependent on mix and pricing rather than volume scale. profit_quality: Profitability is fragile: operating income nearly washed out despite solid gross margin, indicating that mix, increased personnel/marketing, or one-offs drove SG&A up. Ordinary income above operating income suggests non-operating support, not structural earnings strength. outlook: Near-term earnings recovery hinges on normalizing SG&A and stabilizing tax effects. With a strong balance sheet and ample working capital, the company has capacity to pursue efficiency measures; however, absent clearer visibility on cost normalization, margin recovery timing is uncertain.

Financial Health

liquidity:

• current_ratio: ≈582% (¥3,882m / ¥667m)
• quick_ratio: ≈582% (inventories undisclosed, treated as zero)
• working_capital: ¥3,215m – substantial buffer solvency:
• debt_to_equity: 0.20x (Total liabilities ¥809m / Equity ¥4,009m)
• equity_ratio_inferred: ≈82.4% (¥4,009m / ¥4,868m) – despite reported 0.0% field, which appears undisclosed
• interest_coverage: Not assessable from disclosed data (interest expense undisclosed; reported 0). Ordinary income positive suggests no immediate burden. capital_structure: Underlevered with low reliance on debt and high equity cushion. This supports resilience during profit volatility and provides optionality for investment when profitability normalizes.

Cash Flow Quality

earnings_quality: Unable to evaluate OCF conversion as cash flow statements are undisclosed (zeros indicate not reported). The mismatch between ordinary income and net income suggests tax/exceptional items influenced earnings quality this quarter. FCF_analysis: Capex and investing cash flows are undisclosed, preventing FCF estimation. Given strong working capital, FCF could be sensitive to receivables and payables timing. working_capital: Working capital is large (¥3,215m). Inventories are undisclosed; thus, receivables and cash likely dominate current assets. Without OCF detail, the cash conversion cycle cannot be assessed.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0, and payout ratio is 0%, consistent with extremely low net income (¥1m) and a prudent stance amidst profit pressure. FCF_coverage: Not assessable due to undisclosed cash flows; formally shown as 0.00x but treated as not reported. policy_outlook: With profitability compressed and cash flow visibility limited, maintaining a conservative dividend stance appears likely until operating margins recover and cash generation is evidenced.

Risk Assessment

Business Risks:

• High operating leverage to SG&A intensity; small revenue changes can swing operating profit materially
• Revenue mix risk if higher-margin segments slow or are replaced by lower-margin business
• Client concentration or project timing risk (implied by modest growth and volatile earnings)
• Pricing power and cost inflation risk (personnel/marketing costs outpacing revenue)

Financial Risks:

• Earnings volatility from tax and below-the-line items causing disconnect between ordinary and net income
• Cash flow opacity due to undisclosed OCF/ICF/FCF; harder to assess cash conversion and investment needs
• Potential working capital swings affecting liquidity despite high current ratio

Key Concerns:

• Severe compression of operating income despite stable revenue
• Tax expense versus profit misalignment impacting bottom line
• Lack of cash flow disclosure limiting assessment of earnings quality and dividend capacity

Investment Implications

Key Takeaways:

• Top-line is stable (+1.0% YoY) but profitability collapsed (OP −88.9% YoY)
• High gross margin (57.5%) signals value-add model, yet SG&A intensity eroded margins
• ROE is negligible (0.02%), driven by margin, not balance sheet or turnover
• Balance sheet is strong (inferred equity ratio ~82%, D/E ~0.20x) providing resilience
• Cash flow data are undisclosed; earnings-to-cash conversion remains a blind spot

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio trajectory
• Ordinary-to-operating income gap (non-operating reliance)
• Effective tax rate normalization and any extraordinary items
• Receivables and payables movement (working capital use) when cash flows are disclosed
• Order backlog/pipeline or booking trends supporting revenue visibility

Relative Positioning: Compared with domestic service-oriented peers, the company exhibits superior balance sheet strength and gross margins but currently underperforms on operating efficiency and ROE due to elevated SG&A and tax volatility.

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