KIYO Learning Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥3.79B
• Operating Income: ¥113M
• Net Income: ¥91M
• EPS: ¥13.30

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

KIYO Learning (TSE:7353, standalone, JGAAP) delivered FY2025 Q3 results showing solid top-line growth but pressured profitability. Revenue grew 12.9% year over year to ¥3,789 million, indicating continued demand for its online learning and certification services. Gross profit is reported at ¥2,908.7 million, implying a very high gross margin of roughly 76.8%, consistent with scalable digital content/platform economics. Operating income declined 28.0% YoY to ¥113 million, compressing the operating margin to about 3.0% as the company appears to be prioritizing growth investments (e.g., marketing, content development, product, and talent). Ordinary income was ¥112 million and net income ¥91 million, with net margin of 2.40%, confirming weaker bottom-line leverage in the period. DuPont analysis shows ROE of 6.51% driven by modest margins (2.40%), decent asset turnover (0.83x), and relatively high financial leverage (3.27x). Balance sheet scale reached ¥4,565 million in total assets, with current assets of ¥3,837 million and current liabilities of ¥3,059 million, yielding a current ratio of 125.4% and working capital of approximately ¥778 million. Total liabilities are ¥3,063 million against total equity of ¥1,397 million, implying a liabilities-to-equity ratio of 2.19x and an equity ratio that can be inferred at roughly 30.6% (equity/total assets), even though the reported equity ratio field shows 0.0% (likely undisclosed in XBRL). Interest expense remains small at ¥3.34 million, and interest coverage is healthy at 33.8x based on operating income. The effective tax rate appears to be around the mid-20% range when comparing income tax expense (¥26.998 million) to pre-tax profit, despite an “0.0%” placeholder in the summary metrics. Cash flow statements and depreciation/amortization are undisclosed (shown as zeros), limiting our ability to assess earnings-to-cash conversion and EBITDA trends. No dividend was paid (DPS ¥0), which is consistent with a reinvestment-led growth posture on the TSE Growth market segment. The YoY decline in operating income despite double-digit revenue growth suggests near-term margin pressures from growth initiatives and possibly higher customer acquisition costs. The high gross margin underscores strong unit economics, but operating leverage is not yet flowing through due to elevated opex. With liabilities largely current, a significant portion likely represents deferred revenue, a common characteristic in subscription-based or prepayment-oriented education/EdTech models. Overall, the company exhibits healthy growth capacity and a sound liquidity position, but profit scaling is the key swing factor for the medium term. Data limitations (notably cash flow, D&A, share count, and certain per-share metrics) temper analytical precision; conclusions are therefore drawn from the disclosed non-zero items and inferred relationships.

Profitability Analysis

ROE_decomposition: ROE 6.51% = Net margin 2.40% × Asset turnover 0.83x × Financial leverage 3.27x. The modest net margin is the primary constraint on ROE, while turnover is reasonable and leverage amplifies returns. margin_quality: Gross margin is very high at ~76.8% (gross profit ¥2,908.7m on revenue ¥3,789m), consistent with digital content/platform economics. Operating margin is ~3.0% (operating income ¥113m), reflecting elevated SG&A (likely marketing, content creation, and personnel for growth). Net margin at 2.40% indicates limited absorption of opex and some non-operating/tax drag. operating_leverage: Despite 12.9% revenue growth, operating income fell 28.0% YoY, indicating negative operating leverage in the period—suggesting increased customer acquisition/investment outpaced gross profit growth. Sustained revenue growth with slower SG&A growth is required to restore margin expansion.

Growth Assessment

revenue_sustainability: Revenue increased 12.9% YoY to ¥3,789m, implying healthy demand and possible growth in both B2C certification and B2B training/SaaS channels. High gross margin suggests scalable economics if growth persists. profit_quality: Net income decreased 23.3% YoY to ¥91m, and operating income fell 28.0% YoY, pointing to near-term pressure from opex investments. With interest expense low (¥3.34m) and ordinary income close to operating income, the profit drop is largely operational rather than financial. outlook: If revenue momentum continues and acquisition costs normalize, operating leverage can recover. Focus areas include cohort retention, ARPU uplift via content breadth and enterprise accounts, and disciplined marketing ROI. Absent this, margins may remain compressed despite top-line growth.

Financial Health

liquidity: Current assets ¥3,837m vs current liabilities ¥3,059m; current ratio 125.4% and quick ratio 125.4% (no inventories). Working capital is ¥778m, indicating adequate short-term liquidity. solvency: Total liabilities ¥3,063m vs equity ¥1,397m yields liabilities/equity of 2.19x. Implied equity ratio is ~30.6% (¥1,397m / ¥4,565m), suggesting moderate capitalization for a Growth-market issuer. capital_structure: Interest expense is minimal (¥3.34m) and interest coverage robust at 33.8x, indicating low financial risk from debt service. A large proportion of liabilities appears current—likely including deferred revenue—supportive of cash flow timing but calling for careful working-capital management.

Cash Flow Quality

earnings_quality: Operating cash flow is undisclosed (shown as zero), so OCF/Net income and accruals analysis cannot be performed. Given high gross margins and likely deferred revenue, cash conversion could be favorable, but this cannot be verified without OCF data. FCF_analysis: Free cash flow is not disclosed (shown as zero). Capex intensity is unknown due to missing investing cash flows and D&A. The digital model typically has light capex but may have capitalized content or software costs under JGAAP; disclosure is insufficient here. working_capital: Current assets exceed current liabilities by ¥778m. With no inventories and potentially meaningful deferred revenue, the model likely benefits from upfront cash collections. However, absent cash flow statements, the magnitude and seasonality of these effects cannot be quantified.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0, implying no dividend and a payout ratio of 0%. With net income at ¥91m and ongoing growth investments, retained earnings deployment appears prioritized. FCF_coverage: FCF is undisclosed; coverage metrics are therefore not meaningful. Given low interest burden and adequate liquidity, the balance sheet could support modest distributions, but strategy appears growth-first. policy_outlook: As a Growth market issuer scaling its platform, management is likely to maintain a reinvestment stance until operating margins and cash generation improve sustainably.

Risk Assessment

Business Risks:

• Customer acquisition cost inflation and weaker marketing ROI pressuring margins
• Competitive intensity in online learning/certification and enterprise training
• Content refresh requirements and product innovation cadence
• Dependence on examination schedules/regulatory changes for certain courses
• Enterprise churn/retention risk affecting ARR stability

Financial Risks:

• High share of current liabilities (likely deferred revenue) requiring continuous bookings to sustain cash inflows
• Potential capitalization of development/content costs (if any) obscuring true cash economics (undisclosed D&A)
• Limited disclosure of cash flow metrics impeding assessment of earnings quality
• Moderate leverage (liabilities/equity 2.19x) magnifies sensitivity to profit volatility

Key Concerns:

• Negative operating leverage despite double-digit revenue growth
• Insufficient cash flow and D&A disclosure to validate cash conversion and capex needs
• Execution risk in scaling B2B while preserving margins

Investment Implications

Key Takeaways:

• Top-line growth solid at +12.9% YoY to ¥3,789m with very high gross margin (~76.8%)
• Operating income down 28.0% YoY to ¥113m; operating margin ~3.0% indicates investment drag
• ROE 6.51% driven by modest margins and higher leverage (3.27x assets/equity)
• Liquidity adequate (current ratio 125.4%, WC ¥778m) and interest burden low (33.8x coverage)
• Cash flow metrics and D&A not disclosed, limiting visibility on earnings quality and FCF

Metrics to Watch:

• Quarterly operating margin trajectory and SG&A as a percent of sales
• Net revenue retention/ARR growth in enterprise and ARPU trends
• Customer acquisition cost and payback period
• Deferred revenue balances and operating cash flow (when disclosed)
• Churn/retention rates and cohort profitability
• Content development cadence and pipeline of new certifications

Relative Positioning: Within TSE Growth market EdTech/online learning peers, KIYO shows above-average gross margins and healthy revenue growth but below-peer operating margins near term; balance sheet leverage is moderate, with liabilities skewed current (likely deferred revenue), positioning the company for operating leverage recovery if opex growth normalizes.

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