IFIS JAPAN LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥5.06B
• Operating Income: ¥587M
• Net Income: ¥368M
• EPS: ¥39.77

Income Statement

Balance Sheet

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

IFIS Japan (78330) reported FY2025 Q3 consolidated results under JGAAP showing robust top-line momentum but more modest profit growth, indicating margin pressure. Revenue rose 22.1% year over year to ¥5.061 billion, supported by broad-based demand and/or pricing, though detailed segment drivers are not disclosed. Gross profit reached ¥1.742 billion, implying a gross margin of 34.4%, which appears adequate for a content/solutions-oriented business model but suggests cost inflation or mix effects versus the revenue growth. Operating income increased 6.3% YoY to ¥587 million, driving an operating margin of 11.6%, implying negative operating leverage in the period as operating costs grew faster than sales. Ordinary income was ¥591 million, broadly in line with operating income, reflecting minimal non-operating effects. Net income was ¥383 million (+4.1% YoY), yielding a net margin of 7.6%, consistent with the provided DuPont net margin of 7.57%. DuPont decomposition points to a calculated ROE of 6.64%, derived from a net margin of 7.57%, asset turnover of 0.736x, and financial leverage of 1.19x; this aligns with the reported ROE. Liquidity is very strong with current assets of ¥5.609 billion versus current liabilities of ¥0.928 billion, resulting in a current ratio of 6.05x and working capital of ¥4.681 billion. Solvency is conservative: total liabilities of ¥1.303 billion versus equity of ¥5.766 billion yield a debt-to-equity of 0.23x and an implied equity ratio (equity/total assets) of approximately 83.9% (the reported 0.0% equity ratio appears to be an unreported item, not an actual value). Interest expense is negligible at ¥10 thousand, producing an interest coverage of roughly 58,700x, highlighting minimal financial risk from debt. Based on the income tax expense of ¥184.8 million relative to ordinary income of ¥591 million, the implied effective tax rate is roughly 31%, suggesting normalized taxation despite a 0.0% figure in the provided metrics. Cash flow statements (operating, investing, financing) and cash balance are not disclosed (shown as zeros), constraining our assessment of earnings-to-cash conversion and investment needs. Depreciation and amortization is also not disclosed, limiting EBITDA-based analysis and capex/D&A cross-checks. Dividend data (DPS, payout, FCF coverage) are unreported; thus, dividend sustainability cannot be evaluated from this release. Overall, the company demonstrates strong balance sheet health and solid profitability, but the quarter shows margin compression despite strong sales growth, and the absence of cash flow disclosures is a key limitation for assessing earnings quality and capital allocation.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 0.0757
• asset_turnover: 0.736
• financial_leverage: 1.19
• calculated_ROE: 0.0664
• commentary: ROE of ~6.6% is driven primarily by moderate profitability and efficient asset use, with low leverage providing limited amplification. margin_quality:
• gross_profit_margin: 0.344
• operating_margin: 0.116
• ordinary_income_margin: 0.117
• net_margin: 0.0756
• observations: Operating margin trails gross margin by ~22.8pp, implying SG&A intensity of roughly 22.8% of sales (SG&A ≈ ¥1.155 billion). Minimal non-operating items (ordinary ≈ operating) and low interest expense indicate clean underlying earnings. The implied effective tax rate is ~31%, consistent with a normalized burden. operating_leverage: Revenue grew +22.1% YoY while operating income grew +6.3% YoY, indicating negative operating leverage this period and margin compression. Without prior-period cost breakdowns, the precise drivers (cost inflation, mix, hiring, or one-off expenses) are unclear. additional_notes: EBITDA is not meaningful due to unreported D&A (shown as 0).

Growth Assessment

revenue_sustainability: Top-line growth of +22.1% YoY is strong. Sustainability depends on order backlog, renewals, customer expansion, and pricing power; these details are not disclosed. No segment or customer mix provided limits visibility into durability. profit_quality: Ordinary income is close to operating income, and interest burden is negligible, supporting quality of operating earnings. However, the lack of OCF disclosure prevents verification of earnings-to-cash conversion. outlook: With low leverage and ample liquidity, the company has capacity to invest in growth. Key uncertainty is whether margin compression is temporary (investment phase) or structural (cost inflation, competitive pricing). Monitoring subsequent quarters for stabilization/improvement in operating margin will be important.

Financial Health

liquidity:

• current_assets: 5608895000
• current_liabilities: 927814000
• current_ratio: 6.05
• quick_ratio: 6.05
• working_capital: 4681081000
• commentary: Exceptional short-term liquidity; inventories are unreported (0), so quick ratio equals current ratio. solvency:
• total_assets: 6874000000
• total_liabilities: 1303418000
• total_equity: 5766000000
• equity_ratio_implied: 0.839
• debt_to_equity: 0.23
• interest_coverage: 58700.0
• commentary: Very conservative balance sheet with low leverage and effectively no interest burden. capital_structure: Low reliance on debt financing; financial flexibility appears high for potential capex, M&A, or shareholder returns, subject to cash flow generation (not disclosed here).

Cash Flow Quality

earnings_quality: Cannot be fully assessed due to unreported operating cash flow. The proximity of ordinary and operating income suggests limited non-operating distortion, but cash conversion remains unverified. free_cash_flow_analysis: FCF cannot be calculated without OCF and capex. D&A is unreported, preventing capex proxying from depreciation. working_capital_dynamics: Working capital is sizable at ¥4.681 billion. Without cash flow statements, changes in receivables/payables cannot be evaluated; potential revenue growth could be accompanied by higher receivables, affecting cash conversion. metrics:

• OCF_to_Net_Income_ratio_reported: 0.0
• note: The 0.0 ratio reflects missing OCF data, not actual zero cash generation.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are unreported in this dataset; EPS is ¥39.77 but DPS is listed as 0.00 (unreported). Therefore, payout metrics cannot be assessed. FCF_coverage: Not assessable as OCF and capex are not disclosed. policy_outlook: No information provided on dividend policy or guidance. Given strong balance sheet and profitability, capacity may exist, but confirmation requires cash flow and policy disclosures.

Risk Assessment

Business Risks:

• Potential margin pressure if cost inflation (personnel, content/IT) outpaces pricing.
• Revenue sensitivity to client activity levels and macro conditions, given information/services exposure.
• Customer concentration and contract renewal risk (not disclosed; typical for B2B services).
• Execution risk around scaling operations while maintaining service quality.
• Seasonality around fiscal period ends could cause quarterly volatility.

Financial Risks:

• Earnings-to-cash conversion risk due to lack of disclosed operating cash flow.
• Working capital absorption risk during high growth periods (receivables stretch).
• Limited visibility into capex needs and commitments given unreported D&A and investing cash flows.
• Tax rate variability; implied ETR ~31% but detailed reconciliation is not provided.

Key Concerns:

• Margin compression despite strong top-line growth in the quarter.
• Absence of cash flow disclosures, constraining assessment of earnings quality and dividend capacity.
• Equity ratio shown as 0.0% in the dataset (clearly unreported) may confuse headline readers; rely on implied 83.9%.

Investment Implications

Key Takeaways:

• Strong revenue growth (+22.1% YoY) but modest operating profit growth (+6.3% YoY) signals near-term operating leverage headwinds.
• Profitability remains sound (operating margin ~11.6%, net margin ~7.6%), with minimal financial risk.
• Balance sheet is robust (D/E ~0.23x; implied equity ratio ~84%), providing strategic flexibility.
• Cash flow data gaps prevent validation of cash conversion and FCF.
• Monitoring cost discipline (SG&A ~22.8% of sales) will be critical to margin trajectory.

Metrics to Watch:

• Operating cash flow and FCF to confirm earnings quality.
• Operating margin trend and SG&A ratio in subsequent quarters.
• Revenue retention/renewal rates and pricing (if disclosed).
• Capex intensity and hiring costs as growth investments.
• Tax rate normalization versus implied ~31%.

Relative Positioning: Within the context of Japan-listed information/services peers, IFIS Japan exhibits above-average balance sheet strength and healthy mid-teens gross-to-operating margin conversion, but faces near-term margin pressure despite strong growth; ultimate positioning depends on cash conversion and cost control, which are not assessable from the current disclosure.

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