f-code Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥8.40B
• Operating Income: ¥1.81B
• Net Income: ¥1.09B
• EPS: ¥84.53

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.

AI Financial Analysis

Executive Summary

F-Code Co., Ltd. (TSE: 92110) reported very strong FY2025 Q3 consolidated results under IFRS with revenue of 84.02 and net income of 10.35, reflecting 173.0% and 89.3% YoY growth, respectively. The DuPont bridge indicates a calculated ROE of 16.3%, driven by a 12.3% net margin, an asset turnover of 0.293x, and financial leverage of 4.51x. Gross profit was 18.13, implying a gross margin of 21.6%, which aligns with the reported calculated metric. Operating income printed at 18.11 (+91.5% YoY), suggesting robust operating performance, though there are classification inconsistencies between gross profit, SG&A (10.01), and operating income that warrant caution in interpreting operating leverage. Profit before tax was 16.80 and the effective tax rate was 18.4%, supporting the bottom-line expansion. Total assets stood at 286.51 and total equity at 63.57, implying a leverage ratio of 4.51x (Assets/Equity) and a debt-to-equity of 2.46x (Liabilities/Equity). The equity ratio was disclosed at 24.9%, slightly above the simple ratio implied by period-end numbers, suggesting possible definitional differences under IFRS presentation. Liquidity looks adequate with cash and equivalents of 62.36 within current assets of 87.05, and accounts receivable at 12.37. However, cash flow statements (OCF/FCF) and key subcomponents (depreciation, capex) are unreported, limiting earnings quality assessment and FCF-based valuation perspectives. Dividend information is unreported, so payout and policy continuity cannot be assessed this quarter. Given the high revenue growth, improving profitability, and solid ROE, the trajectory appears favorable, but the elevated leverage and gaps in cash flow disclosure temper confidence in long-term sustainability. The working capital figure provided appears to equal current assets, implying current liabilities were unreported; hence liquidity ratios are not calculable from the dataset. The relationship between gross profit, SG&A, and operating income appears non-standard; based on the gross margin, implied cost of sales would be c.65.9, suggesting the provided cost of sales figure may reflect a disclosure or classification difference. Overall, F-Code’s Q3 performance reflects strong top-line momentum and improved capital efficiency, but monitoring cash conversion, leverage, and sustainability of margins is key. Data limitations (notably CF, dividends, and some BS breakdowns) constrain precision of several inferences.

Profitability Analysis

ROE decomposition: Net margin 12.3% × asset turnover 0.293 × financial leverage 4.51x yields a calculated ROE of 16.3% (consistent with reported). Gross margin was 21.6% (GP 18.13 / Revenue 84.02). The reported operating income of 18.11 against revenue implies an operating margin near 21.5%, which is unusually close to the gross margin and inconsistent with disclosed SG&A of 10.01; this suggests classification or timing effects in the cost lines rather than true zero SG&A burden. Effective tax rate was 18.4% (3.09 / 16.80), aiding bottom-line conversion. Operating leverage: revenue grew 173% YoY while operating income grew 91.5% YoY, indicating positive scale but potentially higher variable costs or growth investments; the margin expansion at the net level still produced a solid ROE. Non-operating items are unreported, but PBT (16.80) being below operating income (18.11) suggests small net non-operating losses. Absent D&A disclosure, EBITDA and underlying margin quality cannot be quantified; accordingly, assessment of fixed-cost absorption and recurring margin potential is constrained.

Growth Assessment

Revenue rose 173.0% YoY to 84.02, indicating strong demand and/or successful expansion initiatives. Operating income growth of 91.5% YoY shows operating scale, albeit at a slower pace than revenue, implying some cost growth alongside topline expansion. Net income advanced 89.3% YoY to 10.35, supported by a favorable tax rate and solid operating results. The net margin of 12.3% on accelerated revenue suggests improving operating efficiency or better mix, though unreported non-operating and D&A details limit assessment of repeatability. Asset turnover at 0.293 indicates the business is still asset-light to moderate but growing into its asset base; further revenue growth could lift ROE if margins hold. Sustainability: with cash and equivalents at 62.36 and receivables at 12.37, working capital appears manageable for growth, but absence of OCF data prevents verification of cash conversion. Outlook hinges on maintaining gross margin around the 20%+ level while scaling SG&A efficiently; any normalization of the effective tax rate may modestly temper net profit growth. Given the data constraints, we assume the growth is primarily organic/product-led; confirmation from management disclosure would refine sustainability assessment.

Financial Health

Total assets 286.51, total liabilities 156.45, and total equity 63.57 imply a leverage (A/E) of 4.51x and debt-to-equity of 2.46x. Equity ratio reported at 24.9% (vs simple 22.2% using period-end balances), likely due to IFRS line definitions or inclusion/exclusion effects; nonetheless, capital structure is moderately leveraged for a growth company. Liquidity: current assets 87.05 include cash and equivalents of 62.36 and receivables of 12.37; current liabilities are unreported, so current and quick ratios are not calculable. Interest-bearing debt is unreported; therefore, interest coverage and debt serviceability cannot be quantified. The sizable cash balance versus equity (cash/equity ~98%) provides flexibility for operations and investment, though absolute liquidity adequacy depends on unreported current liabilities. Solvency is acceptable given positive profitability and cash position, but leverage should be monitored given the equity base size and growth funding needs.

Cash Flow Quality

OCF, investing CF, and FCF are unreported, so we cannot compute OCF/net income conversion, FCF, or FCF margins. Earnings quality appears directionally solid given positive PBT and a moderate tax rate; however, without D&A and capex, we cannot separate cash versus accrual drivers. Working capital: receivables of 12.37 relative to revenue suggest manageable collections, but days sales outstanding cannot be calculated without period averages and segment timing. The large cash and equivalents balance of 62.36 provides a buffer, yet sustainability of cash accumulation depends on OCF that is not disclosed. Non-operating gains/losses are not disclosed; with PBT slightly below operating income, non-operating drag appears modest. In sum, cash flow quality is indeterminable this quarter from available data; confirmation of positive OCF and controlled capex would strengthen the quality assessment.

Dividend Sustainability

Dividend data (DPS, total dividends paid, payout ratio) are unreported for the period, so payout discipline cannot be assessed. With net income of 10.35 and no FCF disclosure, FCF coverage of dividends is not calculable. Equity base of 63.57 and BVPS of 520.69 JPY suggest retained earnings capacity (11.53) is still building, which is typical for a growth phase. Given elevated growth and leverage, capital allocation may prioritize reinvestment over distributions, but policy clarity is absent in the data. We therefore cannot opine on sustainability of dividends this quarter and would look to management guidance and subsequent filings.

Risk Assessment

Business Risks:

• Sustainability of exceptionally high revenue growth (+173% YoY) amid potential demand normalization
• Gross margin durability at ~21.6% in the face of pricing, mix, or input cost changes
• Execution risk scaling operations while managing SG&A efficiency
• Customer concentration or churn risk (not disclosed)
• Competitive intensity in the company’s end markets (details not disclosed)

Financial Risks:

• Moderate-to-high financial leverage (Assets/Equity 4.51x; D/E 2.46x)
• Cash flow visibility risk due to unreported OCF/FCF and capex
• Potential interest rate exposure and refinancing risk (interest-bearing debt details unreported)
• Tax normalization risk from a relatively low effective tax rate (18.4%)

Key Concerns:

• Data inconsistencies between gross profit, SG&A, and operating income classification
• Lack of cash flow statement details limits earnings quality assessment
• Unreported dividend policy and payout constrain shareholder return analysis

Investment Implications

Key Takeaways:

• Strong topline and earnings momentum with revenue +173% YoY and net income +89% YoY
• Healthy ROE of 16.3% supported by solid net margin and moderate asset turnover
• Gross margin at 21.6% indicates viable unit economics, though cost line classifications need clarification
• Leverage is material (D/E 2.46x), requiring ongoing monitoring as growth continues
• Liquidity appears adequate with cash of 62.36, but absence of OCF/FCF data is a constraint

Metrics to Watch:

• Operating cash flow and FCF trends and OCF/net income conversion
• Gross and operating margin stability, with reconciliation of COGS and SG&A
• Revenue growth trajectory and customer metrics (retention, churn, ARPU if relevant)
• Leverage and interest coverage once debt and interest expenses are disclosed
• Tax rate normalization and its impact on net margin and ROE

Relative Positioning: Within high-growth peers on the TSE, F-Code exhibits standout revenue growth and a competitive ROE profile, but with less transparent cash flow disclosure and moderate leverage, placing it in a strong growth but medium-visibility cohort until cash conversion and cost classifications are clarified.

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