Bridge Consulting Group Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥2.24B
• Operating Income: ¥202M
• Net Income: ¥134M
• EPS: ¥72.55

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

Bridge Consulting Group (TSE: 92250) delivered FY2025 Q4 full-year revenue of ¥2,239m (+11.0% YoY), demonstrating resilient topline growth despite a softer profit profile. Gross profit reached ¥1,089m, implying a robust gross margin of 48.6%, consistent with an asset-light consulting model. Operating income declined 12.4% YoY to ¥202m, compressing the operating margin to roughly 9.0%, as SG&A investments and talent costs appear to have outpaced revenue growth. Ordinary income was ¥204m and net income ¥147m (-13.1% YoY), with a net margin of 6.57%. The DuPont breakdown indicates ROE of 12.82% driven by a healthy asset turnover of 1.461 and modest financial leverage of 1.34x, while net margin contraction limited overall ROE upside. Liquidity remains strong: the current ratio is 390% and working capital is ¥1,043m, supported by current assets of ¥1,402m versus current liabilities of ¥359m. The balance sheet is conservatively structured with total liabilities of ¥415m against equity of ¥1,147m, implying a debt-to-equity ratio of 0.36x and an equity ratio that, based on reported assets and equity, would approximate the high-70% range. Operating cash flow was ¥31m, only 0.21x net income, indicating weak cash conversion this period, likely due to working capital buildup (e.g., receivables timing) typical in growing consulting businesses. Free cash flow was modestly negative at -¥16m after ¥47m of investing outflows. Financing cash flow was -¥126m, suggesting outflows related to debt repayments, lease payments, or equity-related cash movements; no dividend was paid (DPS 0), consistent with reinvestment priorities. Interest expense was minimal at ¥0.8m, yielding very strong interest coverage of approximately 247x on operating income. Depreciation and amortization were only ¥2.1m, underscoring the asset-light nature of operations and indicating that EBITDA (¥204.1m, 9.1% margin) is close to EBIT. Using income tax expense of ¥61.3m versus ordinary income suggests an effective tax rate around 30%, despite the zero shown in the summary line (which appears to be an unreported field). Overall, the company balances double-digit revenue growth and solid ROE with near-term margin pressure and weak cash conversion. Strategic reinvestment in capacity and capabilities likely weighed on profitability in the year but positions the company for medium-term growth. Data limitations exist (e.g., equity ratio, cash balance, and share counts shown as zero reflect unreported fields), but available figures support a view of strong financial health, low leverage, and manageable cash flow headwinds tied to working capital. The outlook hinges on utilization, pricing, and SG&A discipline to translate revenue growth into improved operating leverage.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 6.57% (Net income ¥147m / Revenue ¥2,239m)
• asset_turnover: 1.461x (Revenue ¥2,239m / Total assets ¥1,533m)
• financial_leverage: 1.34x (Total assets ¥1,533m / Equity ¥1,147m)
• calculated_ROE: 12.82% (matches provided DuPont result) margin_quality: Gross margin of 48.6% is strong for consulting, reflecting high value-add services and low direct cost base. Operating margin compressed to ~9.0% as SG&A rose faster than revenue, implying increased hiring, compensation, or go-to-market spend. Net margin of 6.57% was affected by SG&A and a normalized tax burden (~30% by our calculation). operating_leverage: Negative operating leverage this year: revenue +11.0% YoY while operating income -12.4% YoY. This indicates fixed and semi-fixed costs (notably personnel and sales-related expenses) grew ahead of revenue. With utilization and pricing improvements, operating leverage could recover, given the asset-light cost structure (D&A only ¥2.1m).

Growth Assessment

revenue_sustainability: Topline growth of +11.0% YoY suggests steady client demand in core advisory domains. High gross margin indicates services remain premium and differentiated, supporting sustainability if utilization and headcount are well managed. profit_quality: Ordinary income closely tracks operating income, with negligible interest expense, suggesting earnings quality is primarily driven by core operations rather than financial items. However, the gap between earnings and cash flow (OCF/NI 0.21x) signals timing-related cash conversion issues that need monitoring. outlook: Assuming stable demand, incremental headcount/productivity gains and pricing discipline could restore operating leverage. Profit growth will depend on controlling SG&A growth relative to revenue and accelerating collections to improve cash conversion. A normalized tax rate near 30% is assumed in forward comparisons.

Financial Health

liquidity: Current assets ¥1,402m vs. current liabilities ¥359m yields a current ratio of 390% and quick ratio of 390% (inventories unreported). Working capital is sizeable at ¥1,043m, indicating ample short-term liquidity. solvency: Total liabilities ¥415m vs. equity ¥1,147m implies a debt-to-equity ratio of 0.36x and an inferred equity ratio in the high-70% range based on reported assets and equity (the 0.0% shown appears unreported). Interest coverage is very strong at ~247x, reflecting minimal financial risk. capital_structure: The company is conservatively financed with low leverage and predominantly equity-funded assets. Limited D&A (¥2.1m) and minimal interest expense (¥0.8m) are consistent with an asset-light advisory model.

Cash Flow Quality

earnings_quality: OCF of ¥31m vs. net income of ¥147m (OCF/NI = 0.21x) indicates weak cash conversion, likely driven by higher receivables and work-in-progress typical around fiscal year-end and in growth phases. FCF_analysis: Free cash flow was -¥16m (OCF ¥31m minus investing outflows ¥47m). Investing cash flows appear modest, consistent with limited capex needs; negative FCF is manageable given strong liquidity. working_capital: Current assets significantly exceed current liabilities, but cash conversion lag suggests an increase in trade receivables or contract assets. Focus on billing cycle, DSO, and milestone timing should support OCF normalization.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is 0 and payout ratio shows as 0% (no distribution). With net income of ¥147m and modest negative FCF this year, the company appears to prioritize reinvestment over shareholder distributions. FCF_coverage: FCF coverage of dividends is not applicable given no dividend. With improving OCF, potential capacity for distributions could emerge, but sustainable dividends would require consistent positive FCF and stable working capital. policy_outlook: Given growth investments, asset-light model, and low leverage, maintaining a conservative payout (or retaining earnings) is consistent with scaling the business; any future policy shift would depend on cash conversion and visibility on demand.

Risk Assessment

Business Risks:

• Utilization and pricing risk in consulting engagements affecting margins
• Wage inflation and talent retention impacting SG&A and profitability
• Project timing/deferral leading to revenue and cash flow volatility
• Client concentration and renewal risk typical in advisory businesses
• Macroeconomic slowdown reducing discretionary consulting spend
• Regulatory or listing market cycles affecting IPO/J-SOX related demand
• Competitive intensity from larger consulting firms and boutiques

Financial Risks:

• Weak cash conversion (OCF/NI 0.21x) driven by receivables timing
• Working capital swings leading to volatile OCF and FCF
• Limited tangible asset base, increasing reliance on human capital
• Potential exposure to unreported lease liabilities or performance guarantees
• Sensitivity to tax rate normalization (~30%) on net profit

Key Concerns:

• Operating margin compression despite double-digit revenue growth
• Sustained improvement in collections/DSO needed to bolster OCF
• Maintaining operating leverage while scaling headcount

Investment Implications

Key Takeaways:

• Topline growth healthy at +11.0% YoY with high gross margin (48.6%).
• ROE of 12.82% supported by strong asset turnover and low leverage.
• Operating margin compressed to ~9% as SG&A growth outpaced revenue.
• Cash conversion weak (OCF/NI 0.21x); FCF slightly negative at -¥16m.
• Balance sheet conservative (D/E 0.36x) and liquidity strong (current ratio 390%).
• Tax burden appears normalized at ~30% despite the zero shown in summary.
• No dividend, consistent with reinvestment to support growth.

Metrics to Watch:

• Utilization rate and average billing rate
• SG&A-to-revenue ratio and headcount growth vs. revenue growth
• Days sales outstanding (DSO) and receivables turnover
• Operating margin and EBITDA margin progression
• Order backlog / pipeline indicators and client concentration
• OCF/NI ratio and free cash flow consistency

Relative Positioning: Among domestic advisory peers, the company exhibits above-average gross margins and solid ROE with a conservative balance sheet; however, it currently trails best-in-class operators on operating leverage and cash conversion, making margin discipline and working-capital efficiency key differentiators to close the gap.

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