COACH A Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥2.56B
• Operating Income: ¥142M
• Net Income: ¥75M
• EPS: ¥25.35

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

Coach A Co., Ltd. (93390) reported FY2025 Q3 consolidated results under JGAAP showing resilient operating execution amid a softer top line. Revenue was ¥2,562 million, down 5.8% YoY, indicating a slowdown in demand or timing effects in project delivery. Despite the revenue contraction, operating income rose 7.2% YoY to ¥142 million, demonstrating effective cost control and improved operating efficiency. The reported gross profit was ¥1,303 million with a gross margin of 50.9%, consistent with a service-centric model, although the disclosed cost of sales figure is inconsistent with the gross profit and margin provided. Ordinary income was ¥129 million, implying modest non-operating net expense relative to operating profit. Net income declined 19.9% YoY to ¥59 million, reflecting a higher tax burden and/or adverse non-operating items. Net margin stood at 2.30%, while operating margin improved to approximately 5.5%, evidencing margin management in the core business. DuPont analysis indicates ROE of 1.90%, driven by a 2.30% net margin, 0.554x asset turnover, and 1.49x financial leverage. The balance sheet remains strong: total assets ¥4,625 million and equity ¥3,103 million imply an equity ratio around 67.1%, despite the reported equity ratio line showing 0.0% (likely not disclosed in XBRL). Liquidity is robust with a current ratio of 296% and quick ratio of 295%, supported by low inventories of ¥9 million consistent with a services model. Total liabilities are modest at ¥1,280 million, yielding a debt-to-equity ratio of 0.41x and ample working capital of ¥2,424 million. Cash flow statements were not disclosed (zeros represent non-disclosure), limiting assessment of operating cash conversion and free cash flow. Dividend was not declared (DPS ¥0), with a reported payout ratio of 0%, consistent with a reinvestment stance or pending capital policy. Overall, Coach A is navigating a revenue dip with disciplined costs, sustaining high gross margins and improving operating profit, yet net income softness and limited disclosure on cash flows temper visibility. The company’s low leverage and high liquidity provide financial flexibility to invest or weather demand variability. Key areas to monitor include revenue re-acceleration, sustainability of cost discipline, and cash generation once cash flow data are available.

Profitability Analysis

ROE decomposition (DuPont): Net margin 2.30% × Asset turnover 0.554 × Financial leverage 1.49 = ROE 1.90%. The operating margin is ~5.5% (¥142m/¥2,562m), an improvement YoY despite lower revenue, indicating positive operating leverage from cost containment and/or mix. Gross margin is high at 50.9%, consistent with a coaching/training services model; however, the disclosed cost of sales (¥1,417m) conflicts with the gross profit and margin—analysis relies on the provided gross margin/gross profit. Ordinary income margin is 5.0%, slightly below operating margin, suggesting small net non-operating expenses. Net margin at 2.30% is pressured by a relatively heavy tax burden (income tax ¥65m vs. profit before tax likely around ¥124–129m), implying an effective rate near the 50% range; the reported effective tax rate line of 0.0% reflects non-disclosure rather than reality. No interest expense was disclosed, and interest coverage displayed as 0.0x is not meaningful in this context. EBITDA was shown as 0 due to non-disclosure of depreciation, but with D&A not reported and positive operating income, underlying EBITDA is at least around the operating income level (¥142m). Overall profitability quality is stable at the gross level with improved operating efficiency, while bottom-line pressure stemmed from taxes and minor non-operating items.

Growth Assessment

Revenue declined 5.8% YoY to ¥2,562m, indicating weaker demand, client timing, or normalization post-strong comparatives. Despite top-line softness, operating income grew 7.2% YoY to ¥142m, evidencing cost discipline and potential efficiency gains, possibly from delivery productivity, pricing, or a favorable service mix. Ordinary income of ¥129m indicates limited non-operating drag; however, net income fell 19.9% YoY to ¥59m due to higher taxes and/or below-the-line factors. The sustainability of operating improvements hinges on stabilizing revenue—high gross margins provide room, but further opex efficiency gains may be incremental. Asset turnover at 0.554x is moderate for an asset-light service model, hinting at balance-sheet capacity to support growth without heavy capex. Outlook considerations: corporate training/coaching demand is cyclical with HR/L&D budgets; near-term growth will depend on client retention, new enterprise wins, and utilization rates. With liquidity strong and leverage low, the company has resources to invest in sales enablement, digital delivery, and productization to support growth. Data limitations (no segment detail, order backlog, or cash flow) constrain forward visibility; monitoring Q4 seasonality and pipeline will be key.

Financial Health

Balance sheet strength is solid: equity ¥3,103m vs. assets ¥4,625m implies an equity ratio of ~67.1% (the reported 0.0% is a non-disclosed placeholder). Total liabilities are ¥1,280m, producing a debt-to-equity ratio of 0.41x, indicating low leverage. Liquidity is ample: current ratio 296% and quick ratio 295% with minimal inventories (¥9m), consistent with a service model and significant cash/receivables within current assets. Working capital stands at ¥2,423m, offering a substantial buffer for operations and growth. No interest expense was disclosed, implying limited reliance on interest-bearing debt. Solvency risk appears low given the capital structure; the main dependency is on sustaining cash generation, which cannot be verified this quarter due to non-disclosure of cash flows.

Cash Flow Quality

Operating, investing, and financing cash flows were not disclosed (reported as zeros), so cash conversion and free cash flow cannot be assessed this period. The OCF/Net Income ratio shown as 0.00 and FCF reported as 0 are artifacts of non-disclosure rather than economic performance. Earnings quality signals from the P&L are mixed but generally acceptable: gross margins are strong and operating profit improved despite revenue decline, suggesting underlying cost control. Without OCF, we cannot test working capital drag (e.g., receivables days, deferred revenue movements) or capex intensity. Depreciation and amortization were not disclosed; given the model, capex is likely modest, but confirmation is pending. Once available, key checks will include OCF/NI >1.0 over multi-quarter periods, stable receivables turnover, and sustaining positive FCF after capex.

Dividend Sustainability

No dividend was declared (DPS ¥0) and payout ratio is 0%, consistent with either a reinvestment stance or a wait-and-see approach amid revenue softness. FCF coverage metrics cannot be assessed due to non-disclosed cash flows. The balance sheet can support future distributions if management elects, given low leverage and high liquidity; however, near-term prudence may prioritize growth investments and stabilization of top line. Policy outlook will depend on visibility into cash generation and growth opportunities; disclosure of a medium-term shareholder return policy would improve clarity.

Risk Assessment

Business Risks:

• Demand cyclicality tied to corporate HR/L&D budgets and macro conditions
• Client concentration risk typical of enterprise services (potential revenue volatility on contract timing)
• Pricing pressure and competition from consulting/training firms and digital coaching platforms
• Execution risk in scaling delivery capacity while maintaining coach quality and outcomes
• Potential shift to digital/AI-enabled solutions altering service mix and margins
• Talent acquisition and retention for qualified coaches impacting utilization and quality

Financial Risks:

• Limited visibility on cash generation due to non-disclosed cash flow statements this quarter
• Tax rate volatility impacting net income and ROE
• Working capital swings (receivables and deferred revenue) affecting OCF in services businesses
• Currency exposure if serving multinational clients (if applicable), potentially affecting margins

Key Concerns:

• Top-line decline of 5.8% YoY and the need for re-acceleration
• Inconsistency between disclosed cost of sales and gross profit/margin figures
• Net income decline (-19.9% YoY) despite higher operating income, driven by tax/non-operating items
• Lack of cash flow disclosure, limiting assessment of FCF and dividend capacity

Investment Implications

Key Takeaways:

• Resilient operating performance with operating income up 7.2% YoY despite revenue down 5.8%
• High gross margin profile (50.9%) indicative of service model strength
• ROE at 1.90% constrained by low net margin and moderate asset turnover despite low leverage
• Very strong liquidity (current ratio 296%) and low leverage (D/E 0.41x) provide flexibility
• Net income pressure from taxes/non-operating items warrants monitoring
• Data gaps (cash flows, share count metrics) limit full quality-of-earnings assessment

Metrics to Watch:

• Revenue growth re-acceleration and enterprise win rates
• Operating margin sustainability and utilization rates
• Effective tax rate normalization and drivers of below-the-line items
• OCF/Net income and FCF once cash flows are disclosed
• Receivables days and deferred revenue trends as indicators of demand and cash conversion
• Equity ratio (computed) and maintenance of low leverage

Relative Positioning: Among TSE-listed professional services/training peers, Coach A exhibits a high gross margin and conservative balance sheet, but currently delivers modest ROE due to subdued net margins and moderate asset turnover; improved cash flow disclosure and top-line stabilization would enhance comparability and valuation clarity.

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