ibis inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥3.64B
• Operating Income: ¥847M
• Net Income: ¥566M
• EPS: ¥30.91

Income Statement

Balance Sheet

Profitability Ratios

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

Verdict: A strong and clean quarter with high margins, robust profitability, and a fortress balance sheet, albeit with limited cash flow and dividend disclosures that temper conviction on earnings quality and payout sustainability. Revenue was 36.38, yielding gross profit of 21.99 and operating income of 8.47, translating to a gross margin of 60.5% and an operating margin of roughly 23.3%. Net income came in at 5.65, implying a net margin of 15.5% and an effective tax rate of 33.8%. Ordinary income was 8.52, and non-operating items were immaterial (income 0.07; expenses 0.03), confirming that performance was driven by the core business. ROE calculated via DuPont was 21.9%, underpinned primarily by a strong margin profile and modest leverage of 1.35x. Asset turnover of 1.05 indicates decent capital efficiency for a software/digital-service-heavy model with limited inventories. Balance sheet strength is notable: cash and deposits of 20.10 against total assets of 34.64 and current liabilities of 8.17 yields ample liquidity and a net cash position. Current ratio of 323.5% and quick ratio of 323.3% underscore very low short-term refinancing risk. Interest coverage is extremely high at 2406x, consistent with de minimis interest burden. Earnings quality cannot be verified because operating cash flow and free cash flow were not disclosed this quarter; hence OCF vs net income divergence cannot be assessed. Dividend data were not disclosed, but a calculated payout ratio of 129.6% suggests potential over-distribution versus earnings if accurate; cash on hand could bridge near term, but sustainability would depend on underlying OCF. Margin expansion or compression versus prior periods cannot be determined due to missing YoY/QoQ comparatives (bps change: N/A). Intangibles and goodwill are material (goodwill 4.14; intangible assets 6.12), introducing future impairment sensitivity if growth slows. Forward-looking, the company appears well positioned to fund growth organically given net cash and high margins, but the absence of cash flow disclosure and firm dividend policy metrics are the key missing pieces for assessing durability.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 15.5% × 1.05 × 1.35 ≈ 21.9%. Composition: the margin component is the dominant driver, followed by moderate asset efficiency and modest leverage. Change analysis: prior-period breakdowns were not disclosed, so we cannot quantify which component changed the most. Business interpretation: a 60.5% gross margin and ~23.3% operating margin suggest a high value-add/services or software-oriented model with limited COGS and disciplined SG&A. Non-operating impacts are minimal, so operating leverage appears healthy and quality of earnings (within the P/L) is strong. Sustainability: margins at these levels can be sustained if pricing power and utilization remain intact and SG&A growth is controlled; however, elevated intangibles/goodwill point to acquisition/IP-driven earnings that carry potential impairment risk if KPIs soften. Watch-outs: we cannot verify whether SG&A growth exceeded revenue growth this quarter due to undisclosed YoY data. Operating leverage looks constructive in the current snapshot, but we need trend data to confirm durability.

Growth Assessment

Top-line of 36.38 with operating income of 8.47 signals strong unit economics, but the absence of YoY or segment disclosures limits visibility on the growth mix. Profit quality within the income statement is high: negligible non-operating contribution and minimal interest burden indicate core operations drove the quarter. Without OCF/FCF data, sustainability of growth investment is inferred from the net cash position rather than confirmed by internal funding capacity. Outlook hinges on maintaining pricing, user/activity metrics (if app/software-driven), and scaling without SG&A diluting margins. Tax rate at 33.8% may normalize near this level; any tax credits or incentives could create upside variability. Given goodwill and intangibles are sizable, inorganic contributions may be present; organic growth confirmation will require future disclosure of KPIs or segment detail. In sum, fundamentals look solid for continued profitable growth, contingent on execution and maintaining demand momentum.

Financial Health

Liquidity is very strong: current ratio 323.5% and quick ratio 323.3%; no warning triggers (Current Ratio well > 1.0). Solvency is conservative with D/E of 0.35x and long-term loans of 0.11 against equity of 25.74. Cash and deposits of 20.10 comfortably exceed current liabilities of 8.17, indicating low maturity mismatch risk and a net cash posture. Interest coverage at 2406x suggests negligible financial stress. No off-balance sheet obligations were disclosed; absence of such data means potential leases or guarantees cannot be fully ruled out. Equity base is healthy (owners’ equity 25.13), with retained earnings of 17.36 supporting resilience. No red flags on leverage or liquidity.

Cash Flow Quality

Operating cash flow and free cash flow were not disclosed, so OCF/Net Income and FCF coverage cannot be calculated. As such, we cannot confirm whether accruals or working capital movements are boosting earnings. Working capital appears ample (18.25), aided by high cash; however, receivables and payables details were not reported, limiting insight into collections or payment terms. With strong margins and minimal interest outflows, underlying cash generation is likely positive, but confirmation awaits OCF disclosure. No signs of working capital manipulation can be assessed due to missing components (AR/AP/OCF).

Dividend Sustainability

Dividend per share and total dividends paid were not disclosed, but the provided calculated payout ratio of 129.6% implies an over-earnings payout if accurate for the period. Without OCF/FCF data, we cannot verify cash coverage; in the near term, the net cash balance (20.10) could support distributions, but sustained payout above earnings would be questionable. Policy outlook is unclear due to absent guidance; if management targets stability, a recalibration toward <60% payout (benchmark) would align with long-term sustainability. Until cash flow data is available, assess dividends as serviceable near term due to cash reserves, with medium-term sustainability unproven.

Risk Assessment

Business Risks:

• Margin sensitivity to personnel costs and SG&A scaling if growth slows
• Goodwill (4.14) and intangibles (6.12) concentration creating impairment risk in a downturn
• Dependence on potentially concentrated products/services or key platforms (e.g., app store/ecosystem policy changes) typical for software/digital businesses
• Execution risk in converting high gross margin into sustained operating leverage over time

Financial Risks:

• Limited disclosure of cash flow statements obscures earnings quality and FCF coverage
• Dividend payout ratio (calculated 129.6%) suggests potential over-distribution versus earnings if that figure reflects actual payouts
• Tax rate variability (33.8% this period) could affect net margins
• Intangible-heavy asset base can amplify volatility in equity via impairment charges

Key Concerns:

• Absence of OCF/FCF and working capital detail prevents verification of cash conversion
• No YoY comparatives or segment data to attribute growth and assess sustainability
• Potential platform/policy and privacy-related changes that could affect monetization if business relies on mobile apps/ads
• Impairment risk to goodwill/intangibles if KPIs weaken

Investment Implications

Key Takeaways:

• High-quality P/L with strong gross (60.5%) and operating (~23.3%) margins drove an ROE of 21.9%
• Core operations, not non-operating items, explain the bulk of earnings
• Balance sheet is net cash and highly liquid (current ratio 323.5%) with minimal leverage (D/E 0.35x)
• Earnings quality and dividend sustainability cannot be confirmed without OCF/FCF disclosure
• Goodwill/intangibles are material, introducing impairment sensitivity

Metrics to Watch:

• Operating cash flow, OCF/NI ratio (target >1.0)
• Free cash flow after maintenance capex versus dividends
• SG&A growth rate versus revenue growth
• Any segment/KPI disclosures (users, ARPU, retention) and pricing power indicators
• Tax rate normalization and one-offs
• Goodwill impairment testing and intangible amortization trends

Relative Positioning: Versus domestic small-cap software/digital peers on TSE Growth/Standard, the company demonstrates superior margin structure and a conservative, cash-rich balance sheet, offset by limited cash flow disclosure and above-earnings payout indications that warrant monitoring.

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