Business Coach Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥2.00B
• Operating Income: ¥163M
• Net Income: ¥33M
• EPS: ¥111.53

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

Verdict: A strong FY2025 Q4 finish with double-digit topline growth and more than doubling of profits, albeit with softer cash conversion. Revenue rose 25.2% YoY to 20.03, gross profit reached 12.49, and operating income climbed 105.1% YoY to 1.63. Ordinary income increased 125.8% to 1.78, and net income jumped 127.7% to 1.23, underscoring robust operating leverage. Calculated operating margin improved to roughly 8.1% (vs. an implied ~5.0% last year), while net margin rose to 6.1% (vs. an implied ~3.4%), reflecting significant margin expansion. We estimate operating margin expanded by about 317 bps and net margin by about 278 bps YoY based on the reported growth rates and revenue base. Gross margin remained elevated at 62.3%, suggesting a healthy mix and pricing in the period. EBITDA was 1.90 with a 9.5% margin, indicating solid underlying profitability relative to the company’s size. Balance sheet strength is notable: current ratio at 327.8% and D/E at 0.30x, supported by 4.84 in cash, provides high financial flexibility. ROE at 15.9% (DuPont: 6.1% margin × 2.00x asset turnover × 1.30x leverage) is attractive, driven primarily by strong asset turnover and improved margins rather than leverage. Cash flow quality is a watchpoint: OCF of 0.91 vs. NI of 1.23 yields an OCF/NI ratio of 0.74x (<0.8 threshold), signaling weaker conversion this quarter. Free cash flow of 1.11 was positive and more than covered implied dividends (calculated payout ~46%) and minimal capex (0.01), but the Investing CF inflow of 0.20 suggests possible one-time support. Non-operating items were modest (0.15 income, 0.01 expense), so earnings quality is predominantly operating in nature. Liquidity risk appears low with current assets of 7.59 comfortably exceeding current liabilities of 2.32. Forward-looking, sustaining the expanded operating margin while normalizing cash conversion will be key to maintaining ROE in the mid-teens. With small scale (assets 10.02) and a people-centric model, the company remains sensitive to SG&A scaling and demand cycles, but the quarter’s results indicate healthy demand and cost discipline.

Profitability Analysis

ROE decomposition: 15.9% ROE = 6.1% net profit margin × 1.999x asset turnover × 1.30x financial leverage. The largest positive change vs. last year is the margin component: net income rose 127.7% against 25.2% revenue growth, implying notable margin expansion. Business drivers likely include operating leverage from revenue scale and disciplined SG&A relative to gross profit, as well as limited interest burden (interest expense ~0.00). Asset turnover at ~2.0x remains a key structural strength, reflecting efficient use of a small asset base (10.02) to generate sales (20.03). The leverage component is modest at 1.30x, indicating ROE is quality-driven (margin and turnover) rather than financial leverage. Estimated operating margin expanded ~317 bps YoY (to ~8.1% from ~5.0%), while estimated net margin expanded ~278 bps (to 6.1% from ~3.4%), consistent with ordinary income growth of 125.8% YoY. Sustainability: Partially sustainable if revenue growth persists and SG&A remains controlled; however, coaching/training businesses can face wage inflation and hiring costs that pressure margins. Watch for SG&A growth outpacing revenue in subsequent quarters; current period SG&A of 10.85 vs. gross profit 12.49 still leaves a narrow operating buffer. Non-operating contributions (0.15) are modest (non-operating income ratio 12.6%) and do not appear to be the main driver, which is positive for recurring profitability.

Growth Assessment

Topline growth of 25.2% YoY to 20.03 indicates solid demand momentum. Operating income grew 105.1% and net income 127.7%, evidencing strong operating leverage in the model. The 62.3% gross margin suggests favorable pricing and mix, potentially from higher value-added services, though the lack of SG&A breakdown limits attribution. Revenue sustainability will hinge on client retention, repeat engagements, and capacity scaling; small scale increases volatility risk. Profit quality: EBIT margin improved to ~8.1%, and ordinary income margin to ~8.9%; both are healthy for the size of the firm. Outlook considerations: maintaining growth while controlling personnel and delivery costs is key; watch for sequential SG&A intensity and utilization. With ROIC reported at 37.2%, current investments appear high-return, but this may normalize as the base grows. Non-operating income is small, so profit trajectory should largely track operating trends.

Financial Health

Liquidity is strong: current ratio 327.8% and quick ratio 327.8%, with cash of 4.84 versus current liabilities of 2.32. No warning triggers (Current Ratio > 1.0; D/E 0.30x well below 2.0). Solvency is conservative: long-term loans 0.06, interest coverage 815x. Working capital is 5.28, providing ample short-term cushion. Maturity mismatch risk is low given current assets of 7.59 vs current liabilities of 2.32. Note: the balance sheet presents total liabilities of 2.32 while also listing noncurrent liabilities of 1.93; this suggests reporting classification quirks in the source data. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

OCF was 0.91 versus net income of 1.23, yielding OCF/NI of 0.74x, which flags weaker cash conversion this period. Free cash flow of 1.11 was positive, aided by minimal capex (0.01) and a 0.20 investing cash inflow, which may be non-recurring (e.g., asset sale or investment redemption). FCF appears sufficient to fund dividends at a calculated payout of ~46% and maintain organic investment needs, but sustained underperformance in OCF vs NI would pressure coverage. Working capital: accounts receivable at 2.21 suggest some revenue back-end loading; without detailed WC components, we cannot isolate drivers, but timing of collections likely influenced OCF. No evident signs of aggressive working capital release; instead, cash conversion lag is the concern.

Dividend Sustainability

Dividend data is not disclosed, but the calculated payout ratio is 46.0%, which is within a generally sustainable range (<60%). FCF coverage appears comfortable at 1.96x in this period, supported by positive OCF and minimal capex. DOE reported at 0.1% looks unusually low relative to calculated payout and may reflect data label differences; we rely on the calculated payout for assessment. With strong liquidity and low leverage, the company has capacity to maintain dividends, assuming cash conversion normalizes and investing CF is not dependent on one-offs. Policy outlook cannot be inferred due to missing DPS history.

Risk Assessment

Business Risks:

• Demand cyclicality for corporate training/coaching services affecting revenue visibility
• Capacity and talent constraints driving wage inflation and SG&A pressure
• Small scale (assets 10.02) leading to higher earnings volatility
• Potential client concentration risk typical for B2B services (not disclosed)

Financial Risks:

• Cash conversion risk: OCF/NI at 0.74x below 0.8 threshold
• Goodwill/intangible asset impairment risk (goodwill 0.79; intangibles 0.64)
• Reliance on investing cash inflows (0.20) that may be one-time
• Data classification quirks in liabilities may mask duration structure

Key Concerns:

• Sustainability of margin expansion if SG&A scales ahead of revenue
• Working capital management and receivables collection timing
• Maintaining ROE mid-teens without increasing leverage

Investment Implications

Key Takeaways:

• Strong growth and operating leverage drove ROE to 15.9% with modest leverage (1.30x)
• Meaningful margin expansion: operating margin ~+317 bps YoY; net margin ~+278 bps
• Cash conversion below par (OCF/NI 0.74x) is the main quality overhang
• Balance sheet is robust with net cash position and ample liquidity
• FCF positive and appears to cover dividends and capex comfortably in this period

Metrics to Watch:

• OCF/NI and working capital days (AR collection)
• SG&A growth versus revenue growth
• Operating margin sustainability and utilization rates
• Recurring versus one-time components in Investing CF
• Client concentration and backlog/booking indicators

Relative Positioning: Within small-cap professional services/HR development peers, the company shows above-average ROE driven by efficient asset use and improved margins, coupled with a conservative balance sheet; however, it trails best-in-class on cash conversion consistency, which tempers the otherwise strong quality profile.

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