Digital Plus Inc

Digital Plus Inc has a liquidity profile that is marginally stable, with a current ratio of 1.15, indicating that its current assets slightly exceed its current liabilities. However, the company's free cash flow is negative at -1.75 million JPY, and its operating cash flow is only 1.21 million JPY, suggesting limited capacity to fund operations without external financing. The company's debt-to-equity ratio is 0.98, which is relatively balanced, but the presence of long-term debt at 473.08 million JPY raises concerns about long-term solvency.

In terms of profitability, Digital Plus Inc's return on equity is 0.4%, and its return on assets is 0.12%, both of which are below the industry benchmarks for IT services and consulting. The company's net income is only 1.92 million JPY, which is significantly lower than its operating income of 27.34 million JPY, indicating high operating expenses or non-operating losses. The gross profit margin is 84.6%, which is strong, but the net profit margin is a mere 0.93%, highlighting inefficiencies in cost management or one-time expenses.

The company's revenue is concentrated in a single business segment, IT services and consulting, with no disclosed geographic diversification. This lack of diversification increases the risk of revenue volatility due to market-specific downturns or client concentration. The absence of segment-specific financial data makes it difficult to assess the performance of different parts of the business.

Looking at the growth trajectory, the company's recent revenue of 205.37 million JPY is significantly higher than the analyst-estimated 933.14 million JPY, suggesting a potential discrepancy in reporting or a one-time revenue spike. The outlook for the current fiscal year is uncertain, with no clear direction provided in the available data. The company's capital expenditure of -41.62 million JPY indicates a reduction in investment, which could signal a strategic shift or financial constraints.

The risk assessment highlights a medium liquidity risk, primarily due to the negative free cash flow and the key flag of net cash being negative after subtracting total debt. The dilution risk is low, with no significant changes in shares outstanding between basic and diluted figures. However, the company's financial flexibility is constrained by its debt obligations, and any further debt financing could increase the risk of dilution or financial distress.

Recent events, as reflected in the financial data, show a significant drop in the last actual EPS to -16.73 JPY, indicating a loss per share. This is a concerning trend for investors and suggests that the company may be facing operational challenges or market pressures. The discrepancy between the reported revenue and the analyst estimate also raises questions about the accuracy of the financial reporting or the timing of revenue recognition.

Revenue grew at a 32.4% CAGR over four years, demonstrating strong top-line expansion momentum.

Gross profit reached 750.4 billion JPY in FY2025, maintaining high gross margins despite revenue growth.

Dilution risk is assessed as low, suggesting limited immediate threat to existing shareholder equity value.

Long-term debt surged to 1.36 trillion JPY in FY2025, creating a high credit risk profile.

Debt-to-equity ratio of 0.98 is in the bottom quartile, far exceeding the 0.12 cohort median.

ROE of 0.4% is well below the 4.3% cohort median, indicating poor capital efficiency.

Revenue ¥332.8M, +39,4% YoY; Operating income +188,9% YoY.

• ▍Revenue ¥332.8M, +39,4% YoY
• ▍Operating income +188,9% YoY
• ▍Net income +187,1% YoY
• ▍Free cash flow +129,2% YoY
• ▍Net margin 3.2%

Revenue ¥279.6M, +27,4% YoY; Operating income +5 873,2% YoY.

• ▍Revenue ¥279.6M, +27,4% YoY
• ▍Operating income +5 873,2% YoY
• ▍Net income +1 388,6% YoY
• ▍Free cash flow +118,8% YoY
• ▍Net margin 10.3%

Revenue ¥186.2M, −11,5% YoY; Operating income −327,3% YoY.

• ▍Revenue ¥186.2M, −11,5% YoY
• ▍Operating income −327,3% YoY
• ▍Net income −564,0% YoY
• ▍Free cash flow −744,5% YoY
• ▍Net margin -30.3%

Revenue ¥228.6M, +11,3% YoY; Operating income −128,2% YoY.

• ▍Revenue ¥228.6M, +11,3% YoY
• ▍Operating income −128,2% YoY
• ▍Net income −1 737,3% YoY
• ▍Free cash flow −2 782,7% YoY
• ▍Net margin -13.7%

Revenue ¥238.8M; Operating income ¥8.5M.

• ▍Revenue ¥238.8M
• ▍Operating income ¥8.5M
• ▍Net margin -5.1%

Revenue ¥219.4M; Operating income -¥665.0k.

• ▍Revenue ¥219.4M
• ▍Operating income -¥665.0k
• ▍Net margin -1.0%

Revenue ¥210.4M; Operating income ¥18.9M.

• ▍Revenue ¥210.4M
• ▍Operating income ¥18.9M
• ▍Net margin 5.8%

Revenue ¥205.4M; Operating income ¥27.3M.

• ▍Revenue ¥205.4M
• ▍Operating income ¥27.3M
• ▍Net margin 0.9%

Revenue ¥933.1M, +11,3% YoY; Operating income −107,3% YoY.

• ▍Revenue ¥933.1M, +11,3% YoY
• ▍Operating income −107,3% YoY
• ▍Net income −436,6% YoY
• ▍Free cash flow −496,1% YoY
• ▍Net margin -7.6%

Revenue ¥838.5M, +26,0% YoY; Operating income +121,4% YoY.

• ▍Revenue ¥838.5M, +26,0% YoY
• ▍Operating income +121,4% YoY
• ▍Net income +107,6% YoY
• ▍Free cash flow +119,9% YoY
• ▍Net margin 2.5%

Revenue ¥665.5M, +6,7% YoY; Operating income −90,2% YoY.

• ▍Revenue ¥665.5M, +6,7% YoY
• ▍Operating income −90,2% YoY
• ▍Net income −37,2% YoY
• ▍Free cash flow +8,7% YoY
• ▍Net margin -41.6%

Revenue ¥623.9M, +105,8% YoY; Operating income +15,3% YoY.

• ▍Revenue ¥623.9M, +105,8% YoY
• ▍Operating income +15,3% YoY
• ▍Net income −704,7% YoY
• ▍Free cash flow −361,8% YoY
• ▍Net margin -32.4%