Simplex (4373) Q1 2025 earnings summary

Executive summary

• Achieved record Q1 FY3/25 revenue of ¥10.95bn, up 16.5% year-over-year, driven by strong System Integration, Operation Service, and new Strategy/DX Consulting contracts.

• Operating profit was ¥1.63bn, down 4.8% year-over-year, mainly due to increased R&D and one-time SG&A expenses, with operating margin at 14.8%.

• Profit attributable to owners of parent was ¥1.07bn, down 5.9% year-over-year.

• Strategy/DX Consulting and Enterprise DX showed strong growth, while Insurance saw a planned decline.

Financial highlights

• Gross profit rose 9.5% year-over-year to ¥4.55bn; gross margin declined to 41.5%.

• SG&A expenses increased 14% year-over-year, mainly due to office expansion and mid-career recruitment.

• R&D expenses surged 56.2% year-over-year, reflecting accelerated investment in insurance solutions.

• Q1 orders received reached ¥13.0bn, up 24.1% year-over-year; outstanding project orders hit a record ¥21.1bn.

• Cash and cash equivalents at quarter-end were ¥10.91bn, down ¥1.03bn year-over-year.

Outlook and guidance

• Full-year FY3/25 revenue forecast maintained at ¥46.0bn (+13.0% year-over-year), with operating profit projected at ¥10.6bn (+19.8%).

• Profit attributable to owners of parent is projected at ¥7.28bn (+17.5%), with basic EPS of ¥123.97.

• Dividend forecast for FY3/25 is ¥50 per share, up from ¥42 last year.

• Revenue and profit expected to be weighted toward the second half as new hires are assigned to projects and SG&A normalizes.

• Strategy/DX Consulting revenue share expected to rise to 16% in FY3/25, supporting higher gross margins.