GMO Pepabo, Inc. (3633) AI Stock Analysis

• Market Cap: ¥10.84B
• Dividend Yield: 2.16%
• Average Volume (3M): 25.29K
• Price to Earnings (P/E): 12.1
• Beta (1Y): 0.60
• Revenue Growth: 2.75%
• EPS Growth: 25.24%
• Country: JP
• Employees: 338
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 23.36
• Shares Outstanding: 5,468,700
• 10 Day Avg. Volume: 16,420
• 30 Day Avg. Volume: 25,286
• PEG Ratio: 0.26
• Price to Book (P/B): 4.15
• Price to Sales (P/S): 1.06
• P/FCF Ratio: 8.48
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 133.6
• Revenue Forecast (FY): ¥10.87B

• Rating: 65 Neutral
• Price Target: ¥2,192.00 ▼(-1.79% Downside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

The score is led by improved financial fundamentals (margin recovery, better leverage, and solid 2025 free cash flow) and supportive valuation (low P/E with a ~3.29% yield). These positives are offset by weak technicals (below key moving averages and negative MACD) and limited revenue growth, which reduce confidence in near-term momentum.

Positive Factors

Margin recovery and resilient unit economics

Recovering net and operating margins alongside steady gross margins (53–58%) indicate durable unit economics. This suggests the company can sustain profitability through cost control and pricing power in its hosting/domain business, supporting long-term earnings stability if revenue steadies.

Improved leverage and balance sheet

A materially lower debt-to-equity (0.31 vs 0.82) reduces financial risk and interest burden, increasing strategic flexibility for reinvestment or shareholder returns. A stronger balance sheet improves resilience to shocks and supports sustained operating plans over the medium term.

Solid free cash flow generation

Robust FCF that approximates net income demonstrates earnings quality and internal funding capacity. Reliable cash generation supports capex, platform improvements, and optional shareholder returns, reducing reliance on external financing for durable business operations.

Negative Factors

Stagnant to slightly down revenue

Limited top-line growth constrains scalability: without sustained revenue expansion, margin gains must come from cost cuts, limiting long-term upside. For platform businesses, growth is essential to leverage fixed costs and expand market share among SMB and creator customers.

Historical cash-flow volatility

Material swings in operating and free cash flow reduce predictability for capex, dividends, and debt service. Volatility signals sensitivity to working-capital and timing effects, raising execution risk and necessitating consistent earnings to lock in recent balance-sheet improvements.

Volatile historical leverage

Prior episodes of much higher debt show leverage can worsen if cash flow or earnings deteriorate. This history elevates refinancing and interest-rate risk if growth stalls, meaning management must sustain profits to prevent balance-sheet deterioration over the medium term.

GMO Pepabo, Inc. Business Overview & Revenue Model

Company Description

GMO Pepabo, Inc. provides consumer-targeted Internet services in Japan. It operates through four segments: Hosting, Ecommerce Support, Customer to Customer (C2C), and Community. The Hosting segment offers consumer domain registration and web hosting services. The Ecommerce Support segment provides ecommerce platform solutions. The C2C segment offers marketplace for handmade products. The Community segment facilitates communication among Internet users through blogging. The company was formerly known as Paperboy&Co., Inc. and changed its name to GMO Pepabo, Inc. in March 2014. The company was founded in 2003 and is headquartered in Tokyo, Japan. GMO Pepabo, Inc operates as a subsidiary of GMO Internet, Inc

How the Company Makes Money

GMO Pepabo generates revenue primarily through its diverse range of internet-related services. Key revenue streams include subscription fees from web hosting and domain registration services, which cater to both individual users and businesses. The company also earns income from e-commerce solutions, offering platforms that allow users to create online stores. Additionally, GMO Pepabo benefits from partnerships with various technology providers and has a strong presence in the Japanese market, which enhances its customer base and drives consistent revenue growth. Special promotions, value-added services, and customer retention strategies further contribute to its earnings.

GMO Pepabo, Inc. Financial Statement Overview

Summary

Profitability has rebounded strongly after 2023, with net margin ~8.0% and operating margin ~8.5% in 2025, while gross margin stayed healthy (~53–58%). Leverage improved meaningfully (debt-to-equity ~0.31 in 2025 vs. ~0.82 in 2023) and 2025 cash generation was solid (FCF ~¥1.37B, ~0.94x net income). The main constraint is flat-to-slightly down revenue and historical cash-flow volatility (notably 2022).

Income Statement

Profitability recovered meaningfully after a loss in 2023, with net margin improving to ~8.0% in 2025 (vs. ~5.4% in 2024 and negative in 2023) and operating margin back to ~8.5%. Gross margin has been steady and healthy (~53–58%) across the period, indicating resilient unit economics. The key weakness is growth: revenue has been essentially flat for several years and slightly down in 2025, suggesting limited top-line momentum despite better cost control.

Balance Sheet

Leverage looks manageable and has improved: debt-to-equity declined to ~0.31 in 2025 from ~0.82 in 2023, alongside a rising equity base. Total assets have been relatively stable, and the balance sheet appears less stretched than during the 2023 downturn. The main risk is that leverage has been volatile historically (including materially higher debt levels in 2022–2023), so continued earnings consistency matters to keep the improving trend intact.

Cash Flow

Cash generation is a clear strength recently: operating cash flow and free cash flow were solid in 2025 (~¥1.46B and ~¥1.37B), with free cash flow roughly matching net income (about 0.94x), supporting earnings quality. The weakness is variability: 2022 showed negative operating cash flow and free cash flow, and free cash flow has swung materially year to year, indicating working-capital and/or investment timing can create volatility.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	11.10B	10.96B	10.92B	10.90B	10.53B	11.88B
Gross Profit	6.00B	5.96B	5.78B	5.93B	6.08B	6.73B
EBITDA	1.53B	1.44B	1.47B	84.16M	1.12B	1.36B
Net Income	663.90M	878.44M	591.63M	-628.79M	510.09M	715.41M
Balance Sheet
Total Assets	10.98B	11.32B	11.42B	10.87B	11.44B	8.87B
Cash, Cash Equivalents and Short-Term Investments	5.04B	5.75B	4.92B	4.36B	3.61B	3.62B
Total Debt	600.00M	857.45M	1.19B	1.48B	1.57B	209.15M
Total Liabilities	8.61B	8.52B	9.03B	9.06B	8.75B	5.92B
Stockholders Equity	2.37B	2.80B	2.39B	1.81B	2.69B	2.93B
Cash Flow
Free Cash Flow	0.00	1.37B	901.23M	1.38B	-708.88M	338.84M
Operating Cash Flow	0.00	1.46B	1.21B	1.78B	-213.40M	669.08M
Investing Cash Flow	0.00	236.62M	-292.00M	-325.63M	-510.15M	-278.35M
Financing Cash Flow	0.00	-859.23M	-361.39M	-702.63M	712.28M	-392.52M

GMO Pepabo, Inc. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 2232.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3633, the sentiment is Neutral. The current price of 2232 is above the 20-day moving average (MA) of 2056.35, above the 50-day MA of 2158.64, and above the 200-day MA of 1840.45, indicating a neutral trend. The MACD of -32.31 indicates Negative momentum. The RSI at 42.71 is Neutral, neither overbought nor oversold. The STOCH value of 18.21 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:3633.

GMO Pepabo, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4431	75 Outperform	¥49.71B	28.22	―	0.52%	26.98%	19.69%
3633	65 Neutral	¥10.84B	12.15	―	2.16%	2.75%	25.24%
3769	64 Neutral	¥613.64B	27.38	19.76%	1.47%	11.81%	16.69%
3665	61 Neutral	¥17.95B	90.38	―	2.31%	9.71%	-70.49%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4434	61 Neutral	¥16.36B	-46.59	―	―	―	―
3778	52 Neutral	¥120.74B	162.31	―	0.14%	36.42%	28.23%

GMO Pepabo, Inc. Corporate Events

GMO Pepabo Boosts Profit and Dividend on Stable 2025 Sales

GMO Pepabo reported flat net sales of ¥10.96 billion for the year ended 31 December 2025, but sharply higher profitability, with operating profit up 12.5% to ¥932 million and profit attributable to owners of parent surging 48.5% to ¥878 million. The company strengthened its financial base, lifting its equity ratio to 24.7%, growing year-end cash and cash equivalents to ¥5.75 billion, and more than doubling the annual dividend to ¥111 per share, including a special payout.

The group also recorded higher net assets, reflecting improved earnings and capital efficiency, while reshaping its consolidation scope by adding CN Inc. and excluding GMO Creators Network, Inc. For 2026, Pepabo forecasts modest sales growth to ¥11.0 billion and a further rise in operating profit to ¥1.05 billion, but projects lower ordinary profit and net income as profitability normalizes after the strong 2025 results.

The most recent analyst rating on (JP:3633) stock is a Buy with a Yen2442.00 price target. To see the full list of analyst forecasts on GMO Pepabo, Inc. stock, see the JP:3633 Stock Forecast page.