Softmax Co., Ltd. (Japan) (3671) AI Stock Analysis

• Market Cap: ¥7.62B
• Dividend Yield: 8.09%
• Average Volume (3M): 140.46K
• Price to Earnings (P/E): 14.0
• Beta (1Y): 0.43
• Revenue Growth: 32.95%
• EPS Growth: 45.22%
• Country: JP
• Employees: 220
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Healthcare Information Services
• EPS (TTM): 7.43
• Shares Outstanding: 24,050,800
• 10 Day Avg. Volume: 144,320
• 30 Day Avg. Volume: 140,460
• PEG Ratio: 0.73
• Price to Book (P/B): 2.04
• Price to Sales (P/S): 1.16
• P/FCF Ratio: 20.85
• 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): N/A
• Revenue Forecast (FY): N/A

• Rating: 62 Neutral
• Price Target: ¥355.00 ▲(6.29% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is driven primarily by weakening financial trends in 2025 (revenue decline, margin pressure, softer operating cash flow, and higher leverage), partially offset by a reasonable valuation (P/E ~14) and dividend yield (~3%). Technical signals are neutral-to-weak, reinforcing near-term caution.

Positive Factors

Stable profitability margins

Consistent net margins near 8–9% and EBIT in the low-teens across multiple years indicate a resilient profit model and structural cost controls. This durability supports predictable earnings and earnings quality, helping the business absorb cyclical volatility over the next 2–6 months.

High free cash flow conversion

Very strong FCF conversion versus net income shows reported profits translate into cash, supporting dividends, any necessary capex, and potential debt paydown. Reliable cash generation strengthens financial flexibility and resilience to medium-term shocks.

Historically healthy ROE and scale growth

Mid-teens ROE and expanding asset/equity base reflect effective capital allocation and business scale. Persistent above-average returns suggest sustainable competitive advantages or operational efficiency that support medium-term profitability and reinvestment capacity.

Negative Factors

Sharp 2025 revenue decline

A 22% revenue drop in the most recent year signals meaningful demand or contract loss that can structurally impair growth momentum. If persistent, revenue contraction pressures operating leverage, investment plans, and the company’s ability to maintain prior margin and cash generation levels.

Rising financial leverage

A material step-up in leverage reduces financial flexibility and raises interest exposure, limiting room to maneuver if revenues or margins remain weak. Higher debt amplifies downside risk and could force tighter capital allocation over the medium term.

Deteriorating operating cash flow

A sharp fall in operating cash flow reduces internal funding capacity and increases reliance on external financing. Lower OCF relative to revenue undermines the strong FCF conversion story if the trend continues, constraining dividends, capex, and debt reduction plans.

Softmax Co., Ltd. (Japan) Business Overview & Revenue Model

Company Description

Softmax Co., Ltd develops, sales, introduction, and maintenance of corporate systems. It is also involved in medical information system development. The company also offers web based electronic medical record system, web based ordering system, medical accounting, radiology information, rehabilitation department system, health check-up system, nursing work management system, and surgical department system. Softmax Co., Ltd was incorporated in 1974 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Softmax Co., Ltd. generates revenue through multiple streams, primarily from software licensing, subscription models, and consulting services. The company earns money by selling licenses for its proprietary software solutions, which are used by businesses to improve their operational efficiency. Additionally, Softmax offers subscription-based services for its cloud-based applications, providing customers with ongoing access to updates and support. Consulting services also contribute significantly to its revenue, as the company assists clients in integrating and customizing software solutions to meet their specific needs. Strategic partnerships with other technology firms and collaborations with industry leaders further enhance its market reach and create additional revenue opportunities.

Softmax Co., Ltd. (Japan) Financial Statement Overview

Summary

Profitable with generally steady historical margins and good free cash flow conversion versus earnings, but 2025 showed a sharp 22% revenue decline, margin compression, weaker operating cash flow, and higher leverage (debt-to-equity rising to ~0.63).

Income Statement

Profitability is solid and fairly steady, with net margins staying in the ~8–9% range from 2020–2025 and EBIT margin generally in the low-teens. However, the growth profile weakened materially in the latest year: revenue declined 22% in 2025 (annual) after modest growth in 2023–2024, and margins also compressed (gross margin fell to ~26.9% in 2025 from ~30.8% in 2024). Overall, the company remains profitable, but the sharp 2025 revenue drop and margin pressure weigh on the score.

Balance Sheet

The balance sheet shows moderate leverage and improving scale (assets and equity have grown over time), but debt has risen notably in the most recent year. Debt-to-equity increased to ~0.63 in 2025 (annual) from ~0.40–0.46 in 2022–2024, indicating a higher reliance on borrowing. Returns on equity were healthy in 2021–2024 (mid-teens), supporting underlying business quality, but the step-up in leverage adds financial risk if earnings volatility persists.

Cash Flow

Cash conversion is mixed. Free cash flow tracks net income well (free cash flow is ~91–99% of net income across 2021–2025), which is a positive indicator of earnings quality. The key weakness is low operating cash flow relative to revenue (roughly mid-single digits in recent years) and a deterioration in 2025, when operating cash flow fell to 389M from 663M in 2024 and represented a smaller share of net income than in 2024. Cash generation is positive, but consistency and operating cash flow strength are the main watch items.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	6.94B	6.93B	5.43B	5.26B	5.05B	4.49B
Gross Profit	1.88B	1.86B	1.66B	1.55B	1.43B	1.44B
EBITDA	942.98M	784.12M	702.47M	621.88M	571.83M	612.45M
Net Income	646.32M	573.46M	480.15M	452.77M	419.39M	422.55M
Balance Sheet
Total Assets	7.04B	9.13B	7.54B	6.72B	6.55B	5.76B
Cash, Cash Equivalents and Short-Term Investments	3.11B	3.12B	3.45B	2.92B	2.85B	2.76B
Total Debt	1.00B	2.48B	1.41B	1.33B	1.35B	1.38B
Total Liabilities	3.38B	5.20B	4.02B	3.50B	3.61B	3.14B
Stockholders Equity	3.65B	3.93B	3.52B	3.22B	2.94B	2.62B
Cash Flow
Free Cash Flow	0.00	384.89M	625.84M	215.28M	163.96M	266.65M
Operating Cash Flow	0.00	388.95M	663.98M	232.54M	179.73M	284.30M
Investing Cash Flow	0.00	-1.17B	-92.76M	-11.61M	-4.75M	-1.01M
Financing Cash Flow	0.00	883.56M	-100.22M	-200.04M	-144.93M	-401.85M

Softmax Co., Ltd. (Japan) Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 334.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3671, the sentiment is Negative. The current price of 334 is above the 20-day moving average (MA) of 321.55, below the 50-day MA of 336.02, and above the 200-day MA of 328.57, indicating a bearish trend. The MACD of -1.59 indicates Negative momentum. The RSI at 45.08 is Neutral, neither overbought nor oversold. The STOCH value of 57.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3671.

Softmax Co., Ltd. (Japan) Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9341	70 Outperform	¥10.61B	38.97	―	5.30%	0.09%	-48.79%
3902	63 Neutral	¥65.59B	228.03	―	0.39%	6.17%	-8918.66%
4483	63 Neutral	¥214.31B	26.76	―	0.43%	20.55%	48.62%
3671	62 Neutral	¥7.62B	13.99	―	8.09%	32.95%	45.22%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
4480	51 Neutral	¥57.19B	77.03	5.76%	―	31.95%	-40.95%
4438	50 Neutral	¥2.91B	-4.28	―	―	16.19%	-4.42%