FFRI Security, Inc. (3692) AI Stock Analysis

• Market Cap: ¥74.65B
• Dividend Yield: 0.2%
• Average Volume (3M): 975.63K
• Price to Earnings (P/E): 63.0
• Beta (1Y): 1.53
• Revenue Growth: 50.53%
• EPS Growth: 227.57%
• Country: JP
• Employees: 199
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 31.03
• Shares Outstanding: 8,190,000
• 10 Day Avg. Volume: 1,531,580
• 30 Day Avg. Volume: 975,626
• PEG Ratio: 0.67
• Price to Book (P/B): 9.76
• Price to Sales (P/S): 8.95
• P/FCF Ratio: 44.03
• 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: 73 Outperform
• Price Target: ¥10,693.00 ▲(50.61% Upside)

The score is driven mainly by strong financial performance (rapid margin expansion, improving ROE, and minimal leverage). Technicals support the trend but are overheated, adding pullback risk. Valuation is a meaningful constraint due to the high P/E and very low dividend yield.

Positive Factors

Revenue Growth Trend

Sustained double‑digit revenue growth over recent years reflects durable demand for the firm's cybersecurity products and services. This organic top‑line expansion supports scale, strengthens pricing leverage, and underpins longer‑term investment capacity and market position.

Margin Expansion & Profitability

Material improvement in operating and net margins signals structural operating leverage and a high‑margin business mix (software + professional services). Sustained margin levels enhance cash generation, ROI on product development, and the company's ability to reinvest while maintaining returns.

Very Low Leverage

An extremely low debt burden provides long‑term financial resilience and strategic optionality. Minimal interest expense preserves earnings sensitivity to growth, and the conservative capital structure reduces default risk while enabling opportunistic M&A or R&D spending without capital‑structure stress.

Negative Factors

Operating Cash-Flow Volatility

Inconsistent conversion of earnings into operating cash flow is a lasting risk: weak or volatile OCF hinders reliable funding for working capital, R&D, or expansion and could force external financing during downturns, undermining the company's ability to execute strategic plans smoothly.

Gross Margin Volatility

Visible swings in gross margin point to sensitivity to cost of sales, pricing, or customer/mix shifts. Persistent volatility in unit economics can impair forecasting, reduce free cash flow reliability, and make margins vulnerable to competitive pressure or rising input costs over the medium term.

Limited Liquidity Disclosure

Absence of explicit liquidity metrics creates a structural transparency gap. Even with negligible debt, unclear short‑term liquidity and working‑capital details make it harder to assess the firm's ability to meet near‑term obligations or seize investment opportunities without disrupting operations.

FFRI Security, Inc. Business Overview & Revenue Model

Company Description

FFRI Security, Inc. provides cyber security products in Japan. The company engages in the research, consulting, information provision, and education of computer security and network systems. It is also involved in the planning, development, sale, leasing, maintenance, management, and operation of computer software and programs; and the acquisition, transfer, lending, and management of related property right, such as copyrights, patent rights, utility model rights, trademark rights, and design rights. The company was founded in 2007 and is based in Tokyo, Japan.

How the Company Makes Money

FFRI Security, Inc. generates revenue through the sale of its cybersecurity products and services. The company's key revenue streams include licensing fees for its software solutions, subscription fees for ongoing security services, and consulting fees for specialized security assessments and threat analysis. Additionally, FFRI Security may engage in partnerships with other technology firms to enhance its offerings and reach a broader client base, further boosting its revenue. The company's focus on cutting-edge research and development allows it to maintain a competitive edge and attract clients looking for innovative security solutions.

FFRI Security, Inc. Financial Statement Overview

Summary

Strong fundamentals: accelerating revenue growth and sharply expanding profitability (net margin up to ~22.6% and EBIT margin ~29.0% in 2025) supported by an extremely low-debt balance sheet (debt-to-equity ~0.004) and improved ROE (~24.6%). Key risk is cash-flow consistency—operating cash conversion has been uneven and included a negative year (2022).

Income Statement

Revenue growth accelerated meaningfully, rising from roughly 10% in 2022–2023 to 25% in 2024 and 15.6% in 2025. Profitability also improved sharply: net margin expanded from 9.6% (2023) to 17.7% (2024) and 22.6% (2025), alongside higher operating profitability (EBIT margin up to ~29.0% in 2025). A key watch-out is volatility in gross margin (peaked in 2021–2022, dipped in 2023, then recovered), suggesting the cost structure can swing year to year.

Balance Sheet

The balance sheet is very conservatively financed, with minimal debt (debt-to-equity ~0.004 in 2025; effectively zero in prior years). Equity and assets have grown steadily, supporting an improving profitability profile, and return on equity strengthened to ~24.6% in 2025 from ~10.7% in 2023. The main limitation is that the provided data doesn’t include liquidity details (like cash or current ratios), so short-term balance sheet flexibility can’t be fully assessed from what’s shown.

Cash Flow

Cash generation is solid in the last three years, with operating cash flow and free cash flow positive and rising (free cash flow of ~¥618M in 2025 vs ~¥276M in 2023). Free cash flow tracks reported earnings well (free cash flow is ~96% of net income in 2025), which supports earnings quality. However, operating cash flow has been meaningfully below net income (about 43% in 2025 and ~33% in 2024), and there was a notable cash flow setback in 2022 when both operating cash flow and free cash flow turned negative—highlighting potential working-capital or timing-driven volatility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.41B	3.04B	2.45B	1.95B	1.78B	1.62B
Gross Profit	2.35B	2.03B	1.54B	1.17B	1.23B	1.33B
EBITDA	1.15B	925.15M	538.00M	257.32M	209.29M	387.27M
Net Income	891.09M	687.02M	432.17M	187.28M	120.98M	249.24M
Balance Sheet
Total Assets	5.04B	4.31B	3.38B	2.63B	2.45B	2.66B
Cash, Cash Equivalents and Short-Term Investments	3.47B	2.16B	2.08B	1.76B	1.64B	2.09B
Total Debt	9.99M	10.33M	0.00	0.00	0.00	0.00
Total Liabilities	2.16B	1.52B	1.20B	878.49M	730.52M	814.32M
Stockholders Equity	2.87B	2.79B	2.18B	1.75B	1.72B	1.84B
Cash Flow
Free Cash Flow	0.00	618.01M	370.42M	276.17M	-48.47M	75.00M
Operating Cash Flow	0.00	641.50M	390.63M	302.31M	-16.31M	120.16M
Investing Cash Flow	0.00	-477.61M	-20.72M	-26.10M	-157.98M	-42.82M
Financing Cash Flow	0.00	-79.64M	-50.09M	-161.52M	-275.08M	0.00

FFRI Security, Inc. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 7100.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3692, the sentiment is Positive. The current price of 7100 is below the 20-day moving average (MA) of 8956.50, below the 50-day MA of 8151.60, and above the 200-day MA of 7052.52, indicating a bullish trend. The MACD of 337.94 indicates Positive momentum. The RSI at 55.67 is Neutral, neither overbought nor oversold. The STOCH value of 59.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3692.

FFRI Security, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4333	81 Outperform	¥21.88B	15.96	―	3.86%	0.50%	17.15%
3692	73 Outperform	¥74.65B	62.96	―	0.20%	50.53%	227.57%
4323	73 Outperform	¥60.16B	20.83	―	1.50%	13.48%	35.63%
4259	64 Neutral	¥62.15B	-34.28	―	―	8.98%	-581.59%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4382	51 Neutral	¥12.67B	-166.92	―	―	16.29%	93.98%