FFRI Security, Inc. (3692) AI Stock Analysis

• Market Cap: ¥63.27B
• Dividend Yield: 0.2%
• Average Volume (3M): 975.63K
• Price to Earnings (P/E): 48.8
• Beta (1Y): 1.30
• 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: ¥8,742.00 ▲(23.13% Upside)
• Action: Upgraded Date: 01/14/26
• Date: Action: Upgraded 01/14/26

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

Margin Expansion

Sustained margin expansion to high double digits indicates structural improvements in pricing, cost control and operating leverage. Higher EBIT and net margins enhance durable cash generation, funding R&D, sales expansion and cushioning profitability through cyclical slowdowns.

Very Low Leverage

An extremely conservative capital structure reduces solvency risk and preserves strategic optionality. Minimal debt supports reinvestment, M&A or shareholder returns without refinancing risk, and enhances resilience to shocks or cyclical revenue swings.

Strong Revenue Growth Trend

Sustained double-digit revenue expansion demonstrates market demand and product-market fit in cybersecurity. Growing top-line supports scalable margin gains and investments in product and services, reinforcing competitive position in enterprise and public-sector security.

Negative Factors

Cash-Flow Conversion Risk

Operating cash conversion has been inconsistent, with OCF lagging net income and a prior negative year. Persistent timing or working-capital swings can constrain sustainable FCF, limit reinvestment or dividends, and make earnings less reliable as a cash source.

Gross Margin Volatility

Material swings in gross margin imply sensitivity to pricing, mix or cost pressures. Such volatility reduces predictability of profitability and could force margin compression if competitive dynamics or input costs worsen, complicating long-term planning.

Limited Liquidity Disclosure

Absence of explicit liquidity metrics prevents clear assessment of short-term resilience despite low debt. In stress scenarios, unclear cash buffers or working-capital flexibility could risk operational continuity or require costly financing.

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	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
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: Negative
• Last Price: 7100.00
• 50DMA: Negative
• 100DMA: Negative
• 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 Negative. The current price of 7100 is below the 20-day moving average (MA) of 8556.00, below the 50-day MA of 8617.80, and below the 200-day MA of 7665.43, indicating a neutral trend. The MACD of -313.41 indicates Positive momentum. The RSI at 41.67 is Neutral, neither overbought nor oversold. The STOCH value of 20.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3692.

FFRI Security, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3921	74 Outperform	¥24.84B	13.80	―	2.53%	16.13%	62.27%
3692	73 Outperform	¥63.27B	48.80	―	0.20%	50.53%	227.57%
9692	73 Outperform	¥64.02B	13.97	―	2.41%	13.05%	4.42%
2326	66 Neutral	¥74.10B	22.94	―	1.42%	-6.04%	-24.88%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
3905	52 Neutral	¥46.45B	16.46	―	―	27.58%	-1.50%
7527	47 Neutral	¥4.75B	-18.61	―	―	-40.57%	83.14%