GMO Research & AI,Inc. (3695) AI Stock Analysis

• Market Cap: ¥7.86B
• Dividend Yield: 5.22%
• Average Volume (3M): 4.97K
• Price to Earnings (P/E): 42.7
• Beta (1Y): 0.40
• Revenue Growth: 26.41%
• EPS Growth: -20.60%
• Country: JP
• Employees: 135
• Sector: Technology
• Sector Strength: 88
• Industry: Specialty Business Services
• EPS (TTM): 14.35
• Shares Outstanding: 4,446,357
• 10 Day Avg. Volume: 4,400
• 30 Day Avg. Volume: 4,966
• PEG Ratio: -0.81
• Price to Book (P/B): 3.27
• Price to Sales (P/S): 1.17
• P/FCF Ratio: 8.06
• 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: 59 Neutral
• Price Target: ¥1,802.00 ▼(-9.04% Downside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is primarily supported by improving financial performance—strong 2025 revenue recovery, higher gross margin, and a sharp improvement in free cash flow. This is tempered by clear technical weakness (bearish trend and negative momentum signals) and a demanding valuation (high P/E), with added risk from the 2025 increase in leverage alongside compressed net margins.

Positive Factors

Revenue Recovery

A clear revenue rebound in 2025 (~+19% YoY) indicates regained demand or successful commercial execution. Sustained top-line recovery improves scale economics, funds reinvestment, and reduces execution risk over the medium term if the company sustains this growth trajectory.

Gross Margin Expansion

A material gross margin expansion to ~56% suggests improved pricing, product mix, or cost control, which enhances structural profitability. Higher gross margins create durable operating leverage, enabling the company to absorb SG&A and finance costs while supporting long-term margin recovery.

Strong Free Cash Flow

Significant operating and free cash flow in 2025 with high conversion rates shows earnings are backed by cash. Robust FCF supports capital allocation flexibility—debt servicing, dividends, buybacks, and reinvestment—and is a durable indicator of financial resilience if volatility is managed.

Negative Factors

Compressed Net Margin

Net margin compression to ~2.3% significantly reduces earnings cushion versus prior years. Persistently low net margins make the firm more vulnerable to cost shocks, limit retained earnings for reinvestment, and strain long-term return on capital unless operating efficiencies or pricing improvements continue.

Rising Leverage

A notable step-up in debt and D/E to ~0.27 marks a structural shift in financial risk. Higher leverage raises interest and refinancing exposure, reducing strategic flexibility and increasing the importance of consistent cash generation to avoid balance sheet stress during downturns.

Earnings and Cash‑flow Volatility

Historic volatility in EPS and free cash flow (sharp FCF drop in 2022 and EPS growth of -90.8%) signals inconsistent earnings quality. This variability complicates long-term planning and raises execution risk; durable improvement requires sustained, predictable cash generation across cycles.

GMO Research & AI,Inc. Business Overview & Revenue Model

Company Description

GMO Research & AI, Inc. (3695) is a leading technology company specializing in market research and artificial intelligence solutions. The company operates primarily in the data analytics and consumer insights sectors, leveraging advanced AI algorithms to provide businesses with actionable insights derived from large data sets. Its core products include AI-driven survey platforms, data analytics tools, and consulting services aimed at enhancing decision-making processes for clients across various industries.

How the Company Makes Money

GMO Research & AI generates revenue through multiple streams, primarily by offering subscription-based access to its AI-driven research platforms and analytics tools. Additionally, the company earns money by providing customized market research services and consulting solutions tailored to the specific needs of clients. Key revenue streams include licensing fees from its proprietary software, charges for survey deployments, and project-based consulting fees. The company also benefits from partnerships with academic institutions and other technology firms, which enhance its service offerings and expand its market reach.

GMO Research & AI,Inc. Financial Statement Overview

Summary

2025 showed a strong revenue rebound (~+19% YoY) and meaningful gross margin expansion (~56% vs ~50%), supported by a major step-up in operating and free cash flow. Offsetting these positives, net margin compressed to ~2.3% (down from ~3.6% in 2024 and ~6.0% in 2023) and leverage increased in 2025 (debt-to-equity ~0.27 vs near-zero historically), raising execution risk.

Income Statement

Revenue rebounded strongly in 2025 (up ~19% year over year after modest declines in 2023–2024), and gross margin improved to ~56% from ~50% in 2024, signaling better pricing and/or cost control. However, profitability has compressed materially: net margin fell to ~2.3% in 2025 from ~3.6% in 2024 and ~6.0% in 2023, with operating profitability also down versus 2022–2023 levels. Overall, top-line momentum is a clear positive, but the weaker bottom-line conversion is the key concern.

Balance Sheet

The balance sheet looks generally healthy with meaningful equity of ~2.43B and historically very low leverage (debt-to-equity near zero in 2021–2024). That said, 2025 shows a notable step-up in debt to ~650M, lifting debt-to-equity to ~0.27—still manageable, but a clear shift in financial risk versus prior years. Assets expanded sharply in 2025, which could support growth, but the increased leverage makes execution and cash generation more important going forward.

Cash Flow

Cash generation strengthened significantly in 2025 with operating cash flow near ~991M and free cash flow near ~986M, a major improvement from 2024 levels (~238M). Free cash flow conversion to net income is consistently strong (roughly ~0.75–1.00x across most years, ~1.0x in 2024–2025), suggesting reported earnings are backed by cash. The main weakness is volatility (notably the sharp drop in 2022 free cash flow), so while recent performance is excellent, consistency across cycles is the watch item.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	5.73B	6.82B	5.03B	5.12B	5.20B	4.09B
Gross Profit	3.12B	3.83B	2.55B	2.54B	2.46B	1.98B
EBITDA	357.72M	489.82M	354.23M	518.18M	544.66M	454.54M
Net Income	99.54M	155.64M	183.15M	307.31M	356.38M	274.06M
Balance Sheet
Total Assets	3.84B	9.46B	3.00B	2.99B	3.07B	2.80B
Cash, Cash Equivalents and Short-Term Investments	1.68B	5.52B	1.19B	1.33B	1.17B	1.26B
Total Debt	6.56M	650.22M	5.50M	12.22M	16.80M	26.29M
Total Liabilities	1.58B	7.00B	883.41M	946.14M	1.16B	1.12B
Stockholders Equity	2.24B	2.43B	2.10B	2.05B	1.91B	1.68B
Cash Flow
Free Cash Flow	0.00	986.28M	236.00M	354.53M	39.82M	406.93M
Operating Cash Flow	0.00	990.78M	237.50M	475.49M	131.65M	482.16M
Investing Cash Flow	0.00	-379.84M	-221.00M	-131.49M	-111.34M	-50.65M
Financing Cash Flow	0.00	455.83M	-195.90M	-187.50M	-145.31M	-96.53M

GMO Research & AI,Inc. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1981.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3695, the sentiment is Neutral. The current price of 1981 is above the 20-day moving average (MA) of 1850.95, below the 50-day MA of 1983.06, and below the 200-day MA of 2191.14, indicating a bearish trend. The MACD of -76.60 indicates Positive momentum. The RSI at 40.86 is Neutral, neither overbought nor oversold. The STOCH value of 50.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:3695.

GMO Research & AI,Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4171	72 Outperform	¥4.21B	18.11	―	4.27%	-3.62%	-17.47%
6088	70 Outperform	¥61.80B	14.15	―	2.56%	8.08%	10.43%
4346	64 Neutral	¥9.82B	10.65	―	3.65%	16.07%	50.91%
6183	64 Neutral	¥110.28B	11.62	―	4.17%	0.44%	44.52%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
3695	59 Neutral	¥7.86B	42.69	―	5.22%	26.41%	-20.60%
7814	52 Neutral	¥28.66B	4.45	―	1.57%	9.04%	-0.91%