SAKURA Internet Inc. (3778) AI Stock Analysis

• Market Cap: ¥106.26B
• Dividend Yield: 0.14%
• Average Volume (3M): 1.25M
• Price to Earnings (P/E): 146.7
• Beta (1Y): 1.70
• Revenue Growth: 36.42%
• EPS Growth: 28.23%
• Country: JP
• Employees: 839
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 1.89
• Shares Outstanding: 41,890,700
• 10 Day Avg. Volume: 655,830
• 30 Day Avg. Volume: 1,250,683
• PEG Ratio: 0.16
• Price to Book (P/B): 4.78
• Price to Sales (P/S): 4.57
• P/FCF Ratio: -12.11
• 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: 52 Neutral
• Price Target: ¥2,685.00 ▼(-3.42% Downside)

SAKURA Internet Inc. has a satisfactory financial performance with strong revenue growth but faces challenges in cash flow management. Technical indicators suggest bearish momentum, and the stock appears overvalued with a high P/E ratio. These factors contribute to a moderate overall stock score.

Positive Factors

Sustained Revenue Growth

Material year-over-year revenue growth indicates durable demand for hosting and cloud services, supporting recurring subscription and consumption revenue. Sustained top-line expansion improves scale economics and provides room to invest in products, sales, and data center capacity over months.

Improving Margins

Notable gross and EBITDA margin expansion suggests better cost control and operating leverage in the cloud/hosting business. Higher margins increase cash conversion potential and make incremental revenue more profitable, supporting longer-term reinvestment and competitive positioning.

Operating Cash Generation

Operating cash flow nearly twice reported net income signals earnings quality and real cash generation from customers. Strong operating cash supports ongoing service delivery and can finance some growth or buffer cyclicality, improving financial resilience over multiple quarters.

Negative Factors

Negative Free Cash Flow

Persistent negative free cash flow from elevated capex undermines the company’s ability to self-fund expansion and may necessitate external financing. Over 2–6 months this reduces financial flexibility and raises execution risk if growth fails to quickly boost cash conversion.

Rising Liabilities and Debt

Although leverage (debt/equity ~0.79) is moderate, growing total liabilities and debt increase interest and refinancing exposure. If cash flows remain pressured, higher leverage could constrain capital allocation, raising long-term risk to margins and investment plans.

Weak EPS Growth and Low Net Margin

Sharp negative EPS growth alongside a modest net margin indicates profitability volatility and limited bottom-line resilience. Over the medium term this can limit retained earnings, reduce capacity to fund growth internally, and increase sensitivity to cost or demand shocks.

SAKURA Internet Inc. Business Overview & Revenue Model

Company Description

SAKURA Internet Inc. provides internet connection services in Japan. The company offers housing services; and hosting services, such as dedicated and rental server, VPS, and cloud services. It is also involved in setting up and management of servers on the internet; and provision of various information services using the Internet, consulting on the Internet, and telecommunications services. In addition, the company designs, produces, and sells multimedia; designs, develops, and sells computer software; produces, sells, and maintains computers and computers peripherals; and leases and manages real estate properties. SAKURA Internet Inc. was founded in 1996 and is headquartered in Osaka, Japan.

How the Company Makes Money

SAKURA Internet generates revenue through a subscription-based model, primarily by offering cloud computing services and managed hosting solutions. Key revenue streams include fees for virtual private servers, dedicated servers, and additional services such as domain registration and SSL certificates. The company also benefits from long-term contracts with clients, providing stability in its cash flow. Strategic partnerships with software providers and tech companies enhance its service offerings and attract more customers, further contributing to its earnings. Additionally, SAKURA Internet capitalizes on the growing demand for digital transformation and cloud solutions in various industries, which supports its revenue growth.

SAKURA Internet Inc. Financial Statement Overview

Summary

SAKURA Internet Inc. shows strong revenue growth and improving operational margins, indicating a positive trajectory. However, the balance sheet requires careful monitoring of debt levels, and cash flow management is a concern due to negative free cash flow.

Income Statement

SAKURA Internet Inc. has shown significant revenue growth over the past year, with a 43.9% increase from 2024 to 2025. The gross profit margin improved from 26.3% to 35.8%, indicating better cost management. However, the net profit margin is relatively low at 9.4%, despite an improvement from the previous year. The EBITDA margin increased to 28.7%, showcasing operational strength. The company needs to focus on further enhancing profitability.

Balance Sheet

The company has a reasonable debt-to-equity ratio of 0.79, indicating a balanced leverage position. The return on equity is strong at 9.8%, up from 7.1% the previous year, reflecting efficient use of equity. The equity ratio stands at 36.9%, suggesting a stable financial structure. However, the increase in total liabilities and debt levels poses a potential risk if not managed carefully.

Cash Flow

The operating cash flow increased significantly, but the free cash flow remains negative due to high capital expenditures, leading to a negative free cash flow growth rate. The operating cash flow to net income ratio is robust at 1.97, indicating good cash generation relative to profits. The negative free cash flow to net income ratio highlights the need for better capital management to improve free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	32.97B	31.41B	21.83B	20.62B	20.02B	22.17B
Gross Profit	11.08B	11.23B	5.74B	5.37B	4.71B	5.69B
EBITDA	9.93B	9.00B	4.14B	3.90B	3.83B	4.47B
Net Income	2.57B	2.94B	651.72M	666.55M	275.45M	758.36M
Balance Sheet
Total Assets	81.00B	81.42B	30.22B	26.26B	28.40B	27.98B
Cash, Cash Equivalents and Short-Term Investments	24.25B	29.49B	5.26B	4.81B	5.45B	4.17B
Total Debt	21.81B	23.65B	12.40B	9.56B	11.50B	12.22B
Total Liabilities	51.18B	51.16B	20.90B	17.77B	19.95B	19.86B
Stockholders Equity	29.61B	30.06B	9.14B	8.35B	8.32B	8.00B
Cash Flow
Free Cash Flow	0.00	-11.87B	-734.64M	3.19B	2.53B	2.62B
Operating Cash Flow	0.00	5.79B	2.88B	3.96B	3.96B	4.11B
Investing Cash Flow	0.00	-8.32B	-2.03B	-606.13M	-1.67B	-1.36B
Financing Cash Flow	0.00	26.76B	-410.59M	-4.00B	-1.01B	-3.15B

SAKURA Internet Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2780.00
• 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:3778, the sentiment is Negative. The current price of 2780 is above the 20-day moving average (MA) of 2757.05, below the 50-day MA of 2889.62, and below the 200-day MA of 3287.97, indicating a bearish trend. The MACD of -51.11 indicates Positive momentum. The RSI at 36.95 is Neutral, neither overbought nor oversold. The STOCH value of 20.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3778.

SAKURA Internet Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4493	78 Outperform	¥18.09B	26.25	―	0.17%	31.39%	13.12%
3915	68 Neutral	¥27.00B	17.72	―	―	17.93%	91.21%
3694	68 Neutral	¥27.39B	20.53	―	―	6.33%	14.82%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4434	61 Neutral	¥15.93B	-45.43	―	―	―	―
3778	52 Neutral	¥106.26B	146.67	―	0.14%	36.42%	28.23%

SAKURA Internet Inc. Corporate Events

SAKURA Internet Slips to Nine-Month Loss but Sticks to Full-Year Profit and Higher Dividend Plan

SAKURA Internet reported consolidated net sales of ¥24.0 billion for the nine months ended 31 December 2025, up 12.3% year-on-year, but swung to an operating loss of ¥1.1 billion and a net loss attributable to owners of the parent of ¥551 million, compared with solid profits a year earlier. Total assets edged up to ¥82.6 billion while the equity ratio slipped to 35.5%, reflecting weaker profitability, and basic earnings per share fell to a loss of ¥13.77. Despite the earnings deterioration, the company maintained its full-year forecast for the fiscal year ending March 2026, projecting a 16.2% rise in net sales to ¥36.5 billion and sharply lower but still positive full-year profit, and it plans to raise the annual dividend payout to ¥5 per share, signaling confidence in its longer-term earnings capacity and commitment to shareholder returns.

The most recent analyst rating on (JP:3778) stock is a Hold with a Yen2689.00 price target. To see the full list of analyst forecasts on SAKURA Internet Inc. stock, see the JP:3778 Stock Forecast page.

SAKURA Internet Secures Funding for Data Center Expansion

SAKURA Internet Inc. announced its decision to borrow up to 12 billion yen for the development of a containerized data center, expected to be completed by the fiscal year ending March 2026. This strategic investment, backed by major banks, aims to enhance the company’s infrastructure, although it is projected to have minimal immediate impact on the current fiscal year’s financial results.

The most recent analyst rating on (JP:3778) stock is a Hold with a Yen3055.00 price target. To see the full list of analyst forecasts on SAKURA Internet Inc. stock, see the JP:3778 Stock Forecast page.

SAKURA Internet Inc. Corrects Financial Results for Q2 FY2026

SAKURA Internet Inc. has issued a correction to its financial results presentation for the second quarter of the fiscal year ending March 2026, initially disclosed on October 28, 2025. The correction involves adjustments to investment figures and personnel numbers, reflecting an increase in investments in data centers and generative AI services, as well as a rise in employee numbers, which may impact the company’s operational and strategic positioning.

The most recent analyst rating on (JP:3778) stock is a Hold with a Yen3629.00 price target. To see the full list of analyst forecasts on SAKURA Internet Inc. stock, see the JP:3778 Stock Forecast page.