SAKURA Internet Inc. (3778) AI Stock Analysis

• Market Cap: ¥120.74B
• Dividend Yield: 0.14%
• Average Volume (3M): 1.25M
• Price to Earnings (P/E): 162.3
• Beta (1Y): 1.54
• 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): -2.79
• Revenue Forecast (FY): ¥35.46B

• Rating: 52 Neutral
• Price Target: ¥2,685.00 ▼(-3.42% Downside)
• Action: Reiterated Date: 11/18/25
• Date: Action: Reiterated 11/18/25

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

Revenue Growth Trend

High recurring and consumption-based revenue growth demonstrates durable demand for SAKURA’s infrastructure services. Sustained top-line expansion supports investment in capacity, strengthens competitive positioning, and enables long-term customer expansion and upsell across cloud and hosting segments.

Improving Margins

Rising gross and EBITDA margins indicate better cost management and operational leverage as scale grows. Margin expansion improves cash generation potential and resilience to pricing pressure, allowing reinvestment in data centers and product development to sustain competitive advantages.

Asset Ownership & Recurring Model

Owning infrastructure plus subscription/usage pricing creates sticky, predictable revenue and control over service quality. This vertical ownership enables bundled offerings, higher switching costs for customers, and durable customer lifetime value, supporting long-term market share retention.

Negative Factors

Negative Free Cash Flow

Persistent negative free cash flow from heavy capex reduces financial flexibility and increases reliance on external financing. Over months this can constrain ability to fund growth initiatives, dividends, or debt reduction, and heightens exposure if revenue growth slows or capex needs persist.

Rising Liabilities and Debt Risk

Growing liabilities and leverage elevate refinancing and interest-rate risk and reduce balance sheet optionality. Over a multi-month horizon higher debt can pressure net income via interest costs and limit capital allocation choices, restraining strategic investments or buffer for downturns.

Relatively Low Net Profit Margin

A modest net margin, even with improving gross/EBITDA margins, signals remaining cost, SG&A, or financing pressures that limit cash returns. Durable profitability constraints could slow free cash flow recovery and investor returns unless operational or financial efficiencies are further realized.

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	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
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: Positive
• Last Price: 2780.00
• 50DMA: Positive
• 100DMA: Positive
• 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:3778, the sentiment is Positive. The current price of 2780 is below the 20-day moving average (MA) of 2878.25, below the 50-day MA of 2820.70, and below the 200-day MA of 3232.37, indicating a neutral trend. The MACD of 49.65 indicates Negative momentum. The RSI at 62.02 is Neutral, neither overbought nor oversold. The STOCH value of 66.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3778.

SAKURA Internet Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3915	68 Neutral	¥23.06B	15.13	―	―	17.93%	91.21%
4475	68 Neutral	¥32.66B	24.33	―	0.39%	30.59%	65.14%
3633	65 Neutral	¥10.84B	12.15	―	2.16%	2.75%	25.24%
147A	62 Neutral	¥46.05B	44.77	―	―	―	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4434	61 Neutral	¥16.36B	-46.59	―	―	―	―
3778	52 Neutral	¥120.74B	162.31	―	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.