WHY HOW DO COMPANY,Inc. (3823) AI Stock Analysis

• Market Cap: ¥7.10B
• Dividend Yield: N/A
• Average Volume (3M): 3.17M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.73
• Revenue Growth: 134.28%
• EPS Growth: 94.74%
• Country: JP
• Employees: 31
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): -1.23
• Shares Outstanding: 131,420,700
• 10 Day Avg. Volume: 1,873,480
• 30 Day Avg. Volume: 3,166,339
• PEG Ratio: 1.13
• Price to Book (P/B): 4.85
• Price to Sales (P/S): 4.28
• P/FCF Ratio: -66.22
• 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: 49 Neutral
• Price Target: ¥55.00 ▲(7.84% Upside)
• Action: Reiterated Date: 02/11/26
• Date: Action: Reiterated 02/11/26

The score is held back primarily by weak profitability and negative operating/free cash flow despite solid revenue growth and manageable leverage. Technicals are supportive in the short term (price above key moving averages, positive MACD) but look stretched due to overbought RSI. Valuation remains unattractive because earnings are negative and no dividend support is available.

Positive Factors

Diversified recurring revenue mix

The company derives revenue from direct software sales, subscription-based cloud services, consulting fees and long-term enterprise contracts, supported by partnerships. This diversified, recurring mix increases revenue predictability, customer stickiness and upsell potential, bolstering durability over 2–6 months as contract renewals and subscriptions sustain topline even if new sales slow.

Healthy gross margin (~51%)

A gross margin around 51% suggests scalable software/cloud economics and pricing power versus peers. High gross margins provide room for operating leverage: as subscription and license revenue grows, incremental sales can contribute disproportionately to profit improvement, supporting sustainable margin recovery if operating expenses are controlled over the medium term.

Manageable leverage

A low debt-to-equity ratio (~0.22) implies limited interest burden and financial flexibility. This capital structure gives the company runway to invest in product and sales initiatives or absorb near-term losses without immediate refinancing pressure, reducing solvency risk and preserving strategic optionality over the next several months.

Negative Factors

Loss-making operations

Negative net margin and losses at the EBIT/EBITDA level show the business has not reached operational profitability. Persistent operating losses limit the firm's ability to self-fund growth, require external capital to sustain operations, and lengthen the timeline to durable profitability unless structural cost or revenue efficiency improvements are achieved.

Negative operating and free cash flow

Negative operating and free cash flows indicate the company is burning cash despite revenue gains. That constrains reinvestment, heightens reliance on external funding, and increases liquidity risk if cash burn continues, making it harder to execute growth initiatives or withstand market stress over a 2–6 month horizon.

Negative return on equity

A negative ROE signals the firm is not converting shareholder capital into profits, highlighting structural inefficiency or underutilized capital. This undermines investor confidence, can increase the cost of future capital, and may limit fundraising options until profitability and cash generation trends reverse.

WHY HOW DO COMPANY,Inc. Business Overview & Revenue Model

Company Description

THE WHY HOW DO COMPANY, Inc. provides services and solutions for smartphones in Japan. The company offers IoT services, including i ball technical shot, I ball technical pitch, and IoT system for intercoms; games, such as Boku-J, Soccer Japan National Team Heroes, and Nade-Saka; Kiskae Touch, a service to change themes on android smartphones; demo device management system for mobile operator retail outlets; and Rakuobi application for real estate agencies, as well as develops Digital Copel and others. It also provides platform services for smartphones and IoT related solutions; social game and application related development services; contracted game development; IT services for research and development; and system for bingo games, a Guam government-approved gaming system. In addition, the company engages in real estate subleases, trademark management, food and beverage, and hospitality businesses. Further, it develops variety stores under the Niku Yokochu brand name; and operates Interplan IT school, which provides IT seminars for job seekers and training services. The company was formerly known as Acrodea, Inc. and changed its name to THE WHY HOW DO COMPANY, Inc. in January 2022. The company, Inc. was incorporated in 2004 and is headquartered in Tokyo, Japan.

How the Company Makes Money

The company generates revenue through multiple streams, including direct sales of its software products, subscription-based services for its cloud solutions, and consulting fees from its advisory services. Key revenue streams come from long-term contracts with enterprise clients who utilize its software solutions, as well as recurring monthly or annual fees from clients subscribing to its cloud services. Additionally, WHY HOW DO COMPANY, Inc. has established significant partnerships with technology providers and industry leaders, which not only enhance its service offerings but also create opportunities for joint ventures and co-marketing initiatives that further contribute to its earnings.

WHY HOW DO COMPANY,Inc. Financial Statement Overview

Summary

Revenue grew strongly (+18%) and gross margin is healthy (51.4%), but the company is still loss-making (negative net margin, EBIT/EBITDA). Cash generation is weak with negative operating and free cash flows, outweighing the benefit of a moderately leveraged balance sheet (debt-to-equity 0.22).

Income Statement

The company has shown a significant improvement in revenue growth, with an 18% increase in the latest year. However, profitability remains a concern as the net profit margin is negative, indicating ongoing losses. The gross profit margin is relatively healthy at 51.4%, but negative EBIT and EBITDA margins suggest operational inefficiencies.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio of 0.22, indicating manageable leverage. However, the return on equity is negative, reflecting the company's inability to generate profits from shareholders' equity. The equity ratio is stable, suggesting a solid capital structure.

Cash Flow

Cash flow analysis reveals challenges, with negative operating and free cash flows. The free cash flow to net income ratio is high, indicating that cash flow issues are impacting profitability. The company needs to improve its cash generation capabilities to support operations.

Breakdown	Aug 2025	Aug 2024	Aug 2023	Aug 2022	Aug 2021
Income Statement
Total Revenue	1.75B	747.64M	941.14M	919.08M	901.53M
Gross Profit	900.27M	354.64M	319.08M	368.82M	53.58M
EBITDA	44.74M	-934.40M	-298.24M	-324.29M	-367.55M
Net Income	-69.04M	-961.64M	-347.53M	-403.28M	-581.02M
Balance Sheet
Total Assets	2.47B	1.53B	1.35B	1.67B	1.41B
Cash, Cash Equivalents and Short-Term Investments	1.25B	595.68M	520.03M	1.10B	736.31M
Total Debt	335.41M	460.83M	337.21M	416.48M	519.24M
Total Liabilities	895.31M	757.41M	541.28M	567.15M	657.62M
Stockholders Equity	1.55B	760.00M	758.60M	1.10B	748.00M
Cash Flow
Free Cash Flow	-113.30M	-785.10M	-421.58M	-171.90M	-336.38M
Operating Cash Flow	-64.48M	-54.45M	-370.73M	-139.30M	-315.09M
Investing Cash Flow	-24.15M	-772.05M	-80.66M	-135.18M	46.05M
Financing Cash Flow	740.41M	902.01M	-136.98M	616.20M	409.36M

WHY HOW DO COMPANY,Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 51.00
• 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:3823, the sentiment is Negative. The current price of 51 is below the 20-day moving average (MA) of 57.80, below the 50-day MA of 56.02, and below the 200-day MA of 72.18, indicating a bearish trend. The MACD of -1.16 indicates Positive momentum. The RSI at 46.16 is Neutral, neither overbought nor oversold. The STOCH value of 43.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3823.

WHY HOW DO COMPANY,Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9698	76 Outperform	¥9.80B	14.61	―	4.24%	2.08%	25.42%
4168	67 Neutral	¥9.18B	11.67	―	0.70%	9.78%	-23.98%
3804	65 Neutral	¥9.62B	19.92	―	1.51%	8.65%	12.86%
5244	65 Neutral	¥10.13B	7.53	―	1.20%	12.21%	6.86%
3826	64 Neutral	¥5.23B	9.17	―	2.28%	―	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
3823	49 Neutral	¥7.10B	-12.80	―	―	134.28%	94.74%