Datasection, Inc. (3905) AI Stock Analysis

• Market Cap: ¥55.68B
• Dividend Yield: N/A
• Average Volume (3M): 5.98M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.15
• Revenue Growth: 27.58%
• EPS Growth: -1.50%
• Country: JP
• Employees: 210
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): N/A
• Shares Outstanding: 29,769,050
• 10 Day Avg. Volume: 5,608,600
• 30 Day Avg. Volume: 5,980,486
• PEG Ratio: 0.46
• Price to Book (P/B): 7.09
• Price to Sales (P/S): 5.74
• P/FCF Ratio: -95.26
• 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: 57 Neutral
• Price Target: ¥1,942.00 ▼(-2.66% Downside)

The overall stock score is primarily influenced by financial performance challenges, particularly in profitability and cash flow. Technical analysis shows positive short-term momentum, but valuation concerns due to negative earnings impact the score. Addressing operational inefficiencies and improving profitability are key to enhancing the stock's attractiveness.

Positive Factors

Sustained Revenue Growth

Consistent high revenue growth through 2025 indicates durable market demand and product adoption. Over 2-6 months this supports scaling benefits, expands addressable market penetration, and provides a foundation to absorb fixed costs and invest in product and sales capability to pursue profitability.

Strong Cash Position

A strong cash buffer relative to liabilities gives the company runway to execute strategic initiatives and weather operational shortfalls. This durable liquidity reduces near-term refinancing risk, supports capex or R&D spending, and enhances flexibility while management addresses profitability gaps.

Stable Gross Profit Margin

Stable gross margins show sustained control over cost of goods sold and underlying unit economics. This durability implies pricing power or efficient delivery; as revenue scales, stable gross margin creates potential for operating leverage and margin recovery if SG&A and operational inefficiencies are improved.

Negative Factors

Persistent Profitability Shortfall

Ongoing negative operating and net margins demonstrate structural profitability issues. Over the medium term this limits internal capital generation, forces reliance on external financing, and constrains the company's ability to reinvest for growth. Turning margins positive is essential for durable financial health.

Weak Free Cash Flow

Negative free cash flow driven by operating cash conversion and heavy capex undermines the firm's ability to self-fund growth or reduce debt. Persisting cash generation shortfalls increase dependence on external capital, raise financing costs, and reduce resilience to industry cyclicality over the next several quarters.

Rising Reliance on Debt

A declining equity ratio signals growing leverage and greater creditor reliance to finance assets. Higher leverage elevates interest burden and refinancing risk, reducing financial flexibility. If earnings remain weak, this structural dependence on debt could constrain investment and heighten solvency risk.

Datasection, Inc. Business Overview & Revenue Model

Company Description

Datasection Inc. provides solutions for social media analysis, retail marketing, and artificial intelligence development in Japan, Chile, and Colombia. Its solutions include product review survey; lifestyle analysis; brand image measurement; public opinion polls; Insight Intelligence Q, a tool that allows to search and analyze consumer voices on the web; and Social Monitor, a risk monitoring tool that constantly checks the consumer voices. The company also offers FollowUP, a tool that analyzes the behavior of the store visitors; and artificial intelligence solutions comprising data crawling, image processing, and social media data analysis. Datasection Inc. was incorporated in 2000 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Datasection, Inc. generates revenue through a combination of subscription-based services and licensing fees for its software products. The company primarily earns money from businesses that subscribe to its data analytics platforms for ongoing access to advanced tools and features. Additionally, Datasection partners with various enterprises to offer customized analytics solutions, which contribute significantly to its revenue. These partnerships often involve long-term contracts that provide a steady income stream. The company also benefits from offering training and support services, further enhancing its revenue generation capabilities.

Datasection, Inc. Financial Statement Overview

Summary

Datasection, Inc. shows strong revenue growth but struggles with profitability and cash flow. The company maintains a strong cash position, providing some financial stability. Addressing operational inefficiencies and reducing debt reliance are crucial for improvement.

Income Statement

Datasection, Inc. has shown a steady revenue growth from 2020 to 2025, with a significant increase from 2024 to 2025. However, the company is currently facing profitability challenges as evidenced by its negative EBIT and net income margins in recent years. The gross profit margin has remained relatively stable, indicating the company is maintaining its cost of goods sold effectively. Despite the growth in revenue, the company needs to improve its operational efficiency to return to profitability.

Balance Sheet

The company's balance sheet shows a moderate debt-to-equity ratio, which suggests a balanced capital structure. However, the equity ratio has been declining, indicating an increasing reliance on debt to finance assets. The company has maintained a strong cash position relative to its liabilities, which provides some financial stability. Improving stockholders' equity and reducing total liabilities will be crucial for long-term financial health.

Cash Flow

The cash flow statement highlights challenges in generating positive free cash flow, with negative values in recent years. The operating cash flow to net income ratio indicates cash flow issues, exacerbated by significant capital expenditures. Despite these challenges, the company has seen periods of positive operating cash flow, suggesting potential for cash generation if operational inefficiencies are addressed.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.07B	2.94B	2.23B	1.92B	1.69B	1.39B
Gross Profit	1.15B	1.16B	701.28M	785.61M	684.75M	537.87M
EBITDA	-467.09M	-315.25M	-873.90M	226.12M	322.44M	240.38M
Net Income	-895.12M	-654.99M	-1.26B	-530.29M	2.44M	-41.77M
Balance Sheet
Total Assets	6.42B	4.59B	3.79B	4.39B	4.40B	4.27B
Cash, Cash Equivalents and Short-Term Investments	2.00B	526.04M	1.69B	1.45B	1.45B	1.64B
Total Debt	1.03B	1.37B	1.24B	1.51B	1.21B	1.11B
Total Liabilities	1.65B	2.19B	1.80B	1.88B	1.58B	1.40B
Stockholders Equity	4.74B	2.38B	1.95B	2.48B	2.80B	2.83B
Cash Flow
Free Cash Flow	0.00	-177.43M	-360.75M	-294.40M	-76.90M	-4.12M
Operating Cash Flow	0.00	-83.41M	333.60M	2.42M	113.09M	169.73M
Investing Cash Flow	0.00	-1.19B	-569.26M	-255.77M	-304.07M	-508.84M
Financing Cash Flow	0.00	163.55M	382.96M	242.02M	28.31M	232.93M

Datasection, Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1995.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3905, the sentiment is Negative. The current price of 1995 is below the 20-day moving average (MA) of 2102.45, below the 50-day MA of 2085.28, and below the 200-day MA of 2091.20, indicating a bearish trend. The MACD of -47.32 indicates Positive momentum. The RSI at 31.87 is Neutral, neither overbought nor oversold. The STOCH value of 6.74 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3905.

Datasection, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4299	76 Outperform	¥13.62B	12.91	―	3.56%	3.96%	-3.68%
3800	71 Outperform	¥14.19B	19.16	―	3.62%	0.85%	12.73%
3937	68 Neutral	¥12.70B	12.80	―	3.78%	0.43%	44.79%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
3905	57 Neutral	¥55.68B	-20.14	―	―	27.58%	-1.50%
3856	46 Neutral	¥10.73B	2.41	―	1.45%	-40.21%	-54.31%
3823	43 Neutral	¥6.97B	-34.87	―	―	134.28%	94.74%