freee K.K. (4478) AI Stock Analysis

• Market Cap: ¥121.37B
• Dividend Yield: N/A
• Average Volume (3M): 425.28K
• Price to Earnings (P/E): 136.8
• Beta (1Y): 1.02
• Revenue Growth: 31.57%
• EPS Growth: N/A
• Country: JP
• Employees: 1,722
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): N/A
• Shares Outstanding: 59,669,865
• 10 Day Avg. Volume: 390,490
• 30 Day Avg. Volume: 425,280
• PEG Ratio: -1.46
• Price to Book (P/B): 11.51
• Price to Sales (P/S): 6.80
• P/FCF Ratio: 62.59
• 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: 55 Neutral
• Price Target: ¥2,246.00 ▼(-26.36% Downside)
• Action: Reiterated Date: 02/27/26
• Date: Action: Reiterated 02/27/26

The score is primarily supported by improving fundamentals—strong revenue growth, operational profitability turning positive, a stable balance sheet, and free cash flow improving. Offsetting this, technical signals remain bearish with the stock below key moving averages and a negative MACD, and valuation is a meaningful headwind given the very high P/E.

Positive Factors

Revenue Growth

Sustained double-digit revenue growth indicates solid product-market fit with Japanese SMEs and persistent subscription adoption. Over a multi-month horizon this supports recurring revenues, scale effects on gross margins, and the ability to reinvest in product and sales without relying on short-term financing.

Improving Operating Profitability

The shift to positive EBIT/EBITDA demonstrates operational leverage becoming effective as revenue scales. This structural improvement reduces reliance on external capital for operations, increases internal funding for strategic initiatives, and provides a clearer path to sustained net profitability if maintained.

Free Cash Flow Turnaround

A move to positive free cash flow is a durable improvement in financial flexibility, enabling investment in product, M&A or marketing without incremental borrowing. Over 2-6 months this strengthens the balance sheet, reduces refinancing risk, and supports longer-term strategic options.

Negative Factors

Low Net Margin

Persistently high operating expenses compress net margins despite revenue growth, limiting free earnings available for shareholders and long-term retained earnings. Unless structural cost efficiencies or higher pricing power are achieved, margin pressure could slow improvement in shareholder returns and ROE.

Negative Return on Equity

A negative ROE signals the company has not yet converted equity capital into positive shareholder returns. Even with improvements, sustained profitability and retained earnings growth are required to drive ROE positive; until then capital efficiency and investor return prospects remain constrained.

Volatile Cash Flows

Historic cash flow volatility reduces predictability of funding for operations and investments, increasing the likelihood of needing external financing during downturns. This undermines long-term planning, raises funding costs, and can impede steady execution of strategic initiatives despite recent FCF improvement.

freee K.K. Business Overview & Revenue Model

Company Description

freee K.K. provides cloud-based accounting and HR software in Japan. It offers Accounting freee, an integrated accounting software solution for SMBs; and HR freee, a cloud-native integrated payroll software solution that provides payroll and other human resource related functions for SMBs. The company was founded in 2012 and is headquartered in Tokyo, Japan.

How the Company Makes Money

freee K.K. generates revenue primarily through subscription fees for its software services. The company offers various pricing tiers based on the features and number of users, which allows them to cater to different business sizes and needs. Additionally, freee earns revenue from ancillary services, such as premium support and consulting. The firm has also established partnerships with financial institutions and other service providers, enabling them to offer integrated solutions that enhance their value proposition and drive customer acquisition. The growing trend toward digital transformation among SMEs and the increasing demand for efficient financial management tools contribute significantly to freee's earnings.

freee K.K. Financial Statement Overview

Summary

Revenue growth is strong (15.09%) and operating profitability is improving with EBIT/EBITDA turning positive. The balance sheet is stable with a strong equity ratio and moderate leverage, but ROE remains negative. Cash flow has improved with free cash flow turning positive, though historical volatility and a low net margin due to high operating expenses limit the score.

Income Statement

The company has shown a strong revenue growth rate of 15.09% in the latest year, indicating a positive trajectory. Gross profit margin is healthy, reflecting efficient cost management. However, the net profit margin is low due to high operating expenses, impacting overall profitability. The EBIT and EBITDA margins have improved significantly, moving from negative to positive, which is a positive sign of operational improvement.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio, indicating a balanced approach to leveraging. The return on equity is still negative, but there is an improvement compared to previous years, suggesting better utilization of equity. The equity ratio is strong, showing a solid capital structure with a good proportion of equity financing.

Cash Flow

The company has achieved a significant turnaround in free cash flow, moving from negative to positive, which is a strong indicator of improved cash management. The operating cash flow to net income ratio is positive, suggesting that the company is generating cash efficiently relative to its net income. However, the historical volatility in cash flows poses a risk to stability.

Breakdown	Jun 2025	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	33.27B	25.43B	14.38B	10.26B	6.90B
Gross Profit	27.36B	20.99B	11.54B	8.16B	5.34B
EBITDA	901.21M	-10.06B	-11.72B	-2.36B	-2.50B
Net Income	1.37B	-10.15B	-11.61B	-2.76B	-2.97B
Balance Sheet
Total Assets	52.60B	39.95B	47.41B	55.29B	17.90B
Cash, Cash Equivalents and Short-Term Investments	35.79B	31.75B	42.55B	47.64B	15.64B
Total Debt	9.60B	4.70B	576.00M	292.05M	0.00
Total Liabilities	32.93B	23.00B	10.98B	8.41B	4.04B
Stockholders Equity	19.66B	16.95B	36.43B	46.87B	13.85B
Cash Flow
Free Cash Flow	3.62B	-7.43B	-3.17B	-656.47M	-2.10B
Operating Cash Flow	3.66B	-6.77B	-1.07B	-192.53M	-1.38B
Investing Cash Flow	-4.60B	-1.09B	-4.48B	-3.18B	-1.31B
Financing Cash Flow	4.98B	3.71B	451.99M	35.38B	11.97B

freee K.K. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3050.00
• 50DMA: Negative
• 100DMA: Negative
• 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:4478, the sentiment is Negative. The current price of 3050 is above the 20-day moving average (MA) of 2239.60, above the 50-day MA of 2682.52, and below the 200-day MA of 3334.23, indicating a bearish trend. The MACD of -189.84 indicates Negative momentum. The RSI at 40.51 is Neutral, neither overbought nor oversold. The STOCH value of 57.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4478.

freee K.K. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4397	68 Neutral	¥6.71B	16.64	―	―	11.32%	―
9629	68 Neutral	¥36.63B	25.92	―	4.58%	4.58%	-15.00%
5588	62 Neutral	¥9.44B	47.92	―	0.12%	37.21%	129.72%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4165	60 Neutral	¥22.86B	22.45	―	―	21.87%	240.21%
4478	55 Neutral	¥121.37B	136.80	―	―	31.57%	―
3994	49 Neutral	¥171.08B	108.42	-19.16%	―	19.57%	-16.67%

freee K.K. Corporate Events

Freee Lifts FY2026 Guidance on Strong ARR and Customer Growth

Freee K.K. reported second-quarter fiscal 2026 revenue of JPY 10,197 million, up 29.5% year on year, and raised its full-year revenue guidance to JPY 41,930 million, implying 26.0% growth. The company also highlighted strong expansion in its Platform Annual Recurring Revenue and the appointment of a Chief AI Officer as it deepens its technology strategy.

Mid Segment Platform ARR climbed 28.2% year on year to JPY 14,770 million, with quarterly net additions accelerating to JPY 974 million on the back of solid new customer wins. The number of corporate paying customers surpassed 250,000 after net additions of 21,265 in the first half, underscoring momentum from accounting firm channels and reinforcing Freee’s positioning in Japan’s mid-market cloud back-office space.

The most recent analyst rating on (JP:4478) stock is a Hold with a Yen2368.00 price target. To see the full list of analyst forecasts on freee K.K. stock, see the JP:4478 Stock Forecast page.

Freee K.K. Delivers Strong Revenue Growth but Lower Profit, Lifts FY2026 Outlook

Freee K.K. reported consolidated net sales of ¥19,941 million for the six months ended Dec. 31, 2025, up 30.8% year on year, with operating profit falling 38.8% to ¥531 million and profit attributable to owners of parent down 61.6% to ¥305 million as higher growth investments and costs weighed on margins. Total assets rose slightly to ¥53,370 million and the equity ratio remained stable at 37.5%, while the company maintained a zero-dividend policy for the period as it prioritizes reinvestment.

For the fiscal year ending June 30, 2026, Freee forecasts net sales of ¥41,930 million, a 26.0% increase driven by continued expansion of its SaaS customer base and enhanced customer value in its platform business. Adjusted operating profit is projected at ¥2,520 million and adjusted free cash flow at ¥1,260–2,520 million, indicating expectations of improved profitability and cash generation that could strengthen its competitive position in Japan’s SME-focused cloud ERP market.

The most recent analyst rating on (JP:4478) stock is a Hold with a Yen2368.00 price target. To see the full list of analyst forecasts on freee K.K. stock, see the JP:4478 Stock Forecast page.

freee K.K. Raises FY2026 Earnings Guidance on Strong Customer Growth

freee K.K. has revised upward its consolidated earnings guidance for the fiscal year ending June 30, 2026 in response to strong performance in the first half, especially steady progress in acquiring new customers. The company now expects net sales of ¥41.93 billion, representing 26% year-on-year growth, and has modestly raised its targets for adjusted operating profit to ¥2.52 billion and adjusted free cash flow to a range of ¥1.26 billion to ¥2.52 billion.

The updated guidance signals that freee is successfully converting customer growth into higher revenue while still pursuing a balance between strategic investment and productivity gains. For stakeholders, the move suggests improving profitability and cash-generation prospects relative to prior expectations, reinforcing the company’s growth trajectory in Japan’s cloud-based business software market.

The most recent analyst rating on (JP:4478) stock is a Hold with a Yen2368.00 price target. To see the full list of analyst forecasts on freee K.K. stock, see the JP:4478 Stock Forecast page.