XNET Corporation (4762) AI Stock Analysis

• Market Cap: ¥12.85B
• Dividend Yield: 3.16%
• Average Volume (3M): 2.32K
• Price to Earnings (P/E): 12.8
• Beta (1Y): 0.15
• Revenue Growth: 0.11%
• EPS Growth: 20.93%
• Country: JP
• Employees: 188
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 38.99
• Shares Outstanding: 8,261,600
• 10 Day Avg. Volume: 1,810
• 30 Day Avg. Volume: 2,320
• PEG Ratio: 0.24
• Price to Book (P/B): 2.11
• Price to Sales (P/S): 1.16
• P/FCF Ratio: 7.47
• 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: 63 Neutral
• Price Target: ¥1,595.00 ▲(6.48% Upside)

The score is driven primarily by mixed financial performance: profits and free cash flow remain solid, but the sharp revenue decline and higher leverage meaningfully weaken the fundamental profile. Technicals are moderately positive (price above key averages and positive MACD) but are tempered by an overbought RSI. Valuation is a positive support with a moderate P/E and ~3.17% dividend yield.

Positive Factors

Profitability

Strong operating and net margins indicate efficient cost management and pricing power, supporting long-term earnings stability.

Cash Generation

Robust cash generation supports financial flexibility and the ability to reinvest in growth opportunities or return capital to shareholders.

Return on Equity

High return on equity reflects efficient use of shareholder capital, enhancing investor confidence and long-term value creation.

Negative Factors

Revenue Decline

A significant revenue drop indicates potential challenges in market demand or competitive positioning, impacting future growth prospects.

Increased Leverage

Higher leverage increases financial risk and reduces balance sheet flexibility, potentially limiting strategic options in downturns.

Cash Flow Coverage

Weaker cash flow coverage suggests reduced ability to cover obligations, increasing vulnerability to earnings fluctuations.

XNET Corporation Business Overview & Revenue Model

Company Description

XNET Corporation provides software applications outsourcing services in Japan. It offers insurance solutions, such as portfolio management, corporate finance management, and NAV calculation for variable insurance; banking and asset management solutions, including customized loan management, trust for individuals, interbank deposit management, and bond account management for OTC sale; and solutions for other business companies. The company also offers solutions for proxy/engagement management, market information services, reports management, IFRS data management, and STP solutions with brokers and custodians, as well as business process outsourcing services. The company was founded in 1991 and is based in Tokyo, Japan. XNET Corporation is a subsidiary of NTT Data Corporation.

How the Company Makes Money

XNET Corporation generates revenue primarily through its cloud computing and data center services. By offering subscription-based cloud services, the company provides scalable and flexible solutions to businesses, charging fees based on the usage and resources consumed. Its data center services involve hosting and managing server resources for clients, which also follows a subscription and usage-based pricing model. Additionally, XNET Corporation may engage in strategic partnerships with technology providers and enterprises to enhance its service offerings and expand its market reach, contributing to its revenue streams.

XNET Corporation Financial Statement Overview

Summary

Overall financials are acceptable but weaker versus the prior year: profitability remains solid (FY2025 operating margin ~16%, net margin ~11%) and free cash flow closely matched net income (~0.99), but FY2025 revenue declined sharply and leverage increased materially (debt-to-equity ~0.86 versus essentially no debt previously), reducing resilience.

Income Statement

Profitability is solid for a software business, with recent annual gross margin around 28% and operating and net margins still healthy (FY2025 operating margin ~16% and net margin ~11%). However, earnings and margins stepped down versus FY2024, and the reported revenue growth in FY2025 is sharply negative, pointing to meaningful top-line pressure and a weaker near-term trajectory despite still-positive profits.

Balance Sheet

The balance sheet profile deteriorated notably in FY2025: total debt rose to 2.5B and debt-to-equity moved up to ~0.86, versus essentially no debt in prior years. While return on equity improved to ~20% in FY2025, the jump appears driven by a much smaller equity base versus FY2024, which raises the risk profile and reduces balance-sheet flexibility compared with the company’s historically conservative structure.

Cash Flow

Cash generation remains a positive: FY2025 free cash flow was strong and closely matched net income (free cash flow to net income ~0.99), supporting earnings quality. The key weakness is the sharp drop in cash flow coverage in FY2025 (operating cash flow coverage ~0.27 versus ~1.7–1.9 in prior years), indicating weaker cash conversion/coverage in the most recent period and higher sensitivity if profitability softens further.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.32B	5.30B	5.55B	5.36B	5.42B	5.04B
Gross Profit	1.54B	1.50B	1.70B	1.51B	1.52B	1.21B
EBITDA	1.08B	890.85M	1.09B	963.38M	1.58B	1.31B
Net Income	618.13M	581.34M	741.35M	694.01M	718.33M	576.74M
Balance Sheet
Total Assets	6.35B	6.68B	9.91B	9.28B	8.95B	8.24B
Cash, Cash Equivalents and Short-Term Investments	1.71B	1.76B	4.62B	3.72B	3.51B	1.49B
Total Debt	2.20B	2.50B	0.00	0.00	0.00	0.00
Total Liabilities	3.37B	3.76B	1.39B	1.26B	1.38B	1.16B
Stockholders Equity	2.98B	2.92B	8.52B	8.02B	7.57B	7.08B
Cash Flow
Free Cash Flow	0.00	826.04M	1.05B	847.29M	990.93M	709.56M
Operating Cash Flow	0.00	837.03M	1.44B	1.16B	1.39B	1.08B
Investing Cash Flow	0.00	1.26B	-416.19M	-523.34M	-685.53M	-752.42M
Financing Cash Flow	0.00	-3.68B	-247.95M	-239.25M	-230.93M	-231.17M

XNET Corporation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1498.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4762, the sentiment is Positive. The current price of 1498 is below the 20-day moving average (MA) of 1516.65, above the 50-day MA of 1463.88, and above the 200-day MA of 1384.12, indicating a bullish trend. The MACD of 21.01 indicates Negative momentum. The RSI at 62.59 is Neutral, neither overbought nor oversold. The STOCH value of 61.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4762.

XNET Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3969	80 Outperform	¥11.16B	15.08	―	2.28%	3.30%	-6.27%
9343	73 Outperform	¥13.02B	15.79	―	5.82%	0.96%	19.02%
5591	65 Neutral	¥7.63B	40.07	―	―	35.46%	59.47%
4762	63 Neutral	¥12.85B	12.77	―	3.16%	0.11%	20.93%
4193	63 Neutral	¥11.25B	35.97	―	2.81%	12.49%	-57.87%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
5572	56 Neutral	¥8.95B	67.41	―	―	60.41%	-27.67%