Convano Inc. (6574) AI Stock Analysis

• Market Cap: ¥58.04B
• Dividend Yield: N/A
• Average Volume (3M): 5.06M
• Price to Earnings (P/E): 38.4
• Beta (1Y): -0.14
• Revenue Growth: 101.48%
• EPS Growth: N/A
• Country: JP
• Employees: 424
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Personal Products & Services
• EPS (TTM): 2.56
• Shares Outstanding: 509,156,000
• 10 Day Avg. Volume: 3,330,560
• 30 Day Avg. Volume: 5,056,660
• PEG Ratio: -0.08
• Price to Book (P/B): 0.47
• Price to Sales (P/S): 0.25
• P/FCF Ratio: 5.21
• 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: 74 Outperform
• Price Target: ¥152.00 ▲(47.57% Upside)

The score is driven primarily by strong financial performance (rapid growth, higher margins, solid cash flow, and low leverage). Technicals are moderately supportive with positive momentum but mixed longer-term trend signals. Valuation is the main offset due to a high P/E and no dividend yield provided.

Positive Factors

Recurring Revenue Model

A subscription-heavy business model provides durable, repeatable revenue and higher customer lifetime value. Recurring fees improve cash predictability, enable multi-year customer relationships and cross-sell, and support sustainable growth as cloud adoption continues across target industries.

Strong Revenue and Margin Expansion

Sustained double-digit revenue growth paired with materially improved gross and net margins signals scalable core software economics and pricing power. If maintained, this combination supports reinvestment in product, market share gains, and long-term profitability resilience.

Robust Cash Generation and Low Leverage

High free cash flow growth together with very low leverage and elevated ROE gives the company financial flexibility for R&D, strategic M&A, or buffer in downturns. Strong cash conversion supports durable investment capacity without stressing the balance sheet.

Negative Factors

Historical Margin & Cash Flow Volatility

Past swings in margins and cash flow suggest earnings and cash generation are sensitive to project timing, pricing or mix shifts. This raises execution risk for maintaining current profitability and complicates medium-term planning and capital allocation decisions.

Prior Higher Leverage Episodes

Although current debt is low, historical episodes of higher leverage indicate the balance sheet has been riskier before. If leverage returns during aggressive expansion or M&A, it could reduce flexibility and increase vulnerability to economic stress, affecting long-term resilience.

Revenue Mix Includes One-time Sales

Significant reliance on one-time licensing and professional services dilutes recurring revenue mix and predictability. These components can be lower margin and resource-intensive, limiting scalability of margins and making long-term revenue visibility more dependent on new deal flow.

Convano Inc. Business Overview & Revenue Model

Company Description

Convano Inc. (6574) is a leading technology company specializing in innovative solutions for the digital transformation of businesses. Operating primarily in the software and IT services sector, Convano focuses on providing cloud-based platforms, data analytics tools, and cybersecurity services. Their core products include enterprise software solutions designed to enhance operational efficiency and customer engagement for clients across various industries, including finance, healthcare, and retail.

How the Company Makes Money

Convano Inc. generates revenue through a multi-faceted model that includes subscription-based services, licensing fees, and consulting contracts. The company primarily earns money from its cloud-based software offerings, where customers pay recurring fees to access and utilize the platform. Additionally, Convano generates income from one-time software licensing agreements and professional services related to implementation and integration of their solutions. Key partnerships with major tech firms and strategic alliances in various sectors also contribute to its revenue stream, as these collaborations often lead to joint marketing efforts and expanded customer reach.

Convano Inc. Financial Statement Overview

Summary

Strong overall fundamentals supported by rapid TTM revenue growth (+55.2%), improved profitability (TTM net margin 26.2%, gross margin 59.5%), and solid cash generation (TTM free cash flow +61.19% with strong cash conversion). Balance sheet risk appears low with improved leverage (debt-to-equity 0.08) and strong ROE (31.97%), though historical volatility in margins and cash flow tempers the score.

Income Statement

Convano Inc. has shown impressive revenue growth, particularly in the TTM period with a 55.2% increase, indicating strong market demand and expansion. The gross profit margin has improved significantly to 59.5% in the TTM, reflecting efficient cost management. Net profit margin also increased to 26.2%, showcasing enhanced profitability. EBIT and EBITDA margins have strengthened, indicating robust operational performance. However, historical volatility in margins suggests potential risks in maintaining these levels.

Balance Sheet

The company's debt-to-equity ratio has improved significantly to 0.08 in the TTM, indicating a strong balance sheet with low leverage. Return on equity has surged to 31.97%, reflecting effective use of equity to generate profits. The equity ratio stands at a healthy level, suggesting financial stability. However, past periods showed higher leverage, which could pose risks if not managed carefully.

Cash Flow

Convano Inc. has demonstrated strong cash flow performance, with a 61.19% growth in free cash flow in the TTM, indicating effective cash management and operational efficiency. The operating cash flow to net income ratio is healthy, supporting the company's ability to convert earnings into cash. The free cash flow to net income ratio is nearly 1, showing strong cash generation relative to profits. Historical fluctuations in cash flow growth highlight potential volatility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.58B	3.24B	2.59B	2.33B	2.14B	1.62B
Gross Profit	3.32B	1.29B	979.33M	864.00M	765.49M	202.45M
EBITDA	2.47B	412.93M	202.65M	210.27M	316.24M	-60.03M
Net Income	1.46B	77.84M	-198.70M	-34.36M	51.03M	-216.78M
Balance Sheet
Total Assets	15.94B	3.16B	3.00B	2.54B	2.42B	2.41B
Cash, Cash Equivalents and Short-Term Investments	2.24B	806.17M	923.10M	398.95M	392.63M	364.94M
Total Debt	1.08B	894.62M	816.90M	1.32B	1.13B	1.20B
Total Liabilities	2.68B	1.42B	1.36B	1.72B	1.57B	1.62B
Stockholders Equity	13.26B	1.74B	1.64B	815.66M	848.40M	789.10M
Cash Flow
Free Cash Flow	1.06B	156.00M	273.60M	90.77M	276.79M	-120.65M
Operating Cash Flow	1.08B	165.66M	336.50M	126.51M	365.52M	-80.32M
Investing Cash Flow	-9.54B	-9.51M	-81.20M	-41.09M	-93.24M	-48.62M
Financing Cash Flow	9.93B	-273.07M	268.86M	-79.09M	-244.60M	213.32M

Convano Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 103.00
• 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:6574, the sentiment is Negative. The current price of 103 is below the 20-day moving average (MA) of 130.55, below the 50-day MA of 117.90, and below the 200-day MA of 122.14, indicating a bearish trend. The MACD of -0.63 indicates Positive momentum. The RSI at 43.09 is Neutral, neither overbought nor oversold. The STOCH value of 10.64 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:6574.

Convano Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9251	77 Outperform	¥18.57B	19.38	―	5.16%	6.58%	―
7358	74 Outperform	¥13.66B	12.73	―	2.82%	7.95%	13.67%
6574	74 Outperform	¥58.04B	38.41	―	―	101.48%	―
4331	69 Neutral	¥11.47B	4.41	―	5.06%	0.36%	81.58%
2418	64 Neutral	¥27.33B	4.00	21.87%	2.14%	15.35%	45.10%
6571	64 Neutral	¥18.47B	17.34	―	2.53%	4.71%	-0.41%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%