Broadleaf Co., Ltd. (3673): FY2025 Results Summary — Operating Profit More Than Triples as Cloud Services Grow 44.1%; Payout Target Raised to 40%

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Broadleaf Co., Ltd., a provider of cloud software for the automotive aftermarket, released its Business Results Briefing Material for FY12/2025 (fiscal year ended December 2025) on February 12, 2026. Revenue rose 15.4% year on year to 20,815 million yen, driven by an increase in the number of contracts for monthly subscription-based software and by capturing replacement demand for PCs. Owing to a revenue structure with a high contribution margin, operating profit rose to 2,063 million yen (+206.0%) and profit attributable to owners of the parent rose to 1,240 million yen (+261.3%), each increasing by more than three times year on year. For FY2026 the company forecasts revenue of 23,500 million yen and operating profit of 4,800 million yen, and it raised its target consolidated payout ratio to 40% or higher, with the annual dividend forecast at 15.00 yen per share. All figures are in millions of yen unless otherwise stated.

Consolidated Results (FY12/2025 Actual)

Revenue was 20,815 million yen (+2,770 million yen, +15.4%) and gross profit was 13,520 million yen (+15.4%). Selling, general and administrative expenses, etc. rose only 3.8% to 11,457 million yen, lifting operating profit to 2,063 million yen from 674 million yen. Profit before tax was 1,854 million yen (+240.3%) and profit for the year attributable to owners of the parent was 1,240 million yen (+261.3%). Basic earnings per share were 13.79 yen, compared with 3.85 yen in FY2024.

Item (Millions of yen)	FY2025	FY2024	YoY change	YoY ratio
Revenue	20,815	18,045	+2,770	+15.4%
Cost of sales	7,296	6,334	+962	+15.2%
Gross profit	13,520	11,712	+1,808	+15.4%
SG&A expenses, etc.	11,457	11,038	+419	+3.8%
Operating profit	2,063	674	+1,389	+206.0%
Profit before tax	1,854	545	+1,309	+240.3%
Profit attributable to owners of the parent	1,240	343	+897	+261.3%
Basic EPS (yen)	13.79	3.85	–	–

Results exceeded the initial forecasts for FY2025 (revenue of 20,100 million yen, operating profit of 1,500 million yen and profit attributable to owners of the parent of 1,000 million yen). The company noted that over the four years since the launch of its Medium-Term Management Plan (2022–2028), actual results have exceeded the initial forecasts in every year, as it continued developing cloud-based software and progressively migrated users whose legacy software licenses had expired to monthly subscription-based contracts.

In the operating profit bridge, the revenue increase added 2,770 million yen, while cost of sales reduced profit by 962 million yen (mainly an increase in amortization expense of cloud services of 401 million yen and an increase in cost of goods purchased of 672 million yen due to higher hardware revenue, mainly PCs), SG&A expenses by 296 million yen (mainly an increase in IT infrastructure procurement costs of 208 million yen) and other factors by 124 million yen. The company said it actively leveraged AI to enhance efficiency in sales activities, development processes and administrative operations, including reduced outsourcing fees.

At year-end, total assets were 41,425 million yen (+1,530 million yen), with intangible assets up 2,035 million yen due to investment in the development of cloud-based software, and contract liabilities up 2,102 million yen in line with growth in five-year package contracts for cloud-based software. Total equity was 24,293 million yen. Cash flow from operating activities was 6,897 million yen, cash flow from investment activities was -4,409 million yen and free cash flow was 2,488 million yen; cash and cash equivalents at the end of the year were 4,121 million yen.

Sales by Service Category

Broadleaf reports revenue by service category. Cloud services grew 44.1% to 11,832 million yen, led by software services (+48.2% to 11,302 million yen), within which software revenue rose 50.6% to 9,838 million yen. As customers continue to migrate to monthly subscription-based contracts, packaged system revenue declined 23.5% to 5,699 million yen, including a 22.7% decline in operation and support service; the company said this decline was more than offset by growth in software services. Others rose 37.7% to 3,285 million yen, with hardware up 54.7%. Recurring revenue (the total of software, support, and operations and support service) rose 18.6% to 14,737 million yen, and the recurring revenue ratio increased to 70.8% from 68.9%.

Service category (Millions of yen)	FY2025	FY2024	YoY change	YoY ratio
Cloud services	11,832	8,210	+3,622	+44.1%
Software services	11,302	7,626	+3,676	+48.2%
Software	9,838	6,532	+3,306	+50.6%
Maintenance contract	642	387	+255	+65.8%
Initial setup	822	706	+116	+16.4%
Marketplace	530	584	-54	-9.3%
Packaged system	5,699	7,450	-1,751	-23.5%
Software sales	1,441	1,941	-500	-25.8%
Operation and support service	4,258	5,508	-1,251	-22.7%
Others	3,285	2,386	+899	+37.7%
Hardware	2,613	1,689	+924	+54.7%
Supply	672	697	-25	-3.5%
Total	20,815	18,045	+2,770	+15.4%
Recurring revenue	14,737	12,428	+2,310	+18.6%
Recurring revenue ratio	70.8%	68.9%	–	–

FY2026 Forecast

For FY12/2026, Broadleaf forecasts revenue of 23,500 million yen (+12.9%), operating profit of 4,800 million yen (+132.7%) and profit attributable to owners of the parent of 3,200 million yen (+158.0%), with basic earnings per share of 35.35 yen. The company expects to achieve double-digit revenue growth without increasing service delivery costs: cost of sales is forecast to fall 10.9% to 6,500 million yen as PC replacement demand stabilizes, and beginning in FY2026 certain hardware transactions will be recognized as sales commissions rather than on a gross (purchase-and-sale) basis. Because introducing cloud-based software to large operators takes time, revenue is expected to increase toward the second half; the first-half forecast is revenue of 10,400 million yen and operating profit of 1,100 million yen.

Item (Millions of yen)	FY2026 Full-year forecast	FY2025 Full-year	YoY ratio	FY2026 1H forecast	FY2025 1H
Revenue	23,500	20,815	+12.9%	10,400	9,819
Cost of sales	6,500	7,296	-10.9%	3,100	3,448
Gross profit	17,000	13,520	+25.7%	7,300	6,371
SG&A expenses, etc.	12,200	11,457	+6.5%	6,200	5,600
Operating profit	4,800	2,063	+132.7%	1,100	771
Profit before tax	4,750	1,854	+156.2%	1,050	600
Profit attributable to owners of the parent	3,200	1,240	+158.0%	700	417
Basic EPS (yen)	35.35	13.79	–	7.74	4.64

By service category, cloud services are forecast at 15,700 million yen (+32.7%), including software services of 15,000 million yen (+32.7%), while packaged system is forecast at 5,500 million yen (-3.5%) and others at 2,300 million yen (-30.0%). In the operating profit bridge, the revenue increase is expected to add 2,685 million yen and cost of sales to add 796 million yen (a decrease in purchase costs of +900 million yen, partly offset by an increase in cloud amortization of -350 million yen), while SG&A expenses are expected to reduce profit by 743 million yen, mainly due to an increase in personnel expenses of 500 million yen and IT infrastructure procurement expenses of 250 million yen, as the company strengthens the recruitment and development of highly skilled talent for the AI era.

Shareholder Returns

The forecast year-end dividend for the fiscal year ended December 2025 was revised upward to 3.50 yen per share, bringing the annual dividend to 6.00 yen (interim 2.50 yen), a dividend payout ratio of 43.5%; the year-end dividend was scheduled to be proposed at the shareholders’ meeting in March 2026. Reflecting the transition to a profit expansion phase beginning in 2026, the company revised its basic policy from a consolidated payout ratio of 35% or higher to a target consolidated payout ratio of 40% or higher, stating that it will proactively and flexibly implement shareholder returns while securing internal reserves necessary for business development. For FY2026, it forecasts an annual dividend of 15.00 yen per share (interim 7.50 yen, year-end 7.50 yen), a payout ratio of 42.4%. Dividend amounts for FY2027 and FY2028 are scheduled to be determined at the beginning of each fiscal year in accordance with this policy.

Dividend per share	FY2026 Forecast	FY2025
Interim dividend	7.50 yen	2.50 yen
Year-end dividend	7.50 yen	3.50 yen
Annual dividend	15.00 yen	6.00 yen
Dividend payout ratio	42.4%	43.5%

Plan for 2026–2028 and Cloud Software KPIs

Broadleaf expects to continue achieving record performance in the latter three years of its Medium-Term Management Plan (2022–2028). Its current forecasts call for revenue of 27,500 million yen and operating profit of 9,000 million yen in FY2027, and revenue of 32,000 million yen (previous forecast: 31,500 million yen), operating profit of 13,000 million yen (operating profit rate of 40.6%) and profit attributable to owners of the parent of 8,500 million yen (previous forecast: 8,000 million yen) in FY2028. The previous forecasts are the values announced on February 7, 2025.

Item (Millions of yen)	FY2026 Current forecast	FY2027 Current forecast	FY2028 Current forecast	FY2028 Previous forecast
Revenue	23,500	27,500	32,000	31,500
Operating profit	4,800	9,000	13,000	13,000
Operating profit rate	20.4%	32.7%	40.6%	41.3%
Profit attributable to owners of the parent	3,200	6,000	8,500	8,000
Basic EPS (yen)	35.35	66.28	93.90	–

The company stated that the revenue forecast is achievable if the migration of legacy software users to cloud-based software proceeds as planned. To support this, it consolidated seven nationwide branches into three blocks, individually designated migration timelines for all customers on standby or with expiring legacy licenses, and established a dedicated sales organization targeting priority new customers such as nationwide and regional chain operators and dealer-affiliated repair shops. For cloud software KPIs, the cloud migration rate was 35.1% and the number of licenses was 20,556 in FY2025, with targets of 100.0% and 60,300 respectively in FY2028. ARPL (monthly revenue per license) was 25,217 yen in FY2025, and ARR (December recurring revenue annualized) was 6,220 million yen, which is expected to reach 20 billion yen at the end of 2028 as planned. Looking further ahead, Broadleaf aims to be an indispensable infrastructure company for the automotive aftermarket in the Physical AI era, evolving from a SaaS provider into a Service as Software (SaS) company.

Cloud software KPI	FY2025	FY2026	FY2027	FY2028
Cloud migration rate	35.1%	49.0%	68.0%	100.0%
Number of licenses	20,556	29,300	41,800	60,300
ARPL (monthly revenue per license, yen)	25,217	26,400	27,400	27,600
ARR (millions of yen)	6,220	9,300	13,800	20,000

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.