Scala, Inc. (4845) AI Stock Analysis

• Market Cap: ¥6.93B
• Dividend Yield: 4.26%
• Average Volume (3M): 42.30K
• Price to Earnings (P/E): 6.9
• Beta (1Y): 0.29
• Revenue Growth: -25.27%
• EPS Growth: N/A
• Country: JP
• Employees: 529
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 25.77
• Shares Outstanding: 17,762,660
• 10 Day Avg. Volume: 45,680
• 30 Day Avg. Volume: 42,300
• PEG Ratio: -0.06
• Price to Book (P/B): 1.55
• Price to Sales (P/S): 0.91
• P/FCF Ratio: 14.53
• 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: Hold
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 58 Neutral
• Price Target: ¥410.00 ▲(5.94% Upside)

Scala, Inc.'s overall stock score reflects a mixed outlook. The most significant factor is the company's financial performance, which shows improvements in profitability but challenges in revenue and cash flow. Technical analysis indicates bearish momentum, which could pose risks. However, the stock's attractive valuation with a low P/E ratio and high dividend yield provides a potential opportunity for value investors.

Scala, Inc. Business Overview & Revenue Model

Company Description

Scala, Inc. provides SaaS/ASP services supporting communications between corporations and individuals primarily in Japan. The company operates through five segments: IT/AI/IoT/DX Business, Customer Support Business, HR & Education Business, EC Business, and Incubation & Investment Business. The IT/AI/IoT/DX Business segment engages in the planning and development of services promoting digital transformation (DX); DX initiatives for local governments and the financial industry; and digital platforms using the app "xID", which is linked to My Number Card (the individual number card issued under the Social Security and Tax Number System). The Customer Support Business segment provides consulting services for call centers and others. The HR & Education Business segment provides recruitment support services for new graduates, which are specialized for athletic and female students, as well as services for the planning and operation of related events comprising joint information sessions and career seminars; childcare and educational services; services in the areas of sports school for children, the planning and management of sports events, and online sports education; and support services for the recruitment of foreign talent. The EC Business segment operates a reuse e-commerce site for buying and selling trading cards games (TCG), which also contains game walkthrough pages. The Incubation & Investment Business segment engages in activities related to the investment discovery, and investments execution and engagement; and implements business development, and businesses related to immigration support services. The company was formerly known as Fusion Partners Co. and changed its name to Scala, Inc. in December 2016. Scala, Inc. was founded in 1991 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Scala, Inc. generates revenue primarily through the sale of its software licenses, hardware products, and ongoing support services. The company offers subscription-based models for its content management systems, allowing clients to access continuous updates and technical support. Additionally, Scala partners with hardware manufacturers and digital signage integrators to expand its market reach, which contributes to its revenue through shared sales agreements and joint marketing initiatives. The increasing demand for digital signage in various industries, along with a focus on innovation and customer experience, further enhances Scala's revenue potential.

Scala, Inc. Financial Statement Overview

Summary

Scala, Inc. shows a mixed financial performance. While profitability has improved with a positive net profit margin and reduced leverage, the company faces challenges in revenue growth and cash flow generation. The strong gross profit margin indicates effective cost management, but operational efficiency and cash flow conversion need enhancement.

Income Statement

Scala, Inc. has shown a mixed performance in its income statement. The company experienced a significant revenue decline of 14.79% in the most recent year, indicating potential challenges in maintaining its market position. However, the gross profit margin remains relatively healthy at 48.32%, suggesting effective cost management. The net profit margin improved to 12.01% from a negative position in the previous year, reflecting a turnaround in profitability. Despite these improvements, the EBIT and EBITDA margins are modest at 9.19% and 12.87%, respectively, indicating room for operational efficiency enhancements.

Balance Sheet

The balance sheet of Scala, Inc. reflects a moderate financial position. The debt-to-equity ratio has improved to 0.88 from 1.43, indicating a reduction in leverage and a stronger equity base. Return on equity is positive at 20.45%, showcasing effective utilization of shareholder funds. However, the equity ratio stands at 46.98%, suggesting a balanced but cautious approach to asset financing. The company has made strides in reducing debt, but maintaining this trajectory is crucial for long-term stability.

Cash Flow

Scala, Inc.'s cash flow statement reveals challenges in cash generation. The free cash flow growth rate is negative at -22.79%, indicating a decline in cash available for reinvestment or debt reduction. The operating cash flow to net income ratio is relatively low at 0.17, suggesting limited cash conversion efficiency. However, the free cash flow to net income ratio is healthier at 0.87, indicating that a significant portion of net income is being converted into free cash flow. Improving cash flow generation remains a key area for improvement.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	8.18B	8.18B	10.71B	11.84B	9.57B	8.73B
Gross Profit	3.95B	3.95B	4.56B	4.47B	3.63B	3.64B
EBITDA	1.05B	1.05B	-1.47B	1.22B	497.24M	843.37M
Net Income	982.30M	982.00M	-2.89B	-218.58M	-523.04M	3.07B
Balance Sheet
Total Assets	10.22B	10.22B	12.70B	18.32B	20.82B	20.33B
Cash, Cash Equivalents and Short-Term Investments	4.59B	4.59B	6.82B	7.74B	9.63B	9.81B
Total Debt	4.20B	4.20B	6.19B	7.89B	9.25B	8.58B
Total Liabilities	5.39B	5.39B	8.13B	10.23B	11.81B	9.86B
Stockholders Equity	4.80B	4.80B	4.34B	7.83B	8.69B	10.16B
Cash Flow
Free Cash Flow	512.01M	512.00M	152.34M	392.66M	1.85B	-49.99M
Operating Cash Flow	589.45M	589.00M	251.77M	601.36M	2.05B	720.81M
Investing Cash Flow	779.37M	778.00M	161.98M	-214.87M	-1.89B	4.43B
Financing Cash Flow	-3.60B	-3.60B	-1.35B	-2.25B	-339.02M	-3.16B

Scala, Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 387.00
• 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:4845, the sentiment is Negative. The current price of 387 is below the 20-day moving average (MA) of 394.60, below the 50-day MA of 407.66, and below the 200-day MA of 403.26, indicating a bearish trend. The MACD of -5.41 indicates Positive momentum. The RSI at 36.53 is Neutral, neither overbought nor oversold. The STOCH value of 5.29 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4845.

Scala, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2303	80 Outperform	¥7.60B	18.49	―	0.99%	-0.69%	-6.98%
5029	69 Neutral	¥4.59B	26.78	―	―	30.72%	―
4476	68 Neutral	¥7.12B	73.31	―	―	14.20%	-57.38%
5259	67 Neutral	¥10.13B	45.32	―	0.43%	12.37%	199.06%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4845	58 Neutral	¥6.93B	6.89	―	4.26%	-25.27%	―

Scala, Inc. Corporate Events

Scala, Inc. Outlines Strategy to Meet Tokyo Stock Exchange Listing Criteria

Scala, Inc. has announced a plan to meet the continued listing criteria for the Tokyo Stock Exchange Prime Market after failing to meet the ‘Market Capitalization of Tradable Shares’ criterion as of June 30, 2025. The company has entered an improvement period, during which it aims to enhance corporate value and share price through growth strategies outlined in its ‘Mid-Term Management Plan 2026-2028.’ Scala plans to focus on strengthening its DX business by expanding its SaaS services and leveraging AI technology, as well as recovering and growing its human resources business. These efforts are intended to restore market trust and improve business performance, thereby increasing market capitalization and meeting the listing criteria.

The most recent analyst rating on (JP:4845) stock is a Hold with a Yen434.00 price target. To see the full list of analyst forecasts on Scala, Inc. stock, see the JP:4845 Stock Forecast page.

Scala, Inc. Proposes Reserve Reduction to Bolster Financial Flexibility

Scala, Inc. has announced a proposal to reduce its Legal Capital Reserve and Retained Earnings Reserve, aiming to strengthen its financial position and enhance flexibility for future capital policies, including shareholder returns. This reclassification of accounts within the net assets section of the balance sheet is expected to have no impact on the company’s financial results, pending approval at the upcoming Annual General Meeting of Shareholders.

Scala, Inc. Proposes Amendment to Board Composition

Scala, Inc. has announced a proposal to amend its Articles of Incorporation, specifically to alter the composition of its Board of Directors. The amendment seeks to change the requirement for Outside Directors from at least half to at least one-third of the board, aiming to balance supervisory functions with agile execution. This change is expected to impact the company’s governance structure, potentially influencing its decision-making processes and strategic direction.

Scala, Inc. Reports Financial Discrepancies with Positive Net Income Upsurge

Scala, Inc. reported a discrepancy between its financial forecast and actual results for the fiscal year ended June 30, 2025, with a notable increase in net income attributed to the recognition of deferred tax assets. This improvement reflects the company’s ongoing efforts to stabilize performance through strategic business reforms, which have positively impacted its financial health and stakeholder confidence.

Scala, Inc. Reports Turnaround in Fiscal Year 2025 with Improved Profitability

Scala, Inc. reported its consolidated financial results for the fiscal year ending June 30, 2025, showing a slight decrease in revenue by 0.2% to 8,179 million yen. Despite this, the company achieved a significant turnaround in profitability with a net income of 982 million yen compared to a loss in the previous year. The improvement is attributed to effective cost management and strategic restructuring. The company’s financial position strengthened with an increase in equity ratio to 47.0%, indicating a more robust balance sheet. However, the dividend per share was reduced, reflecting a cautious approach to capital allocation. The financial results suggest a positive shift in Scala’s operational efficiency and market positioning, which could have favorable implications for stakeholders.

Scala, Inc. Unveils Ambitious Mid-Term Management Plan for 2026-2028

Scala, Inc. has announced its Mid-Term Management Plan for 2026-2028, following the withdrawal of its previous plan due to business structure reforms. The new plan aims to achieve further profit growth by enhancing the growth potential of its core businesses, focusing on profitability and efficiency. The company has set ambitious financial targets, forecasting significant revenue and operating income growth over the next three years.