Worth reading
90Important
Scored from 5 of 6 sectionsDirection
Mixed performance
Direction inferred from the company’s description.Scale
37.3
Year-on-year change in operating profit (%)Wording
Conditional
How definitive the wording is.Contents of this document
Earnings briefing transcriptSecond quarter of the fiscal year ending December 202610 items taken from the company’s own explanation
Financial Results Figures (The key points of this material are explained below)
Net Sales¥8,519 million-0.6%
Operating profit¥650 million+37.3%
Ordinary income¥706 million+34.4%
Net income506 Net income attributable to owners of the parent +123.2%¥ million
Gross Profit Margin30.9%
Operating profit margin7.6%
Selling, general and administrative expenses¥1,981 million
Results for the three months of the current quarter
Net Sales
¥4,128 million
Gross profit
¥1,224 million
Operating profit
¥153 million
Ordinary income
¥178 million
Profit attributable to owners of parent for the quarter
¥86 million
Full-year earnings forecast
Net Sales
¥18,300 million
Operating profit
¥1,600 million
Ordinary income
¥1,615 million
Profit attributable to owners of the parent
¥1,050 million
Progress against full-year forecast 通期の予想に対して、いまどこまで進んだかの割合です。
Net Sales46.6%
Operating profit40.6%
Profit attributable to owners of the parent48.2%
What the company explained in this material
Self-assessment against the planThe company's self-assessment against its own plan.
Cumulative first-half results were at the level initially expected. Revenue was 101.7% of plan and operating income was 101.6% of plan. Operating income for the second quarter alone fell short of plan.Breakdown of Factors Affecting the ChangeReasons cited by the Company for the change in the figures.
Operating income increased from ¥473 million in the first half of FY2025 to ¥650 million in the first half of FY2026. Gross profit: +¥231 million; personnel expenses: +¥19 million; recruitment expenses: -¥15 million; education and training expenses: -¥1 million; advertising expenses: -¥4 million; rent: -¥8 million; goodwill amortization: +¥12 million; other: -¥57 million. Total SG&A expenses increased by ¥54 million.
Assumptions Underlying the Business OutlookThe assumptions used by the company in preparing its forecast.
For FY2026, the assumptions are first-half revenue of ¥8,380 million and second-half revenue of ¥9,920 million, and first-half operating income of ¥640 million and second-half operating income of ¥960 million. The company assumes that second-quarter revenue and operating income will tend to be lower than in the first quarter because the second quarter is a slow period for projects and is affected by onboarding training for new graduates.New initiatives
Development and implementation of a local LLM; the launch of a business architecture talent development service aligned with Digital Skill Standards Version 2.0; the full-scale rollout of cross-border M&A services by Singapore-based LTS Strategy Pte. Ltd.; the full-scale development of the physical AI and robotics business; and the research, development and commercialization of an integrated satellite and terrestrial IoT sensor monitoring system with JAXA and Oki Electric Industry.Key KPIsA metric the company considers important as a management benchmark.
The number of new customers increased by 13 companies; front-office employees totaled 911, a net increase of 29 year on year; 19 employees held specialized certifications in the PM and BA fields; average customer spending for LTS alone was ¥20.6 million; and the share of revenue from the top 20 customers declined from an FY2021 average of 83% to an FY2025 average of 71%.Unit price and quantity metricsThese figures show sales broken down by price and volume.
Average customer spending for LTS alone was ¥20.6 million. The customer base comprised 102 existing customers and 13 new customers. Platform & Agent made progress in raising contract prices.Segment results
The company operates in a single segment, the Transformation Services business. By service area, Strategic Consulting revenue declined 4.5% year on year and its gross margin rose 3.2 percentage points; DX Consulting revenue rose 9.4% and its gross margin rose 5.6 percentage points; DX Engineering revenue declined 11.9% and its gross margin fell 4.8 percentage points; and Platform & Agent revenue declined 14.0% and its gross margin rose 0.9 percentage points.Medium-term management plan targets
2nd Growth Plan (FY2025-FY2027). Assumed FY25-FY27 gross margins by service area are 50% or higher for Strategic Consulting, 40% or higher for DX Consulting, 30% or higher for DX Engineering, and 20% or higher for Platform & Agent. The assumed growth rates are 4–8%, 11–15%, 3–7%, and 1–5%, respectively.Financial targets
Net cash of ¥1,544 million, a net debt-to-equity ratio of -0.30, and an equity ratio of 50.1%.Number of employees
Front-office employees totaled 911, a net increase of 29 year on year. The company plans to continue hiring with an emphasis on hiring quality, without being bound by the initial plan for 950 front-office employees at fiscal year-end.| Item | Details |
|---|---|
| Document type | Earnings briefing transcript |
| Fiscal Period Covered | Second quarter of the fiscal year ending December 2026 |
| Net Sales | ¥8,519 million (YoY -0.6%) |
| Operating profit | ¥650 million (YoY +37.3%) |
| Ordinary income | ¥706 million (YoY +34.4%) |
| Net income | 506 Net income attributable to owners of the parent (¥ million) (YoY +123.2%) |
| Gross Profit Margin | 30.9% |
| Operating profit margin | 7.6% |
| Selling, general and administrative expenses | ¥1,981 million |
| Results for the three months of the current quarter | Net Sales ¥4,128 million / Gross profit ¥1,224 million / Operating profit ¥153 million / Ordinary income ¥178 million / Profit attributable to owners of parent for the quarter ¥86 million |
| Full-year earnings forecast | Net Sales ¥18,300 million / Operating profit ¥1,600 million / Ordinary income ¥1,615 million / Profit attributable to owners of the parent ¥1,050 million |
| Progress against full-year forecast | Net Sales 46.6% / Operating profit 40.6% / Profit attributable to owners of the parent 48.2% |
| Self-assessment against the plan | Cumulative first-half results were at the level initially expected. Revenue was 101.7% of plan and operating income was 101.6% of plan. Operating income for the second quarter alone fell short of plan. |
| Segment results | The company operates in a single segment, the Transformation Services business. By service area, Strategic Consulting revenue declined 4.5% year on year and its gross margin rose 3.2 percentage points; DX Consulting revenue rose 9.4% and its gross margin rose 5.6 percentage points; DX Engineering revenue declined 11.9% and its gross margin fell 4.8 percentage points; and Platform & Agent revenue declined 14.0% and its gross margin rose 0.9 percentage points. |
| Breakdown of Factors Affecting the Change | Operating income increased from ¥473 million in the first half of FY2025 to ¥650 million in the first half of FY2026. Gross profit: +¥231 million; personnel expenses: +¥19 million; recruitment expenses: -¥15 million; education and training expenses: -¥1 million; advertising expenses: -¥4 million; rent: -¥8 million; goodwill amortization: +¥12 million; other: -¥57 million. Total SG&A expenses increased by ¥54 million. |
| Key KPIs | The number of new customers increased by 13 companies; front-office employees totaled 911, a net increase of 29 year on year; 19 employees held specialized certifications in the PM and BA fields; average customer spending for LTS alone was ¥20.6 million; and the share of revenue from the top 20 customers declined from an FY2021 average of 83% to an FY2025 average of 71%. |
| Unit price and quantity metrics | Average customer spending for LTS alone was ¥20.6 million. The customer base comprised 102 existing customers and 13 new customers. Platform & Agent made progress in raising contract prices. |
| Number of employees | Front-office employees totaled 911, a net increase of 29 year on year. The company plans to continue hiring with an emphasis on hiring quality, without being bound by the initial plan for 950 front-office employees at fiscal year-end. |
| Assumptions Underlying the Business Outlook | For FY2026, the assumptions are first-half revenue of ¥8,380 million and second-half revenue of ¥9,920 million, and first-half operating income of ¥640 million and second-half operating income of ¥960 million. The company assumes that second-quarter revenue and operating income will tend to be lower than in the first quarter because the second quarter is a slow period for projects and is affected by onboarding training for new graduates. |
| Medium-term management plan targets | 2nd Growth Plan (FY2025-FY2027). Assumed FY25-FY27 gross margins by service area are 50% or higher for Strategic Consulting, 40% or higher for DX Consulting, 30% or higher for DX Engineering, and 20% or higher for Platform & Agent. The assumed growth rates are 4–8%, 11–15%, 3–7%, and 1–5%, respectively. |
| Financial targets | Net cash of ¥1,544 million, a net debt-to-equity ratio of -0.30, and an equity ratio of 50.1%. |
| New initiatives | Development and implementation of a local LLM; the launch of a business architecture talent development service aligned with Digital Skill Standards Version 2.0; the full-scale rollout of cross-border M&A services by Singapore-based LTS Strategy Pte. Ltd.; the full-scale development of the physical AI and robotics business; and the research, development and commercialization of an integrated satellite and terrestrial IoT sensor monitoring system with JAXA and Oki Electric Industry. |
Items this document does not state (9)
Number of stores and locationsRisk amount incorporated into the outlookAnnual DividendPayout ratioAcquisition of treasury sharesCapital expendituresOrders received and order backlogMarket Size / ShareKey points of the Q&A
These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.
The reasons the company gives
The company's own explanation, not something inferred from the numbers.Growth in revenue and the gross margin in the DX Consulting segment drove overall performance. The increase in operating income was also supported by containing the rise in SG&A expenses and the completion of amortization of some goodwill. Meanwhile, DX Engineering was affected by lower utilization as the business shifted toward higher-value-added areas and by losses on certain projects, while demand for SES services was weak in Platform & Agent.
How to read this page
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