Revenue increased, but the operating margin fell to 7.9%, making a recovery in first-half profitability the key focus.

In FY2027-Q1, revenue was ¥2,532 million and operating profit was ¥201 million, resulting in an operating margin of 7.9%. In the same quarter of the previous year, revenue was ¥2,144 million, operating profit was ¥315 million and the operating margin was approximately 14.7%. Thus, despite a ¥388 million increase in revenue, operating profit fell by ¥113 million. According to the earnings presentation, gross margin also fell 6.7 percentage points year on year to 42.7%, while progress against the full-year operating profit forecast of ¥1,460 million was only 13.8%.

The company disclosed the amounts of the factors behind the year-on-year decline in operating profit. Gross profit in the staffing business fell by ¥38 million, the recruitment and hiring-support business by ¥51 million, and the media and solutions business by ¥21 million, each contributing to the decline. In addition, other SG&A expenses for existing businesses increased by ¥8 million and rent expenses by ¥26 million. Gross profit of ¥132 million from new subsidiaries contributed to the increase in profit, but personnel expenses of ¥60 million, goodwill amortization of ¥8 million and other SG&A expenses of ¥33 million at the new subsidiaries weighed on profit. The consolidation effect therefore did not translate directly into higher operating profit.

By segment, the staffing and outsourcing business reported revenue of ¥1,881 million and segment profit of ¥275 million. Revenue increased 35.4% year on year, but profit fell 6.5%. The recruitment business reported revenue of ¥369 million and segment profit of ¥99 million, with profit down 31.6%. The media and solutions business reported revenue of ¥289 million and segment profit of ¥87 million, with profit down 24.3%. In FY2027-H1, the key issues to monitor will be whether gross margin can be lifted from 42.7%, rent and personnel expenses can be absorbed, and segment profit can return to year-on-year growth, rather than revenue growth resulting merely from an expanded scope of consolidation.