Decline in students aspiring to Tokyo metropolitan schools continues to weigh on revenue

Consolidated revenue in FY2026-H1 was ¥6,564 million, down 1.6% from ¥6,674 million in the year-earlier interim period. Revenue in FY2027-Q1 was also ¥2,370 million, down 2.9% year on year, indicating that the decline in revenue is continuing. In particular, education business revenue in FY2027-Q1 was ¥2,207.696 million, down 3.5% year on year, almost directly explaining the decline in consolidated revenue.

The company says that the number of students aspiring to attend Tokyo metropolitan junior and senior high schools, which have been a core strength, is declining following the expansion of effective tuition waivers for private high schools in Tokyo. The company has traditionally linked its record of admissions to Tokyo metropolitan integrated junior and senior high schools and selective senior high schools to its ability to attract students. However, if the overall pool of prospective students shrinks, even a strong admissions record will have a weaker impact on enrollment and revenue. Full-year revenue in FY2026 was also ¥13,069 million, down 1.7% year on year, indicating that the situation should be viewed as a structural change in demand, including changes to the education system, rather than merely a short-term seasonal factor.

Meanwhile, real estate business revenue in FY2027-Q1 rose 3.2% year on year to ¥43.361 million, while other revenue fell 20.2% to ¥124.007 million. Real estate is therefore a stable supplementary revenue source, but not large enough to replace the scale of the education business. In FY2027-H1, the key points to monitor will be whether the rate of decline in education business revenue narrows and whether the expansion of courses for private junior and senior high schools emerges as a new source of education business revenue.

The current first-quarter disclosure does not provide volume-based figures for the number of students aspiring to attend Tokyo metropolitan schools, the number enrolled in private-school courses, revenue by course, or the increase in per-student tuition resulting from tuition revisions. In the next earnings release, it will be important to see whether the company can explain separately not only the year-on-year change in education business revenue, but also the decline in student numbers, the number of students switching to private-school courses, and the contribution from tuition per student. It will be necessary to determine whether a return to at least 0% year-on-year revenue growth reflects only higher tuition offsetting lower student numbers, or whether the private-school initiatives are actually increasing enrollment.