CAREERLINK CO.,LTD. Q2 FY2026 earnings call

Overall Interim Financial Performance

• Total consolidated interim revenue hit 21.639 billion yen, reaching 100.7% of the revised interim forecast and growing 5.7% year-over-year. Strong order flow in BPO and manufacturing HR services offset a scale-down of a large prior-period BPO project.
• Operating profit hit 1.938 billion yen, reaching 106.5% of the revised interim forecast and growing 63.1% year-over-year. Revenue growth and cost cuts (including efficient staff placement and reduced recruiter acquisition costs) offset higher investment in labor and systems.
• Recurring profit hit 1.948 billion yen, reaching 106.8% of the revised forecast and growing 63.5% year-over-year.
• Net profit attributable to parent company shareholders hit 1.324 billion yen, reaching 107.7% of the revised forecast and growing 65.4% year-over-year.

Mid-Term Management Plan (through FY2028 March ending)

• The existing mid-term plan remains unchanged. Management maintains a strategy of active investment that accepts trial-and-error to achieve sustained growth.
• Target average annual growth of 5% for total revenue and ~4% for operating profit over the 3-year plan period, based on organic growth projections.
• Segment-level growth targets: 5% average annual revenue growth for office-related HR services, 6% average annual revenue growth for manufacturing-related HR services.
• Cumulative average annual growth from FY2020 February through the final plan year (FY2028 March) is targeted at 10.5%, matching the industry average growth of 9.6%. A target KPI of 240 total BPO projects is set to support 10.5% compound annual growth.

Core Growth Strategies and Key Priorities

• Expand performance base: Expand geographic and service coverage with local governments, secure more long-term contracts, strengthen private-sector BPO, and develop new businesses and service areas.
• Active investment for sustained growth: Strengthen operational capabilities for service expansion, advance digital transformation (DX), recruit specialized talent, and improve BPO operational governance to boost customer satisfaction, quality, and process efficiency.
• Pursue inorganic growth: Actively evaluate and advance M&A and strategic business alliance opportunities.

Shareholder Returns

• Maintains a core policy of stable dividends. The planned full-year end dividend remains 120 yen per share, with a forecast payout ratio of 77.1%. This 120 yen per share dividend is planned to be maintained throughout the mid-term plan period, as baseline profit is on track to meet targets.
• Annual Quo Card shareholder benefits are offered to shareholders holding at least 100 shares as of September 30 each year, with tiers based on share count and holding period.

1. Office-related HR Services: Revenue of 17.398 billion yen, up 3.3% year-over-year; segment profit of 1.765 billion yen, up 67.1% year-over-year, accounting for 80.4% of total consolidated revenue. Within this segment: BPO-related services grew revenue year-over-year despite a scale-down of a prior large legacy project; CRM-related services grew revenue year-over-year from expanded existing client business, new client acquisition, and new call center dispatch contracts; general office services saw a year-over-year revenue decline due to ended/downscaled short-term public sector contracts and reduced orders from financial institutions including new NISA-related projects. BPO project count grew 12.5% year-over-year to 171 projects, and the number of contracted local governments grew 14.7% year-over-year. 2. Manufacturing-related HR Services: Revenue of 4.111 billion yen, up 18.2% year-over-year; segment profit of 158 million yen, up 40.5% year-over-year, accounting for 19.0% of total consolidated revenue. Both the food processing division and manufacturing processing division saw strong order growth, with the manufacturing processing division additionally securing a large government policy-related dispatch contract from a housing equipment client. Cost control and efficient operations drove profit growth. 3. Other Segments: Reported a year-over-year decline in both revenue and profit, primarily due to sustained labor tightness.

• Full-year FY2026 March ending earnings guidance is maintained unchanged, despite interim results exceeding the revised interim forecast. Guidance is kept steady due to uncertain external conditions and potential for volume increases in the second half.
• As of the interim period, progress against the full-year forecast is: 50.9% for revenue, 71.6% for operating profit, 72.1% for recurring profit, and 71.7% for net profit attributable to parent company shareholders.
• The mid-term management plan through FY2028 March ending is also maintained unchanged, with all original growth targets and strategic priorities kept in place.
• Management is accelerating planned investment from the mid-term plan (including M&A activity) in the second half of FY2026 to expand business scale, diversify operations, and expand addressable service areas, though final investment details and total outlay have not yet been finalized.

• Persistent labor tightness negatively impacted performance of the 'Other' business segment, leading to year-over-year declines in both revenue and profit.
• The broader external operating environment remains uncertain, creating variable factors that make precise full-year earnings projections difficult.
• The company's historical performance has been heavily weighted to the second half, though this trend is expected to moderate in the current fiscal year, but unforeseen changes in order timing or volume could create earnings volatility.
• While the company is transitioning to a more stable, stock-based business model with a higher share of long-term contracts, changes in external conditions can still lead to fluctuations in the share of long-term vs. short-term spot contracts, creating operational and earnings volatility.

Q: With 71.6% of the full-year operating profit forecast achieved in the first half, is there upside potential to the current full-year guidance? / A: Some orders planned for the second half were pulled forward to the first half, easing the historical second-half bias to annual results. Management believes the current full-year revenue and profit forecasts are achievable. However, uncertain external conditions create many variable factors that prevent more precise forecasting, so guidance is kept unchanged. Active planned investment in skilled talent, IT systems, new business development and M&A means total investment spending is not yet finalized, also supporting keeping guidance steady.

Q: Why did the number of contracted local governments see only limited growth from the first quarter level? / A: Management prioritized upselling to existing contracted local governments in the first half, focusing on securing additional orders for My Number, Family Registry Act reform, benefit payments, and citizen affairs division work. While this focus slowed the pace of adding new local government clients, it has strengthened relationships and increased business share with existing clients. The company still started new contracts with large ordinance-designated cities and core regional cities that it had not worked with before, and will continue expanding the total number of contracted local governments going forward.

Q: What is the progress on securing more long-term contracts to reduce dependence on short-term spot projects? / A: The company has been working to restructure its business model to lower spot contract dependence. Long-term project contracts now account for approximately 50-60% of total contracting revenue, meaning the shift to a more stable stock-based business model is progressing as planned. The share will likely fluctuate based on external conditions that affect large spot project awards and project size changes, but management confirms the structural shift is on track.

Q: What is the progress on hiring core talent? / A: As of the end of September 2025, just under 380 core employees are on staff. Going forward, the company will continue expanding core talent hiring to also cover core roles in information systems, business planning, and other administrative departments in addition to front-line operational roles.