SIGMAXYZ Holdings Inc. Q2 FY2026 earnings call

• Financial Results Summary

  • Interim consolidated revenue was 12.558 billion yen, flat year-over-year, with operating profit and ordinary profit both increasing 13% year-over-year; interim net profit fell 1% year-over-year due to higher corporate taxes.
  • Gross profit margin improved from 45% to 47.4% driven by lower subcontracting costs and a reversal of prior year bonus provisions, and ordinary profit margin rose 3 percentage points to 26.9%.
  • Total assets stood at 18.062 billion yen, with cash and deposits of 6.115 billion yen; total liabilities fell 1.862 billion yen year-over-year, with no outstanding debt, and equity ratio remained a strong 80%.

• Operational Highlights

  • Consultant headcount grew 13% year-over-year to 694, and project satisfaction (a delivery quality metric) held at 97 points.
  • 24 experienced hires and 81 new graduates joined in the first half, with over 20 more experienced hires confirmed for the second half; the firm targets 90 new graduates for April 2026 entry, continuing a quality-focused hiring strategy.
  • Completed high-profile client projects including generative AI-enabled system maintenance advancement for Intec, company-wide digital business and system reform for Sadenko, and GX business development support for Itochu Techno Solutions, and launched a new partnered service CIO × Compass powered by Co-CIO with Itochu Techno Solutions.

• Shareholder Return Enhancement

  • The firm increased the maximum amount of its share repurchase program to 1.8 billion yen, and plans to cancel 3 million repurchased shares. The full-year dividend forecast is maintained at 26 yen per share, bringing the total projected payout ratio to over 100%.
  • Management maintains a core policy of balancing investment in medium- to long-term sustainable growth with maintaining an appropriate level of equity capital to absorb risks.

The firm's primary business segment is Consulting Services, which generated 12.558 billion yen in interim consolidated revenue. Key segment metrics: project count and client count each decreased 2% year-over-year, while average revenue per contract increased 3% year-over-year to 20.9 million yen. Top 10 clients saw a year-over-year decrease in revenue. The segment is focused on large core system SaaS transformation projects, GX (Green Transformation) initiatives, and generative AI-enabled consulting services, with key industry clients in transportation, finance, information and communications, retail, and general trading. The former subsidiary SXD (focused on corporate system procurement) was deconsolidated, removing 1.1 billion yen in expected full-year revenue from the segment.

• Full-year guidance was revised downward in November 2025: revenue was cut from 30 billion yen to 24.5 billion yen, operating profit from 6.95 billion yen to 6.1 billion yen, ordinary profit from 7.06 billion yen to 6.3 billion yen, and net profit attributable to parent shareholders from 4.9 billion yen to 4.4 billion yen.
• The annual dividend per share forecast is maintained at 26 yen, with no change from prior guidance.
• The 500 billion yen revenue target for the FY2030 mid-term plan remains unchanged, though management acknowledges that returning to the 14% annual average compound growth target immediately next fiscal year will be difficult, and will focus on securing large new projects to get back on track to hit the goal.
• The firm does not expect a recovery in new project starts and revenue in the third quarter; recovery is projected to start in the fourth quarter of the current fiscal year or early next fiscal year.
• Second half consultant utilization is projected to come in the mid-60% range, below the 70% target.

• New project start delays have created a 3 billion yen negative revenue impact for the full year, caused by overlapping high-complexity large project delivery that drew senior consultant resources away from new business proposal work, combined with extended internal decision-making timelines at client companies.
• While overall demand for DX, SaaS, and AI consulting remains strong, some manufacturing clients have shown more cautious investment behavior amid global trade policy uncertainty and rising inflation.
• The proportional share of senior consultants (who lead high-complexity projects and new business proposals) has declined slightly as the firm expands and hires more junior staff, which created resource allocation challenges when multiple large high-difficulty projects overlapped in the first half.
• Second half consultant utilization is expected to fall below target, which creates near-term pressure on revenue and profit if unutilized capacity cannot be reallocated to growth initiatives.

Q: What are the size and breakdown of factors driving the full-year revenue downward revision? / A: The total downward revenue revision is more than 5 billion yen. 1.1 billion yen comes from the deconsolidation of subsidiary SXD after its full share transfer in October 2025. 3 billion yen comes from delayed new large project starts, with an additional ~1.5 billion yen reduction from lower expected subcontracting costs linked to the delayed projects. The delayed 3 billion yen in revenue comes from multiple large new client projects, each with an individual size of over 1 billion yen, not just a single client.

Q: Is the new project delay due only to internal factors, and will the dedicated SaaS proposal team separate sales and delivery roles permanently? / A: Only new project starts are delayed; all existing in-flight projects launched on schedule while meeting client satisfaction targets. Delays stem from a mix of client-side decision timing and internal resource allocation: senior consultants were concentrated on launching near-completion large high-complexity projects, so new business development was under-resourced. This internal issue is resolving as those large projects launch, and workload is normalizing. The new dedicated SaaS team will focus on accelerating proposal speed to drive top-line growth, but will still be led by consultants who can handle both proposal and delivery, so the firm's core operating model of consultants handling both functions does not change.

Q: What positive and negative impacts does generative AI have on the business, and how do you see medium-term consulting demand? / A: The primary positive impact is improved internal productivity: younger staff especially adopt generative AI tools voluntarily to improve output speed and quality, and the firm is investing to provide open access to these tools to continue driving productivity gains. The main potential negative concern is AI replacing consultants, but the firm does not do commodity work or labor displacement staffing; it solves high-complexity client strategic problems, so direct substitution risk is low. The key opportunity is helping clients navigate AI adoption, which is still unclear for most businesses, and the firm is already working hands-on with clients to implement generative AI, which will drive medium-term consulting demand growth.

Q: Has your hiring policy changed amid the project delays, and what is your current turnover rate? / A: Core hiring policy is unchanged: the firm grows headcount via new graduate hiring, replaces departing staff with experienced hires, and always prioritizes hiring quality. New graduate hiring is on track to exceed last year's intake, with 2026 and 2027 hiring progressing as planned. Experienced hiring is adjusted more flexibly for project timing, with closer monitoring of start dates amid current delays. Turnover holds steady at 10% to 12%, which is within expected ranges, and the firm does not see material hiring market pressure that threatens its hiring plans.