WILL GROUP,INC. Q1 FY2026 earnings call

• Overall Performance: The company achieved a strong start to the final year of its mid-term management plan WILL-being 2026, with overall performance meeting expectations, and all KPIs tracking on track except construction technical worker retention.
• Strategic Priority 1: Further growth and monetization of the domestic construction technical worker segment
  • The segment has maintained consistent quarter-over-quarter revenue growth, with a record high 814 new hires and 2,700 total active workers in Q1. Contract unit pricing increased ~5% year-over-year, and utilization stands at 91.8%.
  • Retention rate is 71.4%, which is below target. The company launched a revised evaluation system in April 2025 to improve retention, with results expected to materialize over a 1-2 year horizon.
• Strategic Priority 2: Re-growth of non-construction segments in domestic Working business
  • Permanent staff placement hit a record high 3,778 active workers with 722 new hires, a record high quarterly intake.
  • Foreign worker employment support reached a record high 3,550 total supported workers, with 658 new placements in Q1. Growth has expanded beyond the traditional factory outsourcing and care segments to new hospitality and tourism sectors, with early tangible results after one year of expansion.
• Strategic Progress on Profit Mix: The combined share of high-margin priority strategic businesses (permanent staff placement and foreign employment support) in domestic total gross profit increased from 29.8% at the end of FY2023 to 44.6% in Q1 FY2026, pushing overall domestic gross profit margin up 1.8pp to 20.3%.
• Domestic Brand Promotion: Key metrics for the domestic Working brand WILLOF, including brand awareness, branded search volume, and user intent to use, all increased materially in the quarter.
• Overseas Business Recovery: While Singapore and Australia face continued challenging market conditions, staffing order intake from Australian state governments and financial institutions has shown gradual recovery signals. Staffing-led growth is driving core profit improvement in the region.

1. Domestic Working Business: Revenue of 21.18 billion yen, segment profit of 0.58 billion yen. Revenue grew driven primarily by the construction technical worker segment, and segment profit increased 144.8% year-over-year due to expanded gross profit in the construction technical worker segment and improved selling, general and administrative (SG&A) efficiency across the domestic business. The construction technical worker sub-segment achieved 0.24 billion yen in year-over-year profit growth, with its Q1 operating deficit greatly reduced from historical levels due to expanded revenue scale. 2. Overseas Working Business: Revenue of 14 billion yen, segment profit of 0.47 billion yen. In yen terms, revenue decreased 3.7% year-over-year due to 1.11 billion yen in negative foreign exchange impact from yen appreciation, though it achieved revenue growth in local currency terms. Reported segment profit decreased 17.9% year-over-year due to the lap of 0.25 billion yen in Singapore government subsidy recorded in the prior year period; normalized segment profit (excluding the subsidy impact) increased 50.9% year-over-year, showing recovering core profit growth. Overall consolidated results: Total revenue of 35.2 billion yen, up 0.4% year-over-year; total operating profit of 0.39 billion yen, up 122.7% year-over-year, driven by strong performance in the domestic construction technical worker segment.

• The company reaffirms its full-year FY2026 March fiscal year performance target, noting that Q1 results got the final year of the mid-term management plan off to a solid start.
  • Domestic Working business is expected to continue expanding led by the construction technical worker segment.
  • Overseas Working business will focus on securing skilled consultants while implementing cost control that does not impact business value, with a goal of hitting full-year mid-term plan targets.
  • The full-year dividend forecast is maintained at 44 yen per share, matching the prior year's actual dividend, with a planned total payout ratio of 65.2%. The existing shareholder benefit program for long-term holders remains unchanged.

• Negative foreign exchange impacts on overseas Working business results when translated to yen, which reduced Q1 consolidated revenue growth by 1.11 billion yen.
  • The construction technical worker segment has underperformed on retention goals, which is an ongoing operational challenge that will take 1-2 years to address through new evaluation system changes.
  • In Australia, the shift to the Labor government's policy of expanding permanent public sector employment has suppressed demand for government-related staffing services, leading to multi-year sales declines in the core Australian staffing business. The market environment for staffing remains challenging.
  • Utilization in the construction technical worker segment saw a slight decline in Q1, and improvement requires future operational adjustment.
  • High hiring competition in tight labor markets creates ongoing challenges for talent retention and recruitment.

Q: Australia has seen early recovery in staffing but has not solved its core structural challenges from policy changes. How does Will Group plan to reposition the business for stable long-term growth? / A: After the Labor government’s policy shift reduced demand for government staffing, the company is now exploring expansion into new high-potential segments with persistent labor shortages: construction and elder care. Organic entry into these sectors would require significant time and upfront cost, so the company is evaluating M&A as a possible entry route, alongside expansion from the group’s existing businesses that already operate in these sectors. Management sees strong long-term growth potential for these segments in Australia, matching the labor demand trends seen in Japan. (736 characters)

Q: In the current tight hiring environment, why has Will Group achieved consistent success in talent recruitment, and what drives strong retention? / A: The company uses two core strategies for strong recruitment. First, it maintains an open hiring model with partnerships with dozens of recruitment agencies to build a large candidate pool. Second, it leverages an internal recruiter program where existing frontline staff engage candidates directly, sharing firsthand insights into the benefits of permanent placement roles and career growth to build strong candidate engagement. The company also shares negative and challenging information candidly with candidates during hiring to avoid mismatches, which improves long-term retention alongside investments in clearer career paths, evaluation and compensation frameworks. (812 characters)

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