WILL GROUP,INC. Q3 FY2026 earnings call

• Consolidated Overall Performance

  • Consolidated revenue reached 108.62 billion yen, up 3.1% year-over-year; operating profit reached 2.85 billion yen, up 59.2% year-over-year. Gross profit hit 23.95 billion yen with a 22.1% gross margin, a 1.1 percentage point improvement year-over-year.
  • The core focus of the current mid-term management plan (WILL-being 2026, now in its final year after 2 years and 9 months) is to improve the company's underlying earning power by increasing the portfolio share of high-margin businesses, which has now delivered clear results.
  • The company reduced investment in traditional fixed-term dispatch to improve efficiency, while directing investment to high-margin priority areas, resulting in a moderate top-line growth rate but significant profit expansion.

• Mid-term Management Plan KPI Progress

  • Strategy I (Further growth and monetization of the construction technician segment): Rated on track, with cumulative hiring of 1,382 employees against a full-year target of 1,500, progressing at a steady on-target pace. Operating rate reached 96.1%, average contract price for new graduate/inexperienced hires increased approximately 5% year-over-year, and retention improved from 68.4% in the prior year Q4 to 71.9% after personnel system and compensation adjustments.
  • Strategy II (Re-growth of non-construction areas in Domestic Working): Rated on track and already exceeding plan. Permanent staff dispatch active headcount increased 12.6% year-over-year, with record highest mid-term hiring volume from Q2 to Q4 driven by strong growth in sales outsourcing and factory outsourcing. Foreign employment support headcount increased 47.2% year-over-year, with new hire intake up 67.9% year-over-year, hitting record highs in both factory outsourcing and care business support, with sustained high hiring levels in new expansion areas (food service, tourism).

• Recent Operational Initiatives

  • M&A integration: HR CAREER, a medical and welfare specialized recruiting firm that joined the group in October 2025, has already contributed to revenue growth. The company plans to add this high-margin business as a new priority strategic area in the next mid-term management plan to build a more profitable portfolio.
  • Brand promotion: Ongoing brand promotion for the domestic WILLOF brand has delivered strong improvements across all KPIs, including brand recognition, branded search volume, and user intent to use, and the company will continue these efforts to improve hiring efficiency.
  • Compensation and governance: The company issued paid stock options to 15 executives (parent and subsidiary), with an exercise condition of consolidated operating profit exceeding 5.5 billion yen in any fiscal year from FY2029 to FY2031, to strengthen executive commitment to mid-to-long term growth and enterprise value improvement. The company also updated its shareholder benefit program to offer benefit points redeemable for cash vouchers, electronic money, and other rewards via the Will Group Premium Benefit Club.
  • Overseas business adjustments: After a year of focused restructuring, the company achieved accelerated growth in high-margin executive search and mid-level recruiting in Australia and Singapore, with Q3 2025 results breaking negative seasonal trends, showing that adjustments have delivered clear results.

1. Domestic Working Segment: Revenue of 65.52 billion yen, up 4.9% year-over-year; segment profit of 3.01 billion yen, up 44.7% year-over-year. This segment accounts for approximately 60.3% of total consolidated revenue. Key sub-segment performance: Construction technician segment achieved a 19.9% year-over-year revenue increase and 104.2% year-over-year operating profit increase, reaching the highest sales level since March 2022. Sales outsourcing, care business support, and factory outsourcing segments all reached highest sales since March 2022, with almost all sub-segments achieving profit growth. Call center outsourcing saw a 1.23 billion yen revenue decrease, but improved sales, general and administrative (SG&A) efficiency minimized profit decline. High-margin priority areas (permanent staff dispatch/contracting and foreign employment support) now account for approximately half of domestic total gross profit, up from a lower share in FY2023.

2. Overseas Working Segment: Revenue of 43.03 billion yen, up 0.6% year-over-year; segment profit of 1.75 billion yen, up 16.2% year-over-year. Normalized segment profit (excluding one-time gains/losses in the prior year period) increased 39.2% year-over-year. This segment accounts for approximately 39.7% of total consolidated revenue. Overall segment revenue increased 3.8% year-over-year, with recruiting revenue growing against normal seasonal trends: Q3 recruiting revenue exceeded Q2 revenue, breaking the typical seasonal pattern of Q3 decline. Operating profit increased 53.7% year-over-year driven by cost optimization and growth in high-margin recruiting.

• Full-year FY2026 (ending March 2026) earnings guidance is maintained unchanged, despite revenue, operating profit, and parent net income all progressing ahead of plan with a clear upward bias, as results remain within the existing forecast revision range.
• Full-year FY2026 dividend guidance is maintained unchanged: the per-share dividend remains 44 yen, matching the prior year actual result, with a projected total payout ratio of 50.8%.
• Management confirms that the construction technician segment will continue to receive aggressive investment and pursue scale expansion in the next mid-term management plan, driven by expected sustained growth in construction demand from the Japanese government's policy focus on public and private investment in key sectors including national resilience, ICT, defense, and renewable energy.
• The company plans to continue carrying out appropriate growth-focused advance investment in Q4 to lay the foundation for growth in coming fiscal years.

• In the domestic call center outsourcing segment, the market environment remains challenging, with the segment already seeing a 1.23 billion yen year-over-year revenue decline, requiring ongoing efficiency improvements to limit profit downside.
• The sales outsourcing/mobile business faces uncertainty from changing competitive dynamics among key clients, with clients increasingly focused on cost efficiency, creating negotiation uncertainty and making full-year forecasts for coming years difficult to pin down.
• Construction technician retention still has room for improvement relative to competitor levels, with a high current share of employees with less than 1 year of tenure, requiring ongoing adjustments to compensation and personnel policy.
• Construction technician operating rate is currently at 96.1%, which is within the company's target range but requires ongoing active management to maintain a stable target level between 96% and 98%.
• Competition in the Japanese graduate university hiring market is intensifying, increasing the challenge of expanding new graduate hiring for general positions at a reasonable cost.
• Overseas recruitment markets remain challenging, requiring ongoing cost management and strategic adjustments to sustain growth.

Q: Looking at the construction technician segment, the growth rate has slowed slightly compared to past periods after Q2, and hiring growth is expected to be lower than in previous years. Is the correct understanding that future growth will center on margin improvement via unit price increases and productivity gains, or is there still room to pursue further scale expansion?

A: The current mid-term plan has prioritized monetization of the construction technician segment, with a focus on building a profitable, efficient operation after persistent deficits through Q1 FY2025. Under the new administration, construction remains a priority investment area, with strong expected demand growth driven by investments in national resilience, ICT, defense, and renewable energy. The company will continue aggressive investment and pursue further scale expansion, alongside larger profit gains, in the next mid-term management plan starting next fiscal year.

Q: There appears to be still room for improvement in the construction technician segment operating rate, even after recovering from Expo-related impacts. Is there a clear path to further operating rate recovery?

A: The current operating rate is 96.1%, which the company views as within the appropriate target range of 96% to 98%. Some idle time is normal and necessary to accommodate new hire training, job transition between sites, and qualification training for construction management technicians, so the current range is appropriate. The first quarter saw operating rate in the low 90% range due to Expo-related disruptions and planned idle time for training, but it has now recovered to the target range. The company will continue active management to sustain this stable operating rate.

Q: Compared to competitors that reach retention rates close to 80%, Will Group still has room to improve construction technician retention after recent compensation system adjustments. What additional actions will you take to further improve retention?

A: The company views the mid-to-high 70% range as a realistic near-term target. Currently, the share of employees with less than 1 year of tenure is still high, and as the business scales and this share falls to between 25% and 33% of total headcount, retention is expected to rise to the mid-70% range. The company has identified that compensation transparency, particularly clarity around long-term earning potential and clear career paths, is the most important factor for retention. It will continue to work to deliver competitive compensation compared to both construction competitors and clear role-based professions like IT engineers, which requires ongoing negotiation to increase average contract prices with clients to fund improved pay. The company is also using data modeling to identify the characteristics of successful, retained technicians, to reduce hiring mismatches and improve fit from the point of hire, driving sustainable retention improvements.

Q: The sales outsourcing segment has returned to sales growth after productivity improvements, creating optimism for next year. Can you confirm that the segment will return to full-year growth next year, and what is the outlook and challenges for the mobile sub-segment in particular?

A: Will Group is the top share partner for major mobile carrier clients in sales outsourcing, and sees strong potential for further expansion of existing partnerships. At the same time, changing competitive dynamics in the client industry mean that maintaining market position is not easy, so the company is carefully monitoring market conditions to retain its strong position. Many clients in this space maintain a strong focus on cost efficiency, and negotiations on mutually beneficial terms are still ongoing, so there is still some visibility uncertainty for next year. That said, the company has a strong, established position in this space, with a well-regarded sales capability that clients value highly, and the company is confident in its ability to continue winning new orders.

Q: The incremental restructuring efforts led by management, including order sharing between subsidiaries, have started to deliver results for overseas recruiting. What were the key drivers of the recent recovery, and what actions will you take going forward?

A: Over the past year, the company has focused on restructuring, centered on two core priority areas: executive search and mid-level recruiting in Australia. The company believes that without a recovery in high-margin recruiting, the overseas business will not be able to return to prior performance levels. The key to success is getting alignment and commitment from local subsidiary CEOs, as the group CEO does not have direct operating experience in these markets, so repeated communication to build buy-in has been critical. Two key practical changes were implemented: first, improving return on investment by focusing on increasing the number of high-performing consultants, which is the key priority in markets where labor is the largest cost and marketing costs are lower than in Japan, and rotating out low-performing staff where necessary; second, analysis of historical high-performance periods found that consistent sales activity volume was the most critical success factor, so the company pushed for consistent high activity levels through Q1 and Q2 after a very weak start to the fiscal year, which directly delivered the Q3 growth we see today.

Q: Given that you have not raised guidance despite strong profit progress, it suggests you plan to increase advance investment for future growth in Q4. What areas will you prioritize for this advance investment, and what is your priority ranking?

A: The company plans to carry out a reasonable level of advance investment in Q4 to prepare for future growth, with three core priority areas: first, continued investment in HR CAREER, the newly acquired medical and welfare recruiting firm, to support its growth next year; second, the company is considering expanding the size of new graduate general position hiring, and will strengthen hiring activity at a reasonable cost, even as the market for new graduates becomes more competitive; third, continued appropriate investment in permanent staff dispatch and foreign employment support, focused on the construction technician and factory outsourcing segments, to lay the foundation for strong growth next fiscal year.