7088.T

Consolidated Financial Results

• Total consolidated 3rd quarter results: Revenue of 26.052 billion yen (+10.9% YoY), operating profit of 3.417 billion yen (+41.1% YoY), net income attributable to parent shareholders of 2.33 billion yen (+42.7% YoY). Progress against full-year guidance is 75.3% for revenue, 85.4% for operating profit, and 85.5% for net income, tracking on schedule.
• Domestic SG&A cost optimization generated 75 million yen in incremental profit year-over-year.

Strategic Resource Allocation (cognavi Vision2026)

• Management has concentrated resources on 3 core businesses from the prior term, and will add Cognavi College as a fourth priority business starting next term to leverage synergies with Cognavi New Grads.

Cognavi Haken (Core Dispatch Business) Operations

• Cumulative active headcount through the 3rd quarter grew 212 from the start of the term to 4,492. Full-year active headcount is now projected at 4,580 (300 net increase from start of term), down from the original plan of 4,700, due to lower new grad hiring and higher than planned early term attrition.
• 3rd quarter hiring missed plan by 32 hires (208 actual vs 240 planned) due to a 3x increase in job opening ratios across 4 major hiring platforms that reduced total applicant volume, a seasonal trend also seen last year. Applicant volume recovered to normal levels in January, with hiring back on track to hit the full-year target of 1,023 hires.
• Attrition returned to plan in the 3rd quarter following the October launch of a new stock ownership plan and skill-linked compensation structure, after exceeding plan in the first half. Full-year attrition is expected to meet plan.
• The company has increased hiring volume for 3 consecutive terms without increasing hiring costs, and launched a new external recruitment initiative in January to grow hiring next term without additional cost.
• Paid time off (PTO) usage is tracking below plan, at 3.8 days in the 3rd quarter and a projected full-year 20.2 days, due to the company's PTO carryover system; the company continues to target 100% PTO utilization.

Cognavi New Grads Business Operations

• The business switched its pricing model from success-based fees to listing and platform usage fees starting in October. Current sales activities cover 2 cycles: free listings for 2026 graduates and paid listings for 2027 graduates, with revenue recognition starting next term.
• As of end-January, free CogFes listing count grew 65 to 971 companies, with 350 companies posting job openings; the company expects to exceed last year's total company count by the end of March. Target annual revenue next term is over 500 million yen, with a minimum 1 million yen per company listing fee.
• The 168 largest target companies (hiring 50+ new grads annually) account for 55% of total target hiring volume. All 168 are now listed on free CogFes, with 30 already converted to paid listings as of end-January; the company targets 50 conversions by end-March and full conversion within next term.

Cognavi Platform Operations (India)

• The Cognavi recruitment platform exceeded its 3rd quarter company acquisition target, with 5,523 active companies as of end-January, and is on track to exceed 8,000 active companies by end-March. Over half of active companies have 1,000+ employees, including 1,169 listed companies and major global firms like Coca-Cola, Bridgestone, Daimler Truck, and Mahindra.
• Partner universities have grown to 62 total, including 3 campuses of the Indian Institutes of Technology (IIT), with the system provided for free to IIT. This partnership is expected to drive further large enterprise client adoption, with full IIT campus expansion planned.
• Student membership exceeded 210,000 as of end-January, and is projected to exceed 300,000 by end-March, driven by growing partner universities and organic direct web registrations from rising brand awareness.
• A multi-lingual AI avatar career counselor will launch in February to streamline student skill data registration, with plans to expand the tool for corporate outreach and support future global expansion (it supports 30 languages). Cross-program integration with Japan's Cognavi New Grads will launch next term, allowing Japanese companies to recruit Indian students via the platform.
• Cognavi India is targeting breakeven in the following term, with projected next term revenue of 310 million yen and an operating loss of 170 million yen.

Other Initiatives

• Cognavi Career Change will restart full operations in two terms, leveraging the accumulated 15,922 Cognavi New Grads members, 30% of whom are expected to consider career changes within 3 years of hiring.
• Sustainability initiatives include a new short-term academic exchange program "Discover India" for Japanese STEM students, with 3 Japanese universities sending 24 students and 6 professors in February-March 2025. The company has also published TCFD-aligned climate disclosures covering governance and risk management, and will continue to update disclosures going forward.

• Full-year FY2025 (March 2025 term) guidance is maintained at the previously upward revised levels: revenue of 34.6 billion yen (+10.6% YoY), operating profit of 4.0 billion yen (+32% YoY), ROE of 20%.
• The previously upward revised targets for the 2nd and 3rd years of the mid-term plan cognavi Vision2026 are maintained. For the 3rd year (March 2026 term), the plan targets revenue of 38.7 billion yen, operating profit of 4.8 billion yen, operating margin of 12.4%, and ROE of 23.5%.
• Full-year FY2025 active engineer headcount is guided to 4,580, down from the original target of 4,700, with full-year hiring still projected to hit the 1,023 hire target.
• Cognavi India's full-year FY2025 operating loss is maintained at a projected 350 million yen, with next term (FY2026) guided to 310 million yen revenue and 170 million yen operating loss, targeting breakeven the following term.
• Cognavi New Grads targets revenue exceeding 500 million yen next term, with the company on track to hit this target.

1. Core domestic business (Forum Engineering): Revenue of 26.036 billion yen, up 10.8% year-over-year; operating profit of 3.701 billion yen, up 45.1% year-over-year. This segment accounts for over 99.9% of total consolidated revenue.
2. Engineer Dispatch (Cognavi Haken): Increased pre-tax profit by 1.041 billion yen year-over-year, driven by rising active headcount and higher dispatch unit rates. Average active unit rate rose 68 yen to 4,065 yen, beating the planned 4,007 yen by 58 yen.
3. Cognavi Services (including Cognavi New Grads): Increased pre-tax profit by 28 million yen year-over-year. Cognavi New Grads posted 275 million yen in operating profit for the current period with 308 closed contracts.
4. Cognavi India: Revenue of 15 million yen, operating loss of 279 million yen. Pre-tax loss narrowed 1.051 billion yen year-over-year, as the business remains in an investment phase in its second full year of operation.
5. Cognavi College: 649 total accumulated participants through the 3rd quarter, exceeding plan. 67 participants joined the new foundational training program launched this term for new hires placed via Cognavi New Grads.
6. Cognavi Career Change: Currently only focuses on internal transfers of dispatched engineers to client direct hire, with 50 accumulated transfers through the 3rd quarter, slightly below plan with no material impact on full-year earnings.

• Hiring volume in the core dispatch business was below plan in the 3rd quarter due to market-wide increases in job opening ratios that reduced applicant supply, creating seasonal volatility in recruitment outcomes.
• Lower than planned new grad hiring and higher than expected early term attrition led to a downward revision to the full-year active headcount target for the dispatch business.
• PTO utilization continues to miss plan, even with the company's 100% utilization target, partly due to the existing PTO carryover policy.
• Cognavi India remains in an investment phase and is expected to report operating losses for one more term before targeting breakeven.

No question and answer section was included in the provided earnings call transcript.