Rise Consulting Group,Inc. Q1 FY2026 earnings call

• Overall Financial Performance

  • The quarter delivered a stronger-than-expected start to the fiscal year, with both revenue and operating profit exceeding internal plans, driven by proactive pre-quarter pipeline building and carry-over projects from the prior fiscal year end.
  • Gross margin is 3 percentage points lower than the prior year, but this decline was fully planned, and management expects margin to improve gradually starting from the second quarter.
  • Selling, general and administrative expenses were kept within planned ranges despite revenue growth, leading to operating profit coming in above forecast.

• Key KPI Update

  • Total registered consultants reached 319, an increase of 33 from the prior fiscal year end, meeting hiring plans. The definition of "billable consultants" was revised at the start of the fiscal year to better reflect actual operations, changing from 70% of senior staff counted as billable at 70% utilization to 50% counted as billable at 100% utilization. This revision reduces the reported number of billable consultants and increases reported utilization, with the underlying operational trend remaining consistent with prior periods.
  • Reported billable consultant utilization hit 95% due to stronger-than-expected demand, which is structurally higher from the definition change but matches actual prior year utilization levels.
  • Average billable rate is slightly lower than prior year and plan, driven by higher-than-expected early deployment of newly hired junior and new graduate analysts (half started paid work in May vs the planned June start), which is a positive operational outcome despite pulling down the overall average. Role-by-role average rates are nearly unchanged year-over-year.

• Capital Business Alliance with SHIFT Inc.

  • The alliance completed its formal share transfer on April 24, 2025, and on-the-ground collaboration kicked off in mid-May. Cross-company working groups have been formed and active, close communication is ongoing.
  • Two primary collaboration pipelines are being developed: 1) Upstream consulting engagements (strategy planning, BPR, PMO) related to SHIFT's existing testing and IT client accounts; 2) Upstream strategy and business restructuring support for clients implementing SHIFT's own products, including EVAC corporate value improvement service and the ワスレナイ free IT asset management SaaS tool.

• Strategic Priorities

  • The firm remains in a high-growth phase, with core priorities focused on talent acquisition and project winning. Complementary priorities include expanding service practices, scaling the inside sales team, and strengthening generative AI adoption to improve value added, productivity, and service scope.

Rise Consulting Group operates as a single consulting segment, with no separate product segments disclosed. For the 1Q of the 2026 February fiscal year: total sales revenue was 2.21 billion yen, representing a 31.5% year-over-year increase; operating profit was 0.49 billion yen, a 38.7% year-over-year increase. Gross profit margin was 53.5% (down 3 percentage points year-over-year), and operating profit margin was 22.3%. Progress toward full-year targets reached 23.1%, which is stronger than typical year-over-year progress.

• Management maintains the original full-year 2026 February fiscal year guidance, with no upward or downward revision to the published plan despite the strong first quarter start, as the firm's business model is heavily weighted to the second half of the fiscal year.
  • Management expects gross margin to improve gradually from the second quarter onward as price increases take effect, after the planned first quarter margin pressure from higher wages and increased outsourcing.
  • Management confirms no change to the existing shareholder return policy, and aims to increase the payout ratio for the current fiscal year, following the initiation of dividends in the prior fiscal year.

• The revised definition of billable consultants creates comparability issues with prior year figures, which may cause confusion for investors analyzing headcount growth trends.
  • First quarter average billing rates are below plan due to higher early junior consultant deployment, and may remain under pressure until the workforce portfolio balance improves in the second half of the year.
  • The firm's business has an inherent heavy second half weighting, so strong first quarter progress does not guarantee full-year target achievement.

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