Rise Consulting Group,Inc. Q2 FY2026 earnings call

• Overall Financial Results

  • 2Q 2026 revenue grew 21.8% YoY and operating profit grew 21.3% YoY; the slower sequential growth rate vs 1Q 2026 (31.5% revenue growth, 38.7% operating profit growth) is attributed to a lumpy prior year performance (2025 1Q was low-growth, 2025 2Q saw over 30% growth to recover missed targets)
  • Both revenue and operating profit exceeded internal plan; gross and operating margins improved slightly vs 1Q 2026
  • Retained earnings currently stand at 4.7 billion yen

• Key KPIs

  • Available consultant headcount grew steadily, with total registered consultants flat at 319 at end-2Q due to under-hiring of senior member-level consultants, a core role that operates at 100% utilization; delayed hiring of this cohort disrupts team formation and pulls down overall utilization
  • Utilization rose 2pp YoY but fell from 95% in 1Q 2026 due to the hiring shortfall; it remains at a high level overall
  • Average monthly rate per consultant fell from 2.59 million yen in 1Q 2026 to 2.57 million yen, driven entirely by a one-time strategic discount for a large client switching from another consulting firm; this discount was accepted to win the account, which has already grown from ¥300,000 monthly revenue to over ¥40 million monthly revenue
  • Rate increases led by the partner group for both new and existing clients are offsetting downward pressure; the usual Q2 rate decline from newly assigned junior new hires did not occur this year due to early onboarding in 1Q

• Hiring Update

  • The firm set a 30% YoY hiring growth target (up from 25% annual growth the prior two years) to accelerate expansion
  • Targeted fixes for the senior member hiring shortfall include increased agency fees, direct executive involvement in recruiting, and more frequent 1-day selection events to expand candidate pools; September and October 2025 are already tracking 5 hires per month above plan, so improvement is expected
  • Turnover remains in line with plan; improvements to compensation, internal communication, and alignment of project assignments with consultant interests have increased employee satisfaction, though work on assignment balance continues carefully to preserve the firm's high utilization advantage

• Strategic Collaboration with SHIFT Inc.

  • A capital and business alliance was finalized in Q2 2026, with on-site cross-referral and collaboration activities launched
  • Three priority co-development areas will be scaled up in the second half: 1) AI-enabled system modernization (combining Rise's upstream planning/PMO expertise with SHIFT's AI automation tools for legacy system migration, with a large pipeline already developed with insurance and public sector clients); 2) partnered enterprise value-enhancement consulting (combining SHIFT's EVAC service and M&A growth experience with Rise's hands-on upstream consulting and PE portfolio value-add experience, with a large client opportunity in the supply chain space already in late-stage bidding); 3) business process innovation (end-to-end domestic one-stop consulting from Rise's upstream work to SHIFT's IT development, testing, and BPO services, to compete with large global consulting firms)

• Corporate Governance & Shareholder Returns

  • The firm has submitted an application to transfer listing to the Prime Market, meeting nearly all formal requirements; the move aims to improve share price stability and expand the investor base to include more foreign institutional investors to boost enterprise value
  • A full-year dividend increase to 21 yen per share has been approved, in line with the medium-term target of total payout ratio of 30% or higher and steady dividend growth

The transcript only reports consolidated financial results for the full firm, with no separate breakdown of financial performance for individual product segments. On a consolidated basis for 2Q 2026: sales revenue was 4.36 billion yen, up 21.8% year-over-year; operating profit was 0.99 billion yen, up 21.3% year-over-year; gross profit margin was 53.9%, operating profit margin was 22.8%. Cumulative first half operating profit came in approximately 0.1 billion yen above plan.

• Management maintains the original full-year fiscal 2026 guidance set at the start of the period, with no upward or downward revision
  • The firm's business model is inherently second-half weighted, so cumulative progress through 2Q that is below 50% of plan is consistent with historical patterns
  • Management expects utilization to improve in the second half as hiring accelerates, and the full-year plan will be achieved

• Under-hiring of senior core member-level consultants prevents full team formation, leading to utilization below plan and limits near-term revenue growth
  • Turnover continues to be driven by misalignment between project assignments and consultant career interests; addressing this issue requires careful balancing with the firm's core competitive advantage of high utilization, so improvements will take time
  • Collaboration with SHIFT Inc. is still in the early stages, and co-developed new offerings have not yet generated material revenue, with future revenue upside dependent on successful go-to-market execution

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