Axis Consulting Corporation Q3 FY2025 earnings call

• Overall 9-month cumulative performance

  • Total company revenue is 3.78 billion yen, a 15.8% increase year-over-year.
  • Operating profit is 125 million yen, a 76.2% decrease year-over-year, driven by lower revenue from the high-margin talent introduction segment and increased personnel costs from headcount growth.
  • The company's balance sheet remains stable, with high cash and deposit reserves that provide sufficient capacity for future investment.

• Key operational updates

  • Despite lower-than-forecasted hiring placements at major consulting firms, Axis Consulting has expanded market share to hold the number one position in consultant placements, and has built strong relationships that will support high share gains when hiring recovers.
  • New client acquisition for corporate client talent introduction is progressing as planned, with new accounts growing steadily. Unplanned frontline departures from a subsidiary merger contributed to lower-than-target placement volumes this period.
  • Skill sharing growth has been driven by increased frontline headcount, stronger management systems, improved client support, higher contract renewal rates, and more proposal opportunities.
  • End-of-period total headcount is projected to reach 150 employees, below the initial forecast of 159, but frontline headcount is near target and growing steadily. The company will continue prioritizing hiring.

1. Talent Introduction: For the 9-month cumulative period, revenue decreased 570 million yen year-over-year due to hiring freezes at major consulting firms. Gross profit declined proportionally with revenue, but average revenue per placement remains at a high level, with demand for manager-level and above roles holding steady. For the full fiscal year 2025, revenue is projected to come in below initial forecasts. This segment has a higher gross profit margin than the skill sharing segment, so its revenue shortfall has driven overall company profit declines.
2. Free Consul Biz (Skill Sharing): For the 9-month cumulative period, revenue increased 263 million yen year-over-year, growing 68.7% year-over-year. The segment has set new all-time revenue records for five consecutive quarters, with operating headcount growing steadily. For the full fiscal year 2025, revenue is projected to exceed initial forecasts. The newly opened Osaka office has already begun contributing to revenue, and gross profit margin improvement efforts are ongoing.

• Full year 2025 June fiscal year revised guidance:

  • Revenue is revised upward to 5.21 billion yen from the initial 5.20 billion yen, as upside from skill sharing offsets the talent introduction revenue shortfall.
  • Operating profit is revised downward to 170 million yen, ordinary profit to 170 million yen, and net income to 270 million yen, all below initial forecasts. The full year dividend forecast is maintained at 35 yen per share, with no change from the initial plan.

• Next 3-year revised mid-term targets:

  • The company plans to invest a total of 3 billion yen across three core areas: advertising, IT, and hiring. Annual revenue targets are set above the prior mid-term plan. Due to the large incremental investment, operating profit will be below the prior target through the 3-year period, but is projected to reach 1.4 billion yen at the end of the 3-year plan, which exceeds the prior operating profit target.

• Long-term milestones:

  • 2028 June fiscal year: Exceed 10 billion yen in revenue and 10 billion yen in market capitalization as an intermediate milestone toward the 2031 goal.
  • 2031 June fiscal year: Target 20 billion yen in revenue and 3.7 billion yen in operating profit. From 2031 onward, the company plans to enter new business areas leveraging knowledge and resources from existing core businesses.

• Unexpected hiring slowdown at major consulting firms: The company did not anticipate the large-scale hiring freezes at major consulting firms at the start of the fiscal year, which led to a larger-than-expected decline in talent introduction placement volumes and revenue.
• Unplanned operational disruption: A subsidiary merger led to an unforeseen number of frontline employee departures, which further reduced talent introduction placement volumes and contributed to missed full-year profit targets.
• Investment execution risk: The company's large planned 3 billion yen investment schedule depends on successful execution of advertising, IT, and hiring initiatives to drive top-line growth, and there is no guarantee that investments will deliver the projected revenue and profit gains.

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