Axis Consulting Corporation Q3 FY2026 earnings call

Industry Context and Market Dynamics

• Japan's total working population is steadily declining, with the population of young potential business leaders shrinking rapidly: 10 years younger cohorts have 30% fewer people, 20 years younger cohorts have 40% fewer people, and current college-age cohorts are 50% smaller than baby boomer generations. This has created a structural, growing shortage of high-end business leaders and DX/IT talent nationwide.
• Japan's IT talent ratio as a share of total workforce is just 60% of the U.S. ratio, while the U.S. and India have growing working populations compared to Japan's decline. The DX sector has an effective job opening ratio of ~7x, meaning only 1 out of 7 open roles can be filled.
• After over-hiring during the COVID-19 DX bubble, consulting firms suppressed hiring for 1-2 years to clear backlogs of non-utilized consultants. This hiring pause has mostly resolved, and firms began restarting hiring around May-June, pointing to a coming recovery in talent placement demand.
• The global consulting industry is expected to grow at a 10% compound annual growth rate, aligned with most major consulting firms' internal growth targets.

Business Model and Strategic Position

• Axis defines "high-end talent" as professionals who build and operate core business operations, a role that cannot be automated. Its core competitive advantage is its large database of high-end, consulting-focused talent.
• The firm operates a problem-driven service model: it helps companies solve talent needs via either permanent full-time hiring or flexible skill sharing/freelance engagements, depending on what fits the company's specific timeline and requirements.
• High-end talent moving to flexible work (side roles, multiple engagements, full freelancing) is a growing, necessary trend to address Japan's talent shortage. This allows top talent to deliver value across multiple organizations instead of being tied to a single employer.
• Currently, half of consultants placed by Axis move to other consulting firms, and half move to general business companies, with demand for placements at business companies growing rapidly as more firms pursue digital transformation and M&A, both of which require experienced DX/IT talent.
• 70-80% of current consulting projects are tied to DX/IT, including M&A which now requires digital due diligence, making consulting firms the largest natural pool of available DX talent in Japan.

Growth Initiatives

• Axis is making additional investments in advertising and recruitment to expand beyond its core consulting industry focus, growing its general business company talent placement and skill share businesses. The firm's long-term goal is to grow registered consultant penetration to 1 out of every 2 active consultants in its target market.

No segment-level absolute financial results or revenue contribution percentages are provided in the transcript. Axis Consulting operates two primary business segments: 1) High-end executive/high-end talent placement, focused primarily on consulting industry talent with expansion into general corporate client talent placement; 2) Skill share/freelance talent matching for high-end and DX-focused professionals. The firm holds the No.1 market share for closed placements in the consulting industry talent segment, with 1 out of every 4 consultants at Axis' 23 defined target consulting firms registered in its talent database.

• Management has revised its 3-year medium-term plan to accelerate growth, with increased upfront investment in promotion, recruitment and new market expansion. The updated plan targets 11.2 billion yen in revenue and 1.4 billion yen in operating profit by the end of the 3-year period.
• The firm's 2031 long-term target is 20 billion yen in revenue and 3.7 billion yen in operating profit, which management expects to be achievable if the 3-year medium-term targets are met.
• Growth will be aligned with underlying market growth: core consulting industry placement will grow in line with the 10% industry CAGR, general business company placement will grow in line with the existing split of consultant placements (50% to consulting, 50% to business companies), and skill share will grow in line with its fast-growing market CAGR.

• Japan's structural shrinking working population and low IT talent ratio creates persistent talent supply constraints that could limit industry growth if flexibility does not increase.
• Smaller software houses and system integrators are already facing increasing bankruptcy risk, driven by a combination of inability to hire sufficient talent and disruption from generative AI, which creates near-term industry churn.
• Over-reliance on full-time permanent hiring can leave companies unable to meet urgent DX and leadership needs, as high-end executive hiring can take 6-12 months, delaying critical business initiatives.

Q: What is "skill share" and why is this segment growing? / A: Skill share refers to flexible work arrangements where side-gig, part-time, and freelance professionals engage with multiple companies instead of holding just one full-time role. It is growing because persistent high-end talent shortage means companies cannot fill all their needs via full-time hiring alone. High-end executive hiring takes 6-12 months, so combining full-time hiring with flexible skill share lets companies keep progress on critical initiatives while recruiting for permanent roles, especially with DX talent facing a 7x open job ratio. The combination of full-time and flexible talent resourcing will become the standard model for Japanese companies.

Q: How do permanent placement and skill share segments interact going forward? / A: Management emphasizes that companies need to intentionally split work into domains best suited for full-time employees and domains best suited for external skilled talent. Axis operates a problem-driven service model that starts with the client's core business problem, then recommends full-time placement or a flexible skill share engagement to solve it, rather than pushing one service model universally. Management expects this problem-driven, flexible approach to become the standard for talent resourcing in Japan as the talent shortage worsens.

Q: What share of the consultant talent market does Axis hold, and what is its expansion goal for this pool? / A: Currently, 1 in 4 consultants at the 23 major consulting firms Axis defines as its core market are registered in the company's talent database. It is executing initiatives to grow this penetration to a target of 1 in 2 active consultants in its target market over the medium term, which will support growth across both talent placement and skill share segments. Half of all placed consultants already move to general business companies, so growing the core consultant pool directly supports expansion into the fast-growing general corporate client segment.