9344.T

• Overall Period Positioning

  • FY26/6 is defined as a year of full-scale structural reform and strategic investment to build the company's second growth curve, with priority placed on long-term growth investment over short-term profit performance to lay the foundation for achieving the mid-term management plan centered on growth of the Human Resources Introduction and Skill Share businesses.

• M&A Strategy

  • The three core pillars of mid-term growth are re-growth of human resources introduction, expansion of skill share, and entry into the DX support field. Human capital investment has progressed faster than expected, and M&A will be used as a tool to further accelerate growth.
  • The core purpose of M&A is to expand the company's value delivery model: moving beyond high-end permanent placement and external talent solutions to add DX consulting and system integration execution support, deepen client business problem solving, and expand the company's service menu.
  • M&A targets are limited to areas with clear synergy with existing businesses and high growth repeatability, specifically targeting companies with high affinity for the company's core consulting and DX-related fields and capabilities that allow deeper engagement in solving client management problems. This will enable end-to-end support from strategy development to execution by combining existing human resources introduction and skill share services.
  • The company's unique post-merger integration (PMI) value creation capabilities rely on two core strengths: cross-selling (leveraging existing sales experience across existing business lines to deliver multiple services to key accounts, which will be extended to newly acquired group companies) and recruiting strength (as a recruitment support firm, the company can stabilize project operations for acquired companies through permanent and freelance talent deployment, enabling value creation in a relatively short timeframe).
  • The first roll-up M&A target is San System Planning (SSP), a long-established stable SES business with specialized expertise in high-demand technical fields such as NonStopServer, a stock-based business model, and strength in the execution phase of client DX transformation that aligns perfectly with the company's M&A strategy. Cross-sell opportunities have already emerged after acquisition, and SSP's infrastructure focus creates synergy for future roll-up targets in application and cloud-focused fields.
  • The SSP acquisition expands the company's support coverage into the execution phase of DX and system implementation, allowing the company to evolve to a position where it can support end-to-end client problem-solving from management issue identification through talent placement to execution, expanding the company's service menu through ongoing M&A.

• New Business and Operational Updates

  • The side-business CxO matching service "CxO-Pass" has surpassed 1,000 registered users.
  • The company has run an acceleration program specialized for the advanced science/deep tech field, using the company's spot consulting service to support participating companies with the goal of expanding and improving the quality of participating firms.
  • The company is continuing to expand its candidate database by hosting regular webinars on AI and human capital management, which have successfully driven candidate acquisition and will be expanded further.

• Growth Investment and Shareholder Return Balance

  • The company prioritizes growth investment (M&A and human capital) while balancing this with shareholder return as a core management priority. Growth investment is intended to improve profitability and expand future return capacity, so the company maintains strict investment discipline, continues M&A activity while maintaining stable financial operations, and only pursues targets after verifying post-integration profitability and cash generation capacity.
  • A year-end dividend of 35 yen per share is planned, and a new shareholder benefit program has been introduced that gives all shareholders a 1,000 yen digital gift. For shareholders holding 100 shares, the total return yield including dividend is 4.9%. The company will continue to balance growth investment with shareholder return aligned with profit expansion to improve long-term corporate value.

• Overall Financial Performance

  • Cumulative first half sales reached 3.154 billion yen, up 29.8% year-over-year. Cumulative first half operating profit was a loss of 0.191 billion yen, down from a 0.097 billion yen profit in the prior year period, driven by concentrated investment in advertising and frontline hiring in the first half. This lower operating profit progression was intentional per the initial plan and results are exactly as expected. In Q2 alone, operating profit returned to surplus after concentrated advertising investment in Q1, with selling, general and administrative (SG&A) growth suppressed quarter-over-quarter.

• Full-year guidance is maintained unchanged from the initial plan, which structured the fiscal year with the first half as an investment phase and the second half as a harvest phase, and progress is currently aligned with this plan. The company remains focused on securing sales growth while restoring profitability in the second half.
  • For Human Resources Introduction: Frontline mid-career hires made in the first half will begin full operation in the second half, which is expected to accelerate growth significantly. Q3 sales for the segment are projected to hit a new quarterly record high, significantly exceeding Q2 results, based on current forward visibility from the long lead time between offer acceptance and onboarding.
  • For Skill Share: Strong sales growth is expected to continue driven by robust DX demand. Most strategic investment (led by advertising spend) will be completed in the first half, so profitability is expected to recover significantly in the second half, and the segment is projected to move to cumulative surplus by Q3.
  • SG&A growth is expected to moderate in the second half: after concentrated advertising spend in Q1 and accelerated human capital investment in the first half, the pace of increase in both advertising spend and personnel investment will slow, reducing cost pressure in the second half.

1. Human Resources Introduction Business: In the Q2 26/6 period, this segment achieved record-high quarterly sales, with positive year-over-year growth for the first time in 6 quarters. It contributed 50% of total Q2 revenue. Performance improved across both consulting firm and corporate client segments: for major consulting firms, demand recovered after the post-boom slowdown from 2022-2023 mass junior hiring, with hiring decision volume growing sharply year-over-year and quarter-over-quarter while average sales per placement remained flat. For corporate clients, strategic investment drove accelerated growth, with Q2 sales hitting a new record, average sales per placement remaining steady, and hiring decision volume growing faster quarter-over-quarter. Overall, the business has returned to a growth phase with stable unit pricing and expanding placement volume. 2. Skill Share Business: In the Q2 26/6 period, this segment contributed 49.7% of total Q2 revenue. It marked 8 consecutive quarters of record sales growth and 7 consecutive quarters of record gross profit growth, driven by strong demand for DX transformation. For corporate clients, strong growth continued on the back of robust DX demand and strengthened frontline team structure; while measured average order value declined due to utilization rate differences, 100% utilization-adjusted average order value remains at a high level, and active operating headcount grew sharply quarter-over-quarter from successful new client acquisition. For consulting firm clients, after a temporary slowdown in Q1 due to resource constraints, the business returned to growth in Q2, with both average order value and active operating headcount growing gradually. The segment maintains a healthy growth structure: corporate clients are in an expansion phase driven by growing headcount, while consulting firm clients are in a stable growth phase.

No specific material operational risks or failures were discussed in the available transcript. The only noted uncertainty relates to the company's CM talent issue, which management states will be evaluated in detail for next fiscal year's strategy, with no material impact on the current fiscal year's plan.

Q: The first half recorded an operating deficit — can we confirm this is in line with plan?

A: Yes, this is exactly as planned. The full-year plan calls for approximately 1 billion yen in total strategic investment this fiscal year, with most advertising and human capital investment allocated to the first half. The lower first half profit level is a direct result of executing this planned investment, which we view as a successful outcome. Both the Human Resources Introduction and Skill Share businesses delivered 40% year-over-year sales growth. Notably, Human Resources Introduction turned positive after 5 consecutive quarters of year-over-year decline, driven both by recovering consulting firm demand and the successful hiring of experienced mid-career talent (including former staff from major recruiting firms), which is already starting to drive higher sales.

Q: What is your outlook for second half performance?

A: The investments and hiring completed in the first half will start to deliver results in the second half. Based on current indicators, Human Resources Introduction is on track to hit a record-high Q3 sales level, confirming that the frontloaded first half investment is already delivering clear results. Promotional activity for corporate client-focused human resources introduction has already generated clear positive results, and we project continued steady performance through the second half. For Skill Share, strong DX demand continues to drive expanding operating headcount, and this high growth trend is expected to continue in the second half. Since most advertising spend was concentrated in the first half, the pace of advertising investment will slow in the second half. Combining sales growth with normalized cost levels, profitability will enter a recovery phase starting in Q3, and we project cumulative profitability will turn positive by Q3.

Q: You reallocated some strategic investment budget from advertising to human capital — can you restate your second half strategic investment allocation plan?

A: The share of investment allocated to human capital has increased slightly compared to the initial plan, driven largely by external factors. Major recruiting firms are currently restructuring their portfolios and shrinking or divesting their recruiting businesses, which has led to a large increase in available experienced recruiting talent in the market. This is a rare opportunity to hire large numbers of ready-to-work experienced talent that we did not want to miss, so we adjusted our priority to prioritize experienced talent hiring, and we will continue to focus human capital investment in the second half on this opportunity. There is no change to our 3-year mid-term target of 30 billion yen in annual sales, but we are flexibly adjusting our near-term hiring plans within the single-year timeframe to capitalize on this rare opportunity to secure high-quality talent.

Q: Skill Share's profit contribution looks low — is this profit level the ceiling, and do you have plans to improve profitability?

A: I will explain profitability improvement in two parts. First, we are actively implementing initiatives to improve profit margins: we are growing the share of corporate client projects which have higher gross margins, and we are building a structure where we hire full-time in-house consultants that manage freelance talent on projects. By having our in-house project managers lead client project delivery as a team, we are able to improve margins, and growing the share of this project type is our core improvement initiative. Second, in terms of per-employee gross profit output, the Skill Share business actually generates comparable gross profit per frontline employee to the Human Resources Introduction business. If you look at total gross profit divided by active frontline headcount (rather than just profit margin percentage), output is already at the same level as human resources introduction. Profit margins are already improving, and per-frontline gross profit output is already at a strong level. We will continue to leverage this mix to drive further strong growth.

Q: For the general investor, can you explain the benefits and synergies of the SSP acquisition, and what level of profit contribution do you expect?

A: This acquisition is the first core target for our roll-up M&A strategy, which expands our business from people-focused management problem solving into execution phase services including SI, SES, and consulting. We focused on three key criteria when selecting SSP: 1) the business is very stable, with over 40 years of operation (founded 1981) and an established loyal client base; 2) it generates consistent steady profit, it is a business succession deal where the original owner sold due to advanced age, and we prioritized targets with confirmed profit that allow for clear payback; 3) there are clear potential synergies. We have already received cross-sell inquiries, and deals that SSP could not handle alone can now be delivered in partnership with the broader Axis group. Synergies will develop over time, and SSP's infrastructure-focused positioning also creates synergy for future roll-up targets in application and cloud-focused areas. We are very pleased to have added such a high-quality, well-positioned company as the first acquisition in our roll-up strategy.

Q: There has been media coverage around issues with your contracted CM talent — will this impact your future advertising strategy?

A: We are aware of the ongoing media reporting on this issue. We will conduct a full review of promotion strategy for next fiscal year and beyond. For the second half of this fiscal year, we will adjust our promotion plans based on market developments. Currently, there is a large supply of experienced talent available in the market, so we are reallocating strategic investment to this talent acquisition opportunity, and we plan to restart full-scale promotion activity starting next fiscal year.