Dive (151A) FY2026 Q2 Earnings Report

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Executive Summary

For the cumulative Q2 ended June 2026, the Company recorded higher revenue and higher profits, with the expansion in the number of employees in the Tourism HR Business driving performance. Revenue was ¥77.5B (+8.3% YoY), Operating Income was ¥6.0B (+8.1%), Ordinary Income was ¥6.0B (+8.1%), and Net Income was ¥3.8B (+2.8%). The gross margin remained broadly in line with the previous year at 26.1%, while the Operating Income margin was nearly unchanged at 7.7%, as the increase in expenses remained at approximately the same level as revenue growth. The primary reason Net Income growth fell below the Operating Income growth rate was the increase in the effective tax rate to 37.2%, from approximately 34% in the previous year.

Factors Affecting Performance

【Revenue】Revenue increased 8.3% YoY to ¥77.5B. The core Tourism HR Business generated ¥71.8B (+8.2%), driven by record-high revenue per employee of ¥1.356M (+4.4%), thereby leading revenue growth. The Regional Revitalization Business posted ¥5.5B (+11.9%), delivering complementary growth.

【Profit and Loss】Operating Income increased 8.1% to ¥6.0B, while Ordinary Income also increased 8.1% to ¥6.0B, indicating that non-operating income and expenses had virtually no impact and that the results reflected the earnings power of the core business. Extraordinary losses were minimal, consisting of a ¥0.06B loss on retirement of fixed assets, and the impact of temporary factors was limited. Net Income increased only 2.8% to ¥3.8B, with the gap versus Ordinary Income primarily attributable to the rise in the effective tax rate to 37.2% from approximately 34.0% in the previous year. In conclusion, the Company achieved higher revenue and higher profits.

Segment Analysis

The Tourism HR Business generated ¥71.8B in revenue, accounting for approximately 93% of total revenue, and is positioned as the core business. Operating Income in this business was ¥7.6B (+8.1% YoY), with the increase in the number of employees and higher revenue per employee contributing to profit growth. The Regional Revitalization Business is small in scale, with revenue of ¥5.5B (+11.9%), but achieved substantial profit growth of +53.5% YoY, reflecting a notable improvement in its profit margin. Overall revenue and profit growth was led by the core Tourism HR Business, with the Regional Revitalization Business providing additional profit growth.

Key Financial Metrics

Profitability: ROE 29.4% (annualized), Operating Income margin 7.7%.
Cash flow quality: Operating CF/Net Income 1.88x (healthy at 1.0x or above), FCF ¥5.2B.
Investment efficiency: Against capital expenditures of ¥0.4B, the scale of property, plant and equipment was ¥5.6B, indicating that investment during the period remained at a maintenance level for existing assets.
Financial soundness: Equity Ratio 50.6%, Current Ratio 173.2%.

Cash Flow Analysis

Operating CF was ¥7.1B, or 1.88x Net Income, indicating solid cash backing for earnings. Investing CF was negative ¥1.9B, primarily due to the ¥1.25B acquisition of shares in subsidiaries and affiliated companies and ¥0.4B in capital expenditures. Financing CF was negative ¥1.4B, mainly due to the acquisition of treasury shares amounting to ¥0.84B and debt repayments. FCF remained positive at ¥5.2B (Operating CF ¥7.1B less Investing CF). The assessment of cash generation is strong.

Earnings Quality

Net Income of ¥3.8B differed significantly from Ordinary Income of ¥6.0B (approximately -37%), primarily due to the increase in the effective tax rate to 37.2%. Non-operating income was ¥0.1B, or less than 0.2% of revenue, and earnings were primarily generated by the core business. Operating CF exceeded Net Income, indicating good earnings quality from an accruals perspective.

Earnings Forecasts and Guidance

Progress against the full-year forecasts (Revenue ¥160.0B, Operating Income ¥8.0B) was 48.4% for Revenue and 74.8% for Operating Income. Operating Income progress was substantially above the standard 50%, while only approximately ¥2.0B in Operating Income is required in the second half, compared with required second-half revenue of ¥82.5B. This suggests that the full-year profit plan may be conservative, with acceleration in revenue growth becoming the focus for the second half.

Shareholder Returns

The dividend per share is ¥0 for both Q2 and the full year, resulting in a Payout Ratio of 0%. The Company conducted share repurchases of ¥0.84B, resulting in a Total Return Ratio of approximately 22.3% of Net Income when dividends and share repurchases are combined. FCF of ¥5.2B exceeded the amount of share repurchases, indicating that shareholder returns were funded by internal resources.

Catalysts

【Short term】The degree to which second-half revenue of ¥82.5B is achieved, as well as trends in the number of inbound travelers, will affect demand for the Tourism HR Business. 【Long term】Key areas of focus include progress in the comprehensive resort part-time employment platform strategy, expansion in the number of facilities adopting the SaaS product “Hassaku,” and the realization of benefits from upfront investments, including new business development, strengthening the M&A framework, and dormitory-related businesses.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Return

Both the Operating Income margin and Net Income margin were below the industry median, placing the Company’s profitability relatively low within the industry.

Growth and Capital Efficiency

The Revenue growth rate was also substantially below the industry median, placing the Company in the lower tier of the industry in terms of growth speed.

※Source: Compiled by the Company

Risk Factors

1. Demand and labor supply risk: Achieving the full-year revenue target requires second-half revenue of ¥82.5B, and performance is dependent on inbound travel demand and the Company’s ability to secure prospective employees.

2. Working capital and collection risk: Accounts receivable increased 25.4% YoY to ¥14.6B, accounting for 28.6% of total assets. Accounts receivable represented a ¥2.96B cash outflow factor in Operating CF, requiring ongoing monitoring of collection conditions.

3. Tax burden and margin risk: The effective tax rate of 37.2% (approximately 34.0% in the previous year) limited Net Income growth to below the Operating Income growth rate. Against a projected full-year revenue growth rate of 16.1%, the Company forecasts Operating Income growth of 5.8%, and cost increases, including personnel expenses, may pressure profit margins in the second half.

Key Earnings Highlights

1. The Operating Income margin remained broadly in line with the previous year at 7.7%, while cash generation was strong, with Operating CF/Net Income at 1.88x. ROE of 29.4% was supported by a high total asset turnover ratio and financial leverage.

2. The full-year Operating Income progress rate of 74.8% was substantially above the standard level, suggesting that the Company’s second-half plan is conservative; however, the full-year Revenue progress rate of 48.4% presupposes acceleration in second-half revenue.

3. The Company continued to pay no dividends and implemented shareholder returns through share repurchases (¥0.84B), resulting in a Total Return Ratio of approximately 22.3%. Retained earnings were secured within the range of FCF.

Theoretical Share Price (Reference Value)

Sensitivity: ¥423–¥450 at ±1% for the cost of equity, and ¥433–¥441 at ±0.1 for ω.

Notes:

• Since the progress of Net Income against the full-year forecast (70%) exceeds the standard level (50%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies with progress ahead of plan tend to outperform forecasts. The adjustment may be excessive for businesses with strong seasonality).
• Net assets as of the quarter-end have been used (there is a timing difference relative to the full-year forecast).
• Since Net Assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson type; explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data and is not a forecast of the market share price or a recommendation of any specific investment action, nor does it predict or guarantee the future share price.)

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This report is an earnings analysis document automatically generated through an integrated AI analysis of XBRL earnings summary data and PDF earnings presentation materials. It does not recommend investment in any specific security. The industry benchmark is reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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