| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥135.4B | ¥117.9B | +14.8% |
| Operating Income / Operating Profit | ¥43.9B | ¥34.1B | +28.7% |
| Ordinary Income | ¥44.0B | ¥34.2B | +28.4% |
| Net Income / Net Profit | ¥30.0B | ¥23.4B | +28.5% |
| ROE | 15.1% | 10.5% | - |
FY2026 Q1 results achieved revenue ¥135.4B (YoY +¥17.5B +14.8%), Operating Income ¥43.9B (YoY +¥9.8B +28.7%), Ordinary Income ¥44.0B (YoY +¥9.7B +28.4%), and Net Income ¥30.0B (YoY +¥6.7B +28.5%), representing growth in both top and bottom lines. Operating margin reached 32.4% (up +3.5pt from 28.9% a year ago), a high level, and SG&A ratio declined to 60.5% (down -3.3pt from 63.8%), with operating leverage from SG&A control driving profit expansion. Progress against the Full Year plan (Revenue ¥532.0B, Operating Income ¥126.0B) stands at Revenue 25.5%, Operating Income 34.8%, Net Income 34.9%, with profit items running about 10pt ahead of standard progress (25%) and therefore front-loaded. Domestic Recruitment (human resources placement) accounted for 91.2% of revenue, growing +15.0% YoY, while Overseas business expanded +14.9%, indicating growth on both fronts.
[Revenue] Revenue was ¥135.4B (YoY +14.8%), continuing double-digit growth. By segment, Domestic Recruitment was ¥123.5B (composition 91.2%, YoY +15.0%), the core business, Overseas was ¥11.0B (8.1%, +14.9%), and Domestic Job Advertising was ¥1.2B (0.9%, +11.9%), all achieving revenue increases. Gross profit was ¥125.9B (gross margin 93.0%, up +0.2pt from 92.8% a year ago), remaining high, with improved service mix and realized price improvement contributing. Both domestic and overseas grew in a balanced way, broadening the base of growth.
[Profitability] Operating Income was ¥43.9B (YoY +28.7%), rising well above revenue growth. SG&A was ¥82.0B (SG&A ratio 60.5%, down -3.3pt from 63.8%), with expense growth contained relative to revenue expansion, producing strong operating leverage. Major SG&A breakdown: Salaries and allowances ¥35.0B (prior year ¥30.8B), Advertising ¥6.6B (¥6.8B), Rent ¥4.3B (¥3.8B). While personnel expenses increased, their growth rate was relatively restrained versus revenue growth (+14.8%). Non-operating income was ¥0.2B (interest income ¥0.2B, foreign exchange gains ¥0.1B, etc.), and non-operating expenses were ¥0.2B (foreign exchange losses ¥0.1B, etc.), with minor impact; Ordinary Income was ¥44.0B (YoY +28.4%). No extraordinary gains/losses were recorded; income before income taxes ¥44.0B less corporate tax, etc. ¥13.9B (effective tax rate 31.6%) resulted in Net Income ¥30.0B (YoY +28.5%, net margin 22.2%). In summary, growth in the domestic core business and SG&A control delivered revenue and profit expansion.
Domestic Recruitment segment recorded Segment Profit ¥43.0B (prior year ¥33.4B, +28.7%), a substantial profit increase driving consolidated profits. That segment includes goodwill amortization of ¥0.1B, but impact is negligible. Domestic Job Advertising posted Segment Profit ¥0.4B (prior year ¥0.2B, +90.5%), small but with improved profitability. Overseas recorded Segment Profit ¥0.6B (prior year ¥0.6B, -3.3%), essentially flat. The high margin of Domestic Recruitment clearly supports consolidated profitability, and improved operating efficiency in that segment is the primary driver of consolidated profit expansion.
[Profitability] Operating margin 32.4% (prior year 28.9%), Net margin 22.2% (prior year 19.8%), both materially improved, with gross margin 93.0% (prior year 92.8%) maintained at a high level. ROE 15.1% is strong relative to history; DuPont decomposition is Net margin 22.2% × Total Asset Turnover 0.51x × Financial Leverage 1.32x. Improvement in operating margin is the largest contributor, driven by SG&A ratio decline (-3.3pt) and fixed cost absorption from revenue expansion. [Cash Quality] Days Sales Outstanding (DSO) is 99 days (extended +19 days from 80 days a year ago), indicating extended collection terms; Accounts receivable ¥36.8B (prior year ¥25.8B, +42.9%), increasing faster than revenue. The build-up of working capital including receivables may delay conversion to operating cash flow, requiring monitoring. [Investment Efficiency] Total Asset Turnover 0.51x reflects the low-asset model of recruitment; EBITDA (Operating Income ¥43.9B + depreciation ¥1.3B + goodwill amortization ¥0.1B) is approximately ¥45.3B, a high level. Capital expenditures are minor, indicating low capital intensity. [Financial Soundness] Equity Ratio 75.5% (up +3.2pt from 72.3%), Current Ratio 358.2%, Interest Coverage 1,097x, indicating extremely strong balance sheet. Cash and deposits ¥178.0B, interest-bearing debt negligible (leases only), so financial risk is kept low.
In operating cash flow items, Accounts receivable increased YoY by ¥11.1B, expanding working capital demand. Accrued expenses decreased from ¥34.1B to ¥10.7B (-¥23.4B), and income taxes payable decreased from ¥18.2B to ¥9.9B (-¥8.4B), suggesting cash outflows in the period. Prepaid expenses increased by ¥5.9B (4.8→10.8B), temporarily tying up cash. Cash and deposits decreased from ¥233.1B at prior fiscal year-end to ¥178.0B (-¥55.1B), likely due to tax payments, expense payments, and shareholder returns. Retained earnings decreased from ¥239.5B at prior fiscal year-end to ¥212.0B (-¥27.5B), suggesting dividends and other shareholder returns exceeded profit accumulation. Extraordinary items were zero and profits were primarily from core operations. Nevertheless, the increase in accounts receivable and DSO extension suppress cash generation from operations, so improving collections is a priority. Investing cash flow appears minor based on tangible/intangible fixed asset records, and free cash flow is dependent on operating cash flow. Financing cash flow saw cash reduction due to dividend payments and share buybacks, but cash balances remain high and liquidity risk is low.
Of Ordinary Income ¥44.0B, non-operating income was ¥0.2B (0.2% of sales), very small, so the bulk of profit is derived from core operations. Major components of non-operating income were interest income ¥0.2B and foreign exchange gains ¥0.1B, and did not include investment security valuation gains or equity-method income—non-recurring elements. Extraordinary items were zero and no one-off losses such as disposal of fixed assets occurred. The difference between Ordinary Income and Net Income is mainly corporate tax, etc. ¥13.9B (effective tax rate 31.6%), within normal ranges. Comprehensive income ¥30.2B is almost identical to Net Income ¥30.0B, with minor valuation differences (foreign currency translation adjustment ¥0.1B). On an accrual basis, the buildup of Accounts receivable (+42.9%) and DSO extension (99 days) suggests delayed cash conversion relative to operating profit, signaling a risk that operating cash flow may lag net income. Goodwill amortization ¥0.1B is minimal and the JGAAP-specific profit compression factor is limited. Overall, earnings quality is high, but working capital management improvement is key to enhancing real cash-generating capability.
Full Year plan: Revenue ¥532.0B (YoY +15.4%), Operating Income ¥126.0B (YoY +7.8%), Ordinary Income ¥126.0B (YoY +7.6%), Net Income ¥86.0B (EPS forecast ¥54.18). Q1 progress rates: Revenue 25.5%, Operating Income 34.8%, Ordinary Income 34.9%, Net Income 34.9%, with profit items about 10pt ahead of standard progress (25%). SG&A control and the front-loading of high-unit-price projects likely boosted profit progress. No revisions to full-year guidance as of Q1, and the company remains cautious, but if the current pace continues there is upside risk to the full-year figures. Dividend forecast is ¥19.00 per year (Payout Ratio approx. 35.1%), set at a sustainable level. Whether progress from Q2 onward converges around 50% will be a key factor in assessing the likelihood of meeting guidance.
Full-year dividend forecast ¥19.00, payout ratio relative to forecast EPS ¥54.18 is approx. 35.1%, a sustainable level. Cash and deposits ¥178.0B and low leverage (Equity Ratio 75.5%) provide strong capacity to execute dividends. Retained earnings decreased from ¥239.5B at prior fiscal year-end to ¥212.0B (-¥27.5B), suggesting dividends and share buybacks have been executed. Short-term free cash flow will vary with timing of collections, but the recruitment model’s low-asset, high-cash characteristics support strong medium-term cash generation, so dividend stability is assessed as sufficient. Total Return Ratio could change depending on future share buyback/cancellation policy, so monitor capital policy disclosures.
Working Capital Management Risk: Accounts receivable increased YoY +42.9% and DSO extended to 99 days, indicating a potential delay in operating cash flow generation. Accrued expenses -¥23.4B and income taxes payable -¥8.4B resulted in cash outflows this period; improving collection management is key to generating operating cash flow. Increase in prepaid expenses is also a short-term cash strain, so working capital efficiency is a material issue.
Business Concentration Risk: Domestic Recruitment accounts for 91.2% of revenue, a high concentration that links directly to risk of lower placement rates or fee declines in an economic downturn or hiring freeze. Deterioration in domestic employment indicators or cooling of the job market would have high sensitivity on results, so structural vulnerability from single-business dependence exists.
Cost Control Risk: Salaries and allowances increased +13.6% YoY, reflecting upfront costs for consultant hiring and development in a growth phase. If competition for talent intensifies or recruitment costs and advertising rise sharply, operating leverage could reverse and compress margins.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 32.4% | 6.2% (4.2%–17.2%) | +26.2pt |
| Net Margin | 22.2% | 2.8% (0.6%–11.9%) | +19.4pt |
Profitability is outstanding within the industry, reflecting the high value-added model of the recruitment business.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 14.8% | 20.9% (12.5%–25.8%) | -6.1pt |
Revenue growth is somewhat below the industry median, but the strategy appears to prioritize high and stable margins and profitability.
※Source: Company compilation
Structural improvement in margins and upside to full-year guidance: Operating margin 32.4% (up +3.5pt YoY) and lower SG&A ratio materially improved profitability, and operating income progress 34.8% is about 10pt above the standard (25%). If SG&A control and operating leverage persist, upside to the full-year Operating Income guidance ¥126.0B is likely. ROE 15.1% demonstrates high capital efficiency and a continuation of quality growth trends.
Room to improve working capital management and cash conversion: Accounts receivable +42.9% and DSO extension (99 days) suggest delayed operating cash flow generation; accrued expenses -¥23.4B and income taxes payable -¥8.4B cash outs were major drivers of the cash balance decline (-¥55.1B). Improving collection processes and working capital efficiency would convert high operating profits into more reliable cash flows, potentially expanding shareholder return capacity.
This report was automatically generated by AI analyzing XBRL financial statement data to produce a financial analysis document. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult professionals as needed.