JAC Recruitment Co.,Ltd. FY2026 Q2 Earnings Report

Quick View

Executive Summary

This was a high-quality earnings result featuring both revenue and profit growth, accompanied by improved margins, with cost efficiencies contributing to increased profitability. Revenue rose to ¥258.1B (+11.0% YoY), Operating Income to ¥71.1B (+13.9%), Ordinary Income to ¥71.4B (+14.3%), and Net Income to ¥48.9B (+14.4%), representing double-digit growth across all metrics. In addition to higher revenue, an improvement in the gross margin (93.2% versus 92.7% the previous year) and restrained advertising expenses lifted the Operating Income margin to 27.5% (26.8% the previous year), resulting in profit growth exceeding the rate of revenue growth.

Factors Affecting Performance

【Revenue】Revenue increased 11.0% YoY to ¥258.1B. By segment, the core Domestic Recruitment Business accounted for 90.6% of revenue at ¥233.9B (+10.5%), while the Overseas Business drove growth with double-digit expansion of 17.2% to ¥22.3B. The Domestic Job Advertising Business remained small in scale but expanded steadily, increasing 7.5% to ¥2.4B. Performance obligations satisfied at a point in time accounted for 94.2% of revenue, and the characteristic of recognizing revenue at the time of contract completion remained unchanged from the previous year.

【Profit and Loss】Operating Income rose 13.9% to ¥71.1B and Ordinary Income increased 14.3% to ¥71.4B, exceeding the rate of revenue growth. Cost of sales was limited to ¥17.5B, improving the gross margin to 93.2%, while the SG&A expense ratio declined slightly to 65.7% from 65.8% the previous year. The decline in advertising expenses (¥12.3B versus ¥13.2B the previous year) contributed to improved profitability. Salaries and allowances increased 11.1% to ¥94.6B, broadly in line with revenue growth. Extraordinary gains and losses were negligible (extraordinary loss of ¥0.01B), limiting the impact of temporary factors; the difference between Ordinary Income and Net Income was primarily attributable to the normal tax burden from income taxes and other taxes (effective tax rate: 31.6%). In conclusion, this was an earnings result characterized by revenue and profit growth alongside improved profitability supported by cost discipline.

Segment Analysis

Segment profit for the Domestic Recruitment Business was ¥69.1B (+13.4% YoY), maintaining high profitability with a margin of 29.6% and accounting for the majority of company-wide profit. The Domestic Job Advertising Business generated ¥0.8B (+64.0%), reaching a margin of 36.0% and demonstrating high profitability despite its small scale. The Overseas Business generated ¥1.5B (+47.5%), although its margin remained at 6.6%; profit growth has accelerated from the previous year, indicating ongoing profitability improvements as the business progresses beyond its growth investment phase. Overall, the two domestic divisions form a highly profitable earnings base, while the Overseas Business complements them through its high growth rate.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 27.5% from 26.8% the previous year, while the Net Income margin rose to 18.9% from 18.3%; ROE reached 22.4%. The improvement in ROE was not driven by increased financial leverage but primarily by higher margins resulting from gross margin expansion and advertising expense restraint.【Cash Flow Quality】Against Profit Before Tax of ¥71.4B, non-operating gains and losses were limited to income of ¥0.6B and expenses of ¥0.2B, indicating that earnings were primarily generated by the core business.【Investment Efficiency】Cash and deposits accounted for ¥206.3B of total assets of ¥300.0B, meaning that most assets were held in highly liquid forms. Fixed assets were small at ¥46.2B, reflecting a low-capital-intensity business model.【Financial Soundness】The Equity Ratio remained high at 72.7% (72.3% the previous year), while fixed liabilities were only ¥0.8B, indicating virtually no dependence on interest-bearing debt. Current liabilities were ¥81.0B against current assets of ¥253.8B, providing substantial short-term liquidity headroom.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is not available, an analysis of funding trends based on changes in the balance sheet shows that cash and deposits declined to ¥206.3B from ¥233.1B the previous year, while Profit Before Tax increased by +¥14.3B YoY to ¥71.4B, indicating that the underlying earnings power of the core business strengthened. Accounts receivable and notes receivable increased significantly to ¥36.1B from ¥25.8B the previous year, suggesting that the expansion of receivables associated with revenue growth may have partially pressured cash efficiency. Retained earnings declined to ¥230.8B from ¥239.5B the previous year, suggesting that dividend payments and treasury stock transactions affected the cash balance. Overall, although operating profit and loss improved, the increase in working capital in connection with the lack of growth in the cash balance is an area to monitor in assessing funding trends.

Earnings Quality

Non-operating income of ¥0.6B and non-operating expenses of ¥0.2B were both minimal relative to revenue, and the difference between Operating Income of ¥71.1B and Ordinary Income of ¥71.4B was negligible, indicating that the majority of earnings was generated by the core business and demonstrating high earnings quality. Extraordinary loss was minimal at ¥0.01B, with almost no impact from temporary factors such as losses on the disposal of fixed assets. Against Profit Before Tax of ¥71.4B, Net Income was ¥48.9B, resulting in an effective tax rate of 31.6%. The divergence between Ordinary Income and Net Income was attributable to the normal tax burden, with no distortion from non-recurring items. Comprehensive income was ¥49.1B, nearly in line with Net Income of ¥48.9B; the impact of foreign currency translation adjustments of ¥0.2B was also small, resulting in a limited divergence between Net Income and comprehensive income.

Earnings Forecast and Guidance

First-half progress against the full-year company plan was 48.5% for revenue (¥258.1B against the plan of ¥532.0B), 56.4% for Operating Income (¥71.1B against the plan of ¥126.0B), and 56.6% for Ordinary Income (¥71.4B against the plan of ¥126.0B). Operating Income and Ordinary Income exceeded the standard seasonal progress rate of 50%, indicating that performance was ahead of plan as of the first half. Revenue progress was broadly in line with the plan, while the effects of expense control were reflected in the upside in profit progress. No revisions were made to the earnings forecast or dividend forecast during the current quarter.

Shareholder Returns

The first-half dividend was ¥19 per share, resulting in a Payout Ratio of approximately 64% based on first-half Net Income (¥48.9B and average shares outstanding during the period of 158,691 thousand shares). The full-year company plan provides for an annual dividend of ¥38 and forecast EPS of ¥54.18, implying a full-year Payout Ratio of approximately 70% and indicating a high shareholder return policy. No disclosure has been made regarding the acquisition of treasury stock, and shareholder returns currently center on dividends. The strong financial foundation, including an Equity Ratio of 72.7% and cash and deposits of ¥206.3B, supports the company’s capacity to maintain this level of shareholder returns.

Risk Factors

1. High concentration in the domestic business: The Domestic Recruitment Business accounts for 90.6% of revenue, creating a structure in which fluctuations in domestic employment and recruitment market conditions have a significant impact on overall performance.

2. Increase in accounts receivable: Accounts receivable and notes receivable increased significantly to ¥36.1B from ¥25.8B the previous year. Any lengthening of collection periods or changes in credit conditions associated with revenue growth could affect cash conversion.

3. SG&A pressure from rising personnel expenses: Salaries and allowances increased 11.1% to ¥94.6B, broadly in line with revenue growth. If competition for talent intensifies or personnel cost inflation continues, a rise in the SG&A expense ratio could affect the sustainability of margin improvement.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

The company’s profitability significantly exceeds the industry median and is also above the upper bound of the IQR.

Growth and Capital Efficiency

The revenue growth rate is below both the industry median and the lower bound of the IQR, indicating a relatively slower growth rate within the industry.

※Source: Compiled by the Company

Key Earnings Highlights

1. The Operating Income margin improved to 27.5% from 26.8% the previous year, with advertising expense restraint and gross margin expansion contributing to margin growth. ROE of 22.4% was driven by margin improvement rather than leverage, demonstrating the qualitative strength of the earnings structure.

2. The Overseas Business is growing faster than the company as a whole, with revenue up +17.2% and segment profit up +47.5%. Its role as a growth driver is expanding within a business portfolio that remains highly dependent on the domestic market.

3. Accounts receivable increased by approximately +40% YoY, and the expansion of working capital accompanying revenue growth may be related to the decline in cash and deposits. The future trend in cash efficiency warrants monitoring.

Theoretical Share Price (Reference Value)

Sensitivity: ¥261–¥275 at Cost of Equity ±1%, and ¥265–¥272 at ω±0.1.

Notes:

• Net assets as of the quarter-end are used (there is a timing difference relative to the full-year forecast).
• Because 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 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

---

This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with professionals as necessary.

---End of Report---