| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2294.7B | ¥2289.1B | +0.2% |
| Operating Income / Operating Profit | ¥-13.3B | ¥-12.8B | -3.8% |
| Ordinary Income | ¥-2.9B | ¥-8.4B | +66.0% |
| Net Income / Net Profit | ¥-15.5B | ¥-55.7B | +72.2% |
| ROE | -1.2% | -3.9% | - |
For the cumulative Q3 results for the fiscal year ending May 2026, Revenue amounted to ¥2,294.7B (YoY +¥5.6B +0.2%), Operating loss was ¥13.3B (YoY -¥0.5B, deficit widened), Ordinary loss was ¥2.9B (YoY +¥5.5B, loss narrowed by 66.0%), and quarterly Net loss attributable to owners of the parent was ¥15.5B (YoY +¥40.2B, loss narrowed by 72.2%). Revenue was only slightly higher; gross margin of 22.5% improved by 0.8pt from 21.7% a year earlier, but an increase in SG&A ratio to 23.0% (prior year 22.3%) resulted in continued operating-stage losses. Non-operating items included interest income of ¥2.9B and equity-method investment income of ¥0.9B, which contributed to a significant narrowing of the ordinary loss from ¥-8.4B in the prior year. Extraordinary losses were ¥12.9B (prior year ¥29.7B), approximately halved, including impairment losses ¥1.6B and litigation settlement ¥0.3B. Pre-tax loss was ¥13.9B, and income taxes were ¥1.6B, resulting in a negative effective tax rate. After deducting Net income attributable to non-controlling interests of ¥3.4B, Net loss attributable to owners of the parent was ¥15.5B, a substantial improvement from ¥-55.7B in the prior year. ROE was -1.2% (prior year estimated in the -4% range), narrowing despite being in negative territory, and EPS was ¥-50.20 (prior year ¥-157.36), with loss per share reduced by 68.1%.
【Revenue】
Revenue of ¥2,294.7B (YoY +0.2%) saw the core BPO Solutions & Expert Solutions at ¥2,007.6B (-0.6%) slightly down, but growth in Life Solution ¥70.6B (+12.1%), Regional Revitalization & Tourism ¥59.6B (+20.4%), and Global Solution ¥86.9B (+5.7%) covered the decline. Career Solutions decreased to ¥105.1B (-2.5%), suggesting a deterioration in the employment/transfer market mix. Revenue composition: BPO Solutions & Expert Solutions 87.5%, Career Solutions 4.6%, Global Solution 3.8%, Life Solution 3.1%, Regional Revitalization & Tourism 2.6%. The 0.8pt improvement in gross margin to 22.5% (prior year 21.7%) is presumed to have been driven by price/unit improvements and a higher proportion of high-margin projects.
【Profitability】
Cost of sales was ¥1,779.5B (prior year ¥1,792.3B, -0.7%), securing gross profit of ¥515.2B (prior year ¥496.8B, +3.7%). SG&A was ¥528.5B (prior year ¥509.6B, +3.7%), increasing in line with gross profit, resulting in an operating loss of ¥13.3B (prior year ¥-12.8B) and an expanded deficit. The main drivers of SG&A increases were group administrative expenses and new business incubation costs (adjustment amount ¥110.6B, prior year ¥109.2B). Non-operating income totaled ¥19.4B (interest income ¥2.9B, equity-method income ¥0.9B, other ¥4.3B, etc.) and non-operating expenses were ¥9.0B (interest expense ¥3.0B, other non-operating expenses ¥1.4B, etc.), narrowing the ordinary loss to ¥2.9B. Extraordinary income was ¥1.9B (gain on sale of investment securities ¥1.8B, etc.), and extraordinary losses were ¥12.9B (impairment ¥1.6B, loss on disposal of fixed assets ¥0.5B, litigation settlement ¥0.3B, etc.), resulting in pre-tax loss of ¥13.9B. After recording income taxes of ¥1.6B (adjustment to income taxes ¥-9.9B) and deducting non-controlling interests of ¥3.4B, Net loss attributable to owners of the parent was ¥15.5B. In conclusion, despite slight revenue growth, the structure remains one of declining profit with continued operating and bottom-line losses.
BPO Solutions & Expert Solutions recorded Revenue of ¥2,007.6B (-0.6%), Operating Income ¥71.6B (+1.5%), and margin 3.6%, serving as the core of corporate profit. Career Solutions posted Revenue ¥105.1B (-2.5%), Operating Income ¥31.5B (-16.9%), and a high margin of 30.0%, but revenue decline pressured the bottom line. Global Solution grew Revenue to ¥86.9B (+5.7%) but Operating Income fell to ¥0.8B (-56.1%) with margin down to 0.9%, reflecting upfront costs for overseas expansion. Life Solution had Revenue ¥70.6B (+12.1%), Operating Income ¥4.1B (+484.3%), and margin 5.8%, showing significant improvement in profitability. Regional Revitalization & Tourism achieved high growth Revenue ¥59.6B (+20.4%) but an Operating loss of ¥10.7B (prior year ¥-14.7B, deficit reduced by 27.3%), with margin -17.9% as investments are still being recovered. Significant margin disparities across segments continue, with stable earnings from BPO & Expert supporting investments in Regional Revitalization and Global segments.
【Profitability】Operating margin -0.6%, Net margin -0.7%, ROE -1.2%, EBITDA undisclosed. Gross margin 22.5% improved by 0.8pt YoY, but an increased SG&A ratio of 23.0% (prior year 22.3%) resulted in continued operating-stage losses. 【Cash Quality】Interest coverage -4.43x (Operating Income / Interest Expense), indicating a thin profit cushion. Days Sales Outstanding (DSO) 74 days (Accounts receivable ¥465.9B ÷ annualized Revenue × 365 days) extended from the prior year, suggesting working capital is tying up cash. 【Investment Efficiency】Total asset turnover 1.00x (Revenue ¥2,294.7B ÷ Total assets ¥2,292.8B), ROIC -1.3% (estimated; negative returns indicate low capital efficiency). 【Financial Soundness】Equity Ratio 58.4% (prior year 53.2%), Current Ratio 264.3% (Current assets ¥1,404.9B ÷ Current liabilities ¥531.5B), Interest-bearing debt ¥369.8B (long-term borrowings ¥314.5B, short-term borrowings ¥55.3B, corporate bonds ¥18.4B), Debt/Equity ratio 0.29x, Cash and deposits ¥718.9B indicating very ample liquidity.
While a full cash flow statement disclosure is not provided, balance sheet trends were analyzed for cash movements. Cash and deposits were ¥718.9B, down ¥528.9B (-42.4%) from ¥1,247.7B a year earlier, suggesting insufficient operating cash generation and cash outflows for investments and returns. Tangible fixed assets increased to ¥575.3B from ¥471.5B, up ¥103.9B (+22.0%), indicating accelerated capital expenditures and site investments. Intangible fixed assets also grew to ¥94.3B (prior year ¥76.2B, +¥18.6B +24.5%), reflecting continued system/software investment. Long-term borrowings increased to ¥314.5B from ¥236.7B, up ¥77.8B (+32.9%), indicating external financing for investments. Current liabilities decreased significantly to ¥531.5B from ¥877.3B, mainly due to the reduction of deposits received to ¥108.1B (prior year ¥387.4B, -¥279.3B). Accounts receivable rose to ¥465.9B (prior year ¥412.7B, +¥53.2B +12.9%), and combined with the DSO extension to 74 days, working capital appears to be constraining operating cash flow.
Recurring earnings are centered on service revenue from BPO & Expert segments, with non-operating contributions of interest income ¥2.9B and equity-method income ¥0.9B. Total non-operating income of ¥19.4B is 0.8% of Revenue, indicating no reliance above 5%. One-off items include extraordinary income ¥1.9B (gain on sale of investment securities ¥1.8B, etc.) and extraordinary losses ¥12.9B (impairment ¥1.6B, loss on disposal of fixed assets ¥0.5B, litigation settlement ¥0.3B, etc.), which reduced pre-tax profit by ¥11.0B. The prior year recorded extraordinary losses of ¥29.7B, so one-off loss magnitude has halved, but the company has not returned to operating profitability, and earnings quality remains insufficient. Comprehensive income of ¥-16.1B is close to the Net loss of ¥-15.5B; foreign currency translation adjustments +¥1.6B, valuation differences on available-for-sale securities -¥1.2B, and adjustments related to retirement benefits -¥1.0B are minor, so the gap between Net income and Comprehensive income is small. On the accrual side, the increase in accounts receivable and DSO extension pose a risk to the cash realization of operating profits.
Full Year / FY forecast: Revenue ¥3,100.0B (+0.2%), Operating Income ¥5.0B, Ordinary Income ¥18.0B, Net loss attributable to owners of the parent ¥18.0B, EPS ¥-47.72. Progress through cumulative Q3: Revenue 74.0% (in line with typical pacing), Operating Income progress not measurable due to negative (forecast ¥5.0B vs. actual ¥-13.3B, shortfall), Ordinary Income also far behind at ¥-2.9B / ¥18.0B, and Net loss at ¥-15.5B already represents 86.1% of the full-year projected loss of ¥-18.0B. The forecast was revised in this quarter; Revenue is roughly as assumed, but profitability relies on containment of extraordinary losses, SG&A control, and accumulation of high-margin projects in Q4. The main causes of progress deviation are believed to be persistently high SG&A ratio and the burden of group administrative & incubation costs (adjustment amount ¥110.6B), and deterioration in profitability in Global and Regional Revitalization segments.
Dividend forecast is ¥75 per share at year-end (ordinary dividend ¥15 + special dividend ¥60), with interim dividend of ¥0, resulting in an annual dividend of ¥75. Given the full-year Net loss forecast of ¥-18.0B (EPS ¥-47.72), paying dividends makes payout ratio metrics incalculable. Based on an estimated number of outstanding shares after treasury stock deduction of approximately 37.35 million shares, total dividend payout is approximately ¥2.8B. With Cash and deposits of ¥718.9B, the capacity to pay is sufficient, but given continued operating losses, prolonged accounts receivable collection periods (DSO 74 days), and increased long-term borrowings, dividend execution depends on available liquidity; medium- to long-term sustainability hinges on recovery of operating cash flow. No share buyback has been disclosed, so Total Return Ratio cannot be assessed.
Segment concentration risk: BPO Solutions & Expert Solutions account for 87.5% of Revenue and the majority of profits, creating high concentration where market fluctuations, loss of large contracts, or price adjustments in that area directly impact consolidated results. Slowing growth of the core business (-0.6%) is causing stagnation of overall Revenue; monitoring progress of diversification is critical.
Investment recovery risk for new/low-margin businesses: Regional Revitalization & Tourism shows high growth with Revenue ¥59.6B (+20.4%) but an Operating loss of ¥10.7B (margin -17.9%); Global Solution has Revenue ¥86.9B (+5.7%) but Operating Income ¥0.8B (margin 0.9%, down -56.1% from prior year 1.9%), indicating significant profitability deterioration. Absorption of group administrative & incubation costs of ¥110.6B is delayed, posing risk of review of investment decisions.
Working capital & liquidity risk: Accounts receivable ¥465.9B (+12.9%) and DSO extension to 74 days are tying up working capital and pressuring operating cash flow; Cash and deposits declined sharply by ¥528.9B YoY (-42.4%). Increased long-term borrowings ¥314.5B (+32.9%) and the reduction of deposits received to ¥108.1B (-72.1%) are occurring simultaneously, reducing funding flexibility. Low interest coverage of -4.43x lowers resilience in a rising-rate environment.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating margin | -0.6% | 8.2% (3.6%–18.0%) | -8.8pt |
| Net margin | -0.7% | 6.0% (2.2%–12.7%) | -6.7pt |
Profitability is well below the industry median, and continued operating losses place the company in the lower ranks.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | 0.2% | 10.4% (-1.1%–19.5%) | -10.2pt |
Revenue growth rate is 10.2pt below the industry median, indicating weak growth momentum.
※ Source: Company aggregation
The stability of the core BPO & Expert domain and success in controlling SG&A are key to reaching breakeven. While gross margin is solid at 22.5% (+0.8pt), SG&A ratio remains elevated at 23.0% (+0.7pt) sustaining operating losses; absorption progress of group administrative expenses and incubation costs of ¥110.6B will determine profitability improvement from Q4 onward.
Investment recovery in new businesses (Regional Revitalization & Global) and the sensitivity of Career Solutions to market conditions create pressure to restructure the segment mix. Regional Revitalization is loss-making at ¥-10.7B (margin -17.9%), and Global’s margin has halved to 0.9% (from 1.9%), highlighting deteriorating profitability and the need to accelerate selection and concentration.
Large cash decline (¥-528.9B), increased long-term borrowings (+¥77.8B), and rising accounts receivable with extended DSO (74 days) indicate changes in cash circulation and necessitate rebalancing investment, collection, and returns. The dividend of ¥75 (total approx. ¥2.8B) can be covered by on-hand liquidity, but sustained shareholder returns depend on recovery of operating cash flow.
This report was generated by AI analyzing XBRL financial statement data and is an automatically produced earnings analysis. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are aggregated by the company from publicly disclosed financial statements and are for reference only. Investment decisions should be made at your own responsibility and, if necessary, after consulting a professional advisor.