PERSOL HOLDINGS CO.,LTD. FY2027 Q1 Earnings Report

Quick View

Executive Summary

The first quarter was characterized by higher revenue and earnings, with profit growth outpacing top-line expansion. Revenue was ¥4,240.2B (+13.5% YoY), Operating Income was ¥188.8B (+22.6%), Profit Before Tax was ¥186.4B (+22.1%), and quarterly profit attributable to owners of the parent was ¥121.9B (+14.3%). The primary driver of revenue growth was the strong growth of the Asia Pacific segment, while the primary driver of earnings growth was an improvement in the SG&A ratio, confirming growth accompanied by cost discipline.

Factors Affecting Results

【Revenue】Revenue was ¥4,240.2B, up +13.5% YoY. By segment, Asia Pacific led company-wide growth with revenue of ¥1,454.4B (+26.0%), while Staffing maintained the largest revenue contribution at ¥1,559.7B (+3.3%). Technology and BPO posted steady growth of ¥289.0B (+7.6%) and ¥341.1B (+6.5%), respectively, while Career was the only segment to report a revenue decline, at ¥383.4B (-0.9%).

【Profit and Loss】Operating Income was ¥188.8B (+22.6% YoY), and the Operating Income margin improved to 4.45% from 4.12% a year earlier. Although the gross margin declined from the previous year to 22.5%, the lower SG&A ratio of 17.9% supported profitability. By segment, Asia Pacific posted significant growth in segment profit to ¥41.2B (+96.1%), while Staffing remained the core contributor to company-wide profit at ¥116.7B (+13.8%). Career, meanwhile, reported lower profit of ¥93.5B (-10.5%) despite maintaining a high margin of 24.4%, and BPO was essentially flat at ¥12.6B (-0.6%). Profit Before Tax was ¥186.4B (+22.1%), and Net Income attributable to owners of the parent was ¥121.9B (+14.3%), indicating higher revenue and earnings.

Segment Analysis

Staffing remained the core business, generating revenue of ¥1,559.7B and profit of ¥116.7B, while securing a profit margin of 7.5%. Asia Pacific recorded revenue of ¥1,454.4B (+26.0%) and profit of ¥41.2B (+96.1%), the highest growth and profit growth rates among all segments, with profitability improving alongside expansion in scale. Career maintained the highest profit margin at 24.4%, but both revenue and profit were below the previous year, indicating that the segment is in an adjustment phase. Technology improved profit to ¥12.4B (+42.8%) and its profit margin to 4.3%, while BPO posted revenue growth of 6.5% but essentially flat profit (-0.6%), making profitability improvement a key challenge. A contrast is evident among the segments between the high-growth, low-profitability Asia Pacific business and the stable, highly profitable Career business.

Key Financial Metrics

【Profitability】The Operating Income margin improved to 4.45% from 4.12% a year earlier, while the Net Income margin was 2.88%, broadly in line with the previous year. Although the gross margin declined from the previous year to 22.5%, this was offset by a decline in the SG&A ratio to 17.9%.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥204.5B, approximately 1.68 times Net Income of ¥121.9B, indicating a high level of cash generation relative to earnings.【Investment Efficiency】ROE was 5.2%, and EBIT was ¥188.8B. In terms of asset efficiency, there appears to be room for improvement in the asset turnover ratio relative to total assets of ¥6,269.7B.【Financial Soundness】The Equity Ratio was 35.3%, broadly unchanged from 35.4% in the previous year. Cash and deposits were ¥826.4B, and the relationship between OCF and dividend payments indicates that short-term funding sustainability has been secured.

Cash Flow Analysis

OCF increased significantly by +48.7% YoY to ¥204.5B. Starting from Profit Before Tax of ¥186.4B and depreciation and amortization of ¥98.6B, the increase in operating liabilities of ¥66.0B contributed to cash inflows, while increases in contract assets of ¥32.5B and prepaid expenses were sources of cash outflows. Investing Cash Flow was -¥60.4B, reflecting ongoing investments including ¥19.0B for the acquisition of property, plant and equipment and ¥33.8B for the acquisition of intangible assets. Financing Cash Flow was -¥171.9B, with dividend payments of ¥133.1B, lease liability repayments of ¥54.6B, and repayments of long-term borrowings of ¥101.8B as the primary sources of cash outflows. Free Cash Flow was ¥144.1B, broadly covering dividend payments of ¥133.1B, although the headroom was limited. As a result, cash and cash equivalents were ¥826.4B, down ¥23.7B from the end of the previous fiscal period.

Earnings Quality

The current period’s earnings growth was primarily driven by the expansion of Operating Income, with limited impact from non-recurring factors. Outside operating income, financial income of ¥3.6B versus financial expenses of ¥8.0B resulted in a net amount of -¥4.4B, while other income of ¥2.6B and other expenses of ¥5.3B were both small in scale and had a limited impact on Profit Before Tax of ¥186.4B. Equity in earnings of affiliates of ¥2.1B also made a limited contribution to consolidated earnings. The gap between Profit Before Tax and Net Income was attributable to an effective tax rate of 32.3%, up from 27.8% in the previous year; the higher tax burden restrained Net Income growth (+14.3%) relative to Operating Income growth (+22.6%). OCF at approximately 1.68 times Net Income indicates that earnings are supported by cash flow, and earnings quality can be assessed as favorable. Comprehensive Income was ¥149.6B, exceeding Net Income of ¥121.9B (¥126.3B on a consolidated basis), primarily due to a ¥21.2B increase in foreign currency translation adjustments for foreign operations, reflecting the rise in the value of overseas subsidiaries’ assets resulting from yen depreciation.

Earnings Forecast and Guidance

Progress against the full-year plan was 25.5% for Revenue (¥4,240.2B/¥16,650.0B), 26.6% for Operating Income (¥188.8B/¥710.0B), and 27.4% for Net Income (¥121.9B attributable to owners of the parent/¥445.0B). All exceeded the simple seasonal benchmark of Q1=25%, indicating steady progress toward the full-year plan. As of the current quarter, no revisions have been made to the earnings forecast or dividend forecast.

Shareholder Returns

The company’s full-year dividend forecast is ¥13.00 per share. Based on the EPS forecast of ¥19.60, the Payout Ratio is approximately 66.3%. Dividend payments during the first quarter were ¥133.1B, up from ¥110.3B in the previous year, and were broadly covered by Free Cash Flow of ¥144.1B. Share repurchases were ¥0.0B in the current period, making dividends the central framework for shareholder returns.

Risk Factors

1. Working capital intensity: Contract assets increased to ¥357.0B at the end of the current period from ¥317.5B at the end of the previous year, while trade and other receivables, including operating receivables, remained high at ¥2,052.1B. The ratio of trade and other receivables to revenue reached approximately 48.4%, making it a factor affecting funding stability.

2. Concentration in goodwill and intangible assets: Goodwill was ¥953.7B, accounting for approximately 39.6% of net assets of ¥2,408.8B. This reflects the growth strategy pursued through M&A, and the results of regular impairment tests should be closely monitored with respect to future impairment risk.

3. Variability in performance among segments: While the Career segment maintained a high margin of 24.4%, both revenue and profit were below the previous year, and BPO profit was also essentially flat. Company-wide earnings growth is highly dependent on Asia Pacific and Staffing, requiring monitoring of the impact of changes in segment mix on overall profitability.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Both the Operating Income margin and Net Income margin were below the industry median, placing profitability somewhat toward the lower end of the industry.

Growth and Capital Efficiency

The Revenue growth rate exceeded the industry median, indicating a relatively high level of growth within the industry.

※Source: Compiled by the Company

Key Points from the Financial Results

1. In addition to higher revenue and earnings, an increase in the Operating Income margin from 4.12% to 4.45%, accompanied by an improvement in the SG&A ratio (-161bp equivalent), was confirmed. This indicates a structural shift toward growth accompanied by cost efficiency improvements.

2. OCF reached approximately 1.68 times Net Income, indicating that earnings growth was supported by cash generation despite the burden of working capital, including increases in contract assets and trade and other receivables.

3. By segment, the contrasting trends of high growth and profit growth in Asia Pacific and declining revenue and profit in Career continued. Changes in segment mix are structurally positioned to influence the future trajectory of company-wide profitability.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥128–¥135 at Cost of Equity ±1%, and ¥131–¥133 at ω±0.1.

Notes:

• Goodwill represents a high proportion of net assets, and the assumptions would change substantially if impairment were recognized.
• Net assets as of the end of the quarter are used; there is a timing difference relative to the full-year forecast.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This figure does not predict or guarantee the future share price.)

---

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 available earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

---End of Report---

---

AI Financial Analysis

Executive Summary

PERSOL Holdings delivered a strong FY2027 Q1 result, with revenue growth translating into faster operating-profit growth and solid cash generation. Revenue rose 13.5% year on year to ¥424.0bn. Operating income increased 22.6% to ¥18.9bn, exceeding the pace of revenue growth by 9.1 percentage points. Net income attributable to owners rose 14.3% to ¥12.2bn, and basic EPS increased to ¥5.54 from ¥4.86. Gross profit increased 7.7% to ¥95.2bn, but the gross margin narrowed 120bp to 22.5% as cost of sales rose 15.3%, faster than revenue. Despite that gross-margin pressure, the operating margin improved 30bp to 4.5% because SG&A grew only 4.2%, substantially below the 13.5% revenue increase. This indicates favorable operating leverage and tighter overhead absorption. The 4.5% EBIT margin remains below the 5% efficiency threshold and is the principal profitability constraint. Operating cash flow rose 48.7% to ¥20.4bn and exceeded net income by 1.68x, supporting the quality of reported earnings. Free cash flow was ¥14.4bn after ¥1.9bn of tangible capex, broadly covering ¥13.3bn of cash dividends paid during the quarter. Cash flow benefited from a ¥66.0bn inflow from payables and a ¥57.4bn increase in unpaid consumption taxes, while contract assets and prepaid expenses absorbed cash. Asia Pacific was the principal source of growth, while the domestic Career segment contracted in both revenue and adjusted EBITDA. The company maintained its full-year forecast, and Q1 progress is modestly ahead of a linear 25% run rate for revenue, operating income, and net income. Full-year forecast achievement will depend on sustaining Asia Pacific momentum, recovering Career profitability, and preventing further gross-margin dilution. The balance sheet remains liquid, although the current ratio is only 1.07x and the liability structure is heavily weighted toward current operating obligations. Goodwill equals 39.6% of equity, an elevated but not warning-level exposure that makes the preservation of acquired-business earnings important. Overall, the quarter supports an improving earnings trajectory, but margin expansion must continue to validate the full-year profit target.

Profitability Analysis

The annualized DuPont ROE is 20.2%, comprising a 2.9% net profit margin, 2.705x annualized asset turnover, and 2.60x financial leverage. The strongest feature is high annualized asset turnover, consistent with the labor-staffing and outsourcing business model, whereas the 2.9% net margin remains thin. Financial leverage also makes a material contribution to ROE, so the return profile is not driven solely by operating profitability. The operating margin improved to 4.5% from 4.1% a year earlier, a 30bp expansion, as operating income rose 22.6% against 13.5% revenue growth. SG&A increased only 4.2% to ¥76.1bn, creating favorable operating leverage and offsetting the 120bp decline in gross margin to 22.5%. The gross-margin decline shows that direct labor and delivery costs grew faster than revenue, which limits the durability of margin expansion if pricing and staffing mix do not improve. The quality alert for low operating efficiency is warranted: a 4.5% EBIT margin is below 5% and indicates that relatively small changes in gross profit or personnel costs can have a meaningful effect on earnings. The five-factor analysis shows a 0.987 interest burden, meaning finance costs had only a limited effect on pre-tax profit, while the 0.654 tax burden reflects a 32.3% effective tax rate. Finance costs rose to ¥8.0bn from ¥4.5bn, partly offsetting the operating improvement, although interest coverage remains strong at approximately 23.6x based on quarterly EBIT divided by finance costs. Segment adjusted EBITDA increased 21.6% to ¥264.9bn, faster than revenue, reinforcing the evidence of improved operating leverage before reconciliation items. Staffing remained the core business by adjusted EBITDA contribution, producing ¥116.7bn on ¥156.0bn of external revenue and representing 42.3% of aggregate reportable-segment EBITDA. Career had the highest adjusted EBITDA margin among the major segments at 24.4%, but this was down from 26.5% a year earlier.

Growth Assessment

Revenue growth was broad-based, with Asia Pacific the main driver: external revenue increased 26.0% year on year to ¥145.4bn and adjusted EBITDA nearly doubled to ¥41.2bn. Staffing revenue rose 3.3% to ¥156.0bn and adjusted EBITDA increased 13.8% to ¥116.7bn, demonstrating profit growth ahead of sales. BPO revenue grew 6.5% to ¥34.1bn, but adjusted EBITDA edged down 0.6% to ¥12.6bn, reducing its adjusted EBITDA margin from 4.0% to 3.7%. Technology revenue increased 7.6% to ¥28.9bn and adjusted EBITDA rose 42.8% to ¥12.4bn, with margin improving from 3.2% to 4.3%. Career revenue declined 0.9% to ¥38.3bn and adjusted EBITDA fell 10.5% to ¥93.5bn, with margin contracting 210bp to 24.4%; this is the clearest weak point in the operating portfolio. Other businesses increased external revenue to ¥21.2bn from ¥9.7bn and reduced their adjusted EBITDA loss to ¥0.5bn from ¥9.0bn. Aggregate reportable-segment adjusted EBITDA margin increased to 6.5% from 6.4%, while consolidated EBIT margin improved to 4.5%. Against full-year guidance of ¥1,665.0bn in revenue, ¥71.0bn in operating income, and ¥46.5bn in net income, Q1 progress was 25.5%, 26.6%, and 27.2%, respectively. Each measure is 0.5-2.2 percentage points above a linear 25% Q1 run rate, which is constructive but not sufficient to establish a material full-year beat given the modest deviations. The unchanged forecast indicates management has not incorporated a higher outlook despite the favorable Q1 progress. Revenue sustainability is most dependent on continued Asia Pacific expansion and stable demand across staffing, BPO, and technology services. The mix shift toward Asia Pacific can support growth, but it may also introduce foreign-exchange, regional labor-market, and integration sensitivity.

Financial Health

Total assets increased ¥64.4bn from the March 2026 year-end to ¥6,269.7bn, while total equity increased ¥20.9bn to ¥2,408.8bn. The equity ratio was stable at 35.3%, indicating that balance-sheet expansion did not materially dilute capitalization. Current assets of ¥3,404.6bn exceeded current liabilities of ¥3,182.7bn, producing a current ratio of 1.07x. This is above the 1.0x warning threshold, but it is below the 1.5x healthy benchmark and leaves limited liquidity headroom if operating working capital becomes less favorable. Cash and cash equivalents were ¥826.4bn, equivalent to 26.0% of current liabilities. Trade receivables were broadly stable at ¥2,052.1bn, while trade payables increased ¥74.4bn to ¥1,287.2bn. Current bonds and borrowings were ¥225.5bn, exceeding non-current bonds and borrowings of ¥119.0bn, but current assets exceed current borrowings by a wide margin and mitigate refinancing risk. Lease liabilities totaled ¥489.2bn, matched in part by ¥513.0bn of right-of-use assets. Reported debt-to-equity was 1.60x, below the 2.0x aggressive-leverage warning level but still indicative of meaningful liability leverage for a service company. Finance costs of ¥8.0bn were readily covered by EBIT of ¥18.9bn. Goodwill was ¥953.7bn, or 15.2% of assets and 39.6% of equity; this is elevated relative to the 30% healthy benchmark but below the 50% warning threshold. Intangible assets were ¥598.6bn, or 9.5% of total assets, which is within the balanced range. Deferred tax assets of ¥307.1bn represented 12.8% of equity, making the realization of taxable profits relevant to capital quality.

Notable B/S Changes

Trade payables: +¥74.4bn (+6.1% from March 2026) to ¥1,287.2bn — a material source of Q1 operating-cash inflow; subsequent settlement patterns should be monitored. Income taxes payable: -¥62.0bn (-42.0%) to ¥85.7bn — reflects tax settlement and reduced current-tax obligations, partly offset by the increase in unpaid consumption taxes within other current liabilities. Current provisions: +¥7.7bn (+59.8%) to ¥20.5bn — a large percentage increase that may reflect higher expected near-term obligations. Goodwill: +¥13.5bn (+1.4%) to ¥953.7bn — goodwill remains significant at 39.6% of equity, maintaining sensitivity to acquisition performance and impairment testing. Cash and cash equivalents: -¥23.7bn (-2.8%) to ¥826.4bn — positive operating cash flow was more than offset by dividends, debt repayments, lease payments, and investing activity.

Cash Flow Quality

Cash conversion was favorable: operating cash flow of ¥20.4bn was 1.68x reported net income of ¥12.6bn. The negative 1.3% accruals ratio also supports good earnings-to-cash conversion. Operating cash flow increased from ¥13.8bn in the prior-year quarter, materially outpacing the 14.5% increase in net income. The operating cash-flow subtotal was ¥31.4bn before net interest and tax payments, supported by non-cash depreciation and amortization of ¥98.6bn. Working-capital cash inflows included ¥66.0bn from payables, ¥19.6bn from receivables, and ¥57.4bn from unpaid consumption taxes. These favorable movements were partly offset by a ¥32.5bn increase in contract assets, a ¥31.0bn increase in prepaid expenses, and a ¥107.5bn reduction in unpaid bonuses. The increased reliance on payables and indirect-tax liabilities means part of the strong quarterly operating cash flow is timing-related rather than purely recurring. Free cash flow, defined as operating cash flow less tangible capex, was ¥14.4bn. Including intangible asset purchases of ¥33.8bn, cash flow after tangible and intangible investment was ¥9.2bn, below cash dividends paid of ¥13.3bn. Investing cash outflow totaled ¥60.4bn, including ¥45.2bn for acquisition of subsidiaries, ¥33.8bn for intangible assets, and ¥19.0bn for tangible capex. Acquisition spending was only 1.1% of quarterly revenue, indicating limited near-term M&A cash intensity. Financing cash flow was an outflow of ¥171.9bn, reflecting ¥133.1bn of dividends, ¥101.8bn of long-term debt repayment, ¥54.6bn of lease payments, and a net ¥120.0bn increase in short-term borrowings. Cash declined ¥23.7bn during the quarter to ¥826.4bn, despite positive free cash flow, because shareholder distributions and debt repayment exceeded operating cash generation.

Dividend Sustainability

The full-year forecast dividend of ¥13.00 per share implies a dividend payout ratio of 66.3% against forecast EPS of ¥19.60. This is above the 60% sustainability benchmark but remains below a 100% warning threshold. Using approximately 2.22bn shares outstanding excluding treasury shares, the indicated full-year cash dividend is approximately ¥288.7bn, equivalent to about 62.1% of forecast net income attributable to owners of ¥445.0bn. Q1 cash dividends paid were ¥133.1bn, exceeding parent-attributable quarterly earnings of ¥121.9bn, which reduced retained earnings despite quarterly profitability. Q1 free cash flow of ¥144.1bn covered dividends paid by approximately 1.08x on a tangible-capex basis. However, free cash flow after both tangible and intangible investment was approximately ¥93.7bn, below the dividend cash payment. Dividend sustainability therefore depends on continued strong operating cash conversion, management of intangible-investment requirements, and avoidance of a reversal in working-capital inflows. No share buybacks were reported, so the relevant shareholder-return measure is the dividend payout ratio rather than a total return ratio. The absence of a dividend forecast revision is consistent with a stable distribution policy, but the elevated payout ratio provides less flexibility should Career remain weak or cash conversion normalize.

Risk Assessment

Business risks include High priority — Gross-margin pressure: gross margin declined 120bp to 22.5% as cost of sales grew 15.3%, faster than 13.5% revenue growth. Persistent wage inflation, pricing pressure, or unfavorable worker mix could reverse the Q1 EBIT-margin improvement., High priority — Career segment deterioration: external revenue declined 0.9% and adjusted EBITDA fell 10.5%, reducing the segment margin by 210bp to 24.4%. A prolonged slowdown in recruitment activity would weigh disproportionately on group profitability because Career remains a high-margin business., Medium priority — Asia Pacific concentration in incremental growth: Asia Pacific generated ¥30.0bn of the ¥50.3bn group revenue increase and ¥20.2bn of the ¥36.1bn rise in reportable-segment EBITDA. Regional labor-market weakening, execution issues, or currency volatility would materially affect group growth., Medium priority — IT, BPO, and staffing competition: the sector is exposed to price competition, talent availability, automation and AI-led changes in client hiring processes, and demand sensitivity to corporate employment plans..

Financial risks include Medium priority — Limited short-term liquidity buffer: the current ratio is 1.07x, above the warning threshold but below the 1.5x healthy benchmark. A material unwind of payables or tax-related liabilities could tighten liquidity., Medium priority — Liability leverage: debt-to-equity is 1.60x, below the 2.0x aggressive threshold, but lease liabilities of ¥489.2bn and current borrowings of ¥225.5bn require continued operating cash-flow resilience., Medium priority — Goodwill and acquisition-value retention: goodwill is ¥953.7bn, equal to 39.6% of equity. Under IFRS, goodwill is not amortized and is subject to impairment testing, creating downside risk if acquired businesses underperform., Low priority — Higher financing costs: finance costs increased to ¥8.0bn from ¥4.5bn. Coverage remains strong, but sustained higher rates or refinancing costs could narrow the gap between operating and pre-tax profit..

Key concerns include The explicit low-operating-efficiency alert is justified: EBIT margin of 4.5% remains below the 5% concern threshold. While the margin improved 30bp, the investment case remains sensitive to maintaining SG&A discipline and restoring gross-margin momentum., Operating cash flow was strong but partly supported by timing-related working-capital inflows, notably payables and unpaid consumption taxes. Monitoring subsequent reversals is important when assessing normalized free cash flow., The full-year operating-income forecast requires continued margin delivery: Q1 operating-income progress of 26.6% is only 1.6 percentage points ahead of a linear annual run rate., The indicated 66.3% dividend payout ratio is above the stated 60% sustainability benchmark, reducing the buffer for investment needs, debt reduction, or weaker earnings..

Investment Implications

Key takeaways include Revenue, operating income, and net income grew 13.5%, 22.6%, and 14.3%, respectively, demonstrating positive operating leverage., SG&A growth of 4.2% was well below revenue growth, but the 120bp gross-margin decline remains the central profitability issue., Asia Pacific was the largest incremental growth contributor, while Career weakened and requires monitoring., Q1 progress against unchanged full-year guidance is modestly ahead of a linear pace: 25.5% for revenue, 26.6% for operating income, and 27.2% for net income., Cash conversion is sound, with OCF/net income of 1.68x, but quarterly cash flow includes meaningful working-capital support., The balance sheet is adequately capitalized, though the 1.07x current ratio and 39.6% goodwill-to-equity ratio warrant continued attention..

Metrics to watch include Gross margin and consolidated EBIT margin, particularly whether EBIT margin can remain above 5.0%., Career segment revenue and adjusted EBITDA margin recovery., Asia Pacific revenue growth, adjusted EBITDA conversion, and foreign-exchange effects., Payables, contract assets, prepaid expenses, and unpaid bonus movements as indicators of normalized operating cash flow., Current ratio, short-term borrowings, lease-liability obligations, and finance-cost trends., Goodwill impairment indicators and the earnings performance of acquired businesses., Progression versus the ¥1,665.0bn revenue, ¥71.0bn operating-income, and ¥46.5bn net-income full-year forecasts..

Regarding relative positioning, PERSOL exhibits the high asset turnover characteristic of a diversified staffing, recruitment, BPO, and technology-services group, generating a strong 20.2% annualized ROE despite a thin 2.9% net margin. Relative earnings quality is favorable due to cash conversion above net income, while relative operating efficiency remains constrained by a sub-5% EBIT margin. The company’s profitability profile is supported by scale and overhead leverage rather than a high-margin operating model, making gross-margin discipline and the recovery of Career strategically important.