Plus Alpha Consulting (4071) FY2026 Q1 Earnings Report

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Executive Summary

The first quarter of fiscal 2026 saw increases in both revenue and earnings, with profit growth exceeding revenue growth as the key highlight. Revenue was ¥4.44B (+14.0% YoY), Operating Income was ¥1.68B (+49.5%), Ordinary Income was ¥1.67B (+49.7%), and Net Income was ¥1.15B (+52.1%). Strong growth and improved profitability in the core HR Solutions business drove performance, while the restraint of SG&A expenses increased operating leverage and supported earnings growth.

Factors Affecting Earnings

【Revenue】Revenue was ¥4.44B, representing a +14.0% increase YoY. By segment, HR Solutions drove growth with revenue of ¥3.52B (79.3% composition ratio, +20.3% YoY), while Marketing Solutions recorded a decline in revenue to ¥0.92B (20.7% composition ratio, △5.0% YoY). By revenue recognition category, recurring service revenue transferred over time amounted to ¥4.09B, accounting for 92.1% of total revenue and reflecting a stable revenue base.

【Profit and Loss】Operating Income was ¥1.68B (+49.5% YoY), and the Operating Margin improved to 37.8% from 28.8% in the same period of the previous year, an improvement of 897bp. Although the Gross Profit Margin declined slightly to 69.7% from 72.1% in the same period of the previous year, SG&A expenses decreased 15.9% YoY to ¥1.42B. Fixed-cost control exceeding the decline in the gross margin led the increase in earnings. Ordinary Income was ¥1.67B and Net Income was ¥1.15B. The impact of non-operating and extraordinary gains and losses was negligible, leading to the conclusion that both revenue and earnings increased through the combined effects of revenue growth and SG&A discipline.

Segment Analysis

HR Solutions recorded revenue of ¥3.52B (+20.3% YoY), segment profit of ¥1.65B (+62.8%), and a profit margin of 46.8% (+1,220bp YoY), representing significant improvements in both growth and profitability. The segment accounted for 82.1% of consolidated segment profit (¥2.01B in total before adjustments). Marketing Solutions posted revenue of ¥0.92B (△5.0% YoY), segment profit of ¥0.36B (△16.8%), and a profit margin of 39.1% (△556bp), resulting in declines in both revenue and earnings. The company-wide expense adjustment was △¥0.33B, increasing only +2.3% YoY and therefore not significantly offsetting the profit improvement generated by the two segments. The business portfolio is becoming increasingly dependent on HR Solutions.

Key Financial Indicators

【Profitability】The Operating Margin improved significantly to 37.8% from 28.8% in the same period of the previous year (+897bp), while the Net Profit Margin improved to 25.8% from 19.4% (+640bp). 【Cash Quality】Cash and deposits were ¥13.58B, accounting for 77.2% of total assets. There was no dependence on non-operating income or extraordinary gains and losses, and earnings reflected the profitability of the core business. 【Investment Efficiency】Annualized ROE was 31.2%, while goodwill of ¥0.33B accounted for only 2.2% of net assets, indicating limited dependence on M&A-related assets. 【Financial Soundness】The Equity Ratio was 83.8%, improving from 79.4% in the same period of the previous year. Current assets of ¥15.81B substantially exceeded current liabilities of ¥2.69B, indicating extremely high liquidity, while the company maintained a conservative financial structure with low non-current liabilities of ¥0.16B.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is not available, cash trends can be assessed from changes in the balance sheet. Cash and deposits decreased to ¥13.58B from ¥14.66B in the same period of the previous year. Meanwhile, retained earnings were largely unchanged at ¥13.59B, compared with ¥13.68B in the same period of the previous year. Given the decline in capital surplus from ¥1.37B to ¥0.56B, dividend payments and treasury stock-related transactions are presumed to have been uses of funds. Current liabilities declined YoY, and the decrease in income taxes payable, from ¥1.28B to ¥0.49B, is considered one factor behind the decline in cash. The company continues to maintain a high cash ratio relative to both total assets and net assets, and its financial safety remains at a high level.

Quality of Earnings

Operating Income of ¥1.68B, Ordinary Income of ¥1.67B, and Profit Before Tax of ¥1.67B were virtually identical, indicating that the impact of non-operating gains and losses was negligible. Non-operating income was ¥0.002B, representing only 0.0% of revenue, and no dependence on non-operating income was identified. The ¥0.53B difference between Ordinary Income and Net Income was primarily attributable to income taxes of ¥0.53B, with no uplift from extraordinary gains or losses identified. Accordingly, Net Income for the current period generally reflects recurring earnings power based on Operating Income, and the quality of earnings is assessed as high.

Earnings Forecast and Guidance

Q1 progress against the full-year company plan was 22.8% for revenue (¥4.44B / ¥19.50B), 22.3% for Operating Income (¥1.68B / ¥7.50B), and 22.0% for Net Income (¥1.15B / ¥5.20B). Although all were slightly below the standard quarterly progress rate of 25%, the variance was limited to 2–3pt. Q1 Operating Income growth of +49.5% YoY substantially exceeded the full-year plan of +17.6% YoY, and continued SG&A restraint and future revenue growth will be key to achieving the plan. No revisions were made to the earnings forecast or dividend forecast.

Shareholder Returns

The full-year dividend forecast is ¥38.00 per share, while forecast EPS is ¥122.73, implying a forecast Payout Ratio of approximately 31.0%. Based on forecast Net Income of ¥5.20B, the estimated total annual dividend amounts to approximately ¥1.61B. Given the financial foundation of cash and deposits of ¥13.58B and an Equity Ratio of 83.8%, the company has substantial capacity to make dividend payments. The company holds 472 thousand treasury shares, but no treasury stock repurchases during the current period were included in the disclosed data. Accordingly, the Payout Ratio is evaluated based solely on dividends.

Risk Factors

1. Concentration of profits in HR Solutions: This business accounts for 82.1% of segment profit, creating a structure in which changes in customer acquisition and renewal trends and in the competitive environment could have a significant impact on consolidated earnings as a whole.

2. Slowdown in Marketing Solutions: Revenue declined △5.0% YoY, segment profit declined △16.8%, and the profit margin fell by 556bp. A delayed recovery could weigh on the company-wide growth rate and profitability.

3. Sustainability of margin improvement from SG&A reductions: SG&A expenses decreased 15.9% YoY and made a substantial contribution to the improvement in the Operating Margin. However, the sustainability of this effect needs to be monitored in light of a potential reacceleration of growth investments and increases in personnel expenses.

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Return

Both the Operating Margin and Net Profit Margin substantially exceed the industry median, placing the company among the high-profitability group within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate is slightly above the industry median but does not reach the upper end of the IQR (25.6%), leaving growth at a mid-range level within the industry.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. A key feature of Q1 was profit growth substantially exceeding revenue growth, with Revenue increasing +14.0%, Operating Income increasing +49.5%, and Net Income increasing +52.1%. The Operating Margin improved 897bp YoY to 37.8%, confirming a trend of improving profitability.

2. While HR Solutions drove both growth and earnings, Marketing Solutions recorded declines in both revenue and earnings, highlighting the clear contrast between the business portfolios. The increasing dependence of consolidated earnings on HR Solutions is a structural characteristic apparent from the earnings data.

3. The company achieved annualized ROE of 31.2% under a conservative financial structure consisting of an Equity Ratio of 83.8% and cash and deposits of ¥13.58B. The earnings figures confirm the high level of capital efficiency achieved without reliance on leverage.

Theoretical Share Price (Reference Value)

Sensitivity: ¥663–¥705 at Cost of Equity ±1%, and ¥674–¥698 at ω±0.1.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• As 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 using only 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.)

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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 responsibility, after consulting with a professional as necessary.

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