Plus Alpha Consulting Co.,LTD. FY2026 Q3 Earnings Report

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Executive Summary

Revenue and earnings increased, primarily driven by the expansion of the HR Solutions business, resulting in a high-quality earnings performance in which the growth rates of Operating Income and Net Income exceeded Revenue growth. Revenue increased 12.3% YoY to ¥140.1B, Operating Income increased 21.2% to ¥53.7B, Ordinary Income increased 22.5% to ¥53.6B, and Net Income attributable to owners of the parent increased 23.9% to ¥36.7B. Control of SG&A expenses (down 2.7% YoY) absorbed the decline in the gross profit margin (70.2%, compared with 72.4% in the same period of the previous year), resulting in a 2.8pt improvement in the Operating Income margin to 38.3%.

Factors Affecting Business Performance

【Revenue】The core HR Solutions business (80.6% of the composition) led growth, increasing 17.7% YoY to ¥112.9B, while the Marketing Solutions business (19.4% of the composition) contracted 5.7% to ¥27.2B. Revenue from continuously provided services accounted for 90.3% of Revenue, indicating the stability of the earnings base.

【Profit and Loss】Segment profit for HR Solutions increased 31.9% YoY to ¥54.4B, and the segment profit margin rose to 48.2% (43.0% in the same period of the previous year). In contrast, segment profit for Marketing Solutions declined 17.6% to ¥10.4B, while the profit margin decreased to 38.1% (43.6% in the same period of the previous year). The adjustment for company-wide expenses and other items was ¥11.1B, an increase of 16.3% YoY, partially offsetting the expansion of profits in the HR business. Non-operating income and expenses resulted in a net loss of only ¥0.1B, leaving Ordinary Income at approximately the same level as Operating Income. Applying an effective tax rate of 31.5% to Profit Before Tax of ¥53.6B resulted in Net Income of ¥36.7B. The structure was one of increasing Revenue and earnings, with profit growth exceeding Revenue growth.

Segment Analysis

HR Solutions accounted for 84.0% of segment profit, indicating a high degree of concentration in the business portfolio. While HR Solutions improved in both Revenue and profit margin, Marketing Solutions experienced declines in both Revenue and earnings, as well as a lower profit margin, widening the growth disparity between the businesses. Against total profit of the reporting segments of ¥64.8B, the adjustment for company-wide expenses of ¥11.1B (up +16.3% YoY) was deducted, resulting in consolidated Operating Income of ¥53.7B.

Key Financial Indicators

【Profitability】The Operating Income margin of 38.3% improved by 2.8pt from 35.5% in the same period of the previous year, while the Net Income margin also rose 2.5pt from 23.7% to 26.2%. Although the gross profit margin declined 2.2pt from 72.4% in the same period of the previous year to 70.2%, the SG&A ratio decreased 5.0pt to 31.9% (36.9% in the same period of the previous year), driving the improvement in profit margins.【Cash Flow Quality】Accounts receivable declined 4.5% YoY despite Revenue growth of 12.3%, with no apparent increase in collection burdens associated with higher Revenue.【Investment Efficiency】Annualized ROE was high at 28.4%, driven primarily by the high Net Income margin, with low reliance on financial leverage.【Financial Soundness】The Equity Ratio was 84.0%, while the current ratio exceeded 591%, based on current assets of ¥187.8B and current liabilities of ¥31.8B, indicating an extremely conservative financial base.

Cash Flow Analysis

Although explicit data from the statement of cash flows is not available, trends in the balance sheet indicate that internal accumulation of funds is progressing. Cash and deposits increased by ¥19.9B (+13.6%) YoY to ¥166.6B, accounting for 81.1% of total assets. Retained earnings also increased by ¥24.4B from ¥136.8B to ¥161.1B, supporting the accumulation of net assets. Meanwhile, work in process increased 144.5% YoY to ¥0.6B. Although the balance is small, continued monitoring of project progress and the timing of acceptance inspections may be warranted. Overall, internal funds are accumulating through higher Revenue and earnings, while liabilities declined 13.6% YoY, expanding financial flexibility.

Quality of Earnings

The difference between Operating Income of ¥53.7B and Ordinary Income of ¥53.6B was only ¥0.1B, indicating low reliance on non-operating income and expenses. Non-operating income of ¥0.2B consisted primarily of interest income, with no reliance on temporary sources of income observed. Profit Before Tax of ¥53.6B was approximately the same as Ordinary Income, and no increase in Net Income resulting from extraordinary income or losses was identified. Net Income of ¥36.7B represented 68.4% of Ordinary Income, with the effective tax rate of 31.5% being the primary adjustment factor. The decline in accounts receivable during a period of Revenue growth also suggests favorable cash conversion of earnings.

Earnings Forecasts and Guidance

The full-year company forecasts (Revenue of ¥195.0B, Operating Income of ¥75.0B, Ordinary Income of ¥75.0B, and Net Income of ¥52.0B) remain unchanged. The cumulative Q3 progress rates were 71.9% for Revenue, 71.6% for Operating Income, 71.4% for Ordinary Income, and 70.5% for Net Income. While all were 3–5pt below the standard progress rate of 75%, they were generally at a satisfactory level. To achieve the company forecasts, Q4 will require Revenue of ¥54.9B, Operating Income of ¥21.3B, and Net Income of ¥15.3B.

Shareholder Returns

The Q2 dividend is zero, but the full-year dividend forecast is ¥50 per share. The Payout Ratio against forecast full-year EPS of ¥122.73 is 40.7%, below the 60% level generally viewed as an indicator of sustainability. Based on 42,402 thousand shares outstanding, total dividends will be approximately ¥2.12B, equivalent to approximately 40.8% of forecast full-year Net Income of ¥52.0B. Capital resources of Retained Earnings of ¥161.1B and Cash and Deposits of ¥166.6B support the company’s ability to pay the forecast dividend. This Payout Ratio does not include share repurchases.

Risk Factors

1. Dependence on the HR Solutions business: This business accounts for 80.6% of Revenue and 84.0% of segment profit and has a structure in which customer investment trends and the competitive environment in this area have a significant impact on overall company performance.

2. Slowdown in Marketing Solutions: Revenue declined 5.7% YoY, segment profit declined 17.6%, and the profit margin decreased 5.5pt to 38.1%, indicating limited breadth in the growth potential of the overall business portfolio.

3. Increase in work in process: Work in process increased 144.5% YoY. Although its balance itself remains small at 0.3% of total assets, delays in project progress or acceptance inspections could affect cost and revenue recognition, requiring ongoing monitoring.

Industry Benchmark (Reference; Company Analysis)

Industry Benchmark (it_telecom)

Profitability and Returns

Both the Operating Income margin and Net Income margin significantly exceeded the industry median, placing the company among the high-profitability group within the IT and telecommunications industry.

Growth and Capital Efficiency

The Revenue growth rate was slightly above the industry median, placing the company at an average to somewhat above-average level of growth within the industry.

※Source: Company analysis

Key Takeaways from the Earnings Results

1. Revenue increased 12.3%, while Operating Income increased 21.2% and Net Income increased 23.9%, meaning that profit growth exceeded Revenue growth. The primary driver was a 5.0pt decline in the SG&A ratio, which absorbed the decline in the gross profit margin.

2. HR Solutions achieved double-digit growth in both Revenue and earnings, while Marketing Solutions experienced declines in both Revenue and earnings, increasing the concentration of profits among the businesses.

3. Progress rates against the full-year company forecasts were 71.9% for Revenue and 71.6% for Operating Income, slightly below the standard progress rate of 75%. However, the divergence was not substantial, making Q4 performance a key point of focus.

Theoretical Share Price (Reference Value)

Sensitivity: ¥677–¥717 at ±1% for the cost of equity, and ¥689–¥708 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from 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 using only publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, nor does it 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 discretion and responsibility, after consulting a professional advisor as necessary.

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