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

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Executive Summary

The Company posted an increase in both revenue and earnings, with double-digit revenue growth and operating leverage resulting in the operating income growth rate exceeding the revenue growth rate. Revenue was ¥140.1B (+12.3% YoY), Operating Income was ¥53.7B (+21.2%), Ordinary Income was ¥53.6B (+22.5%), and Net Income was ¥36.7B (+24.1%). Strong growth and improved profitability in the core HR Solutions Business drove results, while an improvement in the SG&A ratio contributed to margin expansion.

Factors Affecting Performance

【Revenue】Revenue was ¥140.1B, up +12.3% YoY. By segment, the HR Solutions Business led overall growth with revenue of ¥112.9B (+17.7%), increasing its revenue mix to approximately 80.6%. Meanwhile, the Marketing Solutions Business recorded a revenue decline to ¥27.2B (-5.8%), with its revenue mix decreasing to 19.4%. In terms of revenue recognition, revenue transferred over a period of time amounted to ¥126.5B, accounting for approximately 90.3% of total revenue and indicating a highly recurring revenue structure.

【Profit and Loss】Operating Income was ¥53.7B (+21.2%), and the Operating Income margin improved to 38.3% from 35.5% in the prior year, an improvement of +2.8pt. Although the gross margin declined to 70.2% from 72.4% in the prior year, the SG&A ratio improved to 31.9% from 36.9%, a -5.0pt improvement, resulting in operating leverage. By segment, the HR Solutions Business posted substantial earnings growth, with segment profit of ¥54.4B (+31.9%; margin of 48.2%), while the Marketing Solutions Business recorded a decline in earnings, with segment profit of ¥10.4B (-17.6%; margin of 38.1%). Ordinary Income and Net Income both remained broadly at the same level as Operating Income, indicating that the impact of non-operating and extraordinary gains and losses was limited. Both revenue and earnings increased.

Segment Analysis

The HR Solutions Business recorded revenue of ¥112.9B (¥95.9B in the prior year, +17.7%) and segment profit of ¥54.4B (¥41.3B in the prior year, +31.9%), with its margin improving to 48.2% from 43.0% in the prior year, an improvement of +5.2pt. The Marketing Solutions Business recorded revenue of ¥27.2B (¥28.9B in the prior year, -5.8%) and segment profit of ¥10.4B (¥12.6B in the prior year, -17.6%), with its margin declining to 38.1% from 43.6% in the prior year, a decrease of -5.5pt. Corporate expenses (adjustments) increased to -¥11.1B from -¥9.6B in the prior year; however, earnings growth in the HR Solutions Business absorbed this increase and contributed to lifting the Company-wide Operating Income margin. The business portfolio is becoming increasingly dependent on the HR Solutions Business.

Key Financial Indicators

【Profitability】The Operating Income margin of 38.3% (35.5% in the prior year) and Net Income margin of 26.2% (23.7% in the prior year) both improved. The improvement in the SG&A ratio to 31.9% (36.9% in the prior year) more than offset the decline in the gross margin to 70.2% (72.4% in the prior year). 【Cash Quality】Cash and deposits were ¥166.6B, accounting for 81.1% of total assets. Accounts receivable declined slightly to ¥17.2B (¥17.97B in the prior year), indicating favorable cash collection. Income taxes payable decreased from ¥12.83B to ¥7.49B, suggesting tax-related cash outflows during the period. 【Investment Efficiency】ROE was 21.3%. Pretax Income and Net Income were broadly consistent, while financial leverage (total assets/net assets) was low at 1.19x, indicating a high ROE driven primarily by profitability. 【Financial Soundness】The Equity Ratio was 84.0%. Cash and deposits of ¥166.6B substantially exceeded current liabilities of ¥31.8B, and the debt-to-equity ratio was extremely low, indicating a financial position that is effectively close to debt-free.

Cash Flow Analysis

As indicators of Operating Cash Flow, accounts receivable declined from ¥17.97B to ¥17.2B, indicating progress in cash collection. Meanwhile, income taxes payable declined from ¥12.83B to ¥7.49B (-41.6%), and the provision for bonuses declined from ¥2.95B to ¥1.84B (-37.6%), indicating cash outflows related to tax payments and bonus payments during the period. Work in process increased from ¥0.23B to ¥0.57B, indicating the accumulation of project progress; however, this remains immaterial relative to total assets. Increases in property, plant and equipment and intangible assets were limited, indicating low capital intensity, and pressure from cash outflows for investing activities is considered limited. Cash and deposits accumulated to ¥166.6B, increasing from ¥146.6B in the prior year, demonstrating strong cash-generation capacity from business operations and substantial capacity to absorb temporary fluctuations in working capital.

Quality of Earnings

Operating Income of ¥53.7B was broadly in line with Ordinary Income of ¥53.6B and Pretax Income of ¥53.6B. The impact of non-operating gains and losses (non-operating income of ¥0.2B and non-operating expenses of ¥0.3B) was limited, indicating that the earnings increase was highly recurring in nature. No extraordinary gains or losses were identified, and the majority of earnings can be assessed as being generated by the earning power of the core business. Net Income was ¥36.7B, with the difference from Ordinary Income primarily attributable to income taxes of ¥16.9B, resulting in an effective tax rate of approximately 31.5%, a standard level. Comprehensive Income was ¥36.7B, broadly equal to Net Income. The impact of valuation differences on securities and other components of other comprehensive income was limited, and the divergence between Net Income and Comprehensive Income was small, indicating high earnings quality.

Earnings Forecast and Guidance

Progress against the full-year forecast (Revenue of ¥195.0B, Operating Income of ¥75.0B, and Ordinary Income of ¥75.0B) was 71.8% for Revenue and 71.6% for Operating Income, slightly below the simple time-based progress rate of 75% for Q3 cumulative results. However, the gap was limited to approximately 3–4 points, and considering seasonality and the future conversion of ¥0.57B of work in process into revenue, the delay in progress is considered to be within a limited range. Neither the earnings forecast nor the dividend forecast was revised on this occasion, and management has maintained its initial plan.

Shareholder Returns

The interim dividend for the current period was ¥0, while the full-year dividend forecast is ¥50/share. Based on forecast EPS of ¥122.73, the forecast Payout Ratio is approximately 40.7%, which is a sound level when assessed as a single consistent figure. The estimated annual total dividend based on 42,402 thousand shares outstanding is approximately ¥2.12B, equivalent to approximately 12.7% of cash and deposits of ¥166.6B, indicating a limited financial burden. Given the ample cash balance and high Equity Ratio of 84.0%, no concerns regarding dividend sustainability are apparent. This assessment covers dividends only, and no disclosure concerning share buybacks was identified.

Risk Factors

1. Divergence in growth and profitability among segments: The Marketing Solutions Business continues to experience declines in both revenue and earnings, with revenue down -5.8% and segment profit down -17.6%. Its margin also declined to 38.1% from 43.6% in the prior year. Company-wide earnings growth is dependent on expansion in the HR Solutions Business, indicating some weakening within the business portfolio.

2. Downward trend in gross margin: The gross margin declined to 70.2% from 72.4% in the prior year, a decrease of -2.2pt. Although the Operating Income margin improved through SG&A efficiency, it will be necessary to monitor future trends to determine whether the decline in gross margin, which appears to reflect rising costs or changes in the product mix, represents a structural trend.

3. Increase in work in process and collection timing: Work in process increased +144.6% from ¥0.23B to ¥0.57B. Although its ratio to total assets is immaterial, whether project acceptance and revenue recognition progress as planned will require monitoring, particularly given that the full-year progress rate is currently slightly below the standard trajectory.

Industry Benchmark (For Reference; Based on Company Research)

Industry Benchmark (it_telecom)

Profitability and Returns

The Company’s profitability substantially exceeds the industry median, placing it among the high-profitability group within the IT and telecommunications industry.

Growth and Capital Efficiency

The growth rate is slightly above the industry median but does not reach the upper bound of the IQR (19.9%), placing it in the middle-to-upper range within the industry.

※Source: Company research

Key Takeaways from the Results

1. High growth and improved profitability in the HR Solutions Business (revenue +17.7%; segment profit margin of 48.2%) lifted the Company-wide Operating Income margin to 38.3%, confirming a change in the earnings structure within the business portfolio.

2. The SG&A ratio improved substantially to 31.9% from 36.9% in the prior year, generating operating leverage that more than offset the decline in gross margin (-2.2pt). Whether this improvement in SG&A efficiency is sustainable with scale or attributable to temporary cost controls will become clear through future trends.

3. Full-year progress was approximately 72% for both Revenue and Operating Income, slightly below the standard progress rate of 75%. Neither the earnings forecast nor the dividend forecast was revised, and achievement of management’s plan will depend on Q4 trends.

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 quarter-end 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 value based solely on publicly available data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary 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 discretion and responsibility, after consulting a professional as necessary.

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