MEDLEY,INC. FY2026 Q2 Earnings Report

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Executive Summary

Driven by highly profitable growth in its core RecruitmentPlatform Business, the company delivered strong results in which profit growth significantly outpaced revenue growth. Revenue was ¥226.8B (¥184.7B in the previous year, +22.8%), Operating Income was ¥24.5B (¥14.6B in the previous year, +67.4%), Ordinary Income was ¥28.0B (¥15.8B in the previous year, +77.6%), and Net Income was ¥15.0B (¥6.5B in the previous year, +131.4%). The fact that the increase in profit significantly exceeded the increase in revenue was attributable to operating leverage resulting from margin improvement in the core business and company-wide SG&A expense controls.

Factors Affecting Performance

【Revenue】Revenue was ¥226.8B, up +22.8% year on year. By segment, RecruitmentPlatform generated ¥166.8B (+24.4%), accounting for 73.5% of the revenue mix and leading growth. MedicalPlatform grew to ¥54.9B (+22.8%), while NewBusinessDevelopmentServices declined to ¥5.1B (-12.9%).

【Profit and Loss】Operating Income was ¥24.5B (+67.4%), and the Operating Income margin improved to 10.8% from 7.9% in the previous year. RecruitmentPlatform’s Operating Income was ¥62.2B (+29.3%), with a highly profitable margin of 37.3%, driving company-wide profit. In contrast, MedicalPlatform posted an Operating Loss of ¥4.8B, widening from a loss of ¥0.5B in the previous year, while NewBusinessDevelopmentServices also posted a loss of ¥3.9B; loss-making businesses are diluting the company-wide margin. Ordinary Income was ¥28.0B (+77.6%), with non-operating income of ¥5.2B and non-operating expenses of ¥1.7B, resulting in a limited impact on Net Income. Net Income increased significantly to ¥15.0B (+131.4%), but the recognition of ¥12.6B in corporate income taxes resulted in a high effective tax rate of approximately 45.6%, with the tax burden suppressing Net Income growth to some extent. The results featured both revenue and profit growth, with the increase in profit significantly exceeding the increase in revenue.

Segment Analysis

The segment composition consists of three businesses: RecruitmentPlatform, MedicalPlatform, and NewBusinessDevelopmentServices. RecruitmentPlatform generated revenue of ¥166.8B (+24.4%) and Operating Income of ¥62.2B (+29.3%), with a margin of 37.3%, making it the primary source of company-wide profit. MedicalPlatform continued to grow, with revenue of ¥54.9B (+22.8%), but its Operating Loss widened to ¥4.8B from a loss of ¥0.5B in the previous year, indicating that it remains in an investment-for-growth phase. NewBusinessDevelopmentServices recorded revenue of ¥5.1B (-12.9%) and an Operating Loss of ¥3.9B, resulting in the lowest profitability, with a margin of -75.0%. Against company-wide Operating Income of ¥24.5B, the total for reportable segments was ¥53.5B, while adjustments, including company-wide common expenses, amounted to a negative ¥29.0B, indicating a structure in which the burden of common expenses puts pressure on company-wide profit.

Key Financial Indicators

【Profitability】The Operating Income margin improved significantly to 10.8% from approximately 7.9% in the previous year, while the Net Income margin improved to 6.6% from approximately 3.5%; the gross margin was maintained at 60.9%. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥33.3B, approximately 2.2 times Net Income of ¥15.0B, demonstrating strong cash backing for earnings. Cash generation capacity also remained stable after taking into account depreciation and amortization of ¥5.5B. 【Investment Efficiency】ROE was 10.0%, while capital expenditures were limited to ¥0.5B, indicating that profitability was secured while keeping the investment burden low. 【Financial Soundness】The Equity Ratio was 33.0%. The company had long-term borrowings of ¥140.5B, while intangible fixed assets of ¥226.5B, including goodwill of ¥124.9B, accounted for 49.9% of total assets of ¥453.8B, making the high concentration of intangible assets a notable feature of its financial structure.

Cash Flow Analysis

Operating Cash Flow (OCF) increased significantly by +72.4% year on year to ¥33.3B, generating approximately 2.2 times the cash represented by Net Income of ¥15.0B, indicating good earnings quality. Investing Cash Flow was negative ¥7.6B, primarily due to the acquisition of investment securities and other items in addition to capital expenditures of ¥0.5B, although the overall scale was limited. As a result, Free Cash Flow was positive at ¥25.6B, a level sufficient to fund growth investments and shareholder returns through internal funds. Financing Cash Flow was positive at ¥9.0B, as proceeds from long-term borrowings exceeded the ¥17.1B share buyback conducted during the period. Cash and deposits increased substantially from the end of the previous fiscal year to ¥120.4B, strengthening the company’s funding base.

Earnings Quality

Most profit was generated from recurring business activities, and the impact of extraordinary gains and losses was extremely limited (extraordinary income of ¥0.0B and extraordinary losses of ¥0.5B). Non-operating income was ¥5.2B, or 2.3% of revenue, representing a small component; the gap between Ordinary Income and Operating Income was mainly attributable to this non-operating balance. Against Ordinary Income of ¥28.0B, Net Income was limited to ¥15.0B, with the gap primarily attributable to the ¥12.6B corporate income tax burden, equivalent to an effective tax rate of approximately 45.6%. Operating Cash Flow (OCF) of ¥33.3B substantially exceeded Net Income, indicating that accruals—the difference between accounting profit and cash—were negative, i.e., earnings were supported by cash, and earnings quality can be assessed as high. However, the company has a structure in which amortization expenses for goodwill and other intangible assets continue; therefore, it should be noted that JGAAP Net Income is somewhat restrained relative to cash generation capacity.

Earnings Forecast and Guidance

Progress against the full-year forecast was approximately standard for Revenue at 48.9% (¥226.8B out of ¥464.0B), while Operating Income was significantly ahead at 82.9% (¥24.5B out of ¥29.5B), and Ordinary Income was also significantly ahead at 86.2% (¥28.0B out of ¥32.5B). This lead in profit progress suggests that highly profitable growth in the core business and SG&A expense controls exceeded plan. No revision was made to the earnings forecast during the quarter, although the dividend forecast was revised. The full-year outcome may vary depending on whether investments are brought forward in the second half.

Shareholder Returns

The dividend paid for the first half was zero, but the full-year dividend forecast is ¥18.00 per share, and the dividend forecast was revised during the quarter. Based on the full-year Net Income forecast of ¥18.0B, the Payout Ratio is approximately 30%, calculated from total dividends based on the number of shares outstanding after deducting treasury shares. Meanwhile, the company conducted share buybacks of ¥17.1B during the first half, and total shareholder returns, including dividends and share buybacks, were within the first-half Free Cash Flow of ¥25.6B. Because the ratio based solely on dividends differs from the Total Return Ratio including share buybacks, the two should be evaluated separately.

Risk Factors

1. Business Portfolio Concentration: RecruitmentPlatform accounts for 73.5% of revenue (¥166.8B/¥226.8B) and generates the majority of segment profit. Demand fluctuations in this business are therefore likely to have a direct impact on company-wide performance.

2. Intangible Asset Concentration and Goodwill Risk: Intangible fixed assets of ¥226.5B account for 49.9% of total assets of ¥453.8B, while goodwill of ¥124.9B represents 83.5% of net assets of ¥149.6B. If concerns arise regarding the recoverability of goodwill in the future, the impact on equity could be substantial.

3. High Effective Tax Rate and Continued Segment Losses: The effective tax rate is high at approximately 45.6% and is therefore likely to be a factor affecting EPS volatility. In addition, losses at MedicalPlatform (Operating Loss of ¥4.8B) and NewBusinessDevelopmentServices (Operating Loss of ¥3.9B) continue, diluting the company-wide margin.

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Returns

Compared with the industry median, both the Operating Income margin and Net Income margin are below the mid-range within the industry.

Growth and Capital Efficiency

The Revenue growth rate is broadly in line with the industry median, placing the company’s growth pace at a standard level within the industry.

※Source: Compiled by the Company

Key Points from the Financial Results

1. The emergence of operating leverage through higher profitability in the core business has been confirmed. RecruitmentPlatform’s Operating Income margin of 37.3% significantly exceeds the company-wide margin of 10.8%, and the financial results indicate a high degree of dependence on the core business in the earnings structure.

2. The fact that profit progress significantly exceeds revenue progress against the full-year plan will be an important point to monitor when assessing the expense recognition pattern and the status of any investment acceleration in the second half.

3. Goodwill and intangible assets account for approximately half of total assets and more than approximately 80% of net assets, indicating the significant impact that future goodwill valuation trends associated with business combinations and changes in the business environment could have on financial indicators.

Theoretical Share Price (Reference Value)

Sensitivity: ¥673–¥713 at ±1% for the Cost of Equity, and ¥687–¥700 at ±0.1 for ω.

Notes:

• Goodwill amortization of ¥47.0 per share is added back to profit (to reflect a non-cash expense and comparability with IFRS companies).
• Because Net Income progress against the full-year forecast (83%) exceeds the standard level (50%), forecast EPS is adjusted upward within a maximum range of +10% (because companies ahead of schedule tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• The goodwill-to-net-assets ratio is high, and the assumptions would change substantially if impairment were recognized.
• Net assets as of the quarter-end 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 at a somewhat high level.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest Rate Reference Month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; it 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 disclosed earnings data. You should make investment decisions at your own responsibility and, where necessary, consult a professional.

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AI Financial Analysis

Executive Summary

Medley delivered a strong FY2026 Q2 result, with accelerating profit growth and robust cash conversion, although the capital structure remains M&A-heavy and leveraged. Revenue rose 22.8% YoY to ¥22.683bn. Operating income increased 67.4% to ¥2.446bn, materially outpacing sales growth. Ordinary income rose 77.6% to ¥2.802bn. Net income more than doubled, increasing 131.2% YoY to ¥1.497bn. The operating margin expanded by 287bp YoY to 10.8% from 7.9%, reflecting meaningful operating leverage. Gross margin declined by 134bp to 60.9%, indicating that the operating-margin improvement was driven by SG&A discipline rather than gross-margin expansion. SG&A increased 13.3% YoY, substantially below the 22.8% revenue-growth rate. The Human Resources Platform was the earnings engine, generating segment profit of ¥6.217bn and offsetting continued losses in the Healthcare Platform and New Development Services. Operating cash flow of ¥3.326bn exceeded net income by 2.22x, supporting the quality of reported earnings. Free cash flow was ¥2.564bn for the half year, aided by low tangible capex. The reported annualized ROE was 20.0%, above the 15% benchmark, but this return is materially supported by 3.03x financial leverage. JGAAP goodwill amortization was ¥0.710bn, equivalent to 23.7% of EBITDA, meaning statutory operating and net earnings remain meaningfully lower than an IFRS-style, pre-goodwill-amortization comparison. Goodwill equals 83.5% of equity and intangible assets represent 49.9% of total assets, leaving book value and future earnings sensitive to the performance of acquired businesses. The company has already achieved 82.9% of full-year operating-income guidance and 83.2% of net-income guidance in H1, versus a standard 50% first-half progress rate. Revenue progress is broadly in line at 48.9% of the full-year plan, implying that management’s full-year margin assumptions are conservative or that profitability is expected to normalize in the second half. The full-year dividend forecast of ¥18 per share introduces a shareholder-return component, while the sizable ¥1.709bn H1 repurchase indicates active capital allocation. The central issue for investors is therefore whether Medley can sustain organic operating leverage and cash generation while deleveraging and validating the returns on its acquired intangible asset base.

Profitability Analysis

The reported annualized DuPont ROE of 20.0% comprises a 6.6% net profit margin, 1.000x asset turnover and 3.03x financial leverage. Financial leverage is the principal amplifier of shareholder returns, so the 20.0% ROE should not be interpreted solely as an operating-return outcome. Underlying operating performance nevertheless improved materially: the operating margin rose 287bp YoY to 10.8%, placing Medley within the 8-15% 'good' operating-margin range. Revenue growth of 22.8% exceeded SG&A growth of 13.3%, creating positive operating leverage despite a 134bp contraction in gross margin to 60.9%. EBITDA rose to ¥2.997bn, for a 13.2% EBITDA margin. On a JGAAP pre-goodwill-amortization basis, EBITDA was ¥3.707bn, implying that acquisition-related amortization is a material drag on reported operating profit. Goodwill amortization of ¥0.710bn represents 23.7% of reported EBITDA, above the 15% material-distortion threshold; this is a structural JGAAP accounting burden rather than necessarily a cash-cost equivalent. The tax burden was weak at 0.544, corresponding to a 45.6% effective tax rate, and constrained conversion of ¥2.752bn pre-tax profit into ¥1.497bn net income. Interest burden was 1.125 because non-operating income exceeded net interest and other non-operating costs in aggregate, while operating interest coverage remained strong at 23.08x. The Human Resources Platform is the core business, contributing ¥6.217bn of segment profit on ¥16.681bn of external revenue; its segment profit increased 29.3% YoY and revenue increased 24.4% YoY. The Healthcare Platform grew revenue 22.8% to ¥5.488bn but recorded a ¥0.484bn segment loss, versus a ¥0.051bn loss a year earlier. New Development Services revenue declined 12.9% YoY to ¥0.513bn and its segment loss widened to ¥0.385bn from ¥0.349bn. Accordingly, consolidated profitability is currently dependent on the scale, pricing power and cost discipline of the Human Resources Platform, while the loss-making businesses remain a drag on group margin.

Growth Assessment

Top-line growth remains strong at 22.8% YoY, led by the Human Resources Platform’s 24.4% revenue expansion and supplemented by 22.8% growth in the Healthcare Platform. The revenue mix remains concentrated in the Human Resources Platform, which accounted for 73.5% of consolidated revenue and supplied all positive segment profit. Healthcare Platform sales growth has not yet translated into segment profitability, making the pace of loss containment an important indicator of the quality of group growth. New Development Services contracted by 12.9% YoY, indicating that growth is not uniform across the portfolio. Consolidated operating income growth of 67.4% substantially exceeded revenue growth, demonstrating strong near-term scalability in the cost base. Net-income growth of 131.2% exceeded operating-income growth, although the prior-year comparison included a ¥0.204bn extraordinary gain, which reduced the comparability of the YoY net-income growth rate. Full-year revenue guidance of ¥46.4bn implies 26.1% YoY growth, and H1 revenue progress of 48.9% is close to the typical 50% pace. H1 operating-income progress of 82.9%, ordinary-income progress of 86.2%, and net-income progress of 83.2% are each more than 30 percentage points above the standard H1 progress rate. This gap indicates substantial first-half outperformance versus plan, but also embeds an expectation of much lower second-half profitability if guidance is unchanged. Sustained growth will depend on continued Human Resources Platform momentum, conversion of Healthcare Platform scale into profits, and disciplined management of the acquired asset base.

Financial Health

Liquidity is adequate, with a 138.3% current ratio, a 135.8% quick ratio and ¥5.277bn of working capital. Cash and deposits increased 40.4% YoY to ¥12.042bn and cover the ¥4.782bn current portion of long-term loans by approximately 2.5x. Current assets of ¥19.047bn also exceed current liabilities of ¥13.770bn, so there is no immediate maturity mismatch based on the reported balance sheet. However, leverage is elevated. The reported D/E ratio is 2.03x, exceeding the 2.0x aggressive-financing threshold; this indicates that debt-funded expansion materially raises the sensitivity of equity returns and financial risk. Debt/EBITDA is also high at 4.69x, above the 4.0x high-yield benchmark, suggesting limited tolerance for a sustained EBITDA decline or further large debt-funded acquisitions. Debt/capital is 48.4%, below the 60% severe-risk threshold but above the 40% investment-grade benchmark. Interest coverage is nevertheless robust at 23.08x on EBIT and 28.27x on EBITDA, so current earnings capacity comfortably covers cash interest expense. The balance sheet is highly acquisition-oriented: goodwill is ¥12.494bn, or 27.5% of assets and 83.5% of equity, while total intangible assets are ¥22.647bn, or 49.9% of assets. The goodwill-to-equity quality alert is material because future impairment or a deterioration in acquired-business performance could erode a large portion of the equity base. The intangible-asset concentration alert is also significant because almost half of assets are subject to amortization, valuation assumptions and potential impairment rather than being readily liquid resources. Contract liabilities of ¥2.206bn provide an operating funding source, while deferred tax liabilities total ¥2.551bn. Treasury stock increased by ¥1.250bn YoY to negative ¥6.093bn, reflecting continued buyback activity and reducing the equity cushion. Retained earnings increased ¥1.498bn YoY to ¥9.074bn, partly offsetting the capital impact of repurchases.

Notable B/S Changes

Cash and deposits: +¥3.467bn (+40.4% YoY) to ¥12.042bn - materially strengthened liquidity and provides coverage for the ¥4.782bn current portion of long-term loans. Treasury stock: -¥1.250bn (-25.8% YoY) to -¥6.093bn - reflects active repurchases, supporting per-share metrics but reducing the equity cushion amid elevated leverage. Retained earnings: +¥1.498bn (+19.8% YoY) to ¥9.074bn - accumulated profitability is rebuilding internal capital, partly offsetting the balance-sheet effect of buybacks.

Cash Flow Quality

Cash-flow quality was strong in H1. Operating cash flow was ¥3.326bn, equal to 2.22x net income of ¥1.497bn and well above the 0.8x quality-warning threshold. Cash conversion was also strong at 1.11x of EBITDA, indicating that EBITDA was converted into operating cash rather than being primarily accrual-based. The accruals ratio was negative 4.0%, which is consistent with favorable cash realization. Free cash flow was ¥2.564bn after capital expenditures of only ¥0.047bn. Operating cash flow benefited from non-cash depreciation and amortization, including ¥0.710bn of goodwill amortization, which supports cash generation but also highlights the distinction between JGAAP earnings and cash economics. Receivables increased by ¥0.722bn and inventories increased by ¥0.210bn, representing working-capital uses of cash, but operating cash flow remained substantially positive. Contract liabilities declined by ¥0.109bn, another modest use of operating cash, while other payables increased by ¥0.155bn. These movements do not undermine the overall conclusion that cash conversion was sound during the period. The principal quality concern is not cash generation but reinvestment intensity: capex was only 0.09x depreciation and amortization, far below the 0.7x underinvestment alert threshold. This may reflect the asset-light nature of the platform businesses and the fact that reported amortization includes goodwill, but it also means that low capex should not automatically be extrapolated as permanent free cash flow. Investing cash outflow was ¥0.762bn, including ¥0.410bn of investment-security purchases and ¥0.154bn of intangible-asset purchases. Financing cash flow was positive ¥0.898bn, as ¥5.000bn of loan proceeds exceeded ¥2.373bn of repayments and ¥1.709bn of share repurchases.

Dividend Sustainability

No Q2 dividend was paid, while the full-year forecast calls for ¥18.0 per share. Based on forecast EPS of ¥58.25, the implied dividend payout ratio is approximately 30.9%, which is within a sustainable range if earnings guidance is achieved. The forecast dividend is supported by positive H1 free cash flow of ¥2.564bn and cash and deposits of ¥12.042bn. Share repurchases were ¥1.709bn in H1, exceeding H1 net income and representing a 114.2% H1 total return ratio before including the forecast dividend. Using the forecast dividend and current average-share base as an approximation, dividends would be about ¥0.545bn; adding these to H1 buybacks would imply aggregate shareholder returns of roughly ¥2.254bn. This amount remains below H1 free cash flow, but such coverage is sensitive to the persistence of exceptionally low capex and to debt-service priorities. Given D/E of 2.03x and Debt/EBITDA of 4.69x, future buyback capacity should be evaluated alongside deleveraging needs rather than dividend capacity alone. The ¥18 DPS policy appears supportable on forecast earnings, while the scale and timing of additional buybacks are the more consequential capital-allocation variable.

Risk Assessment

Business risks include The Human Resources Platform contributed ¥6.217bn of segment profit, while the Healthcare Platform and New Development Services generated combined segment losses of ¥0.869bn; group earnings are therefore concentrated in one core business., Healthcare Platform revenue rose 22.8% YoY but its segment loss widened to ¥0.484bn, creating execution risk around the timing and scale of profitability., New Development Services revenue declined 12.9% YoY and its segment loss widened to ¥0.385bn, indicating weaker momentum in a smaller growth initiative., As a healthcare and HR-platform operator, Medley faces industry-specific risks from healthcare-sector regulation, changes in recruitment demand, competition for medical professionals, platform disintermediation, and requirements for secure handling of sensitive personal and medical-related data., The high proportion of acquired goodwill and intangible assets means that integration performance, customer retention and realization of acquisition synergies are critical to maintaining reported asset values..

Financial risks include The HIGH_LEVERAGE alert is material: reported D/E of 2.03x exceeds the 2.0x threshold, and Debt/EBITDA of 4.69x exceeds the 4.0x threshold. This leverage may be manageable while EBITDA growth and interest coverage remain strong, but it increases downside sensitivity if core-business growth or acquired-business performance weakens., Interest coverage is strong at 23.08x EBIT and 28.27x EBITDA, mitigating near-term servicing risk; however, ¥4.782bn of long-term borrowings is classified as current, so refinancing and repayment execution remain important., The GOODWILL_RISK alert is significant: goodwill equals 83.5% of equity. Although goodwill/EBITDA is 4.17x and therefore within the sub-5x healthy payback benchmark, equity remains exposed to impairment if acquisitions underperform., The INTANGIBLE_CONCENTRATION alert is material: intangible assets are 49.9% of total assets, far above the 30% warning threshold. This raises sensitivity to amortization and impairment assumptions., The JGAAP_GW_AMORT_DRAG alert is material: goodwill amortization is 23.7% of EBITDA. JGAAP amortization depresses reported operating income and net income versus IFRS peers, while also creating a recurring earnings burden., The HIGH_TAX_BURDEN alert is evident in the 45.6% effective tax rate and 0.544 tax burden. This reduced net-income conversion despite strong operating and ordinary-income growth., The UNDERINVESTMENT and CAPEX_UNDERINVESTMENT alerts arise from capex/depreciation of 0.09x. The ratio supports near-term free cash flow, but sustained low investment could constrain product development, systems renewal or capacity expansion if it does not reflect the economic reinvestment needs of the business..

Key concerns include Whether H1 operating-income progress of 82.9% versus full-year guidance reflects durable efficiency gains or a first-half timing benefit that reverses in H2., Whether the Healthcare Platform can convert revenue growth into segment profitability and whether New Development Services can stabilize its revenue base., The interaction between shareholder returns, elevated leverage and the need to preserve capacity for debt reduction or future acquisition integration., Potential impairment exposure from goodwill of ¥12.494bn and intangible assets of ¥22.647bn relative to equity of ¥14.961bn..

Investment Implications

Key takeaways include Revenue grew 22.8% YoY while operating income grew 67.4% YoY, demonstrating substantial positive operating leverage., The operating margin improved 287bp YoY to 10.8%, despite a 134bp gross-margin decline, because SG&A growth was contained at 13.3%., The Human Resources Platform is the core profit generator, whereas Healthcare Platform and New Development Services remain loss-making., H1 cash conversion was strong, with ¥3.326bn of operating cash flow, ¥2.564bn of free cash flow and OCF/net income of 2.22x., Annualized ROE of 20.0% is strong, but leverage at 3.03x financial leverage, D/E of 2.03x and Debt/EBITDA of 4.69x materially contributes to return generation and risk., JGAAP goodwill amortization is material at ¥0.710bn, or 23.7% of EBITDA; pre-goodwill-amortization EBITDA of ¥3.707bn is useful for comparing operating performance with IFRS-reporting peers..

Metrics to watch include Human Resources Platform revenue growth and segment-profit margin, Healthcare Platform segment-loss trajectory and timing of break-even, New Development Services revenue stabilization and loss trend, Second-half operating-margin trajectory relative to the 82.9% H1 operating-income guidance progress, Debt/EBITDA, D/E, current loan repayments and refinancing activity, Goodwill/equity, intangible-assets/assets, goodwill amortization and any impairment charges, Operating cash flow conversion, receivables growth, capex/depreciation and free-cash-flow coverage of dividends plus buybacks, Effective tax rate and tax-burden normalization.

Regarding relative positioning, Medley exhibits attractive platform-style revenue growth, a 60.9% gross margin, improving operating leverage and strong cash conversion. Relative to a conservatively financed asset-light IT-services profile, however, its balance sheet is more acquisition-intensive: 49.9% of assets are intangible, goodwill equals 83.5% of equity, and Debt/EBITDA is 4.69x. Reported profitability is also less directly comparable with IFRS peers because JGAAP goodwill amortization absorbs 23.7% of EBITDA.