Quick View
| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥196.7B | ¥187.1B | +5.1% |
| Operating Income | ¥6.5B | ¥3.5B | +88.1% |
| Ordinary Income | ¥6.3B | ¥3.5B | +82.2% |
| Net Income | ¥5.0B | ¥2.4B | +108.4% |
| ROE | 17.2% | 8.3% | - |
Executive Summary
FY2025 Q3 results show revenue of 196.7B yen (YoY +5.1%), operating income of 6.5B yen (YoY +88.1%), ordinary income of 6.3B yen (YoY +82.2%), and net income of 5.0B yen (YoY +108.4%). The dramatic profit expansion was driven by operating leverage from revenue growth combined with effective SG&A cost management, with operating income nearly doubling despite modest top-line growth. Gross profit margin of 15.0% remains structurally low for the industry, but improved operational efficiency at the segment level, particularly in the domestic IT job matching business, contributed to the strong profitability turnaround.
Performance Drivers
Revenue increased 5.1% YoY to 196.7B yen, with domestic IT job matching business driving growth at 124.7B yen and overseas operations maintaining scale at 69.0B yen. The overseas IT job matching business in Australia stabilized after prior-period losses, while the Seed Tech business expanded to 3.6B yen. Cost of sales increased to 167.2B yen, resulting in gross profit of 29.5B yen with a gross margin of 15.0%. The modest gross margin reflects the labor-intensive nature of IT staffing and project-based revenue models, where pricing power remains limited. SG&A expenses of 22.9B yen represented 11.7% of revenue, demonstrating effective cost discipline that enabled operating leverage. Operating income surged 88.1% to 6.5B yen as incremental revenue contributed disproportionately to profit growth. Non-operating expenses of 0.4B yen, primarily interest expense of 0.3B yen on long-term borrowings of 15.1B yen, resulted in ordinary income of 6.3B yen. Extraordinary income of 0.8B yen boosted profit before tax to 7.1B yen. After income tax expense of 2.1B yen (effective tax rate 30.1%), net income reached 5.0B yen, more than doubling from the prior year. The substantial gap between operating income (6.5B yen) and net income (5.0B yen) was primarily due to the tax burden and minor non-controlling interests, with the extraordinary gain partially offsetting these factors. This represents a revenue up/profit up pattern with profit growth significantly outpacing revenue growth due to improved operational efficiency and cost control.
Segment Analysis
The domestic IT job matching business is the core operation, generating revenue of 124.7B yen (63.4% of total) with operating income of 10.2B yen and an operating margin of 8.2%. This segment demonstrated strong profitability improvement from prior-year losses of 0.9B yen to positive 1.0B yen, indicating successful turnaround execution. The overseas IT job matching business in Australia contributed revenue of 69.0B yen (35.1% of total) with operating income of 0.4B yen and a margin of 0.6%. This segment recovered from a prior-year operating loss of 0.1B yen, suggesting stabilization but still operating at materially lower margins than the domestic business due to market maturity and competitive dynamics. The Seed Tech business generated revenue of 3.6B yen with operating income of 0.3B yen and a margin of 9.3%, the highest among segments, though scale remains limited. The significant margin differential between segments (domestic 8.2%, overseas 0.6%, Seed Tech 9.3%) highlights the profitability concentration in domestic operations and the challenge of replicating domestic margins internationally.
Key Metrics
[Profitability] ROE of 17.2% reflects high asset efficiency (asset turnover 2.58x) and moderate financial leverage (2.64x) rather than exceptional profit margins, with net profit margin of only 2.5% indicating structural margin constraints. Operating margin of 3.3% remains low by industry standards, though improved from prior-year levels. The combination of low margins and high turnover characterizes the labor arbitrage business model. [Cash Quality] Cash and deposits of 37.1B yen provide robust liquidity, covering short-term liabilities with a cash-to-short-term-debt ratio of approximately 56.7x. Operating cash flow data is not disclosed in the quarterly filing, limiting assessment of earnings quality through cash conversion metrics. [Investment Efficiency] Asset turnover of 2.58x demonstrates efficient asset utilization, significantly above industry norms, driven by the light-asset staffing business model. Goodwill of 2.6B yen and intangible assets of 6.0B yen represent 11.3% of total assets, warranting monitoring for impairment risk. [Financial Health] Equity ratio of 37.9% is within acceptable range, though below the industry median of 59.2%, reflecting strategic use of debt financing. Current ratio of 223.1% indicates strong short-term liquidity. Long-term loans of 15.1B yen and total interest-bearing debt of 15.7B yen result in a debt-to-equity ratio of 0.54x, representing moderate leverage. Interest coverage ratio of 20.5x provides ample cushion for debt service obligations.
Cash Flow Analysis
Cash and deposits increased 2.7B yen YoY to 37.1B yen, reflecting profit accumulation and effective working capital management. Operating profit growth of 3.0B yen contributed significantly to cash buildup, with net income of 5.0B yen providing the primary cash generation driver. Working capital efficiency showed mixed signals, with trade payables of 12.5B yen increasing modestly from prior levels, suggesting stable supplier payment terms. Short-term borrowings increased 0.3B yen to 0.7B yen, indicating some reliance on revolving credit facilities for operational flexibility, though the increase is minor relative to cash reserves. On the investment side, property, plant and equipment expanded dramatically by 0.7B yen (+315.8%) to 0.9B yen, signaling capital deployment for growth infrastructure or operational expansion. Intangible assets of 6.0B yen, including goodwill of 2.6B yen, reflect prior M&A activity requiring ongoing performance monitoring. The substantial cash position of 37.1B yen provides coverage of 1.2x total current liabilities of 30.3B yen, indicating no immediate liquidity concerns. Retained earnings grew 2.9B yen (+56.9%) to 7.9B yen, demonstrating strong profit retention after dividends and supporting future growth investment capacity.
Earnings Quality
Ordinary income of 6.3B yen compared to operating income of 6.5B yen shows a net non-operating expense of approximately 0.2B yen, primarily comprising interest expense of 0.3B yen on debt facilities partially offset by interest income of 0.1B yen. Non-operating items represent less than 1% of revenue, indicating minimal reliance on financial income and a clean operating-focused earnings structure. The extraordinary income of 0.8B yen, however, represents a non-recurring boost that inflated profit before tax to 7.1B yen from an operating base of 6.5B yen. This extraordinary gain of approximately 12.3% of operating income requires adjustment when assessing normalized earning power. The effective tax rate of 30.1% aligns with statutory expectations, showing no unusual tax benefits or charges. With operating cash flow not disclosed in quarterly filings, direct comparison of operating CF to net income is unavailable, creating a gap in assessing cash-backed earnings quality. The accrual component cannot be quantified from available data. Overall earnings quality is supported by the operational focus of income generation, but the extraordinary gain introduces a material non-recurring element that should be excluded when projecting sustainable profitability.
Guidance Update
Full-year guidance calls for revenue of 266.0B yen, operating income of 8.0B yen, and ordinary income of 7.7B yen. Q3 cumulative results show revenue progress of 73.9% (196.7B of 266.0B), operating income progress of 81.8% (6.5B of 8.0B), and ordinary income progress of 82.1% (6.3B of 7.7B). Operating income and ordinary income are tracking significantly ahead of the seasonal benchmark of 75% for Q3, suggesting strong performance momentum and conservative full-year guidance or potential upside revision. Revenue progress is slightly below the 75% benchmark, implying Q4 requires acceleration to approximately 69.3B yen (versus Q3 run-rate of approximately 65.6B yen per quarter) to achieve the target. The company indicated no forecast revision this quarter despite strong progress, suggesting management confidence in achieving or exceeding targets while maintaining conservative external guidance. The dividend forecast was revised during the quarter, though the nature of the revision is not detailed. Full-year EPS forecast of 53.66 yen implies Q4 net income of approximately 0.5B yen, a sharp deceleration from the Q3 cumulative pace, likely reflecting seasonality or the absence of Q4 extraordinary gains. Investors should monitor whether the strong Q3 operational momentum sustains into Q4 to determine if guidance proves conservative.
Shareholder Returns
The company forecasts a full-year dividend of 20.00 yen per share, comprising no interim dividend and a year-end dividend of 10.00 yen, though the forecast indicates a total of 20.00 yen suggesting a potential revision. Based on net income of 5.0B yen for the nine-month period and forecasted full-year net income implied by EPS guidance of 53.66 yen (approximately 5.5B yen), the payout ratio on current earnings is approximately 37.3% (20.00 yen dividend / 53.66 yen EPS). This ratio is within a sustainable range, supported by strong cash reserves of 37.1B yen. No share buyback activity is disclosed in the available data. The total shareholder return ratio equals the payout ratio at approximately 37.3% in the absence of buybacks, indicating a balanced capital allocation approach that retains majority earnings for growth investment while returning over one-third to shareholders. The dividend was revised during Q3, suggesting responsive capital allocation to improved earnings performance. With cash coverage and moderate payout ratio, the dividend appears sustainable barring significant business deterioration.
Risk Factors
Revenue concentration in domestic IT job matching business (63.4% of revenue) and exposure to cyclical IT spending creates vulnerability to domestic economic slowdown or technology sector weakness, with potential for material revenue and margin compression if corporate IT budgets contract. Structurally low gross margin of 15.0% and operating margin of 3.3% leave minimal buffer for cost inflation or pricing pressure, with risk that wage inflation in IT labor markets or intensified competition for placements could eliminate profitability, particularly in the low-margin overseas segment (0.6% operating margin). Intangible assets and goodwill totaling 8.6B yen (11.3% of total assets, including 2.6B yen goodwill) carry impairment risk if acquired businesses or developed technologies fail to generate expected returns, with potential for material non-cash charges that would reduce equity and ROE.
Industry Benchmark (Reference - Proprietary Data)
[Industry Position] (Reference - Proprietary Analysis)
The company operates in the IT and telecom services sector with a specific focus on IT staffing and project matching. Profitability metrics show divergence from industry norms: ROE of 17.2% substantially exceeds the industry median of 8.3% (Q3 2025), ranking in the upper quartile and driven by high asset turnover (2.58x vs. industry median 0.67x) rather than superior margins. Operating margin of 3.3% falls well below the industry median of 8.2%, placing the company in the lower quartile and highlighting structural margin pressure inherent to the staffing business model. Net profit margin of 2.5% also trails the industry median of 6.0%, confirming margin as a relative weakness. Financial health metrics are mixed: equity ratio of 37.9% is below the industry median of 59.2%, indicating more aggressive financial leverage, though still within acceptable bounds. Current ratio of 223.1% significantly exceeds the industry median of 215.0%, demonstrating superior short-term liquidity. Growth metrics are moderate: revenue growth of 5.1% YoY lags the industry median of 10.4%, suggesting slower top-line expansion than peers. EPS growth of 89.1% far exceeds the industry median of 22.0%, reflecting the strong operational leverage achieved this period, though sustainability at this rate is questionable given the low base and extraordinary items. The company's business model trades margin for asset efficiency, achieving superior ROE through turnover and leverage despite below-average profitability on sales, a positioning that creates sensitivity to volume and cost pressures.
(※ Industry: IT & Telecom Services, Comparison: FY2025 Q3 industry data, Source: Proprietary analysis)
Key Takeaways from Earnings
Strong operational leverage drove profit doubling despite modest revenue growth, with operating income surging 88.1% on 5.1% revenue increase, demonstrating the power of fixed cost absorption and improved segment profitability in a maturing cost structure. The domestic IT job matching business turnaround from losses to 10.2B yen operating income with 8.2% margin establishes a stable profit base, while overseas operations achieved breakeven after prior losses, reducing drag and creating potential for margin expansion if Australian market conditions improve. Structurally low margins (3.3% operating, 15.0% gross) and below-industry profitability per unit of sales remain a fundamental constraint, requiring sustained volume growth and cost discipline to maintain profit momentum, with limited ability to absorb shocks from wage inflation or competitive pricing pressure. Balance sheet strength with 37.1B yen cash and moderate leverage (debt-to-equity 0.54x) provides strategic flexibility for M&A, organic investment, or enhanced shareholder returns, though goodwill and intangible assets require ongoing performance validation to avoid impairment. Dividend policy at 37.3% payout ratio with potential upward revision signals management confidence in earnings sustainability, supported by ample cash reserves, while leaving majority earnings for reinvestment in growth. The company's high ROE of 17.2% versus industry median 8.3% is achieved through asset-light model efficiency rather than pricing power, creating a profile of capital-efficient growth but margin fragility that investors should weigh against valuation multiples.
This report was automatically generated by AI analyzing XBRL earnings data as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.
AI Financial Analysis
Executive Summary
FY2026 Q3 earnings show a clear profit recovery, with modest revenue growth translating into sharply higher operating and net profit. Revenue increased 5.1% year on year to ¥19.67bn. Operating income rose 88.1% to ¥654m, materially outpacing sales growth. Profit attributable to owners of the parent increased 88.3% to ¥491m. The operating margin expanded 147bp year on year to 3.3% from 1.9%. Gross margin improved 94bp to 15.0% from 14.1%, indicating better gross-profit conversion despite the relatively low-margin business mix. SG&A increased only 0.4% year on year to ¥2.29bn, versus 5.1% revenue growth. This cost discipline was the principal driver of operating leverage and the earnings recovery. Domestic IT human resources remained the core business, generating ¥12.42bn of revenue and ¥1.02bn of segment profit. Overseas IT human resources returned to segment profitability, recording ¥40m of profit versus a ¥114m loss a year earlier. Seed Tech also turned profitable, generating ¥33m of segment profit versus a ¥7m loss in the prior-year period. The Q3 cumulative operating-income progress rate is 81.8% against the full-year forecast, ahead of the standard 75% seasonal benchmark. Profit attributable to owners has reached 89.3% of the full-year target, also materially ahead of the standard progress rate. However, pre-tax profit includes a ¥77m extraordinary gain on reversal of subscription rights to shares, so the degree of net-income outperformance should not be interpreted as entirely recurring. The reported annualized ROE of 22.7% is strong, but it is supported by a financial leverage factor of 2.64x rather than by a high net margin. Liquidity is robust, with cash of ¥3.71bn, a current ratio of 223.1%, and net cash of approximately ¥2.14bn after interest-bearing debt. The principal investment issue is whether the improved domestic staffing profitability and overseas turnaround can sustain the higher earnings base while group operating margin remains below 5%.
Profitability Analysis
The reported annualized ROE of 22.7% decomposes into a 2.5% net profit margin, 3.439x asset turnover, and 2.64x financial leverage. Asset turnover is the strongest fundamental contributor to ROE, consistent with a labor-intermediation-oriented IT human resources model that produces high revenue relative to the asset base. Financial leverage also makes a meaningful contribution, while the 2.5% net margin remains low in absolute terms. The largest year-on-year operating change was margin expansion: operating margin improved 147bp to 3.3%, reflecting a 94bp increase in gross margin and virtually flat SG&A. Gross profit increased 12.0% to ¥2.95bn, faster than the 5.1% revenue increase. SG&A rose only ¥10m year on year to ¥2.29bn, producing substantial operating leverage. Domestic IT human resources segment profit increased 10.6% to ¥1.02bn, while its segment margin was broadly stable at 8.2% versus 8.2% in the prior-year period. Overseas IT human resources improved from a 1.6% segment loss margin to a 0.6% segment profit margin, and Seed Tech improved from a 3.1% loss margin to a 9.5% profit margin. These turnarounds explain the increase in aggregate segment profit to ¥1.10bn from ¥804m, although unallocated corporate expenses remained substantial at ¥442m. The low operating-efficiency alert is valid: a 3.3% EBIT margin is below the 5% concern threshold, leaving earnings sensitive to modest changes in gross margin, utilization, or personnel-related costs. The low gross-margin alert is also valid at 15.0%; this level can be structurally consistent with IT staffing and intermediary models, but it limits the buffer against wage inflation and pricing pressure. The improvement is operationally credible because it is reflected in gross-profit growth and restrained SG&A, but sustaining it requires continued domestic execution and a durable overseas recovery.
Growth Assessment
Growth was moderate at the consolidated revenue level but improved in quality through profit conversion. Domestic IT human resources revenue increased 9.8% year on year to ¥12.42bn and accounted for 63.2% of consolidated revenue, making it the core business. Overseas IT human resources revenue declined 2.8% to ¥6.90bn, representing 35.1% of group revenue; its return to profitability is therefore important for consolidated-margin sustainability. Seed Tech revenue increased 55.2% to ¥350m, but remains only 1.8% of group revenue and is not yet a material group earnings driver. Japanese revenue rose 10.0% to ¥12.77bn, while Australian revenue declined 2.8% to ¥6.90bn, increasing the relative dependence on the domestic market. The disposal of the x-Tech business at the end of FY2025 removed the former Other segment, which improves focus but reduces business diversification. Q3 cumulative revenue has reached 73.9% of the ¥26.60bn full-year forecast, broadly in line with the standard 75% progress rate. Operating income has reached 81.8% of the ¥800m forecast, 6.8 percentage points above standard progress. Ordinary income progress is 82.2% against the ¥770m forecast, also ahead of the seasonal benchmark. Profit attributable to owners is at 89.3% of the ¥550m full-year target, although the extraordinary gain contributed to this outperformance. The full-year forecast implies a Q4 operating income requirement of ¥146m and profit attributable to owners requirement of ¥59m, compared with cumulative Q1-Q3 results, suggesting that the stated targets are operationally achievable if current profitability is maintained. The full-year operating margin forecast is 3.0%, below the Q1-Q3 achieved 3.3%, providing some margin cushion within the guidance.
Financial Health
Financial health is sound from a liquidity perspective. Current assets of ¥6.75bn exceed current liabilities of ¥3.03bn, resulting in a current ratio and quick ratio of 223.1%. Working capital is ¥3.73bn, and cash and deposits alone amount to ¥3.71bn, or 48.7% of total assets. Interest-bearing debt totals ¥1.57bn, leaving net cash of approximately ¥2.14bn. Short-term debt represents only 4.2% of interest-bearing debt, while cash covers short-term debt by 56.66x, indicating no material maturity mismatch between short-term obligations and current liquid assets. Long-term loans of ¥1.51bn account for the bulk of borrowings and represent 19.8% of total assets. The reported debt-to-equity ratio of 1.64x is below the 2.0x aggressive-financing warning threshold, while debt-to-capital of 35.3% is within the sub-40% investment-grade benchmark. Interest coverage of 20.53x is strong and indicates that current operating earnings comfortably service interest expense. Retained earnings increased ¥286m, or 56.9% year on year, to ¥789m, reflecting the earnings recovery and strengthening internally generated capital. PPE increased ¥68m, or 315.8%, to ¥89m, but remains only 1.2% of assets and does not alter the asset-light nature of the group. Short-term loans increased ¥25m, or 61.4%, to ¥66m, but the absolute amount is immaterial relative to cash. Goodwill of ¥256m equals 8.9% of equity and 3.4% of assets, implying limited balance-sheet dependence on acquired business values and low current goodwill-impairment exposure. Intangible assets represent 7.8% of assets, a manageable level for the group.
Notable B/S Changes
PPE: +¥0.68bn (+315.8%) to ¥0.89bn - increase is sizeable in percentage terms but PPE remains only 1.2% of total assets; the group remains asset light. Short-term loans: +¥0.25bn (+61.4%) to ¥0.66bn - requires monitoring, but the absolute balance is small relative to ¥3.71bn cash and does not create a near-term liquidity concern. Retained earnings: +¥2.86bn (+56.9%) to ¥7.89bn - reflects substantially improved cumulative profitability and supports the equity base.
Cash Flow Quality
The balance-sheet cash position provides a solid liquidity buffer, with ¥3.71bn of cash and deposits against ¥1.57bn of interest-bearing debt. Cash exceeded total interest-bearing debt by approximately ¥2.14bn at Q3. The improvement in operating profit and retained earnings is consistent with stronger earnings generation. Trade accounts payable were broadly stable year on year at ¥1.25bn despite revenue growth, which does not indicate an obvious supplier-financing-driven cash benefit. Accrued expenses increased to ¥531m from ¥301m, while accrued consumption taxes declined to ¥234m from ¥319m; these movements should be monitored as they can affect short-term working-capital timing. The company has substantial current liquidity relative to obligations, reducing near-term refinancing dependence. Cash-flow conversion, free-cash-flow generation, capital-expenditure coverage, and operating-cash-flow-to-net-income measures are not assessed here because only balance-sheet and earnings information is used.
Dividend Sustainability
The company has paid an interim dividend of ¥10.00 per share and forecasts a full-year dividend of ¥30.00 per share. Based on forecast EPS of ¥53.66, the implied full-year dividend payout ratio is approximately 55.9%. This is below the 60% sustainability benchmark and leaves a reasonable earnings-retention buffer. The interim ¥10.00 dividend represented a calculated 21.0% payout ratio against Q3 cumulative net income. At ¥30.00 per share and 10.33 million issued shares, the implied annual cash dividend is approximately ¥310m. This compares with the ¥550m forecast for profit attributable to owners, implying that forecast earnings should cover the dividend. The strong net-cash position and high liquidity further support the capacity to fund the announced distribution. The key determinant of sustainability is maintaining operating-profit momentum, as the group’s low 3.3% operating margin creates greater sensitivity to a downturn in staffing demand or pricing. No share repurchase information is incorporated; therefore, the analysis refers only to the dividend payout ratio rather than total return ratio.
Risk Assessment
Business risks include Domestic IT human resources accounts for 63.2% of group revenue and is the principal earnings contributor; a slowdown in IT project demand, freelancer utilization, or client hiring budgets would have a direct group impact., Australian revenue declined 2.8% year on year to ¥6.90bn despite the overseas segment returning to profit. A renewed decline in overseas demand, execution setbacks, or competitive pricing could reverse the modest 0.6% segment margin., The group EBIT margin is only 3.3% and gross margin 15.0%. In an IT staffing/intermediary model, contractor compensation inflation, lower bill rates, or utilization pressure can rapidly dilute profit., The business has meaningful Australian revenue exposure, creating sensitivity to local economic conditions and foreign-exchange movements; foreign-currency translation adjustments were negative during the period., The disposal of the x-Tech business narrows the portfolio and increases the relative importance of the three continuing IT-related segments..
Financial risks include The reported debt-to-equity ratio of 1.64x is not at the aggressive-financing threshold, but leverage remains a meaningful contributor to the 22.7% annualized ROE rather than profitability alone., Long-term loans of ¥1.51bn comprise most interest-bearing debt. Although liquidity and 20.53x interest coverage are strong, a sustained earnings decline would reduce debt-service headroom., Profit before tax includes a ¥77m extraordinary gain on reversal of subscription rights to shares, which lifted reported net profit but is not a recurring operating source., Corporate costs remain high at approximately ¥442m in Q1-Q3, absorbing 40.3% of aggregate segment profit and limiting the conversion of segment gains into consolidated operating income..
Key concerns include Highest priority: sustain the domestic IT human resources revenue growth and gross-margin improvement, as this segment is the core profit engine., High priority: confirm that the overseas segment’s return to profitability is durable despite declining revenue., High priority: monitor whether consolidated operating margin can remain above the 3.0% full-year forecast level and move toward 5%, given the low operating-efficiency alert., Moderate priority: distinguish recurring operating progress from the contribution of the ¥77m extraordinary gain when evaluating full-year profit delivery., Moderate priority: monitor long-term debt reduction and interest expense, even though current liquidity is ample..
Investment Implications
Key takeaways include Revenue growth of 5.1% combined with operating-income growth of 88.1% demonstrates meaningful operating leverage., Domestic IT human resources is the core business, contributing ¥12.42bn of revenue and ¥1.02bn of segment profit., Overseas IT human resources and Seed Tech both returned to profitability, broadening the sources of segment earnings improvement., Q3 cumulative operating-income and owner-profit progress are ahead of standard seasonal levels relative to full-year guidance., The group has strong liquidity and net cash, while goodwill exposure is limited., The central constraint remains structurally low gross and operating margins, which heighten sensitivity to relatively small execution deviations..
Metrics to watch include Domestic IT human resources revenue growth and segment margin, Australian revenue trend and overseas IT human resources segment margin, Consolidated gross margin and operating margin, particularly progress toward or above 5%, Corporate-cost trend relative to aggregate segment profit, Recurring ordinary-income performance excluding extraordinary gains, Long-term loan balance, interest expense, and interest coverage, Cash balance and working-capital movements.
Regarding relative positioning, The company combines high asset turnover, strong liquidity, and a strong reported annualized ROE with comparatively thin margins. Relative to asset-light IT services businesses, its financial profile is more defensible on liquidity than on margin resilience; relative to higher-margin SaaS models, its 15.0% gross margin and 3.3% operating margin indicate a staffing/intermediary-style earnings structure with greater utilization and pricing sensitivity.