for Startups (7089) FY2026 Q3 Earnings Report

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Executive Summary

The third quarter of the fiscal year ending March 2026 delivered accelerated revenue and profit growth, driven by improved productivity in the core Human Capital Business. Revenue was ¥3.59B (¥2.68B in the same period of the previous year, +34.3%), Operating Income was ¥0.62B (¥0.20B, +209.2%), Ordinary Income was ¥0.59B (¥0.20B, +196.8%), and Net Income was ¥0.36B (¥0.13B). The gross margin remained high at 79.2%, and the Operating Income margin improved to 17.4% as the Company absorbed the increase in SG&A expenses. In response to the strong progress, the full-year forecasts were revised upward to Revenue of ¥5.10B (+38.1%) and Operating Income of ¥1.00B (+120.8%).

Factors Affecting Performance

【Revenue】Revenue was ¥3.59B, representing a 34.3% year-on-year increase. The core Human Capital Business, which accounts for approximately 88% of the revenue mix, led growth with a 34.5% increase, primarily due to record highs in the number of placements per employee at 0.62 placements/month and the average fee per placement at ¥4.32M. The Open Innovation Business also grew by 33.2%.

【Profit and Loss】Operating Income increased significantly to ¥0.62B (+209.2%), while Ordinary Income rose to ¥0.59B (+196.8%). In addition to the high-margin business structure, with a gross margin of 79.2%, the fact that SG&A expenses (¥2.22B) grew more slowly than Revenue supported the improvement in profitability. Extraordinary gains and losses were almost nonexistent, and temporary factors were limited. The difference between Ordinary Income and Net Income was minor, indicating that earnings were based on recurring business activities. In conclusion, the Company achieved both revenue and profit growth.

Segment Analysis

The core business is the Human Capital Business, which generated Revenue of ¥3.15B (approximately 88% of total Revenue) and segment profit of ¥1.40B (+41.0% year on year), making it the primary driver of business expansion. The Open Innovation Business generated Revenue of ¥0.44B and segment profit of ¥0.06B, returning to profitability from a loss in the same period of the previous year, supported by sponsorship revenue from the “GRIC2025” conference. The Venture Capital Business generated zero Revenue and recorded a segment loss of ¥0.10B, affected by the recognition of an investment valuation loss of ¥0.093B. While the high profitability of the Human Capital Business drives Company-wide earnings, the Venture Capital Business represents a source of earnings volatility due to valuation losses.

Key Financial Indicators

Profitability: ROE (annualized) of 16.0% and Operating Income margin of 17.4%
Financial soundness: Equity Ratio of 67.8%
Per share: Basic EPS of ¥68.54 (¥19.97 in the previous year, +243.2%) and diluted EPS of ¥68.38
Liquidity: Cash and deposits of ¥2.01B against current assets of ¥3.09B and current liabilities of ¥1.11B, indicating a comfortable liquidity position

Cash Flow Analysis

Details of the statement of cash flows (Operating Cash Flow, Investing Cash Flow, and Financing Cash Flow) were not included in the disclosed data. Based on the balance sheet, cash and deposits stood at ¥2.01B, representing an increase of approximately +5.9% year on year, indicating that the Company has maintained its funding level amid business expansion. Investment securities increased by ¥0.51B year on year, with the investment in GO Job Co., Ltd. and its resulting classification as an equity-method affiliate being one factor behind the use of funds.

Earnings Quality

There is a certain divergence between Ordinary Income of ¥0.59B and Net Income of ¥0.36B (Net Income attributable to owners of the parent of ¥0.45B); this is attributable to Net Income attributable to non-controlling interests being negative ¥0.09B and is not due to a temporary extraordinary gain or loss. Both extraordinary gains and extraordinary losses were almost zero, while non-operating income and expenses were also small at less than 1% of Revenue. Accordingly, the majority of profit can be assessed as recurring earnings derived from the core business. In the Venture Capital Business, an investment valuation loss of ¥0.093B was recorded in segment profit and loss; this should be noted as a source of volatility inherent to the nature of the business.

Earnings Forecasts and Guidance

The full-year forecasts have been revised upward to Revenue of ¥5.10B, Operating Income of ¥1.00B, and Ordinary Income of ¥0.92B. The progress rates against the cumulative Q3 results (Revenue of ¥3.59B and Operating Income of ¥0.62B) are 70.5% for Revenue and 62.4% for Operating Income. While Revenue is slightly below the standard progress rate of 75%, Operating Income is progressing at a favorable level when considering the full-year forecast growth rate of +120.8%. The assumed full-year Operating Income margin is approximately 19.6%, implying further improvement from the Q3 actual result of 17.4%.

Shareholder Returns

Both the interim and year-end dividends are ¥0, and the full-year dividend forecast is also ¥0, indicating that the no-dividend policy remains in place. Although there is no basis for calculating the Payout Ratio, the Company plans to repurchase up to ¥0.20B of treasury shares, or 200,000 shares, for the purpose of improving capital efficiency. Shareholder returns therefore need to be assessed primarily based on the Total Return Ratio centered on share repurchases. In addition, the Company conducted a 2-for-1 stock split effective December 1, 2025.

Catalysts

【Short Term】The status of the treasury share repurchase program, capped at ¥0.20B, and productivity trends in orders and placement volumes in Q4.

【Long Term】The deepening of existing businesses and the launch of new businesses following the transition to a co-representative structure, including the full-scale development of the M&A advisory business, as well as the trend in earnings contributions following the classification of GO Job Co., Ltd. as an equity-method affiliate.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Both the Operating Income margin and Net Profit margin are substantially above the industry median, placing the Company’s profitability among the higher levels within the industry.

Growth and Capital Efficiency

The Revenue growth rate substantially exceeds the industry median, placing the Company among the high-growth group within the industry.

※Source: Compiled by the Company

Risk Factors

1. Investment valuation loss risk: The Venture Capital Business recorded an investment valuation loss of ¥0.093B in Q2, and fluctuations in the market value of investment securities with a balance of ¥0.60B (+574.3% year on year) may become a source of future earnings volatility.

2. Productivity volatility: The Human Capital Business may experience short-term fluctuations in the number of placements and average fees due to variations in the timing of new graduate hiring and monthly order volumes.

3. Equity-method loss risk: Following the classification of GO Job Co., Ltd. as an equity-method affiliate, the Company may record equity-method losses due to the J-curve-shaped earnings structure during the early stage following establishment.

Key Points from the Earnings Results

1. The Operating Income margin of 17.4% is substantially above the industry median of 8.3%, with the high-margin structure reflected in a gross margin of 79.2% and the relative control of SG&A expenses driving profit growth.

2. The full-year forecasts for both Revenue and profit have been revised upward. Progress rates are 62.4% for Operating Income and 70.5% for Revenue, indicating that the trend of revenue and profit growth has continued through the nine-month cumulative period.

3. The sharp increase in investment securities (+574.3%) was primarily attributable to the investment in GO Job Co., Ltd. As a change in the asset composition accompanying business expansion, future equity-method income and loss and valuation trends will be key points to monitor.

Theoretical Share Price (Reference Value)

Sensitivity: ¥647–¥688 at ±1% for the cost of equity, and ¥661–¥676 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference relative to the full-year forecasts).
• 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 / These are mechanically calculated values based solely on publicly disclosed data and do not constitute a forecast of the market share price or a recommendation of any specific investment action, nor do they predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI through integrated analysis of XBRL earnings summary data and PDF earnings presentation materials. 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 as necessary.

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