NEO MARKETING Inc.

Business Details

Based on the proprietary framework "Marketing Framework 4K" (Core, Development, Cultivation, Improvement), the company comprehensively provides qualitative research, quantitative research, digital marketing & PR, and Customer Success & Crowdsourcing. Using its proprietary consumer panel "i-Research" as infrastructure, it has a cumulative track record of transactions with over approximately 3,700 companies since founding. In the interim period of FY2026 (ending September 2026) (first-half cumulative), sales were ¥1,385 million (up 6.7% year-on-year) and operating profit was ¥120 million (up 12.7% year-on-year), representing an increase in both sales and profit. The full-year sales target is ¥2,800 million (up 21.4% from the prior fiscal year).

Recent Overview

The interim period saw increased sales and profit, but net profit declined significantly due to the prior-year tax effect dropping off; two companies were made subsidiaries as subsequent events

In the interim period of FY2026 (ending September 2026) (October 2025 to March 2026), sales were ¥1,385 million (up 6.7% year-on-year) and operating profit was ¥120 million (up 12.7% year-on-year), with the core business expanding steadily. However, interim net profit attributable to owners of parent declined significantly to ¥117 million (down 35.9% year-on-year). This was mainly due to the reversal of a tax effect that had occurred in the same period of the prior year from the recognition of deferred tax assets (income tax adjustment of -¥81 million); the underlying earnings power of the business has actually improved. As subsequent events, the company made Essence Marketing (an SNS operation agency; 60% voting rights acquired, acquisition cost ¥66 million) a subsidiary effective April 1, 2026, and PA Communication (an integrated marketing communications company in the beauty and fashion domain; 90.16% voting rights acquired, acquisition cost ¥110 million) a subsidiary effective April 28, 2026, respectively, expanding its service domains. The full-year earnings forecast remains unchanged at sales of ¥2,800 million and operating profit of ¥100 million. The interim progress rate is 49.5% for sales, while operating profit has already exceeded the full-year forecast at 120% in the first half.

Key Products

Growth Drivers

• Expansion of the customer acquisition and order-taking framework through continued hiring and training of marketing consultants (hiring and training are being promoted in line with the medium-term management plan)
• Increase in per-customer revenue: customer unit price rose from ¥2,112 thousand to ¥2,795 thousand (prior fiscal year results) driven by cross-selling and up-selling initiatives
• Strengthening of strategic design and operational capabilities in TikTok-centered SNS marketing for younger demographics through the Essence Marketing subsidiary acquisition
• Incorporation of PR functions in the beauty and fashion domain and enhancement of integrated marketing proposal capabilities through the PA Communication subsidiary acquisition
• Medium- to long-term expansion of demand for corporate marketing support, driven by AI utilization, innovation creation, and customer creation needs amid population decline
• Increasing inquiries across all service areas: Insight Driven, Customer Driven, and Digital Marketing & PR
• Expansion of provided value and creation of new customer touchpoints through the launch of new services "Quantitative Qualitative Research™" and "entrys Navi"

Risks

• Risk that personnel expansion will not proceed as planned, as hiring and training marketing consultants requires a considerable amount of time
• Risk of profit pressure in a scenario where upfront investment (increases in personnel expenses and other SG&A) outpaces sales growth
• Risk of downside sales pressure if the decline in the number of customers, from 993 companies to 825 companies (prior fiscal year results), is not continuously offset by increases in per-customer revenue
• Risk of goodwill recognition (amount undetermined) and integration costs arising from the integration of Essence Marketing and PA Communication
• Risk that acquisition-related expenses for the two M&A deals (advisory fees and other costs totaling an estimated ¥19 million) will materialize as expenses in the second half and beyond
• Risk of curtailed corporate marketing investment due to price increases, geopolitical risks, and trends in US trade policy
• Risk of competitiveness decline due to delayed response to technological innovation such as generative AI
• A structural risk of second-half expense weighting, given that operating profit of ¥120 million was already recorded in the interim period against a full-year operating profit forecast of ¥100 million, with expense increases expected in the second half