Key Positives From The 3Q Results
Revenue reached JPY 1,805M (+16.6% YoY), sustaining double-digit top-line growth, while standalone 3Q revenue of JPY 640M set a new record. Growth was led by higher security consulting orders and large- and mid-cap corporate mandates sourced through synergies with Itochu Corporation. Volume metrics corroborate the top-line gain: customer count reached 952 (+14%) and referrals from professional-services firms (accountants, tax and legal practitioners) totaled 1,826 (+18%). Capital raised at IPO lifted the equity ratio to 75.5%, expanding capacity for growth investment.
- Standalone 3Q revenue of JPY 640M, +21% YoY, a record high (company disclosure)
- Consulting up +84% on a standalone 3Q basis, driven by a larger deal count and capture of security demand
- Customer count of 952 (+14%) and professional-firm referrals of 1,826 (+18%) — both customer-touchpoint KPIs expanded in tandem
- Public offering and third-party allotment at IPO added JPY 294M each to common stock and capital surplus; cash and deposits rose to JPY 1,474M
- Interest-bearing debt reduced from JPY 195M to JPY 79M; equity ratio improved from 60.4% to 75.5% (company disclosure)
Key Concerns From The 3Q Results
Operating income fell to JPY 167M (-29.4% YoY). The decline reflects JPY 30M in IPO-related expenses, JPY 24M in recruitment and training costs, JPY 41M in higher personnel costs, and JPY 21M in office-related costs. Together, higher SG&A and cost of sales more than offset the JPY 257M revenue increase (per the company's variance analysis). Progress toward the full-year operating income plan of JPY 428M stands at just 39.1%, requiring JPY 261M of operating income in 4Q — the single most important item to verify.
- Gross profit margin declined to 50.2% (from 53.9%, -3.7pt) as higher outsourcing and personnel costs pushed up cost of sales (our estimate)
- SG&A of JPY 738M (+23.6% YoY) grew faster than the 16.6% revenue increase
- Operations was -5% on a standalone 3Q basis, hit by the completion of a large staffing contract (JPY 51M in 3Q last year) and the slippage of a major project launch into 4Q
- EPS fell sharply to JPY 58.20 (from JPY 98.35), with share issuance from the capital raise adding dilution
- The JPY 71M provision for losses related to the unauthorized access incident is unchanged from the prior year-end; timing of resolution and final cost remain open questions
Focus Areas / Items To Monitor Going Forward
- The revenue contribution and margin of the large accounting/payroll outsourcing project ramping up in 4Q. Achieving full-year guidance hinges on delivering JPY 1,108M of revenue and JPY 261M of operating income in 4Q.
- Utilization rates and billing rates for the 215-person workforce, up 48 YoY (and up 50 from 165 at the start of the fiscal year). The key question is how quickly this upfront investment converts into operating margin from 4Q onward.
- How far deal creation from the 100-plus member firms on the "withDX" professional-services platform translates not just into referral volume, but into revenue and gross profit.
- The composition and probability of the JPY 261M of 4Q operating income, including expected monthly contribution from the large project
- What portion of the JPY 30M in IPO-related expenses represents recurring costs that will persist beyond this fiscal year
- The steady-state annual run-rate for rent and depreciation associated with the new Ichigaya office
- The breakdown of the 48 net hires by function, and the target level for revenue per consultant
- The outlook for releasing the JPY 71M provision for unauthorized-access-related losses, and the scale of preventive investment
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 1,805M | +16.6% |
| └ Cost of Goods Sold | JPY 899M | +26.0% |
| Gross Profit | JPY 905M | +8.5% |
| └ SG&A | JPY 738M | +23.6% |
| Operating Income | JPY 167M | -29.4% |
| Recurring Profit | JPY 170M | -29.5% |
| Net Income Attributable to Owners of Parent Company | JPY 112M | -32.6% |
| EPS | JPY 58.20 | -40.8% |
| EBITDA | JPY 200M | -26% |
| Customer Count | 952 | +14% |
| Referrals From Professional-Services Firms | 1,826 | +18% |
| Headcount (Employees + Temporary Staff) | 215 | +48 |
Gross profit margin of 50.2% (vs. 53.9% prior year) and operating margin of 9.3% (vs. 15.3%) are our estimates. EBITDA, customer count, referral count and headcount are company-disclosed figures from the supplementary earnings materials. EPS YoY is on a post-stock-split retroactively adjusted basis.
Performance By Business Segment
The company operates a single segment, the "DX Platform Business," so no segment-level P&L is disclosed. The supplementary materials break out revenue across three domains — Consulting, Technology and Operations. Consulting deal-count growth and Technology software sales drove the top line, while Operations sits in a transition period between large contracts.
- Segment Performance Table
- Revenue By Domain (9M Cumulative)
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| DX Platform Business (company-wide) | JPY 1,805M | +16.6% | JPY 167M | -29.4% | 9.3% |
Standalone 3Q growth rates are company-disclosed. Cumulative 9M figures and cumulative YoY changes are our estimates, calculated by summing quarterly revenue from the supplementary materials; rounding in the quarterly disclosures means these do not tie exactly to consolidated revenue.
- Consulting: +84% on a standalone 3Q basis. Growing demand for security measures and information-security framework rebuilds, combined with large- and mid-cap mandates won through Itochu synergies, lifted deal count.
- Technology: +20% on a standalone 3Q basis. Software unit sales tracked well, with customer referrals from professional-services firms converting into license and implementation-support engagements.
- "withDX" professional-services platform: commercial launch in January 2026, with over 100 member firms. A driver behind the 1,826 referrals (+18%) (company disclosure).
- Operations (staffing): the JPY 51M large contract booked in 3Q last year has ended, and this roll-off was the principal cause of the -5% standalone 3Q decline.
- Operations (accounting/payroll outsourcing): the full ramp-up of a major project originally slated for 3Q has slipped into 4Q. Management states that underlying demand for IT-support and accounting/payroll outsourcing remains solid.
Progress Versus Full-Year Guidance
Revenue is 62.0% of plan, but operating income is only 39.1% and net income 37.1% — profit progress lags materially. In the prior year, 9M progress against full-year actuals was 72.9% for revenue and 74.0% for operating income (our estimate), so this year's profit profile is far more back-end loaded, reflecting the concentration of one-off IPO costs and upfront investment in 1H–3Q. Meeting guidance requires JPY 1,108M of revenue and JPY 261M of operating income in 4Q. Management has left guidance unchanged, premised on the 4Q ramp of the large project and revenue/profit contribution from the expanded headcount.
| Item | Value (9M Cumulative) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 1,805M | JPY 2,913M | 62.0% |
| Operating Income | JPY 167M | JPY 428M | 39.1% |
| Recurring Profit | JPY 170M | JPY 428M | 39.8% |
| Net Income Attributable to Owners of Parent Company | JPY 112M | JPY 302M | 37.2% |
| EPS | JPY 58.20 | JPY 159.82 | - |
Progress rates are our estimates.
- Last fiscal year, 4Q revenue of JPY 576M accounted for 27.1% of full-year revenue of JPY 2,124M, indicating a back-half-weighted revenue profile (our estimate).
- Management states that the headcount added in 3Q this year will begin contributing meaningfully to revenue and profit from 4Q.
Changes To Guidance
No change from the full-year consolidated guidance announced on December 19, 2025 (revenue JPY 2,913M, operating income JPY 428M, recurring profit JPY 428M, net income JPY 302M). Profit progress at 3Q is running behind plan, but guidance is maintained on the assumption that the large project ramps in 4Q and one-off costs annualize out.
Commentary On Shareholder Returns
The dividend forecast for FY9/26 is JPY 0.00 per share (no dividend), unchanged from the previous forecast. There is no mention of share buybacks, and treasury shares stood at zero at quarter-end. The capital allocation policy continues to prioritize growth investment.
Financial Position
The IPO public offering and third-party allotment added a combined JPY 588M to common stock and capital surplus (JPY 294M each); together with a JPY 112M increase in retained earnings, net assets rose JPY 700M. Borrowings were reduced in parallel. Net cash of JPY 1,394M and an equity ratio of 75.5% leave the balance sheet materially stronger than pre-IPO.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Deposits | JPY 1,474M | +56.8% vs. prior year-end |
| Accounts Receivable and Contract Assets | JPY 306M | +10.3% vs. prior year-end |
| Goodwill | JPY 242M | -8.6% vs. prior year-end; 9M amortization of JPY 22M |
| Total Assets | JPY 2,263M | +35.4% vs. prior year-end |
| Shareholders' Equity | JPY 1,710M | +69.4% vs. prior year-end |
| Interest-Bearing Debt | JPY 79M | -59.2% vs. prior year-end |
| └ Current Portion of Long-Term Debt | JPY 30M | - |
| └ Long-Term Debt | JPY 49M | - |
| Provision for Unauthorized-Access-Related Losses | JPY 71M | Unchanged from prior year-end |
| Net Cash | JPY 1,394M | Cash and deposits less interest-bearing debt (our estimate) |
| EBITDA | JPY 200M | Company disclosure (operating income + depreciation + goodwill amortization) |
Net Debt/EBITDA is not applicable given the net cash position.
Disclosures Released Alongside The Earnings Announcement
Major Announcements During The Quarter
- 2026/06/15The J-Float Project, in which the company participates, launched the "J-Float Certification Program" to support overseas expansion of Japanese-made SaaS J-Float Project, in which Tsuji Hongo IT Consulting participates, launches the "J-Float Certification Program" to endorse and support products pursuing global expansion
- 2026/06/23Full launch of the "withDX Acceleration Program," supporting DX at mid-sized and small enterprises in partnership with accounting firms Tsuji Hongo IT Consulting fully launches the "withDX Acceleration Program"
- 2026/06/26SoLabo, a lending and subsidy support provider, joined the program, expanding the professional-services partner network SoLabo joins the "withDX Acceleration Program" offered by Tsuji Hongo IT Consulting
- 2026/07/28Added "freee Accounting Hands-On Training" to the "Hands-On Training for Accounting Firms" program, expanding a platform used by more than 3,000 participants cumulatively New "freee Accounting Hands-On Training" added to the "Hands-On Training for Accounting Firms" platform
- 2026/08/04Commercial web service launch of "withDX," the DX platform for member professional-services firms, with roughly 100 member firms participating Announcement of the launch of "withDX," a DX platform for member professional-services firms
Large-Shareholding Filings / Material Proposals Over The Past Year
- Hongo holdings: 0.00%→38.07% (2026/01/27) — new filing in connection with the IPO; purpose of holding is pure investment, with no material proposal activity
- Itochu Corporation: 0.00%→23.12% (2025/12/26) — new filing in connection with the IPO; purpose of holding is strategic investment under a capital and business alliance, with no material proposal activity
- No other change reports, shareholder proposals, or disclosures constituting material proposal activity were identified
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