Insource Co.,Ltd.

Business Details

INSOURCE Co., Ltd. Group provides talent development and organizational consulting services to private companies and government agencies, centered on four businesses: the Instructor-Dispatch Training Business, the Open Course Business, the IT Services Business, and Other Businesses. Customers are primarily corporate clients, and the company offers diverse solutions combining in-person and online training, HR tech via the LMS "Leaf", and e-learning/video content. In the second quarter (interim period) of FY2026 (ending March 2026, note: fiscal year end is September), net sales were ¥7,584 million (up 8.0% year on year), and operating profit was ¥2,951 million (up 0.3% year on year).

Recent Overview

Net sales rose 8%, but operating profit was nearly flat due to higher personnel costs; full-year forecast revised downward

In the interim period of FY2026 (ending September 2026), net sales reached ¥7,584 million (up 8.0% year on year), but total personnel expenses increased by 16.2% year on year, limiting operating profit growth to ¥2,951 million (up 0.3% year on year). Unit prices rose due to full-scale implementation of price revisions and promotion of combined-offering proposals. The company also developed and promoted the new generative-AI-based service "AI-OJT" and added generative AI features to the LMS "Leaf". The full-year consolidated earnings forecast was revised downward for both sales and profit from the figures announced on November 4, 2025 (to net sales of ¥16,000 million and operating profit of ¥6,380 million).

Key Products

Growth Drivers

• Continued solid demand in the adult/corporate education market driven by momentum toward human capital management
• Rapid market expansion in DX- and generative-AI-related training (DX-related training sessions up 13.2% year on year; Open Course DX participants up 31.3% year on year)
• Continued expansion of LMS "Leaf" ARR and number of paid-use organizations (ARR up 29.3% year on year; paid-use organizations up 11.4% from prior fiscal year-end)
• Rise in average customer unit price per organization from full-scale implementation of price revisions (up ¥15.3 thousand year on year)
• Increased proposal values through group-wide promotion of combined proposals integrating multiple services and products
• Operational efficiency gains and proposal-document creation features enabled by generative AI utilization (core system "Plants")
• Development and promotion of new services such as "AI-OJT" and generative AI assessments to comprehensively support organizational adoption of generative AI
• Medium-term management plan "Road to Next 2028" targeting net sales of ¥23,400 million and a CAGR of 17.3% by FY2028 (ending September 2028)

Risks

• Rising personnel costs ahead of revenue growth due to increased hiring (total personnel costs up 16.2% year on year in the interim period of FY2026 ending September 2026, lowering the operating profit margin)
• Risk of delays in bringing newly hired employees to full productivity
• Risk of intensifying competition and delayed response to technological change in the generative AI/DX market
• Earnings volatility in the IT Services Business due to fluctuations in orders for LMS "Leaf" customization projects
• Uncertainty regarding achievement of plans, as indicated by the downward revision of the full-year earnings forecast (announced May 7, 2026)
• Risk of the adult/corporate education market as a whole being sensitive to economic conditions (e.g., reduced training budgets among manufacturing clients due to deteriorating conditions in the Middle East)
• Risk of sluggish growth in Open Course participant numbers due to an insufficient number of courses offered