teno.Holdings Company Limited

Business Details

Centered on direct operation of licensed nurseries and small-scale licensed nurseries, along with contracted operation of in-house/in-hospital nurseries and after-school childcare centers. As of the end of March 2026, the Childcare Business operated 311 facilities (47 licensed nurseries, 19 small-scale licensed nurseries, 127 contracted nurseries, 77 after-school childcare centers, 33 Waiwai Hiroba facilities, 4 unlicensed nurseries, 2 community-based childcare facilities, and 1 bilingual kindergarten). Revenue from government subsidies and grants based on the official childcare price schedule is the main source of income. This core business accounts for approximately 77% of the group's consolidated revenue.

Recent Overview

Front-loading of the official price schedule settlement reduced costs, substantially improving profitability.

In Q1 FY2026 (January to March), revenue in the Childcare Business was ¥3,524 million (up 5.6% year on year), and segment profit rose sharply to ¥436 million (up 51.2% year on year). The revenue increase was driven by an increase in facilities newly contracted in FY2025 (nurseries and after-school childcare) and an increase in enrolled children at the bilingual kindergarten. On the cost side, the front-loading of the official price schedule settlement—normally conducted in March—to December reduced costs in the current Q1 compared with the same period of the prior year, improving the profit margin. In addition, the company resolved to acquire shares of Kodomo First Japan Co., Ltd. (Kagoshima City), but the share acquisition date has been postponed from April 1, 2026 due to unfulfilled procedural requirements on the seller's side. The formulation of the company's proprietary "childcare method" is largely complete, and efforts to establish a framework for its rollout across all facilities are underway.

Key Products

Growth Drivers

• Revenue growth effect from the full-period contribution of facilities newly contracted in FY2025 (nurseries and after-school childcare)
• Revenue expansion from an increase in enrolled children at the bilingual kindergarten (Fukuoka City)
• Preparation of a reception framework and new revenue opportunities associated with the full implementation of the "Childcare Access Program for All Children" system in April 2026
• Reflection in revenue of treatment improvement allowances from revisions to the official price schedule for licensed nurseries
• Building "facilities of choice" and improving occupancy rates through the rollout of the company's proprietary "childcare method" across all facilities
• Operational efficiency gains and cost reductions from the launch of DX projects
• Expansion of market share through the planned (currently postponed) consolidation of Kodomo First Japan Co., Ltd.

Risks

• Medium- to long-term contraction in childcare demand due to worsening declining birthrate (68,000 births in FY2024, a record low)
• Shift in childcare policy focus from "quantitative expansion" to "ensuring and enhancing quality," risking lower occupancy rates at existing facilities
• Difficulty securing childcare staff due to persistently high job openings-to-applicants ratio for childcare workers, and rising labor costs associated with revisions to the official price schedule
• Increased operating costs due to rising prices and energy costs
• Responding to changes in regional childcare demand structure resulting from measures such as Tokyo's free childcare fees for first children
• Risk of plan delays due to the postponement of the share acquisition of Kodomo First Japan Co., Ltd.
• Possibility that the temporary cost-reduction effect in Q1 FY2026, resulting from the front-loaded booking of the official price schedule settlement (December 2025), will reverse