Key Positives From The Results
Revenue reached JPY 3,332M (+18.6% YoY), a record high on a H1 cumulative basis. Subscription services expanded to 43% of the revenue mix, while gross margin remained elevated at 75.0%. Concentrated investment during the peak January demand season drove record-high demand acquisition across all services, securing an order backlog that will underpin H2 revenue recognition.
- Shadotenpaid subscribers reached 11,556 (+36.6% YoY) with monthly revenue of ~JPY 205M.Speafullpaid subscribers hit 13,287 (3.1x YoY), sustaining rapid growth
- Gross margin of 74.7% (Q2 standalone); rising subscription mix absorbed the seasonal drag from fewer operating days
- Graduate continuation course enrollment rate of 74% and customer satisfaction of 4.5/5.0 remained at high levels; referral rate of 18% supports CAC efficiency
- Corporate training client base expanded to 374 companies (+61 YoY); enterprise coverage remains low, leaving significant room for expansion
- The Study Hacker (ENGLISH COMPANY) acquisition creates a pool of ~260 English coaching specialists; integration of 56,000+ learner data sets is intended to enhance service quality
Key Concerns From The Results
Operating income came in at JPY 701M (−12.3% YoY) with OPM of 21.0% (−7.5pt YoY), reflecting a decline in profitability. Front-loaded investment from H1 drove up the S&M ratio, creating a structure where H2 profit recovery is a prerequisite for achieving full-year targets.
- Q2 standalone operating income of JPY 252M (−28.8% YoY); S&M expenses of JPY 746M (+JPY 265M YoY) weighed heavily on profitability
- EPS of JPY 39.14 (−16.7% YoY); non-application of the wage increase promotion tax credit also contributed to the decline in net margin
- English coaching service Q2 revenue of JPY 905M (−7.8% QoQ); structural seasonal headwind from fewer operating days (−8.8% vs. Q1) persists
- Study Hacker is expected to post revenue decline and an operating loss in FY2026/3; net assets were negative JPY 597M as of end-FY2025/3 (technically insolvent). The amortization burden of estimated goodwill of JPY 348M and the acquiree's earnings turnaround will determine the impact on consolidated profit
- Consultant headcount at 151 (vs. initial plan of 161–170); accelerating net additions in H2 is key to securing capacity
Focus Areas / Items To Monitor Going Forward
- Whether the S&M ratio will decline from Q3 onward. Against management's projections (Q3: 39% → Q4: 46% → full-year normalization), progress needs to be tracked on conversion of January peak-season orders into revenue on a service-delivery basis
- Quantitative disclosure on the impact of Study Hacker's consolidation (from Q3) on full-year guidance. Key focus areas are the finalization of goodwill amount/amortization period and the path to narrowing the acquiree's operating losses
- Churn rate trends for subscription services. While Shadoten/Speafull paid subscriber counts surged on the back of January investment, quarterly retention rates and average subscriber tenure will determine medium-term revenue stability
- Primary drivers of Study Hacker's FY2026/3 operating loss and the assumed timeline to breakeven
- Expected timing for finalization of goodwill amount/amortization period and any revision to consolidated guidance
- Priorities and timeline for service integration and brand strategy with Study Hacker
- Actual advertising ROI metrics from the January demand season (CPA, LTV/CAC, and other quantitative data)
- Consultant hiring progress and confidence in achieving the year-end target of 161–170
- Conversion targets from the free vocabulary app "ProWords" to premium services
- Revenue monetization timeline for DearTalk and preconditions for full-scale marketing spend
- Cross-sell results for corporate subscription services (Shadoten/Speafull) and go-forward strategy
- M&A policy going forward (deal size, target domains, financial criteria)
- Whether dividend policy will be affected following the transition to consolidated reporting
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 3,332M | +18.6% |
| └ English Coaching Services | JPY 1,888M (H1 cumulative) | - |
| └ Subscription English Learning Services | JPY 1,444M (H1 cumulative) | - |
| Cost of Goods Sold | JPY 831M | +16.1% |
| Gross Profit | JPY 2,501M | +19.5% |
| Gross Profit Margin | 75.0% | +0.5pt |
| SG&A | JPY 1,799M | +39.2% |
| Operating Income | JPY 701M | −12.3% |
| Operating Income Margin | 21.0% | −7.5pt |
| Recurring Profit | JPY 706M | −12.0% |
| Interim Net Income | JPY 485M | −17.3% |
| EPS | JPY 39.14 | −16.7% |
| Diluted EPS | JPY 38.66 | −15.8% |
On a Q2 standalone basis, revenue of JPY 1,656M (+19.3% YoY) and gross profit of JPY 1,236M (+20.3% YoY) both set new records. However, concentrated advertising spend during the January peak season drove S&M expenses up by JPY 265M YoY, and operating income was limited to JPY 252M (−28.8% YoY).
Performance By Business Segment
| Service Category | Revenue (Q2 Standalone) | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| Company-Wide (Single Segment) | JPY 1,656M | +19.3% | JPY 252M | −28.8% | 15.3% |
- Subscription English Learning Services: Q2 revenue of JPY 750M (+47.2% YoY). Shadoten paid subscribers reached 11,556 (+36.6% YoY) and Speafull paid subscribers reached 13,287 (3.1x YoY), delivering strong growth across all services. January marketing investment was the key catalyst for the rapid subscriber expansion
- Corporate Training: Client base of 374 companies (+61 YoY). Enterprise coverage (companies with revenue over JPY 1T) stands at just 22%, pointing to significant untapped growth potential as a key driver
- English Coaching Services (Q2 standalone): Revenue of JPY 905M (−7.8% QoQ), declining due to seasonal factors with 8.8% fewer operating days vs. Q1. On a YoY basis, growth of +3.2% was maintained
Progress Versus Full-Year Guidance
H1 cumulative revenue progress stands at 47% and operating income progress at 49%, broadly tracking in line with the plan. Management explicitly stated it expects to achieve full-year guidance. In the prior year (FY2025/8), revenue was H2-weighted (Q3: 25% + Q4: 26% = 51%), and a similar H2 profit recovery is embedded in the current-year structure.
| Item | Value (H1 Cumulative) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 3,332M | JPY 7,100M | 46.9% |
| Operating Income | JPY 701M | JPY 1,420M | 49.4% |
| Recurring Profit | JPY 706M | JPY 1,424M | 49.6% |
| Net Income | JPY 485M | JPY 967M | 50.2% |
- English coaching services can experience quarterly revenue swings of up to 8.8% due to differences in operating days (Q2 had the fewest at 83 days, owing to the 7-day year-end/New Year holiday)
- January is the strongest demand period of the year and offers the highest advertising ROI. Orders are recognized as revenue over Q2–Q4 on a service-delivery basis
- The S&M ratio rose from 35% in Q1 to 45% in Q2 but is projected to be 39% in Q3 and 46% in Q4, declining on a YoY basis per the plan
Changes To Guidance
No changes to the full-year guidance announced on October 9, 2025. However, the impact of Study Hacker's consolidation (from Q3) on FY2026/8 results is under review, and the company will disclose any material effects as soon as they are determined.
Commentary On Shareholder Returns
The company's policy is to pay stable and consistent dividends targeting a payout ratio of approximately 30%. The FY2026/8 interim dividend was set at JPY 11.00 per share, in line with the initial forecast. The year-end dividend forecast also remains unchanged at JPY 11.00, resulting in a full-year dividend forecast of JPY 22.00 (+JPY 3.00 YoY). The projected payout ratio is 28.2%.
Financial Position
The company maintains a near net-cash balance sheet with an equity ratio of 54.2%. Stable operating cash flow generation has built cash and deposits to JPY 3,559M, and ample liquidity is expected to be maintained even after the M&A execution.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Deposits | JPY 3,559M | +JPY 143M vs. prior FY-end |
| Total Assets | JPY 4,679M | +JPY 193M vs. prior FY-end |
| Total Current Assets | JPY 3,903M | +JPY 203M vs. prior FY-end |
| Total Non-Current Assets | JPY 775M | −JPY 9M vs. prior FY-end |
| Total Interest-Bearing Debt | JPY 210M | −JPY 39M vs. prior FY-end |
| └ Current Portion of Long-Term Borrowings | JPY 69M | - |
| └ Long-Term Borrowings | JPY 141M | - |
| Contract Liabilities | JPY 1,006M | +JPY 64M vs. prior FY-end |
| Net Assets | JPY 2,563M | +JPY 282M vs. prior FY-end |
| Shareholders' Equity | JPY 2,538M | +JPY 276M vs. prior FY-end |
| EBITDA | JPY 719M | Operating income JPY 701M + depreciation JPY 18M; our estimate |
※ Note: Following the transition to consolidated reporting, Study Hacker's interest-bearing debt will be added (estimated interest-bearing debt of JPY 549M, equity ratio of 46.2%).
News Released Alongside The Earnings Announcement
- 2026/04/09Notice regarding acquisition of company shares by directors and officers Notice Regarding Acquisition of Company Shares by Directors and Officers
- 2026/04/09The company's views on the evolution of generative AI and its impact on the business The Company's Views on the Evolution of Generative AI and Its Impact on the Business
- 2026/04/07Resolved to acquire all shares of Study Hacker (operator of ENGLISH COMPANY), with share acquisition scheduled for April 28, 2026. This creates Japan's largest specialist group (~260 professionals) in the English coaching space, with consolidated reporting to begin from Q3 Progrit Announces Study Hacker Joining the Group
Major Announcements During The Quarter
- 2026/04/07Executed a share transfer agreement to acquire all shares of Study Hacker from Benesse Corporation. A strategically significant announcement with expected synergies for business expansion and integration in the English learning space Progrit Announces Study Hacker Joining the Group
- 2026/04/03Launched "ProWords," a free English vocabulary learning app. Aimed at expanding the product portfolio and boosting brand awareness, with the intention of funneling users to premium services Progrit Launches Free Vocabulary App "ProWords"
- 2026/01/30Disclosed updated materials on business plan and growth potential via TDnet. A key investor communication updating the full-year growth outlook and business highlights Business Plan and Growth Potential Update
- 2026/01/14Released Q1 FY2026/8 earnings summary. Confirmed earnings progress, financial position, and reiteration of full-year guidance FY2026/8 Q1 Earnings Summary (Japanese GAAP, Non-Consolidated)
Large-Shareholding Filings / Material Proposals Over The Past Year
- Shogo Okada(CEO / including co-holders): 36.94% → 35.06% (2025/07/10) — Held as a stable shareholder in capacity as founder and representative director
- Shuntaro Yamasaki(Vice President): 15.84% → 15.55% (2025/10/30)
- Sumitomo Mitsui DS Asset Management: 0.00% → 5.00% (2025/07/22) — Pure investment (return-focused)
- Asset Management One: 8.47% → 5.32% (gradual reduction from 2025/11 through 2026/03)
Envalith, Inc. ("Envalith") provides exclusive research coverage services to domestic and international institutional investors, as well as domestic individual investors, with the objective of contributing to the development of global and Japanese capital markets by providing information necessary for considering investments in Japanese listed companies.
- Purpose and Disclaimer Regarding Investment Decisions
This report has been prepared solely for informational purposes and does not constitute a solicitation to acquire, sell, or hold securities or any other financial products. Furthermore, this report does not constitute specific investment, financial, or tax advice. Any opinions, judgments, or recommendations contained herein are not intended to induce investment activities. Please be advised that all investment decisions must be made based on the investor's own responsibility and judgment, and Envalith and subject company shall not be involved in any such investment decisions.
- Information Sources, Accuracy, and Disclaimer of Warranty
This report has been prepared based on a formal request from the subject company, utilizing information provided by and interviews conducted with said company. By using this report, you are deemed to have agreed to the following: 1. Information Sources: This report is prepared on the assumption that the publicly available information and information disclosed by the subject company and provided during interviews is true and reliable. Envalith has not independently verified or validated the veracity of such information. 2. Accuracy: The interpretations, analyses, and hypotheses or conclusions based thereon contained in this report are independently derived by Envalith using its own perspectives and analytical methods based on the information mentioned in the preceding paragraph. 3. Disclaimer of Warranty: In the event that there are errors or omissions in the information disclosed by the subject company, Envalith and subject company shall not be held liable for any inaccuracies in this report resulting therefrom. Envalith and subject company make no warranties, whether express or implied, regarding the accuracy, safety, validity, completeness, or any other aspect of this report, nor regarding the past or future performance of the subject company.
- Limitation of Liability
Envalith and subject company shall not be liable for any costs, damages, or losses (including direct, indirect, incidental, consequential, or punitive damages) arising from the use of this report or the information obtained therefrom. Users of this report acknowledge and agree that such use is at their own risk.
- Potential Conflicts of Interest
Envalith may have, or may have in the future, business relationships with the subject company. Accordingly, investors should be aware that conflicts of interest may exist that could affect the objectivity of this report.
- No Obligation to Change or Update Content
The contents and opinions in this report, as well as the information upon which it is based, are current as of the date of preparation and are subject to change without notice. Please be advised that Envalith is under no obligation to update the contents of this report, and investors must verify the timeliness of the information on their own.
- Governing Language
This report is prepared in Japanese, English, and Chinese. In the event of any discrepancy or difference in interpretation between the language versions, the Japanese version shall be treated as the original and shall prevail.
- Copyright
All rights (including copyrights) relating to this report belong to Envalith. Any reproduction, redistribution, or other use of all or part of this report without the prior written permission of Envalith is strictly prohibited.
- Use for Other Investment Products
Except where Envalith has provided prior written approval, the use of this report and the trademarks or trade names of Envalith or the subject company in connection with the information distribution, transaction, sales promotion, or advertising of any investment products (including derivatives, structured products, investment trusts, or investment assets whose price, return, or performance is based on or linked to this report) is strictly prohibited.