Key Positives From The 2Q Results
Revenue reached JPY 8,247M (+7.7% YoY), a record for the first half. Operating income and recurring profit beat the initial 1H plan by +3.0% and +4.4%, respectively. All five domains posted revenue growth, and monthly-contract team consulting revenue outpaced company-wide growth. The core positive is a thickening recurring revenue base.
- Gross profit margin improved to 50.0% (+0.7pt). A 0.7% decline in Cost of Goods Sold amplified the gross profit uplift from higher revenue.
- Team consulting revenue rose +15.4% YoY to JPY 5,287M (our estimate). Engagements grew +11.0% to 1,548, while client count rose only +0.7% to 1,011. This points to deeper wallet share within existing clients (cross-solution selling).
- Base revenue, which comprises long-term contracts of six months or more, hit a record JPY 6,061M. It grew +19.9% YoY (our estimate), so the stable revenue base is expanding faster than total revenue.
- Human capital investment ran JPY 132M over plan. This was absorbed by factors including a JPY 116M gross profit beat on higher revenue, leaving operating income JPY 27M ahead of plan (company disclosure).
Key Concerns From The 2Q Results
SG&A rose +13.0%, outpacing revenue growth, and OPM fell to 11.4% (-1.1pt). Front-loaded human capital investment continues to weigh on margins. Standalone 2Q revenue grew only +1.1%. The key question is whether organic growth can be sustained now that the uplift from the Peacemind consolidation has annualized.
- Standalone 2Q revenue was JPY 4,403M (+1.1% YoY) and operating income was JPY 651M (-8.8% YoY) (our estimates). The prior-year 1Q predates the Peacemind consolidation, so the gap versus 1Q revenue growth of +16.5% reflects different comparison bases.
- Interim net income attributable to owners of parent company was JPY 528M, 8.1% below the 1H plan. Management cited incidental costs related to the Actus share acquisition. Income taxes rose to JPY 369M from JPY 318M a year earlier.
- Human capital investment reached JPY 3,992M (+12.5%). Headcount of 896 already exceeds the full-year plan of 890 at the half-year mark. Investors need to gauge when headcount growth will translate into productivity gains.
- Operating CF of JPY 445M was weighed down by a JPY 360M increase in trade receivables. Securities purchases for surplus cash management also contributed, and company-disclosed FCF was -JPY 147M.
Focus Areas / Items To Monitor Going Forward
- The revenue and profit contribution from Actus Consulting Group for the six months from October to March, and its impact on 2H earnings including goodwill amortization and PMI costs. Whether these are built into the initial plan will shape the outlook for the full-year landing.
- Whether higher human capital investment converts into growth in team consulting engagements and pricing, securing the full-year planned OPM of 11.0%. 3Q is Peacemind's peak revenue season and will be the test for a 2H margin recovery.
- Reacceleration of the slower-growing Digital/DX and Brand & PR domains. Whether the "AI Management Implementation Consulting" service launched with JAPAN AI becomes a new growth driver in the DX/AX domain.
- Expected six-month earnings contribution from Actus Consulting Group and the extent to which it is reflected in the full-year plan
- Amount and P&L classification of share acquisition-related costs, and the outlook for any additional costs in 2H
- Drivers of the slowdown in standalone 2Q revenue growth, and quantitative disclosure of the organic growth rate
- Measures to lift growth in Digital/DX and Brand & PR, and the timeline for monetizing AI Management Implementation Consulting
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 8,247M | +7.7% |
| Gross Profit | JPY 4,126M | +9.3% |
| └ Gross Profit Margin | 50.0% | +0.7pt |
| SG&A | JPY 3,188M | +13.0% |
| Human Capital Investment (COGS + SG&A, Company Disclosure) | JPY 3,992M | +12.5% |
| Operating Income | JPY 937M | -1.8% |
| └ Operating Income Margin | 11.4% | -1.1pt |
| Recurring Profit | JPY 950M | -0.2% |
| Income Taxes | JPY 369M | +16.2% |
| Interim Net Income Attributable to Non-Controlling Interests | JPY 51M | -28.4% |
| Interim Net Income Attributable to Owners of Parent Company | JPY 528M | -5.9% |
| EPS | JPY 16.48 | -4.5% |
| Team Consulting Revenue | JPY 5,287M | +15.4% |
| Base Revenue | JPY 6,061M | +19.9% |
| Headcount | 896 | +53 from 843 at prior fiscal year-end |
Versus the 1H plan, revenue beat by +1.8%, gross profit by +2.9%, operating income by +3.0%, and recurring profit by +4.4%. In contrast, interim net income attributable to owners of parent company missed the JPY 575M plan by 8.1% (all company disclosure). The YoY profit decline reflects higher investment in human capital (+JPY 444M), branding and marketing (+JPY 52M), and digital/DX (+JPY 33M), which together exceeded the JPY 350M increase in gross profit. YoY growth rates for team consulting revenue and base revenue are our estimates.
Performance By Business Segment
The company operates a single segment: Management Consulting. All five management consulting domains grew revenue, with HR the largest domain at 22.8% of the mix. Prior-year figures for Digital/DX and Brand & PR have been restated to reflect the reclassification of J3 and the FP&A business.
- Segment Performance Table
- Revenue By Management Consulting Domain
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| Management Consulting (Company-Wide) | JPY 8,247M | +7.7% | JPY 937M | -1.8% | 11.4% |
| Domain | Revenue | YoY | Mix | Full-Year Forecast | Progress Rate Rate (Our Estimate) |
|---|---|---|---|---|---|
| Strategy & Domain | JPY 1,625M | +12.6% | 19.7% | JPY 3,450M | 47.1% |
| Digital/DX | JPY 1,277M | +3.6% | 15.5% | JPY 2,750M | 46.4% |
| HR | JPY 1,882M | +12.2% | 22.8% | JPY 3,600M | 52.3% |
| Finance/M&A | JPY 1,666M | +8.9% | 20.2% | JPY 3,300M | 50.5% |
| Brand & PR | JPY 1,611M | +0.5% | 19.6% | JPY 3,400M | 47.4% |
| Other | JPY 183M | +8.7% | 2.2% | JPY 700M | 26.1% |
- Strategy & Domain: Fastest-growing domain at +12.6%. The newly established industry-specific "Industry & Domain" organization drove more growth-strategy engagements in construction, manufacturing, and wholesale. Government and public-sector projects, such as strengthening management capabilities at mid-sized companies, also increased.
- HR: +12.2%, cementing its position as the largest domain. Human capital management themes performed well, including redesigning HR and compensation systems, establishing corporate universities, and EAP. Among listed companies, succession planning and executive compensation design grew strongly.
- Finance/M&A: +8.9%. End-to-end M&A support including cross-border deals, business succession, and IPO support performed well. Referrals from partners such as financial institutions also contributed to deal origination. For listed clients, cost-of-capital-conscious management and IR support themes grew.
- Digital/DX: +3.6%. Themes such as ERP deployment and implementation and AI implementation are reportedly strong, but growth trails the company-wide rate. The domain is tracking in line with its full-year plan of +3.7%, and lifting growth through new AX-related offerings is the key challenge.
Progress Versus Full-Year Guidance
Progress against the full-year plan (our estimates) stood at 47.9% for revenue (47.0% a year earlier), 49.3% for operating income (52.6%), and 45.7% for net income (51.0%). Revenue progress is in line with last year, but profit progress lags. Achieving the full-year plan requires 2H operating income of JPY 963M (+12.1% vs. prior-year 2H) and net income of JPY 627M (+16.3%) (our estimates). Peacemind's 3Q revenue concentration and six months of Actus consolidation provide upside. However, 4Q profit is typically low, so the build-up through 3Q is key to hitting the plan.
| Item | Value (2Q Cumulative) | Full-Year Forecast | Progress |
|---|---|---|---|
| Revenue | JPY 8,247M | JPY 17,200M | 47.9% |
| Gross Profit | JPY 4,126M | JPY 8,480M | 48.7% |
| Operating Income | JPY 937M | JPY 1,900M | 49.3% |
| Recurring Profit | JPY 950M | JPY 1,900M | 50.0% |
| Net Income | JPY 528M | JPY 1,155M | 45.7% |
| EPS | JPY 16.48 | JPY 35.97 | 45.8% |
- Revenue from Peacemind's corporate well-being services, such as stress checks, tends to concentrate in 3Q (company disclosure).
- The company typically makes upfront investments for the following fiscal year in 4Q. Standalone 4Q operating income was JPY 128M in FY3/25 and JPY 197M in FY3/26, low relative to other quarters (company-disclosed quarterly trend).
Changes To Guidance
Full-year guidance is unchanged from the figures announced on May 13, 2026. In 1H, results beat plan through recurring profit, but net income missed due to incidental costs. Management is maintaining the initial plan for now despite the start of Actus consolidation.
Commentary On Shareholder Returns
The interim dividend is JPY 13, up JPY 1 from JPY 12 a year earlier. Combined with a forecast year-end dividend of JPY 16, the annual forecast of JPY 29 (+JPY 2 YoY) is maintained. The company-disclosed payout ratio is 80.3%. The company repurchased JPY 99M of treasury shares in 1H. In September, it resolved to introduce an ESOP trust for employee share grants and the related disposal of treasury shares via third-party allotment. The medium-term return policy targets a payout ratio of 70–80%, DOE of 7% or higher, and a consolidated total payout ratio of 100%. The shareholder benefit program (digital gifts) also continues.
Financial Position
The equity ratio stands at 68.1%, and interest-bearing debt is roughly one-tenth of cash, so the company remains effectively debt-free. Net assets declined slightly due to dividends, share buybacks, and additional purchases of subsidiary shares, but financial soundness remains high.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Cash Equivalents | JPY 5,541M | -14.6% vs. prior FY-end |
| Securities | JPY 1,000M | JPY 500M at prior FY-end; surplus cash management |
| Accounts Receivable and Contract Assets | JPY 1,560M | +32.4% vs. prior FY-end |
| Goodwill | JPY 1,433M | -5.9% vs. prior FY-end; Actus not yet recognized |
| Total Assets | JPY 15,298M | +0.9% vs. prior FY-end |
| Shareholders' Equity | JPY 10,413M | -1.4% vs. prior FY-end |
| Interest-Bearing Debt | JPY 595M | -13.6% vs. prior FY-end; excludes lease obligations |
| └ Current Portion of Long-Term Borrowings | JPY 161M | - |
| └ Long-Term Borrowings | JPY 433M | - |
| EBITDA | JPY 1,137M | Operating income + depreciation + goodwill amortization; our estimate; +2.8% YoY |
| Metric | Value | Notes |
|---|---|---|
| Net Debt/EBITDA | Net cash | Cash equivalents exceed interest-bearing debt by JPY 4,946M; our estimate |
| Debt/Equity | 0.06x | 0.07x at prior FY-end; our estimate |
| Interest Coverage Ratio | 203.7x | Operating income ÷ interest expense; our estimate |
| Equity Ratio | 68.1% | -1.5pt from 69.6% at prior FY-end; company disclosure |
Disclosures Released Alongside The Earnings Announcement
Major Announcements During The Quarter
- 2026/08/19Resolved to acquire a majority stake in US-based Actus Consulting Group and make it a subsidiary. Actus has offices in five US cities and has supported more than 1,000 Japanese companies expanding into the US. The deal strengthens the group's global business consulting capabilities
- 2026/09/16Resolved to introduce an ESOP trust for employee share grants. The trust is linked to human capital KPIs in the medium-term plan, such as a 60% employee stock ownership plan participation rate, and strengthens employee incentives to enhance corporate value
- 2026/09/16Resolved to dispose of treasury shares via third-party allotment in connection with the ESOP trust
- 2026/10/07Launched "AI Management Implementation Consulting" in partnership with JAPAN AI. The initiative puts into practice the medium-term plan's Professional DX/AX and Consulting & BPaaS model
Large-Shareholding Filings / Material Proposals Over The Past Year
- Toki Narasaki: 8.6%→6.5% (2026/04/13) - Held as a member of the founding family. Reasons for filing: a decrease in holding ratio of 1% or more, and the conclusion of a material contract relating to the shares
- Toki Narasaki: 6.5%→8.9% (2026/04/14) - Held as a member of the founding family. Increase in holding ratio of 1% or more
- Toki Narasaki: 8.9%→7.9% (2026/08/27) - Held as a member of the founding family. Decrease in holding ratio of 1% or more
- Toki Narasaki: 7.9%→6.9% (2026/10/22) - Held as a member of the founding family. Decrease in holding ratio of 1% or more
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