Monthly consulting and M&A drove record 1H results; operating income progress of 52% absorbed growth investments, while the Tokio Marine capital alliance sets up the next growth axis

Key Positives From The 2Q Results

Revenue of JPY 16,825M (+4.9% YoY) and operating income of JPY 4,736M (+1.1% YoY) were both record highs for a second quarter (company disclosure). The company delivered profit growth while absorbing office investment tied to the Osaka headquarters relocation, human capital investment, and M&A investment. Operating income beat the 1H plan by 0.8%, and progress against the full-year plan reached a solid 52.0%. Rising unit prices in stock-type revenue streams — monthly consulting and management study groups — lifted the earnings base.

• Gross profit of JPY 7,349M (+11.0% YoY) with gross margin improving to 43.7% (+2.4pt YoY). Cost of goods sold was contained at +0.6% (our estimate)
• Monthly consulting at JPY 9,367M (+9.9% YoY) and management study group fees at JPY 1,674M (+8.2% YoY) — the two stock-type categories drove the top line
• Monthly consulting unit price of JPY 288,753 per month (+6.2% YoY) and management study group unit price of JPY 31,025 per month (+4.9% YoY) show continued pricing gains (company disclosure)
• The mid-sized enterprise transformation consulting area (JPY 10B enterprise transformation, M&A, subsidies) reached JPY 1,408M (+112.0% YoY), with M&A alone at JPY 938M (+128.4% YoY)
• Extraordinary losses narrowed to JPY 171M (vs. JPY 2,155M of impairment in the prior year), lifting interim net income to JPY 3,218M (+94.9% YoY)

Key Concerns From The 2Q Results

SG&A rose 34.8% YoY to JPY 2,613M, far outpacing revenue growth, and operating margin declined to 28.1% (-1.1pt YoY). Headcount additions and fixed costs from the headquarters relocation are running ahead of revenue, and productivity metrics fell below the prior year. Accelerating top-line growth in 2H is the key condition for margin recovery.

• SG&A ratio rose to 15.5% (from 12.1%). Profit growth of +1.1% lagged revenue growth of +4.9% (our estimate)
• Operating income per employee of JPY 2,641K (-5.8% YoY) and revenue per employee of JPY 9,383K (-2.3% YoY) point to lower productivity (company disclosure)
• Revenue progress of 45.5% (vs. 48.6% a year earlier). Against full-year guidance of +11.0% revenue growth, 1H cumulative growth of +4.9% leaves a gap. That said, 2Q standalone accelerated to +7.4% revenue and +10.9% operating income growth; the focus is whether the company can push growth higher still in 2H
• Non-stock and BPO categories declined: logistics BPO JPY 1,221M (-31.0% YoY), projects JPY 1,614M (-4.2% YoY), and advertising operations JPY 1,253M (-2.9% YoY)
• Operating cash flow of JPY 2,853M (vs. JPY 3,717M a year earlier), reflecting higher corporate tax payments of JPY 1,988M and the absence of the prior year's JPY 823M tax refund

Focus Areas / Items To Monitor Going Forward

• Order intake limited to monthly consulting and projects rose just +1.7%, with the order backlog up +1.6%. The scope differs from total company revenue so a direct comparison is not meaningful, but 2H growth here bears watching as a gauge of the build-up in the existing consulting pipeline.
• The extent to which the roughly JPY 600M annual fixed-cost increase from the Osaka headquarters relocation (company disclosure) flows through in 2H, and the path back up from an operating margin in the 28% range.
• Timing of earnings contribution from customer referrals and joint solutions under the capital and business alliance with Tokio Marine & Nichido (disposal of 2,196K treasury shares, JPY 2.3B in proceeds).

Key Financial Highlights

(Prior-year EPS is JPY 17.81 on a stock-split-adjusted basis. Gross margin, operating margin, and ratio calculations are our estimates. Prior-year extraordinary losses of JPY 2,196M include JPY 2,155M of impairment related to the sale of the Gotanda office.)

Performance By Business Segment

From this interim period, the company consolidated its reportable segments into a single "Management Consulting" segment (previously three: Management Consulting / Logistics / Digital Solutions). The consolidation reflects the medium-term plan, under which both the logistics and digital businesses will be advanced with a consulting focus; segment-level disclosure is therefore omitted. We substitute the company's disclosed revenue by service category (external customer basis) below.

Progress Rate Versus Full-Year Guidance

Against revenue progress of 45.5% (vs. 48.6% a year earlier), operating income progress of 52.0% (vs. 52.6%) and recurring profit progress of 53.9% (vs. 52.7%) kept profit tracking in line with the prior year. Net income progress of 49.1% improved sharply from 25.0% a year earlier (when JPY 2,155M of impairment was booked in 1Q). MTUS, consolidated as a subsidiary in July, is an additional revenue driver for 2H.

• Profit progress is broadly in line with the prior year, when operating income progress was 52.6% and recurring profit progress 52.7%
• Versus the 1H plan (announced February 6, 2026), revenue came in 3.9% below plan while operating income beat by 0.8% and recurring profit by 4.3% (company disclosure)

Changes To Guidance

No revision to full-year consolidated guidance. The company maintained revenue of JPY 37,000M (+11.0% YoY), operating income of JPY 9,100M (+3.3% YoY), recurring profit of JPY 9,100M (+2.9% YoY), and net income attributable to owners of parent company of JPY 6,550M (+0.4% YoY). The plan for operating income growth to lag revenue growth reflects the roughly JPY 600M annual fixed-cost increase from the Osaka headquarters relocation (company disclosure).

Commentary On Shareholder Returns

No revision to the dividend forecast. For FY12/2026 the company plans an annual dividend of JPY 48 (interim JPY 24, year-end JPY 24), which if achieved would mark the 16th consecutive year of dividend increases (+JPY 5.5 versus the prior year's split-adjusted annual dividend of JPY 42.5). Under the medium-term management plan (2026–2028), the shareholder return policy targets a total payout ratio of at least 65% and a dividend payout ratio of at least 60%, alongside opportunistic share buybacks and a commitment to maintaining a progressive dividend track record. A 2-for-1 common stock split was completed effective January 1, 2026. Separately, on July 17 the company disposed of 2,196,000 treasury shares (total proceeds of JPY 2,343M) via a third-party allotment to Tokio Marine & Nichido Fire Insurance.

Financial Position

The equity ratio stood at 78.0% (+5.6pt vs. end-FY), and with cash and cash equivalents of JPY 12,674M against interest-bearing debt of just JPY 280M, the balance sheet is effectively debt-free. The company is building up investment securities and long-term deposits as surplus fund management while maintaining balance with growth investment.

News Released Alongside The Earnings Announcement

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

• SMBC Nikko Securities (joint holders): 5.11%→3.98% (filing date: 2026/07/23; reporting obligation date: 2026/07/15) — temporary holdings related to securities operations, strategic holdings, and pure investment
• SMBC Nikko Securities (joint holders): 5.11% (filing date: 2026/07/07; reporting obligation date: 2026/06/30) — new large-shareholding report. Temporary holdings related to securities operations, strategic holdings, and pure investment
• Fidelity Management & Research Company LLC (joint holders): 5.09%→3.86% (filing date: 2026/06/19; reporting obligation date: 2026/02/27) — amendment and refiling of the same holding change reported by FMR LLC on 2026/03/06
• Fidelity Management & Research Company LLC (joint holders): 6.22%→5.09% (filing date: 2026/06/19; reporting obligation date: 2026/01/30) — amendment and refiling of the same holding change reported by FMR LLC on 2026/02/06
• Sumitomo Mitsui DS Asset Management (joint holders): 5.03%→3.95% (filing date: 2026/04/22; reporting obligation date: 2026/04/15)
• MUFG Bank et al. (joint holders): 5.28%→4.24% (filing date: 2025/11/17)
• Sumitomo Mitsui DS Asset Management (joint holders): 5.21%→5.03% (filing date: 2025/09/22)

*The Fidelity Management & Research Company LLC filings dated 2026/06/19 are refilings of large-shareholding reports previously submitted under the FMR LLC name, following a correction of the filing entity. They do not represent new changes in holdings.