Summary
This fiscal year is the first year of the Medium-Term Management Plan (2026–2028). 1H recurring profit reached 53.9% of the full-year target, ahead of 53.0% in the prior-year period. The first checkpoint in 3Q is whether growth in the core monthly advisory and management study group membership fees continues. We will also assess whether the 1H strength in "mid-market scale-up consulting themes," such as M&A advisory and subsidy consulting, can be sustained. The contribution from newly consolidated subsidiaries, including MTUS (consolidated in July), is another focus. Meeting the company plan requires 2H revenue growth of +16.7% YoY (our estimate). A further question is how far stronger revenue can absorb rising investment in human capital, M&A and offices. 3Q is seasonally the weakest quarter for standalone OPM. Comparing it with the prior-year quarter will show whether the company can invest and still grow profits.
Key Points for Next Quarter
| Key Points & Focus | Implications |
|---|---|
Full-Year Plan Progress9M cumulative recurring profit vs. full-year plan | 1H progress was 53.9%, above 53.0% a year earlier. Benchmarking against the prior-year 9M rate of 72.4% (our estimate) will indicate how likely the full-year target of ¥9,100M is. |
Core Business GrowthYoY growth and order trends in monthly advisory and management study group fees | In 1H, monthly advisory grew +9.9% and management study group fees +8.2%. However, order intake rose only +1.7% and the order backlog +1.6%. We will check whether this gap shows up in 3Q revenue. |
Revenue MixSustainability of M&A revenue and contribution from newly consolidated subsidiaries | 1H M&A revenue was ¥938M (+128.4%), driven by a large deal closing. The question is how much of the required 2H revenue of ¥20,175M (+16.7%, our estimate) M&A and new subsidiaries can cover. |
Profitability3Q standalone operating income and YoY SG&A | SG&A rose +34.8% in 1H, but gross profit margin expanded to 43.7% (+2.4pt) and absorbed the increase. We will compare 3Q against the prior-year standalone operating income of ¥1,687M and OPM of 19.9% (our estimate) to judge whether investment costs are being absorbed. |
Net IncomeExtraordinary items and net income progress vs. full-year plan | Prior-year 9M extraordinary losses were ¥2,485M, which sets up strong YoY net income growth. The full-year plan of ¥6,550M (+0.4%) already reflects the absence of the prior-year 4Q extraordinary gain of ¥3,159M. Progress rates are therefore the better yardstick. |
Key Issues from Previous Results (2Q FY12/26)
1H revenue was ¥16,825M (+4.9%), operating income ¥4,736M (+1.1%) and recurring profit ¥4,902M (+4.6%). Progress toward the full-year plan was in line with the prior year. 2Q standalone operating income was ¥2,636M, up +10.9% YoY and a recovery from 1Q (-9.0%) (our estimate). In the first year of the Medium-Term Management Plan, the company is pursuing M&A, organizational restructuring and capital and business alliances at the same time. The key 3Q issue is how these initiatives feed through to core business growth and profit levels.
1. Building Toward the Full-Year Plan in 2H
- Previous Quarter: 1H progress rates (our estimates) were 45.5% for revenue, 52.0% for operating income and 53.9% for recurring profit. The prior-year figures were 48.1%, 53.1% and 53.0%, respectively.
- This Quarter's Check: The full-year plan calls for revenue of ¥37,000M (+11.0%) and recurring profit of ¥9,100M (+2.9%). The plan was not revised at 2Q. 2H requires revenue of ¥20,175M (+16.7% YoY) and recurring profit of ¥4,198M (+1.1% YoY), so revenue momentum is the key variable (our estimates).
- Key Metrics: 3Q standalone revenue vs. ¥8,497M in the prior-year quarter (our estimate), and 9M cumulative recurring profit progress vs. 72.4% a year earlier.
2. Sustained Growth in Monthly Advisory and Management Study Groups, and Order Trends
- Previous Quarter: Monthly advisory revenue was ¥9,367M (+9.9%), driven by higher contract pricing and a larger client base. Management study group fees were ¥1,674M (+8.2%), driven by membership growth.
- This Quarter's Check: Order intake for monthly advisory and projects was ¥11,740M (+1.7%), with a backlog of ¥10,528M (+1.6%), both lagging revenue growth. We will check whether pricing gains persist. We will also look for growth in new orders from mid-market consulting and AX/DX support.
- Key Metrics: YoY growth in monthly advisory and project revenue in the 9M breakdown. If order intake and backlog are disclosed, whether their growth improved from 1H.
3. Sustainability of M&A Revenue and Contribution from Portfolio Restructuring
- Previous Quarter: M&A revenue reached ¥938M (+128.4%) on the closing of a large deal. Logistics BPO fell to ¥1,221M (-31.0%) due to a deliberate scale-back. Excluding both, revenue grew +5.8% (our estimate).
- This Quarter's Check: M&A revenue tends to be lumpy. We will monitor deal closings after Funai Soken Agata FAS absorbed MI Consulting on July 1. For MTUS, acquired on July 21, the start date for P&L consolidation has not been disclosed. We will check whether it is included in 3Q.
- Key Metrics: 9M M&A revenue vs. the prior year, the rate of decline in logistics BPO, and changes in goodwill (¥1,209M at 1H-end).
4. Balancing Investment Costs and OPM
- Previous Quarter: SG&A was ¥2,613M (+34.8%), and the SG&A-to-revenue ratio rose to 15.5% from 12.1% a year earlier (our estimate). Goodwill amortization was ¥179M and depreciation ¥291M, both up YoY.
- This Quarter's Check: Office investment has moved construction in progress into buildings, so the depreciation burden should continue in 2H. Prior-year 3Q standalone gross profit margin was a seasonally low 33.6%. The focus is whether this year's margin improvement holds in 3Q (our estimate).
- Key Metrics: 3Q standalone operating income vs. ¥1,687M a year earlier, 9M gross profit margin (38.6% in the prior year) and YoY SG&A growth.
5. Normalization of Extraordinary Items and Net Income/EPS
- Previous Quarter: 1H Net Income Attributable to Owners of Parent Company was ¥3,218M (+94.9%). The jump reflects a ¥2,155M impairment loss in the prior-year period. Extraordinary losses this 1H were ¥171M, mainly ¥165M in office relocation costs.
- This Quarter's Check: Prior-year 9M extraordinary losses were ¥2,485M, which sets up strong YoY growth in 9M net income. On July 17, the company completed the disposal of treasury shares to Tokio Marine & Nichido Fire Insurance (2,196,000 shares, ¥2,343M). This affects net assets and share count, not the P&L.
- Key Metrics: 9M net income progress vs. the full-year plan of ¥6,550M (49.1% at 1H, our estimate), the breakdown of extraordinary items, and any revision to EPS guidance of ¥72.07.
Key Timely Disclosures This Fiscal Year
- 2026/08/20Launch of "PRIME," an integrated AI agent platform. The company gave management study group member companies an early preview of four AI agents. PRIME could become a core service for the AX/DX consulting highlighted in the Medium-Term Management Plan. Monetization timing is undisclosed, so the 3Q contribution is likely limited.
- 2026/08/20Launch of "Fmedia," a web media service for business owners. A paid plan is scheduled to start on September 1, so the 3Q contribution is capped at one month. The initiative moves the management study group model online on a subscription basis. The key checkpoint is any uplift to study group fees from 4Q onward.
- 2026/08/07Agreement with Japan Asia Investment (JAIC) to establish a joint venture, "Funai Soken JAIC Capital." Its first fund is planned as a ¥2–3B business succession fund for the mobility industry. Combining consulting with capital expands the company's reach in business succession and M&A. The 3Q P&L impact is likely limited.
Previous Quarter Results (2Q FY12/26 Actual)
The group is a management consulting firm whose revenue base is monthly advisory consulting and management study groups for SMEs. From this 1H, it moved to a single reportable segment. The Medium-Term Management Plan (2026–2028) prioritizes three areas: consulting for mid-sized companies, consulting that helps SMEs scale into mid-sized companies, and AX/DX consulting in partnership with global platformers. 1H delivered higher revenue and profits on growth in monthly advisory and M&A, and the full-year plan was left unchanged.
| Item | Amount | YoY | vs. Company Plan | Notes |
|---|---|---|---|---|
| Revenue | ¥16,825M | +4.9% | - | Monthly advisory +9.9% and M&A +128.4%, partly offset by logistics BPO -31.0% |
| Operating Income | ¥4,736M | +1.1% | - | Gross profit margin rose to 43.7%; SG&A +34.8% |
| Recurring Profit | ¥4,902M | +4.6% | - | Non-operating income of ¥206M, including insurance surrender proceeds |
| Interim Net Income Attributable to Owners of Parent Company | ¥3,218M | +94.9% | - | Absence of ¥2,155M prior-year impairment loss; ¥165M office relocation costs this period |
| EPS | ¥35.36 | +98.5% | - | Retroactively adjusted for the 2-for-1 stock split effective January 1, 2026 |
Progress Toward Full-Year Plan (Recurring Profit Basis): 53.9% (Prior Year: 53.0%)
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