Performance trend of Project Holdings Co., Ltd. <9246>.
Segment trends by business:
(1) Digital Transformation Business In the same business, we have succeeded in additional orders from existing customers who evaluate past support achievements and business quality, as well as acquiring new customers. We also judged that there is room to further expand revenue by improving customer unit prices through cross-domain proposals for new customers. For example, even if the entry is a consultation about UI/UX, there are many cases where there is a substantial proposal for solving DX issues that span domains. As the nature of the service offering, the same business often continues to support in the mid- to long-term once it receives an order, and the ratio of stock sales revenue (sales revenue from customers who have obtained continuous orders for six months or more, excluding advertising placement and user test items that have a strong spot nature) in the December 2023 period is high at 93.1%.
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(2) DX x Technology Business In the same business, we recognize that there is still a strong demand for engineering personnel of customer companies, but due to the departure of sales representatives at Project Technologies in December 2023 and the termination of multiple transactions that mainly utilized external partners, sales revenue for the same business has been decreasing. Therefore, in April 2024, we merged with Altwise, which has a strength in creating an environment where engineers can work comfortably and is steadily recruiting engineers, and are promoting the revitalization of the business. (3) DX x HR Business The movement of technology companies' personnel recruitment in the technology field continues to be active, and the company considers that the demand environment is favorable, taking into account legal arrangements such as the compulsory stress check system and the implementation of work-style reform-related laws. However, since we prioritized the revitalization of the core business, Digital Transformation Business, the same business's sales revenue decreased from the previous quarter.
In terms of service sales, consulting services were 951 million yen (5.8% decrease from the previous quarter), marketing services were 110 million yen (10.0% increase from the previous quarter), and UIscope services were 8 million yen (27.3% decrease from the previous quarter). Due to the prioritization of organizational restructuring, the number of UIscope cases and customers remained sluggish, but the unit price of existing customers continued to be favorable. Although the resignation of the former Vice President Representative Director has subsided, the turnover rate continues to be high, and as a result, the number of employees engaged in the same business has decreased since the previous quarter, and sales revenue has also decreased. As a countermeasure, we implemented a base-up based on the renewal of the personnel evaluation system, including the salary table, in January 2024. We also began strengthening training, mainly for newly recruited employees, from the first quarter of December 2024, and completed business using external partners. As a result, the total cost of employees such as consultants and outsourcing costs for external partners increased, and the gross profit margin decreased from the previous quarter.
From the above, the same business had sales revenue of 1,070 million yen (10.5% decrease from the previous year's same period), gross profit of 406 million yen (16.8% decrease from the previous year's same period), and a gross profit margin of 37.9% (2.9 points decrease from the previous year's same period). As for the quarterly trend in sales revenue, it continued to decrease from 1,196 million yen in the December 2023 quarter, and decreased by 4.5% from the previous quarter due to the impact of 15 people resigning in December for the first quarter of December 2024, but exceeded the initial plan.
From the above, the same business had sales revenue of 244 million yen (10.3% increase from the previous year's same period), gross profit of 56 million yen (43.6% increase from the previous year's same period), and a gross profit margin of 23.0% (5.0 points increase from the previous year's same period). In terms of quarterly trends, sales revenue continued to decrease from the peak of 354 million yen in the second quarter of December 2023 and decreased by 18.7% from the previous quarter in the first quarter of December 2024. The decrease in sales continues due to factors such as the departure of sales personnel.
Recognizing that the expansion of consultant numbers is the main driver for mid- to long-term business growth, we are continuously working on talent acquisition and absorbed Altwise, which has a strength in creating an environment where engineers can work comfortably and is steadily recruiting engineers, in April of 2024, and 14 mid-career employees joined in the first quarter of December 2024 (new graduates of 35 and mid-career hires of 13 joined on April 1, 2024). Although adoption progressed smoothly compared to the plan, the resignation rate continued to be high, and the number of employees engaged in the same business decreased from the previous quarter, and sales revenue also decreased. We are promoting revitalization of the business by starting a policy to enhance training of newly recruited employees from the first quarter of December 2024 and completing business using external partners. Therefore, the total cost of employees such as consultants and outsourcing costs for external partners increased, which was the main cause of the decrease in gross profit margin from the previous quarter.
(1) Digital Transformation Business In the same business, we have succeeded in additional orders from existing customers who evaluate past support achievements and business quality, as well as acquiring new customers. We also judged that there is room to further expand revenue by improving customer unit prices through cross-domain proposals for new customers. For example, even if the entry is a consultation about UI/UX, there are many cases where there is a substantial proposal for solving DX issues that span domains. As the nature of the service offering, the same business often continues to support in the mid- to long-term once it receives an order, and the ratio of stock sales revenue (sales revenue from customers who have obtained continuous orders for six months or more, excluding advertising placement and user test items that have a strong spot nature) in the December 2023 period is high at 93.1%.
Recognizing that the expansion of consultant numbers is the main driver for mid- to long-term business growth, we are continuously working on talent acquisition and absorbed Altwise, which has a strength in creating an environment where engineers can work comfortably and is steadily recruiting engineers, in April of 2024, and 14 mid-career employees joined in the first quarter of December 2024. Although adoption progressed smoothly compared to the plan, the resignation rate continued to be high, and sales revenue decreased compared to the previous quarter. However, we consider that the demand environment for personnel recruitment in technology companies in the technology field is still strong, taking into account legal arrangements such as the compulsory stress check system and the implementation of work-style reform-related laws.
As a result, the revenue was ¥124 million (an increase of 61.4% from the same period last year), the gross profit was ¥85 million (an increase of 54.5% from the same period last year), and the gross profit margin was 68.5% (a decrease of 3.4 points from the same period last year). With respect to service-specific revenue, HR solution services amounted to ¥91 million (an increase of 19.2% from the same period last year), and healthcare services amounted to ¥32 million (prior to consolidation). In the HR solution services segment, taking into account the recent business situation, etc., the company decided at the May 2024 board of directors meeting to sell Project HR Solutions to Mr. Sekikawa, the representative director and president, and signed a stock transfer agreement.
3. Financial Condition and Management Indicators
As of the end of the first quarter of the fiscal year ending December 2024, the total assets amounted to ¥58.82 billion yen, an increase of ¥2.44 billion yen from the end of the previous quarter. Current assets amounted to ¥35.95 billion yen, a decrease of ¥0.0 billion yen. This was mainly due to a ¥0.64 billion yen decrease in cash and deposits, while bills receivable and trade receivables increased by ¥0.1 billion yen and accrued consumption tax increased by ¥0.51 billion yen, respectively. Fixed assets amounted to ¥22.84 billion yen, an increase of ¥0.245 billion yen. This was mainly due to a ¥0.306 billion yen increase in tangible fixed assets, while intangible fixed assets (goodwill) decreased by ¥0.058 billion yen.
The total liabilities amounted to ¥32.51 billion yen, an increase of ¥2.65 billion yen from the end of the previous quarter. Current liabilities increased by ¥0.387 billion yen, mainly due to an increase in accounts payable. Fixed liabilities decreased by ¥0.122 billion yen, mainly due to a decrease in long-term borrowings. As a result, interest-bearing liabilities, including long-term borrowings and bonds, amounted to ¥21.1 billion yen, a decrease of ¥0.127 billion yen. The total equity amounted to ¥26.3 billion yen, a decrease of ¥0.21 billion yen from the end of the previous quarter, mainly due to a decrease in retained earnings. As a result, the equity ratio decreased by 2.3 points from the end of the previous quarter to 44.6%, but it is still much higher than the average safety level of all industries listed on the Tokyo Stock Exchange Prime, Standard, and Growth segments in March 2023 of 32.2%. In addition, the ROA (total asset turnover) for the fiscal year ending December 2023 was 16.9%, and the ROE (return on equity) was 21.6%, both of which were significantly higher than the average for all industries listed on the Tokyo Stock Exchange Prime, Standard, and Growth segments in March 2023 of 4.2% and 9.1%, respectively, indicating a high level of profitability.
(Written by FISCO guest analyst Nozomi Kokushige).