Performance Trends of Axis Consulting <9344>

3. Outlook for the Fiscal Year Ending June 2025

For the fiscal year ending June 2025, it is expected that the revenue will be 52.0 billion yen (an increase of 11.4% from the previous year), operating profit 7.0 billion yen (a decrease of 16.0%), ordinary profit 7.0 billion yen (a decrease of 15.8%), and net income 6.36 billion yen (an increase of 26.5%). Due to the absorption merger of Cambridge Research Institute on July 1, 2024, the fiscal year ending June 2025 will be on a non-consolidated basis, and therefore the earnings forecast has not been disclosed in the financial results announcement. However, for convenience, the growth rates compared to the consolidated financial statements for the fiscal year ending June 2024 were calculated using the numbers disclosed in the earnings presentation materials. Additionally, it is expected that a special profit of 172 million yen from the extinction of consolidated shares due to the absorption merger will occur, leading to a double-digit increase in net income by absorbing forward investments such as increased personnel.

The company will continue to capture the demand for high-end talent focusing on consulting firms, and plan to significantly expand the introduction of personnel for business companies. Furthermore, by further expanding the SkillShare, which returned to a growth trajectory from the second half of the fiscal year ending June 2024 through measures such as organizational strengthening, the company plans to increase sales in personnel introductions and SkillShare as a whole. On the profit side, to significantly develop the introduction of personnel for business companies and SkillShare towards medium-term growth, there is a plan to increase personnel in a forward-looking manner during the period of the medium-term management plan, especially in the first year ending in June 2025. Therefore, it is expected that the operating profit and ordinary profit for the fiscal year ending June 2025 will temporarily remain flat as part of the efforts towards sustained growth.

By service, regarding the revenue of personnel introduction (= average annual income × average commission rate × number of hires), anticipating a cooling-off period in the demand for recruitment by major consulting firms, the average annual income is expected to be at a similar level to the previous year, and the average commission rate is predicted to trend below the actual performance of consulting firms from the previous year. On the other hand, strengthening services for business companies leads to an estimated 13.6% increase in the number of hires compared to the previous year, with the revenue of personnel introduction expected to be 32.59 billion yen (an increase of 3.1% from the previous year). For the revenue of FreeConsultBiz (monthly average contract price per person × total number of monthly working consultants), it is expected that the average contract price per person will be maintained at a similar level to the previous year, while assuming a 31.7% increase compared to the previous year in the number of working consultants, maintaining the growth trajectory from the preparatory period of the previous year. As a result, it is anticipated that the total revenue for SkillShare will be 19.41 billion yen (an increase of 29.1% from the previous year).

While emphasizing amount-driven growth, the improvement of proportions is also being pursued.

4. Medium-term Growth Image

Considering the strengths of the company and the medium-term management plan, it is expected that the introduction of personnel for consulting firms will exceed the market growth rate of 10% + α. The introduction of personnel for business companies is expected to achieve significant growth due to the effects of integrating Cambridge Research Institute, as well as significant growth through the utilization of consulting firm personnel and cross-selling with SkillShare. In terms of SkillShare, high growth can be expected by enhancing responses to large-scale projects by consultants employed by the company and freelancers, and by expanding into business companies. Therefore, we believe that the sales growth envisioned by the company in the medium-term can be achieved. Additionally, depending on the projects, accelerating sales growth is also considered possible by adding M&A or alliances.

In terms of profitability, while the business company-oriented talent introduction and skill sharing are expected to see significant growth and have good profitability, the profitability of talent introduction for consulting firms is not as high, so the gross profit margin is expected to continue to decline. In addition, in the first year of the medium-term management plan, there will be upfront investments in personnel and other areas, so in this medium-term management plan, the operating profit growth rate from June 2024 is expected to be 12.9% (3-year weighted average), which is below the revenue growth rate of 17.1% (3-year weighted average), making it a reasonable plan. However, starting from June 2025, as the decrease in the gross profit margin slows down and upfront investments complete a cycle, it is expected that the operating profit growth rate will exceed 30.9% (2-year weighted average) and the revenue growth rate will exceed 20.1% (2-year weighted average). Therefore, it seems that the focus is on emphasizing the amount in growth, but at the same time, it is evident that numerical targets are also being considered with an eye on improving the rate.

(Author: FISCO guest analyst Nobumitsu Miyata)