SHIFT (3697) investor relations material

Executive summary

• Achieved record-high net sales in Q2, with FY2026 Q2 reaching JPY 37.2bn (up 18% YoY) and H1 net sales at JPY 72.0bn (up 16.8% YoY), driven by digital transformation and AI-related services.

• Gross profit reached JPY 12.8bn in Q2 (up 14.3% YoY), though gross margin declined to 34.4% due to front-loaded AI investments.

• Operating profit declined 14.3% YoY to JPY 6,907 million in H1, reflecting strategic AI spending and increased hiring expenses.

• Significant AI investment of JPY 2.5bn in H1, with anticipated returns in H2 and a strategic shift to AI-integrated business models.

• Accelerating transition to a generative AI-native business model, with several AI-driven services launched.

Financial highlights

• Net sales grew 122% YoY on a non-consolidated basis; gross margin recovered to 34.4%, up 1.9 points from Q1.

• SG&A expenses increased to 23.4% in Q2, mainly from AI investment and hiring, but are expected to decrease as investments settle.

• Adjusted operating profit was JPY 7,951 million in H1; EBITDA for the period was JPY 8,590 million, down 11.0% YoY.

• Full-year revenue forecast raised to JPY 160 billion, with an operating profit target of JPY 20 billion.

• Basic earnings per share was JPY 15.32, and adjusted basic earnings per share was JPY 19.30.

Outlook and guidance

• H2 targets include net sales of JPY 80bn+, gross margin above 35%, and operating profit of JPY 11.5–12.5bn.

• Full-year net sales forecast is JPY 150bn, with a stretch target of JPY 160bn and operating profit of JPY 20bn.

• Profitability is expected to recover in H2 as AI investments begin to generate revenue.

• Ambition to reach JPY 190 billion in sales next year and JPY 300 billion by FY2030.

• No change to previously announced earnings forecast.