Institution for a Global Society (4265) Q3 2024 earnings summary

Executive summary

• 3Q cumulative standalone revenue was ¥434.7m; existing businesses were broadly on plan, while ONGAESHI system-sale revenue in Q4 is central to the full-year profit outlook.

• HR remained on track; education faced risk of a modest full-year shortfall, with HR and platform growth intended to offset it.

Financial highlights

• 3Q cumulative standalone revenue was ¥434.739m, down 2.4% YoY; gross profit was ¥205.368m, down 33.3%.

• Operating loss was ¥238.972m versus ¥103.219m; net loss was ¥238.163m versus ¥146.616m in the prior-year period.

• Cost of sales rose 66.7% to ¥229.371m; SG&A increased 8.1% to ¥444.340m YoY.

• R&D expense rose 60.9% to ¥140.082m, including investment for ONGAESHI; personnel costs across cost of sales and SG&A totaled ¥294m, the highest in three years.

Outlook and guidance

• FY standalone plan: revenue ¥913m and net income ¥14m; plan assumes a subsidiary leaves consolidation during the year.

• Q4 system sale for the new business is planned to support full-year profitability; sale structure and results may vary with subsidiary funding conditions.

• Revenue is seasonally weighted toward Q4; HR expects to meet its plan, while education may finish slightly below plan.

• HR and platform upside is expected to compensate for education risk and support the full-year target.