SHIFT (3697) Q3 2025 earnings summary

Executive summary

• Q3 and the nine months ended May 31, 2025, saw net sales rise 17.6% YoY to ¥95.4B, with operating profit up 68.7% to ¥11.9B and profit attributable to owners up 89.5% to ¥6.3B, driven by improved utilization, digital transformation demand, and operational enhancements.

• Gross profit margin improved to 35.1% in Q3, up 3.4 points YoY, and operating profit margin rose to 11.4%, up 3.2 points YoY.

• Operating profit exceeded plan, prompting an upward revision of the full-year operating profit forecast from ¥13.5B to ¥15B.

• Strategic focus remains on customer retention, expanding multi-service offerings, and leveraging AI and BPaaS for future growth.

• All profit categories exceeded prior year levels, supported by profitability improvement measures and rising KPIs such as sales per customer and number of engineers.

Financial highlights

• Q3 gross profit was ¥11.8B, up 29.4% YoY; cumulative gross profit reached ¥33.0B, up 28.5% YoY.

• EBITDA for the nine months ended May 31, 2025, was ¥14.3B, up 57.5% YoY.

• Net income attributable to owners for Q3 was ¥1.8B, up 437.4% YoY; cumulative net income was ¥6.3B, up 89.5% YoY.

• Net sales forecast maintained at ¥130B; gross profit margin and operating profit forecasts revised upward, but net profit forecast unchanged due to external risks.

• Basic earnings per share for the period was ¥23.86, reflecting a 15-for-1 stock split effective January 24, 2025.

Outlook and guidance

• Full-year forecast for fiscal year ending August 31, 2025: net sales ¥130B (+17.5% YoY), operating profit ¥15B (+42.4%), ordinary profit ¥14.5B (+34.8%), profit attributable to owners ¥7.9B (+54.1%), and EPS ¥30.02 (post-split).

• Progress rates as of May 31, 2025: net sales 73.4%, operating profit 79.4%, ordinary profit 80.2%, profit attributable to owners 79.5%.

• Gross profit margin expected to decline in Q4 due to onboarding of new graduates, but overall figures remain solid.

• Full-year net profit forecast unchanged due to conservative stance on non-operating expenses and asset valuations.

• Long-term strategy (SHIFT 3000) targets ¥300B in net sales through M&A, BPaaS, and AI expansion.