Link and Motivation Inc. Q2 FY2026 Earnings Deep Dive Report

Link and Motivation Inc. (Securities Code: 2170), a leader in organizational and human resources consulting and the Motivation Cloud business, reported significant year-on-year growth in both revenue and gross profit for the second quarter of the fiscal year ending December 2026. This performance was driven by the steady expansion of its core consulting, cloud, and recruitment businesses, alongside contributions from group companies acquired in previous periods. Furthermore, the strong launch of new products has led to an upward revision of the monthly subscription revenue target for its flagship "Motivation Cloud" service, further accelerating the momentum toward mid-to-long-term growth.

This report extracts 10 key topics from the earnings disclosure, providing a comprehensive analysis of the company's performance summary, segment trends, organizational strength (human capital management), the "2030 Plan" mid-to-long-term growth strategy, and shareholder return policies.

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1. Performance Highlights and Income Statement Analysis

In the first half of the fiscal year ending December 2026, consolidated revenue and gross profit grew significantly. Operating profit also exceeded the same period last year, successfully absorbing the increase in SG&A expenses resulting from upfront investments and new consolidations.

As shown in the consolidated income statement above, revenue reached 22,269 million yen (+11.7% YoY) and gross profit hit 12,596 million yen (+14.6% YoY) , achieving double-digit growth. In terms of profitability, operating profit was 3,234 million yen (+2.2% YoY) , representing a 51.3% progress rate against the full-year forecast, indicating a very steady trajectory.

The reason the growth rate of operating profit is more limited than that of gross profit is the proactive allocation of SG&A expenses, including personnel costs, system/office-related expenses, and sales-related costs, aimed at accelerating future growth. Specifically, the inclusion of expenses from three newly consolidated group companies, including Unipos Inc. (total SG&A expenses were 9,347 million yen, +19.9% YoY), is the primary factor. This is viewed as a structural and planned investment to expand the top line.

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2. Detailed Segment Trends

The company's business is composed of three divisions: "Organizational Development," "Individual Development," and "Matching." The results and challenges for each segment are as follows:

① Organizational Development Division (Driving Core Business)

• Revenue : 8,772 million yen (+14.6% YoY)
• Gross Profit : 6,095 million yen (+14.4% YoY) In the core "Consulting & Cloud Business," recurring revenue from "Motivation Cloud" remained solid (revenue of 7,008 million yen, +9.2% YoY). Additionally, in the "IR Support Business," the contribution of high-margin video distribution services from two companies acquired since Q2 2025 led to a dramatic increase, with gross profit for the IR Support Business rising by 48.6% YoY (967 million yen) .

② Matching Division (High-Growth Driver)

• Revenue : 10,909 million yen (+13.4% YoY)
• Gross Profit : 5,389 million yen (+17.8% YoY) The "ALT Placement Business," which connects foreign nationals with local governments, expanded steadily (revenue of 7,693 million yen, +9.0% YoY). Furthermore, the "Recruitment Business" saw a significant jump. Notably, revenue from "OpenWork Recruiting" reached 2,164 million yen (+39.3% YoY) , strongly driving the group's overall earnings.

③ Individual Development Division (Undergoing Structural Reform)

• Revenue : 2,892 million yen (-6.3% YoY)
• Gross Profit : 1,299 million yen (-11.7% YoY) While the "Cram School Business" achieved revenue and profit growth due to an increase in student numbers and average customer spend (revenue of 473 million yen, +17.7% YoY), the "Career School Business" was impacted by a decline in student numbers at existing locations, leading to a decrease in revenue and profit for the segment as a whole.

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3. Unique "Human Capital Management" and Group Organizational Strength

The company places the embodiment of its own "Human Capital Management" philosophy at the core of its management. It treats business strategy and organizational strategy as equals, aiming to maximize "productivity" as a return on human capital.

Specifically, it utilizes the "Engagement Rating," calculated based on one of Japan's largest databases, as a key performance indicator (KPI). According to 2026 projections, almost all major group entities maintain the highest "AAA" or "AA" ranks, and engagement improvements are steadily progressing at companies acquired in 2025, such as Unipos (AA) and E-Associates (improving to A). High organizational engagement serves as the foundation for a mid-to-long-term high-profit structure.

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4. Mid-to-Long-Term Growth Strategy "2030 Plan" and ARR Growth Policy

The company has established the "2030 Plan" as a guideline for enhancing corporate value over the mid-to-long term.

This slide is a crucial roadmap visualizing the company's target growth trajectory and the supporting ARR (Annual Recurring Revenue) growth policy . Starting from the 2025 targets of 4.2 billion yen in operating profit and 7.5 billion yen in ARR, the company has set highly ambitious goals for 2030: 15 billion yen in operating profit (approx. 3.5x) and 24 billion yen in ARR (approx. 3x) .

The following strategies are presented as growth engines to achieve these targets:

1. Expansion of Existing Services (Horizontal and Vertical Expansion) : Expanding "Motivation Cloud Engagement" beyond traditional large enterprise clients to mid-sized companies and local governments . New contract numbers are accelerating in diverse core industries such as manufacturing (Panasonic, Brother Industries, etc.), construction (Takenaka Corporation, Obayashi Corporation, etc.), and energy/transportation (JR Kyushu, JR West, etc.), with support for local governments expanding to 26 organizations, including 9 government offices .
2. Expansion of New Services (Transformation of Product Lineup) : Diversifying services from the "diagnostic" domain, which addresses disclosure needs, to the "transformation" domain , which directly solves organizational issues. The recruitment support service "Motivation Cloud Entry Management," released in April 2026, saw an extremely smooth start, surpassing 200 million yen in ARR (205 million yen) in just three months . In August 2026, the company launched a new product, "Motivation Cloud Management," where AI autonomously supports management tasks, further deepening the product portfolio.
3. Promotion of Global Expansion : Strengthening sales activities centered on five Asian countries (Singapore, Vietnam, Thailand, Indonesia, and the Philippines), with overseas monthly subscription revenue growing rapidly by approximately 260% YoY . Overseas organizational diagnostic data has surpassed 200,000, advancing the foundation as a "Global Human Capital Management Platform."

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5. Upward Revision of Motivation Cloud Subscription Revenue and Shareholder Returns

Following the successful launch of new products and steady growth in existing services, the company announced an upward revision of the Motivation Cloud monthly subscription revenue target .

As shown in the slide above, the monthly subscription revenue target for "Motivation Cloud" at the end of Q4 2026 has been increased from the previous 700 million yen to 730 million yen (+16.4% YoY) . As is clear from the trend since the end of Q4 2020 (approx. 200 million yen), a beautiful upward-sloping recurring revenue base has been formed, demonstrating the company's ability to balance earnings stability with growth.

Furthermore, the company is showing a proactive stance toward improving capital efficiency and strengthening shareholder returns:

• Dividend Policy : The company has introduced a quarterly dividend system. The Q2 dividend for the fiscal year ending December 2026 is 4.1 yen per share (annual dividend forecast of 16.4 yen), maintaining a trend of continuous dividend increases to record highs .
• Share Buybacks : As of July 31, 2026, the company has achieved 47.01% progress in terms of the number of shares and 54.11% in terms of total acquisition cost, executing flexible capital policies.
• Expansion of Shareholder Benefits : The base amount has been increased by 10% , and the system has been modified to offer benefits worth up to 440,000 yen per year depending on the number of shares held and the holding period.
• M&A and Capital Alliances : The company has concluded a basic agreement to make SELF Inc. a wholly owned subsidiary through a share exchange. By integrating SELF's AI technology, "SELFBOT," into Motivation Cloud, the company aims to dramatically improve product value and productivity.

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Conclusion

Link and Motivation's Q2 FY2026 earnings report demonstrates that the company is not merely achieving short-term performance improvements but is taking steady steps toward its "2030 Plan" (15 billion yen in operating profit, 24 billion yen in ARR) .

Double-digit growth in revenue and gross profit, the rapid ARR ramp-up of the new "Entry Management" product, and the resulting upward revision of the "Motivation Cloud" monthly subscription plan are evidence that the company's recurring business model is functioning robustly. By appropriately controlling the increase in SG&A expenses due to upfront investments, while incorporating AI technology (considering the acquisition of SELF and the release of AI management functions) and advancing global expansion, the company's moves to strengthen its position as a leading company in human capital management are noteworthy.