rakumo (4060) H1 FY2026 Earnings Analysis: Detailed Review of Revenue Growth, KPI Progress, and the Impact of Price Revisions and M&A

rakumo Inc. (Securities Code: 4060) has announced its financial results for the first half of the fiscal year ending December 2026. The company has demonstrated steady growth in both revenue and profit, driven by the expansion of its flagship "rakumo" series, the positive impact of price revisions, and the expansion of its consolidated scope through M&A.

This report organizes the key takeaways from the earnings presentation into 10 points, providing a multi-faceted analysis of performance highlights, cost structures, competitive advantages, and future growth strategies.

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10 Key Topics Extracted

1. Significant Revenue and Profit Growth : Recorded revenue of 1,096 million JPY (+36.5% YoY) and operating profit of 261 million JPY (+16.3% YoY).
2. Strong Growth in ARR and ARPU : ARR (Annual Recurring Revenue) reached 2.01 billion JPY (+26.2% YoY), and ARPU (Average Revenue Per User) expanded to 778,000 JPY (+22.1% YoY).
3. Successful Progress of Price Revisions : Price adjustments for "rakumo for Google Workspace" initiated in January 2026 contributed an additional 15 million JPY to MRR (Monthly Recurring Revenue) in the first half.
4. Maintenance of Ultra-Low Churn Rate : The net churn rate remained at a low level of 0.71%, well below 1%, proving a solid customer base.
5. "Collaborative" Platform Strategy : Leveraging the 90% market share of Google Workspace and Microsoft 365, the company has established a position providing optimized add-on features for these platforms.
6. Non-linear Growth and Business Expansion via M&A : Revenue from "Other Services" increased significantly to 297 million JPY (+165.6% YoY), driven by the contribution of subsidiaries like DEGINA acquired in the previous fiscal year.
7. Factors Behind Rising COGS and SG&A : The SG&A ratio rose to 45.8% due to base salary increases, headcount expansion, and the amortization of goodwill (66 million JPY) associated with M&A.
8. Disclosure of Adjusted EBITDA and Adjusted EPS : To evaluate actual value creation by adjusting for non-cash expenses such as goodwill amortization, the company disclosed Adjusted EBITDA of 370 million JPY (+33.7% YoY) and Adjusted EPS of 43.90 JPY (+31.3% YoY).
9. Expansion in Government/Public Sector and Generative AI Adoption : The number of sales leads in the public sector reached 80% of the previous full-year total. Additionally, developer productivity improved by 38% YoY through the use of generative AI.
10. Progress Against Full-Year Targets : Progress stands at 47.1% for revenue, 48.6% for Adjusted EBITDA, and 47.4% for operating profit, tracking steadily in line with the characteristics of a subscription model that accumulates revenue throughout the second half.

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1. Performance Highlights and KPI Trends

In the first half of the fiscal year ending December 2026, rakumo achieved high revenue growth through a combination of increased unit prices for its flagship products and the effects of M&A.

As shown in the slide above (H1 Key KPIs and Financial Indicators), all core metrics for the SaaS business show high growth rates. ARR reached 2.01 billion JPY (+26.2% YoY), surpassing the 2 billion JPY milestone. This growth is driven by the increase in ARPU (778,000 JPY, +22.1% YoY).

The number of paid licenses has steadily accumulated to 1.26 million IDs (+4.1% YoY), with license revenue showing significant expansion to 1.08 billion JPY (+37.7% YoY). Furthermore, Adjusted EBITDA , which indicates cash-generating ability, reached 370 million JPY (+33.7% YoY), and operating profit reached 260 million JPY (+16.3% YoY), achieving profit growth while absorbing costs associated with growth investments and M&A.

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2. Detailed P/L Analysis and Full-Year Progress

An analysis of the earnings summary and various profit indicators is as follows:

Revenue was 1,096 million JPY (+36.5% YoY), representing a 47.1% progress rate against the full-year forecast of 2,330 million JPY. Given that the company’s services operate on a stock-based subscription model where revenue accumulates monthly from the beginning to the end of the fiscal year, a 47% progress rate at the half-year mark indicates that performance is tracking exactly as planned.

Breakdown of Revenue and Expenses

• rakumo Service Revenue : 799 million JPY (+15.7% YoY). The primary driver is the effect of price revisions accompanying functional enhancements for existing customers.
• Other Service Revenue : 297 million JPY (+165.6% YoY). This reflects the consolidation of DEGINA and other subsidiaries acquired in the previous fiscal year.
• Cost of Sales : 332 million JPY (+37.8% YoY). While impacted by increased server costs for Google (+38 million JPY) and higher labor costs, the cost-to-sales ratio remained largely flat at 30.3% (+0.2pt).
• SG&A Expenses : 502 million JPY (+49.2% YoY). The main drivers are increased personnel costs due to the rise in consolidated subsidiaries (+79 million JPY) and goodwill amortization (+66 million JPY).

Ordinary profit was 253 million JPY (+13.1% YoY), and net profit was 143 million JPY (-1.9% YoY). The suppressed growth in net profit is due to a temporary increase in the effective consolidated tax rate, as goodwill amortization expenses arising from M&A are not tax-deductible.

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3. Operating Profit and Adjusted EBITDA Generation

As the company pursues business expansion through aggressive M&A, it places significant importance on "Adjusted EBITDA," which indicates actual management efficiency by excluding goodwill amortization and other items , in addition to accounting "operating profit."

As seen in the slide above, Adjusted EBITDA has grown significantly to 373 million JPY (+33.7% YoY), maintaining an extremely high Adjusted EBITDA margin of 34.1% .

Compared to operating profit (261 million JPY, 23.8% margin) , which includes goodwill amortization and one-time M&A-related costs, the company's inherent cash-generating power is highlighted. Because the structure involves accounting goodwill amortization costs front-loading and depressing profit, it is essential to monitor Adjusted EBITDA trends to grasp the actual earning power.

Accordingly, in addition to accounting EPS, the company discloses Adjusted EPS (43.90 JPY, +31.3% YoY) , which adds back goodwill amortization, establishing an environment where actual profitability can be evaluated on a standard comparable to IFRS-compliant companies.

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4. Unique Product Strategy and Competitive Advantage

rakumo's competitive advantage lies in its "collaborative" approach with "Google Workspace" and "Microsoft 365," which command over 90% of the groupware market.

While overseas platforms are attractive for their simple, globally standardized designs, they often fail to accommodate the complex "organizational hierarchies," "approval workflows," and "position-based schedule displays" unique to Japanese companies. Rather than building a platform from scratch, the company provides its services as add-on features (extension tools) on top of these massive platforms.

This allows customers to utilize their familiar infrastructure while meeting Japan-specific business needs. This strategic positioning generates extremely high customer loyalty, evidenced by a 0.71% churn rate , and stable recurring revenue.

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5. Key Topics and Future Growth Trends

Important business topics in the first half include:

• Progress of Price Revisions : The price revisions for flagship services initiated in January 2026 were implemented smoothly without causing customer churn, generating an MRR uplift of +15 million JPY in the first half alone.
• Development of Government/Public Sector Market : Features matching the unique organizational structures of local governments have been well-received, leading to the acquisition of multiple large-scale contracts. Sales leads have reached 80% of the previous full-year total, accelerating adoption in the public sector.
• Development Efficiency via Generative AI : Full-scale adoption of generative AI in internal development processes has improved product developer productivity by 38% YoY , promising faster implementation of new features.
• Collaboration with Other SaaS : The company is strengthening its peripheral ecosystem, such as initiating system integration between "rakumo Workflow" and "OLGA," a legal automation SaaS provided by GVA TECH.

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Summary

In the first half of the fiscal year ending December 2026, it is evident that rakumo's dual-growth strategy— increasing unit prices of existing products (price revisions/cross-selling) and expanding business domains through M&A —is functioning effectively. While net profit growth is temporarily moderate due to the impact of goodwill amortization, key indicators such as Adjusted EBITDA and ARR demonstrate high growth potential and a robust profit structure.