Medley (4480) Q2 FY2026 Earnings Deep Dive: Strong Profit Growth, Upward Earnings Revision, and a New AI-Native Strategy and Shareholder Return Policy

Medley, Inc.'s Q2 FY2026 earnings results demonstrated robust growth in both revenue and profit across all stages, driven by the strong performance of its core businesses: the "Human Resources Platform (HR PF)" and the "Medical Platform (Medical PF)." Revenue reached ¥12.493 billion (+21% YoY) , operating profit hit ¥2.513 billion (+59% YoY) , and net income attributable to owners of the parent surged to ¥1.560 billion (+116% YoY) .

This report provides a detailed analysis of the company's current position and its mid-to-long-term growth trajectory, focusing on 10 key topics from the latest earnings disclosure, including performance highlights, segment KPI trends, the AI-native strategy, progress against full-year forecasts, and the shift in shareholder return policy.

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1. Q2 FY2026 Consolidated Earnings Summary: Strong Growth in Revenue and Profit

The consolidated results for the first half of FY2026 significantly outperformed the same period last year across all key metrics, including revenue, gross profit, EBITDA, and various profit stages.

As shown in the summary above, revenue expanded from ¥10.325 billion in the same period last year to ¥12.493 billion (+21% YoY) . Gross profit also grew steadily to ¥8.214 billion (+23% YoY) . Notably, the company achieved significant margin improvements: EBITDA reached ¥3.235 billion (+43% YoY) , operating profit ¥2.513 billion (+59% YoY) , ordinary profit ¥2.741 billion (+74% YoY) , and net income ¥1.560 billion (+116% YoY) , illustrating a structure where profit growth rates accelerate further down the income statement.

This substantial profit growth was driven by revenue gains in the core HR PF business, alongside improved efficiency in advertising expenditures and optimized operations. The company-wide EBITDA margin reached 26% , an improvement of +4pt from the same period last year.

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2. Human Resources Platform (HR PF) Business: Maintaining High Growth and a 50% EBITDA Margin

The HR PF business operates recruitment systems such as "Job Medley" and "Guppy," as well as the online training system "Job Medley Academy." In Q2, revenue growth accelerated to +22% YoY (¥9.650 billion) , up from the +14% growth rate recorded in the same period last year.

A key strength of this segment is its exceptional profitability. The HR PF EBITDA margin reached 50% this quarter, successfully balancing high growth with high margins. Despite a seasonal tendency for revenue to be weighted toward the second quarter, the EBITDA margin improved by +2pt from 48% in the same period last year, underscoring its position as a dominant profit engine.

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3. HR PF Key KPIs: 466,000 Client Establishments and a 23% Increase in Scout Messages

The growth of the HR PF business is supported by the continuous expansion of client establishments and registered job seekers (practitioners).

• Client Establishments : Increased by 35,000 (+8% YoY) to 466,000 establishments . The penetration rate among all medical, nursing, childcare, and beauty establishments nationwide (approx. 1.155 million) has risen to approximately 40% .
• Registered Members : The number of Job Medley members increased by 20% YoY to 3.33 million (in addition to 600,000 members from the acquired Guppy group).
• Scout Messages : The use of "direct recruiting," where employers approach job seekers directly, continues to grow, with the number of scout messages reaching 4.61 million (+23% YoY) .

As the maldistribution of human resources in the medical and healthcare sector intensifies, demand for the company's platform—which features a success-fee model and direct recruiting capabilities—remains robust.

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4. Medical Platform (Medical PF) Business: Transitioning to a New Revenue Model and Solid Adoption Base

The Medical PF business provides cloud-based electronic medical record (EMR) and receipt software such as "CLINICS," "MALL," "MEDIXS," and "DENTIS," as well as the patient app "melmo." Q2 revenue grew 19% YoY to ¥2.596 billion , and the number of medical institutions using the services increased by 5% YoY to 23,000 (approx. 9% coverage).

The Medical PF EBITDA margin was 0% this quarter (compared to 2% in the same period last year). This is attributed to order adjustments, upfront investments in AI-native product development, and increased advertising spend, with a return to profitability expected from the second half onward. The company is intentionally shifting from a simple SaaS monthly subscription model to a "subscription + transaction" model that combines AI-related feature fees and payment processing commissions. This revenue index grew by 20% YoY .

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5. Expanding AI Features to Revolutionize Medical Practice: Reducing Charting and Documentation Time by Approx. 80%

The most significant growth driver in the Medical PF business is its AI-powered operational efficiency solutions.

The slide above illustrates the workload reduction effect of the AI features integrated into the cloud-based medical support system "CLINICS." Following the launch of "AI Summary Assist" (which automatically summarizes conversations during consultations) in November 2025, the company began offering "AI Document Assist" in August 2026, which automatically generates drafts of medical documents such as referral letters by referencing patient information and test results.

With the introduction of these AI features, tasks that previously took approximately 120 minutes per day (approx. 90 minutes for charting + 30 minutes for medical documentation) in a non-AI environment are reduced to approximately 24 minutes (approx. 20 minutes for charting + 4 minutes for medical documentation). This groundbreaking data shows an approx. 80% reduction in burden (creating about 96 minutes of extra time per day) . Significantly reducing the workload for doctors and medical staff provides a strong incentive for medical institutions to adopt the product and directly contributes to increasing ARPU (Average Revenue Per User).

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6. Full-Scale Hospital DX: AI-Native Development of "MALL Cloud"

In response to the government's "Medical DX Reiwa Vision 2030" and the trend toward standardization and cloud-based EMRs, the company is accelerating the development of "MALL Cloud," an AI-native version of its EMR system for hospitals and clinics with beds, "MALL."

Since Q2 FY2026, development resources have been prioritized for this product, and sales of the traditional on-premise version are being phased out. The company plans to begin recruiting pilot users in Q3 and expects full-scale sales to commence in FY2027 . The strategy aims to capture market share in the hospital DX sector, bolstered by government policy support (such as subsidies for cloud-native EMRs).

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7. Progress Against FY2026 Full-Year Earnings Forecasts: High Probability of Upward Revision in Profit Items

The performance and progress rates for the first half (H1) against the full-year forecasts are as follows:

• Revenue : H1 result ¥22.683 billion (49% progress) against the full-year forecast of ¥46.40 billion.
• Gross Profit : H1 result ¥13.819 billion (48% progress) against the full-year forecast of ¥29.00 billion.
• EBITDA : H1 result ¥3.866 billion (67% progress) against the full-year forecast of ¥5.80 billion.
• Operating Profit : H1 result ¥2.446 billion (83% progress) against the full-year forecast of ¥2.95 billion.
• Ordinary Profit : H1 result ¥2.802 billion (86% progress) against the full-year forecast of ¥3.25 billion.
• Net Income : H1 result ¥1.497 billion (83% progress) against the full-year forecast of ¥1.80 billion.

While revenue progress is at 49%, in line with the plan (50% in the same period last year), profit items are progressing at a pace significantly ahead of initial forecasts, with EBITDA at 67% , operating profit at 83% , and net income at 83% . With quarterly revenue growth expected to accelerate in the second half (approx. +25-30% in Q3, approx. +30% in Q4), there is a high probability of an upward revision to full-year profit forecasts.

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8. On Track Toward New Mid-Term Goal (¥100 Billion Revenue in FY29)

In February 2024, the company announced a new mid-term goal of "¥100 billion in revenue and ¥200 billion in EBITDA by FY2029." Achieving this requires a Compound Annual Growth Rate (CAGR) of +30% from FY23 to FY29 .

The full-year revenue forecast for FY2026 (¥46.4 billion, +26% YoY) shows steady progress in line with this mid-term roadmap. Through agile business expansion, including M&A, and improvements in ARPU for existing products, the company is maintaining the growth trajectory required to achieve its goals early.

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9. Fundamental Update to Capital Allocation and Shareholder Return Policy: Shift to Dividend-Focused Returns

One of the major highlights of this earnings announcement is the significant revision to the capital allocation and shareholder return policy.

As shown in the slide above, the company has previously invested aggressively in business growth during its profit growth and free cash flow (FCF) expansion phase. Having confirmed that its ability to generate FCF and profit has stabilized, the company has updated its return policy.

Specifically, the policy has shifted from a focus on "agile share buybacks" to a "performance-linked return method centered on dividends."

• Inaugural Dividend : The company plans to initiate dividends starting at the end of this fiscal year (FY2026). It has set a policy of an initial dividend of ¥18 per share , with a target dividend payout ratio of 30% .
• Cancellation of Treasury Shares : A policy has been established to cancel treasury shares exceeding 5% of the total number of issued shares.

While prioritizing growth opportunities through business investment and M&A, the company has clearly signaled its commitment to appropriately returning generated cash to shareholders.

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10. Summary and Outlook

Through its Q2 FY2026 earnings, Medley has demonstrated that its two growth engines— "continued high growth and high profitability in the core HR PF" and "establishment of a new AI-driven revenue model in the Medical PF" —are functioning powerfully.

In particular, the quantitative results of an 80% reduction in medical staff workload through AI features and the deployment of "MALL Cloud" in the hospital DX sector are factors that further solidify the company's mid-to-long-term competitive advantage. Furthermore, by announcing its first dividend policy with a target payout ratio of 30% amidst expectations of upward revisions to full-year profit forecasts, the company has signaled its full-scale transition into a "cash generation and profit expansion phase." Continued enhancement of corporate value is expected through the expansion of synergies between both businesses and the social implementation of AI technology.