Nyle (5618) Q2 FY2026 Earnings Deep Dive: Sustained Revenue Growth and Narrowing Losses, Supported by New M&A and AI Expansion

Nyle Inc. (Securities Code: 5618) reported its Q2 FY2026 financial results, demonstrating steady revenue growth and improved operating profitability , tracking precisely toward its full-year target of returning to profitability. The company’s performance is being driven by top-line expansion and improved margins in its core Automotive DX business, alongside high customer retention and stable profit contributions from its Horizontal DX business.

This report extracts 10 key topics from the disclosed financial materials, providing a comprehensive, multi-faceted analysis of performance highlights, segment details, M&A strategy, and mid-to-long-term growth scenarios.

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1. Consolidated Performance Highlights: Record-High Revenue and Steady Progress Toward Full-Year Profitability

For the first half of FY2026, Nyle achieved record-high revenue of 3,738 million JPY, up 17.3% year-on-year . Progress toward the full-year revenue forecast (7,500–7,900 million JPY) stands at 49.9%–47.3% , indicating that the company is performing well within its planned trajectory.

Regarding profitability, the operating loss was 87 million JPY , an improvement of 8 million JPY from the 96 million JPY loss in the same period last year. Ordinary loss also improved to 106 million JPY (+7 million JPY YoY), and net loss improved to 99 million JPY (+12 million JPY YoY), confirming that the accumulation of a solid revenue base is effectively translating into improved bottom-line results.

[Slide Commentary: Corporate Performance and Progress Against Full-Year Forecast]

The slide (Page 7) above is the fundamental comparison table showing Nyle’s H1 FY2026 results against its full-year forecast. This slide is critical because it provides numerical proof that the company’s " top-line growth and cost optimization strategy for full-year profitability " is proceeding as planned. While gross profit increased by 7.9% YoY to 1,270 million JPY, the growth rate of SG&A expenses was contained at 6.7%, demonstrating steady steps toward operating profitability.

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2. Quarterly Trends and Expense Structure Analysis: Maintaining Cost Discipline and Improving SG&A Ratios

Looking at quarterly trends, revenue has hit a record high for five consecutive quarters , reaching 1,878 million JPY in Q2 alone (+12.1% YoY). Operating profit also improved by 17 million JPY compared to the same quarter last year (Q2 loss of 57 million JPY), indicating that a structure where revenue growth leads to profit improvement is taking root.

According to the operating profit variance analysis, while the company executed growth investments such as increased project costs (-437 million JPY) and personnel expenses (-69 million JPY) to support revenue growth (+552 million JPY), disciplined cost control—specifically the optimization of advertising expenses (+31 million JPY improvement) —contributed to the bottom-line recovery.

As a result, the SG&A-to-revenue ratio improved from 38.8% in the same period last year to 36.2% . The company is successfully building a structure where " operating leverage " can easily take effect by expanding revenue while appropriately controlling fixed costs like personnel and administrative expenses.

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3. Automotive DX Business: 20.0% Top-Line Growth and Expansion of Recurring Revenue

The Automotive DX business, which includes services such as car subscription (leasing) for individuals, is the company’s core growth segment. Despite external headwinds such as a slowdown in used car export demand due to Middle Eastern geopolitical tensions, the segment recorded strong growth with revenue of 2,494 million JPY, up 20.0% YoY . Segment loss also saw a significant improvement, narrowing by 73 million JPY to 116 million JPY .

This profitability improvement was driven by the optimization of advertising expenses (suppressed from 105 million JPY in Q1 to 93 million JPY in Q2 while still growing revenue) and the accumulation of monthly recurring revenue.

[Slide Commentary: Key KPIs Underpinning the Automotive DX Business]

The slide (Page 13) above summarizes the key performance indicators (KPIs) that demonstrate the future revenue base and customer engagement strength of the Automotive DX business. The most critical metrics to watch are consolidated here:

• Customer Churn Rate: 0.23% , maintaining an extremely low level. This indicates a structure where customer attrition is minimal and acquired customers generate revenue over a long period.
• Remaining Performance Obligations (RPO): Exceeded 6.6 billion JPY (FY2024: 6.2 billion JPY → FY2025: 6.5 billion JPY). This represents "contracted future revenue," providing a solid foundation for future performance.
• Total Applications: 370,000 , showing steady growth. The expansion of customer touchpoints continues in line with increased brand awareness.

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4. Horizontal DX Business: A Stable Foundation Supporting the Company with High Margins and Retention

The Horizontal DX business (consulting and digital marketing support) boasts high profit margins and serves as the company’s stable earnings foundation.

• Revenue : 1,244 million JPY (+12.4% YoY)
• Segment Profit : 193 million JPY (Segment profit margin of approx. 15.5%)

On a quarterly basis, revenue grew steadily to 605 million JPY (+14.9% YoY). The key KPI, customer retention rate, remains at a very high level of 94.96% (up from 93.79% in the same period last year), and the number of contracted clients increased to 221 (a significant increase from 173). This is backed by high customer satisfaction through high-quality support and the building of long-term relationships.

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5. Accelerating AI Business Development: Launching New Services Utilizing Generative AI

Nyle is actively expanding the know-how cultivated in its Horizontal DX business into the AI domain. In Q2 FY2026, the company announced a series of key initiatives to expand its AI monetization channels:

1. Practical AI School "With AI Academy" (Launched July 2026)
   • A 30-day intensive program designed to help students automate and streamline business tasks using AI.
2. AI Content Creation Tool "Nyle Content Studio" (Launched August 2026)
   • A platform equipped with a rule engine based on Nyle’s track record of producing content for over 2,000 companies and its SEO expertise. It supports the creation of 11 types of content, including articles, white papers, and ad banners.

With these, monetization in the product and education sectors has begun in earnest, complementing the traditional consulting business.

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6. M&A Strategy: Acquisition of NEW PHASE and Building a "Talent Ecosystem"

On August 1, 2026, Nyle acquired an 80% stake in NEW PHASE Inc. , which operates the video editing school "STEP UP," for an estimated 44 million JPY, making it a consolidated subsidiary. Despite being in its second year of operation, NEW PHASE is a highly profitable company, recording 34.62 million JPY in revenue and 12.17 million JPY in operating profit.

This M&A is not merely about scale; it is crucial for building the " Talent Ecosystem " the company envisions.

[Slide Commentary: Talent Ecosystem Vision via NEW PHASE Acquisition]

The slide (Page 20) above illustrates the strategic synergies and the full scope of the ecosystem the Nyle Group aims to create through the acquisition of NEW PHASE. This slide is important because it shows the integration of Nyle’s corporate support know-how with school operations and freelance talent utilization, completing a consistent revenue cycle model from customer acquisition to training and project matching .

• ① Customer Acquisition : Fusing Nyle’s SEO/Web traffic expertise with NEW PHASE’s SNS marketing power.
• ② Skill Support : Providing practical skills through "With AI Academy" (AI/DX) and "STEP UP" (video editing).
• ③ Talent Utilization : Matching graduates to corporate projects through Nyle’s internal talent platform, " Nyle X Partners ."

By having trained talent participate in project teams for Nyle’s Horizontal DX business, the company expects synergistic effects that will contribute to the expansion of existing businesses and the reduction of cost-of-sales ratios.

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7. Future Growth Strategy: Roll-up M&A in Automotive Distribution DX and TAM Expansion

Clear policies have been set for mid-to-long-term growth in both business areas.

Future of the Automotive DX Business

• Expansion of Product Lineup : By offering diverse products to segments that do not pass credit checks or are seeking low-cost short-term leases, the company will avoid opportunity loss and dramatically improve customer acquisition efficiency.
• Roll-up M&A Strategy : The company aims to horizontally deploy its proven "Automotive Dealer DX Model" (AI modules for vehicle procurement, pricing, dynamic pricing, and marketing) to local used car dealers nationwide through roll-up M&A, aiming to establish an "Automotive Distribution DX Economic Zone."

Expansion of Total Addressable Market (TAM)

The target market size (TAM) is vast, at approximately 18 trillion JPY for the Automotive DX business and 4.2 trillion JPY for the Horizontal DX business . With a focus on problem-solving capabilities, technology, and marketing expertise, the company plans to continue exploring new industrial DX opportunities to expand its long-term growth potential.

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8. Conclusion

The Q2 FY2026 results demonstrate that Nyle is achieving steady revenue growth and narrowing losses by leveraging its two main pillars: the expanding recurring revenue base of the Automotive DX business (6.6 billion JPY in RPO) and the solid profit generation of the Horizontal DX business (193 million JPY in segment profit) .

Furthermore, the company has laid a solid foundation for its next growth phase through the launch of new AI products and the construction of a "Talent Ecosystem" via the acquisition of NEW PHASE. The structural reforms and growth investments required to achieve full-year operating profitability and subsequent leaps in performance are now firmly in place.