Executive Summary

CELM, Inc. (Securities Code: 7367) reported its financial results for the first quarter of the fiscal year ending March 31, 2027 (April 1, 2026 – June 30, 2026), achieving a record-high Q1 net sales of 2,332 million yen (+2.8% YoY) .

During this period, the company successfully absorbed planned upfront investments and business infrastructure enhancement costs—including salary table revisions, wage increases, and group-wide AI investments —through revenue growth driven by deepened client engagement in the peak season for its "First Career" segment. Consequently, EBITDA reached 383 million yen (+0.9% YoY) and operating profit stood at 262 million yen (+1.6% YoY) , demonstrating performance levels equal to or exceeding the same period last year.

Concurrent with these results, the company announced a fundamental overhaul of its capital allocation and shareholder return policies aimed at enhancing long-term corporate value. The ROE target has been raised from 25% to "30% or higher," and the shareholder return policy has shifted from a payout ratio-based approach to a "progressive dividend policy with the previous year's dividend as a floor." Additionally, the cancellation of 400,000 treasury shares was approved. These results reflect a balanced approach between investing in business foundations for sustainable future growth and the pursuit of capital efficiency.

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1. Q1 FY2027 Performance Highlights and Revenue Structure Analysis

The consolidated results and key performance indicators for the first quarter are as follows:

Metric (Millions of JPY)	Q1 FY26.3	Q1 FY27.3	YoY Change	Progress vs. Full-Year Plan
Net Sales	2,269	2,332	+2.8%	22.5% (Prev. Q1: 22.0%)
EBITDA	380	383	+0.9%	24.3% (Prev. Q1: 22.8%)
Operating Profit	258	262	+1.6%	23.8%
Ordinary Profit	248	247	-0.3%	23.5%

[Significance of the Slide and Numerical Data Analysis]

The slide above (P.5 "Q1 FY27.3 Performance Highlights") is critical as it clearly demonstrates that net sales reached a record high for a Q1 and confirms the resilience of the revenue structure , which absorbed the cost increases (infrastructure investment and wage hikes) forecasted in the previous quarter.

The company’s business is highly seasonal, with the "First Career" segment peaking in Q1 due to the concentration of new graduate recruitment and onboarding training. By leveraging deep relationships with existing clients during this peak period, the company successfully achieved revenue growth.

Furthermore, the SG&A ratio improved by 0.5 percentage points to 39.4% (from 39.9% in the same period last year). This indicates that despite costs related to personnel revisions and AI investments for productivity, the company is maintaining a lean management structure without unnecessary increases in variable personnel. As a result, the EBITDA margin remains high at 16.5% (16.8% in the same period last year).

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2. Segment Performance and Key KPI Progress

The company operates in two segments: "Organizational and Human Resource Development" and "Stakeholder Relations." Q1 performance trends are as follows:

① Organizational and Human Resource Development

• Segment Sales : 1,726 million yen (+4.4% YoY)

• Segment Profit : 337 million yen (+7.9% YoY)

• Executive & Middle Management : Sales of 1,096 million yen (+4.9% YoY) . Driven by the increasing complexity of management challenges in large corporations, the demand for long-term internal talent development remains robust, showing steady growth.

• First Career : Sales of 571 million yen (+3.3% YoY) . Despite the short-term headwind of reduced new graduate hiring by large corporations, the company secured growth by leveraging strong client relationships to expand its service scope.

• Aptitude Prediction : Sales of 58 million yen (+4.6% YoY) . Demand for data-driven development support, centered on the "Caliper Profile," continues to grow steadily.

② Stakeholder Relations (Multilingual Support)

• Segment Sales : 606 million yen (-1.5% YoY)
• Segment Profit : 45 million yen (-17.7% YoY)

While there was a slight decline in revenue and profit compared to the previous year due to the absence of a one-off large-scale project, this was fully anticipated in the initial plan , and existing business remains on track. The primary cause of the profit decline is the execution of company-wide business infrastructure investments, which is proceeding as planned.

Key KPI Progress

• Number of Client Groups with Annual Transactions over 100 Million Yen (Executive/Middle) : Progressing steadily. The company is refining its plan to reach the annual target of 17 groups, focusing on the peak Q3 (October–December) season.
• Number of Clients with Annual Sales over 10 Million Yen (First Career) : 12 clients as of Q1 (Full-year target: 33). This is viewed as a transition period to expand the domain from new graduate hiring to mid-career hiring and onboarding.
• EBITDA per Employee : Against a full-year target of 5.8–6.2 million yen (FY26.3 actual: 6.8 million yen), this has temporarily declined due to fundamental investments in human capital (salary revisions, etc.), but productivity gains are expected to materialize in the second half.

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3. Full-Year Outlook and Mid-to-Long-Term Growth Strategy (FY29.3 Target)

The company’s full-year forecast for FY2027 and the outlook from Q2 onwards reflect a strategic investment stance.

[Significance of the Slide and Numerical Data Analysis]

The slide above (P.10 "FY27.3 Full-Year Forecast and Q2 Performance Image") clearly illustrates that the company is prioritizing business infrastructure enhancement to achieve its mid-to-long-term operating profit target (2 billion yen) rather than pursuing short-term profit maximization.

• Full-Year Net Sales Forecast : 10,373 million yen (+0.6% YoY)
• Full-Year EBITDA Forecast : 1,581 million yen (-5.0% YoY)
• Full-Year Operating Profit Forecast : 1,100 million yen (-5.3% YoY)
• Full-Year Ordinary Profit Forecast : 1,050 million yen (+1.7% YoY)
• Full-Year Net Income Forecast : 600 million yen (+3.2% YoY)

From Q2 onwards, revenue and profit accumulation will accelerate, centered on the "Executive & Middle Management" segment, which is the company's profit pillar. The policy is to actively execute investments in human capital and AI to boost productivity, even if it temporarily suppresses EBITDA and operating profit, while maintaining ordinary profit at levels comparable to the previous year .

Furthermore, the company has set a "target vision" of 2 billion yen in operating profit for the fiscal year ending March 2029 (FY29.3) , following the voluntary adoption of IFRS. This demonstrates a strong commitment to investing in its foundation today to achieve this ambitious goal.

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4. Capital Allocation Policy and Refinement of Shareholder Returns

One of the most significant topics in this earnings report is the enhancement of capital efficiency and shareholder return policies .

[Significance of the Slide and Numerical Data Analysis]

The slide above (P.12 "Disciplined Capital Allocation and Shareholder Return Policy") summarizes the dramatic evolution in capital efficiency and return stance presented to investors.

Key changes include:

1. Raising the Capital Efficiency (ROE) Target : The target has been raised from "25% or higher" to "30% or higher in the mid-to-long term." The company plans to maximize capital efficiency by effectively utilizing financial leverage and M&A.
2. Change in Shareholder Return Policy (Progressive Dividend Principle) : The previous "40-50% payout ratio policy" has been replaced with a "progressive dividend policy with the previous year's dividend as a floor." This promises stable and sustainable dividend returns to shareholders, regardless of quarterly fluctuations or investment phases.
3. Growth Investment (M&A) and Financial Discipline : Capital allocation priority is redefined as "M&A and Strategic Investment." The company has set a Net Debt/EBITDA ratio of 2.5x as a guideline for M&A investment, allowing for disciplined and agile leveraged investment. The equity ratio, which declined during the past acquisition of KYT, has recovered to the 40% range through accumulated operating cash flow, providing financial headroom for future M&A.
4. Utilization of Surplus Capital and Share Cancellation : The company has established a policy to return surplus funds—remaining after growth investments and stable dividends—via share buybacks. On the day of the earnings announcement, the cancellation of 400,000 treasury shares was resolved.

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5. Changes in the Business Environment and CELM's Strengths (The Flywheel of Sustainable Profitability)

As corporate management challenges become more complex, awareness regarding "succession planning" and leadership personnel—driven by revisions to the Corporate Governance Code (CG Code)—is rising. CELM has built a competitive advantage against these external changes through its unique business model.

• High Predictability and Recurring Nature : Over half of sales are generated from clients with continuous transactions of 3 years or more . The company has a solid client base, including more than half of the top 100 companies by market capitalization on the Prime Market (average annual transaction value for the top 150 companies has expanded to 38.7 million yen).
• Variable Cost Model Utilizing External Professionals : By utilizing a network of over 1,700 external experts, the company maintains an asset-light operation with a high gross margin of around 50% . This provides tailored support for complex, client-specific issues while reducing fixed-cost risks.
• Stable Cash Generation and Reinvestment : The company has built a "4-Step Flywheel" (virtuous cycle) where cash generated from high productivity—5 to 7 million yen in EBITDA per employee—is reinvested into M&A, internal human capital, and AI.

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Conclusion

CELM's Q1 FY2027 results were of high quality, achieving a record-high Q1 net sales and maintaining solid profits by absorbing planned cost increases from wage hikes and AI investments.

For the full year, the company has clearly prioritized "thorough business infrastructure investment" with an eye toward its mid-to-long-term operating profit target of 2 billion yen, while simultaneously announcing the advancement of capital efficiency and shareholder returns through "ROE of 30% or higher," "progressive dividends," and "cancellation of treasury shares."

With favorable business conditions (increasingly complex management challenges and demand for succession planning), a lean management structure, and a clear capital strategy, the company's performance from Q2 onwards and the progress of its mid-to-long-term growth story will be closely watched.