Orchestra Holdings FY2026 Q2 Earnings Deep Dive: Returning to Profit Growth After Structural Reform, Accelerating Expansion via Large-Scale M&A and DM×DX Integration

Orchestra Holdings (Securities Code: 6533) has released its FY2026 Q2 financial results , signaling a definitive transition into a "phase of simultaneous revenue and profit growth" following the completion of organizational structural reforms implemented over the past several years.

This report provides a comprehensive analysis of the company's current performance highlights, segment-specific strategies, growth initiatives including major M&A, and shareholder return policies, centered on 10 key topics derived from the earnings materials.

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1. FY2026 Q2 Earnings Highlights: Structural Reform Yields Significant Profit Growth

For the first half of FY2026, consolidated results showed revenue of 7.798 billion JPY (+0.1% YoY) and operating profit of 873 million JPY (+26.7% YoY) . Profit growth was particularly notable in the second quarter alone, with operating profit reaching 283 million JPY (+44.5% YoY) .

Historically, the second quarter tends to see a decline in both revenue and operating profit compared to the first quarter due to the seasonality of the Digital Marketing (DM) business (client budget execution cycles). However, this period saw a significant increase in profit levels compared to the same period last year, driven by disciplined SG&A management and improved profitability.

[Importance and Background of Slide 12 (FY2026 Q2 Performance Highlights)]

This slide provides critical data objectively illustrating the company's quarterly revenue structure and seasonal trends. While revenue remained steady at 3.762 billion JPY (+1.3% YoY), operating profit surged by 44.5% , rising from 195 million JPY (FY2025 Q2) to 283 million JPY (FY2026 Q2).

Looking at the quarterly progression from Q1, the company successfully offset seasonal profit-dampening factors while achieving a high year-on-year growth rate. This confirms that the shift in product mix and operational efficiency gains through AI utilization are directly boosting profit margins . Furthermore, the cumulative operating profit of 873 million JPY for the first half represents a 54.6% progress rate against the full-year forecast (1.60 billion JPY) , indicating performance is trending ahead of plan.

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2. Segment Performance Trends: Qualitative Transformation and Next-Gen Growth

① Digital Marketing (DM) Business: High Profitability via AI Advancement and Sales Strengthening

DM business revenue for FY2026 Q2 was 1.339 billion JPY (+8.8% YoY) , with segment profit reaching 399 million JPY (+31.7% YoY) . In addition to securing large-scale projects through strengthened sales structures, the company limited the increase in SG&A expenses through company-wide AI promotion (business automation and generative AI utilization) , resulting in significant profit growth.

A key highlight is the deployment of "Forté.AI," an in-house AI platform covering all eight stages of the marketing process. The company has begun offering advanced products externally, such as "Forté.AI LLMO Analytics," which adapts to the shift from search to LLM-based information touchpoints, and "Forté-MCP," which integrates external AI agents with proprietary data, thereby increasing service value and differentiation.

② Digital Transformation (DX) Business: Product Mix Shift and Large-Scale M&A

Although DX business revenue for FY2026 Q2 was 1.867 billion JPY (-1.6% YoY) , segment profit increased to 167 million JPY (+24.9% YoY) . Profitability improved significantly as a result of a product mix shift from low-margin projects to high-value-added, high-margin projects (such as AI-related services and automatic recognition solutions).

Furthermore, the acquisition of SALTO Co., Ltd. was announced as a strategic move to dramatically accelerate the growth of the DX business.

[Importance and Background of Slide 16 (DX Business Topics: Acquisition of SALTO)]

This slide highlights the most impactful strategic M&A in the company's future growth story. SALTO, a system development firm with approximately 230 employees and projected revenue of approximately 2.60 billion JPY (for the fiscal year ending August 2026) , represents the largest acquisition since the integration of Vess in 2023.

This M&A is significant not only for its scale but also for providing "immediate reinforcement of development resources" and "mutual synergy in customer bases." By expanding the target customer base into defense, AI, and social infrastructure—areas where SALTO excels—in addition to Orchestra Holdings' existing strengths in information/communications, manufacturing, and services, the acquisition is expected to strongly drive revenue and profit growth in the DX business from the second half onward.

③ IP, Entertainment, and Other Businesses: Fundamental Profitability Improvement and IP Cultivation

Despite a revenue decline to 581 million JPY (-9.0% YoY) due to the downsizing of the recruitment business, the IP/Entertainment segment saw a dramatic improvement in profitability, particularly in game development, resulting in a segment profit of 7 million JPY (a turnaround of 21 million JPY compared to the previous year) .

In the IP domain, the company is steadily yielding results in cultivating long-term revenue pillars, such as the confirmed release of the Nintendo Switch software "Derby Stallion 2" (scheduled for September 2026) and the successful solo concert of the in-house idol group "Honey Devil" at Zepp Shinjuku.

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3. Future Growth Strategy: DM×DX Integration and Building a "Consulting Team"

Orchestra Holdings' strength lies in its ability to provide both independent marketing support and advanced system development capabilities within the same group. As an update to its growth strategy, the company has launched the creation of a consulting sales team that integrates the DM and DX businesses .

[Importance and Background of Slide 19 (Growth Strategy Update: Building a Consulting Team)]

This slide represents the core of the company's vision of a "Chain of Creation" materialized at the business structure level . Previously, the DM business (awareness, advertising, SEO, LLMO, etc.) and the DX business (cloud, system development, software testing, security, etc.) approached clients separately. By organizing cross-functional teams that integrate the expertise of both, the company is now equipped to propose solutions in a one-stop manner, from marketing to IT infrastructure construction and digital transformation .

This not only maximizes proposal value and LTV for existing clients but also enables the acquisition of new customer segments that were previously unreachable under traditional consulting frameworks, serving as a powerful differentiator.

M&A Strategy and Investment Criteria: Dual-Track TAM Expansion and Roll-ups

Having executed 30 M&A deals since its founding , the company conducts selective investments based on clear criteria (business growth potential, HD synergy, and valuation).

Moving forward, the company plans to pursue a dual-track strategy: M&A in new domains (IT consulting, ERP implementation, security, etc.) to expand its TAM (Total Addressable Market), and roll-up strategies (acquiring competitors in the DM, DX, and IP sectors) to expand market share and customer bases in existing businesses.

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4. Financial Position, Shareholder Returns, and Compliance with TSE Prime Market Standards

Sound Financial Base and Strong Commitment to Shareholder Returns

Following the acquisition of SALTO, non-current assets and interest-bearing debt have increased, resulting in a parent-owned equity ratio of 36.7% and a goodwill-to-equity ratio of 0.95x . However, the company expects sufficient recovery due to the high profitability and synergy creation of the acquired entity.

Shareholder return is positioned as a top management priority. The annual dividend forecast for FY2026 is 30 JPY per share (a significant increase from 12 JPY in the previous year), consisting of a base dividend of 25 JPY plus a 10th-anniversary commemorative dividend of 5 JPY . The company will also continue its shareholder benefit program (15,000 JPY in digital gifts) for shareholders holding 200+ shares for over a year, resulting in a total yield of 9.0% (2.6% dividend + 6.5% benefit, based on the stock price at the end of June 2026), demonstrating a highly generous stance toward shareholders.

Compliance with Prime Market Listing Maintenance Standards

While the company meets the criteria for "number of shareholders," "number of tradable shares," and "tradable share ratio" under the TSE Prime Market listing maintenance standards, it has not yet met the "market capitalization of tradable shares" requirement (3.6 billion JPY vs. the 10 billion JPY standard) . During the improvement period (until the end of FY2026), the company plans to aim for stock price optimization and increased market capitalization, centered on improving core business performance, strengthening IR, and enhancing shareholder returns.

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5. FY2026 Full-Year Earnings Forecast and Outlook

The company's consolidated earnings forecast for the full year of FY2026 is as follows:

• Revenue: 17.50 billion JPY (+11.0% YoY)
• Operating Profit: 1.60 billion JPY (+10.9% YoY)

In the second half, in addition to the continued growth of the robust DM business, the contribution of SALTO's consolidated results will be fully realized, which is expected to significantly accelerate growth in the DX business.

Business Segment	Key Themes and Initiatives	H2 Focus Points
DM Business	Strengthening sales, promoting external AI process sales	Improving large-scale project win rates, external monetization of Forté.AI
DX Business	Expanding human capital, synergies with existing subsidiaries	Scaling development capacity via SALTO integration, shifting to high-margin projects
IP/Entertainment	Idol production, game development	Release of "Derby Stallion 2," expanding live event attendance

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Summary

Orchestra Holdings' FY2026 Q2 results indicate that the company has emerged from its structural reform phase and is now simultaneously achieving "profitability improvement" and "aggressive scale expansion."

1. Qualitative improvement in performance (Q2 operating profit +44.5% YoY, H1 progress rate 54.6%)
2. Immediate reinforcement via large-scale M&A (Strengthening the DX business through the integration of SALTO)
3. Organizational synergy between DM and DX (Increasing customer unit price via the new consulting team)
4. Active shareholder returns (30 JPY dividend including commemorative dividend, 9.0% total yield)

Through the interaction of these four pillars, the company is successfully returning to its targeted "sustainable revenue and profit growth trajectory." Key points to watch for in the second half include the PMI (Post-Merger Integration) of SALTO and the realization of synergies from the full-scale operation of the new consulting team.