Quants Research Holdings Q3 FY2026 Earnings Deep Dive: A Growth Story Driven by Strategic Shifts Toward Productivity and Rapid Consulting Expansion

Quants Research Holdings Co., Ltd. (Tokyo Stock Exchange Prime Market: 9552) delivered a robust performance in the third quarter of the fiscal year ending September 2026, achieving significant year-on-year growth in both revenue and operating profit . The results underscore a clear evolution in the company's business portfolio, characterized by a strategic overhaul of its core M&A brokerage business alongside aggressive upfront investment in its second growth pillar: the consulting business.

This report provides a comprehensive analysis of the company's earnings, based on the disclosed financial materials, covering performance summaries, segment trends, productivity initiatives, long-term growth strategies, and shareholder return policies.

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1. Q3 FY2026 Consolidated Earnings Summary and Full-Year Progress

For the first nine months of the fiscal year (IFRS), the company reported revenue of 15.927 billion yen (+37.3% YoY) , operating profit of 4.447 billion yen (+42.0% YoY) , and net income of 2.645 billion yen (+45.5% YoY) . Progress against full-year forecasts has reached 71.5% for revenue , 77.0% for operating profit , and 77.7% for net income , indicating that profit generation is outpacing initial projections.

The following slide provides a comprehensive overview of the Q3 consolidated earnings, progress against full-year forecasts, and segment-level profitability.

Slide Commentary: Overview and Background of Earnings Revision

This summary highlights the company's current growth phase and key challenges. The M&A brokerage business , which accounts for over 80% of total revenue, drove performance with 12.896 billion yen in revenue (+20.3% YoY) and a substantial operating profit increase to 5.194 billion yen (+31.8% YoY) . Due to a strong pipeline and effective cost control, the full-year operating profit forecast for the M&A brokerage segment has been upwardly revised from 6.499 billion yen to 6.949 billion yen .

Conversely, while the consulting business is growing rapidly with revenue of 2.707 billion yen (+211.1% YoY) , it recorded an operating loss of 695 million yen . The full-year operating profit forecast for this segment was downwardly revised from -650 million yen to -1.1 billion yen . This is not due to poor performance, but rather the result of increased upfront investment in recruitment and advertising following faster-than-expected hiring success.

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2. M&A Brokerage: Strategic Shift from Volume to "Quality and Productivity"

In the M&A brokerage business, the company is pivoting from a growth model driven by headcount expansion to one focused on "improving revenue per employee" through stricter engagement and hiring criteria .

In Q3 alone, the number of closed deals reached a record high of 67 (including 6 large-scale transactions). The average deal value also trended upward to 65 million yen , compared to 59 million yen in the same period last year. While the number of advisors decreased to 337 from the previous quarter, this reflects the application of rigorous hiring standards, signaling a shift from quantitative pursuit to qualitative improvement.

The following slide presents the strategic review of this business and the results of productivity enhancements.

Slide Commentary: The Significance of Improved Revenue per Employee

The importance of the slide above lies in the empirical proof of the company's structural reforms. By moving away from a policy dependent on "accumulating deal volume and headcount" toward "declining low-probability deals" and "tightening hiring standards," revenue per employee has recovered dramatically from 9.8 million yen in the same period last year to 13.0 million yen (+32.7% YoY) .

Although the number of deals in the pipeline temporarily decreased to 1,563, this is the result of cleansing the portfolio of deals that did not meet the new criteria, indicating higher quality. Furthermore, the utilization of AI tools has enabled a 9-hour monthly reduction in man-hours per advisor (streamlining financial analysis, corporate profile creation, and matching), proving that operational enhancements are yielding tangible results.

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3. Consulting Business: Rapid Scaling and Evolution into an "AI-Native" Firm

The consulting business is expanding explosively as the company's "second growth foundation." The number of consultants reached 274 as of Q3 (+132.2% YoY) . Having achieved the initial full-year target of 300 ahead of schedule, the company has upwardly revised its year-end target to approximately 320 .

Currently, there is strong demand for generative AI implementation and utilization projects (PoC, AI agent deployment, DX support, etc.) from major financial institutions, manufacturers, and system integrators, reflecting sustained high interest in AI investment among clients. To address this, the company established an "AI Lab" and is promoting a training program to turn over 75% of its consultants into AI experts.

The following slide illustrates the long-term growth roadmap and revenue expansion vision for the consulting business.

Slide Commentary: Long-Term Vision of Matching M&A Brokerage Scale in 4-5 Years

This slide clearly positions the consulting business not as a secondary operation, but as a future core business. Its competitive advantages lie in a "one-pool" flexible assignment system and rigorous management via proprietary systems, supported by aggressive hiring.

As the graph indicates, the company has set an ambitious goal to reach a revenue scale equivalent to the M&A brokerage business within 4 to 5 years . The current expansion of losses is a deliberate upfront investment (recruitment and branding costs) to capture this massive market opportunity, serving as a runway for profit contribution starting next fiscal year as the new headcount becomes fully productive.

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4. Launch of Incubator Business and Changes in Financial Structure

The newly launched incubator business (operating lease business, etc.) has completed the necessary licensing and has begun structuring and selling its first project (primarily JOLCO). The first project is expected to sell out within this fiscal year , with a full-year revenue forecast of 492 million yen (operating loss of 70 million yen).

Regarding the financial position (IFRS balance sheet), due to the company's holding of operating lease assets such as aircraft (approx. 5 billion yen), non-current assets increased to 6.837 billion yen , and current/non-current liabilities rose to 9.023 billion yen , bringing total assets to 12.784 billion yen (up from 8.123 billion yen at the end of the previous fiscal year). Borrowings from financial institutions for asset acquisition (5.5 billion yen) are planned to be repaid sequentially as the products are sold.

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5. Shareholder Return Policy and Share Buybacks

The company prioritizes a balance between growth investment and shareholder returns, maintaining a capital allocation policy with a target dividend payout ratio of 10% (a dividend of 5 yen per share was paid for the fiscal year ended September 2025).

Furthermore, to improve capital efficiency and enhance shareholder value, the company executed flexible share buybacks and cancellations:

• Share Buyback : Acquired 3,876,500 shares (approx. 3.8 billion yen) between May 18 and June 22, 2026.
• Share Cancellation : Cancelled 3,405,888 shares (6.30% of total shares outstanding before cancellation) on July 31, 2026.

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Conclusion and Future Outlook

Quants Research Holdings' Q3 FY2026 results highlight a transitional period of structural change, characterized by improved profitability and productivity in the core M&A brokerage business alongside ultra-rapid headcount expansion in the consulting business .

Key points for investors to monitor moving forward include:

1. M&A Brokerage : Whether the high productivity of 13.0 million yen per employee can be sustained under stricter engagement and hiring criteria, and whether this translates into an increase in closed deals.
2. Consulting Business : Whether the utilization rate of the rapidly expanded 320-consultant team can be maintained, allowing the business to transition into a phase where upfront investments are recouped starting next fiscal year.
3. AI Utilization and Cross-Border Expansion : The expansion of operational efficiency through the AI Strategy Headquarters and the generation of M&A deals utilizing overseas bases (e.g., Singapore).

We look forward to the continued progress of this disciplined management strategy, which balances a shift toward productivity with aggressive capital deployment into new growth engines.