Core Concept Technologies FY2026 Q2 Earnings Deep Dive

This report provides a detailed analysis of the FY2026 Q2 (interim) financial results for Core Concept Technologies, Inc. (Securities Code: 4371) , a company specializing in DX support and IT talent procurement services primarily for the manufacturing, construction, and logistics sectors. We examine performance trends, shifts in business structure, KPI progression, and future growth strategies.

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1. Earnings Highlights: Revenue and Operating Profit Exceed Targets

For the first half of the fiscal year ending December 2026, the company achieved year-on-year growth in both revenue and operating profit, tracking ahead of the initial plan.

• Revenue : ¥11.343 billion (+11.6% YoY)
• Gross Profit : ¥3.093 billion (+11.3% YoY)
• Operating Profit : ¥1.148 billion (+7.0% YoY)
• Ordinary Profit : ¥1.171 billion (+9.0% YoY)
• Quarterly Net Profit : ¥520 million (-31.7% YoY)
• Adjusted Net Profit : ¥817 million (+7.2% YoY)

Detailed Performance Analysis

As shown in the income statement slide above, the progress rate against the full-year revenue forecast (¥23.0 billion) is 49.3% , and the progress rate against the operating profit forecast (¥2.43 billion) is 47.3% . This indicates steady progress, particularly given the company's historical tendency toward second-half weighting.

The significant decline in quarterly net profit is primarily due to a one-time ¥296 million "trust-type stock option-related loss" recorded in Q1. Excluding this non-recurring factor, adjusted net profit stands at ¥817 million (+7.2% YoY) , with a progress rate of 48.5% against the full-year plan, confirming that the underlying earning power remains robust.

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2. Performance by Service Segment and Order Backlog Trends

Core Concept Technologies operates two main segments: "DX Support" and "IT Talent Procurement Support." In the first half, the DX Support business served as the primary driver for top-line and profit growth .

Segment Performance Details

1. DX Support Business (Direct Contracting/High-Value-Added)

   • Revenue : ¥5.704 billion (+19.1% YoY)
   • Gross Profit : ¥2.124 billion (+13.9% YoY)
   • Gross Profit Margin : 37.2% (-1.7pt YoY)
   • Order Backlog : ¥2.696 billion (+31.8% YoY)

   Projects for major end-users in manufacturing, construction, and logistics expanded, resulting in approx. 20% revenue growth . The order backlog also surged by 31.8% , establishing a solid pipeline to support performance in the second half and beyond.

2. IT Talent Procurement Support Business (For Major SIers)

   • Revenue : ¥5.639 billion (+4.8% YoY)
   • Gross Profit : ¥968 million (+5.9% YoY)
   • Gross Profit Margin : 17.2% (+0.2pt YoY)
   • Order Backlog : ¥2.072 billion (+13.7% YoY)

   Leveraging a network of approximately 6,500 business partners, the company continues to capture stable demand for projects via major SIers.

The total company-wide order backlog reached ¥4.768 billion (+23.3% YoY) , reflecting a high-demand environment across both segments.

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3. Quarterly Trends (QoQ): Profitability Improvement and Cost Structure

Looking at quarterly performance, Q2 revenue reached ¥5.905 billion , marking a record high on a quarterly basis .

Profit Margin and Outsourcing Cost Trends

• Gross Profit Margin : Increased from 26.8% in 2026Q1 to 27.7% in 2026Q2 (+0.9pt).
• Outsourcing Cost Ratio : Decreased from 59.2% in 2026Q1 to 56.4% in 2026Q2 (-2.8pt). This improvement is attributed to the resolution of certain unprofitable projects that remained in Q1.
• SG&A Expenses : Increased to ¥1.089 billion in 2026Q2 (from ¥855 million in 2026Q1). This is a seasonal factor due to training costs and personnel expenses for the largest-ever intake of new graduates (92 employees group-wide) in April 2026 , which is in line with the plan.

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4. Key KPI Progress: Increasing Customer Unit Price and Strengthening Human Capital

Steady progress is evident in key KPIs measuring long-term sustainable growth.

① Expansion of Large-Scale Clients

Deepening relationships with existing clients to increase project scale is a core strategy.

• Total Number of Clients : Expanded from 336 in 2024Q2 to 437 in 2025Q2, and 455 in 2026Q2.
• Transaction Scale Trends : Notably, the number of clients in the "¥10 million to ¥50 million" range increased from 96 to 110 , building a pipeline of potential future ¥100 million+ accounts.

② Employee Count and Evolving Recruitment Strategy

• Consolidated Employees : 673 (481 on a non-consolidated basis).
• New Graduate Hiring : 92 joined the group in FY2026 (74 non-consolidated, approx. 1.5x YoY).
• Shift in Hiring Policy : The company has shifted focus beyond mere programming aptitude to emphasize "logical thinking," "communication skills," and "project management (PM) aptitude." With the proliferation of AI tools, the company is prioritizing the acquisition of talent capable of leading the organization as future project managers.

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5. Pillars of Growth: Three Specialized Manufacturing Solutions

The foundation for sustainable growth and high profitability in the DX support business lies in three core solutions that digitize manufacturing processes end-to-end.

Roles and Competitive Advantages of the 3 Solutions

1. MES (Manufacturing Execution System): "Orizuru MES"
   • Developed in-house, accounting for the "mix of old and new equipment" and "expert know-how" unique to Japanese manufacturing sites. It enables rapid visualization and automation of factory lines.
2. ERP (Enterprise Resource Planning): "mcframe"
   • Revamps business processes specific to Japanese manufacturing—such as production planning, inventory management, and cost management—through "Fit to Standard" functionality and agile development.
3. PLM (Product Lifecycle Management): "Aras Innovator"
   • An open platform that integrates design data (CAD/BOM) with manufacturing information and existing peripheral systems for centralized management.

By covering everything from upstream processes (PLM) to core operations (ERP) and on-site execution (MES), the company has enhanced the impact of client business reforms, leading to larger project sizes and growth in DX support revenue .

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6. Capital Policy, Partnerships, and Organizational Updates

• Relationship with Sigmaxyz Holdings : Sigmaxyz Holdings holds a 16.03% stake (as of July 10, 2026). The company maintains a policy of "continuing constructive discussions to expect mutual business synergies while maintaining management autonomy and independence."
• Group Reorganization : Absorbed the subsidiary "Pros Cons" into the DX business division on April 1, 2026. In July, a new Osaka office was established to consolidate operations and strengthen group synergies and development capabilities in the Kansai region.
• Financial Foundation : Despite share buybacks (¥373 million) and dividend payments (¥308 million), net assets stand at ¥5.214 billion, with an equity ratio of 60.3% (+1.3pt from the previous fiscal year-end) , maintaining a sound financial position.

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7. Summary

In the second quarter of FY2026, Core Concept Technologies absorbed one-time trust-type stock option losses while achieving strong growth in its core DX support business, with revenue up approximately 20% .

With the normalization of profitability following the resolution of unprofitable projects, double-digit growth in order backlogs, expansion of development resources through mass hiring of new graduates, and the advancement of large-scale project strategies centered on MES, ERP, and PLM, the company has confirmed a solid business foundation for achieving its full-year targets.