North Sand Reports Rapid Growth in Q2 FY2027: Revenue Up 60.2% and Operating Profit Up 68.7%; Announces Upward Revision to Full-Year Guidance, Dividend Increase, and Application for Tokyo Stock Exchange Prime Market Listing

1. Executive Summary

North Sand, Inc. (Securities Code: 446A), a provider of comprehensive consulting services, has announced its financial results for the second quarter of the fiscal year ending January 2027. Driven by robust demand for IT and business consulting, the company has demonstrated strong performance, with both revenue and profit at all levels significantly exceeding the same period last year.

For the first half of the fiscal year, revenue reached 18,445 million yen (+60.2% YoY) , operating profit was 3,766 million yen (+68.7% YoY) , and the operating profit margin stood at 20.4% (+1.0pt YoY) , achieving a balance of high growth and high profitability. Performance was strongly driven by successful consultant recruitment, high retention rates, sustained high utilization rates, and an increase in average unit prices.

In light of these strong results, the company has announced an upward revision to its full-year earnings forecast , an increase in the annual dividend forecast (from 33 yen to 35 yen) , and an application for a market segment change to the Tokyo Stock Exchange Prime Market .

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2. Q2 FY2027 Financial Highlights and Key KPI Trends

First-half results show that both revenue and operating profit are expanding at a pace exceeding initial projections.

As shown in the slide above, the company's growth drivers—key KPIs including the number of consultants, utilization rate, and average unit price—are all performing exceptionally well.

• Revenue : 18,445 million yen (+60.2% YoY)
• Operating Profit : 3,766 million yen (+68.7% YoY)
• Operating Profit Margin : 20.4% (+1.0pt YoY)

Key KPI trends are as follows:

• Number of Consultants : 1,916 (an increase of 689 YoY) , indicating rapid organizational scaling.
• Utilization Rate : Maintained at a high level of over 90% , a core strength since the company's founding.
• Average Unit Price : Increased by 6.5% YoY due to strengthened client relationships and enhanced value delivery.

All three elements of the consulting business revenue model—"Number of Consultants × Utilization Rate × Average Unit Price"—contributed positively, resulting in significant top-line growth and improved profit margins.

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3. Analysis of Profitability and Cost Structure

Gross Profit Margin Trends

The gross profit margin for the first half was 48.3% (Q1: 49.7%, Q2: 47.0%), landing in line with the plan and consistent with the same period last year (48.3%). The rapid surge in revenue successfully absorbed the increase in labor costs (Q1: 3,349 million yen, Q2: 3,958 million yen) and outsourcing expenses associated with aggressive consultant hiring.

Improvement in SG&A Ratio and Maintenance of 20%+ Operating Margin

The SG&A ratio for the first half was 27.9% (a 1.0pt improvement YoY) . On a quarterly basis, the ratio decreased from 29.3% in Q1 to 26.6% in Q2. While continuing to invest in recruitment, training, and office-related expenses, the company has realized economies of scale, maintaining a high-profit structure with an operating profit margin of 20.4% .

Financial Soundness

As of the end of Q2 FY2027, total assets grew to 24,376 million yen (+11.5% from the previous fiscal year-end) , and net assets increased to 19,238 million yen (+16.9%) . Driven by the accumulation of retained earnings from strong profitability, the equity ratio reached 78.9% (+3.6pt) , reflecting an extremely sound and robust financial position.

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4. Workforce Expansion Supported by Recruitment Power and Low Turnover

North Sand leverages unique strengths in talent acquisition, the primary source of growth for consulting firms.

• Quarterly Recruitment Performance : In Q2, the company hired 200 mid-career professionals and 177 new graduates (total 377) . Combined with 188 mid-career hires in Q1, the company secured 388 mid-career professionals in the first half alone.
• Targeting Non-Experienced Talent and Selective Hiring : The company builds a broad applicant pool, including those without consulting experience (88.5% of applicants are from outside the consulting industry). By prioritizing cultural fit, the company maintains a selective hiring ratio of 35.5x .
• Industry-Leading Retention Rate : Through culture-fit hiring and organizational culture initiatives, the company maintains a turnover rate of 7.6% (FY26/1 actuals), significantly lower than the industry average, even during a period of rapid expansion.

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5. Upward Revision to Full-Year Forecast and Dividend Increase

Based on strong recruitment progress, sustained high utilization, and increased average unit prices, the company has announced an upward revision to its full-year consolidated earnings forecast for FY2027.

As shown in the slide above, the revisions from the initial forecast are as follows:

• Revenue : 38,493 million yen → 40,560 million yen (+5.4% revision, +54.9% YoY)
• Operating Profit : 8,630 million yen → 9,207 million yen (+6.7% revision, +66.0% YoY)
• Operating Profit Margin : 22.4% → 22.7% (+0.3pt, +1.5pt YoY)
• Annual Dividend per Share : 33.00 yen → 35.00 yen (+2.00 yen increase)

Key full-year KPI targets include 900+ annual hires (Actual: 177 new grads/388 mid-career; H2 target: 360 mid-career), maintaining a 90%+ utilization rate , and a 3–5% annual increase in average unit price . The dividend policy targets a payout ratio of 30–40% , with shareholder returns strengthened in line with the upward earnings revision.

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6. Robust Client Base and Non-Dependency Structure

North Sand has built a stable portfolio of clients in terms of both quality and quantity.

• Growth in Client Count : The number of clients has steadily increased to 293 (as of FY26/1).
• Focus on Large Enterprises : Large companies with revenue of 100 billion yen or more account for approximately 60% of the total (21.1% are 1 trillion yen+, 38.6% are 100 billion–1 trillion yen).
• Diversified Revenue Structure : The top client accounts for 10.7% of revenue , with the top 2–20 clients accounting for 46.7%, and the remaining 42.6% from other clients, creating a structure resilient to budget fluctuations of any single client.
• Broad Industry Coverage : The company captures DX and business reform demand across diverse industries, including Information & Communications (36.8%), Manufacturing (24.9%), Services (17.4%), and Finance (10.3%).

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7. Mid-to-Long-Term Management Goals and the "Fan-Building Cycle" Growth Strategy

The company has clearly outlined its mid-to-long-term growth roadmap.

The core of the mid-to-long-term management goals shown in the slide is as follows:

• Mid-Term Goals :
  • Revenue CAGR of 30% or more during the plan period
  • Operating profit margin of 25% or more by FY2029
  • Mid-term consultant count target: 3,000
• Long-Term Goals :
  • Revenue of 100 billion yen
  • Operating profit margin of 30% or more
  • Long-term consultant count target: 5,000

The core strategy to achieve these ambitious goals is the "Fan-Building Cycle" :

1. Turning Talent Agents and Candidates into Fans : Promoting referral hiring and increasing brand awareness to continuously attract top talent.
2. Turning Employees into Fans : Strengthening support systems and embedding corporate philosophy to maintain a low turnover rate (below 10%).
3. Turning Clients into Fans : Providing hands-on support rooted in human-centricity and team-based principles to achieve both high utilization (90%+) and increased unit prices.

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8. Capital Allocation Policy and Application for TSE Prime Market Listing

Focus on Capital Efficiency (ROE Target of 30%+)

The company estimates its cost of capital at approximately 10% (around 9% based on CAPM, 10–11% based on market expectations) and has set a target of maintaining an ROE of 30% or more , significantly exceeding its cost of capital.

Capital allocation policy for operating cash flow and cash on hand is as follows:

• Operating Funds (approx. 30%) : Retaining approximately two months of monthly sales as working capital.
• Shareholder Returns (approx. 20%) : Continuous dividends with a target payout ratio of 30–40%.
• Strategic Funds (approx. 50%) : Securing approximately six months of labor costs for human capital investment and contingency reserves.

Application for TSE Prime Market Listing

Aiming for further sustainable growth and long-term corporate value enhancement, the company applied for a market segment change to the Tokyo Stock Exchange Prime Market on September 7, 2026 . The company intends to strengthen its governance and social credibility as a listed company, with a goal of completing the transition within 2026.

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9. Conclusion

North Sand's Q2 FY2027 results demonstrate exceptionally strong growth, with revenue up 60.2% and operating profit up 68.7%. The rapid increase in consultants—backed by strong recruitment and low turnover—combined with a 90%+ utilization rate and rising average unit prices, has led to an upward revision of full-year forecasts and a dividend increase.

With clear mid-term goals (30%+ Revenue CAGR, 25%+ Operating Margin) and long-term goals (100 billion yen revenue, 30%+ Operating Margin), the company is steadily building its growth foundation, including the application for the Prime Market listing. Future business progress warrants close attention.