Nareru Group Q3 FY2026 Earnings Deep Dive: Advancing the 'Change and Growth 2030' Mid-Term Plan through Improved Utilization and Rapid Expansion in Value-Added Segments

1. Q3 FY2026 Earnings Overview

Nareru Group (Securities Code: 9163) reported revenue growth for the first nine months of the fiscal year ending October 2026, driven by an increase in the number of registered and active personnel in its core Construction Solutions business, alongside rising contract unit prices. While profitability was impacted by increased costs from growth investments and front-loaded hiring, the company’s performance has exceeded its initial plans.

Earnings Highlights (Cumulative)

• Revenue : 19,229 million JPY (+7.3% YoY, -4.4% vs. initial plan)
• Operating Profit : 2,203 million JPY (-2.6% YoY, +12.5% vs. initial plan)
• Profit Before Tax : 2,144 million JPY (-2.8% YoY, +12.3% vs. initial plan)
• Quarterly Profit Attributable to Owners of Parent : 1,512 million JPY (-5.4% YoY, +5.7% vs. initial plan)

Against the full-year targets (Revenue: 29,250 million JPY, Operating Profit: 3,010 million JPY), the progress rate for revenue stands at 65.7% , while profitability remains robust with operating profit at 73.2% and quarterly profit attributable to owners of the parent at 72.4% .

Looking at quarterly trends, revenue for the third quarter (three-month period) was 6,560 million JPY , with an operating profit of 848 million JPY . The operating profit margin saw a sharp recovery to 12.9% , up from 9.9% in the second quarter.

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2. Analysis of Operating Profit Fluctuations

Factors for Year-on-Year Change

The primary reasons for the 58 million JPY decrease in operating profit compared to the same period last year are as follows:

• Increase in Revenue (+1,302 million JPY) : Contributed by higher active personnel counts and rising contract unit prices.
• Increase in Cost of Sales/Personnel Expenses (-1,103 million JPY) : Driven by an increase in registered personnel due to intensified hiring and the occurrence of non-active periods due to supply-demand adjustments.
• Increase in SG&A/Personnel Expenses (-194 million JPY) : Upfront investments in expanding internal staff to strengthen sales and recruitment capabilities, and building infrastructure for the monetization of DX and BPO services.

Factors for Outperformance Against Plan

Although revenue fell 1,960 million JPY short of the plan, operating profit exceeded the target by 246 million JPY (+12.5%) . This was achieved through agile hiring management based on supply-demand balance, which reduced cost-of-sales personnel expenses by 1,275 million JPY , alongside disciplined cost control in recruitment expenses (+333 million JPY) and SG&A expenses (+268 million JPY).

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3. Segment Trends

① Construction Solutions Business (World Corporation, etc.)

• Revenue : 17,350 million JPY (+8.1% YoY)
• Segment Profit : 1,737 million JPY (-4.4% YoY)
• Number of Registered Personnel : 3,719 (+120 YoY)

Top-line growth remains solid, supported by optimized utilization rates and higher unit prices resulting from the provision of DX value-added services.

② IT Solutions Business (ATJC)

• Revenue : 1,879 million JPY (-0.2% YoY)
• Segment Profit : 153 million JPY (+37.0% YoY, 8.2% margin)
• Number of Registered Personnel : 389 (-38 YoY)

Despite a slight decline in the number of registered personnel, the profit margin improved by 2.2 percentage points year-on-year, driven by higher contract unit prices resulting from the successful acquisition of upstream projects.

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4. Key KPI Trends and Status

Utilization Rate Trends

The utilization rate in the Construction Solutions business (excluding those in training) tracked at 91.3% in Q1, 91.9% in Q2, and 91.9% in Q3. On a monthly basis, after bottoming out at 90.4% in May, the rate has shown a clear upward trend, reaching 92.4% in June and 93.0% in July, thanks to area-focused sales and placement optimization.

Increase in Contract Unit Prices

• Construction Solutions : 1Q 520k JPY → 2Q 525k JPY → 3Q 528k JPY (vs. 519k JPY in the same period last year)
• IT Solutions : 1Q 526k JPY → 2Q 531k JPY → 3Q 543k JPY (vs. 531k JPY in the same period last year)

Both businesses continue to see consistent growth in contract unit prices due to improved technical skills and enhanced proposal capabilities tailored to client needs.

Recruitment and Retention (Turnover Rate) Challenges and Measures

The turnover rate in Construction Solutions has risen to 34.0% (compared to 29.4% in the same period last year and 31.1% for the full previous fiscal year), which the company identifies as a critical issue. The following measures are being strengthened:

• Expansion of Qualification Support : The total number of certified personnel has grown to 573 , supported by industry-leading allowances and expanded training programs.
• Revision of Personnel System (Effective Sept 2026) : A review of grade classifications and evaluation systems, along with improved salary increases, to encourage long-term career development.

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5. Progress of Mid-Term Management Plan "Change and Growth 2030" and Growth Strategy

In the first year of its mid-term plan, Nareru Group is improving the earnings base of its core business while building a foundation for growth areas.

Progress on Key Initiatives

1. Monetization of Construction DX and Expansion of Value-Added Models

   • Strengthened partnership with SkymatiX through a capital investment (June 2026). Linking the expansion of the spatial data integration platform "Kumiki" with DX talent development.
   • Expanding the business model from simple staffing to "Construction DX Talent Staffing," "Contracting (Hands-on DX Promotion Support)," and "Outsourced BPO."
   • Revenue in value-added segments recorded rapid growth, up 273.9% YoY and 115.6% QoQ .

2. Geographic Expansion of the Craftsman Referral Business

   • The number of member companies in the National Construction Talent Association has surpassed 2,100 .
   • Rapidly expanding customer touchpoints with specialized construction firms through collaborations with BRANU, Daisan, and regional financial institutions (e.g., Seishin Shinkin Bank, Saitama-ken Shinkin Bank).

3. Productivity Improvement and Company-wide BPR

   • Efficiency gains in on-site operations using no-code AI through the AI Boost Project .
   • Established the "Corporate DX Promotion Department" in June 2026.
   • New core system launched in July 2026 to advance matching functions and automate business processes.

Construction Talent Platform Concept

Starting from a base of over 3,700 construction management engineers, the company aims to establish an integrated platform that fuses craftsman matching, a network of over 2,100 companies, and technology (SkymatiX, Arent, BRANU, etc.) to "Collect, Nurture, Connect, and Utilize" construction talent in the field.

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6. Summary and Future Focus

In Q3 FY2026, the company achieved profit progress exceeding its plan through agile hiring and cost control. Key points to monitor for future performance include:

• Further improvement and stabilization of the utilization rate , which has recovered to 93.0%.
• Reduction of turnover and improvement of retention rates through the new personnel system and qualification support.
• Full-scale contribution to earnings from value-added segments such as DX and BPO, which are growing at over 2.7 times the previous year's level.
• Improvements in matching efficiency and sales productivity following the launch of the new core system.