Hennge (4475) Q2 2026 earnings summary

Executive summary

• Net sales for Q2 FY2026 reached JPY 6,129M, up 17.7% year-over-year, driven by strong growth in the HENNGE One business segment, with recurring net sales growth and strong gross profit margin supported by higher ARPU.

• Operating income increased 13.3% year-over-year to JPY 1,268M, with a margin of 20.7%, and profit attributable to owners of parent rose 11.7% to JPY 884M.

• Active investments in headcount and advertising are underway to support future business expansion, despite a challenging recruitment environment for sales personnel.

• Multiple contracts were acquired from large companies, and stable growth continues among small to mid-size clients, with a steady increase in contracted users.

• New services, including HENNGE Endpoint & Managed Security, were launched to enhance the Zero Trust security portfolio.

Financial highlights

• Gross profit grew 18.9% year-over-year to JPY 5,319M, with gross margin improving to 86.8% due to higher ARPU.

• SG&A and operating expenses increased year-over-year, reflecting higher personnel and advertising costs, with first half operating expenses at JPY 4,051M.

• ARR and ARPU both showed positive trends, with HENNGE One Pro accounting for about 20% of total ARR and ARPU rising to JPY 4,016.

• Churn rate remains low, with the average contract period exceeding 25 years and monthly churn at 0.26%.

• Cash and cash equivalents at Q2 FY2026 stood at JPY 6,088M.

Outlook and guidance

• Full-year FY2026 net sales forecast is JPY 12,834M, a 17.5% increase year-over-year, with operating income projected at JPY 2,057M and profit attributable to owners of parent at JPY 1,595M.

• The company targets JPY 20B in ARR by FY2029, focusing on strengthening sales, accelerating customer acquisition, and enhancing service value through new services and M&A.

• Ongoing investments in recruitment and brand building are expected to drive mid- to long-term growth.

• Basic earnings per share for the full year projected at JPY 50.06.