SHIFT (3697) Q3 2024 earnings summary

Executive summary

• Net sales for Q1–Q3 FY2024 rose 28.1% year-over-year to ¥81.1bn, driven by growth in all business segments and measures to counter slow Q1 growth.

• Operating profit declined 14.2% YoY to ¥7.1bn due to lower utilization rates and one-time M&A-related costs.

• Gross profit margin decline was minimized through improved supply-demand matching and the captain system.

• Strategic focus on customer segmentation, new AI-driven services, and the "Wasurenai" SaaS platform.

• Recruitment of over 2,000 skilled professionals in Q3, with a shift toward higher-value personnel.

Financial highlights

• Q3 FY2024 net sales: ¥28.8bn (+25.3% YoY); Q1–Q3 net sales: ¥81.1bn (+28.1% YoY).

• Q1–Q3 gross profit: ¥25.7bn (+20.3% YoY); Q3 gross profit: ¥9.1bn (+17.1% YoY).

• Q1–Q3 EBITDA: ¥9.1bn (–3.3% YoY); Q3 EBITDA: ¥3.2bn (–10.3% YoY); EBITDA margin for nine months: 11.2%.

• Q1–Q3 operating profit: ¥7.1bn (–14.2% YoY); Q3 operating profit: ¥2.4bn (–24.6% YoY).

• Q1–Q3 profit attributable to owners: ¥3.3bn (–17.2% YoY); basic EPS: ¥187.32 (down from ¥225.78 YoY).

Outlook and guidance

• Full-year sales target: ¥122bn (progress rate: 66.5% as of Q3); minimum target: ¥114bn (progress rate: 71.2%).

• Operating profit forecast: ¥11.6–14.6bn (up 0.3–26.2% YoY); profit attributable to owners: ¥7.3–10.0bn (up 16.9–60.1% YoY).

• Expectation of margin recovery in Q4, supported by strengthened recruitment and sales force.

• Strategic initiatives to accelerate growth toward "SHIFT3000" include expanding AI and SaaS offerings, and further M&A.

• No change to previously announced guidance.