ZIGExN Co., Ltd. (3679) Q3 2026 Earnings Call Transcript

ZIGExN Co., Ltd. Q3 Financial Results Briefing for the Fiscal Year Ending March 2026 February 9, 2026

Event Summary [Company Name]

ZIGExN Co., Ltd.

[Company ID]

3679-QCODE

[Event Language]

JPN

[Event Type]

Earnings Announcement

[Event Name]

Q3 Financial Results Briefing for the Fiscal Year Ending March 2026

[Fiscal Period]

FY2026 Q3

[Date]

February 9, 2026

[Number of Pages]

31

[Time]

17:00 – 17:41 (Total: 41 minutes, Presentation: 25 minutes, Q&A: 16 minutes)

[Venue]

Webcast

[Venue Size] [Participants] [Number of Speakers]

2 Joe Hirao Sachiko Hatano

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Representative Director, Operating Officer, CEO Director, Operating Officer

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Presentation Hatano: Thank you for watching ZIGExN Co., Ltd.’s web briefing today. Today, Representative Director Hirao and I, Director Hatano, will provide the briefing. First, I will explain today’s agenda. I, Hatano, will explain an outline of the financial results, and Hirao will explain the current external environment, our management strategy, and the progress in M&A. We will then proceed to the Q&A session. I will now move on to the explanation of the financial results overview.

First, let me briefly explain the highlights. In Q3, results were revenue of JPY20,891 million, EBITDA of JPY5,394 million, and operating income of JPY4,161 million. Driven by the growth of existing businesses, centered on Ties, and contributions from M&A, we ended with YoY increases in both revenue and profit. Progress toward our earnings forecast remains within expectations, taking into account the peak season in Q4. Also, as part of improving management efficiency, to strengthen recruitment support in the logistics industry and improve management efficiency, Awesome Agent absorbed Sanko Ad effective October 1, 2025. In M&A, within life service, we made Quantum Reservation a wholly owned subsidiary, which operates a hotel bedbank business for travel agencies in Southeast Asia, centered on Singapore. Going forward, we plan to pursue M&A opportunities actively regardless of whether they are domestic or international, or their scale.

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In vertical HR, at Ties, revenue on both a joining basis and an offer-acceptance basis continues to maintain high growth, and at REJOB, new client acquisition continues to expand. PMI for new M&A is progressing generally smoothly. In living tech, demand is declining in the moving and renovation domains, but cross-selling in the energy domain is performing well, supported by the growing momentum for households to review their expenses. In life service, in the travel domain, leisure travel demand has been trending moderately due to the impact of the weaker yen, but business travel demand remains steady. We executed the M&A of Quantum, and we also promoted management integration of some low-profitability businesses.

Next, quarterly performance trends. In Q3, revenue increased 13.6% YoY to JPY7,114 million, EBITDA increased 4% YoY to JPY1,741 million, and operating income decreased 1.4% YoY to JPY1,310 million. Revenue increased both YoY and QoQ, including the consolidation effect of M&A. As for profit, due to changes in the portfolio mix resulting from new M&A and upfront investments centered on Ties, the profit margin has shown a slightly declining trend, but EBITDA ended at a record high for Q3.

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Next, this is the progress rate toward the full-year earnings forecast. The progress rate toward the earnings forecast for the fiscal year ending March 2026 was 75% for revenue, 73% for EBITDA, and 71% for operating income. Revenue is progressing steadily toward the earnings forecast, supported by the growth of existing businesses and the consolidation effect of new M&A. On the profit side, due to upfront investments in vertical HR, there remain some challenges in the growth rate, but progress toward the earnings forecast remains within expectations.

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Next, regarding the number of corporate clients and the corporate client unit price. The number of corporate clients was 24,179, and it has been steadily increasing due to progress in developing clients in existing businesses and contributions from new M&A. The unit price per corporate client has been steadily increasing due to changes in the product mix associated with the expansion in performance of high unit price businesses. We will continue to build up corporate clients and increase the unit price per client.

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Next, this is the trend in profitability by segment. In Q3, the operating income margin before allocation of common costs was 20% for vertical HR, 21% for living tech, and 24% for life service. In vertical HR, the profit margin in Q3 itself declined due to an increase in the personnel cost ratio caused by seasonality, specifically an impact of approximately 3.5% on the QoQ decline in Ties’ profit margin, and changes in the sales mix due to new M&A, specifically an impact of approximately 2.7% on the QoQ decline in profit margin due to the effect of new M&A such as AnyCareer and Alpha Staff. However, since Q4 is the peak season for recruitment placement businesses such as Ties, we expect a profit margin improvement of around 5%. For living tech, although there are businesses in the midst of PMI, we maintained a level equivalent to the previous year. This segment is also in its peak season in Q4, so we expect a profit margin improvement of around 5%. For life service, improved profit margins in the travel domain and in comparison media businesses, driven by business management with a focus on profitability, contributed to results. We also implemented management efficiency improvements for some low-profitability businesses, and as a result of these initiatives, although revenue decreased YoY and QoQ, profit increased, and we ended accordingly.

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Next, this is the quarterly trend in expenses. In Q3, personnel-related expenses and advertising and sales promotion expenses are on a slightly increasing trend due to the impact of business investments at Ties and the impact of newly added group companies, including Alpha Staff. We will gradually optimize them while taking into account the status of business investments and PMI.

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Next, this is an analysis of changes in profit metrics. This is an analysis of changes in operating income and EBITDA for the nine months through Q3 from the same period of the previous year. As shown in the chart below, operating income increased only slightly YoY due to the impact of human capital investments in vertical HR, marketing investments for business expansion, and system investments, including software development. In addition, the difference between EBITDA and operating income is widening compared with the previous year, mainly due to increases in software amortization and depreciation associated with system investments.

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Please look at revenue trends by domain. In vertical HR, we maintained high growth mainly in the manufacturing domain and the construction and real estate domain, and due in part to the consolidation effect of new M&A, revenue increased significantly YoY, rising 34% and 34.3% YoY. In living tech, revenue increased steadily, up 7.3% YoY, due to successful cross-selling in the energy domain and growth in the cross-border real estate business, among other factors. In life service, we promoted business operations with a focus on profitability, and revenue decreased slightly YoY. In addition, since we executed the management integration of Awesome Agent and Sanko Ad in Q3, approximately JPY60 million shifted from life service to vertical HR. That concludes my presentation. Next, Representative Director Hirao will explain the current external environment, our management strategy, and progress in M&A.

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Hirao: I am Hirao, Representative Director of ZIGExN. I would like to talk about changes in the external environment and business progress. First, regarding VHR, as in the previous quarter, I believe both the client side and the user side have been performing steadily. On the other hand, looking at living tech and life service, particularly on the user side, amid inflation, and while exchange rates may be having an impact, for customers’ relatively high-spending decisions, we believe there may be some pullback in purchases, and demand may be declining somewhat. On the other hand, conversely, corporate needs are continuing to increase, and we believe that companies’ need to attract users is continuing to rise.

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I would like to explain each domain. Today, I would like to focus on vertical HR, VHR. In Q3, we updated our all-time high, and both posting fees and performance-based fees were updated. We also updated revenue. The number of clients, unit price per client, and the number of members are also increasing steadily. Since Alpha Staff, which newly joined through M&A, is a staffing business, it is included in “other,” so please refer to that.

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This is Ties. It is a company that is growing significantly, but this time the figures may look a little underwhelming at 15% and 18%. However, if you look at the bar chart for the previous fiscal year, there was a situation where offer acceptances were somewhat concentrated in Q3, and in terms of underlying strength, I believe it is stable at around 30%. When you split it by quarter, it results in growth of just under 20% this time. The unit price per client may also look like it is struggling to grow, but it is a company that is being used by many of Japan’s large companies, as indicated by “repeat clients” here. On the other hand, we are also increasing new orders. Structurally, as orders increase, the unit price per client declines, so it is not that we are indiscriminately taking on new clients, but we are managing the business while keeping the balance in mind. Since there are various timing points for recording, such as joining and offer acceptance, I would like to provide various explanations later today.

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First, these are the characteristics of Ties’ business. Basically, it has a structure in which revenue increases as people’s productivity increases, and if you look at the chart on the left first, proficiency increases by year. Since this is indexed, it may be difficult to understand, but if one person in their first year is set at 1.0, productivity becomes about four times higher when you consider growth in the second year. Many people likely exceed the break-even point in their first year, but once they go beyond their second year, profitability increases significantly for many people, and as their skills improve further in the third and fourth years, labor productivity improves, and this is the model we use. Basically, as written in the middle, as the productivity of consultants increases, their tenure extends, and the number of people increases, revenue increases, and for reference, on the right, we have shown “Consultant Headcount Trends.” We have been able to standardize operations steadily, and it is a recruitment placement business. If, after our M&A, people were to leave and such things were to happen, value would be significantly impaired, but fortunately, after we started working together, almost everyone has stayed, headcount has steadily increased, and I believe we can build a strong organization.

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As a key point in Q3, in Q3 this time, as a trend in several of our recruitment placement businesses, what we call the order backlog has been increasing, and we believe this will differ from the timing of joining and the timing of offer acceptances. This is shown in the bar chart below, but in terms of lead time, if it is long, it can be as long as about six months. If it is short, there is a lead time of about one to two months from offer acceptance to joining. In particular, depending on the job type, some months are somewhat concentrated, such as the timing when bonuses are paid, the New Year, people joining in April, and people joining in October, so roughly the month before becomes the peak season. However, in terms of recording, for us, it is not the timing of offer acceptance but the timing of joining, so please note that the order backlog has been increasing significantly at present. In December 2025, compared with the previous year, not only Ties but also Applebase and AnyCareer have increased as recruitment placement business companies, so the order backlog is growing significantly compared with last year. Hatano provided the financial report, and this is a view on Q3 on a standalone basis, but if we do not also take this order backlog into account, I believe our earnings, our results, could become misread, so I would like to emphasize this time that the order backlog is increasing. However, within the two to six months, since it is now December, there are those that will fall into this fiscal year through March and those that will fall into Q1. Since going forward, there will be people who join and also people who subsequently decline, I believe we need to make investments while carefully assessing this.

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I think the significant increase in revenue orders in December will be split between those that will impact through March and those who will join after April. In a typical year, Q4 has been a very busy season, but the level of busyness is increasing further in Q4. Also, similarly, Q1 and our busy seasons have been Q4 and Q1, but since the concentration of human resources there is gradually increasing, we believe the weighting toward Q4 and Q1 will gradually increase.

We are also advancing M&A within Ties, and since performance is very strong, I would like to provide a progress report. This is a company that operates an RPO business, which provides recruitment outsourcing for HR departments, and we have brought URG, Ultimate Resources Group, into the Group from this fiscal year. Recently, while the Company operates RPO, it is also a recruitment placement company, and the chart on the left shows YoY revenue growth for the recruitment placement business. It is growing significantly. Since it is still small, the base was small, but YoY is plus 160%, which means it has become 2.6 times compared with the previous year. In addition, if you look at revenue on the right side, RPO, which is our core business, also increased 90%, and it is growing very strongly. While leveraging synergies with Ties, and although this domain has many consultants, I believe we were able to expand and grow it, expanding from consultants to manufacturing and so on. We have been able to horizontally deploy our know-how, and we believe we are also laying the groundwork to expand not only this recruitment placement business, but also RPO and other offerings horizontally.

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For living tech this time, we have limited it to this one slide, and the red area is the key point. This time, what is growing particularly is the energy domain, and in addition, although it is still a small business, we have been developing overseas businesses, such as a cross-border real estate investment business. I believe this also grew steadily in Q3. Overall, the revenue growth rate was just under 10%, but when you combine growth in the areas that are growing and areas where growth is somewhat flat, it comes to just under 10%. Looking at it in parts, I think several businesses have emerged that are growing significantly.

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From here, I will discuss progress in our management strategy and M&A, and since this fiscal year is the final year of the second mid-term management plan, we have reposted it.

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I explained this as well last time, but we currently operate two types of businesses: recruitment placement and staffing, and job advertising media, which are platform-type businesses. In particular, under the second mid-term management plan, I believe we were able to expand our scale by actively expanding in the HR business. I believe we have finally exceeded JPY10,000 million in revenue. I believe we still have not reached the single-digit revenue level, so we would like to further grow this area and mix this know-how.

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M&A is also a very good fit for us, and through roll-ups, particularly in the recruitment placement business, as shown in the chart on the left, the number of people becoming independent has been increasing significantly. However, while the number of people becoming independent is increasing, once companies reach a certain size, various issues arise, such as challenges in attracting users, matching, and system investment, so I believe the number of companies that choose to sell will increase at some point. In recent years, there has also been discussion of the “Growth 10 billion issue,” so I think more companies that previously had only the option of an IPO are now increasingly considering M&A. I believe this is because the number of business establishments is increasing. Although not to the same extent as recruitment placement, staffing has also been growing quite steadily since COVID, and in staffing as well, fairly large companies have been pursuing M&A earlier than in recruitment placement, and I believe consolidation is progressing significantly.

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In areas where we have strengths, such as vertical HR, this has already been happening in the staffing business. Companies that are strong in construction, companies that are strong in manufacturing, and various other companies have emerged, and while the number of companies is increasing, we believe there may be roll-up opportunities going forward. Within our group, we would like to identify domains where recruitment placement operates and domains within staffing where we can be aggressive, and further sharpen our focus in these verticals.

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As shown on page 24, our domains have expanded considerably, and since we are pursuing M&A, which continues to expand the market size of the areas we enter, we are currently operating in seven domains, I believe. If you look in more detail, including AnyCareer, which REJOB acquired through M&A, we operate in eight domains. We would like to continue expanding horizontally, and in a compounding manner, as mentioned earlier, also expand our business models within those domains.

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Although the scale was quite small this time, we conducted one M&A transaction involving Quantum Reservation, a Singapore-based company, in the travel domain within life service. This is like an overseas version of Apple World’s business in Japan, and it is a company engaged in B2B travel services. In particular, it operates a business that provides hotels in Southeast Asia and travel inventory to travel agencies. It is called a bedbank, and we believed there would be synergies by linking it with Japan inventory and, conversely, selling Japan inventory overseas. This M&A was executed through Apple World, rather than ZIGExN. As with AnyCareer at ReJob and URG Ultimate Resources Group at Ties, we would like to horizontally deploy our M&A across group companies, expand further, and increase speed.

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Finally, I would like to introduce some of our AI initiatives. This is a repost, but we are introducing AI, generative AI, and AI agents across each domain. In HR, many initiatives are still more on the back-office side rather than the front line, but these include automating scout messages and how to match resumes with job postings. In living tech, since we operate call centers, we are using AI to improve productivity there, and I believe productivity efficiency has improved significantly. For life service, as shown for travel, we are working to automate areas such as quotations, which are still handled inefficiently by customers on paper in many cases.

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There has been a lot of news recently about various global companies making progress with AI, and we are as well. We looked at the ratio between code written by humans and code written using AI, including AI agents, and it has already exceeded about half, and I believe this trend will continue to expand. For some projects, as shown in the chart on the right, it has reached around 80%, and AI-native source code has already become the core. By continuing to improve productivity in this way, we are starting with engineers, but we believe AI is a very good fit for other roles, particularly white-collar roles, so we would like to continue expanding it.

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In addition, since it is the same as the previous quarter, regarding the balance sheet, our goodwill-to-equity multiple is 0.6x. We would like to continue to invest aggressively in M&A. That concludes my presentation. Thank you very much for your attention.

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Question & Answer

Hatano [M]: That concludes our presentation, and we will now move on to the Q&A session. We have received several questions, and we would like to respond to them in order. Participant [Q]: Regarding the operating income margin before allocation of common costs, you said that in vertical HR, you expect the margin to improve by around 5% in Q4 due to the peak season for Ties. After Q4, can we expect a further improvement to around 30% as PMI progresses and the impact of seasonal personnel costs disappears? Hirao [A]: I will answer. I believe that, mainly due to Ties, the operating income side looks like VHR declined significantly in Q3. If you look at VHR alone, this Q3 includes a staffing business called Alpha Staff, which accounts for around 2% to 3%, around 2.7%, and this is a factor causing the profit margin to decline QoQ. If you look at Ties alone, I believe that in Q4, as you asked, a profit margin of over 30% could be achieved, but there is also a mix with Alpha Staff and other businesses. I believe you are looking at the dotted line shown here, but on page eight, Q4 of the previous fiscal year was 33%, so I do not think it will reach that level. If you follow this dotted line, you will see the profit margin that we are expecting. However, in terms of Ties alone, I understand that we will be able to achieve the order of around 30% that you mentioned. That is my answer. Hatano [M]: Next, we have received several strategic questions, so I would like to present them one by one. Participant [Q]: While vertical HR is becoming a clear pillar, my impression is that living tech and life service have not reached that level yet. Three years from now, is ZIGExN aiming to be an HR-focused HR company, or a portfolio company with multiple businesses, and which are you aiming for? While vertical HR is becoming a clear pillar, my impression is that living tech and life service have not reached that level yet. Hirao [A]: I will explain. If it is between the two you mentioned, we would like to aim for the latter. We would like to maximize our life infrastructure while growing multiple business entities within our group. We recognize that the current HR market is very strong. Particularly in Japan, I think it is becoming one of the major markets. Of course, amid a declining population, I think this paradox will continue for another 10 years or 20 years, but we believe it is important what position we can take within that. However, as you pointed out, you are looking at the recent growth rates of living tech and life service, and it feels like a clear division between winners and losers is emerging. ZIGExN has expanded horizontally into various domains, but rather than a market shakeout, factors such as inflation and the population declining further are making it necessary for any business in Japan to pursue survivability, and I think there are also some areas where we will further increase cash conversion.

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For us, we will carefully select markets, and since you may ask about this later, we would like to capture new opportunities and manage the Company as a portfolio company with multiple business entities. Participant [Q]: This is a question regarding M&A. To date, your M&A has mainly been a roll-up type. As your next move, are you considering discontinuous M&A that changes your business structure, or is your policy to thoroughly pursue roll-ups? Hirao [A]: I will explain. Basically, we believe roll-ups are one of the more general approaches to M&A. If it becomes a roll-up, I think it tends to be easier to succeed in horizontal expansion. However, with bolt-on deals such as URG, which we did recently, and although it is in a domain we did not have, approaches that are half roll-up and half bolt-on are a very good fit, and as I mentioned earlier, we have been able to generate PMI growth rates as introduced. While horizontally deploying our know-how, rather than simply wrapping, we also bolt on, and we have divided our strategy into several types within our group. We believe there are quite a few companies where the same customers have different needs, and we would like to expand our products. In that regard, for discontinuous areas or domains where we do not have know-how or expertise, we would like to actively buy time and know-how. In terms of numbers, roll-ups will likely continue to account for the majority, but within that, we have created a shortlist of some domains where we would like to invest and win that know-how. In those areas, I think we will pursue the kind of discontinuous M&A you mentioned. After acquiring that know-how, I believe we will then proceed with roll-ups. That is my answer. Participant [Q]: What would you, President Hirao, personally like to call ZIGExN as a company 10 years from now? I assume you are considering an HR company or a matching platformer, among other possibilities, but what are your thoughts? Hirao [A]: I will answer. Among what you wrote, we would like to be the latter, a matching platformer, and we believe this will not change even 10 years from now, while keeping matching businesses at our core. To go further, I believe it is the topic of AI that has been discussed recently, and there may have been a lot of discussion in the capital markets since around last week about SaaS is Dead, but while we are a matching company, we place importance on verticals. Over the next 10 years, we would like to be a company that provides AI and AI agents to specific, highly specialized domains. A company that originally engaged in matching as a media company has recently entered the HR industry, and we came to understand that, in addition to the domain of matching online through marketing and matching through digital technology, the capital market for matching by human hands is also very large. We believe there are users who want an extra push, and we believe that AI still cannot do the part that goes beyond simply lining up data in an impersonal manner. Ties originally wanted analog matching, but we would like to combine the domain of matching in an analog way, the domain where sales capabilities become strong, with the domain where we do digital matching through marketing and technology. It depends on how AI agents will evolve, but as the Company Quantum Reservation that I explained today is doing, we believe that Web and SaaS, which have been built with human-to-human interfaces, will increasingly shift so that the UX becomes AI-to-AI.

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I believe APIs will increasingly become the foundation, so we believe we can further roll out this flow of UI and this flow of APIs across our Apple World and other HR businesses. We believe this can be rolled out not only in Japan but also overseas, in terms of cross-border expansion. We believe it would be very interesting to become a company that converts this global vertical data into APIs and matches it through AI. If we can create a world where it is divided into the part that is automated and the part where humans provide a firm extra push, and those are integrated, then 10 years from now, as a matching platformer, although we may need to select domains in various ways, we believe we will be able to play an active role. Participant [Q]: This may overlap in part with your previous answer, but this is a question about the use of AI. My impression is that the current use of AI is strongly focused on improving efficiency. Do you have a concept for using AI to create a competitive advantage that competitors would find difficult to imitate? Hirao [A]: This overlaps slightly with what I mentioned earlier, but as I said, I believe three components are necessary for the use of vertical AI agents. I believe it is very important to make something specific and vertical into a domain. Of course, for generalpurpose models, I think the competition among LLMs themselves will be a battle on the scale of hundreds of trillions, but for a small company like us, I believe it is important to firmly enter vertical domains, particularly in the B2B area, in a proper way. As you may already know, having proprietary data has become very important, and that was said even before AI emerged, regarding how much proprietary data you have. The third point is the shift from UI to API that I mentioned earlier. From here, I think the way monetization works may change. This is a world where robots will automate more and more, whether it is media, SaaS, contract development, or consulting. It will increasingly shift from customer ID-based to outperform, outcome based, and at that time, where to monetize will likely become an area where each company’s capabilities will be tested. Therefore, SaaS that charges per ID, and for media, markets that charge posting fees, and operators that were able to receive payments reliably even if results did not materialize, will likely no longer be able to receive money based on that alone. Sharing revenue from what customers earn, and so on, and since we are still in a transition period, until around 2030, I wonder how it will be. At this stage, I believe the mainstream will still be contract development and per person-month pricing, rather than success-based fees. As for 10 years from now, I believe that will likely be eliminated, and not only UX but also monetization, monetization methods that are explainable to customers, a sense of unit pricing, and competitive advantages in pricing, may become one of the things that cannot be imitated. When the information media emerged, the question was how to obtain data with scarcity. I do not think that has changed, but costs will continue to decline. This was also the case in the Web 2.0 era, and I think it was a cost revolution. Going forward, it will be an outcome revolution, and as AI takes that form, I believe it will become a world where only companies that can internalize that will be able to do it, and with human hands, pricing will not be feasible. I believe the combination of vertical, proprietary data, and UX business models is important. That is my answer.

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Hatano [M]: Those are the five questions we received. Thank you for watching and for sending in so many questions. Since it appears there are no further questions at this time, we will conclude this web briefing. Thank you very much for your attention. Hirao [M]: Thank you. [END]

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Document Notes 1. 2. 3. 4.

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Portions of the document where the audio is unclear are marked with [inaudible]. Portions of the document where the audio is obscured by technical difficulty are marked with [TD]. Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides an answer from the Company, or [M] neither asks nor answers a question. This document has been translated by SCRIPTS Asia.

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