Financial Performance of $3679 (+0.66%)
Revenue: ¥6,759M (+9% YoY, record Q1)
EBITDA: ¥1,801M (+1% YoY)
Operating Income: ¥1,416M (-2% YoY) – impacted by one-off M&A costs (~¥35M)
EPS: ¥9.69 (+2% YoY)
All major indicators at 24% progress toward FY forecast; guidance unchanged.
Segment Trends
Vertical HR: ¥2,929M revenue (+10% YoY) – strong growth in “Ties” and M&A additions.
Living Tech: ¥1,694M (+29% YoY) – boosted by insurance & reuse acquisitions, cross-selling gains.
Life Service: ¥2,136M (-3% YoY) – travel sector strong in business travel, leisure moderated; non-core businesses still a drag.
Strategic & M&A Progress
Achieved “Z Core” (¥10B revenue) in Vertical HR ahead of schedule via multiple M&As.
Recent deals:
AnyCareer (Pharma HR) – ¥2.92B acquisition (Sep 2025).
USAEL (Travel DX) – ¥325M acquisition (Jun 2025).
URG (RPO & job placement) – ¥400M acquisition (May 2025).
14 M&A deals in 2nd mid-term plan (~¥6.6B invested); larger deals (Ties, TSD) made biggest impact.
Shareholder Returns
Buyback: Up to ¥700M (1.49% of shares); ~¥400M already repurchased.
Dividend: Increase to ¥11/share (prev. 10.5).
Treasury stock cancellation: 1.7M shares (1.52% of shares) in May 2025.
Shareholder benefit program: Up to 4.03% yield in benefits; total potential yield ~6.38%.
Financial Position
Equity ratio: 56.5%; goodwill-to-equity: 0.6x.
Cash & equivalents: ¥10.6B; total loans down to ¥2.8B.
Operational Initiatives
AI adoption across divisions to improve efficiency (resume/job post automation, scouting optimization, AI quotes in travel).
Portfolio rationalization: downsizing/combining low-margin businesses (e.g., Sanko Ad, MIRAxS).
Outlook & Risks
Inflation and weak yen affecting renovation, leisure travel, overseas real estate.
Tariff concerns in some HR clients but manageable.
Continued M&A focus across multiple domains with “roll-up” strategy in Vertical HR.
As the intention for this 🦆is to hold long-term, its natural to wonder if these are good results…
Yes — these are solid results overall, though not without some caution flags.
Why they’re good:
Record Q1 revenue & EBITDA despite some headwinds.
Revenue growth +9% YoY with strong momentum in Vertical HR (+10%) and Living Tech (+29%).
EPS growth (+2%) and steady margins suggest operational stability.
Guidance unchanged with 24% of annual targets already achieved in Q1 (on track).
Healthy balance sheet – low debt, strong equity ratio (56.5%), good cash reserves.
Active capital returns (buyback, dividend hike, benefit program) show confidence in future performance.
Continued M&A success — “Z Core” milestone reached ahead of plan in Vertical HR.
Caution points:
Operating income down (-2%) due to one-off M&A costs — not a structural issue, but worth tracking if integration expenses pile up.
Life Service segment still struggling (-3% revenue) due to non-core drag and macro headwinds (weak yen, inflation).
Inflation is weighing on renovations, leisure travel, and overseas real estate demand.
Heavy reliance on M&A for growth — organic growth needs to keep pace to avoid overdependence.
Bottom line:
✅ Strong top-line growth, healthy margins, and aggressive shareholder returns make this a good set of results.
⚠️ The main watchpoints are Life Service recovery, inflation impacts, and ensuring M&A integration delivers sustained profitability.
The market reacted with a -4% though…
That reaction isn’t too surprising — even “good” results can trigger a drop if:
1. Expectations vs. Reality
The market may have been pricing in stronger growth (especially in operating income and margins).
Operating income was down 2% YoY, and Life Service is still in decline — this can sour sentiment even if revenue is at record levels.
Heavy M&A focus can make investors cautious if they worry about integration risk or overpaying.
2. Forward-looking Concerns
Guidance was unchanged, not raised — so while results are on track, there’s no upside surprise.
Macro commentary mentioned inflation, weak yen, and demand declines in some areas — investors might see a risk to hitting full-year targets.
3. Profitability Mix
Growth is being driven heavily by acquisitions (Vertical HR, Living Tech), but organic growth may be less exciting.
Margins in Living Tech are around 25% (below target 30%), which might make analysts cautious.
4. Technical/Market Factors
The stock may have been overbought into earnings — a “sell the news” move is common if traders were front-running a beat.
Broader market conditions (sector sentiment, macro jitters) can magnify the drop.
Patito’s Take:
Fundamentally, this was a healthy quarter, but not a “blowout” quarter. The lack of a guidance raise + soft spots in Life Service + one-off costs likely made investors lock in profits.
Since we are holding for the long-term, the growth strategy (especially M&A in Vertical HR) still looks intact — but if we were to be trading short-term, this drop could continue until the price finds support, especially if volume is heavy.
For now Zigexn $3679 (+0.66%) is still boasting a Patito Score of 97 and a WB score of 9A ranking it in the top of our~3200 scored stocks and staying in the nest.
ps. Yes its fiscal year 2026 for Zigexn uses a March year-end 💡