SHIFT Inc. (3697): FY2025 Results Summary — Operating Profit Up 48% on Record Gross Margin

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SHIFT Inc. (TSE Prime Market: 3697) announced on October 14, 2025 its earnings results for FY08/2025, the fiscal year ended August 31, 2025. Consolidated net sales rose to ¥129.8B (+¥19.2B, +17% year on year), while gross profit margin (GPM) reached a record-high 34.7% (+2.7pt) and operating profit grew to ¥15.6B (+¥5.1B, +48%). Profit at each level exceeded the company’s forecasts, with profit attributable to owners of parent reaching 113.1% of the forecast.

Consolidated Results (Full-Year Actual)

For the full year, net sales grew 17.3% to ¥129,819 million, and gross profit rose 27.3% to ¥45,016 million. The company states it achieved a record-high GPM of 34.7% (up 2.7pt from 32.0% in FY08/24), attributing the significant improvement to a sustained high utilization rate. EBITDA increased 40.6% to ¥18,868 million (EBITDA margin 14.5%, +2.4pt), and profit attributable to owners of parent jumped 74.3% to ¥8,935 million.

Item (M JPY)	FY08/25	FY08/24	Change
Net Sales	129,819	110,627	17.3%
Gross Profit	45,016	35,360	27.3%
GPM	34.7%	32.0%	2.7pt
SG&A expenses	29,387	24,823	18.4%
EBITDA	18,868	13,424	40.6%
Operating profit	15,628	10,537	48.3%
OPM	12.0%	9.5%	2.5pt
Ordinary profit	15,181	10,753	41.2%
Profit before income taxes	13,674	9,032	51.4%
Profit attributable to owners of parent	8,935	5,127	74.3%

Against the FY08/25 performance forecast, net sales came in at 99.9% of the forecast of ¥130,000 million, while operating profit reached 104.2% of the ¥15,000 million forecast, ordinary profit 104.7% of the ¥14,500 million forecast, and profit attributable to owners of parent 113.1% of the ¥7,900 million forecast.

On the balance sheet, total assets stood at ¥77,001 million at year-end (+22.8% year on year), of which cash and deposits were ¥23,726 million. Shareholders’ equity was ¥40,598 million (+20.5%) and the shareholders’ equity ratio was 52.7%. Capital efficiency improved markedly: ROE rose to 24.1% (from 16.4%), ROIC to 18.6% (from 13.3%), and ROA to 12.8% (from 9.1%).

Segment Results

Driven mainly by improved utilization across the entire SHIFT Group, gross margins increased in all segments. Software Testing Related Services, the largest segment, grew net sales 18.2% with GPM up 3.4pt to 36.8%. Software Development Related Services grew 14.6%, and Other Proximate Services grew 29.0% with a GPM of 45.4%.

Segment	Net Sales (M JPY)	YoY Change	GPM	GPM YoY
Software Testing Related Services	84,295	+12,953 (+18.2%)	36.8%	+3.4pt
Software Development Related Services	40,128	+5,120 (+14.6%)	26.1%	+1.1pt
Other Proximate Services	10,741	+2,414 (+29.0%)	45.4%	+2.5pt

By industry, ERP was the largest area at ¥19.9B in FY2025 net sales (+14% year on year, +¥2.5B). Government agencies grew fastest at +49% to ¥5.1B, followed by telecommunications at +38% to ¥11.6B and mobility at +26% to ¥6.8B. Entertainment (social/consumer game related) declined 5% to ¥5.6B.

FY2026 Targets

For FY2026, the company presents targets of ¥150B in net sales, a GPM of 34.5%, an SG&A ratio of 22.5%, and adjusted operating profit of ¥20B, compared with the FY2025 results of ¥129.8B, 34.7%, 22.6%, and ¥17.6B respectively. The company notes that adjusted operating profit is operating profit plus goodwill amortization, customer-related asset amortization, and incidental costs incurred during the M&A process such as advisor fees and due diligence.

Item	FY2026 Target	FY2025 Result
Net Sales	¥150B	¥129.8B
GPM	34.5%	34.7%
SG&A Ratio	22.5%	22.6%
Adjusted Operating Profit	¥20B	¥17.6B

Shareholder Returns

The results presentation does not include a section on dividends or share repurchases. The shareholder return policy cannot be confirmed from the materials.

Medium-Term Plan / Topics

Under its growth roadmap toward “SHIFT3000,” the company targets net sales of ¥200B with adjusted operating profit of ¥35B in FY2027-28, and net sales of ¥300B with adjusted operating profit of ¥75B in FY2030, aiming to trigger a phase transition early and achieve these ahead of schedule.

On M&A, SHIFT executed five M&A deals in FY2025 and announced two deals in FY2026, bringing cumulative M&A transactions to 38 as of the end of August 2025, with no impairment losses across its 25 SIer acquisitions to date. The company plans to establish a sub-fund with a fund size of ¥3B (general partner: SHIFT Growth Capital Inc. and others) and welcomed Yosuke Sasaki, a founding member of the SoftBank Vision Fund, as advisor to strengthen M&A initiatives.

In hiring, FY2025 consolidated hiring results were 2,217 people, with an FY2026 hiring target of 2,500 to 2,700 people, including 500 new graduates (up from 380 in FY2025). In AI, generative AI usage has reached approximately 90% of parent company employees, AI-related net sales (consolidated) stand at ¥590M per month, and the company recorded a cost reduction effect of approximately ¥150M in FY2025. The company was also selected as a constituent of the Nikkei Stock Average, with calculation including SHIFT commencing from October 1, 2025, and maintained the highest AAA rating in the MSCI ESG Rating in 2025.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.