Future Q2 FY2026: Net income up 13% but year-end dividend scrapped

Future posted first-half revenue of ¥38,322 million (up 7.5% year-on-year), operating profit of ¥7,379 million (up 3.8%), and net income attributable to owners of the parent of ¥5,165 million (up 13.0%). The gross profit margin was almost flat at 47.4% versus 47.6% a year earlier. Selling, general and administrative expenses rose, causing the operating margin to slip to 19.3% from 19.9%, but a sharp rise in net income was driven by improved non-operating income and the absence of extraordinary losses. EBITDA came in at ¥9,045 million (up 3.2%).

Full-year guidance was left unchanged: revenue ¥80,600 million, operating profit ¥17,500 million, and net income ¥11,800 million. First-half progress rates stood at 47.5% for revenue, 42.2% for operating profit, and 43.8% for net income, broadly on track with large-scale projects expected to ramp up in the second half. The biggest surprise was the revision of the year-end dividend to zero, slashing the annual dividend from ¥46 to ¥24. The move suggests management is steering cash toward growth investments.

The company reports under two segments: IT Consulting & Services and Business Innovation.

IT Consulting & Services revenue climbed 9.1% to ¥34,653 million, with operating profit rising 4.3% to ¥7,580 million. The core Future Architect unit benefited from the smooth rollout of its cloud-based next-generation banking system for SBI Shinsei Bank, alongside large-scale transformation projects at trading houses and beverage makers, and a government healthcare DX initiative. In AI, the launch of the “FutureBANK AI HUB” linked to a loan support system and the opening of a research lab signal an accelerating push toward AI-driven solutions. Subsidiary Rivamp grew revenue on expanding DX services but saw profit decline due to hiring costs. Future Inspace also reported higher revenue but lower profit. FutureOne increased both revenue and profit by industry-specific sales of its InfiniOne package software. Future Artisan delivered higher revenue and profit from strong PLM/BOM projects, while Future Securewave suffered a revenue and profit drop as some orders shifted to the second half.

Business Innovation revenue declined 5.9% to ¥3,532 million, yet the segment swung to an operating profit of ¥67 million from a ¥67 million loss a year earlier. YOCABITO narrowed its operating loss through structural reforms that improved gross margins and cut fixed costs. Tokyo Calendar posted higher revenue and profit on strong advertising and event income. Livertz grew revenue and profit by expanding sports team system deployments. Curiosity, however, saw revenue and profit fall as soaring construction costs led to the cancellation or postponement of high-end hotel projects.

Total assets at end-June 2026 stood at ¥97,702 million (up ¥210 million from year-end). Cash and deposits increased ¥3,561 million, and investment securities rose ¥1,444 million, more than offsetting a decline in trade receivables. Liabilities fell to ¥31,264 million (down ¥3,471 million), mainly due to repayment of long-term debt (down ¥1,428 million) and lower accrued income taxes. Net assets expanded to ¥66,437 million (up ¥3,682 million), lifting the equity ratio to 68.0% from 64.4%.

Operating cash flow surged to ¥8,473 million (up ¥1,612 million year-on-year). Investing cash flow was negative ¥1,433 million on purchases of tangible and intangible assets and investment securities, while financing cash flow was negative ¥3,519 million due to debt repayment and dividend payments. Cash and cash equivalents ended the period at ¥36,361 million.

On shareholder returns, the interim dividend was raised to ¥24.00 (from ¥23.00), but the year-end dividend was revised to ¥0.00. Consequently, the annual dividend falls to ¥24.00 from ¥46.00. The company cited a comprehensive assessment of the business environment and investment opportunities, indicating a preference for retaining cash for growth. No share buybacks were conducted during the period.

Full-year consolidated forecasts are unchanged: revenue ¥80,600 million (up 6.1% year-on-year), operating profit ¥17,500 million (up 8.2%), and net income ¥11,800 million (up 0.7%). The first-half progress of 47.5% for revenue and 42.2% for operating profit leaves the company on track, given the planned concentration of large-scale project deliveries and new implementations in the second half. Strengthening AI foundations and the rollout of the next-generation banking system are key growth drivers.

Future is positioning itself as the “No. 1 AI Social Implementation Company,” with a strong focus on deploying AI in real-world settings. This half saw the activation of the “FutureBANK AI HUB” and the establishment of the “Future AI Science Laboratories,” underscoring an accelerating build-out of its AI platform. The decision to implement the next-generation banking system at SBI Shinsei Bank is particularly significant as it lays the groundwork for expanding recurring revenue.

Meanwhile, structural reforms at subsidiary YOCABITO are progressing, and Tokyo Calendar’s online services are showing revenue growth, illustrating diversification beyond core IT. On the other hand, the slashing of the year-end dividend reflects a deliberate shift in capital allocation toward growth investments. The sharp rise in recruitment expenses, up 122.6% to ¥1,071 million, highlights the intense competition for talent in a tight labor market.

The operating environment remains uncertain. Higher oil prices, inflation, rising long-term interest rates, a weak yen, and labor shortages pose ongoing risks, while the rapid evolution of generative AI is fundamentally altering demand for traditional IT services. Future is transitioning from generic IT services to AI-powered solutions, but intensifying competition and the risk of technological obsolescence are unavoidable.

On the operational front, the timing of large project orders and revenue recognition based on acceptance creates variability, as does the risk of project cancellations or postponements from external factors like the construction cost surge that hit Curiosity. The decision to eliminate the year-end dividend also signals a change in shareholder return policy, which will require careful communication with the market.