SHIFT (3697.T): Lower utilization leads to profit miss, but earnings bottoming out on hiring restraint and AI business growth

Research evidence excerpt

SHIFT (3697.T): Lower utilization leads to profit miss, but earnings bottoming out on hiring restraint and AI business growth

Equity Research

15 July 2026 | 11:17PM JST

SHIFT (3697.T): Lower utilization leads to profit miss, but earnings

bottoming out on hiring restraint and AI business growth

SHIFT announced its 3Q8/26 (March-May) results following the close on July 15. 3Q Chikai Tanaka, CFA

+81(3)4587-9840 |

operating profits were ¥4.48 bn (+16% yoy), representing a substantial miss versus chikai.tanaka@gs.com

Goldman Sachs Japan Co., Ltd.

the Bloomberg consensus (¥4.91 bn) and the company assumption (c.¥5 bn). This

Yuki Sato

reflected the utilization rate dropping below expectations, mainly for small-scale +81(3)4587-8536 | yuki.z.sato@gs.com

projects, as the company prioritized future major and long-term projects. While this Goldman Sachs Japan Co., Ltd.

looks reasonable as an initiative to underpin medium-term growth, in the short term,

the hurdle to achieving profit guidance appears higher. The company revised down

its guidance from the adjusted recurring profit line downwards, taking into account

recent progress, the new consolidation impact of Nisseicom, and impairment losses

at Rise Consulting. Adjusted operating profit guidance was left unchanged at ¥20 bn,

but factoring in the increase in adjustment items (amortization of goodwill and

customer-related assets, etc.) associated with the new consolidation of Nisseicom,

we estimate that SHIFT’s operating profit target is down by around ¥500-900 mn

compared to previous guidance. This brings it closer to our estimate, which is lower

than initial guidance, and while this is not surprising to us, we note that earnings

remain on a somewhat lackluster trend. On the other hand, from 4Q onward the