Account Closing Review

Consolidated Financial Results for the Three Months Ended June 30, 2021

(Adoption of the Accounting Standard for Revenue Recognition)

  • transcosmos (the Company) has adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and the related guidance since the beginning of the current first quarterly consolidated accounting period.
  • Accordingly, all sales generated from the transactions in which the Company has acted as an agent (i.e. agency transactions), such as in the Company’s internet advertising business, are presented on a net basis whereas, previously these were presented on a gross basis (total sales minus cost of sales).
  • In this report, the Company has restated the consolidated sales generated from the agency transactions in the first quarter of the previous fiscal year on a net basis from the gross basis (total sales minus cost of sales). For this reason, the amount has decreased by 4,848 million yen.
    Please note that there is no change in operating income line and below as a result of the above restatement.

(Units: millions of yen)

  Prior period
Current period
comparison (%)
Net sales 73,637 82,038 11.4
Gross profit 15,330 18,319 19.5
Selling, General & Administrative Expenses 11,988 12,627 5.3
Operating income 3,342 5,692 70.3
Ordinary income 3,421 5,540 62.0
Net income attributable to owners of transcosmos inc. 1,722 3,886 125.6

Qualitative Information Regarding Consolidated Business Results

In the business environment where our Group operates, demands for outsourcing services that lead to higher productivity, stronger cost competitiveness, and higher sales remain solid. At the same time, under the COVID-19 crisis, there is a growing need for services that enable companies to promote digitalization, build up e-commerce and other contactless sales channels, apply a teleworking model, and implement BCP measures.
Against this backdrop, as the digital transformation partner of our clients, our Group continued to take an energetic approach, and delivered both Digital Marketing • E-Commerce • Contact Center (DEC) services and Business Process Outsourcing (BPO) services that assist our clients in managing and transforming their businesses. At the same time, building on our Group’s immense execution capability, we have also played a role as a social infrastructure, proactively providing the national and local governments with services that assist them in carrying out various policies.
In addition, we have created and released services as well as enhanced our organizational structure in order to meet the accelerated demand for digital transformation (DX) in both the public and private sectors.
Specifically, we began full-scale operations of support desk services for home-based contact centers (CC) with the aim of further spreading the home-based CC service model. By providing solutions that address the four challenges of the home-based CC model (security, call quality, productivity and home-agents’ sense of loneliness), we powerfully encourage businesses to make it a regular business model, which shows high business continuity capabilities under the prolonged COVID-19 crisis. We also released a packaged service that combines a COVID-19 vaccine booking system for receiving a COVID-19 vaccination run by municipal governments across Japan, and “DEC Bot for Government,” our chatbot services that enable citizens to fill out pre-vaccination screening questionnaire online instead of filling the form out at the vaccination sites. All citizens need do at the group vaccination sites is print out the form using the QR code they receive when they complete their online form. With those features, the packaged service helps municipal governments avoid the 3Cs (Closed spaces, Crowded places, Close-contact settings) at their vaccination sites, and cut back on staff workload. In addition, we joined the ServiceNow Sales and Service Provider Partner Program modules. This expands our work with ServiceNow as a member of the ServiceNow Sales and Service Provider Partner Program modules in Japan. Membership in this partner program module enables us to deliver IT outsourcing services with Now Platform, which may include sales of Now Platform, resale of products or services, and operate Now Platform in a managed service capacity on behalf of our clients.
With regard to our initiatives for enhancing our organizational structure, we renamed our Nagoya office Chubu office, and opened the Kyushu office, relocating and expanding the existing Fukuoka office. By consolidating all sales-related functions into the new office, we will enhance our service delivery framework for the DX services, as well as expanding the contact centers located in Kyushu and Okinawa, thereby growing its business in the region. In addition, we setup the DX Promotion Division to strengthen the link among various DEC services in order to push its multichannel integrated services. We will enhance our services that comprehensively help our clients achieve DX.
We have also promoted our initiatives for accelerating global expansion. In Malaysia, we opened the third operations center in Kuala Lumpur to accommodate business growth. With the operational hub that enables us to offer services in as many as 25 different languages, we will further enhance and drive our multilingual services. In Indonesia, we opened a new operations center in Jakarta with a reorganized service delivery framework and reinforced IT facilities. Moreover, we beefed up our sales team targeting the ASEAN market and our Group’s global development framework in Singapore.

Business Results by Segment

1. Parent Company

Parent Company achieved sales of 56,935 million yen, up 9.1% from the same period last year, primarily due to expanded demand for our outsourcing services. The segment income increased by 67.4% from the same period last year to 3,944 million yen due primarily to higher profitability generated from existing projects, and a better selling, general and administrative expense as a percentage of sales.

2. Domestic Affiliates

Domestic affiliates’ sales resulted in 9,506 million yen, up 18.7% from the same period last year, due primarily to a steady increase in orders in listed subsidiaries. The segment income grew by 67.1% from the same period last year to 1,032 million yen due primarily to a healthier profitability in listed subsidiaries.

3. Overseas Affiliates

Overseas affiliates achieved sales of 18,178 million yen, a 17.2% increase from the same period last year, and the segment income of 704 million yen, a 94.4% increase from the same period last year, due primarily to an increase in orders and a better profitability in subsidiaries in South Korea and South East Asia.

Note that all segment income figures are calculated based on the operating income shown on the quarterly consolidated statement of income.

■ Consolidated net sales per segment for the three months ended June 30, 2021

Business Results by Segment

*Note: Elimination of inter-segment transactions of ¥-2,582 million is not included.

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