Hello everyone and thank you for joining us. I'm Masaru Tange, President and CEO of SHIFT. Thank you for taking the time to attend SHIFT's earnings briefing for the fourth quarter and full year of the fiscal year ended August 2025. Today, I will present the FY 2025 highlights, followed by Kobayashi, who will explain our initiatives toward SHIFT 3000. We will hold a Q&A session after the presentations. If you have questions, please enter your organization and name, then join the chat to submit your question. We would appreciate it if you could submit your questions by the time our presentations conclude. With that, let me begin. Here are the highlights for FY 2025. As executive summary, revenue for FY 2025 reached JPY 129.8 billion. Gross margin was 34.7%, increased by 2.7 points year-on-year. The SG&A ratio was 22.6%, an increase limited to +0.2 points.
Operating income was JPY 15.6 billion, up approximately JPY 5.1 billion year-on-year. Let me break this down. We have divided it into consulting, development, testing, BPO, and others. Consulting saw a 40% growth. Given that market growth is around 9%, we substantially outperformed. Development grew 16%, while testing was 14%. In particular, BPO grew 328%. The revenue increased from JPY 0.7 billion previously to JPY 2.2 billion in FY 2025. I will provide details shortly. Another highlight this term beyond top-line growth was a significant improvement in gross profit. Our gross margin reached an all-time high of 34.7%. Here is the consolidated statement of income. We achieved improvements across all line items. Let me touch on key KPIs. We track consultant/engineer billing rates as a key indicator. These increased 11% year-on-year. Monthly project unit price also rose, and customer unit price increased accordingly. Next, a word on gross margin improvement.
As noted, consolidated gross margin was 34.7%. Parent only was 35.4%. Profitability at a project level improved markedly. In our high layer, defined unit price as JPY 1.5 million or more, the share rose from 14% in 2024 to 18.1% in 2025, for 0.1 point improvement. Along with this, gross profit margin of the group companies was 30.3%. For each group company, those with a gross profit margin below 20% accounted for 30% in 2024, but in 2025 accounted for 20%. It improved 9.4 points. In addition, across the parent and group companies, we put strong emphasis on raising utilization rate. To that end, we created dedicated assignment teams and, under a divisional structure connecting sales, delivery, and HR, communicated closely, contributing materially to margin improvement. Turning to SG&A. The SG&A ratio scaled appropriately with growth. Notably, recruitment spending became more efficient compared to the last year.
I would say we were able to restrain hiring costs. Here is the SG&A breakdown. We categorize SG&A into strategic costs and operating costs. Strategic costs primarily fund hiring of engineers/consultants and salespeople to drive revenue growth. Operating costs were 7.9%, essentially flat year-on-year. While yen depreciation increased, certain system usage fees and acquisitions bring in companies with higher SG&A ratios. As a result, operating costs came in at 7.9%. Conversely, we see room to further improve efficiency in these areas. Here is the consolidated balance sheet. The balance sheet expanded steadily in tandem, ROE, ROIC, and ROA improved versus last year, reflecting greater efficiency. Let me turn to M&A activity. In FY 2025, we completed about five acquisitions. Looking ahead to FY 2026, as of today, we have around two M&A deals agreed. Our M&A process has improved markedly.
In sourcing, the number of IMs obtained increased to 1.3x versus three years ago. For mid to large-size IMs, it was 2.3 x increased. It shows a step-up in our sourcing capability. On PMI, across about 25 SI-related acquisitions, we recorded zero impairments. Three years post-joining, acquired companies reached 2.7 x sales and 2.3 x EBITDA, evidence that our PMI capability has strengthened. With this track record, while we historically focused on deals at or below 8 x EBITDA, our stronger PMI and capacity for larger deals position us to pursue higher multiple transactions without goodwill write-downs, while maintaining operating profitability. To support this, beyond using our own cash for M&A, we are also putting new financing in place. First, creating a fund with SHIFT's capital to execute higher multiple deals within that structure.
Once proven, we intend to raise external capital, apply appropriate leverage, and build a framework for larger-scale M&A. To close the summary, let me cover four perspectives. First, hiring. Japan's market includes roughly 1.42 million engineers, with demand estimated around 790,000. In short, by continuing to hire, we can keep growing revenue. That said, engineering recruitment is an extremely tough market, with about a 10 times job-to-applicant ratio. Even so, we have one of Japan's leading recruiting teams, which helps us overcome that challenge. This year, we hired about 2,000 1,500 people, roughly 2,000 mid-career, and 500 new graduates reflecting our current capacity. Notably, we hired 500 new graduates and ranked number three in employer popularity. Leveraging this, we believe we can lift new grad hiring from 500 - 1,000 in FY 2026.
For mid-career hires, we are pursuing both scale and quality, and we believe we achieved quality goals in FY 2025. As noted here, we continue to bring in leaders capable of running entire divisions, so our recruiting engine is performing well. Second, sales. Given our hiring capacity and the size of the market, sales execution is critical. Sales capability in a very large market, sales strength is crucial. Sales are key to raising utilization and to delivering higher value services to higher-tier customers. We now have salespeople who can drive JPY 300 million, JPY 500 million per person annually. If we add about 90 sales hires group wide, we expect around JPY 21.6 billion in annual organic growth. Beyond volume, we will upgrade quality by hiring senior, highly skilled sales talent to lift unit price per both projects and customers.
Regarding our unit prices, our current consulting unit price is about JPY 1.9 million per month, while the industry average is around JPY 1.1 million. There is still room to raise unit prices. Our engineer unit price is around JPY 1.1 million, while the industry average of roughly JPY 1.5 million, so we believe engineer rates can increase. Hiring senior sales should help us secure larger, more complex engagements. Customer unit price is about JPY 8.9 million per month. Some peers are likely around JPY 100 million per month per account, implying roughly ten times potential. We aim to build toward that potential this year and prepare for further gains next year and beyond. Third, services. We are building competitive offerings across the DX market. In SI, winning RFPs is critical. Consulting has been the traditional path, and we are strengthening it to capture upstream work and win RFPs.
We have developed an AI modernization service that we believe can help us win RFPs. It is an epoch-making service that uses AI to visualize source code and automatically generate RFPs. From there we use Devin, an AI service that automatically generates source code to build software and microservices efficiently. As many customers, perhaps around 80%, struggle with migration, we now have a service we can deliver firmly into this market. In our founding business of testing a JPY 5 trillion market, we’ve built a Test CoE that proposes comprehensive testing organizations across entire customers, and we plan to drive sales here as well. We also created an AI-enabled consulting service. Large companies can pay large firm rates, but about 99.7% of Japanese companies are small/mid companies, and many cannot. We aim to serve that market with cost-effective, competitive consulting powered by AI. The ERP market is also sizable.
We already have a solid track record implementing ERP for small/mid companies underserved by larger vendors, and will keep hiring ERP talent to scale. We launched Wasurenai, a SaaS tool that visualizes all SaaS usage. From there, related BPO call centers, sales support, payroll, and more naturally arises. By capturing that BPO and combining it with consulting-led BPR, we can differentiate and grow revenue. We also developed Nakusanai, a service to manage corporate assets, PCs, desks, chairs, and other fixed assets, and will leverage it to deliver greater value to customers. In M&A and PMI, as noted, we have about 25 SI or PMI cases with no impairments, and we’ve been winning mid-sized deals over JPY 3 billion. We will go after higher multiple deals, strengthen financing with appropriate leverage, and we see FY 2026 as an exciting year. To close my section, here are our FY 2026 targets.
We target net sales of JPY 150 billion, about JPY 20 billion above FY 2025’s JPY 129.8 billion. Based on the capabilities I described, we believe this is achievable. We have set a conservative budget at JPY 150 billion. We conservatively target a gross margin of 34.5%, with disciplined management of utilization and the balance between sales and hiring. Our SG&A ratio target is 22.5%. As more companies join via M&A, SG&A can initially be heavy, but by establishing CoE and shared services of back-office functions, we expect to capture efficiencies and lower the ratio.
On an adjusted basis, we have budgeted operating income of around JPY 20 billion. Looking ahead, we’re targeting JPY 200 billion in 2027, 2028, and JPY 300 billion in 2030. In FY 2026, we aim to exceed JPY 150 billion and step up structurally. Within that, we plan a step change in hiring. For example, moving from 2,500 - 3,000 hires.
On sales, our current team already delivers, and adding senior talent should deepen customer engagement. If we capture higher-value consulting-led work and accelerate Test CoE or ERP, that could add about JPY 5 billion annually, with larger wins, potentially around JPY 10 billion. M&A contributed only about JPY 2 billion in FY 2025, but we now have access to larger clients. With our PMI capability, we believe we could execute plus JPY 10 billion- JPY 30 billion in FY 2026. All in, demand is strong. We have the recruiting capacity to meet it, and we’re strengthening sales, services, and M&A. Even on a conservative view, we intend to deliver JPY 150 billion. We will aim higher and strive to bring forward the FY 2028 target of JPY 200 billion as much as possible. That concludes my section. Next, Kobayashi will present the details of our specific initiatives toward SHIFT 3000.
Let me start with sales. We have prepared to deliver JPY 150 billion in FY 2026. With our current sales headcount, the attainable figures are shown here. At the parent, revenue per salesperson is about JPY 590 million. At group companies, it is about JPY 300 million. We see these levels as proof that our sales structure materials, playbooks, and mechanisms is in place. By adding sales headcount from here, we plan to drive year-on-year growth. Within sales, some individuals are better suited to delivery rather than frontline sales. We will reassign roles where needed and keep hiring 50 at the parent and 40 at group companies in FY 2026. Even assuming newcomers perform at half the benchmarks, JPY 600 million, JPY 300 million, this structure supports about JPY 151.4 billion. That is the capability-based path we are building. We have also strengthened account follow-up since last year.
Looking at the parent's distribution in 2024, some reps carried very heavy loads. By rebalancing account assignments and reassessing aptitude, shifting toward JPY 300 million, JPY 600 million per rep, we made follow-up easier and lifted overall sales capacity. As a result, visits, proposal unit prices, and cross-sell outreach increased significantly. A further upside we see in this capability is engineer billing rates. As mentioned, engineer unit price rose 11% this year, and versus the market, we still see clear room to move up. While delivering strong value to customers, we will raise our unit price along with the value and cascade that uplift across all pricing, thereby increasing revenue per salesperson. We also focused hard on improving repeat business in the second half of FY 2025.
In our last results, we noted year-on-year adds were 44.5%, but churn was 31.7% from Q3 - Q4 of 2024, and we flagged the high churn as an issue. In response, we built a rigorous follow-up framework across all sales activities. For example, we set a target ROI at project kickoff, confirmed alignment with customers, surfaced issues with proposals, and executed follow-ups for 100% of accounts. As a result, churn improved by 3.6 points. Our next goals are 15% churn and a 55% add rate, which together with higher pricing, sets us up for roughly 40% annual growth. We will continue driving this qualitative improvement. We will also leverage senior sales talent to reach CXOs and win larger, more complex deals. Some customers already generate substantial revenue for us.
We are codifying success patterns and checking for issues and rhythm within each team, and senior sales will engage to drive further expansion. Building the right environment for that will be a major theme in FY 2026. For example, we will establish top relationships through advisors. Advisors and senior sales will also bring in large and complex proposals. We are building teams that can fully handle those opportunities. By setting up an execution review team, we will grow revenue smoothly and at the right cadence. We have executed items one, two, three, and we will move on to four.
The graph shows quarterly YoY growth from 2024 onward against this backdrop. As of now, working toward FY 2026 Q2, we see a JPY 19.3 billion pipeline with 22 weeks to go. Based on past 22-week builds, we expect to add roughly JPY 5 billion. This describes the situation at the parent company.
Sales reforms are progressing well, and we will keep strengthening execution. Next, human resources. Although utilization constraints existed this year, hiring landed well this year. We hired 2,217 people, including 380 new graduates. For FY 2026, we are targeting 2,500, 2,700 hires, and over time, we will aim for around 3,000. It is not just volume, we will keep hiring senior talent as well. Professionals and senior hires were 22.6% in 2024 and rose to 32% in 2025. Hiring such professionals has also lifted engineer unit price. Recruiting costs can rise, but by using direct channels and other measures, we have kept fees well under control. As a result, we achieved a 34.9% of fee rate. I would say that we have built a strong hiring engine. For senior hires, an increasing number are joining from top-tier companies.
We will keep building SHIFT brand and hiring from major SI companies and consulting firms to form a stronger organization toward SHIFT 3000. New graduate hiring is also important. We plan to hire 500 new graduates in FY 2026, and over time, aim for around 1,000. This is supported by our employer brand. We have risen to number three in popularity rankings. We received 59,000 applications. About 11% of all job-seeking students applied to SHIFT. We will continue to strengthen new graduate recruiting capabilities. We are also securing high-caliber new graduates. Two years in, our new grad engineers are achieving monthly unit price around JPY 1.68 million, JPY 2.00 million. With hiring and training in place, we aim to sustain those rates even with 1,000 new grad hires and provide an environment where they can thrive. Next, services. The first topic. Consulting is one of our fastest-growing service lines.
This year it reached JPY 8.5 billion in scale, growing 142%. Scaling consulting creates a shower effect, driving revenue from upstream to downstream. SHIFT now has the capability to cover consulting, development, design, testing, and operations with our own resources, and we will leverage this end-to-end flow to drive expansion. Partnering with Rise Consulting Group will win larger programs and aim for JPY 200 billion. Another strong growth area is ERP. ERP grew 130% at the parent level. We have five core strategies for ERP. Having built experience and talent through testing, we are moving further upstream into rollouts and version upgrades. We are also capturing adjacent ERP areas such as SaaS, operations, and maintenance. Strategically, we focus on local regions and small mid-business, a blue ocean area where major vendors have difficulty entering, and our recruiting strength enables us to secure excellent local talent.
By concentrating here, we aim to generate higher growth. Next is testing, our founding business, which we are scaling further. We are advancing a centralized testing CoE. In financial services, TCoE adoption is taking hold. From JPY 1.5 billion in 2025, the visible pipeline for 2026 is around JPY 3.1 billion, roughly double. We will drive TCoE within large financial programs, expand cross-functionally, then connect into maintenance, BPO, AI, and modernization. Beyond testing itself, we will cross-sell adjacent services and scale accounts. We are also acquiring the engineers and top talent to deliver this. Alongside sales expansion, we are aggressively improving efficiency through AI services. Within SHIFT, AI utilization has reached 90%. Nearly all employees use AI to raise productivity. Cost savings of JPY 150 million are expected in FY 2025. Because we have an environment that enables rigorous AI usage, we can also launch new services.
Examples include our in-house generative AI, Tensai-kun, AI-driven low-code development, and AI-based reverse documentation for testing, all contributing to revenue. Revenue from AI-enabled service offerings has reached about JPY 600 million. We will keep scaling them, lift margins, and establish leadership in AI. Among these, services with the strongest synergy with AI are consulting and modernization. In consulting, AI is highly effective for research, analysis, and report generation. Consulting is currently growing at roughly 150%. By coupling AI with engineers and junior consultants, we can build a highly competitive consulting team. By raising productivity, we will increase revenue per person, which in turn drives higher pricing and gross margin. Japan's biggest challenge is legacy software assets. We are addressing this through modernization. Today, modernization is largely manual engineers read and rewrite code. That drives higher costs and expensive operations.
Our epoch-making AI modernization reads all source code with AI, documents it, and proposes cloud lift architectures. By documenting with AI, code that is unused need not be modernized. We can cut code volume by, say, 50%, and for the remaining half, use AI-driven development, raising margins and productivity. We will deliver this to customers in Japan who are struggling with modernization, win RFPs for core system projects, and lead growth toward SHIFT 3000. We are also launching new services. We developed Wasurenai, a SaaS management service, and are now releasing Nakusanai, an asset management service. This enables us to reach not only IT, but also general affairs, all back-office functions. Leveraging our consulting and resource strengths, we define optimal processes, BPR, and through AI-enabled BPO, help customers reduce SG&A. We will accelerate this BPaaS monetization model. Nakusanai deploys quickly. We onboarded 100 customers within one month.
In this way, we believe customers will see SHIFT not just as an IT vendor, but as a builder of marketable services. Next, M&A and PMI. As mentioned, we are now receiving much larger information memoranda, called IM, for M&A opportunities. We obtained 34 IMs of more than JPY 3.0 billion. It is 2.3x more versus 2020-2022. This reflects SHIFT's M&A track record and strengthened brand. We have also expanded the M&A team and increased external outreach. We will build a strong execution record and pursue medium-sized deals and larger. For group companies that join through M&A, we have advanced PMI primarily through support. But many common areas exist. By consolidating these, newly joined companies can operate seamlessly like SHIFT. We will advance a CoE style PMI. This will reduce SG&A costs and enhance growth potential. We will advance these initiatives.
The expertise and track record in optimizing back-office operations through PMI will drive the acceleration of BPO services in conjunction with the Wasurenai initiative. In summary, SHIFT is now prepared to drive substantial growth toward SHIFT 2000. By strengthening sales, hiring, services, and M&A, and pushing efficiency, we aim to pull SHIFT 2000 forward from 2027, 2028, and build earnings power, setting up FY 2026 to bring SHIFT 3000 forward from 2030 as well. That concludes my detailed remarks.
We will now move on to the question-and-answer session. The first question. Looking at page 15 of the briefing material, we can see that this fiscal year's adjusted operating profit is JPY 17.6 billion, and the operating profit before the adjustments is JPY 15.6 billion. This allows us to calculate an adjustment amount of approximately JPY 2 billion. How much will the adjustment amount be, and what will the underlying assumptions and actual operating profit be for the FY 2026 guidance? Based on the planned sales, gross profit, and SG&A expenses, the figure appears to be JPY 18 billion. Can we assume that the adjustment amount is not expected to increase in FY 2026?
As you asked, you may understand it to be around JPY 18 billion. The adjusted figures are stated on page 43 of the financial results materials. As for the earnings forecast, we have not yet factored in new M&A. However, if we accelerate M&A activities in the future, we anticipate an increase primarily driven by goodwill amortization expenses. Therefore, while we currently estimate it to exceed JPY 2 billion, it could potentially be even higher. We would appreciate it if you could bear this in mind.
Could you please confirm whether the forecast for operating profit and ordinary profit before adjustments on a conventional basis for the fiscal year ending August 31st, 2026, is indeed JPY 18 billion?
As I mentioned in response to the previous question, we would be grateful if you could interpret this as JPY 18 billion. We would also be grateful if you could review page 43. Thank you.
Operating income for the previous fiscal year exceeded the target. How would you analyze the main factors behind this?
Last fiscal year, our initial gross profit margin target was set at 33.5%. Within that framework, we were able to raise the utilization rate to over 34.5% by linking improvements in utilization rate and productivity. Of all the factors contributing to the upward revision in operating profit, this one was the most significant in our original scenario for improving the gross profit margin. Going forward, we aim to maintain this improvement in gross profit margin while advancing towards FY 2026 and the SHIFT 2000 and SHIFT 3000 initiatives. That concludes my response.
If anyone else has any questions, please enter them. We will wait for about one minute. We have the next question. Could you explain the M&A pipeline for this and next fiscal year? We cannot provide detailed information on this matter, but we appreciate your understanding. However, sourcing is proceeding smoothly. Given the number of hires this time around, the revenue growth rate seems rather conservative. Could you explain the reason behind this growth rate?
For FY 2025 hiring, our recruitment efforts were primarily focused in the second half. Therefore, in terms of contribution to annual sales, it is very limited. Looking ahead to the next fiscal year, 2026, we plan to drive revenue growth alongside all our new employees. That is all.
What is your view on the impact of AI? Is the productivity gap compared to the competitors widening? Will competition intensify as these tools become more widespread? It is difficult to obtain information on how competitors are using AI. However, our own AI utilization rate exceeds 90%, so I believe we are leveraging AI extensively. Various services are emerging within our company through AI, so I think we are leading the way compared to many other companies, particularly in terms of AI advancement. In this context, we proactively host AI-focused events. However, precisely because our own AI usage is so advanced, we often find that other companies have not fully leveraged it yet and haven't reached our level. Consequently, I believe that selling our services to other companies is still relatively rare at this point.
Conversely, I think our AI utilization might be progressing at a top-tier level, even within Japan, which is a significant strength. In addition, regarding AI, as I explained earlier, we have developed solutions that use AI to modernize legacy systems, which most system integrators and operating companies struggle with. This includes automatically generating RFPs and using microservices to write source code for various services, with AI playing a central role. We plan to actively sell these solutions throughout this fiscal year. I am originally a consultant, and I believe that consulting work and AI are very compatible. Taking a broader view, I am also concerned about the high cost of consulting fees. Our own fees are reasonably priced at around JPY 2.5 million per month, which is cheaper than those of other firms.
However, even major clients are finding it increasingly difficult to justify paying more than that, which is leading many of them to want to discontinue consulting services. With this in mind, although we are now developing AI-powered consulting services, I actually think AI is better suited to handling the consulting itself than to writing source code. Since we have built various AI-powered services internally, developing this as an extension of that would make areas such as scheduling, taking meeting minutes, arranging dates, conducting market research, and creating proposal materials highly compatible with AI. By leveraging AI in these areas, I believe that we can significantly disrupt the consulting industry. We are entering a very exciting phase. In addition, both our AI consulting and AI modernization services generate a gross profit margin of 60%, while BPI projects usually have a maximum cap of 40% of gross margin.
These new services can significantly increase profitability. We believe this makes them highly attractive propositions. While improvements were made across the board in the previous term, what structural changes would you most like to see from the president's perspective? As we have been communicating for some time, we have undertaken numerous initiatives to increase our utilization rate. This has enabled us to consistently achieve a very high and stable gross profit margin. We would like you to continue focusing on this aspect. Furthermore, our aim is to increase not only gross profit but also the top line. Currently, net sales are only increasing by around 17% annually. However, when we consider the bigger picture, we see that around 40% of our business comes from new sales. Conversely, because new business is concentrated, we often find that around 30% is lost due to insufficient time being allocated to servicing existing customers.
Therefore, since the second half of last year, we have been making a significant effort to improve the repeat rate. Even with a 40% increase in sales, if losses are reduced to 20%, this naturally translates to a 20% increase in sales. If losses are 10%, it becomes a 30% increase. When such improvements build up on a monthly basis, the cumulative effect over the year leads to significant growth. Therefore, achieving growth 1.4x or 1.5 x, even at this scale, is not an unrealistic goal. In that sense, I really want you to focus on the repeat rate. Additionally, as mentioned at the end of this earnings report, although we have only completed around five M&A deals per year until now, the broader picture shows that the system integration industry sees around 200 M&A deals per year. We have actually only completed five.
This is because we operate with the discipline of an EBITDA multiple below 8 x. We have many years of experience in pursuing M&A within the system integration industry, and we have a proven track record of exceptional PMI execution without impairment losses. Therefore, even if we proceed with M&A deals at an EBITDA multiple exceeding 8 x, we believe we can achieve results that surpass that multiple within one or two years. If we can execute M&A deals exceeding our standard multiples, our annual deal volume, currently around five, could increase to 10 or even 20. For this reason, we would very much like you to keep an eye on our M&A progress. With the increasing use of AI, concerns have been raised about a potential decline in demand for outsourcing software testing services.
Could you share any information about current reductions in demand for testing or changes in the nature or quality of testing requests from customers? Overall, is AI having a positive or negative impact on your company's testing business?
We are receiving significant demand from our customers regarding the utilization of AI. However, the most fundamental premise is that using AI does not mean we can compromise on quality. We also consider this point to be extremely important. We do not believe that the quality of our current services matches the current level of AI accuracy. Therefore, we believe that adopting AI does not eliminate the need for testing; rather, it requires us to use AI to streamline the testing process and enhance its quality. On that note, we are already using AI to streamline testing internally. Furthermore, we plan to collaborate with our clients from the upstream development stages, starting with requirements definition, and not only on testing. Our goal is to facilitate requirements definition to make testing and development more efficient. Therefore, for SHIFT, we view this as a positive development.
In terms of development, I believe that an era is approaching where AI will write source code, similar to AI-driven development. In that context, we believe that the need for testing, the downstream process that safeguards and ensures quality, will only increase. Therefore, at this point, we consider SHIFT to be in a highly advantageous position. That is all.
We have noticed notable ventures, such as the establishment of a subsidiary in Bahrain, that appear to diverge from your core business. What is the intention behind this? Do you intend to continue such investments going forward? Setting up a subsidiary in Bahrain does not represent a departure from our core business. Rather, we see it as a natural extension of our operations. In particular, Japanese content, such as games and anime, enjoys particular popularity in the Middle East. What we are establishing in Bahrain is a testing center and localization hub. In that sense, this does not depart from our core business at all. It is part of our core operations. Furthermore, we receive significant preferential treatment from the Bahraini government, covering about 70% of employee recruitment and salary costs.
This enables us to firmly establish ourselves in the Arab-speaking region by localizing Japanese content, such as games, animation, and manga, for our employees. Additionally, as the Arabic-speaking region has very high incomes, we anticipate further sales growth. How much of the sales plan for the fiscal year ending August 31st, 2026, is based on the impact of M&A? What is the projected organic growth rate for net sales of software testing-related services?
For FY 2026, we are currently working on the basis that no new M&A has been announced. We are not disclosing the projected revenue growth for the software testing-related services segment at this time. We plan to communicate this appropriately through our earnings announcements. That is all.
If you had to choose one KPI, which KPI would you prioritize? As I explained earlier, since gross profit margin has stabilized, our focus is on the top line. To achieve this, we need to significantly increase the repeat rate, which is a key component of the top line. We believe that if the repeat rate improves substantially, sales growth could accelerate from 1.2 x - 1.4x, or even 1.5 x. We intend to pursue this vigorously. Conversely, if you were to express dissatisfaction with progress, what would that be based on? To repeat, our focus this term is on improving our repeat rate. Since the second half of the previous term, we have been making significant efforts to transform our sales organization. Naturally, we handle detailed work within the sales organization, but we are also aiming to secure high-level business.
We have around 200 salespeople working on a standalone basis. While changing the composition of this team, we are also excelling in recruitment. Our plan is to hire high-level salespeople to provide a solid service to our customers and increase the repeat rate. Over the past six months or so, has the president identified any new trends in terms of customer needs, the competitive environment, or technology? I think there are three main trends. Consulting firms have recently become extremely popular. There is high demand for consulting services, particularly PMO support, where consultants help clients to draft internal proposals. Furthermore, when clients cannot hire enough employees internally, consulting firms fill the gap, leading to a significant volume of work being outsourced to consultants. Specifically, the feedback I have received from clients is that they want to minimize consulting as much as possible, keep consulting rates low, and bring development in-house.
As I mentioned earlier, we're continuously hiring individuals with extensive experience from major system integration companies, so we can offer industry knowledge at a high level. We're also recruiting highly talented new graduates who can deliver results, enabling us to provide excellent services in a cost-effective manner. I believe this puts us in a strong position to meet our clients' needs. Secondly, in terms of customer trends, I estimate that system integrators currently handle around 10% of their work in-house, outsourcing the remaining 90%. However, there is a growing desire to shift this to a 50/50 split, with 50% of work being done in-house and 50% being outsourced. Customers themselves want to hire engineers or build engineering teams. We aim to respond to this demand. Specifically, the job applicant ratio for engineering roles is about 10 : 1, which makes it difficult for clients to recruit.
Since we specialize in recruitment, we can assist them with the hiring process. By hiring through us, they can build teams while outsourcing non-core tasks such as testing and BPO, creating a clear framework for collaboration. We aim to support them in establishing such arrangements. Thirdly, in terms of AI, although the LLM boom began around two years ago, clients are now entering a phase of solid utilization. I believe that AI has truly permeated business operations. Consequently, more clients want to leverage AI. Over the past two years, we have accumulated substantial know-how in this area, and I am confident that we can provide effective support. Can you achieve overall growth by providing quality-assured IT services and incorporating AI to transform and expand business models, even if the demand for simple testing decreases?
As I mentioned earlier, we believe that AI is a tailwind in testing. Furthermore, in terms of AI modernization services and consultancy, we are actively expanding our own AI-powered services, essentially acting as AI consultants. Currently, SHIFT is targeting BPO needs with new services such as Wasurenai and Nakusanai. We believe that even in this BPO area, tasks performed by humans can achieve greater productivity through AI utilization. SHIFT has a BP ratio of 10%, and 90% of our engineers work in-house. Therefore, we believe that we can deliver significantly better results than other companies in terms of productivity improvement and profitability enhancement through the use of AI. We want to engage with this new AI-driven world ourselves. That concludes my remarks.
We have now reached the end of our time. This concludes the presentation of SHIFT's full-year financial results briefing for the fiscal year ended August 31st, 2025. Any questions that could not be answered today will be answered by IR staff at a later date. Thank you very much for your participation.