Leifras (NASDAQ:LFS) reported higher revenue and profit for the first half of fiscal 2026, supported by growth in its school club support operations and higher customer spending in its core sports school business. Management said several financial measures, including revenue, operating income and net income, reached first-half records in the comparison period presented since fiscal 2025 under U.S. GAAP.
Net revenue rose 8.9% year over year to $36.8 million, while gross profit increased 22.6% to $10.9 million. Income from operations grew 35.9% to $0.6 million, and net income increased 43.5% to $0.5 million. Operating margin improved to 1.5% from 1.2% a year earlier.
Adjusted income from operations, which excludes acquisition-related costs and is not a U.S. GAAP measure, more than doubled to $0.9 million, or JPY139.7 million, from $0.4 million in the prior-year period. The calculation included a $0.3 million add-back for acquisition-related costs.
Sports School Revenue Rises Despite Membership Decline
Leifras said its sports school business generated $25.5 million in first-half revenue, up 5.4% from a year earlier, while segment profit rose 2.5% to $5.3 million. The business benefited from revised monthly membership fees and higher average spending per customer.
Sports school membership, however, declined 0.9% year over year to 68,873. Representative Director and Chief Executive Officer Kiyotaka Ito attributed the decline to a greater number of graduating students, a shift in the timing of new-member recruitment and class openings to strengthen employee training and service quality, and the termination of one franchise agreement.
Management expects membership to recover during the third and fourth quarters through new initiatives. Ito said the company plans to pursue both membership growth and higher revenue per member through expansion in existing markets, services for younger children, acquisitions and business alliances.
During the period, Leifras expanded its sports-school footprint to all 47 Japanese prefectures after opening a collaborative school in Odate City, Akita Prefecture, through an alliance with Blaublitz Akita. The company also introduced new offerings, including the L-Spo multisport school, the 1v1 DRIBBLE ACADEMY D-UNLOCK soccer school, and SIX SHOOT, a sports competition developed with the “BLUE LOCK” anime franchise.
Leifras also acquired approximately 1,185 members through its Tokai Sports acquisition. Ito said the transaction included a business-to-business-to-consumer platform serving about 20 kindergartens and nursery schools, and that none of those partner institutions had ended their contracts during the preceding three years.
Social Business Posts Faster Growth
The company’s social business recorded revenue of $11.3 million, up 18.0% year over year, while segment profit rose 156.7% to $1.7 million. Leifras cited expansion in school club support contracts as the principal driver.
As of June 30, Leifras supported 478 schools and had 2,224 school club activities under contract. The number of supported schools increased 37.0% from a year earlier, while contracted activities increased 6.2%. The company served 24 local governments and seven private schools, adding five local-government contracts while retaining all 19 existing local-government clients.
Management said the transition of school activities to community-based programs is changing the relationship between the number of schools and the number of activities served. Ito said joint activities and community clubs can bring students from multiple schools together, meaning growth in supported schools may not be matched by a comparable increase in the number of individual club activities.
Leifras also expanded its after-school daycare network to 29 locations, up nine locations, or 45%, from a year earlier. The expansion included four locations acquired through Well Resource, as well as the addition of programs providing motor-learning and independent-learning support.
Childcare Entry and M&A Strategy
Leifras signed a share transfer agreement for SWIFT JAPAN on June 23, and the business became a subsidiary on July 1, after the end of the first-half reporting period. The acquisition added five small-scale licensed daycare centers, one corporate-sponsored daycare center and one after-school care facility, marking the company’s entry into childcare.
Ito said the childcare business provides a public-funding-supported operating base and allows Leifras to establish relationships with children and parents earlier than in its existing businesses. The company expects to pursue synergies through sports schools in childcare facilities, non-cognitive-skills assessment systems and partnerships with preschool operators.
On international growth, Ito said the company’s Canadian initiative is designed as a test market rather than a large initial commitment. Leifras intends to assess whether its approach to developing non-cognitive skills can generate revenue abroad and validate customer-level economics before committing more capital. He said the company envisions adding its offerings to established local services rather than building an overseas business from scratch.
Management said acquisition activity will remain focused on businesses adjacent to sports and education, rather than unrelated industries. Ito said the company will assess strategic fit, synergies, investment recovery criteria and post-merger integration requirements when evaluating targets.
Cash Position and Full-Year Outlook
As of June 30, total assets were $30.4 million, up 5.6% from Dec. 31, while shareholders’ equity increased 4.2% to $11.8 million. Cash and cash equivalents totaled $15.9 million, compared with $15.4 million at the end of the prior-year first half.
Operating activities generated $1.6 million in cash during the first half, compared with $1.9 million a year earlier. Investing activities used $1.3 million, compared with $0.3 million in the prior-year period, while financing activities provided $0.2 million. Overall cash and cash equivalents increased by $0.4 million during the half.
Leifras maintained its fiscal 2026 outlook, forecasting net revenue of $82.9 million to $95.7 million, representing year-over-year growth of 10.8% to 27.9%. It expects income from operations of $4.5 million to $5.4 million, up 13.2% to 33.9%, with an operating margin of 5.5% to 5.6%.
The outlook assumes no additional business acquisitions, restructuring transactions or legal settlements. Management emphasized that the company typically generates most of its annual profit in the second half, reflecting membership patterns, school holidays and the timing of certain local-government payments.
About Leifras (NASDAQ:LFS)
Leifras Inc is a Japan-based sports education and youth development company. It operates sports schools and related programs designed to provide children with opportunities to learn athletic skills, develop teamwork, and build confidence through regular participation in sports.
The company’s activities include instruction in sports such as soccer, basketball, baseball, and dance, along with other sports-related educational services. Leifras also provides programs for schools, communities, and extracurricular settings, with an emphasis on accessible, structured activities for children and young people.
Leifras primarily serves customers in Japan through its network of sports programs and educational services.
