Assess the plan to maintain sales growth while operating profit growth slows in FY2027.

Consolidated sales in FY2026 were ¥104.280 billion, operating profit was ¥13.122 billion and net income attributable to owners of the parent was ¥12.163 billion. By comparison, the FY2027 company forecast calls for sales of ¥110.0 billion, operating profit of ¥13.5 billion and net income attributable to owners of the parent of ¥10.0 billion. Based on the prior-year results, sales are expected to increase by approximately 5.5%, operating profit by approximately 2.9% and net income to decline by approximately 17.8%. The operating margin is also calculated to decline from approximately 12.6% in FY2026 to approximately 12.3% in the FY2027 forecast, indicating that the plan does not assume sales growth will translate directly into profit growth.

Cumulative FY2026 quarterly results were sales of ¥23.005 billion and operating profit of ¥4.462 billion in Q1, sales of ¥47.746 billion and operating profit of ¥6.895 billion for the first half, and sales of ¥72.669 billion and operating profit of ¥9.323 billion for the first three quarters. Year-on-year operating profit growth slowed from 63.5% in Q1 to 21.6% for the first half and 3.9% for the first three quarters. Q1 benefited from royalty income and settlement proceeds received in connection with the conclusion of a settlement, among other factors. In FY2027-Q1, these special factors included in the prior-year comparison must be separated out to avoid misjudging the underlying growth potential.

In Q4 FY2026 alone, sales were ¥31.611 billion, operating profit was ¥3.799 billion and the operating margin was 12.0%. For the full year, the gross margin improved to 63.6%, but selling, general and administrative expenses continued to rise due to overseas business expansion and foreign exchange movements. The increase in the FY2027 operating profit forecast is only ¥378 million. In FY2027-Q1, the starting point for assessing the validity of the full-year forecast will be whether sales exceed the ¥23.005 billion recorded in the year-earlier period and whether operating profit can be maintained at ¥4.462 billion without one-off income.

A simple division of the full-year forecast into four quarters would result in FY2027-Q1 sales of ¥27.5 billion and operating profit of ¥3.375 billion, but the company has not disclosed these levels as quarterly targets. Accordingly, the results will be assessed not only by Q1 performance itself, but also by seasonality, foreign exchange assumptions, the repeatability of royalty income, and whether the full-year forecast is maintained or revised. As of now, the company has not disclosed the FY2027-Q1 progress rates against the full-year forecast or a quantitative outlook separating operating profit into recurring earnings and temporary factors.