Revenue is rising but margins are shrinking; achieving the FY2026 forecast depends on execution in the fourth quarter

For the nine months ended September 2026, revenue was ¥2,055 million, up ¥181 million, or 9.6%, from ¥1,874 million in the same period a year earlier. Operating profit, however, was ¥206 million, down ¥76 million, or 27.1%, from ¥283 million. Ordinary profit also fell 24.8% to ¥212 million, while profit attributable to owners of the parent fell 26.0% to ¥142 million, indicating that higher revenue has not translated directly into profit growth.

A simple calculation of the operating margin shows a decline of approximately 5.1 percentage points, from approximately 15.1% in the same period a year earlier to approximately 10.0% in the current period. The full-year operating profit forecast is ¥300 million, down 20.2% from the FY2025 result of ¥376 million, while the revenue forecast is ¥2,817 million, up 10.0% from the FY2025 result of ¥2,560 million. In other words, the company's own plan incorporates both revenue growth and lower margins, which is important.

Progress against the full-year forecast at the end of the third quarter was approximately 73.0% for revenue and 68.7% for operating profit. To achieve the full-year forecast, the company needs revenue of ¥762 million and operating profit of ¥94 million in the fourth quarter. In the fourth quarter of FY2025, revenue was ¥686 million and operating profit was ¥93 million, so the required operating profit is almost unchanged year on year, while the required revenue is approximately 11.1% higher. The hurdle does not appear high when looking only at the profit amount, but the company must secure the additional revenue without allowing margins to deteriorate further.

The third-quarter results identified expansion of the customer base through stronger sales capabilities, improvements to generative-AI-related functions in the Mieruca business, and cross-selling to existing customers as revenue-growth drivers. In the distribution business, however, front-loaded investment, particularly hiring costs, is continuing, so the source of revenue growth and the factor depressing profit are present at the same time. In the next results, we will review total selling, general and administrative expenses and their year-on-year change, personnel expenses associated with the increase in sales staff, and the breakdown between one-time and recurring costs among the front-loaded investments.

In the full-year results, the key issue will not be limited to whether the company achieved the full-year forecast of ¥2,817 million in revenue and ¥300 million in operating profit. It will also be necessary to track fourth-quarter standalone revenue and operating profit, the operating margin, each business's contribution to profit, and whether the company presents assumptions for a recovery in margins toward FY2027.