Revenue growth continues, but the accumulation of recurring revenue has yet to translate into an operating profit

Revenue in FY2027-Q1 was ¥236,932 thousand, up ¥34,798 thousand, or 17.2%, from ¥202,134 thousand in the year-earlier quarter. The company attributed the increase to more business opportunities generated by marketing initiatives, the accumulation of recurring-revenue business, and several new large-scale orders. Meanwhile, the operating loss widened from ¥2,731 thousand in the year-earlier quarter to ¥12,263 thousand, and the operating margin declined from approximately -1.4% to -5.2%.

In terms of costs, FY2026 revenue was ¥960,060 thousand, gross profit was ¥419,493 thousand, and SG&A expenses were ¥537,381 thousand, resulting in a gross profit margin of 43.7% and an SG&A ratio of 56.0%. In FY2025, revenue was ¥823,600 thousand, gross profit was ¥408,238 thousand, and operating profit was ¥28,670 thousand. Thus, despite higher revenue in FY2026, gross profit growth was limited, while SG&A expenses and costs related to new businesses weighed on earnings.

By business segment, the Communication Platform business reported FY2027-Q1 revenue of ¥236,247 thousand and segment profit of ¥45,163 thousand. Compared simply with the consolidated operating loss, the business generated a profit, but the AI Data Center business also recorded a segment loss of ¥4,921 thousand, in addition to unallocated corporate expenses and growth investments. The next results will therefore need to show how much of these company-wide expenses can be absorbed by profit from the existing business.

For FY2027-H1, the year-earlier benchmarks are revenue of ¥409,615 thousand and an operating loss of ¥30,887 thousand. It will be important not only to determine whether revenue exceeds the year-earlier level, but also whether the operating loss narrows below ¥30,887 thousand or the company turns profitable. It will also be necessary to assess how effectively the company controlled personnel recruitment and marketing costs while continuing to reduce cost of sales through lower outsourcing expenses, and whether the gross profit margin recovered to 43.7%.