Q1 revenue and profit rose, with H1 FY2027 focused on progress toward the full-year plan and maintaining margins

FY2027-Q1 revenue was ¥2,711 million, operating profit was ¥1,035 million, ordinary profit was ¥1,060 million, and net profit attributable to owners of the parent was ¥718 million. Compared with revenue of ¥2,270 million and operating profit of ¥795 million in the same period of the previous year, revenue rose 19.4% and operating profit rose 30.2%, with profit growth outpacing revenue growth. The company cited security measures, cloud services, generative AI usage management, second-phase GIGA School Initiative projects, government ministry projects, and progress in orders for the new Z-FILTER product as factors behind the increase in revenue.

The operating margin was approximately 38.2% in Q1, up approximately 3.1 percentage points from approximately 35.0% in the same period of the previous year. Communications costs, software amortization, and personnel expenses increased, while recruitment expenses and costs related to the previous fiscal year's 30th anniversary decreased. However, as of Q1, the company had not disclosed the amount of change by expense category or whether the increase in expenses was temporary, reflecting expanded cloud usage, or structural and likely to continue. In H1, the key issue will be whether the company can absorb increases in communications costs, amortization, and personnel expenses while maintaining its operating margin.

Using 50% of the full-year plan as a simple H1 benchmark gives revenue of ¥6,000 million and operating profit of ¥2,700 million. However, in FY2026, H1 revenue of ¥4,992 million represented 46.1% of full-year revenue of ¥10,835 million, while H1 operating profit of ¥2,021 million represented 42.2% of full-year operating profit of ¥4,791 million, reflecting seasonality, with revenue concentrated toward the end of the fiscal year. Accordingly, a shortfall in H1 alone should not immediately be taken as evidence that the full-year plan is unattainable. Year-on-year growth, contract value, progress on public-sector projects, and deferred revenue recognition should also be considered.

The FY2027 full-year forecasts are revenue of ¥12,000 million, operating profit of ¥5,400 million, ordinary profit of ¥5,505 million, and net profit of ¥3,770 million, with no revision as of Q1. Q1 progress against the full-year forecast was 22.6% for revenue and 19.2% for operating profit, meaning revenue progress was ahead of profit progress. At the next earnings release, it will be important to check not only cumulative H1 revenue and operating profit, but also whether the improved Q1 margin has been maintained and whether the levels of revenue and profit required from Q2 onward to achieve the full-year plan have become excessively high.