Sharp 1Q profit growth: an early bias toward the full-year forecast, or sustainability to be tested in H1

In 1Q, from 1 March to 31 May 2026, revenue was ¥1,304 million, up 6.8% year on year, and operating profit was ¥124.116 million, up 149.1%. Ordinary profit was ¥125.916 million, while net profit attributable to owners of the parent was ¥82.229 million, representing increases of 153.5% and 119.6%, respectively. Operating profit grew significantly faster than revenue, resulting in a calculated consolidated operating margin of 9.5% in 1Q.

The full-year forecast is revenue of ¥5,024 million, operating profit of ¥280 million and net profit attributable to owners of the parent of ¥139 million. Comparing the 1Q results with the full-year forecast on a simple basis gives progress rates of 26.0% for revenue, 44.3% for operating profit and 59.2% for net profit. However, as the company had not disclosed an H1 forecast or quarterly plans as of 1Q, the likelihood of achieving the full-year forecast cannot be assessed from these progress rates alone. In particular, the reasons operating profit and net profit are progressing substantially faster than revenue need to be reconfirmed using cumulative H1 figures.

The company attributed the profit growth to expanded sales of “Wagasha de DOMO” in its human resources services business, sales of optional products, increased orders for programming training for new employees in its IT education business, and expanded sales in its RPO business. However, the company has not disclosed the revenue contribution, profit contribution or number of orders for each initiative. It is therefore not possible to determine how much of the ¥124.116 million in 1Q operating profit represents recurring earnings and how much resulted from one-off projects.

At the H1 results, the first point to confirm is whether operating profit can maintain its 1Q progress rate of 44.3% against the ¥280 million full-year forecast. In addition, the company did not prepare a quarterly consolidated cash flow statement for 1Q, and operating cash flow and the period-end cash balance were not disclosed. To determine whether the increase in profit is merely apparent, for example because of accounts receivable, H1 should be checked for operating cash flow, the cash balance and any revision to the full-year forecast.