Can FY2027 return to modest revenue and profit growth after FY2026's decline?

FY2026 full-year results were revenue of ¥10,059 million, operating profit of ¥1,411 million, ordinary profit of ¥1,505 million and net profit of ¥1,081 million. Compared with revenue of ¥10,918 million, operating profit of ¥1,502 million and ordinary profit of ¥1,664 million in the previous fiscal year, revenue declined 7.9%, operating profit declined 6.1% and ordinary profit declined 9.6%, while net profit increased 0.4%. The operating margin rose slightly from 13.8% in the previous fiscal year to 14.0%, confirming that the decline in operating profit was less pronounced than the decline in revenue.

The company cited the reaction to large projects recorded in the previous year and a decline in transaction volume at major customers as factors behind the FY2026 revenue decline. However, these effects are not sufficiently disaggregated in the annual earnings report, while the earnings presentation materials show the drivers of the decline in revenue from separate category-based and industry-based perspectives. At the next results announcement, it will be necessary to assess whether the impact of the comparison base has run its course by comparing the results with FY2026-Q1 revenue of ¥2,586 million, operating profit of ¥354 million, ordinary profit of ¥369 million and net profit of ¥255 million.

For FY2027, the company forecasts revenue of ¥10,500 million, operating profit of ¥1,500 million, ordinary profit of ¥1,700 million and net profit of ¥1,150 million. Compared with the previous year's actual results, this represents growth of 4.4% in revenue, 6.3% in operating profit, 12.9% in ordinary profit and 6.3% in net profit. Operating profit growth is not in the double digits, so at this stage it is appropriate to view the plan as a gradual recovery that absorbs the reaction-driven decline in the existing business rather than a sharp rebound.

In FY2027-Q1, it will be important to see whether standalone quarterly revenue and profit are disclosed and whether progress against the full-year forecasts is shown. We will particularly monitor whether revenue and operating profit both increase year on year and whether the operating margin remains at or above approximately 13.7% in FY2026-Q1. Achieving the full-year plan will depend not only on the reaction to large projects running its course, but also on the extent to which growth areas such as SaaS, transportation DX and electronic money can offset declines in E-Billing and other businesses.