Q1 revenue progress was 24.4%, but the company itself recognizes that it is behind its full-year plan

Revenue in Q1 was ¥3,799 million, down 8.6% from ¥4,155 million in the same period of the previous year. Operating results went from a ¥18 million profit in the same period of the previous year to a ¥79 million loss, ordinary results went from a ¥19 million profit to a ¥71 million loss, and net loss attributable to owners of the parent increased from a ¥11 million loss to a ¥66 million loss. The important point is that several levels of earnings deteriorated simultaneously, in addition to the decline in revenue.

The full-year forecasts are revenue of ¥15,600 million, operating profit of ¥20 million, ordinary profit of ¥10 million, and net loss attributable to owners of the parent of ¥700 million. Revenue progress in Q1 was 24.4%, only ¥101 million below the simple one-quarter benchmark of ¥3,900 million, but the company assessed itself as behind plan in its Q&A session. Operating results were already at a ¥79 million loss in Q1, meaning that earnings must improve by at least ¥99 million over the remainder of the year to achieve the full-year operating profit forecast of ¥20 million.

By segment, Marketing Solutions posted revenue of ¥422.745 million, up 2.2% year on year, but recorded a segment loss of ¥87.804 million. Consumer Services posted revenue of ¥3,344.127 million, down 10.6% year on year, and segment profit of ¥113.022 million, down 53.3%. The decline in Consumer Services, which accounts for most consolidated revenue, is not being offset by the modest increase in the advertising business.

At the next interim results announcement, the focus will be not only on whether revenue reaches a simple half-year pace, but also on whether standalone operating results return to a profit in Q2. The Q1 disclosure did not quantify the respective contributions of the reorganization of promotional initiatives, low-gross-margin projects, and the recovery in product procurement to revenue and margins. Key points will be whether segment earnings improvements and the assumptions for the remainder of the year underlying the ¥20 million full-year operating profit forecast are disclosed.