Will underlying growth continue into FY2027-H1 despite the apparent decline in revenue?

FY2027-Q1 revenue was ¥3,374 million, an apparent 1.8% decline from ¥3,436 million in the prior-year quarter. However, following a change in the transaction terms for direct-mail delivery services, postage-equivalent costs previously included in revenue have been deducted. Assuming the same terms had applied in the prior-year quarter, the comparable prior-year revenue would have been ¥2,884 million, representing underlying year-on-year growth of 17.0%. Accordingly, the next earnings release should present both reported figures and figures reflecting the change in terms, so that apparent growth can be distinguished from underlying growth.

By business area, first-quarter revenue was ¥901 million for IT and Services, up 39% year on year, ¥1,377 million for Retail, up 8%, and ¥1,095 million for Manufacturers, up 15%. IT and Services recorded the strongest growth, but as the company reports a single segment, it does not disclose operating profit or gross margin by business area. In H1, we will look for disclosure not only on revenue growth across the Retail 360° Full-Service business, but also on which areas are supporting profit growth and whether gross profit, operating profit, or at least the increase in transaction value is provided by area.

The full-year revenue forecast is ¥15,400 million, making Q1 progress approximately 21.9%, below the simple 25% quarterly elapsed-period benchmark. The earnings presentation assumes that H1 will account for 46.9% of full-year revenue and H2 for 53.1%, implying required H1 revenue of approximately ¥7,223 million. After deducting Q1 actual revenue, approximately ¥3,849 million would be required in Q2 alone. At the next earnings release, it will be important to determine whether this required level was achieved on the same postage-excluded basis.

At present, order intake, order backlog, profit by business area, and revenue contribution by customer are not disclosed. Even where new projects or expanded transactions with existing customers are described, it is difficult to determine from revenue alone whether they reflect one-off large projects or a sustained increase in transaction volume. In FY2027-H1, we will review the impact of the change in accounting terms, revenue by business area, order and project backlogs, and management’s assessment of performance against its H1 plan.