Revenue increased, but AI investment and one-time costs weighed on profit

In FY2027-Q1, revenue was ¥312.98 million, operating profit was ¥6.63 million, ordinary profit was ¥6.16 million and quarterly net profit was ¥2.64 million. Revenue increased 40.0% from approximately ¥223.63 million in the same quarter of the previous year, while operating profit declined 54.3% from approximately ¥14.52 million. On a simple calculation, the operating margin fell approximately 4.4 percentage points, from approximately 6.5% in the previous year to approximately 2.1% in the current period, indicating that revenue growth from customer acquisition and integration has not yet translated directly into profit.

The company's FY2027 full-year plan calls for revenue of ¥1,352 million, operating profit of ¥30 million, ordinary profit of ¥30 million and net profit of ¥21 million. Progress at the Q1 stage was 23.1% for revenue, 22.1% for operating profit, 20.5% for ordinary profit and 12.6% for net profit, and the company assessed revenue and operating profit as progressing smoothly. However, compared with a simple one-quarter benchmark, revenue was 1.9 points below and operating profit was 2.9 points below, while net profit progress was only 12.6%. If 50% of the full-year plan is used as a mechanical benchmark for FY2027-H1, cumulative revenue of ¥676 million, operating profit of ¥15 million and net profit of ¥10.5 million would provide reference points. However, seasonality has not been disclosed, so these figures should not be treated as the company's formal first-half plan.

The earnings presentation attributed the decline in profit to growth investment in AI solutions and temporary spending associated with the office relocation. However, the FY2027-Q1 materials do not show the breakdown of AI investment, relocation costs, cost of sales or SG&A expenses. As the company has a single segment, it also does not disclose profit by segment, making it impossible to determine from the current materials how much of the increase in revenue from the ReviCo integration, UGC solutions and existing services contributed to operating profit.

For FY2026, revenue was ¥973.16 million, operating profit was ¥81.76 million and the operating margin was 8.4%. Cost of sales was ¥384.67 million and gross profit was ¥588.49 million. Depreciation and amortization was ¥99.96 million for the full year and ¥48.44 million in FY2027-Q1 alone. In addition, FY2026 research and development expenses were ¥10.18 million, while software investment associated with product enhancement was ¥171.24 million. The company plans to invest ¥313.18 million in enhancement and improvement during FY2027. In the first-half results, it will be necessary to determine, alongside expense-by-expense amounts, whether the operating margin fails to recover even after the one-time office relocation costs fall away, or whether AI and product investment remains a recurring cost burden.