Q1 came in slightly below straight-line sales plan progress, while FY2027-H1 will be the point at which profit recovery is tested

Revenue for the first quarter of the fiscal year ending February 2027 was ¥2,540 million, representing progress of approximately 23.1% against the full-year sales plan of ¥11,000 million. This was approximately 1.9 percentage points below the 25% implied by assuming even quarterly progress, but given the timing of game launches and the seasonality of device shipments, it is too early to conclude from this difference alone that the plan will be missed. In the next H1 filing, it will be important to see how far cumulative revenue exceeds the ¥5,500 million equivalent to 50% of the full-year plan, and, if it falls short, to understand the reasons.

On the earnings front, Q1 posted an operating loss of ¥68 million, an ordinary loss of ¥18 million and a net loss attributable to owners of the parent of ¥62 million. The full-year forecasts are ordinary income of ¥300 million and net income attributable to owners of the parent of ¥150 million, making a return to positive ordinary income in H1 the first specific threshold for assessing the achievability of the annual plan. Although the losses narrowed year on year in Q1, operating, ordinary and net income were all negative, so profit recovery is not yet complete.

Q1 revenue declined 4.9% year on year, while the operating loss narrowed from ¥85.6 million in the prior-year quarter to ¥68.4 million, and the ordinary loss narrowed from ¥67.8 million to ¥18.2 million. The company attributes the improvement to higher gross profit in the IoT & Devices business, lower selling, general and administrative expenses, and higher earnings in the AI & Cloud business. In the next filing, it will be important to determine, together with segment revenue and earnings, whether these improvements reflect temporary cost reductions or improvements in gross margins and recurring revenue.

The full-year forecast does not include a numerical operating income figure, preventing revenue, ordinary income and operating-level profit progress from being compared on the same basis. In H1, attention will focus on whether the company provides an additional operating income forecast or continues not to disclose one, particularly whether positive ordinary income and improved operating income occur together or whether the return to profitability depends on non-operating income and expenses.