Maintaining operating profitability in 4Q is necessary to meet the full-year forecast

For the nine months ended Q3, revenue was ¥1,336 million and operating profit was ¥22 million. The full-year forecast is revenue of ¥1,836 million and operating profit of ¥30 million, representing progress rates of 72.8% and 73.3%, respectively. Although both are slightly below the 75% benchmark at the nine-month point, the gaps between revenue and operating profit progress are small, and the results appear to be broadly on track.

However, the full-year plan has already been reduced substantially during the year. At the interim point, the forecasts were revenue of ¥2,100 million, operating profit of ¥100 million, ordinary profit of ¥10 million and profit attributable to owners of the parent of ¥240 million. As of Q3, these had been changed to ¥1,836 million, ¥30 million, a ¥142 million loss and ¥78 million, respectively. The downward revisions were ¥264 million for revenue and ¥70 million for operating profit. In the FY2026 results, it will be necessary to confirm not only whether actual results exceeded the latest forecasts, but also why they diverged so significantly from the initial plan.

Cumulative operating profit improved from a ¥21 million loss in Q1 to approximately zero at the interim stage and ¥22 million in Q3. Although the nine-month figure indicates a recovery, only ¥8 million of operating profit remains in the full-year forecast. If fourth-quarter revenue falls short of ¥500 million, the revenue plan will not be achieved, and if operating profit falls below ¥8 million, achievement against the latest forecast will decline. The quality of the results will depend on whether growth in contracted development projects and licence fees continued into the fourth quarter.

Below operating profit, the full-year forecast is already under considerable pressure. Cumulative ordinary profit or loss for the nine months was a ¥111 million loss, leaving a ¥31 million gap to the full-year forecast of a ¥142 million loss. This implies that the fourth quarter incorporates an ordinary loss of approximately ¥31 million. Net income was ¥104 million on a cumulative basis against a full-year forecast of ¥78 million, implying a fourth-quarter net loss of approximately ¥26 million. At the next results announcement, we will need to confirm whether fourth-quarter revenue of ¥500 million and operating profit of ¥8 million were achieved, as well as the actual ordinary and net losses and the factors behind the variance from the full-year forecast. Orders received, order backlog and Q3 operating cash flow have not been disclosed, so information available externally to verify revenue visibility and the conversion of profit into cash remains limited.