Q1 revenue rose, but strategic investment drove a sharp decline in profit; profit recovery from H2 onward is needed to meet the full-year plan

FY2027-Q1 revenue was ¥922.810 million, or 100.6% of the year-earlier level. Operating profit was ¥25.289 million, ordinary profit was ¥36.653 million and net profit attributable to owners of the parent was ¥30.170 million. Operating profit fell sharply from approximately ¥63 million in the year-earlier quarter. The operating margin also declined from approximately 6.9% to approximately 2.7%, indicating that the company has not converted higher revenue into profit.

The company maintained its FY2027 full-year forecasts of ¥4,000 million in revenue, ¥400 million in operating profit, ¥400 million in ordinary profit and ¥240 million in net profit attributable to owners of the parent. As of Q1, revenue progress was approximately 23.1%, while operating profit progress was only approximately 6.3%. FY2026 operating profit was ¥360.195 million, meaning this year's plan represents an 11.1% increase, and approximately ¥375 million in additional profit must be generated over the remaining period from Q1's weak level.

The decline in profit was attributed to continued strategic investment in developing new services, strengthening service systems and enhancing the proprietary database. Q1 cash flow from operating activities was an inflow of ¥267.774 million, while cash flow from investing activities was an outflow of ¥243.410 million, equivalent to approximately 91% of operating cash flow. Depreciation and amortization was also ¥206.940 million, suggesting that investment in development and data infrastructure may be weighing on profit through both investment spending and accounting expenses.

In the next reporting period, FY2027-H1, the first point to confirm will be whether operating profit exceeds the year-earlier ¥176.881 million. More important than simply maintaining the full-year forecast will be the extent to which the company discloses the effects of investment spending, depreciation and amortization, fixed-cost reductions and higher contribution profit from improved utilization, broken down by factor. If H1 operating profit falls below the year-earlier level while the full-year forecast remains unchanged, additional explanation will be needed regarding the assumption that profit will be concentrated in H2 and the feasibility of that assumption.