Flat revenue, but Q1 losses widened, making the recovery in the first half of FY2027 the key point to monitor

Revenue in the first quarter of FY2027 was ¥359.111 million, down ¥2.859 million, or 0.8%, from ¥361.970 million in the year-earlier quarter. Revenue was broadly flat, but the operating loss widened to ¥89.407 million from ¥65.522 million, an increase of ¥23.885 million. The fact that the operating loss widened substantially despite only a modest decline in revenue is the central negative signal from these results.

The operating margin fell by approximately 6.8 percentage points, from approximately negative 18.1% in the year-earlier quarter to approximately negative 24.9% in the current quarter. The ordinary loss also widened to ¥85.872 million from ¥65.605 million, while the quarterly net loss attributable to owners of the parent was ¥69.468 million, compared with ¥53.038 million in the year-earlier quarter. No impact from extraordinary gains or losses was identified, and both the ordinary loss and the quarterly net loss before income taxes and other adjustments were ¥85.872 million, indicating that the deterioration in Q1 was mainly reflected in operating profitability.

The company explained that average processing fees rose following price-review negotiations with existing customers, while implementation-related revenue also increased due to specification changes to the Child and Childcare Support Contribution. On the other hand, the number of employees processed in the monthly payroll service declined, and the company recorded a bonus provision in addition to its budget, causing both cost of sales and selling, general and administrative expenses to increase. However, the company did not disclose the change attributable to each factor or the actual number of people processed. In H1, it will be necessary to assess in monetary terms whether the improvement in fees outweighed the decline in volume and the personnel cost burden.

The reported business consists of a single segment, the BPaaS business, while segment information for other businesses has been omitted because they are not quantitatively material. Accordingly, the ¥359.111 million decline in revenue and the ¥89.407 million increase in the operating loss cannot be analyzed by service, such as payroll processing and implementation support. In the next results, we will monitor whether the company discloses at least BPaaS revenue, segment profit, the number of people processed and average processing fees.