Revenue fell sharply following the removal of subsidiaries from consolidation, while the operating loss narrowed slightly on SG&A reductions

Revenue in FY2027-Q1 was ¥101.8 million, down ¥91.3 million, or 47.3%, from ¥193.2 million in the same period of the previous year. The main reason was the removal of エンジニアファーム, バニヤンズ and TENJIN SYSTEM CONSULTING from the scope of consolidation at the end of the previous consolidated fiscal year. Accordingly, rather than judging demand deterioration solely from the rate of decline, it is necessary to assess how well revenue has been maintained on an existing-business basis following the change in the scope of consolidation.

Gross profit was ¥13.1 million, down ¥13.8 million from the same period of the previous year. Meanwhile, SG&A expenses fell by ¥20.2 million, or 30.3%, to ¥46.4 million from ¥66.6 million, narrowing the operating loss by ¥6.4 million to ¥33.3 million from ¥39.7 million. In other words, part of the decline in gross profit was absorbed through SG&A reductions. On a simple calculation, the operating margin deteriorated from approximately negative 20.6% in the same period of the previous year to approximately negative 32.7% in the current quarter, so the reduction in the loss alone cannot be described as an improvement in profitability.

The quarterly net loss attributable to owners of the parent was ¥34.3 million, widening from ¥25.1 million in the same period of the previous year. This was because the net impact of extraordinary gains and losses associated with personnel-system reforms, including a ¥27.5 million loss on termination of the retirement benefit plan and a ¥23.0 million gain from the reversal of the provision for bonuses, was negative ¥4.5 million. Accordingly, FY2027-H1 will need to distinguish improvement at the operating level from one-off gains and losses related to the system reforms and assess the normalization of ordinary and net income.

The operating loss in FY2026-H1 was ¥88.2 million, while the ordinary loss was ¥86.4 million. In FY2027-H1, it will be important not only to fall below these year-earlier levels, but also to secure a gross margin commensurate with revenue after the removal of the subsidiaries from consolidation. The full-year earnings forecast remained undetermined when the results were announced. In H1, we will track whether the company can disclose its revenue, operating income or loss, earnings assumptions including the impact of M&A, the breakdown of SG&A reductions, and the remaining amount of one-off expenses.