Revenue increased in Q1 but margins declined, making recovery in the eBASE business the key issue for FY2027-H1.

Consolidated revenue in FY2027-Q1 was ¥1,158 million, up 7.9% from ¥1,074 million in the same period last year. However, operating profit declined 12.2% to ¥129 million from ¥147 million, while ordinary profit was ¥138 million and profit attributable to owners of the parent was ¥76 million. Revenue growth is not translating into profit growth, making a bottoming-out in margins more important in the next interim results than simply continuing to grow revenue.

The operating margin on revenue declined by approximately 2.5 percentage points, from approximately 13.7% in the same period last year to approximately 11.2% in the current quarter. By segment, the eBASE business reported revenue of ¥440,987 thousand and segment profit of ¥19,132 thousand, while the eBASE-PLUS business reported revenue of ¥717,366 thousand and segment profit of ¥119,102 thousand. Although consolidated profit was affected by M&A-related costs, the eBASE-PLUS business generated most of the profit, leaving the eBASE business with continued weak profitability.

This issue is not limited to one-off costs. In FY2026, the eBASE business reported revenue of ¥2,591,313 thousand and segment profit of ¥1,062,534 thousand, down substantially from FY2025 revenue of ¥2,861,683 thousand and segment profit of ¥1,405,923 thousand. Human resources were concentrated on a large customization development project for the MDM eBASE product in an industry where the company had limited experience, delaying expansion sales and reducing sales of high-margin packaged software. It is necessary to determine whether this structure remained in FY2027-Q1 or whether the business normalized excluding the ¥45,731 thousand acquisition-related cost.

For FY2027-H1, the comparison base is eBASE business revenue of ¥1,137,658 thousand and segment profit of ¥371,120 thousand in the previous interim period. If only revenue recovers without a corresponding recovery in profit, the burden from customization projects is likely to be continuing. Conversely, if high-margin revenue from packaged software, licenses and support, and cloud services recovers alongside a resumption of expansion sales, confidence in the full-year operating profit forecast of ¥1,540 million will increase.