Q1's sharp earnings growth was concentrated in the investment business, while the software business's underlying earnings power remains unconfirmed

FY2027-Q1 revenue was ¥824 million, up 7.0% year on year, while operating profit was ¥2,451 million, profit before tax was ¥2,446 million, and profit attributable to owners of the parent was ¥1,733 million. Profit growth was extremely large relative to revenue growth, creating an earnings structure that is difficult to explain through ordinary software sales alone.

By segment, the software business posted a loss of ¥0.160 million, compared with investment business profit of ¥2,447.229 million. This means that almost all operating profit came from the investment business, so Q1 earnings growth cannot be assessed simply as an improvement in the software business's profitability. In FY2026, the software business generated segment profit of ¥583.285 million and the investment business generated ¥393.984 million, indicating a major shift in the earnings mix in Q1 compared with prior years.

The company identified gains on the partial sale and valuation gains of SpaceX shares as factors behind Q1 earnings growth. However, the Q1 financial figures do not break down the amounts of gains on sales and valuation gains related to SpaceX, or valuation gains and losses on other investments. Within the ¥2,447.229 million of investment business profit, whether realised gains and unrealised valuation gains can be disclosed separately will be important in assessing earnings quality.

In FY2027-H1, the focus will be on whether the software business's segment profit excluding Q1's investment-related factors returns to positive territory, and whether revenue growth from Warp, Platio and other products can absorb personnel, research and development, and promotional expenses. The company did not prepare a cash flow statement for Q1 and did not disclose cash flow from operating activities, so H1 should also clarify how much of the accounting profit from investments translated into cash inflows.