1Q was loss-making despite revenue growth, making proof of a profit recovery in FY2027-H1 the focus

FY2027-Q1 revenue was ¥1,634.6 million. On the basis of the earnings summary, this was up 3.7% year on year, but on a continuing-operations basis excluding ¥91.8 million in Finovale revenue included in the previous-year quarter, the company described growth as 10.1% year on year. Because this comparison spans a change in the scope of consolidation, these two methods of comparison need to be viewed separately when assessing year-on-year growth.

No improvement has been confirmed on the profit side. Adjusted operating loss based on the earnings presentation materials was ¥85 million, while operating loss based on the earnings summary was ¥118.96 million, compared with an operating loss of ¥69.585 million in the previous-year quarter. Gross profit was ¥434 million and the gross margin was 26.6%, down 1.6 percentage points year on year. In addition to a concentration of high-cost-ratio projects in the Business Produce segment, increases in hiring investment, outsourcing costs and promotional expenses also weighed on earnings.

The full-year forecasts are revenue of ¥8,200 million, reported operating profit of ¥460 million and adjusted operating profit of ¥500 million. The 1Q revenue progress rate was 19.9%, below the 25% quarterly average, but the company indicates that revenue tends to be weighted toward the second half. Given the historical revenue shares of 22.2% in FY2026-Q1 and 19.9% in FY2025-Q1, it would be premature to conclude from revenue progress alone that the full-year target will be missed.

However, adjusted operating profit must improve by ¥585 million over the remaining 3 quarters, from a loss of ¥85 million in 1Q to ¥500 million for the full year. Whether adjusted operating income turns profitable on a 2Q cumulative basis, whether the gross margin exceeds 26.6%, and whether the increase in hiring and outsourcing costs runs its course will be specific tests of the credibility of the full-year forecast.