Will a sharp rebound in sales be accompanied by a recovery in margins?

Revenue in the first quarter of the fiscal year ending March 2027 was ¥2,258.4 million, up 60.3% from ¥1,408.9 million in the same quarter of the previous year. Operating profit was ¥354.2 million, up 8.2% from ¥327.2 million in the same quarter of the previous year. Profit attributable to owners of the parent was also limited to ¥212.5 million, up 0.7% year on year, making profit growth clearly smaller than the increase in revenue.

The calculated operating margin was 15.7% in the quarter, down 7.5 percentage points from approximately 23.2% in the same quarter of the previous year. As the increase in revenue has not flowed through directly to profit, the first-half results will need to show how much increases in the cost of sales, selling, general and administrative expenses, sales personnel costs and new service-related expenses pushed down the margin. The current disclosure does not provide a bridge breaking down the change in margin by factor.

The reported business consists of a single WEB marketing segment, and revenue and profit by segment have not been disclosed. Accordingly, the consolidated figures alone cannot determine whether the ¥2,258 million increase in revenue came from larger projects with existing customers, new customers, one-off projects or changes in the service mix. In the second-quarter results, it will be important to see whether supplementary metrics are added to explain the recurring or one-off nature of sales.

The full-year operating profit forecast is ¥1,800 million, implying a planned operating margin of 25.0% against forecast full-year revenue of ¥7,200 million. The gap from the first-quarter margin of 15.7% is 9.3 percentage points, so if the margin does not recover in the first half, a relatively high margin will be required in the second half. In the first half of the fiscal year ending March 2027, the focus will be not only on revenue growth, but also on whether the operating margin returns to the 20% range and whether the amounts attributable to the factors behind the margin decline are disclosed.