Q1 was broadly in line with the full-year forecast, but normalising margins is the challenge for FY2027

In Q1 of FY2027, revenue was ¥970.1 million, operating profit was ¥26.7 million, ordinary profit was ¥85.0 million and net income attributable to owners of the parent was ¥68.2 million. Revenue increased 14.7% year on year, while operating income, ordinary income and net income all turned profitable from losses in the year-earlier quarter. According to the company's materials, revenue progress against the full-year forecast of ¥4,307.9 million was 22.5%, while operating profit progress against the full-year forecast of ¥125.964 million was approximately 21%, indicating that the quarter's start was not materially behind schedule.

However, the company reported revenue of ¥4,014 million and operating profit of ¥307 million for FY2026. For FY2027, it plans to increase revenue by ¥293.6 million, or 7.3%, while forecasting a ¥181.1 million, or 59.0%, decline in operating profit. The operating margin is therefore expected to fall from approximately 7.6% in FY2026 to approximately 2.9% in FY2027. The plan should be viewed as incorporating margin normalisation or temporarily higher costs, rather than simply assuming continued growth.

The company explained that the return to operating profitability in Q1 reflected not only higher revenue but also a reduction in outsourced costs. However, it has not disclosed the reduction by expense category or whether it can be replicated for the full year. In the Q2 results, it will be important to determine which of outsourcing costs, personnel costs, advertising expenses and upfront investment increased or decreased, and whether the Q1 improvement in operating profit resulted from temporary cost controls or a sustainable improvement in project profitability.

The full-year forecast was unchanged as of Q1, and the annual dividend forecast remained at ¥0. In the next results announcement, it will be important to check not only revenue progress but also whether operating profit progress is improving in line with revenue, and how much profit is being left for the second half to achieve the full-year operating profit target of ¥125 million.