Returned to profitability through cost reductions, but achieving ¥280 million in full-year operating profit will require the second half's improvements to be sustainable

First-quarter revenue was ¥1,472 million, down ¥119 million from ¥1,591 million in the same quarter a year earlier. Operating income was ¥9 million, an improvement of ¥195 million from the ¥186 million operating loss recorded in the prior-year quarter. Ordinary income also turned positive at ¥5 million, but quarterly net loss attributable to owners of the parent was ¥53 million, indicating that achieving profitability at the operating level has not translated directly into bottom-line profitability.

The company attributes the return to profitability mainly to operations focused on profitability, company-wide reductions in cost of sales and SG&A expenses, and reviews of SG&A expenses and organisational structures across each business. However, as of the first quarter, the company had not disclosed a breakdown by expense category of the amounts of cost-of-sales, SG&A and fixed-cost reductions. At the next results announcement, disclosure will need to distinguish whether the improvement reflects temporary spending controls or a permanent improvement in margins resulting from organisational restructuring and operational efficiency gains.

For FY2026/3, revenue was ¥6,968 million and the operating loss was ¥248 million, compared with full-year forecasts for FY2027/3 of revenue of ¥7,030 million, operating income of ¥280 million, ordinary income of ¥240 million and net income attributable to owners of the parent of ¥220 million. First-quarter revenue progress was approximately 20.9% of the full-year forecast and operating profit progress was approximately 3.2%, meaning that ¥271 million in additional operating profit must be recorded from the second quarter onward to maintain the full-year forecast.

The full-year forecast does not assume a substantial upside in revenue, so achieving full-year profitability depends more on the sustainability of margin improvements than on revenue growth. At the next results announcement, we will want to confirm second-quarter standalone operating income or loss, first-half cumulative cost of sales and SG&A expenses, the profit contribution from the IT Solutions business to offset the decline in the Online Media business, and the amount of new-business investment planned for the second half.