FY2027-H1 will test whether revenue growth can be sustained while the company turns an operating profit

In the first quarter from March to May 2026, revenue rose 29.2% year on year to ¥908 million, while operating income was a ¥2 million loss and ordinary income was a ¥3 million loss. The operating loss narrowed from ¥19 million in the year-earlier quarter, but the core business has not yet turned profitable. Revenue progress against the full-year forecast of ¥3,850 million was 23.6%, about 1.4 percentage points below the 25% level implied by a simple equal quarterly allocation.

When assessing first-half progress, it is necessary to look not only at the simple revenue growth rate but also at the required level calculated backward from the full-year plan. Half of the full-year revenue forecast is ¥1,925 million, meaning that revenue of approximately ¥1,017 million will be required in the second quarter to reach the first-half target based on first-quarter results. The full-year operating profit forecast is ¥75 million. If the first half ends with a ¥2 million operating loss, the company will need to generate ¥77 million in operating profit in the second half alone. These are verification benchmarks calculated from the full-year forecast, not half-year targets disclosed by the company.

First-quarter revenue was ¥868.5 million from the consulting business, ¥5.8 million from the innovation business, and ¥33.8 million from the DX and regional co-creation business. The consulting business alone accounted for approximately 95.7% of company-wide revenue, meaning that overall revenue growth and earnings improvement depend heavily on its utilization rate and project progress. Although the DX and regional co-creation business turned profitable, it remains small, while revenue from the innovation business is limited. Whether the company can achieve company-wide operating profitability in the second quarter will therefore depend primarily on the consulting business.

The quality of earnings also requires attention. First-quarter net income was positive at ¥14 million, but this resulted from a ¥19 million gain on the sale of shares in an affiliated company related to the sale of shares in TOUCH TO GO. Operating income and ordinary income were both negative. Accordingly, rather than judging earnings recovery solely from first-half net income, operating income, ordinary income and extraordinary income and losses must be assessed separately. The reviewed disclosure for the first quarter also did not provide specific figures for the statement of cash flows, orders received and order backlog, or utilization rates.

At the next results announcement, first- and cumulative second-quarter revenue, operating income and ordinary income should be reviewed to determine whether revenue growth is translating into profit. In particular, the feasibility of the full-year operating profit target of ¥75 million will depend on whether high utilization in the consulting business continues, whether increases in recruitment and training costs and sales and administrative personnel expenses have peaked, and whether earnings are improving even excluding extraordinary income.