Can the FY2027 plan for substantially higher earnings show execution momentum from Q1?

FY2026 revenue was ¥8,427 million and operating profit was ¥216 million, representing year-on-year increases of 5.5% and 21.5%, respectively. The company secured higher revenue and profit from FY2025 revenue of ¥7,984 million and operating profit of ¥177 million, while its FY2027 plan calls for revenue of ¥9,909 million and operating profit of ¥329 million, implying revenue growth of 17.6% and operating profit growth of 52.4%. The plan assumes that the operating margin will rise from approximately 2.6% in FY2026 to approximately 3.3% in FY2027.

FY2026 is said to have fallen short of the initial forecast by 3.0% for revenue and 7.9% for operating profit, partly because acceptance of large projects was pushed back into FY2027. Accordingly, at the next Q1 it will not be sufficient simply to confirm year-on-year revenue growth. It will also be necessary to determine whether the delayed projects were actually accepted and recognized as revenue, or pushed back further. The project names, total contract values and amounts recognized in Q1 have not previously been disclosed, making it important to see whether the company provides additional details this time.

FY2026-Q1 revenue was ¥1,919 million and operating profit was ¥5 million. If FY2027-Q1 exceeds these levels, growth at least continued year on year, but achieving FY2027 operating profit of ¥329 million will require the margin improvement to continue beyond Q1. Previous explanations indicated that the company’s earnings tend to increase in the second half, so full-year performance should not be judged on Q1 profit alone. The project mix and gross margin should also be considered.

For FY2026, Mobile Engineering Services revenue declined 3.4% year on year to ¥3,252 million, while IoT Engineering Services increased 13.1% to ¥3,742 million and Other Services increased 9.4% to ¥1,431 million. From Q1 onward, a key point to assess will be the extent to which growth in the FY2027 plan can offset the shrinking mobile business through IoT, network and SaaS, among other new areas.

At present, the company has not disclosed the quarterly allocation of the full-year plan, order intake, order backlog, profit by service or a value bridge for delayed projects. At the next results announcement, it will be important to see whether the company can disclose not only revenue but also year-on-year operating profit, operating margin, progress against the full-year plan, and the balance or acceptance timing of projects not yet recognized.