Q1 turned profitable, but the focus in FY2027-H1 is whether the recovery is sustainable

In FY2027-Q1 (April–June 2026), revenue was ¥481.8 million, up 9.3% year on year, while the company posted operating income of ¥8.7 million, ordinary income of ¥6.6 million and net income attributable to owners of the parent of ¥0.1 million. In the same quarter of the previous year, the company recorded an operating loss of ¥48.6 million, an ordinary loss of ¥48.7 million and a net loss attributable to owners of the parent of ¥48.3 million. The clear improvement is that all three levels of the income statement turned from loss to profit.

In contrast, FY2026 full-year revenue was ¥1,758.3 million, against an operating loss of ¥409.2 million and a net loss attributable to owners of the parent of ¥414.6 million. The return to profitability reflected the completion of the large investment in BIG ADVANCE GLOBAL made in the previous year, productivity gains from the use of generative AI, and progress in services for financial institutions and subsidy consulting. At this stage, however, it is not possible to fully distinguish recurring margin improvement from the disappearance of the investment burden.

Q1 revenue represented approximately 24.1% of the full-year forecast of ¥2,000 million, roughly in line with the 25% elapsed-quarter rate. Operating income, however, represented only approximately 10.8% of the full-year forecast of ¥80 million. The explanatory materials attribute the change in EBITDA to a ¥41 million contribution from higher revenue, an ¥11 million reduction in personnel expenses, a ¥20 million negative impact from higher outsourcing expenses and ¥18 million from other factors. The Q1 improvement in profit therefore also included cost-related factors. In H1, it will be necessary to check whether the effects of lower personnel expenses and the completion of the investment phase continue, in addition to revenue growth.

At the next results announcement, we will use revenue of ¥1,000 million and operating income of ¥40 million as simple interim benchmarks and check the actual position against them. These are mechanical check lines equivalent to 50% of the full-year forecasts, not targets based on the company’s forecasts or seasonality. We will also review the revenue breakdown for Big Advance, subsidy consulting, DX services for financial institutions and BIG ADVANCE GLOBAL, as well as the breakdown of SG&A expenses that was not disclosed in Q1, to determine whether the return to profitability depends on one-off cost reductions.