A ¥40 million full-year operating profit requires a ¥157 million improvement in the second half

Revenue from January through June FY2026 was ¥2,043.384 million, down 4.8% from ¥2,146.737 million in the same period of the previous year. Operating income turned from a profit of ¥14.617 million in the same period of the previous year to a loss of ¥117.454 million. Ordinary income likewise turned from a profit of ¥22.132 million to a loss of ¥119.661 million, while interim net income attributable to owners of the parent turned from a profit of ¥11.915 million to a loss of ¥144.432 million. Profit deteriorated much more sharply than revenue declined, suggesting that the issue may involve deterioration in gross margin or fixed-cost absorption rather than simply lower revenue.

The full-year forecasts presented by the company are revenue of ¥4,600 million, operating profit of ¥40 million, ordinary profit of ¥40 million and net profit of ¥20 million, and had not been revised as of the interim results. Mechanically calculated from H1 results, the remaining revenue required to reach the full-year forecast is ¥2,556.616 million. As the company had recorded an operating loss of ¥117.454 million through H1, it must generate operating profit of ¥157.454 million in the second half alone to reach the full-year forecast of ¥40 million. Merely halting the loss in Q3 would not be sufficient; the plan requires substantial profit generation in Q3 and Q4.

The earnings presentation states that profit is expected to be concentrated in the second half as a result of winning large projects. However, the value of orders for large projects, recognition timing, gross margins, project-level profitability and order backlog have not been disclosed quantitatively. Accordingly, at the next earnings release, the key issue will be whether the company provides details on order backlog, including professional production and marketing projects, scheduled revenue recognition and project gross profit, rather than merely offering the qualitative explanation that large projects are available.

Using a simple benchmark that does not account for seasonality, H1 revenue progress of 44.4% is 5.6 percentage points below 50%. The 75% benchmark at Q3 would be ¥3,450 million, but this is only a mechanical reference point and does not incorporate the company’s plan or seasonality. Operating profitability also fell from a profitable position in the same period of the previous year to an operating margin of approximately negative 5.8% in H1. It is therefore necessary to assess separately how far the cumulative operating loss narrows by Q3 and whether the concentration of profit in the second half is actually reflected in the results.

At the next earnings release, the most important issue will not be the decision to maintain the full-year forecast itself, but the concrete progress supporting that decision. The key points are whether revenue reaches around ¥3,450 million, whether operating results improve from the H1 loss of ¥117.454 million, whether the professional segment’s losses narrow, and whether cloud profit is maintained. Even if the full-year forecast is maintained, achievement confidence should still be considered low on the numbers if project recognition is delayed or too much profit remains concentrated in Q4.