Revenue growth despite an operating loss; profit improvement in Q4 is required to meet the full-year forecast

Consolidated revenue for the 9 months ended May 2026 was ¥1,565 million, up approximately ¥245 million from approximately ¥1,320 million in the same period of the previous year. Meanwhile, operating income deteriorated from a ¥44 million profit to a ¥77 million loss, ordinary income from a ¥38 million profit to a ¥91 million loss, and net income attributable to owners of the parent from a ¥42 million profit to a ¥34 million loss. The key issue for the next earnings release is that revenue growth has not translated into earnings growth.

On a standalone basis, revenue for the 9 months was ¥1,552 million and operating income was ¥33.9 million. The year-on-year decline in operating income reflects a ¥232.0 million increase in revenue, offset by an ¥80.0 million increase in cost of sales excluding software amortization, a ¥59.4 million increase in software amortization, an ¥82.2 million increase in SG&A expenses and ¥23.0 million in office relocation costs. Operating income excluding relocation costs had improved to ¥57.0 million, so the full-year results should distinguish between the one-time relocation costs and recurring amortization, personnel and infrastructure expenses.

The standalone gross margin in Q3 alone was 61%, down 6 percentage points from 67% in the same quarter of the previous year. The operating margin also declined 4 percentage points, from 7% to 3%. Because the margin on customized development projects, amortization of software assets, infrastructure costs and stepped-up hiring of personnel supporting product implementation are all affecting results, the scope for reducing the consolidated loss will remain limited unless the gross margin recovers in Q4 even if revenue increases.

The full-year forecast remains unchanged at revenue of ¥2,298 million, an operating loss of ¥110 million, an ordinary loss of ¥120 million and a net loss attributable to owners of the parent of ¥45 million. Based on the simple difference from the 9-month results, Q4 requires revenue of ¥733 million and an operating loss of no more than ¥33 million. Although vottia's upfront investment is cited as a primary driver of the consolidated operating loss, standalone revenue, operating income or loss, and investment amount for the subsidiary have not been disclosed. In the full-year results, it will be necessary to assess not only cost improvements on a standalone basis, but also whether investment in the subsidiary is within budget and whether Q4 revenue recognition and the start of billing actually limited the loss.