Large finance deals drive a return to profitability in Q1; H1 will test the sustainability of the trend

The finance business reported FY2027-Q1 revenue of ¥531.849 million, up 102.7% year on year, and segment profit of ¥119.717 million. As the growth business posted a segment loss of ¥41.341 million, profit from the finance business effectively supported consolidated operating profit of ¥78.375 million. The finance business had recorded an operating loss of ¥110.589 million in the year-earlier quarter, making this return to profitability significant. However, the extent to which the source of profit will continue is the central issue for the next results announcement.

In the previous fiscal year, the fintech transaction business expanded to revenue of ¥2,026.601 million and operating profit of ¥406 million, led by fund formation. By contrast, FY2027-Q1 finance revenue was equivalent to approximately 26% of the full-year result, leaving open the possibility that a large deal in the quarter alone drove profit higher. The company attributed the increase in gross profit to the formation of large fundraising deals, but based on the disclosure available to date it is not possible to sufficiently distinguish the timing of revenue recognition by deal, the proportions of success fees, management fees and formation fees, or the repeatability of the revenue.

Among the leading indicators, cumulative fundraising support rose 55.5% year on year to ¥27.9 billion, AUM increased 18.6% to ¥56.2 billion, and GMV rose 881.2% to ¥7.6 billion. Fundraising support and AUM indicate an expanding business base, while GMV growth can appear large when the prior-year base is small. The absolute amounts, number of deals, average deal value and fee rates therefore need to be considered together. It is also necessary to determine whether the increase in AUM is directly building management fees or whether it depends on disposal gains and success fees.

In FY2027-H1, in addition to year-on-year comparisons for finance revenue and segment profit, it will be important to see whether the company can disclose the number, average size and gross profit of large deals. In particular, if Q1 finance gross profit was lifted by large deals, a simple comparison with the full-year operating profit forecast of ¥53 million will not be possible unless deals of a similar scale are completed in H1. Disclosure of the order backlog, expected formation timing and the proportion of highly recurring revenue, such as management fees, would allow a more accurate assessment of the sustainability of the return to profitability in Q1.