Plan calls for revenue growth to continue in the fiscal year ending June 2027, while profit margins continue to decline

Revenue in FY2026 was ¥2,436.465 million, up 11.9% year on year, but operating profit was ¥404.681 million, down 0.8%, and the operating margin fell 2.1 percentage points, from 18.7% to 16.6%. While revenue growth itself is continuing, the fact that the increase in revenue has not translated directly into higher operating profit is the starting point for the first verification in FY2027-Q1.

The company forecasts FY2027 revenue of ¥2,808.958 million, representing 15.3% growth from FY2026. In contrast, the forecasts are ¥404 million for operating profit, ¥405 million for ordinary profit and ¥288 million for net profit. Operating profit is expected to remain broadly flat, while net profit is planned to decline 4.6% year on year. A simple calculation gives a revenue operating margin of approximately 14.4%, a further decline of approximately 2.2 percentage points from the 16.6% recorded in FY2026. The company explains that investment in advanced technologies, including AI, business process reform and employee development will temporarily suppress profit. In Q1, it will therefore be necessary to check not only revenue progress but also which expense items actually reflect the investment burden.

The medium-term management plan presented in the earnings presentation sets FY2027 targets of ¥2,785 million in revenue, ¥479 million in operating profit and a 17.2% operating margin. Compared with the FY2027 forecasts in the earnings summary, this is approximately ¥24 million higher for revenue but approximately ¥75 million lower for operating profit. The two sets of figures may coexist because of differences in the timing of their formulation or in their definitions. However, the distance between the target of restoring the operating margin to 17.2% after the investment phase and the current official forecast of approximately 14.4% should be clarified in the next earnings presentation.

FY2027-Q1 revenue of ¥702 million and operating profit of ¥101 million are merely mechanical reference values based on dividing the full-year forecasts by four, not company forecasts incorporating seasonality. Even so, if Q1 falls materially below these levels, it will be easier to assess the achievability of full-year revenue of ¥2,809 million; if it exceeds them, the focus will be on whether the company can absorb the investment burden and maintain its margin. The company has indicated a dividend of ¥19 per share and a forecast payout ratio of 21.5%. It will also be necessary to check whether its policy of maintaining shareholder returns remains unchanged even if earnings forecasts are flat.