H1 is tracking ahead of the full-year plan, but the slowdown in standalone Q2 profit needs to be examined

H1 revenue was ¥7,516 million, up 13.7% year on year, while operating profit was ¥582 million, up 48.5%. The full-year forecasts are ¥14,000 million in revenue and ¥1,000 million in operating profit. At the H1 stage, progress rates were 53.7% for revenue and 58.2% for operating profit, meaning operating profit was 4.5 percentage points ahead of revenue. Ordinary profit was also ¥577 million, and net income attributable to owners of the parent was ¥365 million, with both remaining profitable.

However, cumulative figures alone may give a misleading picture of near-term profit momentum. Q1 revenue was ¥3,889 million and operating profit was ¥397 million, producing a 10.2% operating margin. In standalone Q2, revenue was ¥3,627 million and operating profit was ¥184 million, with the operating margin limited to 5.1%. Since the cumulative H1 operating margin was 7.7%, the standalone Q2 margin was 2.6 percentage points below the cumulative level. In Q3, it will be necessary to determine whether the Q2 decline resulted from a temporary change in project mix or from changes in SG&A expenses, costs, or business mix.

Using the full-year forecast simply as a benchmark for quarterly progress, the amounts still required after H1 are ¥6,484 million in revenue and ¥418 million in operating profit. To reach 75% progress on a cumulative Q3 basis, at least ¥750 million in operating profit would serve as one reference level. This is not a new target set by the company, but a monitoring benchmark calculated from the elapsed portion of the fiscal year and the full-year forecast. In the Q3 earnings release, it will be important not only to see whether the full-year forecast is revised, but also whether the company can explain specifically why the H1 profit increase is expected to continue in H2.

The company attributed the H1 profit increase to expanded IoT service functionality, growth in the payments services market, and the development and proposal of automation solutions in the robotics and automation fields. However, the H1 results presentation did not provide a self-assessment against the full-year plan or a specific explanation of the profit required in H2. In Q3, we will track whether the company discloses the standalone quarterly operating margin, SG&A expenses, gross margin, and project recognition timing together.