Revenue growth, but FY2027 profit guidance incorporates investment costs and calls for lower earnings

Revenue in the first quarter of the fiscal year ending March 2027 was ¥489 million, up 19.4% year on year, while operating profit was ¥12 million, up 13.0%. Ordinary profit was ¥13 million, down 12.4%, and quarterly net income was ¥6 million, down 22.7%. Although the company remained profitable at the operating level, the benefit did not flow through to lower-line earnings after non-operating income and expenses and tax costs, so net income did not grow in line with revenue.

The full-year forecasts are ¥2,200 million in revenue, ¥80 million in operating profit, ¥78 million in ordinary profit and ¥63 million in net income, making first-quarter progress rates 22.3%, 15.6%, 17.1% and 9.5%, respectively. On a simple basis, the amounts remaining after the first quarter are ¥1,711 million in revenue, ¥68 million in operating profit, ¥65 million in ordinary profit and ¥57 million in net income. The company said that, although it had initially expected an operating loss in the first quarter, it finished in the black, and that progress was solid given the accumulation of recurring projects and large projects expected from the second quarter onward.

However, results for the fiscal year ended March 2026 were ¥1,870 million in revenue and ¥101 million in operating profit. For the fiscal year ending March 2027, revenue is planned to increase 17.6%, while operating profit is expected to decline 21.3%. Against the 5.4% operating margin in the fiscal year ended March 2026, the operating margin forecast for the fiscal year ending March 2027 is only about 3.6%. The plan assumes upfront costs for investment in personnel, new AI solution development and systems-related expenses. In FY2027-H1, if revenue growth does not translate into profit as planned, the reasons will need to be assessed in terms of both project mix and costs.

There was no revision to the full-year earnings forecast in the first-quarter results, and the full-year targets for revenue, operating profit, ordinary profit and net income were maintained. Accordingly, the next assessment will use the simple half-year benchmarks of ¥1,100 million in revenue and ¥40 million in operating profit as reference points, while taking seasonality and the timing of large-project recognition into account. In particular, it will be important to confirm whether operating profit progress improves from its current level below revenue progress, and whether the low progress rates for ordinary profit and net income are attributable to temporary factors.