Can Q3 recoup the decline in implementation support revenue that cloud growth alone cannot offset?

Revenue in the first half of FY2026 ending December 2026 was ¥991.5 million, down 0.4% from ¥995.9 million in the same period of the previous year. By segment, cloud revenue was ¥643.1 million, up 22.2% year on year, while support revenue was ¥207.1 million, up 7.1%. Upselling and cross-selling to existing customers and the addition of stores are driving recurring revenue. By contrast, implementation support revenue was ¥108.8 million, down 37.0% year on year, and package revenue was ¥32.6 million, down 68.6%.

First-half progress against the full-year revenue forecast of ¥2,344 million was 42.3%, 7.7 percentage points below the simple 50% halfway mark. Achieving the full-year forecast requires approximately ¥1,352.5 million in revenue in the second half. First-half operating profit was ¥104.3 million against a full-year forecast of ¥390 million, representing progress of only 26.7%; this implies that approximately ¥285.7 million must be generated in the second half. Quarterly order intake and order backlog are not disclosed, so the size of the projects supporting the revenue plan and their acceptance timing cannot be confirmed externally.

The decline in implementation support revenue was attributed to some projects not being won following customers’ revisions to their systems investment plans, as well as projects being deferred to the second half or later. This may not represent a simple loss of demand, but rather a timing issue affecting initial support revenue associated with new cloud implementations and cross-selling to existing customers. However, as migration from packages to cloud services progresses, the timing of implementation support revenue recognition may diverge from the start of recurring cloud billing. Revenue and ARR therefore need to be reviewed separately.

In Q3, we will assess how much implementation support revenue has recovered from its 37.0% year-on-year decline and whether projects deferred to the second half have actually reached acceptance and revenue recognition. It is important not only whether cloud revenue exceeds ¥643.1 million, but also which revenue category will make up any shortfall during the remaining period against the full-year plans of ¥654 million for implementation support, ¥413 million for support and ¥1,240 million for cloud. If the company does not disclose the number of projects, implementation timing, order backlog or the amount scheduled for recognition in the second half, the likelihood of maintaining the full-year forecast cannot be sufficiently verified from reported revenue alone.