Revenue growth notwithstanding, the first quarter was loss-making at the operating level; absorbing costs in the first half is the key to meeting the full-year forecast

First-quarter revenue for the fiscal year ending March 2027 was ¥3,008 million, up 9.4% year on year. Operating profit fell from ¥99 million in the year-earlier quarter to an operating loss of ¥7 million, ordinary profit swung from ¥96 million to a loss of ¥11 million, and profit attributable to owners of the parent also fell from a profit of ¥53 million to a loss of ¥105 million. Although revenue grew, the decline in profit was substantial, and revenue growth has not yet translated directly into profit growth.

The full-year forecasts remain unchanged at revenue of ¥14,160 million, operating profit of ¥970 million, ordinary profit of ¥950 million and profit attributable to owners of the parent of ¥610 million. First-quarter revenue progress was 21.2%, approximately 3.8 percentage points below the 25% implied by a simple equal quarterly progression. Since operating profit was a ¥7 million loss, achieving the full-year operating profit forecast requires ¥977 million over the remaining 3 quarters, or approximately ¥326 million per quarter on a simple average basis. This calculation is not the company's own earnings plan, but whether signs of a return to profitability emerge in FY2027-H1 will be an important point to monitor.

The first-quarter earnings presentation broke down the year-on-year change in operating profit into a positive ¥73 million contribution from revenue growth, a negative ¥41 million contribution from changes in gross margin and a negative ¥138 million contribution from changes in SG&A expenses. Within SG&A, R&D expenses associated with generative AI development investment increased by ¥40 million, advertising expenses by ¥13 million, payment fees by ¥13 million and expenses related to the launch of the shareholder benefit program by ¥10 million, each weighing on profit. The cost-of-sales ratio also rose 1.4 percentage points year on year to 73.0%, leaving both gross margin and SG&A expenses as issues.

Profit attributable to owners of the parent was also affected by an impairment loss on investment securities of ¥69.125 million. Since this loss did not reduce operating profit, FY2027-H1 should be assessed by separating operating cost burdens from non-operating and extraordinary loss factors such as impairment losses on investment securities. In particular, whether the increases in R&D and advertising expenses are temporary launch costs or fixed costs that will continue throughout the year remains an important undisclosed issue in assessing the reliability of the full-year forecast.