Revenue is on track, but the hurdle for achieving the 9-month profit forecast is high

Revenue for January–June FY2026 was ¥1,385.162 million, up 25.0% from ¥1,108.397 million in the same period a year earlier. Operating profit, however, fell 39.5% from ¥75.935 million to ¥45.924 million, while ordinary profit was ¥58.886 million and interim net profit attributable to owners of the parent was ¥56.845 million. Operating margin was approximately 3.3% for the first half, down approximately 3.5 percentage points from approximately 6.9% in the same period a year earlier.

The company's FY2026 forecasts are revenue of ¥2,221 million, operating profit of ¥134 million, ordinary profit of ¥126 million and net profit of ¥113 million. Revenue had reached 62.4% of the forecast by the end of the first half, but operating profit had reached only approximately 34.3%. On a simple calculation, the company will need to generate revenue of ¥835.8 million and operating profit of ¥88.1 million in the remaining July–September period, implying a plan to earn approximately 1.9 times the first-half operating profit of ¥45.9 million in 3 months.

First-quarter operating profit was approximately ¥62.3 million, implying an operating loss of approximately ¥16.4 million in the second quarter alone. FY2026 is a 9-month transitional accounting period from January to September due to the change in the fiscal year-end, and does not include the busy fourth quarter under the former December year-end. In prior years, the company had explained that revenue in October–December was higher than in other quarters. Accordingly, the ability to significantly build profit in July–September, without the traditional year-end demand, is more important than in a normal full-year settlement.

At the next results announcement, we will look at the July–September revenue and operating profit results, as well as whether increases in fixed costs, depreciation and amortization, and M&A-related expenses are temporary or represent a cost structure that will remain in FY2027. In particular, if the company achieves its full-period forecast but operating margin does not return to the prior-year level, its previous explanation that revenue growth directly leads to profit growth will need to be reassessed.