Can the shortfall against the ARR plan be recovered through the Q3 price revisions and sales recovery, despite higher revenue and profit?

FY2026-H1 revenue was ¥2,771 million, operating profit was ¥619 million, ordinary profit was ¥649 million and interim net profit attributable to owners of the parent was ¥447 million. Year on year, revenue rose 14.6%, operating profit 30.0%, ordinary profit 51.5% and net profit 43.7%, with profit growth outpacing revenue growth. The full-year forecasts are revenue of ¥6,000 million and operating profit of ¥1,200 million, representing progress rates of 46.2% and 51.6%, respectively, at the H1 stage.

On a simple time-apportioned basis, however, revenue was at 46.2% against 50% of the fiscal year elapsed, while operating profit was at 51.6%, giving a different impression for revenue and profit. The mechanical 75% benchmark for cumulative 3Q results would be revenue of ¥4,500 million and operating profit of ¥900 million, but the company has not disclosed seasonality or the timing of project recognition. These levels should therefore be treated not as company targets, but as benchmarks for measuring the distance from plan at the next results announcement.

On a quarterly basis, FY2026-Q2 revenue was ¥1,377 million and operating profit was ¥256 million, up only 11.8% and 8.9%, respectively, year on year. The standalone Q2 operating margin was 18.7%, down 0.5 percentage points year on year. The H1 cumulative operating margin improved to 22.4% from 19.7% a year earlier, so it is necessary to distinguish the reasons why both the growth rate and operating margin slowed in Q2 alone, rather than relying solely on the strong cumulative performance.

In the post-results Q&A, the company attributed the ARR shortfall to lower-than-expected new customer acquisition for some products, a temporary increase in cancellations during H1, and the time required to allocate responsibilities and hand over work following organizational changes at the start of the fiscal year. However, it has not disclosed ARR amounts by factor, the number of lost deals, cancellation numbers or salesforce productivity. At the next results announcement, the key issue will be not only how much ARR increased from ¥5,270 million at the end of the interim period, but also whether quantitative data are provided to confirm that the causes of the shortfall have been resolved.

The company operates a single cyber-security segment and does not disclose revenue or profit breakdowns for Web Security, CloudFastener, AI Security and other products. Accordingly, it will be difficult to verify whether the increase in 3Q revenue came from existing recurring revenue, price revisions, new products or contracted services and M&A-related business unless qualitative explanations of product-level ARR or orders are provided.