Is Q1's strong progress sufficient evidence that the full-year forecast will be met?

Revenue in Q1 of the fiscal year ending March 2027 was ¥163.310 billion, up 63.7% year on year, operating profit was ¥66.911 billion, up 90.6%, and quarterly profit attributable to owners of the parent was ¥97.696 billion, up 148.2%. The operating margin was approximately 41.0%, up approximately 5.8 percentage points from approximately 35.2% in the year-earlier period. The full-year forecasts are revenue of ¥700.0 billion, operating profit of ¥220.0 billion and profit attributable to owners of the parent of ¥210.0 billion. Progress at the end of Q1 had therefore reached 23.3%, 30.4% and 46.5%, respectively.

However, it is too early to assess the likelihood of meeting the full-year forecasts based on progress ratios alone. Although Q1 profit attributable to owners of the parent was close to half the full-year plan, other income includes a ¥48.97 billion gain on bargain purchase arising from business combinations. Accordingly, at the next earnings announcement it will be necessary to assess operating profit, profit before tax and profit attributable to owners of the parent excluding one-off or non-operating factors such as the gain on bargain purchase, deferred tax assets and share of profit of investments accounted for using the equity method.

The earnings baseline has also changed. Revenue and operating profit were ¥438.268 billion and ¥156.603 billion, respectively, in the fiscal year ended March 2025, and ¥499.677 billion and ¥166.725 billion, respectively, in the fiscal year ended March 2026. The forecasts for the fiscal year ending March 2027 are revenue of ¥700.0 billion and operating profit of ¥220.0 billion, implying increases of approximately 40% in revenue and approximately 29% in operating profit from the previous fiscal year. Since these targets assume an expanded consolidation scope following M&A, the second-quarter results should be assessed by separating growth in existing businesses from contributions by acquired businesses.

For FY2027-H1, mechanically calculated benchmarks equivalent to half of the full-year plan are revenue of ¥350.0 billion, operating profit of ¥110.0 billion and profit attributable to owners of the parent of ¥105.0 billion. These are reference figures, not company-disclosed first-half forecasts, and ignore seasonality and one-off factors. At the next earnings announcement, it will be necessary to check whether the full-year forecasts of ¥700.0 billion, ¥220.0 billion and ¥210.0 billion are maintained, and whether the company can absorb integration costs for acquired businesses and higher R&D expenses even if the operating margin declines from 41.0%.