Recognition of milestone revenue in FY2026 H2 is the tipping point for achieving the full-year plan

Business revenue in Q1 of the fiscal year ending December 2026 was ¥801 million, rising to ¥1,455.6 million on a cumulative first-half basis. The full-year forecast is ¥3,980 million, putting first-half progress at 36.6%. This is 13.4 percentage points below the 50% implied by simple time apportionment, indicating a plan weighted toward H2 on the revenue side. At the next Q3 earnings announcement, the first quantitative test of progress toward the plan will be whether cumulative business revenue reaches ¥2,985 million, or 75% of the full-year forecast.

On the earnings side, the company recorded an operating loss of ¥338 million, an ordinary loss of ¥326 million, and an interim net loss attributable to owners of the parent of ¥466 million in the first half. In contrast, its full-year forecasts are operating profit of ¥165 million, ordinary profit of ¥86 million, and a net loss attributable to owners of the parent of ¥63 million. Accordingly, the company must generate operating profit of ¥503 million in H2 alone, requiring not only revenue growth but also simultaneous control of research and development expenses and selling, general and administrative expenses.

The company has maintained its full-year forecasts because, although it was unable to recognize the milestone revenue and contract-upfront-payment revenue underlying those forecasts in the first half, it expects to recognize this revenue in H2. This explanation indicates that non-recurring revenue linked to contract progress, in addition to ordinary royalty revenue, is a condition for achieving full-year results. At the next earnings announcement, it will be necessary to determine which projects generated the revenue expected in H2, whether revenue recognition will be concentrated in Q3, or whether it will be pushed back to the year-end.

Business revenue in the fiscal year ended December 2025 was ¥3,979 million, while the forecast for the fiscal year ending December 2026 is ¥3,980 million, essentially flat. Given the deterioration in first-half earnings, if the company maintains its full-year forecast at the next earnings announcement, the certainty of H2 milestones and measures to control costs will become more important. The most important checks for this earnings release are the cumulative Q3 revenue progress, operating profit or loss, the breakdown of other income, and whether the full-year forecast is revised, considered together.