FY2027-Q1 improved, but FY2027-H1 will test the quality of the return to profitability with summer courses

In the first quarter of the fiscal year ending February 2027, revenue rose 4.4% year on year to ¥4,188 million. The operating loss was ¥68 million, the ordinary loss was ¥107 million, and the net loss attributable to owners of the parent was ¥108 million. In the year-earlier period, the operating loss was ¥293 million, the ordinary loss was ¥344 million and the net loss was ¥270 million, so all 3 loss measures narrowed in addition to the increase in revenue. However, the company remained in the red at the operating, ordinary and net levels.

The full-year forecast calls for revenue of ¥18,721 million, operating income of ¥928 million, ordinary income of ¥756 million and net income attributable to owners of the parent of ¥355 million, putting Q1 revenue progress at 22.4%. A simple equal allocation would be 25%, but the company has consistently explained that its business has a seasonal structure: the number of enrolled students is lowest in the first quarter, summer and winter course revenue has not yet been fully recognized, and fixed costs such as rent and personnel expenses are incurred ahead of revenue. It is therefore too early to conclude that the full-year target will be missed solely because Q1 revenue progress was below 25%.

At the next interim results, the focus will be whether the number of enrolled students after the summer courses, the number of new seasonal-course students and customer acquisition across each brand can reproduce the growth in revenue to ¥4,188 million. In particular, for enrolled students and seasonal-course students, which are described as progressing well year on year, we will monitor whether the company discloses actual figures, year-on-year comparisons or budget variances rather than relying, as previously, on qualitative descriptions.

On earnings, the first test will be whether the company can return to profitability in H1, which includes summer-course revenue, from the Q1 operating loss of ¥68 million. In addition to operating income, we need to monitor the extent to which the ¥107 million ordinary loss and ¥108 million net loss narrow, and whether the full-year operating income forecast of ¥928 million is maintained.