Product licenses drive growth, but the Solutions segment continues to suffer lower revenue and profit

Consolidated revenue in FY2027-Q1 was ¥6,781 million, up 12.3% year on year, while operating profit was ¥1,910 million, up 10.5%. Orders received also increased 17.0% to ¥7,214 million, indicating solid performance in both revenue and orders. However, profit growth was 1.8 percentage points below revenue growth, meaning that company-wide growth was not evenly distributed across the businesses.

By segment, Product business revenue rose 40.2% year on year to ¥2,739 million, while segment profit increased 52.9% to ¥1,159 million, standing out from the other segments. In contrast, Solutions business revenue declined 1.4% to ¥3,935 million, and segment profit fell 10.0% to ¥1,165 million. System Support business revenue increased 11.8% to ¥106 million, but segment profit declined 5.1% to ¥131 million. Accordingly, the key issue for FY2027-H1 is less the Product business's strong performance itself than whether the Solutions business's lower revenue and profit are temporary or reflect ongoing issues with project mix and profitability management.

License sales performance is consistent with the growth story of recent years. mcframe license revenue increased from ¥2,594 million in FY2025-H1, up 21.6% year on year, to ¥3,136 million in FY2026-H1, up 20.9%, and reached ¥6,184 million for FY2026, up 20.8% from the previous fiscal year. In FY2027-Q1, revenue was ¥2,040 million, up 43.5% year on year, exceeding the high growth rate recorded a year earlier. In the next earnings release, it will be necessary to assess, using license revenue, order backlog and implementation figures together, whether this growth reflects a temporary contribution from large projects or expansion driven by more sales partners and sustained product demand.

In FY2027-H1, it will be important to track not only whether Product business revenue and profit can maintain their FY2027-Q1 levels, but also whether the Solutions business improves from the benchmarks of ¥3,935 million in revenue and ¥1,165 million in profit. The company has previously cited the restraint of unprofitable projects and improved project profitability as drivers of profit improvement. The next release should therefore be checked for Solutions orders received, order backlog, segment profit margin and any new unprofitable projects.