Q1: Operating profit rises despite lower revenue; how much headroom remains to meet the full-year plan?

Revenue for the first quarter of the fiscal year ending March 2027 was ¥13,314 million, down 11.2% year on year. Operating profit was ¥1,468 million and ordinary profit was ¥1,606 million, up 10.5% and 16.0%, respectively, from the same period a year earlier. Operating profit increased despite lower revenue, making the central issue in this earnings release the fact that lower costs associated with the business transfer and structural reforms began to flow through to earnings ahead of a recovery in demand.

The Q1 operating margin was approximately 11.0%, calculated from revenue of ¥13,314 million and operating profit of ¥1,468 million. In the same period a year earlier, revenue was ¥14,991 million and operating profit was ¥1,328 million, producing an operating margin of approximately 8.9%, an improvement of about 2.2 percentage points. However, the operating margin implied by the full-year operating profit forecast of ¥2,800 million and revenue forecast of ¥50,000 million is 5.6%. Although the plan appears to incorporate seasonality and investment in the second half, if margins decline significantly in the first half, it will be important to explain whether the cost reductions are temporary and what the second-half investments entail.

In terms of progress against the full-year forecasts, Q1 revenue was 26.6% of the ¥50,000 million forecast, operating profit was 52.4% of the ¥2,800 million forecast, and ordinary profit was 47.2% of the ¥3,406 million forecast. Operating profit is well ahead of plan, but revenue is only slightly above the 25% level corresponding to one quarter of the fiscal year. At the next interim earnings release, we will assess whether the earnings lead reflects healthy improvement in profitability or merely cost reductions, using revenue of at least ¥25,000 million and operating profit of at least ¥1,400 million as benchmarks.

For the fiscal year ended March 2026, revenue was ¥59,093 million and operating profit was ¥3,962 million, representing an operating margin of 6.7%. By contrast, the fiscal year ending March 2027 plan assumes revenue of ¥50,000 million and operating profit of ¥2,800 million, equivalent to a 15.4% decline in revenue and a 29.3% decline in operating profit. Next time, we will check whether the decline in revenue narrows from the 11.2% seen in Q1, whether continuing businesses such as Agent, Other Recruitment Services and overseas operations can offset the contraction in the Media business, and how much of the reductions in personnel and advertising expenses can be sustained.