Revenue is rising but margins are narrowing, making a recovery in the first half necessary to meet the full-year plan

FY2027-Q1 revenue was ¥4,100 million, up ¥401 million, or 10.8%, from ¥3,699 million in the same period last year. Operating profit, however, fell ¥89 million from ¥573 million to ¥484 million, while ordinary profit was ¥467 million and net profit attributable to owners of the parent was ¥264 million. Revenue growth did not translate directly into profit growth, resulting in higher revenue but lower profit.

The decline in margins is more pronounced. The Q1 operating margin was 11.8%, down approximately 3.7 points from approximately 15.5% in the same period last year. The FY2026 full-year operating margin was also 13.5%, so the Q1 level is low even compared with the latest full-year result. The company’s FY2027 full-year forecast is revenue of ¥16,500 million and operating profit of ¥1,980 million, implying a simple full-year operating margin of approximately 12.0%. At the next results announcement, it will be necessary to assess whether first-half results exceed the margin assumed in the plan or whether the low Q1 margin continues.

Q1 progress against the full-year plan was 24.8% for revenue and 24.5% for operating profit, broadly in line with the 25% calendar-year benchmark. However, this is only a simple benchmark based on reaching ¥8,250 million in revenue and ¥990 million in operating profit in the first half. It is not a forecast adjusted for the seasonality indicated by the company. In the first-half results, Q2 standalone revenue and operating profit need to be considered separately, together with the change in operating margin from Q1.

The results presentation provided some detail on the factors behind the decline in operating profit, but the full-year assumptions for new-business investment, advertising and promotional expenses, personnel expenses and amortisation of goodwill have not been disclosed. It is therefore not yet possible to determine whether the Q1 decline reflects a temporary concentration of upfront investment or a structural increase in fixed costs that will continue throughout the year. At the next results announcement, the results for margins and expense items will need to be reviewed alongside the unchanged full-year forecast.