Sharp H1 recovery supported a full-year upward revision, but Q3 will focus on earnings sustainability

FY2026-H1 revenue was ¥2,799.005 million, up 65.6% year on year. Operating profit was ¥327.663 million, ordinary profit was ¥298.596 million, and interim net profit attributable to owners of the parent was ¥297.138 million. These figures represent a significant improvement from operating profit of ¥17.018 million, an ordinary loss of ¥9.002 million, and an interim net loss attributable to owners of the parent of ¥451.556 million in the same period of the previous year. The simultaneous progress in revenue growth and the return to operating profitability will be the most important points to verify in the next results announcement.

Comparing H1 results mechanically with the revised full-year forecast, revenue progress is 49.1–50.0% against the forecast range of ¥5,600–5,700 million, while operating profit progress is 81.9–109.2% against ¥300–400 million. Revenue is broadly at the level expected for half a year, but operating profit has already exceeded the top end of the full-year range. After deducting H1 results, ¥2,800.995–2,900.995 million of second-half revenue is required to meet the full-year revenue forecast, while second-half operating profit would range from a loss of ¥27.663 million to a profit of ¥72.337 million based on a simple calculation from the full-year range. This calculation does not account for seasonality or the timing of expense recognition, so Q3 standalone results and management’s assumptions for the second half will be necessary.

In light of strong H1 performance, the company raised its full-year revenue forecast from ¥5,100–5,300 million to ¥5,600–5,700 million and its operating profit forecast from ¥0–200 million to ¥300–400 million. Forecasts for ordinary profit and net profit were also raised from the previous range of a ¥100 million loss to a ¥100 million profit, to ¥200–300 million each. However, the earnings presentation materials state that performance-linked share-based compensation expense will be recorded in the second half and that the company plans to invest aggressively in its products. Q3 therefore needs to be assessed not only on revenue growth, but also on the operating margin and the timing of expense recognition.

The company’s materials do not expressly state H1 progress against the full-year forecast or the revenue and profit levels required on a standalone Q3 basis. In the next results announcement, it will be important to see whether the company discloses standalone Q3 revenue, gross profit, SG&A expenses, and operating profit, or provides its own assessment against the revised range. If profit slows substantially in Q3, the cause should be separated between temporary product investment and share-based compensation expense, and a slowdown in the growth rate of the personal authentication business.