FY2027/3: Focus on turning a first-half operating profit despite higher revenue

Consolidated revenue in Q1 FY2027/3 was ¥1,204.439 million, while the company posted an operating loss of ¥6.463 million, an ordinary loss of ¥3.612 million and a quarterly net loss attributable to owners of the parent of ¥12.667 million. Revenue represented 24.1% of the full-year forecast of ¥5,000 million, close to the simple 25% pace after three months, while profit remained negative against the full-year operating profit forecast of ¥150 million, indicating a substantial gap between revenue and profit progress.

Calculated against the full-year operating profit forecast, the Q1 profit progress rate was negative 4.3%. To cover the Q1 operating loss and secure ¥150 million, the company will need total operating profit of ¥156.463 million over the remaining three quarters, or approximately ¥52.2 million per quarter on average. The full-year forecast implies an operating margin of 3.0%, whereas the Q1 operating margin was approximately negative 0.54%, indicating that the first half will require improved profitability to absorb personnel expenses and other fixed costs in addition to revenue growth.

Operating income, ordinary income and net income were all in the red in Q1. The company explained that personnel expenses and other costs increased as it pursued the development of proprietary AI-based technologies and entry into new markets, while actively recruiting and training personnel and raising wages and allowances. Accordingly, at the next earnings release, it will be necessary to check not only whether revenue reached around ¥2,500 million, but also whether operating income turned positive and how far the operating margin on revenue improved from negative territory.

Because consolidated figures for the prior-year period have not been disclosed following the transition to consolidated reporting, the year-on-year revenue growth rate and profit comparison for Q1 cannot be determined straightforwardly. In assessing progress in Q1 FY2027/3, priority should be given to revenue and operating profit progress against the full-year forecasts, the profit level at the end of the first half, and whether the full-year forecasts are revised, rather than to year-on-year comparisons.