Costs are improving, but profitability remains out of reach as losses continue amid declining revenue

FY2026-H1 revenue was ¥2,095 million, down ¥108 million, or 4.9%, from ¥2,203 million in the year-earlier period. Meanwhile, the operating loss narrowed by ¥50 million, from ¥129 million to ¥79 million, and the ordinary loss narrowed by ¥45 million, from ¥123 million to ¥78 million. The interim net loss attributable to owners of the parent narrowed by ¥42 million, from ¥140 million to ¥98 million. However, revenue continued to decline, while the company remained loss-making at the operating, ordinary and net income levels. Profitability improvement therefore remained limited to narrower losses rather than a return to profitability.

The company explains that various profitability improvement measures have increased gross margin and reduced expenses. However, the H1 disclosures provided do not specify the gross margin or cost-of-sales ratio, the breakdown of cost of sales and SG&A expenses by amount, or which measures contributed how many millions of yen in improvement. In FY2026-Q3, it will be necessary to determine whether the improvement in gross margin reflects product mix, procurement terms or temporary factors. It should also be assessed whether the reduction in SG&A expenses represents a structural decline in fixed costs or merely a shift in the timing of expenditures.

The FY2026 full-year forecasts are revenue of ¥4,200 million, an operating loss of ¥130 million, and a net loss attributable to owners of the parent of ¥160 million. As of H1, progress was 49.9% for revenue, 60.8% based on the absolute amount of the operating loss, and 61.3% based on the absolute amount of the net loss. To maintain the full-year forecasts, the company will need to secure at least ¥2,105 million in revenue in the second half, while limiting the additional operating loss to ¥51 million and the additional net loss to ¥62 million. In Q3, the review will cover not only cumulative revenue progress but also whether losses remain within the allowable range for the second half and whether circumstances now require revisions to the full-year forecasts.