Revenue growth alone is not enough: the quality of the FY2027-Q1 operating profit

FY2026 revenue rose 28.0% year on year to ¥4,766.9 million, while gross profit increased 11.3% to ¥1,011.6 million. However, the gross margin remained at approximately 21.2%, and the operating loss widened to ¥168.9 million from ¥111.6 million in the previous fiscal year. Even as revenue recovers, gross profit growth has not kept pace with revenue growth and has not fully absorbed expenses. This will be a key point of verification in FY2027-Q1.

On the cost side, SG&A expenses increased from ¥1,020.8 million in FY2025 to ¥1,180.6 million in FY2026. The company continues to invest in personnel and advertising while working to improve the efficiency of its product-planning process and review its procurement terms. However, quarterly operating results in FY2026 deteriorated from a ¥72.7 million profit in Q1 to losses of ¥52.6 million in Q2, ¥61.7 million in Q3 and ¥127.3 million in Q4. In the next earnings release, it will be necessary to determine whether the Q1 profit reflects a mere seasonal factor or is accompanied by improved gross margins and fixed-cost absorption.

For FY2027, the earnings presentation forecasts revenue of ¥5,046 million, while operating and ordinary losses are each presented in a range of ¥150–203 million. Full-year net income attributable to owners of the parent remains undecided. The plan calls for revenue growth of approximately 5.9% from FY2026, but still factors in a loss at the operating level. Even if revenue grows in FY2027-Q1, failure to secure an operating profit would increase the likelihood that the full-year loss range reflects the current earnings structure rather than merely conservative assumptions.

In the next earnings release, revenue, gross profit and SG&A should be reviewed on a basis that permits comparison with at least the same period of the previous year. In particular, because the company reports a single travel business segment, it does not disclose profit from individual travel, corporate travel or inbound travel separately. The earnings materials therefore provide only limited insight into which businesses generated gross profit and which expenses increased. The practical criteria for assessing a return to profitability will be whether Q1 operating profit exceeds ¥0 million, whether the gross margin can be maintained at around 21%, and whether the growth rate of SG&A does not exceed that of revenue.