FY2027 Q1: Profit ahead of plan; can high profitability be replicated in H1?

In the first quarter of the fiscal year ending March 2027, revenue was ¥5,844 million, operating profit was ¥559 million, ordinary profit was ¥571 million, and net profit attributable to owners of the parent was ¥333 million. Year on year, revenue increased 9.0%, while operating profit rose 72.0%, ordinary profit 76.2%, and net profit 58.8%, with profit growth substantially outpacing revenue growth. The operating margin also improved by 3.5 percentage points, from approximately 6.1% in the same quarter of the previous year to 9.6%.

The full-year plan calls for revenue of ¥22,000 million, operating profit of ¥1,600 million, ordinary profit of ¥1,600 million, and net profit attributable to owners of the parent of ¥1,000 million. As of Q1, progress rates were 26.6% for revenue, 34.9% for operating profit, 35.7% for ordinary profit, and 33.3% for net profit. Revenue was slightly ahead of the 25% elapsed-quarter benchmark, while profit was substantially ahead. However, seasonality related to the timing of music content releases and royalty collection cannot be confirmed from the figures, so the Q1 margin should not be extrapolated directly to the full year.

The operating profit bridge in the earnings presentation showed a ¥240 million positive contribution from higher revenue, offset by ¥10 million in higher personnel costs and ¥7 million in higher systems and other costs. The improvement from operating profit of ¥325 million in the same quarter of the previous year to ¥559 million this quarter can be attributed to a combination of revenue growth and cost controls. The Q1 operating margin already exceeds both the FY2026 full-year margin of 6.3% and the FY2027 full-year target of 7.3%. Accordingly, in H1 it will be important not only to maintain the high profitability, but also to determine whether systems and personnel costs accelerate again in the second half.

The company did not prepare a cash flow statement for Q1, and cash flow from operating activities, cash flow from investing activities, cash flow from financing activities, and cash at the end of the period were not disclosed. As a result, whether the increase in profit was also reflected in cash generation can only be verified in the H1 results. As a simple halfway benchmark, revenue of ¥11,000 million and operating profit of ¥800 million can be used, while also checking whether operating profit growth was driven by higher revenue or by the timing of expense recognition.