FY2026 focus: the pace of progress toward the earnings plan despite continued revenue growth

Consolidated revenue for FY2025 was ¥18,077 million and operating profit was ¥819 million. By contrast, the initial full-year forecast for FY2026 was revenue of ¥24,182 million, operating profit of ¥1,324 million and net income attributable to owners of the parent of ¥660 million, implying revenue growth of 33.8% and operating profit growth of 61.6%. Revenue and operating profit were ¥5,740 million and ¥629 million, respectively, in the first quarter of FY2026, ¥10,661 million and ¥524 million on a cumulative basis through the second quarter, and ¥15,879 million and ¥602 million on a cumulative basis through the third quarter.

Cumulative third-quarter revenue represented approximately 65.7% of the full-year forecast, about 9.3 percentage points below the simple quarterly progress benchmark of 75%. Operating profit was even further behind, at approximately 45.5% of the full-year forecast. If the full-year forecast is maintained, the fourth quarter alone would need to generate revenue of ¥8,303 million, operating profit of ¥722 million and net income attributable to owners of the parent of ¥332 million. Operating profit would therefore need to exceed the cumulative third-quarter result of ¥602 million in a single quarter.

The deterioration in margins also warrants attention. The operating margin was approximately 9.1% in the first half of FY2025, compared with approximately 4.9% in the first half of FY2026. On a cumulative third-quarter basis, revenue and operating profit were ¥13,402 million and ¥889 million, respectively, in the prior-year period, versus ¥15,879 million and ¥602 million in FY2026. The operating margin consequently fell from approximately 6.6% to approximately 3.8%. The company has explained its investment in advertising to acquire engineers and customers, as well as recruitment of full-time engineers and sales and consulting personnel, but has not disclosed the amount by which each investment factor reduced profit.

At the next earnings release, it will be necessary to confirm not only whether the earnings forecast is maintained or revised, but also which businesses will deliver the required fourth-quarter revenue of ¥8,303 million and operating profit of ¥722 million. In particular, revenue growth needs to be broken down into the effects of an increase in deployed engineers, expansion of the consolidation scope through M&A and higher unit prices. The company did not prepare a cash flow statement on a cumulative third-quarter basis, so full-year operating cash flow should also be reviewed alongside the recovery in profit.