Strong Q1 progress points to upside potential for the full-year plan, but sustainability must be confirmed in H1

In Q1 of FY2027, revenue was ¥10,844 million, operating profit was ¥1,434 million and profit for the quarter attributable to owners of the parent was ¥892 million. Compared with the same quarter of the previous year on a continuing-operations basis, revenue increased 20.3%, operating profit increased 52.7% and net income increased 58.0%. The operating margin was 13.2%, calculated by dividing ¥1,434 million by ¥10,844 million, up approximately 2.8 percentage points from approximately 10.4% in the same quarter of the previous year.

The full-year forecasts are revenue of ¥44,000 million, operating profit of ¥5,500 million and profit for the year attributable to owners of the parent of ¥3,300 million. The company's planned increases over the previous year's results are 15.0%, 20.2% and 20.5%, respectively. Q1 progress against the full-year forecasts was 24.6% for revenue, 26.1% for operating profit and 27.0% for net income. The company describes progress in revenue and operating profit as exceeding its initial forecasts, but has not disclosed H1 numerical targets or quarterly earnings forecasts.

Using simple equal allocation across the two halves of the year as a benchmark, the H1 reference points are revenue of ¥22,000 million, operating profit of ¥2,750 million and net income of ¥1,650 million. This is not a company forecast, however, but a mechanical benchmark that does not take seasonality into account. After Q1, the amounts remaining to achieve the full-year plan were ¥33,156 million in revenue, ¥4,066 million in operating profit and ¥2,408 million in net income. The H1 results therefore need to be assessed together with the Q2 contribution and the amounts still required in the second half.

The key issue in H1 is whether Q1's profit growth was reproduced through higher utilisation rates and expansion in users and contracts across the businesses, rather than resulting from a temporary timing difference in expenses. In particular, it will be necessary to confirm whether the operating margin can remain in the 13% range, whether profit growth continues to outpace revenue growth of around 20%, and which segments and assumptions would change if the full-year forecasts were revised.