Q1 was ahead on revenue, but earnings catch-up is needed in FY2027-H1

The first quarter from April to June 2026 generated revenue of ¥2,682 million, operating profit of ¥188 million, ordinary profit of ¥209 million and net profit attributable to owners of the parent of ¥134 million. Revenue had reached 23.7% of the full-year forecast, close to the 25% benchmark based on simply dividing the year into four quarters. By contrast, progress was 17.3% for operating profit, 17.8% for ordinary profit and 16.6% for net profit, indicating that earnings are progressing more slowly than revenue.

The company has set full-year forecasts of ¥11,300 million in revenue, ¥1,090 million in operating profit, ¥1,175 million in ordinary profit and ¥810 million in net profit, and had not revised its forecasts as of the first quarter. Because year-on-year comparisons with the previous year's consolidated figures are unavailable following the consolidation of Aisei, FY2027-H1 should be assessed primarily against cumulative progress toward the company's own full-year plan rather than year-on-year changes.

The 50% first-half benchmark is not an interim target disclosed by the company, but a comparison standard obtained by mechanically dividing the full-year forecasts in half. Even so, reaching ¥5,650 million in revenue and ¥545 million in operating profit would represent completion of half the full-year plan. If both are achieved, cumulative operating margin would be approximately 9.6%, almost the same as the FY2026 full-year operating margin of 9.7%. Since first-quarter operating margin was 7.0%, margins will need to improve in the first half.

It is not yet clear whether the earnings shortfall is due to temporary cost increases or an issue with the business mix. In the first quarter, Navita generated operating profit of ¥261 million and the Ad Promotion business generated ¥89 million, while the Sign business posted an operating loss of ¥41 million. The company also explained that selling, general and administrative expenses increased due to hiring and salary increases. At the next results announcement, the key points to check will be first-half cumulative revenue and operating profit, the basis for maintaining the full-year forecasts, the extent of operating-margin recovery and each segment's contribution to profit.