Profit is progressing faster than revenue, but the second-half burden is high following the upward revision for the first half

Q1 revenue was ¥105.281 billion, up 9.8% year on year, while operating profit was ¥4.534 billion, up 15.0%. Revenue progress against the ¥450.0 billion full-year forecast was 23.4%, slightly below the simple elapsed-period benchmark of 25%, while operating profit reached 28.7% of the ¥15.8 billion full-year forecast. Profit progress was 5.3 percentage points ahead of revenue progress, making the first question whether this was a start accompanied by improved margins.

The company’s full-year forecasts are revenue of ¥450.0 billion, operating profit of ¥15.8 billion, ordinary profit of ¥16.0 billion and net income attributable to owners of the parent of ¥10.5 billion. In addition, the company reportedly raised its first-half operating profit forecast to ¥13.5 billion, up 55.0% year on year, in a revision to its first-half forecast at the end of September. The first-half operating profit forecast represents 85.4% of the full-year forecast, so the FY2027-H1 results need to be assessed not only on whether they exceed the prior-year period, but also on whether the revised first-half target was achieved.

Subtracting Q1 operating profit of ¥4.534 billion from the first-half forecast of ¥13.5 billion means that standalone Q2 operating profit needs to reach approximately ¥8.966 billion. This is close to twice the Q1 standalone level and indicates that the first-half profit plan is heavily weighted toward Q2. Even if the first-half forecast is achieved, only approximately ¥2.3 billion would remain to reach the full-year operating profit forecast, so FY2027-H1 should be assessed not only on first-half results but also on the second-half assumptions, the reversal of the product launch effect and the projected loss in the video and music business.

At the next results announcement, we will check whether revenue is at least around 25% of the full-year plan and whether operating profit has progressed by 100% or more against the first-half plan of ¥13.5 billion. In particular, if first-half operating profit falls short of ¥13.5 billion, second-half profit growth will be required to maintain the ¥15.8 billion full-year forecast. Conversely, if first-half operating profit exceeds ¥13.5 billion and the full-year forecast or margin outlook is raised, the Q1 profit-led performance will be easier to view as an improvement in FY2027 earnings power rather than a temporary factor.