Standalone second-quarter profitability will be the first test of the full-year profit forecast

FY2027-Q1 revenue was ¥4,657 million, up ¥458 million, or 10.9% year on year, from ¥4,199 million in the prior-year quarter. Operating loss narrowed by ¥12 million, from ¥152 million to ¥140 million, but the company remained loss-making at the operating level. Ordinary loss narrowed from ¥167 million to ¥109 million, while the quarterly net loss attributable to owners of the parent narrowed from ¥169 million to ¥128 million. Although the loss deficit improved, the company did not return to profitability.

The full-year forecasts are revenue of ¥20,000 million, operating profit of ¥250 million, ordinary profit of ¥250 million and profit attributable to owners of the parent of ¥175 million. First-quarter revenue progress was approximately 23.3%, close to one-quarter of the full-year forecast, while operating profit was negative ¥140 million and therefore remains behind the full-year forecast on a simple progress-rate basis. If the company records ¥140 million in operating profit in the second quarter alone, cumulative interim operating profit will be zero mathematically. Merely exceeding the prior-year interim operating loss of ¥133 million would require approximately ¥8 million in second-quarter operating profit as a minimum threshold.

In FY2026-H1, revenue was ¥9,275 million, operating loss was ¥133 million, ordinary loss was ¥101 million and the interim net loss attributable to owners of the parent was ¥85 million. In the second quarter alone of the prior year, the company recorded revenue of ¥5,075 million, operating profit of ¥18 million, ordinary profit of ¥66 million and quarterly net profit attributable to owners of the parent of ¥84 million. In other words, standalone second-quarter profitability narrowed the cumulative interim loss in the prior year, but in FY2027-H1 the first-quarter operating loss was ¥140 million, only a modest improvement from the ¥152 million recorded in the prior-year first quarter. Second-quarter profit at around the same level as the prior year would not be enough to produce cumulative interim profitability.

The company has not revised its full-year forecasts. The key issue to assess in FY2027-H1 is whether revenue growth is translating into profit. Even if revenue exceeds the prior-year figure of ¥9,275 million, the company will need to build substantially more than the full-year operating profit forecast of ¥250 million in the third and fourth quarters if operating profit remains negative. Conversely, if the company secures operating profit of around ¥140 million in the second quarter alone and also returns to profitability in ordinary profit and net profit, market views on the achievability of the full-year forecasts are likely to improve.

In the next earnings release, we will check standalone second-quarter operating profit, ordinary profit and profit attributable to owners of the parent, as well as cumulative interim year-on-year changes. The key points are not only the amount of standalone second-quarter profit, but also how far it exceeds the prior-year figure of ¥18 million and whether the company explains the profit required over the remaining period against the full-year operating profit forecast of ¥250 million. At present, no quantitative explanation has been disclosed regarding the profit required over the remaining period or the probability of achieving it. The assessment will therefore focus not simply on a return to profitability, but on the profit build-up implied by the full-year forecast.