Sustainability of an operating profit, rather than first-half revenue growth, is the focus

Revenue in the first quarter of the fiscal year ending March 2027 was ¥1,027 million, up ¥27 million, or 2.7%, from ¥1,000 million in the year-earlier period. Meanwhile, the operating loss narrowed by ¥83 million, from ¥100 million to ¥17 million. The operating margin calculated from these figures improved by approximately 8.3 percentage points, from negative 10.0% in the year-earlier period to negative 1.7%, indicating a larger improvement in profitability than the rate of revenue growth.

The comparable first half of the fiscal year ended March 2026 recorded revenue of ¥1,963 million and an operating loss of ¥174 million. Accordingly, at the next first-half earnings announcement, the key issue will be not only whether revenue exceeds ¥1,963 million, but also how far operating income improves from the ¥174 million loss. The first-quarter operating loss of ¥17 million does not by itself mean that the cumulative first-half result will be profitable. The disclosure will need to be reviewed to determine whether expenses increase in the second quarter and whether revenue is seasonal.

Cost reductions made a significant contribution to the first-quarter improvement. R&D expenses were ¥171 million, down 20.7% year on year, while other SG&A expenses were ¥569 million, down 9.5%. It will be necessary to assess, based not only on the second-quarter cumulative amounts and year-on-year changes but also on the explanation by expense category, whether these reductions represent lasting efficiency gains or a timing shift in development and promotional activities or temporary spending restraint.

At the next earnings announcement, the focus will be on whether first-half revenue exceeds ¥1,963 million, whether operating income reaches ¥0 million or more, and whether the operating margin reaches 0.0% or higher. In addition, the cumulative first-half amounts of R&D expenses and other SG&A expenses, the sustainability of the cost reductions, and whether profitability data by product and service within the single segment are disclosed will help assess the quality of the operating turnaround.