FY2026 full-year forecast is heavily dependent on a large fourth-quarter revenue recognition

Revenue for the nine months ended FY2026 September was ¥274 million, representing 26.5% of the ¥1,035 million full-year forecast. With 75% of the year already elapsed by the end of the third quarter, the company must recognize ¥761 million in the fourth quarter, or 73.5% of annual revenue, to achieve the full-year forecast. Revenue was ¥63 million in the first quarter, ¥240 million for the first half, and only ¥274 million for the nine months, making the company’s explanation that revenue is concentrated toward the fiscal year-end particularly important in light of actual results.

In terms of earnings, the nine-month operating loss was ¥383 million, ordinary loss was ¥386 million, and net loss was ¥391 million. By contrast, the full-year forecast is an operating loss of ¥356 million, ordinary profit of ¥175 million, and net profit of ¥146 million. On a simple calculation, the company must generate operating profit of ¥27 million, ordinary profit of ¥561 million, and net profit of ¥537 million in the fourth quarter. Operating earnings only require a reduction in the loss, but ordinary earnings and bottom-line profit require a return to profitability, so it is necessary to isolate the extent to which the timing of recognizing non-operating income, such as grants related to contracted research and development, contributes to the results.

The company explains that it undertakes many government-policy projects and that revenue is recognized in the third or fourth quarter because activities as of the end of each March are subject to acceptance. It has also stated that its performance forecast includes only private-sector projects that have already been contracted or are equivalent to contracted projects. However, the contract amount, amount accepted, revenue recognition timing, and profit margin for each project expected to be recognized in the fourth quarter have not been disclosed. Accordingly, it is necessary to confirm not only that the full-year forecast remains unchanged, but also the certainty of the projects comprising the ¥761 million of revenue.

At the next full-year results announcement, it will be necessary to confirm not only whether revenue of ¥1,035 million was achieved, but also whether the revenue concentrated in the fourth quarter consisted mainly of one-off payments or of revenue from contracted research and development, licensing, technology packages, and other sources that can continue into subsequent fiscal years. In particular, whether the company can disclose by project and revenue category the factors behind achieving ordinary profit of ¥175 million and net profit of ¥146 million, including non-operating income, projects deferred to the following fiscal year, and the reasons for any variance from the full-year forecast will determine the accuracy of FY2027 forecasts.