Revenue continues to grow, while margins have fallen sharply due to upfront investment

Revenue in FY2026-H1 was ¥1,033.710 million, up ¥135.450 million, or 15.1%, from ¥898.260 million in the same period of the previous year. However, operating profit of ¥13.217 million in the same period of the previous year turned into an operating loss of ¥6.758 million. Ordinary profit also turned from ¥16.185 million to an ordinary loss of ¥5.818 million, while interim net income attributable to owners of the parent turned from ¥9.810 million to an interim net loss of ¥5.337 million. The issue is not that revenue growth itself has stopped, but that the earnings profile has changed so that higher revenue is no longer translating into profit.

Pressure on margins is also evident from SG&A growing faster than gross profit. The second-quarter financial results presentation showed cumulative gross profit up 12.6% from ¥338 million in the same period of the previous year to ¥380 million, while SG&A rose 19.2% year on year to ¥387 million. On a standalone second-quarter basis, revenue was ¥527 million, gross profit was ¥192 million, and the operating loss was ¥9 million, suggesting that the increase in gross profit alone has not been sufficient to absorb personnel costs, new-business-related costs, and subsidiary-related costs.

The company attributes revenue growth to expanding demand for household support services, partnerships with local governments, and the expansion of its business base through M&A. At the same time, it plans an operating loss of ¥133 million for the fiscal year ending November 2026 due to upfront investment in new businesses. In FY2026-Q3, it will be necessary to distinguish whether operating results are deteriorating because of temporary investment costs or because the profitability of the existing business itself is declining. The amounts and year-on-year changes in gross margin, cast compensation and outsourcing fees, advertising expenses, personnel costs, and subsidiary SG&A are not currently broken down in sufficient detail.

In the next results release, the focus should be not only on revenue growth, but also on whether gross profit growth exceeds SG&A growth and whether operating results improve from the standalone second-quarter loss. As of FY2026-H1, operating results had deteriorated by more than ¥20 million despite revenue growth of 15.1% year on year, making it difficult for sustained double-digit revenue growth alone to alleviate investor concerns. The most important issue for FY2026-Q3 is whether operating profit from the existing business is being maintained and whether the increase in investment costs remains within plan.