Whether profit growth can keep pace with accelerating revenue growth is the key issue for FY2027-Q1

In FY2025, revenue was ¥13,070 million and operating profit was ¥1,958 million, resulting in an operating margin of approximately 15.0%. In FY2026, revenue increased 4.5% to ¥13,664 million, but operating profit fell 6.1% to ¥1,838 million, reducing the operating margin to 13.5%. The recent underlying structure is that the expansion in revenue has not translated directly into profit growth.

For FY2027, the company forecasts revenue of ¥16,500 million, operating profit of ¥1,870 million, ordinary profit of ¥1,820 million and net income attributable to owners of the parent of ¥1,140 million. Revenue is planned to increase by ¥2,836 million, or 20.8%, from FY2026, while operating profit is expected to rise by only ¥32 million, or 1.7%. The forecast operating margin is approximately 11.3%, below FY2026's 13.5%. Ordinary profit is also expected to increase only 0.5%, from ¥1,811 million to ¥1,820 million. In essence, the company's plan calls for a small increase in profit alongside substantial revenue growth and a lower margin.

Past disclosures have repeatedly cited the recording of costs upfront in the first year of equipment-sale projects, higher line usage fees accompanying increased communications traffic, and higher personnel and selling expenses as factors behind the margin decline. In FY2026, the impact of higher costs from equipment-sale projects was expected to ease gradually, while margin pressure from changes in the customer mix and other factors was expected to continue. In FY2027-Q1, it will be necessary to assess, together with the operating margin, whether the cost burden from equipment-sale projects has genuinely peaked and whether variable costs such as line usage fees are being absorbed by higher revenue.

Using a mechanical 25% benchmark that ignores quarterly seasonality, ¥4,125 million in revenue, approximately ¥468 million in operating profit and ¥455 million in ordinary profit provide reference points against the FY2027 full-year forecasts. However, these are not quarterly targets disclosed by the company. Revenue in FY2026-Q1 was ¥3,456 million and operating profit was ¥412 million. Accordingly, in the next earnings release, the key issues will be not only the year-on-year revenue growth rate, but also whether operating profit growth exceeds revenue growth or, at a minimum, whether the decline in margins has stopped.