Sales growth offset by significant operating profit pressure from upfront investment

In FY2026, revenue was ¥17,306 million and operating profit was ¥2,463 million. Revenue increased 6.6% year on year, while operating profit declined 6.6%. The operating margin was 14.2%, approximately 2.0 percentage points below FY2025’s 16.2%. The main reason for the decline in profit despite higher revenue was a 16.1% year-on-year increase in the net increase in development personnel and outsourcing costs.

The same pattern intensified in FY2027-Q1. Revenue was ¥4,332 million, up 9.1% year on year, while operating profit was ¥391 million, down 33.6%; ordinary profit was ¥414 million, down 31.1%; and net profit attributable to owners of the parent was ¥207 million, down 40.6%. The operating margin was approximately 9.0%, calculated as ¥391 million divided by ¥4,332 million, down approximately 5.8 percentage points from approximately 14.8% in the prior-year quarter. The company cited higher personnel expenses and costs such as AI infrastructure investment, but did not disclose a breakdown by factor.

The FY2027 full-year forecasts are revenue of ¥18,971 million, operating profit of ¥1,267 million, ordinary profit of ¥1,314 million and net profit attributable to owners of the parent of ¥799 million. Revenue is expected to increase 9.6%, while operating profit is expected to decline 48.6%, leaving the operating margin at approximately 6.7%. The company plans to invest approximately ¥1 billion in total in AI development, cloud migration, internal infrastructure and the recruitment of IT and AI personnel. The decline in profit therefore includes an intentional investment burden, not only weaker demand.

As of Q1, operating profit was approximately 30.9% of the full-year plan, above the approximately 22.8% progress rate for revenue, so the plan is on track based on progress rates alone. However, if costs are incurred ahead of revenue in the first half, a high operating-profit progress rate would not eliminate the possibility that additional investment or development costs in the second half could cause the full-year forecast to be missed. In FY2027-H1, the company should disclose, to the extent possible, separate figures for personnel expenses, outsourcing costs, AI infrastructure costs and research and development expenses, and clarify whether upfront investment is temporary or reflects a sustained increase in the cost structure.