Revenue increased, but the profit margin fell sharply and the interim profit forecast was revised downward

FY2027-Q1 revenue was ¥10,516 million, up 4.6% from ¥10,052 million in the prior-year quarter. However, operating profit fell 54.2% to ¥299 million from ¥655 million, indicating that revenue growth is not translating into profit. Operating margin also fell by approximately 3.7 percentage points, from approximately 6.5% to approximately 2.8%. It is necessary to determine whether this reflects deteriorating utilization and cost structure rather than merely the timing of quarterly revenue recognition.

The company revised its interim operating profit forecast from ¥1,550 million to ¥1,300 million, its ordinary profit forecast from ¥2,010 million to ¥1,760 million, and its profit attributable to owners of the parent forecast from ¥1,293 million to ¥1,197 million. Meanwhile, the full-year revenue forecast of ¥43,600 million, operating profit forecast of ¥3,430 million, and profit attributable to owners of the parent forecast of ¥2,848 million were unchanged. Reaching interim operating profit of ¥1,300 million from the Q1 results requires ¥1,001 million in Q2 alone, while maintaining the full-year operating profit forecast of ¥3,430 million requires ¥3,131 million over the remaining 3 quarters after Q1.

Factors cited for the decline in profit include lower utilization caused by uneven personnel allocation, delays in launching new projects, a higher outsourcing ratio, increased recruitment costs, research and development related to AI utilization and ACT-Horizon, and relocation costs for the Hamamatsu BPO Center. The company disclosed relocation costs for the Hamamatsu BPO Center of ¥33 million, but has not sufficiently broken down how many millions of yen each of lower utilization, the higher outsourcing ratio, recruitment costs, and R&D reduced operating profit. The next disclosure should clarify whether margins remain below the prior-year level even after excluding one-off costs.

Past disclosures show that operating profit accounted for 59.1% of the fourth quarter in some years and rose as high as 95.4% in another, indicating that profit tends to be concentrated in the second half and at fiscal year-end. This seasonality explains to some extent the low Q1 profit progress, but the separate issue is that the interim forecast itself has been lowered. In the next results announcement, the key points to monitor will be whether Q2 operating profit alone reaches ¥1,001 million, whether operating margin recovers from 2.8%, and whether operating cash flow is disclosed for the first time.