Progress toward full-scale operation of standardized municipal systems will determine FY2027-H1 revenue growth and earnings improvement

FY2027-Q1 revenue was ¥8,692 million, up 12.7% from ¥7,712 million in the prior-year period. Public-sector revenue was ¥3,936 million, up 27.2% year on year, supported by the migration plan toward full-scale operation of standardized municipal systems. Private-sector revenue was also up 3.0% to ¥4,756 million, mainly supported by increased systems development for financial institutions. The operating loss was ¥78 million, an improvement of ¥800 million from the ¥878 million loss in the prior-year period.

In FY2026-H1, by contrast, public-sector revenue was ¥6,913 million, down 18.1% year on year, while private-sector revenue was ¥9,573 million, down 6.1%, and the operating loss was ¥920 million. Accordingly, at the next interim results announcement, whether public-sector revenue exceeds the ¥6,913 million recorded in the prior-year period and whether private-sector revenue can also exceed ¥9,573 million will be benchmarks for determining whether the recovery has taken hold rather than reflecting only quarterly factors.

Standardization efforts were previously affected by the postponement of migration deadlines, failure to meet standards in quality testing, and revisions to migration methods. These factors led to a deterioration in the cost ratio and the recognition of a ¥488 million provision for loss on orders in FY2026. FY2026 full-year public-sector revenue was also ¥17,077 million, down 14.1% from the previous fiscal year. FY2027-Q1 was described as proceeding “according to the revised migration plan,” so in H1 it will be necessary to confirm the number of municipalities migrated, the timing of operation, the breakdown of standardization-related revenue, and whether the cost ratio has deteriorated.

The full-year revenue forecast is ¥40,000 million, and Q1 progress was only 21.7%, so it is too early to judge achievement of the full-year plan based solely on the improvement in Q1. Disclosure of cumulative H1 public- and private-sector revenue, operating results, and development and migration costs related to standardization projects will be particularly important. At present, profit by sector, order intake and backlog, and project-level profitability have not been disclosed sufficiently, making the extent to which H1 supplements the explanation of earnings the key focus.