Visibility on the landing after the first-half upward revision and further upside to full-year guidance

In the first quarter of the fiscal year ending March 2027, revenue was ¥29,930 million, operating profit was ¥4,175 million, ordinary profit was ¥4,263 million and quarterly net profit attributable to owners of the parent was ¥2,514 million. Year on year, these figures increased by 9.6%, 17.4%, 17.3% and 15.2%, respectively, with profit growth outpacing revenue growth. The company cited a favorable order environment, increased orders for financial IT, growth in medical and healthcare, and improved profitability accompanying higher revenue as factors behind the profit increase.

Comparing first-quarter results with the revised full-year forecast announced in September, revenue progress was approximately 23.4% (¥29,930 million ÷ ¥128,000 million), while operating profit progress was approximately 20.8% (¥4,175 million ÷ ¥20,100 million). Against a simple one-quarter benchmark, revenue is broadly on plan, while operating profit is slightly below plan, making the amount of profit accumulated in the first half important. On 28 September, the first-half ordinary profit forecast was raised to ¥9,000 million and the full-year ordinary profit forecast to ¥20,400 million. The first point to check at the next results announcement will be whether actual results support this upward revision.

Full-year targets were raised from the original ¥126,000 million in revenue, ¥19,500 million in operating profit and ¥13,100 million in net profit to ¥128,000 million, ¥20,100 million and ¥13,300 million, respectively. The reasons cited included core-system renewal projects and expansion of existing projects in financial IT, as well as strong sales of security products. The revision was not based on one-off extraordinary gains. However, the contribution of the revision by financial IT and the solutions business, as well as orders received and order backlog, has not been disclosed. At the next results announcement, the repeatability of the upward revision will therefore need to be tested using revenue and profit by segment.

In the first-quarter summary report, the company did not prepare a quarterly consolidated cash flow statement, and cash flow from operating, investing and financing activities, as well as cash and cash equivalents at period-end, were all undisclosed. Although management gave a qualitative explanation that the order environment was favorable, it did not disclose the value of orders received or the order backlog. At the interim results announcement, we will assess whether higher operating profit is accompanied by actual cash collection and improved working capital, whether the order backlog supports the full-year forecast, and whether the earnings forecast is revised again and the ¥100 dividend is maintained.