Stock-type (recurring) revenue grew +26.4% YoY, driving 1Q into the black; gross margin trajectory during this upfront investment phase is the key focus from here

Key Positives From The 1Q Results

Revenue reached JPY 489M (+19.4% YoY), of which stock-type revenue was JPY 440M (+26.4% YoY). Manufacturer client count rose to 201 companies (+39 YoY). Company guidance had assumed an operating loss in 1Q, but the build-up of stock-type contracts and under-spending on certain expense lines delivered operating income of JPY 12M — a positive result.

• Revenue of JPY 489M (+19.4% YoY) with stock-type at JPY 440M (+26.4% YoY); the recurring base is driving company-wide growth
• Manufacturer client count of 201 (+39 YoY, +21 QoQ), with "FOODATA" contracts under the ITOCHU partnership accumulating at the start of the fiscal year
• Retail solutions revenue of JPY 117M (+118.5% YoY), as the large-retailer retail DX project launched last year moves into a full-year contribution phase
• Contract liabilities of JPY 143M (+25.1% vs. prior year-end), reflecting stronger stock-type order intake and an expanding pool of future revenue
• Zero interest-bearing debt and an equity ratio of 76.8% (vs. 75.9% at prior year-end) provide a solid balance sheet and capacity for CVC and M&A investment

Key Concerns From The 1Q Results

Gross profit margin fell to 51.2% (-9.1pt YoY), so despite top-line growth, gross profit was only JPY 250M (+1.4% YoY). The company has already embedded a 51.0% full-year gross margin in guidance. Mix deterioration from the increase in partnership contracts, spot projects where development costs are recognized on a gross basis, and rising system costs all weighed on gross margin. Profitability improvement through upselling, cross-selling and price pass-through is the key focus from here.

• Cost of goods sold of JPY 239M (+46.6% YoY), with system-related costs of JPY 120M (vs. JPY 73M a year earlier) the main driver of the increase
• Recurring profit of JPY 13M (-12.4% YoY) and net income of JPY 6M (-22.7% YoY); non-operating income shrank as miscellaneous income fell from JPY 4M to JPY 677K
• Spot-type revenue of JPY 49M (-19.8% YoY, -64.8% QoQ). The company has flagged timing-slippage risk on projects slated for 2Q recognition, which are scheduled for September
• Operating income progress of only 15.6% against full-year guidance of JPY 80M points to a 2H-weighted profile. Management expects to earn the majority of full-year operating income in 4Q
• Cash and deposits fell to JPY 852M (-12.3% vs. prior year-end) following purchases of investment securities and capital contributions. Investment securities stood at JPY 149M and capital contributions at JPY 118M, with payback on a medium-term horizon

Focus Areas / Items To Monitor Going Forward

• Timing of recognition for the additional development spot revenue from a major retailer scheduled for 2Q. It is slated for September, so any slippage would materially affect profit progression from 2Q onward.
• Trajectory of revenue per client as client count expands via partnership contracts. The timing of the shift from volume expansion to upselling/cross-selling is key to gross margin recovery.
• Monetization pace in retail media and other areas. Revenue was JPY 56M in the quarter (-12.1% YoY); we want to see when new tie-ups such as the one with FreakOut begin to translate into actual revenue.

Key Financial Highlights

Gross profit margin and QoQ figures are as disclosed by the company (earnings presentation). YoY percentages are based on the tanshin and the same materials. Operating income rose while recurring profit declined, primarily because miscellaneous income of JPY 4,367K booked a year earlier fell to JPY 677K this period, shrinking non-operating income.

Performance By Business Segment

The company operates a single segment, the Data Marketing business, so segment disclosure is omitted (company disclosure). By service category, stock-type revenue of JPY 440M (+26.4% YoY) drove company-wide growth, while spot-type revenue was limited to JPY 49M (-19.8% YoY) on the absence of large projects.

Segment Performance Table

Progress Versus Full-Year Guidance

Revenue progress of 22.3% against full-year guidance of JPY 2,200M is close to an even quarterly pace, but profit progress lags at 15.6% for operating income and 10.3% for net income. Management explains that spot revenue recognition is concentrated in 2Q and 4Q, with the majority of full-year operating income earned in 4Q. We therefore view the progress as consistent with a 2H-weighted phasing.

Progress rates are our estimates (consistent with company-disclosed figures; net income based on thousand-yen figures in the tanshin).

• Company guidance assumes spot-type revenue recognition is concentrated in 2Q and 4Q, with the majority of FY3/27 operating income earned in 4Q (company disclosure)
• Manufacturer contracts tend to accumulate at the start of the fiscal year; 1Q client count rose +21 QoQ

Changes To Guidance

FY3/27 full-year guidance is unchanged from the figures published on May 15, 2026. Although 1Q came in profitable against a planned operating loss, the company has left guidance intact, citing its intention to carry out necessary spending.

Commentary On Shareholder Returns

The FY3/27 dividend forecast is nil (JPY 0.00 annually), unchanged from the prior forecast. The medium-term management plan states that shareholder returns will commence during the plan period once retained earnings turn positive (company disclosure). Retained earnings stood at -JPY 412M at the end of 1Q.

Financial Position

The company maintains an effectively debt-free balance sheet with zero interest-bearing debt and a high equity ratio of 76.8%. In 1Q, funds were deployed into investment securities and capital contributions, and while cash and deposits declined versus the prior year-end, liquidity still accounts for more than half of total assets.

News Released Alongside The Earnings Announcement

None

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

None