Simplex (4373) Q1 2027 earnings summary

Executive summary

• Revenue for Q1 FY3/27 rose 19.8% year-over-year to ¥16.1bn, driven by strong DX demand, increased hiring, and capacity expansion.

• Operating profit increased 6.6% year-over-year to ¥3.43bn, with a margin of 21.2%.

• Orders received and order backlog reached record highs, indicating robust demand and future growth potential.

• AI initiatives, centered on the Simplex Siphon framework, are being rolled out to enhance productivity and standardize best practices.

• Net AI Productivity was flat in Q1 as AI usage fees were offset by productivity gains; the company aims to turn this positive in future phases.

Financial highlights

• Q1 FY3/27 gross profit increased 26.1% year-over-year to ¥7.47bn; gross profit margin improved to 46.3%.

• R&D and related expenses surged, mainly due to AI-related investments, with a 306.9% year-over-year increase to ¥1.0bn.

• Selling, general and administrative expenses rose 31.5% year-over-year, mainly due to recruitment initiatives.

• Profit attributable to owners of parent increased 4.2% year-over-year to ¥2.25bn.

• Cash and cash equivalents at quarter-end were ¥11.1bn, down ¥1.77bn year-over-year.

Outlook and guidance

• Full-year FY3/27 forecasts remain unchanged: revenue of ¥70.0bn (+19.3% YoY), operating profit of ¥17.2bn (+19.3% YoY), and gross profit of ¥31.5bn (+22.9% YoY).

• Basic earnings per share for the year are expected to be ¥22.19 for the first half and ¥55.08 for the full year.

• H2 revenue and operating profit are expected to be higher than H1 due to the timing of new graduate assignments and lower SG&A expenses.

• Net AI Productivity is targeted to remain flat for the year, with a positive shift expected in the harvest phase of the MTBP.

• Earnings forecasts are based on current assumptions and actual results may differ due to various factors.