Simplex (4373) Q2 2027 earnings summary

Executive summary

• H1 FY3/27 revenue, gross profit, gross margin, orders received and order backlog reached records; revenue rose 19.1% YoY to ¥33,122mn.

• A four-year MTBP beginning FY3/27 targets ¥100.0bn revenue in FY3/30, with the first two years focused on proactive generative AI and web3 investment.

• Growth reflected strong System Integration and Operation Service sales and Strategy / DX Consulting contract wins.

Financial highlights

• H1 revenue was ¥33,122mn (+19.1% YoY), gross profit ¥15,414mn (+26.4%), and gross margin 46.5%, up 2.6P.

• Operating profit rose 4.8% to ¥7,397mn; operating margin fell 3.1P to 22.3% as SG&A and R&D expenses increased.

• Profit before tax was ¥7,280mn (+3.2%) and profit attributable to owners of parent was ¥4,810mn (+0.7%); basic EPS was ¥21.48 versus ¥21.01.

• SG&A rose 32.8% to ¥6,088mn, mainly reflecting recruitment initiatives; R&D expense rose 238.3% to ¥1,880mn, mainly for generative-AI development capabilities.

Outlook and guidance

• FY3/27 revenue forecast was raised ¥1.0bn to ¥71.0bn and operating profit ¥0.3bn to ¥17.5bn; forecast gross margin is 46.3%.

• Revised FY3/27 forecasts include gross profit ¥32,850mn, R&D-related expenses ¥4,500mn, profit before tax ¥17,229mn and parent-attributable profit ¥12,420mn.

• FY3/27 forecast basic EPS is ¥55.08; it assumes 1,822,909 additional average shares from exercise of share acquisition rights.

• Revenue, current-year order backlog and H1 performance-based sales covered 77.4% of the full-year forecast at Q2-end; expected FY3/27 performance-based sales are ¥2.3bn.

• Net AI Productivity was slightly positive in H1 and is expected to be broadly flat for FY3/27; full-year AI usage fees are estimated at ¥1.8bn.