Softcreate Q1 Operating Profit Climbs 7.7% to ¥1.19 Billion on EC and Cloud Demand, but Ordinary Profit Slips

Softcreate Holdings Co., Ltd. (TSE: 3371), the Tokyo-based holding company behind the ecbeing e-commerce platform and a range of enterprise cloud and security services, reported consolidated results for the first quarter of the fiscal year ending March 31, 2027 — the three months from April 1 to June 30, 2026 — under Japanese GAAP. Net sales rose 8.8% to ¥8,583 million, operating profit rose 7.7% to ¥1,194 million, ordinary profit slipped 1.1% to ¥1,316 million, and net profit attributable to owners of the parent rose 1.4% to ¥854 million. Basic earnings per share were ¥33.64, against ¥33.84 a year earlier; diluted EPS was ¥33.64, up from ¥33.41. Comprehensive income jumped 41.1% to ¥1,337 million.

Both segments grew — but the profit mix flipped

Softcreate reports in two segments, and both expanded on the top line. EC Solutions, which sells the ecbeing site-building package alongside SaaS products including the Mercart e-commerce cloud service, the visumo visual-marketing tool, the ReviCo review-optimisation tool and the Sechstant omnichannel analytics suite, lifted external sales 7.9% to ¥4,626 million on stronger site-construction work and growing cloud revenue. But segment profit fell 16.9% to ¥944 million, pointing to a heavier cost base as the company invests behind the SaaS line-up.

IT Solutions — home to the group's own SC Cloud and X-point Cloud workflow services, the AgileWorks and L2Blocker products, and security and infrastructure build work — grew external sales 9.9% to ¥3,956 million and lifted segment profit 25.8% to ¥655 million. The swing was enough to offset the EC decline: combined reportable-segment profit came to ¥1,600 million against ¥1,658 million a year earlier, with unallocated corporate costs and intersegment eliminations trimming ¥284 million (versus ¥327 million last year). Management also flagged demand for Safe AI Gateway, its in-house generative-AI service for corporate customers, as a new driver alongside the established DX, cloud and security themes.

Why ordinary profit fell while operating profit rose

The divergence sits entirely below the operating line. Non-operating income dropped 43.0% to ¥127 million from ¥222 million, and the single largest cause was equity-method investment income, which fell to ¥52 million from ¥172 million — a ¥120 million swing on its own. Sponsorship income (¥41 million) and dividend income (¥24 million) both rose, but not by enough to close the gap. At the same time non-operating expenses climbed to ¥4.6 million from a negligible ¥14 thousand, as the company booked settlement-related and compensation costs. Net, the ¥86 million improvement at the operating line was more than erased, leaving ordinary profit ¥15 million lower year on year.

A securities gain, then a heavier tax bill

Below ordinary profit the picture turns positive again. The quarter carried ¥208 million of extraordinary income — principally a ¥204 million gain on the sale of investment securities, plus ¥5 million from the reversal of share-subscription rights — against no extraordinary losses at all. Pre-tax profit therefore rose 14.6% to ¥1,525 million. That gain, however, was largely handed back to the tax line: total income tax expense rose 39.4% to ¥577 million, lifting the effective rate to 37.9% from 31.1%. Non-controlling interests took a further ¥93 million, up from ¥74 million. What reached parent shareholders was consequently a much flatter +1.4%.

EPS slipped on a larger share count

Basic EPS fell to ¥33.64 from ¥33.84 even though attributable profit grew, because the denominator grew faster. The weighted-average share count rose about 2.0% to 25,405,136 shares from 24,898,758, as treasury stock was drawn down over the past year — the treasury holding stood at 2,077,788 shares at June 30, against 2,211,388 at the March year-end, on an unchanged 27,550,278 shares issued. Diluted EPS moved the other way, rising to ¥33.64 from ¥33.41, as previously dilutive subscription rights ceased to weigh on the calculation.

Balance sheet strengthens as receivables unwind

Total assets ended the quarter at ¥41,460 million, down ¥600 million from the March year-end, as a ¥1,863 million fall in notes, accounts receivable and contract assets outweighed a ¥564 million build in cash and deposits and a ¥513 million rise in investment securities. Liabilities fell further — down ¥1,223 million to ¥11,635 million — on an ¥865 million drop in income taxes payable and a ¥452 million reduction in the bonus provision. Net assets rose ¥623 million to ¥29,824 million, helped by a ¥399 million increase in unrealised gains on other securities. Shareholders' equity of ¥25,775 million lifted the equity ratio to 62.2% from 59.7%. Depreciation for the quarter was ¥378 million and goodwill amortisation ¥97 million, up sharply from ¥11 million a year earlier.

Guidance held despite the fast start

Softcreate left both its half-year and full-year forecasts exactly as published on May 11, saying results are tracking to plan. For the first half it guides net sales of ¥17,840 million (+8.1%), operating profit of ¥2,745 million (+0.2%), ordinary profit of ¥2,965 million (−2.4%), net profit of ¥1,815 million (−2.9%) and EPS of ¥71.63. For the full year it guides net sales of ¥37,000 million (+7.6%), operating profit of ¥6,300 million (+1.5%), ordinary profit of ¥6,550 million (+0.1%), net profit of ¥4,200 million (+0.6%) and EPS of ¥165.75. The gap between a 7.7% first-quarter operating gain and a 1.5% full-year target implies a distinctly more cautious view of the remaining nine months — although at ¥1,194 million the quarter delivered only 19.0% of the annual operating-profit target and 43.5% of the half-year figure, so the phasing is weighted to later quarters. The annual dividend forecast is unchanged at ¥62.00 per share (¥31.00 interim plus ¥31.00 year-end), matching the prior year.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.