Sakura Internet (3778) Q1 FY2027 Earnings Deep Dive Report

Sakura Internet Inc.'s financial results for the first quarter of the fiscal year ending March 2027 were exceptionally strong. Driven by a surge in demand for generative AI, the company saw remarkable growth in its GPU infrastructure services , leading to record-high Q1 revenue and operating profit . This marks a significant turnaround from the operating loss recorded in the same period last year. Furthermore, reflecting robust current demand and improved profitability, the company has announced an upward revision to its full-year and first-half earnings forecasts.

This report provides a detailed analysis of the company's overall performance, the structure of its growth-driving segments, factors behind profit fluctuations, and its future growth strategy and investment roadmap, based on the officially released financial materials.

---

1. Q1 Consolidated Financial Highlights: Significant Revenue Growth and Record Profits

For the first quarter (Q1) of the fiscal year ending March 2027, consolidated revenue reached 11,134 million yen (+48.6% year-on-year, an increase of 3,642 million yen). Operating profit stood at 1,230 million yen (compared to a loss of 457 million yen in the same period last year), ordinary profit was 1,258 million yen (compared to a loss of 438 million yen), and net profit attributable to owners of the parent was 855 million yen (compared to a loss of 324 million yen).

The upfront investments made in the previous fiscal year, such as the large-scale deployment of NVIDIA H100 GPUs, have begun to generate significant returns. The company has successfully transitioned to a profit structure where substantial revenue growth fully absorbs the increase in fixed costs associated with aggressive capital and human resource investments.

---

2. Trends by Service Category: Explosive Growth in GPU Infrastructure

An analysis of revenue by service category clearly identifies GPU infrastructure services as the company's primary growth driver.

Revenue from GPU infrastructure services reached 4,718 million yen , recording explosive growth of +245.9% year-on-year (an increase of 3,455 million yen). This segment has rapidly grown into a core business, now accounting for 42.4% of total revenue. In addition to maintaining high utilization rates for existing NVIDIA H100 GPUs, the additional investment and early deployment of NVIDIA H200 and B200 GPUs have powerfully driven revenue expansion.

Meanwhile, the stock-based foundation business, cloud infrastructure services , also maintained double-digit growth, rising +11.1% year-on-year to 2,810 million yen . Annual Recurring Revenue (ARR), a key indicator for stock-based revenue, grew +8.9% year-on-year to 15,579 million yen , demonstrating the stable growth of a solid customer base.

---

3. Analysis of Operating Profit Fluctuations: Revenue Growth Outpacing Investment Costs

The factors contributing to the V-shaped recovery in operating profit—from a loss of 457 million yen in the same period last year to a profit of 1,230 million yen this quarter—are as follows:

The primary driver of profit growth was the contribution from increased revenue in GPU infrastructure services (+3,354 million yen) . This was supplemented by revenue growth in cloud services (+277 million yen) and other services (+103 million yen).

On the other hand, cost increases aimed at future growth included higher depreciation and lease expenses (△1,365 million yen) due to the large-scale GPU investments made in the previous fiscal year, as well as server maintenance costs (△251 million yen), increased investment in human resources (△184 million yen), taxes and dues (△71 million yen), and higher electricity costs (△47 million yen). However, because revenue growth significantly outpaced these cost increases, operating profit showed an improvement of 1,687 million yen compared to the same period last year.

Additionally, EBITDA , which indicates cash-generating capability, reached a record high of 4,389 million yen (+264.2% year-on-year) , demonstrating a dramatic increase in the company's ability to self-fund future growth investments.

---

4. Upward Revision of Earnings Forecasts: Reflecting Strong Demand and Profitability

Based on the strong Q1 performance and future demand outlook, the company has announced an upward revision —not a downward one—to its consolidated earnings forecasts for the full year and the first half.

The revised outlook is as follows:

• First Half (Cumulative Q2) :
  • Revenue: Initial forecast 21,000 million yen → 22,500 million yen (+1,500 million yen, +7.1%)
  • Operating Profit: Initial forecast 650 million yen → 2,200 million yen (+1,550 million yen, +238.5% )
• Full Year (FY ending March 2027) :
  • Revenue: Initial forecast 45,000 million yen → 45,500 million yen (+500 million yen, +1.1%)
  • Operating Profit: Initial forecast 1,500 million yen → 2,500 million yen (+1,000 million yen, +66.7% )

This revision is underpinned by the expectation that high GPU utilization rates will be maintained due to the rapid expansion of demand for generative AI. Leveraging the profits generated in Q1, the company plans to achieve significant profit growth while accelerating aggressive growth investments in the AI and cloud sectors from Q2 onwards.

---

5. Key Initiatives and Strengthening of Technical and Sales Foundations

During the first quarter, the company vigorously promoted the construction of a domestic AI ecosystem and the revitalization of its sales foundation .

1. Technical Evaluation and Adoption in National Projects :
   • The cloud-based supercomputer "Sakura ONE" achieved 22nd place globally in the "HPCG" performance evaluation for AI/HPC infrastructure.
   • Trial use of domestic foundation models on "Sakura Cloud" has begun as part of the proof-of-concept for "Gennai," a generative AI usage environment promoted by the Digital Agency.
   • The company's GPU bare-metal server, "High-Power PHY," was adopted for the GENIAC Phase 4 project by Sakana AI Inc.
2. Strengthening Sales and Partner Foundations :
   • The "Sakura Partner Network" was revamped, reorganizing the collaborative structure with over 213 partner companies .
   • The company promoted lead generation and brand awareness through participation in major exhibitions (Japan IT Week, NexTech Week, Interop Tokyo, etc.).

---

6. Mid-to-Long-Term GPU Investment Roadmap and Shareholder Return Policy

To ensure sustainable growth, the company has disclosed an investment roadmap to strengthen its computing resource supply capacity.

• GPU Facility Expansion Schedule :
  • In addition to the installation and deployment of H100 (2,840 units), H200 (1,072 units), and B200 (approx. 1,500 units), the company has decided to invest in the latest NVIDIA GPU, "Rubin" (announced in July 2026).
  • Following the operation of the first and second phases of container-type data centers at the Ishikari Data Center, the construction and expansion of a third-phase container-type DC are planned.
• Shareholder Returns (Dividend Policy) :
  • While pursuing aggressive growth investments, the company aims to balance this with shareholder returns. The annual dividend forecast for the fiscal year ending March 2027 has been increased from the previous year's actual (5.0 yen) to 5.50 yen per share (+0.5 yen increase) .

---

7. Conclusion

Sakura Internet's Q1 FY2027 earnings report marks a milestone, characterized by the rapid growth of its GPU infrastructure services capturing the wave of generative AI demand, leading to record-high performance and significant upward revisions.

The company has entered a "cycle of recovery and expansion of upfront investment," where revenue growth exceeds the burden of depreciation and other costs from previous investments. By investing in the latest "Rubin" GPUs and strengthening partnerships with the Digital Agency and cutting-edge AI companies, the company is demonstrating its commitment to further solidifying its position as a domestic cloud and AI infrastructure provider.