Business Engineering Corp. (Securities Code: 4828) delivered an exceptionally strong start to the fiscal year ending March 2027, with its Q1 results achieving record-high quarterly figures across key metrics: revenue, operating profit, and order intake. Driven by persistent demand for digital transformation (DX) in the manufacturing sector, the company saw a significant surge in license sales for its proprietary product, "mcframe." Furthermore, the consolidation of five previously non-consolidated overseas subsidiaries starting this quarter provided an additional boost to performance.

This report provides a comprehensive analysis of the earnings highlights, segment-specific trends, factors behind profit fluctuations, and the company's AI strategy and full-year outlook based on disclosed materials.

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1. Q1 Consolidated Earnings Highlights and Overview

Consolidated results for the first quarter of the fiscal year ending March 2027 were as follows: Revenue of 6,781 million yen (+12.3% YoY) , Operating Profit of 1,910 million yen (+10.5% YoY) , Ordinary Profit of 1,921 million yen (+9.7% YoY) , and Net Profit Attributable to Owners of the Parent of 1,274 million yen (-7.1% YoY). The decline in net profit is attributed to the absence of a one-time gain from the sale of cross-held shares recorded in the same period last year; operating profit, which reflects core business profitability, continues to show steady growth.

The consolidated P&L highlight slide above is critical as it comprehensively illustrates the structure of this quarter's strong performance and the impact of changes in the scope of consolidation.

[Slide Commentary: Significance and Background of Consolidated P&L Highlights]

As evident from the presentation materials, the consolidation of five previously non-consolidated overseas subsidiaries starting this quarter contributed 293 million yen to revenue, 50 million yen to operating profit, and 33 million yen to net profit. However, even when excluding these consolidation effects, the company achieved solid year-on-year growth in both revenue and operating profit on an organic basis.

Also noteworthy is the improvement in profitability metrics. The gross profit margin rose by 3.1 percentage points to 50.1% , up from 47.0% in the same period last year. This is primarily due to a significant increase in the ratio of high-margin proprietary product license sales. Order intake also grew strongly to 7,214 million yen (+17.0% YoY) , confirming a notable accumulation of backlog for future revenue growth. Progress against full-year and first-half forecasts is also highly favorable, reaching 51.4% of the first-half revenue target and 55.4% of the operating profit target, indicating a smooth trajectory toward achieving annual plans.

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2. Segment Performance Analysis

The company's business is broadly categorized into three segments: "Product Business," "Solution Business," and "System Support Business." Trends for each segment in Q1 are as follows:

(1) Product Business: Rapid Expansion of High-Margin Licenses

• Revenue : 2,739 million yen (+40.2% YoY)
• Operating Profit : 1,159 million yen (+52.9% YoY)
• Operating Profit Margin : 42.3%

The Product Business was the primary driver of this quarter's performance. The flagship proprietary package, "mcframe," saw a dramatic expansion in license sales, fueled by strengthened strategic partnerships and the acquisition of large-scale projects. In addition to the contribution from overseas subsidiary consolidation, the company's strong market share expansion in Japan also played a key role. The segment operating profit margin reached an impressive 42.3%.

This slide displays the quarterly trend of "mcframe" license sales over the past several years, demonstrating the true value of the company's growth engine.

[Slide Commentary: Importance of 'mcframe' License Sales Trends]

"mcframe" license sales (licenses + license maintenance) reached a record quarterly high of 2,040 million yen (+43.5% YoY). Looking at historical trends, sales have steadily climbed from 982 million yen in FY22 Q1 to 1,082 million yen (FY23 Q1), 1,320 million yen (FY24 Q1), and 1,421 million yen (FY25 Q1), before breaking through the 2,000 million yen threshold in FY26 Q1. This is not merely a one-time spike but evidence that "mcframe" has established market superiority in meeting the needs for supply chain management (SCM) and core system renewals in the Japanese manufacturing industry.

(2) Solution Business: Maintaining High Backlog Despite Project Transition Period

• Revenue : 3,935 million yen (-1.4% YoY)
• Operating Profit : 1,165 million yen (-10.0% YoY)
• Operating Profit Margin : 29.6%

The Solution Business, which handles the implementation and construction of third-party ERPs like SAP as well as the company's own products, saw a slight decline in revenue and profit due to the reactionary impact of large one-time projects from the previous year and a transition period between projects. However, revenue remained at a high level of 3,935 million yen (comparable to 3,991 million yen in the previous Q1), and the operating profit margin remained robust at 29.6%. Furthermore, as a result of strengthened proposal activities, the backlog for the second quarter has accumulated to a very high level of 4,973 million yen , creating a structure that is expected to contribute to revenue in the second half.

(3) System Support Business

• Revenue : 106 million yen (+11.8% YoY)
• Operating Profit : 131 million yen (-5.1% YoY)

This business, centered on operations and maintenance, also showed stable performance, maintaining high profit margins and supporting the company's overall stable revenue base.

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3. Analysis of Operating Profit Fluctuations: Structural Evolution of Profitability

The details of the 182 million yen (+10.5%) increase in operating profit from 1,728 million yen in the same period last year to 1,910 million yen are as follows:

• Profit increase from revenue growth : +349 million yen (primarily driven by license expansion in the Product Business)
• Improvement in gross profit margin : +205 million yen (gross margin improved from 47.0% to 50.1% due to the higher ratio of high-margin licenses)
• Increase in SG&A expenses : -372 million yen (due to intensified sales activities, rising personnel/salary levels, and investments in organizational strengthening)

Although personnel and SG&A expenses increased due to proactive talent investment and sales reinforcement, the growth in license sales and high marginal profit ratios far outweighed these costs, confirming an ideal high-profitability cycle.

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4. AI Strategy and Product Evolution Roadmap (mcframe Alchemist)

In the company's medium-to-long-term growth, the "AI Strategy" aimed at enhancing product value is one of the most important initiatives.

This slide illustrates the roadmap (product evolution story) showing how "mcframe" will evolve in the future.

[Slide Commentary: 'mcframe' Evolution Story and 'AI Driven Manufacturing']

Based on 30 years of accumulated expertise in manufacturing operations, the company has defined the phases of its product evolution:

1. Phase 1 (up to FY2025) : Established as a "Process ERP" to support the recording and control of business processes (track record of 1,131 companies across 17 countries).
2. Phase 2 (FY2026 onwards) : Evolving into a "Data Platform" that integrates data across the entire supply chain, serving as a standardized data foundation for AI utilization.
3. Phase 3 (FY2028 onwards) : Realizing "AI Driven Manufacturing" through collaboration with AI agents to automate business processes and create a foundation for autonomous manufacturing operations.

As a concrete realization of this strategy, the company is accelerating development speed and plans to release the first version of "mcframe Alchemist," a new product that creates new value from data, in the fourth quarter of FY2026 (FY27 4Q). This demonstrates a clear long-term vision of evolving from simple business management software into an "AI-era manufacturing and digital platform."

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5. Full-Year Earnings Outlook and Medium-Term Goals for FY2027

The full-year consolidated earnings forecast for the fiscal year ending March 2027 remains unchanged from the plan announced on May 12, 2026, with the company continuing to expect record-high results.

• Revenue : 26,800 million yen (+9.6% YoY) [Expected to reach a record high for the 5th consecutive year]
• Operating Profit : 6,900 million yen (+7.6% YoY) [Expected to reach a record high for the 11th consecutive year]
• Ordinary Profit : 6,900 million yen (+7.2% YoY)
• Net Profit : 4,600 million yen (-5.9% YoY) (due to the absence of one-time tax relief, etc.)

The company has set a long-term goal of "33 billion yen in revenue and 10 billion yen in operating profit by FY30 (fiscal year ending March 2030)." Given the growth trajectory of recent years (revenue growing from 18.5 billion yen in FY22 to a forecast of 26.8 billion yen in FY26), it is evident that the company is advancing toward its goals with high reliability.

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6. Financial Soundness and Shareholder Return Policy

The company possesses an extremely sound financial base. As of the end of Q1, total assets were 23,193 million yen , net assets were 16,878 million yen , and the equity ratio stood at a high level of 72.0%. With ample cash and deposits of 13,083 million yen, the company maintains a solid financial structure capable of balancing growth investment with shareholder returns.

Shareholder Return (Dividend Policy)

• FY26 Annual Dividend Forecast : 42.0 yen/share (21.0 yen interim, 21.0 yen year-end)
• Expected Dividend Payout Ratio : 54.5%

Following the significant increase in the dividend payout policy to "over 50%" in the previous fiscal year (FY25), the company plans to increase the annual dividend to 42.0 yen from 41.6 yen (adjusted for stock splits) in the previous year (progressive dividend policy). Even in a phase where net profit is expected to temporarily decline year-on-year due to tax effects, the company is clearly maintaining its stance on shareholder returns by continuing its progressive dividend policy.

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Summary

Business Engineering's Q1 results for the fiscal year ending March 2027 were excellent, achieving record quarterly revenue and operating profit. This was driven by the structural expansion of consolidating all overseas subsidiaries and a record-high quarterly performance in license sales for its flagship product, "mcframe" (+43.5%).

Manufacturing DX investment appetite remains robust, and the backlog for the Solution Business has accumulated to a high level. Furthermore, the company is steadily advancing its AI-era product evolution roadmap , including "mcframe Alchemist." This earnings report demonstrates not only smooth short-term progress but also a clear growth story aimed at medium-to-long-term profitability expansion.