Globalway Q1 FY2027 Earnings Analysis: Turning to Operating Profit and Rebuilding the Business Foundation – A Growth Story Driven by Strategic AI/Overseas Investment and Improved Profitability in Core Segments

Globalway, Inc. (Securities Code: 3936) has announced its financial results for the first quarter of the fiscal year ending March 31, 2027 (April 1, 2026 – June 30, 2026). The company has achieved a notable turnaround to operating profit compared to the operating loss recorded in the same period last year. This performance was driven by strengthened profitability management in its core Digital Solutions business and revenue growth in the Creator Economy business.

This report provides a detailed, multi-perspective analysis of the company’s earnings highlights, factors contributing to the improvement in operating profit, segment-specific progress, and the medium-to-long-term management policy and growth strategy leading up to the fiscal year ending March 2030.

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1. Q1 FY2027 Earnings Summary: Significant Revenue Growth and Achievement of Operating Profitability

Consolidated financial results for the first quarter were as follows: Net sales of 970.1 million yen (+14.7% YoY) , operating profit of 26.66 million yen (compared to a loss of 55.14 million yen in the same period last year) , ordinary profit of 84.99 million yen (compared to a loss of 65.06 million yen in the same period last year) , and quarterly net profit attributable to owners of the parent of 68.24 million yen (compared to a loss of 24.17 million yen in the same period last year) .

Progress against the full-year earnings forecast stands at 22.5% for net sales and 21.2% for operating profit (against the annual forecast of 125.96 million yen), indicating steady progress in line with the initial plan.

[Significance of Slide 5 and Background Data Analysis]

The slide above summarizes the most critical indicators from the Q1 results. The primary highlight is the reversal from a significant operating loss in the previous year to an operating profit of 26 million yen . The increase in net sales (up 124 million yen YoY) was supported by the rapid expansion of the TikTok Liver Management business and robust demand for Salesforce implementation support . The figures clearly reflect the success of structural reforms, which involved not only increasing top-line revenue but also eliminating unprofitable projects and strengthening profitability management to dramatically improve profit margins .

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2. Analysis of Operating Profit Fluctuations: The Dual Effect of Revenue Expansion and Cost Structure Reform

The dramatic profit improvement of 81.7 million yen —from an operating loss of 55.14 million yen in the same period last year to an operating profit of 26.66 million yen this term—is rooted in clear structural reforms and cost optimization.

Key factors contributing to the profit improvement include:

• Profit boost from increased sales (+124.1 million yen) : Significant contributions from the growth of the Digital Solutions (DS) and Creator Economy (CE) businesses.
• Increase in cost of sales (-44.3 million yen) : While outsourcing costs in the DS business decreased, overall costs rose due to increased commission fees associated with the expansion of the CE business.
• Increase in advertising and sales promotion expenses (-50.0 million yen) : Aggressive promotional investments were made to acquire new streamers and generate revenue in the CE business.
• Reduction in external outsourcing costs (+55.5 million yen) : The CE business successfully reviewed its outsourcing structure and shifted toward in-house operations, significantly reducing fixed outsourcing costs.

[Significance of Slide 6 and Background Data Analysis]

This waterfall chart logically illustrates how the operating profit achieved a V-shaped recovery. Particularly noteworthy is the fact that while the company increased gross profit through sales growth, it simultaneously reduced external outsourcing costs by 55.5 million yen . This visualizes how the "thorough management of profitability"—cutting unnecessary outsourcing costs while driving revenue growth—has led to a fundamental improvement in the company's earnings structure.

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3. Segment Performance and Changes in Business Structure

The company has reorganized its business segments into three categories: Digital Solutions Business , Career Innovation Business , and Creator Economy Business (renamed from the former Sharing Business), with each field operating under clearly defined roles.

[Significance of Slide 9 and Background Data Analysis]

This segment-by-segment performance list is crucial for understanding the company's overall growth story. In addition to achieving revenue growth across all three segments compared to the same period last year, the composition of segment profit has shifted significantly. Specifically, the Digital Solutions business has grown rapidly into the primary profit driver (segment profit of 95.5 million yen, +193.5% YoY) , creating a virtuous cycle that easily absorbs and covers the losses (20.5 million yen) incurred from new investments and upfront overseas investments in the Creator Economy business.

Below is a deep dive into each segment:

(1) Digital Solutions Business (DS Business)

• Net Sales : 354.93 million yen (+5.9% YoY)
• Segment Profit : 95.5 million yen ( +193.5% YoY )
• Full-year Budget Progress : Net sales 19.9%, Segment profit 23.8%
• Overview and Key Topics : Provides IT consulting and system development utilizing Salesforce, MuleSoft, AWS, etc. Despite some timing delays in revenue recognition for certain projects, profit margins surged due to thorough profitability improvements and the maintenance of high utilization rates. Furthermore, the company is accelerating its entry and expansion into the AI support domain , having been selected as one of the first nine partners for the "Salesforce FDE Partner Network," which specializes in supporting the implementation of "Agentforce," Salesforce's AI agent functionality.

(2) Career Innovation Business

• Net Sales : 157.64 million yen (+9.0% YoY)
• Segment Profit : 45.62 million yen ( +27.3% YoY )
• Full-year Budget Progress : Net sales 28.7%, Segment profit 76.7%
• Overview and Key Topics : Operates the job change and recruitment platform "CareerConnection" and provides high-class talent placement. The recruiting sector remained strong, backed by robust demand in the IT and consulting talent market. As of the first quarter, progress against the full-year profit budget has reached 76.7% , indicating exceptionally high performance. Additionally, the company officially released a new talent database service leveraging the CareerConnection DB and has begun monetization through a performance-based model for large enterprises.

(3) Creator Economy Business (CE Business)

• Net Sales : 457.51 million yen ( +25.0% YoY )
• Segment Profit : -20.5 million yen (compared to -23.73 million yen in the same period last year)
• Full-year Budget Progress : Net sales 23.0%
• Overview and Key Topics : Operates time and skill-sharing services, a TikTok LIVE-affiliated streamer agency, and live commerce. The top line (net sales) shows high growth at +25%. While a loss remains in terms of profit, this is due to aggressive upfront investments for future overseas scaling , such as building streamer acquisition systems in regional hubs like Fukuoka, establishing a U.S. subsidiary, and expanding agency operations into Indonesia and Latin America. The company aims to transition to a profit-harvesting phase from the second half of the year onward.

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4. Medium-to-Long-Term Management Policy: Roadmap to 1.4 Billion Yen in Operating Profit by FY2030

Moving beyond a mere extension of existing businesses, the company has set a long-term goal of becoming an "AI-Native Company," aiming for operating profit of approximately 1.4 billion yen and net profit of over 1 billion yen by the fiscal year ending March 2030.

Phases for long-term growth:

1. FY2026 (Completed) : Achieved profitability for the first time in three years and established the business foundation and three-segment structure.
2. FY2027 (Current/Ongoing) : "AI-Native & Upfront Investment Phase." Concentrated implementation of company-wide AI, launch of AI-related services, and upfront investment in overseas growth markets.
3. FY2028–FY2029 : "Expansion and Monetization of AI Business." Significant improvement in profit margins through AI implementation, re-acceleration of DS business growth, and construction of a structure where overseas revenue exceeds domestic revenue.
4. FY2030 (Goal) : Establishment of a high-profit structure with operating profit of approx. 1.4 billion yen and net profit of over 1 billion yen .

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5. External Environment and Market Tailwinds

The markets targeted by the company are in strong, long-term growth trends:

• Domestic DX-related investment : Expected to expand from 4.0 trillion yen in 2023 to 10.2 trillion yen by 2030 (Source: Fuji Chimera Research Institute).
• Domestic AI system market : Predicted to reach approx. 4.18 trillion yen by 2029 from approx. 1.34 trillion yen in 2024 (Source: IDC).
• Japan's live commerce market : Forecasted to grow rapidly from 0.9 trillion yen in 2024 to a scale of 16.1 trillion yen by 2033 (Source: Grand View Research).

By leveraging its strengths in both "Technology (DS Business)" and "Human Capital (Career Innovation & CE Businesses)," the company has positioned itself to capture corporate transformation needs and individual challenges in the AI/DX era.

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6. Conclusion and Comprehensive Assessment

Globalway's Q1 FY2027 financial results prove that the company has emerged from its past period of stagnation and is steadily advancing toward fundamental improvement in its earnings structure and the construction of a new growth foundation .

A mechanism has begun to function where the company maintains strong earning power through higher profit margins in the DS business and new monetization of the CareerConnection DB, while reinvesting the generated cash into overseas expansion (U.S. and Southeast Asia) and the AI domain (Agentforce, etc.) for the Creator Economy business. Moving forward, the timing of profitability for the Creator Economy business—currently in an investment phase—and the contribution of company-wide AI-nativity to further improvements in gross profit margins are expected to be the key points for achieving medium-to-long-term goals.