Japanese technology services provider Appirits Inc. reported a 97.9% drop in operating profit for its fiscal first quarter as outsourcing expenses and acquisition-related costs eroded margins despite revenue growth.
The Tokyo-based company posted operating profit of just ¥2 million ($13,800) for the three months ended April, down from ¥96 million a year earlier. Revenue climbed 6.2% to ¥2.48 billion ($17.1 million), according to the firm’s earnings statement released Friday.
Appirits swung to an ordinary loss of ¥1 million after reporting ¥123 million in profit during the same period last year. The company also recorded a net loss of ¥9 million ($62,100), reversing from a ¥76 million profit.
The web solutions and gaming company attributed the profit decline to increased reliance on external contractors as it handled larger projects and integrated new staff. Outsourcing costs jumped across multiple business segments, particularly affecting the web solutions division where unprofitable contracts weighed on results.
The company’s hiring spree added 67 new graduates in 2025, creating upfront training expenses before these employees become productive. Management expects profitability to improve as these workers replace costly outsourced services.
Appirits’ web solutions segment generated ¥971 million in revenue, up 26.7%, but segment profit fell 3.7% to ¥176 million. The digital human resources training and dispatch division posted a segment loss of ¥5 million compared with ¥19 million in profit last year, despite 15.3% revenue growth to ¥420 million.
The entertainment-focused Oshi Culture & Games segment saw revenue rise 7.8% to ¥1.10 billion, driven by anniversary events for long-running mobile games “Kemono Friends 3” and “UNI’S ON AIR.” However, segment profit plummeted 62.7% to ¥41 million due to transition costs from taking over operations of the “Nogizaka-teki Fractal” game.
Despite the quarterly setback, Appirits maintained its full-year forecast, projecting revenue of ¥10.46 billion ($72.2 million) and operating profit of ¥610 million ($4.2 million) for fiscal 2026. The company expects net profit to surge to ¥372 million ($2.6 million).
Shares of Appirits traded at ¥1,040 on the Tokyo Stock Exchange, giving the company a market value of approximately ¥4 billion.
