BIPROGY (8056) 1Q results: Earnings significantly below market expectations on repeated system issues

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

05 August 2026

BIPROGY (8056)

1Q results: Earnings significantly below market

expectations on repeated system issues

Negative: 1Q revenue was ¥91.5 billion (-5.6% YoY; our estimate ¥102.3 billion)

and operating profit ¥6.8 billion (-20.4%; ¥8.9 billion). Uniadex experienced

problems with an internal system upgrade,resulting in the delay of ¥6 billion in

revenue (approximately ¥1 billion in gross profit). Even excluding this, revenue

and operating profit fell significantly short of market expectations, and given that

the company limited SG&A, our overall impression is negative. Management

maintained FY2026 guidance, and said that it would delay some SG&A expenses

to FY2027, but since the system repairs will continue through 2Q, we feel the risk

of an FY2026 guidance miss has already risen.

1Q earnings summary: Orders were ¥119.9 billion (+25.8% YoY; our

estimate: ¥113.4 billion), which looks strong at first glance and is ¥6.5 billion

above our estimate. A breakdown shows that services fell short by ¥7.3 billion,

software overshot by ¥2.1 billion, and hardware overshot by ¥11.7 billion due

to the company securing a large-scale AI infrastructure platform project (¥20

billion). Management stated that the large-scale AI platform project will span

three to four years, with an estimated gross margin of around 10%. Despite a

strong demand environment, the internal system upgrade, which we thought

was largely completed in FY2025, ran into problems on the Uniadex side and

caused delays in purchasing operations. The company is trying to recover

through overtime work and outsourcing, but a quick recovery in 2Q seems

unlikely.

By segment, (1) services revenue rose 8.6% to ¥74.7 billion (our estimate ¥82

billion). The shortfall versus our estimate was mainly due to the impact of

deferred revenue recognition on the support service side (part of the ¥6 billion

in deferred sales) and the fact that outsourcing revenue remained flat,

excluding the consolidation of Catalina Marketing Japan (CMJ; approximately

¥4 billion). Purchase price allocation (PPA) amortization for CMJ is yet to be

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