Trading margin for growth: the investment-first turn (2021)

An advance notice: from 24.1% to 4.8%

On 13 May 2021, Nakamura Takanori published in advance a quarterly plan that would drop the operating margin from 24.1% to 4.8%. He gave no full-year profit forecast, offering instead only two levels five years out: net profit above ¥10 billion and net assets above ¥20 billion. It came close to a request that the intervening years’ profits be removed from the scorecard. The plan to raise advertising spending in the second quarter alone from ¥450 million to ¥1.816 billion followed the same yardstick the president had stated — that if customer lifetime value exceeds acquisition cost by even ten yen, the business holds.

Yet in the year to March 2026, when all three five-year figures were exceeded, the stock market’s gauge pointed the other way. The price-to-book ratio fell from 36.6 to 10.1, and the company cited an adjustment in expectations for the cloud market and concern over a competitive environment that now includes artificial intelligence. In the new medium-term plan from the year to March 2027, the revenue CAGR target is lowered to 15% or more, set alongside a “Rule of 50” — growth rate plus operating margin at 50% or above. Writing the plan so as to give up margin first and go after growth happened exactly once in those five years.