MIXI,Inc. FY2027 Q1 Earnings Report

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Executive Summary

Amid revenue growth across all segments, a sharp expansion in the Sports Business and improved selling, general and administrative expense efficiency drove substantial increases in both revenue and profit. Revenue was ¥47.07B (+50.3% YoY), Operating Income was ¥5.43B (+102.8%), Ordinary Income was ¥5.65B (+179.3%), and Net Income attributable to owners of the parent was ¥5.83B (+311.9%). The Operating Income margin improved by +300bp to 11.5% (8.5% in the previous year), primarily due to a lower SG&A expense ratio and contributions from high-margin segments. At the Ordinary Income level, the recognition of ¥0.40B in foreign exchange gains provided an additional uplift.

Factors Affecting Results

【Revenue】All 4 segments recorded revenue growth. Sports posted the highest growth at +94.5%, expanding its revenue mix to 46.0% (¥21.67B). Digital Entertainment (DE) grew +21.5%, accounting for 41.5% of revenue (¥19.53B), while Lifestyle increased +24.5% (¥4.36B) and Investment rose +158.1% (¥1.50B), resulting in broad-based revenue growth. The revenue mix, which had previously been heavily concentrated in DE, is becoming more diversified as Sports expands in scale.

【Profit and Loss】The SG&A expense ratio declined to 52.3% (approximately -310bp YoY), and operating leverage drove a +102.8% increase in Operating Income. Ordinary Income rose +179.3%, exceeding the growth in Operating Income due to the recognition of ¥0.40B in foreign exchange gains. Extraordinary losses consisted solely of an impairment loss of ¥0.01B, limiting the impact of one-off factors. Net Income attributable to owners of the parent was ¥5.83B (¥1.41B in the previous year, +311.9%). Both revenue and profit increased.

Segment Analysis

Digital Entertainment generated revenue of ¥19.53B (+21.5%) and Operating Income of ¥10.88B (+39.5%), with a profit margin of 55.7%, making it the core contributor to company-wide profits. Sports significantly expanded its scale, with revenue of ¥21.67B (+94.5%), but Operating Income was ¥1.26B (+108.3%) and the profit margin remained at 5.8%, leaving cost absorption during the expansion phase as a challenge. Lifestyle generated revenue of ¥4.36B (+24.5%) and Operating Income of ¥0.26B (+478.3%), improving to a level close to a return to profitability. Investment generated revenue of ¥1.50B (+158.1%) and Operating Income of ¥0.86B (+2305.1%), with a profit margin of 57.3%, thereby expanding its contribution through highly profitable operations. Company-wide profits remain dependent on the high-margin DE and Investment businesses, making improvement in Sports’ profit margin a key issue for the balance among segments going forward.

Key Financial Metrics

【Profitability】The Operating Income margin improved by +300bp to 11.5% (8.5% in the previous year), while the gross profit margin remained at 63.9%, broadly unchanged from the previous year. The net profit margin based on Net Income attributable to owners of the parent expanded by +790bp to 12.4% (4.5% in the previous year), reflecting improved SG&A efficiency as well as the uplift from foreign exchange gains at the Ordinary Income level.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥3.33B, representing only 0.57x Net Income attributable to owners of the parent of ¥5.83B, indicating a divergence between earnings and cash generation.【Investment Efficiency】ROE was 2.7%, and basic EPS was ¥89.47 (¥20.92 in the previous year, +327.7%).【Financial Soundness】The Equity Ratio improved to 69.1% (67.6% in the previous year), while cash and deposits remained at a substantial level of ¥106.68B.

Cash Flow Analysis

Operating Cash Flow was ¥3.33B, turning positive YoY due to a rebound from the deterioration in working capital in the previous year; however, its ratio to Net Income attributable to owners of the parent of ¥5.83B remained at only 0.57x. Decreases in accounts payable and other liabilities, the reversal of the provision for bonuses, and corporate income taxes paid of ¥3.81B weighed on OCF, while contract liabilities increased by ¥0.94B, indicating an accumulation of deferred revenue related to billing. Investing Cash Flow was -¥1.25B, primarily reflecting investments in property, plant and equipment and intangible assets. Financing Cash Flow was -¥4.35B, with dividend payments of ¥3.44B and other items serving as the main sources of cash outflow. Free Cash Flow, calculated as the sum of OCF and Investing Cash Flow, was ¥2.08B, and cash and cash equivalents at the end of the period totaled ¥109.21B.

Earnings Quality

Extraordinary income and losses were minimal, at ¥0.002B and ¥0.007B, respectively, and had a limited impact on Net Income. Foreign exchange gains accounted for ¥0.40B of non-operating income of ¥0.58B, contributing to higher Ordinary Income; however, their dependence on foreign exchange movements means that such gains are not uniformly recurring. Against Profit Before Tax of ¥5.65B, corporate income taxes were only ¥0.34B, resulting in an effective tax rate of approximately 6.0%, substantially below the statutory effective tax rate; changes in deferred tax assets and liabilities may have had an impact. Comprehensive Income was ¥6.14B (of which ¥6.65B was attributable to owners of the parent), including foreign currency translation adjustments of ¥0.39B and valuation differences on securities of ¥0.44B, resulting in a divergence of approximately +¥0.82B from Net Income attributable to owners of the parent of ¥5.83B.

Earnings Forecast and Guidance

During Q1, revisions were made to both the earnings forecast and dividend forecast. Progress against the full-year forecast (Revenue of ¥185.00B, Operating Income of ¥19.50B, Ordinary Income of ¥20.00B, and Net Income attributable to owners of the parent of ¥25.00B) was 25.4% for Revenue, 27.8% for Operating Income, 28.3% for Ordinary Income, and 23.3% for Net Income. Compared with a simple quarterly allocation of 25%, Revenue, Operating Income, and Ordinary Income are tracking above expectations, indicating solid progress. Although the progress rate for Net Income is slightly lower, this reflects a level excluding the boost from the low effective tax rate during the current period.

Shareholder Returns

The annual dividend forecast is ¥155 (revised during the current quarter), resulting in a Payout Ratio of 40.4% against forecast EPS of ¥384. Dividend payments totaled ¥3.44B, exceeding current-period Free Cash Flow of ¥2.08B; however, the ample level of cash and deposits of ¥106.68B supports the company’s liquidity. Treasury stock decreased from the previous year, suggesting a shareholder return policy involving changes in the number of shares outstanding.

Risk Factors

1. Revenue concentration risk: Digital Entertainment generated Operating Income of ¥10.88B and remains the core of company-wide profits, resulting in high dependence on the performance of major titles and content lifecycles.

2. Differences in segment profitability: While the Sports Business expanded rapidly, with revenue increasing +94.5%, its Operating Income margin remained at 5.8%; progress in absorbing costs associated with scale expansion will require monitoring.

3. Weak cash conversion: OCF of ¥3.33B was only 0.57x Net Income attributable to owners of the parent of ¥5.83B, while working capital movements, including decreases in accounts payable and the reversal of the provision for bonuses, delayed the conversion of earnings into cash.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Both the Operating Income margin and Net Profit margin exceed the industry median, placing the company’s profitability among the higher levels within the industry.

Growth and Capital Efficiency

The Revenue growth rate substantially exceeds both the industry median and the upper bound of the IQR, representing an outstanding rate of revenue growth within the industry.

※Source: Compiled by the Company

Key Takeaways from the Results

1. Company-wide revenue composition changed primarily due to the Sports Business’s +94.5% revenue growth, with the business mix becoming more diversified from its previous concentration in Digital Entertainment.

2. The +300bp improvement in the Operating Income margin resulted from improved SG&A efficiency and contributions from high-margin businesses. However, the effective tax rate was approximately 6.0%, substantially below the statutory level, and the level of Net Income includes the impact of tax effects, which should be noted when interpreting the results.

3. OCF remained at only 0.57x Net Income attributable to owners of the parent, while working capital movements, including decreases in accounts payable and the reversal of the provision for bonuses, weighed on cash generation.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥3,362–¥3,558 at ±1% for the cost of equity, and ¥3,447–¥3,474 at ±0.1 for ω.

Notes:

• Amortization of goodwill of ¥43.7/share has been added back to earnings (due to its non-cash nature and to improve comparability with IFRS companies).
• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual income model / Interest rate reference month: 2026-06 / This value is not intended to predict or guarantee the future share price.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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