| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1477.0B | ¥1640.0B | -9.9% |
| Operating Income / Operating Profit | ¥186.9B | ¥289.7B | -35.5% |
| Profit Before Tax (Taxable Income) | ¥257.6B | ¥318.2B | -19.0% |
| Net Income / Net Profit | ¥184.4B | ¥229.7B | -19.7% |
| ROE | 7.7% | 9.1% | - |
For the fiscal year ended March 2026, Revenue was ¥1477.0B (YoY -¥163B, -9.9%), Operating Income was ¥186.9B (YoY -¥102.8B, -35.5%), Ordinary Income (JGAAP) / underlying operating-level profit was ¥325.8B (YoY +¥5.3B, +1.6%), and Net Income was ¥184.4B (YoY -¥45.3B, -19.7%), resulting in a year of lower sales and profits. At the operating stage, declines in the core Game Business sales (-17.7%) and impairment losses of ¥99.1B pressured profit, but Equity Method Investment Income of ¥88.1B (YoY +281.7%) supported results at the ordinary-income stage, limiting the decline in pre-tax profit to 25.8%. By segment, the LiveStreaming Business achieved a large turnaround to Operating Income of ¥39.8B (YoY +2082%), improving the revenue portfolio, while the Healthcare & Medical Business saw an expanded deficit due to impairment recognition. On the financial side, Operating Cash Flow (OCF) was ¥334.3B (YoY -14.3%), maintaining cash-generation capability; Investment Cash Flow was +¥348.2B due to securities disposals, and after debt repayment of ¥287B and share buybacks of ¥106.9B, cash balance increased to ¥1030.5B (YoY +¥103B). Equity Ratio rose to 69.8% (prior year 61.3%), interest-bearing debt was compressed to ¥24.9B (Debt/EBITDA 0.10x), and financial soundness was further strengthened.
[Revenue] Revenue was ¥1477.0B (YoY -9.9%). By segment, the Game Business declined significantly to ¥641.8B (YoY -17.7%), and was the primary factor dragging down consolidated revenue. This reflected lifecycle progression of existing titles and insufficient contribution from new titles. LiveStreaming Business decreased slightly to ¥397.9B (YoY -1.9%) and is in a profitability-improvement phase. Sports & Smart City Business increased to ¥326.5B (YoY +4.8%), aided by the opening of BASEGATE Yokohama Kannai in March 2026. Healthcare & Medical Business fell substantially to ¥87.0B (YoY -18.9%) as business selection and structural reforms continued. New Businesses & Others declined to ¥23.8B (YoY -33.4%). Consolidated Gross Profit was ¥793.6B, with a gross margin of 53.7% (prior year 56.5%), deteriorating by 280bp. The main causes were a lower share of Game Business revenue and changes in the mix toward lower-high-margin titles.
[Profitability] Cost of Sales was ¥683.4B (cost of sales ratio 46.3%); Selling, General & Administrative expenses were ¥516.9B (SG&A ratio 35.0%, prior year 36.7%), an improvement of 170bp in SG&A ratio. Other expenses of ¥109.0B included impairment losses of ¥99.1B, mainly goodwill and intangible asset impairments in the Healthcare & Medical area. Operating Income was ¥186.9B (Operating Margin 12.7%, prior year 17.7%), a substantial YoY decline of -35.5% due to impairment and gross margin deterioration. Segment Operating Income: Game ¥296.6B (margin 46.2%, YoY -23.1%), LiveStreaming ¥39.8B (margin 10.0%, YoY +2082%), Sports ¥17.9B (margin 5.5%, YoY -2.8%), Healthcare & Medical -¥23.3B (YoY: deficit narrowed 35.6%), New Businesses & Others -¥15.5B (YoY deterioration). Non-operating items: net financial income -¥17.4B (financial income ¥20.1B, financial expenses ¥37.5B), while Equity Method Investment Income of ¥88.1B made a large positive contribution, resulting in Ordinary Income of ¥325.8B (YoY +1.6%). From Pre-tax Profit ¥257.6B, after deducting income taxes ¥73.2B, Net Income was ¥184.4B (YoY -19.7%). In conclusion, this was a year of lower sales and profits, but equity-method gains supported the ordinary-income stage.
The Game Business recorded Revenue ¥641.8B (YoY -17.7%) and Operating Income ¥296.6B (YoY -23.1%), maintaining a margin of 46.2% and remaining the largest contributor to consolidated operating profit. The revenue decline was due to lifecycle progression of existing titles and insufficient new title contribution, but high margins remained and the segment continues to be the core cash generator. LiveStreaming Business posted Revenue ¥397.9B (YoY -1.9%) and Operating Income ¥39.8B (YoY +2082%), achieving a margin of 10.0% and profitability; this was a significant improvement from an operating loss of -¥2.0B in the prior year, driven by monetization optimization and cost efficiency in Pococha and IRIAM. Sports & Smart City Business recorded Revenue ¥326.5B (YoY +4.8%) and Operating Income ¥17.9B (YoY -2.8%), margin 5.5% — revenue increased but profits declined slightly due to upfront investments and event costs related to smart city initiatives. Healthcare & Medical Business had Revenue ¥87.0B (YoY -18.9%) and Operating Loss -¥23.3B (deficit narrowed 35.6% from -¥36.2B), remaining in loss after impairment but showing progress in structural reforms. New Businesses & Others posted Revenue ¥23.8B (YoY -33.4%) and Operating Loss -¥15.5B (worsened from -¥1.3B prior year), reflecting contraction in new areas and ongoing upfront investment burdens. Corporate adjustments were -¥38.9B (prior year -¥40.3B), a slight improvement.
[Profitability] Operating Margin was 12.7% (prior year 17.7%), deteriorating 502bp, mainly due to impairment losses of ¥99.1B and gross margin decline. Net Profit Margin was 12.5% (prior year 14.0%), down 150bp. ROE was 8.0% (prior year 10.7%), down 270bp, affected by lower profits and increased equity (increase in treasury stock from buybacks and accumulated retained earnings). EBIT was ¥234.5B (approximation after adjusting Operating Income + Depreciation ¥70.1B - Impairment ¥99.1B), giving an EBITDA margin of approximately 17.1%. Gross margin of 53.7% worsened 280bp YoY, reflecting a lower share of Game Business revenue and shifts in high-margin title mix.
[Cash Quality] Operating Cash Flow was ¥334.3B, 1.81x Net Income ¥184.4B, indicating a high OCF/Net Income ratio and strong cash realization of profits. OCF subtotal (before working capital changes) was ¥400.1B, with accounts receivable decrease +¥124.9B contributing to working capital, while advances received increased +¥28.5B and accounts payable decreased -¥10.6B. The accrual ratio is (Net Income ¥184.4B - OCF ¥334.3B) / Total Assets ¥3,332.4B ≒ -4.5%, negative, indicating high earnings quality. Cash conversion (OCF/EBITDA) is about 1.30x (EBITDA estimated ≒ Operating Income ¥186.9B + Depreciation ¥70.1B + Impairment ¥99.1B - other adjustments ≒ ¥256B), which is strong.
[Investment Efficiency] Total Asset Turnover was 0.443x/year (Revenue ¥1477.0B ÷ average total assets during period ¥3,638B), slightly down from 0.453x prior year. Fixed Asset Turnover was 0.783x/year (Revenue ¥1477.0B ÷ fixed assets ¥1,886B). ROA was 5.1% (Net Income ¥184.4B ÷ Total Assets ¥3,332.4B), down from 5.8% prior year. Investment securities and other long-term financial assets declined significantly to ¥467.7B (prior year ¥1,084.7B), with disposal proceeds used for debt repayment and share buybacks.
[Financial Soundness] Equity Ratio was 69.8% (prior year 61.3%), up 850bp, strengthening the balance sheet via debt repayment and equity accumulation. Interest-bearing debt was short-term borrowings ¥24.2B + long-term borrowings ¥0.7B = ¥24.9B (prior year ¥361.5B), with Debt/EBITDA about 0.10x, an extremely low level. Net cash was ¥1030.5B - ¥24.9B = ¥1005.6B, effectively debt-free. Current Ratio was approximately 225% (current assets ¥1446.8B ÷ current liabilities ¥643.6B), indicating sufficient short-term liquidity. Lease liabilities totaled ¥129.5B (current ¥26.8B + non-current ¥102.7B), corresponding to right-of-use assets ¥237.1B under IFRS16. Deferred tax liabilities decreased materially to ¥161.6B (prior year ¥358.4B), and Other Components of Equity (OCI) declined to ¥129.7B (prior year ¥526.5B), reducing fair-value volatility risk of securities.
Operating Cash Flow was ¥334.3B (YoY -14.3%). OCF was derived by subtracting corporate tax payments ¥163.0B from OCF subtotal ¥400.1B, with interest and dividend receipts of ¥97.6B contributing. In OCF subtotal, Pre-tax Profit ¥257.6B was adjusted by Depreciation ¥70.1B and Impairment ¥99.1B; Equity Method Investment Income -¥88.1B and securities gains/losses -¥34.3B were adjusted, and working capital changes provided net positive contribution (accounts receivable decrease +¥124.9B, advances received increase +¥28.5B, accounts payable decrease -¥10.6B, consumption tax payable decrease -¥30.3B, bonus reserve decrease -¥30.6B). The large decrease in accounts receivable reflects both strengthened collections and lower sales; DSO was about 78 days (accounts receivable ¥316.8B ÷ daily sales ¥4.05B), improved from 99 days prior year but still above industry average. Investment Cash Flow was +¥348.2B (prior year -¥122.8B), mainly due to proceeds from sale/redemption of marketable and investment securities ¥509.1B. Outflows included acquisition of tangible fixed assets and investment properties -¥81.5B, acquisition of intangible assets -¥65.1B, acquisition of equity in affiliates -¥11.8B, resulting in a large net positive. Free Cash Flow was ample at OCF ¥334.3B + Investment CF ¥348.2B = ¥682.5B. Financing Cash Flow was -¥580.8B, including long-term loan repayments -¥287.8B, dividend payments -¥72.5B, share buybacks -¥106.9B, net decrease in short-term borrowings -¥49.0B, and acquisition of subsidiaries from non-controlling interests -¥53.6B. Cash and cash equivalents rose from ¥928.0B at the beginning of the period, plus foreign exchange effect ¥0.7B, to ¥1030.5B at period-end (YoY +¥102.4B). FCF substantially exceeded dividends and CAPEX, and even after debt repayment and buybacks cash grew, demonstrating strong cash-generation capability.
Earnings quality is high. Recurring earnings are composed of segment operating profits from Game, LiveStreaming, and Sports and Equity Method Investment Income of ¥88.1B. A one-off factor, impairment losses of ¥99.1B (mainly goodwill and intangible assets in Healthcare & Medical), was recorded in Other Expenses and depressed operating income. On non-operating items, net financial items were -¥17.4B (financial income ¥20.1B, financial expenses ¥37.5B), while Equity Method Investment Income of ¥88.1B substantially boosted Ordinary Income. OCF is 1.81x Net Income and the accrual ratio is -4.5%, indicating strong cash backing of earnings. Comprehensive income was ¥120.4B, below Net Income ¥184.4B, with Other Comprehensive Income -¥64.0B (mainly losses on investments in capital instruments -¥59.7B) contributing negatively. The OCI decline reflects fair value decreases in securities and is a temporary valuation loss that does not directly affect ongoing earning power. The divergence between Ordinary Income and Net Income is explained by income taxes ¥73.2B (effective tax rate 28.4%); the sustainable profit level is close to Operating Income + Equity Method Income ≒ ¥186.9B + ¥88.1B = ¥275.0B.
Full-year guidance is Revenue ¥1540.0B and Operating Income ¥150.0B (YoY -19.8%), a conservative outlook relative to this period’s results. The plan of about a 20% decrease in Operating Income from current ¥186.9B likely reflects allocation to investments for the post-impairment growth phase and uncertainty on the timing of contributions from the game pipeline. Progress rate concepts are difficult to apply, but assuming stabilization of LiveStreaming profitability, improved utilization in Sports & Smart City assets, and completion of structural reforms in Healthcare & Medical, there is upside potential depending on timing of new game releases in H2.
Year-end dividend is ¥66 (Payout Ratio 29.9%; relative to Basic EPS ¥171.36 this is about 38.5%; actual dividend payout total ¥72.5B ÷ Net Income ¥184.4B ≒ 39.3%), a sustainable level. The prior year payout ratio was 29.9%, maintained at the same level. Total dividends ¥72.5B versus FCF ¥682.5B yields coverage of about 9.4x, providing ample room. Share buybacks amounted to ¥106.9B this period (estimated average share price about ¥2,200 implying roughly 4.86M shares), increasing treasury stock balance to ¥310.6B (14.76M shares). Total shareholder returns (dividends + buybacks) were ¥72.5B + ¥106.9B = ¥179.4B, giving a Total Return Ratio of ¥179.4B ÷ ¥184.4B ≒ 97.3%, a high level. Even after deducting total returns from FCF, ¥503.1B remains, and after debt repayment ¥287.8B cash increased, demonstrating the coexistence of returns and balance-sheet strengthening. Next fiscal year dividend forecast is undecided, but policy suggests continuation of stable dividends combined with flexible buybacks.
Game-title concentration risk: Game Business revenue ¥641.8B (43.4% of consolidated) and Operating Income ¥296.6B (majority of segment profit) are dependent on specific titles’ lifecycles. This period’s revenue decline (-17.7%) in existing titles was the primary cause of consolidated revenue decline; performance could vary materially based on initial performance and retention of new titles. Deterioration in gross margin to 53.7% (prior year 56.5%) indicates a lower share of high-margin titles, and the uncertainty of producing hits will determine profitability.
Healthcare & Medical impairment risk: This period recorded impairment losses ¥99.1B (mainly in this area), reducing goodwill to ¥207.5B (prior year ¥303.6B). The segment remains loss-making with Operating Loss -¥23.3B, and risks remain from delayed commercialization or additional impairments. The goodwill / Net Assets ratio of 8.6% has comparatively declined, but successful selection and concentration remain critical.
Accounts receivable collection risk: Accounts receivable ¥316.8B with DSO about 78 days improved from 99 days, but remains above industry average. Due to the customer mix in LiveStreaming and Sports (platforms, corporate clients), collection periods may lengthen, so monitoring of collection delays and bad-debt risk is required.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity (ROE) | 8.0% | 10.1% (2.2%–17.8%) | -2.1pt |
| Operating Margin | 12.7% | 8.1% (3.6%–16.0%) | +4.6pt |
| Net Profit Margin | 12.5% | 5.8% (1.2%–11.6%) | +6.6pt |
In profitability, Operating Margin and Net Profit Margin both materially exceed industry medians, maintaining a high-profit profile, but ROE is below the median, indicating scope for capital efficiency improvements.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -9.9% | 10.1% (1.7%–20.2%) | -20.0pt |
Revenue growth is substantially below the industry median, primarily due to declines in the Game Business. With the industry median continuing double-digit growth, restoring growth in subsequent periods is a key challenge.
※ Source: Company compilation based on public financial statements
LiveStreaming profitability and portfolio improvement: LiveStreaming achieved Operating Income ¥39.8B (YoY +2082%), stabilizing profitability and reducing Game concentration. Monetization optimization and cost efficiency in Pococha and IRIAM were effective; with international expansion and ARPU improvements, this segment could become a second revenue pillar. Segment margin of 10.0% still has upside, and continued operational efficiency is key.
Further strengthening of financial soundness: Interest-bearing debt compressed to ¥24.9B (Debt/EBITDA 0.10x) and net cash ¥1005.6B established an effectively debt-free position. Equity Ratio 69.8% and a robust balance sheet improve resilience to structural reform in Healthcare & Medical and to new investments. High Total Return Ratio 97.3% was executed while cash increased, underscoring high FCF generation.
Catalysts for growth recovery and monitoring items: Next-year guidance is conservative (Operating Income ¥150.0B, YoY -19.8%), but catalysts include game new-release initial KPIs (MAU, ARPPU, retention), LiveStreaming NRR and international expansion progress, utilization rates at Sports & Smart City facilities, and whether additional impairments occur in Healthcare & Medical. A recovery trend in gross margin and operating leverage after impairments are prerequisite for ROE improvement and renewed growth acceleration.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult a professional if necessary.