| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1741.4B | ¥1405.8B | +23.9% |
| Operating Income | ¥174.6B | ¥152.9B | +14.1% |
| Equity Method Investment Income (Loss) | ¥0.4B | ¥11.3B | -96.7% |
| Ordinary Income | ¥177.5B | ¥164.6B | +7.8% |
| Net Income | ¥58.6B | ¥54.4B | +7.7% |
| ROE | 8.9% | 9.7% | - |
For the fiscal year ended March 2026, Revenue was ¥1,741.4B (YoY +¥335.6B, +23.9%), Operating Income was ¥174.6B (YoY +¥21.6B, +14.1%), Ordinary Income was ¥177.5B (YoY +¥12.9B, +7.8%), and Net Income was ¥58.6B (YoY +¥4.2B, +7.7%), delivering year-on-year increases in both top and bottom lines. The core Amusement Equipment business drove double-digit growth with Revenue +29.2% and Operating Income +30.1%, and expansion in sales within this segment—which accounts for 91.3% of consolidated revenue—lifted overall results. Operating margin declined to 10.0% from 10.9% a year earlier (-0.9pt); the increase in Cost of Goods Sold ratio to 78.0% (prior year 74.9%) was partly offset by compression in SG&A ratio to 12.0% (prior year 14.2%). Ordinary Income trailed Operating Income growth due to deterioration in non-operating results (Equity Method Investment Income ¥0.4B sharply down from ¥11.3B). Net Income was recorded after tax expense at an effective tax rate of 23.8% on Profit Before Tax of ¥173.0B. EPS was ¥209.70 (prior year ¥178.78, +17.3%), achieving double-digit EPS growth.
Revenue: The Amusement Equipment business achieved Revenue of ¥1,590.7B (+29.2% YoY), representing 91.3% of consolidated sales. Operating Income for this segment was ¥198.8B (+30.1% YoY) with a high margin of 12.5%. Conversely, the Contents & Digital business recorded Revenue of ¥138.7B (-15.5% YoY) and Operating Income of ¥9.3B (-67.1% YoY). Other businesses posted Revenue of ¥17.8B (+6.0% YoY) and Operating Income of ¥0.4B (+680.0% YoY), small but turning profitable. Consolidated Revenue increased by ¥335.6B YoY, driven by introduction of new models in Amusement Equipment and higher unit sales. By segment, Amusement Equipment accounted for approximately 95% of consolidated Operating Income, indicating a high concentration of earnings in that business.
Profitability: Cost of Goods Sold was ¥1,357.6B (prior year ¥1,053.2B, +28.9%), outpacing Revenue growth and lowering gross margin to 22.0% (prior year 25.1%, -3.1pt). SG&A was controlled at ¥209.3B (prior year ¥199.7B, +4.8%), substantially below Revenue growth, improving SG&A ratio to 12.0% (prior year 14.2%, -2.2pt). Advertising expense was ¥24.8B (prior year ¥26.2B) and lease expenses ¥11.1B (prior year ¥11.5B) were restrained, while depreciation (SG&A portion) rose to ¥8.4B (prior year ¥5.7B). Operating Income was ¥174.6B (Operating margin 10.0%), up ¥21.6B YoY, though margin fell by 0.9pt. Non-operating income included dividend income ¥2.9B, interest income ¥0.4B, and equity method investment income ¥0.4B (down sharply from ¥11.3B), shrinking non-operating income to ¥6.7B (prior year ¥15.7B). Non-operating expenses were ¥3.8B (including interest expense ¥1.5B; prior year ¥4.0B), nearly flat, resulting in Ordinary Income of ¥177.5B (+7.8% YoY). Extraordinary items comprised Extraordinary Gains ¥0.6B (gain on sale of investment securities ¥0.4B, gain on sale of fixed assets ¥0.6B) and Extraordinary Losses ¥5.1B (impairment loss ¥1.6B, loss on retirement of fixed assets ¥0.3B, restructuring costs ¥3.0B), producing Profit Before Tax of ¥173.0B. Income taxes ¥41.2B (effective tax rate 23.8%) and Non-controlling interests ¥1.4B were deducted, leaving Net Income attributable to owners of the parent of ¥58.6B (Net margin 3.4%, prior year 3.9%), concluding the year with revenue and profit growth.
The Amusement Equipment business recorded Revenue ¥1,590.7B (+29.2% YoY), Operating Income ¥198.8B (+30.1% YoY), and an Operating margin of 12.5%, maintaining high profitability and accounting for roughly 95% of consolidated Operating Income. Profit growth outpaced Revenue growth, supported by improved product mix and scale effects. The Contents & Digital business reported Revenue ¥138.7B (-15.5% YoY), Operating Income ¥9.3B (-67.1% YoY), and an Operating margin of 6.7%, with timing of IP deployment and upfront production costs pressuring profitability. Other businesses (including fitness) posted Revenue ¥17.8B (+6.0% YoY) and Operating Income ¥0.4B (+680.0% YoY), achieving small-scale profitability. Consolidated Operating Income after corporate expenses was ¥174.6B, while the sum of reported segment Operating Income was ¥208.2B, resulting in corporate adjustments of -¥33.6B (prior year -¥28.2B), an increase.
Profitability: Operating margin 10.0% (prior year 10.9%, -0.9pt) and Net margin 3.4% (prior year 3.9%, -0.5pt) slightly declined, while ROE was 8.9% (disclosed as a financial metric), a modest improvement year-on-year. Gross margin was 22.0% (prior year 25.1%) due to higher COGS ratio, but operating leverage was realized through compression of SG&A ratio to 12.0% (prior year 14.2%). EBITDA was ¥193.1B (Operating Income ¥174.6B + Depreciation ¥18.5B), with an EBITDA margin of 11.1%. Cash quality: Operating Cash Flow (OCF) was ¥74.8B versus Net Income of ¥58.6B, yielding an OCF/Net Income ratio of 1.28x, above the benchmark (≥0.8x). However, OCF subtotal of ¥106.5B experienced large working capital outflows (Inventory increase -¥125.0B, Trade receivables decrease +¥84.1B, Trade payables decrease -¥51.5B), constraining OCF growth. The OCF/EBITDA ratio was low at 0.39x, indicating weak cash conversion. Free Cash Flow was positive at ¥51.6B (OCF ¥74.8B - CapEx ¥15.4B - Intangible investment ¥5.9B + Other investing activities -¥2.3B). Investment efficiency: Total Asset Turnover was 1.69x (Revenue ¥1,741.4B ÷ Total Assets ¥1,033.6B), and Return on Assets (ROA, based on Ordinary Income) was 17.2% (Ordinary Income ¥177.5B ÷ Total Assets ¥1,033.6B), indicating high efficiency. CapEx/Depreciation ratio was 0.83x (¥15.4B ÷ ¥18.5B), reflecting maintenance/ selective investments. Financial soundness: Equity Ratio was 64.0% (prior year 56.8%, +7.2pt) and Current Ratio 298.5% (Current Assets ¥740.8B ÷ Current Liabilities ¥248.2B), both very healthy. Interest-bearing debt totaled ¥90.9B (Short-term borrowings ¥10.6B + Long-term borrowings ¥46.5B + Long-term borrowings (current portion) ¥33.8B), while Cash and deposits were ¥309.4B, resulting in a net cash position. Debt/EBITDA was very low at 0.47x (Interest-bearing debt ¥90.9B ÷ EBITDA ¥193.1B), and Interest Coverage was healthy at 119.6x (EBITDA ¥193.1B ÷ (Interest expense ¥1.5B + ¥0.1B)).
OCF was ¥74.8B (prior year ¥77.8B, -3.9%), remaining in a flat range. OCF subtotal was ¥106.5B (Profit Before Tax ¥173.0B + Depreciation ¥18.5B + Goodwill amortization ¥2.8B - Equity method investment income ¥0.4B + Impairment loss ¥1.6B + other non-cash items), from which working capital changes included Inventory increase -¥125.0B (primarily work in progress ¥169.4B), Trade receivables decrease +¥84.1B (progress in collection of accounts receivable and notes receivable), and Trade payables decrease -¥51.5B (settlement of prior period procurement liabilities), and after income taxes paid -¥33.7B resulted in final OCF. Investing Cash Flow was -¥23.1B, primarily CapEx -¥15.4B, Intangible asset investments -¥5.9B, and acquisition of investment securities -¥1.9B, offset by proceeds from sale of tangible fixed assets ¥1.3B, sale of investment securities ¥0.9B, and long-term loan repayments received ¥2.7B. Free Cash Flow was positive at ¥51.6B (OCF ¥74.8B + Investing CF -¥23.1B). Financing Cash Flow was -¥52.0B, including repayment of long-term borrowings -¥22.1B, dividend payments -¥31.1B, cash outflows for acquisition of subsidiary shares -¥30.4B, long-term borrowings raised +¥62.8B, and increase in short-term borrowings +¥1.6B. Cash inflow from increase in newly consolidated subsidiaries ¥7.0B and foreign exchange translation adjustments ¥0.1B resulted in ending cash and cash equivalents of ¥308.4B (prior year ¥308.5B, -0.0%), essentially flat. While the OCF/Net Income ratio of 1.28x is healthy, the OCF/EBITDA ratio of 0.39x highlights constrained cash conversion, and normalization of working capital (inventory turnover improvement and stabilization of payables) remains a key issue.
Of Ordinary Income ¥177.5B, Operating Income ¥174.6B is the primary component. Non-operating income ¥6.7B (Dividend income ¥2.9B, Interest income ¥0.4B, Equity method investment income ¥0.4B, etc.) accounts for 0.4% of Revenue and is limited, indicating a core-business-led revenue structure. Extraordinary items comprised Extraordinary Gains ¥0.6B (gain on sale of investment securities ¥0.4B, gain on sale of fixed assets ¥0.6B) and Extraordinary Losses ¥5.1B (impairment loss ¥1.6B, restructuring costs ¥3.0B, loss on retirement of fixed assets ¥0.3B), producing a net extraordinary loss of ¥4.5B, which is minor at 2.6% of Profit Before Tax and suggests limited distortion from one-off factors. The divergence between OCF and Net Income is primarily driven by working capital changes (Inventory increase -¥125.0B, Trade payables decrease -¥51.5B, etc.), delaying cash realization after profit recognition, though progress in collecting Trade receivables (decrease +¥84.1B) partially mitigates this. The accrual ratio ((Net Income ¥58.6B - OCF ¥74.8B) ÷ Net Assets ¥661.9B ≒ -2.4%) is negative, suggesting conservative accounting, and considering working capital factors is at a neutral level. The gap between Ordinary Income and Net Income reflects income taxes (Profit Before Tax ¥173.0B, tax expense ¥41.2B at effective tax rate 23.8%) and Non-controlling interests ¥1.4B; accounting special factors are limited. Note the significant drop in Equity Method Investment Income from ¥11.3B to ¥0.4B requires attention, but this is a non-operating item and does not impact core operating profitability.
For the fiscal year ending March 2027, management forecasts Revenue ¥1,870.0B (YoY +7.4%), Operating Income ¥190.0B (YoY +8.8%), Ordinary Income ¥191.5B (YoY +7.9%), and Net Income attributable to owners of the parent ¥135.0B (YoY +130.4%), expecting continued revenue and profit growth. Revenue is planned to grow a further 7.4% from a high base, with Operating margin improving slightly to 10.2% (¥190.0B ÷ ¥1,870.0B) from 10.0% in the prior year. Net Income is forecast to increase from ¥58.6B to ¥135.0B (2.3x), reflecting an expected substantial profit recovery in the second half (the prior year’s ¥58.6B corresponds to the prior year Q2 cumulative figure). EPS forecast is ¥216.86 (prior year ¥209.70, +3.4%). There is no explicit statement indicating a change from the year-end dividend forecast of ¥70 (interim ¥0); Payout Ratio is 32.3% (¥70 ÷ ¥216.86), up from 28.0% last year, indicating room for higher payout. Progress rates are high at Revenue 93.1% (¥1,741.4B ÷ ¥1,870.0B), Operating Income 91.9% (¥174.6B ÷ ¥190.0B), and Ordinary Income 92.7% (¥177.5B ÷ ¥191.5B), suggesting Full Year targets are in sight. Key assumptions include continuation of new model launches in Amusement Equipment, smooth digestion of inventory (work in progress), optimization of timing for Contents & Digital deployments, and no material change in current demand conditions.
A year-end dividend of ¥70 (interim dividend ¥0) was paid, resulting in a Payout Ratio of 28.0% (Total dividends ¥31.1B ÷ Net Income ¥130.5B (parent company attributable, as per the statement of comprehensive income)). The prior year year-end dividend was ¥0, so dividends were resumed this fiscal year. Coverage of total dividends ¥31.1B by Free Cash Flow ¥51.6B is 1.66x, and with Cash and deposits of ¥309.4B and a net cash stance, dividend-paying capacity is sufficient. No share buybacks (treasury stock acquisitions) were disclosed in Financing Cash Flow, so no share repurchase was confirmed. The Payout Ratio of 28.0% is within a sustainable range, and combined with the next fiscal year forecast dividend of ¥70 (Payout Ratio 32.3%), management signals a direction toward phased enhancement of shareholder returns. However, while OCF/Net Income 1.28x is healthy, if weak cash conversion driven by working capital persists, scope for further dividend increases will depend on inventory digestion and stabilization of OCF.
Inventory (Work in Progress) buildup and demand-supply mismatch risk: Inventory increased from ¥6.97B to ¥13.54B (+94.3%), with Work in Progress ¥169.4B (prior year ¥109.6B, +54.6%) accumulating. This resulted in a cash absorption of -¥125.0B in OCF and raises concerns about potential delays in inventory digestion, markdowns, or impairment. Delays in new model launches or demand shifts for Amusement Equipment could worsen inventory turnover.
Business concentration and earnings volatility risk: The Amusement Equipment business accounts for 91.3% of Revenue and approximately 95% of Operating Income, making the company highly dependent on product cycles and hit titles in that business. The Contents & Digital business experienced a sharp profit decline (Operating Income ¥9.3B vs prior ¥28.4B, -67.1%), indicating limited portfolio diversification. Regulatory changes (e.g., performance standards for gaming machines) or market deterioration could directly impact consolidated results.
OCF weakness and working capital management risk: With OCF ¥74.8B and OCF/EBITDA ratio 0.39x, cash conversion is low. Reduction in Trade payables (-53.7%; prior year ¥137.1B → current period ¥63.5B) contributed to cash outflow from working capital. Continued normalization of payables or further inventory accumulation could pressure Free Cash Flow, constraining dividend increases and additional investments.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.0% | 3.4% (1.4%–5.0%) | +6.7pt |
| Net Margin | 3.4% | 2.3% (1.0%–4.6%) | +1.1pt |
Operating margin of 10.0% exceeds the industry median of 3.4% by +6.7pt, placing the company among the higher profitability cohort in the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 23.9% | 5.9% (0.4%–10.7%) | +18.1pt |
Revenue growth rate of 23.9% significantly outpaces the industry median of 5.9%, ranking the company in the top growth class within the industry.
※ Source: Company compilation
High profitability and sustainable growth in the core business: The Amusement Equipment business achieved an Operating margin of 12.5%, significantly above industry average, and strong growth with Revenue +29.2% and Operating Income +30.1%. Management plans Revenue +7.4% and Operating Income +8.8% for the next fiscal year, premised on visibility of product pipeline and continued scale effects. ROE 8.9% and Equity Ratio 64.0% highlight the balance of profitability and financial soundness.
Progress on working capital management and normalization of OCF: Work in Progress increased +54.6% YoY, weakening cash conversion (OCF/EBITDA 0.39x). Reduction in Trade payables (-53.7%) also caused short-term cash outflows. Free Cash Flow ¥51.6B exceeds total dividends ¥31.1B, but scope for dividend increases depends on inventory digestion and normalization of working capital. Improvement in inventory turnover and stabilization of OCF in subsequent periods are prerequisites for expanding shareholder returns.
Exposure to business concentration and regulatory risk: High earnings concentration in Amusement Equipment (Revenue 91.3%, Operating Income 95%) means results are sensitive to product cycles and regulatory changes (e.g., gaming machine performance standards). The Contents & Digital business recorded a significant profit reduction (-67.1%), indicating limited portfolio diversification. For medium-to-long-term stability, diversification of businesses and expanded monetization of IP are key strategic levers.
This report is an AI-generated financial analysis document created from XBRL financial statement data. It is not a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the Company from public financial statement data. Investment decisions should be made at your own responsibility, and, if necessary, after consulting a professional advisor.