| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥513.2億 | ¥571.1億 | -10.1% |
| Operating Income | ¥40.3億 | ¥48.6億 | -17.2% |
| Ordinary Income | ¥49.4億 | ¥37.6億 | +31.3% |
| Net Income | ¥38.8億 | ¥11.5億 | -91.1% |
| ROE | 4.0% | 1.2% | - |
Although revenue and operating income declined, net income increased substantially due to non-operating factors, including foreign exchange gains and gains on sales of investment securities. Revenue was ¥513.2億 (-10.1% YoY), while operating income was ¥40.3億 (-17.2% YoY), reflecting the contraction of the core GameAnime Business. Meanwhile, ordinary income was ¥49.4億 (+31.3% YoY), and net income was ¥38.8億 (¥11.5億 in the previous year, -91.1% YoY). Net income attributable to owners of the parent was ¥40.9億 (+242.3% YoY), which is distinct from consolidated net income of ¥38.8億, which includes profit or loss attributable to non-controlling interests. The primary drivers of the increase were temporary factors, namely foreign exchange gains of ¥8.8億 and gains on sales of investment securities of ¥4.0億. Operating Cash Flow (OCF) remained at ¥19.7億, a level that compares unfavorably with net income.
【Revenue】Revenue declined to ¥513.2億 (-10.1% YoY). The contraction of the core GameAnime Business, which accounted for 57.4% of the total, to ¥294.4億 (-20.3% YoY) weighed heavily on overall performance. Meanwhile, the VTuber Business increased to ¥91.6億 (+10.7% YoY), the Engineering Business rose to ¥13.2億 (+328.9% YoY), and the DX Business grew to ¥74.1億 (+5.3% YoY), indicating progress in diversifying the business portfolio. The Investment Business contracted to ¥26.2億 (-21.7% YoY).
【Profit and Loss】Operating income was ¥40.3億 (-17.2% YoY), while the gross margin declined to 47.6% (approximately -3.5pt YoY) and the operating margin fell to 7.8% (approximately -0.7pt YoY), indicating lower profitability. In contrast, ordinary income increased to ¥49.4億 (+31.3% YoY), primarily because foreign exchange gains of ¥8.8億 boosted other operating income of ¥14.0億. Extraordinary income of ¥4.2億, including gains on sales of investment securities of ¥4.0億, also contributed to final profit. Combined with a decrease in income taxes and other taxes due to a lower effective tax rate, net income attributable to owners of the parent increased to ¥40.9億 (+242.3% YoY). Overall, the Company recorded lower revenue and operating income, but higher ordinary income and net income due to non-operating factors, indicating that temporary factors offset the decline in core earnings power.
The GameAnime Business secured operating income of ¥37.1億, the largest segment contribution, but contracted by -19.2% YoY, putting pressure on the overall profit margin. The VTuber Business recorded operating income of ¥14.9億 (+125.2% YoY; profit margin of 16.2%), representing substantial profit growth and emerging as a new earnings driver. The Engineering Business generated operating income of ¥7.1億 (+306.9% YoY) and a profit margin of 53.9%; although small in scale, it demonstrated high profitability. The DX Business achieved stable growth, with operating income of ¥9.7億 (+5.6% YoY; profit margin of 13.1%). The IP Business posted an operating loss of ¥0.2億, while the Investment Business posted an operating loss of ¥7.2億, with the loss widening YoY; these two segments are eroding consolidated profit. Although the higher margins of the VTuber and Engineering Businesses are contributing to an improved business mix, the contraction of the core GameAnime Business and continued losses in the Investment Business are factors behind the decline in the overall operating margin.
【Profitability】The operating margin was 7.8%, down approximately 0.7pt from 8.5% in the previous year, while the gross margin also declined to 47.6% from 51.2%, a decrease of approximately 3.5pt. Meanwhile, the net profit margin, based on net income attributable to owners of the parent, improved substantially to 8.0% from 2.1% in the previous year, largely due to the contribution of non-operating and extraordinary gains.【Cash Flow Quality】Operating Cash Flow was ¥19.7億, and the OCF/NI ratio relative to net income attributable to owners of the parent of ¥40.9億 was approximately 0.48x, a low level indicating limited cash conversion of earnings.【Investment Efficiency】ROE was 4.0%; basic EPS was ¥23.82 (+241.3% YoY), and BPS was ¥554.14 (+2.1% YoY). The absolute level of ROE remains low, leaving room for improvement in capital efficiency.【Financial Soundness】The equity ratio was high at 77.1%, and liquidity was ample, with current assets of ¥1124.1億 against current liabilities of ¥173.0億. Although the Company had long-term borrowings of ¥90.0億, bonds of ¥17.0億, and bonds due for redemption within one year of ¥60.0億, these obligations were sufficiently covered by cash and deposits of ¥504.2億.
Operating Cash Flow was ¥19.7億, improving from ¥6.7億 in the previous year, but the cash conversion rate remained low relative to net income attributable to owners of the parent of ¥40.9億. In terms of working capital, a ¥13.5億 cash inflow resulted from a decrease in trade receivables, but this was offset by a decrease in contract liabilities (-¥7.5億) and ¥8.9億 in income taxes and other taxes paid. Investing Cash Flow was -¥15.4億, primarily comprising proceeds from the sale of investment securities (+¥9.9億) and purchases (-¥35.0億), while capital expenditures were small at ¥0.2億. Financing Cash Flow recorded a substantial outflow of -¥108.8億, mainly due to the redemption of ¥90億 in bonds and dividend payments of ¥24.8億. As a result, free cash flow (Operating Cash Flow + Investing Cash Flow) was limited to ¥4.3億. Cash generated from operating and investing activities was insufficient to cover the outflow from financing activities, and cash and cash equivalents declined from the end of the previous year.
While operating income, which reflects recurring earnings power, was ¥40.3億, foreign exchange gains accounted for ¥8.8億 of other operating income of ¥14.0億, which boosted ordinary income. These gains have a strongly non-recurring character, as they depend on market conditions. Of extraordinary income of ¥4.2億, gains on sales of investment securities of ¥4.0億 were also a temporary factor that boosted final profit. Excluding these temporary factors, the earnings power of the core businesses remains weak, as indicated by the operating margin of 7.8% (declining YoY). In addition, Operating Cash Flow remained low relative to net income, with an OCF/net income ratio of approximately 0.48x, indicating a divergence between the increase in profit reported on the income statement and actual cash generation. Comprehensive income was ¥42.7億, while the portion attributable to owners of the parent was ¥43.9億, both approximately in line with net income; however, it should be noted that these figures include the impact of foreign currency translation adjustments of ¥7.8億.
Against the full-year outlook of revenue of ¥510.0億 and operating income of ¥39.0億, actual revenue was ¥513.2億, representing a progress rate of 100.6%, and operating income was ¥40.3億, representing a progress rate of 103.2%. Both results finished slightly above the forecast. The outperformance was attributable to the realization of foreign exchange gains and growth in high-margin segments, namely the VTuber and Engineering Businesses. From the next fiscal year onward, a similar contribution from foreign exchange gains cannot be assumed, and recovery in the profitability of the core GameAnime Business will be a prerequisite for achieving the plan.
The year-end dividend was ¥22.00, with no interim dividend, and the payout ratio was high at 92.4%. Total dividends were approximately ¥37.8億, and coverage was insufficient relative to free cash flow of ¥4.3億; accordingly, the dividend for the period was funded by cash on hand, including cash and deposits of ¥504.2億. No share repurchases were identified for the current period. If the high payout ratio continues, the sustainability of the dividend funding will require monitoring unless accompanied by an improvement in Operating Cash Flow.
Content Dependence Risk: The GameAnime Business accounted for 57.4% of revenue and recorded a revenue decline of -20.3% YoY. Concentration of earnings in a specific business is likely to contribute to performance volatility.
Cash Flow Quality Risk: Net income attributable to owners of the parent was ¥40.9億 compared with Operating Cash Flow of ¥19.7億, indicating a low cash conversion rate. In addition, free cash flow was limited to ¥4.3億 against total dividends of approximately ¥37.8億, resulting in insufficient coverage.
Earnings Volatility in the Investment Business: The segment posted an operating loss of ¥7.2億, with the loss widening from the previous year, and its impact on consolidated profit continues.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.8% | 8.1% (3.7%–16.1%) | -0.3pt |
| Net Profit Margin | 7.6% | 5.9% (2.2%–11.8%) | +1.6pt |
The operating margin is slightly below the industry median, while the net profit margin exceeds the industry median, including the impact of non-operating factors.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -10.1% | 10.1% (1.8%–20.2%) | -20.2pt |
The revenue growth rate is substantially below the industry median, and the Company’s revenue decline stands out within the industry.
※Source: Compiled by the Company
Rather than recording higher revenue and profit, the Company recorded lower revenue and operating income, while temporary factors—foreign exchange gains and gains on sales of investment securities—resulted in substantial growth in net income. The trend in the operating margin should be closely monitored when evaluating the earnings power of the core businesses.
Operating Cash Flow remained low relative to net income, with an OCF/net income ratio of approximately 0.48x, indicating a divergence between the improvement reported on the income statement and cash generation capacity. The payout ratio was high at 92.4%, and coverage from free cash flow was insufficient; consequently, future trends in Operating Cash Flow will be a key area of focus.
The VTuber and Engineering Businesses are transitioning toward higher margins, indicating signs of a structural decline in dependence on the core GameAnime Business. However, continued losses in the Investment Business are eroding consolidated profit. Changes in the earnings structure of the business portfolio will be a key focus going forward.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any particular 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, and you should consult a professional adviser as necessary.
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