| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥157.0B | ¥190.0B | -17.4% |
| Operating Income | ¥13.2B | ¥6.1B | +116.7% |
| Ordinary Income | ¥25.3B | ¥10.7B | +135.7% |
| Net Income | ¥15.0B | ¥-6.0B | +349.2% |
| ROE | 2.2% | -0.9% | - |
Despite a decline in revenue, Operating Income, Ordinary Income, and Net Income all increased significantly due to a review of the cost structure and an increase in non-operating income. Revenue was ¥157.0B (-17.4% YoY), Operating Income was ¥13.2B (+116.7% YoY), Ordinary Income was ¥25.3B (+135.7% YoY), and Net Income was ¥15.0B, representing a return to profitability from a loss of ¥-6.0B in the previous year (+349.2% YoY). The primary drivers of the earnings increase were improved operating leverage resulting from significant reductions in selling, general and administrative expenses, and contributions from non-operating income, including a foreign exchange gain of ¥8.0B.
【Revenue】Both segments recorded lower revenue, with the core Entertainment Business generating ¥146.8B (-12.9%) and the Investment Business generating ¥10.2B (-52.2%). The Entertainment Business accounts for 93.5% of company-wide revenue, creating a structure in which its performance determines the overall top line. Due to the nature of the Investment Business, which relies on valuation gains and gains on sales, both revenue and profit are highly volatile.
【Profit and Loss】Selling, general and administrative expenses were significantly reduced to ¥32.7B (¥55.3B in the previous year), resulting in Operating Income of ¥13.2B (+116.7%) and an improvement in the Operating Income margin to 8.4% from 3.2% in the previous year. Non-operating income included a foreign exchange gain of ¥8.0B and interest income of ¥3.6B, bringing Ordinary Income to ¥25.3B (+135.7%). An extraordinary gain of ¥0.7B (gain on sale of investment securities) partially offset an extraordinary loss of ¥2.7B (business structure reform expenses), and Net Income returned to profitability at ¥15.0B. In conclusion, the company achieved higher profit despite lower revenue.
The Entertainment Business recorded revenue of ¥146.8B (-12.9% YoY), Operating Income of ¥11.1B (+234.4% YoY), and a profit margin of 7.6%, representing a significant recovery in profitability despite lower revenue. The Investment Business contracted to revenue of ¥10.2B (-52.2% YoY) and Operating Income of ¥2.1B (-85.4% YoY), but maintained a profit margin of 20.4%, above that of the Entertainment Business. The gap in profit margins between the two segments reflects differences in their business characteristics, and the impact of fluctuations in the Investment Business on total company profit is too significant to ignore.
【Profitability】The Operating Income margin was 8.4%, improving by +520bp from 3.2% in the previous year, while the Net Income margin improved significantly to 9.6% from -3.2% in the previous year. Meanwhile, the gross profit margin was 29.2%, indicating that the increase in profit was driven by cost reductions.【Cash Flow Quality】Of Ordinary Income of ¥25.3B, a foreign exchange gain of ¥8.0B and interest income of ¥3.6B made significant contributions, indicating a relatively high degree of dependence on factors outside the core business. Comprehensive income was limited to ¥6.9B, below Net Income of ¥15.0B, primarily due to valuation difference on securities of ¥-7.7B.【Investment Efficiency】ROE was 2.2%, which can be explained as the product of a Net Income margin of 9.6%, total asset turnover of 0.22, and financial leverage of 1.08; the low asset turnover ratio is a constraint on ROE.【Financial Soundness】The Equity Ratio was 92.9% and the Current Ratio was 1,373.8%, both extremely high levels. Cash and deposits of ¥464.3B accounted for 64.2% of total assets, indicating a conservative financial structure.
Cash and deposits were ¥464.3B, a decrease of ¥38.4B from ¥502.7B at the end of the previous fiscal year. Inventories were ¥8.7B, an increase of +77.3% from ¥4.9B at the end of the previous fiscal year, representing a factor behind the expansion in working capital. Total assets were ¥722.5B, a decrease of ¥34.9B from ¥757.4B in the previous fiscal year, while net assets were also ¥671.1B, a decrease of ¥18.3B from ¥689.4B in the previous fiscal year. Treasury stock was ¥46.45B, largely unchanged from the previous fiscal year, and no significant cash outflow was identified.
Of Ordinary Income of ¥25.3B, non-operating income such as the foreign exchange gain of ¥8.0B and interest income of ¥3.6B accounted for most of the ¥12.1B difference from Operating Income of ¥13.2B, indicating a relatively high degree of dependence of the increase in Ordinary Income on factors outside the core business. Extraordinary items consisted of an extraordinary gain of ¥0.7B (gain on sale of investment securities) and an extraordinary loss of ¥2.7B (business structure reform expenses), both of which were temporary factors. Comprehensive income was ¥6.9B, below Net Income of ¥15.0B, primarily due to valuation difference on securities of ¥-7.7B, reflecting changes in the fair value of other securities.
The interim dividend was ¥0, and the forecast year-end dividend for the fiscal year ending September 2026 has not yet been determined. Since no dividend has been paid, the Payout Ratio cannot be calculated. The company has a robust financial base, with cash and deposits of ¥464.3B and an Equity Ratio of 92.9%; disclosure regarding its capital allocation policy is awaited.
Concentration of the business portfolio: The Entertainment Business accounts for 93.5% of the revenue mix, creating a structure in which performance is susceptible to the life cycles of major titles and the performance of new releases.
Fluctuations in the valuation of investment securities: The company holds investment securities of ¥81.0B, while valuation difference on securities of ¥-7.7B reduced other comprehensive income. The Investment Business also has a high degree of volatility, with revenue down -52.2% and Operating Income down -85.4%.
Dependence on non-operating income: Of Ordinary Income of ¥25.3B, a foreign exchange gain of ¥8.0B and interest income of ¥3.6B made significant contributions, meaning that fluctuations in foreign exchange rates could affect the level of Ordinary Income.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income margin | 8.4% | 8.3% (3.6%–18.6%) | +0.1pt |
| Net Income margin | 9.6% | 6.1% (2.3%–12.8%) | +3.4pt |
The Operating Income margin is around the industry median, while the Net Income margin is above the industry median.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | -17.4% | 10.4% (-0.9%–19.9%) | -27.8pt |
The Revenue growth rate is significantly below the industry median and is also below the lower bound of the IQR.
※Source: Compiled by the Company
Selling, general and administrative expenses were significantly reduced from ¥55.3B in the previous year to ¥32.7B, improving the Operating Income margin to 8.4% (3.2% in the previous year) and clearly demonstrating the effects of the cost structure review.
The increase in Ordinary Income was substantially supported by the foreign exchange gain of ¥8.0B and interest income of ¥3.6B, exceeding Operating Income of ¥13.2B. This is an important consideration when assessing earnings sustainability.
Inventories increased by +77.3% year on year, warranting close monitoring of future sales trends and inventory turnover.
This report is an earnings analysis document automatically generated by AI based on XBRL financial results 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 financial results data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.
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