| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥91.8B | ¥89.4B | +2.7% |
| Operating Income / Operating Profit | ¥0.8B | ¥3.7B | -77.5% |
| Ordinary Income | ¥21.7B | ¥21.0B | +3.2% |
| Net Income / Net Profit | ¥-4.1B | ¥-2.9B | -40.8% |
| ROE | -1.8% | -1.6% | - |
For the fiscal year ended April 2026, Revenue was ¥91.8B (YoY +¥2.4B +2.7%), Operating Income was ¥0.8B (YoY -¥2.9B -77.5%), Ordinary Income was ¥21.7B (YoY +¥0.7B +3.2%), and Net Income attributable to owners of parent was ¥14.5B (YoY -¥6.1B -29.5%). Revenue grew slightly, but a large increase in SG&A (¥27.9B, YoY +62.5%) offset gross margin improvements, causing operating margin to deteriorate to 0.9% (previously 4.1%). At the ordinary income level, non-operating income of ¥29.1B (foreign exchange gains ¥2.4B, interest/dividend income ¥0.4B, etc.) boosted non-operating profit, securing a slight increase in Ordinary Income. However, recognition of special losses of ¥7.5B (impairment losses ¥6.1B, etc.) led to a final profit decline of -29.5% YoY. The result is a revenue-increase, profit-decrease fiscal year.
[Revenue] Revenue was ¥91.8B (YoY +¥2.4B +2.7%), a slight increase. By segment, the core Mobile Online Game Business expanded to ¥70.1B (+8.6%), accounting for 76.3% of total revenue. The Blockchain and other businesses decreased to ¥21.8B (-12.5%) but maintained a 23.7% share. In the Mobile Online Game Business, domestic revenue rose significantly to ¥69.1B (from ¥54.8B last year, +26.2%), while overseas revenue slightly decreased to ¥0.9B (from ¥1.0B last year, -7.4%). In the Blockchain and other businesses, contract revenue with customers was ¥1.8B and other income (investment partnerships, etc.) totaled ¥20.0B; contract revenue declined YoY while other income increased by ¥4.7B. Cost of sales was ¥63.1B, gross profit was ¥28.8B, and gross margin improved to 31.3% (from 23.4% last year, +7.9ppt).
[Profitability] Operating Income was ¥0.8B (YoY -¥2.9B -77.5%), a large decline; operating margin fell to 0.9% (from 4.1% last year, -3.2ppt). Although gross margin improved by +7.9ppt, SG&A surged to ¥27.9B (from ¥17.2B last year, +¥10.7B +62.5%), pushing SG&A ratio to 30.4% (from 19.2% last year, +11.2ppt), which pressured operating profitability. Non-operating activities produced a net gain of ¥20.9B, as non-operating income of ¥29.1B (foreign exchange gains ¥2.4B, interest/dividend income ¥0.4B, etc.) substantially exceeded non-operating expenses of ¥8.3B (equity-method investment losses ¥4.5B, interest expense ¥1.1B, etc.). As a result, Ordinary Income was ¥21.7B (YoY +¥0.7B +3.2%). Extraordinary items were a net loss of ¥6.4B (extraordinary gains ¥1.1B, extraordinary losses ¥7.5B), mainly due to impairment losses of ¥6.1B and valuation losses on investment securities of ¥1.1B. Profit before tax was ¥15.2B (from ¥24.7B last year, -38.2%); after deducting income taxes of ¥2.7B and adjusting for Net Loss attributable to non-controlling interests of ¥2.0B, Net Income attributable to owners of parent was ¥14.5B (YoY -¥6.1B -29.5%). In conclusion, the fiscal year shows higher revenue but lower profit.
The Mobile Online Game Business posted Revenue of ¥70.1B (YoY +8.6%) and an operating loss of ¥4.7B (from △¥1.2B last year, a -294.4% deterioration), with an operating margin falling to △6.7% (from △1.8% last year, -4.9ppt). Revenue growth was mainly driven by strong domestic titles, but customer-acquisition and operating costs rose sharply, widening the loss. The Blockchain and other businesses recorded Revenue of ¥21.8B (YoY -12.5%) and Operating Income of ¥5.5B (from ¥4.9B last year, +12.8%), maintaining high profitability with an operating margin of 25.4% (from 19.7% last year, +5.7ppt). Despite revenue decline, margin improvement led to increased operating income, effectively driving consolidated operating profit. The gap in operating margins between segments is roughly 32ppt (Blockchain etc. 25.4% vs Mobile Online Game △6.7%), extreme enough that improving the Mobile Game Business’s profitability is essential for portfolio-wide profitability improvement.
[Profitability] Operating margin 0.9% (from 4.1% last year, -3.2ppt), gross profit margin 31.3% (from 23.4% last year, +7.9ppt), SG&A ratio 30.4% (from 19.2% last year, +11.2ppt) — gross margin improvements were offset by higher SG&A. ROE is 6.6% (from 14.4% last year, -7.8ppt), driven mainly by declines in net profit margin to 15.8% (from 23.1% last year), total asset turnover to 0.319x (from 0.374x), and financial leverage to 1.30x (from 1.34x). ROA (on an Ordinary Income basis) was 7.5% (from 8.8% last year, -1.3ppt). [Cash Quality] Operating Cash Flow / Net Income is △0.96x, meaning OCF lags Net Income and cash backing of earnings is weak. Operating CF subtotal (before working capital changes) was △¥9.6B; accounts receivable increase of △¥5.8B pressured working capital. [Investment Efficiency] Total asset turnover 0.32x (from 0.37x), EPS 28.46円 (from 43.50円 last year, -34.6%), BPS 384.47円 (from 337.45円 last year, +13.9%). [Financial Soundness] Equity Ratio 76.8% (from 69.9% last year, +6.9ppt) remains high, but of interest-bearing debt ¥48.2B over 99% is short-term (short-term borrowings ¥40.0B, long-term borrowings due within 1 year ¥5.8B, bonds redeemable within 1 year ¥2.0B), and cash and deposits of ¥33.9B cannot fully cover short-term interest-bearing debt, leaving cash / short-term interest-bearing debt at 0.71x. Current ratio 328.5% and quick ratio 328.5% indicate ample liquidity, but rollover management is important.
Operating Cash Flow was △¥14.0B (from △¥8.8B last year, a deterioration of -58.7%), a substantial negative. The operating CF subtotal (after adjustments to pre-tax profit) was △¥9.6B; adding back non-cash items such as depreciation ¥7.4B, impairment losses ¥6.1B, equity-method investment losses ¥4.5B, and adjusting for foreign exchange and non-operating gains/losses produced this result. In working capital, accounts receivable increase of △¥5.8B drained cash, while accounts payable increase of +¥0.2B provided limited support. Payments of income taxes △¥3.6B and interest payments △¥1.1B were also deducted, resulting in a large negative OCF. Investing Cash Flow was △¥35.9B (from △¥16.6B), mainly due to acquisition of intangible fixed assets △¥13.7B and other investment expenditures (acquisition of investment securities, etc.). Capital expenditures were limited to △¥0.6B, implying a CapEx-to-depreciation ratio of 9% versus depreciation of ¥7.4B — indicating restrained investment in future asset formation. Free Cash Flow was △¥49.9B (Operating CF △¥14.0B + Investing CF △¥35.9B), a substantial negative, which was financed through Financing Cash Flow. Financing Cash Flow was +¥23.5B, primarily from net increases in short-term borrowings +¥20.0B, proceeds from share issuance +¥15.1B, and contributed capital from non-controlling interests +¥11.7B, net of long-term borrowings repayments △¥9.0B and bond redemptions △¥4.2B. Cash and cash equivalents declined by △¥26.8B from ¥60.8B at the beginning of the period (including foreign exchange effects) to ¥33.9B at period-end, shrinking the cash position.
Of Ordinary Income ¥21.7B, Operating Income accounts for only ¥0.8B, and non-operating income of ¥29.1B (31.7% of revenue) constitutes the bulk of profit. Major components of non-operating income are foreign exchange gains ¥2.4B, interest/dividend income ¥0.4B, and other non-operating income ¥0.0B, indicating high dependence on non-recurring FX and investment-related items. Non-operating expenses of ¥8.3B, including equity-method investment losses ¥4.5B and interest expense ¥1.1B, pressured earnings but were more than offset by non-operating income. Extraordinary items included extraordinary gains ¥1.1B (gain on sale of investment securities ¥1.0B, etc.) and extraordinary losses ¥7.5B (impairment losses ¥6.1B, valuation losses on investment securities ¥1.1B, etc.), resulting in a net extraordinary loss of ¥6.4B. The drop from Ordinary Income ¥21.7B to profit before tax ¥15.2B reflects the impact of special losses. The divergence between Net Income ¥14.5B and Operating Cash Flow △¥14.0B reached approximately ¥28.5B, yielding an accrual ratio of about 31.0%, a high level that raises concerns about cash backing for earnings. Reproducibility of foreign exchange gains and investment-related income is uncertain, and the quality of recurring earnings depends on operating-level profitability. Comprehensive income was ¥22.9B (from ¥15.0B last year, +52.7%), with foreign currency translation adjustments ¥8.9B and other comprehensive income attributable to equity-method affiliates ¥2.1B boosting Net Income attributable to owners of parent ¥14.5B on a comprehensive income basis.
Interim and year-end dividends were both ¥0, resulting in a payout ratio of 0%. With Operating CF △¥14.0B and Free CF △¥49.9B, cash generation is substantially negative, and recovery of cash generation capacity is a prerequisite for resuming dividends. Retained earnings improved to ¥3.6B (turning positive from △¥11.0B last year), but accumulation of distributable internal reserves is still at an early stage. No share buybacks were executed, and shareholder returns have not been implemented. Going forward, improvement in Mobile Game Business profitability, restoration of positive Operating CF, and reduction of short-term interest-bearing debt, thereby building internal reserves, are conditions for resuming dividends.
Liquidity risk from concentration of short-term interest-bearing debt: Over 99% of interest-bearing debt ¥48.2B is short-term (short-term borrowings ¥40.0B, long-term borrowings due within 1 year ¥5.8B, bonds redeemable within 1 year ¥2.0B), and cash and deposits of ¥33.9B do not cover short-term interest-bearing debt. Cash / short-term interest-bearing debt remains at 0.71x, raising concerns about liquidity stress if rollover fails. Interest coverage (EBIT / interest expense) is 0.76x, at a cautionary level; interest rate increases or deterioration in financing conditions could pressure earnings.
Weak operating cash generation: Operating CF is △¥14.0B for the second consecutive period, and Operating CF / Net Income is △0.96x, indicating earnings are not backed by cash. Accounts receivable increase of △¥5.8B pressures working capital; if collections slow or receivables become impaired, liquidity could worsen. Low operating margin of 0.9% makes generating Operating CF difficult; controlling SG&A and improving segment profitability are urgent.
Deterioration of Mobile Game Business profitability and impairment risk: The Mobile Online Game Business, which accounts for 76.3% of revenue, turned to an operating loss of ¥4.7B (operating margin △6.7%), a YoY deterioration of -294.4%. The company recorded impairment losses of ¥6.1B this period; if future profitability of intangible assets (software in progress ¥12.1B, software ¥9.9B, etc.) cannot be secured, additional impairment risk remains. Shorter title life cycles and rising customer acquisition costs may sustain operating losses, further pressuring portfolio-wide profitability and cash generation.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 0.9% | 8.1% (3.6%–16.0%) | -7.2pt |
| Net Profit Margin | -4.4% | 5.8% (1.2%–11.6%) | -10.3pt |
Both operating margin and net profit margin are well below industry medians, indicating relative underperformance in profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.7% | 10.1% (1.7%–20.2%) | -7.4pt |
Revenue growth lags the industry median, indicating weaker growth prospects relative to peers.
※Source: Company compilation
Improving operating-level profitability is the top priority. Operating margin of 0.9% (7.2ppt below the industry median of 8.1%) reflects a low-profitability structure, with the majority of Ordinary Income derived from non-operating income (foreign exchange gains, etc.) of ¥29.1B. Improving the Mobile Game Business (operating loss ¥4.7B, which accounts for 76.3% of revenue) and curbing the SG&A ratio of 30.4% (YoY +11.2ppt) are keys to sustainable Operating CF generation and ROE improvement. The Blockchain and other businesses maintain high profitability with a 25.4% operating margin, indicating significant room for portfolio optimization between segments.
Reducing short-term interest-bearing debt and restoring cash generation are conditions for maintaining financial soundness. Over 99% of interest-bearing debt ¥48.2B is short-term, and cash and deposits ¥33.9B do not cover short-term interest-bearing debt (cash / short-term interest-bearing debt 0.71x). Operating CF is negative for two consecutive periods (△¥14.0B), and Free CF is △¥49.9B, a continued large deficit. Going forward, returning Operating CF to positive, normalizing working capital (accelerating accounts receivable collection), and lengthening or repaying short-term borrowings are required to reduce liquidity and rollover risks.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult professionals as needed prior to making any investment choices.