| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue | ¥258.6B | ¥236.5B | +9.3% |
| Operating Income | ¥74.4B | ¥39.1B | +90.1% |
| Ordinary Income | ¥76.2B | ¥42.3B | +79.9% |
| Net Income | ¥57.6B | ¥-27.2B | +311.8% |
| ROE | 12.7% | -6.6% | - |
For the full year ended March 2026, Revenue was ¥258.6B (¥+22.0B YoY, +9.3%), Operating Income was ¥74.4B (¥+35.3B YoY, +90.1%), Ordinary Income was ¥76.2B (¥+33.8B YoY, +79.9%), and Net Income attributable to owners of the parent was ¥57.6B (¥+84.8B YoY, +311.8%), achieving substantial top-line and bottom-line growth. The GameComic segment accounted for 85.8% of revenue and drove consolidated profit with a high operating margin of 35.9%. Gross margin declined to 54.3% from 57.9% a year ago (-3.6pt), but SG&A ratio was compressed to 25.5%, improving operating margin to 28.8% (prior year 16.6%), a 12.2pt improvement. Net special gains of ¥19.2B (gain on sale of investment securities ¥18.1B) less special losses of ¥12.3B resulted in a fairly large post-operating-to-net profit drop of -25.8%, with an effective tax rate of 32.0%. Equity Ratio was 72.8% and cash and deposits were ¥305.6B, reflecting solid finances; however, Operating Cash Flow (OCF) was ¥26.9B, only 47.7% of Net Income, as working capital deterioration from increased accounts receivable and decreased contract liabilities pressured cash generation.
[Revenue] Revenue of ¥258.6B (+9.3% YoY) was driven overall by strong growth in Entertainment & Lifestyle at ¥25.8B (+119.1%), while the GameComic segment was ¥222.1B, slightly down (-1.0%). AI & DX Solutions recorded ¥11.5B (zero in the prior year) and was newly consolidated. In GameComic, operational efficiencies and optimization of advertising spend produced a large Operating Income increase of +92.9% despite a slight revenue decline. Entertainment & Lifestyle expanded more than twofold to ¥25.8B due to consolidation of subsidiaries such as PAPABUBBLE, with solid performance from online lottery systems and fan-app operations. AI & DX began to be recorded due to new consolidations like Natee, but incurred a segment loss of ¥2.4B at the launch-investment stage. Gross profit was ¥140.3B, with a gross margin of 54.3% down 3.6pt from 57.9% a year earlier, likely impacted by higher platform fees, outsourcing costs, and changes in revenue mix.
[Profitability] Operating Income of ¥74.4B (+90.1% YoY) improved operating margin substantially to 28.8% due to effective SG&A control. SG&A was ¥65.8B, down ¥32.0B from ¥97.8B a year ago, and the SG&A ratio improved to 25.5% from 41.3% (improvement of 15.8pt). GameComic segment Operating Income was ¥79.7B (segment margin 35.9%), representing the bulk of consolidated operating profit. Entertainment & Lifestyle achieved Operating Income of ¥4.7B (margin 18.4%) remaining profitable, while AI & DX posted an operating loss of ¥2.4B (margin -20.9%). Ordinary Income of ¥76.2B (+79.9% YoY) included non-operating income of ¥8.3B (interest income ¥2.2B, foreign exchange gain ¥4.8B) and non-operating expenses of ¥6.6B (interest expense ¥0.7B, foreign exchange loss ¥0.5B, investment partnership operating loss ¥2.99B, etc.), resulting in a net add-on of ¥1.8B from Operating Income. Net special gains of ¥19.2B (gain on sale of investment securities ¥18.1B, gain on step acquisitions ¥0.5B, gain on reissuance of stock acquisition rights ¥0.6B) less special losses of ¥12.3B (impairment of investment securities ¥5.1B, impairment loss ¥3.9B, business liquidation loss ¥1.2B, etc.) produced a net ¥6.9B, making profit before income taxes ¥83.1B. After deducting corporate taxes of ¥26.6B (effective tax rate 32.0%), Net Income was ¥57.6B (+311.8% YoY). In conclusion, strong operating performance in GameComic and SG&A efficiency drove substantial revenue and profit growth.
GameComic segment (Revenue ¥222.1B, -1.0% YoY; Operating Income ¥79.7B, +92.9% YoY) saw a slight revenue decline but improved margin to 35.9% through operational efficiencies and advertising optimization, forming the bulk of consolidated operating profit. Entertainment & Lifestyle segment (Revenue ¥25.8B, +119.1% YoY; Operating Income ¥4.7B, +2.4% YoY) doubled revenues through subsidiary consolidation such as PAPABUBBLE and maintained profitability with an 18.4% margin. AI & DX Solutions segment (Revenue ¥11.5B, prior year zero; Operating Loss ¥2.4B) was newly consolidated (e.g., Natee) and remains loss-making during launch investments with margin -20.9%. Other segments (Revenue ¥0.4B, -68.8% YoY; Operating Loss ¥0.6B) include content investment businesses and are shrinking. Pre-allocation segment profit total was ¥82.1B; after corporate/headquarter allocations of -¥7.7B, consolidated Operating Income was ¥74.4B.
[Profitability] Operating margin was 28.8%, up 12.2pt from 16.6% a year earlier; Net Income margin was 22.3% (prior year 7.0%), up 15.3pt. ROE was 12.7%, an 8.6pt improvement from 4.1% in the prior year, primarily driven by the large expansion of Net Income margin. ROA (based on Ordinary Income) was 13.0%, exceeding prior-year 7.9%. The GameComic segment’s operating margin of 35.9% drove consolidated profitability, while gross margin of 54.3% fell 3.6pt YoY, suggesting upward pressure from outsourcing and platform fees. [Cash Quality] OCF of ¥26.9B was only 46.7% of Net Income, with accruals at ¥30.7B (53.3% of Net Income) high; increases in accounts receivable of ¥7.0B and decreases in contract liabilities of ¥3.2B were primary drivers. Cash conversion (OCF/EBITDA) was 0.35x, indicating weak cash generation. Free Cash Flow was -¥5.9B, significantly affected by investment cash flow related to M&A at -¥32.8B (including acquisition of subsidiary shares -¥36.6B). [Investment Efficiency] Total asset turnover was 0.42x, and ROIC (NOPAT/(equity + interest-bearing debt)) was 10.9%, indicating good capital efficiency. CapEx was modest at ¥1.0B; with depreciation of ¥2.1B, CapEx/Depreciation was 0.46x. Goodwill was ¥37.8B (8.3% of equity, 0.49x of EBITDA), increased by M&A but within acceptable range. [Financial Soundness] Equity Ratio was 72.8%, down 3.1pt from 75.9% but still high. Interest-bearing debt was ¥89.6B (long-term borrowings ¥89.5B, corporate bonds ¥20.0B total, including short-term borrowings), and Debt/EBITDA was 1.17x, conservative. Cash and deposits of ¥305.6B result in a net cash position, and interest coverage (OCF/interest payments) was 40.1x, showing ample capacity to meet interest obligations. DSO extended to 79 days from 67 days prior year (+12 days), contributing to working capital deterioration.
OCF was ¥26.9B, down -26.0% from ¥36.4B a year ago, representing 0.47x of Net Income (¥57.6B) and a low level. OCF subtotal (before working capital changes) was ¥65.4B and robust, but increases in trade receivables of ¥7.0B, decreases in contract liabilities of ¥3.2B, and other asset/liability movements led to a negative working capital contribution of ¥30.7B. Corporate tax payments of ¥38.7B were also significant, increasing markedly from ¥4.1B in the prior year. Investing Cash Flow was -¥32.8B; main items include acquisition of subsidiary shares -¥36.6B, purchases of investment securities -¥34.1B, withdrawals of time deposits ¥55.0B and placements of time deposits -¥37.7B, driven by M&A and strategic investments. CapEx was -¥1.0B and restrained; with depreciation of ¥2.1B, CapEx/Depreciation was 0.46x, indicating maintenance-level investment. Financing Cash Flow was ¥31.8B, reflecting borrowings of ¥67.5B from long-term borrowings less repayments of long-term borrowings -¥19.8B, corporate bond redemptions -¥10.0B, and dividend payments -¥15.9B. Free Cash Flow was -¥5.9B, meaning dividend payments were not covered by internal funds and were supplemented by borrowings and on-hand liquidity. Cash and cash equivalents increased by ¥31.8B from ¥310.6B at the beginning of the period to ¥342.4B at period-end, maintaining ample liquidity.
Recurring earnings are centered on Operating Income of ¥74.4B. Non-operating income of ¥8.3B (3.2% of revenue) mainly consisted of interest income ¥2.2B and foreign exchange gain ¥4.8B. Net special gains were ¥6.9B (special gains ¥19.2B, including gain on sale of investment securities ¥18.1B, less special losses ¥12.3B including impairment of investment securities ¥5.1B). The gain on sale of investment securities ¥18.1B is a one-time factor and its repeatability next year is limited. Ordinary Income of ¥76.2B versus Net Income of ¥57.6B shows a -24.3% divergence, mainly due to corporate taxes of ¥26.6B (effective tax rate 32.0%) and tax effects after special items. OCF of ¥26.9B was only 46.7% of Net Income, raising concerns about accrual quality (OCF/NI ratio 0.47x). Increase in accounts receivable of ¥7.0B and extension of DSO to 79 days, and decrease in contract liabilities of ¥3.2B reducing the deferred revenue cushion, weakened cash conversion. Goodwill amortization was ¥1.99B, causing minor EBITDA distortion; EBITDA before goodwill amortization (for IFRS comparisons) was ¥76.5B (Operating Income ¥74.4B + amortization ¥2.0B), indicating underlying strength. Comprehensive Income was ¥55.2B, ¥2.4B lower than Net Income ¥57.6B, with other securities valuation differences -¥1.6B and foreign currency translation adjustments ¥0.3B net negative.
The year-end dividend was ¥60, and together with the interim dividend of ¥55 the annual dividend totaled ¥115. Payout Ratio was 29.3% (annual dividend ¥115 ÷ EPS ¥391.97) and is at a sustainable level. Total dividends paid amounted to ¥1.66B (year-end ¥0.87B + interim ¥0.79B), and the dividend-to-Net Income ratio was 28.8% of Net Income ¥57.6B, conservative. However, Free Cash Flow was -¥5.9B and dividend payments were not covered by internal cash, with FCF coverage of -0.35x indicating shortfall. Dividend funding in the period was supplemented by on-hand liquidity of ¥305.6B and financing cash flow borrowings. Given ample cash and low leverage (Equity Ratio 72.8%), short-term dividend sustainability is high, but sustained shareholder returns depend on recovery of OCF in subsequent periods. The company revised the year-end dividend from undecided to ¥60, and the year-end dividend for the fiscal year ending March 2027 is currently undecided. No share buybacks were conducted; the return policy relies on dividends only.
Concentration risk of business portfolio: The GameComic segment accounts for 85.8% of revenue and the majority of operating income, resulting in very high dependence on specific titles and operational KPIs. Although the segment’s revenue decline was limited (-1.0%), future increases in user acquisition costs or platform policy changes could impair profitability. With gross margin down -3.6pt YoY, continued upward pressure from outsourcing and platform fees could make maintaining operating margin difficult.
Working capital deterioration and weakening cash generation risk: OCF was ¥26.9B, only 46.7% of Net Income ¥57.6B, driven by accounts receivable increase ¥7.0B, DSO extension to 79 days, and contract liabilities decrease ¥3.2B. Cash conversion (OCF/EBITDA) at 0.35x is low, and Free Cash Flow was -¥5.9B, with dividends not covered by internal funds. If OCF recovery is delayed, securing dividend funds and investment capacity could be constrained, reducing financial flexibility.
Delay in monetization of new businesses: The AI & DX Solutions segment generated revenue of ¥11.5B but an operating loss of ¥2.4B (margin -20.9%) and remains in launch-investment phase. If this segment’s monetization is slower than expected, pressure on consolidated margins could be prolonged. Additionally, goodwill of ¥37.8B (8.3% of equity) is currently within acceptable range but could be subject to impairment risk if acquired businesses underperform.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 28.8% | 8.1% (3.6%–16.0%) | +20.7pt |
| Net Income Margin | 22.3% | 5.8% (1.2%–11.6%) | +16.4pt |
Both Operating Margin and Net Income Margin rank substantially above peers in the IT & Communications sector, with GameComic’s high-margin operations driving profitability well above industry averages.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 9.3% | 10.1% (1.7%–20.2%) | -0.8pt |
Revenue growth is slightly below the industry median but near the median, indicating steady growth.
※ Source: Company aggregation
Structural improvement to an Operating Margin of 28.8% and the high-margin GameComic operations (segment margin 35.9%) support ROE of 12.7% and high industry ranking. SG&A ratio compressed to 25.5%, demonstrating strong operating leverage. However, gross margin fell to 54.3% (-3.6pt YoY), with upward pressure from platform fees and outsourcing costs emerging. Future gross margin trends and sustainability of SG&A control will be key to maintaining margin levels.
OCF of ¥26.9B was only 46.7% of Net Income ¥57.6B, and working capital deterioration driven by increased accounts receivable (DSO 79 days) and decreased contract liabilities depressed cash generation. Free Cash Flow was -¥5.9B and dividends were not covered by internal funds, supplemented this term by liquidity and borrowings. While Equity Ratio is 72.8% and cash and deposits total ¥305.6B, recovery in OCF is a prerequisite for sustained dividends and investment capacity. Shortening collection periods and restoring advance payment levels are important monitoring points.
GameComic accounts for 85.8% of revenue and the company is highly dependent on a specific business. Although the segment maintained high-margin operations with +92.9% profit growth despite slight revenue decline, increased user acquisition costs or platform policy changes could pressure profitability. Entertainment & Lifestyle contributed with +119.1% revenue growth, while AI & DX remains in start-up investment with an operating loss of ¥2.4B; portfolio diversification and timing of new-business monetization are medium-term issues.
This report is an earnings analysis document automatically generated by AI from XBRL earnings release data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your own responsibility; please consult a professional if necessary.