| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥160.0B | ¥307.4B | -47.9% |
| Operating Income | ¥-46.1B | ¥62.1B | +18.4% |
| Ordinary Income | ¥-44.4B | ¥64.1B | +21.5% |
| Net Income | ¥-29.1B | ¥43.0B | -167.6% |
| ROE | -6.8% | 9.2% | - |
FY2026 Q3 cumulative results show revenue of 160.0B yen (YoY -47.9%), operating loss of 46.1B yen (prior year operating income of 62.1B yen, representing a swing of -108.1B yen), ordinary loss of 44.4B yen (prior year ordinary income of 64.1B yen, swing of -108.5B yen), and net loss of 29.1B yen (prior year net income of 43.0B yen, swing of -72.1B yen or -167.6%). The company recorded a significant non-recurring gain from sale of investment securities amounting to 17.5B yen, which partially offset operating losses. Despite maintaining a strong equity base of 426.8B yen and equity ratio of 86.8%, the company faces severe profitability challenges with negative ROE of -6.8% and ROIC of -16.4%. Cash reserves declined 32.6% YoY to 145.3B yen, while working capital deteriorated sharply with accounts receivable up 118.0% and inventory up 620.0%, extending the cash conversion cycle to 305 days.
Revenue declined sharply by 47.9% to 160.0B yen, driven by a 38,395-unit decrease in pachinko and pachislot machine sales to 38,552 units (pachinko 33,348 units down 25,804 units, pachislot 5,204 units down 12,591 units). The company operates in a single segment (amusement machine business) facing structural headwinds from declining machine installations (pachinko 1.97M units, pachislot 1.36M units in 2024) and hall closures (6,706 operating halls).
Gross profit margin contracted 6.8pt to 48.2% from 55.1% in the prior year, primarily due to increased proportion of main unit sales and higher common parts inventory valuation losses. Despite maintaining a healthy gross margin above 48%, selling, general and administrative expenses surged to 123.3B yen (77.1% of revenue vs. 34.9% prior year), driven by research and development expenses of 71.9B yen (up 19.8B yen YoY). This cost structure mismatch resulted in an operating loss of 46.1B yen compared to operating income of 62.1B yen in the prior year.
The gap between ordinary loss of 44.4B yen and net loss of 29.1B yen (difference of 15.3B yen) is attributable to non-recurring factors: the company recorded extraordinary income of 17.6B yen, primarily from the sale of Sun Corporation shares generating 17.2B yen in investment securities disposal gains. This one-time benefit substantially reduced the net loss below the ordinary loss level.
The company exhibits a "revenue down/profit down" pattern, with both top-line contraction and bottom-line deterioration driven by volume decline, margin compression, and fixed cost deleverage in a challenging industry environment.
The company operates exclusively in the amusement machine business segment, encompassing pachinko and pachislot machine manufacturing and sales. As the sole segment, this constitutes 100% of revenue and operating results.
Revenue of 160.0B yen (down 47.9% YoY) comprised 86.5% from pachinko machines and 13.5% from pachislot machines by unit volume. Operating loss of 46.1B yen reflects a significant deterioration from operating income of 62.1B yen in the prior year. The operating margin was -28.8%, down from positive 20.2% in the prior year, representing a 49.0pt contraction.
The core amusement machine business drove both revenue decline and profitability deterioration. Key product launches in Q3 included "e Jigoku Shoujo 7500Ver." (pachinko, November 2025) and "Sma-slot Toaru Kagaku no Railgun 2" (pachislot, October 2025). The margin compression stemmed from unfavorable product mix shifts toward main unit sales (lower margin) and elevated research and development costs of 71.9B yen (44.9% of revenue), which increased 19.8B yen YoY despite revenue contraction.
The single-segment concentration creates significant business risk, as performance is entirely dependent on the pachinko/pachislot market, which faces structural decline with estimated market sizes of approximately 850,000 units (pachinko) and 600,000 units (pachislot) for FY2025.
Profitability: ROE -6.8% (prior year positive), ROA -5.9% (prior year positive), Operating Margin -28.8% (prior year 20.2%), Net Profit Margin -18.2% (prior year 14.0%). ROIC -16.4% indicates capital deployed is generating negative returns significantly below cost of capital. The gross margin of 48.2% (down 6.8pt YoY) remains relatively healthy, but is overwhelmed by SG&A expenses at 77.1% of revenue.
Efficiency: Total Asset Turnover 0.33x (vs. industry median 0.58x), indicating underutilization of assets. Accounts Receivable Days of 89 days (up from 39 days prior year) signals collection challenges. Inventory Days of 344 days (up from 11 days prior year) represents severe inventory turnover deterioration and potential obsolescence risk. Operating Working Capital Days of 305 days (Cash Conversion Cycle) is significantly elevated compared to industry median of 108 days, reflecting severe working capital management issues.
Financial Health: Equity Ratio 86.8% (prior 88.0%), substantially above industry median of 63.8%, indicating conservative capital structure. Current Ratio 638.9% (vs. industry median 284%), demonstrating strong short-term liquidity coverage. Debt-to-Equity Ratio 0.15x reflects minimal leverage. Cash and deposits of 145.3B yen provide a liquidity cushion, though declining 32.6% YoY.
Investment: CapEx and Depreciation data not disclosed in available materials, limiting assessment of capital intensity and growth investment stance.
Operating cash flow data is not disclosed in the available XBRL and PDF materials, limiting comprehensive cash flow analysis. However, indirect indicators suggest significant cash generation challenges.
The company's cash position declined 70.3B yen (32.6%) from 215.5B yen to 145.3B yen despite recording a 17.2B yen gain from investment securities sales. This substantial cash outflow with operating losses of 46.1B yen suggests negative operating cash flow, likely exacerbated by working capital deterioration.
Working capital changes show significant cash absorption: accounts receivable increased 21.1B yen (118.0%) and inventory increased 0.9B yen (620.0%), collectively tying up approximately 22B yen in operating working capital. These increases, combined with operating losses, likely consumed substantial cash during the period.
Financing activities include dividend payments, though specific amounts are not disclosed. The company maintains a dividend policy of 25 yen interim and 30 yen year-end per share, which with negative earnings results in a calculated payout ratio of -43.3% (dividends paid from reserves rather than current earnings).
Free cash flow is estimated to be significantly negative given operating losses, working capital build, and dividend payments. Cash generation quality warrants close monitoring, as continued negative cash flow would deplete the 145.3B yen cash reserve over time.
The gap between ordinary loss of 44.4B yen and net loss of 29.1B yen stems from non-recurring extraordinary income of 17.6B yen, primarily the 17.2B yen gain from selling Sun Corporation shares. This one-time asset disposal gain reduced net loss by approximately 60% compared to ordinary loss, significantly distorting underlying earnings quality.
Core operating performance shows a 46.1B yen operating loss, reflecting genuine business difficulties rather than accounting adjustments. The operating loss translates to a -28.8% operating margin, indicating the business is generating negative returns on a recurring basis before any non-operating or extraordinary items.
Non-operating income composition is not fully detailed, but the modest difference between operating loss of 46.1B yen and ordinary loss of 44.4B yen (1.7B yen) suggests limited non-operating income or expenses. The extraordinary gain from investment securities disposal represents 10.8% of revenue, materially impacting reported results and masking underlying operational weakness.
Earnings quality concerns include: (1) reliance on non-recurring asset sales to reduce reported losses, (2) inability to generate operating profits despite 48.2% gross margins due to cost structure issues, and (3) deteriorating working capital (particularly receivables and inventory) suggesting potential accrual quality issues. The receivables increase of 118.0% against revenue decline of 47.9% raises questions about revenue recognition timing or collection issues. Inventory buildup of 620.0% signals potential overproduction, slow-moving stock, or market timing mismatches.
Without operating cash flow disclosure, the cash-backing of reported earnings cannot be quantified, but the combination of operating losses, working capital deterioration, and cash decline of 32.6% strongly suggests negative cash earnings quality.
Full-year FY2026 guidance projects revenue of 231.0B yen, operating loss of 38.0B yen, ordinary loss of 37.0B yen, and net loss of 21.0B yen, with annual dividend of 50 yen per share (25 yen interim + 25 yen year-end). This guidance was revised on February 6, 2026.
Q3 cumulative progress against full-year targets: Revenue 160.0B yen represents 69.3% of 231.0B yen full-year guidance (below standard 75% for Q3). Operating loss of 46.1B yen already exceeds the full-year loss guidance of 38.0B yen by 21.3%, indicating Q4 is expected to generate operating income to partially offset Q1-Q3 losses. Net loss of 29.1B yen represents 138.6% of full-year net loss guidance of 21.0B yen, also exceeding full-year expectations.
The revenue shortfall at Q3 (69.3% vs. standard 75%) suggests Q4 revenue must reach approximately 71B yen to achieve full-year guidance, representing 30.7% of annual revenue in a single quarter. This implies significant Q4 sales concentration, which is feasible given planned product launches of "e Isekai de Cheat Nouryoku" (pachinko) and "Sma-slot Goblin Slayer II" (pachislot) scheduled for February 2026.
The operating loss exceeding full-year guidance by 21.3% indicates management expects Q4 operating income of approximately 8B yen or more to bring full-year operating loss to 38B yen. This requires substantial Q4 volume and margin improvement, dependent on successful new product launches and SG&A cost control. Research and development expenses are 71.9B yen through Q3 (81.7% of 88B yen full-year budget), leaving limited room for Q4 R&D spending increases.
The net loss already exceeding full-year guidance despite Q4 remaining suggests the extraordinary gain of 17.6B yen in Q1-Q3 is not expected to recur in Q4, or management expects additional losses. The guidance implies Q4 net income must offset Q1-Q3 excess losses to meet the 21B yen full-year net loss target.
Achievement of full-year guidance is highly dependent on Q4 execution, specifically: (1) successful launch and market acceptance of two new titles in February, (2) achievement of planned unit sales (approximately 15,400 units needed in Q4 to reach 54,000 full-year target), (3) SG&A cost containment especially in R&D, and (4) working capital management to convert inventory and receivables to cash.
The company maintains a dividend policy of 25 yen per share for interim (Q2) and 30 yen per share for year-end, totaling 55 yen annual dividend as initially planned. However, the latest guidance shows revised annual dividend of 50 yen per share (25 yen interim + 25 yen year-end), representing a slight reduction from initial plans.
With net loss of 29.1B yen in Q3 cumulative and full-year net loss guidance of 21.0B yen, the dividend payout ratio is negative (dividends are paid from retained earnings rather than current period profits). The calculated payout ratio of -43.3% at Q3 indicates dividends are not covered by current earnings.
Despite operating and net losses, the company maintains dividend payments supported by its substantial equity base of 426.8B yen and cash reserves of 145.3B yen. This represents a shareholder-friendly policy prioritizing dividend stability over payout ratio adherence during a cyclical downturn.
No share buyback programs are disclosed in available materials, so total return ratio equals the payout ratio. The dividend yield cannot be calculated without share price data, but the absolute dividend amount of 50 yen per share with EPS of -100.4 yen (per guidance) represents a commitment to shareholder returns despite temporary profitability challenges.
Dividend sustainability depends on: (1) return to operating profitability in subsequent periods, (2) maintenance of cash reserves through working capital improvements, and (3) success of new product launches to restore revenue and margin. The current cash position of 145.3B yen provides several years of dividend coverage at 50 yen per share (assuming no further significant cash outflows), but sustained losses would eventually constrain dividend capacity.
Near-term:
Long-term:
Industry Position (Reference - Proprietary Analysis):
Profitability: Operating Margin -28.8% (Industry Median 8.3%, Q3 2025), Net Profit Margin -18.2% (Industry Median 6.3%), ROE -6.8% (Industry Median 5.0%), ROA -5.9% (Industry Median 3.3%), ROIC -16.4% (Industry Median 5.0%). The company's profitability metrics are substantially below industry standards across all measures, reflecting severe operational challenges.
Efficiency: Asset Turnover 0.33x (Industry Median 0.58x) indicates below-average asset utilization. Receivables Days 89 days (Industry Median 83 days) is slightly above median but within normal range; however, the 118.0% YoY increase signals deteriorating collection. Inventory Days 344 days (Industry Median 109 days) is severely elevated at more than 3x industry median, indicating significant inventory management issues. Operating Working Capital Days 305 days (Industry Median 108 days) is nearly 3x industry median, reflecting comprehensive working capital efficiency problems.
Financial Health: Equity Ratio 86.8% (Industry Median 63.8%) is significantly above median, indicating conservative capitalization. Current Ratio 638.9% (Industry Median 284%) is more than 2x industry median, demonstrating strong liquidity coverage. Financial Leverage 1.15x (Industry Median 1.53x) is below median, consistent with minimal debt usage.
Growth: Revenue Growth -47.9% (Industry Median 2.7%) is drastically below industry median, representing severe top-line contraction compared to industry stability.
Industry: Manufacturing sector (98 companies), Comparison: FY2025 Q3, Source: Proprietary analysis.
The company's positioning reflects financial strength (high equity, strong liquidity) but operational weakness (negative profitability, poor asset efficiency, severe revenue decline). While the balance sheet provides a buffer during this downturn, operating performance is substantially below industry norms and requires fundamental improvement in revenue recovery, cost structure, and working capital management to return to industry-standard profitability levels.
Structural market decline risk: The pachinko/pachislot industry faces ongoing contraction with machine installations declining to 1.97M pachinko and 1.36M pachislot units (2024), hall count decreasing to 6,706 facilities, and estimated annual market sizes of only 850,000 pachinko and 600,000 pachislot units for FY2025. This represents a fundamental demand headwind that limits revenue recovery potential and requires market share gains for growth, with single-segment concentration (100% revenue exposure) amplifying vulnerability.
Working capital liquidity risk: Accounts receivable increased 118.0% to 38.9B yen despite revenue declining 47.9%, extending collection days to 89 from 39 days and raising concerns about customer creditworthiness or payment terms deterioration. Inventory surged 620.0% to 1.1B yen with inventory days at 344 (vs. industry median 109 days), creating obsolescence risk if products do not sell. Combined cash conversion cycle of 305 days (vs. industry 108 days) with operating losses of 46.1B yen and cash declining 32.6% to 145.3B yen indicates potential for accelerated liquidity deterioration if working capital management does not improve in Q4.
Operating leverage and cost structure risk: SG&A expenses of 123.3B yen represent 77.1% of revenue (vs. 34.9% prior year), driven by R&D costs of 71.9B yen (44.9% of revenue, up 19.8B yen YoY). This fixed cost base requires approximately 257B yen in revenue at 48.2% gross margin just to break even operationally, substantially above the 231B yen full-year guidance. Without revenue recovery above 300B+ yen or significant cost restructuring, the company faces persistent operating losses and negative ROIC of -16.4%, eroding the 426.8B yen equity base over time.
Financial position provides temporary buffer amid operational distress: The company maintains substantial financial strength with equity ratio of 86.8%, cash reserves of 145.3B yen, and current ratio of 638.9%, enabling continued dividend payments of 50 yen per share despite net losses. However, cash declined 32.6% YoY and operating losses of 46.1B yen indicate ongoing cash consumption. The 17.2B yen extraordinary gain from investment securities sales provided one-time support but masks underlying cash generation weakness. The financial cushion allows time for business recovery, but is not infinite—sustained operating losses would deplete resources within several years.
Q4 execution critical to guidance achievement and business turnaround: Full-year guidance requires Q4 revenue of approximately 71B yen (30.7% of annual total) and material operating profit to offset Q1-Q3 losses, dependent on successful February 2026 launches of "e Isekai" pachinko and "Goblin Slayer II" pachislot machines. Management's ability to deliver 15,400 units in Q4 (to reach 54,000-unit full-year target), improve margins, control SG&A costs, and collect 38.9B yen in elevated receivables while liquidating 1.1B yen in excess inventory will determine whether the company meets guidance and demonstrates operational recovery momentum or faces further guidance reductions and extended losses.
Structural challenges require fundamental business model adaptation: Revenue decline of 47.9% against industry growth of 2.7% and operating margin of -28.8% versus industry median of 8.3% reflects company-specific execution issues beyond industry headwinds. The cost structure with R&D at 44.9% of revenue and SG&A at 77.1% of revenue is unsustainable at current scale, requiring either revenue recovery above 300B yen or structural cost realignment. Single-segment concentration in a declining market (estimated 850,000 pachinko and 600,000 pachislot units annually, down from historical peaks) with installation base shrinkage and hall closures necessitates market share gains, product differentiation, or business diversification for long-term viability. Working capital management with receivables days of 89 and inventory days of 344 (both severely elevated) requires immediate operational attention to preserve cash.
This report was automatically generated by AI integrating XBRL earnings data and PDF presentation materials as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.
AI analysis of PDF earnings presentation
FUJISHOJI Co., Ltd.’s results for the third quarter of the fiscal year ending March 2026 showed unit sales declining by approximately 38,000 units year on year to 38,552 units. Net sales were 160億3百万円 (down △47.9% year on year), and the company recorded an ordinary loss of 44億41百万円, reflecting a significant deterioration. In pachinko machines, the company launched “e地獄少女7500Ver.” (released in November 2025), and in pachislot machines, “スマスロ とある科学の超電磁砲2” (released in October 2025). A portion of the company’s holdings of Sun Corporation shares was sold, and 1,721百万円 was recorded as an extraordinary gain. For the full year, the company projects net sales of 231億円 and an operating loss of 38億円, and plans to introduce new titles in the fourth quarter, namely “e異世界でチート能力を手にした俺は、現実世界をも無双する” and “スマスロ ゴブリンスレイヤーII.” Dividends are planned at 25円 at interim and 25円 at year-end.
Total unit sales were 38,552 units, down △38,395 units year on year; composition: pachinko 86.5%, pachislot 13.5%. Gross margin declined to 48.2%, down △6.8pt from 55.1% in the prior-year period, driven by a higher mix of base-unit sales and increased valuation losses on common components. SG&A expenses were 123億33百万円, rising sharply to 77.1% of net sales from 34.9% a year earlier; R&D expenses increased to 71億91百万円 (up +19.83億円 year on year). Recorded an extraordinary gain of 17億21百万円 on sale of investment securities. Full-year plan assumes total sales of 54,000 units comprising 41,000 pachinko units and 13,000 pachislot units.
For the full fiscal year ending March 2026, the company projects net sales of 231億円, an operating loss of 38億円, an ordinary loss of 37億円, and a net loss of 21億円. In the fourth quarter, new titles “ｅいせれべ” (pachinko) and “スマスロ ゴブリンスレイヤーII” (pachislot) are scheduled to be introduced in February 2026. The pachinko market is estimated at approximately 850,000 units and the pachislot market at approximately 600,000 units (FY2025 forecast). The operating environment is expected to remain challenging, with continued declines in installed units across the market (2024: pachinko 1,969,000 units; pachislot 1,355,000 units) and a decrease in the number of halls (6,706).
Management recognizes the deterioration in sales and profits resulting from lower unit volumes and revised the full-year earnings and dividend forecasts as of February 6, 2026. Within SG&A, R&D expenses show a utilization rate of 81.7% against the full-year budget of 88億円, and personnel expenses are at 78.8%, highlighting the need for tighter cost control in the fourth quarter. In advertising and promotion, the company is implementing the “anime blast” and “BIGスタート” campaigns to enhance market awareness. The company intends to maintain dividends at 25円 at interim and 25円 at year-end despite the profit decline.
New title launches: Pachinko “ｅいせれべ” (equipped with BIGスタート function, 1/179 spec) and pachislot “スマスロ ゴブリンスレイヤーII” (surpassing the previous title in payout potential, featuring upper-tier AT) to be rolled out in February 2026. Enhanced advertising and promotion: Execute the “anime blast” and “BIGスタート” campaigns to bolster brand recognition and drive market appeal of new models. Portfolio optimization: Booked an extraordinary gain of 1,721百万円 through partial sale of Sun Corporation shares held, aiming to strengthen the financial base. Continued R&D investment: With a full-year R&D budget of 88億円 (71.91億円 used cumulatively by Q3, 81.7% utilization), strengthen next-generation machine development and software development. Expansion of series lineups: Extend the sales life of existing titles by introducing additional spec models such as “P防振り129ver” and “P緋弾のアリア129ver”.
Declining demand in the pachinko/pachislot market and ongoing decreases in installed units and the number of halls. Uncertainty around sales timing due to conformity status in model certification tests for gaming machines. Fixed-cost burden from maintaining high levels of SG&A (particularly R&D expenses). Risk of delayed collection of accounts receivable (up +118.0% year on year). Inventory valuation risk due to an increase in inventories (up +620.0% year on year).