| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥124796.2B | ¥120349.2B | +3.7% |
| Operating Income | ¥14475.1B | ¥12766.4B | +13.4% |
| Profit Before Tax | ¥14223.7B | ¥13432.0B | +5.9% |
| Net Income | ¥-3024.9B | ¥3616.8B | +27.8% |
| ROE | -3.6% | 4.2% | - |
Sony Group's results for the fiscal year ended March 2026 recorded a net loss due to discontinued operations losses related to the financial business spin-off, but continuing operations achieved solid revenue and profit growth. Revenue was ¥12兆4,796B (YoY +¥4,447B +3.7%), Operating Income was ¥1兆4,475B (YoY +¥1,709B +13.4%)—a double-digit increase—raising the operating margin to 11.6% (prior year 10.6%), an improvement of approximately +100bp. Ordinary Income (Profit Before Tax from continuing operations) was ¥6,507B (YoY +¥3,279B +101.6%), doubling year-on-year; however, a discontinued operations loss related to the financial business spin-off (equivalent to ¥1兆3,578B attributable to the company's shareholders) led to a significant net loss attributable to owners of the parent of ¥-3,269B (deterioration of ¥1兆4,685B from prior year ¥+1兆1,416B). Nonetheless, net income attributable to owners of the parent from continuing operations remained positive at ¥1兆309B, and basic EPS (continuing) was ¥172.51. The three pillars—Game & Network Services (Operating Income ¥4,633B, +12%), Music (¥4,470B, +25%), and Imaging & Sensing Solutions (¥3,573B, +37%)—drove earnings, advancing qualitative improvement of the business portfolio.
[Revenue] Revenue from continuing operations was ¥12兆4,796B (+3.7%), with divergence across major segments. Imaging & Sensing Solutions recorded the highest growth rate with revenue of ¥2兆590B (+20.2%), supported by recovery in smartphone sensor demand and improved product mix. Music revenue was ¥2兆905B (+14.8%), driven by streaming music production (USD-denominated +9%) and music publishing (+14%), with increased box office and merchandising revenues reaching record high levels. Conversely, Entertainment Technology & Services revenue declined to ¥2兆185B (△7.5%) due to market adjustments in display products and lower unit sales, and Pictures revenue was nearly flat at ¥1兆486B (△0.8%). Game & Network Services revenue was ¥4兆570B (+0.6%), where hardware slowdown was offset by increases in Digital Software & Add-on Content (¥2兆4,153B, +5.4%) and Network Services (¥7,631B, +13.9%). Cost of sales ratio improved to 69.2% (prior year 70.7%, △1.5pt), and SG&A ratio decreased to 18.4% (prior year 18.8%, △0.4pt), indicating progress in operating efficiency.
[Profitability] Operating Income grew to ¥1兆4,475B (+13.4%), outpacing revenue growth, with operating margin improving +100bp to 11.6%. By segment, Music delivered Operating Income of ¥4,470B (+25.1%, margin 21.4%) setting a new high; Imaging & Sensing Solutions posted ¥3,573B (+36.8%, margin 17.4%) also at record profit. Game & Network Services reported Operating Income of ¥4,633B (+11.7%, margin 10.1%), but included one-time charges such as an impairment loss related to Bungie of ¥886B; excluding this, adjusted Operating Income reached a record ¥7,198B. Entertainment Technology & Services Operating Income declined to ¥1,586B (△16.9%, margin 7.3%) due to weaker demand and a ¥165B impairment on display devices. Ordinary Income (Profit Before Tax) was ¥6,507B (+101.6%)—a doubling—partly because equity-method investment losses widened to △¥642B (from △¥79B, a deterioration of △¥563B), while net financial costs were modest at △¥252B (financial income ¥760B less financial expenses ¥1,012B). At the Net Income level, a discontinued operations loss of ¥1兆3,578B (prior year ¥+742B gain) struck, producing a large net loss attributable to owners of the parent of △¥3,269B. Net income from continuing operations was ¥1兆553B (△2.9%), a slight decrease, and after income taxes of ¥3,671B the company still secured over ¥1兆 in profit. Excluding one-offs, the company sustained a trend of revenue and profit increases.
Game & Network Services posted revenue of ¥4兆685B (including intersegment transactions) and Operating Income of ¥4,633B, representing an operating margin of 9.9%. External customer revenue was ¥4兆570B (36.6% of consolidated revenue), the largest segment. Growth was driven by Digital Software & Add-on Content at ¥2兆4,153B (+5.4%) and Network Services at ¥7,631B (+13.9%), while Hardware & Other declined to ¥1兆3,916B (△12.1%) due to PS5 slowdown, resulting in a modest overall increase of +0.6%. Operating Income rose +11.7% but included one-time charges of ¥886B impairment for Bungie and ¥183B development cost adjustments. Monthly Active Users (MAU) were 125 million (1.25億, +1%), showing steady engagement.
Music generated revenue of ¥2兆121B and Operating Income of ¥4,470B, yielding the highest segment margin at 21.1%. External customer revenue was ¥2兆905B (16.8% of consolidated revenue). Growth drivers included Streaming Music Production at ¥8,527B (+8.1%) and Music Publishing at ¥4,199B (+10.6%), with Video Media & Platform at ¥3,253B (+33.1%) also significantly expanding. Operating Income grew +25.1% and included one-time items such as ¥347B valuation gain from additional acquisition of Peanuts Holdings.
Pictures recorded revenue of ¥1兆499B and Operating Income of ¥1,049B (margin 7.0%). External customer revenue was ¥1兆486B (11.9% of consolidated revenue). While film production revenue declined to ¥4,957B (△18.8%), television program production at ¥5,124B (+11.6%) and Media Networks at ¥4,783B (+11.5%) provided support. Operating Income decreased △10.6%, but excluding a ¥271B impairment loss at Pixomondo the segment would have improved +13%.
Entertainment Technology & Services recorded revenue of ¥2兆261B and Operating Income of ¥1,586B (margin 7.0%). External customer revenue was ¥2兆185B (17.5% of consolidated revenue). Display revenue fell substantially to ¥4,763B (△20.3%) amid market adjustments, leading to overall revenue decline of △6.6% and Operating Income decline of △16.9%. One-time charges such as a ¥165B impairment on display devices also weighed on profits.
Imaging & Sensing Solutions achieved revenue of ¥2兆152B and Operating Income of ¥3,573B (margin 16.6%). External customer revenue was ¥2兆590B (16.5% of consolidated revenue). Recovery in smartphone sensor demand and expansion of high-value products drove revenue +20.2% and Operating Income +36.8%, reaching record profit. Even after absorbing a ¥199B loss on sale of Sony Semiconductor Israel and a ¥165B display device impairment, the segment delivered substantial profit growth.
Profitability: ROE -3.6% (prior year +14.0%) temporarily deteriorated due to discontinued operations losses; ROE on continuing operations remained solid at 13.7%. Operating margin 11.6% (prior year 10.6%) improved +100bp, exceeding the three-year average of approximately 10%.
Cash Quality: Operating Cash Flow (OCF) was ¥1兆9,456B versus Net Income of △¥3,025B, resulting in OCF/Net Income of △6.4x; this ratio is distorted by the final-year loss, but relative to continuing operations net income of ¥1兆553B, OCF is 1.84x, indicating soundness. Free Cash Flow (FCF) was △¥249B (OCF ¥1兆9,456B - Investing CF ¥1兆9,705B), a small negative, driven by capital expenditures of ¥4,577B and M&A outflows of ¥1,854B.
Investment Efficiency: Capital expenditure was ¥4,577B versus depreciation ¥1兆1,807B, yielding CapEx/Depreciation of 0.39x, indicating maintenance-level investment and prioritization of cash generation. OCF/Depreciation was 1.65x, showing good conversion of profit to cash.
Financial Soundness: Equity Ratio (自己資本比率) 51.8% (prior year 23.2%) rose substantially due to liability reduction from the financial business spin-off. Current Ratio 118% (Current Assets ¥5兆9,500B / Current Liabilities ¥5兆326B) is within acceptable range. Debt/Capital 0.6% (short-term borrowings ¥512B + long-term borrowings ¥8,244B / Total Assets ¥15兆6,835B) indicates extremely low reliance on interest-bearing debt and a conservative balance sheet. Goodwill of ¥1兆6,739B represents 19.7% of net assets, not overly concentrated.
Operating CF: ¥1兆9,456B (YoY △¥3,866B △16.6%) was generated ¥1兆9,663B from continuing operations but saw ¥△207B outflow from discontinued operations, resulting in a YoY decline. Continuing operations OCF was produced from Profit Before Tax of ¥1兆4,224B with non-cash depreciation add-back of ¥1兆1,807B, inventory reduction of ¥1,554B, accounts payable increase of ¥705B improving working capital, and tax payments △¥2,343B. OCF/continuing operations net income was 1.84x, indicating good cash backing of profits.
Investing CF: △¥1兆9,705B was led by CapEx △¥4,577B, business acquisitions △¥1,854B (mainly additional acquisition of Peanuts Holdings, etc.), and investing CF from discontinued operations △¥1兆1,863B (related to financial business spin-off preparations). Net acquisition of investment securities △¥1,797B offset by sales/recoveries ¥130B (net △¥1,667B) also contributed, expanding the total by △¥1,040B YoY.
Financing CF: △¥8,428B was driven primarily by shareholder returns (dividends △¥1,350B and share buybacks △¥5,221B totaling △¥6,571B). Repayment of long-term borrowings △¥1,354B added to the outflow, increasing YoY by △¥5,445B. Dividend payments of ¥1,350B represent 6.9% of OCF and are easily covered, but total returns of ¥6,571B equal 33.8% of OCF, a high level.
FCF: △¥249B (OCF ¥1兆9,456B - Investing CF ¥1兆9,705B) was slightly negative but on a continuing-operations basis OCF covers CapEx and M&A. Cash and cash equivalents were ¥2兆2,089B (YoY △¥7,721B) decreased, but considering foreign exchange translation effects +¥956B and lease liability repayments △¥859B, the cash position remains substantively strong.
Cash Generation Assessment: Strong. OCF close to ¥2兆 with continuing operations OCF/Net Income 1.84x indicates good cash conversion. CapEx/Depreciation at 0.39x shows restrained investment and high cash-flow margins. FCF was slightly negative due to temporary M&A and elevated shareholder returns, but underlying cash generation capability remains very high.
The gap between Ordinary Income ¥6,507B and continuing operations Profit Before Tax ¥1兆4,224B is mainly attributable to discontinued operations; on a standalone continuing-operations basis Profit Before Tax of ¥1兆4,224B broadly reflects recurring earnings power. One-time items recorded at the operating income level include Bungie impairment loss ¥886B, Pixomondo impairment ¥271B, display device impairments ¥165B (ET&S ¥165B, I&SS ¥165B), loss on sale of Sony Semiconductor Israel ¥199B, and Sony Honda Mobility loss ¥449B—totaling more than approximately ¥2,000B of special losses. Conversely, Music included one-time gains such as a ¥347B revaluation gain on additional acquisition of Peanuts Holdings and ¥72B revaluation gain on affiliates. Net of items, one-off costs are estimated to have suppressed profit by about ¥1,500B.
Non-operating income included financial income ¥760B (prior year ¥1,390B), 0.6% of revenue—low—and equity-method losses △¥642B (worsening from △¥79B), which depressed Ordinary Income. The deterioration in equity-method results stems from performance volatility and impairments at affiliates and is largely non-recurring.
With OCF ¥1兆9,456B vs continuing operations net income ¥1兆553B, OCF/Net Income ratio of 1.84x indicates strong cash backing for profits. Inventory reduction ¥1,554B and accounts payable increase ¥705B reflect working capital improvements; the accrual ratio (Net Income - OCF) / Total Assets is △9.8%, meaning OCF significantly exceeds net income and signaling very high quality of earnings. The final net loss was driven by a one-time discontinued operations loss of ¥1兆3,578B, but continuing operations show high-quality, sustainable earnings.
The FY2026 consolidated guidance is Revenue ¥12兆3,000B (YoY △1.4%), Operating Income ¥1兆6,000B (+10.5%), and net income attributable to owners of the parent ¥1兆1,600B. Progress vs current fiscal results (FY2026 results) has not been disclosed, but comparing prior-year trends across segments suggests: Game & Network Services Operating Income ¥6,000B (+30%) driven by reversal of the Bungie impairment; Music Operating Income expected to decline △11% from one-off reversals though revenue is broadly flat; Pictures anticipated to increase Operating Income +38% as Peanuts revaluation effect reverses and Pixomondo impairment effect normalizes; Entertainment Technology & Services projected to decline Operating Income △5% due to TCL-related partnership costs ¥200B and memory cost increases ¥300B; Imaging & Sensing Solutions planned Operating Income +12% (revenue △4%) driven by reversal of restructuring charges. Company expects an Operating Margin of 13.0% (from 11.6%, +1.4pt) aided by disappearance of one-time charges and higher weight of high-margin segments.
Earnings revisions: The prior forecast (as of February) anticipated Operating Income ¥1兆5,400B vs actual ¥1兆4,475B, missing by △¥886B mainly due to the Bungie impairment of ¥886B; excluding one-offs, business performance is assessed as favorable. Key near-term focus: Game & Network Services hardware slowdown (PS5 unit maintenance vs rising digitalization); Imaging & Sensing Solutions responding to the pause in large-format smartphone adoption and uncertain memory market; Entertainment Technology & Services monitoring actual impact of partnership costs and memory price increases.
As a manufacturing proxy, Contract Liabilities (advance receipts) were ¥5,943B (prior year ¥5,907B, nearly flat), indicating visibility into future revenue. Backlog/revenue ratio is approximately 4.8%, with subscription-type network services in Games and Music forming the bulk of deferred revenue. The mid-term plan (FY24-26) targets average annual Operating Income growth >10%; actual achieved 16% progress and cumulative operating margin target >10% vs actual 11.7%, both exceeding targets—next-year outlook is on this extension.
Annual dividend for the period was ¥25 per share (¥12.5 at Q2-end, ¥12.5 at year-end), total dividends ¥1,206B. Payout Ratio on continuing operations basic EPS basis is 0.1%—very low—because final net results were a loss due to discontinued operations; relative to continuing operations EPS of ¥172.51 the payout ratio is 14.5%. Note a 5-for-1 stock split on October 1, 2024, and dividends above are stated on a post-split basis.
Share buybacks totaled ¥5,221B, and combined with dividends ¥1,350B total shareholder returns amounted to ¥6,571B. Dividend payout ratio (dividends only) on continuing operations is 14.5%, while Total Return Ratio (dividends + buybacks) was about 63.8%, a high level. Total returns ¥6,571B represented 33.8% of OCF ¥1兆9,456B; FCF was △¥249B marginally negative, but given cash and cash equivalents of ¥2兆2,089B and a strong balance sheet, these returns were feasible.
For FY2026 the company plans an increased dividend of ¥35 per share (annual), a ¥10 increase, expecting payout normalization as continuing operations recover. In connection with the financial business spin-off, on the record date September 30, 2025 the company distributed one share of Sony Financial Group (SFGI) common stock to shareholders as an in-kind dividend (equivalent to ¥9,557B) separate from cash dividends as a capital restructuring measure. The mid-term plan contemplates shareholder returns (dividends + share repurchase) of ¥1.9兆 financed by OCF ¥2.5兆 plus asset disposals/borrowing ¥1.0兆, signaling a sustained shareholder-return stance.
[Short-term]
[Long-term]
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 13.7% | 6.3% (3.2%–9.9%) | +7.4pt |
| Operating Margin | 11.6% | 7.8% (4.6%–12.3%) | +3.8pt |
| Net Margin | -2.4% | 5.2% (2.3%–8.2%) | -7.6pt |
ROE and Operating Margin both significantly exceed industry medians, placing the company in the upper tier on profitability. Net Margin is negative due to the one-time discontinued operations loss, but on a continuing-operations basis it is 8.4%, at a top-industry level.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.7% | 3.7% (-0.4%–9.3%) | +0.0pt |
Revenue growth matches the industry median, aligning with the manufacturing sector’s growth pace.
Source: Company compilation
Platform transition risk in the gaming business: PS5 hardware sales are trending down in the latter part of the console cycle, and increased investment for next-generation consoles may exert short-term pressure on earnings. The key issue is whether growth in digital software and network services can sufficiently offset hardware slowdown. MAU of 125 million (+1%) shows engagement stability, but limited growth in total play time and scope for increasing ARPU (average revenue per user) are significant.
Demand-supply volatility risk in the image sensor business: With a pause in large-format smartphone adoption and uncertainty in memory market conditions, the company forecasts a mobile sensor revenue decline of △4% next term. High dependence on major customers means delays or order reductions directly affect performance. Although the current term posted +20.2% revenue growth, the next-term plan adopts a cautious scenario; capacity utilization decline and memory price escalation (about ¥300B impact) may pressure margins. Restructuring (sale of Sony Semiconductor Israel, display device impairments) has eliminated low-margin operations, but sensitivity to market swings remains high.
Content monetization risk and recurrence of one-time charges: Recovery risk in film/gaming content monetization has emerged; this term included one-offs such as Bungie impairment ¥886B and Pixomondo impairment ¥271B totaling over ¥2,000B. In film, while expectations for major franchises (Spider-Man, Jumanji, etc.) are high, box office uncertainty persists and catalog licensing revenue may decline. M&A-related risks such as goodwill amortization and impairment following acquisitions like Peanuts Holdings (recorded ¥347B revaluation gain) remain medium- to long-term. Production cost inflation and longer recovery periods amplify earnings volatility structurally.
Qualitative growth of continuing operations and segment portfolio improvement: Operating margin 11.6% (+100bp) reflects higher weight of high-margin segments (Music 21.4%, I&SS 17.4%) and structural improvements from digitalization in G&NS. Next-year Operating Income guidance ¥1.6兆 (+10.5%) embeds reversal of one-time charges; mid-term plan targets of 16% average annual Operating Income growth and cumulative operating margin 11.7% (above 10%) indicate sustainable improvement in underlying earnings power. The net loss from discontinued operations is transient; continuing operations generating over ¥1兆 net income demonstrates core strength.
Cash generation and sustainability of capital allocation: OCF ¥1兆9,456B was generated while keeping CapEx/Depreciation at 0.39x in maintenance investment mode, and despite content build-up and M&A (Peanuts, etc.) FCF was a small negative △¥249B. The mid-term plan envisages OCF ¥2.5兆 + asset disposals/borrowings ¥1.0兆 funding shareholder returns ¥1.9兆, supporting next-year dividend increase (+¥10) and ongoing buybacks backed by OCF strength. Cash and cash equivalents ¥2兆2,089B and Debt/Capital 0.6% represent a conservative financial structure that supports both next-generation platform investments and shareholder returns.
One-off charges falling away and upside for profit from next year onward: This term recorded over ¥2,000B of one-time charges (Bungie, Pixomondo, display devices, Sony Honda Mobility, etc.), but next year G&NS is expected to rebound (Operating Income +30%, ¥6,000B) and I&SS to recover from restructuring (Operating Income +12%, ¥4,000B). ET&S will face TCL partnership costs ¥200B and memory cost pressure ¥300B as new cost items; however, company-wide Operating Margin is projected to improve to 13.0% (+1.4pt), making the recovery post one-off charges a key point in the earnings release.
This report was automatically generated by AI integrating XBRL earnings data and PDF earnings presentation materials to produce an earnings analysis. It is not a recommendation to invest in any particular security. Industry benchmarks are compiled by the company from public financial statements as reference information. Investment decisions are your responsibility; consult a professional advisor as needed.