| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1465.7B | ¥1316.9B | +11.3% |
| Operating Income / Operating Profit | ¥40.9B | ¥-18.2B | +46.9% |
| Ordinary Income | ¥43.3B | ¥-17.0B | +354.4% |
| Net Income / Net Profit | ¥26.4B | ¥-38.3B | +169.0% |
| ROE | 5.0% | -7.5% | - |
For the fiscal year ended March 2026, Revenue was ¥1,465.7B (YoY +¥148.8B +11.3%), Operating Income was ¥40.9B (YoY +¥59.1B +46.9%), Ordinary Income was ¥43.3B (YoY +¥60.3B +354.4%), and Net Income attributable to owners of the parent was ¥26.4B (YoY +¥64.7B +169.0%), marking a strong turnaround from the prior-year operating loss to significant top- and bottom-line growth. Operating margin improved to 2.8% (YoY +4.2pt) and gross profit margin improved to 28.5% (+1.8pt). Revenue expansion was driven by growth across all segments: the core Music Business +6.8%, Anime & Visuals Business +17.5%, and Overseas Business +17.2%. At the same time, SG&A was restrained at ¥376.9B (virtually flat YoY), allowing operating leverage to materialize. At the ordinary income level, equity-method investment income of ¥5.0B contributed, and net uplift from extraordinary items (extraordinary gains ¥12.2B including ¥10.3B gain on sale of investment securities less extraordinary losses ¥6.3B) added approximately ¥5.9B to pre-tax profit. Operating Cash Flow was ¥20.8B (YoY +144.4%) but the Operating CF / Net Income ratio remained at 0.79x, as increases in trade receivables of ¥25.3B and inventories of ¥9.3B delayed cash conversion. Cash and deposits stood at ¥343.1B, down ¥14.2B during the period, but liquidity remains at a high level.
[Revenue] Revenue growth was driven by expansion across all segments. The Music Business, accounting for 83.4% of sales, led with ¥1,223.1B (YoY +¥108.7B +9.8%). The Anime & Visuals Business recorded high growth at ¥217.2B (YoY +¥32.7B +17.7%), and the Overseas Business expanded to ¥40.4B (YoY +¥5.9B +17.1%). External customer sales totaled ¥1,465.7B, and the domestic revenue share remained above 90%. Inter-segment internal sales declined significantly to ¥21.9B from ¥54.9B in the prior year, suggesting progress in revising intragroup transactions. Gross profit was ¥417.8B with a gross margin of 28.5% (up from 26.7% YoY +1.8pt), supported by an increase in higher-margin projects.
[Profitability] SG&A was held at ¥376.9B, nearly flat YoY (¥+0.4B +0.1%). Breakdown: advertising expense ¥62.8B, promotion expense ¥23.8B, commissions ¥78.5B — maintaining sales-promotion investment — while other SG&A was restrained to ¥112.7B (down from ¥118.6B). Depreciation and amortization decreased to ¥14.4B from ¥16.1B, while goodwill amortization rose to ¥2.6B from ¥1.0B. Operating Income was ¥40.9B, improving ¥59.1B from an operating loss of ¥18.2B in the prior year, yielding an operating margin of 2.8%. Non-operating items contributed net income of ¥2.4B, driven primarily by equity-method investment income of ¥5.0B; non-operating expenses were limited to ¥4.3B. Ordinary Income improved substantially to ¥43.3B (YoY +354.4%). Extraordinary items comprised extraordinary gains of ¥12.2B (mainly ¥10.3B gain on sale of investment securities) less extraordinary losses of ¥6.3B (impairment losses ¥3.7B, disaster losses ¥1.6B, valuation loss on investment securities ¥1.0B), producing a net uplift of approximately ¥5.9B. Pre-tax profit was ¥49.3B, and after income taxes of ¥9.5B (effective tax rate 19.3%, depressed by recognition of deferred tax assets) and non-controlling interests of ¥4.2B, Net Income attributable to owners of the parent was ¥26.4B (improvement of ¥64.7B from a net loss of ¥38.3B prior year). In summary, revenue growth across all segments and SG&A control produced operating leverage and drove the revenue and profit expansion.
The Music Business posted Revenue of ¥1,223.1B (YoY +6.8%), Operating Income of ¥34.7B (YoY +393.9%), and margin 2.8%, a large improvement from an operating loss of ¥11.8B in the prior year. Expansion in music content, distribution, and live events plus fixed-cost discipline contributed. The Anime & Visuals Business recorded Revenue of ¥217.2B (YoY +17.5%), Operating Income of ¥10.6B (YoY +255.2%), and margin 4.9%, supported by greater supply of anime works and increased licensing revenue. The Overseas Business had Revenue of ¥40.4B (YoY +17.2%), Operating Loss of ¥4.7B (reduced from a prior-year loss of ¥9.4B), margin -11.5%; losses continued due to upfront costs for expansion in North America and Asia, though signs of improvement were observed. Other segments (e.g., travel) posted Revenue of ¥6.8B (YoY +3.5%), Operating Income ¥0.3B (YoY +766.7%), margin 3.8%, turning slightly profitable at a small scale. Consolidated adjustments resulted in Operating Income of ¥40.9B, and eliminations of intersegment transactions were minor at -¥0.1B.
[Profitability] Operating margin improved to 2.8% (YoY +4.2pt) but remains low versus peers. Gross profit margin rose to 28.5% (+1.8pt) as the proportion of high-margin projects increased. ROE was 5.0% (improving +2.8pt from 2.2% prior year). ROA (on an ordinary income basis) was 4.0% (up +5.6pt from -1.6% prior year). [Cash Quality] Operating CF was ¥20.8B. The Operating CF / Net Income ratio was 0.79x. Operating CF before depreciation (pre-tax profit + non-cash adjustments) was ¥54.8B; significant cash outflow items included income tax payments of ¥38.0B, and working capital pressures from trade receivables increase of ¥25.3B and inventories increase of ¥9.3B. Days sales outstanding approx. 64 days; inventory days approx. 3 days. Work-in-progress for productions was ¥41.6B, accounting for most of inventories of ¥12.7B, indicating substantial working capital burden. [Investment Efficiency] Total asset turnover improved to 1.32x (from 1.24x), and fixed asset turnover improved to 5.05x (from 4.67x). Capital expenditure was ¥18.0B, intangible asset investment ¥6.1B, totaling ¥24.1B — exceeding depreciation of ¥14.4B, indicating continued net investment. [Financial Soundness] Equity ratio was 47.7% (nearly flat from 47.3%). Current ratio was 145.5% (slight decline from 147.2%) and quick ratio 143.2%, signaling good liquidity. Interest-bearing debt shows no short-term borrowings; interest coverage (Operating CF / interest paid) is approximately 2,080x, indicating negligible interest burden. Goodwill was ¥25.4B, representing 4.8% of net assets; goodwill rose sharply from ¥0.2B in the prior year but remains within a healthy range.
Operating CF was ¥20.8B (up from ¥8.5B prior year, +144.4%), but Operating CF / Net Income remained weak at 0.79x. Operating CF subtotal (pre-tax profit + non-cash items) was ¥54.8B. Major adjustments included depreciation ¥14.4B, equity-method investment income -¥5.0B, reversal of allowance for doubtful accounts -¥7.9B, impairment losses ¥3.7B, and gain on sale of investment securities -¥10.3B. In working capital, trade receivables increased by ¥25.3B, inventories increased by ¥9.3B, and advances paid increased by ¥4.7B, while advances received increased by ¥18.7B and other current liabilities increased by ¥6.0B, resulting in net working capital outflow of approximately ¥10B. Income tax payments of ¥38.0B heavily pressured Operating CF (prior year included a tax refund of ¥11.2B). Investing CF was -¥6.7B: tangible fixed asset additions ¥18.0B, intangible fixed asset additions ¥6.1B, investment securities acquisitions ¥0.7B, offset by investment securities sales ¥17.1B and long-term loan recoveries ¥20.0B, leaving a small net outflow. Financing CF was -¥29.1B, mainly due to dividend payments ¥21.3B, dividends to non-controlling interests ¥0.9B, and acquisition of subsidiary shares without change in consolidation scope ¥6.7B. Free Cash Flow was Operating CF ¥20.8B - Investing CF ¥6.7B = ¥14.1B; FCF coverage of dividend payments ¥21.3B was 0.66x, insufficient, and cash reserves were reduced by ¥14.2B. Increases in trade receivables and WIP are pressuring working capital; shortening collection cycles and improving turnover of production projects are key to enhancing CF generation.
Of Ordinary Income ¥43.3B, Operating Income ¥40.9B represents core business earnings, and equity-method investment income ¥5.0B was the main add-on at the ordinary income level. Non-operating income totaled ¥6.7B (interest income ¥1.2B, dividend income ¥0.1B, other ¥0.4B), while non-operating expenses were ¥4.3B (interest expense ¥0.1B, fees ¥0.4B, foreign exchange losses ¥0.3B, other ¥0.8B), all limited in scale. Of extraordinary gains ¥12.2B, gain on sale of investment securities ¥10.3B is a one-off item; extraordinary losses ¥6.3B include impairment losses ¥3.7B, disaster losses ¥1.6B, and valuation loss on investment securities ¥1.0B, also non-recurring. Net extraordinary items added approximately ¥5.9B to pre-tax profit, but the operating-stage profitability supports the quality of earnings. From an accruals perspective, Operating CF ¥20.8B vs. Net Income ¥26.4B (Operating CF / Net Income 0.79x) shows divergence, with increases in trade receivables and inventories delaying cash realization. Comprehensive income was ¥45.1B, ¥9.6B higher than consolidated net income ¥35.5B; other comprehensive income contributed net ¥5.3B (foreign currency translation adjustments ¥4.9B, valuation difference on securities ¥2.3B, adjustments related to retirement benefits -¥1.4B, OCI share of equity-method affiliates -¥0.4B). The bulk of ordinary income was composed of operating profit and equity-method income; excluding temporary extraordinary items, the quality of earnings is improving, though weak cash conversion remains a key issue.
The company plan targeted Operating Income ¥60.0B (YoY +46.9%), Net Income attributable to owners of the parent ¥32.0B, EPS ¥75.36, and annual dividend ¥25.0 per share. Actuals: Operating Income ¥40.9B (31.8% below plan), Net Income attributable to owners of the parent ¥26.4B (17.5% below plan), while EPS was ¥83.68, exceeding plan. Shortfall at the operating level is attributed to continued losses in the Overseas Business and upfront production costs; at the net income level, contribution from extraordinary gains (gain on sale of investment securities, etc.) narrowed the downside. Full-year dividend was ¥50.0 (interim ¥25.0, year-end ¥25.0), exceeding the planned ¥25.0. The planned operating margin was 4.1% vs. actual 2.8%; while revenue growth and SG&A restraint improved results, project mix and segment-level profit balance underperformed plan. For upcoming periods, reducing losses in the Overseas Business and increasing the share of high-margin projects are key to improving operating margins.
Annual dividend of ¥50.0 (interim ¥25.0, year-end ¥25.0). Based on Net Income attributable to owners of the parent ¥26.4B and total dividends ¥21.4B (based on weighted average shares outstanding 42,465 thousand), the payout ratio is approximately 81.1%. The prior year also paid annual dividends of ¥50.0 (total dividends ¥21.4B), maintaining the dividend level for two consecutive years. The payout ratio is high, and with FCF ¥14.1B vs. dividend payments ¥21.4B, FCF coverage is 0.66x, indicating insufficiency; dividend sustainability depends on improvement in Operating CF. With cash and deposits of ¥343.1B, short-term capacity to pay dividends is ample, but medium-term sustainability requires stronger cash generation via improved receivable collections and faster turnover of production projects. No share buybacks were executed; total return consists solely of dividends. DOE (dividend on equity) is approximately 4.2%, maintaining balance with equity growth.
Concentration risk in core business: The Music Business accounts for 83.4% of revenue, and performance is highly correlated with artist activity, presence of hit releases, and live-event conditions. While the Music Business moved from an operating loss in the prior year to substantial improvement this year, managing the artist pipeline and diversifying revenue sources remain critical.
Vulnerability of cash flow quality: Operating CF / Net Income is 0.79x; DSO approx. 64 days and accumulation of production WIP are pressuring working capital. As revenues expand, trade receivables increased by ¥25.3B and inventories by ¥9.3B. Income tax payments of ¥38.0B are also significant. Improving cash generation is a prerequisite for dividend sustainability and maintaining investment capacity. Shortening collection cycles and improving turnover of production projects are urgent.
Continued losses in the Overseas Business and foreign-exchange volatility: The Overseas Business posted Revenue ¥40.4B and Operating Loss ¥4.7B, margin -11.5%. Upfront costs for expansion in North America and Asia have driven continued losses. Demand uncertainty and FX volatility (foreign exchange loss ¥0.3B recorded) compress profitability. Although overseas revenue is under 10% of the total, it is an important growth segment and early achievement of profitability is key to improving consolidated margins.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.8% | 8.1% (3.6%–16.0%) | -5.3pt |
| Net Profit Margin | 1.8% | 5.8% (1.2%–11.6%) | -4.0pt |
Profitability is below the industry median: operating margin -5.3pt and net profit margin -4.0pt, placing the company in the lower quartile. There is significant room for improvement via SG&A restraint and expansion of higher-margin projects.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 11.3% | 10.1% (1.7%–20.2%) | +1.2pt |
Growth is +1.2pt above the industry median, positioning the company slightly above the sector median. Expansion across all segments drove this growth.
※ Source: Company compilation
The turnaround from an operating loss in the prior year to Operating Income ¥40.9B and operating margin improvement of +4.2pt demonstrates realization of operating leverage from SG&A restraint and revenue expansion, indicating progress in improving the earnings structure. The Music Business delivered Operating Income growth of +393.9% YoY and the Anime & Visuals Business +255.2%, confirming recovery in core segment profitability.
Operating CF / Net Income 0.79x, DSO approx. 64 days, and accumulation of production WIP are emerging as cash-quality issues. Income tax payments ¥38.0B (prior year tax refund ¥11.2B) also weighed heavily. With FCF ¥14.1B vs. dividend payments ¥21.4B, FCF coverage is 0.66x, insufficient. While cash/deposits ¥343.1B provide short-term capacity to sustain dividends, medium-term sustainability requires stronger receivables collection and production turnover.
Goodwill rose sharply from ¥0.2B to ¥25.4B, and intangible fixed assets expanded from ¥26.6B to ¥49.7B, suggesting active M&A and content investment. Goodwill / net assets ratio is 4.8% and goodwill / EBITDA is 0.46x, both within healthy ranges; however, monitoring earnings progress of acquired businesses and goodwill impairment risk will be focal points. Payout ratio approx. 81% is high, and without FCF improvement the scope for further dividend increases is limited.
This report was automatically generated by AI analyzing XBRL earnings release data. It does not constitute investment advice for specific securities. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.