| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥23130.5B | ¥11649.2B | +98.6% |
| Operating Income | ¥3601.2B | ¥2825.5B | +27.5% |
| Ordinary Income | ¥5422.0B | ¥3723.2B | +45.6% |
| Net Income | ¥2716.6B | ¥2258.2B | +20.3% |
| ROE | 9.2% | 8.3% | - |
For the fiscal year ended March 2026, Revenue was ¥23130.5B (YoY +¥11481.3B, +98.6%), Operating Income was ¥3601.2B (YoY +¥775.7B, +27.5%), Ordinary Income was ¥5422.0B (YoY +¥1698.8B, +45.6%), and Net Income was ¥2716.6B (YoY +¥458.4B, +20.3%), representing a substantial increase in both top- and bottom-line results. The doubling of Revenue was primarily driven by expanded unit sales of both hardware and software. Although the Operating Margin declined to 15.6% (down -8.7pt from 24.3%) due to a deterioration in gross margin, a large increase in non-operating items (equity-method investment income ¥827.9B, foreign exchange gains ¥443.4B, interest received ¥460.6B) substantially boosted Ordinary Income. Net margin decreased to 11.7% (down -7.7pt from 19.4%), indicating that non-operating and special items materially supported overall profit growth.
[Revenue] Revenue doubled to ¥23130.5B (YoY +98.6%). The increase of ¥11481.3B from ¥11649.2B in the prior year was driven by expanded sales of both hardware and software. Accounts receivable rose to ¥1474.8B (+126.3%) and inventories increased to ¥5398.0B (+11.0%), reflecting higher receivables and inventory accumulation with the expansion in sales scale. As a single-segment company, regional and product breakdowns are not disclosed, but the substantial increase in equity-method investment income to ¥827.9B (from ¥351.3B, +135.6%) suggests strong ecosystem-wide performance complemented the Revenue expansion.
[Profitability] Cost of goods sold was ¥14040.9B, yielding gross profit of ¥9089.6B (gross margin 39.3%), a marked decline of -21.7pt from 61.0% in the prior year. This deterioration likely reflects a higher mix of hardware sales, pricing policies, and the combined impact of FX and logistics costs. Selling, general and administrative expenses were ¥5488.4B (SG&A ratio 23.7%), up ¥1060.8B (+28.1%) year-over-year, reflecting increased spending on promotion, R&D, and investments in digital infrastructure. Despite these investments, Revenue growth outpaced expense control, resulting in Operating Income of ¥3601.2B (Operating Margin 15.6%). Non-operating income was large at ¥1829.2B, with interest received ¥460.6B, foreign exchange gains ¥443.4B, and equity-method investment income ¥827.9B contributing; after subtracting non-operating expenses ¥8.4B, Ordinary Income reached ¥5422.0B (Ordinary Income margin 23.4%). Special gains totaled ¥326.8B (gain on sales of investment securities ¥326.6B) and special losses were ¥66.8B, leading to income before income taxes of ¥5681.9B and income taxes of ¥1441.0B, resulting in Net Income of ¥2716.6B (Net Margin 11.7%). In conclusion, the company achieved substantial Revenue and profit growth supported by large non-operating contributions, although operating-stage profitability materially declined due to worsening gross margin.
[Profitability] Operating Margin was 15.6% (down -8.7pt from 24.3%), and Net Margin was 11.7% (down -7.7pt from 19.4%), both lower year-over-year. The large deterioration in gross margin to 39.3% (down -21.7pt from 61.0%) compressed the bottom line, and the improvement in SG&A ratio to 23.7% (from 36.7%, -13.0pt) was insufficient to offset this. ROE was 9.2%, indicating somewhat modest capital efficiency in exchange for a very high Equity Ratio of 77.7%. [Cash Quality] Operating Cash Flow (OCF) was ¥2897.9B compared with Net Income of ¥2716.6B, giving an OCF/Net Income ratio of 1.07x, which is healthy. The company absorbed increases in working capital (accounts receivable +¥747.9B, inventories +¥275.9B, offset by accounts payable +¥797.0B) and corporate tax payments of ¥1054.5B, generating net operating cash of ¥3429.3B before adjustments. Free Cash Flow was ¥797.4B; while this is below total shareholder returns of dividend payments ¥1478.6B and share buybacks ¥999.4B, available liquidity is sufficient to continue returns. [Investment Efficiency] Total asset turnover was 0.61x (Revenue ¥23130.5B / Total Assets ¥38053.1B), markedly improved from the prior year due to sales expansion. Days Inventory Outstanding (DIO) is about 140 days (Inventories ¥5398.0B / COGS ¥14040.9B × 365), a relatively high level suggesting room for inventory compression. Fixed asset turnover was approximately 2.9x, reflecting a light-asset business model. [Financial Soundness] Equity Ratio was 77.7% (down -2.5pt from 80.2%), extremely high, with a Current Ratio of 395.9% and Quick Ratio of 324.9%, indicating no short-term liquidity concerns. Interest-bearing debt is effectively zero; cash and deposits of ¥17918.0B plus short-term securities ¥4250.5B yield liquidity of ¥22168.5B, about 2.9x current liabilities of ¥7601.5B. Interest coverage, based on Operating Income ¥3601.2B against interest expense ¥2.1B, is approximately 1,715x, consistent with a no-debt management profile.
Operating Cash Flow (OCF) was ¥2897.9B (from ¥120.7B prior year, +2301.1%), a large increase. OCF subtotal was ¥3429.3B; working capital changes included increases in trade receivables of -¥747.9B and inventories of -¥275.9B which pressured cash, partially offset by an increase in trade payables of +¥797.0B. After corporate tax payments of ¥1054.5B, interest and dividends received of ¥524.9B, and interest paid of ¥1.7B, OCF settled at ¥2897.9B. Investing Cash Flow was -¥2100.5B, primarily reflecting purchases of securities -¥2562.3B and sales proceeds ¥4156.0B, time deposits placements -¥18415.5B and withdrawals ¥14972.2B, and acquisition of tangible and intangible assets -¥271.7B. Free Cash Flow (OCF + Investing CF) was ¥797.4B. Financing Cash Flow was -¥2497.1B, mainly due to dividend payments -¥1478.6B and share buybacks -¥999.4B. EBITDA, including depreciation ¥158.5B, was approximately ¥3759.7B, making the OCF/EBITDA ratio 0.77x; cash conversion was slightly weakened by increases in inventory and receivables. Ending cash and deposits were ¥17918.0B (down ¥972.7B YoY), maintaining ample liquidity.
Of Ordinary Income ¥5422.0B, Operating Income was ¥3601.2B; the difference of ¥1820.8B stems from non-operating income ¥1829.2B less non-operating expenses ¥8.4B, with non-operating items such as interest received ¥460.6B, foreign exchange gains ¥443.4B, and equity-method investment income ¥827.9B significantly lifting profits. Foreign exchange gains and investment-related income are market-dependent and have uncertain sustainability, necessitating separation from recurring operating earning power. Special gains of ¥326.8B (gain on sales of investment securities ¥326.6B) are one-off and represent about 5.8% of income before income taxes ¥5681.9B. Comprehensive income was ¥4773.7B, well above Net Income ¥2716.6B, primarily due to a positive foreign currency translation adjustment of ¥653.8B, although valuation differences on available-for-sale securities of -¥147.2B detracted. OCF ¥2897.9B versus OCF subtotal ¥3429.3B reflects the pre-working-capital-change level; increases in receivables and inventories have delayed cash conversion. Depreciation of ¥158.5B accounted for only 4.4% of Operating Income, reflecting asset lightness, but equity-method investment income ¥827.9B is not added back to OCF, so caution is required when assessing cash conversion of earnings. Overall, non-operating and special items materially contributed; evaluation of recurring earnings quality should focus on the operating-income level.
The company plan for the coming fiscal year forecasts Full Year Revenue of ¥20500B (YoY -11.4%), Operating Income of ¥3700B (YoY +2.7%), and Ordinary Income of ¥4300B (YoY -20.7%). The projected Revenue decline reflects an expected reversion to normal levels after the current-period peak in hardware and software sales. The projected increase in Operating Income is assumed to result from a higher proportion of software, mix improvement, and cost efficiencies, implying a recovery in Operating Margin to about 18.0% (up +2.4pt from this period’s 15.6%). The decline in Ordinary Income is likely incorporating a reversal of this period’s large non-operating gains (foreign exchange gains, equity-method investment income). EPS is forecast at ¥268.90 (from ¥364.51, -26.2%), reflecting lower Net Income, and the dividend forecast is ¥162 (down from ¥219), representing a payout reduction; the Payout Ratio is about 60.2% (based on forecast EPS), indicating a continued shareholder-return stance. Progress in H1 is undisclosed, so mid-year monitoring is needed; results may vary with FX assumptions and title release schedules.
Annual dividend was ¥219 per share (interim ¥42, year-end ¥177), with a Payout Ratio of 50.1%. This was a large increase from the prior-year dividend of ¥35, reflecting a shareholder-return policy aligned with earnings growth. Share buybacks totaled ¥999.4B, and combined with dividend payments ¥1478.6B, total returns amounted to ¥2478.0B. The Total Return Ratio (dividends + buybacks / Net Income) was approximately 91.2%, a high level, with buybacks and sales of investment securities supplementing cash generation. Next-year dividend guidance is ¥162, a reduction, but relative to forecast EPS ¥268.90 the Payout Ratio of about 60.2% is within an acceptable range, suggesting flexible allocation according to earnings. Free Cash Flow ¥797.4B versus total returns ¥2478.0B yields coverage of 0.32x, low, but ample liquidity from cash and deposits ¥17918.0B and short-term securities ¥4250.5B supports continued returns. Going forward, recovery in OCF and normalization of inventory and working capital should strengthen the sustainability of returns.
Inventory levels and obsolescence risk: Inventories ¥5398.0B (YoY +11.0%) and DIO about 140 days are high; lifecycle of hardware and transition to next-generation consoles may trigger write-downs or markdowns. Failure to compress inventory could have lagged negative effects on cash flow and margins.
FX volatility: Non-operating income included foreign exchange gains ¥443.4B and foreign currency translation adjustment ¥653.8B, indicating high FX sensitivity. Yen appreciation could reduce Revenue, profits, and comprehensive income, and deviations from the FX assumptions underlying next-year plans would directly affect results.
Dependence on non-operating income: Non-operating income comprised ¥1829.2B (33.7%) of Ordinary Income ¥5422.0B, with sizable contributions from equity-method investment income ¥827.9B, foreign exchange gains ¥443.4B, and interest received ¥460.6B. These items depend on market conditions and investee performance, posing a risk of significant volatility in Ordinary Income.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 15.6% | 7.8% (4.6%–12.3%) | +7.8pt |
| Net Margin | 11.7% | 5.2% (2.3%–8.2%) | +6.6pt |
Both Operating Margin and Net Margin materially exceed manufacturing medians, indicating a high-profit position within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 98.6% | 3.7% (-0.4%–9.3%) | +94.9pt |
Revenue growth far outpaced the manufacturing median, driven by exceptional hardware and software sales expansion this period.
※ Source: Company compilation
Potential for Operating Margin recovery: This period saw a sharp deterioration in gross margin to 39.3% (down -21.7pt), pulling Operating Margin to 15.6% (down -8.7pt). Next-year company plan forecasts Operating Income up +2.7%, incorporating mix improvement and cost efficiencies to recover margin. Increasing software mix and progress on inventory adjustments are key to margin recovery, and first-half results and FX trends will determine achievability.
Ample liquidity and return capacity: Cash and deposits ¥17918.0B and short-term securities ¥4250.5B total ¥22168.5B versus current liabilities ¥7601.5B, yielding a Current Ratio of 395.9%, indicating strong liquidity. Although total returns this period ¥2478.0B exceeded Free Cash Flow ¥797.4B, available liquidity and proceeds from sales of investment securities allowed sufficient coverage, preserving medium-to-long-term return capacity. Recovery in OCF next period should further strengthen the return base.
Volatility risk in non-operating income: Of Ordinary Income ¥5422.0B, non-operating income ¥1829.2B (33.7%) was significant, with equity-method investment income ¥827.9B, foreign exchange gains ¥443.4B, and interest received ¥460.6B contributing. These are market- and investee-dependent; the company’s plan incorporates a -20.7% decline in Ordinary Income reflecting anticipated reversals. Monitoring operating-level earnings and sustainability of non-operating items separately is necessary.
This report was generated by AI analyzing XBRL financial statement data to produce an automated earnings analysis. It does not constitute 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 responsibility; consult a professional advisor as needed.