| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4844.2B | ¥4619.1B | +4.9% |
| Operating Income | ¥693.3B | ¥549.2B | +26.2% |
| Ordinary Income | ¥820.8B | ¥657.2B | +24.9% |
| Net Income | ¥617.5B | ¥474.3B | +30.2% |
| ROE | 6.0% | 4.8% | - |
For the fiscal year ended March 2026, the company closed with Revenue ¥4,844.2B (YoY +¥225.1B +4.9%), Operating Income ¥693.3B (YoY +¥144.1B +26.2%), Ordinary Income ¥820.8B (YoY +¥163.6B +24.9%), and Net Income attributable to owners of parent ¥617.5B (YoY +¥143.2B +30.2%), delivering both top-line and bottom-line growth. Operating margin improved by 2.4pt to 14.3%, and net margin expanded by 1.8pt to 12.7%, indicating a material improvement in profitability. The core Content & Media Business led performance with Revenue +5.0% and Operating Income +28.6%, lifting its margin to 14.8%. Non-operating items included equity-method investment income ¥53.6B, interest income ¥31.4B, and dividend income ¥30.9B, totaling ¥135.8B of non-operating income. Extraordinary items were net positive ¥49.2B, primarily due to gains on sales of investment securities ¥83.5B, which further boosted final profit. ROE improved slightly to 6.0%, but with an Equity Ratio of 80.4% and very strong balance sheet, there remains significant scope to improve capital efficiency.
Revenue increased to ¥4,844.2B (YoY +4.9%). By segment, the Content & Media Business accounted for ¥4,528.9B (+5.0%), representing 93.5% of total revenue, driven by recovery in advertising revenue and expansion in distribution & rights businesses. The Wellness Business grew slightly to ¥276.6B (+3.4%), and the Real Estate-related Business was largely flat at ¥115.5B (+0.2%). External factors such as improvement in advertising market conditions and higher interest income supported results.
On the profit side, Gross Profit was ¥1,808.9B, improving gross margin by 2.0pt to 37.3%. SG&A was controlled at ¥1,115.6B (SG&A ratio 23.0%, improved -0.4pt from 23.4% a year earlier). Operating Income was ¥693.3B (+26.2%), with Operating Margin improving 2.4pt to 14.3%. Non-operating income of ¥135.8B (equity-method income ¥53.6B, interest income ¥31.4B, dividend income ¥30.9B, etc.) lifted Ordinary Income to ¥820.8B (+24.9%), expanding Ordinary Income margin to 16.9% (+2.7pt). Extraordinary income totaled ¥89.4B (primarily gain on sales of investment securities ¥83.5B), while extraordinary losses were ¥40.2B including impairment losses ¥32.5B, resulting in a net extraordinary gain of ¥49.2B. Income taxes were ¥252.5B (effective tax rate 29.0%), and non-controlling interests were ¥49.8B, yielding Net Income attributable to owners of parent of ¥617.5B (+30.2%), with net margin improving 1.8pt to 12.7%.
The Content & Media Business reported Revenue ¥4,528.9B (+5.0%) and Operating Income ¥671.1B (+28.6%), improving margin to 14.8% and accounting for 96.8% of consolidated Operating Income as the core driver. Recovery in ad slot sales, expansion in distribution and royalty income, and cost/SG&A efficiencies contributed. The Wellness Business posted Revenue ¥276.6B (+3.4%) but swung to an operating loss of ¥0.7B (from operating income ¥1.9B a year ago), with a margin of -0.3% and recorded impairment losses of ¥32.5B. The Real Estate-related Business had Revenue ¥115.5B (+0.2%) and Operating Income ¥41.4B (-7.0%), maintaining a high margin of 35.8% though with slight profit decline. Corporate costs increased to ¥40.5B (prior year ¥36.8B), reflecting higher overhead in administrative functions.
Profitability: Operating Margin 14.3% (prior 11.9%, +2.4pt), Net Margin 12.7% (prior 10.3%, +2.4pt), ROE 6.0% (slightly improved from ~5.8%), indicating improved profitability. Gross Margin 37.3% (prior 35.3%, +2.0pt) and SG&A ratio 23.0% (prior 23.4%, -0.4pt) show better cost and expense efficiency. Ordinary Income margin 16.9% (prior 14.2%, +2.7pt) benefited substantially from non-operating income.
Cash quality: Operating Cash Flow / Net Income is 1.07x, indicating good cash backing of profit. However, OCF/EBITDA is 0.74x, below the 0.9x guideline, pointing to issues in working capital efficiency. DSO is 91 days (Accounts receivable ¥1,205.2B ÷ Daily sales 5,484.2百万円 × 365 days), indicating collections take 91 days; this is slightly improved from prior DSO 94 days but remains long. Investment efficiency: Capex / Depreciation is 0.55x (Capex ¥67.8B ÷ Depreciation ¥123.2B), at a low level with continued restraint in capital expenditures. R&D expense is ¥1.6B (0.03% of sales), very limited. Financial soundness: Equity Ratio 80.4% (prior 79.7%, +0.7pt), Debt-to-Equity 0.24x, Current Ratio 293.7%, reflecting a very healthy balance sheet with Cash and Deposits ¥962.0B and Short-term investment securities ¥1,230.0B providing substantial liquidity. Interest-bearing debt totaled ¥51.7B (Short-term borrowings ¥37.5B, Long-term borrowings ¥14.2B), yielding Cash/Short-term debt 25.6x, Debt/EBITDA 0.06x, and Interest Coverage >300x, indicating limited financial risk. Investment securities held ¥5,914.5B (46.1% of total assets), highlighting large unrealized assets but exposure to market volatility.
Operating Cash Flow was ¥607.8B (YoY +¥129.8B +26.9%), with operating cash subtotal ¥809.6B from which taxes paid ¥265.1B and changes in working capital including AR increase -¥21.1B and AP increase +¥26.1B were processed. Investing Cash Flow was -¥275.3B, with Capex -¥67.8B and short-term investment securities purchases -¥300.0B offset by redemptions +¥1,100.0B and investment securities purchases -¥1,074.6B, indicating large liquidity management flows. Free Cash Flow was ¥332.5B (prior ¥215.2B, +54.5%), and Financing Cash Flow used -¥207.7B for dividends ¥103.0B, share buybacks ¥100.0B, and debt repayments ¥12.2B. Cash increased by ¥124.9B to an ending balance of ¥1,295.5B. While Operating CF / Net Income 1.07x indicates good cash conversion of profit, the reduced OCF/EBITDA 0.74x was affected by working capital management and higher tax payments. Continued restraint in Capex warrants monitoring from the perspective of medium- to long-term asset maintenance and competitive strength.
Operating Income ¥693.3B vs Ordinary Income ¥820.8B shows a difference of +¥127.5B, mainly from recurring financial income such as equity-method income ¥53.6B, interest income ¥31.4B, dividend income ¥30.9B, and investment partnership gains ¥10.4B. Net Income ¥617.5B was derived from Ordinary Income adjusted by net extraordinary items +¥49.2B (gain on sales of investment securities ¥83.5B - impairment losses ¥32.5B, etc.) to reach pre-tax income ¥870.0B, then less income taxes ¥252.5B and non-controlling interests ¥49.8B. Most extraordinary gains were from sales of investment securities and are temporary; Comprehensive Income ¥642.5B includes Net Income ¥617.5B plus Net change in valuation of securities +¥20.8B, Foreign currency translation adjustments +¥0.1B, and OCI of equity-method investees +¥4.0B, reflecting accumulation of unrealized asset gains. The Operating CF to Net Income ratio of 1.07x indicates good cash backing of profit, but the decline in OCF/EBITDA to 0.74x—driven by working capital efficiency (DSO 91 days) and higher taxes paid ¥265.1B—warrants attention to earnings quality. Distinguishing recurring income (Operating Income + equity-method income + financial income) from one-off income (sale gains, etc.), the sustainability of recurring income depends on advertising market conditions, content hits, and financial market environment.
Full year guidance projects Revenue ¥5,350.0B (YoY +10.4%), Operating Income ¥490.0B (YoY -29.3%), Ordinary Income ¥590.0B (YoY -28.1%), EPS ¥208.18, and Dividend ¥10.00. Despite expected Revenue growth, operating and ordinary profits are forecast to decline materially, with Operating Margin falling to 9.2%. Compared to current results, progress rates at the half-year point were Revenue 90.5%, Operating Income 141.5%, and Ordinary Income 139.1%, indicating performance already materially above the full-year guidance. The second-half profit decline is presumed to incorporate front-loaded content production and distribution investments, adjustments in advertising rates, and reversals of one-off items in extraordinary and non-operating income. The Dividend guidance ¥10.00 suggests annual Dividend of ¥20.00 when combined with the interim ¥10.00, a substantial cut from prior year Dividend ¥45.00; however, the Dividend Payout Ratio on EPS forecast (Dividend Payout Ratio) is 9.6%, very conservative, so an upward revision is possible given strong performance to date. The outlook of higher Revenue but lower profits suggests shifting revenue mix and front-loaded costs, requiring mid-term monitoring of profitability.
Annual Dividend was ¥45 (Interim ¥10, Year-end ¥35), with Dividend Payout Ratio 21.8% (total Dividends ¥103.0B against Net Income ¥617.5B), a conservative level. Share buybacks of ¥100.0B were executed, increasing treasury stock to ¥253.2B (prior year ¥190.4B, +¥62.8B). Total shareholder returns amounted to ¥203.0B (Dividends ¥103.0B + Share buybacks ¥100.0B), yielding a Total Return Ratio of 32.9% relative to Net Income, which is comfortably covered by Free Cash Flow ¥332.5B. Dividend coverage by FCF is 3.2x, and total returns coverage by FCF is 1.6x, indicating very high sustainability. The next fiscal year Dividend guidance ¥10.00 (Payout Ratio 9.6%) implies a deep cut, but considering conservative guidance and strong first-half progress, upside to the Dividend is possible. With Equity Ratio 80.4% and ample capital, continued share buybacks and stabilization/strengthening of Dividend policy are focal points to improve capital efficiency and shareholder returns.
High dependence on Content & Media Business: With 93.5% of Revenue and 96.8% of Operating Income derived from this business, fluctuations in the advertising market, changes in program viewership and distribution KPIs, and inflation in content production costs directly affect earnings. The next fiscal year guidance forecasting Operating Income down -29.3% suggests front-loaded production/distribution investments and margin compression, highlighting the need for portfolio diversification and cost efficiency.
Working capital efficiency and low investment levels: DSO 91 days demonstrates slow receivables collection, and OCF/EBITDA 0.74x underscores the need for stricter working capital management. Capex/Depreciation 0.55x shows restrained capital expenditure, which could risk mid- to long-term asset maintenance and competitiveness. R&D expense 0.03% is minimal, raising concern about underinvestment in digital and distribution technologies.
Market risk in investment securities: Investment securities account for 46.1% of total assets, and the divergence between Comprehensive Income and Net Income (+¥25.0B) indicates volatility in valuation differences. Gains on sales of investment securities ¥83.5B are one-off; market deterioration could result in valuation losses or reduced sale gains, risking downside to earnings. The impairment of the Wellness Business ¥32.5B indicates structural profitability issues, leaving risks around business restructuring or additional impairments.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.3% | 8.1% (3.6%–16.0%) | +6.2pt |
| Net Margin | 12.7% | 5.8% (1.2%–11.6%) | +6.9pt |
| Profitability materially exceeds industry median and sits in the top quartile. |
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.9% | 10.1% (1.7%–20.2%) | -5.2pt |
| Growth is below the industry median, placing the company in lower-growth territory within the IT & Communications sector. |
※Source: Company compilation
While the marked improvement in profitability and an ultra-strong balance sheet stand out, next fiscal year guidance forecasts Revenue growth but a significant decline in Operating Income, implying front-loaded content investments and margin compression. The strong first-half progress (Operating Income progress 141.5%) suggests conservatism in the full-year guidance and potential for upward revision depending on second-half results. Medium-term margin sustainability hinges on monetization progress in content & distribution businesses and sustained cost efficiencies.
Robust FCF generation ¥332.5B and total shareholder returns ¥203.0B (Total Return Ratio 32.9%) indicate strong capacity for shareholder returns. With Equity Ratio 80.4% and ROE 6.0%, there is considerable room to improve capital efficiency; continuation of buybacks and stabilization of dividend policy (including potential upward revision of the next fiscal year Dividend ¥10) could enhance capital efficiency and shareholder returns. Working capital efficiency (DSO 91 days) and low investment intensity (Capex/D&A 0.55x) should be improved to sustain competitiveness over the medium to long term.
Investment securities ¥5,914.5B (46.1% of total assets) provide balance sheet depth but expose the company to market volatility and reliance on gains on sales of securities (¥83.5B this period), warranting caution on earnings quality and stability. Structural improvement of the Wellness Business (impairment ¥32.5B, operating loss) and sustaining high margins in the Real Estate-related Business (35.8%) are key to portfolio stabilization.
This report is an AI-generated earnings analysis document created by analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are compiled by the company based on public financial statements and provided for reference. Investment decisions are your responsibility; please consult professionals as needed before making investment decisions.