TV TOKYO Holdings (9413) FY2027 Q1 Earnings Report

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Executive Summary

In Q1 of FY2027, the Company recorded lower revenue and lower profit, with its core Terrestrial and BS Broadcasting Business falling into an operating loss, significantly weighing on company-wide earnings. Revenue was ¥376.2B (-4.8% YoY), Operating Income was ¥15.3B (-53.1%), Ordinary Income was ¥19.1B (-44.7%), and Net Income (Net Income attributable to owners of the parent) was ¥13.4B (-42.7%). The primary factors were a decline in advertising revenue and deteriorating profitability in the Broadcasting Business. Although the high-margin Anime and Streaming Business provided support, it was insufficient to offset the decline.

Factors Affecting Earnings

【Revenue】Consolidated Revenue was ¥376.2B, down 4.8% YoY. As a percentage of the segment total (¥397.5B, including intersegment transactions), the Terrestrial and BS Broadcasting Business accounted for 57.0% (¥226.7B, -7.3% YoY), the Anime and Streaming Business for 31.6% (¥125.5B, +1.6%), and the Shopping and Other Business for 11.4% (¥45.3B, +4.5%). The core Broadcasting Business was the primary driver of the revenue decline, affected by weakness in advertising market conditions.

【Profit and Loss】Gross profit was ¥115.5B, with a gross margin of 30.7%, down 3.0pt from 33.7% in the previous year. Selling, general and administrative expenses were ¥100.1B, essentially flat amid the revenue decline (¥100.5B in the previous year), causing the SG&A ratio to rise to 26.6%. Consequently, the operating margin deteriorated to 4.1% from 8.3% in the previous year, a decline of 4.2pt. By segment, the Terrestrial and BS Broadcasting Business posted an operating loss of ¥5.7B, turning from a profit of ¥13.6B in the previous year, while the Anime and Streaming Business generated ¥21.9B (+6.6%, profit margin 17.5%), and the Shopping and Other Business secured ¥1.8B (+48.8%), both recording higher profits. Dividend income of ¥3.4B out of non-operating income of ¥4.2B boosted Ordinary Income. In addition, the Company recorded a gain on the sale of investment securities of ¥1.5B as extraordinary income, a temporary factor that contributed to pre-tax income of ¥20.5B. However, the effective tax rate was high at 34.6%, resulting in a substantial reduction from pre-tax income to Net Income. Accordingly, the Company is judged to have recorded lower revenue and lower profit.

Segment Analysis

The Terrestrial and BS Broadcasting Business posted Revenue of ¥226.7B (-7.3% YoY) and an operating loss of ¥5.7B, turning to a loss from a profit of ¥13.6B in the previous year, with a negative profit margin of -2.5%. The decline in advertising revenue and the relatively heavy burden of program production costs were behind the deterioration in profitability. The Anime and Streaming Business recorded Revenue of ¥125.5B (+1.6%), Operating Income of ¥21.9B (+6.6%), and a profit margin of 17.5%, maintaining the highest profitability among all company segments and serving as the main earnings driver. The Shopping and Other Business recorded Revenue of ¥45.3B (+4.5%) and Operating Income of ¥1.8B (+48.8%), achieving substantial profit growth and improving its profit margin to 4.0%. The profitability gap between segments is widening, and improving the profitability of the Broadcasting Business remains a challenge for the recovery of company-wide performance.

Key Financial Indicators

【Profitability】The operating margin was 4.1%, down 4.2pt from 8.3% in the previous year, while the net profit margin was 3.6%, down 2.3pt from 5.9% in the previous year. ROE was 1.3%, primarily due to the deterioration in profit margins.【Cash Quality】Accounts receivable were ¥321.5B, accounting for 21.6% of total assets. Although this represented a 6.3% decline from ¥342.97B in the previous year, the decrease was associated with lower revenue, requiring continued monitoring of the pace of cash conversion.【Investment Efficiency】Total asset turnover declined on a quarterly basis, indicating that the decline in the earnings power of the Broadcasting Business has also affected the efficiency of invested capital.【Financial Soundness】The Equity Ratio improved to 71.0% from 68.9% in the previous year, while the current ratio remained high at 234%, calculated as current assets of ¥932.1B divided by current liabilities of ¥398.4B. Interest-bearing debt totaled only ¥55.2B on a combined short- and long-term basis, while cash and deposits of ¥459.2B were equivalent to 8.3 times interest-bearing debt, indicating a conservative financial structure.

Cash Flow Analysis

As the cash flow statement has not been disclosed, cash trends are assessed based on changes in the balance sheet. Cash and deposits were ¥459.2B, down ¥33.2B (-6.7%) from ¥492.4B in the same period of the previous year. Accounts receivable declined to ¥321.5B (¥342.97B in the previous year, -6.3%), and investment securities declined to ¥220.9B (¥227.2B in the previous year, -2.7%). Total assets decreased 4.2% YoY to ¥1491.7B. Current liabilities also declined 11.4% to ¥398.4B from ¥449.7B in the previous year, mainly reflecting decreases in accrued expenses and provision for bonuses. Net assets were ¥1059.1B, slightly down from ¥1075.5B in the previous year, apparently affected by dividend payments and a contraction in comprehensive income. Cash remains substantially above interest-bearing debt, and the Company continues to maintain ample financial flexibility.

Quality of Earnings

Current-period earnings show a somewhat high degree of reliance on non-operating income and extraordinary income, which warrants attention when assessing earnings quality. Dividend income accounted for ¥3.4B of non-operating income of ¥4.2B, equivalent to approximately 22% of Operating Income of ¥15.3B. In addition, the Company recorded a gain on the sale of investment securities of ¥1.5B as extraordinary income, which should be distinguished from recurring business earnings as a temporary factor. The gap between Ordinary Income of ¥19.1B and Net Income of ¥13.4B reached approximately 30%, primarily due to the relatively high effective tax rate of 34.6%. By business segment, the high margin of the Anime and Streaming Business represents a high-quality recurring earnings source from the core business. Conversely, the loss in the Broadcasting Business suggests a structural decline in earnings power. Accordingly, assessment of company-wide earnings quality should take the differences between segments into account.

Earnings Forecast and Guidance

Q1 progress against the full-year company plan was 22.4% for Revenue (¥376.2B/¥1680B), 13.3% for Operating Income (¥15.3B/¥115B), 16.2% for Ordinary Income (¥19.1B/¥118B), and 16.8% for Net Income (¥13.4B/¥80B). Compared with the standard quarterly progress rate of 25%, Revenue was only slightly below the expected level, while profit progress lagged significantly. The full-year plan calls for Revenue growth of +1.9%, Operating Income growth of +0.9%, and Ordinary Income growth of -1.2%. Recovery in advertising demand in the Broadcasting Business during the second half of the fiscal year and further earnings accumulation in the Anime and Streaming Business will be key to achieving the plan. As of the current quarter, no revisions have been made to the earnings forecast or dividend forecast.

Shareholder Returns

The company’s full-year dividend forecast is ¥50 per share, representing an increase from the previous year’s interim dividend of ¥15. The Payout Ratio against forecast full-year EPS of ¥300.55 is approximately 16.6% (¥50/¥300.55). Given the conservative financial structure consisting of cash and deposits of ¥459.2B and interest-bearing debt of ¥55.2B, dividend sustainability is considered relatively high. No revision has been made to the dividend forecast during the current quarter.

Risk Factors

1. Profit volatility risk in the Broadcasting Business: The Terrestrial and BS Broadcasting Business recorded Revenue of ¥226.7B (-7.3% YoY) and an operating loss of ¥5.7B, turning into a loss. Profitability may fluctuate in the second half and thereafter depending on advertising market conditions.

2. Risk of pressure from content-related costs: The company-wide gross margin declined 3.0pt YoY to 30.7%, reflecting a structure in which program production costs and rights acquisition expenses place pressure on profit margins. Continued management of production and content-rights costs will remain important to maintaining the high margin of the Anime and Streaming Business (17.5%).

3. Working capital efficiency risk: Accounts receivable were ¥321.5B, accounting for 21.6% of total assets. Although they declined YoY, the decrease was associated with lower revenue, and the trend in the pace of cash collection requires continued monitoring.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the operating margin and net profit margin were below the industry median, with deteriorating profitability in the Broadcasting Business considered the primary reason for the Company’s relative underperformance within the industry.

Growth and Capital Efficiency

While the industry median was in positive-growth territory, the Company recorded lower revenue and ranked toward the lower end of the industry in terms of growth.

※Source: Compiled by the Company

Key Points from the Earnings Report

1. Although the Broadcasting Business’s loss-making position (operating loss of ¥5.7B) reduced the company-wide operating margin by 4.2pt, the Anime and Streaming Business served as the earnings driver with Operating Income of ¥21.9B and a profit margin of 17.5%. The widening profitability gap between segments is a notable structural feature of the earnings results.

2. Q1 profit progress against the full-year plan was 13.3% for Operating Income and 16.8% for Net Income, below the standard progress rate of 25%. The degree of recovery in the Broadcasting Business during the second half and further earnings accumulation in the Anime and Streaming Business will be key to achieving the full-year plan.

3. The financial base remains solid, with cash and deposits of ¥459.2B and an Equity Ratio of 71.0%, securing liquidity substantially exceeding interest-bearing debt of ¥55.2B. However, reliance on dividend income within non-operating income and gains on the sale of investment securities as extraordinary income contributed to the increase in Net Income, which warrants attention when assessing earnings quality.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type, explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥3,674–¥3,893 at ±1% for the cost of equity, and ¥3,774–¥3,785 at ±0.1 for ω.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used; there is a timing gap relative to the full-year forecast.
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat high.

（Calculation model: Residual income model / Interest rate reference month: 2026-06 / This value does not predict or guarantee the future share price）

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific issue. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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AI Financial Analysis

Executive Summary

FY2027 Q1 was a weak earnings start, with lower broadcasting profitability outweighing resilience in anime and distribution-related operations. Revenue declined 4.8% YoY to ¥37.63bn. Operating income fell 53.1% YoY to ¥1.54bn, materially underperforming the top-line decline. Ordinary income decreased 44.7% to ¥1.91bn, supported by ¥0.42bn of non-operating income. Net income attributable to owners declined 42.6% to ¥1.34bn, equivalent to EPS of ¥50.46. Gross profit decreased 13.3% to ¥11.55bn. The gross margin contracted by 300bp YoY to 30.7% from 33.7%. SG&A expense was broadly stable, declining only 0.3% to ¥10.01bn, which created negative operating leverage as revenue fell. Consequently, the operating margin compressed by 420bp YoY to 4.1% from 8.3%. Net margin also declined by approximately 230bp to 3.6% from 5.9%. The terrestrial and BS broadcasting segment shifted to a ¥0.57bn operating loss from a ¥1.36bn profit, representing the principal source of the consolidated earnings decline. In contrast, the anime and streaming segment expanded profit by 6.6% to ¥2.19bn and became the group’s largest operating-profit contributor. Non-operating dividend income of ¥0.34bn and a ¥0.15bn gain on sales of investment securities supported pre-tax income, reducing the decline versus operating income. Comprehensive income fell 70.8% to ¥0.97bn, as a ¥0.38bn negative valuation difference on securities offset net income. The balance sheet remains highly liquid, with ¥45.92bn in cash and deposits against ¥5.10bn of short-term loans. Full-year guidance implies that earnings recovery is heavily weighted toward the remainder of the year, particularly for broadcasting profitability. Q1 progress was below a standard 25% run rate across revenue and all major profit measures, raising execution sensitivity for the following quarters.

Profitability Analysis

Annualized DuPont ROE is 5.1%, comprising a 3.6% net profit margin, 1.009x asset turnover, and 1.41x financial leverage. The low net margin is the dominant constraint on annualized ROE, rather than balance-sheet leverage or asset utilization. Operating performance deteriorated most sharply: the operating margin declined to 4.1%, below the 5% efficiency benchmark, from 8.3% in the prior-year quarter. Gross-margin compression of 300bp was compounded by limited SG&A flexibility, as SG&A fell only 0.3% while revenue declined 4.8%. This cost structure generated negative operating leverage and drove the 53.1% decline in operating income. The primary business driver was terrestrial and BS broadcasting, where external revenue fell 8.7% YoY to ¥21.88bn and segment profit moved from ¥1.36bn to a ¥0.57bn loss. Its segment margin declined to negative 2.6% from positive 5.6%. Anime and streaming revenue was stable at ¥12.00bn, up 0.4%, while segment profit rose to ¥2.19bn from ¥2.06bn; its margin improved by approximately 110bp to 18.3%. Shopping and other revenue increased 5.5% to ¥3.74bn, and segment profit increased 48.8% to ¥0.18bn, lifting its margin to 4.9%. Anime and streaming is therefore the core business by operating-income contribution, although terrestrial and BS broadcasting remains the largest revenue source. The tax burden was 0.654, reflecting an effective tax rate of 34.6%, while the interest burden exceeded 1.0x because non-operating income exceeded net interest expense. Interest coverage of 85.28x confirms that financing costs are not constraining earnings. The low 4.1% EBIT margin is a material operating-efficiency concern: its root cause is the sharp profit reversal in the broadcasting segment and insufficient overhead absorption. For a broadcaster, advertising and content monetization can be cyclical and programming costs can be relatively fixed, but the magnitude of the margin compression makes recovery in terrestrial broadcasting a key determinant of normalized profitability. The investment implication is that group profit growth depends increasingly on the durability of anime and streaming margins and on whether the legacy broadcasting operation returns to profitability.

Growth Assessment

Revenue declined 4.8% YoY, reflecting an 8.7% contraction in terrestrial and BS broadcasting sales, partly offset by 0.4% growth in anime and streaming and 5.5% growth in shopping and other operations. The revenue mix is gradually shifting toward anime and streaming, whose ¥12.00bn of quarterly sales represented 31.9% of consolidated revenue and generated the majority of segment profit. Anime and streaming’s 18.3% segment margin compares favorably with negative 2.6% in terrestrial and BS broadcasting, indicating substantially better earnings conversion. However, anime and streaming sales growth was modest in Q1, so the segment’s profit increase principally demonstrates margin resilience rather than a broad acceleration in sales momentum. Shopping and other operations improved from a small base and remain a secondary earnings contributor. Full-year guidance calls for revenue of ¥168.0bn, operating income of ¥11.5bn, ordinary income of ¥11.8bn, and profit attributable to owners of ¥8.0bn. Q1 progress against guidance was 22.4% for revenue, 13.3% for operating income, 16.2% for ordinary income, and 16.8% for net income. Each profit progress rate is more than 10 percentage points below the standard 25% Q1 pace, indicating that management expects substantial earnings concentration in later quarters. The full-year plan implies a 1.9% increase in revenue and a 0.9% increase in operating income, requiring a meaningful recovery from the Q1 operating-margin trough. The forecast has not been revised, which places emphasis on subsequent advertising demand, programming monetization, and continued anime and streaming contribution. The ¥0.15bn gain on sales of investment securities supported Q1 pre-tax profit but should not be treated as a recurring source of operating growth.

Financial Health

Financial health is strong. The current ratio is 234.0% and the quick ratio is 231.6%, supported by current assets of ¥93.21bn relative to current liabilities of ¥39.84bn. Working capital totals ¥53.37bn. Cash and deposits of ¥45.92bn represent 30.8% of total assets and equal 9.00x short-term debt, providing substantial liquidity against refinancing needs. Total interest-bearing debt is ¥5.39bn, comprising ¥5.10bn of short-term loans and ¥0.29bn of long-term loans. Debt-to-capital is only 4.8%, and financial leverage is 1.41x, demonstrating a conservatively capitalized balance sheet. Total equity of ¥105.91bn funds 71.0% of total assets. Although the short-term debt ratio is high at 94.6%, this does not create an immediate maturity mismatch because cash alone substantially exceeds short-term loans and the current ratio is well above 1.0x. The refinancing-risk alert nevertheless warrants monitoring because the debt structure is concentrated in short-term maturities; its impact is presently mitigated by the company’s large cash reserve and very strong interest coverage. Accounts receivable were ¥32.15bn, equivalent to approximately 78 days of annualized sales. The high receivable-days alert indicates elevated capital tied up in customer balances and increases sensitivity to advertising-agency and commercial-customer collection timing. For media businesses, receivables can reflect billing cycles and advertising settlement practices, but a 78-day level remains a working-capital metric to monitor because it can delay cash realization. Investment securities of ¥22.09bn account for 14.8% of total assets, while valuation movements reduced comprehensive income during the quarter.

Notable B/S Changes

Provision for bonuses: -¥12.73bn (-51.9%) YoY to ¥11.78bn — a substantial reduction in accrued personnel-related obligations that contributed to lower current liabilities. Income taxes payable: -¥2.61bn (-91.2%) YoY to ¥0.25bn — reflects materially lower tax payable balances and reduced current-liability requirements. Accumulated other comprehensive income: -¥0.37bn (-6.3%) YoY to ¥5.47bn — negative securities valuation movements reduced comprehensive income in Q1.

Cash Flow Quality

Dividend Sustainability

The full-year dividend forecast is ¥100 per share. Against forecast EPS of ¥300.55, the indicated dividend payout ratio is 33.3%, below the 60% sustainability benchmark. The payout is also equivalent to approximately ¥2.66bn based on Q1 weighted-average shares, compared with forecast profit attributable to owners of ¥8.0bn. Retained earnings of ¥75.40bn and cash and deposits of ¥45.92bn provide substantial balance-sheet support for the planned dividend. The earnings-based dividend burden is therefore moderate, even though Q1 earnings were weak. Maintaining the forecast dividend depends primarily on delivery of the full-year earnings plan, which requires profit acceleration after the Q1 shortfall. No dividend revision has been announced.

Risk Assessment

Business risks include Broadcasting profitability risk: terrestrial and BS broadcasting revenue declined 8.7% YoY to ¥21.88bn and segment profit reversed to a ¥0.57bn loss from a ¥1.36bn profit. Given the segment’s 58.1% share of consolidated revenue, continued weakness would materially constrain achievement of the full-year operating-income plan., Advertising and content-monetization risk: the 420bp decline in consolidated operating margin to 4.1% illustrates high earnings sensitivity to revenue movements and limited short-term overhead flexibility., Anime and streaming concentration risk: anime and streaming generated ¥2.19bn of segment profit, exceeding consolidated operating income before adjustments. Its continued margin resilience is increasingly important to offset cyclical weakness in broadcasting., Investment-market risk: investment securities totaled ¥22.09bn, and negative valuation differences on securities contributed to the decline in comprehensive income..

Financial risks include Short-term refinancing concentration: 94.6% of interest-bearing debt is short-term. The likelihood of acute liquidity stress is low because cash is 9.00x short-term debt, but maturity concentration remains relevant if treasury policy or operating conditions change., Receivables-collection risk: annualized DSO is approximately 78 days, above the 60-day alert threshold. Slower customer collections would increase working-capital requirements despite the currently strong liquidity position., Low operating efficiency: the 4.1% EBIT margin is below the 5% alert threshold. A sustained sub-5% margin would weaken returns despite a strong balance sheet..

Key concerns include Highest priority is the recovery path for terrestrial and BS broadcasting, because the segment’s loss was the main driver of the consolidated operating-income decline., The full-year forecast requires a significant second-half-weighted profit recovery: Q1 operating-income progress was only 13.3% versus a standard 25% pace., The ¥0.34bn of dividend income and ¥0.15bn securities-sale gain supported earnings below the operating line, making Q1 net income more resilient than core operating profit., Receivable days, broadcasting revenue trends, anime and streaming margin retention, and the composition of short-term funding should be monitored together..

Investment Implications

Key takeaways include Q1 earnings deterioration was severe, with operating income down 53.1% YoY and operating margin down 420bp to 4.1%., Anime and streaming is the core profit engine, delivering ¥2.19bn of segment profit and an 18.3% margin despite only 0.4% revenue growth., Terrestrial and BS broadcasting remains the largest revenue base but recorded a ¥0.57bn segment loss, making its recovery central to group earnings normalization., Balance-sheet resilience is substantial, with ¥45.92bn of cash, a 234.0% current ratio, 4.8% debt-to-capital, and 85.28x interest coverage., The forecast dividend payout ratio of 33.3% appears moderate relative to forecast earnings and retained capital..

Metrics to watch include Terrestrial and BS broadcasting revenue and segment margin, Anime and streaming revenue growth and segment margin, Consolidated operating-margin recovery from 4.1%, Quarterly progress toward ¥11.5bn full-year operating-income guidance, Annualized DSO, currently approximately 78 days, Short-term loan balance and cash-to-short-term-debt coverage, Valuation changes in investment securities and their effect on comprehensive income.

Regarding relative positioning, The company combines a financially conservative balance sheet with an increasingly profitable anime and streaming franchise, but its current earnings profile is held back by weak terrestrial and BS broadcasting profitability. Relative operating quality is therefore bifurcated: anime and streaming produces a high segment margin, while the legacy broadcasting operation currently depresses consolidated returns.