TV TOKYO Holdings Corporation 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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