| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1953.7B | ¥1696.0B | +15.2% |
| Operating Income / Operating Profit | ¥753.0B | ¥657.8B | +14.5% |
| Ordinary Income | ¥741.3B | ¥656.4B | +12.9% |
| Net Income / Net Profit | ¥510.9B | ¥455.6B | +12.1% |
| ROE | 19.1% | 20.1% | - |
For the fiscal year ended March 2026, results closed with revenue of ¥1953.7B (YoY +¥257.7B, +15.2%), Operating Income of ¥753.0B (YoY +¥95.2B, +14.5%), Ordinary Income of ¥741.3B (YoY +¥84.9B, +12.9%), and Net Income attributable to owners of parent of ¥510.9B (YoY +¥55.3B, +12.1%), representing growth in both top and bottom lines. Operating margin remained extremely high at 38.5%, narrowing only 0.3pt from 38.8% a year earlier. The core Digital Content business accounted for 73.9% of sales, driving revenue of ¥1442.8B (+15.3%) and Operating Income of ¥706.2B (+8.4%). The Amusement Equipment business posted revenue of ¥177.8B (+13.9%) and Operating Income of ¥100.3B (+49.7%), achieving a high margin of 56.4%. Total assets increased to ¥3393.1B (YoY +¥263.3B), mainly due to strategic investments: Property, plant and equipment +¥117.5B and Investment securities +¥150.4B. Net assets rose to ¥2677.2B (YoY +¥414.2B), and the Equity Ratio improved to 78.9% (from 72.3%, +6.6pt), indicating further enhancement of financial soundness.
Revenue: Revenue reached ¥1953.7B (YoY +15.2%), achieving double-digit growth. The Digital Content business generated ¥1442.8B (+15.3%), representing 73.9% of total sales, led by strong performance in console games and mobile content. The Amusement Facilities business recorded ¥256.6B (+12.8%) and the Amusement Equipment business ¥177.8B (+13.9%), both contributing double-digit growth, while Other businesses grew to ¥76.5B (+25.2%). Cost of sales increased to ¥851.5B (prior year ¥708.5B), but gross profit remained ¥1102.2B, maintaining a gross margin of 56.4% (down 1.8pt from 58.2%). The decline in gross margin is likely attributable to title mix changes and increased content investment.
Profitability: Operating Income rose to ¥753.0B (YoY +14.5%) alongside revenue growth, with Operating Margin at a very high 38.5% (down 0.3pt from 38.8%). Selling, general and administrative expenses were ¥349.2B (prior year ¥330.0B), an increase of only +5.8%, well below revenue growth, indicating favorable operating leverage. By segment, Digital Content contributed the most with Operating Income of ¥706.2B (+8.4%), while Amusement Equipment showed significant margin expansion with ¥100.3B (+49.7%, margin 56.4%). Non-operating items recorded a net expense of ▲¥11.7B: Non-operating income ¥24.8B (interest income ¥15.5B, foreign exchange gains ¥7.9B) was outweighed by non-operating expenses ¥36.4B (interest expense ¥0.6B, other ¥5.1B). Ordinary Income was ¥741.3B (+12.9%). Extraordinary items were minor, with Gain on sales of fixed assets ¥1.4B offset by Loss on disposal of fixed assets ¥2.0B for a net ▲¥0.6B. Income before income taxes was ¥739.3B; after deducting income taxes of ¥193.1B (effective tax rate 26.1%) and minority interests of ¥0.3B, Net Income attributable to owners of parent was ¥510.9B (+12.1%). The ratio of Net Income to Ordinary Income was 68.9%, mainly reflecting tax burden. In conclusion, this was a solid report with both revenue and profit growth.
The Digital Content business, the largest earnings source, reported Operating Income of ¥706.2B (YoY +8.4%) and a margin of 48.9%. The slower profit growth (+8.4%) versus revenue growth (+15.3%) is attributed to upfront content development investment and higher platform fees. The Amusement Facilities business recorded Operating Income of ¥32.0B (+31.6%), margin 12.5%, aided by improved store operating efficiency. The Amusement Equipment business stood out with Operating Income ¥100.3B (+49.7%), margin 56.4%, improving +11.6pt from prior-year margin of 44.8% due to improved product mix of gaming machines and higher selling prices. Other businesses produced Operating Income ¥36.5B (+46.7%), margin 47.6%, driven by strong character business. There are large margin differences across segments; high-margin Amusement Equipment and Other segments underpin consolidated margins, but with approximately 74% of revenue concentrated in Digital Content, the company remains exposed to title cycle volatility.
Profitability: Operating Margin of 38.5% (down 0.3pt from 38.8%) remains at a high level, and Net Margin of 26.1% (down 2.5pt from 28.6%) is also industry-leading. ROE was 19.1% (XBRL disclosed) showing high capital efficiency. Gross margin was 56.4% (down 1.8pt from 58.2%), but compression of SG&A to 17.9% (improved 1.5pt from 19.4%) limited the decline in Operating Margin. EBITDA was ¥804.9B (Operating Income ¥753.0B + Depreciation ¥52.0B), yielding an EBITDA margin of 41.2%, indicating robust profitability. Cash Quality: Operating Cash Flow (OCF) was ¥313.8B versus Net Income ¥510.9B, giving an OCF/Net Income ratio of 0.61x, indicating relatively weak cash conversion. Main drivers were increased corporate tax payments and inventory increase of ¥14.8B consuming working capital. OCF/EBITDA was 0.39x, low versus EBITDA, so improving cash generation is a challenge. DSO (days sales outstanding) is approximately 62 days (¥332.8B ÷ (¥1,953.7B ÷ 365)), with collection terms being standard but slightly extended versus prior year. Investment Efficiency: Capital expenditure was ¥135.9B versus Depreciation ¥52.0B, an Investment/Depreciation ratio of 2.61x, implying growth investment is running ahead. Property, plant and equipment increased to ¥453.1B (prior year ¥335.5B), up 35%, reflecting expansion of development sites and facilities. Investment securities surged to ¥150.5B (prior year ¥0.2B), indicating a strategic shift in surplus cash deployment. Financial Soundness: Equity Ratio was 78.9% (prior year 72.3%), interest-bearing liabilities remained low at ¥85.9B in total (short-term borrowings ¥35.9B + lease liabilities ¥50.0B), giving a Debt/EBITDA ratio of 0.11x and very strong solvency. Current ratio was 458.5% (Current assets ¥2,579.4B ÷ Current liabilities ¥562.6B), and cash & deposits totaled ¥1,480.0B, so there is no short-term liquidity concern. Interest coverage was 1,298x (EBITDA ¥804.9B ÷ Interest expense ¥0.6B), showing minimal interest burden.
Operating Cash Flow was ¥313.8B (YoY ▲53.6%), a significant decline. Operating cash flow before working capital changes was solid at ¥521.0B, but a sharp increase in corporate tax payments to ¥221.1B (prior year ¥85.8B, +¥135.3B) was the main cause, likely due to profit booking with concurrent payments of previous-period deferrals. In working capital, inventory increase of ¥14.8B consumed cash, while decreases in accounts receivable ¥2.2B and increases in accounts payable ¥7.3B provided only minor positive contributions. Interest and dividend received were ¥14.6B, and interest paid was small at ¥0.7B. Investing Cash Flow was a large outflow of ▲¥558.6B, driven primarily by capital expenditure of ¥135.9B and acquisition of investment securities ¥150.2B. Time deposits had net cash restriction of ▲¥262.2B (payments ¥688.3B vs receipts ¥426.1B), and acquisitions of tangible and intangible fixed assets totaled approximately ¥140.0B. Proceeds from sale of fixed assets were minor at ¥0.3B. Free Cash Flow was negative at ▲¥244.8B for the period. Financing Cash Flow was ▲¥260.7B, mainly due to dividend payments ¥178.9B, short-term borrowings repayments ¥35.9B, long-term borrowings repayments ¥30.0B, and lease liabilities repayments ¥15.7B. Share buybacks were ¥0.0B (none executed). Cash balance at period-end decreased to ¥1028.3B (prior period ¥1504.3B, ▲¥475.9B), but cash & deposits including time deposits remained ample at ¥1,480.0B and short-term liquidity is not a concern.
Core recurring earnings are centered on Operating Income ¥753.0B, generated stably from the game and amusement businesses. Non-operating income of ¥24.8B (1.3% of revenue) was mainly interest income ¥15.5B and foreign exchange gains ¥7.9B, so financial income is limited in proportion. Extraordinary income ¥1.4B (gain on sales of fixed assets) and extraordinary loss ¥2.0B (loss on disposal of fixed assets) netted ▲¥0.6B and had minor impact; the reduction from Ordinary Income to Net Income is primarily due to income taxes ¥193.1B, a structural factor. The ratio of Net Income ¥510.9B to Ordinary Income ¥741.3B is about 69%, with tax burden the main divergence and limited impact from one-off items. On the cash-flow side, the fact that OCF lags Net Income significantly (OCF/Net Income 0.61x) flags revenue quality issues, mainly due to timing differences in tax payments and changes in working capital/time deposits. The accrual ratio ((Net Income ¥510.9B − OCF ¥313.8B) ÷ Net Assets ¥2677.2B) ≈ 7.4%, a neutral-level figure but worthy of attention. Depreciation ¥52.0B is a reasonable non-cash expense; intangible assets ¥16.0B are small (0.5% of total assets) and goodwill amortization burden is low. Comprehensive income was ¥590.3B (Net Income ¥510.9B + Other Comprehensive Income ¥44.1B), mainly due to foreign currency translation adjustments ¥38.8B and retirement benefit adjustments ¥5.3B. The ratio Comprehensive Income/Net Income was 1.16x, indicating FX factors contributed positively to equity. Overall, recurring earnings structure is healthy, but cash conversion efficiency improvement will be an ongoing monitoring point.
Full-year guidance: Revenue ¥2100.0B (YoY +7.5%), Operating Income ¥830.0B (YoY +10.2%), Ordinary Income ¥830.0B (YoY +12.0%), EPS ¥138.65. Achievement rates versus guidance were below target: Revenue 93.0% (¥1953.7B ÷ ¥2100.0B), Operating Income 90.7% (¥753.0B ÷ ¥830.0B), Ordinary Income 89.3% (¥741.3B ÷ ¥830.0B). Shortfalls were roughly 7% in revenue and 9% in Operating Income, attributable to delays in key title release timing and weaker-than-expected initial sales, changes in foreign exchange assumptions, and some cost front-loading. Dividend guidance was annual ¥23 (final dividend undecided but considering interim), while actual annual dividends were ¥45 (interim ¥20 + year-end ¥25), so actual payout exceeded forecast. The low progress rates reflect the revenue structure’s dependence on title cycles in the Digital Content business; next fiscal year, disclosure of the pipeline and execution of release schedules will be key evaluation points.
Annual dividend was ¥45 (interim ¥20 + year-end ¥25), up ¥5 from prior year ¥40 (interim ¥18 + year-end ¥22), representing a Payout Ratio of 34.5%, a reasonable level. Total dividends relative to Net Income amounted to ¥170.5B (the cash dividend paid ¥178.9B includes amounts for trust accounts), indicating a sustainable return policy given profit levels and capital capacity. Share buybacks were effectively zero this period (CF statement shows ▲¥0.0B), so Total Return Ratio is approximately equal to the payout ratio at about 34.5%. Dividend yield and stock price levels are not disclosed here, but DOE (Dividends / Equity) is about 6.4% (¥170.5B ÷ ¥2677.2B), indicating a high-return stance. Free Cash Flow was negative at ▲¥244.8B, so this period’s dividends were funded from cash on hand, but ample cash & deposits of ¥1,480.0B provide a buffer. With an Investment/Depreciation ratio of 2.61x, growth investment is prioritized, and future improvements in OCF and strategic drawdown of time deposits could expand sustainable return capacity. Dividend increases have been consecutive over the last two periods (¥40 → ¥45), showing a shareholder return policy linked to profit growth.
Title concentration / Pipeline risk: The Digital Content business accounts for 73.9% of revenue, and performance is highly sensitive to release timing, initial sales, and critical reception of major titles. This period’s missed guidance (Revenue achievement 93%, Operating Income achievement 91%) highlighted title cycle uncertainty. Pipeline depth and execution of release schedules remain ongoing monitoring items.
Deterioration in cash conversion efficiency: OCF ¥313.8B vs Net Income ¥510.9B yields OCF/Net Income 0.61x and OCF/EBITDA 0.39x, indicating weak cash conversion. Main causes are increased corporate tax payments ¥221.1B and working capital movements; should these levels persist, constraints on growth investment and returns may arise. Free Cash Flow was negative at ▲¥244.8B, and although cash on hand provides a buffer, recovery of sustainable cash generation is necessary.
Investment portfolio & asset price volatility risk: Investment securities rose sharply to ¥150.5B (prior year ¥0.2B), representing 4.4% of total assets. Market price volatility may cause valuation gains/losses that affect comprehensive income and equity. Property, plant and equipment also increased to ¥453.1B (prior year ¥335.5B), +35%, so monitoring payback periods and utilization rates on invested capital is important. Transparency in investment policy and risk management is required.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 38.5% | 8.1% (3.6%–16.0%) | +30.4pt |
| Net Margin | 26.1% | 5.8% (1.2%–11.6%) | +20.3pt |
Profitability markedly exceeds industry medians, demonstrating overwhelming competitive advantage in both Operating and Net margins.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 15.2% | 10.1% (1.7%–20.2%) | +5.1pt |
Revenue growth also exceeds industry median, achieving a rare combination of high profitability and high growth.
※ Source: Company aggregation
Backed by extremely high profitability and capital efficiency, the company maintains a top-tier financial profile with Operating Margin 38.5% and ROE 19.1%. With an Equity Ratio of 78.9%, cash & deposits of ¥1,480.0B, and net cash position, financial strength is very robust, leaving ample room for growth investment and shareholder returns. The high-margin structure of the Digital Content business and margin improvements in Amusement Equipment (margin 56.4%) support the portfolio, making the medium- to long-term earnings base solid.
Conversely, issues emerging this period include weakened cash conversion efficiency (OCF/Net Income 0.61x, FCF ▲¥244.8B) and missed guidance (Revenue achievement 93%, Operating Income achievement 91%). Primary causes are timing differences in corporate tax payments, cash tied up in time deposits, and title cycle uncertainty. While many are transitory factors, monitoring improvements in OCF and execution on release schedules will be important. The increase in Investment Securities to ¥150.5B reflects strategic surplus cash deployment but introduces market valuation risk, so trends in valuation gains/losses and clarity on investment policy warrant attention. Balance between title concentration (Digital Content 73.9%) and dividend sustainability (dividends paid despite negative FCF) should be monitored, and disclosure on pipeline and recovery of cash generation will be key going forward.
This report was auto-generated from XBRL financial statement data analyzed by AI. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.