FY2027-Q1 showed signs of recovery in both new and existing titles, but FY2027-H1 will be the key period for assessing the likelihood of achieving the full-year targets

FY2027-Q1 revenue was ¥17,368 million and operating profit was ¥5,407 million, up 17.4% and 51.3%, respectively, year on year. Ordinary profit was ¥15,719 million and net profit attributable to owners of the parent was ¥11,348 million, up 79.2% and 86.9%, respectively. The company attributed the increases in revenue and profit mainly to the launch of 2 packaged games, the start of operations for 2 IP-licensed smartphone games, strong sales of major titles launched in the previous fiscal year and back-catalogue titles, and increased earnings contributions from existing mobile titles.

However, the full-year forecasts are ¥90,000 million in revenue, ¥32,000 million in operating profit, ¥42,000 million in ordinary profit and ¥31,000 million in net profit, putting Q1 progress at only 19.3% for revenue and 16.9% for operating profit. These figures are approximately 5.7 percentage points below the 25% implied by a simple equal quarterly allocation for revenue and approximately 8.1 points below for operating profit, so it is too early to assess full-year achievement based on Q1 strength alone. Game software sales have historically increased around year-end and in March, and the company has disclosed a tendency for second-half revenue and operating expenses to exceed those in the first half. Results therefore need to be assessed in light of seasonality.

Annual revenue increased from ¥83,150 million in FY2025 to ¥88,393 million in FY2026, while the company forecast ¥90,000 million for FY2027. In other words, the FY2027 forecast is only ¥1,507 million, or 1.7%, above FY2026 actual revenue, and does not assume that Q1's 17.4% growth will continue at the same rate for the full year. In FY2027-H1, we will assess the extent to which revenue can exceed the ¥31,268 million recorded in the year-earlier period, which was centered on existing titles, and whether the contribution from new releases is continuing rather than being a one-off.

At the next results announcement, we will review cumulative H1 revenue and operating profit, any revisions to the full-year forecasts, and title-level unit sales, download numbers and earnings contributions for packaged games and smartphone games. The Q1 materials did not disclose title-level revenue, monetary conversions of unit sales, or the relationship with advertising expenses, so it will also be important to see whether the H1 materials provide additional detail on these points.