FY2026 revenue flat, margins down: front-loaded investment or a structural change in earnings power?

Full-year FY2026 revenue was ¥8,522 million, down just 0.2% from ¥8,535 million in FY2025. Operating profit, however, was ¥2,392 million, down ¥634 million, or 20.9%, from ¥3,026 million in the previous year. The operating margin calculated from these figures fell by approximately 7.4 percentage points, from approximately 35.5% in FY2025 to approximately 28.1% in FY2026. The fact that margins deteriorated more than revenue declined is significant.

On a cumulative quarterly basis, first-half FY2026 revenue was ¥4,143 million and operating profit was ¥1,200 million, up 13.3% and 4.8%, respectively, year on year. By the nine-month period, however, revenue growth had slowed to 0.0% year on year, at ¥6,057 million, while operating profit fell 19.0% to ¥1,696 million. Fourth-quarter revenue alone was ¥2,465 million and operating profit was ¥696 million. The full-year decline in profit was therefore strongly affected by lower margins in the second half, particularly from the third quarter onward.

By business category, FY2026 revenue from the company’s own IP was ¥8,062 million and revenue from third-party IP was ¥460 million. Within own-IP revenue, manga accounted for ¥6,049 million, light novels for ¥1,266 million, and anime and other businesses for ¥745 million. Manga declined 5.0% year on year and light novels declined 7.2%, while anime and other businesses grew 8.1%. The company cites increased editorial headcount, higher manga manuscript fees, investment in visual novel game development, a decline in the benefit from driving e-book sales, and slower new overseas licensing approvals as factors behind the decline in profit, but it does not disclose the amount by which each factor reduced profit. Although some costs, including ¥53 million in listing-related expenses and other items, are disclosed, the total amount of growth investment and the timing of its recovery cannot be confirmed.

For FY2027, the company forecasts revenue of ¥8,780 million, operating profit of ¥2,545 million, and adjusted EBITDA of ¥2,694 million. The plan calls for revenue growth of approximately 3.0% and operating profit growth of approximately 6.4% from FY2026, but the operating margin would remain at approximately 29.0%, below FY2025’s 35.5%. In the next results announcement, it will be necessary to confirm not only whether increased publication volumes and new game and anime businesses lifted revenue, but also whether growth in editorial personnel costs, manuscript fees, and development costs was below the revenue growth rate, and whether the company discloses the basis for margin recovery in monetary terms.