Q1 progress was profit-led, but achievement of the full-year decline plan depends on H2

Revenue for the first quarter of the fiscal year ending March 2027 was ¥22,033 million, up 13.1% year on year, while operating profit was ¥7,465 million, up 13.5%. Ordinary profit was ¥8,241 million, and profit attributable to owners of the parent was ¥6,027 million, up 15.4% and 15.3%, respectively. Both revenue and profit increased, resulting in profit growth accompanied by top-line growth rather than a simple combination of lower revenue and higher profit.

The full-year forecasts remain unchanged at revenue of ¥100.0 billion, operating profit of ¥25.0 billion, ordinary profit of ¥25.6 billion and net profit of ¥18.1 billion. First-quarter progress was 22.0% for revenue, 29.9% for operating profit, 32.2% for ordinary profit and 33.3% for net profit, with each profit measure from operating profit onward exceeding the revenue progress rate. Securing approximately 30% of the full-year operating profit plan in the first quarter is solid, but the company attributed revenue to timing differences, so simple annualisation of quarterly results requires caution.

After deducting first-quarter results from the full-year plan, the company needs to generate ¥77,967 million of revenue and ¥17,535 million of operating profit over the remaining 3 quarters. The full-year forecast implies an operating margin of only 25.0%, compared with 33.9% in the first quarter, indicating a plan for lower margins based on new content releases and higher costs. At the end of the first half, revenue of ¥50.0 billion and operating profit of ¥12.5 billion can be used as progress benchmarks.

At the next earnings release, we will look at how much of the revenue described as timing-related is recovered in the cumulative second-quarter results, and whether the contributions from the overseas business and video production and distribution business, which boosted first-quarter profit, continue. Even if the full-year forecast remains unchanged, if first-half progress falls significantly below 50% for both revenue and operating profit, the required performance in the second half will rise further. Conversely, if the company consumes the profit plan ahead of schedule in the first half, this will provide a basis for assessing the gap versus the forecast for lower full-year profit.