User shortfall at the news media business weighs on media earnings

In the fiscal year ended May 2026, the media business generated revenue of ¥5,470 million and segment profit of ¥1,163 million, down 9.6% and 18.3%, respectively, from the previous fiscal year. The media business accounted for approximately 84.9% of total company revenue of ¥6,441 million, on a simple calculation. Even if other businesses, including Game8, expand, consolidated performance will remain heavily dependent on the media business's profitability. The segment margin had also fallen to approximately 21.3%, making it important to assess not only revenue scale but also advertising rates, ad inventory and revenue per user.

The company explains that DAU fell below expectations and user numbers fell short of plan because there was little news likely to attract attention on its news-curation media platform. This points to a qualitative issue involving weak content engagement and usage frequency, rather than simply the result of reduced advertising and promotional expenses. The company has also previously explained that improvements to its algorithms and notification functions improved long-term retention. In FY2027 Q1, the presence or absence of improvement should therefore be assessed using the combination of new users, DAU, MAU, retention and revenue per user, rather than new users alone.

As of the end of May 2026, cumulative downloads for the 3 apps, Gunosy, News Light and au Service Today, totalled 80.25 million. However, cumulative downloads are a stock metric and do not directly indicate current usage frequency or advertising revenue. If FY2027 Q1 reports only an updated cumulative download figure without actual DAU, performance against plan, year-on-year performance or a breakdown by app, it will not be possible to adequately assess the underlying user base.

For the core cash business in the fiscal year ending May 2027, the company forecasts revenue of ¥4,316 million and operating profit of ¥785 million to ¥920 million. At the next earnings release, we will assess whether quarterly media revenue and segment profit are tracking the assumptions underlying this range, as well as the amount of advertising and promotional expenses and its year-on-year change, the effect of changes to the advertising logic, and the quarter-on-quarter change in revenue per user. Without these disclosures, cumulative download growth should not be equated with a recovery in earnings.