First-quarter results are mechanically on track against the full-year plan, but a recovery in first-half demand has yet to be confirmed

In the first quarter of the fiscal year ending March 2027, revenue was ¥5,092 million, operating profit was ¥1,194 million, ordinary profit was ¥1,378 million and net income attributable to owners of the parent was ¥932 million. The full-year forecasts are revenue of ¥21,000 million, operating profit of ¥3,000 million, ordinary profit of ¥3,500 million and net income of ¥2,400 million, putting first-quarter progress at 24.2% for revenue, 39.8% for operating profit and 38.8% for net income. Revenue was broadly in line with the 25% elapsed-quarter benchmark, while profit was ahead on a relative basis.

However, compared with revenue of ¥6,723 million and operating profit of ¥1,709 million in the same quarter of the previous year, revenue declined 24.3% and operating profit declined 30.1%. Operating profit declined 5.8 percentage points more than revenue, indicating pressure on margins in addition to the contraction in revenue. Although it is too early to judge whether the full-year plan will be achieved based on the first quarter alone, the first point to monitor is whether the year-on-year deterioration continues through the second quarter.

The comparable first half of the fiscal year ended March 2026 recorded revenue of ¥14,202 million and operating profit of ¥3,606 million. As cumulative first-half results for the current fiscal year have not yet been disclosed, the next earnings release will need to confirm the year-on-year changes against these results. The figures of ¥10,500 million in revenue and ¥1,500 million in operating profit are mechanical benchmarks obtained by simply dividing the full-year forecasts by two. They are not formal first-half targets provided by the company or seasonally adjusted plans.

The company cited slower-than-expected market penetration of smart pachinko, higher component prices and labor costs, and a cautious stance among amusement hall operators toward capital investment as factors behind the first-quarter declines in revenue and profit. However, it has not disclosed how many millions of yen each factor reduced revenue, or the extent to which the number of machines sold and the number of installing venues changed. Accordingly, it will also be important to see whether a quantitative explanation of demand and cost factors is provided, in addition to the first-half figures.

At the next earnings release, we will need to confirm how much cumulative first-half revenue exceeds the mechanical benchmark of ¥10,500 million and operating profit exceeds ¥1,500 million, and whether the declines from the previous year's ¥14,202 million in revenue and ¥3,606 million in operating profit have narrowed. In addition, confirming whether the full-year forecasts of ¥21,000 million in revenue, ¥3,000 million in operating profit and ¥2,400 million in net income have been revised will help assess whether the first quarter's profit being ahead of schedule is temporary or represents sustained progress supporting the second-half plan.