FY2027 plan targets higher operating profit despite flat revenue; the focus is on the initial progress

FY2026 results were revenue of ¥57,823 million, operating profit of ¥4,754 million, ordinary profit of ¥5,930 million and profit attributable to owners of the parent of ¥4,565 million. Revenue increased by ¥1,648 million from ¥56,175 million in the previous year, while operating profit declined by ¥114 million from ¥4,868 million. In other words, the top line grew, but the benefit of higher revenue was not captured at the operating-profit level.

The FY2027 company forecasts are revenue of ¥58,000 million, operating profit of ¥5,300 million, ordinary profit of ¥6,000 million and net income of ¥4,200 million. Revenue growth is expected to be limited to approximately 0.3% year on year, while operating profit is forecast to rise 11.5%, making profitability improvement rather than revenue expansion the core of the plan. Operating margin is calculated to improve by 0.9 percentage points from 8.2% in FY2026 to approximately 9.1%. In the next first quarter, we will examine whether product mix, advertising expenses, R&D expenses or live-event-related costs contributed to the improvement.

In the nine months ended FY2026 Q3, revenue was ¥42,356 million and operating profit was ¥4,002 million, representing progress of approximately 75.0% for revenue and 87.0% for operating profit against the full-year forecasts. Full-year results including Q4 subsequently landed at operating profit of ¥4,754 million. In the next first quarter, rather than mechanically using 25% progress as a pass-or-fail test, the analysis should separate the year-on-year comparison with FY2026-Q1 revenue of ¥13,766 million and operating profit of ¥1,668 million from the timing of contributions by new titles and major live events.

Under the FY2027 forecast, ordinary profit exceeds operating profit by ¥700 million, while net income declines by ¥365 million from the FY2026 result. In the previous year, items including interest income of ¥154 million, foreign exchange gains of ¥68 million and a gain on the sale of shares in an affiliate of ¥1,384 million boosted profit through non-operating and extraordinary items. The next first-quarter disclosure will therefore be important in clearly separating improvement in operating profit from one-time gains. The reporting structure consists of a single entertainment segment, and segment profit is not disclosed. Accordingly, where possible, unit-level profit or cost contributions should be assessed alongside unit-level revenue.