Revenue declined in Q1, but operating margin surged; H1 will test the sustainability of high profitability

FY2027 Q1 revenue was ¥6,255 million, down 28.4% from approximately ¥8,739 million in the prior-year quarter. Operating profit, however, increased from ¥243 million to ¥1,042 million, and the operating margin rose from approximately 2.8% to approximately 16.7%. Since profit increased as revenue contracted, the focus of these results is not revenue growth but how repeatable the improvement in profitability is.

By segment, the digital content business reported revenue of ¥2,752 million and segment profit of ¥382 million, the amusement business reported revenue of ¥2,304 million and segment profit of ¥560 million, and the music and visual content business reported revenue of ¥1,198 million and segment profit of ¥517 million. The three segments generated combined segment profit of ¥1,459 million, a difference of ¥417 million from consolidated operating profit of ¥1,042 million. However, the current disclosure does not break down company-wide expenses or intersegment adjustments.

The full-year operating profit forecast is ¥3,000 million, and the Q1 progress rate was 34.7%, above the simple quarterly elapsed rate of 25%. Revenue progress, meanwhile, was only 20.9%, showing a clear difference in the pace of revenue and profit. In H1, cumulative revenue of ¥15,000 million and cumulative operating profit of ¥1,500 million should be used as simple half-year benchmarks, while it will be necessary to check whether the Q2 operating margin alone can remain at 10% or higher. It will also be important to see whether quarterly SG&A expenses, development costs, advertising expenses, and the amount of company-wide adjustments are disclosed.