The key question is whether FY2026 operating profit will come in at ¥1,300 million after the mid-year downward revision

Revenue for the FY2026 interim period was ¥3,876 million, up 2.8% year on year, while operating profit was ¥501 million, down 33.1%, ordinary profit was ¥620 million, down 25.4%, and interim net profit was ¥445 million, down 32.0%. The increase in revenue has not flowed through to profit, with progress against the full-year forecast standing at 47.3% for revenue versus 38.5% for operating profit. Profit progress is therefore 8.8 percentage points behind revenue progress.

At the same time as announcing its interim results, the company revised its full-year revenue forecast from ¥9,000 million to ¥8,200 million and its operating profit forecast from ¥2,000 million to ¥1,300 million. Based on a simple calculation from the interim results, achieving the full-year forecasts will require ¥4,324 million in revenue and ¥799 million in operating profit in the second half. The latter exceeds the interim operating profit of ¥501 million, meaning that continued contributions from hit titles and sales from new labels will not be enough; the company will also need to absorb upfront investment and rising costs.

In the fiscal year ended December 2025, revenue was ¥8,143 million and operating profit was ¥1,756 million. Accordingly, the revised FY2026 forecast represents only 0.7% revenue growth but a 26.0% decline in operating profit. The company is revising its medium-term management plan on a rolling basis for fiscal 2026 to fiscal 2028, shifting from its previous growth assumptions to a plan that factors in the shrinking publishing market and higher manufacturing costs. If there is no further downward revision at the next earnings release, at least ¥1,300 million will serve as the current target for an operating profit floor.

At the third-quarter earnings release, the key items to check will be nine-month cumulative revenue and operating profit, progress against the revised full-year forecasts, and the amounts of revenue and profit required in the fourth quarter. Materials through the interim period explain profit-reducing factors such as upfront investment, printing costs, personnel expenses and advertising expenses, but do not disclose a breakdown by factor or standalone quarterly figures for the three months. Whether the nine-month cumulative operating margin exceeds 12.9%, or whether the full-year forecasts are revised again, will determine the assessment of the next earnings release.