FY2025 Full-Year (4Q) Presentation (Transcript) [PDF：165KB]
Toshiki Oya, Senior Vice President, CFO:
Greetings to everyone. I am CFO Toshiki Oya. Thank you for joining the full-year FY2026 financial results briefing of GREE Holdings.
Page 2 shows the business presentation update to reflect progress made under the management plan. To better reflect the actual state of our businesses and their expanding scope, we have redefined our segment names and categories. The VTuber Business is renamed the Live Entertainment (LE) Business. The IP Business is renamed the Anime,
Manga and Merchandising (AMM) Business. The DX Business and the Engineering Business have been consolidated into the AI Business. Furthermore, we have divested from the
Investment Business, and its impact will be shifted to non-operating income and expenses, as we aim to shift our capital and resources to the high-growth entertainment and AI sectors.
Page 3 provides an executive summary for the full year of FY26. On a four segments basis, we posted net sales of ¥48.7 billion, operating profit of ¥4.7 billion, and EBITDA of ¥5.1 billion. While executing investments targeting renewed growth, our thorough efficient operations enabled us to surpass our operating profit forecast. For our FY27 earnings forecast on a consolidated basis, we will focus on growing our continuous growth businesses, particularly the Live Entertainment Business. The profit contribution from continuous growth businesses is expected to reach approximately 70% of total operating profit.
Page 4 covers the overview for Q4 FY26. On a four segments basis, the reactive decline from anniversaries in the Game Business was absorbed by the growth of other businesses, allowing us to land with profit exceeding expectations. A major highlight is that the
Production Business within the Live Entertainment Business achieved profitability on both a monthly and quarterly basis ahead of schedule. The Investment Business also finished in the black due to distributions from investee funds, leading to QoQ profit growth on a consolidated basis.
Page 7 shows the financial results overview for GREE Holdings on a consolidated basis. Net sales and operating profit are as shown. Ordinary profit and net profit were lifted by foreign exchange gains due to the gradual depreciation of the yen over the fiscal year, as well as gains from the sale of investment securities.
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Page 8 shows the financial results overview on a four segments basis.
Page 9 provides an operating profit analysis for the four segments. As mentioned, despite the reactive decline in sales in the Game Business, variable and fixed costs decreased, allowing us to maintain operating profit at ¥1.46 billion, nearly flat QoQ.
Page 10 covers our cost structure for the four segments. Looking at variable costs, commission fees, etc. decreased due to the decline in net sales. Advertising costs also decreased, primarily driven by improved user acquisition efficiency in the Platform Business.
Regarding fixed costs, costs decreased as we received development support payments associated with the progress of new title development in the Game Business.
Page 11 shows the FY26 year-end dividend and the FY27 dividend forecast. As announced in our previous briefing, we aim to secure a DOE (dividend on equity ratio) of around 4%, and we resolved today to pay an FY26 year-end dividend of ¥22 per share. We are also providing a dividend forecast for FY27, aiming for an annual dividend of ¥22 per share to secure the 4% DOE. Additionally, to return profits to shareholders in a more timely manner, we will transition from a single year-end dividend to semiannual dividend payments (interim and year-end) starting from FY27, forecasting ¥11 for both the interim and year-end dividends.
Sanku Shino, Senior Vice President, CSO:
Next, Sanku Shino will explain the progress toward the management plan targets.
Page 14 shows the trends in sales and operating profit for the four segments. As explained earlier, net sales were ¥11.9 billion, and operating profit was ¥1.46 billion.
Page 15 shows our vision for long-term growth. We position the Game Business as a long- term investment business aiming for upside revenue. On the other hand, the Live
Entertainment, AI, and Anime, Manga and Merchandising businesses are positioned as continuous growth businesses where we aim to steadily monetize and grow core earnings.
Page 16 highlights the sales and operating profit of our continuous growth businesses. As you can see, while there are quarterly fluctuations, we are steadily growing the operating profit of these continuous growth businesses.
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Page 17 shows the business conditions for the four segments. Operating profit landed higher than expected, largely due to the Production Business achieving quarterly profitability ahead of schedule.
Page 18 provides our earnings estimates for Q1 FY27 on a consolidated basis. We expect
QoQ sales growth driven by contributions from new console game titles. However, we anticipate a temporary decline in profit due to the reactive decline from the development support payments received in Q4 and increased development investments for new titles.
Page 19 shows our earnings forecast for full-year FY27 on a consolidated basis. In the Game
Business, we have revised the release timing of a major third-party IP title, expecting a decline in profit. However, we anticipate significant growth in our continuous growth businesses, centered on the Live Entertainment Business, which will cover the cyclical nature of the Game Business.
Page 20 shows our medium-term targets. Compared to the previous medium-term plan, we have partially revised our targets downward for FY27 due to the delayed launch of the major IP title. However, we forecast a return to strong growth from FY28 onward, driven by the contribution of the Game Business and the continuous growth businesses. We also plan to formulate and announce our capital policy, including capital allocation, during FY27 to sustainably enhance corporate value.
Page 21 highlights the continuous growth businesses within our medium-term targets. We expect to grow these businesses steadily over the next three years, with their operating profit share reaching approximately 70% in FY27 and maintaining around 50% thereafter.
Yota Yanagihara, Senior Vice President:
Next, Yota Yanagihara will explain the Game Business.
Page 25 shows the sales and operating profit in the Game Business. In Q4, we posted net sales of ¥6.8 billion and operating profit of ¥1.0 billion. Despite the reactive decline from anniversaries of major titles, thorough operational efficiency allowed us to secure profits that exceeded expectations.
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Page 26 provides a summary of the Game Business. As you can see, development of new titles progressed as planned, and we made steady progress on initiatives to expand our pipeline.
Page 27 and 28 cover the Live Service Game Business and the Console Game Business. For the Console Game Business, Another Eden Begins is scheduled for release on September
17. As development nears completion, investment amounts are slightly decreasing. We will utilize the technology and expertise gained here to establish a foundation for long-term expansion into the console game market.
Page 29 shows our development pipeline. As previously mentioned, the development of a major third-party IP title is progressing, and we currently anticipate a release around the end of FY27. The contribution of this title to FY27 earnings is factored in conservatively.
Page 30 provides the earnings estimates for Q1 FY27. We plan for QoQ sales growth driven by the release of Another Eden Begins and maximization of existing titles, but we expect a temporary profit decline as we accelerate development investments for new titles.
Page 31 shows our earnings forecast for full-year FY27. Factoring in the reassessment of the release timing of the major title mentioned earlier, we forecast a decline in both sales and profit.
Page 32 shows our medium-term targets. Reflecting the revised release schedule, the target for FY27 is lower, but we expect a significant recovery and strong growth from FY28 onward as our long-term investments bear fruit.
Eiji Araki, Senior Vice President:
Next, Eiji Araki will explain the Live Entertainment Business. Previously called the VTuber
Business, it has been renamed to reflect the current scope of the business.
Page 34 shows the overall sales and operating profit trends. In this quarter, we recorded our highest ever net sales and operating profit.
Page 35 provides a summary of the Live Entertainment Business. A major highlight is that the Production Business achieved profitability. After approximately three years of upfront
Page 4 of 8 investments, we achieved quarterly profitability ahead of schedule. Furthermore, driven by operational efficiency in the Platform Business, the entire segment significantly improved profitability.
Page 36 covers the Platform Business. While sales were flat, thorough cost optimization and operational efficiency led to record-high operating profit, maintaining an exceptionally high operating margin of 34.2%.
Page 37 covers the Production Business. We achieved quarterly profitability ahead of our initial plan of reaching single-month profitability within this fiscal year. We achieved significant QoQ sales growth driven by a steadily expanding fan base and growth in ancillary revenue from live events and merchandising.
Page 38 shows the status of our investee company, Brave group. Their Trading Card Game business is performing strongly.
Page 39 provides the earnings estimates for Q1 FY27. Although we expect outsourcing costs to temporarily increase in connection with events in the Production Business, we expect sales to remain on a growth trajectory.
Page 40 shows our full-year earnings forecast for FY27. We forecast net sales of ¥12.6 billion and operating profit of ¥2.8 billion, representing a YoY increase of 89% in profit. We expect significant sales and profit growth as the Production Business begins to contribute to full-year profits.
Page 41 shows our medium-term targets. Reflecting the current pace of growth, we have refined our forecast to a more realistic level, but we continue to project steady profit growth over a three-year period. We also aim to accelerate growth by expanding beyond VTubers into the broader live entertainment market, as well as via M&A and strategic business alliances.
Eiji Araki, Senior Vice President:
Next, I will explain the Anime, Manga and Merchandising Business, previously called IP
Business.
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Page 43 shows the sales and operating profit trends in the Anime, Manga and Merchandising
Business. The overall sales trend remains largely unchanged, and we secured a positive operating profit for the quarter. Over the past year, we have reorganized our business portfolio and prepared several new businesses, which we will continue to grow until they contribute to earnings.
Page 44 provides a summary. Sales were broadly in line with expectations, and operating profit exceeded expectations and landed in the black due to thorough control of outsourcing costs.
Page 45 covers the Anime Business. A major highlight is the release of Mushoku Tensei:
Jobless Reincarnation - Chronicle of Echoes, a game adaptation of an anime we invested in, which we launched via in-house publishing in July. It is off to a smooth start, with pre- registrations topping 500,000, and we expect it to contribute to earnings going forward.
Page 46 and 47 cover the Manga and Merchandising businesses. We are steadily laying the groundwork and preparing these new businesses for medium-to-long-term growth.
Page 48 shows the upcoming schedule for major titles and products. We have listed our pipeline of commercial rollouts utilizing our IP. In Q1 of FY27, three anime series in which we serve as the lead organizer or production committee member began broadcasting.
Moving forward, we will increasingly monetize our proprietary IP through various commercial channels.
Page 49 provides the earnings estimates for Q1 FY27. We expect QoQ sales growth as
Chronicle of Echoes begins contributing to earnings, though we forecast a temporary profit decline due to initial promotional investments for the game.
Page 50 shows our full-year earnings forecast for FY27. We project significant growth in both sales and profit, driven by the multi-layered licensing revenue in the Anime Business and the full-scale contribution from new business clusters.
Page 51 shows our medium-term targets. Following the completion of our business restructuring, we have set a high-growth roadmap aiming for continuous sales and profit growth from FY27 onward.
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Masaki Fujimoto, Senior Vice President, CTO:
Next, Masaki Fujimoto will explain the AI Business.
Page 53 provides an overview of the AI Business. We have integrated the former DX
Business with the Engineering Business, which commercializes our internal shared technology functions. Through this integration, we aim to accelerate company-wide AI transformation (AX) and provide B2B solutions to external customers, transforming from a cost center into a profit-generating AI organization.
Page 54 shows the sales and operating profit trends. With the integration, we have established a more stable earnings base.
Page 55 provides a summary of the AI Business. The steady earnings from the Consulting
Business combined with the highly profitable Engineering Business have accelerated our shift to a profit center.
Page 56 covers the Consulting Business. Operating profit exceeded expectations, and profitability continues to improve.
Page 57 covers the Engineering Business. In its first year, it achieved a very high profit margin, driven by large-scale contracted development and technical support projects.
Page 58 provides the earnings estimates for Q1 FY27. We expect the Consulting Business to remain steady, while overall profit may temporarily slow due to upfront investments associated with the full-scale rollout of the Engineering Business.
Page 59 shows our full-year earnings forecast for FY27. We expect sales to remain flat as we scale back low-margin projects and focus on high-growth consulting and external AI solutions. We forecast an operating profit of ¥1.7 billion, factoring in upfront investments to strengthen our sales capabilities.
Page 60 shows our medium-term targets. While we have refined our sales targets to a more realistic level compared to the previous plan, the quality of our earnings has significantly improved. We aim to achieve steady profit growth over the next three years by accumulating high-margin projects.
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This concludes our presentation. Thank you very much.
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