ENVALITH
ガンホー・オンライン・エンターテイメント株式会社 logo

GungHo Online Entertainment,Inc.

3765・Prime Market・Information & Communication

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ガンホー・オンライン・エンターテイメント株式会社 logo
GungHo Online Entertainment,Inc.3765

Business

GungHo Online Entertainment is a company listed on the Prime Market of the Tokyo Stock Exchange, founded in 1998 and transitioned into the online game business in 2002. Operating as a group of 19 companies including 18 consolidated subsidiaries, it plans, develops, operates, and distributes smartphone games, PC online games, and consumer games. Its core IPs are the "Puzzle & Dragons (Puzzdora)" and "Ragnarok Online" series. Through its subsidiary Gravity Co., Ltd., it also develops Ragnarok-related titles (Gravity Group) for the Asian market and distributes titles globally to North America, Latin America, and Southeast Asia. Its main revenue sources are in-game item purchases and monthly subscription fees from game users, collected through platforms such as Apple and Google. In December 2025, it released a new global title, "LET IT DIE: INFERNO".

Business Model

Game users purchase in-game items and pay through platforms such as Apple and Google or via mobile carriers. The company's revenue structure is such that it receives sales after deduction of platform fees. It also receives royalties and license fees from local publishers to which it has granted licenses. For FY2025 (ending December 2025), the major sales channels were Apple Inc. (37.5% of net sales, ¥34,978 million), Google LLC (17.5%, ¥16,378 million), and Razer Inc. (11.5%, ¥10,784 million).

Company Strengths

Puzzle & Dragons (Puzzdora), which marked its 14th anniversary in February 2026, maintains brand value through diversified initiatives including esports, offline events, collaborations, animation, and merchandise. It boasts one of the longest operating track records among domestic smartphone games and serves as the core of the company's loyal customer acquisition strategy.

Ragnarok-related titles (Gravity Group) operated by subsidiary Gravity Co., Ltd. have contributed significantly to consolidated results. Revenue in the Indonesian market expanded approximately 2.5 times, from ¥3,591 million in the previous fiscal year to ¥8,982 million. In October 2025, the company began distribution of "Ragnarok: Twilight" in Southeast Asia, and growth in the Asian region continues.

As of the end of December 2025, total assets stood at ¥169,474 million against total net assets of ¥151,333 million (equity ratio of approximately 89%). The current ratio was 1,000.4%, and the company held ¥31,021 million in cash and cash equivalents, maintaining a debt-free management approach that funds working capital and capital expenditures entirely with internal resources.

ENVALITH's Perspective

In 1Q FY2026, net sales were ¥26,594 million (up 11.9% year on year), operating profit was ¥3,693 million (up 30.5%), and ordinary profit was ¥4,575 million (up 41.9%), with all major indicators exceeding the same period of the previous year. This represents a rebound following the sharp 71% year-on-year decline in operating profit (to ¥5,056 million) for the full fiscal year ended December 2025, and confirms the contribution of new Ragnarok titles and steady performance of Puzzle & Dragons (Puzzdora). However, it is premature to conclude that this represents a structural recovery based on a single quarter's results alone, and continued monitoring is necessary.

Development costs, mainly outsourcing expenses, have been trending upward as the number of pipeline titles for new releases increased from 5 to 9. On the other hand, selling, general and administrative expenses in 1Q FY2026 were ¥8,195 million, down ¥429 million from the same period of the previous year (¥8,624 million), and this improvement in cost management contributed to an improvement in the operating margin (from 11.9% in the same period of the previous year to 13.9% in the current period). Going forward, there is a risk that development costs will temporarily increase depending on the timing of new title releases, and the sustainability of cost control is a point of attention.

The company continues its policy of not disclosing full-year consolidated earnings forecasts, citing the rapid pace of change in the business environment, leaving investors with limited visibility into future performance. As of the end of 1Q FY2026, the number of treasury shares stood at 16,030,427 shares (up 1,211,955 shares from the end of the previous fiscal year), indicating that share buybacks were carried out, while the dividend amount for FY2026 (ending December 2026) remains undetermined. Net assets decreased by ¥6,444 million from the end of the previous fiscal year due to dividend payments and share buybacks, making clarification of the scale and policy of shareholder returns a matter of investor interest.

Growth Strategy

Aiming for earnings recovery through two pillars: maximizing the value of existing IP and creating new global titles

Continuing seasonal events, anniversary events, and collaborations with well-known characters from other companies to maintain and expand MAU while strengthening the game brand. Net sales in 1Q of FY2026 (ending March 2026) have trended solidly, contributing to stabilizing earnings for this long-running title, which has now marked its 14th anniversary.

Gravity Co., Ltd. and its consolidated subsidiaries newly released "Ragnarok: The New World" (Taiwan, Hong Kong, and Macau, distributed from January 2026) and "Ragnarok Origin Classic" (South Korea, Taiwan, Hong Kong, Macau, and Southeast Asia, distributed from March 2026). The continued rollout of new titles across Asian regions has been confirmed to contribute significantly to consolidated results.

The number of new title pipelines was increased from 5 to 9, strengthening the development framework in anticipation of global distribution. Costs associated with newly developed titles, mainly outsourcing expenses, are trending upward, but this is positioned as an upfront investment aimed at diversifying future earnings.

Last updated: July 17, 2026