and factory,inc

Business Details

Develops and operates smartphone manga apps (Manga UP!, Manga Park, Manga Mee, Sunday Webry, etc.) and fortune-telling apps (uraraca, Hoshi Hitomi no Uranai). Revenue sources are in-app purchases (digital manga download fees and monthly subscription fees) and ad network advertising revenue. The scale of MAU is directly linked to the scale of revenue generation. Includes South Works, Inc. (localization and publishing of games and manga) as a consolidated subsidiary. Major customers include SB Payment Service, Square Enix, Shogakukan, Shueisha, and other major publishers.

Recent Overview

Despite the revenue decline, segment profit rose 154.3% year-on-year due to personnel optimization and operational efficiency improvements

App Business revenue for the nine months ended May 2026 (Q3 cumulative, FY2026 (ending August 2026)) was ¥2,122 million (down 8.1% year-on-year). The conclusion of serialization of popular titles directly led to declines in MAU and in-app purchase revenue, while advertising revenue also declined overall due to slowing ad rewards and lower ad network delivery unit prices. Existing fortune-telling services also showed no notable growth. On the other hand, appropriate staffing allocation and operational efficiency improvements in existing services succeeded in reducing costs, resulting in a significant improvement in segment profit to ¥148 million (up 154.3% year-on-year). Average MAU continued its declining trend, reaching 8.07 million as of the end of May 2026.

Key Products

Growth Drivers

• Risk diversification and stable supply of popular titles through a co-development strategy with major publishers
• Improved cost structure and higher segment profit margin through optimized staffing and operational efficiency in existing services
• Continued revenue contribution from the fortune-telling business (uraraca and Hoshi Hitomi no Uranai)
• Expansion of the revenue base for the localization and publishing business through the new consolidation of South Works, Inc.
• Strengthening of the Rights business and promotion of diversified secondary utilization of IP through the absorption-type company split of narrative's bridge business (effective June 1, 2026)
• Merchandising and advertising/promotion development leveraging commercial usage rights to manga IP (intellectual property) (in coordination with the Other Business segment)

Risks

• Declining trend in MAU and gradual decrease in in-app purchase revenue due to the conclusion/completion of popular titles (MAU declined to 8.07 million as of the end of May 2026, down approximately 30% from peak)
• Structural decline in advertising revenue due to falling ad network delivery unit prices and slowing ad reward growth
• Intensifying competition and rising user acquisition costs amid the maturation of the manga app market (market growth rate of 3.9% in FY2024, projected average annual growth rate of 3.1% through FY2029)
• Risk of revenue concentration among specific customers such as SB Payment Service and Square Enix (top 4 customers account for 73.1% of consolidated revenue)
• Expected recognition of negative goodwill (gain on bargain purchase) associated with the succession of narrative's bridge business (consideration of ¥18 million) and potential future impairment risk