ENVALITH
株式会社NexTone logo

NexTone Inc.

7094・Growth Market・Services

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株式会社NexTone logo
NexTone Inc.7094

Business

NexTone Inc. is a music copyright management business operator (registration number 01005) under the Copyright and Related Rights Management Business Act, operating four segments: Copyright Management Business, Digital Content Distribution (DD) Business, Music Distribution Business, and Business Support Business. The group, comprising the Company, MCJP Inc., NexTone Systems Inc., and RecoChoku Co., Ltd., covers the entire value chain of the music industry, from the collection and distribution of music copyrights to domestic and overseas distribution of master recordings, music distribution services for individuals and corporations, and casting and system development. Its major customers include rights holders such as record makers, music production companies, music publishers, and anime/game makers, as well as major platform and telecommunications operators such as Google LLC and NTT DOCOMO.

Business Model

In the Copyright Management Business, only the management fee portion of the usage fees collected from users is recognized as revenue. In the DD Business, master recording licenses are obtained from rights holders and supplied to domestic and overseas music distribution platforms to generate revenue. In the Music Distribution Business, RecoChoku provides streaming and downloads for individual users as well as BGM and video distribution for corporate clients. Through synergies between the Copyright Management Business and the DD Business, promoting the use of managed songs has a structure that simultaneously expands both copyright royalty income and DD revenue.

Company Strengths

The company entered the business in 2001 as a registered operator (registration number 01005) under the Copyright and Related Rights Management Business Act, and had accumulated 823,341 managed songs (up 131,851 songs year on year) as of the end of FY2026 (ending March 2026). The Copyright Management Business has achieved 10 consecutive periods of revenue growth since its founding, and the accumulation of regulatory licenses and managed songs forms a structural barrier to entry that makes competitive entry difficult.

By operating the Copyright Management Business and the DD Business within the same group, promoting distribution of master recordings including managed songs simultaneously expands both copyright royalty revenue and DD Business revenue. In FY2026 (ending March 2026), the number of master recordings handled by the DD Business reached 1,657,158 (up 186,864 year on year), confirming the track record of continuous acquisition of managed songs and master recordings through composite proposals to rights holders.

In July 2024, the company began direct collection of copyright royalties for YouTube video viewing worldwide in partnership with Google, and has successively concluded collection agency agreements with organizations such as BMI and Exploration Group in the United States, SACEM, SDRM, and IMPEL in Europe, KOSCAP in South Korea, and One Asia Music in China. The annual securities report states that overseas royalty collection amounts increased dramatically in FY2026 (ending March 2026), with the global collection infrastructure functioning as a competitive advantage.

ENVALITH's Perspective

The operating profit margin for FY2026 (ending March 2026) continued to improve to 6.3% (vs. 5.2% in the prior period); however, compared to the margin of the Copyright Management Business alone (43.9%), the structure in which the low profitability of the DD Business, Music Distribution Business, and Other segments drags down the overall figure remains unchanged. The Other segment recorded a loss of ¥325 million, and attention is focused on whether the effects of structural reforms—namely the business transfer of Eggs and its absorption merger into RecoChoku—will materialize as profitability improvements from FY2027 (ending March 2027) onward.

The company's forecast for FY2027 (ending March 2027) calls for net sales of ¥22,000 million (+5.9% YoY), operating profit of ¥1,600 million (+23.0% YoY), and net income of ¥1,000 million (+26.3% YoY), representing increased revenue and profit. However, the growth rate of domestic paid music distribution has recently been moderating, and the growth rate of interactive distribution usage fees—the main revenue source of the Copyright Management Business—has slowed to 102.4% year-on-year. As an external factor, changes in the growth rate of the streaming market warrant close attention as a risk factor that could define the upper limit of medium-term performance.

In FY2026 (ending March 2026), the company implemented its first dividend since founding (year-end dividend of ¥20, payout ratio of 24.7%), and for FY2027 (ending March 2027) it plans to increase the annual dividend to ¥22 (interim ¥11 + year-end ¥11). The adoption of a "progressive dividend" policy (in principle maintaining or increasing the dividend without reduction) clearly signals the company's intent to balance growth investment with shareholder returns, which could lead to improved evaluation by institutional investors. Meanwhile, the financial base remains stable, with an equity ratio of 35.2% and cash and deposits of ¥11,064 million, suggesting sufficient capacity for dividend payments.

Growth Strategy

Sustainable growth through full coverage of copyright management rights, overseas expansion, and maximization of group synergies

Overseas royalty collection amounts have increased dramatically due to the worldwide direct collection from YouTube launched in July 2024 and the expansion of direct contracts with copyright management organizations in various countries. For FY2027 (ending March 2027) as well, continued overseas revenue growth is expected through further expansion of direct contracts with copyright management organizations in various countries.

As of the end of FY2026 (ending March 2026), the number of managed songs reached 823,341 (up 131,851 from the previous fiscal year), and the number of handled master recordings reached 1,657,158 (up 186,864 from the previous fiscal year). Transfers of songs from other management organizations also continued, including the acceptance of 3,930 songs in April 2026, and the acquisition of songs related to renowned artists and VTubers is strengthening the business foundation.

New revenue sources have been created through RecoChoku's new DD service "FLAGGLE" (launched July 2025), the corporate master recording licensing scheme "RecoChoku play" (launched June 2025), and NexTone Systems' Copyright Management Cloud Service "Virco" (already launched). In FY2027 (ending March 2027), the company aims to expand sales through the development of new corporate music distribution transactions and the rollout of new services.

As of March 31, 2026, a portion of Eggs' business was transferred to a third party, and as of April 1, 2026, Eggs was absorbed into RecoChoku through a merger. This aims to optimize the allocation of management resources and improve business efficiency, consolidating the operation of the DD Business into RecoChoku to achieve cost reductions and create synergies. An impairment loss of ¥239 million was recorded in FY2026 (ending March 2026).

In FY2026 (ending March 2026), the company paid its first dividend since its founding (year-end dividend of ¥20, payout ratio of 24.7%), adopting a progressive dividend policy (maintaining or increasing dividends in principle, without reduction). For FY2027 (ending March 2027), the company plans to increase the annual dividend to ¥22, aiming to strengthen its appeal to institutional investors by clearly demonstrating a balance between growth investment and shareholder returns.

Last updated: July 19, 2026