Three growth pillars — new games, trading cards, and hobby products — drove revenue to JPY 42.2B and operating income up +51%, with lower SG&A ratio demonstrating structural profitability improvement

Key Positives From The Results

Revenue reached JPY 42,233M (+15.8% YoY) and operating income JPY 1,377M (+51.1% YoY), delivering double-digit top-line growth and a significant earnings beat. SG&A ratio declined from 31.3% to 29.9%, clearly reflecting scale-driven profitability improvement. Operating cash flow of JPY 1,936M enabled simultaneous debt reduction and shareholder returns — a commendable outcome.

• New game revenue surged +49.0% YoY, fueled by demand from next-gen console launches
• Pre-owned trading cards grew +19.5% and pre-owned hobby products +27.9%, sustaining strong momentum; improved trading card gross margins directly contributed to the JPY 639M increase in operating income (directly-operated store P&L variance)
• SG&A ratio fell to 29.9% (▲1.4pt YoY); top-line growth absorbed cost increases including JPY 496M in higher personnel expenses, lifting OPM from 2.5% to 3.3%
• Shopping mall locations expanded to 45 stores (cumulative), bringing the total store count to 175; net addition of only +3 stores, yet meaningfully contributed to revenue growth
• Debt repayment period shortened to 1.5 years (from 2.6 years prior year), and equity ratio improved to 48.8% (+2.9pt), bolstering balance sheet health

Key Concerns From The Results

Gross profit margin declined to 33.2% (▲0.6pt YoY), reflecting structural mix deterioration as the new product mix rose from 46.5% to 49.9%. FY guidance calls for just +0.6% revenue growth — essentially flat — and while operating income is guided at +16.1%, net income is forecast to decline ▲7.8%, warranting caution.

• Gross profit margin at 33.2% (▲0.6pt); rising new product mix is pressuring margins, and sustaining profitability becomes challenging if the trading card margin improvement cycle matures
• Next-FY net income guided at JPY 800M (▲7.8%); this appears primarily driven by the lapping of JPY 167M in extraordinary gains (including JPY 98M gain on sale of investment securities), but assessing underlying earnings power is essential
• E-commerce operations deteriorated by JPY 24M (per the operating income bridge); potential one-time costs during the closure of Furuichi Online and consolidation into Yamtoku Co.
• Headquarters costs increased by JPY 203M; continued upfront investment in TV commercials and SNS advertising (+JPY 106M), with ROI visibility remaining a challenge
• Equity-method investment losses widened to JPY 21M (from JPY 7M prior year), indicating delayed monetization of global/affiliate operations

Focus Areas / Items To Monitor Going Forward

• Sustainability of next-gen console tailwinds: The +49.0% surge in new game sales likely includes transient demand, making the magnitude of any hangover effect next fiscal year and the extent of spillover into peripherals/software/accessories a key focus
• Whether the trading card gross margin improvement trend can persist: Gross margin that had dipped in FY02/2025 recovered in FY02/2026 and was a major contributor to operating income growth — the question is whether pricing optimization through specialty store enhancement represents a structural or cyclical improvement
• Gap between medium-term targets (FY02/2029: revenue JPY 50B, operating income JPY 2.5B) and next-FY guidance (revenue JPY 42.5B, operating income JPY 1.6B); specificity of the path to bridge the remaining JPY 7.5B in revenue and JPY 900M in operating income over two years will be scrutinized

Key Financial Highlights

Performance By Business Segment

Next Fiscal Year Guidance

For the next fiscal year (FY02/2027), the company guides for revenue of JPY 42,500M (+0.6%) and operating income of JPY 1,600M (+16.1%). The revenue outlook is near-flat and conservative, though OPM is expected to improve from 3.3% to 3.8%.

• Q4 (December–February) coincides with the year-end/New Year shopping season and next-gen console launch timing, making it the highest-revenue quarter of the year (Q4 this FY: JPY 12.23B vs. Q1: JPY 8.56B)

Changes To Guidance

An upward revision to full-year guidance was announced on April 10, 2026, alongside a decision to pay a year-end dividend of JPY 5 including a JPY 1 special dividend. Next-FY (FY02/2027) new guidance calls for revenue of JPY 42,500M, operating income of JPY 1,600M, and net income of JPY 800M. Net income represents a ▲7.8% YoY decline.

Commentary On Shareholder Returns

The FY02/2026 year-end dividend is JPY 5 (ordinary dividend JPY 4 + special dividend JPY 1), up JPY 1 from the prior year's JPY 4. Total dividend payments of JPY 320M imply a payout ratio of 36.6% (vs. 50.4% prior year). For next fiscal year, an ordinary dividend of JPY 4 (no special dividend) is planned, implying a 31.8% payout ratio. No share buybacks have been conducted for two consecutive fiscal years.

Financial Position

Equity ratio improved to 48.8% (+2.9pt), and debt repayment period shortened to 1.5 years (from 2.6 years), reflecting enhanced balance sheet health. No new long-term borrowings were raised during the period, with systematic repayment of existing debt proceeding as planned. Stable operating cash flow generation of JPY 1,936M underpinned both debt reduction and store expansion investment.

News Released Alongside The Earnings Announcement

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

• Teitsuu Inc. (filer): Sold down stake in TORICO (7138) from 9.30% to 5.52% (reported 2026/01/14) — disposition of shares in connection with the unwinding of a capital and business alliance (sequential sell-down). Amended filing (2026/02/13) revised the stated holding purpose to "no intention to participate in management"