IMAGE MAGIC Inc.

Business Details

Guided by the corporate philosophy "We contribute to building a rich society overflowing with individuality and creativity," the company operates on two axes: its own sales channel providing on-demand printing services for apparel and general merchandise via the internet, and a solution service that provides businesses with software and hardware incorporating AI-driven automated optimization workflows. It has realized a zero-inventory on-demand production model, contributing to reduced environmental impact from an SDGs perspective as well.

Recent Overview

Net sales grew 22.9% year on year, a high growth rate, but the operating loss widened due to increased SG&A expenses

Net sales for the first quarter of FY2026 (ending December 2026) (January to March 2026) were ¥2,283 million (up 22.9% year on year). Both services performed well: the on-demand print service rose 19.9% year on year to ¥2,049 million, and the solution service rose 57.1% to ¥233 million. On the other hand, selling, general and administrative expenses swelled to ¥896 million (up 23.4% year on year), and the operating loss widened to ¥41 million (compared with a loss of ¥3 million in the same period of the prior year). Cash and deposits decreased by ¥536 million from the end of the previous fiscal year to ¥631 million. The full-year earnings forecast (net sales of ¥10,700 million, operating profit of ¥650 million) remains unchanged, and the company states that the first quarter progressed largely as planned.

Key Products

Growth Drivers

• Expansion of the on-demand print market's customer base driven by growing demand for "oshi-katsu" (fan-support activities) and personalization
• Increased purchase frequency among existing customers and acquisition of new customers through expansion of items handled and strengthened marketing measures for the proprietary service "Original Print.jp"
• Expansion of implementation sites for the solution service centered on DTF-method printers and accumulation of stable revenue through consumables sales
• Strengthened partnerships with leading partner companies to build a short-lead-time, high-quality production system
• Advancement of automation and labor-saving in production processes through design support utilizing generative AI and development of autonomous control systems for inspection and production processes using AI cameras
• Capturing market expansion through synergies between generative AI technology and diverse content

Risks

• Risk of profit pressure from persistently high raw material prices and rising logistics costs (Q1 gross profit margin declined to 37.5% from 38.9% in the same period of the prior year)
• Risk of rising SG&A expense ratio due to continued increases in personnel and recruitment costs (Q1 SG&A expenses rose 23.4% year on year)
• Uncertainty in the external environment, including trends in US trade policy and exchange rate fluctuations
• Risk of information security breaches and system failures (a characteristic of internet-based services)
• Risk of transaction concentration with partner companies
• Continued recording of losses on retirement of fixed assets and impairment losses (Q1 FY2026 ending December 2026: total extraordinary losses of ¥2 million, including impairment losses of ¥2 million)
• Liquidity management risk associated with the decrease in cash and deposits (¥631 million at the end of Q1) and the new procurement of ¥200 million in short-term borrowings