ENVALITH
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Avex Inc.

7860・Prime Market・Information & Communication

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エイベックス株式会社 logo
Avex Inc.7860

Business

Avex Inc. is a comprehensive entertainment company listed on the Tokyo Stock Exchange Prime Market, founded in 1988. The group comprises 34 companies in total, consisting of 28 consolidated subsidiaries and 5 equity-method affiliates. It operates three segments: the Music Business (net sales of ¥122,312 million), centered on the planning, production, sales, distribution, and live event operations of music content; the Animation & Video Business (net sales of ¥21,723 million), responsible for the planning, production, and distribution of animation and video content; and the Overseas Business (net sales of ¥4,040 million), which handles the distribution of entertainment content in North America and Asia. The company possesses an integrated value chain spanning from the management of artists, talent, and creators to merchandising, fan club operations, and e-commerce site operations, with the maximization of IP value both domestically and internationally at the core of its business.

Business Model

The company discovers and nurtures artist and content IP in-house, monetizing it across multiple channels including music package sales, music streaming, live shows and concerts, merchandising, fan clubs, video streaming, and overseas anime sales. It positions the accumulation of rights as a stable revenue foundation, and also operates a catalog business through Avex Catalog Fund I LLC and Avex Song Fund I LLC. By leveraging its partner network both domestically and overseas, the company maximizes the value of its IP both in Japan and internationally.

Company Strengths

The company operates three segments—Music Business (net sales of ¥122,312 million), Animation & Video Business (¥21,723 million), and Overseas Business (¥4,040 million)—diversifying dependence away from a single genre. It has built a consistent value chain within its own group, spanning from Artist Management to video streaming and overseas distribution, giving it a framework capable of monetizing IP value in multiple ways.

The company operates an integrated value chain for music content covering planning, production, sales, streaming, live events, merchandising, fan club operations, and e-commerce site operations through a group of consolidated subsidiaries (avex entertainment Inc., avex live creative Inc., avex music publishing Inc., etc.). In FY2026 (ending March 2026), it reduced SG&A expenses by ¥984 million through measures such as revising expenditure execution rules, achieving a turnaround from an operating loss of ¥1,180 million to operating income of ¥3,468 million.

The establishment of Avex Catalog Fund I LLC and Avex Song Fund I LLC (March 2026) launched joint ventures for the commercialization of music-related rights. The consolidation of S10 Entertainment & Media LLC as a subsidiary (April 2025) secured a creative network in North America. In the Animation & Video Business, sales to overseas markets performed well, with segment net sales rising 17.5% year on year to ¥21,723 million, reflecting progress in diversifying revenue through rights utilization.

ENVALITH's Perspective

Operating profit of ¥4,085 million in FY2026 (ending March 2026) marked a significant improvement from an operating loss of ¥1,819 million in the prior period, but the operating margin remained low at 2.8%. A temporary factor—a decrease in provision for doubtful accounts (from ¥1,228 million to negative ¥60 million)—contributed to the profit improvement, and it remains to be seen whether this represents a structural improvement in earning power based on trends from FY2027 (ending March 2027) onward. Achieving the FY2027 operating profit forecast of ¥6,000 million (up 46.9% year on year) presupposes that the live, streaming, and overseas drivers continue to function effectively.

The Overseas Business continued to post an operating loss of ¥466 million in FY2026 (ending March 2026) (compared to a loss of ¥942 million in the prior period), but the earnings structure is improving, with gross margin rising to 49.3%. On the other hand, goodwill surged to ¥2,535 million (from ¥22 million in the prior period) due to the consolidation of S10 Entertainment & Media LLC as a subsidiary, and the straight-line amortization over 5 to 8 years (amortization of ¥250 million in the current period) will weigh on future profits, warranting attention. The timing of the Overseas Business's turnaround to profitability will be a key checkpoint for investment decisions.

In terms of market environment, both the live market (up 5.3% year on year industry-wide) and the paid music streaming market (up 8.7% year on year) remain on an expansionary trend, and the external tailwind for avex's core businesses continues. On the other hand, structural concentration risk—whereby the presence or absence of hit artists and hit content directly affects performance—and management dependence on the founding member and Representative Director, Chairman, remain company-specific challenges. The risk of infringement on held rights due to the spread of AI has also been disclosed as a new risk factor, warranting continued medium- to long-term monitoring.

Growth Strategy

Revenue expansion through IP creation, maximization of rights value, and construction of a global value chain

Continuously promote the creation of IP in each segment, and expand the activities of artists and works both domestically and overseas. Through the joint commercialization of music-related rights via Avex Catalog Fund I LLC and Avex Song Fund I LLC, monetization of the existing catalog is being accelerated. The balance of advance royalties has expanded to ¥4,140 million, and investment in rights acquisition continues.

Secured access to the North American creative network through the consolidation of S10 Entertainment & Media LLC as a subsidiary. Overseas sales of anime titles are driving revenue growth in FY2026 (ending March 2026), with Overseas Business sales of ¥4,040 million (up 17.2% year on year) and gross profit margin improving to 49.3%. The next target is turning the Overseas Business profitable.

Continuously promote selection and concentration of existing businesses, and implement reviews of expense execution rules and investment monitoring methods, as well as operational efficiency improvements. Optimization of the business portfolio is progressing through the deconsolidation of 7 companies (via merger, share transfer, and liquidation). Management has noted that profitability per employee has improved significantly.

Due to strong overseas sales of anime titles, Animation & Video Business sales in FY2026 (ending March 2026) improved significantly to ¥21,723 million (up 17.5% year on year), with operating profit of ¥1,062 million (up 254.8% year on year). The company will continue to expand its IP portfolio while capturing the growth of the video streaming market (which reached a scale of ¥571.0 billion in 2024) as part of the external environment.

Last updated: July 19, 2026