North America turned profitable on a single-month basis in July, with route-visit volumes back to pre-integration levels. Quality improvements and a USD 7M annualized cost-reduction program underpin the maintained JPY 30B full-year target.

Summary

1H FY01/2027 revenue reached JPY 103.6B (+40.1% YoY) and adjusted EBITDA JPY 11.2B (+21.1% YoY). Revenue exceeded the initial budget of JPY 98.7B, while profit came in marginally below the JPY 11.3B budget. In the closely watched North American business, rounder route visits recovered to 16.3k in July and 16.7k in August, back above the pre-integration level of 15.7k seen in October 2025, and July delivered adjusted net income of JPY 340M — the first single-month profit. From 3Q, the focus shifts from visit volume to visit quality, and management verbally quantified cost savings of roughly USD 7M on a 12-month basis from the program's start. As in 1Q, domestic amusement outperformance is absorbing overseas shortfalls, and the full-year adjusted EBITDA target of JPY 30B is maintained.

Key Points (Results Highlights and Growth Initiatives)

• Management Strategy and Market View
  • Management characterized North America as having completed the turnaround phase and entered the build-up phase, defining 3Q onward as a growth phase.
  • Under its framework of IP content × platform, the company is accelerating expansion into content via platform M&A as the primary driver.
  • Management views the North American boom in Japanese anime IP as originating from video viewing, and expects video hits to spill over into prize demand.
  • Net Debt/EBITDA of 3x is a normal-course operating guideline rather than a rigid ceiling; temporary breaches are acceptable for high-quality deals following discussions with lenders.
• Recent Business Progress and Drivers
  • 2Q standalone revenue was JPY 53.9B, above the initial budget of JPY 52.5B, while adjusted EBITDA of JPY 6.5B fell short of the JPY 6.9B budget.
  • North American visit volumes recovered on four factors: headquarters-led route management, a points-based incentive scheme, consolidation onto Kiddleton Force, and improved rounder proficiency.
  • Domestic amusement adjusted EBITDA beat budget by JPY 1.28B, driven by GiGO-exclusive prizes and prize sales tied to movie hits.
  • The JPY 210M karaoke budget shortfall stemmed mainly from a delayed closing of the Malaysia karaoke deal; the domestic business itself was on plan.
• Key Strategic Initiatives and Inflection Points
  • From 3Q, the company will expand IP prize deployment into large cranes and visits accompanied by Work Instructions; the sales lift is +31.0% versus +16.1% for standard visits.
  • Warehouse consolidation, unprofitable store closures, and DX-driven overhead reductions are underway; management verbally indicated roughly USD 7M of savings potential over the first 12 months.
  • The company announced a capital and business alliance with SBI Holdings, plus successive business alliances and collaborations with Sanrio and CyberAgent.
  • It signed contracts for 26 locations with Walmart, opening progressively from 3Q; revenue per machine at new sites is roughly 1.8x that of existing sites.

Outlook and Strategy

• Full-year guidance is unchanged at revenue of JPY 215B, adjusted EBITDA of JPY 30B, and adjusted net income of JPY 10.6B, on the assumption that the JPY 1.5B reduction to the North American annual outlook is offset by the domestic business and others.
• North American 3Q is positioned as a seasonally weak quarter used to seed IP prize rollouts, new openings, Add-ons, and cost structure reform, with harvest in 4Q, the peak selling season.
• On the JPY 4B full-year North American plan raised in Q&A, management in both Japan and the US stated they fully intend to deliver and are committing all resources.
• Add-ons totaled 386 in 1H, a 45.4% progress rate, lagging new openings (58.8%); the company plans to step on the accelerator from 3Q to hit the annual plan.
• Next fiscal year's budget is still being formulated group-wide, and management stated there are no fixed figures at this point, including for North America.
• Shareholder benefit points will be increased 1.5x across all tiers (applicable from the May 1, 2027 grant), underscoring the commitment to shareholder returns.

Positive Factors

• North American monthly results bottomed in February and have recovered; July delivered revenue of JPY 4.08B, adjusted EBITDA of JPY 540M, and adjusted net income of JPY 340M — profitable even excluding one-off factors.
• Visit volumes held at high levels, with 16.3k in July followed by 16.7k in August, confirming the durability of the improvement.
• Domestic amusement same-store revenue growth reached 116% in July (day-of-week adjusted), with 200–300 GiGO-exclusive prize titles developed in-house annually.
• At the 61 stores with GiGO Link installed, existing member visit frequency rose +27.5% and app-based payment value increased 2.2x, showing customer-touchpoint DX feeding directly into earnings.
• The Kiddleton app in North America acquires roughly 5,000 new members per week solely via in-store QR codes with no marketing spend, with membership now above 27,000.
• Negotiating leverage with IP holders has improved on the back of the company's leading domestic scale, and management sees smoother traction on North American collaboration approaches versus the prior two years.

Concerns and Risks

• Both 1H adjusted EBITDA and adjusted net income missed the initial budget, relying on the buffer built up in 1Q.
• North America met its post-1Q revised budget, but overseas amusement overall was JPY 470M below budget.
• Europe posted top-line growth in the peak season, but inflation-driven store cost increases weighed on profit.
• North American cost savings will have limited P&L impact this fiscal year given the small number of months in effect; full benefit comes from next fiscal year.
• Net Debt/EBITDA rose to 2.9x, and the current ratio fell to 98% from 152% at the prior year-end (reflecting JPY 8B of bonds maturing next May).
• On a GAAP basis, interim net loss attributable to owners of parent was JPY 322M, with JPY 500M of M&A-related expenses weighing on net income.

Performance Highlights

1H revenue was JPY 103.6B (+40.1% YoY), adjusted EBITDA JPY 11.2B (+21.1% YoY), and adjusted net income JPY 2.7B (+0.1% YoY). Versus the initial budget, revenue beat by JPY 4.9B, while adjusted EBITDA missed by JPY 160M and adjusted net income by JPY 300M. On a GAAP basis, revenue was JPY 103,664M, operating income JPY 2,252M (-30.4%), and interim net loss attributable to owners of parent JPY 322M, driven mainly by goodwill and intangible asset amortization and M&A-related expenses.

• Domestic Amusement Same-Store Revenue Growth (July, day-of-week adjusted): 116%
• North America Visit Volume: 16.3k in July, 16.7k in August (recovered from 8.9k in November 2025)
• North America July Results: Revenue JPY 4.08B, adjusted EBITDA JPY 540M, adjusted net income JPY 340M
• North America New Openings: 447 in 1H (full-year plan 760, progress 58.8%)
• North America Add-ons: 386 in 1H (full-year plan 850, progress 45.4%)
• North America Locations with PMI Completed: 5,410; PMI pending 4,014 (as of end-July 2026)
• Cumulative GiGO App Users: 2.09M (from 1.45M on September 1, 2025 to September 1, 2026)
• Stores with GiGO Link Installed: 61 stores, 400,000 users (vs. 2 stores and 20,000 users on September 1, 2025)
• Kiddleton App Members: over 27,000 (as of end-August 2026)
• Net Debt/EBITDA: 2.9x (2.7x at prior year-end), Equity Ratio 28.3%

Q&A List

• Q: You say North America has moved into a growth phase — does this mean profit levels step up another notch?
  A: The phase shift means we have completed rebuilding the foundation needed to execute various initiatives going forward. We restored visit volumes by 2Q, so from 3Q we move to a phase of maintaining that while firmly executing initiatives to raise quality on top of that foundation.
• Q: How much profit growth do you expect in North America from 3Q onward?
  A: 3Q is seasonally weak, and 4Q afterward is the most important with the Christmas holidays. During 3Q we will firmly seed initiatives — deploying IP prizes, increasing new openings, executing Add-ons — and advance cost structure reform, and connect that to subsequent growth.
• Q: Net Debt/EBITDA has risen to 2.9x. Do you still have capacity to continue M&A?
  A: We believe we have ample capacity. First, GENDA's business model is weighted to the second half, so more cash is generated from 2H onward, which drives deleveraging. In addition, keeping Net Debt/EBITDA within 3x is a normal-course guideline; if a good M&A opportunity arises, we believe temporarily exceeding 3x is acceptable while communicating carefully with our lenders.
• Q: Is the strength in domestic amusement sustainable?
  A: We have very strong confidence. GiGO-exclusive prizes are working extremely well, and we plan and produce 200 to 300 titles per year that cannot be won at other arcades and are only available at GiGO. Recently, collaborations with overseas artists such as TWICE LOVELYS and Stray Kids have gone well, and we have more good projects in the pipeline, so this is an area of strong confidence.
• Q: As seen in the Dragon Ball prizes and recent alliances, IP holders' interest in your North American business appears to be the key to these partnerships. Should we understand that your negotiating power with IP holders for securing good prizes has risen considerably versus the past?
  A: To begin with, GiGO has become the largest player in Japan's amusement/arcade industry, and negotiations with IP holders for GiGO-exclusive prizes for the domestic market are proceeding very smoothly. Sometimes projects are brought to us, and increasingly our own proposals are well received. As you note, discussions with IP holders about working together in North America have also become smoother — this has improved year over year over the past two years.
• Q: Game IP appears to have very high interest in North America. How are you approaching game IP, including Pokémon?
  A: On game IP, you are right; we are preparing various initiatives for the future, including things we cannot announce today. Some Japanese game IP is even more popular overseas than in Japan, so we intend to pursue that firmly.
• Q: I've asked before, but how is local IP holders' interest in your company?
  A: Last time we mentioned that a famous Netflix drama IP we rolled out was very popular. Our core weapon remains bringing Japanese anime IP overseas, but we are not limited to that and also intend to firmly incorporate locally popular local IP.
• Q: On regional differences in North America, IP holders often say Japanese IP recognition has progressed on the East and West Coasts but the middle of the country is difficult. Do you see this gap in your business, and how will you address it?
  A: We conduct nationwide consumer research and understand that sensitivity to IP is considerably lower in the central US than on the coasts. Simply put, affinity for and understanding of anime IP is higher on the coasts. On the other hand, we find enthusiasts who love a particular niche IP in every region. Anime IP fans exist everywhere, but the central US has little supply. New York and San Francisco have many anime merchandise shops, but in regions with none, our game corner in the local Walmart may be the primary point of contact with anime IP, and in some cases products sell better due to the supply/demand balance. We conduct sales activities by region, looking at differences in customer characteristics and the supply/demand balance.
• Q: On customer acquisition in North America, how you funnel anime fans into the Kiddleton app seems important going forward. What are you planning?
  A: For the Kiddleton app, currently 100% of the funnel is in-store at our mini-locations, where customers scan a QR code to become members. Stickers are affixed to the game machines, and scanning the QR enrolls them. That is the sole entry point — with no other initiatives and no marketing spend, roughly 5,000 new members join each week via stores nationwide.
• Q: Once profitability recovers, initiatives such as streaming platforms like Crunchyroll or movie theaters could come into play. Should we assume further expansion initiatives will take more time?
  A: Those next steps may come, but for now we believe this approach can be developed into a very substantial weapon.
• Q: How confident are you in achieving the JPY 4B full-year plan for North America?
  A: We fully intend to deliver, and both the Japanese and local management teams are committing everything to it. We will give it our all.
• Q: How much cost reduction do you expect in North America?
  A: As for how much the cost reductions now underway will contribute annually, we estimate roughly USD 7M — about JPY 1B — on a 12-month basis. This will take effect gradually from 3Q, so given the limited number of months in effect, the figure within this fiscal year will not be that large. Over the 12 months from the start, we believe we can execute roughly USD 7M of cost savings.
• Q: The 1Q materials showed a JPY 1.1B shortfall versus budget, and this time the materials show a JPY 1.5B downward revision plus a JPY 500M negative. Should we read that as a JPY 2B shortfall versus the initial plan, implying a JPY 3.5B run-rate against the initial plan of JPY 5.5B in profit?
  A: Broadly that is correct, but the minus JPY 500M in the overseas figure includes some China and Europe, so the US itself is not that weak.
• Q: For the US, should we understand that you are slightly behind the revised plan in your current tone, but not materially off track?
  A: Exactly as you say.
• Q: In your explanation of the July recovery in visit volumes, headquarters-led route management and incentive design are listed as if they were the primary drivers. I understand the issues of familiarity and duplicated work, but it sounds as if things that were done routinely under the old system became impossible after the system change, requiring new interventions to restore visit volumes. Could you explain again what happened with the introduction of Kiddleton Force?
  A: Apologies for the lack of clarity. Originally we merged a company called NEN and a company called Player One, with the rounder operations and mini-location business mainly on the NEN side. Each used a different system, and we consolidated onto Player One's CCX system. That forced the NEN side to adopt a new system, and in hindsight CCX proved a very poor fit — for example, daily data entry was set as the default requirement. Recognizing this was unsustainable, we built a new core system, Kiddleton Force, and migrated to it. Kiddleton Force was built from scratch by GENDA as an integrated system spanning headquarters through to store-level operational apps. We overlaid Kiddleton Force on the system previously consolidated into CCX, and for a transitional period both ran in parallel, but as of today we have fully discontinued CCX and standardized on Kiddleton Force.
• Q: If the story were simply consolidation plus familiarity restoring the previous level, I'd understand, but the materials emphasize headquarters-led route management and incentive design. It looks as if things that were done without them before now require headquarters to push. Why is that?
  A: Compared with before the integration, there was simply less work involved, so rounders could complete visits with less time per store. Now we require more sophisticated work, so completing the same number of visits is considerably harder for a rounder. So headquarters directs them — visit six stores today rather than five, or go to this higher-revenue store that is a bit farther rather than that one. We rigorously track whether it was done, and when it is, points accumulate and translate into higher pay. This incentive design is working very well.
• Q: Since inserting your prizes increases how often machines run out of stock, does that mean simply returning to prior visit levels is nowhere near enough? At 16,000 visits, is the picture that volumes are back to prior levels but replenishment is still insufficient?
  A: Previously, which stores to visit was largely left to the field. Now headquarters analyzes, based on data, which stores will drive sales, and issues instructions via route AI on where to go. Even with the same number of visits and harder work per visit, we believe the combination of where to go and what to do there can generate real alpha.
• Q: When you acquired NEN and Player One, I recall the story was that simply putting Japanese plush toys in their machines would double or triple sales. Looking at progress to date, prizes have presumably shifted to Japanese-sourced items, but the impression is that the sales uplift has not been that large. Should we now understand that the upside comes from IP rather than Japanese plush toys?
  A: It is true that sales rose the moment we inserted them, but there was subsequent decay, and a major lesson learned is that we needed to manage that properly. It remains true that the response to cute Japanese products is good and sales exceed what was previously placed in the US. That said, the response is stronger when we bring in anime IP products, so that is what we are now centering on.
• Q: EBITDA grew YoY in 2Q but not in 1Q. Should we understand 2Q growth as reflecting the seasonality of M&A additions such as Kiratto and Playnation kicking in?
  A: Fundamentally, the change in seasonality from M&A is the largest factor. Also, the US is a fixed-cost-heavy business, so incremental revenue drops straight through to profit — that is another effect. Related to seasonality, and this applies to JGAAP goodwill amortization as well as EBITDA, goodwill amortization itself is a fixed cost charged equally in 1Q and 4Q, so as seasonality becomes more pronounced, the overall structure makes profit look stronger in high-revenue quarters.
• Q: On the sizeable EBITDA growth in the US in July — you said it holds even excluding one-off factors. What should we understand happened?
  A: In July we achieved the highest visit count since the system integration. There is a meaningful correlation between visit counts and sales, and that was the major contributor. To repeat, the business model is such that once the top line exceeds roughly JPY 3B, profit comes through sharply. There were some one-off factors, but in any case these normalize in 2H; we bottomed in February and turned profitable on a single-month basis in July. From here, the cost cuts that were the original purpose of the integration finally begin, so we want to sustain the chain of lowering fixed costs, extending into the portion where PMI is not yet complete to raise sales and cut costs. The link between visits and prize sell-through may be counterintuitive, but on the ground, visiting to right fallen prizes and replenish depleted ones is very important, and a single staff member can adjust win rates to make the game more engaging. Unmanned operation has advantages and disadvantages, but the key is how much of the work that someone must do can be covered. Where there used to be just one machine, there are now multiple smaller units, which increases the to-do list; first we increased the frequency. Next is the quality of each visit — efficiently completing to-dos across many machines using the app.
• Q: On improving visit quality, which parts are easy and which are difficult? Please explain the crux.
  A: "Scale the Hits, Cut the Losers" — we want to expand popular items aggressively and pull unpopular ones off the floor to build an attractive overall assortment. That is one of our objectives, and while not easy, we are getting there. Realizing the ideal floor layout at each location scattered across the US is what we want to do, and it is coming together. But the difficulties go beyond that. For example, when swapping one prize for another, you may need to strengthen the claw setting or, conversely, raise the lip of the drop chute because the shape makes it too easy to win. Such things happen throughout the arcade industry in Japan and worldwide, but here we have rounders do it remotely. Setting each booth so the prize is most fun as a game while remaining commercially viable is extremely important, but getting that right is quite difficult. We address this through Work Instructions — task directives from headquarters. This is also built into the incentive design: we have embedded a points system awarding one point for executing headquarters' instructions as specified, and we will pursue this rigorously.
• Q: If North America goes well this fiscal year, how much profit can be expected next year versus JPY 4B this year?
  A: We are right now building next year's budget by business across the entire group, not just North America, and discussions are in full swing. At this moment, we have no firm internal figure for next year. First we will achieve this year's target, and then work to grow substantially from that base next year.
• Q: In the April–June results, Bandai Namco's Toys and Hobby profits were very strong with video content as the hook, and domestic gacha was also strong, suggesting rising leverage from video. You are launching Dragon Ball figures in 3Q, and I believe the Dragon Ball anime's Beerus arc remake will air from 3Q. Do you see this video leverage effect rising in the US too? Given a weak 3Q, should we consider upside potential beyond expectations from video?
  A: The reason the Japanese anime IP boom is happening globally, particularly in North America, is precisely that people watch the video content, feel an affinity for the IP, and want to keep the merchandise close at hand — and not merely to buy it, but to obtain it together with an experience. In Japan, when a movie is a hit, prizes for that IP sell extremely well in crane games, and we expect the same to occur in the US.