GENDA Inc.

Business Details

Comprises "Amusement," "Karaoke," "Food & Beverage (F&B)," "Tourism," and "Lifestyle." In addition to operating domestic and overseas amusement facilities centered on GENDA GiGO Entertainment, the segment continues to expand its business domains through M&A, including Karaoke BanBan (Shin Corporation), SMART EXCHANGE (foreign currency exchange machines), and Carat (photo studios), functioning as an offline platform connecting IP content with fans.

Recent Overview

While advancing internal group reorganization, sales grew 47.8% year on year, though second-half weighting is intensifying

In Q1 FY2027 (ending January 2027) (February to April 2026), in the karaoke domain, ENNE was established through the merger of Ontsu and Kaji Corporation (February 2026), Aesetsu was absorbed (March 2026), and Shin Corporation absorbed Melo Works (April 2026). In North America, Kiddleton, Inc. was renamed GENDA Americas, Inc., consolidating operations into one company each in the U.S. and Canada. In China, a new store opened in Shanghai. Meanwhile, the pronounced second-half weighting seasonality of GENDA Playnation Entertainment in the UK is intensifying the overall second-half weighting of consolidated results. Segment profit (before M&A-related expenses) secured ¥4,399 million, up 14.7% year on year, but profit growth was limited relative to the sales growth rate (47.8%).

Key Products

Growth Drivers

• Rapid expansion of the store network and number of locations through aggressive roll-up M&A (including realization of integration synergies through internal group reorganization)
• Significant growth in existing store sales through conversion to the Crane Game Oasis format and new store openings (the 3 converted stores achieved significant sales growth compared to pre-conversion levels)
• Acceleration of overseas expansion: global platform expansion through GENDA Americas (North America), GENDA Playnation (UK), and new store openings in China
• Strengthened value chain and scale benefits through vertical integration of karaoke equipment distribution (ENNE) (establishing the largest business platform in the industry)
• Capture of inbound demand and expansion of installed units by SMART EXCHANGE (approximately 300 units increase year on year as of the end of April 2026)
• Enhanced customer acquisition through collaboration campaigns with popular IP and cross-group customer referrals utilizing the GiGO app and GENDA ID

Risks

• Risk that the pronounced second-half weighting seasonality of GENDA Playnation Entertainment in the UK will intensify the overall second-half weighting of consolidated results, reducing first-quarter profitability
• Pressure on operating profit from increased M&A-related expenses (goodwill amortization increased significantly to ¥1,204 million year on year from ¥759 million in the prior-year period)
• Risk of impairment and increased amortization burden associated with the significant increase in goodwill and intangible assets (goodwill balance of ¥50,506 million)
• Rising financial leverage and increased interest expenses (¥563 million in the current first quarter) due to a sharp increase in interest-bearing debt (long-term borrowings of ¥63,744 million, bonds of ¥18,300 million, etc.)
• Foreign exchange fluctuation risk in overseas operations (U.S., UK, China) and operational integration risk associated with internal group reorganization
• Rising store operating costs due to price increases and higher labor costs, and impact on consumers' disposable income

Business Details

Comprises two areas: "Character Merchandising (MD)" and "Content & Promotion." The segment operates prize planning and wholesale for prize games (Fukuya Group, Ares Company), film distribution (GAGA), VR and experience-based attraction development (Dynamo Amusement), movie information site operation (eiga.com), and exhibition and event display (D8), among others. It serves as the upstream of the value chain, supplying IP content to the Entertainment Platform Business.

Recent Overview

Sales grew 56.7% year on year, but segment profit declined 40.7%, indicating lower profitability

Sales of the Entertainment Content Business in Q1 FY2027 (ending January 2027) were ¥6,066 million, up 56.7% year on year, representing significant sales growth. On the other hand, segment profit before M&A-related expenses was ¥52 million, down 40.7% year on year, a significant decline. Character Merchandising performed well, driven by Ares Company's record monthly sales and strengthened supply of North American IP prizes. In Content & Promotion, GAGA's distribution of Academy Award-related titles attracted attention, but sales declined year on year (¥914 million versus ¥1,540 million).

Key Products

Growth Drivers

• Deepening vertical integration with "Amusement" through expanded prize supply to group amusement facilities such as GiGO
• Acceleration of Character Merchandising's overseas expansion through strengthened supply of Japanese IP prizes to North America
• Distribution of a diverse film lineup (Japanese films, foreign films, anime) by GAGA and acquisition of notable titles such as Academy Award winners
• Deployment of new VR facility formats (such as VR BASE TOKYO) by Dynamo Amusement and utilization of group synergies
• Expansion of business domains and deepened collaboration with the GENDA Group through the consolidation of D8 and eiga.com as subsidiaries

Risks

• Box office revenue in the film distribution business fluctuates significantly by title, resulting in lower earnings stability (Content & Promotion sales declined 40.7% year on year)
• Prize supply is dependent on the number of stores and customer traffic trends in the Entertainment Platform Business (GiGO, etc.)
• The structure of recording M&A-related expenses (advisory fees, etc.) pressures segment profit
• Continued amortization burden from goodwill and intangible assets (consolidated goodwill amortization increased 58.6% year on year to ¥1,204 million)
• The VR and experience-based attraction business carries a heavy burden of new investment, with risk that monetization will take time