MEDIA DO Co.,Ltd. Q1 FY2026 earnings call

• Overall Consolidated Financial Performance

  • 2026 February Fiscal Year Q1 consolidated revenue: 26 billion yen, up 3.6% year-over-year, driven by steady growth of existing e-book distribution flows.
  • EBITDA: 950 million yen, up 150 million yen year-over-year; Operating profit: 650 million yen, up 170 million yen year-over-year, driven by overall profit improvement across strategic investment businesses, especially Nihon Bungeisha.
  • Net profit attributable to parent shareholders: 810 million yen, up sharply from 240 million yen year-over-year, due to the inclusion of a 531 million yen gain from the March 2025 sale of MyAnimeList.
  • Progress against full-year guidance: 24.5% for revenue, 24.2% for EBITDA, 24% for operating profit, which is ahead of historical Q1 averages and above internal expectations.

• Updated Mid-Term Management Strategy

  • Two core strategic updates: (1) Expand the original domestic-only e-book distribution business to a global business that delivers Japanese content to worldwide audiences via AI-powered translation and multi-format distribution; (2) Formalize the regional creation business as SC (Sustainability Creation) to capture growing demand for regional-focused asset development.

• Global Content Expansion Strategy

  • Prioritize support for overseas expansion of Japanese text-based content first: while Japanese comics are already growing globally, text content accounts for 94% of the total global book market (vs. 6% for comics), offering far larger untapped potential. Multiple translated Japanese text titles have already become global bestsellers with higher pricing than domestic Japanese sales, demonstrating strong market demand.
  • Leverage the existing Firebrand Group subsidiary (acquired 2021), the market-leading provider of DX tools for global publishers, to deliver end-to-end distribution:
    • NetGalley: The #1 pre-launch marketing platform with 300+ publisher clients including all top 5 US publishers, 600,000 industry member users, which lets publishers gather pre-launch reviews to help overseas bookstores reduce inventory risk under the fixed-purchase global distribution system.
    • Booktrovert: A newly launched influencer marketing platform that collected 26,000 influencer registrations in its first two weeks, to drive SNS-driven word-of-mouth sales, which has become a key driver of unexpected bestsellers in the US market.
  • Announced a capital and business alliance with SHIFT in July 2025, focused initially on expanding Japanese content into the Middle East market, where demand for Japanese culture and content is already very high.

• SC (Sustainability Creation) Business Update

  • Current core business is the Tokushima Gambarous professional basketball team, which achieved profitability in its second season, hit B.ONE entry requirements, and will join the top-tier B.ONE league for the 2026-2027 season. A new 5,000-10,000 seat arena has been formally approved for construction in Tokushima, which will expand club revenue opportunities significantly. The team is targeting ~50 million yen in operating profit for the upcoming 2025-2026 season.
  • The second core activity is entrepreneur support, with existing innovation bases established across 16 prefectures. Leveraging community relationships built through the Tokushima Innovation Base, the company has announced plans to launch a regional study abroad support program (Tokushima version of Tobitate! Study Abroad JAPAN), and will explore growth opportunities in the regional education sector going forward, with a plan to build profitable, scalable regional business rather than purely CSR activity.

1. E-book Distribution Segment: Year-over-year revenue growth, with existing domestic distribution flows maintaining a steady 4.2% growth rate in Q1. Profit decreased year-over-year and quarter-over-quarter due to transitory factors including timing shifts of prior year campaigns and changes to sales incentives. This segment accounts for approximately 91.6% of total consolidated revenue (23.833 billion yen of 26 billion yen total revenue).
2. Strategic Investment Segment: Total Q1 revenue is 2.167 billion yen. Excluding the sold-off Everista business, the segment actually grew revenue year-over-year. Operating loss came in at -146 million yen, a 242 million yen improvement in operating result year-over-year, which is on track to meet the full-year plan of reducing annual operating loss to 500 million yen from ~1 billion yen prior year. It is split into three sub-segments:

• International Business: Loss widened by 18 million yen due to ongoing system and operational strengthening.
• IP & Solution Business: Delivered 205 million yen in total profit improvement, driven by 121 million yen of improvement at Nihon Bungeisha, which achieved its first Q1 profit after restructuring, 31 million yen improvement at Flyer, and 53 million yen improvement from other units.
• SC (Sustainability Creation) Business: No material change in profit year-over-year; this new segment now includes Tokushima Gambarous basketball team operations, which achieved profitability in its second season.

• Full-year 2026 February fiscal year guidance is maintained from the original plan. Q1 2026 results are already ahead of plan, with progress against full-year targets reaching nearly 25% for core profitability metrics ahead of the higher-selling Q2 and Q4 periods.
• Strategic Investment Segment full-year operating loss is guided to improve to 500 million yen from the prior year's ~1 billion yen operating loss, and Q1 results are on track to meet this plan.
• Tokushima Gambarous is guided to achieve ~50 million yen in operating profit for the 2025-2026 season, with further revenue growth expected after the arena completion and 2026-2027 B.ONE entry.
• Management expects growing long-term potential for MediaDo's global Japanese content distribution business, with meaningful scale achievable within 5-10 years, with potential to reach material size relative to the domestic business.

• International expansion depends on successful development and scaling of AI translation technology, as well as building local operational and distribution partnerships; rapid market entry may face unforeseen regulatory and cultural barriers.
• Profitability of new initiatives (global expansion, SC business expansion, education initiatives) is not guaranteed, and will require ongoing strategic investment that may pressure short-term earnings.
• The e-book distribution segment's near-term profit volatility is driven by transitory factors (campaign timing, incentive changes) that can create quarterly swings in results.

Q: Why partner with SHIFT, why is this the right timing, and what is the planned expansion trajectory starting with the Middle East? / A: The Middle East has a total population of 470 million, much larger than Japan, with high household incomes. Hot weather drives high demand for indoor content like anime, and there is little existing localized Arabic translation of Japanese manga and book content, creating large untapped demand. MediaDo's proprietary MDTS translation system supports translation into Arabic and other non-English languages, eliminating the historic cost barrier to entry. SHIFT already has plans for local on-the-ground expansion in the Middle East that MediaDo could not achieve quickly alone, making this the optimal timing to enter the market in partnership with SHIFT.

Q: How has the popularity of Japanese culture overseas changed recently, and how do you see it evolving over the next 5 to 10 years? / A: The spread of streaming platforms like Netflix and YouTube has made global content distribution far easier, driving growing global demand for Japanese IP. Viewer exposure to Japanese anime first builds awareness, which then increases interest in Japanese books, manga, and other consumer products, creating a growing pipeline of demand. Text-based Japanese content has massive untapped potential: as translation technology improves, more translated Japanese text content will find global audiences, matching the existing success of Japanese comics and anime. Over 5-10 years, MediaDo expects to build a strong position as the gateway for Japanese publishers to expand globally, with enough potential to reach material scale relative to its domestic business.