MEDIA DO Co.,Ltd. Q2 FY2026 earnings call

• Mid-term Growth Strategy Pillars:

  • Grow domestic e-book distribution market share
  • Expand Japanese content (e-books + physical books) globally
  • Scale up regional revitalization under the new Sustainability Creation (SC) business segment

• Domestic E-book Distribution Operational Progress:

  • Focused on reducing distribution friction and increasing delivery speed via system integration with major e-book stores including pixiv, Piccoma, and mechacomic
  • Daily content registration volume increased 23.8% year-over-year to 3,067 entries, creating a positive cycle of more content, higher sales, and more new content creation
  • Core competitive advantage: direct contracts with nearly all domestic Japanese publishers, creating a continuous flow of new Japanese content

• Global Expansion Strategy and Progress:

  • Globally, physical books account for ~90% of the publishing market, so Media Do pursues multi-format distribution covering e-books, physical books, audiobooks, and library circulation
  • AI-powered MDTS translation system cuts translation time from 2-6 months to a few days, reducing costs to enable mass translation of under-translated Japanese content
  • Owns NetGalley, the #1 marketing platform for publishers/bookstores in the US/EU with 2.5x more members than the 2nd place competitor, and launched Booktrovert in June 2025, which gained 30,000 influencer creators in 3 months to drive discoverability for Japanese content
  • Audiobooks surpassed e-books in market size in North America in 2024; Media Do is developing AI-powered text-to-speech for translated novels that delivers native-level natural speech in multiple languages
  • Initial focus on the large US English market, partnering with local publishers to aggregate Japanese content efficiently for local distribution

• SC (Sustainability Creation) Business Progress:

  • Two core pillars: entrepreneur support and sports-based regional revitalization
  • The Tokushima Innovation Base entrepreneur support model launched in 2020 has expanded to 17 prefectures, and will reach 25 prefectures (over 50% of all prefectures excluding Tokyo) next fiscal year
  • The annual LEC entrepreneur/CEO conference will be held in Kumamoto in November with over 1,000 attendees, and the first full SC 1-Day Conference will be held in Tokyo next year targeting 1,500 attendees
  • Tokushima Gambarous basketball team (B3 League) is off to a 6-0 start this season, with average attendance up 60% year-over-year to 2,446. It achieved profitability in its second season (revenue 440 million yen, profit 30 million yen) and targets 620 million yen revenue and 50 million yen profit this season. It will promote to the newly created B.LEAGUE ONE next season, and a new arena is scheduled for completion in Tokushima around 2030
  • Media Do CEO Fujita was appointed as the first ever B.LEAGUE board member from a B3 team, to support the league's "B. Innovation" structural reform focused on improving club operational capacity and regional revitalization

1. E-book Distribution Segment: Cumulative revenue for the first half was 50.246 billion yen, accounting for 93.4% of total consolidated revenue. It posted 1.311 billion yen in operating profit. Existing commercial flow grew 5.3% year-over-year (up from 4.1% in the prior year period), and the newly added "mechacomic" commercial flow contributed strong growth of 111.2% in July-August. Revenue is near its all-time high after the adjustment of the LINE Manga commercial agreement. 2. Strategic Investment Segment: Cumulative revenue for the first half was 4.298 billion yen, accounting for 8.0% of total consolidated revenue. Excluding the impact of the sold-everista, revenue grew year-over-year. The segment posted a cumulative operating deficit of 246 million yen, a 410 million yen improvement from the prior year period deficit of 656 million yen. This improvement was driven primarily by narrowed losses at Nihon Bungeisha and reduced goodwill amortization after prior-year impairment. International business saw slightly widened deficit due to capacity building, but improved 10 million yen from Q1 to Q2. The segment targets full-year deficit of 410 million yen, with the lowest-ever half-year deficit on track for early full segment profitability.

• Full-year guidance is maintained, with all top-line metrics (revenue, EBITDA, operating profit) already exceeding 50% of full-year guidance at the half-way mark, on track to meet or exceed full-year targets
• Net profit progress is higher than other metrics due to the already booked MyAnimeList gain in Q1, which was included in the initial full-year plan
• For Strategic Investment Segment, management targets achieving full segment profitability by fiscal 2027
• Revenue growth for the domestic e-book distribution existing commercial flow is expected to remain at the current strong 5.3% level through the second half, with no major expected change
• The Strategic Investment Segment expects revenue and profit to improve further in the second half, driven by the start of the Tokushima Gambarous season and gradual scaling of SaaS flyer business

• International new service development (such as Booktrovert) is expected to take time to reach full profitable revenue contribution, requiring continued near-term investment
• While half-year performance is ahead of plan, management maintains a conservative view on full-year profit for e-book distribution due to the scheduled end of a high-margin service in the second half
• Achieving the 2027 profitability target for the Strategic Investment Segment requires continued balanced management of new investment and profit collection
• Physical book distribution varies by country in production and logistics processes, creating execution risk for global expansion that requires local partnership to mitigate

Q: What is the current progress of physical book distribution expansion overseas? / A: Management is evaluating entry to both major US distribution channels: general distributor channels (like Ingram) and big 5 publisher-led aggregated distribution channels. Management has personally traveled to the US to meet directly with local publishers. Media Do is also in discussions to partner with Kinokuniya, which operates 22 US stores and 42 stores globally, to distribute Japanese printed books overseas, still evaluating whether to print domestically in Japan or locally in market.

Q: Has the restructuring of the Strategic Investment Segment reached a phase of sustained profit contribution, or does the investment phase continue? / A: Considerable progress has been made on restructuring. Nihon Bungeisha has reached a stage where it can generate stable profits without special interventions, though future expansion into new genres, deeper digitalization, and media adaptations will still require some investment. New global initiatives like Booktrovert still need time to reach meaningful profit contribution. Management remains committed to achieving full Strategic Investment segment profitability by fiscal 2027, and will continue balancing investment and profit collection until that target.

Q: When will overseas expansion start contributing meaningfully to revenue? / A: Development of the AI-powered MDTS translation system has required some moderate investment, but management expects revenue contribution from the global expansion initiative to start emerging starting next year.

Q: What is the outlook for full year performance, given the better-than-expected first half? / A: Domestic e-book existing growth is expected to remain at the current strong half-year level through the second half with no major changes. Strategic Investment is expected to improve further in the second half. However, management still maintains a conservative view on full-year profit because a high-margin e-book distribution service is scheduled to end in the second half, so management will continue to monitor profit contribution carefully.