KeyHolder,Inc. Q2 FY2025 earnings call

Recent Acquisitions and New Business Launches

• Topos Enterprise joined the group in January 2025, and Red List (operator of Empire Steak House Roppongi) joined the group in May 2025; Aoi Corporation, a long-established talent agency with well-known clients including Hiroshi Tamaki and Saki Takaoka, joined the group in August 2025, adding valuable industry expertise and talent resources to KeyHolder's entertainment operations.
• Launched a new film distribution division, KeyHolder Pictures, which has already secured multiple unannounced distribution projects and plans to release its first titles within 2025.
• Group subsidiary TOKYO ROCK STUDIO became Japan's only partner of the global production service network PSN, enabling the company to capture large international filming location projects.

Segment Strategic Initiatives

• Comprehensive Entertainment: Will push Nogizaka46 promotions focused on the growth of new 6th generation members to improve equity method investment gains. For SKE48, will continue organizational reform to capitalize on increased media exposure from its recent restructuring, and deliver successful planned 2025 tours and anniversary events. The company views new original content and talent acquisition as core to its long-term growth as a comprehensive entertainment group.
• Video Production: Existing program and drama production divisions are performing in line with plan; the company will focus on building stable results through the end of the fiscal year, while expanding monetization opportunities via the new distribution division, which can secure input on casting and open up new revenue streams for content development, production and talent placement.
• Advertising Agency: The digital advertising division completed its planned mid-year headcount expansion, and new hires are expected to contribute to earnings in early H2. The division has stopped declining revenue following the major client spend cut, and is actively diversifying its client portfolio to target growing AI and automotive/motorcycle industries, while leveraging in-house synergies by handling branding and website build projects for group subsidiaries. The traditional advertising division is stabilizing existing partnerships with Seven Net Shopping, and has new planned event and digital platform projects already in motion to drive future revenue growth.
• New Consumer Business: The company will explore opportunities for multi-location expansion of the Empire Steak House Roppongi brand in Japan.

Capital and Shareholder Return Strategy

• The company is pursuing an "Entertainment × Finance" strategy following recent capital alliances including a partnership with SBI Holdings and TWIN PLANET, and a Mitsubishi UFJ Bank investment in the K2 Pictures film fund.
• As of the interim period, the company holds roughly 47 billion yen in cash and cash equivalents; when including 50% of Nogizaka46 LLC's cash (available for future use under the equity method), total available capital reaches roughly 100 billion yen. The company will use this capital to pursue partnerships and cross-industry joint projects to drive large-scale future growth.
• The company balances dividends and shareholder benefits, prioritizes a progressive payout ratio, and will actively consider special dividends based on performance. Current shareholder benefits include Olive Spa relaxation tickets for long-term holders of 1,000+ shares, and raffle entries for artist live tickets for all holders of 100+ shares.

Financial Position

• Total assets as of the interim period were 53.732 billion yen, down 542 million yen from the end of the prior fiscal year. Operating cash flow increased by 1.276 billion yen, investing cash flow increased by 505 million yen, and financing cash flow decreased by 1.158 billion yen. Ending cash and cash equivalents were 4.734 billion yen, up 1.153 billion yen year-over-year.

1. Comprehensive Entertainment Business: Segment revenue decreased 122 million yen year-over-year due to weak game app sales (offset by strong Nogizaka46 concert merchandise and DVD sales). Segment profit increased 44 million yen year-over-year to 800 million yen, driven by cost-cutting and improved profitability at the digital content division. Novelbright's arena tour merchandise sales saw year-over-year growth, while SKE48 posted soft sales and profits amid its transition to a new organizational structure. 2. Video Production Business: Segment revenue increased 40 million yen year-over-year, with growth from the staffing business offsetting lower revenue from fewer regular programs and drama productions. Segment profit decreased 47 million yen year-over-year to 28 million yen due to upfront costs for the newly launched KeyHolder Pictures distribution division and delayed closure of an overseas project. 3. Advertising Agency Business: Segment revenue decreased 998 million yen year-over-year following a major client (a hair removal clinic) cutting its digital ad spend. Segment profit fell 140 million yen year-over-year, resulting in a 74 million yen net loss, due to lower overall contract values, low-margin large sponsorship deals, and upfront costs for talent acquisition and organizational restructuring. 4. Logistics Business: Newly added following the acquisition of Topos Enterprise, the segment operates general freight and special amusement facility gaming machine logistics. It posted segment profit of 199 million yen (adjusted for one-off accounting items from the acquisition). General logistics saw soft performance due to upfront investment for two new hubs and slower-than-expected customer acquisition, while the gaming machine logistics business maintains higher margins and pricing. 5. Other Businesses: Includes existing real estate management, Topos Enterprise's wholesale, hotel and convenience store operations, and the newly added Empire Steak House Roppongi restaurant business. Segment profit increased 10 million yen year-over-year to 34 million yen. Consolidated adjusted operating profit for the first half was 506 million yen, down 2 million yen year-over-year, after removing 122 million yen in one-off gains from the Topos Enterprise acquisition from the reported 628 million yen operating profit. Consolidated revenue was 16.833 billion yen, up 2.683 billion yen year-over-year. Intermediate profit attributable to parent company owners was 287 million yen.

• Revenue and operating profit are progressing in line with the full-year internal plan. Operating profit progress through the first half is 42% of the full-year target, which is consistent with the company's typical business model that concentrates revenue and profit in the second half.
• Management maintains its original full-year consolidated earnings forecast, and expects to achieve the full-year target by delivering all planned projects in the second half.
• The comprehensive entertainment business targets a full-year profit above the prior year's result, with solid performance in line with internal plan despite lower first half revenue year-over-year.

• General logistics business at the newly acquired Topos Enterprise has seen slower-than-expected customer acquisition after opening two new hubs, leading to soft near-term performance for the segment.
• Digital advertising revenue remains dependent on the shrinking hair removal clinic market, and client portfolio diversification efforts have not yet generated material revenue to offset this decline.
• SKE48 is facing soft CD sales and has not yet completed its organizational transition turnaround, creating near-term pressure on the segment's performance.
• Nogizaka46 streaming revenue has underperformed expectations, and equity method investment profit declined year-over-year due to the prior year's high baseline from Asuka Saito's graduation concert.

No Question and Answer section was included in the provided earning call transcript.