ANYCOLOR Inc. Q3 FY2026 earnings call

• Overall Financial Performance
  • The company delivered double-digit year-over-year revenue and profit growth in the third quarter, with revenue exceeding initial forecasts due to strong contributions from large-scale initiatives in the core commerce segment.
  • A one-time 970 million yen product impairment charge was recognized in the third quarter for products with no planned future sales (mostly older event-related merchandise deemed unsuitable for current sale), which pulled operating income below initial expectations.
• Talent Operations
  • In the third quarter, 2 new VTubers debuted under the にじさんじ (main Japanese) brand, 1 VTuber resumed activities, and 1 VTuber graduated, resulting in a net increase of 3 active VTubers. There was no net change in the number of NIJISANJI EN VTubers.
  • As of the end of January, ANYCOLOR ID accounts reached approximately 1.94 million. Employee headcount remained broadly stable from the prior quarter, with disciplined hiring continuing across all business segments.
  • Three types of auditions are currently ongoing for future VTuber debuts via the VTA training program.
• Key Third Quarter Initiatives
  • Live streaming: Launched year-end/New Year special programming and 3D music live events on YouTube.
  • Events: Held a broad portfolio of events across music and gaming, including the global tour Tokyo performance and unit/individual live shows.
  • Commerce: Sold a wide range of merchandise, including goods tied to 3D live events, VTuber unit anniversary goods, and popular VTuber birthday goods.
  • Promotion: Executed both IP collaborations and promotional streams, including multiple large-scale campaigns featuring large groups of VTubers, which is a core company strength.

1. Live streaming: Membership-based revenue maintained steady performance; YouTube watch time trended solidly, driven by strong engagement from year-end/New Year special programming, 3D live streams and event-related content. No absolute revenue figure was disclosed for the segment. 2. Commerce: Revenue reached 10.7 billion yen, exceeding the upper end of management's initial forecast range, and contributed 68.15% of total third quarter revenue. Performance was very strong, with large initiatives launched after year-end/New Year outperforming expectations, and includes the recognition of initiatives deferred from the second quarter. 3. Events: Revenue reached 1.39 billion yen, exceeding the upper end of management's initial forecast, and contributed 8.85% of total third quarter revenue. A wide range of events were held, including the year-end/New Year countdown live, the Tokyo performance of にじさんじ WORLD TOUR 2025 Singin' in the Rainbow!, VTuber unit/individual performances, and non-music gaming events; all events outperformed expectations, driven by online ticket sales. 4. Promotion: The number of executed campaigns and average campaign value were broadly in line with initial management forecasts. 5. Company-wide total third quarter revenue was approximately 15.7 billion yen. Operating income came to 5.837 billion yen, after recognizing a 970 million yen inventory impairment charge for discontinued products that was not included in initial forecasts; operating margin was slightly below initial forecasts due to this charge. After the impairment charge, ending inventory stood at 5.22 billion yen.

• Fourth Quarter 2026 (ending April 2026) Guidance
  • Live streaming revenue is expected to remain largely unchanged from the third quarter.
  • Commerce revenue is forecast between 9.05 billion yen and 9.75 billion yen. The にじさんじ 8th anniversary merchandise, which launched in February and is historically the highest-selling annual initiative for the segment, is already tracking very well, with additional planned product sales contributing to the forecast range.
  • Events revenue is expected to be lower than the third quarter, as only one encore performance of the にじさんじ WORLD TOUR 2025 Singin' in the Rainbow! is planned for the quarter.
  • Promotion revenue is expected to see steady performance, supported by annual advertising budget spending ahead of corporate fiscal year-ends in March.
  • Cost forecasts include an expected approximately 1.5 billion yen inventory impairment charge tied to the ongoing inventory valuation policy review, as well as a planned 650 million yen provision for annual employee year-end bonuses.
• Full Year 2026 April Fiscal Year Revised Guidance
  • Full year revenue guidance has been revised upward, reflecting the better-than-expected third quarter performance across commerce and events.
  • Full year operating income guidance has been revised downward, as the 970 million yen third quarter impairment charge and expected 1.5 billion yen fourth quarter impairment charge were not included in the previous full year forecast, and this downward adjustment more than offsets the operating profit benefit from higher full year revenue.

• Inventory valuation risk: Management is currently revising the company's inventory valuation policy, moving from only recognizing impairment for products with explicitly no planned future sales to a standardized policy that recognizes impairment based on inventory turnover days, regardless of stated sales plans. The expected 1.5 billion yen fourth quarter impairment charge is based on initial estimates, and final amounts could differ from current forecasts.
• Unplanned one-time charges: The unplanned 24.7 billion yen cumulative inventory impairment charge across the third and fourth quarters (970 million yen + 1.5 billion yen) has resulted in a downward revision to full year operating profit, creating downside risk to full year profitability against previous market expectations.

The full answers to the listed questions are not included in the provided transcript excerpt. The questions covered in the scheduled Q&A session are listed below: Q: What is the background for reviewing inventory valuation methods and carrying out an impairment write-down at this timing, and what are future outlooks?

Q: What is the fourth quarter revenue outlook?

Q: What is the impairment loss tied to product disposal, and what are its future impacts?

Q: What is the total company-wide impact of impairment losses for the 2026 April fiscal year?

Q: What initiatives does management expect to drive growth going forward?

Q: What is behind the growth in fan count and the strong profit performance of the commerce business?

Q: What is the possibility of restocking older products, and how does management decide to discontinue product sales?

Q: What is the background for the increase in inventory, and what led to the current impairment charges?

Q: Why did event results outperform expectations, and what role did online ticketing play in this performance?

Q: What is the threat posed by AI, and how will it impact the VTuber industry?

Q: What is the impact of VTubers that have surpassed 1 million subscribers?

Q: What is the planned number of VTuber debuts next fiscal year, and what is the re-growth strategy for NIJISANJI EN?

Q: What is the policy direction for the company's medium-term management plan?

Q: How does management balance inventory management practices and impairment charge recognition?

Q: What is the outlook for VTuber activity resumptions?