6047.T

• Core Business Stabilization

  • After multi-years of resource allocation to address existing business issues, Gunosy single entity has maintained expanding operating profit following first quarter profitable conversion
  • Game Eight has achieved number 1 domestic game media traffic share amid a soft domestic market, and continues to deliver strong growth in high-margin overseas business
  • Generative AI adoption internally has improved productivity and supported ongoing cost control

• New Strategic Initiatives

  • Approved the establishment of joint venture S8 Plus with Sony Payment Services to enter the game-related payment space, enabled by new Japanese legislation allowing external third-party payment in mobile games
  • The joint venture will leverage Game Eight's highly engaged, high-intent paying game user base (predominantly from search engine SEO traffic) and Sony Payment Services' established payment expertise to pursue the over 1 trillion yen (close to 2 trillion yen) total game payment market, offering three core solutions: in-guide seamless payment, packaged self-hosted payment systems for game publishers, and game download key sales

• Investment Update: slice (India Fintech)

  • slice completed its merger with North East Small Finance Bank, becoming the first India fintech to obtain a full small finance bank license (only 32 private full-service banks operate in India, making this license extremely rare and defensible)
  • The license upgrade enables slice to accept customer deposits (lowering funding costs from 10-15% to 5-7% average), issue credit cards directly, and increase maximum financial leverage from 7x to 14x, all of which are expected to drive stronger long-term growth and improve profitability
  • Dilution from the merger was limited; Gunosy remains the largest external shareholder, but slice is no longer accounted for under the equity method, leading to 303 million yen of projected full-year profit improvement

• Capital Allocation & Shareholder Return Policy Change

  • Balance sheet totals ~10 billion yen (excluding liabilities), split equally between investment side (~5 billion yen, majority allocated to slice targeting 30% IRR) and operating side (~5 billion yen)
  • Operating side has 2-2.5 billion yen allocated to existing business, which is currently tracking to ~20% ROIC, exceeding the 15% target, while available investable cash has increased to 3.5-4 billion yen from prior 2.5-3 billion yen
  • The company changed its long-held no-dividend policy: it now plans to prepare to initiate shareholder returns balancing growth and dividend payouts, as core business stability and reliable profit generation have been achieved. The company will allocate available cash to high-quality, stable cash-generating M&A to improve capital efficiency while moving forward with dividend planning.

• Full-year 2025 May fiscal year guidance was revised upward: consolidated operating profit was raised by 230 million yen to 680 million yen from the original forecast, driven by ongoing cost improvements at Gunosy and stronger-than-expected profit contribution from Game Eight, amplified by favorable yen depreciation tailwinds for overseas business
• Full-year net profit was revised upward by 290 million yen to a 180 million yen black ink forecast, with an additional 87 million yen of special profit from the sale of a domestic unlisted investment holding
• Consolidated full-year revenue is projected to see a 2.9% slight decline, reflecting slower domestic mobile game market growth impacting Game Eight's domestic revenue, which is offset by growing high-margin overseas revenue contribution leading to higher overall profit despite lower total revenue
• Medium-term 2027 May fiscal year financial targets are maintained: 900 million yen operating profit/EBITDA from the operating business segment, and 15%+ ROIC on existing invested capital; current 2025 full-year forecast of 680 million yen operating profit is tracking in line with the medium-term target trajectory
• slice is expected to achieve an IPO in 4-5 years, with Gunosy planning to return 20% of any future slice sale proceeds to shareholders

1. Media Business (Gunosy Single Entity): After strict cost control implemented following a 2024 policy shift, Gunosy single entity has maintained and expanded operating profit, achieving consecutive quarterly black ink with expanding margins after first quarter profitable conversion. Total consolidated revenue for H1 (Q1+Q2) is 3.075 billion yen, with Q2 consolidated operating profit reaching 366 million yen, which is over 80% progress against the full-year revised target. Key KPIs (DAU, MAU, Sales/DAU) are stable: MAU is flat despite reduced advertising spend, Gunosy core MAU saw slight growth, and Sales/DAU has bottomed out after years of decline. CPI has decreased due to lower ad spend, and estimated IRR remains above target. 2. Game Eight Segment: Game Eight continues to deliver double-digit year-over-year growth in both revenue and profit, driving group-level growth. It has achieved the number 1 share in domestic game media across all three SimilarWeb measured metrics (traffic share, unique visitors, sessions). Domestic revenue is slightly down due to slowing mobile game market growth, but high-margin overseas business continues growing, increasing overseas revenue contribution and lifting group-level overall margin. Revenue contribution from Game Eight has grown year-over-year and continues to drive the group's profit growth.

• The new game payment joint venture is an early-stage new business with high uncertainty around market adoption and revenue generation, even with large market size potential
• Domestic mobile game market growth is slowing, which continues to pressure Game Eight's domestic revenue
• As a late entrant to Indian banking, slice faces uncertainty around how quickly it can establish market positioning and scale its new banking business despite the favorable license upgrade
• All future dividend and shareholder return specifics have not been finalized, so details are still to be determined and disclosed

Q: How will Gunosy differentiate its new game payment business from expected competing offerings from other players? / A: Most competing activity is led by payment companies partnering loosely with game media outlets. Gunosy is co-leading a joint venture with Sony Payment Services as the game media operator, enabling deeper, more seamless user integration that loose partnerships cannot achieve. This structure also allows Gunosy to provide white-label backend payment functionality for game publishers, not just end-user payment on Game Eight's own site, which would not be possible without the dedicated joint venture structure with a payment provider. This combination of end-user and publisher-facing integrated capabilities is the core differentiation.

Q: What is the company's dividend policy framework, including targets like payout ratio or return on equity objectives, after the policy shift? / A: No final specifics have been determined yet, and will be disclosed after internal discussions conclude. The company separates return policy into two buckets: for investment side exits, 20% of sale proceeds will be returned to shareholders as previously announced. For operating business profits generated from capital allocated to core operations, the company is now actively planning to return a portion of these profits to shareholders alongside ongoing growth investment. Any future dividend policy will be aligned with the company's core capital efficiency goals, maintaining target ROIC for core invested capital and ROE for any incremental M&A investment before determining the appropriate payout level.