6430.T

Market Environment

• Smart pachislot adoption has grown steadily, reaching a 56.3% installation share as of the interim period, with continued strong utilization that outperforms non-smart models; upcoming A-type smart pachislot models are expected to further expand the market.
• Smart pachinko installation share grew to 23.3% from 8.7% a year prior, driven by new improved-performance models and a shift by manufacturers to prioritize smart pachinko development, and utilization also outperforms conventional models.
• The pachinko hall industry is seeing continued polarization, with large leading halls driving the generational shift to smart gaming machines, supporting steady capital expenditure demand.

Long-Term Strategy (2030 Vision & Mid-Term Management Plan)

• The company's 2030 Vision is anchored on the mission "Make CX Amazing ~ Bringing unknown customer experiences to the world", with two core strategic priorities:
  • Leverage in-house technology to create new future entertainment experiences, redefine customer experience, and build next-generation smart entertainment.
  • Expand into new industries, specifically tourism and food & beverage, to deliver new customer experiences using existing company capabilities.
• The company plans to allocate cash flow generated from high-margin existing businesses to complementary new businesses and M&A, targeting a 25% revenue share for new businesses by 2030 fiscal year. Growth will be driven by two wheels: existing core businesses and new expanded businesses.
• Strategic segment goals:
  • Information System Business: Optimize hall operations, drive DX, expand customer acquisition support and cloud-based management services, and implement data-driven management using AI and big data.
  • Amusement Business: Strengthen in-house smart pachislot development capabilities to create hit titles, and grow the content business.
• Sustainability & ESG: The company runs stakeholder-aligned initiatives including programming classes for children aligned to its innovation mission, and the Wellph noise-canceling earbud product aligned to SDG Goal 3, and is embedding sustainability into all employee activities.

Interim Operational Highlights

• Despite a year-over-year revenue decline from the reversal of 2025's special demand for new banknote reprinting, the interim period recorded the second-highest revenue in company history, driven by strong demand for smart gaming machine-related equipment. Key new products including VEGASIA card units, BiGMO XCEL, and TJ-01 outperformed sales plans, and the MIRAIGATE DX service for pachinko halls grew its store network steadily.

• Full year 2026 March fiscal year consolidated guidance is maintained at: 51.0 billion yen revenue (down 11.3% YoY), 7.5 billion yen operating profit (down 38.7% YoY), 7.5 billion yen ordinary profit, and 4.7 billion yen net income (down 39.2% YoY). The guidance accounts for the reversal of last year's special demand but still reflects a strong high-level performance baseline.
• The company upwardly revised its full year 2026 dividend guidance: an interim dividend of 30 yen per share, a 20 yen increase to the year-end dividend bringing it to 70 yen per share, for a full year total dividend of 100 yen per share.
• The company raised its minimum annual dividend guidance for the next three years, from 80 yen per share to 100 yen per share, strengthening its shareholder return commitment. The company continues to proactively invest in research and development and capital expenditure to support future growth.

1. Information System Business: Interim revenue of 25.449 billion yen, down 21.8% year-over-year (YoY), contributing 83.8% of total consolidated revenue. Interim operating profit of 7.123 billion yen, down 31.0% YoY. For the full fiscal year, it is projected to see lower revenue and profit due to the reversal of last year's special demand for new banknote reprinting, but sales of card units and new products remain strong amid growing smart pachinko adoption.
2. Amusement Business: Interim revenue of 4.292 billion yen, up 132.9% YoY, contributing 14.1% of total consolidated revenue. Interim operating profit of 1.063 billion yen, an increase of 1.065 billion yen YoY. For the full fiscal year, it is projected to deliver year-over-year revenue and profit growth, driven by strong sales of group company smart pachislot and in-house game titles.
3. Other Business: Interim revenue of 0.659 billion yen, up 353% YoY, contributing 2.1% of total consolidated revenue. It recorded an operating loss of 12 million yen in the interim period.

No explicit operational or financial risks were discussed in the available transcript content.

Q: Why has smart pachinko adoption finally started growing rapidly after a slower start than smart pachislot? / A: Management cites three core drivers. First, July 2025 saw the launch of new models with the improved Lucky Trigger 3.0 Plus feature, which expands game design and performance, creating more attractive gameplay than earlier smart pachinko models. Second, overall utilization of smart pachinko is now consistently higher than conventional models, with some models maintaining stable long-term utilization, making it easier for pachinko halls to justify adoption. Third, all major gaming machine manufacturers have shifted their new product development focus entirely to smart pachinko, with over 60% of all new pachinko launches now being smart models, marking the shift from the introduction phase to the growth phase.

Q: What are Daikoku Denki's core strengths in the pachinko hall industry, and how will ongoing industry consolidation affect the business? / A: Management notes that Daikoku's existing customer base is concentrated among large leading pachinko hall operators, which means the customer base remains intact after consolidation. As the industry shifts to DX and smart gaming machines, halls increasingly demand advanced systems integration, data utilization, and labor-saving operations, all core strengths of Daikoku. Industry consolidation that increases the market share of large halls actually plays to Daikoku's strengths, as larger operators have higher demand for Daikoku's data analysis and ongoing support services. Daikoku's model of being a long-term partner that provides post-installation improvement support further differentiates it from competitors, and the company expects ongoing industry change to strengthen its market position.

Q: Why did you decide to raise the multi-year minimum dividend level beyond this year's upward revision? / A: Management cites three core reasons. First, the company now judges that the smart pachinko market has entered a stable growth phase matching smart pachislot, which will drive medium-long term revenue and cash flow growth for the core Information System business. Second, the company is prioritizing capital efficiency as a core management theme, and raising the minimum dividend makes its shareholder return commitment clearer, supporting long-term corporate value growth. Third, the raise strengthens the company's shareholder return policy, balancing stable minimum returns with performance-based variable returns to deliver consistent long-term returns to shareholders.