7138.T

Three Core Growth Strategies

• Profitability Improvement for Existing Businesses: The company has intentionally prioritized margin growth over top-line revenue expansion amid a sluggish domestic comic market. Cost optimization focused on advertising efficiency and payroll rationalization reduced total selling, general and administrative costs by ~21% year-over-year, equal to nearly 90 million yen in total cuts. These efforts reduced the half-year operating loss to 76 million yen, a 72% reduction in the deficit size year-over-year, putting the company on track for an early return to net profitability.
• Accelerated Overseas Expansion: The company is expanding its previously Japan-only event business via partnerships with local partners. It is currently running a traveling pop-up event for a Thai drama co-starring a popular Japanese idol across Bangkok, Tokyo, Osaka and Greater China, to test a cross-regional event expansion model. The new Taiwan collaboration store with partner TAIYU Co. outperformed early expectations, leveraging a prime location in Ximending and combined overlapping fan bases to reach 3x the revenue of the prior Taiwan location. Management sees significant remaining room for growth across Asian markets, starting with Taiwan, and is considering active future investment in the segment.
• New Business Creation: The company is moving forward with entry into the crypto asset business, announced in July 2025. A special shareholder meeting will be held at the end of October 2025 to approve adding crypto business to the company's articles of incorporation, after which the company will proceed with crypto asset acquisitions and new business launch. To offset limited internal crypto expertise, the company is pursuing strategic partnerships with established industry players, starting with a recently announced partnership with Gentosha. The company has also launched preparations to bring the global large-scale entertainment event The Big Bounce, which has drawn 1 million cumulative attendees worldwide, to the Japanese market. Management's long-term goal is to combine its 20 years of entertainment industry expertise with crypto and blockchain technology to build a differentiated next-generation entertainment business that cannot be easily replicated by competitors. The company is also open to M&A of high-potential players in the crypto space to accelerate expansion.

Operational Updates

• The company has satisfied the Tokyo Stock Exchange Growth Market listing maintenance requirements: as of September 2025, its traded market capitalization increased to 1.9 billion yen from below 500 million yen in March 2024 and March 2025, driven by new share warrant exercises that increased the free float ratio and positive market sentiment around the company's new growth plans. Exercises of new share warrants and convertible bonds also increased the company's cash balance by 500 million yen, lifting the equity ratio to 62.1% and providing sufficient capital for new business and overseas investment. The company is currently revising its mid-term management plan amid a changing business environment, and will disclose the updated plan once it is finalized.

• Management maintains the full-year 2026 March fiscal year consolidated earnings guidance. Half-year revenue reached 38.3% of the full-year target, a 12 percentage point gap against the planned run rate.
• Management expects to recover the gap in the second half, particularly from the high season months of December and January, when EC sales historically grow strongly, and expects continued momentum in the event segment to drive a full-year recovery.
• For EC services, the company will continue to optimize its cost structure to offset market stagnation while focusing on driving conversion rate growth to achieve profitability.
• For event services, the company will expand merchandise-focused pop-up store operations and step up efforts to improve online event sales performance to hit full-year targets.

1. EC Service: Total company consolidated revenue is 1.435 billion yen, down 21.8% year-over-year. EC revenue came in 16.1% below budget, driven by a deliberate profit-over-revenue strategy and broader weakness in the comic market. Key KPIs: user count is declining due to reduced inefficient advertising and lack of hit titles, purchase conversion rate recovered to 1%+ after falling to 0.8-0.9%, average order value is below the 8,500 yen target at under 8,000 yen, and sales promotion cost as a percentage of revenue has fallen from ~10% to 4% after optimization efforts. The Q1 2026 is expected to be the revenue bottom, with a mild recovery in Q2.
2. Event Service: Event revenue was 33.1% below budget, with strong growth in in-store sales (especially pop-up stores at external venues) but weak performance in the online/EC event sales segment. Collaboration cafes with food and beverage offerings underperformed expectations, while overall in-store sales remained at a high level though below the strong year-ago period. New initiatives like online lottery sales are being tested to drive online event sales growth, and the company will shift to a merchandise-focused model to improve efficiency.
3. New and Overseas Business: Overseas segment revenue grew 364.7% year-over-year, on a still small base. The new joint collaboration store "Furuichi × Manga Exhibition" opened in Ximending, Taiwan in July 2025, generating ~3x the revenue of the company's first Taiwan location. The new and overseas segment grew more than 200% year-over-year but has not yet hit internal growth targets, and is still in the investment phase.

• The domestic comic and print media market is in a prolonged stagnation, with few new breakout hit titles to drive EC traffic and revenue.
• New and overseas businesses are still in the early investment phase and have not yet met internal growth expectations, creating uncertainty around their ability to deliver planned growth.
• The company has limited internal expertise in crypto asset and Web3 businesses, requiring external partnerships to de-risk execution.
• Collaboration cafes with food and beverage offerings significantly underperformed expectations, requiring a business model pivot that could create near-term disruption.

No substantive Q&A content is included in the provided transcript.