Starts Publishing Corporation Q2 FY2025 earnings call

Corporate Strategy and Mid-Term Plan

• Corporate vision: "Become a production company that creates moving experiences", mission: "Create demand for culture and smiles", current period slogan: "Innovation for the next future!"
• Mid-term management plan core priorities to counter the declining publishing market:
  • Maximize revenue through IP expansion
  • Shift focus to comics and accelerate new label launches
  • Improve productivity through generative AI utilization

Book Content Business Updates

• Core business model: Discover authors via submission platforms, grow readership through a print-digital content cycle, and drive long-term sales through content adaptation; adaptations consistently drive renewed print sales of original works
• Large pipeline of confirmed IP adaptations for H2 2025 through 2027: 1 film in Q3 2025, 2 dramas in Q4 2025, 5 films and 1 anime in 2026, 2 animes, 3 films and 1 drama in 2027, with additional adaptations in negotiation for after Q4 2027
  • Confirmed high-profile projects: Oni no Hanayome (The Demon's Bride) (5.8 million cumulative copies) TV anime adaptation, with promotional displays already launched at major bookstores; Subete no Koi ga Owaru to Shitemo TV drama, Seishun BL first series TV drama (both starting October 2025); Ano Hana ga Saku Oka de... sequel live-action film, launching 2026, which has already driven strong reprint sales of the series
• International IP expansion has launched: Oni no Hanayome distribution started in North America and multiple Asian/European markets, Koukan Uso Nikki is a hit in Korea with print launches in Vietnam and Taiwan, and one digital comic title has launched translated distribution globally; revenue is still small at this early stage
• 3 new labels will launch in Q4 2025 targeting niche segmented audiences: OZbooks/comics (October, comics and essays), Comic Zerise (November, shonen comics, with a joint promotional website already launched), BeLuck Comics (December digital launch, 2026 print launch, tied to the already successful Seishun BL series)
• Publishing volume will grow sharply in H2: 110 titles in H1 (impacted by staffing changes), 131 titles confirmed for Q3, 164 for Q4; 12 new graduates were hired in April 2025, half assigned to editorial to support long-term growth in publication volume
• New genre experimentation: A newly launched mockumentary horror title went straight to reprint and received adaptation offers from multiple film studios; accessible editions of classic Japanese literature and Confucian texts for young readers are also in development

Media Solution Business Updates

• Long-established media brands (Ozmagazine, Metrominute, Aerde, Ozmall) are leveraged to expand beyond traditional advertising into event planning, tourism support, owned media production and SNS operation for commercial real estate developers and retailers; demand for tourism-related content and in-store activation has grown strongly with rising inbound tourism
• Completed the first acquisition in company history: RelyonTrip, developer of the travel planning app SASSY, which supports 4 languages for inbound travelers and integrates with Instagram and Google Maps
• The company is currently testing synergies between SASSY and the existing media solution business, with combined commercial products for local governments and commercial facilities expected to launch starting next fiscal year

Capital and Organizational Updates

• Retained earnings exceeded 8 billion yen (0.8 billion USD-equivalent) at the end of 2024, providing strong cash reserves for growth investments, with the RelyonTrip acquisition as the first step; the company will pursue larger M&A deals going forward with limited risk exposure
• 71% of employees are women, 104 employees are in their 20s; the company maintains a collaborative, open corporate culture with policies to support employee growth and communication, and the team remains positive despite weaker H1 performance

1. Book Content Business: Reported a large decline in both revenue and profit. Major labels including Starts Publishing Bunko, Comic Berry's, and noicomi saw revenue drops, driven by a lack of new hit IP works, slow growth in the number of digital book releases, and a sharp decrease in reprints compared to the strong performance of 2023-2024. Smaller labels saw slight revenue growth. No absolute revenue values or percentage contribution are provided in the transcript. 2. Media Solution Business: Achieved slight growth in both revenue and profit for the first half. Core services OZ Premium Reservation and Private Venue Booking saw steady growth, with OZ Private Venue Booking bookings doubling year-over-year. Brand solution and tourism support services also saw growing demand.

• Management expects that H2 2025 will reverse the H1 decline, driven by the sharp increase in publication volume, new label launches, and the start of large-scale promotional activities tied to confirmed IP adaptations.
• Publishing volume growth will be sustained into 2026 and beyond, supported by recent new hiring to expand editorial capacity.
• The company expects the confirmed pipeline of IP adaptations to drive sustained sales of original works over the medium term, with potential for long tail sales if adaptations perform well.
• Synergies between the newly acquired SASSY app and the existing media solution business are expected to drive new revenue growth starting in the next fiscal year, following 2025 experimentation and product development.

• H1 profit decline was driven by predictable upfront costs for new label launches and editorial expansion, which will only generate revenue starting in H2 2025.
• Book content business performance is dependent on the success of new IP adaptations; weaker-than-expected performance of upcoming films, dramas and animes would reduce associated book sales and reprint volumes.
• The company's first M&A transaction is still in early integration, and expected synergies may take longer to materialize than planned, or fail to meet projections.
• Overall publishing industry demand is on a long-term downward trend, creating ongoing headwinds for the book content business.

No question and answer section was included in the provided transcript.