Starts Publishing Corporation Q4 FY2026 earnings call

• Corporate Vision and Mid-Term Strategy

  • The company's vision is to become a "production company that delivers感动 (emotional excitement)", with a mission of "creating demand for culture and smiles". The 2025 slogan is "Innovate for the next future!"
  • The 2025-2027 mid-term management plan has three core pillars: maximize revenue through IP expansion, accelerate comic-focused content and new label launches, and improve productivity via generative AI adoption.
  • Q1 2025 results were a 12.7% year-over-year revenue decline and 33.9% year-over-year operating profit decline, but no changes to the full-year plan were made.

• IP and Content Expansion

  • 16 works are confirmed for video adaptation (film, TV drama, anime) over the three years from H2 2025, up from the previously announced 15, with 2-3 additional projects still in negotiation, putting the likely total at around 20 works by 2027.
  • Full-scale IP expansion launches in H2 2025: the mega-hit Oni no Hanayome (total 5.8 million copies sold across print and digital) has been confirmed for TV anime adaptation, with a new volume released alongside the June 2025 announcement. The English digital version of Oni no Hanayome is already a hit in North America, and the company plans to expand the title globally via streaming platforms after the anime launches.
  • The company has a dedicated in-house rights team that actively pitches works to entertainment companies, after initially receiving inbound inquiries. The company is also co-developing new original content with production partners from the early stages, with pre-planned video adaptation.
  • New labels: 4 new labels are already launched, with 3 additional comic-focused labels (Comic Zerise, OZ Comic, BeLuck Comic) scheduled to launch in Q4 2025. New publication volumes are scheduled to grow from 110 in Q1 to 162 in Q4 2025, supported by maturing new editorial staff hires from recent years.

• Generative AI Productivity Improvements

  • Generative AI is deployed across all divisions: for Ozmall, AI now automatically generates venue content that previously required outsourcing, cutting costs to near zero and reducing lead times. AI is also used for first-round screening of novel contest entries and database integration projects, cutting manual workload for editorial and technical teams.

• Media Solution Business Updates

  • OZ no Premium Yoyaku, the female-focused curated restaurant/experience booking service, has seen steady growth in listed stores and booking volumes, with peak demand in Q4 during the holiday season. The segment recently launched high-end luxury lunch (around 10,000 yen per person) for adult women's gatherings, with a promotion offering one free spot for four-person bookings across 100 luxury stores. It also launched new evening afternoon tea service to meet shifting post-COVID consumer demand, aligning with changing leisure patterns that favor daytime/early evening outings over late nights.

• Capital Strategy and M&A

  • Retained earnings exceeded 8 billion yen (0.8 billion USD equivalent) at the end of 2024, and the company will use this strong cash position for growth investments including M&A and capital alliances. Target sectors include digital solution, content service, and marketing companies.
  • In June 2025, the company completed its first M&A: acquisition of RelyonTrip, developer and operator of the travel DX planning app SASSY, which is a 5-language travel planning app popular with Gen Z and inbound tourists. The company will pursue synergies between SASSY, OZ's existing booking platform, and the company's long-standing media brands to accelerate growth in the outing/leisure support business.

• Corporate Governance and Culture

  • Dividends have increased rapidly from 30 yen (2022) to 110 yen (2024), with a planned 120 yen dividend for 2025, targeting a 30% payout ratio. Shareholder benefits were changed from free books to OZ booking digital coupons in response to shareholder feedback.
  • The company has a young workforce with an average age of 34.6, 71% female employees, and recently appointed 2 new female executive officers to strengthen the management team. The company prioritizes team-based development and a collaborative, communicative corporate culture to retain talent.

1. Book Content Segment: Q1 2025 revenue was 1 billion yen, down from 1.4 billion yen in the year-ago quarter. The decline was driven by tough comparables: Q1 2024 saw extremely high sales from the hit movie tie-in Anata to Mata Deaeru Nara, Ano Hana Saku Oka de (over 1.3 million copies sold, with multiple reprints) and a new volume release of the hit title Oni no Hanayome, which did not occur in Q1 2025. This segment accounts for approximately 75.8% of total Q1 2025 revenue. 2. Media Solution Segment: Q1 2025 delivered revenue growth and profit growth. After posting losses during the COVID-19 pandemic, the segment returned to profitability in 2023 and has gradually grown profits since. It accounts for approximately 24.2% of total Q1 2025 revenue.

• No changes were made to the company's full-year 2025 financial plan despite Q1 2025's lower results, and management remains committed to hitting full-year targets.
• The company targets breaking through 10 billion yen in total revenue and 3 billion yen in operating profit by the end of the 2025-2027 mid-term plan, with faster growth to 12 billion, 15 billion, and eventually 20 billion yen in revenue after hitting the 10 billion yen milestone.
• New publication volumes will increase sequentially through 2025, growing to 130 in Q3 and 162 in Q4, which is expected to drive a second-half sales rebound, with benefits from IP promotion expected to flow through to results in late 2025 and 2026.
• 5 films are scheduled for release in 2026, which will create continuous in-store promotional activity and drive ongoing sales lift for original books and comics.

• The main long-term risk cited is the potential for AI to disrupt the content creation industry, which could fundamentally change the market environment within 5 years. Management has addressed this risk by proactively adopting generative AI across all business units now, to build internal capability to adapt to any future changes.
• Video adaptation commercial success is inherently uncertain, though management noted that even non-blockbuster adaptations deliver guaranteed sales lift from in-store promotional activity and new consumer purchases, mitigating this risk.
• Management noted that there are no major material risks to the execution of the 2025-2027 mid-term plan, as all core projects have already been seeded over the past 18 months and will deliver results within the plan period barring extreme unforeseen events.

Q: What synergies exist between Starts Publishing and the broader Starts Group, and what is the future strategy for these ties? / A: Starts Publishing originated as a regional publication for the Starts Group's real estate business, which still remains a core founding business. Today, the group's 9,000 sales staff distribute Starts Publishing magazines and hit books to customers when making real estate pitches, which softens the sales approach and builds customer trust. For the group's urban redevelopment projects, Starts Publishing's media assets (Ozmall, the newly acquired SASSY app) allow the group to offer destination promotion and foot traffic generation that competing developers cannot, creating unique competitive advantages that will grow over time.

Q: What are the main challenges or bottlenecks to executing the mid-term management plan? / A: Management states there are no major bottlenecks or risks to the current mid-term plan: all core content projects were seeded over the past 18 months, and the business model requires 1-3 years from seeding to results, so all projects are on track to deliver within the plan period. External risks like new COVID-19 outbreaks have limited impact, as demand for publishing content actually rises during restrictions, and global demand for Japanese IP remains strong with no major trade barriers. The main long-term change is AI-driven industry disruption, which the company is preparing for by adopting AI across all operations now. Succession planning is also already underway, with the CEO training dozens of mid-level leaders to take over senior roles, so leadership is not a bottleneck.

Q: What is the general scale of planned growth investment, and how will the company allocate capital between investment and dividends? / A: Management targets growth investment on the order of several tens of billions of yen, which the company can fully fund from its existing cash position with no debt. The company just completed its first M&A (RelyonTrip) after announcing its M&A strategy, and will first build results with this acquisition while continuing to scout additional targets in digital solutions and content marketing. Organic growth through new hires will not be enough to hit the 10+ billion yen revenue target and accelerate growth beyond that, so M&A is a necessary part of the long-term growth strategy, following the path of other successful growing media companies.