Financial

Summary of Financial Results for Second Quarter (First Half) of Fiscal Year Ended December 31, 2025

7 August 202516 pages8,956 words

Summary

KLab Inc. experienced a challenging first half of the fiscal year ending December 31, 2025, characterized by a 12.9% year-over-year revenue decline to 3,161 million yen and a substantial net loss of 4,748 million yen. This loss was primarily driven by a 4.43 billion yen impairment on software in progress, which contributed to a sharp reduction in total assets from 15.7 billion yen to 10.9 billion yen. Despite these pressures, the game business segment achieved a profit of 313 million yen, and operating losses showed slight improvement compared to the previous year. Due to ongoing volatility and the difficulty of projecting future performance, no full-year forecast has been provided, and interim dividends have been suspended. To stabilize its financial position and pivot its corporate strategy, the firm executed several capital-raising and restructuring initiatives. These included the sale of the subsidiary GlobalGear for 1.1 billion yen and the issuance of new stock acquisition rights. These rights are tied to rigorous performance hurdles, requiring the company to achieve over 1,000 million yen in non-game revenue and a market capitalization exceeding 10 billion yen before they can be exercised. These measures are designed to incentivize a recovery in market value and diversify revenue streams beyond traditional mobile gaming. Management remains focused on achieving profitability through aggressive cost-cutting, workforce optimization, and a refined development pipeline. While the company has faced four consecutive years of operating deficits and delays in the release of EA SPORTS FC™ TACTICAL, it maintains that there is no material uncertainty regarding its status as a going concern. Future growth is predicated on the successful launch of new projects, including a My Hero Academia title and an expansion into the hybrid casual gaming market. This strategic shift aims to balance the high-risk nature of major game development with more sustainable, diversified business operations.

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KLab Inc. reports consolidated financial results for the first half of fiscal year 2022, covering the period from January 1 to June 30, 2022. The primary purpose of the disclosure is to provide a comprehensive overview of the company’s financial health, operating performance, and strategic adjustments under Japanese GAAP. The scope focuses on the Japanese mobile gaming market and related research and consulting segments. Financial data indicates a challenging period characterized by a significant decline in revenue, which fell 32.3% year-over-year to 8,357 million yen. Despite this contraction, the company narrowed its operating loss to 446 million yen compared to a loss of 842 million yen in the same period of the previous year. Ordinary income turned positive at 111 million yen, largely bolstered by 465 million yen in foreign exchange gains. However, the company recorded a net loss attributable to owners of the parent of 342 million yen, impacted by extraordinary losses including a 410 million yen impairment loss on software within the Game Business segment. Methodologically, the results reflect the first-time application of the Accounting Standard for Revenue Recognition. This change shifted revenue recognition for in-game currency from the time of exchange to an estimated period of use, resulting in a 53 million yen decrease in reported revenue for the period. The consolidated balance sheet shows total assets of 19,296 million yen and a solid equity ratio of 64.1%. Looking ahead, the company maintains a policy of non-disclosure regarding full-year forecasts due to the volatility of the mobile gaming industry. Significant subsequent events include the issuance of the 18th Stock Acquisition Rights to Morgan Stanley MUFG Securities to procure approximately 5.1 billion yen and the establishment of a 4 billion yen credit line with MUFG Bank to ensure future liquidity and financial stability.

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Summary of Financial Results for Second Quarter (First Half) of Fiscal Year Ended December 31, 2025

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