Financial

Q3 Results Presentation: Fiscal Year Ending March 2026

Summary

Sega Sammy Holdings faces a pivotal fiscal turning point, projecting its first net loss in eleven years at 13 billion yen for the fiscal year ending March 2026. This downturn is primarily driven by 46.3 billion yen in impairment losses related to the acquisitions of Rovio and Stakelogic, which failed to meet performance expectations amid market volatility and regulatory shifts. Consequently, the company is suspending large-scale mergers and acquisitions to prioritize capital efficiency, initiating a 20 billion yen share buyback, and pivoting toward a more disciplined, data-driven operational model. The company’s performance remains bifurcated across its diverse business segments. The Pachislot and Pachinko division continues to serve as a financial anchor, exceeding profit forecasts through the successful deployment of flagship titles like Smart Pachislot Tokyo Revengers and e Hokuto No Ken 11. Conversely, the Consumer segment has struggled significantly, hampered by the underperformance of new full-game releases and free-to-play titles, including Sonic Rumble and Football Manager 26. While the Animation and AM & Toy segments demonstrate steady growth and the Transmedia business shows promise in licensing, these gains have been insufficient to offset the broader digital and consumer-facing setbacks. Moving forward, the strategic focus shifts from aggressive expansion to the optimization of core intellectual properties, such as Sonic and Angry Birds. Management is prioritizing the development of a repeatable system for hit production and enhanced community engagement to stabilize long-term profitability. By reallocating resources toward internal development efficiency and strengthening its B2B omnichannel strategy, the company aims to navigate current market challenges while maintaining its regulatory obligations across international gaming jurisdictions. This transition marks a deliberate move away from acquisition-led growth toward a model centered on sustainable, high-quality content delivery.

From the report

23 Tor tne Fiscal Year Enaing Marcn zuzo Q3 for the Fiscal Year Ending March 2026 Results Presentation February 13, 2026 The market forecasts. performance outlooks, plans, strateqies, and other forward-looking created. They do not The market forecasts, performance outlooks, plans, strategies, and other forward-looking statements contained in this document are based on information available to the Company and the judgment of its management at the time this material was created. They do not constitute a guarantee of future performance. The information provided herein involve uncertainties that may be affected by various factors, including economic conditions, industry trends, competitive environment, exchange rates, interest rates, raw material prices, changes, amendments or abolishment of laws and regulations, large-scale natural disasters, outbreaks of infectious diseases, conflicts, and risks related to cybersecurity. Such uncertainties could cause actual results or events to differ materially and adversely from those presently anticipated. The Company does not undertake to update or revise this document. Disclaimer In addition, information contained in this document that relates to parties other than the Company has been quoted from publicly available sources and other references. However, the accuracy or completeness of such information is not warranted or guaranteed. This document is for informational purposes only, and is not intended to solicit or recommend any investments.

rties other than the Company has been quoted from publicly available sources and other references. However, the accuracy or completeness of such information is not warranted or guaranteed. This document is for informational purposes only, and is not intended to solicit or recommend any investments. Any investment decisions should be made solely at your own discretion and responsibility. The Company and the information providers shall bear no responsibility whatsoever for any damages incurred by users as a result of utilizing the information contained in this document. Unauthorized reproduction, redistribution, or alteration of this document or its contents for any purpose is strictly prohibited. If you quote all or part of this document, please clearly indicate the source of the citation or link to this page. This is an English translation from the original Japanese-language version. The translation is provided for your reference and convenience only and without any warranty as to its accuracy or otherwise. The Company assumes no responsibility for this translation and for direct, indirect or any other forms of damages arising from the translation. Should there be any inconsistency between this translation and the original Japanese-language version, the Japanese-language version shall prevail. © SEGA SAMMY HOLDINGS INC. All Rights Reserved. <Disclaimer> This document is a transcription from the financial results briefing presentation, and some edits and modifications have been made for ease of understanding. Speaker: Koichi Fukazawa (Director of the Board, Senior Executive Vice President and Group CFO of SEGA SAMMY HOLDINGS INC.)

. <Disclaimer> This document is a transcription from the financial results briefing presentation, and some edits and modifications have been made for ease of understanding. Speaker: Koichi Fukazawa (Director of the Board, Senior Executive Vice President and Group CFO of SEGA SAMMY HOLDINGS INC.) I will explain the results for Q3 of the fiscal year ending March 2026 and the outlook going forward. The materials used today are the "Results Presentation" available on our company website.

Q3 Topics 1 Impairment of goodwill and ● Rovio: Approx. 31.3 billion yen other intangible assets at ● Stakelogic: Anticipating approx. 15.0 billion yen*1 Rovio and Stakelogic (expected to be recognized at the end of FY) *The amount is currently under review 2 Review of ● Suspend large-scale M&A for the time being capital allocation policy ● Implement the acquisition of treasury stocks (share buybacks) of 20.0 billion yen 3 Revision of ● Recognized extraordinary losses associated with the operating results forecast implement of impairment (See P. 6 for details) ● Reflected performance progress in each segment -3- I will provide an explanation on three topics. First, regarding impairment losses, as announced today, we recorded an impairment loss of 31.3 billion yen in the third quarter at Rovio, which we decided to acquire in April 2023, due to intensifying competition in the global mobile game market. Regarding Stakelogic, whose acquisition was decided in July 2024, we revised our business plan following changes to its business model and priority markets due to the rapid contraction of the Dutch market. Although it is the first year following closing and it is standard practice to assess impairment based on deviations over time, in light of current marketing conditions in the Netherlands, we have decided to take a conservative approach, and as a result, we expect to recognize impairment losses of approximately 15.0 billion yen at the end of this fiscal year.

ard practice to assess impairment based on deviations over time, in light of current marketing conditions in the Netherlands, we have decided to take a conservative approach, and as a result, we expect to recognize impairment losses of approximately 15.0 billion yen at the end of this fiscal year. We take this situation very seriously, as we have recognized or expect to recognize in Q4, significant impairment losses related to M&A activities conducted as growth investments. Accordingly, we have decided to review our capital allocation policy. For the time being, we will suspend large-scale M&A and reduce the growth investment budget previously allocated for M&A and similar activities. Accordingly, we will conduct a ¥20.0 billion share buyback using the funds previously allocated for growth investments.

Q3 Topics (Approach to Impairment of Goodwill, etc..) [Trend of balance of Rovio’s goodwill etc..] 2Z 514 506 (Million euros) 201 197 194 191 187 184 ⮚ Recognized impairment losses of approx. 181 177 174 229 million euros (approx. 31.3 billion yen) ⮚ Assumption to calculate impairment loss 269 amount • Reduce the sales forecast to be generated 368 364 359 355 350 346 341 336 332 from existing and new game titles going 269 forward based on the shortfall rate of the most recent sales forecast • Taking into account the impact of reductions Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 in fixed expenses to be implemented in the (After future and the reduction in fee burdens impairment) FY2024/3 FY2025/3 FY2026/3 through promotion of utilization of external Goodwill Other intangible assets (Angry Birds trademark rights, Beacon tech-related intangible assets payment *Converted to yen when reflected in the Company's consolidated balance sheet -4- This graph shows Rovio's goodwill since its acquisition and the balance of intangible assets, including Angry Birds in local currency (euros). As a result of an impairment charge of 229 million euros, the goodwill balance has been reduced to zero, and the balance of intangible assets is now 269.0 million euros. The premise for calculating this impairment loss is that Rovio has continued to fall significantly short of its sales plan in recent periods. Based on this, we applied a stress factor reflecting the recent sales shortfall rate to our future sales projections and revised the sales plan downward.

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Words: 14,720
Type: Financial

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