Earnings Results for the 2nd Quarter Ended September 30, 2025: Kadokawa

Kadokawa’s second‑quarter earnings for FY 2026 reveal a modest decline in consolidated performance, with net sales falling 1.9 % to ¥136,320 million and operating profit contracting 29.7 % to ¥4,597 million. The downturn is largely attributable to weaker Animation/Film and Gaming units, while Publication/IP Creation and Web Services have partially recovered from last year’s cyber‑attack losses. Consequently, the company has lowered its full‑year outlook to ¥278.2 bn in net sales and trimmed operating profit guidance by roughly 38 % to ¥10.3 bn, reflecting a cautious stance amid shifting market dynamics.

Within Publication/IP Creation, first‑half sales dipped 0.2 % as domestic paper book revenue fell 6.7 % and e‑book income dropped 15.2 %, though international paper sales grew 20.1 %. Operating profit suffered a sharp 94.1 % decline, driven by timing adjustments in sales recognition and higher variable costs from new titles, despite a 9.6 % increase in newly launched IPs. The segment plans to reorganize its domestic publishing structure, concentrate on comics and light novels, and trim costs in lower‑volume genres to restore profitability.

Other business segments experienced an 11.0 % YoY sales decline and a 21.3 % drop in operating profit, largely due to reduced MD sales; however, recreation sales rose 22.1 % thanks to strong IP‑event performance. Management intends to reinforce MD product lines, expand global merchandise and event hosting, and rationalize SAKURA TOWN operations to recover earnings in the second half.

The Education/EdTech unit shows modest growth, with high‑school enrollments up 11 % and Vantan enrollment rising 6 %. International Animation/Film and Gaming continue to dominate revenue, accounting for roughly 58 % of sales. Capital investment reached ¥14.1 bn, mainly in intangible assets and property/plant/equipment. After a ¥15 bn loan repayment, the equity ratio stands at 64.3 % and net cash balances ¥101.4 bn as of September 30, 2025, underscoring a solid balance sheet amid earnings volatility.