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

Key insights

6 takeaways

01
Kadokawa significantly lowered its full-year operating profit forecast for the fiscal year ending March 31, 2026, from 16.7 billion JPY to 10.3 billion JPY, a 38.3% decrease from initial expectations.
02
First-half consolidated operating profit fell 47.8% year-on-year to 5.55 billion JPY, driven by underperformance in the Publication/IP Creation and Animation/Film segments.
03
The Publication/IP Creation segment will undergo organizational restructuring in January 2026 to separate high-potential comic and light novel businesses from other genres to improve editorial efficiency and restore operating margins to 10%.
04
Animation/Film segment operating profit plummeted 95.8% year-on-year for the first half, largely due to a reliance on first-time adaptations with lower-than-expected revenue and delays in scheduled titles.
05
Gaming remains a bright spot, with FromSoftware's 'ELDEN RING NIGHTREIGN' performing well beyond initial expectations, contributing to a 7.7% increase in segment sales compared to initial forecasts.
06
The company is implementing immediate cost optimization and price revisions across its publishing business to address the decline in earnings caused by the downsizing of titles and insufficient media mix effects.

Summary

Kadokawa’s earnings briefing for the second quarter of the fiscal year ending March 31, 2026, details a period of significant financial contraction, prompting a downward revision of full-year forecasts. For the first six months, consolidated net sales fell 1.8% year-on-year to 133,933 million yen, while operating profit plummeted 47.8%. Consequently, the company lowered its full-year operating profit forecast by 38.3% to 10,300 million yen. The leadership team attributes these results primarily to underperformance in the Publication/IP Creation and Animation/Film segments, driven by the downsizing of titles and shifts in revenue recognition timing.

The Publication/IP Creation segment faced challenges due to decreased efficiency and lower-than-expected earnings per title, despite an increase in the total number of new IPs. To address this, the company is initiating a structural reorganization in January 2026, separating the comic and light novel businesses from other publishing categories to better manage editing processes and production volumes. Management is prioritizing a return to a 10% operating margin by optimizing advertising costs, implementing price revisions, and strategically reviewing low-volume titles.

The Animation/Film segment’s decline is viewed as a temporary reflection of a lineup dominated by first-time adaptations rather than established sequels. While the segment struggled in the first half, management remains optimistic about the medium-to-long-term outlook, citing a robust pipeline of major titles and sequels scheduled for the coming fiscal years. Conversely, the Gaming segment outperformed expectations, bolstered by the success of FromSoftware’s titles. Moving forward, the company intends to leverage its Global Rights Bureau and newly established merchandising divisions to maximize the international media mix potential of its core intellectual properties.