Sega Sammy Holdings

Sega Sammy Holdings’ third-quarter financial results briefing for the fiscal year ending March 2026 outlines a strategic shift toward improved capital efficiency and a more unified global marketing structure. Facing a net debt position and performance shortfalls in certain segments, management is prioritizing the optimization of existing assets over large-scale mergers and acquisitions. The company intends to refine its capital allocation policy in the upcoming medium-term plan, focusing on businesses where it can leverage core strengths to ensure sustainable growth.

In the Entertainment Contents segment, the company is addressing challenges in its consumer business by transitioning from a region-specific publishing model to a centralized, data-driven global strategy. While the acquisition of Rovio’s "Beacon" system has not yet yielded the expected results due to operational differences between casual and core mobile titles, the company remains committed to maximizing the value of its intellectual property. Future growth is anchored by a robust pipeline of major titles scheduled for the fiscal year ending March 2027, alongside a transmedia strategy that leverages the Sonic the Hedgehog film franchise to drive licensing and merchandise revenue.

The Pachislot and Pachinko business continues to serve as a stable earnings pillar, with the company maintaining flexible pricing strategies to navigate competitive pressures. Despite a downward revision in unit sales volume, high demand for mainstay titles has allowed the company to remain on track with its profit forecasts. Meanwhile, the Gaming business is focused on integrating recent acquisitions, such as GAN and Stakelogic, to expand recurring revenue through platform migration and content development. Management has clarified that it will not pursue large-scale investments in domestic integrated resorts, preferring instead to offer operational expertise and equipment supply if opportunities arise.

SEGA SAMMY HOLDINGS INTEGRATED REPORT 2025 SEGA SAMMY HOLDINGS INTEGRATED REPORT 2025 Key Visual from Sonic the Hedgehog 3 movie Group Value Introduction Strengthening of Non-Financial Capital Creativity is Mindset and DNA SEGA SAMMY Group Core Businesses 02 Materiality 56 Creativity is Alway...

Q3 for the Fiscal Year Ending March 2026 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.

2026年3⽉期 Q3決算補⾜データ集 Data Appendix (FY2026/3 Q3 ) （⼗億円 Billion yen） FY2024/3 FY2025/3 FY2026/3 FY2024/3 FY2025/3 FY2026/3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ...

The quarterly consolidated financial results for SEGA SAMMY HOLDINGS INC. cover the nine‑month period ending December 31, 2025, within a fiscal year that ends March 31, 2026. Net sales rose 4 % to ¥335,232 million from ¥322,316 million in the prior year. Operating income fell sharply by 54.6 % to ¥19,844 million, driven largely by a ¥31,380 million impairment loss on goodwill and other intangible assets related to the Rovio subsidiary. Ordinary income declined 51.8 % to ¥23,838 million, and profit attributable to owners of parent turned a loss of ¥16,894 million. Adjusted EBITDA contracted 93.6 % to ¥3,482 million from ¥54,518 million, reflecting the extraordinary impairment and restructuring costs. Basic earnings per share shifted from a profit of ¥194.14 to a loss of ¥79.98.

Segment performance varied: Entertainment Contents sales increased modestly (1.5 %) but ordinary income fell 34.3 % to ¥24,676 million; Pachislot & Pachinko sales declined 4.0 % with ordinary income dropping 46.0 %; Gaming revenue surged 438.5 % to ¥16,795 million but incurred a loss of ¥247 million due to consolidation of newly acquired GAN and Stakelogic. The Group’s balance sheet shows total assets at ¥640,474 million and net equity of ¥360,618 million, with the equity ratio at 56.2 %. Current liabilities rose to ¥109,254 million, lowering the current ratio to 35.1 %. Treasury stock increased from ¥54,866 million to ¥26,459 million as the company retired 20 million shares and subsequently acquired up to 12 million shares at a maximum cost of ¥20 billion. The results reflect significant impairment impacts, a shift in capital allocation policy toward shareholder returns, and ongoing adjustments to the Gaming and Entertainment segments amid new acquisitions.

Financial results for the third quarter of the fiscal year ending March 2026 reveal a complex performance landscape characterized by robust revenue generation offset by substantial extraordinary losses. Consolidated sales reached 134.1 billion yen for the quarter, driven primarily by the Entertainment Contents segment. However, the company recorded a net loss of 19.5 billion yen due to 31.8 billion yen in extraordinary charges. These financial pressures necessitated a revision of the full-year forecast, which now anticipates higher overall sales of 490.0 billion yen but a projected net loss of 13.0 billion yen for the fiscal year.

The consumer games division remains a cornerstone of the business, though it faces tempered expectations for the remainder of the year. While third-quarter sales were strong at 66.5 billion yen and full-game unit sales reached 8.69 million, the annual unit sales target was lowered from 30.0 million to 26.5 million. This adjustment stems largely from a decline in anticipated repeat sales of older titles. Key intellectual properties continue to demonstrate market resonance, with the Sonic series leading performance at 4.0 million units year-to-date, followed by the Total War, Like a Dragon, and Persona franchises, which each contributed between 2.4 million and 3.2 million units.

In the amusement and resort sectors, the Pachislot and Pachinko segments show signs of recovery despite regulatory and competitive challenges. While Pachislot approval rates remain low and utilization shares have dipped to 14.5%, the Pachinko segment saw an improved utilization share of 10.0%, ranking the company third in the market. Simultaneously, the Paradise Segasammy casino resort reported growth, hosting 321,000 users year-to-date and generating a cumulative operating profit of 86.2 billion KRW. These diverse results highlight a period of strategic recalibration as the company manages high-performing legacy IPs against broader structural financial headwinds.

The company’s Q3 fiscal year ending March 2026 fell short of its initial forecast, primarily due to weaker entertainment‑content sales and a substantial goodwill impairment of approximately 31.3 billion yen following the Rovio acquisition. Operating income reached 43.7 billion yen versus a forecast of 48.1 billion yen, while adjusted EBITDA for the full year was revised upward to 62.2 billion yen after accounting for M&A effects and impairment losses. The balance sheet reflected a 6.6 billion‑yen increase in goodwill and a 39.9 billion‑yen decline in shareholders’ equity, driven by the impairment and a treasury‑stock buyback.

Entertainment‑content sales underperformed across most segments, with the Consumer area’s full‑game and new free‑to‑play titles falling short of expectations. Animation sales, however, exceeded forecasts, and licensing revenue alongside subscription services in the Consumer segment are projected to grow year‑over‑year. The company highlighted strong character licensing and a steady animation business but noted sluggish results for Rovio and the need to boost holiday‑period sales.

The Gaming Business continued to build a foundation for growth, launching new titles such as “Railroad RICHES Link™” and “Super Burst Boosted Cartin’ Gold™.” Casino sales hit a record high, driven by Japanese VIP and mass‑market customers, yet the group anticipates roughly 15 billion yen in impairment losses from Stakelogic and is restructuring management and product development to improve profitability. Focus remains on B2B omnichannel expansion in online gaming and social casino markets while tightening capital allocation for new IP development.

Looking ahead, the next fiscal year will concentrate on expanding SEGA Sammy’s core entertainment portfolio with four major IP releases, enhancing sales capabilities for content titles, and launching a full‑scale B2B online gaming platform. In the pachislot/pachinko segment, new cabinet models featuring flagship IPs will roll out through Q3‑Q4 2026. The animation arm plans several high‑profile releases, including new “Detective Conan” and “Lupin the Third” projects, with a mix of global launches and Netflix exclusives to diversify revenue streams.

Sega Sammy’s performance through the third quarter of the fiscal year ending March 2026 is characterized by a significant divergence between robust domestic gaming machine operations and substantial financial setbacks in the global consumer and mobile segments. While the Pachislot and Pachinko division exceeded expectations—driven by high-volume unit sales of titles like Smart Pachislot Tokyo Revengers—the broader group faces a projected net loss of 13.0 billion yen for the fiscal year. This downturn is primarily the result of 46.3 billion yen in extraordinary impairment losses related to the acquisitions of Rovio and Stakelogic, the latter of which was impacted by regulatory shifts in the Netherlands.

The Entertainment Contents Business struggled with underperforming new full game launches and a deteriorating user acquisition environment for mobile titles, most notably Sonic Rumble. Consequently, management has pivoted from aggressive expansion to a period of consolidation, suspending large-scale M&A activities in favor of a 20.0 billion yen share buyback program. To restore profitability within the mobile sector, the strategy now emphasizes a "regrowth phase" for Rovio, leveraging AI-driven marketing efficiencies and a transmedia approach that includes major theatrical releases for the Angry Birds and Sonic franchises scheduled through 2027.

Despite current headwinds, the medium-term outlook relies on a robust multi-platform pipeline and the expansion of the Gaming Business, which includes record-high performance at Paradise SegaSammy fueled by Japanese VIP demand. Upcoming releases for the Nintendo Switch 2 and the continued rollout of high-profile intellectual properties like Yakuza and Persona are intended to stabilize the consumer area. Geographically, the company remains focused on global markets while maintaining strict compliance with international gaming regulations in jurisdictions such as Nevada, which govern both corporate operations and shareholder requirements.

Sega Sammy Holdings experienced a period of financial transition during the first nine months of the fiscal year ending March 31, 2026, characterized by modest revenue growth alongside significant bottom-line volatility. Net sales increased by 4.0% to ¥335.2 billion, supported by the successful execution of the Sonic the Hedgehog transmedia strategy and record profits from the Paradise City integrated resort in South Korea. However, the company recorded a net loss of ¥16.9 billion, a sharp reversal from the prior year’s profitability. This downturn was primarily driven by a ¥31.4 billion impairment loss on goodwill and intangible assets associated with the acquisition of Rovio Entertainment, which contributed to a 54.6% decline in operating income.

Performance across core business segments remained mixed as the company integrated recent acquisitions. While the Gaming segment saw a 441.6% surge in third-party sales following the consolidation of Stakelogic and GAN, it ultimately recorded an ordinary loss. Meanwhile, ordinary income fell by 34.3% in the Entertainment Contents division and 46% in the Pachislot and Pachinko segment. These operational headwinds, combined with dividend payments and treasury stock acquisitions, led to a reduction in total net assets to ¥360.6 billion.

In response to these financial pressures and the impact of the Rovio impairment, a strategic shift in capital allocation has been implemented. The company has formally suspended large-scale M&A activities to prioritize shareholder returns and balance sheet stability. This pivot includes a ¥20 billion treasury stock buyback program scheduled between February and July 2026, intended to acquire and retire up to 5.71% of outstanding shares. By reallocating capital previously reserved for aggressive growth investments, the focus has moved toward optimizing existing assets and enhancing shareholder value through disciplined financial management.

Sega Sammy Holdings’ 2025 Integrated Report details a transformative strategic shift aimed at establishing a more balanced and resilient business portfolio. Historically reliant on the volatile Pachislot & Pachinko market, the Group is transitioning to a three-pillar structure: Entertainment Contents, Pachislot & Pachinko, and a newly formed Gaming Business. This "Welcome to the Next Level!" plan focuses on global expansion and transmedia integration to drive long-term growth through 2030.

The Entertainment Contents segment remains the primary revenue driver, contributing ¥321.5 billion of the Group’s ¥428.9 billion in FY2025 net sales. This growth is fueled by a "mille-feuille" revenue model that leverages major intellectual properties like Sonic the Hedgehog, Persona, and Like a Dragon across games, film, and licensing. Meanwhile, the Pachislot & Pachinko segment is being repositioned as a stable cash generator. To combat a shrinking domestic market, the Group is introducing innovative modular cabinet systems to reduce costs for operators and improve player engagement.

The most significant strategic development is the establishment of the Gaming Business as a third pillar, targeting the North American iGaming and B2B casino solutions markets. This expansion is underpinned by the major acquisitions of Rovio, GAN, and Stakelogic, totaling over ¥130 billion, alongside the divestment of non-core assets like the Phoenix Seagaia Resort. Financially, the Group reported a robust FY2025 performance with a profit of ¥45.1 billion and an ROE of 12.2%. Looking ahead, the Group targets a cumulative adjusted EBITDA of over ¥230 billion by FY2027, supported by a commitment to shareholder returns including a 50% total return ratio and a 3% dividend on equity. Sustainability and governance also remain central, with goals for carbon neutrality by 2050 and enhanced diversity within its global workforce.

Sega Sammy’s financial performance for the fiscal year ended March 2025 reflects a transitional period characterized by strategic restructuring and the expansion of global intellectual property. While net sales and operating income saw a decline to 428.9 billion yen and 48.1 billion yen respectively, net profit rose to 45.0 billion yen following the divestment of Phoenix Resort. The Entertainment Contents division remained a primary growth engine, bolstered by high-margin repeat game sales and the successful integration of Rovio. Despite a temporary downturn in the Pachislot and Pachinko segment due to a lack of major releases, the Gaming division achieved profitability through record-breaking casino performance at Paradise SegaSammy and robust slot machine sales in the United States.

The medium-term strategy centers on a transmedia approach designed to maximize the lifecycle value of core franchises. This is exemplified by the Sonic the Hedgehog brand, which saw significant licensing growth and substantial box office success, paving the way for a multi-year pipeline of films and animation through 2027. To sustain this momentum, the company is reviving legacy titles such as Virtua Fighter and Shinobi while investing 20.93 billion yen to acquire Stakelogic, targeting the North American online gaming market. These initiatives are supported by structural reforms in European operations and a commitment to human capital, including specific targets for cultural diversity and female leadership by 2031.

Looking toward the fiscal year ending March 2026, a recovery in sales to 475.0 billion yen is projected, driven by a strong pipeline of new titles and the revitalization of the Pachislot business through innovative cabinet systems. The company maintains a disciplined capital policy, targeting a 50% total return ratio for shareholders and a cumulative adjusted EBITDA of over 230 billion yen by 2027. Furthermore, Sega Sammy continues to prioritize ESG benchmarks, maintaining high ratings for gender diversity and climate change management while navigating the complex regulatory requirements of international gaming jurisdictions.

This financial presentation details the consolidated results for Sega Sammy Holdings for the third quarter of the fiscal year ending March 2025. The findings indicate a strong overall performance, particularly within the Entertainment Contents segment, which includes consumer games and animation. While the company reported a year-to-date net sales decrease to 322.3 billion yen compared to the previous year, it revised its full-year ordinary income forecast upward to 51.5 billion yen, driven by robust performance in its core intellectual properties.

The scope of the report covers global operations across three primary segments: Entertainment Contents, Pachislot and Pachinko Machines, and Gaming. In the consumer area, the successful launches of Metaphor: ReFantazio and Sonic X Shadow Generations contributed to strong sales, though the company recorded an inventory write-down following the cancellation of Football Manager 25. The animation division saw significant gains from the Sonic the Hedgehog cinematic franchise. Conversely, the Pachislot and Pachinko segment faced a downward revision in sales forecasts due to the postponement of mainstay titles to the next fiscal year to ensure product quality.

The Gaming business, centered on North American slot machine sales and the Paradise City resort in South Korea, showed steady growth. The company announced an organizational restructuring of this segment to integrate recent acquisitions like GAN and Stakelogic, aiming to establish gaming as a third major business pillar. Methodologically, the report utilizes consolidated financial data, exchange rate impact analysis, and unit sales tracking. The company maintains a shareholder return policy targeting a total return ratio of 50% or a 3% dividend on equity, supported by a medium-term plan to invest over 100 billion yen in research, development, and strategic growth.