Koei Tecmo Holdings (3635) Q2 2025 earnings summary

Executive summary

• First half FY2024 sales declined 11.4% year-over-year to ¥35.2B, with operating profit down 23.1% to ¥10.7B and net profit down 4.9% to ¥16.0B, mainly due to fewer new title launches and a focus on back catalog sales.

• Comprehensive income dropped to ¥13.0B from ¥23.3B a year earlier.

• Despite lower sales, operating profit and net profit exceeded initial forecasts, driven by cost reductions in outsourcing, advertising, and personnel.

• Entertainment segment saw a significant sales and profit decline, while amusement and real estate segments remained stable or improved slightly.

• Overseas sales fell 11.5% year-over-year, with Asia dropping 22.1%, but North America and Europe grew.

Financial highlights

• Sales: ¥35.2B (down 11.4% YoY); Operating profit: ¥10.7B (down 23.1% YoY); Net profit: ¥16.0B (down 4.9% YoY).

• Gross profit for the period was ¥20.6B, down from ¥24.8B year-over-year.

• Compared to initial forecast, operating profit and net profit were up 33.1% and 59.8% respectively, despite sales being 7.4% below plan.

• Console/PC unit sales fell 22.9% YoY; digital download ratio increased to 78.7%.

• Basic earnings per share for the six months was ¥50.58, compared to ¥53.24 in the prior year.

Outlook and guidance

• Full-year FY2024 forecast unchanged: sales ¥90B, operating profit ¥30B, net profit ¥30B.

• Second half expected to be stronger with multiple new console titles and unannounced releases.

• Ordinary profit is forecast at ¥40B, down 12.6% YoY; full-year basic EPS forecast is ¥95.04.

• Medium-term operating profit target revised to ¥30B (from ¥40B) due to adjusted title launch expectations.

• Risks include performance of new and mobile titles; no major cost risks anticipated.