Konami Q1 Business Profit Jumps 62% to ¥44.7 Billion on Record Digital Entertainment Quarter; Guidance Untouched

Konami Group Corporation (TSE: 9766), the Tokyo-based games, arcade, casino-equipment and sports-club operator, reported consolidated results for the first quarter of the year to March 2027 — the three months ended June 30, 2026 — under IFRS. Revenue rose 33.6% to ¥129,524 million, business profit (revenue less cost of sales and SG&A) climbed 61.7% to ¥44,699 million, operating profit rose 63.3% to ¥45,285 million, profit before tax rose 66.6% to ¥46,453 million, and profit attributable to owners of the parent advanced 64.2% to ¥32,574 million. Basic and diluted earnings per share were both ¥240.30, against ¥146.32 a year earlier. The company said every revenue and profit line set a first-quarter record.

The step-up was as much about mix as volume. Gross profit expanded to ¥70,244 million from ¥47,954 million, lifting the gross margin to roughly 54.2% from 49.5%, while SG&A grew far more slowly, to ¥25,545 million from ¥20,307 million. Total comprehensive income nearly doubled, up 91.6% to ¥34,017 million, helped by a ¥1,507 million positive swing in foreign-currency translation of overseas operations, against a ¥2,078 million negative translation entry a year earlier.

Digital Entertainment does the heavy lifting

Digital Entertainment — mobile, console and card games — generated segment revenue of ¥100,083 million, up 36.5% from ¥73,315 million, and segment business profit of ¥43,870 million, up 57.4% from ¥27,868 million. That single segment accounts for roughly 77% of group revenue and, before corporate adjustments, essentially all of group profit.

Konami attributes the strength to its established franchises rather than a one-off hit. The quarter saw the launch of Powerful Pro Baseball 2026-2027, a 30th-anniversary edition of the series' "Success" mode carrying nine scenarios and players from the 2026 World Baseball Classic, plus eFootball™ Kick-Off! for Nintendo Switch™ 2. On the live-operations side, eFootball™ passed one billion cumulative downloads and ran anniversary and World-Cup-year campaigns; Pro Baseball Spirits A and Jikkyou Powerful Pro Baseball ran anime tie-ups; eBaseball™: MLB PRO SPIRIT — which has passed five million downloads and features cover athlete Shohei Ohtani — ran a limited-time promotion; and the Yu-Gi-Oh! Card Game shipped products tied to the THE CHRONICLES animated shorts. Esports activity ran alongside, including the eJ.League eFootball™ 2026 finals and qualifying for the Yu-Gi-Oh! World Championship 2026.

Casino equipment swings to profit; arcade and sports both grow

Gaming & Systems was the fastest-growing segment in percentage terms, with revenue up 64.9% to ¥12,388 million from ¥7,513 million and a swing to a ¥827 million segment profit from a ¥166 million loss a year earlier. Slot-machine sales of the Solstice 49C™ and content such as BOMBERMAN™ in North America and Bull Rush Stampede™ in Australia drove the gain, while the SYNKROS® casino-management system was rolled out to Carnival Corporation cruise ships. The unit also entered the Class II markets of Texas and Washington, and its US arm Konami Gaming, Inc. became the first gaming-equipment maker to file for licensing with Japan's Casino Regulatory Commission ahead of the country's first integrated resort, planned for 2030.

Arcade Games — reported as a standalone segment since Q3 last year — lifted revenue 8.3% to ¥4,312 million and business profit 58.9% to ¥929 million, helped by pop'n music High☆Cheers!! and card-print machine tie-ups, with the first Demon Slayer arcade title announced for a July start. Sports revenue rose 5.2% to ¥12,712 million with business profit up 79.4% to ¥764 million, as the Pilates Mirror studio format added 16 locations to pass 100 in total and contract operation of public facilities expanded. The "Other" category contributed ¥678 million of revenue and ¥27 million of profit, against ¥572 million and a ¥38 million loss. Corporate adjustments took ¥1,718 million off segment profit, versus ¥1,028 million a year earlier. By region, Japan revenue rose to ¥103,697 million from ¥71,211 million and Asia/Oceania to ¥5,570 million from ¥4,004 million, while the United States edged up to ¥16,334 million from ¥15,904 million and Europe fell to ¥3,923 million from ¥5,845 million.

The number management chose not to touch

Here is the tension in the release. Konami reaffirmed FY3/2027 guidance of revenue ¥505,000 million (+2.3%), business profit ¥150,000 million (+4.5%), operating profit ¥143,000 million (+5.2%), profit before tax ¥143,000 million (+1.7%) and profit attributable to owners of ¥101,000 million (+1.0%), with basic EPS of ¥745.08 — identical to the forecast issued with the May 8, 2026 full-year results, with no revision flagged.

Run that against the quarter. Q1 business profit of ¥44,699 million is about 29.8% of the ¥150,000 million full-year target; operating profit is 31.7% of its ¥143,000 million target and bottom-line profit 32.3% of ¥101,000 million — all ahead of a flat 25% quarterly pace, and all achieved while the guidance implies full-year business-profit growth of just 4.5% against 61.7% delivered in the first three months. To land exactly on target, the remaining nine months would have to produce ¥105,301 million of business profit, an average of about ¥35.1 billion a quarter — roughly a fifth below the level just reported. Revenue is the one line tracking closer to plan, at 25.6% of the ¥505,000 million target, which is consistent with a forecast built on the first quarter being seasonally strong on new-title launches. Investors will read the unchanged numbers either as conservatism ahead of a heavy second-half release slate — METAL GEAR SOLID: MASTER COLLECTION Vol.2, SILENT HILL: Townfall, Pro Baseball Spirits 2026 and Castlevania: Belmont's Curse are all in the pipeline — or as a signal that management does not expect Q1's mix to repeat.

Dividend held at ¥224 for the year

The FY3/2027 dividend forecast is unchanged at ¥224.00 per share, split evenly between a ¥112.00 interim and a ¥112.00 year-end payment. That compares with ¥221.50 paid for FY3/2026 (¥83.00 interim plus ¥138.50 year-end) and represents a payout of about 30% of guided EPS of ¥745.08. Shares issued stood at 143,500,000 with 7,943,518 held in treasury, essentially flat on the year.

Balance sheet and cash flow

Total assets edged up ¥3,007 million from the March 31, 2026 year-end to ¥751,772 million, as cash fell on dividend and tax payments while other current assets, goodwill and intangibles, and inventories increased. Total liabilities fell ¥12,235 million to ¥171,977 million, mainly on lower income taxes payable. Total equity rose ¥15,242 million to ¥579,795 million, lifting the ratio of equity attributable to owners of the parent to 77.1% from 75.4%. Operating cash flow rose 55.4% to ¥16,343 million; investing outflows were broadly stable at ¥8,382 million on lower capital expenditure, while financing outflows widened 33.6% to ¥20,356 million on higher dividend payments. With a ¥943 million positive currency effect, cash and equivalents ended the quarter at ¥316,112 million, down ¥11,452 million from the year-end.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.