GameWith (6552) Full-Year Financial Results Deep Dive Report for May 2026: Profit Turnaround and Growth Strategy of "Offense and Defense"

GameWith Inc. (Securities Code: 6552) announced its full-year financial results for the fiscal year ending May 2026, demonstrating a turnaround to profitability across all key metrics: net sales, operating income, ordinary income, and net income attributable to owners of the parent . This marks a significant turning point for the company, indicating business recovery and a shift towards growth. This report, based on the attached materials, provides a detailed analysis of GameWith's May 2026 financial results, the status of each segment, and its future growth strategies and outlook.

Full-Year Financial Highlights for May 2026: All Profit Items Turn Black

For the fiscal year ending May 2026, net sales reached 4,047 million yen (up 17.2% year-on-year) , expanding the business scale beyond 4 billion yen. Particularly noteworthy is the fact that all profit items, which were in the red in the previous fiscal year, turned profitable. Operating income was 101 million yen (an improvement of 297 million yen year-on-year) , ordinary income was 116 million yen (an improvement of 323 million yen year-on-year), and net income attributable to owners of the parent was 25 million yen (an improvement of 260 million yen year-on-year). This can be attributed to the successful implementation of business structure reforms and growth in each business segment.

The historical performance trend is as follows: This slide is the most crucial information for understanding GameWith's overall financial performance for the fiscal year ending May 2026. It clearly shows that while the previous year (fiscal year ending May 2025) had net sales of 3,451 million yen with operating income, ordinary income, and net income attributable to owners of the parent all in the red, the current fiscal year saw net sales increase to 4,047 million yen, an increase of 17.2% , with all profit items turning black. In particular, the significant improvement in operating income from △196 million yen in the previous year to 101 million yen, achieving a V-shaped recovery , is strong evidence of the company's improved operational efficiency and profitability. This turnaround to profitability signifies the establishment of a solid foundation for driving future growth strategies.

Quarterly Performance Trends and Contributing Factors

Quarterly net sales remained relatively stable throughout the fiscal year ending May 2026, with some fluctuations. Notably, 3Q (December-February) recorded high sales of 1,170 million yen, primarily due to large prize money income from the e-sports business being concentrated in 3Q . Net sales for 4Q (March-May) were 915 million yen, landing at a similar level to the previous year's corresponding quarter.

Looking at the quarterly operating income trend, while the annual result was profitable, 4Q operating income was a loss of △86 million yen. The factors contributing to this include a decrease in high-margin network advertising sales in the Media business and a temporary increase in operating costs in the e-sports business . This can be analyzed as a result of a combination of profitability challenges in specific businesses and increased costs associated with growth investments.

Segment-Specific Performance Overview and Strategies

Media Business: Challenges in PV Unit Price and Focus on BtoB Tie-ups

The Media business's full-year net sales grew steadily to 2,316 million yen (up 9.1% year-on-year) . However, 4Q operating income declined from 155 million yen to 98 million yen due to a decrease in high-margin network advertising sales. The primary reason for this decline in network advertising sales was a decrease in PV unit price (index 129 → 112) . While the number of PVs itself remained stable at approximately 350 million PVs for the full year, indicating maintained user engagement, changes in the advertising market impacted profitability.

The performance trend and revenue structure of the Media business are as follows: This slide provides a detailed view of the revenue composition and operating profit margin trends of GameWith's core Media business . The left graph shows the quarterly breakdown of network advertising, tie-up advertising, and other sales. While full-year net sales grew by +9.1% year-on-year, the right graph, showing operating income and operating profit margin trends, clearly indicates a significant drop in the operating profit margin in 4Q (from 32% to 18%) . This is attributed to a decrease in high-margin network advertising sales, particularly the decline in PV unit price. This data strongly suggests the market environment challenges faced by the Media business and the necessity for a strategic shift. Specifically, the future strategy involves maintaining the revenue base of ad networks (BtoC), which are in a mature market phase, while expanding tie-up advertising (BtoB) as a growth driver . The plan is to transform the revenue structure through increased orders for large projects and strengthened collaboration with major publishers.

e-sports & Entertainment Business: Significant Growth and Improved Profit/Loss

The e-sports & Entertainment business saw full-year net sales significantly increase to 1,162 million yen (up 53% year-on-year) , and its operating loss improved by 206 million yen , from △222 million yen to △16 million yen. This was largely driven by sponsor income (up 59%), tie-up income (up 97%), and prize money from tournaments (more than 10 times higher). The business is strengthening its foundation through improved competitive performance, awards, establishment of new divisions, and sponsor acquisition, with expectations for future growth.

The future strategy is based on " Five Pillars ." Specifically, the company aims to maximize revenue by maximizing competitive results, strengthening sales and partnerships, committing to next-generation talent development, enhancing fan business/content/merchandise, and building a reproducible business model .

ISP Business: Steady Growth and Improved Customer Acquisition Efficiency

The ISP business saw annual net sales steadily increase to 431 million yen (up 79 million yen) , and its operating loss was significantly reduced from △107 million yen to △12 million yen. The cumulative number of contracts reached approximately 6,900 lines, continuing steady growth. Particularly noteworthy is the approximately halved Customer Acquisition Cost (CPA) , indicating successful efficient customer acquisition utilizing SEO know-how cultivated in game media. Going forward, the strategy is to establish brand power as a dedicated e-sports line and strongly appeal to users through enhanced collaboration with DFM.

New Business (EGGRYPTO): Cost Control and Transition to New Title

The blockchain game "EGGRYPTO," a new business, has been in service for six years. While sales are in an adjustment phase, stable profits are being generated through cost control . The company aims to transition its cultivated user base to the new title " EGGRYPTO X ," scheduled for release in autumn 2026, to generate significant revenue.

Management Policy for May 2027: "Offense and Defense" for a New Growth Phase

The management policy for the fiscal year ending May 2027 is based on a dual approach of " Offense and Defense ." For "Offense," businesses launched to date, such as e-sports, ISP, and blockchain games, are nearing profitability. Furthermore, the Media business will undertake new challenges by exploring two new services, " Strategy Platform " and " Creator Media ," with a global expansion in mind, aiming for early profitability. For "Defense," the company will promote organizational structure reforms utilizing AI to enhance productivity and build an organizational foundation that maximizes profits. Specifically, it aims to improve the ratio of direct departments and enhance per-person sales and operating income through reforms in the production workflow.

The overall vision for future management policy is as follows: This slide illustrates GameWith's overall medium-term growth strategy from two perspectives, "Offense and Defense," for the fiscal year ending May 2027 and beyond. On the left, "Offense = New Challenges" shows plans to launch new services, a strategy platform and creator media, in response to changes in the existing media market . These services hold the potential to be future growth drivers. On the right, "Defense = Organizational Structure Reform" highlights the establishment of an organizational foundation for productivity improvement and profit maximization, specifically mentioning improving the ratio of direct departments and reforming production workflows . The graph at the bottom shows the actual performance from FY20 to FY26 and a "directional image" from FY27 onwards, illustrating how new businesses, blockchain games, ISP, e-sports, and media (growth areas/existing) are expected to contribute to operating income growth. This indicates a diversified business portfolio growth strategy . This slide is highly important as it presents a concrete roadmap for the company to move beyond past losses and transition into a new growth phase.

May 2027 Earnings Forecast Undisclosed

The full-year and half-year earnings forecasts for the fiscal year ending May 2027 are currently undisclosed. The main reasons cited include: the high possibility of significant fluctuations in e-sports tournament prize money sales depending on competitive results , uncertainty in the advertising market and changes in the release timing of major game titles , the new media services (Strategy PF, Creator Media) being in the launch phase, making revenue recognition timing and scale subject to change from plans , and the release timing of new titles in the new business (blockchain games) being subject to external factors, causing fluctuations in sales recognition timing . The company plans to disclose forecasts promptly once reasonable calculations become possible.

Financial Health and Capital Investment Policy

GameWith maintains a high level of financial health with a shareholders' equity ratio of 76.0%, no debt, and cash of 2,320 million yen . Regarding capital allocation, growth investment is prioritized , and as the company is in a phase of upfront investment, internal funds will be allocated to growth areas for the time being. For shareholder returns, the company states that maximizing corporate value through business growth is its top priority.

Conclusion

In the fiscal year ending May 2026, GameWith achieved significant results with a turnaround to profitability across all profit items , demonstrating its business resilience. While there were temporary fluctuating factors such as challenges in PV unit price in the Media business and increased costs in the e-sports business, the growth of the e-sports & Entertainment business and the ISP business drove overall performance. For the fiscal year ending May 2027, under the "Offense and Defense" management policy, the company clearly aims for further growth through the launch of new media services and organizational structure reforms . The undisclosed earnings forecast reflects the investment phase for growth and uncertainties in the business environment, but the specific strategies in each business and the sound financial foundation underscore expectations for sustained future growth.