Image Magic H1 FY2026 Earnings Report: Accelerating Growth in On-Demand Services and Evolution of Platform Strategy

Executive Summary

Image Magic, Inc. delivered strong results for the first half of the fiscal year ending December 2026, driven by the robust performance of its core On-Demand Print Service . The company achieved record-high semi-annual revenue and profits across all levels. Successful marketing initiatives led to a surge in customer acquisition, resulting in a rapid expansion of transaction volume on its proprietary e-commerce site, "originalprint.jp." Despite increased SG&A expenses due to aggressive advertising investments and workforce expansion, the company successfully absorbed these costs through expanded gross profit, ultimately achieving growth in operating income.

Leveraging its in-house production expertise, the company is evolving its business model into an On-Demand Print Network (OPN) and a Marketplace (MP) that connects external partner production lines. It is also promoting productivity improvements and long-term platformization through the integration of automation technology and AI. Regarding shareholder returns, the company is flexibly implementing dividend increases and share buybacks, effectively balancing growth investment with shareholder returns.

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1. H1 FY2026 Earnings Highlights

For the first half of the fiscal year, the company reported revenue of 5,148 million yen (+17.6% YoY) , gross profit of 2,048 million yen (+14.7% YoY) , operating income of 242 million yen (+16.6% YoY) , ordinary income of 245 million yen (+17.2% YoY) , and quarterly net income of 164 million yen (+41.4% YoY) .

Earnings Progress and Seasonal Characteristics

As shown in the earnings summary above, the progress against the full-year forecast (revenue of 10,700 million yen, operating income of 650 million yen) stands at 48.1% for revenue and 37.3% for operating income . Given the seasonal nature of the company's business model, where demand is concentrated in the second half (particularly during the autumn/winter season and year-end gift-giving period), the profit progress at the half-year mark is considered to be in line with the full-year plan. On a quarterly basis, Q2 revenue reached 2,865 million yen (+14% YoY) , and operating income reached 283 million yen (+34% YoY) , demonstrating strong growth.

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2. Segment Trends and KPI Analysis

① On-Demand Print Service

Revenue and gross profit for this service reached record highs on a quarterly basis, driven by strong performance from both the proprietary "originalprint.jp" site and apparel orders through partner channels.

KPI Analysis of "originalprint.jp"

As indicated by the order trend data in the slide above, transaction volume (number of orders) has increased significantly due to active web marketing and the expansion of the product lineup. While the average unit price remained stable, the substantial increase in the volume of orders was the primary driver of top-line growth for the entire segment.

② Solution Service

In the Solution Service segment, although there were no large-scale equipment installation projects recorded compared to the same period last year, sales of consumables to existing client factories remained extremely robust. With the increasing adoption of the cloud-based production management system "ODPS" and the on-demand e-commerce SaaS "maker town," the company is steadily building a high-margin, stock-based revenue foundation.

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3. Cost Structure and Operating Income Drivers

SG&A expenses for the quarter totaled 1,805 million yen (+14.5% YoY) . A breakdown shows that personnel expenses increased to 593 million yen (+8.1%) due to organizational strengthening, advertising and promotion expenses rose to 577 million yen (+26.8%) in line with sales-linked marketing, and server costs increased to 34 million yen (+311.4%) to support infrastructure expansion.

However, the increase in gross profit (+262 million yen) resulting from revenue growth fully absorbed these increases in SG&A expenses (personnel +44 million yen, advertising +121 million yen, etc.). Consequently, operating income achieved a year-on-year increase of +34 million yen (+16.6%) . Top-line growth is demonstrating profit-generating power that exceeds the rise in fixed costs and growth investments.

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4. Financial Position and Cash Flow

• Assets and Liabilities : Total assets were 3,499 million yen (a decrease of 8 million yen from the end of the previous fiscal year). While fixed assets increased to 1,466 million yen (+214 million yen from the previous year-end) due to factory expansion and equipment upgrades, cash and deposits stood at 552 million yen. The equity ratio remains at a high level of 58.4% , maintaining a sound financial base.
• Cash Flow Trends : Cash flow from operating activities was -42 million yen (due to an increase in trade receivables of 317 million yen, etc.), cash flow from investing activities was -353 million yen (acquisition of tangible fixed assets of 339 million yen), and cash flow from financing activities was -218 million yen (share buybacks of 96 million yen, dividend payments of 80 million yen, etc.). These figures reflect the active execution of growth investments and shareholder returns.

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5. Productivity Revolution through Capital Investment and R&D

During the first half, the company invested a total of 111 million yen in R&D-related expenses (17 million yen in R&D, 11 million yen in capital investment, and 83 million yen in related expenses) to aggressively promote labor-saving and automation on the factory floor.

1. Introduction of AMRs (Autonomous Mobile Robots) : Automating the movement of materials and work-in-progress within the factory to reduce transport man-hours.
2. Camera Installation on Existing Printers : By using cameras to accurately recognize print targets, the company has eliminated the need for traditional jig adjustments ( jig-less production ), significantly shortening setup times.
3. Laser Marking Machines : Technology that prints directly onto apparel products at high speed without using ink, achieving both zero consumable costs and improved work speed.

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6. Progress on Shareholder Return Policy

While prioritizing long-term growth investments, the company continues to enhance shareholder returns.

• Dividend Policy : The annual dividend for the fiscal year ending December 2026 is planned at 35 yen per share (an increase from the previous year's 32 yen).
• Share Buybacks : The company 100% completed its share buyback program for up to 60,000 shares (total acquisition cost of 99.33 million yen) between February and July 2026.
• Shareholder Benefit Program : Combined with the existing shareholder benefit program, the company demonstrates a comprehensive commitment to returning value to shareholders.

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7. Mid-to-Long-Term Growth Strategy: Evolution into a Platform

Evolution Process of the Business Model

The most critical element in the company's long-term growth roadmap is the "evolution of the business model starting from in-house operations and expanding outward."

• In-house Model (Expanding Supply Capacity) : A phase of manufacturing proprietary items in-house and accumulating know-how in operational efficiency.
• Manufacturing Network (Expanding OPN) : A phase of standardizing specifications and processes, and integrating systems with external partner print factories (OPN partners) to flexibly expand supply capacity while limiting the burden of in-house capital investment.
• Marketplace (Consolidating Options) : A phase of elevating the business into a platform that matches diverse item holders (third-party items) with manufacturing factories, maximizing transaction volume without holding inventory risk.

By incorporating AI-driven design suggestions, image generation, demand forecasting, and automated quoting systems into these foundations, the company aims to create overwhelming competitive advantages in the on-demand print market and generate network effects as a platform.