Bandai Namco Q1FY25: Strategic Growth and Financial Resilience

Bandai Namco Holdings Inc., a renowned Japanese entertainment conglomerate, continues to be a dominant force in various sectors such as video games, toys, arcades, anime, amusement parks, and more. Founded in 2005 through the merger of Namco and Bandai, the company operates four key divisions: Digital Business, Toys and Hobbies, Amusement Business, and IP Production. As we look into the company’s performance in the first quarter of Fiscal Year 2025 (Q1FY25), Bandai Namco has shown growth and strategic resilience, even amid a highly competitive industry landscape.

Q1FY25 Financial Highlights

Bandai Namco’s Q1FY25 financial results reflect a solid performance, marked by both stability and growth across its diverse business segments. The company reported net revenue of 280,627 million JPY, an increase of 0.88% compared to the previous quarter (278,175 million JPY in Q4 FY2024), and a notable 24.83% increase year-over-year (224,812 million JPY in Q1 FY2024).

• Operating profit reached 44,023 million JPY, a remarkable 255.02% increase from Q4 FY2024 (12,400 million JPY) and 57.29% higher than the 27,989 million JPY achieved in Q1 FY2024.
• Profit for the quarter stood at 34,075 million JPY, reflecting a 16.82% decrease from Q4 FY2024 but an encouraging 56.37% growth compared to Q1 FY2024.
• Selling, general, and administrative (SG&A) expenses saw a 12.72% decrease to 66,108 million JPY from the previous quarter, yet rose 7.72% compared to the same period last year, aligning with the company’s expansion in certain segments.

The basic earnings per share (EPS) stood at 52.05 JPY, maintaining the company’s robust profitability metrics, even as it navigates operational shifts and strategic developments.

Business Breakdown by Division

1. Digital Business

Bandai Namco’s Digital Business segment remains a critical driver of the company’s growth, especially with continued success in the home console and network content areas.

• Home Console Games: The quarter was bolstered by the release of “ELDEN RING” downloadable content, which sold over 5 million units within its first three days, with repeat title sales reaching 8.14 million units. This highlights the franchise’s sustained popularity and Bandai Namco’s strength in leveraging blockbuster titles.
• Network Content: Major app titles continued to perform well across Japan and internationally, with the new app THE IDOLM@STER Gakuen off to a strong start. This showcases Bandai Namco’s success in the mobile gaming space, adding another stream of recurring revenue.

2. Toys and Hobbies

Bandai Namco’s Toys and Hobbies division performed exceptionally well, with revenue driven by products tailored for mature fanbases, including model kits. The division saw strong results from trading card games, capsule toys, and confectionery products. Expansion efforts in global markets and increased touchpoints for fans across various regions further bolstered this segment’s growth.

3. IP Production

The IP Production Unit experienced solid success, particularly with the release of Mobile Suit Gundam SEED Freedom in theaters. The company’s continued investment in live events, video distribution, and licensing of key IPs helped maintain strong sales. Gundam-related products, both in theaters and merchandise, continued to capture attention across multiple regions.

4. Amusement Business

In the Amusement Unit, Bandai Namco Cross Stores and other activity-based facilities recorded a 5.9% year-over-year increase in sales from existing stores in Japan. While new amusement machines showed promising performance, changes in the product lineup compared to the previous year had some impact on growth. Nevertheless, Bandai Namco’s amusement business remains a valuable segment, driving foot traffic and engagement in physical entertainment spaces.

Business Outlook and Forecasts

Looking ahead, Bandai Namco remains optimistic about its financial future. The company has set ambitious targets for the first half of FY2025, forecasting:

• Net sales of 555,000 million JPY
• Operating profit of 82,000 million JPY
• Recurring profit of 88,000 million JPY
• Profit attributable to owners of the parent of 60,000 million JPY

For the full fiscal year 2025, Bandai Namco projects:

• Net sales of 1,080,000 million JPY
• Operating profit of 115,000 million JPY
• Recurring profit of 119,000 million JPY
• Profit attributable to owners of the parent of 81,000 million JPY

These forecasts reflect Bandai Namco’s confidence in maintaining growth across its divisions, supported by continued product innovation and market expansion.

Market Performance and Shareholder Value

As of June 30, 2024, Bandai Namco’s stock traded between 2,732.5 JPY and 3,225.0 JPY, with a closing price of 3,109.0 JPY on June 28, 2024. The company continues to provide value to shareholders through twice-yearly dividends, reinforcing its commitment to steady returns. The company’s equity saw a modest increase of 1.30%, rising to 708,908 million JPY compared to 699,823 million JPY at the end of March 2024.

Recent Announcements and Upcoming Games

Bandai Namco has several highly anticipated game releases scheduled for the remainder of FY2025, including:

• “That Time I Got Reincarnated as a Slime ISEKAI Chronicles” (Aug 8, 2024)
• “GUNDAM BREAKER 4” (Aug 29, 2024)
• “Sword Art Online: Fractured Daydream” (Oct 4, 2024)
• “DRAGON BALL: Sparking! ZERO” (Oct 11, 2024)
• “Unknown 9: Awakening” (Oct 18, 2024)
• “Little Nightmares III” (2025)
• “Tales of Graces f Remastered” (2025)
• “The Dark Pictures Anthology: Directive 8020” (Jan 17, 2025)
• “Fate/EXTRA Record” (2025)
• “Bleach: Rebirth of Souls” (TBA)

These releases underscore Bandai Namco’s ability to continuously deliver highly anticipated titles, contributing to its sustained dominance in the global gaming industry.

Conclusion

Bandai Namco Holdings Inc. demonstrated resilience and growth in Q1FY25, leveraging its diverse portfolio to navigate a competitive entertainment landscape. The company’s strong performance in the digital, toy, amusement, and IP production sectors underscores its ability to adapt to changing consumer preferences while maintaining a steady pipeline of innovative products. With strong financial results, promising game launches, and a robust strategic outlook, Bandai Namco is well-positioned to continue its leadership in the entertainment industry.