Konami Q1FY25: Financial growth driven by gaming and fitness.

Konami Group Corporation, a leading Japanese entertainment company founded in 1969, continues to expand its reach across the gaming, amusement, fitness, and casino industries. Headquartered in Tokyo, the company operates through four main divisions: Digital Entertainment Business, Amusement Business, Gaming & Systems Business, and Sport Business. This diversified portfolio allows Konami to leverage various market opportunities while adapting to evolving industry trends.

Q1FY25 Financial Highlights

Konami’s financial performance in Q1FY25 demonstrated both challenges and growth:

• Net Revenue: Konami reported 90,039 million JPY, an increase of 23.96% compared to Q1FY24, but a decrease of 16.02% compared to Q4FY24. This quarter-on-quarter dip is expected as Q4 typically includes holiday-season sales, while the year-over-year growth signals a positive trajectory.
• Gross Profit: The company recorded 43,737 million JPY in gross profit, reflecting a 36.71% increase year-over-year but an 8.26% decline from Q4FY24.
• Operating Profit: Konami saw a substantial improvement in its operating profit, which reached 25,145 million JPY, an increase of 21.74% from Q4FY24 and a 46.61% increase compared to Q1FY24. This growth highlights the company’s ability to manage operational costs effectively while boosting sales.
• Profit for the Period: Net profit stood at 19,160 million JPY, a notable 30.54% increase from Q4FY24 and a 43.25% rise compared to Q1FY24, showcasing the company’s growing profitability.
• Earnings Per Share (EPS): Both basic and diluted EPS were 141.35 JPY, reflecting strong profitability.

Segment Performance

Konami’s business is divided into four main segments, each contributing differently to the company’s overall performance in Q1FY25:

• Digital Entertainment Business: This segment continues to be the dominant contributor, generating 64,202 million JPY, accounting for 71.30% of total revenue. The growth in this segment is driven by the success of titles like eFootball 2024 and ongoing strong sales of Yu-Gi-Oh! cards, especially in international markets. Digital content remains a core revenue driver for the company.
• Sport Business: Contributing 11,836 million JPY or 13.15% of total sales, this segment saw solid growth with continued expansion in fitness-related offerings. Konami opened 11 pilates studios in Q1FY25 and plans to open seven more, highlighting the company’s commitment to fitness and health services.
• Gaming & Systems Business: This segment accounted for 9,698 million JPY or 10.77% of total sales. Konami has made strides in its gaming systems, with the installation of SYNKROS in large casinos in New Jersey and Ohio. These installations further Konami’s footprint in the gaming industry.
• Amusement Business: The smallest segment, contributing 4,915 million JPY or 5.46% of total revenue, saw steady demand for its products, including the launch of new series like Charms Full Link.

Key Business Initiatives

1. eFootball 2024: The ongoing success of eFootball 2024 has been a major driver of revenue. The game’s additional features and in-game events have kept the player base engaged, and its presence in the esports scene, particularly with events like the finals held at eLiga BBVA MX 2024, continues to boost visibility.
2. Yu-Gi-Oh! 25th Anniversary: The continued global demand for Yu-Gi-Oh! cards, particularly during its 25th anniversary, has been a key revenue generator for Konami. The international success of the franchise underscores the company’s expertise in monetizing long-standing intellectual property.
3. New Fitness Ventures: Konami’s Sport Business is diversifying with innovative fitness offerings. The launch of the Personal 30 studios, offering concentrated 30-minute workouts, and the opening of additional pilates studios signal the company’s intention to capture a larger share of the fitness market.
4. Gaming Systems Expansion: Konami’s expansion into the casino industry continues with the installation of its SYNKROS system at prominent casinos in the U.S., further solidifying its presence in the gaming technology market.

Business Outlook

Konami has a robust pipeline of upcoming releases and projects across its divisions:

• Gaming: Major releases like PAWAFURU PUROYAKYU 2024-2025 and Professional Baseball Spirits 2024-2025 will capitalize on the growing interest in sports video games. The company is also working on a highly anticipated remake, METAL GEAR SOLID Δ: SNAKE EATER.
• Esports: Konami’s commitment to esports is evident with the upcoming eFootball CHAMPIONSHIP 2024 World Finals and the Yu-Gi-Oh! World Championship 2024, both of which will enhance the company’s global presence in the competitive gaming space.
• Amusement: The launch of MINECRAFT DUNGEONS ARCADE for amusement arcades reflects Konami’s focus on interactive and social gaming experiences. Additionally, the company’s plans to introduce new pachinko and pachislot machines, such as Kyokara Orewa!! Pachislot Hen, will likely cater to the strong demand for gaming in Japanese amusement markets.
• Fitness and Health: Konami will continue to expand its fitness offerings with more pilates studios and the introduction of events like the Konami Sports Club Kids Golfer Challenge Cup, supporting its goal to capture a broader audience in health and fitness.

Stock Performance

Konami’s shares traded between 9,052 JPY and 11,775 JPY during Q1FY25. The stock closed at 11,670 JPY on June 28, 2024, reflecting confidence in the company’s growth prospects. Konami pays dividends twice a year, although no dividends were paid in Q1FY25.

Conclusion

Konami Group Corporation’s Q1FY25 results demonstrate its ability to balance innovation and expansion across diverse business segments. With a strong digital entertainment division, steady growth in fitness services, and an expanding presence in gaming systems and amusement, Konami is well-positioned for continued success. Looking ahead, the company’s focus on major game releases, esports initiatives, and fitness expansion provides a promising outlook for future quarters.