Avex : Consolidated Financial Summary for the First Three Months Quarter of Fiscal Year Ending March 31, 2026 (Japanese Accounting Standards)

August 7, 2025

Avex Inc. Tokyo Stock Exchange, Prime Market

Code No: 7860 URL: https://avex.com/jp/en/

Representative: Katsumi Kuroiwa, President, CEO

Contact: Shinji Hayashi, Representative Director, CFO TEL: 0570(020)050 Scheduled date for commencement of dividend payments: -

Supplementary documents for financial results: Yes Financial results briefing: None

Note: All amounts are rounded down to the nearest million yen.

1. Consolidated operating results for the first three months of fiscal year ending March 31, 2026 (April 1, 2025 to June 30, 2025)

   1. Consolidated operating results Note: Figures in percentages denote the year-on-year change.

      	Net sales		Operating profit		Ordinary profit		Profit attributable to owners of parent
      	million yen	%	million yen 1,458 (1,281)	% - -	million yen	%	million yen 761 1,834	%
      Three-Month Period of Fiscal Year Ending March 31, 2026	32,735	28.1			1,439	-		(58.5)
      Three-Month Period of Fiscal Year Ended March 31, 2025	25,548	(20.1)			(1,236)	-		(32.2)

      (Note) Comprehensive income Three-Month Period of Fiscal Year Ending March 31, 2026: ¥819 million (-64.6%)

      Three-Month Period of Fiscal Year Ended March 31, 2025: ¥2,313 million (62.4%)

      	Profit per share		Diluted profit per	share
      		yen		yen
      Three-Month Period of Fiscal Year Ending March 31, 2026	17.96		-
      Three-Month Period of Fiscal Year Ended March 31, 2025	40.54		-

   2. Consolidated financial position

   	Total assets	Net assets	Shareholders' equity ratio
   Three-Month Period of Fiscal Year Ending March 31, 2026 Fiscal year ended March 31, 2025	million yen 102,136 105,960	million yen 50,786 51,112	% 48.7 47.3

   (Reference) Shareholders' equity Three-Month Period of Fiscal Year Ending March 31, 2026: ¥49,737 million

   Fiscal year ended March 31, 2025: ¥50,109 million

2. Status of dividend payments

   	Annual dividends
   	End of first quarter	End of second quarter	End of third quarter	End of year	Annual
   Fiscal year ended March 31, 2025 Year ending March 31, 2026	yen - -	yen 25.00	yen -	yen 25.00	yen 50.00
   Year ending March 31, 2026 (forecast)		25.00	-	25.00	50.00

   (Note) Revisions to dividend forecasts published most recently: None

3. Forecasts for consolidated operating results for the year ending March 31, 2026 (April 1, 2025 to March 31, 2026)

   Note: Figures in percentages denote the year-on-year change.

   	Operating profit		Profit attributable to owners of parent		Profit per share
   Full year	million yen 3,000	% -	million yen 1,200	% 5.4	yen 28.31

   (Note) Revisions to earnings forecasts published most recently: None

   • Notes

     1. Significant changes in the scope of consolidation during the period: Yes Newly added: 1 company (Company name) S10 Entertainment & Media LLC Excluded: 1 company (Company name) Avex Technologies Inc.

     2. Application of particular accounts procedures to the preparation of quarterly consolidated financial statements:

        None

     3. Changes in accounting policies and changes in or restatement of accounting estimates

        1. Changes in accounting policies in conjunction with revisions to accounting standards: None

        2. Changes in accounting policies other than 1: None

        3. Changes in accounting estimates: None

        4. Restatement: None

     4. Outstanding shares (ordinary shares)

        1. Shares outstanding at end of term (including treasury stock)

           As of June 30, 2025: 45,792,500 shares

           Fiscal year ended March 31, 2025: 45,792,500 shares

        2. Treasury stock at end of term

           As of June 30, 2025: 3,410,680 shares

           Fiscal year ended March 31, 2025: 3,410,680 shares

        3. Average number of share (quarter-to-date)

        As of June 30, 2025: 42,381,820 shares

        As of June 30, 2025: 45,252,799 shares

   • Review by certified public accountant or audit corporation of the attached quarterly consolidated financial statements: None

   • Explanation for forecasts of business results and other notes

The forecasts for business results and other forward-looking statements contained in this release are based on data and information that the Group has obtained so far and specific assumptions that the Group judges to be reasonable. Please note, therefore, that the actual results and others may greatly differ from the forecasts due to various factors.

• Index for Supplementary Information

1. Overview of Operating Results, etc. 4

   1. Overview of Consolidated Financial Results for the

      Three-Month Period of Fiscal Year Ending March 31, 2026 4

   2. Overview of Financial Position for the

      Three-Month Period of Fiscal Year Ending March 31, 2025 5

   3. Summary of Consolidated Financial Forecasts and Other Future Forecast Information 5

2. Quarterly Consolidated Financial Statements and Key Notes 6

   1. Quarterly Consolidated Balance Sheets 6

   2. Quarterly Consolidated Statements of Income and

      Quarterly Consolidated Statements of Comprehensive Income 8

   3. Notes Concerning Consolidated Quarterly Financial Statements 10

(Notes to Segment Information) 10

(Note Regarding Significant Changes in the Amount of Shareholders' Equity) 11

(Notes on Going Concern Assumptions) 11

(Notes on Statement of Cash Flows) 11

1. Overview of Operating Results, etc.

   1. Overview of Consolidated Financial Results for the Three-Month Period of Fiscal Year Ending March 31, 2026

      (Unit: million yen)

      First three months results	Fiscal year ended March 31, 2022	Fiscal year ended March 31, 2023	Fiscal year ended March 31, 2024	Fiscal year ended March 31, 2025	Year ending March 31, 2026
      Net sales	19,417	28,473	31,973	25,548	32,735
      Cost of sales	12,537	17,947	20,881	18,526	23,069
      Gross profit	6,880	10,526	11,092	7,022	9,665
      Gross profit margin	35.4%	37.0%	34.7%	27.5%	29.5%
      Personnel expenses	2,545	3,241	3,606	3,194	3,243
      Sales promotion and advertising expenses	1,332	1,745	1,625	1,194	1,386
      General expenses	2,739	3,251	3,978	3,915	3,577
      Total SG&A expenses	6,617	8,237	9,210	8,303	8,207
      Operating profit (loss)	262	2,288	1,881	(1,281)	1,458
      Operating margin	1.4%	8.0%	5.9%	-%	4.5%

      In the entertainment industry, to which the Group belongs, the production of music software, including music videos, was up 19.3% year on year, to 107,179 million yen (January to June 2025; according to a survey by the Recording Industry Association of Japan). Sales of paid music downloads were up 1.7% year on year, to 31,736 million yen (January to March 2025; according to a survey by the Recording Industry Association of Japan). In the video-related market, sales of video software decreased 4.0% year on year, to 42,309 million yen (January to June 2025; according to a survey by the Japan Video Software Association).

      In this business environment, the Group worked to realize the Medium-Term Management Plan "avex vision 2027" by making aggressive investments, with emphasis on "seeking out and cultivating new talent" as the starting point of value creation and by building a structure that will allow it to aim for long-term growth, while at the same time implementing strategic initiatives for overseas markets. In each segment, progress was made in IP discovery, cultivation, development and acquisition with a global perspective, expanding the IP portfolio, and building a global value chain to maximize the value of IP. We have already steadily strengthening our business foundations in overseas markets. In our mainstay businesses such as LIVE and LABEL, we worked to maximize the value of existing IP and strengthened collaboration with partner companies.

      Net sales increased 28.1% year on year to 32,735 million yen due to an increase in the number of major live performances in the Music Business and strong sales of live-action video works in the Anime & Visual Content Business. Operating profit was 1,458 million yen (compared with an operating loss of 1,281 million yen in the same period of the previous fiscal year), mainly due to an improvement in the gross profit margin resulting from an increase in the number of music package titles sold and a decrease in selling, general and administrative expenses as a result of a review of cost execution. Profit attributable to owners of the parent amounted to 761 million yen (down 58.5% year-on-year), mainly due to the recording of extraordinary income from the transfer of shares in subsidiaries in the first quarter of the previous fiscal year.

   2. Overview of Financial Position for the Three-Month Period of Fiscal Year Ending March 31, 2025

      Assets at the end of the first quarter under review decreased 3,824 million yen, to 102,136 million yen from the end of the previous consolidated fiscal year. This was chiefly attributable to a decrease of 7,329 million yen in cash and deposits, more than offsetting increases of 1,239 million yen and 2,697 million yen in notes and accounts receivable-trade and goodwill, respectively.

      Liabilities were reduced by 3,497 million yen from the end of the previous consolidated fiscal year, to 51,350 million yen. This was mainly due to decreases of 4,381 million yen in accounts payable-other and 1,769 million yen in income taxes payable, despite increases of 1,886 million yen in other current liabilities and 1,174 million yen in notes and accounts payable-trade, respectively.

      Net assets decreased 326 million yen from the end of the previous consolidated fiscal year, to 50,786 million yen. This was chiefly attributable to a decline of 2 84million yen in retained earnings.

   3. Summary of Consolidated Financial Forecasts and Other Future Forecast Information

   With respect to the summary of consolidated financial forecasts for the fiscal year ending March 31, 2026, the financial forecasts presented in the "Consolidated Financial Summary for the Year Ended March 31, 2025" announced on May 8, 2025 remain unchanged.

   If any revision to the financial forecasts becomes necessary in the future, the Company will promptly disclose it.

2. Quarterly Consolidated Financial Statements and Key Notes

1. Quarterly Consolidated Balance Sheets

   (Unit: million yen)

   As of March 31, 2025 As of June 30, 2025

   (Assets)

   Current assets Cash and deposits	35,690	28,360
   Notes and accounts receivable - trade	22,952	24,191
   Merchandise and finished goods	910	1,009
   Work in process	3,683	4,080
   Raw materials and supplies	315	301
   Others	14,474	15,389
   Allowance for doubtful accounts	(253)	(239)
   Total current assets	77,774	73,094
   Non-current assets Property, plant and equipment Buildings and structures, net	4,214	4,723
   Land	2,690	2,958
   Other, net	1,595	1,794
   Total property, plant and equipment	8,500	9,475
   Intangible assets Goodwill	22	2,719
   Others	2,637	2,710
   Total intangible assets	2,660	5,430
   Investments and other assets Investment securities	9,839	7,386
   Retirement benefit asset	42	50
   Others	8,767	8,435
   Allowance for doubtful accounts	(1,624)	(1,736)
   Total investments and other assets	17,025	14,136
   Total non-current assets	28,186	29,042
   Total assets	105,960	102,136

   (Liabilities) Current liabilities

   (Unit: million yen)

   As of March 31, 2025 As of June 30, 2025

   Notes and accounts payable - trade	2,972	4,146
   Current portion of long-term loans payable	3	2
   Accounts payable - other	29,511	25,129
   Income taxes payable	2,105	336
   Refund Liabilities	1,323	1,262
   Provision for bonuses	310	232
   Others	16,607	18,494
   Total current liabilities	52,834	49,603
   Non-current liabilities
   Others	2,013	1,746
   Total non-current liabilities	2,013	1,746
   Total liabilities	54,848	51,350
   (Net assets)
   Shareholders' equity Share capital	4,755	4,755
   Capital surplus	5,649	5,649
   Retained earnings	43,677	43,393
   Treasury shares	(4,933)	(4,933)
   Total shareholders' equity	49,149	48,865
   Accumulated other comprehensive income
   Valuation difference on available-for-sale securities	700	924
   Foreign currency translation adjustment	(49)	(291)
   Remeasurements of defined benefit plans	308	239
   Total of accumulated other comprehensive income	960	872
   Non-controlling interests	1,003	1,048
   Total net assets	51,112	50,786
   Total liabilities and net assets	105,960	102,136

2. Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income Quarterly Consolidated Statements of Income

   (Consolidated First Quarter)

   (Unit: million yen)

   	For the three-month period	For the three-month period
   	ended June 30, 2024	ended June 30, 2025
   Net sales	25,548	32,735
   Cost of sales	18,526	23,069
   Gross profit	7,022	9,665
   Selling, general and administrative expenses
   Advertising expenses	946	1,100
   Promotion expenses	247	285
   Employees' salaries and bonuses	2,077	2,077
   Provision for bonuses	34	220
   Retirement benefit expenses	53	(10)
   Commission fee	1,694	1,596
   Others	3,249	2,936
   Total selling, general and administrative expenses	8,303	8,207
   Operating profit (loss)	(1,281)	1,458
   Non-operating income
   Interest income	6	22
   Dividend income	7	6
   Share of profit of entities accounted for using equity method	-	58
   Gain on investments in investment partnerships	59	1
   Foreign exchange gains	7	-
   Gain on valuation of investment securities	2	-
   Others	12	5
   Total non-operating income	95	94
   Non-operating expenses
   Interest expenses	0	2
   Share of loss of entities accounted for using equity method	21	-
   Foreign exchange losses	-	96
   Loss on valuation of cryptocurrencies	10	1
   Others	18	13
   Total non-operating expenses	51	114
   Ordinary profit (loss)	(1,236)	1,439
   Extraordinary income
   Gain on sale of shares of subsidiaries	4,548	-
   Total extraordinary income	4,548	-
   Extraordinary losses
   Loss on liquidation of business	-	43
   Loss on retirement of noncurrent assets	53	19
   Provision for loss on contracts	174	-
   Others	-	15
   Total extraordinary losses	228	79
   Profit before income taxes	3,082	1,360
   Income taxes - current	952	290
   Income taxes - deferred	238	161
   Total income taxes	1,190	452
   Profit	1,892	908
   Profit attributable to non-controlling interests	57	146
   Profit attributable to owners of parent	1,834	761

   Quarterly Consolidated Statements of Comprehensive Income (Consolidated First Quarter)

   For the three-month period

   (Unit: million yen) For the three-month period

   	ended June 30, 2024	ended June 30, 2025
   Profit	1,892	908
   Other comprehensive income
   Valuation difference on available-for-sale securities	52	223
   Foreign currency translation adjustment	332	(200)
   Remeasurements of defined benefit plans	(22)	(69)
   Share of other comprehensive income of associates accounted for using equity method	59	(42)
   Total other comprehensive income	421	(88)
   Comprehensive income	2,313	819
   (Comprehensive income attributable to)
   Comprehensive income attributable to owners of parent	2,255	673
   Comprehensive income attributable to non-controlling	57	146

   interests

3. Notes Concerning Consolidated Quarterly Financial Statements (Notes to Segment Information)

   [Segment information]

   Net sales and profit (loss) for each reportable segment and the breakdown of revenue For the three-month period ended June 30, 2024

   (Unit: million yen)

   	Reportable segments				Other (Note 1)	Total	Adjustments (Note 2)	Quarterly consolidated statement of income (Note 3)
   	Music Business	Anime & Visual Content Business	Overseas Business	Subtotal
   Net sales Revenue from contracts with customers	21,415	3,422	693	25,531	17	25,548	-	25,548
   Sales to external customers	21,415	3,422	693	25,531	17	25,548	-	25,548
   Inter-segment sales and transfers	948	134	0	1,083	154	1,238	(1,238)	-
   Total	22,364	3,556	693	26,614	172	26,787	(1,238)	25,548
   Segment profit (loss)	(847)	(296)	(147)	(1,291)	(0)	(1,292)	11	(1,281)

   (Notes) 1. The category, others, is a business segment not included in reportable segments, which mainly includes the travel business.

   1. The segment loss adjustment of 11 million yen is for the elimination of intersegment transactions.

   2. Segment loss is adjusted to the operating loss in quarterly consolidated statements of income.

For the three-month period ended June 30, 2025

(Unit: million yen)

(Notes) 1. The category, others, is a business segment not included in reportable segments, which mainly includes the travel business.

1. An adjustment of 4 million yen in segment profit (loss) represents the deduction of intersegment transactions.

2. Segment profit (loss) have been adjusted with operating profit recorded in the consolidated quarterly income statement.

(Note Regarding Significant Changes in the Amount of Shareholders' Equity)

Not applicable

(Notes on Going Concern Assumptions)

Not applicable

(Notes on Statement of Cash Flows)

The Company did not prepare quarterly consolidated statements of cash flows for the first quarter under review. Depreciation (including amortization of intangible assets excluding goodwill) and amortization of goodwill for the first three months are as follows.

(Unit: million yen)