Company Reports

We think Sega Sammy will benefit from new opportunities through the globalization of its well-established intellectual property with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business and expanding its global presence. We expect all of this to improve Sega Sammy’s competitiveness and growth outlook. Coupled with the steady operation and decent profitability at its pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.

Sega Sammy's June-quarter revenue rose 17% year over year, and adjusted EBITDA margin improved to 8.3% from 1.7%. Losses from newly consolidated GAN and Stakelogic, added in the third quarter of fiscal 2025, were more than offset by profit growth in the pachislot and pachinko machines business.

We think Sega Sammy will benefit from new opportunities through the globalization of its well-established intellectual property with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business and expanding its global presence. We expect all of this to improve Sega Sammy’s competitiveness and growth outlook. Coupled with the steady operation and decent profitability at their pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.

Sega Sammy’s fiscal 2025 (ended March 2026) revenue rose 14%, but operating income fell 2% due to weak performance in entertainment content and gaming. For fiscal 2026 (ending March 2027), management guides for 5% revenue growth and a 6% operating income decline, on upfront gaming investments.

We think Sega Sammy will benefit from new opportunities through the globalization of its well-established intellectual property with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business and expanding its global presence. We expect all of this to improve Sega Sammy’s competitiveness and growth outlook. Coupled with the steady operation and decent profitability at their pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.

We are transferring coverage of Sega Sammy Holdings, a Japanese entertainment company with core businesses in video game development and pachinko/pachislot machines.

We think Sega Sammy will benefit from new opportunities through the globalization of its well-established intellectual property, or IP, with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business, and expanding its global presence. We expect all of this to improve Sega’s competitiveness and growth outlook. Coupled with the steady operation and decent profitability at Sammy’s pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.

We reassessed our Morningstar Economic Moat Rating for Sega Sammy, following a review of the company's business performance across key segments and the potential long-term impact of artificial-intelligence disruption.

We think Sega Sammy will benefit from new opportunities through the globalization of its well-established intellectual property, or IP, with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business, and expanding its global presence. We expect all of this to improve Sega’s competitiveness and growth outlook. Coupled with the steady operation and decent profitability at Sammy’s pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.

Sega Sammy's December-quarter revenue was up 21% year on year, but operating profit declined 10%, amid persistent weakness in core entertainment business. Full-year operating income guidance for fiscal 2025 (ending March 2026) was reduced to JPY 40 billion from JPY 53 billion.

Sega Sammy's September-quarter revenue was up 12% year on year, but operating profit declined 22% with operating margin falling to 8.7% from 12.6% a year ago, partly due to goodwill amortization from the two recently acquired online gaming companies. Full-year guidance remains intact.

We think Sega Sammy will benefit from new opportunities through the globalization of its well-established intellectual property, or IP, with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business, and expanding its global presence. We expect all of this to improve Sega’s competitiveness and growth outlook. Coupled with the steady operation and decent profitability at Sammy’s pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.

We think Sega Sammy will benefit from new opportunities through the globalization of its well-established intellectual property, or IP, with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business, and expanding its global presence. We expect all of this to improve Sega’s competitiveness and growth outlook. Coupled with the steady operation and decent profitability at Sammy’s pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.

Sega Sammy posted a weak start to the new fiscal year, with revenue falling 23% year over year and an operating loss of JPY 0.5 billion in the June quarter.

Sega Sammy's fiscal 2024 (ending March 2025) results were in line with guidance, with revenue and operating income falling 7% and 17% year over year, respectively. For fiscal 2025, the company guides operating income of JPY 53 billion, reflecting 10% growth.

We think Sega Sammy will benefit from new opportunities through the globalization of its well-established intellectual property, or IP, with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business, and expanding its global presence. We expect all of this to improve Sega’s competitiveness and growth outlook. Coupled with the steady operation and decent profitability at Sammy’s pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.

We think Sega Sammy will benefit from new opportunities through the globalization of its well-established intellectual property, or IP, with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business, and expanding its global presence. We expect all of this to improve Sega’s competitiveness and growth outlook. Coupled with the solid operation and decent profitability at Sammy’s pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.

Sega Sammy's December-quarter revenue and operating income fell 14% and 28% year over year, respectively, largely due to weaker Pachinko and Pachislot sales. Nevertheless, video contents remain solid, and the gaming business is accelerating.

We think Sega Sammy will benefit from new opportunities through the globalization of its well-established intellectual property, or IP, with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business, and expanding its global presence. We expect all of this to improve Sega’s competitiveness and growth outlook. Coupled with the solid operation and decent profitability at Sammy’s pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.

Sega Sammy’s September-quarter revenue and operating income fell 6% and 22% year over year, respectively, to JPY 106.9 billion and JPY 13.5 billion. The declines in revenue and operating income were within our expectations, which was largely due to the high base of strong pachislot sales a year ago, while the segment’s revenue improved sequentially, following the launch of the firm’s first smart pachinko product “e Hokuto No Ken 10” in August 2024. Meanwhile, revenue for the entertainment content business remained solid, partly offsetting the reactionary decline in pachislot and pachinko sales. Management also released a few new Full Games titles in the second half and plans to launch the movie “Sonic the Hedgehog 3” in December as part of its transmedia strategy. We believe these visible pipelines will continue to support steady sales growth throughout the year and maintain our fair value estimate of JPY 2,680 per share after a minor tweak of our earnings forecasts. We think the shares are currently fairly valued.