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GENDA IR © GENDA Inc.
FY2026/1 3Q Earnings Presentation
2025.12.12
GENDA IR
FY2026/1 3Q Earnings Presentation
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
1. Regarding the recent slump in the stock price
2
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
159%
147%
88%
50%
100%
150%
200%
250%
300%
350%
2023/7 2023/8 2023/9 2023/10 2023/11 2023/12 2024/1 2024/2 2024/3 2024/4 2024/5 2024/6 2024/7 2024/8 2024/9 2024/10 2024/11 2024/12 2025/1 2025/2 2025/3 2025/4 2025/5 2025/6 2025/7 2025/8 2025/9 2025/10 2025/11 2025/12
Regarding the recent slump in the stock price
3
GENDA
TOPIX
Growth Index
Q4 earnings
Q3 earnings
Q2 earnings
1
2
3
BOJ Shock Trump Shock
Key reasons for the stock price slump recognized through continuous dialogue with many investors
◼The concern about the acquisition of Player One in North America which became our largest-ever M&A deal announced in late March 2025 under the shock of the Trump
→ To be explained in Chapter 3
◼The announcement of a public offering for M&A standby funds, announced on May 13, 2025 (10 months after the public offering in July 2024) → To be explained in Chapter 2
◼The secondary offering of a majority stake by Shin, former Representative Director and President, executed concurrently with ②→ Repost the “FAQ” in Appendix
1
2
3
Note: The stock price point is the closing price of December 11, 2025. The GENDA stock price is adjusted to reflect the compas stock splits with effective dates of June 1, 2024 and April 1, 2025.
IPO
July 28, 2023
Offering price ¥442
Q2 earnings
(Start of next fiscal year
forecast disclosure)
Q3
earnings
(Upward revision
of the next fiscal
Q4
earnings
(Shin, former
president,
stepped down)
Public offering Announcement (2nd time) +
Sale of a majority stake by Shin, former president
Public offering
announcement (1st time)
Q1 earnings
(M&A: NEN)
M&A: Player One (North America)
Q1 earnings
(Upward revision
of the next fiscal
Q2 earnings
(Change of capital allocation)
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
2. Revision of Strategy
4
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
What was initially expected
◼
◼For that purpose, we would execute only M&A deals that contribute to EPS (Earnings Per Share) improvement
◼-term shareholder value and enhance stock price
What ultimately happened
◼From the IPO @¥442 in July 2023, stock price rose by 3.5x following the public offering (1st time) in July 2024, maintaining an upward trend for c.20 months
◼However, following the M&A of Player One in North America during the Trump Shock, and the consecutive public offering (10 months after the previous one)
accompanied by the sale of a majority stake by the former president, the stock price has been in a downward trend for c.8 months
What was correct
Long--
◼All past M&A transactions were executed with the objective of being EPS-accretive and as a whole have delivered results exceeding our initial expectations
◼A strategy of continuously raising capital and executing EPS-accretive M&A, thereby driving ongoing equity value, is one that long-term investors find compelling
◼In fact, long-term shareholders now comprise c.80% of our shareholder register; notably, global leader Capital Group recently increased its stake to 9.18%
(Our shareholder register as of the end of July: Midas Capital c.30%Officers & employees c.20%Long-term institutional investors c.30%Other institutional investors c.10%Retail investors c.10%)
What was mistaken
The short-term supplydemand overhang that accompanies consecutive public offerings has proven more burdensome than anticipated
◼With the risk of consecutive public offerings, short-term supplydemand concerns make our shares harder to gain traction with investors with shorter time horizon
◼For investors expecting a near-
→ We deeply acknowledge our misperception identified through dialogue with the capital markets,
and having learned from the insights gained, we will now present our revised strategy on the next page.
Revision of Strategy
Capital-market insights prompting a re-examination of our strategy
5
Note: Long-term institutional investors include long only investors (c.26%) and operating companies holding with strategic angles (c.4%).
Other institutional holders include institutions except long only investors, plus securities companies and other operating companies.
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
◼Achieve “Continuous Transformational Growth” through M&A in the entertainment industry
◼Execute only M&A deals that contribute to EPS improvement
◼①Revision of company-wide strategy on public offering
For at least next 3 years, GENDA will not conduct the “public equity offering for the purpose of M&A standby funds,”
which was the format carried out twice in the past, through the strategic revisions ②and ③below;
◼②Revision of strategy for M&A (inorganic)
Concentrate on roll-up M&A in our core domains in principle
Limit and strictly select M&A outside the core domains
(As a result, we will reduce the number of M&A transactions while selectively focusing on deals that meaningfully sustain company-wide growth)
◼③Revision of strategy for existing businesses (organic)
Strictly select growth capex in existing businesses, generating ¥5.0bn in FCF from them in the next fiscal year
→ We will explain the details of each of these points, from the next page.
Revision of Strategy
6
Revise our M&A strategy to align with the capital markets
What will not be changed
What will be changed
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
0.4 1.2 1.4
38.1
46.0
55.6
111.7
157.0
210.0
FY19/1 FY20/1 FY21/1 2022/1 2023/1 2024/1 2025/1 2026/1E 2027/1E
0.0 0.0
3.5
2.7
3.5
4.3
4.6
8.0
10.6
0.1 0.3 0.0
5.7 6.2
8.1
14.2
22.0
28.0
FY19/1 FY20/1 FY21/1 2022/1 2023/1 2024/1 2025/1 2026/1E 2027/1E
6/11
What will not be changed: Continuous Transformational Growth through M&A
7
2025/12024/12023/12022/1 2026/1
E
2021/12020/12019/1 2027/1
E2025/12024/12023/12022/1 2026/1
E
2021/12020/12019/1 2027/1
E2025/12024/12023/12022/1 2026/1
E
2021/12020/12019/1 2027/1
E
Revenue (¥bn) EBITDA (¥bn) Net income before
amortization of goodwill (¥bn)
Special
gain
From
Negative
goodwill
Note: The figures for FY2019/1 through FY2021/1 are reference values because consolidated financial statements were not prepared for that period.
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
What will not be changed: M&A will be limited to those deals that contribute to EPS
8
0.47 0.54
37.67
23.61
28.25
34.12
40.39
51.76
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1 2026/1 2027/1
56.47
+α
Anticipate further
enhancement by fully
allocating the funds
reserved for M&A
Adjusted Cash EPS (¥)
EE
Adjusted Cash EPS is earnings per share that is calculated by excluding;
1) one-time M&A-
2)
Booking a special
gain resulting from
negative goodwill
The figures for FY2019/1 through FY2021/1 are reference values because consolidated financial statements
were not prepared for that period.
All past M&A transactions were executed with the objective of being EPS-accretive
and as a whole have delivered results exceeding our initial expectations
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
◼Executing M&A of diversified entertainment companies at a high speed
Even with available debt capacity, the high pace of M&A outruns the practical ability to secure new loans, forcing us to use our own cash for M&As
Moreover, also executed full growth investments in our existing businesses, actively making our FCF negative (Current fiscal year: FCF ▲¥10.0bn)
◼Despite that, prioritizing the speed of M&A, implemented a public offering for M&A standby funds “2 years in a row”
Adhering to our M&A discipline, while the number of shares since the listing has increased by 48%,
Net income before amortization of goodwill has increased by +196%, resulting in a Cash EPS increase of +101%
Nevertheless,
◼Revision of strategy for M&A (inorganic)
Concentrate on roll-up M&A in our core domains in principle
Strictly limit and select out-of-core M&A to maintain the growth rate with fewer deals
(As a result, we will reduce the number of M&A transactions while selectively focusing on deals that meaningfully sustain company-wide growth)
→ Strict deal selection and reduced M&A frequency will enable deal-by-deal debt financing, allowing full utilization of debt capacity
◼Revision of strategy for existing businesses (organic)
Strictly select growth investments in existing businesses, generating ¥5.0bn in FCF from them in the next fiscal year
→ FCF to be improved by c.¥15.0bn, comparable to the recent ¥15.4bn public offering
◼Revision of company-wide strategy on financing
which was the format carried out twice in the past, through the strategic revisions above
→ Will not conduct a public offering that gain funds in advance and allocating them for future M&As, at least until the end of Jan. 2029
(¥ in billions)
FY26/1 FY27/1 Difference
EBITDA
22.0 28.0 +6.0
Tax 4.0 5.0 +1.0
Maintenance Capex 6.0 6.5 +0.5
FCF
(Steady state) 12.0 16.5 +4.5
Growth Capex 22.0 11.5 ▲10.5
FCF (after Growth Capex)
▲10.0 +5.0 +15.0
What will be changed: Revise our M&A strategy to align with the capital markets
9
Up until now
From now on
Note: The increase rate for the number of shares is calculated from outstanding shares as of pre-IPO (July 27, 2023) and end of November 2025. The growth rate for Net income before amortization of goodwill is calculated from actual results for
FY2023/1 and the forecast for FY2027/1. The Cash EPS growth rate is calculated using the same number of shares and Net income before amortization of goodwill figures that were used for the previously mentioned growth rate calculations.
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
10
3. FY2026/1 3Q Earnings Results
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
Summary of Consolidated Financial Report (“Tanshin”)
Actual performance of existing businesses = Adjusted income before amortization of goodwill
= Actual results excluding amortization of goodwill & M&A-related expenses
11
Amortization of goodwill is recorded as an expense = JGAAP (reference)
Amortization of goodwill is not recorded as an expense ≒IFRS (to be introduced at the end of the next fiscal year) → To be explained on the next page
Results excluding M&A-related expenses = Our KPI
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
Summary of Consolidated Statement of Income
3Q YTD Actuals Full-year
Adjusted (excl. M&A-related expenses) GAAP results (incl. M&A-related expenses) Actual / Company forecast (run rate)
(¥ in billions)
FY2025/1 FY2026/1 YoY FY2025/1 FY2026/1 YoY FY2026/1 vs Adjusted vs Results
Revenue
¥77.6bn ¥119.6bn +54 %¥77.6bn ¥119.6bn +54 %¥157.0bn 76 %76 %
EBITDA ¥10.0bn ¥14.7bn +47%¥9.4bn ¥13.8bn +47%¥22.0bn 67%63%
EBITA
(≒Operating income under IFRS) ¥6.9bn ¥8.5bn +23%¥6.2bn ¥7.5bn +21%- - -
Net income before amortization of
goodwill (
≒Net income under IFRS) ¥4.3bn ¥5.6bn +31%¥3.5bn ¥4.6bn +33%¥8.0bn 71%58%
12
Note: M&A-related expenses include: ①M&A execution fees: brokerage fees, legal fees, DD fees, financial advisory fees and appraisal fees, ②M&A financing fees, and ③Stock-related fees: Equity financing fees (offering fees).
The same- those operating for a full comparative months in both the cur-to equate the
number of holidays with the previous year.
105% 103%
106%
100%
102%
107%
102%
107%
111%
100%
109%
105% 103%
106%
102%
98%
102% 105%
105% 107%
108% 103%
109%
Nov 2024 Dec 2024 Jan 2025 Feb 2025 Mar 2025 Apr 2025 May 2025 Jun 2025 Jul 2025 Aug 2025 Sep 2025 Oct 2025
Unadjusted Calendar adjusted
Same-store sales growth rate for domestic amusement arcades
Amortization of goodwill is not recorded as an expense ≒IFRS (to be introduced at the end of the next fiscal year)
Our KPI
✓
✓
✓
✓
Target
Achieved
For 3Q YTD M&A-related expenses totaled ¥0.93bn (operating expenses) impacting EBITDA and EBITA, and
¥0.98bn (operating and non-operating expenses, after tax), impacting net income before amortization of goodwill.
Target
Achieved
Target
Achieved
Target
Achieved
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
Summary of Consolidated Balance Sheet
13
(¥ in billions) FY2025/1
End of Full-year FY2026/1
End of 3Q Difference Remarks
Current assets 45.6 58.1 +12.5
Of which, cash and deposits 25.6 28.1 +2.4
Fixed assets 69.3 138.8 +69.5 Mainly increase in goodwill and tangible asset by M&As
Of which, goodwill 18.5 53.5 +35.0 -PPA intangible
assets, booked entirely as goodwill until PPA is completed
Total assets 114.9 197.0 +82.0
Total liabilities 79.3 133.1 +53.8 Mainly increase in interest-bearing debt due to M&A financing
Of which, interest-bearing debt 52.4 99.7 +47.2
existing businesses are expected to decline for the first time starting next fiscal year
Net assets 35.6 63.8 +28.2
35.4 63.7 +28.3 Increased by accumulated income, offering and stock-based M&A
Net Debt / EBITDA 1.7 x2.5 x+0.8 x
Ample debt capacity remains. In addition, under our revised FCF policy for the next fiscal
year, borrowings associated with existing businesses will decline for the first time, being
projected to further strengthen our overall debt capacity
Capital adequacy ratio 30.8 %32.4 %+1.6 %
2
1
1
¹ in the calculation of the Net Debt / EBITDA ratio.
² Despite Net Debt / EBITDA increasing to 3.0x (+0.5x), sufficient debt capacity remains as M&As will increase both the numerator and denominator. For example, if we mechanically
back-calculate the debt capacity when the Net Debt / EBITDA ratio is 3.0x, assuming M&A continues solely through debt financing and target company achieves zero growth;
M&A continues at 5.0x EBITDA multiple: Our Net Interest-bearing debt is calculated as ¥102.6bn (+¥31.0bn) and EBITDA as ¥34.2bn (+¥6.2bn)
M&A continues at 7.0x EBITDA multiple: Our Net Interest-bearing debt is calculated as ¥93.3bn (+¥21.7bn) and EBITDA as ¥31.1bn (+¥3.1bn)
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
Target an EBITDA of ¥6.5bn from the North American business alone next fiscal year, and ¥11.0bn in 2030, based on the Mid-term Management Plan
◼The full-scale expansion of Japanese anime IP prizes across the U.S. has become possible
The biggest factor is that, by gaining a presence across the U.S. through M&A, we have earned the trust of Japanese IP holders to handle their products
Sales at stores that introduced Japanese anime IP prizes have sharply increased compared to existing North American prizes
◼The M&A of 4 North American companies enabled Kiddleton to establish locations in major nationwide chain stores, a feat difficult to achieve independently
ations next fiscal year
In addition, it has become widely understood that Japanese anime IP prizes lead to increased sales, resulting in numerous inquires for new store openings
◼Cost reductions through the integration process are progressing better than initially expected
Expected to achieve cost reductions of c.$6.4m (c.¥0.9bn) compared to the initial full-year projection of $2.0m (c.¥0.3bn)
(although this will contribute negatively to current fiscal year performance due to restructuring costs)
As a result of Japanese IP prizes selling faster than existing ones, the replenishment operation became a challenge (see specific plans on the following pages)
◼Investigation of stores where sales began to decline after SWAP (replacement of claw machine and prize), revealed claw machines left unstocked for a long time
The cause was the inability of the prize replenishment operation to keep up, due to the faster-than-expected growth in sales of Japanese IP prizes
The operational improvement has become visible due to the concentrated workload from simultaneous replacement of claw machines and prizes across c1,100 locations
◼As a result of appropriately restocking the Japanese anime IP prizes at these stores, revenue sharply increased once again
Sales decline was caused by opportunity loss from empty claw machines, thus confirming the fundamental validity of our narrative: Japanese anime IP prizes drive sales growth
◼We will temporarily pause M&A activities in North America to focus resources on post merger integration for operational improvement
North American Business Strategy
14
What will not be changed, and what is working well
What will be changed
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
60
168
1Q End 2Q End 3Q End
515
946 1,111
1Q End 2Q End 3Q End
Initiatives implemented in North American business
15
SWAP: replace claw machines and prizes at mini-locations of NEN Add on: Add claw machines and prizes at amusement arcades of Player One
Same-store sales uplift at existing stores
--
The incremental increase in sales may appear small but the ROI is greater than SWAP
because this lifts overall large store sales by using some claw machines and Japanese IP prizes.
Effectiveness
Details
Average of Sales growth rate after SWAP
The average before/after growth rate across the 1,111
locations where the initiatives have been implemented
Number of
locations
implemented
185%+12%
Before
consolidation
1. The growth rate of SWAP is shown consistently with the notation used for domestic same-store sales growth rate (e.g., 185% indicates +85%). To calculate the growth rate, we compare the sales growth/decline rate for the number of
before and after the SWAP implementation, regarding stores implemented by the end of each quarter. If the same period cannot be obtained, such as new stores, it is calculated by using the longest comparable period available.
2. Growth rate is calculated by comparing the average sales of July October 2024 against July October 2025. The 46% figure from FY2026/1 2Q Earnings Presentation is the average sales growth for 9 stores in July 2025 and is not
comparable due to a different calculation method. The uplift at Existing of Add on is defined as the difference between the rate of implemented and the rate of non-implemented stores. 12% at the 3Q-end
was calculated based only on the 168 implemented existing stores as of October 2025 that were operating in the comparable period last year (July October).
12
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
515
946
1,111
1Q End 2Q End 3Q End
Operational Improvement
Timely prize replenishment
Monitoring
◼Sales growth after SWAP declined over
time (although much higher than domestic)
◼Initial survey of stores with sharp growth
rate decline was made
Implementation of rounder training
◼These locations were restocked to proper
levels, and the sales change was
investigated
◼Comparison of Post-SWAP/Pre-Restock vs
Post-SWAP/Post-Restock
◼Result: Claw machines were found near-
empty for an extended period (up to 8months)
◼Cause: Replenishment operations cannot
keep pace with prizes selling at twice the
original speed
◼Prize restocking that was left to the rounders ◼Implement a system via DX for monitoring
from both the U.S. HQ and Japan
◼Instructional content lacked consistency
among sales managers
◼Conduct online training for all sales managers
and aim for quality standardization.
1
2 3
Temporarily pausing M&A activities in North America to focus resources on post merger integration for operational improvement
◼Post-SWAP/Post-Restock saw growth rate
improvement at the 9 locations initially investigated.
◼Reconfirmed the strength of our Japanese anime IP
popularity story in North America.
416
Locations where sales declined following SWAP
Post-SWAP/Pre-Restock vs
Post-SWAP/Post-Restock
(Note: This compares post-SWAP periods:
Pre-Restock vs Post-Restock)
Sales
growth rate
High
Middle
Low
107% 112% 133% 150% 164%
190% 194%
224%
248%
A B C D E F G H I
Number of locations where SWAP was implemented
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
17
132% 154%
188% 193% 209% 224%
257%
283%
a b c d e f g h
Sales growth rate after the replacement of
prizes at existing large claw machines
(existing prizes to Japanese IP ones)
◼Utilize existing large claw machines, and replace
prizes with Japanese IP ones
◼Originally, Japanese IP prizes were mainly small,
but the introduction of large Japanese IP prizes
enabled us to use existing large claw machines
◼No Capex is required (prizes are COGS), leading to
increased sales and a dramatic improvement in IRR
(the same PMI as utilized in Japan)
Sale growth rate per machine
Next fiscal year’s full-year
cost reduction contribution Initial plan Current estimate Difference
Personnel reduction $ 1.0m$ 4.8m+ $ 3.8mPersonnel reduction plan succeeded
Others $ 1.0m$ 1.6m+ $ 0.6mIntegration of non-life insurance, etc.,
and reducing unnecessary costs
Total amount $ 2.0m$ 6.4m+ $ 4.4mApprox. ¥0.93bn in cost savings projected for full-year contribution
starting next fiscal year (although negatively impacting current fiscal year)
Focusing on ROI
◼New store openings
New store openings have a high return on investment (ROI) and we will implement actively
The expectation of strong sales for Japanese IP prizes allows us to pursue a lease contract featuring a favorable percentage rent rate
We anticipate opening 600 new stores next fiscal year (targeted at over 100 locations at Walmart)
◼Existing stores
Add on Initiative at Player One has a high ROI and we will implement actively
Planned to implement at 1,000 locations next fiscal year
We will temporarily suspend SWAP at NEN and focus on operational improvements.
Furthermore, existing locations with high (unfavorable) percentage rent commences using large prizes on existing large claw machines, bypassing SWAP
Cost Reduction
Japanese
IP prizes Japanese
IP prizes
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
6.5
8.5
10.0
11.0
2027/1
E2028/1
E2029/1
E2030/1
E
Mid-term Business Plan for the North American Business (restatement of figures published in 2Q)
18
EBITDA (¥bn)
2.0
3.0
3.5
4.0
2027/1
E2028/1
E2029/1
E2030/1
E
50.0
58.0
65.0
72.5
2027/1
E2028/1
E2029/1
E2030/1
E
Revenue (¥bn)
All North
American
entities begin
contributing
for the full
year
Note: The assumed exchange rate is ¥145 per dollar.
Net income before
amortization of goodwill (¥bn)
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
SMART EXCHANGE 48
CARATT 42
Shin Corporation 40
ONTSU 38
HALOS 24
PLABI 20
FUKUYA 14
DORAMA 11
ATOM 10
(Reference) Supplementary notes regarding Goodwill
Illustrative EBITDA level that would trigger
potential goodwill impairment in North America
Goodwill impairment in North America would only be triggered if
EBITDA falls significantly below the Mid-term Plan since;
1) The acquisition price is attractive
EV / EBITDA at the acquisition was 3.6x for NEN,
8.5x for Player One, 5.0x for Barberio and VENUplus
2) Additional buffer to recoup the investment using
the ability to sale of the game machines
Our North America business is largely a mini-location model
Thus, our tangible assets are almost entirely game machines
(with minimal interiors)
Even if EBITDA falls below the impairment trigger, machines
whose net selling price exceeds value in use can be
monetized through secondary-market sales
6.5
8.5
10.0
11.0
2027/1
E2028/1
E2029/1
E2030/1
E
¥53.6bn
2026/1
3Q
Kiddleton 2
VENUplus 9
NEN 13
Barberio 30
Player One 174
Our Mid-term management plan
for the North American Business
(Cumulative impairment loss for 60 M&A deals
since our foundation in 2018 is only ¥0.2bn.)
19
Goodwill (¥bn) North American EBITDA (¥bn)
North American
Business
Total of Goodwill
¥22.8bn
Note: The assumed exchange rate is ¥145 per dollar. The goodwill for Player One is the figure where the full amount of intangible assets has been temporarily recorded as goodwill until the completion of the PPA.
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
5.7 6.2
8.1
14.2
22.0
2022/1 2023/1 2024/1 2025/1 2026/1E 2027/1E
6/11
38.1
46.0
55.6
111.7
157.0
2022/1 2023/1 2024/1 2025/1 2026/1E 2027/1E
2.7
3.5
4.3 4.6
8.0
2022/1 2023/1 2024/1 2025/1 2026/1E 2027/2E
2025/12024/12023/12022/1
A second upward revision for FY2027/1 (next fiscal year)
210.0
2026/1
E
20
2027/1
E
28.0 10.6
2025/12024/12023/12022/1 2026/1
E2027/1
E2025/12024/12023/12022/1 2026/1
E2027/1
E
FY2027/1 Earnings Forecast
Revenue (¥bn) EBITDA (¥bn) Net income before
amortization of goodwill (¥bn)
Revenue ¥210.0bn │ EBITDA ¥28.0bn │ Net income before amortization of goodwill ¥10.6bn (assuming zero M&A going forward)
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
4. Share Repurchase
21
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
Considering our future EBITDA and EPS growth, we view the current GENDA valuation of EV/EBITDA 7.2x and P/E 12.4x as justifiable for share repurchase.
We resolved to execute a share repurchase at an amount that does not impede M&A growth.
Share Repurchase
Resolution of Share Repurchase Facility
22
Period
December 15
, 2025 ～April 30, 2026
Total purchase amount ¥3.0bn
Total number of shares to be repurchased Up to 5 million shares
The distributable amount is c.¥1.2bn as of today but is expected to reach c.¥5.0bn after the mid-December 3Q extraordinary financial closing (reflecting dividends from
group companies). Therefore, share repurchases up to ¥1.2bn are possible starting December 15 and purchases up to the ¥3.0bn limit will be possible after the
completion of the extraordinary financial closing.
Note: EV/EBITDA is calculated using our Market Capitalization as of the closing price of December 11, 2025, the full-year projected EBITDA for FY2027/1 of ¥28.0bn, and Net Interest-bearing Debt as of the end of 3Q of the fiscal year ending on
January 31, 2026. P/E multiple is calculated using our Market Capitalization as of the closing price on December 11, 2025, divided by the full-year Net income before amortization of goodwill of ¥10.6bn for the fiscal year ending on January 31, 2027.
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
Appendix
23
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
(Reference) Repost “Frequently Asked Questions and Answers (November)” released on November 27, 2025
Q1. Will the supply-demand balance worsen due to the lock-up expiration on November 25, 2025?
24
On the other hand, this time, it is also a fact that we have received
numerous inquiries from a wide range of investors - both institutional and
individual - regarding the potential sale of the remaining shares held by
Mai Shin, who is a current director and a former Representative Director
and President, and who sold more than half of her holdings in the offering
this past May.
would like to add the supplementary point that share sales are not easy for
her because, in addition to her position as a current director, our
company's characteristic of conducting continuous M&A often leads to the
possession of material non-public information, imposing considerable
practical constraints on market sales of shares.
Furthermore, even if a situation were to hypothetically arise where Shin
considers the disposal of shares, it is our company's policy to take the
most appropriate measures possible to minimize the impact on
shareholder value.
We are currently aware that the market has a certain level of attention
regarding the lock-up expiration on November 25.
Specifically, since the lock-up period due to the offering conducted last
May has terminated on November 25, major shareholders whose share
sales were restricted are now able to sell their shares.
We recognize that the expiry of the lock-up following an IPO (Initial Public
Offering) is particularly scrutinized - as it allows major shareholders who
have invested for a long time since the pre-listing period to sell for the first
time whereas the lock-up expiry due to a offering does not attract as
much attention as the one following an IPO.
In fact, in January 2025, when the lock-up due to the offering conducted in
July 2024 expired, we did not receive any particular concerns from
investors.
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
Debt
DebtDebt
(Reference) Details regarding the Strategy revision
Need to deploy own
Cashflow, however
FCF was negative
→ Public offering for
M&A standby funds
July 2024: ¥10.0bn
May 2025: ¥15.4bn
Debt
utilization
これまで：
これから：
Our FCF
(M&A standby funds
are not required)
M&A will focus on core domains in principle / Limit non-core M&A to reduce the number of M&A. Prioritize FCF generation by strictly selecting growth investments. Consequently, we
s f
New borrowing is practically constrained until the M&A bridge loan is refinanced into permanent debt, such as a syndicated loan (even if debt capacity remains). Under these
circumstances, to conduct high-paced M&A of diversified entertainment companies, M&A using our own cash flow was necessary. However, due to implementing comprehensive
growth investments, FCF is negative (this fiscal plan: FCF ▲¥10.0bn). Prioritizing M&A speed led to public offerings for M&A standby funds for 2 consecutive (adhering
to M&A discipline, Net income before amortization of goodwill growth (+196%) exceeded share dilution (+48%), resulting in Cash EPS rise (+101%).
Debt Debt
Permanent
financing
Bridge loan
Debt Debt
Up until now
From now on
(¥ in billions) FY26/1
target FY27/1
target Difference
EBITDA 22.0 28.0 +6.0
Tax 4.0 5.0 +1.0
Maintenance Capex 6.0 6.5 +0.5
FCF (Steady state) 12.0 16.5 +4.5
Growth Capex 22.0 11.5 ▲10.5
FCF (after Growth Capex) ▲10.0 +5.0 +15.0
Amount
invested
in M&A
25
Cash flow to be improved by an amount equivalent to the ¥15.4bn
public offering conducted in July 2025 for future M&A standby funds
Note: The increase rate for the number of shares is calculated from outstanding shares as of pre-IPO (July 27, 2023) and end of November 2025. The growth rate for Net income
before amortization of goodwill is calculated from actual results for FY2023/1 and the forecast for FY2027/1. The Cash EPS growth rate is calculated using the same number of
shares and Net income before amortization of goodwill figures that were used for the previously mentioned growth rate calculations.
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
The Company’s Full-year Earnings Forecast from the next fiscal year
Company forecast will be only 1) Revenue, 2) Adjusted EBITDA, and 3) Adjusted Net income
26
Operating income
2) Adjusted EBITDA 3) Adjusted Net income
M&A-related expenses
Adjusted EBITDA
EBITDA
Amortization of goodwill
Depreciation
◼
◼Our KPI indicating annual cash flow generation capability
◼
(EBITDA excluding one-off M&A related expenses)
＋）
＋）
＋）
Net income attributable to owners of the parent
M&A-related expenses
Adjusted Net income
Negative goodwill
Amortization of goodwill
Goodwill impairment loss
＋）
＋）
＋）
－）
◼
◼A KPI excluding items unrelated to cash flow from net income
◼
(Net income excluding one-off M&A-related expenses)
3)’ Adjusted EPS
◼Divide 3) Adjusted Net income by the number
of shares
◼A KPI to assess whether continuous M&A
resulted in increasing equity value
◼
A measure to correctly prove the intrinsic performance of the company as an M&A practitioner to the market
・ Because the JGAAP forecast necessitated factoring in increased amortization of goodwill due to unbudgeted M&A, a mid-period earnings forecast revision was prevented
・ Because the earnings forecast was not adjusted basis, we had to factor in unbudgeted M&A-related expenses, which prevented a mid-period earnings forecast revision
Note: M&A-related expenses include: ①M&A execution fees: brokerage fees, legal fees, DD fees, financial advisory fees and appraisal fees, ②M&A financing fees, and ③Stock-related fees: Equity financing fees (follow-on offering fees).
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
(Repost) The outcome of PMI Initiatives
Strong Performance, not only in Amusement arcades but also in M&A from what were formerly new domains
27
309
584
21/2-
22/1 24/2-
25/1
+89%
-3
41
21/10-
22/9 24/2-
25/1
+¥44mn
Turned profitable
-7
11
22/10-
23/9 24/2-
25/1
-29
457
22/10-
22/9 24/2-
25/1
3,291
3,584
23/2-
24/1 24/2-
25/1
1,127
970
22/10-
23/9 24/2-
25/1
99
119
22/10-
23/9 24/2-
25/1
675
677
23/2-
24/1 24/2-
25/1
92
282
22/10-
23/9 24/2-
25/1
129
133
23/5-
24/4 24/8-
25/7
145
245
23/6-
24/5 24/8-
25/7
641
790
23/2-
24/1 24/8-
25/7
437
536
23/10-
24/7 24/10-
25/7
71
276
22/12-
23/11 24/2-
25/1
+¥487mn
Turned profitable
+¥18mn
Turned profitable
+23%
+290%+4%
+69%
+9%
+20%
-14%
+20%
+0.2%
+205%
Entertainment Platform Entertainment
Contents
* Importantly, even this M&A
earns high returns with entry
valuation of EV/EBITDA1.8x
(¥ in millions)
Note： Showing amusement arcades which have completed a consolidation or merger as of FY2025/1, and companies and businesses which have recorded a contribution of ¥100mn or more to our consolidated EBITA (≒Operating income under IFRS).
For companies and businesses where one year or more has passed since consolidation or merger as of FY2025/1, showing the management accounting results from the audited full-year financial report for FY2025/1 (comparing 12 months prior to M&A vs 12 months of FY2025/1).
For companies and businesses where one year or more has not passed since consolidation or merger as of FY2025/1, showing the results up to the end of July 2025 in a simplified manner for the purpose of long-term comparison (X months prior to M&A vs X months till July 31, 2025).
To maintain a fair comparison, amusement arcades and karaoke are compared based on the earnings of existing stores (that is, excluding stores which closed after M&A and not including profit-increasing effects from the closure of unprofitable stores, etc.).
Other than amusement arcades and karaoke, the calculation is based on the company-wide EBITA, which is derived by adding back amortization of goodwill to company-wide operating income.
¹ Actually, while a simple comparison shows a +230% increase, the intrinsic performance of the business is +4% when comparing before and after, which is calculated by adding back one-off expenses (such as retirement payments) that occurred before M&A.
² Actually, while a simple comparison shows a +1,747% increase, the intrinsic performance of the business is +69% when comparing before and after, which is calculated by adding back one-off expenses (such as retirement payments) that occurred before M&A.
³ Actually, while a simple comparison shows a +124% increase, the intrinsic performance of the business is +20% when comparing before and after, which is calculated by adding back one-off expenses (such as consumables) that occurred before M&A.
1
Amusement Karaoke F&B Character MD
(+230%)
2
(+1,747%) 3
(+124%)
Pre-M&A Post-M&A
Pre-M&A
Pre-M&A Pre-M&A
Pre-M&A Pre-M&A
Pre-M&A
Pre-M&A
Pre-M&A
Pre-M&A
Pre-M&A
Pre-M&A
Post-M&A
Post-M&A
Post-M&A Post-M&A
Post-M&A Post-M&A
Post-M&A
Post-M&A
Post-M&A Post-M&A
Post-M&A
Post-M&A
Post-M&APre-M&A
Pre-M&A
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
A. Disciplined M&A at a fair valuation, ensuring ROI
even without factoring in synergies
B. Furthermore, the PMI initiatives for each
company are effective, resulting in improved
performance
strength
In particular, B serves as a testament to the various
synergies created among 37 group companies
an effect that is irreversibly increasing with our
corporate growth.
In fact, businesses like karaoke that were acquired
at a fair valuation are now consistently surpassing
their pre-M&A performance.
The recently announced photography studio
business, acquired with disciplined M&A at a fair
valuation, will also create synergies among our 37
group companies.
(Repost) Countless synergies from a group of 37 Entertainment companies
“Flywheel Effect” = Disciplined M&A at a fair valuation x Growth by synergies through PMI
28
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
(Repost) Countless synergies from a group of 37 Entertainment companies
Formulate and execute specific synergy initiatives across GENDA
29
Examples of Synergy initiatives
Purchasing of food items
Manufacturing and sales of
IP collaboration products
Publicity for distributed films
Design of collaborative
products
VSING
Introduction of multiplexes
Product introduction in
the European market
Agency sales to AM
operators Development of
collaborative products Support for company
establishment and visa acquisition
Cooperation in sales
promotion
Sales expansion of prize
products Design of packaging etc.
Metaverse project
consultation Joint purchasing of prizes
Worker dispatch
Worker dispatch
Worker dispatch
Training of overseas
management personnel
Training of overseas
management personnel
Introduction of a corporate
membership system of JOYFIT
Introduction of a corporate
membership system of JOYFIT
Provision of promotional
tools and design
Provision of promotional
tools and design
Worker dispatch
Provision of promotional
tools and design
Deployment of mini-locations
Deployment of hybrid-format stores
Online claw machine advisory
Mutual customer referral
Procurement and sales of
GiGO exclusive prizes
Sale of raw materials for in-
store beverages
Consultation for pop-up
stores
Provision of foreign currency
exchange machine installation sites
Sale of prizes
Cooperation in new
store planning
Sales of Kleiner
Sale of in-store retail
products
Reduction of foreign currency
procurement costs through foreign
currency exchange
Referral of prize suppliers
Design of collaborative
products
Market research
Preparation of sales
documents
Merchandise production
Expansion of sales
channels for prizes
Use of showrooms
Purchasing, sales
Provision of market
information
Horizontal deployment of
operational methods
Provision of prizes for
overseas
Reduction of peripheral
equipment purchasing costs
Improvement of GiGO brand
awareness in Europe
Cooperation in new
store opening
Cooperation in store design
CM broadcast on GiGO
Vision
Reduction of foreign currency
procurement costs through foreign
currency exchange
Corporate sales collaboration Corporate sales collaboration
IP collaboration proposal
Purchase of prizes
Sale of in-store retail
products
Sale of prizes
Sales of cinema ad
Deployment of mini-
locations
Provision of prizes
Sales to installation
locations
Cooperation in anime
EXPO
Purchase of prizes
Collaboration for expanding
into Taiwan
Purchasing and sales of
prizes
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
13.1
4.2
1.4
4.8
3.3
82.2
24.7
14.0
30.6
14.7
30
¥22.0bn
¥157.0bn
Amusement arcade
related business:
c.70%
GENDA’s Business Portfolio (FY2026/1 Initial Target)
Amusement Centric + Peripheral Areas
We continue to focus on M&As on platform area while entering into the contents area in the mid-to-long term
Revenue EBITDA
Note: The graphs for Revenue and EBITDA do not include "Consolidation Adjustments," which is why their total values (¥166.2bn an
Consolidation Adjustment at -¥9.4bn, primarily due to internal transactions, and the EBITDA Consolidation Adjustment at -¥4.9bn, -¥4.5bn) and M&A-related expenses (-¥0.4bn)
that have already been announced and are confirmed to be recorded in FY2026/1; for reference, the actual consolidation adjustments for FY2025/1 were -¥7.8bn for revenue and -¥3.6bn for EBITDA.
Others
Karaoke (Karaoke BanBan, ONTSU)
Prize-related (FUKUYA and Ares)
Overseas Amusement (mainly North America & China)
Domestic Amusement (GiGO etc.)
49%
15%
8%
18%
9%
49%
16%
5%
18%
12%
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
The Big Picture of the Current Entertainment Industry
IP Contents × Platform
31
ima
the mid-to-long term.
IP CONTENTS PLATFORM FANS
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
Based on a foundation of continuous growth brought about by the steady expansion of our domestic business and aggressive overseas business
rtainment platform and
entertainment content areas. In this way, we believe that we will be able to overcome the volatility of the ever-changing entertainment business by building a
solid business portfolio.
Our growth strategy = “M&A in the Entertainment industry”
Completion of the Entertainment Ecosystem
32
Note: Image of our growth strategy envisioned by GENDA.
Contents &
Promotion Karaoke
Character
MD
F&B
Amusement
Entertainment Contents Entertainment Platform
C
o
n
t
i
n
u
o
u
s
T
r
a
n
s
f
o
r
m
a
t
i
o
n
a
l
G
r
o
w
t
h
t
h
r
o
u
g
h
M
&
A
C
o
n
t
i
n
u
o
u
s
G
r
o
w
t
h
i
n
J
a
p
a
n
C
o
n
t
i
n
u
o
u
s
G
r
o
w
t
h
O
v
e
r
s
e
a
s
E
n
t
e
r
t
a
i
n
m
e
n
t
E
c
o
s
y
s
t
e
m
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
AM
1 store
June 2025March 2025
60 M&A transactions since our establishment
M&A and capital transactions track record
June 2018 July 2019
October 2023
September 2023
September 2023 October 2023September 2023 October 2023
April 2021 October 2021
November 2023 December 2023 December 2023 January 2024
November 2023
December 2020 January 2022 January 2022
February 2024 May 2024 June 2024 June 2024 November 2024February 2024
December 2021 October 2022 October 2022
August 2024
June 2022
November 2023
117 mini-
locations
December 2023
October 2024
AM
1 store
February 2025September 2024 December 2024
March 2025 March 2025 March 2025 April 2025 June 2025May 2025April 2025 May 2025
July 2024
July 2025
July 2025
June 2025
August 2025
12 3 4 56 7 8 910 11 12
13 14 15 16 17 18 19 20 21 22 23 24
25 26 27 28 29 30 31 32 33 34 35 36
37 38 39 40 41 42 43 44 45 46 47 48
49 51 52
September 2025
33
July 2025
50 56
November 2025
57
November 2025
53
October 2025
55
November 2025
58
Karaoke facility
ALL
59
54
October 2025
60
January 2026
(planned)
December 2025 January 2026
(planned)
Entertainment Contents Entertainment Platform
Appx. 1,100
mini-locations
(US)
Karaoke
1 store Karaoke
1 store
Karaoke
7 stores
Karaoke
1 store
Karaoke
1 store
Karaoke
1 store
Karaoke
2 stores
AM 1 store
(China)
AM 9 stores
(US)
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
GENDA Group Overview
GENDA is a pure holding company of amusement centric entertainment companies
34
Entertainment Platform Entertainment Contents
GENDA Inc.
Pure Holding Company
Amusement F&B Contents & PromotionCharacter MDKaraoke Tourism
GENDA Games Inc.
Online claw machines
100%
Fil m
dist ri bution
GAGA
Corporation
78.05%
Dynamo
Amusement, Inc.
100%
100%
100%
Kiddleton,
Inc.
(US)
GiGO Taiwan
Inc.
(Taiwan)
100%
GiGO
VIETNAM
Co., Ltd.
(Vietnam)
100%
100%
GENDA GiGO Entertainment Inc.
Operation of AM arcades
Ares Company
Limited
100%100%
Tokyo Character
Makers Co., Ltd.
100%
100%
FUKUYA
HONGKONG
LIMITED
(Hong Kong)
100%
FUKUYA
TAIWAN
LIMITED
(Taiwan)
100%
FUKUYA
USA INC.
(US)
100%
Fukuya Co., Ltd.
100%
SANDAI Co., Ltd.
GENDA
(Guangzhou)
CO., LTD.
(China)
93%
100%
D-eight CO., LTD.
Approx. 1,100
mini-locations
100%
100%
Pixel Intermediate
Holding
Corporation (US)
National
Entertainment
Network, LLC
(US)
ENTERRIUM (US)
Barberio Music
Company (US)
AM
1 store
-
location
Sweet Pixels inc.
100%
LEMONADE
Lemonica UK Limited
(UK)
100%
100%
SMART
EXCHANGE Inc.
Foreign currenc y
exchange
mac hi ne bu siness
100%
Movie
informati on
website
eiga.com Inc.
100%
Lifestyle
100%
CARATT, Inc.
Operation of
photography studios
100%
(UK)
GENDA Playnation
Entertainment Ltd.
ONTSU
Co., Ltd.
Distribution
of karaoke
equipm ent,
etc.
100%100%
Shin Corporation
Co., Ltd.
Operation of
karaoke facilities,
etc.
100%
KAJI Corporation
Co., LTD.
Melo Works
Co., Ltd.
Operation of
karaoke
facilities
ALL
100%
100%
Eisetsu Co., Ltd.
100%
Asia Pte. Ltd.
(Singapore)
100%
FILLICO JAPAN
Co., Ltd.
100%
Manufacture, sales
and import/export of
Jewelry W ater, etc .
100%
AM
9 stores
100%
GENDA Europe Ltd.
(UK)
JAPAN ABROAD
GENDA
(Shanghai)
CO., LTD.
(China)
Distribution of
karaoke
equipm ent, etc.
Distribution
of karaoke
equipm ent,
etc.
Im port and
whol esale of
al cohol ic
beverages
Planning,
manufacturing and
sales of prizes
Planning and sales
of prizes for AM
arcades
Fukuya Holdings
Co., Ltd.
VR con tents,
virt ual
at tracti ons
Note: Organization chart as of December 12, 2025. AM arcades in the chart refer to amusement arcades. The chart is intended to present mainly our consolidated subsidiaries. Projects of FILLICO JAPAN and Eisetsu are scheduled to be completed in January 2026.
Planning, production
and sales of popcorn
and sweets
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
The Big Picture of the Current Entertainment Industry
35
VisionAspiration
More fun for your days To be the World’s No.1
Entertainment Company in 2040
Speed is King, GRIT and GRIT, Enjoy our Journey
With these three values, we take on new challenges and
© GENDA Inc.
FY2026/1 3Q Earnings Presentation
GENDA IR
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document to is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content o the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use of
this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the reason
thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgement of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
Disclaimer
36
© GENDA Inc.
本日公表のM&Aについて
GENDA IR
37
Thank you
GENDA IR © GENDA Inc.
FY2026/1 2Q Earnings Presentation
2025.9.12
GENDA IR
FY2026/1 2Q Earnings Presentation
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Executive Summary
2
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Executive Summary
2Q Results: Performance in existing businesses is accelerating
Adjusted indicator ： Intrinsic performance of existing businesses excluding one-off M&A-related expenses
Adjusted EBITDA ： ¥9.25bn 2Q YTD YoY +¥3.13bn / +51%
Adjusted EBITA ： ¥5.49bn 2Q YTD YoY +¥1.38bn / +34%
Adjusted net income before amortization of goodwill ： ¥2.65bn 2Q YTD YoY +¥0.18bn / +7%
While FY2026/1 full year target is ¥8.4bn, +42%up from FY2025/1 actual of ¥5.9bn, 2Q YTD run rate greater than 1Q YTD
(most skewed toward the second half due to low absolute value and high fixed-cost ratio)
Company-wide change in investment policy of “Selection and Concentration” of growth investments on existing businesses
– Earn positive FCF and deploy the cash to M&A, reducing the need for external financing of continuous M&As going forward
Turn FCF from negative to positive by selection and concentration growth capex of existing business and channel annual EBITDA of ¥27.0bn cash inflow into M&A.
GENDA EV / EBITDA 7.1x, P/E multiple 12.7x assuming our annual growth remains, share repurchase is a serious alternative today, compared to M&As
M&A / PMI: Amusement arcades and each business are demonstrating synergy
37 group companies are generating mutual synergies across all business areas not only amusement arcades but also karaoke, character MD and F&B, all were once new areas
Flywheel effect where our strict M&A discipline of entry valuation ensure sure cash payback even with no growth, while synergy then further boosts performance
North American business: Mid-term plan along with an organizational restructuring from 14 entities to 3 in North America
North American business alone to generate Revenue of ¥72.5bn, EBITDA of ¥11.0bn, and Net income before amortization of goodwill of ¥4.0bn in FY2030/1 ($1=¥145)
-SWAP same-store sales continue to remain high, averaging +105%1.2x that of NEN
3
≒Operating income under IFRS excluding M&A-related expenses
≒Net income under IFRS excluding M&A-related expenses
1
¹is ¥27.0bn for EBITDA and ¥10.4bn for net income before amortization of goodwill (approximately equivalent to
net incomer under IFRS). The share price used for the calculation is the closing price as of September 11, 2025.
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
4
FY2026/1 2Q Earnings Results
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Summary of Consolidated Statements of Income
M&A-related expenses Showing one-off expenses to show intrinsic performance.
M&A-related expenses (operating) were ¥0.3bn in 2Q/¥0.67bn YTD, affecting EBITDA and below.
M&A-related expenses (non-operating) were ¥0.26bn in 2Q/¥0.26bn YTD.
The total of ¥0.93bn for 2Q YTD including the above affects operating income and below.
2Q YTD Full-year
Adjusted (excl. M&A-related expenses) GAAP results (incl. M&A-related expenses) GAAP results / Company forecast
(incl. M&A-related expenses)
(¥
in millions) FY2025/1 FY2026/1 YoY FY2025/1 FY2026/1 YoY FY2026/1
vs Adjusted
vs Results
Revenue 49,531 73,973 +49 %49,531 73,973 +49 %157,000 47 %47 %
EBITDA 6,119 9,252 +51%5,700 8,584 +51%22,000 42%39%
EBITA
(≒Operating income under IFRS) 4,115 5,495 +34%3,696 4,827 +31%- - -
Net income before
amortization of goodwill
(≒Net income under IFRS) 2,471 2,652 +7%1,918 1,924 +0%8,000 33%24%
Adjusted net income before
amortization of goodwill
(≒Net income under IFRS excl. M&A-related expenses)
Growth of +34% YoY / +¥1.38bn
Adjusted EBITA
(≒Operating income under IFRS excl. M&A-related expenses)
Growth of +7% YoY / +¥0.18bn
Adjusted EBITDA Growth of +51% YoY / +¥3.13bn
b
c
d
a
a
b
c
d5
Note: M&A-related expenses include (i) M&A execution fees: brokerage fees, legal fees, due diligence fees, financial advisor fees and appraisal fees, (ii) M&A financing fees, and (iii) equity offering fees: follow-on offering fees and IPO fees
As previously reported, the same-store growth rate for
domestic amusement arcades was +7.0% in May, +2.1%
in June and +5.8% in July, showing favorable trends.
For your reference, it was +11% in August, the first
month of 3Q and a major peak sales season.
(The same-store growth rate will no longer be disclosed).
Maintaining strong performance, primarily in Amusement arcades and Karaoke
(The consolidation of Player One in North America was for 1 month only)
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
ness.
3.3
2.8
3.9
5.2
4.2
4.9
1Q 2Q 3Q 4Q
Adjusted EBITDA Forecast vs Actual
2Q results significantly exceeded the target, with adjusted EBITDA on pace for ¥23.8bn
Quarterly adjusted EBITDA trends
(unit: ¥bn)
Initial target
Initial target
FY2025/1
Target/Result
FY2026/1
Target/Result
1Q
FY2025/1
Target/Result FY2026/1
Target/Result
2Q
FY2025/1
Target/Result FY2026/1
Target
3Q
FY2025/1
Target/Result FY2026/1
Target
4Q
Note: In the first quarter of FY2026/1, we finalized the provisional accounting treatment related to business combinations. The figures for FY2025/1 reflect the details of the finalized provisional accounting treatment.
(Target is ¥22.4bn for FY2026/1, ¥27.0bn for FY2027/1)
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
9.3
-3.8
5.5
-0.7
4.8
-1.6
3.2
0
1
2
3
4
5
6
7
8
9
10
6.1
-2.0
4.1
-0.4
3.7
-0.5
3.2
0
1
2
3
4
5
6
7
8
9
10
Existing businesses 2Q YTD Forecast vs Actual
Not only EBITDA but also other key metrics beat the initial target
7
IFRS (scheduled for introduction in FY2027/1) JGAAP (current)
2QYTD of FY2026/12QYTD of FY2025/1
(¥bn)
Adjusted = Intrinsic performance of existing businesses Actual results after deducting
M&A-related expenses Reference figures after deducting
amortization of goodwill
Initial
target
Adjusted EBITDA Depreciation M&A-related
expenses
Adjusted EBITA Amortization of
goodwill Operating
income
EBITA
✓
Attained
✓
Attained ✓
Attained
✓
Attained
Profitability improvements in our existing businesses led to a higher budget achievement rate for EBITA (≒IFRS operating income) than for EBITDA
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Summary of Consolidated Balance Sheet
Maintain capital efficiency by utilizing debt, while maintaining financial soundness through a follow-on offering
8
1. If we mechanically reverse-calculate the figures to reach a Net Debt / EBITDA of 3.0x, under the hypothetical assumption that M&A continues using only interest-bearing debt at a 5.0x EBITDA multiple and that the target companies have zero
growth post transaction, GENDA would be a Net interest-bearing debt of ¥101.2bn and an EBITDA of ¥33.7bn, which will give us incremental +¥33.7bn in debt capacity and +¥6.7bn in EBITDA. Even at a 7.0x EBITDA multiple, there metrics remain
+¥23.6bn in det capacity until the Net Debt / EBITDA ratio reaches 3.0x. This is because M&A increases both the numerator and denominator simultaneously, meaning sufficient room remains even with +0.5x increase in the ratio.
2. To approach the discussion with financial institutions in view of the actual debt capacity as of today, the EBITDA used in the calculation of Net Debt / EBITDA is ¥27.0bn expected for the next fiscal year. Besides, to bring the numerator (Net Debt)
as close as possible to the current figure, we calculated it assuming all M&A deals that were disclosed or pending as of today have been completed.
(¥ in millions)
FY2025/1
End of Full-year
FY2026/1
End of 2Q Difference Remarks
Current assets 45,619 53,492 +7,872 Mainly increase in working capital driven by M&As
Of which, cash and deposits +
short-term securities 25,649 26,569 +919 Allocated funds from follow-on offering and additional borrowing for M&A, maintaining a
stable level
Fixed assets 69,344 126,529 +57,184 Mainly increase in goodwill and tangible asset by M&As.
Of which, goodwill 18,542 49,602 +31,060 Maintain c.¥10.0bn buffer against net assets after the follow-on offering. The temporary
-
PPA intangible assets, booked entirely as goodwill until PPA is
completed.
Total assets 114,964 180,046 +65,081 Increased because of the above reasons
Total liabilities 79,325 120,968 +41,643 Mainly increase in interest-bearing debt due to M&A financing
Of which, interest-bearing debt 52,480 87,324 +34,844 Still have sufficient debt capacity due to the recent follow-on offering. By switching to a
policy of making FCF positive, the repayment of existing borrowings has accelerated.
Net assets 35,638 59,077 +23,438 Mainly increase in equity capital.
35,427 58,966 +23,539 Increased by follow-on offering, stock-based M&A and accumulated income
Net Debt / EBITDA 1.7 x2.5 x+0.7 xStill have sufficient debt capacity due to the recent follow-on offering. By switching to a
policy of making FCF positive, the repayment of existing borrowings has accelerated.
Capital adequacy ratio 30.8 %32.8 %+1.9 %Maintaining capital efficiency by leverage even after the follow-on offering
Even at a Net Debt/EBITDA of 2.5x, we have c.¥30.0bn additional debt capacity before the ratio reaches 3.0x (for assumptions, refer to the notes). Reduce financing burden as a
change in our company-wide policy to make FCF of existing businesses positive (details will be provided later in the presentation) will accelerate the use of FCF for M&A and debt repayment.
2
1
1
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
38.1
46.1
55.6
111.7
157.0
2.7
3.5
4.3 4.6
8.0
5.6 6.2
8.1
14.2
22.0
2025/12024/12023/12022/1 (¥bn)
Revenue EBITDA Net income before
amortization of goodwill
(Net income under IFRS)
Next fiscal year (FY2027/1) Earnings Forecast
200.0
2026/1
E
(¥bn) (¥bn) 9
2027/1
E
27.0 10.4
2025/12024/12023/12022/1 2026/1
E2027/1
E2025/12024/12023/12022/1 2026/1
E2027/1
E
FY2027/1 Earnings Forecast
Revenue ¥200.0bn EBITDA ¥27.0bn Net income before amortization of goodwill (Net income under IFRS) ¥10.4bn
Earnings forecast assuming zero M&A going forward. We plan to continue our M&A activities for the remaining part of this fiscal year, growing our EBITDA of ¥27.0bn.
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
North American Business
10
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
As previously reported, NEN has secured a new store contract with Walmart for the first time in 7 years. Those 7 stores opened a
in August 2025. All of the 7 new store locations have been performing well, with sales running above target. Plan to open more in the future, as we have received
numerous requests from Walmart for new store openings.
North American Business: Progress of PMI initiatives
Open new stores at Walmart and Implement additional initiatives
11
Replace all existing machines
Already done at 946 locations
(as of July 31, 2025)
SWAP Add on
By leveraging a large space, add more game machines while
keeping the existing ones. Compared to SWAP, Add on
provides a faster ROI than SWAP because it increases sales
without replacing existing ones.
vs NEN
Sales per
machine
1.2x
Average
sales
growth ＋105%
Average
sales
growth ＋46%
Kiddleton inside Walmart Pueblo CO
A view of the new location in Walmart, with a larger area
than our traditional ones.
822 locations, calculated across the same number of months before and after the implementation of SWAP. These 822
locations are a subset of the 946 locations that underwent SWAP by July 31, 2025 and for which more than one month has passed since implementation. In case where a comparison over the same number of months was not possible, such as
due to new store openings, we calculated based on the average monthly revenue increase/decrease rate for the longest comparable period. The one for Player One was calculated based on nine of the 60 stores where Add on initiative was
implemented by July 31, 2025, and which have been in effect for over a month (Player One began consolidation on July 2, 2025).
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
TAKARA TOMY A.R.T.S ×GENDA New challenge in North America
Collaborate with TAKARA TOMY A.R.T.S to officially launch gacha machines in North America
12
Create a strong synergy by combining our North American business foundation acquired through M&A x
popular IP x the product development capabilities of TAKARA TOMY A.R.T.S.
new sales channel to maximize the value of IP and further grow the business.
【Business growth potential】
Expansion potential: Quickly and widely roll out gacha by using our 13,000 platforms in North America
Strategic rollout: Install additional gacha machines, primarily in vacant spaces within high-profit large-
scale grocery stores and movie theater chains
Expand the Add on initiative: Aim to maximize customer experience value by introducing gacha machines
as Add on to our existing mini claw machines
Utilize popular Japanese IP: Introduce new items every month by using popular IP commercialized by
TAKARA TOMY A.R.T.S, to continuously stimulate customer purchasing interest
CINEMARK 17 (Dallas)
th anniversary of
arriving in Japan in 2025.
-ARTS Company, Ltd.
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Expand the Successful model established in North America into the European market
Steady progress in Global expansion
13
?
?
?
?
?
?
?
??
?
?
?
?
?
Track Record in North America (1~5)
1. Entered US market in 2019 (Kiddleton), one year after foundation. 2. Expanded ~600 mini-locations, leveraging Japanese Kawaii prizes to gain insights of local market.
3. Acquisition of NEN added 10,000+ locations with highly successful SWAP. 4. Acquired Player One, Barberio, and VENUplus with strong conviction.
Add-on integrations produced results overwhelming SWAP. 5. Japanese strong IP prizes continuously introduced, further strengthening competitiveness.
Track Record in Europe (1~3)
1. Established GENDA Europe in 2024 to thoroughly replicate the North American business model.
2. Organically opened 3 mini-locations in London, achieving performance +20% to +100% above plan, validating strong affinity between Japanese Kawaii content and European customers.
e UK marking the true start of full-scale European expansion.
Mini-location
business
Popular Japanese IP co ntents ✕GENDA’s Global Ent ertainment Platform
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Expansion of North American Platform
The number of platforms in North America has expanded rapidly through 4 M&As
14
39amusement arcades
Appx.11,100mini-locations
110amusement arcades
Appx.1,300mini-locations
Appx.900mini-locations
Mini-location business of
13amusement arcades
82mini-locations
Note: Mini-location is a gaming corner mainly with 30 or fewer game machines installed. The number of locations of each company is as of July 31, 2025.
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
As a result of aggressively pursuing M&A since 2024, GENDA now has 14 subsidiaries in North America, including small entities.
pansion phase.
◼Streamline duplicated functions: Thoroughly streamline our operations by consolidating the functions of indirect departments, warehouses, logistics and offices.
◼Share know-how: Share and utilize the strengths and know-how of each company across the board under the new structure.
Reorganization of the North American Business
Strengthen the management structure by establishing “GENDA Americas”
15
Current structure in North America New structure in North America
(scheduled to be in 2026)
GENDA Americas
(Head office
functions)
U.S. operating
company
Canada operating
company
Kiddleton, Inc.
[Texas, USA]
Pixel Intermediate
Holding Corporation
[Delaware, USA]
Claw Holdings LLC
[Delaware, USA] Enterrium, LLC
[Illinois, USA]
Barberio Music
Company Inc.
[Texas, USA]
Pixel Intermediate,
LLC
[Delaware, USA]
NEN MCP Holdings,
LLC
[Delaware, USA]
National
Entertainment Network,
LLC [Delaware, USA]
Playdium
Acquisition Co.
[Delaware, USA]
Player One
Amusement Group
Inc. [Ontario, Canada]
Premier
Amusements, Inc.
[Texas, USA]
NEN Management,
LLC
[Delaware, USA]
National Service
Network, LLC
[Delaware, USA]
Sugarloaf Interactive
LLC
[Delaware, USA]
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Driven by the organic growth of our mini-location business launched by Kiddleton, we acquired NEN, Player One, Barberio and the amusement business of Venue+
through M&A, and now our mini--term plan, which is centered on M&A, is not
announced, we announce a mid-term plan for North America, where organic growth is remarkable (the figures do not include M&As yet to be announced).
Mid-term Business Plan for the North American Business
North American Business to earn ¥72.5bn in Revenue, ¥11.0bn in EBITDA, ¥4.0bn in Net income before amortization of goodwill
16
50.0
58.0
65.0
72.5
2027/1
E2028/1
E2029/1
E2030/1
E
North American business
Revenue
(¥bn)
6.5
8.5
10.0
11.0
2027/1
E2028/1
E2029/1
E2030/1
E
North American business
EBITDA
(¥bn)
2.0
3.0
3.5
4.0
2027/1
E2028/1
E2029/1
E2030/1
E
North American business
Net income before amortization of goodwill
(Net income under IFRS)
(¥bn)
All 5 companies in North America will start full-year contribution ($1=¥145)
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
17
PMI of Domestic businesses
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
The outcome of PMI Initiatives
Strong Performance, not only in Amusement arcades but also in M&A from what were formerly new domains
18
309
584
21/2-
22/1 24/2-
25/1
+89%
-3
41
21/10-
22/9 24/2-
25/1
+¥44mn
Turned profitable
-7
11
22/10-
23/9 24/2-
25/1
-29
457
22/10-
22/9 24/2-
25/1
3,291
3,584
23/2-
24/1 24/2-
25/1
1,127
970
22/10-
23/9 24/2-
25/1
99
119
22/10-
23/9 24/2-
25/1
675
677
23/2-
24/1 24/2-
25/1
92
282
22/10-
23/9 24/2-
25/1
129
133
23/5-
24/4 24/8-
25/7
145
245
23/6-
24/5 24/8-
25/7
641
790
23/2-
24/1 24/8-
25/7
437
536
23/10-
24/7 24/10-
25/7
71
276
22/12-
23/11 24/2-
25/1
+¥487mn
Turned profitable
+¥18mn
Turned profitable
+23%
+290%+4%
+69%
+9%
+20%
-14%
+20%
+0.2%
+205%
Entertainment Platform Entertainment
Contents
* Importantly, even this M&A
earns high returns with entry
valuation of EV/EBITDA1.8x
(¥ in millions)
Note： Showing amusement arcades which have completed a consolidation or merger as of FY2025/1, and companies and businesses which have recorded a contribution of ¥100mn or more to our consolidated EBITA (≒Operating income under IFRS).
For companies and businesses where one year or more has passed since consolidation or merger as of FY2025/1, showing the management accounting results from the audited full-year financial report for FY2025/1 (comparing 12 months prior to M&A vs 12 months of FY2025/1).
For companies and businesses where one year or more has not passed since consolidation or merger as of FY2025/1, showing the results up to the end of July 2025 in a simplified manner for the purpose of long-term comparison (X months prior to M&A vs X months till July 31, 2025).
To maintain a fair comparison, amusement arcades and karaoke are compared based on the earnings of existing stores (that is, excluding stores which closed after M&A and not including profit-increasing effects from the closure of unprofitable stores, etc.).
Other than amusement arcades and karaoke, the calculation is based on the company-wide EBITA, which is derived by adding back amortization of goodwill to company-wide operating income.
¹ Actually, while a simple comparison shows a +230% increase, the intrinsic performance of the business is +4% when comparing before and after, which is calculated by adding back one-off expenses (such as retirement payments) that occurred before M&A.
² Actually, while a simple comparison shows a +1,747% increase, the intrinsic performance of the business is +69% when comparing before and after, which is calculated by adding back one-off expenses (such as retirement payments) that occurred before M&A.
³ Actually, while a simple comparison shows a +124% increase, the intrinsic performance of the business is +20% when comparing before and after, which is calculated by adding back one-off expenses (such as consumables) that occurred before M&A.
1
Amusement Karaoke F&B Character MD
(+230%)
2
(+1,747%) 3
(+124%)
Pre-M&A Post-M&A
Pre-M&A
Pre-M&A Pre-M&A
Pre-M&A Pre-M&A
Pre-M&A
Pre-M&A
Pre-M&A
Pre-M&A
Pre-M&A
Pre-M&A
Post-M&A
Post-M&A
Post-M&A Post-M&A
Post-M&A Post-M&A
Post-M&A
Post-M&A
Post-M&A Post-M&A
Post-M&A
Post-M&A
Post-M&APre-M&A
Pre-M&A
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
A. Disciplined M&A at a fair valuation, ensuring ROI
even without factoring in synergies
B. Furthermore, the PMI initiatives for each
company are effective, resulting in improved
performance
strength
In particular, B serves as a testament to the various
synergies created among 37 group companies
an effect that is irreversibly increasing with our
corporate growth.
In fact, businesses like karaoke that were acquired
at a fair valuation are now consistently surpassing
their pre-M&A performance.
The recently announced photography studio
business, acquired with disciplined M&A at a fair
valuation, will also create synergies among our 37
group companies.
Countless synergies from a group of 37 Entertainment companies
“Flywheel Effect” = Disciplined M&A at a fair valuation x Growth by synergies through PMI
19
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Countless synergies from a group of 37 Entertainment companies
Formulate and execute specific synergy initiatives across GENDA
20
Examples of Synergy initiatives
Purchasing of food items
Manufacturing and sales of
IP collaboration products
Publicity for distributed films
Design of collaborative
products
VSING
Introduction of multiplexes
Product introduction in
the European market
Agency sales to AM
operators Development of
collaborative products Support for company
establishment and visa acquisition
Cooperation in sales
promotion
Sales expansion of prize
products Design of packaging etc.
Metaverse project
consultation Joint purchasing of prizes
Worker dispatch
Worker dispatch
Worker dispatch
Training of overseas
management personnel
Training of overseas
management personnel
Introduction of a corporate
membership system of JOYFIT
Introduction of a corporate
membership system of JOYFIT
Provision of promotional
tools and design
Provision of promotional
tools and design
Worker dispatch
Provision of promotional
tools and design
Deployment of mini-locations
Deployment of hybrid-format stores
Online claw machine advisory
Mutual customer referral
Procurement and sales of
GiGO exclusive prizes
Sale of raw materials for in-
store beverages
Consultation for pop-up
stores
Provision of foreign currency
exchange machine installation sites
Sale of prizes
Cooperation in new
store planning
Sales of Kleiner
Sale of in-store retail
products
Reduction of foreign currency
procurement costs through foreign
currency exchange
Referral of prize suppliers
Design of collaborative
products
Market research
Preparation of sales
documents
Merchandise production
Expansion of sales
channels for prizes
Use of showrooms
Purchasing, sales
Provision of market
information
Horizontal deployment of
operational methods
Provision of prizes for
overseas
Reduction of peripheral
equipment purchasing costs
Improvement of GiGO brand
awareness in Europe
Cooperation in new
store opening
Cooperation in store design
CM broadcast on GiGO
Vision
Reduction of foreign currency
procurement costs through foreign
currency exchange
Corporate sales collaboration Corporate sales collaboration
IP collaboration proposal
Purchase of prizes
Sale of in-store retail
products
Sale of prizes
Sales of cinema ad
Deployment of mini-
locations
Provision of prizes
Sales to installation
locations
Cooperation in anime
EXPO
Purchase of prizes
Collaboration for expanding
into Taiwan
Purchasing and sales of
prizes
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
--GiGO Naha Kokusai-
achieved 3.7x the sales of the former Karaoke BanBan store for the same month last year and became profitable. Beyond this case, we are also actively looking into
other properties that can be converted to GiGO, which will further optimize our business portfolio. Besides, we also plan to open more combined GiGO and Karaoke
BanBan locations (presented on - disclosed on March 12, 2025).
fitability.
The latest example of Synergy: Maximizing value by converting existing store formats
Conversion from “Karaoke BanBan” to “GiGO” significantly improved both sales and earnings
21
GO Naha Kokusai-
Karaoke BanBan
August 2024 GiGO
August 2025
Sales comparison for Naha
Kokusai-dori Store
3.7 x
-
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
25, right after joining GENDA.
This is the result of synergy created by combining the business foundation acquired through M&A with the strong execution of GEN
-wide cash management). Maximize the potential of M&A targets to achieve sustainable growth.
The latest example of Synergy: Foreign Currency Exchange Machine Business
Optimizing capital efficiency has progressed significantly with CMS×AI, sales increase of +47% YoY
22
Note: CMS (Cash Management System) is a solution that aims to improve financial efficiency and streamline operations for a corpo
management and procurement, and its cash management functions. BizDev stands for Business Development, and it refers to either the act of business development or the person responsible for it. MEO stands for Map Engine Optimization, and
.
The YoY sales is a comparison of three months before M&A conducted by GENDA (May to July 2024) with three months after M&A by GENDA (May to July 2025).
Before After
Select the
machines that
need to be
replenished
Manually select based
on the balance inside
the machines AI comprehensively judges
and decides
Which machines to
replenish
Which areas to prioritize
What the most efficient
route is,
based on the balance and
usage frequency, etc.
Assign a
designated
vehicle
Decide based on
discussions within the
team
Route planning Leave it to each person
in charge
Decide the
replenishment
amount
Manually decide the
necessary amount
based on the previous
amount
Predict the optimal amount
by taking into account
recent payout
denominations and work
shifts
Introduction of CMS: Disclosed in 1Q
monthly based on projected usage, return surplus
capital to GENDA for use by other group
companies
Internal fund transfer: Disclosed in 1Q
Successfully reduced the currency exchange costs
that would have been paid to banks by converting
the foreign currency collected by SMX into JPY
within GENDA
Optimize the efficiency of cash collection
& replenishment with AI: Right chart
By using AI to calculate the most optimal
replenishment routes, increased the number of
replenishment cases per person and reduced labor
costs
Improvement of MEO
Increase user touchpoints to provide more
opportunities for reviews
Optimize replenishment routes with the power of AI +20% increase in replenishment cases
per person
Minimize the cash stored inside the
machines
Understand the current situation in
real time and optimize our response to
any issues that may arise
Multiple vehicles travel along a set route
to collect and replenish cash.
①
②
③
④
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Company-wide Selection and Concentration of CAPEX
23
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
24
Change in Capital Allocation Strategy
Selection and Concentration of Organic growth investments
Going forward, use positive FCF to fund M&A and reduce our need for external financing
Up until this quarter, we have executed significant capital investments in various areas, not only for inorganic (M&A) but also for organic (existing business) growth.
Following the verification of results across existing business growth investments, the differences in the IRR for organic growth investments have become clear.
Under these circumstances, M&A activity has reached an all-h flow to M&A funding and reduce
the burden of financing M&A. As a result, we will continue to strategically invest in the following initiatives, which have high quantitative IRR and NPV, as well as a
qualitative path to success. All other investments will be carefully selected.
IRR NPV Remark
M&A of Entertainment
companies ◎ ◎◎◎
A valuable investment opportunity that allows us to maximize NPV while maintaining a high
IRR. This is a pillar of our growth strategy, and we will continue to implement it as our top
priority while maintaining investment discipline.
Amusement arcades
in the U.S.
SWAP
◎◎ △
High same-store growth driven by the full-scale launch of Japanese anime IP in the U.S.
We will execute this at the fastest possible pace because NPV per store is small while this is
the investment with the highest IRR.
Add on
◎◎◎ 〇
High same-store growth driven by the full-scale launch of Japanese anime IP in the U.S.
Since Add on is characterized by having an even higher IRR and NPV than SWAP, it is
prioritized for implementation.
New openings of
amusement arcades
in Japan
◎ ◎
winning strategy among all of our past investments.
Growth capex of
other existing businesses 〇~△ 〇~△
Growth investments in other existing businesses will be carefully selected through a strategy of
focus and selection (maintenance investments will continue to sustain stable growth).
To maximize capital efficiency, we will use a focus-and-selection strategy to curb growth
investments, making FCF positive to fund M&A.
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
25
Change in Capital Allocation Strategy
To always seek the best use of funds, share repurchase has now become a serious alternative
To date (figures as of the end of 2Q FY2025/1) Going forward (figures as of the end of 2Q FY2026/1)
Source of
funds
Annual cash inflow ≒EBITDA ◼¥18.5bn per year ◼¥27.0bn per year
Financing ◼M&As are effectively fully dependent on external financing
◼Existing businesses are also financed
◼Bank loans, issuance of new shares
◼Reduce the burden of external financing by allocating surplus FCF to M&A
◼Eliminate external financing for existing businesses (limiting within the range of EBITDA)
◼In addition to the left, corporate bond facility of ¥60.0bn and a CP facility of ¥10.0bn
Use of funds
Organic
(existing
businesses)
Maintenance capex + tax ◼Critical for business continuity ◼Same as on the left
Growth capex ◼Make FCF negative by investing in existing businesses
beyond our EBITDA
◼As a result, even investments in existing businesses are
financed externally
◼Based on our past investment performance, strictly assess new projects through a
strategy of selection and concentration
◼Turn FCF positive by limiting growth capex within the rage of our EBITDA of existing
businesses
Inorganic
(existing + new
businesses)
M&A ◼With negative FCF, all M&A is financed externally ◼Reduce the need for external financing of continuous M&As by allocating positive FCF
◼In order to reduce the burden of external financing even in case of share repurchase,
utilize purchased shares (but only on an appropriate timing) to M&A considerations
Shareholder
return Share repurchase ◼GENDA EV / EBITDA 11.6x、P/E multiple 28.6x
M&As were more attractive
◼GENDA EV / EBITDA 7.1x、P/E multiple 12.7x
If our past annual growth rates continue (EBITDA+60% / Cash EPS+20%),
our valuation would be at a level of EV / EBITDA 4.4x, and P/E multiple 10.6x next year.
This would make share repurchase a serious alternative compared to M&A
◼To prevent increasing the financing burden for M&As even in case of share repurchase,
GENDA plans to use acquired shares as M&A consideration (but on an appropriate timing),
which could both reduce financial burden and increase M&A returns
Dividend ◼Only if no investment that exceeds our cost of equity ◼Expected to be able to continue making investments that exceed our cost of equity
(Ref.) Shareholder benefit ◼Shareholder benefit yield 1.5% ◼Shareholder benefit yield 5.6%
-consolidated distributable amount is ¥1.2bn increase the distributable amount within this year by receiving dividends from the group companies
(Ref. the simple aggregate of the distributable amounts for all group companies is ¥32.2bn)
&A deal. Last fiscal year, the figures as of the end of 2Q were based on a forecast of ¥18.5bn in EBITDA and
¥7.0bn in net income before amortization of goodwill (≒net income under IFRS). The figures as of the end of 2Q of this fiscal year are based on a forecast of ¥27.0bn in EBITDA and ¥10.4bn in net income before amortization of goodwill (≒net
income under IFRS). The share prices are based on the closing price on September 9, 2024 and the one on September 11, 2025.
utable amount, we plan to conduct a standalone extraordinary financial closing in 3Q, bypassing the normal
requirement for an audited full-year closing. While the maximum distributable amount of c.¥20.0bn is the simple aggregate of eac
through capital reduction, etc., but the final figure will be determined while carefully assessing market trends), our intention is to set an appropriate distributable amount that will not hinder continuous M&A.
11
1 1
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Secured c.¥27.1bn in on-hand liquidity against c.¥15.6bn in interest-bearing debt that is effectively due for
repayment within one year. Maintaining a high effective liquidity ratio of c.170% through both our M&A
and financial discipline, while continuously advancing with M&A.
Breakdown of Current portion of interest-bearing debt c.¥15.6bn;
＋Short-term interest-bearing debt ¥45.8bn
－Bridge loan for M&A (to refinance into long-term debt within 6) ¥20.0bn
－Amount utilized from the commitment line for working capital
(a time lag between cash inflows/outflows from existing businesses) ¥10.2bn
Breakdown of On-hand liquidity c.¥27.1bn;
＋Cash and deposits ¥26.6bn
＋Short-term securities ¥0.5bn
In addition, security deposit of ¥12.2bn still has ample untapped liquidity.
By adding liquidity as a key financial metric for bond investors and maintaining a high
level, we aim to achieve both “maximum debt capacity” and “capital efficiency.”
“Liquidity” as a Financial Discipline
Obtained a BBB+ rating and issued our initial bond.
Disclosing our liquidity to serve as a key indicator for bond investors
26
Note: Liquidity is defined by the following formula: ①cash and cash equivalents + short-term securities - ②short-term interest-bearing debt (excluding bridge loan for M&A purposes) + ③overdraft limit + (unused) commitment line of credit.
Amount utilized from the
commitment line for
working capital
¥10.2bn
Current portion of
interest-bearing debt
¥15.6bn
Short-term securities
¥0.5bn
Bridge loan for M&A of
Player One in North America
¥20.0bn
Cash and deposits
¥26.6bn
Security deposit
¥12.2bn
Scheduled to
refinance into long-
term debt within the
next 6 months
Short-term interest-bearing debt
¥45.8bn in total
Primarily due to a
time lag between
cash inflows and
outflows from
existing businesses
Still some
untapped
liquidity
170%
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
Appendix
27
FY2026/1 2Q Earnings Presentation
GENDA IR
(Reference) Repost “Frequently Asked Questions and Answers (May 2024)” released on May 23, 2024
Q1. Do you have any plans about shareholder return measures, such as dividends or shareholder benefits?
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
The Definition of Growth
Growth is growth in "Cash EPS," and we use "EBITDA," which is a common index to show cash
flow simply, as the KPI.
Reproducibility of GENDA's growth
(i) Appropriate invested capital: M&A at appropriate valuations
(ii) Maximize investment recovery: Growth of each company's cash flow through synergy effects
(iii) Leverage effect: Raising debt by taking advantage of low interest rates
three factors. We will explain each of them in detail below.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31, 2024
Q2. Please explain the GENDA’s definition of growth and its reproducibility.
(i) Appropriate invested capital: M&A at appropriate valuations
There are various approaches to stock price calculation, but one of theoretical approaches is the
DCF method, which calculates the "equity value per share," or the theoretical value of the stock price,
by equity value calculated by deducting net interest bearing liability from (current value of) the
total amount of future cash flow by the number of stock.
Of these, the explanatory variable that has the greatest impact on equity value is "the total amount
of future cash flows. There are two main ways of thinking about future cash flows. Specifically, one is
to grow future cash flows at the expense of immediate cash flows by making additional investments,
and the other is to maximize immediate cash flows by restraining additional investments and return
them to shareholders so that future cash flows will be stable.
As in the former case, when additional investment is made at the expense of immediate cash flow, it
is meaningless unless the investment recovery by generating cash flow in the future equal to or greater
than the invested capital (invested capital < investment recovery). Furthermore, since it must be equal
to or greater even after it adds the cost of capital which a listed company is required, the absolute
amount must be significantly greater than the invested capital (invested capital < investment recovery).
There are two main means of increasing future cash flow through additional investment: organic
growth (opening new stores) and inorganic growth (M&A). Although these two seem to be different,
they theoretically have the same economic effect in terms of "economic activity that recovers
(to be continued to next page)
FY2026/1 2Q Earnings Presentation
GENDA IR
Therefore, we measure the effect by regarding investing one unit of capital for organic growth
(opening new stores, etc.) and investing one unit of capital for inorganic growth (M&A) as the same
≒a profitability indicator
that takes into account the speed of return on invested capital). In order to accurately determine the
return to shareholders, we also use Equity IRR, which takes into account the leverage effect of
utilization of debt.
However, M&A, which is especially inorganic growth, has the advantage of pursuing the "scale" of
the investment. In other words, when considering investment, not only IRR but also "size" that is the
absolute amount of increased cash flow (= the size of NPV) is important.
Because of the big "scale" of a single unit of investment, M&A can have the same effect of
increasing equity value as opening [100] new amusement arcades or karaoke stores in one year, for
example. We believe that you can understand how significant meanings M&A has, considering that it is
impossible to open [100] new stores in one year in reality.
Furthermore, in most cases, inorganic growth through our M&A activities results in not only a
revenue amount (NPV) but also a rate of return (IRR) that is higher than organic growth. However, we
are currently able to achieve both investments in organic growth (new store openings, etc.) and
inorganic growth (M&A) because the absolute IRR values for both are well above the expected rate of
return for a listed company, and we are able to raise funds for each.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31, 2024
Q2. Please explain the GENDA’s definition of growth and its reproducibility. (continued)
We will continue to invest the funds entrusted to us by our shareholders, both organic and inorganic,
in investment projects that we expect will exceed our expected rate of return as a listed company, after
making appropriate leverage on the funds. This is because reinvestment of funds is more conducive to
maximizing share value than returning them to shareholders as long as it exceeds the expected rate of
return.
Therefore, even if the cash flow of the target company does not grow after the M&A, it is possible to
increase Cash EPS simply by conducting M&A at an appropriate valuation. The reproducibility of M&A
at an appropriate valuation itself has been well documented in the CGS report ("Equity Story 1:
GENDA's M&A strategy shows strong potential for success (P3)").
(to be continued to next page)
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
(ii) Maximize investment recovery: Growth in cash flow of each company through synergy effects
Increased cash flow of the target company after M&A will further accelerate the investment recovery,
increase IRR and NPV, and ultimately enable GENDA to achieve the growth that GENDA should aim
for. This is the synergy effect, which is the best part of a roll-up M&A.
In addition to the aforementioned (1), it has already been announced that the cash flow (EBITDA) of
each target company after M&A has grown and is highly reproducible. By combining (1) and (2), we
have shown the "flywheel effect," which is a cycle in which the initial capital investment (M&A) is
appropriate and the subsequent growth in cash flow of the target company further maximizes the
investment recovery.
Specifically, in the "M&A Progress and FY2025/1 Q1 Outlook" released on April 23, we disclosed
that it had already established a PMI pattern in amusement arcade M&A, and had successfully
increased EBITDA (YoY +20% to + 2,970%) on all projects for Takarajima, Sugai Dinos, Avice, Amuzy,
YK Corporation and PLABI.
In addition to amusement arcades, Fukuya HD, which designs prizes for prize games, Ares
Company, which runs the wholesale of prizes, and Shin Corporation, which runs karaoke business,
also increased their EBITDA (YoY +142%, +305% and +85%, respectively), as shown in the
"FY2025/1 Q1 Earnings Presentation" released on June 11, showing that it is possible to improve the
business performance by generating synergies within the group through the cross-selling of countless
products in the entertainment industry by utilizing our Entertainment Ecosystem.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31, 2024
Q2. Please explain the GENDA’s definition of growth and its reproducibility. (continued)
(iii) Leverage effect: Debt financing by taking advantage of low interest rates
The flywheel effect of (1) and (2) up to this point alone is sufficient to increase growth in equity value.
However, we are thoroughly committed to maximizing the growth of "Cash EPS," which is the
Company's goal, through the use of debt with low interest rates.
We proactively approach financial institutions and initiate borrowing transactions in
and currently we actually borrow from a total of 52 banks and leasing companies. This enables us to
raise funds promptly in case of contingency (M&A). We are taking appropriate steps to ensure that
financing will not become a bottleneck in our M&A activities, while we also have an option of issuing
corporate bonds after the recent capital increase through a public offering.
As described above, we believe that our goal of "growth" can be achieved with reproducibility
through M&A at appropriate valuations ×growth of each company's cash flow by synergy effects after
M&A ×debt financing that takes advantage of low interest rates.
FY2026/1 2Q Earnings Presentation
GENDA IR
We disclose adjusted indicators as intrinsic performance of existing businesses cannot be gauged by GAAP measures due to one-off M&A-related expenses
When M&A activities progress, the discrepancy between JGAAP disclosures and Actual cash flow widens
Results before amortization of goodwill (≒IFRS) x “Adjusted” excl. one-off M&A-related expenses
(For reference) As M&A activities progress, the increase in goodwill
reported performance and actual cash flow.
Amortization of goodwill is normally expensed without any future cash
outflow, in contrast to depreciation expenses, which reflect the need for
actual future investment.
heavily weighted towards the latter half of the year, and since
amortization of goodwill is a consistent monthly expense, the first half,
with its weaker seasonal index, experiences greater profit pressure,
which then seems to ease in the second half.
4
2
1
3
to +34% (compared to +9% YoY in 1Q), confirming margin
improvement in existing businesses.
2Q YTD run rate greater than 1Q YTD.
34
Profits after amortization of goodwill = figures for reference
1
Profits before amortization of goodwill = Our KPI
2
© GENDA Inc.
FY2025/1 FY2026/1
(¥
in millions)
1Q 2Q 3Q 4Q 4Q
YTD 1Q 2Q 3Q 4Q
4Q
YTD
(E)
YoY
Revenue
24,685
24,846
28,096
34,149
111,777
34,269
39,704
-
-
157,000
+40.4%
Gross profit
5,286
5,075
6,506
8,531
25,400
8,078
9,243
-
-
-
-
Margin (%)
21.4%20.4%23.1%25.0%22.7%23.6%
23.3%
-
-
-
-
EBITDA
3,301
2,817
3,960
5,284
15,364
4,268
4,984
-
-
22,000
+43.1%
Margin (%)
13.4%11.3%14.1%15.5%13.8%12.5%
12.6%
-
-
14.0%
-
EBITA
(≒
Operating income under IFRS)
2,317
1,798
2,826
3,487
10,429
2,518
2,977
-
-
-
-
Margin (%)
9.4%7.2%10.1%10.2%9.3%7.3%
7.5%
-
-
-
-
Net income before amortization of
goodwill
(≒
Ne income under IFRS)
1,536
935
1,842
1,575
5,890
1,333
1,319
-
-
8,000
+35.8%
Margin (%)
6.2%3.8%6.6%4.6%5.3%3.9%
3.3%
-
-
5.1%
-
Quarterly results
33
Intrinsic Performance excluding M&A-related expenses
Note that GENDA has different businesses mix on a fiscal year, or even quarterly basis
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
FY2025/1 FY2026/1
(¥
in millions)
1Q 2Q 3Q 4Q 4Q
YTD 1Q 2Q 3Q 4Q
4Q
YTD
(E)
YoY
Revenue
24,685
24,846
28,096
34,149
111,777
34,269
39,704
-
-
157,000
+40.4%
Gross profit
5,286
5,075
6,506
8,531
25,400
8,078
9,243
-
-
-
-
Margin (%)
21.4%20.4%23.1%25.0%22.7%23.6%
23.3%
-
-
-
-
EBITDA
3,277
2,423
3,717
4,788
14,207
3,900
4,684
-
-
22,000
+54.8%
Margin (%)
13.2%9.7%13.2%14.0%12.7%11.4%
11.8%
-
-
14.0%
-
EBITA
(≒
Operating income under IFRS)
2,292
1,404
2,583
2,992
9,272
2,150
2,677
-
-
-
-
Margin (%)
9.3%5.7%9.2%8.8%8.3%6.3%
6.7%
-
-
-
-
Net income before amortization of
goodwill
(≒
Net income under IFRS)
1,456
461
1,596
1,096
4,611
983
941
-
-
8,000
+73.4%
Margin (%)
5.9%1.8%5.7%3.2%4.1%2.9%
2.4%
-
-
5.1%
-
(Reference) Quarterly results
34
GAAP actuals including M&A-related expenses
Data from the previous page, with M&A-related expenses deducted for each quarter
Figures after deducting one-off M&A-related expenses
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
13.1
4.2
4.8
3.3
82.2
24.7
14.0
30.6
14.7
¥22.0bn
¥157.0bn
Amusement arcade
related business:
c.70%
GENDA’s Business Portfolio (FY2026/1 Initial Target)
Amusement Centric + Peripheral Areas
We continue to focus on M&As on platform area while entering into the contents area in the mid-to-long term
Revenue
Note: The graphs for Revenue and EBITDA do not include "Consolidation Adjustments," which is why their total values (¥166.2bn an
Consolidation Adjustment at -¥9.4bn, primarily due to internal transactions, and the EBITDA Consolidation Adjustment at -¥4.9bn, -¥4.5bn) and M&A-related expenses (-¥0.4bn)
that have already been announced and are confirmed to be recorded in FY2026/1; for reference, the actual consolidation adjustments for FY2025/1 were -¥7.8bn for revenue and -¥3.6bn for EBITDA.
Others
Karaoke (Karaoke BanBan, ONTSU)
Prize-related (FUKUYA and Ares)
Overseas Amusement (mainly North America & China)
Domestic Amusement (GiGO etc.)
49%
8%
18%
9%
49%
16%
5%
18%
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
ima
the mid-to-long term.
The Big Picture of the Current Entertainment Industry
IP Contents × Platform
36
IP C ONT E NTS FANSPL AT F ORM
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
Based on a foundation of continuous growth brought about by the steady expansion of our domestic business and aggressive overseas business
rtainment platform and
entertainment content areas. In this way, we believe that we will be able to overcome the volatility of the ever-changing entertainment business by building a
solid business portfolio.
Our growth strategy = “M&A in the Entertainment industry”
Completion of the Entertainment Ecosystem
37
Note: Image of our growth strategy envisioned by GENDA.
Contents &
Promotion Karaoke
Character
MD
F&B
Entertainment Contents Entertainment Platform
C
o
n
t
i
n
u
o
u
s
T
r
a
n
s
f
o
r
m
a
t
i
o
n
a
l
G
r
o
w
t
h
t
h
r
o
u
g
h
M
&
A
C
o
n
t
i
n
u
o
u
s
G
r
o
w
t
h
i
n
J
a
p
a
n
C
o
n
t
i
n
u
o
u
s
G
r
o
w
t
h
O
v
e
r
s
e
a
s
E
n
t
e
r
t
a
i
n
m
e
n
t
E
c
o
s
y
s
t
e
m
© GENDA Inc.
GENDA IR
53 M&A transactions since our establishment
M&A and capital transactions track record
June 2018 July 2019
October 2023
September 2023 October 2023September 2023 October 2023
April 2021 October 2021
November 2023 December 2023 January 2024
November 2023
December 2020 January 2022 January 2022
February 2024 June 2024 June 2024 November 2024
February 2024
December 2021 October 2022 October 2022
June 2022
November 2023
117 mini-
locations
December 2023
AM 1 store
(China)
October 2024
AM
1 store
Karaoke
1 store
February 2025
September 2024 December 2024
Karaoke
2 stores
March 2025 March 2025 March 2025 April 2025 June 2025
AM
1 store
June 2025
Karaoke
1 store
May 2025
April 2025
July 2024
June 2025 July 2025
Appx. 1,100
mini-locations
in the US
July 2025 August 2025
Karaoke
1 store
2 3 4 56 7 8 10 11 12
13 14 15 16 18 19 20 21 22 23 24
26 27 28 29 30 31 32 34 35 36
37 38 40
39 42 43 44 45 46 47 48
52 53
November 2025
(planned)
October 2025
(planned)
38
Entertainment Contents Entertainment Platform
50
Karaoke
1 store
July 2025
51
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
GENDA Group Overview
GENDA is a pure holding company of amusement centric entertainment companies
39
Entertainment Platform Entertainment Contents
GENDA Inc.
Amusement F&B
Character MD
Karaoke Tourism
GENDA Games Inc.
Online claw machines
100% 78.05% 100%
100%
100%
Kiddleton,
Inc.
(US)
GiGO
Taiwan Inc.
(Taiwan)
GiGO
VIETNAM
Co., Ltd.
(Vietnam)
100%
100%
GENDA GiGO Entertainment Inc.
Operation of AM arcades
AM
1 store
ONTSU
Co., Ltd.
Distribution of
karaoke
equipment
100%100%
Shin
Corporation
Co., Ltd.
Operation of karaoke.
100%
Fukuya Holdings
Co., Ltd.
100%
100%
100%
(Hong Kong)
100%
(Taiwan)
FUKUYA
USA INC.
(US)
100%
100%
100%
SMART
EXCHANGE Inc.
NEW
Five Colors
Inc.
(China)
93%
(UK)
GENDA Europe
Ltd.
100%
LEMONADE
Lemonica UK Limited
100%
100%
Appx. 1,100
mini-locations
100%
100%
Pixel Intermediate
Holding Corporation (US)
(US)
ENTERRIUM (US)
Barberio (US)
100%
CARATT, Inc.
(UK)
Indigo Newco
Limited
100%
Pure Holding Company
JAPAN ABROAD
Foreign currency
exchang e
machine business
LEMONADE
Lemonica Inc.
Sweet Pixels
inc.
Import and
wholesale of
alcoholic
beverages
Production and
sales of
Lemonade
Planning, production
and sales of HillValley
brand popcorn and
sweets
Ares Company
Limited
GAGA
Corporation
Planning,
manufacturing and
sales of prizes
Planning and sales of
prizes for AM arcades Film
distribution VR contents , virtual
attractions
Fukuya Co., Ltd. Tokyo Character
Makers Co., Ltd. D-eight CO., LTD.
FUKUYA
TAIWAN
LIMITED
Sandai Co., Ltd.
Note: Organization chart as of September 12, 2025. AM arcades in the chart refer to amusement arcades. The chart is intended to present mainly our consolidated subsidiaries. CARATT is scheduled to join in October 2025 and Indigo Newco in November 2025.
Operation of
photography studios
100%
eiga.com, Inc.
Film
information
website
100%
100%
Asia Pte. Ltd.
(Singapore)
© GENDA Inc.
FY2026/1 2Q Earnings Presentation
GENDA IR
The Big Picture of the Current Entertainment Industry
40
VisionAspiration
More fun for your days To be the World’s No.1
Entertainment Company in 2040
Speed is King, GRIT and GRIT, Enjoy our Journey
With these three values, we take on new challenges and
FY2026/1 2Q Earnings Presentation
GENDA IR
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document to is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content o the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use of
this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the reason
thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgement of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
Disclaimer
41
© GENDA Inc.
本日公表のM&Aについて
42
Thank you
GENDA IR © GENDA Inc.
M&A announced today
2025.8.27
GENDA IR
M&A announced today
© GENDA Inc.
M&A announced today
GENDA IR
53 M&A transactions since our establishment
M&A and capital transactions track record
June 2018
October 2023
September 2023
September 2023 September 2023 October 2023
April 2021
November 2023 December 2023 December 2023
November 2023
December 2020 January 2022
February 2024 May 2024 June 2024 November 2024
February 2024
December 2021 October 2022
August 2024
June 2022
117 mini-
locations
December 2023
AM 1 store
(China)
AM
1 store
Karaoke
1 store
February 2025
December 2024
Karaoke
2 stores
March 2025 March 2025 March 2025 April 2025
AM
1 store
June 2025
Karaoke
1 store
April 2025 May 2025
July 2024
July 2025
Appx. 1,100
mini-locations
in the US
July 2025
Karaoke
1 store
124568910 12
13 14 16 17 18 20 21 22 24
25 26 28 29 30 32 33 34 36
37 38
39 41 42 44 45 46 48
49 52
November 2025
(planned)
October 2025
(planned)
2
NEW
NEW
Entertainment Contents Entertainment Platform
50
Karaoke
1 store
July 2025
102 AM stores
in the UK
51
© GENDA Inc.
M&A announced today
GENDA Group Overview
GENDA is a pure holding company of amusement centric entertainment companies
3
Entertainment Contents
GENDA Inc.
Amusement Contents & Promotion
Character MD
Karaoke
GENDA Games Inc.
Online claw machines
100% 100%100%
100%
Kiddleton,
Inc.
(US)
GiGO
Taiwan Inc.
100%
GiGO
VIETNAM
Co., Ltd.
(Vietnam)
100%
GENDA GiGO Entertainment Inc.
Operation of AM arcades
-
locations
ONTSU
Co., Ltd.
Distribution of
karaoke
equipment
100%
Shin Corporation Co., Ltd.
Operation of karaoke.
100%100%
Fukuya Holdings
Co., Ltd.
100%
100%
(Hong Kong)
(Taiwan)
100%
FUKUYA
USA INC.
100%
100%
100%
NEW
100%
Five Colors
Inc.
93%
(UK)
GENDA Europe
Ltd.
LEMONADE
Lemonica UK Limited
(UK)
100%
Appx. 1,100
mini-locations
100%
100%
(US)
National
Entertainment
Network, LLC
(US)
(US)
Barberio (US)
CARATT, Inc.
(UK)
100%
NEW
Pure Holding Company
ABROAD
Karaoke
2stores Foreign currency
exchang e
machine business
LEMONADE
Lemonica Inc.
Sweet Pixels
inc.
Import and
wholesale of
alcoholic
beverages
Planning, production
and sales of HillValley
brand popcorn and
sweets
Ares Company
Limited
GAGA
Corporation
Planning,
manufacturing and
sales of prizes
Planning and sales of
prizes for AM arcades Film
distribution
Fukuya Co., Ltd. Tokyo Character
Makers Co., Ltd. D-eight CO., LTD.
FUKUYA
TAIWAN
LIMITED
Sandai Co., Ltd.
Note: Organization chart as of August 27, 2025. AM arcades in the chart refer to amusement arcades. The chart is intended to present mainly our consolidated subsidiaries. CARATT is scheduled to join in October 2025 and Indigo Newco in November 2025.
100%
eiga.com, Inc.
Film
information
website
100%
© GENDA Inc.
M&A announced today
01. Amusement arcade M&A in the UK
4
M&A announced today
GENDA IR
Starting Full-scale entry into UK amusement arcade (AM) operations
Acquire AM business from Inspired Gaming (UK), a gateway to the European market
5
¹ Since Adjusted EBITDA is calculated by fully deducting corporate SG&A expenses from the target business EBITDA (i.e., Adjusted EBITDA < Target business EBITDA), the EV/EBITDA based on the target business EBITDA would be lower than 4.4x.
Note: In this project, we acquire shares of Indigo Newco Limited, which is a subsidiary of Inspired Gaming (UK) and acquires the AM operation business run by -
installed.
UK Indoor Amusement Center Market Size & Outlook-VR games, indoor go-karts, indoor adventure
entertainment & education area and trampoline parks.
Major locations
In Holiday Park business, the strength lies in long-term
relationships with major operators across the UK
96%
Project overview
Adjusted EV / EBITDA 4.4x¹
Plan to cover the entire acquisition cost by loans by
utilizing the expanded debt capacity from the
international offering in May 2025.
EPS unilaterally increases.
Inspired Gaming (UK) operates an entertainment business in the UK, with about 80% of its sales generated from its AM business wi
-site entertainment and recreational facilities.
As sales are concentrated during the UK holiday season (April to October), expected to help balance the seasonal sales fluctuations of our existing business, which are weighted
toward the latter half of the fiscal year (August to January).
The UK's indoor AM market was c.$2.9bn (appx. ¥440.0bn) in 2024 and is expected to grow to c.$5.0bn (appx. ¥750.0bn) by 2030.
be higher than that of Japan.
We aim to expand our business not only in North America but also in the growing UK market by leveraging Japanese IP.
①Holiday Park
②Locations within a service area
③FEC (Family Entertainment Center)
1
78%
18%
2%
4% 1
3
2
・
①～③
Outline of Business (as of Aug 2025)
Appx. 100 amusement arcades
Appx. 125 mini-locations
© GENDA Inc.
M&A announced today
Gaining a platform with nationwide coverage in the UK
3 mini-locations in London Acquire appx.100 AM arcades + appx.125 mini-locations in the UK!
6
3 mini-locations
NEW
appx. 100 amusement arcades
appx. 125 mini-locations
© GENDA Inc.
GENDA IR
PMI Initiatives: Plan to focus on “Add on” for higher investment efficiency
Numerous “Add on” opportunities with large store spaces and high potential for adding new machines
7
Note: The average sales growth rate for NEN was calculated by selecting 461 locations where replacements were completed by April 30, 2025 and for which sales data was available both before and after the replacement. We then compared
four months of sales data from both periods ensuring the number of comparison months was the same. The one for Player One was calculated based on nine of the 60 stores where Add on initiative was implemented and which have been in
effect for over a month.
Actual Add on
implemented at
s all existing machines.
The newly acquired business has plenty of room for Add on, as it includes appx.100 large-scale amusement arcades.
In the U.S., Add on is progressing smoothly, as Player One's monthly revenue per mini claw machine has recorded up to 1.2x that of NEN.
Also, Player One strategically placed new mini claw machines at the front of the store which boosted the sales and attracted new customers. Despite the small size of Add on
mini claw machines compared to the overall store, same store sales surged by +46% YoY, underscoring our confidence that this initiative has made a significant contribution.
SWAP Add on
Leveraging the large space, add more game machines without
removing the existing ones and increase existing sales without
replacing them unlike SWAP. Even if the sales per machine is
the same as SWAP, offers a faster recoupment.
NEW
Amusement arcade operation
business of
＋110%＋46
Average
sales
growth
vs NEN
Sales per
Machine
1.2x
M&A announced today
Expand the Successful model established in North America into the European market
Steady progress in Global expansion
8
?
?
?
?
?
?
?
NEW
?
Track Record in North America (1~5)
1. Entered US market in 2019 (Kiddleton), one year after foundation. 2. Expanded ~600 mini-locations, leveraging Japanese Kawaii prizes to gain insights of local market.
3. Acquisition of NEN added 10,000+ locations with highly successful SWAP. 4. Acquired Player One, Barberio, and VENUplus with strong conviction.
Add-on integrations produced results overwhelming SWAP. 5. Japanese strong IP prizes continuously introduced, further strengthening competitiveness.
Track Record in Europe (1~3)
1. Established GENDA Europe in 2024 to thoroughly replicate the North American business model.
2. Organically opened 3 mini-locations in London, achieving performance +20% to +100% above plan, validating strong affinity between Japanese Kawaii content and European customers.
3. Acquisition of Inspired provided an immediate nationwide footprint for Kawaii prizes across the UKmarking the true start of full-scale European expansion.
Mini-location
business
Popular Japanese IP co ntents ✕GENDA’s G lobal Entertain ment Plat f orm
© GENDA Inc.
M&A announced today
GENDA IR
02. Photography studio M&A in Japan
9
© GENDA Inc.
M&A announced today
GENDA IR
Creating new revenue opportunities: Entering the domestic photo studio management
Acquire shares of “CARATT,” photography studios popular with younger generations and families
Corporate outline Project overview
Establishment: 1994
Performance:
Revenue ¥3.99bn
EBITDA ¥0.41bn
(FY2024/3 Results)
Number of stores:
108 stores
(as of August 27, 2025)
communication value which is born from the customer experience itself.
Provide younger generations and families modern, stylish photos that are perfect for social media.
Captured a wide range of customer needs and established a unique market position by offering diverse
concepts such as accessible self-photo studios and moving beyond the traditional photography market.
EV/EBITDA is 5.2x (based on FY2025/9 forecast)
Photo studios is more free cash flow generative compared to
amusement arcades, due to their minimal maintenance CAPEX.
Consideration:
Stock consideration 30% / Cash consideration 70%
Stock consideration:
Cash consideration:
All the cash consideration by bank loans.
Structure the deal with discipline for both stock and cash considerations,
leading to an increase in cash EPS in addition to Inspired.
© GENDA Inc.
PMI initiatives: Expected synergies
Aim to create new value by leveraging synergies between our business domains
11
①Create added value by leveraging IP
②Customer base commonality
④Share property information for new store openings
The photo booth at GiGO Ikebukuro Flagship Store, which gained popularity during
the GiGO x TWICE LOVELYS collaboration in August 2025. Similar initiatives can be
implemented not only amusement arcades but also in photo studios.
③Strengthen marketing strategies
base of over 2.4 million customers.
services to each customer segment.
Centralize and share tenant information just as we have already done with GiGO and
Karaoke BanBan. This will enable us to efficiently expand into appropriate locations.
© GENDA Inc.
03. FY2027/1 earnings forecast
12
GENDA IR
46.1
55.6
111.7
157.0
4.3
8.0
5.6 6.2
8.1
2025/12023/12022/1 (¥bn)
Revenue EBITDA Net income before
amortization of goodwill
(Net income under IFRS)
Upward revision to FY2027/1 forecast (assuming zero M&A going forward)
200.0
2026/1
E
(¥bn) (¥bn) 13
27.0 10.4
2024/12023/12022/1 2026/1
E
2024/12022/1 2026/1
E2027/1
E
Upward revision to FY2027/1 Forecast
¥200.0 ¥27.0 ¥10.4
M&A announced today
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document to is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content o the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use of
this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the reason
thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgement of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
Disclaimer
14
本日公表のM&Aについて
15
GENDA IR © GENDA Inc.
FY2026/1 1Q Earnings Presentation
2025.6.11
GENDA IR
FY2026/1 1Q Earnings Presentation
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Executive Summary
2
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Executive Summary
FY2026/1: Our KPIs (IFRS) significantly exceeded the initial target, putting us on track for full-year target
Adjusted indicator ： Intrinsic performance excluding one-off M&A-related expenses
Adjusted EBITDA ： ¥4.26bn (+11.9%) (1Q Target ¥3.81bn) 1Q YoY +¥0.96bn + 29.2%
Adjusted EBITA (≒Operating income under IFRS) ： ¥2.51bn (+32.2%) (1Q Target ¥1.9bn) 1Q YoY +¥0.20bn + 8.6%
Adjusted net income before amortization of goodwill (≒Net income under IFRS) ： ¥1.33bn (+19.4%) (1Q Target ¥1.11bn) 1Q YoY ▲¥0.20bn ▲13.1%※
※ This FY’s target is heavily weighted towards the second half compared to last year’s, with the YoY increase also expected mostly in the latter half.
Adjusted net income before amortization of goodwill is on track: last year’s result was ¥5.9bn, while this year’s target is ¥8.4bn
Earnings Forecast：Upward revision to FY2027/1 forecast
FY2027/1 forecast：Revenue ¥185.0bn | EBITDA ¥ 25.7bn | Net income under IFRS (Net income before amortization of goodwill) ¥9.9bn (assuming 0 M&A going forward)
FY2026/1 forecast：Remaining unchanged, based on the timing of P/L consolidation and one-off M&A-related expenses
PMI：Launch of Major IPs in North America + Surge in Foreign Currency Exchange Machine Business
PMI at NEN in the U.S.： After SWAP, same-store sales still hold strong at an “average of +110%,” remaining high compared to the domestic same-store growth rate
Strong IP in North America：Starting late June, launch exclusive Sanrio, Godzilla, & other major Japanese IP-themed prizes for GENDA’s North American Operations (more IPs to follow)
Surge in forex machines： SMART EXCHANGE (foreign currency exchange machine) achieved historical high record sales in both March and April 2025
New funding source: Foreign currency gained from inbound tourists via exchange to fund U.S. M&A (USD) and Kleiner’s purchase price (EUR)
M&A：Successfully completed 2 roll-up M&As in the rapidly growing U.S. market
Roll-up in North America： Following our success in Japan, leverage our core NEN + Player One in the U.S. to implement various PMI – the essence of roll-up M&A
M&A valuation：Expect a combined EV / EBITDA of 5.0x(an appropriate acquisition price), which should decrease further as PMI initiatives boost earnings
3
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
4
FY2026/1 1Q Earnings Results
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Summary of Consolidated Statements of Income
Showing intrinsic performance excluding one-off M&A-related expenses. M&A-related expenses were ¥0.36bn in 1Q, affecting EBITDA and below.
1Q YTD
Adjusted (excl. M&A-related expenses) GAAP results (incl. M&A-related expenses)
FY2025/1 FY2026/1 FY2025/1 FY2026/1
(¥ in millions)
Result Result vs Target YoY Result Result vs Target YoY
Revenue 24,685 34,269 +0.7%+38 %24,685 34,269 +0.7%+38 %
EBITDA 3,301 4,268 +11%+29%3,277 3,900 +13%+19%
EBITA
(
≒Operating income under IFRS) 2,317 2,518 +32%+8%2,292 2,150 +40%▲6%
Net income before amortization of goodwill
(
≒Net income under IFRS) 1,536 1,333 +19%▲13%1,456 983 +33%▲32%
EBITA (Operating income under IFRS)
EBITDA
b
c
d
a
a
b
c
d5
M&A-related expenses
Net income before amortization of goodwill (≒Net income under IFRS)
Exceeded 1Q target, making a Strong Start, driven by Amusement arcades and Karaoke in Japan
+11% / +¥0.45bn against target, +29% YoY / +¥0.96bn
+32% / +¥0.61bn against target, +8% YoY / +¥0.20bn
+19% / +¥0.21bn against target, ▲13% YoY / ▲¥0.20bn
Note: M&A-related expenses include (i) M&A execution fees: brokerage fees, legal fees, due diligence fees, financial advisor fees and appraisal fees, (ii) M&A financing fees, and (iii) equity offering fees: follow-on offering fees and IPO fees. .
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Adjusted EBITDA Forecast vs Actual
Heavier weight on the 2nd half based on our current business structure & IP/campaigns
6
We achieved adjusted EBITDA above target in all quarterly accounting periods last fiscal year (FY2025/1).
We had a strong start in 1Q of FY2026/1, exceeding our target.
Our core businesses, amusement arcades and karaoke, are seasonally weighted towards the second half for revenue and we set an even more second-half-
weighted target than the previous fiscal year.
Adjusted EBITDA trend by Quarter
(in ¥bn)
Even more second-half-
weighted target than
the previous fiscal year
During the first quarter of the current fiscal year, we finalized the provisional accounting treatment related to business combinations. The year-on-year (YoY) change rates are stated by comparing the figures for the previous fiscal year after
reflecting the details of the provisional accounting treatment.
Initial target
Initial target
33
28
39
52
42
1Q 2Q 3Q 4Q
FY2025/1
Target・Result FY2026/1
Target・Result
1Q
FY2025/1
Target・Result FY2026/1
Target
2Q
FY2025/1
Target・Result FY2026/1
Target
3Q
FY2025/1
Target・Result FY2026/1
Target
4Q
4.2
2.8
3.9
5.2
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Summary of Consolidated Balance Sheet
B/S is now fully improved owing to the ¥18.4bn follow-on offering, allowing M&A to restart
7
1. To approach the discussion with financial institutions in view of the actual debt capacity as of today, the EBITDA used in the calculation of Net Debt / EBITDA is ¥25.7bn expected for the next fiscal year. Besides, Net Debt calculation reflects
the completion of already disclosed/in-progress M&A deals and the follow-on offering, aiming for a figure as close as possible to the current Net Debt. The reason for not using the LTM results is that, in M&A, the debt is fully consolidated on
the closing date, while the full-year contribution of the EBITDA of the target company, which is the main source of repayment of that debt, is in the next fiscal year. Using our LTM results, the EBITDA of the relevant target company is not
included, and the ability to repay debt within one year, which is the purpose of this indicator, cannot be measured. In addition, in the calculation of Net Debt, considering the impact of the closing of disclosed M&As, and the figure is as close
as possible to the Net Debt as of today after all the disclosed M&As.
1
(¥ in millions)
FY2025/1
End of Full-year
FY2026/1
End of 1Q Difference Remarks
Current assets 45,619 44,327 ▲1,292 M&A increased current assets, but decreased cash and deposit led to a
slight overall reduction
Of which, cash and deposits +
short-term securities 25,649 21,641 ▲4,008 Funds from last year’s follow-on offering for M&A decreased after being
applied to acquisitions
Fixed assets 69,344 87,580 +18,236 Mainly increase in goodwill and tangible asset by M&As
Of which, goodwill 18,542 29,275 +10,732 ¥10.0bn buffer on ¥39.0bn in net assets grew further with the recent
¥18.4bn follow-on offering
Total assets 114,964 131,908 +16,943 Increased because of the above reasons
Total liabilities 79,325 92,747 +13,421 Mainly increase in interest-bearing debt due to M&A financing
Of which, interest-
bearing debt
52,480 63,013 +10,532 Figures before the completion of Player One
The recent follow-on offering significantly boosted our debt capacity
Net assets 35,638 39,160 +3,522 Mainly increase in equity capital. Expected to increase by ¥18.4bn due to
the follow-on offering
Of which, shareholders’ equity
35,427 38,922 +3,495 Increased by stock-based M&A and accumulated income
Net Debt / EBITDA 1.7 x1.9 x+0.2 x
Assuming Player One has completed (increased debt, increased EBITDA),
the level after reflecting the follow-on offering (increased cash)
Capital adequacy ratio 30.8 %29.5 %▲1.3 %Maintaining capital efficiency by leverage even after the follow-on offering
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
8
M&A / PMI
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
M&A and capital transactions track record
9
Entertainment Contents Entertainment Platform
Announced 2 new M&As, total 48 M&As since the establishment
June 2018 July 2019
October 2023
September 2023
September 2023 October 2023September 2023 October 2023
April 2021 October 2021
November 2023 December 2023 December 2023 January 2024
November 2023
December 2020 January 2022 January 2022
February 2024 May 2024 June 2024 June 2024 November 2024February 2024
December 2021 October 2022 October 2022
August 2024
June 2022
November 2023
117 mini-
locations
December 2023
1 AM facility
(China)
October 2024
AM
1 store
Karaoke
1 store
February 2025September 2024 December 2024
Karaoke
2 stores
March 2025 March 2025 March 2025 March 2025 April 2025 July 2025
(planned)
AM
1 store
June 2025
Karaoke
1 store
May 2025 December 2024 May 2025
July 2024
July 2025
(planned) July 2025
(planned)
Approx.
1,100 mini-
locations
(US)
48 NEW
36
24
12
47 NEW
35
23
11
46
34
22
10
45
33
21
9
44
32
20
8
43
31
19
7
42
30
18
6
41
29
17
5
40
28
16
4
39
27
15
3
38
26
14
2
37
25
13
1
Note: The date of closing for Pixel Intermediate Holding Corporation, Barberio and Mini-location business of VENUplus is scheduled to be July 1, 2025.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Barberio Music Company, which operates 12 amusement arcades and 89 mini-
locations in the U.S. Opening locations in major trampoline parks across the U.S.,
leading luxury hotel chains and FECs. Their strength in expanding within high-
profile, high-traffic large-scale facilities.
Roll-up M&A in North America
Announced 2 new M&As today: Transformational Strengthening of the US Amusement Business
10
Acquired the business from VENUplus, Inc., which operates approx. 1,100 mini-
locations. We can achieve even greater labor cost efficiencies by minimizing the
succession of existing staff. We will integrate operations like cash collection and prize
replenishment by leveraging NEN’s personnel, who manage approx. 10,000 mini-
locations nationwide.
Today, we announced the acquisition of share in U.S. amusement arcade operator, Barberio, as well as the transfer of VENUplus’s mini-location business.
Both are a roll-up of our focused mini-location business.
We aim to grow same-store sales, similar to NEN, by replacing with Kiddleton-style mini crane game machines and implementing “Kawaii” prize strategy (SWAP).
Combined EV/EBITDA multiple for both acquisition is 5.0x, indicating we are acquiring both companies at a fair price based on their past performance.
Similar to previous deals, we expect EV/EBITDA multiple to decrease even further when factoring in future performance, thanks to profit expansion and cost reductions through our PMI
initiatives.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
NEW
Strengthen Platform in North America
Further Expanding Entertainment Platform Network in North America (USA + Canada)
11
19amusement arcades
Approx.10,000mini-locations
104amusement arcades
Approx. 2,000mini-locations
Approx.1,100mini-locations
Mini-location Business of
12amusement arcades
Approx. 89mini-locations
Note: Mini-location is a gaming corner mainly with 30 or less game machines installed. The number of locations of each company is as of January 2025 for NEN, December 2024 for PLAYER ONE, May 2025 for BARBERIO and Mini-location
Business of VENUplus.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
12
Progress Status of PMI initiatives at NEN
Replacement has been successfully completed at 515 locations
Average Same Store Sales Growth remains high at +110% (2.1x)
SWAP to Kiddleton-style
After
Before
+110%
+ a few%
Approx.
+ 20%
PMI initiative (=SWAP) involves replacing with Kiddleton-style mini cranes featuring Japanese “Kawaii” prizes at NEN’s locations.
Completed 515 SWAPs from the start of consolidation in November 2024 through the end of April 2025.
Sales growth rate for the implemented stores, while stabilizing from the +201% recorded at the end of February, still registers an average of +110%.
Domestic same
store sales growth
(GiGO)
Domestic same
store sales growth
(M&A stores)
Overseas
same-stores
(after SWAP at NEN)
Illustrative comparison of same
store sales growth
Domestic vs Overseas (image)
Note: PMI results were derived from 461 locations (where replacements were completed by the end of April 2025 and sales data before and after the replacement was available). We compared 4 months of sales before and after replacement,
ensuring an identical comparison period.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
13
North American Business PMI: Favorable Progress and Future Growth Strategies
Unexpected Positive Progress in North America
①“New” store openings at Walmart
Although the anticipated termination of select Walmart store contracts had progressed as planned prior to the acquisition, the post-acquisition swap strategy proved
highly effective. NEN has entered into a new term lease agreement with Walmart for seven Kiddleton Stores to be opened in August. This is NEN’s first agreement
with Walmart Real Estate, and first new NEN Walmart concept in over seven years.
②“New” store openings beyond Walmart
Given NEN’s significant SWAP results, we have received very strong interest in new store openings, that was not expected before the acquisition.
New store openings have ultimately surpassed closures at Walmart, leading to a net monthly increase in store count. Now we have over 200 new stores.
New store openings offer higher investment efficiency than SWAP in existing stores. Despite temporary costs, proceed with this as the best organic growth investment.
③Started procuring game machines for the U.S. at discounted prices through Player One’s wholesale function
Roughly 30% of Player One’s revenue comes from its game machine wholesale business.
Successfully started procuring game machines to be used by NEN at volume discount prices through Player One.
④Set to begin PMI initiatives at Player One this month, ahead of its closing
Set to begin location tests at 65 Player One sites this month, ahead of its closing. These tests will feature Kiddleton-style game machines and prizes.
At Player One, advance not only SWAP but also “Add on,” which are additional deployments to empty space in existing stores. SWAP replaces existing sales, while
Add on is more efficient for pure sales growth. Therefore, at Player One, with its abundant empty space, we will focus on Add on to avoid cannibalizing existing revenue.
This will strengthen Player One’s platform for offering Japanese anime IP offline, while effectively utilizing its empty space.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Japanese anime IP prizes arriving late June
Existing Kawaii prizes
Our long-anticipated Japanese anime IP prize rollout finally starts late June!
These are “Exclusive specialty prizes” that can only be handled by Kiddleton, NEN and Player One (post-closing) in North America area.
Finally start deploying strong IP!
Start deploying exclusive Japanese anime IP in amusement arcades in North America!
14
+
Reaching anime fans across North America via GENDA’s 13,000+ platforms.
With a unique rarity and collectability exclusive to GENDA, these items are anticipated to drive customer acquisition and enhance visit frequency.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Japan unites to unleash anime IP to North American fans
Send “Oshi (Faves)” from Japan to the World! GENDA’s Global Platform
15
Established our long-awaited entertainment platform directly with North American consumers. Deliver Japan’s IP to global fans via GENDA’s worldwide network.
Achieve overwhelming differentiation from other players by developing and deploying exclusive prizes.
Fusion of crane game culture and IP contents especially in North American market is driving new demand.
We will continuously roll out exclusive prizes featuring popular IP going forward. Stay tuned!
Popular IPs in Japan GEND A serv es as the Global Entertainment Platform
NEW!
EXCLUSIVE!
Popular IP Contents Successively
coming to North America!
Mini-location
business
Fan
Fan
Fan
Fan
Fan
Fan
Fan
Fan
Fan
Fan
?
?
?
?
?
?
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Newly acquired SMART EXCHANGE (SMX), a foreign currency exchange machine business, saw record monthly sales in March and April 2025, driven by increasing inbound tourism.
Progressively implement our PMI initiatives. From mid-May, started efficiently utilizing foreign currency to support growth funding in the U.S. and will achieve reduced exchange fees for
foreign currency acquisition within GENDA’s global expansion, covering expenses like M&A acquisition costs (USD) introduced on the previous page and Kleiner procurement fees (EUR).
GENDA’s New Source of Foreign Currency
SMART EXCHANGE has continuously set new monthly sales records!
Apply such acquired foreign currencies to overseas M&A (USD) & Kleiner procurement (EUR)
PMI initiatives
Spread optimization
Improve revenue by adjusting the currently uniform spread for each
machine, optimizing it based on its price elasticity and economics.
More efficient fund usage with CMS adoption
Adjust each machine’s monthly replenishment funds to projected
usage, returning surplus cash to GENDA for other group
companies’ use.
Marketing collaboration with GiGO
Installing currency exchange machines at GiGO attracts inbound
customers, boosting usage for both SMX and GiGO.
Optimizing security transport with AI
Increase transports per person and reduce labor costs by using AI
to optimize security transport routes.
Data foundation & KPI optimization
Enhance machine profitability by tracking exchange amounts and
growth rates per unit’s economics, guiding decisions on new
installations and removing unprofitable ones.
International money transfer process (eg. GiGO) Foreign exchange fees
Before
¥1 exchange fee per US$1 sent
⇒”US$10M sent = ¥10M fees”
+ Outward foreign exchange
remittance fee incurred
After
No exchange fees (only
transfer fees apply) because it
is a foreign currency transfer
↓
To send US$10M, the entire
group reduced “exchange fees
by ¥10M”
※①. Transfer specific US$ to GiGO ①’ Convert all non-USD/EUR foreign currency to JPY
②. Transfer the same JPY amount to SMX (incl. fees) ③. SMX replenishes ②JPY in the machine
【SMX】
JPY account
Funding for
Kiddleton
【GiGO】
Foreign
currency
account
【SMX】
Foreign
currency
account
Funding for
Kiddleton
※USD
【GiGO】
JPY account
①
②
Efficiently use foreign currency within GENDA
16
Apply to M&A
acquisition
consideration,
etc.
Flow of JPY
Flow of Foreign currency
③
①’
①
【GiGO】
JPY account
※1: This is the general fee if no reduction or exemption were applied, and we have already received a partial reduction.
Note: CMS (Cash Management System) is a solution for corporate groups. It centralizes financial and cash management functions to improve fund efficiency and streamline operations across consolidated subsidiaries.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
38.1
46.1
55.6
111.7
157.0
2.7
3.5
4.3 4.6
8.0
5.6 6.2
8.1
14.2
22.0
Upward revision to FY2027/1 Forecast
2025/12024/12023/12022/1 (bn¥）
Revenue EBITDA Net income before
amortization of goodwill
(Net income under IFRS)
Upward revision to FY2027/1 forecast (assuming zero M&A going forward)
185.0
2026/1
E
（bn¥）（bn¥）17
2027/1
E
25.7 9.9
2025/12024/12023/12022/1 2026/1
E2027/1
E2025/12024/12023/12022/1 2026/1
E2027/1
E
Revenue 183.0→¥185.0bn │ EBITDA 25.0→¥25.7bn │ Net income before amortization of goodwill (Net income under IFRS) 9.5→¥ 9.9bn
Upward revision to FY2027/1 forecast including 2 M&As announced today.
FY2026/1 forecast remains unchanged, based on the timing of P/L consolidation & one-off M&A-related expenses.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
This paid SO is a strategic tool to maximize shareholder value and maintain discipline in our M&A strategy, not just a cash bonus for performance.
This is a system where directors and employees receive no benefit if the stock price falls, thus structurally deterring reckless M&A.
To maximize per-share equity value and meet EBITDA targets, we are now strongly incentivized to manage the company with shareholders’ best interests in mind.
Issuance of Paid Stock Options (Paid SO)
Aiming for a 5x increase in EBITDA over 5 years!
A target of ¥75.0bn and an incentive design linked to Stock Price Improvement
18
FY2025/1
列
1FY2030/1E
14.2
75.0
Outline of Issuance
(excerpt)
EBITDA
(¥bn)
Total number
issued
5,220,000 shares
(2.9% of the total number of shares outstanding as of
today)
Grantees A part of directors, corporate auditors and employees
of the Company and its affiliated companies
Exercise
period
From May 1, 2030 till January 31, 2040
(after performance-linked condition is confirmed)
Performance-
linked
condition
EBITDA ¥75.0bn
Tenure-linked
condition Remain employed till January 31, 2029
5X
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
19
DX
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Our DX initiatives focus on improving organizational management, increasing productivity and maximizing customer experience value.
Our proud tech team will deep dive into DX for businesses integrated through M&A.
Following GiGO, DX efforts are rapidly underway at Karaoke BanBan as well.
GENDA’s Approach to DX (Digital Transformation)
“Offensive & Defensive DX” Strategy to Maximize PMI Effectiveness
20
•Operational streamlining, workload
reduction, operational improvement
✓Providing business support tools
✓AI agent
✓Labor saving through remote store
management
✓Promoting BPR・BPO
•Infrastructure development
✓Integrating systems
✓Master data management
✓Promoting cashless system
•Governance enhancement
✓Pipeline development
✓Building management cockpit, BI
✓Data management
•Data-Driven Marketing Initiatives
✓Optimizing business logic with AI
✓Demand forecasting & task automation
with AI
•Customer experience value improvement
✓Enhancing convenience & loyalty
through a Member App
✓Personalized CRM
✓Expansion of non-storefront online
services
•Leveraging customer data
✓Building Entertainment Ecosystem
(GENDA ID)
✓Inter-group customer referral
This initiative PJ PAO (Ref. published material)
Product Role Next Steps
GiGO App
Enhance in-store experience value, improve
convenience through electronic payments &
coupons, drive store visits through CRM,
strengthen engagement through subscription
features, etc.
Seamless payments via GiGO Link integration
Grade & assist functions based on usage
Prize and store search functions
DigiChime
QR code calling system for staff
Realize a proactive customer service
experience
Customer service integration with AI cameras
Automated staff scheduling based on real-time
conditions
Strengthen remote management in labor-saving
stores
GENDA ID GENDA’s cross-group ID system
Inter-group customer referral
Establish Entertainment Ecosystem through the
development of GENDA-wide point system
Simplified login & authentication
Expand point usage & redemption options
AI/Data Science
Work and experimentation that exceeds
human capabilities, relevant to all business
operations and services
Purchasing automation
Prize order automation
AI agent
GiGO NAVI Amusement arcade operational support
Data platform for management accounting
Eliminate Excel from all business operations
Further streamlining of prize operations
AI-powered operational instructions & work
recommendations
For customers For employees
Defensive DX
Operational streamlining, workload
reduction, infrastructure development,
governance enhancement
Offensive DX
Revenue/Profit enhancement, customer
experience value improvement
GiGO’s Planned DX Initiatives
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
【Purpose of Implementation】
Eliminated wasteful tasks, manual work and paper-based operations, and unified and standardized operations through systems.
This eliminates dependence on individual employees (allowing multiple employees to handle tasks previously done by only one) and accelerate data-driven store operations.
【Initiatives】
1. DX for Sales & Dispensing Input: For without POS, GiGO NAVI now enables direct sales date entry on the floor, eliminating the need to input notes into an office PC.
2. DX for Prize Planning: Implemented a user interface (UI) where newly arriving prizes are displayed with images, making them intuitively easy to grasp and plan with.
3. DX for Prize Performance Review: Enabled staff to check sales information directly on their App from the floor and allowed for facilitating smoother prize rotations.
【Future Outlook】
Aim to improve store operations and boost sales by further leveraging out digital platforms.
Boosting Productivity through DX of Amusement Arcade Operations
Achieved 4,000 hours of monthly work hour reduction through DX of In-store Operations
21
Before After
✓Inefficient data management (heavy excel files)
✓Viewable by back office only
✓Limited information sharing & access rights
✓Multiple users can work
simultaneously
✓Flexible information sharing & rights
✓Linking incoming prize information
with images
✓Enhanced user experience
✓Real-time performance review on the floor
✓Multiple users can access
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Innovation from the Front Lines: Generative AI for Business Efficiency and Value Creation
Our unique AI agent, co-created by on-site and tech teams with a focus on practical needs
22
Automated information extraction & conversion by AI Agent
Extract required date, modify text and add categorization, etc.
Challenges at Front Lines：Format barriers & manual entry burden
Varying formats for order forms, invoices and
order lists of across manufacturers
BanBan AI Agent Development Online Crane Game AI Agent Development
Challenges at Front Lines: Call handling & extensive manuals
“Paper manuals are bulky and hard to use.”
“Too many phone inquiries from stores.”
→Increased HQ burden and difficult information access
PDF Excel
⚫Hight operational workload due to the need
for manual input
⚫Reliance on specific individual’s expertise
Results
Centralized management & efficiency in Excel
Explore implementing a manual ChatBot powered by Generative AI
⚫Study third-party SaaS → did not meet complex on-site needs
⚫Decide to internalize by GENDA Tech team
Internalize BanBan AI Agent: Results
⚫Front-line staff can now dramatically reduce manual
reference time and access information instantly.
⚫Phone inquiries plummeted, reducing HQ’s workload
⚫Operating costs: Approx. 40% reduction vs SaaS
Company A Company B
Excel
GENDA’s DX strategy focuses on creating optimal operations by addressing on-site issues and driving the PDCA cycle through close collaboration with the tech team.
These 2 cases are prime examples of not just adopting technology but fundamentally transforming workflows to boost business advantage.
Our proprietary AI Agents are versatile solutions designed to solve common problems in various retail businesses. A single development investment enables group-wide operational
efficiency and standardization, optimizing investment efficiency and boosting competitiveness.
● Product name
● Arrival date
● Release date
● Item name
● Arrival date
▲Manual input
▲individual dependency
● Prize name
● Arrival date
● Size
● Category
・・・
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
23
Topics
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Starting from the record date at the end of July 2025, in addition to the existing service tickets for GiGO and Karaoke BanBan, Danish premium vodka “DANZKA” will join the lineup.
“DANZKA” is a new product that C’traum inc. began selling this spring. Similar to Kleiner, C’traum inc. has the exclusive distribution rights in Japan.
Expansion of Lineup of Shareholder benefits
Danish Premium Vodka, “DANZKA,” newly joins the lineup!
24
Number of
shares held Contents per grant
100 ～ 299
shares 2,000 points
300 ～ 499
shares 6,000 points
500 shares or
more 10,000 points
DANZKA FIFTY DANZKA
THE SPIRIT
Shareholder benefit point Facility usage Kleiner Feigling DANZKA
NEW
Redeem points
for coupons
Redeem 5,000
points for a box of 20
DANZKA, the premium vodka from
Copenhagen since 1898, has finally
entered the Japanese market.
C’traum holds the exclusive domestic
sales and wholesale contract, with
sales beginning April 24, 2025.
Redeem 6,000
points for a bottle
(MSRP: ¥6,500)
Redeem 8,000
points for a bottle
(MSRP: ¥8,500)
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
25
Appendix
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
4.5 5.9
8.4 9.9
FY2024/1 FY2025/1 FY2026/1E FY2027/1E FY2028/1E
137 157 177
FY2024/1 FY2025/1 公募増資後
Even with increased shares from follow-on offerings and stock-based M&A, our adjusted net income before amortization of goodwill (IFRS net income) significantly outpaced that growth.
Stable increase in the number of shares < Income Growth
We ensures “Net income (IFRS basis)” stably outpaces “share count increases”
26
Growth of Adjusted net income before amortization of goodwill
(≒Net income under IFRS, unit: ¥bn)
Changes in the Number of Shares Outstanding
(unit: million shares)
・・・
M&A completed
in FY2025/1
+M&A going forward
+14%
+13%
Dilution rate by
follow-on
offering +7.0%
¥18.5bn
¥10.0bn
+42%
M&A to be
completed in
FY2026/1
+31%
Dilution rate by
follow-on
offering +10.9%
+18%
¥18.5bn
¥10.0bn
P/E 19.5xP/E 16.6x
After follow-on offering
Note: This takes account of 2 for 1 stock splits at April 1, 2025 and June 1, 2024 and including treasury stock. Adjusted net income before amortization of goodwill is the total of net income attributable to owners of parent, amortization of goodwill and M&A-related expenses. M&A-related expenses
include (i) M&A execution fees: brokerage fees, legal fees, due diligence fees, financial advisor fees and appraisal fees, (ii) M&A financing fees, and (iii) equity offering fees: follow-on offering fees and IPO fees. M&A-related expenses were ¥0.4bn in FY2026/1 (initial target), ¥1.37bn in FY2025/1,
¥0.17bn in FY2024/1. The dilution rate of a public offering is calculated by dividing the number of newly issued shares by the sum of the total shares outstanding (excluding treasury stock) at the time of the resolution and the number of newly issued shares. The number of shares at the end of the
fiscal year changes due to stock-based M&A and similar activities during the period. Please note: Any figures exceeding ¥9.9bn for adjusted net income before amortization of goodwill do not suggest or guarantee that actual M&A (including the underlying financing and assumed synergies from
acquiring each target company) will be executed or realized under similar conditions. Besides, please note that we do not guarantee future M&A of other entertainment companies. The P/E multiple is based on the June 10, 2025 closing market capitalization of ¥164.2bn, showing the P/E multiple for
adjusted net income before amortization of goodwill (≒net income under IFRS) of ¥8.4bm and ¥9.9bn.
+M&A going forward
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
(Reference) Examine M&A investment efficiency from a different perspective
27
All adjusted basis
(¥mn)
FY
2022/1 FY
2023/1 FY
2024/1 FY
2025/1 FY
2026/1
Cash NOPAT
(NOPAT under IFRS)
-- 4,530 5,373 5,515 9,984
Invested Capital
(excl. cash & deposits)
14,690 18,423 29,948 68,602 --
Cash ROIC
30.8% 29.1% 18.4% 14.5% --
Cash EPS
(EPS under IFRS)
-- 28.2 34.1 40.6 47.7
BPS
65.9 88.0 146.8 242.1 --
Cash ROE
42.8% 38.7% 27.6% 19.7% --
•Cash ROIC and Cash ROE
–ROIC and ROE (adjusted), specifically based on NOPAT and EPS under IFRS
–Examine M&A investment efficiency (from a different angle than EPS),
specifically by looking at the return on invested capital
•Timing Gap between Investment and Return
–Typical companies either make routine maintenance capex or large growth
capex just every few years
–In contrast, we make large growth capex (M&A) every year. Our BS (invested
capital) expands first, while P/L (profit) consolidated from the next fiscal year
–For example, even if an M&A is announced mid year, the deal typically closes
near year-end, the numerator (profit contribution) will be zero, and the
denominator (invested capital) will fully increase. Thus, the next fiscal year is
often better for measuring the impact on invested capital
–Thus, P/L fluctuations from the next fiscal year in the numerator is applied
•Start paying taxes from FY2025/1
–The numerators of ROIC and ROE are normalized, after starting to pay
corporate taxes in FY2025/1
–Although ROIC has declined from over 30% when taxes were not being paid,
ROIC remains solid
–Furthermore, by using leverage, maintain a high ROE, ensuring strong returns
for shareholders
–More importantly, succeeded in generating significant absolute returns (NPV)
while maintaining profitability (ROIC & ROE) for M&A returns
1
2
3
2
3
1
3
Cash ROIC and Cash ROE
(on IFRS and adjusted basis excl. M&A-related expenses)
Note: “Cash” ROIC and “Cash” ROE reflect adjustments to ROIC and ROE on IFRS basis, respectively, as the company applies JGAAP that treats goodwill amortization as operating cost. Cash ROIC of any given period (Y) is calculated by dividing
cash NOPAT as at the end of the subsequent period (Y+1) by invested capital excluding cash and deposits as at the end of such given period (Y). Please see the next page for detailed reconciliations to JGAAP-based line items on the consolidated
financial statements. Adjusted net income before amortization of goodwill for FY2025/1’s Cash EPS calculations uses figures from provisional accounting for business combinations in FY2025/1 full-year financial results. Additionally, Cash EPS for
FY2025/1, reflecting the finalization of the provisional accounting treatment for business combinations, is ¥40.4, and Cash ROE for FY2024/1 is 27.5%.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Basis for Cash ROIC and Cash ROE calculation
28
Note: “Cash” ROIC and “Cash” ROE denotes ROIC and ROE on IFRS basis, as the company applies JGAAP that treats goodwill amortization as operating cost. (1) M&A-related fees include (i) M&A execution fees: brokerage fees, legal fees, due diligence fees, financial advisor fees and appraisal fees, (ii) M&A financing fees, and (iii) equity offering fees: follow-on
offering fees and IPO fees. M&A-related fees accounted for the purpose of calculating cash NOPAT include the amount recorded under selling, general and administrative expenses. (2) Adjusted cash EPS for FY2023/1, FY2024/1 and FY2025/1 is the net income per Share before amortization of goodwill (after retrospectively adjusted for the 2-for-1 Shares stock splits
effected as at 1 June 2024 and 1 April 2025) and adjusted for M&A-related fees. M&A-related fees were ¥1.27bn in FY2025/1, ¥0.15bn in FY2024/1 and ¥0.01bn in FY2023/1. M&A-related fees accounted for the purpose of calculating Adjusted Cash EPS includes the amount recorded under selling, general and administrative expenses and non-operating expenses,
partially offset by the amount recorded under income taxes. (3) The average number of issued Shares for the year ended 31 January 2022 has been retrospectively adjusted for the 400-for-1 Shares stock split effected as at 29 April 2023 and the 2-for-1 Shares stock splits effected as at 1 June 2024 and 1 April 2025. The average number of issued Shares for the year
ended 31 January 2023 and 2024 have been retrospectively adjusted for the 2-for-1 Shares stock splits effected as at 1 June 2024 and 1 April 2025. (4) For the calculation of the Actual Tax Rate for FY2026/1, the denominator includes Amortization of Goodwill and M&A-related fees. (4) We changed how to calculate the tax burden rate. Before FY2026/1, it was based
on income before income taxes. From FY2026/1 onwards, we use adjusted EBITA for a more accurate reflection. If we applied the FY2026/1 method to FY2025/1, the tax burden rate would be 33.78%. Cash EPS for FY2025/1, reflecting the finalization of the provisional accounting treatment for business combinations, is ¥40.4, and Cash ROE for FY2024/1 is 27.5%.
(¥ in millions, N = FY)
Calculation FY2022/1 FY2023/1 FY2024/1 FY2025/1 FY2026/1 (E)
Cash ROIC Calculation
Operating Income
A
--
4,244
5,370
7,965
10,500
+ Amortization of Goodwill
B
--
82
181
1,349
3,000
+ M&A
-related fees(1) C
--
12
99
1,156
440
Actual Tax Rate
D = D1 / D2
--
(4.4%)
4.9%
47.3%
(4)
28.3%
Total Income Taxes D1
(145)
217
3,166
3,360
Net Income before Income Taxes D2
3,306
4,414
6,690
8,400
Cash NOPAT
X = (A+B+C) x (1
-
D)
--
4,530
5,373
5,515
9,984
Total Current Assets
E
12,610
12,723
23,567
45,646
--
(Non
-Interest-Bearing Current Liabilities) F = F1 + F2 + F3
- Total Current Liabilities F1
(7,380)
(7,609)
(16,892)
(39,770)
--
+ Short-term Borrowings F2
1,145
100
3,512
11,331
--
+ Current Portion of Long-term Borrowings F3
1,716
2,203
3,679
9,093
--
+ Total Property, Plant and Equipment
G
5,532
7,750
12,581
31,466
--
+ Total Intangible Assets
H
1,207
1,900
5,698
21,290
--
(Other Long
-term Operating Assets) I = I1 + I2
+ Total Investment and Other Assets I1
7,357
8,658
10,293
15,964
--
- Investment Securities I2
(184)
(216)
(113)
(769)
--
-
Cash and Deposits J
(7,315)
(7,086)
(12,379)
(25,649)
--
Invested Capital (excluding Cash and Deposits)
Y = SUM of E~J
14,690
18,423
29,948
68,602
--
Cash ROIC
X (N+1) / Y
30.8%
29.1%
18.4%
14,5%
--
Cash ROE Calculation
Adjusted Cash EPS
(2) (¥) K
--
28.25
34.12
(5)
40.68
47.7
BPS (¥)
L = L1 / L2
65.9
88.0
146.8
242.1
--
Total Shareholder’s Equity L1
7,693
11,186
19,419
35,302
--
Average Number of Issued Shares(3) L2
116,579,984
127,094,400
132,203,292
145,805,182
--
Cash ROE
K(N+1) / L
42.8%
38.7%
(5)
27.6%
19.7%
--
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
We disclose adjusted indicators as intrinsic performance of existing businesses cannot be gauged by GAAP measures due to one-off M&A-related expenses
When M&A activities progress, the discrepancy between JGAAP disclosures and Actual cash flow widens
Results before amortization of goodwill (≒IFRS) x “Adjusted” excl. one-off M&A-related expenses
(For reference) As M&A activities progress, the increase in goodwill
amortization expenses leads to a divergence between JGAAP’s reported
performance and actual cash flow.
Amortization of goodwill is normally expensed without any future cash
outflow, in contrast to depreciation expenses, which reflect the need for
actual future investment.
Additionally, given our business’ high seasonality with performance heavily
weighted towards the latter half of the year, and since amortization of
goodwill is a consistent monthly expense, the first half, with its weaker
seasonal index, experiences greater profit pressure, which then seems to
ease in the second half.
4
45
2
2’
Profits before amortization of goodwill = Our KPI
Profits after amortization of goodwill = figures for reference
1
29
22
4
1
3
3
As an M&A company, we use IFRS metrics to grasp our business’s actual
performance and have begun external disclosure in advance of our
FY2027/1 implementation.
We added EBITA (operating income under IFRS in the future) starting from
this period, to assess the impact of depreciation (D), even when nominal
EBITDA seems strong.
Compared to the previous fiscal year, the current fiscal year is skewed
towards the second half, so while the YoY growth is limited, EBITA outpaces
EBITDA against 1Q target, with EBITDA +11% and EBITA +32% vs target
This fiscal year’s performance is more heavily weighted to the second half
than the last, resulting in a YoY profit decrease. However, we are off to a
good start, with net income before amortization of goodwill exceeding our 1Q
target by +19%.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
FY2025/1 FY2026/1
(¥
in millions)
1Q 2Q 3Q 4Q 4Q
YTD 1Q 2Q 3Q 4Q
4Q
YTD
(E)
YoY
Revenue
24,685
24,846
28,096
34,149
111,777
34,269
-
-
-
157,000
+40.4%
Gross profit
5,286
5,075
6,506
8,531
25,400
8,078
-
-
-
-
-
Margin (%)
21.4%20.4%23.1%25.0%22.7%23.6%
-
-
-
-
-
EBITDA
3,301
2,817
3,960
5,284
15,364
4,268
-
-
-
22,000
+43.1%
Margin (%)
13.4%11.3%14.1%15.5%13.8%12.5%
-
-
-
14.0%
-
EBITA
(≒
Operating income under IFRS)
2,317
1,798
2,826
3,487
10,429
2,518
-
-
-
-
-
Margin (%)
9.4%7.2%10.1%10.2%9.3%7.3%
-
-
-
-
-
Net income before amortization of
goodwill
(≒
Ne income under IFRS)
1,536
935
1,842
1,575
5,890
1,333
-
-
-
8,000
+35.8%
Margin (%)
6.2%3.8%6.6%4.6%5.3%3.9%
-
-
-
5.1%
-
Quarterly results
30
Intrinsic Performance excluding M&A-related expenses
Note that GENDA has different businesses mix on a fiscal year, or even quarterly basis
Note: M&A-related expenses include (i) M&A execution fees: brokerage fees, legal fees, due diligence fees, financial advisor fees and appraisal fees, (ii) M&A financing fees, and (iii) equity offering fees: follow-on offering fees and IPO fees.
During the first quarter of the current fiscal year, we finalized the provisional accounting treatment related to business combinations. The year-on-year (YoY) change rates are stated by comparing the figures for the previous fiscal year after
reflecting the details of the provisional accounting treatment.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
FY2025/1 FY2026/1
(¥
in millions)
1Q 2Q 3Q 4Q 4Q
YTD 1Q 2Q 3Q 4Q
4Q
YTD
(E)
YoY
Revenue
24,685
24,846
28,096
34,149
111,777
34,269
-
-
-
157,000
+40.4%
Gross profit
5,286
5,075
6,506
8,531
25,400
8,078
-
-
-
-
-
Margin (%)
21.4%20.4%23.1%25.0%22.7%23.6%
-
-
-
-
-
EBITDA
3,277
2,423
3,717
4,788
14,207
3,900
-
-
-
22,000
+54.8%
Margin (%)
13.2%9.7%13.2%14.0%12.7%11.4%
-
-
-
14.0%
-
EBITA
(≒
Operating income under IFRS)
2,292
1,404
2,583
2,992
9,272
2,150
-
-
-
-
-
Margin (%)
9.3%5.7%9.2%8.8%8.3%6.3%
-
-
-
-
-
Net income before amortization of
goodwill
(≒
Net income under IFRS)
1,456
461
1,596
1,096
4,611
983
-
-
-
8,000
+73.4%
Margin (%)
5.9%1.8%5.7%3.2%4.1%2.9%
-
-
-
5.1%
-
(Reference) Quarterly results
31
GAAP actuals including M&A-related expenses
Data from the previous page, with M&A-related expenses deducted for each quarter
Note: M&A-related expenses include (i) M&A execution fees: brokerage fees, legal fees, due diligence fees, financial advisor fees and appraisal fees, (ii) M&A financing fees, and (iii) equity offering fees: follow-on offering fees and IPO fees.
During the first quarter of the current fiscal year, we finalized the provisional accounting treatment related to business combinations. The year-on-year (YoY) change rates are stated by comparing the figures for the previous fiscal year after
reflecting the details of the provisional accounting treatment.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
13.1
4.2
1.4
4.8
3.3
82.2
24.7
14.0
30.6
14.7
32
¥22.0bn
¥157.0bn
Amusement arcade
related business:
c.70%
GENDA’s Business Portfolio – FY2026/1 Company Estimate (Initial Target)
Amusement Centric + Peripheral Areas
90% of GENDA’s Revenue and EBITDA
as of today are amusement arcades and karaoke
We continue to focus on M&As on platform area
While entering into the contents area in the mid-to-long term
Revenue EBITDA
Note: The graphs for Revenue and EBITDA do not include "Consolidation Adjustments," which is why their total values (¥166.2bn and ¥26.9bn, respectively) do not match the company’s forecast (¥157.0bn and ¥22.0bn), with the Revenue
Consolidation Adjustment at -¥9.4bn, primarily due to internal transactions, and the EBITDA Consolidation Adjustment at -¥4.9bn, mainly consisting of GENDA’s standalone corporate expenses (-¥4.5bn) and M&A-related expenses (-¥0.4bn)
that have already been announced and are confirmed to be recorded in the FY2026/1 period; for reference, the actual consolidation adjustments for FY2025/1 were -¥7.8bn for revenue and -¥3.6bn for EBITDA.
Others
Karaoke (Karaoke BanBan, ONTSU)
Prize-related (FUKUYA and Ares)
Overseas Amusement (mainly North America & China)
Domestic Amusement (GiGO etc.)
49%
15%
8%
18%
9%
49%
16%
5%
18%
12%
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
We believe the current business environment surrounding the entertainment industry is to deliver the “IP Contents” such as animation to the “fans” through
entertainment “platforms.”
In this context, we will first position “Platform” as our main growth driver, while entering into the “IP Contents” domain in the mid-to-long term.
The Big Picture of the Current Entertainment Industry
IP Contents × Platform
33
IP CONTENT S FANSPLAT FORM S
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
Based on a foundation of continuous growth brought about by the steady expansion of our domestic business and aggressive overseas business
development, we aim to build a “GENDA Entertainment Ecosystem” that will expand globally by accumulating M&A in both the entertainment platform and
entertainment content areas. In this way, we believe that we will be able to overcome the volatility of the ever-changing entertainment business by building a
solid business portfolio.
Our growth strategy = “M&A in the Entertainment industry”
Completion of the Entertainment Ecosystem
34
Note: Diagram of our envisioned growth strategy.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
GENDA Group Overview
GENDA is a pure holding company of amusement centric entertainment companies
35
Entertainment Platform
Amusement F&B Contents & Promotion
Character MD
Entertainment Contents
GENDA Inc.
GENDA Games Inc.
Online crane games
100%
Film
distribution
GAGA
Corporation
78.05%
VR contents , virtual
attractions
Dynamo
Amusement, Inc.
100%100%
C’traum
inc.
Import and
wholesale of
alcoholic
beverages
Pure Holding Company
JAPAN ABROAD
100%
100%
Kiddleton,
Inc.
(US)
GiGO
Taiwan Inc.
(Taiwan)
100%
GiGO VIETNAM
Co., Ltd.
(Vietnam)
100%
100%
GENDA
GiGO Entertainment Inc.
Operation of AM arcades
AM
1 store
GS’s mini-
locations
Karaoke
ONTSU Co.,
Ltd.
Distribution of
karaoke
equipment
100%100%
Shin Corporation Co., Ltd.
Operation of karaoke
Karaoke
1 store
Karaoke
2 stores
Note: Organization chart as of June 11, 2025. AM arcades in the chart refer to amusement arcades. The chart is intended to present mainly our consolidated subsidiaries. Pixel Intermediate Holding Corporation, Barberio and Mini-location Business of VENUplus are scheduled to join on
July 1, 2025.
Planning and sales of
prizes for AM arcades
Ares Company
Limited
100%
Tourism
100%
Planning,
manufacturing and
sales of prizes
Fukuya Holdings
Co., Ltd.
100%
Tokyo Character
Makers Co., Ltd.
100%
100%
FUKUYA
HONGKONG
LIMITED
(Hong Kong)
100%
FUKUYA
TAIWAN
LIMITED
(Taiwan)
100%
FUKUYA
USA INC.
(US)
100%
Fukuya Co., Ltd.
100%
100%
Foreign currency
exchang e
machine business
NEW
Sweet Pixels
inc.
Planning, production
and sales of HillValley
brand popcorn and
sweets
NEW
Sandai Co., Ltd.
100%
Five Colors
Inc.
(China)
93%
(UK)
GENDA Europe
Ltd.
100%
LEMONADE
Lemonica Inc.
Production and
sales of
Lemonade
66%
LEMONADE
Lemonica UK Limited
(UK)
100%
100%
D-eight CO., LTD.
Approx. 1,100
mini-locations
100%
100%
Pixel Intermediate Holding Corporation (US)
National Entertainment
Network, LLC (US)
ENTERRIUM (US)
Barberio (US)
SMART
EXCHANGE Inc.
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
The Big Picture of the Current Entertainment Industry
36
VisionAspiration
More fun for your days To be the World’s No.1
Entertainment Company in 2040
Speed is King, GRIT and GRIT, Enjoy our Journey
With these three values, we take on new challenges and
aim to be the world’s number one entertainment company
We believe that “fun” is essential for human beings
“More fun for your days” is our “Aspiration”
© GENDA Inc.
FY2026/1 1Q Earnings Presentation
GENDA IR
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document to is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content o the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use of
this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the reason
thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgement of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
Disclaimer
37
© GENDA Inc.
2026年1月期 第１四半期決算説明資料
GENDA IR
38
Thank you
GENDA IR © GENDA Inc. M&A announced today
2025.4.9
GENDA IR
M&A announced today
© GENDA Inc. M&A announced todayGENDA IR
A group of companies engaged in operation of amusement arcades (“AMs”), sales, distribution and
service of equipment in the U.S. and Canada, including one of the top companies in North America,
Player One Amusement Group (PLAYER ONE)
With its long history since 1975, opened many stores in large-scale entertainment facilities such as
movie theaters. Compared to our existing business in North America, having more game machines
installed in one site and secured stable contract years. Stable and long-term cashflow is expected.
Large-scale M&A of Amusement arcades in North America
One of the Largest M&As in GENDA’s history
–Strategy for North America with incredible PMI records is GENDA’s further growth engine
2
Corporate outline (FY2024/12)
Establishment:1975
Route Operations (70% of sales)
Approx. 104 AMs and 2,000 mini-locations
Sales &Distribution (30% of sales)
Wholesale and sale of game machines
Sales by region: Approx. 60% in the U.S.,
40% in Canada
Note：We defined a place with 31 or more game machines as “AM” and 30 or less as “mini-location.” Estimates calculated by applying the
target value of sales for the FY2026/1 which we announced on March 12, 2025 to FY2027/1, and totaling the amount and our target value of
PLAYER ONE for FY2025/12, in order to show the scale of GENDA’s sales in North America in FY2027/1 after PLAYER ONE joined us
because the PLAYER ONE’s operating results will contribute to our consolidated ones full year from FY2027/1.
Main locations
Long-term transactions with famous
cinema complexes across North
America
Outline of Project
PLAYER ONE: Revenue $160m EBITDA $20m (Estimate for this FY)
NEN: Revenue $107m EBITDA $13m (Target for this FY)
KDT: Revenue $33m EBITDA $7m (Target for this FY)
After PLAYER ONE is consolidated, our sales volume in North America
will be approx. ¥44.0bn in FY2027/1, equivalent to approx. 25% of all.
For enterprise value of $170m, EV / EBITDA is 8.5x (estimate for this FY),
4.8x for mid-and-long term target and planned to be even less afterwards.
By leveraging the debt capacity, planned to pay all consideration by cash
and borrowings. Thus, Cash EPS is expected to increase continuously
due to contribution to the results and PMI.
© GENDA Inc. M&A announced todayGENDA IR
Strengthen Platforms in North America (USA + Canada)
Note: We define a place with 31 or more game machines as “amusement arcade,” and a place with 30 or less game machines as “mini-location.” NEN’s locations are as of January 2025, PLAYER ONE’s as of December 2024.
+
Expand Entertainment Platform Network in North America by NEN and PLAYER ONE
Amusement arcade104stores
Mini-location approx.2,000locations
Amusement arcade19stores
Mini-location approx. 10,000locations
3
© GENDA Inc. M&A announced todayGENDA IR
Roll-up Strategy
4
・・・
Not only roll up amusement arcades in Japan which are growing with strong demand for Japanese anime, but also keep expanding our network efficiently by
roll-up and become a global platformer to eliminate “demand-supply gaps of Japanese anime merchandise” in North America
Implement the top priority of M&A strategy, “roll-up of AMs,” in North America as well
Amusement arcades in Japan
October 2023
Fixed assets
Acquisition
September 2023
Assets Acquisition
December 2023
Absorption-type split
December 2020
Share Acquisition
(85.1%)
January 2022
Share Acquisition
(100%)
May 2024
Share Acquisition
(100%)
February 2024
Share Acquisition
(82.45%)
October 2024
Absorption-type split
From Matahari Entertainment
AM
1 store
February 2025
Absorption-type split
October 2022
Absorption-type split
March 2025
Share Acquisition
(100%)
June 2024
Share Acquisition
(100%)
October 2022
Business Acquisition
November 2023
Assets Acquisition
From Global Solutions
117 mini-
locations
April 2025
Share Acquisition
(100%)
September 2023
100% ownership Acquisition
November 2024
Equity Acquisition (100%)
・・・
Amusement arcades abroad
NEW
© GENDA Inc. M&A announced todayGENDA IR
Note: Adjusted EBITDA is calculated by adding back (1) one-off expenses associated with the M&A by Open Gate Capital in February 2024 and (2) a subsidy for COVID-19, etc. Regarding Adjusted Net income before amortization of goodwill, in
addition to (1) and (2), although a large amount of borrowing interest is included in FY2024/12 associated with M&A by Open Gate Capital in February 2024, we plan to repay the interest concerned after GENDA conducts M&A and the burden of
interest is expected to return to the same level of FY2023/12. Therefore, we deducted interest on the borrowing concerned and added back the amortization of goodwill.
(unit: USD$ mn) 2022/12 2023/12 2024/12 2025/12 2026/12 Interim
target
Revenue 142.6 161.5 154.3 160.0 180.0 220.0
Adjusted EBITDA 24.2 27.6 18.2 20.0 22.0 35.0
Adjusted Net income before
amortization of goodwill
(IFRS based Net income)
8.7 13.1 8.2 9.0 10.0 18.0
PE fund, Open Gate Capital acquired from Cineplex in February 2024. Intrinsic performance is around $18mn in EBITDA excluding one-off expenses.
Since succeeded the acquisition from the fund in a short time, suppress the acquisition price while securing the seller’s annual return.
PLAYER ONE’s progress of Results
PLAYER ONE acquired by PE fund in 2024 → acquired by GENDA in 2025
Add back the followings
to show intrinsic performance;
・One-off M&A expenses
・Payment of high interest on LBO
loan for acquisition by the PE fund
→ GENDA will borrow in yen with low interest and do capital injection to
Kiddleton. Then Kiddleton will acquire the shares with that fund.
Therefore, almost no payment of interest expected at PLAYER ONE.
Record one-off
expenses due to
acquisition by fund
Add back the following to show
intrinsic performance;
・One-off M&A expenses
→ Standalone intrinsic
performance was approx. $18mn in
EBITDA before M&A
Consolidated to
GENDA and start
full contribution
To be completed
during 2025
(planned)
Cineplex (parent company) covered head
quarter expenses at this time and earning
capacity looked higher than standalone
intrinsic performance (also adjusted by
subsidies for COVID-19 in 2022 and 2023)
Earning capacity looks higher than
intrinsic performance due to cost
covered by Cineplex HQ
FY2024/12
154 m
$
Sales
Route Operations
(Amusement arcades
And Mini-locations)
Distribution
(Wholesale of
game machines)
30 %
70 %
Add back the following
to show intrinsic performance;
・Payment of high interest on LBO
loan for acquisition by the PE fund
5
© GENDA Inc. M&A announced todayGENDA IR
Maximize PMI effects like NEN
Based on results at NEN with same store sales growth “average 3x,”
thoroughly develop upside potential, completely different from that in Japan
6
Against EV / EBITDA of 8.5x at advanced phase, with huge room for PMI, plan to have 4.8x as mid-and-long term target and planned to be even less afterwards
1
2
3
At sites consisting 5% of sales, with “5 or less game machines,” replace with Kiddleton-style. Assume average result of sales after replacement at NEN.
At sites consisting 65% of sales, with “more than 5 game machines,” add Kiddleton-style game machines. Assume average sales after replacement at NEN.
For “wholesale of game machines,” consisting 30% of sales, conservatively assume to remain the same.
After
Before
(For reference) Replacement at NEN
Amusement arcades
and Mini-locations
Wholesale of
game machines
30 %
70 %
5 or less
game
machines 5 %
More than
5 game
machines 6 5 %
2
3
1
© GENDA Inc. M&A announced todayGENDA IR
Phenomenal results with same store sales growth “average +201%” !!
7
Incredible PMI results at NEN
Note: Compare data at 67 locations which had operated for 14 days or more among 101 locations where we replaced game machines and prizes in November and December 2024.
In other words, same store sales tripled on average. For comparison, even with PMI in Japan, same store sales growth is c.+50% “at most”.
Now replacing machines at approx.10,000 locations of NEN across the U.S. as quickly as possible, with inbound inquiries of new store openings.
Number of stores by growth rate by PMI
In our analysis, this implies the nationwide “supply-demand gap” of Japanese IP contents, now available only in a few cities such as NY and LA.
Besides, this result is made only by Japanese-style “Kawaii” stuffed animals, such as bears or rabbits, without real popular Japanese anime IP.
Further upside exists by real popular anime IP fully implemented in the future. (to next page)
A B C D E F G H I J K L M N O P Q S T U
+ 0 %
+ 100 %
+ 200 %
+ 300 %
+ 400 %
+ 500 %
A B C D E F G H I J K L M N O P Q R S T U
Average
+201%
…
564%
+
486%
+
455%
+445%
+435%
+433%
+425%
+
396%
+374%
+
331%
+
300%
+292%
+275%
+272%
+271%
+265%
+259%
+248%
+245%
+242%
+
…
Same store sales
before & after
the acquisition
Before & After the
replacement with
Kiddleton’s style at
NEN’s location in the
U.S.
Before & After the
amusement arcades
in Japan joined via
roll-up M&As
~ 0% - -
+ 0 ~ + 99% 19 9
+ 100 ~ + 199% 15 -
+ 200 ~ + 299% 22 -
+ 300 ~ + 399% 4 -
+ 400 ~ + 499% 6 -
+ 500% ~ 1-
Top 20 stores in Revenue Growth Rate after the replacement
No site decreased the revenue in roll-up
M&A of amusement arcades in Japan /
North America
© GENDA Inc. M&A announced todayGENDA IR
8
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
? ?
Fan
Fan
Fan
Fan
Fan Fan
Fan
?
GENDA is a global platformer of Japanese Anime IP
Japan as one to spread world-class anime IP to fans (GENDA serves as an offline platformer)
Now that GENDA, a Japanese company, has acquired the long-desired entertainment platform with individual consumers across North America, we will gradually sell
famous Japanese anime IP prizes directly to anime fans across North America through the NEN platform (many lined up for 2025, we plan to announce them in
series).
Popular IP Contents
Successively Coming to
North America!
Popular IPs in Japan GENDA serves as the Global Entertainment Platform
© GENDA Inc. M&A announced todayGENDA IR
Room for Further Synergies in combination with NEN
Pursue further synergies by combining North America Platforms of PLAYER ONE and NEN
4
Advantage of purchase price
Make the management more efficient Carved out from Cineplex Inc., a major operator of movie theaters in North America in February 2024.
Initiated by Fund, changed to well-muscled structure by streamlining sales admin dept., sharing information in real time by
renovating the system, etc.
After joining GENDA, further improvement of the management is expected by not only implementing PMI measures but also
sharing know-how which we have as an entertainment operating company.
Since PLAYER ONE has the Distribution business, we can increase the number of purchase more than doing the Route
Operations business alone.
Become possible to purchase equipment with business conditions favorable to us by leveraging economies of scale.
5
6
Efficient operation of warehouses and offices of
PLAYER ONE and NEN
9
NEN’s hub
PLAYER ONE’s hub
1. Dallas Fort Worth
2. Southern California
3. Kennesaw, Georgia
4. Southwestern Ohio
5. Boston Rhode Island
6. East Pennsylvania
and New Jersey
Warehouses and offices located within 80 miles
© GENDA Inc. M&A announced todayGENDA IR
38.1
46.1
55.6
111.7
157.0
2.7
3.5
4.3
4.6
8.0
5.6 6.2
8.1
14.2
22.0
PLAYER ONE’s contribution to earnings
2025/12024/12023/12022/1 (¥bn)
Revenue EBITDA Net income before
amortization of goodwill
(IFRS based Net income)
Earnings Estimate in FY2027/1 (assumes no M&A from today on)
Revenue ¥183.0bn │ EBITDA ¥25.0bn │ Net income before amortization of goodwill (IFRS based Net income) ¥9.5bn
For FY2026/1: PLAYER ONE’s full contribution will be in the next fiscal year. Not revise the results this year because M&A-related expenses occur while PLAYER
ONE will contribute only half-year. Include PLAYER ONE’s growth for mid & long term with plenty room for organic growth different from that in Japan expected.
183.0
2026/1
E
2027/1
E
25.0 9.5
…
2025/12024/12023/12022/1 2026/1
E
2027/1
E
2025/12024/12023/12022/1 2026/1
E
2027/1
E
…
+26.0
+33.0
+3.0
+5.0
+1.5
+2.5
Interim
target …
10
(¥bn)(¥bn)
Note: Assumed exchange rate; $1 = ¥140 for FY2026/1, $1 = ¥145 for FY2027/1.
Interim
target Interim
target
© GENDA Inc. M&A announced todayGENDA IR
By utilizing Debt financing, adjusted Cash EPS is steadily growing. After completed this M&A, expect extra adjusted Cash EPS with growth by PMI and organic growth
Continuous growth of Adjusted Cash EPS by utilizing Debt financing
By disciplined M&A, Cash EPS is linearly growing despite growth through M&A
Cash &
deposits
¥25.6bn
Goodwill
¥18.1bn
Other
assets
¥70.6bn
Interest-
bearing debt
¥52.5bn
Other
debts
¥26.2bn
Net assets
¥35.7bn
Cash & deposits level
Goodwill
•Keep possessing cash
and deposits which can
be allotted for M&A
•Assume to allot for
PLAYER ONE as well
•Hold down the amount
of goodwill against net
assets by disciplined
M&A at a right valuation
Interest-bearing debt
Net assets
•Borrowing from 63
financial institutions (of
which 43 banks of 112
belonging to JBA)
•Received an external
rating of investment
grade (BBB+)
•Financial soundness
drastically improved due
to follow-on offering in
July 2024
•Net assets approx. twice
as much as goodwill
47.23
56.5
68.24
81.36
103.52
2022/1 2023/1 2024/1 2025/1 2026/1
Adjusted Cash EPS
EPS based on Adjusted (intrinsic performance before
deducting M&A-related expenses) Net income before
amortization of goodwill (IFRS based Net income)
(¥)
21%
CAGR
Results Target
Note: Figures before taking into account the 2-for-1 stock split with Effective Date on April 1, 2025.
Consolidated Balance Sheet
As of the end of FY2025/1
11
© GENDA Inc. M&A announced todayGENDA IR
5.7 6.3
8.2
15.4
22.4
2022/1 2023/1 2024/1 2025/1 2026/1
(E)
2.8
3.6
4.5
5.9
8.4
2022/1 2023/1 2024/1 2025/1 2026/1
(E)
Evaluate the M&A consideration in comparison with the cash flow from the target, and enhance cash flow after consolidation with post-merger-integration
Transformational Growth in Cash Flow
Disciplined M&A & PMI cycle to achieve transformational growth in Cash Flow
12
Adjusted Net Income
before Amortization of Goodwill
IFRS based Net Income before one-off M&A costs
32%
CAGR
Adjusted Operating Cash Flow
Operating Cash Flow before one-off M&A costs
Adjusted EBITDA
EBITDA before one-off M&A costs
- Interest
- Tax
- Depreciation
- Impairment
However,
Depreciation and
Impairment are
non-cash items
Although no company
estimate for 2026/1
operating cash flow
available,
company estimate of
major items in operating
cash flow are;
1. Net income before
goodwill amortization
¥8.0bn
2. Depreciation ¥8.5bn
3. Impairment ¥0.5bn
4. M&A costs for M&As
already announced
¥0.4bn
1+2+3+4＝¥17.4bn
Then, change in WC etc.
will be deducted from
above
40%
CAGR
(¥bn) (¥bn) (¥bn)
Organic
growth only
due to IPO
preparation
Started paying tax
therefore nominal
growth rate lower
than EBITDA
Growth boost
with same tax
rate YoY
+ Depreciation
+ Impairment
+/- change in WC
Adding back
depreciation and
Impairment to
show pure cash
flow generating
capabilities
Transformational
Growth via M&A
4.7
6.4
7.6
9.9
2022/1 2023/1 2024/1 2025/1 2026/1
(E)
Note: Each figure of adjusted items is calculated by adding back M&A costs. ①M&A execution fees: Brokerage fees, legal fees, DD fees, FA fees and appraisal fees, ②M&A financing fees: M&A financing fees, ③Equity offering fees:
Follow-on offering fees and IPO fees.
© GENDA Inc. M&A announced todayGENDA IR
Although the global stock market correction triggered by the US tariff policy is
unfavorable when organic growth is the only growth driver, it will allow us to source
more quality deals while the stock prices of listed companies adjusted, and thus the
valuations of unlisted companies are dragged down. We regard this situation as
a tailwind and opportunity for us, with M&A being our center of growth strategy.
Although a cyclical correction in the stock market is practically inevitable, we believe
that the only way to reward all of our investors who have entrusted us with their funds,
is to announce our ample M&A pipeline in front of us one by one as soon as possible,
regardless of the market environment, and to promptly return the fruits of
transformational growth.
FAQ: How do GENDA conceive the current stock market environment?
Global stock market correction is a tailwind for GENDA as M&A is our mainstay of growth
13
適切な取得対価
M&Aの持続性
（負債調達／株式調達による現金対価M&A、株式対価M&A）
株式価値の向上
企業価値の向上
キャッシュフローの増加
エンタメ経済圏の完成
エンタメコングロマリット
エンタメ業界に特化した連続的なM&A
オーガニック成長
（既存事業）
インオーガニック成長
（M&A戦略）
シナジー
GENDA’s Growth Strategy: Transformational Growth through M&A
© GENDA Inc. M&A announced todayGENDA IR
FAQ: What is the effect of escalation of tariffs?
Although the impact is limited now, we will minimize the impact even further
14
Impact on P&L by Escalation of Tariffs
Assuming that the tariff rate on Chinese imports by the U.S. is 104%, there is a possibility that a maximum impact of ¥0.36bn will occur in FY2026/1 (Kiddleton+NEN+PLAYER ONE).
Although PLAYER ONE's sales are approx. 60% in the U.S. and approx. 40% in Canada, the above calculation is assuming all of the currently planned investments are made in the U.S.
On the other hand, we believe that it will be possible to lower the unit purchase price because the number of machines purchased by whole GENDA in North America will increase due
to PLAYER ONE’s joining. Although the impact will be limited, we will minimize the impact even further by implementing measures in the next page.
Besides, the mainstay of GENDA’s growth story in North America is “Kiddleton-style mini crane games and Japanese IP of the prizes in the games.”
The feature of this business is a very short recoupment period of initial investment per site, about 12 to 24 months.
In fact, Kiddleton has opened approx. 600 stores for 4 years all over the U.S. by itself.
The reason for the short recoupment period is low price cost of mini-crane games and prizes (imported to the U.S.) especially against the sales it earns.
This time, although such low price cost is subject to the tariff, as such price is low against the sales in the first place, the impact is limited
Our target
for FY2026/1
Impact %
EBITDA ¥22.0bn ¥0bn
(no impact from
depreciation)
0%
Operating Income
(IFRS based)
¥13.5bn ¥0.36bn Approx. 2.6%
Operating Income
(JGAAP based)
¥10.5bn ¥0.36bn Approx. 3.4%
Net income before
amortization of goodwill
(IFRS based Net Income)
¥8.0bn ¥0.27bn
(after tax effects)
Approx. 3.3%
Machines
Increase in the cost of machines will be
evened out over the depreciation period
on the PL. Estimate of increased costs in
FY2026/1 will be ¥0.36bn in total of
PLAYER ONE’s ¥0.05bn and Kiddleton +
NEN’s ¥0.31bn.
Prizes
We believe it will be possible to pass on the
increased cost of prizes to unit play fees etc.
because our business model is in expensive
at $1 per play.
Besides, even if there is an impact from tariffs,
our prizes are still cheaper and higher quality
than prizes produced in the U.S.
© GENDA Inc. M&A announced todayGENDA IR
FAQ: What is the effect of escalation of tariffs? (continued)
Already started considering specific measures, will start implementing them in 2H of FY2026/1
Future countermeasures
Shift from Speed-minded to Efficiency-minded
・From speed-minded “pursuing dominant strategy” to “pursuing efficiency”
by severely evaluating each location’s ability to pull in more customers and
starting PMI measures from locations with higher sales per machine
・For PLAYER ONE, will start implementing PMI measures from Canada,
that is not affected by escalation of tariffs
Review Manufacturing structure
・Launch a structure that we import parts from China and assemble them in
the U.S. by utilizing NEN’s local manufacturing plants
・The transportation of “finished products” of mini cranes requires a large
portion of “air” transportation due to the space it takes up, but exporting
parts makes transportation more efficient and contributes to reducing
transportation costs.
Review Price costs
・Negotiate with manufacturing plants in China and strengthen efforts to
reduce price costs
・Consider procurement from other countries with lower tariffs
Parts
suppliers
15
© GENDA Inc. M&A announced todayGENDA IR
It is an entertainment at $1 for per play, stable business with strong downward durability compared to luxurious leisure activities.
As there is no data available for the U.S., we use the data for Japan here. Even at a crisis such as COVID-19 pandemic, you can
see the downward durability compared to other physical entertainments as presented in the graph below (on the other hand, it is
less affected by economic boom, too).
FAQ: How is the sensitivity of amusement arcades for the cyclicality of the economy?
Amusement arcades and mini-locations are “cheap, close and short” entertainment,
less affected by the cyclicality of the economy.
16
0
50
100
150
2017 2018 2019 2020 2021 2022 2023
Trend of Scale of Entertainment market in Japan
Travel agency (Domestic)
Amusement parks, leisure facilities
Amusement arcade
(Set 2017 as 100)
Source: “White Paper on Leisure 2024” by Japan Productivity Center
© GENDA Inc. M&A announced todayGENDA IR
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document to is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content o the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use of
this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the reason
thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgement of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
Disclaimer
17
© GENDA Inc. 本日公表のM&AについてGENDA IR
Thank you
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
2025.3.24
GENDA IR
GENDA’s Business Strategy and Growth Potential
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
2
Corporate Outline
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
The Big Picture of the Current Entertainment Industry
3
VisionAspiration
More fun for your days To be the World’s No.1
Entertainment Company in 2040
Speed is King, GRIT and GRIT, Enjoy our Journey
With these three values, we take on new challenges and
aim to be the world’s number one entertainment company
We believe that “fun” is essential for human beings
“More fun for your days” is our “Aspiration”
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
4
Note: All the figures are on a basis of consolidated results of FY2025/1.
Company name:
Headquarters:
Date of Establishment:
Listing:
Revenue:
EBITDA:
Operating income:
Net income before
amortization of goodwill:
Number of Employees:
Group companies:
GENDA Inc.
Tokyo Shiodome Bldg. 17F, 1-9-1 Shimbashi, Minato-ku, Tokyo
May 2018
July 28, 2023 on the Growth Market of the Tokyo Stock Exchange
¥111.7bn
¥14.2bn
¥7.9bn
¥4.6bn
12,147 (Consolidated)
(Employees: 1,730, Annual average number of temp staff: 10,417）
30 consolidated subsidiaries
Corporate outline
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
0.1 0.3 0.1
5.6 6.2
8.1
14.2
22.0
0
5
10
15
20
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1 2026/1E
GENDA’s “Continuous Transformational Growth”
5
0.5 1.2 1.5
38.1
46.1
55.6
111.7
2019/1 2020/1 2021/1 2022/13 2023/1 2024/1 2025/1 2026/1E
0.0 0.0
3.5
2.7
3.5
4.3 4.6
8.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1 2026/1E
(¥bn)
Revenue EBITDA Net income before
amortization of goodwill + 71 %
+ 54 %
+ 40 %
157.0
Note: The figures from FY2019/1 to FY2021/1 are values for reference because we did not make consolidated financial statements for that period.
One-time
extraordinary
income by
negative goodwill
(¥bn) (¥bn)
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
13.1
4.2
1.4
4.9
3.3
82.2
24.7
14.0
30.6
14.7
6
¥22.0bn
¥157.0bn
Amusement arcade
related business:
c.70%
GENDA’s Business Portfolio – 2026/1 Company Estimate (Initial Target)
Amusement Centric + Peripheral Areas
Over 95% of GENDA’s Revenue and EBITDA
as of today are amusement arcades and karaoke
We continue to focus on M&As on platform area
While entering into the contents area in the mid-to-long term
Revenue EBITDA
Note: The graphs for Revenue and EBITDA do not include "Consolidation Adjustments," which is why their total values (¥166.2bn and ¥26.9bn, respectively) do not match the company’s forecast (¥157.0bn and ¥22.0bn), with the Revenue
Consolidation Adjustment at -¥9.4bn, primarily due to internal transactions, and the EBITDA Consolidation Adjustment at -¥4.9bn, mainly consisting of GENDA’s standalone corporate expenses (-¥4.5bn) and M&A-related expenses (-¥0.4bn)
that have already been announced and are confirmed to be recorded in the FY2026/1 period; for reference, the actual consolidation adjustments for FY2025/1 were -¥7.8bn for revenue and -¥3.6bn for EBITDA.
Others
Karaoke (Karaoke BanBan, Ontsu)
Prize-related (Fukuya and Ares)
Overseas Amusement (Mainly U.S. and China)
Domestic Amusement (GiGO etc.)
49%
15%
8%
18%
9%
49%
16%
5%
18%
12%
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
0.4 5.4 7.1 11.9
30.2
114.2
227.6
2019/1
2020/1
2021/1
2022/1
2023/1
2024/1
2025/1
New Management Structure (announced on March 12, 2025)
7
Representative
Director and
President
Nao
Kataoka
Finance
Equity
- IPO new shares of ¥5.9bn (+ secondary offering of ¥9.9bn = ¥15.8bn)
Achieved simultaneous corner stone and IoI for the first time in Japan IPO history
- PO new shares of ¥10.0bn (+ secondary offering of ¥2.0bn = ¥12.0bn)
Ranked No.3 in Best Equity category of Deal of the Year 2024, No.1 in new share issuance
Debt
- Interest-bearing debt: ¥52.4bn (as of 2025/1)
- # of debt providers: 63
(incl. 43 banks of 110 under Japanese Bankers Association)
- Investment-grade rating (BBB+)
Market cap (figures below)
- Ranked No.1 hot stock in TSE Growth Market 2023
selected by market specialists
- Ranked No.1 hot stock in TSE Growth Market 2024
selected by market specialists
(¥bn)
(Company
estimate)
0.5 1.2 1.5
38.1 46.1 55.6
111.7
157.0
2019/1
2020/1
2021/1
2022/1
2023/1
2024/1
2025/1
2026/1
M&A
Numbers
- # Sourcing: over 700 (for 7 years since the establishment)
- # Announcements: 40 (for 7 years since the establishment)
- Ranked No.1 in the number of M&A as a listed company in Japan 2023 (10 deals)
- Ranked No.1 in the number of M&A as a listed company in Japan 2024 (11 deals)
Structures
- Domestic private companies: share acquisition, share exchange, company split,
absorption-type merger, and business acquisition
- Domestic public companies: Tender offer and subsequent squeeze-out
- U.S. private companies: share acquisition
Post-merger-integration
- Made the management more efficient by reorganizing within the group fast
Revenue transition (figures below)
- Led continuous transformational growth mainly through M&A
- Achieved ¥100.0bn in 7 years since the establishment,
the fastest record in the history of a Japanese company
Amusement Arcade Business
Drastically increased the earnings of the core GENDA GiGO Entertainment
43.7
50.0
72.3
2023/1 2024/1 2025/1
5.5 6.0
9.9
2023/1 2024/1 2025/1
Managing
Director
CFO
Taiju
Watanabe
Director CCO
Head of Contents &
Promotion Business
Yuzo
Sato
Director
Mai
Shin
Managing
Director
CSO /CPA
Kohei
Habara
Director (New)
Head of Amusement
Arcade Business
Kazuhiro
Ninomiya
+¥28.5bn
x 1.6 +¥4.3bn
x 1.8
Joined
GENDA
Jun. 2021
IPO
Jul. 2023
@¥60.1bn
PO
Jul. 2024
@¥149.1bn
Joined
GENDA
Sep. 2019
Assumed the
President of
GENDA GiGO
Entertainment
Apr. 2023
Assumed the
President of
GENDA GiGO
Entertainment
Apr. 2023
Revenue EBITDA
Having fully established its core M&A strategy, GENDA will move forward to a “New Growth Phase”, to execute this cycle at its full speed.
With organic performance in top form, Mai Shin will pass the torch to CFO & CSO leading the growth, and continue to support as a director
Note: They will officially assume office when the proposal of appointment of directors is approved at the 7th Ordinary General Meeting of Shareholders to be held in April 2025.
Source: “Deal of the Year 2024” of NIKKEI Veritas, “Market Questionnaire 2025: Hot stocks in Growth Market selected by market specialists” and “Market Questionnaire 2024: Hot stocks in Growth Market selected by market specialists” by Wealth Advisor Co., Ltd.,“Number of M&A by a listed
company in 2024” and “Number of M&A by a listed company in 2023” by M&A Online
(¥bn)
(¥bn) (¥bn)
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Management Team
Board members
Note: They will officially assume office when the proposal of appointment of directors is approved at the 7th Ordinary General Meeting of Shareholders to be held in April 2025.
Operating income of AEON Fantasy Co., Ltd. refers to that of 2,536 million yen for the fiscal year ended February 2014, the year to which March 1, 2013, belonged, the day on which Nao Kataoka became Representative Director and President, and 5,970 million yen for the fiscal year
ended February 2018, the year immediately preceding May 15, 2018, when he stepped down. The market capitalization of AEON Fantasy Co., Ltd. refers to March 1, 2013, when Nao Kataoka assumed the position of Representative Director and President, and May 15, 2018, the date of
his resignation. “The world’s No.1 amusement arcade operator” is based on the number of stores of AEON Fantasy Co., Ltd., ROUND 1, Bandai Namco Amusement Inc., Taito Corporation and Dave & Busters, Chuk E. Cheese, published by each company for the fiscal year 2017, the
fiscal year immediately preceding Nao Kataoka’s stepping down from President of AEON Fantasy Co., Ltd. The number of stores of Bandai Namco Amusement Inc. excludes the number of revenue shared stores.
Nao Kataoka Representative Director and President
Former Representative Director and President of AEON Fantasy Co., Ltd. and led the
company to become the world’s No.1 amusement arcade operator.
Increased operating income by 2.4x, from ¥2.5bn to ¥6.0bn and increased the market
cap by 5.5x, from ¥23.7bn to ¥131.0bn.
Yuzo Sato Director, CCO and Head of Contents & Promotion Business
Former Corporate Officer of Hakuhodo Inc., President & CEO of TBWA / HAKUHODO.
Having extensive knowledge and network in the advertising, media and entertainment
fields.
Kohei Habara Managing Director CSO / CPA
Passed the CPA exam while in college and worked at KPMG AZSA LLC and previously at
PwC Advisory.
Served as financial advisor on more than 30 M&A projects, including projects for
entertainment companies.
Mai Shin Director
Former Managing Director of Goldman Sachs (the youngest Managing Director at that time).
Combined skills in financial professionality and managerial skills through founding business.
Taiju Watanabe Managing Director CFO
Former Vice President at Investment Banking Division of Goldman Sachs.
Having professional expertise in M&A and financing.
Kazuhiro Ninomiya
Director, Head of Amusement Arcade Operations
Previously, at Bandai Namco Amusement, served as Executive Officer in charge of
domestic amusement arcade business and Overseas Business Division Manager.
Serves as Representative Director and President at GENDA GiGO Entertainment as well.
8
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Management team
Executive Officers
Daisuke Kajiwara Executive Officer, CTO and Head of IT Strategy Dept.
Formerly Executive Officer of Yahoo Japan and GREE, General Manager of
Development Division / General Manager of Business Division, Formerly CTO of Every.
Serves as Executive Officer CTO of IT Strategy Division at GENDA GiGO Entertainment
as well.
Atsushi Iyoda Executive Officer, Head of U.S. Operations
Formerly worked at AEON Fantasy Co., Ltd., served as Representative Director of the
company’s subsidiaries in Vietnam and the Philippines as well.
Serves as CEO/President of Kiddleton Inc., a U.S. subsidiary as well.
Minoru Kitagawa Executive officer, CBO and Head of Brand Strategy Dept.
In charge of design and direction of stores, products and SP tools, planning the
development of new business categories and rebranding in Doutor Coffee Co., Ltd. since
2000.
Since 2016, responsible for rebranding AEON CINEMA complex as the Head of Brand
strategy and Creative director in AEON Entertainment Co., Ltd.
Keiichiro Tanaka Executive Officer, Head of Character MD Business
Also serves as Representative Director and Chairman of the Board of Fukuya Holdings
Co., Ltd. and Ares Company, Ltd. and Chairman of the Board of Directors of Tokyo
Character Makers, Ltd.
After managing stores at Namco, he joined Fukuya and established Fukuya Holdings in
2017.
Tomoki Nagae Executive Officer, Head of F&B Business
Previously engaged in advisory and PMI work on M&A projects in PwC Advisory.
Conducted research on sake breweries at the University of Tokyo’s Faculty of Agriculture,
graduating top of his department.
9
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
GENDA Group Overview
GENDA is a pure holding company of amusement centric entertainment companies
10
Entertainment Platforms
Amusement F&B Contents & Promotion
Character MD
Entertainment Contents
GENDA Inc.
GENDA
Games Inc.
Online crane games
100%
Film
distribution
GAGA
Corporation
78.05%
VR contents,
virtual attractions
Dynamo
Amusement, Inc.
100%100%
C’traum
inc.
Import and
wholesale of
alcoholic
beverages
Pure Holding Company
JAPAN
100% ENTERRIUM
(US)
100% National Entertainment Network,
LLC
(US)
Kiddleton,
Inc.
(US)
GiGO Taiwan
Inc.
(Taiwan)
100%
GiGO VIETNAM
Co., Ltd.
(Vietnam)
100%
100%
GENDA GiGO
Entertainment Inc.
Operation of AM arcades
AM
1 store
GS社の
ミニロケ
Karaoke
ONTSU
Co., Ltd.
Distribution
of karaoke
equipment
100%100%
Shin Corporation
Co., Ltd.
Operation of karaoke
Karaoke
1 store
Karaoke
2 stores
Note: Organizational chart as of March 24, 2025. AM arcades in the chart refer to amusement arcades. The chart is intended to present mainly our consolidated subsidiaries.
Planning and sales of
prizes for AM
arcades
Ares Company
Limited
100%
Tourism
100%
Planning,
manufacturing and
sales of prizes
Fukuya Holdings
Co., Ltd.
100%
Tokyo Character
Makers Co., Ltd.
100%
100%
FUKUYA
HONKONG
LIMITED
(Hong Kong)
100%
FUKUYA
TAIWAN
LIMITED
(Taiwan)
100%
FUKUYA
USA INC.
(US)
100%
Fukuya Co., Ltd.
100%
100%
SMART
EXCHANGE Inc.
Foreign currency
exchange machine
business
NEW
Sweet Pixels
inc.
Planning, production
and sales of HillValley
brand popcorn and
sweets
NEW
SANDAI Co., Ltd.
100%
Five Colors
Inc.
(China)
93%
(UK)
GENDA Europe
Ltd.
100%
LEMONADE
Lemonica Inc.
Production and
sales of
Lemonade
66%
LEMONADE
Lemonica UK Limited
(UK)
100%
100%
D-eight CO., LTD.
NEW
HALOS Corporation
100%
ABROAD
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
11
Business Model
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
We believe the current business environment surrounding the entertainment industry is to deliver the “IP Contents” such as animation to the “fans” through
entertainment “platforms.”
In this context, we will first position “Platform” as our main growth driver, while entering into the “IP Contents” domain in the mid-to-long term.
The Big Picture of the Current Entertainment Industry
IP Contents × Platform
12
IP CONTENTS FANSPLATFORMS
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Based on a foundation of continuous growth brought about by the steady expansion of our domestic business and aggressive overseas business
development, we aim to build a “GENDA Entertainment Ecosystem” that will expand globally by accumulating M&A in both the entertainment platform and
entertainment content areas. In this way, we believe that we will be able to overcome the volatility of the ever-changing entertainment business by building a
solid business portfolio.
Our growth strategy = “M&A in the Entertainment industry”
Completion of the Entertainment Ecosystem
13
Note: Diagram of our envisioned growth strategy.
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Right consideration for
acquisition
To achieve our Aspiration, form GENDA’s unique “Entertainment Conglomerate” and create Conglomerate Premium
Our growth strategy = “M&A in the Entertainment Industry”
14
②Suppression of
Volatility
③IR to the world
④Branding
①Optimization of
Capital structure
【Aspiration】More fun for your days
Sustainability of M&A
(Debt financing / Cash consideration M&A by equity finance, Equity consideration M&A)
Increase in Equity value
Increase in Enterprise value
Increase in Cash flow
Premium effects
more than enough to
offset conglomerate
discount against
complexity ((1) to (5)
below)
⑤PL synergies
Unique M&A environment of Entertainment Industry
Need for business succession associated with the aging population issue specific to Japan
High Net-Cash-Ratio of Entertainment companies
High ability to generate cash flow associated with popularity of Entertainment
Certain barriers to entry in M&A in Entertainment industry
In M&A, the highest priority is appropriate valuation
Synergies and PIM are means to generate cash flow
Consistently, the highest priority is M&A at a right price
Avoid targeting synergies or PMI, but make an investment loyal to the theory of equity value
Many synergies are arising within the group under that assumption
Form GENDA’s unique Entertainment Ecosystem
From the industrial revolution to GenAI, the entertainment Industry has been growing because
human leisure time has increased
Transcend the volatility by expanding portfolio, in spite of the industry’s high volatility
Steadily expand “Entertainment Platform” which has low volatility and high ability to generate cash
flow, while building a situation where we can leverage, expand into “Entertainment Contents” in
the mid-to-long-term
Increase the enterprise value through Organic (existing business) and Inorganic (M&A strategy)
Complete Entertainment Ecosystem
Entertainment Conglomerate
Continuous M&A dedicated to Entertainment Industry
Organic Growth
(Existing Businesses) Inorganic Growth
(M&A Strategy)
Synergies
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
③IR to the world
Detailed and sincere
explanations to investors
Number of IR meetings in 2024:
177 companies (of which 102 were
overseas), cumulative 395 meetings (of
which 210 were overseas)
As we expand our investor base around the
world, we will be able to meet investors and
funds with lower capital cost, and as the
capital cost decreases, enterprise value will
increase.
To realize “Conglomerate Premium”
15
Aim to realize “Conglomerate Premium,” more than enough to offset discount on complexity by conglomerate
GENDA’s unique Entertainment Ecosystem
①Optimization of
Capital structure
Increase in Equity
value
“Individual entertainment
companies have unnecessary
cash”
By managing funds on a group-wide basis,
put the remaining funds into investments for
the next growth while preparing.
Based on the “Modigliani-Miller Proposition
(MM Proposition),” the first proposition of
the MM Proposition theoretically proves that
“capital structure has no effect on enterprise
value in a perfect capital market.” On the
other hand, even if the enterprise value
remains constant, we can increase the
equity value by capital structure. We can do
that by utilizing excess funds and debt
properly and making the stock structure
more appropriate.
In addition, it is possible to do business on a
consolidated basis with financial institutions
that each company could not meet on their
own, making it possible to effectively utilize
debt with low capital cost compared to the
equity, which also leads to an increase in
enterprise value.
②Suppression of
Volatility
Increase in Enterpri se
value
(and increase in equi ty
value by that)
“Individual entertainment
companies are undervalued”
Even if individual businesses are volatile,
GENDA will transcend this volatility by
forming an appropriate business portfolio.
In other words, we aim to create a situation
where "we keep growing strongly every year
as a group even though an individual
business might have a bad year.”
As it is necessary to tolerate volatility when
you invest in each company itself, the
expected return goes up and the capital
cost is high, too. However, by forming an
entertainment conglomerate, the volatility
will be reduced as whole GENDA and the
capital cost will decrease. The decrease in
capital cost, which is the discounted rate of
cash flows, will increase the present value
of total amount of cash flows and the
enterprise value will increase.
④Branding
Increase the number of fans
of GENDA
We will increase the number of fans of
GENDA. By doing that, we will achieve
greater effects as a group than if each
individual company acted individually in all
aspects, including recruitment, opening new
stores, purchasing, sales, business tie-ups,
M&A, fundraising etc.
Enterprise value will increase due to the
improvement of PL and decrease in capital
cost of each company.
⑤PL synergies
Realization of countless and
cross-selling synergies
within the group
Countless cross-selling synergies are
generated, which occur in the contiguous
entertainment industry.
Improved PL of each subsidiary increases
cash flow and the enterprise value will
increase.
“Conglomerate Premium” is a state that keeps the value of the whole group valued higher than the sum of the values of the individual businesses
Increase in Enterpri se
value
(and increase i n equity
value by that)
Increase in Enterpri se
value
(and increase i n equity
value by that)
Increase in Enterpri se
value
(and increase i n equity
value by that)
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
M&A and capital transactions track record
16
June 2018
Share Acquisition
(100%)
1
Note: The acquired ratio and the number of acquired properties are as of the date of the announcement of the project. Entertainment Contents Entertainment Platform
July 2019
Joint Venture (50%)
2
15
October 2023
Fixed assets
Acquisition
September 2023
Assets Acquisition
14
September 2023
100% ownership
Acquisition
16
October 2023
Share Acquisition
(66.0%)
September 2023
100% ownership
Acquisition
13 17
October 2023
Share Acquisition
(100%)
April 2021
Business
Acquisition
4
October 2021
Capital Alliance
5
November 2023
Equity Acquisition
(100%)
20
December 2023
Absorption-type split
21
December 2023
Share Acquisition
(100%)
23
January 2024
Share Acquisition
(100%)
24
November 2023
Share Acquisition
(78.05%)
18
December 2020
Share Acquisition
(85.1%)
3
January 2022
100% ownership
Acquisition
7
January 2022
Share Acquisition
(100%)
8
February 2024
Share Acquisition
(78.59%)
26
May 2024
Share Acquisition
(100%)
27
June 2024
Share Acquisition
(100%)
28
June 2024
Business
Acquisition
29
November 2024
Equity Acquisition
(100%)
30
July 2024
100% ownership
Acquisition
31
February 2024
Share Acquisition
(82.45%)
25
December 2021
Business
Acquisition
6
October 2022
Business
Acquisition
10
October 2022
Absorption-type split
11
August 2024
Share Acquisition
(72.92%)
32
June 2022
Capital Alliance
9
November 2023
Fixed assets
Acquisition from
Global Solutions
19
117 mini-
locations
December 2023
Management right
Acquisition
12
22
1 AM arcade
(China)
October 2024
Absorption-type split
(Matahari
Entertainment)
33
AM
1 store Karaoke
1 store
February 2025
(planned)
Absorption-type split
・・・
September 2024
Absorption-type split
(ATOM)
34
December 2024
Fixed assets
Acquisition from
KARATEZ
Karaoke
2 stores
35 36
Completed 40 M&A in total, 11 before IPO and 29 after IPO
38 40 NEW
NEW
39
37
March 2025
(planned)
Share Acquisition
(100%)
March 2025
(planned)
Share Acquisition
(100%)
March 2025
(planned)
Absorption-type split
March 2025
(planned)
Share Acquisition
+ Share Exchange
(100%)
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
GENDA Waste
Management Service Corp
International Rollins Danaher
Market cap $1.3bn $83bn $11bn $24bn $195bn
Growth model M&A in the
entertainment industry
M&A in the industrial
waste service industry
M&A in the funeral
service industry
M&A in the pest control
industry
M&A in the medical &
life science industry
EV/EBITDA 14x 15x 11x 30x 25x
EBITDA CAGR
(3-year forecast) Approx. 45% Approx. 10% Approx. 10% Approx. 12% Approx. 12%
Multiple per
percentage in
EBITDA growth 0.3x 1.5x 1.1x 2.5x 2.0x
Cash ROIC 13% 10% 5% 25% 10%
Operating CF
conversion ratio 70% 80% 70% 70% 90%
Earnings growth
Volatility Medium Medium High Medium Medium
Operating CF
÷
Increase in capital
invested
Approx. 25% Approx. 20% 8～9% Approx. 25% Approx. 10%
GENDA adopts “Continuous Transformational Growth” as its slogan through M&A
in the entertainment domain, and the category of business sector is “M&A”
Selected companies in the same sector of business from a perspective of “growth
model of roll-up M&A in the matured market” and “major M&A companies”
GENDA is a company, which acquires “a company making organic growth” through
M&A and grows “in an inorganic way”
While GENDA is stronger or at the same level in each indicator compared with
other companies in the same sector of business, we have huge
room to expand in multiple per percentage in growth
Comparison with other companies in the same category of business, “M&A”
“Valuation is 70-80% discount” (quoted from Initial Report by Capital Growth Strategy disclosed on October 18, 2024”)
17
Source: Initial Report by Capital Growth Strategies (“CGS”)
Note: The estimates of comparable companies are based on consensus on Bloomberg. Figures are as of October 2024 and 3-year forecasts by CGS.
•
•
•
•
Stronger than GENDA
Weaker than GENDA
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
18
Market Environment
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
1.1
1.2
1.3
1.2
1.2
1.1
1.2
1.3
1.2
1.4
1.5
1.6
0.2
0.3
0.3
0.6
0.8
1.0
1.0
1.2
1.2
1.3
1.5
1.7
7.4 8.0 8.5 8.9 9.4 9.7
10.7 11.3 10.7 11.2
12.3
13.5
0
2
4
6
8
10
12
14
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Smartphone game (abroad)
Manga (comics)
Publication (abroad)
Music concert
Sports viewing
Theater, entertainment
Amusement arcade
Karaoke box
Character products
Theme park
Japanese anime (abroad)
Household game (Japan)
Household game (abroad)
Smartphone game (Japan)
Japanese anime (Japan)
Whole Entertainment market is on a growing trend, led by the popularity of anime home and abroad
19
Japanese anime market abroad
For 11 years since 2012
7. 2x
Scale of Entertainment Market
From the industrial revolution to Generation AI, human leisure time has been increasing and the entertainment industry is on a growing trend
Now we can enjoy anime anytime and anywhere with the popularization of online distribution, which provides a boost to the popularity of anime
(¥tn)Impact by COVID-19
Source: “Japan & World Media x Contents Market Database 2023” by HUMANMEDIA Inc., “Survey on Amusement Industry” by Japan Amusement Industry Association
Note: The market scale of amusement arcades in 2023 is not included because the research by Japan Amusement Industry Association is not disclosed yet.
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
N=19,202
20
Expansion of “Oshi-Katsu” demand
Fan’s consumption behavior is switching from “tangible” to “intangible” (“Oshi-Katsu”)
It became common to have “Oshi” (favorite IP or celebrity)
“Oshi-Katsu” (activities to support favorite IP or celebrity) is not only to “watch” or “buy merchandise” but also expanding into “activities to feel Oshi physically”
Have an experience in Oshi-Katsu
37.2 %
One in 3 people has an experience in Oshi-Katsu!
51.3 %
Having Oshi
One in 2 people has Oshi!
Source: “Oshi-Katsu, Support advertisement Research 2023” by jeki Support Advertisement Office (Cheering AD) of JR East Marketing & Communications, Inc.
N=7142
57.5
47.1
37.4
29.0
28.6
26.3
24.0
23.2
19.0
17.2
16.4
13.9
11.5
10.7
7.9
7.9
7.3
7.2
5.7
4.9
0.0 10.0 20.0 30.0 40.0 50.0 60.0
Watch videos
Go to concerts, theaters, games etc.
Go to buy merchandise
Read books, photo books
Buy merchandise online
Join official fan club
Buy products advertised by Oshi
Celebrate Oshi's birthday and anniversary
Check advertisements on which Oshi appears
Deliver through SNS
Join season-limited events
Pilgrimage to sacred places
Gather with other fans
Go to collaborative café
Write a letter to Oshi
Go around to see support advertisement
Social tipping such as super chat
Make an alter for Oshi
Send flowers to celebrate
Plan or invest on support advertisement
(%)
Contents of Oshi-Katsu which people have experienced
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
“Entertainment Platform” is the place for offline “Oshi-Katsu” (activities to support one’s favorite idols and characters)
Platform as a place where you can fully feel IP contents such as anime in the real world.
Desire to fully feel “Oshi” offline is leading the growth.
VSPO!× GiGO Campaign (2023)
GiGO Fukuoka Tenjin GiGO Shinjuku Kabukicho
TWICE LOVELYS × GiGO Campaign (2024)
©JYP Entertainment. ©2024 Warner Music Japan Inc.
① Video distribution service
Accelerating watching anime online
Popularity of Japanese anime supports the expansion
of demand for prizes
② Entertainment Platform
Accelerating “offline” consumption of anime
Entertainment Platform Business provides a place
where you can interact with “Oshi” in real, which you
found through watching anime, etc.
③ Used market service
Increasing transaction of anime prizes in used market
Used market expanded and made resale possible.
This motivated people to play prize games more.
④ SNS
Information of anime prizes is spreading on SNS
Share acquired prizes on SNS.
Experiences that fans want to brag in their community.
Excitement and sensation of “Oshi-Katsu” remain even after
visiting the store.
Note: Image of Entertainment market which the Company envisions.
With the background that you can watch anime etc. online now, fans can interact with IP contents in real in amusement arcades, karaoke boxes and F&B in
which various IP contents are provided every day.
Demand for platforms where you can fully feel consumption of IP contents as “Oshi-Katsu” from fans of IP contents is expanding.
21
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
256.7
231.4
199.0
182.2
190.4
177.1
183.9
188.6
179.4
189.6
209.6
254.0
281.3
298.8
242.5
306.2
325.0
702.9
678.1
573.1
504.3
495.8
487.5
470.0
456.4
422.2
433.8
462.0
485.9
520.1
540.8
418.7
449.2
490.7
0
100
200
300
400
500
600
700
800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(¥bn)
Changes in the market scale of Amusement arcades
Market scale of Amusement arcades is growing with rapid growth of prize games
Sales of Prize games hit a record high even in 2022 under the pandemic
22
Market scale of Prize
games is on a
growing trend
Source: “Survey on Amusement Industry” by Japan Amusement Industry Association Note: “Monthly sales” means the total of sales of stores which exists in the month concerned of the year and the previous.
Not only getting products of “Oshi” but also the experience itself in getting them are popular “Oshi-Katsu”
TWICE LOVELYS × GiGO Campaign (in 2024)
GiGO Shinjuku KabukichoGiGO Smark Isesaki
Shrink in TV/ medal games market
due to replacing with smartphone /
online games bottomed out
For 5 years, prize games
1.7xgrew rapidly
Even in FY2021, FY2022, during the pandemic,
the sales of prize games in the whole industry
hit a record high
Impact by COVID-19
Prize game
Others
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
23
Source of Growth Potential
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
GENDA aims to be the world’s No.1 entertainment company
Professional talents in three fields to support
our growth strategy
Professionals in
each field
M&A in the
Entertainment
industry
Accelerating global expansion
エンターテイメント
アミューズメント施設
日本・アジア・米国 グローバル
M&A /
Finance
2
Technology
3
1
Management of
Entertainment
companies
Professional Talents in 3 Major Fields
Note: Image of future business development which the Company envisions.
Entertainment
Amusement arcade
Japan · Asia · USA Global 24
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Commit from
Day1
Management of
Entertainment
company
1 .
M&A / Finance
2 . Technology
3 .
Generate synergies between businesses within the group
Deploy business know-how and knowledge within the group
•
•
•
•
•
•
Keep making triune efforts and achieve “Continuous Transformational Growth”
•
•
•
Image of Triune efforts in 3 fields
Future efforts Future efforts
Future efforts
Keep conducting “roll-up M&A” in the
operation business of amusement
arcades which has a lot of smaller
business operators with sufficient room
to improve the management efficiency
Conduct M&A in business which will
produce synergies to create GENDA
Entertainment Ecosystem
Reinforce the sourcing (2) function and
strengthen the relationship with
intermediates through our management’s
connection
Further enhance the functions of GiGO App, an app for
customers, enhance customers’ experience through DX
Further enhance the functions of GiGO NAVI, an app for
internal use, improve operation with DX
Conduct PMI to improve operational efficiency by
laterally deploying GiGO NAVI to companies newly
joined GENDA through M&A
Build and develop IT infrastructures and systems in
group companies which keep increasing through M&A
Transformational
expansion of stores
through continuous
M&A
Horizontally deploy
innovative DX in
industry at once
Expand
business
domains
Improve
margin
Increase the
number of
stores
Note: “Roll-up M&A” means to aim to expand the market share by acquiring many companies in the same business. “Sourcing” means the process to find a target company which meets the requirement in M&A. 25
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
26
① Management of Entertainment companies
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Management team of Entertainment companies
Extensive Management Experience in the Entertainment Industry
GENDA Representative Director and President
Former Representative Director and President of AEON Fantasy Co., Ltd.
Former Representative Director and President of AEON Entertainment
GAGA President and CEO
Former Representative Director, Chairman and President of Avex Inc.
GENDA Director, CCO and Head of Content & Promotion Business
Former Corporate Officer of Hakuhodo Inc. and President & CEO of TBWA/HAKUHODO Inc.
GENDA Executive Officer, Head of Character MD Business and
Representative Director and President of Fukuya Holdings Co., Ltd.
Founder of Fukuya Holdings Co., Ltd.
GENDA GiGO Entertainment Chairman of the Board of Directors
Former Representative Director and President of GENDA GiGO Entertainment
(former SEGA Entertainment)
GENDA Director, Head of Amusement Arcade Business and
Representative Director and President of GENDA GiGO Entertainment
Former Executive Officer in charge of facility operation business of Bandai Namco Amusement Inc.
Nao Kataoka
Keiichiro Tanaka
Yuzo Sato
Tom (Tatsumi) Yoda
Satoshi Ueno
Kazuhiro Ninomiya
Note: They will officially assume office when the proposal of appointment of directors is approved at the 7th Ordinary General Meeting of Shareholders to be held in April 2025. 27
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
PMI
28
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
The key point is that we can not only reduce cost, which is a general PMI measure, but also implement measures which contribute to increase in sales.
Besides, effectively improve by implementing the measures at arcades in decreasing order of cost performance based on the database of existing arcades.
We can expect an earnings growth rate higher than a sales growth rate in the amusement arcade business with marginal profit ratio of 70%.
Accumulated PMI know-how for Amusement arcades through roll-up M&As in the past
PMI in the Amusement arcades domain
Expand the lineup of prizes including GiGO exclusive prizes
Provide arcades which joined the group as well, with GiGO exclusive prizes (including
campaigns) and the most appropriate lineup of prizes that we can purchase as a group having
about 400 arcades.
Increase the number of prize machines
Invest on equipment such as prize games and accommodate equipment within the group to
make the mix of games appropriate based on GiGO’s database.
Horizontally deploy operation manuals
Improve the quality of service by horizontally deploy GiGO’s manuals and know-how on layout.
Horizontally deploy DX measures
Utilize tools used in GiGO stores such as GiGO app for customers, GiGO NAVI for employees,
Digichime, etc.
Refurbish the appearance (including change to GiGO brand)
Huge effect by implementing the above measures on prizes, equipment, refurbishment of
interior and appearance as well as changing the brand.
Procurement cost for game machines
By joining GiGO group, became able to directly make bulk purchase of game machines, which
small companies are unable to purchase directly, from each manufacturer and reduced the
purchase price.
Procurement cost for prizes
Able to reduce not only purchase price of prizes but also logistic cost by bulk purchase as the
whole group.
Repairing cost for equipment
Became able to complete repair work within the group, which used to be outsourced.
Cost for regular cleaning
Reduce the cost by outsourcing to a cleaning company with which GiGO has a bulk contract.
Cost for equipment (uniform, bags for prizes, etc.)
Not only reduce cost by bulk purchase but also improve the customer satisfaction by improving
the quality.
Measures to increase sales Measures to reduce costs
29
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Both sales and EBITDA improved not only by reducing costs, which is a general PMI measure, but also by implementing measures which contribute to increase in sales.
Earnings growth rate higher than a sales growth rate in the amusement arcade business with marginal profit ratio of 70%.
PMI record in the Amusement arcade domain
Accumulated know-how established PMI model in roll-up M&A in Amusement arcades,
Top priority of M&A strategy
30
Repost the actual results presented on page 12 to 17 of “M&A Progress and FY2025/1 Q1 Outlook” dated on April 23, 2024
Note: EBITDA is a value calculated by adding back depreciation and amortization of goodwill to operating income. Comparison in the number of stores excluding ones which closed by the end of FY2024/1. For Takarajima, 20 stores for comparison (acquired on January 31, 2022), comparative period: 12
months before M&A (February 2021
～
January 2022
年
1
月
) vs the latest 12 months (April 2023
～
March 2024). For Sugai Dinos, 18 stores for comparison (acquired on October 1, 2022), comparative period: 12 months before M&A (October 2021
～
September 2022) vs the latest 12 months (April 2023
～
March
2024). For Avis (JamJam), 4 stores for comparison (acquired on October 1, 2022), comparative period: 12 months before M&A (October 2021
～
September 2022) vs the latest 12 months (April 2023
～
March 2024). For MAXIM HERO, one store for comparison (renewed and opened on October 5, 2023),
comparative period: 5 months before M&A (November 2022
～
March 2023) vs 5 months after M&A (November 2023
～
March 2024). For SUPER NOVA, 6 stores for comparison (acquired on December 26, 2023), comparative period: 3 months before M&A (January 2023
～
March 2023) vs 3 months after M&A
(January 2024
～
March 2024). For PLABI, 51 stores for comparison (acquired on February 1, 2024), comparative period: 2 months before M&A (February 2023
～
March 2023)vs 2 months after M&A (February 2024
～
March 2024).
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
-1
0
1
2
3
4
5
6
FY2019/3 FY2020/3 FY2021/1 FY2022/1 FY2023/1 FY2024/1 FY2025/1
PMI record in the Amusement arcade domain
Progress of Operating income (GENDA GiGO Entertainment / Former SEGA
Entertainment)
31
COVID-19
pandemic
Declared State of Emergency
April 2020
Join the group
December 2020
0.17bn
1.45bn
▲3.21bn
(¥bn)
3.90bn
4.89bn
Completely lifted
Priority Preventative Measures
March 2022 5.71bn
3.87bn
Former SEGA Entertainment PMI after joining GENDA
PMI team with Management experience in 3 Major companies in the industry
Kataoka, Former President of AEON Fantasy (President of GENDA)
Ueno, Former President of SEGA Entertainment (Chairman of the Board of GENDA GiGO
Entertainment)
Ninomiya, Former Executive Officer of Bandai Namco Amusement (Director of GENDA, President
of GENDA GiGO Entertainment)
Implemented Revolution in Shopping mall-styled store (“Musamura Serious Project”) in
GiGO AEON Mall Musashimurayama as a test store.
V-shaped huge recovery of Operating income in the first fiscal year in GENDA as a result of
horizontal development of know-how and reduction of costs (ref. graphs on the right).
Note: They will officially assume office when the proposal of appointment of directors is approved at the 7th Ordinary General Meeting of Shareholders to be held in April 2025.
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
32
Post-merger-integration (PMI) has been steadily executed at NEN in the U.S.
Replacing NEN locations with Kiddleton-style prize games and Japanese prizes
PMI measures to replace prize games and Japanese prizes with “Kiddleton-style mini crane games x Japanese-style Kawaii prizes” at NEN’s locations
Implemented the replacement at 194 locations from the commencement of consolidation in November 2024 till the end of February 2025
First, promote the replacement at bigger locations, and then plan to implement the replacement at smaller ones. After
Before
“Kawaii” prizes
Mini crane games
Replacement with Kiddleton style
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Phenomenal results with same store sales growth “average +201%” !!
33
Incredible results from the replacement with Kiddleton’s style
Note: Compare data at 67 locations which had operated for 14 days or more among 101 locations where we replaced game machines and prizes in November and December 2024.
In other words, same store sales tripled on average. For comparison, even with PMI in Japan, same store sales growth is c.+50% “at most”.
Now replacing machines at approx.10,000 locations of NEN across the U.S. as quickly as possible, with inbound inquiries of new store openings.
Number of stores by growth rate by PMI
In our analysis, this implies the nationwide “supply-demand gap” of Japanese IP contents, now available only in a few cities such as NY and LA.
Besides, this result is made only by Japanese-style “Kawaii” stuffed animals, such as bears or rabbits, without real popular Japanese anime IP.
Further upside exists by real popular anime IP fully implemented in the future. (to next page)
A B C D E F G H I J K L M N O P Q S T U
+ 0 %
+ 100 %
+ 200 %
+ 300 %
+ 400 %
+ 500 %
A B C D E F G H I J K L M N O P Q R S T U
Average
+201%
…
564%
+
486%
+455%
+445%
+435%
+433%
+425%
+396%
+374%
+
331%
+300%
+292%
+275%
+272%
+271%
+265%
+259%
+248%
+245%
+242%
+
…
Same store sales
before & after
the acquisition
Before & After the
replacement with
Kiddleton’s style at
NEN’s location in the
U.S.
Before & After the
amusement arcades
in Japan joined via
roll-up M&As
~ 0% - -
+ 0 ~ + 99% 19 9
+ 100 ~ + 199% 15 -
+ 200 ~ + 299% 22 -
+ 300 ~ + 399% 4 -
+ 400 ~ + 499% 6 -
+ 500% ~ 1-
Top 20 stores in Revenue Growth Rate after the replacement
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Now that GENDA, a Japanese company, has acquired the long-desired entertainment platform with individual consumers across the U.S., we will gradually sell famous Japanese anime IP prizes directly to anime fans across the U.S. through the NEN platform (many lined up for 2025, we plan to
announce them in series).
GENDA is a global platformer of Japanese Anime IP
Japan as one to spread world-class anime IP to fans (GENDA serves as an offline platformer)
34
Popular IPs in Japan GENDA serves as the Global Entertainment Platform
×
Fan
Fan
Fan
Fan
Fan
Popular IP Contents
Successively Coming to U.S.!
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
????
Fan
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
FUKUYA plans “prizes,” that are the most important in amusement arcades nowadays, and Ares bears the function of wholesale of the prizes.
The organic relationship with GENDA’s Entertainment Platform has contributed to expand the performance of each company in the Character MD domain.
PMI in the Character MD domain
PMI measures for “FUKUYA” and “Ares,” which are engaged in prizes
Increase the sales volume of prizes at FUKUYA and Ares
Increased the sales volume as a manufacturer and wholesaler by leveraging GENDA Platform. As a
result, gained economy of scale, negotiating power, initiatives, etc. to fuel business growth.
Cross-selling of clients and products at FUKUYA and Ares
By collaborating with each of Character MD companies and F&B, promote introducing existing
business partners each other and cross-selling of each company’s products. Became able to build a
multilayered procurement/sales network that cannot be achieved by a single company.
Develop new prizes at FUKUYA and Ares
Became able to jointly do a location test of prizes by utilizing GiGO’s expertise in store operation and
the nationwide store network. Develop highly value-added prizes by reflecting new ideas arising from
interaction and feedback from end-users.
FUKUYA and GiGO jointly develop stores
Share tenant information and expertise in interior as a joint store with GiGO, such as opening of
fanfancy+, and smoothly advance initiatives for new expansion to enhance contact with customers in
value chain.
Expand the channel for wholesale of prizes at Ares
GENDA has a diverse network of stores, including GiGO, Karaoke BanBan and overseas, and is
attractive for prize manufacturers which we did not have business before. Plenty of room to expand
transactions.
Reduce unit production costs
Enjoy economy of scale because it became able to manufacture in a quantity based on the
assumption that they will be sold by whole GENDA.
Consolidate admin divisions and utilize GENDA’s resources
While reducing SG&A by consolidating corporate functions to GENDA, became able to use
functions which each company did not have by themselves, such as legal, IT, PR/brand creative,
etc., dramatically improved in terms of quality as well.
Accelerate getting a grant of copyright
With the increase in sales volume by GENDA and the credit as a group company of the listed
company, became easy to get a permission from owners of attractive copyright, which leads to
more proposals of attractive and new products.
Commonalize suppliers
Commonalize the suppliers among Character MD companies.
Became able to have transactions with top-quality suppliers as soon as they join GENDA.
Improve credit as a group company of the listed company
Secondary effects from improved credit at the time of transaction, such as focusing on the core
business and improving the business efficiency, etc.
Measures to increase sales Measures to reduce costs
35
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
The key point is that we can implement measures which contribute not only to reduction of costs but also increase in sales by utilizing GENDA platform. Furthermore, the
marginal profit for karaoke is “90%” and the PMI’s effect of increasing the amount of profit and profit margin is higher than that of amusement arcades, which have a marginal
profit of 70%.
PMI in the Karaoke domain
PMI measures utilizing GENDA’s Entertainment Ecosystem and connections
Optimize prices
Appropriately revised prices in some stores. Big impact on profits due to high marginal profit ratio.
Cooperate in promotion between Karaoke x Amusement arcade
Attracted more customers at neighboring stores of GiGO and Karaoke BanBan by distributing
promotional tickets and displaying posters at both stores.
Increase the number of collaboration of Karaoke x IP
By utilizing GiGO’s business network, collaborate with IPs which could not be done by Karaoke
BanBan alone and offer collaborative menu to increase the average spending per customer.
Open combined stores of Karaoke × Amusement arcade
Became able to open business in a property that we could not consider opening a store with either
GiGO or Karaoke BanBan alone.
Karaoke × GENDA F&B
Contributed to increase the average spending per customer and expand the sales of businesses in
GENDA by adding food and beverage of GENDA’s F&B domain to karaoke’s grand menu.
Karaoke × DX
Improve customer satisfaction by revamping the app for customers and streamline the operation by
deploying IT tools for internal use.
Close unprofitable stores
Closely examined how each store recovered from COVID-19 pandemic and implemented
appropriate store operation.
Production costs for Karaoke promotional materials
Became able to complete production of items for promotion such as pop displays and
decorations for the stores within GENDA.
Joint procurement of consumables and other items in GENDA
Negotiate prices for consumables, etc. by mutually introducing existing suppliers which we have
already had a contract within the group.
Reduce financing costs
Contribute to the group-wide reduction of financing costs by utilizing CMS for GENDA’s surplus
funds.
We can expect a reduction of procurement
costs for machines and equipment in the same
way if there is further expansion of scale or
M&A in the karaoke domain.
Measures to increase sales Measures to reduce costs
36
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
The key point is that we can implement measures which contribute not only to reduction of costs but also increase in sales by utilizing GENDA Entertainment Platform and
Entertainment Contents.
Besides, it became possible to implement IP collaborations and open new stores, which used to be too difficult for F&B alone.
PMI in the F&B domain
PMI measures by leveraging GENDA’s Entertainment Ecosystem and connection
Product planning collaboratively with GENDA Marketing team
Plan end-to-end within GENDA, from market research, development of flavors, designing
packages, making promotion items.
Increase the number of IP collaborations
Implement IP collaborations by leveraging GENDA’s connection
Accelerate opening new stores
Open a store by using a connection which we got by participating exhibitions with GiGO
Get connected to a developer on referral from GiGO and open a new store
Open combined stores F&B × Amusement arcade
By opening a combined store with GiGO, became able to open business in a property that we
could not consider opening a store with F&B alone.
F&B×Karaoke
Contributed to increase the average spending per customer at karaoke and expand the sales
of businesses in GENDA by adding food and beverage of GENDA’s F&B domain to karaoke’s
grand menu. Develop menu for Karaoke BanBan as well.
Reduce financing costs
Contribute to the group-wide reduction of financing costs by utilizing CMS for GENDA’s surplus
funds.
Improve credit as a group company of the listed company
Secondary effects from improved credit at the time of transaction, such as focusing on the core
business and improving the business efficiency, etc.
Reduce fixed costs by consolidating offices
Reduce fixed costs by jointly using the office with GENDA
Measures to increase sales Measures to reduce costs
37
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Promptly sell business not related to entertainment, entertainment business but too difficult to operate, real estate below cost of shareholder’s equity, securities for non-business
Selection and Concentration essential for M&A strategy – Focus on Entertainment Businesses
Thoroughly sort out portfolio by sale behind continuous M&A
38
Sold daycare business
to a local company
operated by an amusement
arcade we acquired through
roll-up M&A
Daycare Business
Sold a total of 11 stocks held by
the acquired target companies.
Convert the proceeds into cash
and use them for higher yield
investments including M&A.
Securities
Closed loss-making stores
of an amusement arcade we
acquired through roll-up
M&A immediately after
consolidation
Closure of loss-making stores
Have the sellers carve out its real
estate before our acquisition.
Will try to liquidate our remaining
real estate (book value c.¥2.0bn)
to convert into higher yield
investment including M&A.
(not expect hidden profit as they
are mainly in rural areas)
Real estate
Sold cinema business to a
close entertainment company,
originally operated by an
amusement arcade we
acquired through roll-up M&A
Cinema Business
Sold the fitness club operation
business operated by an
amusement arcade we
acquired through roll-up M&A
Fitness Club Business
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
Synergies in GENDA
39
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Entertainment industry is contiguous and countless synergies, something more efficient when it is operated as the same group than as a single one, arise.
With 30+ consolidated subsidiaries, top decision makers of each get together at a monthly meeting, and examine synergies and promote measures with immediate decisions.
Verbalization and embodiment of synergies
GENDA synergy table (excerpted from the latest group management meeting in November 2024)
40
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Without synergies, it would be too difficult to explain how entertainment companies in different business categories hit the historical high earnings (division income) in their 12-
year / 35-year/71-year history at the same time after joining the same group through M&A. This embodies “conglomerate premium” in entertainment that entertainment is
contiguous and business grows more managed by the same group than individually.
Simultaneous historical high earnings by 3 different entertainment companies is an evidence of Synergies
GiGO Historical High! Karaoke BanBan Historical High! FUKUYA Historical High!
41
64%
9%
7%
17%
3%
35-year
history
Highest
¥2.0bn
71-year
history
Highest
¥0.7bn
12-year
History
Highest
¥7.2bn Others
Karaoke (Karaoke BanBan, ONTSU)
Prize related (FUKUYA, Ares)
Overseas AM (mainly in U.S., China)
Domestic AM (GiGO, others)
FY2025/1
Breakdown of EBITDA
Hit the highest income in
the first year in GENDA
Hit the highest income in
the first year in GENDA
Hit the highest income for the 4th
straight year since joining GENDA
Top 3 earnings contributors (after full year consolidation) recorded historical high
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Originally, Karaoke BanBan solely operated in a two-story building in Kuwana city, Mie.
Renewed the building and opened again with GiGO on the first floor and Karaoke BanBan on the second floor in December 2024.
Sales increased 100% and EBITDA increased 54% in the same place for the first 2 months after opening.
Plan to renew and open more stores in the similar format in the future
Combined store of GiGO x Karaoke BanBan – Synergies expected at M&A is becoming evident in numbers
Combined store of GiGO x Karaoke BanBan
doubled the sales of the same building
42
14,139
28,316
100%
+
(¥1,000)
3,756
5,784
54%
+
Revenue EBITDA
(Repost) “FY2025/1 3Q Earnings Presentation”
dated December 10, 2024
Note: Comparison of sales and EBITDA for the period December 2023 to January 2024 and the period December 2024 to January 2025.
The figures for the period December 2023 to January 2024 are for Karaoke BanBan only, and the figures for the period December 2024 to January 2025 are for Karaoke BanBan and GiGO combined.
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Had a campaign of GiGO exclusive prizes of TWICE LOVELYS, characters born
from TWICE, No.1 girls’ group in Asia, all over Japan.
Many customers, even those who do not normally come to amusement arcades,
visited GiGO.
Confirmed the potentiality of campaign with popular artists etc.
Continuously have collaboration campaigns with other IPs as well.
GiGO Excusive Campaign
As “Oshi-Katsu” of anime and artists, high demand for Exclusive prizes and Excusive experiences in GiGO
created by leveraging GENDA’s purchasing power
43
GiGO Fukuoka Tenjin GiGO SMARK Isesaki GiGO Shinjuku Kabukicho GiGO Shinjuku Kabukicho
GiGO stores during “TWICE LOVELYS” GiGO Exclusive Campaign (August, 2024)
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
We have countless synergies within our group and we have verbalized them in detail. Below is the latest table of our group synergies that we use in our internal management
meetings. (Note: the table is presented on the previous page)
This is just an example for your reference.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q2. What kind of synergies have been generated specifically?
44
For example, although amusement arcades and karaoke seem to be different businesses and customer segments, the concept of opening
new stores is the same, and the amount of information on available tenants is critical. While we used to collect tenant information as an operator of
about 330 amusement arcades, the addition of about 360 karaoke premises has improved our store development capabilities by integrating store
development with tenant information on the karaoke side.
This has also made it possible that it is possible to open an amusement arcade even if it is unprofitable to open karaoke (or vice versa). Even
among existing stores, we have changed a store which is too big only for karaoke to an amusement arcade and improved the profitability. In areas
where store locations overlap, we attract new customers by distributing discount coupons for both.
Fukuya, which designs prizes, is located on the upstream of value chain of amusement arcades. Its volume of transactions has dramatically
increased not only because of the expansion of GiGO’s operation, but also the creation of huge demand for Japanese Kawaii products in North
America through Kiddleton and NEN as GENDA. There is a big effect of increasing the equity value just to take in the profits by making it
consolidated, which would flow away outside if we did not conduct the M&A. Besides, we share the information on sales of each product in a timely
manner and this makes us possible to make minor changes. The same effect has arisen for Ares, too, which has a function as a trading company
of prizes.
(to next page)
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
As for Lemonade and Kleiner, the sales functions have dramatically improved, that was difficult when they stood alone. By joining in the group,
products of Lemonade and Kleiner are distributed on the grand menus of all 360 Karaoke BanBan premises, and they have opened new stores
in existing amusement arcades, too. In addition, it is possible for them to share the opportunity when we open a new amusement arcade in a
shopping center.
Furthermore, since ONTSU, which is a distributor of karaoke equipment, joined us, the volume of business with Karaoke BanBan has increased
and this has enabled our group to take in the profits which were supposed to flow away outside of the company. In addition, it is now possible to
sell Kleiner for the night market which is ONTSU’s customer base. C'traum, which sells Kleiner, did not have any employee or sales function
before the M&A. But now it is possible to access to sales channels on a number of fronts without any additional cost.
GAGA, which is a movie distribution company, has also created countless cross-selling synergies that were difficult to achieve on its own, such as
extensive advertising of its movies on digital signage at GiGO Flagship Store facing Ikebukuro Sunshine 60 Street, staff of amusement arcades
wearing a T-shirt with movie ads, and offering rooms with movie characters and food and beverages at karaoke etc.
These are just a few of the verbalized synergies, but the reason for the various synergies is that although the entertainment industry seems to be broad, from
a broad perspective, it is connected from the upstream "Contents" to the downstream "Platform" from the customers’ (entertainment fans’) perspective. Based
on the structure of entertainment industry, which is "IP→platform→fans," there are countless cross-selling synergies.
Of course, there are synergies from roll-up M&A of amusement arcades. However, there is much room to create synergies in M&A focused on the
entertainment field which is contiguous, more than in M&A limited to amusement arcades. From these perspectives above, we believe that the formation of an
entertainment conglomerate through GENDA's unique Entertainment Ecosystem has many advantages.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q2. What kind of synergies have been generated specifically? (continued)
45
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
46
② M&A / Finance team
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
② M&A / Finance team
Built an internal structure to complete M&A and financing fast and flexibly
47
Taiju Watanabe
GENDA Managing Director CFO
Formerly worked in Goldman Sachs, Mizuho Corporate Bank, Ltd. (current Mizuho Bank, Ltd.) Kohei Habara
GENDA Managing Director CSO / CPA
Formerly worked in KPMG AZSA LLC, PwC Advisory LLC
Shunji Shiima
GENDA General Manager of Strategic Investment Department / US CPA
Formerly worked in SMBC, PwC Advisory LLC, Japan Pulp & Paper Co., Ltd.
Atsushi Kawata
GENDA General Manager of Group Business Management Department / CPA
Formerly worked in KPMG AZSA LLC, KPMG Mexico
Yusaku Kitada
GENDA General Manager of Accounting Department / CPA
Formerly worked in Deloitte Touche Tohmatsu LLC
Yorikazu Hattori
GENDA General Manager of Finance Department
Formerly worked in Mizuho Corporate Bank, Ltd. (current Mizuho Bank, Ltd.)
Mika Ito
GENDA General Manager of IR Department
Formerly worked in Mizuho Securities Co., Ltd.
Misato Fujimoto
GENDA General Manager of Legal Dept. 1 / Attorney at law
Formerly worked in Nishimura & Asahi, TOMY Company, Ltd.
Kenta Nishioka
GENDA General Manager of Legal Dept. 2 / Attorney at law (Japan, State of NY, UK)
Formerly worked in Mori Hamada & Matsumoto
GENDA GiGO Entertainment General Manager of Accounting Department / CPA
Formerly worked in Deloitte Touche Tohmatsu LLC, Recruit Co., Ltd.
Yusuke Gomi
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Debt finance - Loan from numerous banks and investment-grade rating are the fruits of our financial discipline
Loan Approval by creditors based on “details of M&A, not disclosed to the stock market”
48
Tie domestic and overseas entertainment platforms, and work together to spread world-class IP such as anime to the world
Downside of our investment
centered on M&A is deemed “safe”
by financial institutions and a
rating agency which evaluate
mainly risks based on undisclosed
details of M&A, we believe this will
reassure our shareholders who will
enjoy the upside.
63 financial institutions (incl. 43 banks of 112 belonging to Japanese Bankers Association (“JBA”)) + acquired an investment-grade rating (BBB+)
As of January 31, 2025
GENDA’s outstanding borrowings ¥52.4bn
(43 banks + 20 leasing companies etc. = 63)
As of January 31, 2025
Total amount of loaned money in banks in Japan Approx. ¥607tn
(112 banks are members of JBA) 2024
Corporate bond market in Japan Approx. ¥15tn
Plan to issue straight bond as soon as we are
ready. While we start with small amount (¥5.0 to
¥10.0bn) as we need to discover bond investors’
demand as Debt IPO, we expect to issue regularly
after the launch of the initial straight bond
Source: Japanese Bankers Association as of January 31, 2025)
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Stock Deal M&A
To increase “Cash EPS” by M&A through Stock Deal, it is important that
“PER of GENDA” > “PER of Target”
49
①+
+
②
＝ ＝
Cash EPS
Before M&A Number of existing GENDA shares
NI+A of GENDA Cash EPS
After M&A NI+A of GENDA
Number of existing GENDA shares
NI+A of Target
Number of newly issued GENDA shares
To “increase Cash EPS”in M&A, it is necessary to have “(1) Cash EPS before M&A < (2) Cash EPS after M&A.”When Cash EPS increases in an M&A in which new shares are issued,
that translates to “increase in the number of shares < increase in profit”i.e., “the number of shares increases, but the profit increases even more."
Thus, there are M&As that increase Cash EPS (as a result of a further increase in earnings) even when the number of shares increases due to M&As from GENDA's new stock issuance.
The final criterion is “whether the PER of the company is greater than the PER of the target company”(see next page for details). The following three categories are illustrative examples.
If the M&A consideration is “Stock only,” Cash EPS will increase if "PER of GENDA” >“PER of Target”
The denominator “number of new GENDA shares to be issued”is determined by “the value of the subject company‘s shares (divided by GENDA’s share price). Therefore, the threshold is
whether the “equity value of Target”relative to the ”net income before amortization of goodwill of Target", which translates to the “PER of Target" is lower than the "PER of GENDA".
If the M&A consideration is “Stock + Debt,” Cash EPS will increase if the “PER of GENDA”> “PER of Target ×% of Stock consideration”
For example, if the acquisition consideration is "60% stock + 40% debt," the increase in GENDA shares determined by the "value of the target company's equity (divided by GENDA's share price)"
is limited to only 60%, unlike in the case of 100% equity and 0% debt, and as a result, the threshold is "PER of Target x 60%" is lower than the "PER of GENDA”.
Cash EPS is maximized when M&A consideration is “Debt only”
Cash EPS is maximized because the denominator "number of new GENDA shares to be issued" is zero and only the numerator "Net income before amortization of goodwill" of the subject company increases.
However, an overpriced M&A cannot be justified only because the entire consideration is debt. If the entire consideration is financed by debt to an M&A that is significantly overpriced relative to the target
company's profit, the absolute interest burden will offset the increase in profit, and in the first place, financial institutions will not provide full debt financing for an M&A that is significantly overpriced.
Note: NI+A refers to Net income before amortization of goodwill. Assumptions do not take into account one-time M&A-related costs. Assumption is that borrowing costs are sufficiently low. Assumptions remain unchanged as long as the current domestic financialand
market environment remains within the current outlook (including a certain level of interest rate hikes). For PER, to inspect the Cash EPS, the comparison is based on Cash EPS-based PER, i.e., PER based on Net income before amortization of goodwill.
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Stock Deal M&A
50
Cash EPS will increase if PER of GENDA > PER of Target, even for Stock Deal M&A
①+
+
M & A 後
Cash EPS
②＝＝
＞
×＞×
GENDA PER Target PER
＜
＞
・・・
・・・
①＜②
＜+
+
＞
GENDA新規発行株数 ＜
+
＜
+
GENDAのれん償却前当期純利益
+
1
＜
+
1
Therefore, even if the number of shares increases via stock deal M&A, Cash EPS will not be diluted but rather increase if the target PER is lower than our PER
Cash EPS
Before M&A
NI+A of GENDA NI+A of GENDA
# of GENDA shares outstanding # of GENDA shares outstanding
NI+A of Target
# of GENDA shares newly issued
GENDA Market Cap Target Market Cap
GENDA NI+A
GENDA NI+A
GENDA NI+A
#of GENDA shares outstanding
# of GENDA shares outstanding
# of GENDA shares outstanding
# of GENDA shares outstanding
# of GENDA shares newly issued
GENDA NI+A
GENDA NI+A
NI+A of Target
NI+A of Target
NI+A of Target
NI+A of Target
NI+A of Target
# of GENDA shares
newly issued GENDA
Share Price
GENDA
Share Price
# of GENDA shares newly issued
GENDA market cap = Number of GENDA shares x GENDA share price
Target market cap = Number of newly issued GENDA shares x GENDA share price
Divide both sides by GENDA share price
Swap the denominator of the left-hand side and the numerator of the right-hand side
Turn over the numerator and denominator
Note: NI+A refers to Net income before amortization of goodwill. Assumptions do not take into account one-time M&A-related costs. Assumes that the subject company's Net income before amortization of goodwill is in the black. For PER, to inspect the Cash EPS, the
comparison is based on Cash EPS-based PER, i.e., PER based on Net income before amortization of goodwill.
Add 1 to both sides
Organize numerator and denominator
Swap the numerator of the left-hand side and the denominator of the right-hand side
# of GENDA shares newly issued
# of GENDA shares outstanding
# of GENDA shares outstanding
# of GENDA shares
outstanding
# of GENDA shares outstanding # of GENDA shares outstanding # of GENDA shares newly issued
NI+A of Target
NI+A of Target
NI+A of Target
GENDA NI+A
GENDA NI+A
GENDA NI+A GENDA NI+A
# of GENDA shares
newly issued
Cash EPS
before M&A Cash EPS
after M&A
Therefore, if “PER of GENDA > PER of Target", then "① ＜ ②", Cash EPS will increase.
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
“M&A Discipline” in GENDA
Maximize Cash EPS
51
Note: “Cash EPS” means “Cash Earnings Per Share.” “FCF” means “Free Cash Flow” calculated by deducting Investment CF from Operating CF.
Entry valuation
“Acquisition cost” is a very important factor in M&A and we take care not to make a wrong entry.
1
Financing
With sufficient FCF as the driving force, we suppress dilution by minimizing the contribution of equity capital, strive to maximize stock return.
2
PMI
We believe that we should avoid buying at the peak with PMI in mind. PMI and synergies are means of M&A, not purposes. The purpose of M&A is to
recoup the investment by cashflow, and the means are PMI and synergies.
3
As a representative of shareholders
5 members hold GENDA shares. As a representative of shareholders, we evaluate if it will contribute to increase in “equity value per share.”
Our officers and employees hold approximately 25% of the shares and share merits and risks with our shareholders.
4
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Shareholder should evaluate whether EPS (= theoretical stock price) has increased.
Because in M&A, EPS may decrease (= theoretical stock price drops) although it seemingly grew as a result of M&A (in M&A,
sometimes increase in earnings < increase in # of shares due to a miss priced acquisition and new stock issuance without discipline)
GENDA issued new shares associated with financing and acquisition costs.
However, Cash EPS (= theoretical stock price) linearly keeps increasing and the theoretical stock price succeeded in increasing
consistently. That is, we continuously succeeded in “earnings growth > dilution” even by growth mainly through “M&A.”
Besides, while deploying the standby fund of ¥10.0bn for M&A raised by follow-on offering in July 2024 to M&As, we will be able
to make further “earnings growth > dilution” by deploying the rest of the fund to future M&A.
We ensure below 3 points as M&A discipline to maintain “earnings growth > dilution”
①M&A at an appropriate valuation
②Appropriate debt financing (to control an increase in number of shares)
③Maximize Post-merger-integration → for details, page 15 and after
After the transformational growth, did the theoretical stock price increase?
Earnings grows as a matter of course, as we acquire profitable companies
52
Adjusted Cash EPS
EPS (¥) based on net income before
amortization of goodwill (net income under
IFRS) after being adjusted (intrinsic
performance before M&A-related expenses
are deducted)
20%
CAGR
Result Target
Note: Figures before taking into account the 2-for-1 stock split with April 1, 2025 as the effective date.
(¥)
47.23
56.5
68.24
81.36
98.69
2022/1 2023/1 2024/1 2025/1 2026/1
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
2025/1 2026/1 2027/1
2025/1 2026/1 2027/1
Our estimate on EBITDA
EV / EBITDA and P/E multiple drop sharply due to Continuous Transformational Growth
For a company with a high growth rate, valuation multiple goes down inverse multiple of the growth rate.
Unlike ordinary companies, it would be difficult to gauge such high growth company only using the FY1 multiple.
Actually, in our estimated multiple, EV/EBITDA will drop from 18.7x to 11.1x (▲7.6x), PER (IFRS basis) from 40.1x to 27.1x (▲13.0x).
We aim for further transformational growth in FY2027/1 too, and multiple will further drop down in that case.
After the transformational growth, what is the valuation level?
Transformational growth
EV / EBITDA
Our estimate on Net income before amortization of goodwill
(Net income under IFRS)
General business growth Transformational growth
General business growth
PER (IFRS basis)EV / EBITDA PER (IFRS basis)
2025/1 2026/1(E) 2027/1(E)
18.7x
2025/1 2026/1 2027/1
40.1x
40.1x
27.1x
(E)
18.7x
11.1x
(E) (E) (E) (E) (E)
(¥bn) (¥bn) (¥bn) (¥bn)
1.3 1.3
2.2
5.4 5.4
8.0
53
Source: Disclosure on March 12, 2025: “FY2025/1 Full-year Earnings Presentation”
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
5.7 6.3
8.2
15.4
22.4
2022/1 2023/1 2024/1 2025/1 2026/1
(E)
2.8
3.6
4.5
5.9
8.4
2022/1 2023/1 2024/1 2025/1 2026/1
(E)
Evaluate the M&A consideration in comparison with the cash flow from the target, and enhance cash flow after consolidation with post-merger-integration
Transformational Growth in Cash Flow
Disciplined M&A & PMI cycle to achieve transformational growth in Cash Flow
54
Adjusted Net Income
before Amortization of Goodwill
IFRS based Net Income before one-off M&A costs
32%
CAGR
Adjusted Operating Cash Flow
Operating Cash Flow before one-off M&A costs
Adjusted EBITDA
EBITDA before one-off M&A costs
- Interest
- Tax
- Depreciation
- Impairment
However,
Depreciation and
Impairment are
non-cash items
Although no company
estimate for 2026/1
operating cash flow
available,
company estimate of
major items in operating
cash flow are;
1. Net income before
goodwill amortization
¥8.0bn
2. Depreciation ¥8.5bn
3. Impairment ¥0.5bn
4. M&A costs for M&As
already announced
¥0.4bn
1+2+3+4＝¥17.4bn
Then, change in WC etc.
will be deducted from
above
40%
CAGR
(¥bn) (¥bn) (¥bn)
Organic
growth only
due to IPO
preparation
Started paying tax
therefore nominal
growth rate lower
than EBITDA
Growth boost
with same tax
rate YoY
+ Depreciation
+ Impairment
+/- change in WC
Adding back
depreciation and
Impairment to
show pure cash
flow generating
capabilities
Transformational
Growth via M&A
4.7
6.4
7.6
8.9
2022/1 2023/1 2024/1 2025/1 2026/1
(E)
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
We are proud that we have the same or even stricter investment perspective as our external shareholders
Shareholders’ perspective of GENDA officers and employees
We intentionally maintain negative free cash flow
55
Our operating cash flow is increasing linearly, but we are using more
investment cash flow than that.
As a result, we maintain negative free cash flow.
We would like to explain our thoughts behind this.
First of all, our officers and employees own c.25% of the company's shares.
In other words, those who hold shares have experience of transferring
money directly from their own bank accounts to GENDA’s bank account.
(For those with families, they made such decisions after family meetings).
As a result, we have seen the cash we have saved for life through our
careers, directly deposited into GENDA’s bank account.
Besides, because the company has no obligation to return this cash, it can
only be justified through dividends, share repurchases, or capital gains.
Moreover, unlike external shareholders, since it cannot be easily sold, even
if we suddenly need cash, we cannot convert it into cash in the short term.
Therefore, we are proud to say that we have the same or even stricter eye
on how to use such cash as our external shareholders.
Since we have transferred the cash from our own bank account and is no
longer accessible, we want to keep the cash working at ALL times without
letting it sleep, or if there is no “good way” to use it, we want to
immediately return it to the shareholders (including ourselves).
The decision on “good way” to use is based on the cost of equity
(of which hurdle higher than WACC).
Because if there is a project that exceeds that, in theory we should invest
even if we issue new shares, which is the most “expensive” cost of capital.
Fortunately, from the industrial revolution to GenAI, human leisure time
has increased, and in the entertainment industry, also benefiting from
Japanese anime, there are many “good ways” for both organic and M&A.
Thus, we are not only using the cash from operating CF, but also raising
funds through financial CF, deploying the cash together through
investment CF. As a result, we are making FCF negative, but all of this is
an activity to maximize “long-term” FCF.
We will try as hard as possible and share the destiny with our
shareholders to take on the challenge of becoming the world’s No.1
entertainment company by 2040.
We would be grateful if you could support us with a long-term perspective.
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Perspective on Dividend
The best way to reward our shareholders who have chosen us calling for “Continuous Transformational Growth” is to give back not in cash but in capital gain.
We are a 7-year-old company, not matured under steady state condition but at the stage to reinvest generated cashflow to grow more.
We can see the path to grow and generate cashflow far exceeding invested capital by reinvestment.
Give priority to growing to be the World’s No.1 entertainment company by 2040, not aim to maximize short-term earnings.
Make shareholder returns with cashflow when we reach a stable phase.
To investors who support the growth process, our policy is to give back in capital gain by reinvesting cashflow in M&A and our businesses.
Perspective on Share repurchase
Under a specific situation, the investment return may be higher in share repurchase than in acquisition of other companies’ shares.
It is highly maneuverable, and we can aim for shareholder returns in a timely way.
The effect of enhancing equity value is higher compared to dividend.
Perspective on Shareholder benefits
Lead to developing a new customer segment and expanding the investor base.
Expansion of shareholders base contributes to decreasing daily volatility of stock price.
As a result, the effect of enhancing equity value by reducing capital cost.
Shareholder benefits do not directly interfere with growth investment, which is different from dividend or
share repurchase which is associated with cashout for real. 56
Perspectives on Shareholder returns
Promptly consider returning if there is no investment that exceeds cost of equity
in organic / inorganic growth
10,000 20,000
6,000 12,000
2,000
worth 2x 4,000
¥/ year
100 299
300 499
500
Coupon for GiGO ・Karaoke BanBan
(planned to add Kleiner Feigling from the date of right allotment on July 31, 2025)
COUPON
Note: The validity period of shareholder benefit coupon is 6 months. The spending limit at GiGO group’s stores is ¥500 per day. No spending limit for usage at Karaoke BanBan. Shareholders who are listed or recorded in our shareholders’ registry as of the last day of January and the last day of July of each year as
holding one unit (100 shares) or more, and who have continuously held such shares for six months or more are eligible.
/ year
/ year
¥
¥
¥
¥
¥
/ year
2x
2x
/ year
/ year
worth
worth
shares
shares
shares
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
57
③ Technology
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Tech team’s leadership
GENDA Inc. is a pure holding company with 123 employees. What makes us different is that about 70
are tech staff, which means that our tech team is bigger than admin one which is in charge of
execution of M&A.
After Admin team executed M&A, Tech team which gained professional experiences in their former
jobs support PMI from the perspective of DX.
The pure holding company hires tech staff, and they are seconded to each subsidiary to conduct DX
measures as part of the PMI after completion of M&A. And then, after the completion, they move to the
next company acquired by M&A. We repeat this cycle in our operation.
③ Technology team
Competent Tech engineers have joined GENDA one after another
Personnel composition of GENDA Inc. (pure holding company)
Daisuke Kajiwara
GENDA Executive Officer, CTO and Head of IT Strategy Department
Formerly worked in Yahoo Japan Corporation.
Formerly worked as Executive Officer, General Manager of Development Div. and General
Manager of Business Div. of GREE Inc.
Formerly worked as Director CTO of every, Inc.
GENDA CGO and General Manager of Corporate Strategy Department
Formerly worked in FiNC Technologies Inc.
Hiroki Shigemura
GENDA VPoE and General Manager of Product Development Department
Formerly worked in Yahoo Japan Corporation.
Formerly worked as General Manager of Frontend Development Dept. of VASILY, Inc.
Formerly worked as Tech lead of Start Today Technologies Co., Ltd. (current ZOZO, Inc.)
Yusuke Arai
Admin team Tech team
Finance
M&A IT strategy
Product
development
Note: As of January 31, 2025
58
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
59
Measures for Customers
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
242,148 277,037 295,492 349,472 392,747 441,392 475,561 515,616
563,068
592,518 616,856 636,336 657,183 676,268 693,241 715,384 738,399 775,779 813,427 851,191 915,984 961,624
1,000,769
1,038,421 1,081,401 1,119,969 1,129,371
2022 2023 2024
Cumulative number of enrollment
(person)
Progress status of DX measures (for customers)
Cumulative membership of GiGO App, which is an app for customers, exceeded 1.12mn
・ The membership has been increasing steadily since the renewal in January 2022.
・ “GiGO App” can deploy various services such as distributing coupon tickets and service ones,
providing “prize pass” service, etc. because it is connected to cashless payment function.
・ We believe that the steady increase in the number of GiGO App members contributes to creating
loyalty to GiGO stores.
2025
Cumulative membership
1.12mn members
60
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
1. GiGOアプリをゲーム機にタッチ 2. GiGOアプリでプレイ金額を設定 3. 瞬時にゲーム機に反映されプレイ開始！
Existing GiGO App needed to be mediated by the physical “terminal” and we had to connect the app to the terminal every time we played a game.
As a result, many customers played games by directly touching the terminal with Suica card, etc. and this was a hurdle to maximize the GiGO App.
Therefore, our tech team, which is a PMI special unit, built “GiGO Link,” on which you can choose the amount for playing just by touching the game machine with GiGO App
once (without being mediated by settlement terminal).
In operation, by consolidating customers’ data by usage of GiGO App, possible to send a notification according to customers’ preference and deliver coupons to invite them to
our stores again. Besides, since we can see customers’ situations since the arrival till the leave in real time, it becomes possible to serve them attentively and properly, which
contributes to improvement of customer satisfaction.
Promote DX in the Entertainment Industry in Japan by GENDA Tech team
Launch “GiGO Link,” dramatically evolves GiGO App (to be introduced during 2025)
61
Touch a game machine with GiGO App Immediately reflect on the game machine and
you can start playing!
Set the amount for playing on GiGO App
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
62
Measures for internal use purpose
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
at Stocktaking test store (GiGO Tachikawa)
Reduced about 62% of time required at normal times
Made a Database by model/prize
Support the most appropriate order placement
Developed a breakthrough app, “GiGO NAVI,” in the operation of amusement arcades, which has a lot of manual works
Outcomes produced by “GiGO NAVI”
Freed from paper and excel works at the stocktaking of prizes, etc., increased the accuracy while substantially reducing the operation time.
The error ratio is 0.1% of the theoretical value at the biggest store of GENDA, “GiGO Flagship Store.”
Visualized the most appropriate volume of order by making a database of sales of prizes in the past.
Keep utilizing to streamline cumbersome work and increase the customer satisfaction by improving operation efficiency and
increasing time to serve customers.
Note: Based on the fact that the total of operation time on a man-hour basis reduced about 62% (from 56 to 21 man-hours) after the app was introduced at a stocktaking test store, GiGO Tachikawa, including counting at the storage warehouse (from 20 to 8 man-hours), counting at the restock warehouse
(from 10 to 4 man-hours), counting in the machines (from 24 to 8 man-hours) and preparing input formats (from 2 to 1 man-hours). The error ratio is the difference between the theoretical value and the actual number of inspections as of the end of November 2023.
Progress status of DX measures (for internal use purpose)
Intermittently update “GiGO NAVI,” an app for internal use purpose
Release an employee app
GiGO NAVI
63
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
DX of Prize Procurement Operational Flow
Project PAO: DX for procurement of “Prizes” for prize games
A DX initiative for prize game's prize procurement, which is important for prize games, that account for about 70% of game arcade sales.
Since prize games have been growing rapidly since 2015, on-site operations have not kept pace, and manual operations have reached their limits.
Under these circumstances, as the first step in DX, we rolled out our “Project PAO (Prize Allocation Optimizer),” a measure that applies AI to solve
the final procedure in the prize procurement flow, which is the allocation of procured prizes to stores nationwide.
3. Optimal Allocation
Prize Procurement Operational Flow
List of thousands of
prizes sent from
manufacturers
Decide which prizes to purchase
from the list of prizes and their
sum for all stores
Decide the order lots according
to prize demand, inventory
status, and store plans
2. How Many Cartons to purchase
1. What to Purchase
0. Prize List
Decide how many
cartons to allocate
to which store?
Scope of this DX
initiative
64
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Prize Allocation DX - Issue
Limitations of Prize allocation depending on manual procedures
Thousands of items are needed to be purchased in bulk at the head office from among thousands of items. Traditionally, an Excel sheet is created for each of these
prizes, and the allocation to several hundred stores throughout Japan is calculated by multiplication by the number of items. Therefore, “several hundred rows /
sheet” x “several hundred sheets” of data are required to organized and managed in “tens of thousands of rows.” This means there are limitations depending on
human-hand operation of the most important “parameters of prize allocation to each store.” In particular, with machines in stores across the country being replaced
flexibly, there is limitation to manually update the parameters of “how many machines of what size are currently in which store,” which can lead to situations where
stores are faced with “we've received a large number of large prizes, but we don't have big-enough machines to fit them all in...” There may be cases where prizes
that have been purchased with great care have possibilities ending up being “discarded as is” after being delivered to the store.
- Parameters cannot reflect the game machine situation of each
store, so there were situations where "A large number of large
prizes arrived, but there are no game machines to place them in."
- Occurs especially in large, powerful stores with high sales and
many prizes are allocated
Discards
Allocation unit size
(1 or 0.5 or 0 boxes)
Store A
Shortage
Shortage
Excess
- Unable to deliver in small quantities in just the right amount, with
discards due to excess inventory / opportunity loss due to shortage
of inventory frequently occur
- Events that tend to occur at mid-sized stores
65
Prize Allocation
Parameters
1. Stores’ sales capacity
2. Prizes’ popularity
3. Location characteristics ×About 320 stores Determining store allocation＝
Store C
Store B
Discards /
Opportunity loss
Although these issues have been recognized, manual operation could not
increase the number of parameters any further and was at its limit.
- Popular prizes are often not allocated to stores with weak sales
power, so the stores fill up their game machines with standard
prizes, resulting in opportunity loss
- Event that tends to occur at small stores
Opportunity loss
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Prize Allocation DX - Solution
AI's machine power verified countless patterns that were beyond human power
Automatic calculation until the budget for each store can be
digested, while satisfying numerous conditions all at the same
time.
Increased parameters enable calculation of allocation ratios that
take into account the type and number of game machines in
stores and the size of prizes
(A brute force calculation that cannot be verified by human labor)
Offset
excess and
shortages
The number of parameters that determine the allocation logic has been increased from three to six, and the machine power of AI verifies countless allocation patterns to derive the optimal solution by brute force. In addition, a separate
distribution center was also devised, making it possible to deliver in small packages (0.75 / 0.25 boxes), which was not possible before, and increasing flexibility in terms of operations. It is now possible to “satisfy a large number of
conditions simultaneously while allocating orders according to the order budgets of stores nationwide,” which was previously impossible to do manually.
This enables the automatic calculation of optimal solutions for prize game allocation and minimizes prize disposal and opportunity losses.
66
1. Stores’ sales capacity
2. Prizes’ popularity
3. Location characteristics ×About 320 stores Determining store allocation＝
Prize Allocation
Parameters +4. Order budget
5. Number and type of game machines in stores
6. Size of prizes
Automation through
AI-based Systems
Store C
Store A
Store B
Allocation unit size
(1 or 0.75 or 0.5 or 0.25 or 0 boxes)
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
19
34
57 46
28 18 12 10 4
25
Prize Allocation DX - Achievements
AI-based prize allocation enables execution according to the prize order plan
Previously, manual operations were made in Excel to match the “actual allocation of prizes” to the “prize order plan* for each store,” but as a result, as shown in the
“Before” figure, the discrepancy rate for the same index varied widely, resulting in “lost opportunities (shortage of popular items)” and “waste (excess delivery of prizes).
In contrast, in May 2024, when the current initiative was implemented, the “prize ordering plan per store” and “actual prize allocation” were within the range of 96-100%
at 227 stores (more than 90% of 244 stores). The company expects the AI will enable it to improve sales by reducing opportunity losses and decrease prize disposal
and nationwide operation has begun in the middle of 2Q.
00 0 0 0 0 0 0
227
5
7
1
4
After
80
70
-
75
-
85
81
-
90
86
-
95
91
-
100
96
-
105
101
-
110
106
-
115
111
-
120
116
-
125
121
-
126+
80
70
-
75
-
85
81
-
90
86
-
95
91
-
100
96
-
105
101
-
110
106
-
115
111
-
120
116
-
125
121
-
126+
Before
67
Distribution of deviation rate of “actual allocation” from “prize ordering plan” for each store
Standard deviation：32.6 Standard deviation：4.9
Opportunity loss
Shortage of popular prizes was compensated for with standard prizes
Discarded
because over-allotted prizes were delivered
Note: A plan for a certain store that "in order to create this sales plan, we need to order this many prizes." Actual results for May.
Deviation rate of planned vs. actual allocation for each store (%)
Number of stores
Digestibility
(%)
Deviation rate of planned vs. actual allocation for each store (%)
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Action / Details of measures
Execution
FY2025/1 FY2026/1
Trial
(Reference) DX of Prize Procurement Operational Flow
We aim to further improve other tasks in the prize procurement operational flow
There are many issues to be addressed in the future, such as more appropriate calculation of allocation unit quantities, improvement of delivery to each store to enable swift
delivery of prizes, etc., as well as starting DX in the upstream process of prize procurement.
68
Improve
accuracy / logistics
Target budget
Broaden selection of
prizes
Upstream
process
1. Allocation logic tuning
2. Earlier prize delivery
4. Consolidation of prize orders
3. Size match budget optimization
5. Automation of preliminary
calculation of prize order
Item count control
Minimum allocation unit size
Negotiation with delivery companies, human
error reduction by DX
Change of budgeting logic
Verification of effects with each
department and consideration of transfer Budget transfer response
Development / implementation
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
69
Business Plan
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
5.6 6.2
8.1
14.2
18.5
20.0
21.2
22.0
Keep “Continuous Transformational Growth” in this fiscal year again
70
38.1 46.1 55.6
111.7
140.0
150.0 156.0
2.7
3.5
4.3 4.6
7.0 7.0
7.4
8.0
12/10
Upward
revision
12/24
Upward
revision
9/9
First
release
2025/12024/12023/12022/1 2025/3/12
Further
Revision
(¥bn)
EBITDA
2026/1E
12/10
Upward
revision
12/24
Upward
revision
9/9
First
release
2025/12024/12023/1 2025/3/12
Further
Revision
2026/1E
The 4th upward revision to FY2026/1 forecast (disclosed on March 12, 2025)
+ 71 %
+ 54 %
+ 40 %
157.0
YoY YoY YoY
Revenue ¥157.0bn YoY +40% I EBITDA ¥22.0bn YoY +54% I Net income before amortization of goodwill ¥8.0bn YoY +71%
These earnings assume zero M&A going forward. Also, expenses of -¥0.4bn deducted for M&A already announced
(In another words, adjusted EBITDA is ¥22.4bn, adjusted net income before amortization of goodwill is ¥8.4bn)
(ref.) OP income: ¥10.5bn YoY +31% / Net income: ¥5.0bn YoY +51%
(ref.) Under IFRS: OP income: ¥13.5bn YoY +69% / Net income: ¥8.0bn YoY +142% (amortization of goodwill is ¥3.0bn in this fiscal year. Scheduled to transfer to IFRS in FY2027/1)
Revenue Net income before
amortization of goodwill
(¥bn)
12/10
Upward
revision
12/24
Upward
revision
9/9
First
release
2025/12024/12023/12022/1 2025/3/12
Further
Revision
2026/1E
(¥bn) 2022/1
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
(millions of yen)
FY2025/1
Full-year FY2026/1 Full-year Earnings
forecast YoY
(%)
Revenue 111,786 157,000 45,214
+40%
EBITDA 14,234 22,000 7,766
Margin (%) 12.7%14.0%+54%
Operating income 7,965 10,500 1,795
Margin (%) 7.1%6.6%+31%
Ordinary income 7,305 9,100 1,795
Margin (%) 9.3%5.7%+24%
Net income before amortization of goodwill 4,653 8,000 3,347
Margin (%) 4.1%5.0%+71%
Net income attributable to owners of the
parent
4,304 5,000 1,696
Margin (%) 2.9%3.1%+51%
CF indicator that is the closest to the reality of business operation.
The most important CF indicator in GENDA’s M&A strategy.
Indicator easily showing net
income on IFRS basis
71
Earnings forecast for FY2026/1 Full-year
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
To be how a M&A company should be, the adoption of IFRS officially resolved at the Board meeting, application targeted at FY2027/1.
This is because admin function strengthened post IPO by improved recruiting capabilities, accumulated M&A know-hows, and incremental resources by acquired companies.
Easier to compare with global roll-up M&A comps, and no need to explain the gap between the real cashflow vs the current JGAAP based results.
Global expansion to be accelerated by applying IFRS, with the impact of sales increase by converting existing NEN stores into Kiddleton-style exceeded our expectation.
Change of Accounting Standards to IFRS aiming to apply in FY2027/1
Start preparations to apply IFRS
72
FY2027/1 FY2028/1 and after
1Q 2Q 3Q 4Q
Consolidated Earnings Forecast JGAAP IFRS
Consolidated Earnings JGAAP IFRS
Note: 1. The effect is not determined at this moment, because we will see the actual effects on P/L in amortization of goodwill in FY2027/1.
2. Since amortization of goodwill is not tax deductible, the amount of effect on net income by the decrease of amortization of goodwill due to the change in accounting standards will be the same as operating income and ordinary income.
J-GAAP ：Amortized (Ref.) Expected amortization of goodwill for one year via M&As announced as of today = c.¥3.0bn
IFRS ：Not amortized
Goodwill
Depreciation method will be changed from declining-balance to straight-line.
For assets which we already acquired and used a declining-balance method, it will be changed retroactively to straight-line.
The impacts on our PL is expected to be limited.
Depreciation of
tangible fixed assets
Changes associated with transition to IFRS
1
2
3
J-GAAP ：Collectively recorded as expenses at execution
IFRS ：Recorded as expenses on a pro rata basis during the loan period by effective interest method
Financing fee
Expected schedule of transition to IFRS
1
If this is actually ¥3.0bn,
our operating income,
ordinary income, and net
income would all be +¥3.0bn2
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Important management indicator / KPI
KPI – EBITDA and Net income before amortization of goodwill
EBITDA
(¥bn) (¥bn)
+54%+71%
73
KPI – M&A-related
KPI FY2023/1
Result FY2024/1
Result FY2025/1
Result FY2026/1
Target
Number of M&A
sourcing 40cases 170cases 431cases 500cases
Target of the Year
200cases
Comparison
215.5 %
KPI FY2021/1
Result FY2022/1
Result FY2023/1
Result FY2024/1
Result FY2025/1
Result FY2025/1
Target
Number of
Amusement
arcades in
operation
(arcades)
202
arcades 227
arcades 250
arcades 323
arcades 399
Arcades 415
arcades
Target of the Year
335arcades
Comparison
119.1 %
KPI – Amusement arcade operation-related
Note: For the number of amusement arcades in operation, the result includes the number of stores added through M&A, but the target does not include the number of stores to be added through M&A. The definition of “number of M&A sourcing” is the number of cases in which the target company has
directly or indirectly (eg. through an M&A intermediary or financial institution) expressed an intention to engage in a capital transaction. The 394 arcades at the end of FY2025/1 include 7 of DORAMA Co., Ltd., which will be acquired through an absorption-type split on February 1, 2025 and 53 of HALOS
Corporation, which will be consolidated from March 1, 2025.
As a company which has M&A as a mainstay of the growth strategy, we give utmost importance
to “EBITDA (Operating income + Depreciation + Amortization of goodwill),” which indicates
the consolidated capacity to generate annual cashflow, and “Net income before amortization
of goodwill,” which is an indicator close to net income under IFRS.
We have conducted many M&As and all the target companies adopted J-GAAP. At present, we
adopt J-GAAP to secure the mobility of M&A and accounting practice. However, we plan to
apply IFRS around 4Q of FY2027/1 to reflect the burden of “amortization of goodwill” (which
does not arise under IFRS) appropriately.
We always give utmost importance to cashflow indicators because the enterprise value is the
total of future free cashflow (after adding back amortization of goodwill, etc.) discounted by time
value and we repeat financing based on the target company’s capacity to generate cashflow in
each M&A.
Net income before
amortization of
goodwill
5.6 6.2 8.1
14.2
22.0
0
5
10
15
20
2022/1 2023/1 2024/1 2025/1 2026/1E
2.7 3.5 4.3 4.6
8.0
0
2
4
6
8
2022/1 2023/1 2024/1 2025/1 2026/1E
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
74
Business outline of Main subsidiaries
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Business Overview of Major Subsidiaries - Amusement
“Amusement arcade” Business centering on GENDA GiGO Entertainment
Operating throughout Japan, deploying business in U.S. and Taiwan as well
75
Amusement
Character MD
Contents & Promotion
事業概要
Owner of
Arcades
Rent for
arcades Rent out
arcades
Amusement
machine
vendors
Expenses for
buying or leasing
equipment
Buy or lease
equipment
Prize
suppliers
Purchasing
expenses Purchase
prizes
Provide various amusement
machines
Gaming fee
(Cash / E-money)
Customers visiting Amusement arcades
Entertainment Platform Entertainment Contents
Karaoke
Food & Beverage (F&B)
Business Business Overview
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Business Overview of Major Subsidiaries - Karaoke
Karaoke chain under “Karaoke BanBan” brand run by Shin Corporation Co., Ltd.
Japan’s third largest karaoke business in terms of number of stores
76
Amusement
Character MD
Contents & Promotion
事業概要
Entertainment Platform Entertainment Contents
Karaoke
Food ＆Beverage (F&B)
Owner of
Facilities
Rent for
facilities Rent out
facilities
Karaoke
equipment
manufacturers
Expenses for
buying or leasing
equipment
Buy or lease
equipment
Copyright
collecting
agency
Royalty
payout Use of
copyrighted
songs
Provide karaoke roomsFee
Customers visiting Karaoke premises
Business Business Overview
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Business Overview of Major Subsidiaries – Character MD
Fukuya Holdings, the core company of Character MD domain,
is a vendor of prizes and capsulated toys for amusement arcades
77
Amusement
Character MD
Contents & Promotion
事業概要
Business
Entertainment Platform Entertainment Contents
Karaoke
Food & Beverage (F&B)
Business Overview
Owner of IP
copyrights
Grant a
license
Factories and
Trading
companies
Purchasing
expenses Purchase
products
Media
Cost of
advertising PR activities
about products
Deliver products
Payment for prizes
and products
Amusement arcades, capsulated toys vendors,
retail shops
License
fee
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
78
Major “Frequently Asked Questions and Answers”
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
Financial affairs and Earnings
Q1 . Many of your M&As are financed through borrowing, but to what extent are they
affected by rising interest rates?
Q2 . You expanded the disclosure of “Tanshin.” Please explain how we should read it.
Q3 . Why did you disclose the full-year forecast for the next fiscal year (FY2026/1) at this
time?
Q1 . Isn’t the profit margin deteriorating from FY2024/1 to FY2025/1?
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2025/1
2024/12
2024/9
2024/3
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Q1. Many of your M&As are financed through borrowing, but to what extent are they affected by
rising interest rates?
80
In conclusion, I would like to explain that the impact from increasing interest rates is insignificant.
The reason is that we have been able to conduct M&As at appropriate valuation. The details are as
follows.
First, many of our past M&A transactions have been financed through borrowings. In many cases,
the condition was eight-year equal repayment.
The source of repayment of this fund is solely dependent on the free cash flow (FCF) of the target
company. In other words, it is assumed that the free cash flow of the company joined the group by
M&A (although each case has its characteristics) will be able to repay the amount paid for the
consideration = the borrowing within eight years.
Based on the assumption that the target company has going concern, this condition (repayment
within eight years) corresponds to an investment yield conversion of at least 12.5% per annum (100
divided by 8). Besides, centering on amusement arcades and karaoke, the target companies have
grown a lot after joining the group with synergy effects as already reported, which means that the
FCF has grown strongly, too, with that growth.
As a result, the recoupment period was 5 years (20% yield), 4 years (25%), 3 years (33%), etc., in
some cases of M&A in the past. These are yields including debt and corresponding to our weighted
average cost of capital (WACC). We believe that they are significantly above the level required of
listed companies.
In addition, since our interference is suppressed as the majority of our M&As are financed by debt
and the majority of the debt costs are slightly more than 1% only, the return on equity investment
excluding debt spikes and is much higher than the above figures. This is the return corresponding to
our cost of equity, and we believe that we have been able to manage at a significantly higher level.
Getting back to the interest rate, this means that we are managing funds, raised at an interest rate
of about 1%, at the above yield. Therefore, in an extreme case, even if our borrowing rate suddenly
rises to 2%, we would still be able to secure a substantial margin.
From a comparative perspective, let me explain a case in which negative effects from increasing
interest rates are significant. It is a case where the investment yield is low. For example, let us take a
look at a case where the yield is 5%.
When an M&A project with a yield of 5% (which means the recoupment period of consideration
paid for M&A is 20 years) is financed with a borrowing with an interest rate of 1%, if the interest rate
rises to 2%, the margin goes from 4% (5%-1%) to 3% (5%-2%), and although the margin itself
remains plus, the return itself is reduced by 25% (3% ÷ 4% -1) and the project’s contribution to
earnings is reduced by 25%, too (in real, it will be lessened a bit by tax shield). Thus, by ensuring
conducting M&A at an appropriate price, we have a large buffer against interest rate fluctuations.
(to be continued to next page)
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In terms of the amount of interest paid, even if interest rates were to rise by 1% against the
balance of interest-bearing debt of 48.6 billion yen as of the end of the third quarter of the fiscal year
ending January 31, 2025, the increase in interest paid would only amount to 0.486 billion yen annual
increase. In this case, EBITDA for the fiscal year ending January 31, 2025 would decrease from 21.2
billion yen (forecast as of December 24, 2024) to 20.7 billion yen and the growth rate of EBITDA
would decrease from +60% to +58%, of which impact on our long-term growth strategy quite limited.
As a result of M&As at an appropriate price, our cash flow indicators are at the highest level
compared to other companies that engage in continuous roll-up M&A in mature industries.
(Compiled from “Capital Growth Strategies Report”, page 22)
At present, under the situation where there are many projects that will generate further cash flow by
reinvestment, we do not accumulate the cash flow of the target companies which is increased by
M&A but make it resource for further investment. We do not try to maximize FCF as of today when it
is possible to invest. Therefore, we use operating cash flow to see the investment performance in
this way.
There is a significant difference from an investment safety perspective between acquiring a
company with EBITDA of 1.0 billion yen for 5.0 billion yen and acquiring the same company for 50.0
billion yen. However, in both cases, it would only be recorded as EBITDA +1.0 billion yen on the PL.
Thus, although we believe that our primary value is in cash flow because indicators of cash flow do
not show our intrinsic performance on PL, we have been conducting M&A with a sense of speed,
such as by ranking first in the number of M&As among listed companies for two consecutive years,
and as a result, our PL has grown significantly. This is because we have secured appropriate M&A
and high yields.
The cash flow of companies which joined us by M&A is further expanded through synergies and
PMI. With this strong cash flow base, the stability of our strategy is well secured against increasing
interest rates.
GENDA Waste
Management Service
Corp Rollins Danaher
OPCF Growth/
Invested Capital Approx.
25% Approx.
20% 8～9% Approx.
25% Approx.10
%
(Reference) Repost “Frequently Asked Questions and Answers (January 2025)” released on January 30
Q1. Many of your M&As are financed through borrowing, but to what extent are they affected by
rising interest rates? (continued)
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GENDA IR
Q1. You expanded the disclosure of “Tanshin.” Please explain how we should read it.
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Our company expanded the disclosure of “Tanshin” from the latest explanation of FY2025/1 3Q
results.
Why we expanded is because it is difficult to “measure organic business” via GAAP results even
though earnings release is an “stationary measurement of organic business.”
One of the main causes is one-off M&A-related expense.
Our company continuously engages M&A activities – while one-off M&A-related expenses incur
when those M&As are completed. The total amount of these expenses is recorded as expenses in a
lump sum when M&A is completed, which means one-off expenses, although they are originally
expenses in order to acquire the target company which will contribute to income every year forever.
Then, in the GAAP results, only the figures, after recording these M&A-related expenses, are
presented.
On the other hand, our organic business itself has remained strong as already reported.
Specifically, GENDA GiGO Entertainment, which runs amusement arcades as GiGO brand, Shin
Corporation, which runs karaoke boxes as BanBan brand, and Fukuya, which plans prizes of prize
games, are the top three companies in the amount of contribution to our consolidated earnings, and
all of the three expect to record the highest earnings in each company’s history.
However, in the GAAP results, only the figures mixing figures of these strong organic businesses
and one-off M&A-related expenses are presented.
Therefore, those working in our company who know the internal figures can see that our organic
businesses are strong. However, if only the GAAP results are shown to external investors, the
information is quite asymmetric, and we are afraid that it will interfere with appropriate decision
making in investments.
Therefore, we are doing our best to solve the asymmetric diversity of information by providing
the internal figures which those in our company know, to external investors as well.
The internal figures which those in our company know mean the earnings results excluding
M&A-related expenses. We show external investors such figures as “adjusted” income.
We believe that “adjusted” figures are important indicators to measure “intrinsic performance of
organic business.”
Now, let us explain to you based on our 3Q earnings presentation.
We are showing the referenced figures by the number for your reference.
(to be continued to next page)
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(Reference: “FY2025/1 3Q Earnings Presentation” disclosed on December 10, 2024, pages 12-
13)
“Adjusted” indicators presented in ⓪
We put “adjusted” indicators after deducting “one-off expenses which would not incur without M&A”
so that you can understand the “intrinsic performance of organic business.” Specifically, we deducted
M&A executing fees, M&A financing fees and Equity offering fees.
Now, let us explain each of them specifically.
⚫M&A executing fees
We deduct brokage fee, legal fee, DD fee, FA fee, appraisal fee for the current and previous
fiscal year.
⚫M&A financing fees
We deduct M&A financing fees for current and previous fiscal year. We limited this to M&A-
related financing fees and do not deduct the ones for organic business.
⚫Equity offering fees
We deduct the follow-on offering fee in July 2024 (UoP: M&A). We deducted the IPO fee in
July 2023, too, to show the intrinsic performance of organic business and stay conservative
comparison although we did not have to because it was not related to M&A (which means this
is a conservative comparison because income of previous fiscal year is adjusted upward and
the comparison hurdle increases).
Next, let us zoom in on each item.
(to be continued to next page)
(Reference) Repost “Frequently Asked Questions and Answers (December 2024)” released on December 25
Q1. You expanded the disclosure of “Tanshin.” Please explain how we should read it. (continued)
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①Income indicators after amortization of goodwill = figures for reference
We think that these income indicators are figures just for reference because amortization of goodwill
which is not related to cashflow is deducted. That means, if you measure the enterprise value by
using income indicators after amortization of goodwill, you will deduct the enterprise value double.
Following is an excerpt from “Frequently Asked Questions and Answers (March 2024).”
First, we believe that for a normal company that only does organic growth, it is appropriate to
measure it in terms of operating income. This is because depreciation is something that will "actually"
continue to cash out in the future due to capital expenditures. We do not believe that it is inherently
necessary to add it back to operating income.
On the other hand, there is no additional cash outflow for amortization (of course, capital
investment will be made, and the same arguments apply for depreciation as described above). In this
respect, it differs significantly from depreciation, that actually need additional cash outflow whereas
none for amortization.
Because of this difference, if goodwill amortization is also deducted in the analysis of performance,
as discussed below, it is doubly deducted from the value of the enterprise. This is because the cash
outflow has already been completed at the completion of the acquisition, it has already been factored
into the balance sheet either through a decrease in cash or an increase in debt, and unlike capital
expenditures, it will not occur in the future.
In the DCF method, which measures the intrinsic corporate value of a company, the equity value is
calculated by adding up all the free cash flows that will be generated forever, and then deducting the
"Net Debt" on the balance sheet at the end, which exactly deducts the completed cash out for the
M&A. Therefore, judging the M&A company by its operating income afterwards is a double deduction
of value.
M&A companies emphasize the addition back of goodwill amortization because only the
amortization of goodwill differs from companies with organic growth, and GENDA, in that regard, is
an appropriate inspection indicator as long as the goodwill amortization is added back to operating
income. In other words, it is precisely speaking, "EBITA.“
(to be continued to next page)
(Reference) Repost “Frequently Asked Questions and Answers (December 2024)” released on December 25
Q1. You expanded the disclosure of “Tanshin.” Please explain how we should read it. (continued)
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In addition, companies that only grow organically basically have zero goodwill amortization, so in a
sense, operating income = EBITA as a figure that adds back (zero) goodwill amortization to operating
income.
However, EBITA is not an indicator that is displayed in a general-purpose database, so we
recommend that you make your decision based on EBITDA, which is a common indicator.
On this point, we officially resolved to aim to apply IFRS in FY2027/1 at a meeting of the Board of
Directors and we believe that this will be solved by applying IFRS.
②All indicators are increase YoY even after amortization of goodwill although they are
figures just for reference
We show the year-on-year comparison of operating income, ordinary income and net income in
organic business which are adjusted, which means “one-off expenses which would not incur without
M&A” are deducted.
Although they are indicators after amortization of goodwill and just for your reference, we believe that
you can see that our organic business has been strong so that all indicators have increased YoY.
Operating income +43.3% and ordinary income +37.5%, a big increase YoY. Only the growth rate of
net income looks lower, this is because corporate tax started incurring from this year.
Besides, since the absolute amount of net income (after tax) is smaller than operating income and
ordinary income, the impact of “amortization of goodwill and M&A-related expenses” is bigger than
operating income and ordinary income. Because these expenses are not tax deductible, and “the
same amount” is deducted from all of operating income, ordinary income and net income. As a result,
net income in the accounting results presented in ②’ tends to look lower.
On the other hand, with these M&A-related expenses, we expect that the target EBITDA of
FY2026/1 should be 21.2 billion yen against the target EBITDA of FY2025/1, 13.0 billion yen, which
means transformational growth with +63% / +8.2 billion yen.
(to be continued to next page)
(Reference) Repost “Frequently Asked Questions and Answers (December 2024)” released on December 25
Q1. You expanded the disclosure of “Tanshin.” Please explain how we should read it. (continued)
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③Indicators before amortization of goodwill = our KPI
Because of the reasons stated above, we believe that it is better for you to see ③ which we
voluntarily and additionally disclose to make an investment decision on our company, which focuses
our strategy on M&A, until IFRS is introduced to us.
④Our KPI achieved higher YoY income growth than the strong the first and second quarters
We show the year-on-year comparison of KPIs excluding M&A-related expenses here.
EBITDA, which we use as a KPI, was adjusted to show a year-on-year increase of +64% / +4.0
billion yen, which is a higher rate of increase than in the first and second quarters. This means that
we have grown into a company that generates cash flow of over 10.0 billion yen in the first three
quarters.
Similarly, our another KPI, net income before amortization of goodwill, increased by +21% / +0.8
billion yen year-on-year after adjustment, and the rate of increase exceeded that of the first and
second quarters, with a significant increase in income after offsetting the corporate tax incurred from
this year.
⑤Cash EPS turns upward although “M&A is not announced yet”
Let us explain in detail the fact that Cash EPS had already turned upward, although 10.0 billion yen
of follow-on offering was not spent on M&A yet as of the third quarter.
Appropriate discipline is absolutely necessary in M&A strategy. We set to check whether “Cash
EPS,” which is a version of “net income before amortization of goodwill” of “EPS,” increases as our
discipline of M&A. If you ignore an appropriate valuation and conduct M&A at a higher price in an
unregulated way, it is possible to show as if the earnings and cashflow are increasing. However,
whether this indicator increases or not, is one of the important axes to test such discipline.
It is because the performance of a company is often judged by the earnings or cashflow after the
M&A, while the consideration for M&A was already paid. The important point is whether cashflow
increases after comparing with the actual consideration paid for the M&A.
(to be continued to next page)
(Reference) Repost “Frequently Asked Questions and Answers (December 2024)” released on December 25
Q1. You expanded the disclosure of “Tanshin.” Please explain how we should read it. (continued)
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Obviously, if you pay more as consideration for M&A than an increase in cashflow, it is a failure as an
investment. Although this is a discussion of M&A consideration combining debt and stock, and the
stock portion excluding the debt matters most for the shareholders.
If you increase the number of shares in an unregulated way, the market value will increase but the
share price will decrease. Cash EPS is an indicator to check this. This indicator is calculated by
dividing net income before amortization of goodwill with the number of shares. As long as this
indicator increases, you can see that the increase in income (numerator) is higher than the increase
in the number of shares (denominator).
We carried out a follow-on offering with 10.0 billion yen last July. It was a decision-making which
increased the number of shares, which is a denominator of Cash EPS, the most in our history. If the
numerator is not increased by spending the 10.0 billion yen on M&A, this increase in denominator will
damage the equity value.
On the other hand, we had not spent the 10.0 billion yen at all as of the third quarter. Therefore, only
the denominator increased drastically. Nevertheless, as provided in ⑤, Cash EPS in the third quarter
was +10%. This suggests that our strong results in organic business are producing effects more than
offsetting the increased number of shares due to the follow-on offering.
Yesterday we announced that we would acquire the foreign currency exchange machine business
through 70% with our shares and +30% in cash. We plan to spend 1.6 billion yen of the 10.0 billion
yen raised for the 30% cash portion of the acquisition.
To increase Cash EPS in the most comprehensible way is to acquire a company or business which
has a lower P/E multiple than our P/E multiple by conducting M&A. With this assumption, we will
spend the M&A fund which was raised by follow-on offering and P/E multiple was 29x at that time, to
get 30% of the shares of the target company, of which P/E multiple is 8.7x. And we will exchange the
rest, 70%, with GENDA shares, which P/E multiple was 38.7x on the day before the announcement.
Therefore, we believe that you can see that Cash EPS will increase remarkably.
If we spend the 10.0 billion yen of follow-on offering for M&A again in future, the absolute amount of
Cash EPS will increase if the target company has a surplus. To be exact, because P/E multiple was
29x on a Cash EPS basis which we raised by the follow-on offering in July 2024, “Cash EPS
increases” and can justify the follow-on offering only after P/E multiple of the M&A target company is
lower than 29x.
Therefore, we do not think that all M&A are acceptable as long as the target company has a surplus
in future. We will execute by emphasizing the appropriate valuation the most.
In our company, our officers and employees examine target companies of M&A pipeline and execute
M&A. At the same time, these officers and employees consist of more than 25% of our shareholders
and we have a strong function to check dilution of Cash EPS as well as our external shareholders.
(to be continued to next page)
(Reference) Repost “Frequently Asked Questions and Answers (December 2024)” released on December 25
Q1. You expanded the disclosure of “Tanshin.” Please explain how we should read it. (continued)
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From our shareholders’ perspective, as a representative of our shareholders, we will invest precious
assets of our shareholders together with the assets of our officers and employees in the
entertainment industry, which enjoys a tailwind from the worldwide Japanese anime culture, with
discipline.
As a result, based on our Aspiration, “More fun for your days,” we set “to be the World’s No.1
Entertainment Company by 2040” as our Vision, keep making “Continuous and Transformational
Growth” through “M&A in the entertainment industry” and aims to complete “GENDA’s unique
Entertainment Ecosystem.”
.
(Reference) Repost “Frequently Asked Questions and Answers (December 2024)” released on December 25
Q1. You expanded the disclosure of “Tanshin.” Please explain how we should read it. (continued)
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
Q3. Why did you disclose the full-year forecast for the next fiscal year (FY2026/1) at this time?
89
Our company's core business is M&A, and as we repeat M&A, there is a large discrepancy
between our cashflow generating ability at the beginning of the fiscal year, and that of after M&As
during the fiscal year. We believe that such information asymmetry is undesirable for investors to
make investment decisions in our company, which advocates Continuous Transformational Growth,
and that it is important for us to present our M&A-consolidated cashflow generating ability in a timely
and appropriate manner.
We consider the sales and profits that can be generated in a 12-month period to be the actual
cashflow generating ability. The assumptions for this are that there will be no additional M&A activity,
and therefore no one-time M&A-related expenses during the period, and no contribution to earnings
by the target company of the M&A activity.
When we try to show you this actual ability, we cannot do so with a full-year forecast during the
same fiscal year in which the M&A took place. This is because (1) one-time M&A-related expenses
are included in the forecast for the year in which the M&A is announced, and (2) the M&A target
company will contribute to the forecast for less than 12 months.
On the other hand, the actual cashflow generating ability is almost synonymous with the "next
fiscal year" earnings forecast. This is because we do not incorporate undisclosed M&A into our
earnings forecast, thus eliminating (1) and (2) above.
Therefore, in the future, when M&As during the fiscal year have a certain impact on our cashflow
generating ability that are initially assumed at the beginning of the year, we expect to disclose such
based on the assumption that M&A-related expenses are excluded and contribute to our
performance for a full 12 months, i.e., our forecast for the following year, in a timely and appropriate
manner without waiting for the full fiscal year results.
Although we will incur a certain amount of M&A-related expenses this fiscal year, we have already
increased the KPI of EBITDA by 5.5 billion yen (+42%) from 13.0 billion yen to 18.5 billion yen at the
end of the first half of the fiscal year. We would like to achieve transformational growth with M&A
expenses rather than 13 billion yen +α growth avoiding M&A expenses.
(Reference) Repost “Frequently Asked Questions and Answers (September 2024)” released on September 24
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
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Q1. Isn’t the profit margin deteriorating from FY2024/1 to FY2025/1?
90
In conclusion, the various businesses we acquire as M&A companies are not necessarily the same
profit margin, and this will naturally occur as we are acquiring businesses with different profit margins.
And that is not a problem from an M&A perspective, as we will explain below.
GENDA, as an M&A firm, sometimes acquires companies in industries different from its existing
businesses, which causes profit margins to fluctuate. For example, comparing FY2024/1 and
FY2025/1, GENDA acquires a karaoke business, and since the profit margin of the karaoke business
is lower than that of the amusement arcade business, the profit margin will be lower.
So, in the case of GENDA, based on the above assumptions, would a lower profit margin as a
result of M&A be a negative?
Indeed, for many general business companies with only organic growth, it is negative if the same
business has a lower profit margin on a year-to-year comparison. However, as an M&A firm, GENDA
merges and acquires companies with different business models and different profit margins;
therefore, if a company has a lower profit margin, its profit margin will naturally decrease.
So next, is it negative to M&A a company that is less profitable than the existing business?
This is the point in M&A that is a bit difficult to understand, but in conclusion, it depends on the
acquisition price.
For example, Shin Corporation, which is responsible for GENDA's karaoke business, is expected to
generate more than ¥2 billion in EBITDA in the proceeding fiscal year, the highest profit in its 35-year
history.
The acquisition price of the company is undisclosed, but just as an extreme metaphor for intuitive
clarity, if you could buy the company for 100 million yen, would you pass on M&A because of low
margins? 100 million yen is an investment that will turn into 2 billion yen a year later.
Rather, forgoing this M&A is what must be avoided as a company is required to maximize
shareholder value. In other words, you can see that high or low margins are a means, not an end.
GENDA, led by its Investment Committee, adheres to the basic principle of investment, which is
solely to invest funds and recover more funds than they are invested.
We would also like to add that we have already seen synergies in many areas of the companies we
have acquired, not only in the amusement arcade business, which is our forte, but also in the
karaoke business, and these synergies have actually materialized as a result. We will disclose these
results at the appropriate time once we have comparable data for a certain period of time after the
M&A.
Currently, we continue to see a positive cycle of acquisitions at appropriate valuations and
growth for the company.
(Reference) Repost “Frequently Asked Questions and Answers (March 2024)” released on March 25
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M&A
Q1 . You have conducted many M&As outside of amusement arcade, which is your main.
Are synergies and PMI all right?
Q4 . I am wondering if GENDA is an investment firm.
Q1 . Please tell us about the report by Capital Growth Strategies (CGS).
Q2 . Please explain the GENDA’s definition of growth and its reproducibility.
Q2 . If we evaluate GENDA’s performance based on “operating income before depreciation
and amortization of goodwill (EBITDA)” and “Net income before amortization of goodwill,”
which do not take into account the amortization of goodwill, does it matter how much
goodwill is generated as a Result of high entry valuations?
Q2 . As a M&A company, why do you use EBITDA as a KPI instead of operating income, given
the Increase in goodwill amortization expenses?
Q1 . Do you plan to disclose your mid-term management plan?
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As we aim to become the world's No. 1 entertainment company, our M&A targets are not limited to
the amusement arcade industry, which has a market size of 540 billion yen, but rather target the whole
entertainment industry. As individual companies of the entertainment industry formed a group of
companies, countless cross-selling synergies have been actually generated, resulting in significant
growth in business performance after joining in the group even outside of amusement arcades.
Fukuya and Shin Corporation are specific examples of non-amusement arcade companies that have
had a significant impact on consolidation. In this fiscal year, which is the first one after M&A, it is
already ensure that they will achieve a record income in their corporate history, 71 years of Fukuya
and 35 years of Shin Corporation. We believe that it is difficult to explain this without synergies.
On that condition, synergies and PMI are only means, not goals, in M&A. In order to make M&A
succeed, the goal should be that “the total amount of cash flow acquired through M&A exceeds the
consideration for M&A paid.” On the other hand, we think that having synergies and PMI as their goal,
which means “having means as the goal,” is a typical example of failure in M&A. The details are
explained below.
⚫Our definition of failure in M&A is a reduction in capital as a result of M&A
First, let me explain our definition of failure in M&A. Our definition of failure in M&A is that "the total
amount of cash flow acquired through M&A is less than the consideration for M&A paid," which means
that we have decreased our capital as a result of M&A. The reasons for this are as follows.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q1. You have conducted many M&As outside of amusement arcade, which is your main.
Are synergies and PMI all right?
As a listed company, it is required to maximize its equity value. Maximizing equity value requires
maximizing enterprise value. Maximizing enterprise value requires maximizing cash flow. Nevertheless,
if "the amount paid for M&A > the total amount of cash flow acquired through M&A," the equity value
will be damaged because cash flow is lost as a result of the M&A.
We define a M&A which damages equity value, which means “the total amount of cash flow acquired
through M&A is less than the consideration for M&A paid,” as "a failure in M&A.” In other words, the
definition of success in M&A is that "the total cash flow acquired through M&A exceeds the
consideration for M&A paid (on a present value basis)," and we have this as our goal
⚫Typical example of failure in M&A is "having means as the goal," which means having
synergies and PMI as the goal.
The goal of M&A is as stated above, and synergies and PMI are just means to increase cash flow.
However, we believe that having “synergies and PMI” which are means as a goal, which means
“having means as the goal,” is a typical example of failure in M&A. Specifically, this means "to conduct
M&A (regardless of the acquisition price) because synergies are likely to be generated with the existing
business and increase by PMI.”
When a company has been conducting M&A aggressively in a particular field, if it continues to
conduct M&A without caring the acquisition price only because it is likely to generate synergies, even if
synergies are actually generated, the acquisition price may be higher than the synergies and it could
fail to recover the investment. We should have cash flow as our goal, and having synergies or PMI as
the goal is a typical example of failure in M&A.
(to be continued to next page)
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⚫Background factors behind the likelihood of failure in M&A by having synergies as a goal.
We believe that the following characteristics of M&A are behind the likelihood of such failures.
- It is easy to conduct M&A just by paying a high price and we can increase PL immediately afterwards.
- On the other hand, it takes some years to find out if the acquisition price was right.
- In M&A, the sunk cost is high because it has a lot of person-hours. People on the line want to
complete the M&A if possible.
- To solve this issue, the function to check the acquisition price deteriorates in the cause of synergies
.
These are the characteristics of M&A. We have analyzed that the cause of typical failure is having
means as the goal, which means that "Let's carry out M&A because it looks like we can generate
synergies (even at a slightly higher price).”
⚫The premise of the doubt that synergies and PMI are all right is a thought that “M&A = overpriced."
When it comes to M&A, there is a common doubt that "synergies and PMI are all right.” A cause
underlying this doubt is a mind that “basically, the acquisition price in M&A is relatively high compared
to the cash flow of the target company on its own, and M&A will fail if the cash flow of the target
company does not increase through synergies and PMI because we cannot recover the investment in
the first place.”
However, the premise that M&A = relatively expensive is not correct. In the entertainment industry,
which is our target, there are structures which are suitable for M&A, such as stable business conditions
with a long business history, balance sheets of net cash and needs for business succession etc. For
more information, please see the following sponsored research report. (For reference: “Capital Growth
Strategies (Initial Report)” dated October 18, 2024)
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q1. You have conducted many M&As outside of amusement arcade, which is your main.
Are synergies and PMI all right? (continued)
⚫GENDA is an operating company which conducts M&A specializing in the entertainment field
by using an investment firm’s perspective of M&A.
We firmly emphasize M&A at the right price, not conducting M&A based on synergies or PMI. M&A
will fail if the goal is not to increase cash flow, and the axis of investment decisions is whether this can
be secured or not. Acknowledging the aforementioned temptation, we avoid having means as the goal
and make investments which are faithful to the theory of equity value.
On that basis, countless cross-selling synergies have been generated. Let me explain specific
examples of the synergies that have actually occurred in Q2, that is why GENDA is an operating
company, not an investment firm in Q3, the rationality of conglomerate in Q4 and the connection
between GENDA’s strategy and its Aspiration “More fun for your days” in Q5.
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We are an operating company, not an investment firm. Although we are an operating company, we
place M&A at the center of our strategy as same as an investment firm does, and conduct M&A based
on the same judging criteria as an investment firm. However, we limit our target domain to the
entertainment domain, and in reality, countless synergies are generated in the entertainment domain,
and we consider ourselves an operating company, not an investment firm.
First, since it is necessary to define an investment firm and an operating company, let me provide a
definition based on our ideas.
⚫Our definition of "investment firm"
Regardless of synergies, an investment firm will choose M&A if it comes into existence as an
investment, in other words, if cash flow increases through M&A. No one asks a question about
Company A and Company B, with which the investment firm has conducted M&A, "Why did the
investment firm conduct M&A with each of these two companies, although they were not related in any
way?" This is because it is obvious for the investment firm that there is an assumption that "Company
A and Company B, each of them comes into existence as an independent investment (we can recover
cash flow compared to the invested capital).
⚫Our definition of "operating company”
We consider a company to be in a state where it operates business in a specific area, each creating
synergies and creating more value than if it existed as a stand-alone company. Although operating
companies may also conduct M&A, they are not considered as an investment firm only because they
conduct M&A. If an operating company continues to conduct M&A in an industry that is too unrelated
to its own, it may be considered as an investment firm. However, if there are more synergies by doing
business together as a group than by doing that independently, then we believe that the company can
be considered as an operating company.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q4. I am wondering if GENDA is an investment firm.
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⚫GENDA is an operating company that conducts M&A based on the same judging criteria as
an investment firm.
Although we are an operating company, we place M&A at the center of our strategy as same as an
investment firm does, and conduct M&A based on the same judging criteria as an investment firm.
However, our target domain is limited to the entertainment domain, and in reality, countless synergies
are generated in the entertainment domain, and we believe that we are an operating company, not an
investment firm.
When you hold several companies which are completely unrelated as an investment firm, there are
cases where the value of the whole group is lower than the sum of the enterprise values of each group
of companies due to the usual conglomerate discount. On the other hand, GENDA will benefit from the
advantages of conducting M&A as an operating company through the conglomerate premium
described above.
Besides, since multiple indexes such as PER are calculated based on the growth rate in theory, we
would like to justify it by maintaining a high growth rate through M&A.
.
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Mr. Nobuzane, Representative Director and President of CGS, who has a career as a foreign
institutional investor mainly in Fidelity, prepared this report for the purpose of verbalizing to investors
the reality of our roll-up M&A strategy and the resulting transformational growth in equity value
(through increased enterprise value by increased cash flow).
As a result, while the index of “investment recovery” relative to “invested capital” (=Incremental
ROI), which is important for the company which conducts M&A, was at the highest level compared to
other companies in the same industry, the EV/EBITDA multiple, which took growth rate into account,
was discounted by approximately 70% to 80% compared to other companies in the same industry.
While the selection and the forecast for growth rate by other companies in the same industry are
based on CGS, the above analysis is a mechanical calculation based on actual market value, and we
believe that we have quantitatively presented the upside to investors. We present the specific
summary below.
As a company whose core business is M&A, we have consistently emphasized "M&A at
appropriate valuations" since we got listed. Specifically, we have emphasized the importance of
"investment recovery" (EBITDA of the target company) relative to "invested capital" (EV of the target
company) through M&A.
However, we focused only on EBITDA growth of the target company after the M&A in IR to date.
While it is true that an increase in cash flow of the target company promotes the investment recovery
is good, this is only a means, not an end. We were not able to measure the effect of "investment
recovery" relative to "invested capital," which was the main objective.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS).
Therefore, in this report, in order to measure the effect of "investment recovery" against "invested
capital," we measured the increase in operating cash flow (≒ EBITDA) ÷ the increase in invested
capital (=”Incremental ROI”) by using the increase (due to M&A) in GENDA’s consolidated balance
sheet (≒EV), not the one of the target company itself, as “invested capital” and the increase in
operating cash flow (due to M&A) (≒EBITDA) as “investment recovery” and compared it with other
companies in the same industry.
The other companies in the same industry are defined as "companies from a boarder range of
industries that similarly employ roll-up M&A strategies within mature markets (p21 of CGS Report)”.
There are a number of companies that are engaged in this industry on a large scale in the U.S. Among
those companies, the report mentions Waste Management, which conducts roll-up M&A in industrial
waste services (Incremental ROI is about 20%), Service Corp International (about 8-9%), which
conducts roll-up M&A in funeral services, Rollins (about 25%), which conducts roll-up M&A in pest
control industry, and Danaher (about 10%), a leading company that achieves growth through M&A.
In contrast, the result of the analysis shows that our index is approximately 25%, which is the
highest level in comparison to other companies in the same industry ("This expected performance
compares favorably with global companies in other sectors following a roll-up M&A growth strategy (p.
20)"). Therefore, it is quantitatively shown that it is justified even if valuations are relatively high
compared to other companies in the same industry.
However, it is noted that when calculating the EV/EBITDA multiple relative to growth rate, our
company is 0.3x while Waste Management is 1.5x, Service Corp International is 1.1x and Rollins is
2.5x (“…at an approx. 70-80% discount. This suggests a strong sense of undervaluation per growth,
from an objective standpoint (p.1)”)
(to be continued to next page)
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EV/EBITDA multiple compared to growth rate is calculated as "EV/EBITDA multiple divided by
EBITDA growth rate.” A similar approach is commonly used for PEG (Price/Earnings-to-Growth), which
is calculated by dividing P/E multiple by EPS growth rate, but this analysis is performed for EBITDA.
The idea behind this approach is that a higher multiple is justified for a company with a higher growth
rate. Following is a concrete example.
If Company A and Company B have the same EBITDA (e.g., 10 billion yen), and Company A
grows at 10% (11 billion yen, 12.1 billion yen, 13.3 billion yen…) annually while Company B grows at
20% (12 billion yen, 14.4 billion yen, 17.3 billion yen…) annually, even over 3 years alone, EBITDA
growth of Company A is 1.3x and that of Company B is 1.7x, which is a large difference, justifying
Company A < Company B in enterprise value. As a result, even if Company A = Company B in the
current EBITDA, it is justified that Company A < Company B in EV/EBITDA multiple calculated by
dividing because it is Company A < Company B in enterprise value.
In addition to growth rates, higher multiples are also justified if there are higher figures measuring
cash flow generation capacity (such as Incremental ROI, ROIC and operating CF conversion rate etc.
in the CGS report).
This is because, although EBITDA is a concept similar to cash flow, in reality, it is steady free cash
flow from which (taxes and) investments necessary to maintain the business (maintenance CAPEX)
are taken into account that affects the theoretical enterprise value. In other words, even if EBITDA is
the same amount, a company with a higher conversion rate from EBITDA to cash flow will have a
higher theoretical enterprise value.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS). (continued)
From this perspective, the CGS report states, "From FY21 to FY23, GENDA’s invested capital has
increased by approx. ¥15.5bn, with cumulative operating CF over the same period totaling around
¥2.9bn (¥3.8bn if including FY24 estimates by CGS). This results in their incremental ROI of 20-25%,
which CGS considers an impressive figure based on our long-time investment experience (p. 20).”
Based on that assumption, he added, "Based on the CGS forecast, GENDA’s expected FCF
generation per profit growth may not reach the level of Rollins (given differences in organic CapEx
requirements and Cash ROIC) but is relatively comparable to Waste Management’s figure. (snp) The
EBITDA multiple currently assigned to GENDA per 1% projected growth (0.3x) appears undervalued in
light of GENDA’s long-term FCF generation potential. Given GENDA’s expected growth rate, CGS
thinks there is considerable upside potential in its current EV/EBITDA multiple from an objective
standpoint. (p22).”
(to be continued to next page)
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The CGS report makes an evaluation based on the capacity to generate cash flow right down the
line, centered on EV/EBITDA multiple. We believe that EV/EBITDA, which is a valuation based on cash
flow, is more appropriate to evaluate companies which core business is M&A (compared to general
PER).
This is because a roll-up M&A style company repeats M&A by relying on its own cash flow or the
one of the target company and financing, however, if it cannot raise funds, it cannot conduct M&A and
as a result, the growth in corporate and equity value suspends.
In other words, cash flow itself is a source of growth and an indicator of potential for future growth.
We will keep showing investors EBITDA, the most common indicator to show cash flow simply, as a
KPI which we emphasize.
Regarding PER, since we believe it is show the reality better to use PER based on "current income
before amortization of goodwill" (which is a pseudo current income under IFRS) from the viewpoint of
cash flow-based valuation and comparison with overseas companies, we present the PER on our
website for your reference.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS). (continued)
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GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
Mr. Nobuzane, Representative Director and President of CGS, who has a career as a foreign
institutional investor mainly in Fidelity, prepared this report for the purpose of verbalizing to investors
the reality of our roll-up M&A strategy and the resulting transformational growth in equity value
(through increased enterprise value by increased cash flow).
As a result, while the index of “investment recovery” relative to “invested capital” (=Incremental
ROI), which is important for the company which conducts M&A, was at the highest level compared to
other companies in the same industry, the EV/EBITDA multiple, which took growth rate into account,
was discounted by approximately 70% to 80% compared to other companies in the same industry.
While the selection and the forecast for growth rate by other companies in the same industry are
based on CGS, the above analysis is a mechanical calculation based on actual market value, and we
believe that we have quantitatively presented the upside to investors. We present the specific
summary below.
As a company whose core business is M&A, we have consistently emphasized "M&A at
appropriate valuations" since we got listed. Specifically, we have emphasized the importance of
"investment recovery" (EBITDA of the target company) relative to "invested capital" (EV of the target
company) through M&A.
However, we focused only on EBITDA growth of the target company after the M&A in IR to date.
While it is true that an increase in cash flow of the target company promotes the investment recovery
is good, this is only a means, not an end. We were not able to measure the effect of "investment
recovery" relative to "invested capital," which was the main objective.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS).
Therefore, in this report, in order to measure the effect of "investment recovery" against "invested
capital," we measured the increase in operating cash flow (≒ EBITDA) ÷ the increase in invested
capital (=”Incremental ROI”) by using the increase (due to M&A) in GENDA’s consolidated balance
sheet (≒EV), not the one of the target company itself, as “invested capital” and the increase in
operating cash flow (due to M&A) (≒EBITDA) as “investment recovery” and compared it with other
companies in the same industry.
The other companies in the same industry are defined as "companies from a boarder range of
industries that similarly employ roll-up M&A strategies within mature markets (p21 of CGS Report)”.
There are a number of companies that are engaged in this industry on a large scale in the U.S. Among
those companies, the report mentions Waste Management, which conducts roll-up M&A in industrial
waste services (Incremental ROI is about 20%), Service Corp International (about 8-9%), which
conducts roll-up M&A in funeral services, Rollins (about 25%), which conducts roll-up M&A in pest
control industry, and Danaher (about 10%), a leading company that achieves growth through M&A.
In contrast, the result of the analysis shows that our index is approximately 25%, which is the
highest level in comparison to other companies in the same industry ("This expected performance
compares favorably with global companies in other sectors following a roll-up M&A growth strategy (p.
20)"). Therefore, it is quantitatively shown that it is justified even if valuations are relatively high
compared to other companies in the same industry.
However, it is noted that when calculating the EV/EBITDA multiple relative to growth rate, our
company is 0.3x while Waste Management is 1.5x, Service Corp International is 1.1x and Rollins is
2.5x (“…at an approx. 70-80% discount. This suggests a strong sense of undervaluation per growth,
from an objective standpoint (p.1)”)
(to be continued to next page)
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EV/EBITDA multiple compared to growth rate is calculated as "EV/EBITDA multiple divided by
EBITDA growth rate.” A similar approach is commonly used for PEG (Price/Earnings-to-Growth), which
is calculated by dividing P/E multiple by EPS growth rate, but this analysis is performed for EBITDA.
The idea behind this approach is that a higher multiple is justified for a company with a higher growth
rate. Following is a concrete example.
If Company A and Company B have the same EBITDA (e.g., 10 billion yen), and Company A
grows at 10% (11 billion yen, 12.1 billion yen, 13.3 billion yen…) annually while Company B grows at
20% (12 billion yen, 14.4 billion yen, 17.3 billion yen…) annually, even over 3 years alone, EBITDA
growth of Company A is 1.3x and that of Company B is 1.7x, which is a large difference, justifying
Company A < Company B in enterprise value. As a result, even if Company A = Company B in the
current EBITDA, it is justified that Company A < Company B in EV/EBITDA multiple calculated by
dividing because it is Company A < Company B in enterprise value.
In addition to growth rates, higher multiples are also justified if there are higher figures measuring
cash flow generation capacity (such as Incremental ROI, ROIC and operating CF conversion rate etc.
in the CGS report).
This is because, although EBITDA is a concept similar to cash flow, in reality, it is steady free cash
flow from which (taxes and) investments necessary to maintain the business (maintenance CAPEX)
are taken into account that affects the theoretical enterprise value. In other words, even if EBITDA is
the same amount, a company with a higher conversion rate from EBITDA to cash flow will have a
higher theoretical enterprise value.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS). (continued)
From this perspective, the CGS report states, "From FY21 to FY23, GENDA’s invested capital has
increased by approx. ¥15.5bn, with cumulative operating CF over the same period totaling around
¥2.9bn (¥3.8bn if including FY24 estimates by CGS). This results in their incremental ROI of 20-25%,
which CGS considers an impressive figure based on our long-time investment experience (p. 20).”
Based on that assumption, he added, "Based on the CGS forecast, GENDA’s expected FCF
generation per profit growth may not reach the level of Rollins (given differences in organic CapEx
requirements and Cash ROIC) but is relatively comparable to Waste Management’s figure. (snp) The
EBITDA multiple currently assigned to GENDA per 1% projected growth (0.3x) appears undervalued in
light of GENDA’s long-term FCF generation potential. Given GENDA’s expected growth rate, CGS
thinks there is considerable upside potential in its current EV/EBITDA multiple from an objective
standpoint. (p22).”
(to be continued to next page)
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GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
The CGS report makes an evaluation based on the capacity to generate cash flow right down the
line, centered on EV/EBITDA multiple. We believe that EV/EBITDA, which is a valuation based on cash
flow, is more appropriate to evaluate companies which core business is M&A (compared to general
PER).
This is because a roll-up M&A style company repeats M&A by relying on its own cash flow or the
one of the target company and financing, however, if it cannot raise funds, it cannot conduct M&A and
as a result, the growth in corporate and equity value suspends.
In other words, cash flow itself is a source of growth and an indicator of potential for future growth.
We will keep showing investors EBITDA, the most common indicator to show cash flow simply, as a
KPI which we emphasize.
Regarding PER, since we believe it is show the reality better to use PER based on "current income
before amortization of goodwill" (which is a pseudo current income under IFRS) from the viewpoint of
cash flow-based valuation and comparison with overseas companies, we present the PER on our
website for your reference.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS). (continued)
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The Definition of Growth
Growth is growth in "Cash EPS," and we use "EBITDA," which is a common index to show cash
flow simply, as the KPI.
Reproducibility of GENDA's growth
①Appropriate invested capital: M&A at appropriate valuations
②Maximize investment recovery: Growth of each company's cash flow through synergy effects
→”Flywheel effect" resulting from (1) and (2)
③Leverage effect: Raising debt by taking advantage of low interest rates
We believe that GENDA's growth of "Cash EPS” can be replicated in the future due to the above
three factors. We will explain each of them in detail below.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q2. Please explain the GENDA’s definition of growth and its reproducibility.
①Appropriate invested capital: M&A at appropriate valuations
There are various approaches to stock price calculation, but one of theoretical approaches is the
DCF method, which calculates the "equity value per share," or the theoretical value of the stock price,
by “dividing equity value calculated by deducting net interest bearing liability from (current value of) the
total amount of future cash flow by the number of stock.”
Of these, the explanatory variable that has the greatest impact on equity value is "the total amount
of future cash flows.” There are two main ways of thinking about future cash flows. Specifically, one is
to grow future cash flows at the expense of immediate cash flows by making additional investments,
and the other is to maximize immediate cash flows by restraining additional investments and return
them to shareholders so that future cash flows will be stable.
As in the former case, when additional investment is made at the expense of immediate cash flow, it
is meaningless unless the investment recovery by generating cash flow in the future equal to or greater
than the invested capital (invested capital < investment recovery). Furthermore, since it must be equal
to or greater even after it adds the cost of capital which a listed company is required, the absolute
amount must be significantly greater than the invested capital (invested capital < investment recovery).
There are two main means of increasing future cash flow through additional investment: organic
growth (opening new stores) and inorganic growth (M&A). Although these two seem to be different,
they theoretically have the same economic effect in terms of "economic activity that recovers
investment against invested capital.”
(to be continued to next page)
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Therefore, we measure the effect by regarding investing one unit of capital for organic growth
(opening new stores, etc.) and investing one unit of capital for inorganic growth (M&A) as the same
"additional investment.” Specifically, we use IRR to measure capital efficiency (≒a profitability indicator
that takes into account the speed of return on invested capital). In order to accurately determine the
return to shareholders, we also use Equity IRR, which takes into account the leverage effect of
utilization of debt.
However, M&A, which is especially inorganic growth, has the advantage of pursuing the "scale" of
the investment. In other words, when considering investment, not only IRR but also "size" that is the
absolute amount of increased cash flow (= the size of NPV) is important.
Because of the big "scale" of a single unit of investment, M&A can have the same effect of
increasing equity value as opening [100] new amusement arcades or karaoke stores in one year, for
example. We believe that you can understand how significant meanings M&A has, considering that it is
impossible to open [100] new stores in one year in reality.
Furthermore, in most cases, inorganic growth through our M&A activities results in not only a
revenue amount (NPV) but also a rate of return (IRR) that is higher than organic growth. However, we
are currently able to achieve both investments in organic growth (new store openings, etc.) and
inorganic growth (M&A) because the absolute IRR values for both are well above the expected rate of
return for a listed company, and we are able to raise funds for each.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q2: Please explain the GENDA’s definition of growth and its reproducibility. (continued)
We will continue to invest the funds entrusted to us by our shareholders, both organic and inorganic,
in investment projects that we expect will exceed our expected rate of return as a listed company, after
making appropriate leverage on the funds. This is because reinvestment of funds is more conducive to
maximizing share value than returning them to shareholders as long as it exceeds the expected rate of
return.
Therefore, even if the cash flow of the target company does not grow after the M&A, it is possible to
increase Cash EPS simply by conducting M&A at an appropriate valuation. The reproducibility of M&A
at an appropriate valuation itself has been well documented in the CGS report ("Equity Story 1:
GENDA's M&A strategy shows strong potential for success (P3)").
(to be continued to next page)
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(ii) Maximize investment recovery: Growth in cash flow of each company through synergy effects
Increased cash flow of the target company after M&A will further accelerate the investment recovery,
increase IRR and NPV, and ultimately enable GENDA to achieve the growth that GENDA should aim
for. This is the synergy effect, which is the best part of a roll-up M&A.
In addition to the aforementioned (1), it has already been announced that the cash flow (EBITDA) of
each target company after M&A has grown and is highly reproducible. By combining (1) and (2), we
have shown the "flywheel effect," which is a cycle in which the initial capital investment (M&A) is
appropriate and the subsequent growth in cash flow of the target company further maximizes the
investment recovery.
Specifically, in the "M&A Progress and FY2025/1 Q1 Outlook" released on April 23, we disclosed
that it had already established a PMI pattern in amusement arcade M&A, and had successfully
increased EBITDA (YoY +20% to + 2,970%) on all projects for Takarajima, Sugai Dinos, Avice, Amuzy,
YK Corporation and PLABI.
In addition to amusement arcades, Fukuya HD, which designs prizes for prize games, Ares
Company, which runs the wholesale of prizes, and Shin Corporation, which runs karaoke business,
also increased their EBITDA (YoY +142%, +305% and +85%, respectively), as shown in the
"FY2025/1 Q1 Earnings Presentation" released on June 11, showing that it is possible to improve the
business performance by generating synergies within the group through the cross-selling of countless
products in the entertainment industry by utilizing our Entertainment Ecosystem.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q2: Please explain the GENDA’s definition of growth and its reproducibility. (continued)
(iii) Leverage effect: Debt financing by taking advantage of low interest rates
The flywheel effect of (1) and (2) up to this point alone is sufficient to increase growth in equity value.
However, we are thoroughly committed to maximizing the growth of "Cash EPS," which is the
Company's goal, through the use of debt with low interest rates.
We proactively approach financial institutions and initiate borrowing transactions in “normal times,”
and currently we actually borrow from a total of 52 banks and leasing companies. This enables us to
raise funds promptly in case of contingency (M&A). We are taking appropriate steps to ensure that
financing will not become a bottleneck in our M&A activities, while we also have an option of issuing
corporate bonds after the recent capital increase through a public offering.
As described above, we believe that our goal of "growth" can be achieved with reproducibility
through M&A at appropriate valuations × growth of each company's cash flow by synergy effects after
M&A × debt financing that takes advantage of low interest rates.
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GENDA’s Business Strategy and Growth Potential
GENDA IR
Q2. If we evaluate GENDA’s performance based on “operating income before depreciation and
amortization of goodwill (EBITDA)” and “Net income before amortization of goodwill,” which do not
take into account the amortization of goodwill, does it matter how much goodwill is generated as a
Result of high entry valuations?
104
The entry valuation being high relative to the cash flow to be generated by the target company in the
M&A transaction, is a critical issue. This is because there is a high probability that the cash invested
will not be recouped in the future.
Therefore, GENDA places the highest importance on cash flow-based valuations in its M&A strategy.
From the above perspective, the absolute amount of goodwill itself is not necessarily a problem in
theory. However, in general, the absolute amount of goodwill tends to be larger for more high
valuation M&As, and it is important not to increase the absolute amount of goodwill in order to
avoid unnecessarily depressing operating income, after deducting goodwill amortization expenses
under Japanese GAAP.
In light of the above, GENDA's "M&A discipline" places the highest importance on entry valuation
on a cash flow basis in M&A and ensures that M&A are conducted at appropriate valuations. Once
this premise is fulfilled, we also strive to minimize the amount of goodwill to the extent possible.
As a result, the recoup of the initial investment is progressing smoothly, as described in the "M&A
Progress and First Quarter Outlook" disclosed today.
In addition, as described in "Q3" of this report, PMI has been more successful than expected due to
significant synergies in areas other than amusement arcades. We will announce the status of PMI in
areas other than amusement arcades in the future as well.
For example, in amusement arcade M&A, assets with relatively small book value such as crane
games, or assets that have depreciated to a small amount in terms of book value, may generate
ample cash flow, supported by customer demand due to the popularity of cartoons and other factors.
In such cases, the net asset value on the balance sheet may appear smaller than the valuation based
on future cash flows, and as a result, goodwill may easily arise as a result. However, based on the
theory of valuation, GENDA gives priority to valuations based on cash flows, while also trying to
minimize the amount of goodwill as much as possible.
(Reference) Repost “Frequently Asked Questions and Answers (April 2024)” released on April 23
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
Q2. As a M&A company, why do you use EBITDA as a KPI instead of operating income, given the
Increase in goodwill amortization expenses?
105
In conclusion, using an earnings measure from which goodwill amortization has been deducted
to determine enterprise value would result in a double deduction of enterprise value for the
reasons discussed below.
First, we believe that for a normal company that only does organic growth, it is appropriate to
measure it in terms of operating income. This is because depreciation is something that will "actually"
continue to cash out in the future due to capital expenditures. We do not believe that it is inherently
necessary to add it back to operating income.
On the other hand, there is no additional cash outflow for amortization (of course, capital
investment will be made, and the same arguments apply for depreciation as described above). In this
respect, it differs significantly from depreciation, that actually need additional cash outflow whereas
none for amortization.
Because of this difference, if goodwill amortization is also deducted in the analysis of
performance, as discussed below, it is doubly deducted from the value of the enterprise. This is
because the cash outflow has already been completed at the completion of the acquisition, it
has already been factored into the balance sheet either through a decrease in cash or an
increase in debt, and unlike capital expenditures, it will not occur in the future.
In the DCF method, which measures the intrinsic corporate value of a company, the equity value is
calculated by adding up all the free cash flows that will be generated forever, and then deducting the
"Net Debt" on the balance sheet at the end, which exactly deducts the completed cash out for the
M&A. Therefore, judging the M&A company by its operating income afterwards is a double deduction
of value.
M&A companies emphasize the addition back of goodwill amortization because only the amortization
of goodwill differs from companies with organic growth, and GENDA, in that regard, is an appropriate
inspection indicator as long as the goodwill amortization is added back to operating income. In other
words, it is precisely speaking, "EBITA".
In addition, companies that only grow organically basically have zero goodwill amortization, so in a
sense, operating income = EBITA as a figure that adds back (zero) goodwill amortization to operating
income.
However, EBITA is not an indicator that is displayed in a general-purpose database, so we
recommend that you make your decision based on EBITDA, which is a common indicator.
The above is the concept of calculating value on an all-share basis based on the assumption that
control is acquired. When looking at value per share without control, we believe that it is common to
refer to P/E multiple and compare relative to other companies in the same industry.
(to be continued to next page)
(Reference) Repost “Frequently Asked Questions and Answers (March 2024)” released on March 25
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
Q2. As a M&A company, why do you use EBITDA as a KPI instead of operating income, given the
Increase in goodwill amortization expenses? (continued)
106
For investors who look at valuations of M&A companies in terms of P/E multiple, we believe it is
appropriate to think in terms of P/E multiple before goodwill amortization. This is because it is
the same as P/E multiple under pseudo IFRS. This is because P/E multiple before goodwill
amortization is almost the same regardless of which accounting standard is adopted.
In other words, if GENDA were to adopt IFRS in the future, the P/E multiple based on GENDA's net
income in each database would suddenly drop, giving the appearance of being undervalued, even
though there would naturally be no essential change in GENDA, because this is not inherently correct.
Therefore, we believe that the P/E multiple before amortization of goodwill, which remains
unchanged regardless of which accounting standard is introduced, is appropriate.
On the other hand, P/E multiple before goodwill amortization is not available in general databases, so
for your reference, I will explain a simplified way to look at GENDA's P/E multiple before goodwill
amortization. In GENDA's case, it is "P/E multiple of net income × 0.8x = P/E multiple of net
income before amortization of goodwill".
This is because GENDA's forecast for the current term is 5.4 billion yen for net income before
amortization of goodwill and 4.3 billion yen for net income, a difference of approximately 1.25 times,
and thus a PER of (1/1.25=) 0.8 when calculated at 1.25 times the P/E multiple normally seen in a
database.
(Reference) Repost “Frequently Asked Questions and Answers (March 2024)” released on March 25
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
Q1. Do you plan to disclose your mid-term management plan?
107
GENDA does not plan to announce its medium-term management plan for the following reasons
While we place M&A at the core of our growth strategy, we believe that if we announce a medium-
term management plan that incorporates M&A, there is a risk that we may carry out unreasonable
M&A to achieve our business performance, resulting in a high price tag, while on the other hand, if we
announce a medium-term management plan that only incorporates organic growth, we believe that
the disclosure of a medium-term management plan that incorporates only organic growth would
increase the possibility of presenting a growth trajectory that differs significantly from that of our group,
which places M&A at the core of its growth strategy. For these reasons, we refrain from disclosing our
medium-term management plan.
(Reference) Repost “Frequently Asked Questions and Answers (February 2024)” released on February 27
© GENDA Inc.
GENDA IR GENDA’s Business Strategy and Growth Potential
108
Valuation
Q2 . Please elaborate on the valuation analysis report by Capital Growth Strategies Co., Ltd.
(“CGS”)
2025/2
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
Q2. Please elaborate on the valuation analysis report by Capital Growth Strategies Co., Ltd. (“CGS”)
109
This report shows what kind of preconditions (specifically, perpetuity growth rate) we should set to
get a stock price of 2,900 yen (which is our present stock price) in a DCF analysis.
The conclusion of the report shows that regarding a perpetuity growth rate in a DCF analysis, while
generally setting a precondition of ±1%, it cannot be explained without entering a “excessively low
and unrealistic" input of perpetuity growth rate of -19.4%, which means that “in other words, this
analysis confirms that the current valuation is significantly undervalued.” (CGS Report p1)
Please let us explain the details.
First, a DCF analysis is the most corporate finance theory-based approach, that calculates
theoretical stock prices from the bottom up.
On the other hand, it has drawbacks, too.
Specifically, “the theoretical stock price is highly sensitive to the terminal value assumption, making
the results prone to subjectivity,” which means that the theoretical stock price fluctuates greatly
depending on the input value of the perpetuity growth rate. (CGS Report p1)
This drawback has been eliminated this time. Specifically, “a reverse DCF helps reduce subjectivity
in investment analysis by revealing the perpetual growth rate assumed in the current stock price,”
which means that it was calculated backwards what percentage the perpetuity growth rate should be
to get 2,900 yen in the DCF analysis (this “back-calculated” part is the reason for the “reverse” DCF).
(CGS Report p1)
Consequently, this perpetuity growth rate becomes the explained variable which is calculated
backwards to connect DCF⇄ market stock prices based on the DCF analysis, and the arbitrariness is
eliminated.
The back-calculated perpetuity growth rate is -19.4% mentioned at the beginning of this section. This
means that if we assume that our free cash flow (hereinafter “FCF”) will decrease by -19.4% every
year forever (after CGS's 10-year earnings forecast period), the stock price calculated by the DCF
analysis will be 2,900 yen. For EBITDA growth rate, the precondition will be that our EBITDA will
decrease -24.5% every year forever.
(CGS report p2)
Next, let us take a look at CGS's 10-year earnings forecast. Since the perpetuity growth rate above
is the growth rate after CGS's 10-year earnings forecast period, if the 10-year earnings forecast was
really aggressive, it would be natural that the perpetuity growth rate were -24.5%.
First of all, as a premise, since we went public, EBITDA has grown by approximately +60% for two
consecutive fiscal years, from 8.1 billion in FY2024/1 to the forecast of 13.0 billion for FY2025/1, and
to the forecast of 21.2 billion for FY2026/1, and we keep conducting M&A activities having a similar
growth rate as our benchmark in the future as well.
(to be continued to next page)
(Reference) Repost “Frequently Asked Questions and Answers (February 2025)” released on February 28, 2025
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
110
On the other hand, CGS's forecast assumes that we failed in our plan. Specifically, it will be +45% for
this fiscal year, +35% for the next fiscal year, and then slowing to +30% and +20% each year after
that.
(CGS Report p2)
As stated above, even though it is a precondition which is far below what we are aiming at, since a
10-year earnings forecast alone exceeds the current market capitalization, the result shows that the
only way to calculate 2,900 yen backwards is to push down the perpetuity growth rate to -19.4%.
Besides, against an opinion that the above 10-year earnings forecast is still strong, in this report, the
perpetuity growth rate is also calculated backwards in case that the forecast for EBITDA growth rate
is further revised downward.
Specifically, as you can see in the upper row of the chart below, if “the EBITDA growth rate from the
4th to the 6th year is 15%” and “the EBITDA growth rate from the 7th to the 10th years is 10%,” a
perpetuity growth rate of -2.9% is back-calculated (the upper left in the chart).
(CGS Report p3)）
(Reference) Repost “Frequently Asked Questions and Answers (February 2025)” released on February 28, 2025
Even in the earnings forecast that EBITDA growth rate of 60%, which is our result and target, will
slow down to 45%, 35%, 15% and 10%, which means that we cannot conduct M&A for mid- and long-
term and the growth is only organic one, it is still -2.9%, a conservative growth rate compared to +/-
1%, which is used in a general DCF analysis.
Based on the above result of analysis, the conclusion is that “In other words, this analysis indicates
that the current stock price and valuation are highly undervalued.” (CGS Report p2)
We have maintained our M&A discipline by intentionally not issuing a medium-term management
plan to prevent blind M&A. However, internally, we have the current growth of 60% per annum as a
benchmark.
Therefore, we do not assume an EBITDA growth rate of 10 to 15% on a mid- and long-term basis,
which substantially means that we can barely conduct M&A (“the long-term EBITDA and FCF
projections do not reflect any input or intentions from GENDA” (CGS Report p2)).
In addition, it says that “CGS does not consider the market consensus forecast for GENDA to be a
good reference for the mid-to-long term. The primary reason is that we estimate the consensus
forecasts have largely not incorporated the company’s future M&A potential beyond those that have
been publicly announced.“ (CGS Report p4).
(to be continued to next page)
Q2. Please elaborate on the valuation analysis report by Capital Growth Strategies Co., Ltd. (“CGS”)
(continued)
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
111
In fact, regarding the EBITDA forecast for FY2026/1, while the market consensus is 18.95 billion yen,
we have already disclosed that the EBITDA forecast for FY2026/1 will be 21.2 billion yen in the
presentation on December 24,2024, and this is a forecast under the assumption that there will be no
M&A conducted in the future.
(CGS Report p4)
Based on them, the report ends with “a consensus forecast that largely excludes future M&A is not
particularly useful given the GENDA’s growth strategy. Furthermore, it means that the trading
multiples derived from consensus estimates do not account for the cash flow contribution from future
M&A. For a valuation that incorporates the potential earnings contribution from future M&A as an
estimated figure, please refer to the trading multiples based on CGS projections.” (CGS Report 4).
Our business model is in the early days in the domestic market, and we believe there are a lot of
different views on valuations. However, this result of DCF analysis by CGS, which eliminated the
arbitrariness, shows that the level of our market stock price is the one which cannot be derived
theoretically.
(Reference) Repost “Frequently Asked Questions and Answers (February 2025)” released on February 28, 2025
We will keep striving to quickly execute, enhance our capability to generate cash flow, our equity
and enterprise value, and to deliver the fruits of Continuous Transformational Growth to our investors.
Reference: "Capital Growth Strategies Report (Valuation Analysis)," February 12, 2025
https://capital-gs.co.jp/wp-content/uploads/2025/02/GENDA-CGS-Report-English-20250212.pdf
Q2. Please elaborate on the valuation analysis report by Capital Growth Strategies Co., Ltd. (“CGS”)
(continued)
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
112
Status of Appropriation of Funds raised at IPO (July 2023) and Risk information
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
Basically, we have executed the investment plan as planned
Status of Deployment of Funds raised at the time of IPO
Deployed ¥4,129mn of the funds raised at the time of IPO
113
Use of Funds Initial targeted
amount of
deployment
Revised
targeted amount
of deployment
Result in
FY2024/1 Result in
FY2025/1
Newly open amusement arcades
1,730
1,730
550
1,177
Refurbish existing amusement arcades
400
400
57
343
Purchase amusement machines
3,343
2,000
511
1,491
Total amount
5,473
4,130
1,118
3,011
(Unit: ¥mn)
Note: The difference between the initial target and the revised one is the result of the exercise of the greenshoe option.
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
Recognized
risk Likelihood of
manifestation
Degree of
Impact Timing of
manifestation Details if manifested Countermeasures for Risk
Risk related to
M&A and others Low Large No specific time
GENDA aims to enhance existing businesses and efficiently enter new
businesses through M&As and business partnerships targeting both domestic
and global entertainment companies. GENDA utilizes its management expertise
to create synergies in business with acquired or partnered companies. However,
the following reasons may have an impact on the financial condition and business
performance of GENDA.
(i) Progress of business plan after acquisition:
GENDA conducts sufficient due diligence and carefully considers risks related to
the business, finance, and laws during the process of M&As. However, if the
business plan assumed at the time of acquisition does not progress as planned,
there is a possibility that it could affect the financial position and business
performance of GENDA, for example, due to impairment of goodwill, etc.
(ii) Occurrence of unexpected debt and unrecognized debt:
When executing M&A, GENDA conducts due diligence on the target company’s
businesses, finances, legal affairs, and taxes in advance, to make decisions after
sufficiently identifying risks and analyzing ordinary earning power. However, if
problems arise that were unable to identify during the prior investigation, such as
the occurrence of unexpected debt or the identification of unrecognized debt, it
could affect the financial position and business performance of GENDA.
(To be continued)
In the execution of
M&A projects,
the company maintains a team of
experienced officers and
employees who can lead a series
of procedures related to
M&A,
including business planning that
incorporates synergies, various
due diligence procedures,
corporate value calculation,
negotiation of transaction terms,
contract execution, closing, and
fundraising in the direct and
indirect markets.
Risk information
114
Note: For risk information other than the above, please refer to “2. Business and Other Risks” in our Annual Securities Report submitted on April 26, 2024.
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
Recognized
risk Likelihood of
manifestation
Degree of
Impact Timing of
manifestation Details if manifested Countermeasures for Risk
Risk related to
M&A and others Low Large No specific time
(iii) Asset restructuring associated with integration:
In the post-M&A management integration process, there is a possibility that
extraordinary profits or losses may occur through business reorganization or the
sale of idle assets, which could affect the financial position and business
performance of GENDA.
(iv) Financing arrangements for M&As:
GENDA is considering M&As of related businesses as one of the effective means
to accelerate business expansion. In addition to new financial burdens and
dilution and changes in equity capital, if new borrowing is used, depending on the
situation of market interest rate changes, the burden of borrowing interest may
increase, which could affect the financial position and business performance of
GENDA.
(v) Consolidated financial statement system due to increase in consolidated
subsidiaries:
Currently, GENDA as the holding company works closely with each of its
subsidiaries to ensure the timely and appropriate closing of account. However, if
it fails to settle the accounts in a timely and appropriate manner due to
inadequate management systems, it may not be able to close its consolidated
financial management systems in a timely and appropriate manner.
Risk information (continued)
115
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
Recognized risk Likelihood of
manifestation
Degree
of
Impact
Timing of
manifestation Details if manifested Countermeasures for Risk
Risk of downturn in
business due to the
slowdown in the
entertainment
industry
Low Large No specific time
GENDA’s earnings rely on its consolidated subsidiaries which operate a business
in the entertainment industry. Although the market scale of the entertainment
industry in Japan receives a tailwind from the popularity of Japanese anime,
there is a risk that the performance of the subsidiaries may deteriorate due to the
diversification of leisure markets, the expansion of home and social games, and
the further decline in the birthrate.
Our management avoids replying
on the popularity of specific
entertainment by expanding
business portfolio and developing
new business categories, etc.
Risk of increased
consumption tax rate Low Large No specific time
If the consumption tax rate increase occurs, it will have an impact on the cost
due to the rise in prices including tax, as well as on the business profit due to the
increase in consumption tax payment on the sales of GENDA.
We will take measures to
minimize the impact on our
customers by implementing
further cost reduction initiatives. If
that becomes challenging, we
may implement price adjustments
in our play fees. However,
GENDA has been actively
introducing amusement machines
equipped with cashless payment
systems. This provides us with
greater flexibility in pricing
compared to machines that only
accept cash payments.
Risk information (continued)
116
© GENDA Inc.
GENDA’s Business Strategy and Growth Potential
GENDA IR
Recognized risk Likelihood of
manifestation
Degree of
Impact Timing of
manifestation Details if manifested Countermeasures for Risk
Other contingent
risks Low Large No specific time
In the regions where GENDA operates, natural disasters such as big
earthquakes, heavy rains, or widespread outbreaks of infectious diseases like the
COVID-19 pandemic, as well as major catastrophes, social or political events, or
turmoil, can potentially have adverse effects such as the suspension of
headquarters functions, damage or closure of our stores, and other disruptions.
These events have the potential to impact the financial condition and business
performance of GENDA. Currently, the ongoing global spread of novel infectious
diseases like COVID-19 has led to reduced customer visits to amusement
arcades, shortened operating hours, temporary closures, and requests for
voluntary restrictions on outings by local government authorities. As a result, the
operational activities of our operated stores may be affected.
We have implemented a system
for prompt information gathering
on a daily basis, and in times of
emergency, we have established
a crisis management
headquarters to respond swiftly
and effectively to mitigate the
situation and ensure a swift
recovery. We have built a unified
structure that allows the entire
company to work together in
addressing the crisis.
Risk information (continued)
117
GENDA IR GENDA’s Business Strategy and Growth Potential © GENDA Inc.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document to is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy of the content o
the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use of this website, including, but not
limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the reason thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about future business
performance, etc. These statements are based on the judgement of our management in light of the information currently available to it and involve risks and uncertainties. Actual
results may differ materially from these forward-looking statements due to various factors, including economic conditions and competition in the entertainment industry.
Disclaimer
118
GENDA IR © GENDA Inc.
GENDA’s Business Strategy and Growth Potential
Thank you
Note： The next scheduled disclosure of GENDA’s Business Strategy and Growth Potential is scheduled for the announcement of full-year results for the period ending January 2026 (around March 2026).
GENDA IR © GENDA Inc. FY2025/1 Earnings Results
2025.3.12
GENDA IR
FY2025/1 Full-year Earnings Presentation
1
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
New Management Structure
2
2
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
0.4 5.4 7.1 11.9
30.2
114.2
227.6
2019/1
2020/1
2021/1
2022/1
2023/1
2024/1
2025/1
New Management Structure
Representative
Director and
President
Nao
Kataoka
Finance
Equity
- IPO new shares of ¥5.9bn (+ secondary offering of ¥9.9bn = ¥15.8bn)
Achieved simultaneous corner stone and IoI for the first time in Japan IPO history
- PO new shares of ¥10.0bn (+ secondary offering of ¥2.0bn = ¥12.0bn)
Ranked No.3 in Best Equity category of Deal of the Year 2024, No.1 in new share issuance
Debt
- Interest-bearing debt: ¥52.4bn (as of 2025/1)
- # of debt providers: 63
(incl. 43 banks of 110 under Japanese Bankers Association)
- Investment-grade rating (BBB+)
Market cap (figures below)
- Ranked No.1 hot stock in TSE Growth Market 2023
selected by market specialists
- Ranked No.1 hot stock in TSE Growth Market 2024
selected by market specialists
(¥bn)
(Company
estimate)
0.5 1.2 1.5
38.1 46.1 55.6
111.7
157.0
2019/1
2020/1
2021/1
2022/1
2023/1
2024/1
2025/1
2026/1
M&A
Numbers
- # Sourcing: over 700 (for 7 years since the establishment)
- # Announcements: 40 (for 7 years since the establishment)
- Ranked No.1 in the number of M&A as a listed company in Japan 2023 (10 deals)
- Ranked No.1 in the number of M&A as a listed company in Japan 2024 (11 deals)
Structures
- Domestic private companies: share acquisition, share exchange, company split,
absorption-type merger, and business acquisition
- Domestic public companies: Tender offer and subsequent squeeze-out
- U.S. private companies: share acquisition
Post-merger-integration
- Made the management more efficient by reorganizing within the group fast
Revenue transition (figures below)
- Led continuous transformational growth mainly through M&A
- Achieved ¥100.0bn in 7 years since the establishment,
the fastest record in the history of a Japanese company
Amusement Arcade Business
Drastically increased the earnings of the core GENDA GiGO Entertainment
43.7
50.0
72.3
2023/1 2024/1 2025/1
5.5 6.0
9.9
2023/1 2024/1 2025/1
Managing
Director
CFO
Taiju
Watanabe
Director CCO
Head of Contents &
Promotion Business
Yuzo
Sato
Director
Mai
Shin
Managing
Director
CSO /CPA
Kohei
Habara
Director (New)
Head of Amusement
Arcade Business
Kazuhiro
Ninomiya
+¥28.5bn
x 1.6 +¥4.3bn
x 1.8
Joined
GENDA
Jun. 2021
IPO
Jul. 2023
@¥60.1bn
PO
Jul. 2024
@¥149.1bn
Joined
GENDA
Sep. 2019
Assumed the
President of
GENDA GiGO
Entertainment
Apr. 2023
Assumed the
President of
GENDA GiGO
Entertainment
Apr. 2023
Revenue EBITDA
Having fully established its core M&A strategy, GENDA will move forward to a “New Growth Phase”, to execute this cycle at its full speed.
With organic performance in top form, Mai Shin will pass the torch to CFO & CSO leading the growth, and continue to support as a director
Note: They will officially assume office when the proposal of appointment of directors is approved at the 7th Ordinary General Meeting of Shareholders to be held in April 2025.
Source: “Deal of the Year 2024” of NIKKEI Veritas, “Market Questionnaire 2025: Hot stocks in Growth Market selected by market specialists” and “Market Questionnaire 2024: Hot stocks in Growth Market selected by market specialists” by Wealth Advisor Co., Ltd.,“Number of M&A by a listed
company in 2024” and “Number of M&A by a listed company in 2023” by M&A Online
(¥bn)
(¥bn) (¥bn)
3
3
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
4
Executive Summary
4
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Executive Summary
FY2025/1: 4Q YoY growth even greater than 3Q, which was greater than the strong 1Q and 2Q, resulting in historical high record
Adjusted indicator: Intrinsic performance excluding one-off M&A-related expenses
Adjusted EBITDA: ¥15.3bn (Target ¥1.3bn) 4Q YTD YoY +87% (3Q YTD YoY +64%)
(ref.) Adjusted OP income: ¥9.1bn (Target ¥7.0bn) 4Q YTD YoY +66% (3Q YTD YoY +43%)
Adjusted Cash EPS： ¥81.36 4Q YTD YoY +19% (YoY +97% excl. the tax increase as the company started paying taxes from FY2025/1)
Stock related: To be more attractive stock for internal and external shareholders
ESOP: Increase incentive subsidy from 5% to 30%
Stock split: 2-for-1 stock split aiming to increase the liquidity
Benefit yield: 1.5%→3.0% Maintain the existing benefits even after the stock split
FY2026/1: 4th upward revision reflecting strong organic growth
Our KPI indicators: Revenue ¥157.0bn | EBITDA ¥ 22.0bn YoY +54%| Net income before amortization of goodwill ¥8.0bn YoY+71%
(ref.) Income indicators: OP income ¥10.5bn YoY +31% | Net income ¥5.0bn YoY +51% →Under IFRS OP income ¥13.5bn YoY +69%| Net income ¥ 8.0bn YoY +142%
Multiple: EV/EBITDA 18.7x → 11.1x (▲7.6x)| PER 40.1x → 27.1x (▲13.0x)
PMI / M&A: Amazing PMI results both domestic and overseas, which cannot be explained without synergies
PMI at major subsidiaries in Japan：GiGO: Historical High | Karaoke BanBan: Historical High | FUKUYA: Historical High
PMI at NEN in the U.S.: Incredible “Average +201%” in same store sales. Japan as one to phyisically spread world-class Japanese anime IP all across the U.S.
5
5
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
6
FY2025/1 Full-year Earnings Results
6
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
M&A-related expenses Showing intrinsic performance excluding one-off expenses. M&A-related operating expenses were ¥0.49bn in 4Q / ¥1.15bn in YTD, affecting EBITDA and below.
M&A non-operating expenses were ¥0.22bn in 4Q YTD (no result in 4Q). Making this together with the above, ¥1.37bn in 4Q YTD affected ordinary income and below.
Full-year
Adjusted
(excl. M&A-related expenses) GAAP results
(incl. M&A-related expenses) Comparison with
Company Estimate
(¥ in millions)
FY2024/1 FY2025/1 YoY FY2024/1 FY2025/1 YoY FY2025/1(E) vs Adjusted vs GAAP
Revenue 55,697 111,786 +100 %55,697 111,786 +100 %110,000 101 %101 %
EBITDA 8,201 15,391 +87%8,102 14,234 +75%13,000 118%109%
(%) 14%13 %14%12%12%
Net income before amortization of goodwill
4,511 5,931 +31%4,359 4,653 +6%5,400 130%86%
(%) 8%5 %7%4%5%
(Ref.)
Net income before amortization of goodwill
(before tax) 4,771 9,414 +97%4,596 8,039 +74%7,425 129%108%
Operating income 5,469 9,122 +66%5,370 7,965 +48%7,000 130%114%
(%) 9%8 %9%7%6%
Net income before
amortization of goodwill +31% / +¥1.4bn YoY, even greater than +21% YoY of 3Q, +18% YoY of 2Q, ▲9% YoY of 1Q, further expanded the growth.
More than offsetting the normalization of corporate tax incurred from this fiscal year. In view of intrinsic performance excl uding the impact of taxes on
“before-tax” basis, +97% / +¥4.6bn YoY. Even though ¥10.0bn through follow-on offerings for M&A is yet to be fully deployed, Cash EPS YoY is already +19%.
(Ref.) Operating income +66% / +¥3.6bn YoY, even greater than +43% YoY of 3Q, +30% YoY of 2Q, +25% YoY of 1Q, further expanded the growth.
EBITDA +87% / +¥7.1bn YoY, even greater than +64% YoY of 3Q, +56% YoY of 2Q,+50% YoY of 1Q, further expanded the growth.
b
c
d
a
a
b
c
d
4Q YoY growth even greater than 3Q, which was greater than the strong 1Q and 2Q
(adjusted basis excl. M&A-related expenses)
Summary of Earnings – Summary of Consolidated Statements of Income
7
7
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
13,000
1,095 292 15 803 312
▲126 15,391
▲1,157 14,234
4Q累計
期初予算
国内
アミューズメント
海外
アミューズメント
プライズ カラオケ その他 連結修正 4Q累計
調整後実績
M&A関連費用 4Q累計
会計上の実績
Existing businesses grew to ¥15.3bn vs. the initial target of ¥13.0bn, +¥2.3bn (largely renewing the historical high record)
Breakdown of ¥15.3bn is existing businesses of c.¥14.5bn + several months contribution by M&A of c.¥0.9bn
(Achieved the Initial target of ¥13.0bn only with organic growth of ¥14.5bn)
Evaluation on performance by business sector
Adjusted EBITDA was up +¥2.3bn, pushing the surplus even further (+¥1.0bn in 3Q YTD)
(¥ in mn)
Domestic amusement
Increased the surplus
from the target from
+¥0.4bn of 3Q YTD to
+¥1.1bn of 4Q YTD.
Strong existing stores +
synergies through GiGO
exclusive prizes to
acquired targets.
Proved the stability of
GENDA’s core business.
In FY2026/1, ready to
finally become the No.1
share in Japan.
Overseas amusement
Reclassified our subsidiary “Five
Colors” from “Others” to “Overseas
AM” considering its major earnings
contribution, exceeded the target
with offsetting Kiddleton, which
changed the policy of opening new
store due to acquisition of NEN.
NEN is consolidated from 4Q
though the contribution for 3months
are negligible with PMI costs, which
achieved incredible record in same
store sales surge. Even with one-
time costs, execution was carried
out at the fastest pace.
>> For details, refer to p20
Prize related
FUKUYA (planning of
prizes) maintained a
strong performance
and hit the highest
earnings record in its
71-year history, in its
first year in GENDA.
Higher growth than the
target even paying
extra-budgetary bonus
and increasing costs
due to weak yen
Karaoke related
Achieved robust
growth against the
initial target.
Shin Corporation
(Karaoke BanBan) hit
the highest earnings
record in its 35-year
history, in its first year
in GENDA.
ONTSU, which was
not included in the
initial target,
contributed from
October 2024.
13,000
(Initial target)
M&A-related
expenses
“Extra-budgetary”
expenses not
related to intrinsic
performance.
Growth investment
to increase equity
value.Burden on
GAAP results in this
year, but lead to a
transformational
growth in FY2026/1
>> For details,
refer to p9
+¥2.3bn compared
to the initial target
Achieved the initial target even
including extra-budgetary M&A-
related expenses
8
4Q YTD
Initial target Domestic
amusement Overseas
amusement Prize Karaoke Others Consolidated
adjustment 4Q YTD
Adjusted results M&A-related
expenses 4Q YTD
Accounting
results
Domestic
amusement
Domestic
amusement
Overseas amusement
Overseas amusement
Prize related
Prize related
Karaoke
Karaoke
Others
Others
8
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
9.4 10
3Q YTD
GAAP figures 3Q YTD
M&A-related expenses
(extra-budgetary)
3Q YTD
Intrinsic performance 4Q Accounting period
Initial target
(Budget)
4Q Accounting period
Surplus
(extra-budgetary)
4Q YTD
Intrinsic performance
22.0
4Q YTD
M&A-related expenses
(extra-budgetary)
4Q YTD
GAAP figures Full-year contribution
of M&As announced
(Assumption)
Intrinsic performance
if there is zero M&A
going forward
(Assumption)
M&A expenses sublimes to Transformational growth in FY2026/1
M&A-related expenses of ▲¥1.1bn in 4Q YTD will sublime to earnings forecast of +¥9.0bn YoY
FY2025/1
4.0
15.3
+1.3 14.2
▲1.1
•3Q YTD initial target: ¥9.0bn
•3Q YTD GAAP results: ¥9.4bn
•3Q YTD M&A-related expenses: ¥0.66bn
•Intrinsic performance prior to M&A-related expenses: ¥10.0bn
→ +¥1.0bn surplus in 3Q to the initial target
•M&A-related expenses of ¥1.1bn
arose for full-year YTD.
→ Achieved ¥14.2bn GAAP results
Initial
Target
13.0
+1.0
+2.3
FY2026/1
•Initial target for 4Q accounting period: ¥4.0bn
•For 4Q accounting period, surplus of ¥1.3bn from the
target being led by strong GiGO and Karaoke BanBan
such as extra-budgetary TWICE LOVELYS campaign, etc.
→Achieved ¥15.3bn in full-year intrinsic performance
+1.2
•On the other hand, by M&A activities,
earnings will sublime to transformational
growth with +¥9.0bn / +69% in FY2026/1.
→ FY2026/1 Earnings forecast ¥22.0bn
(even if there is no M&A going forward)
Initial
Target
9.0
3Q YTD (Result) Full-year
(¥bn)
6.6
+¥9.0bn
+69%
Full-year (Our plan)
9
9
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Shareholder should evaluate whether EPS (= theoretical stock price) has increased.
Because in M&A, EPS may decrease (= theoretical stock price drops) although it
seemingly grew as a result of M&A (in M&A, sometimes increase in earnings < increase in # of
shares due to a miss priced acquisition and new stock issuance without discipline)
GENDA issued new shares associated with financing and acquisition costs.
However, Cash EPS (= theoretical stock price) linearly keeps increasing and the
theoretical stock price succeeded in increasing consistently. That is, we continuously
succeeded in “earnings growth > dilution” even by growth mainly through “M&A.”
Besides, while deploying the standby fund of ¥10.0bn for M&A raised by follow-on
offering in July 2024 to M&As, we will be able to make further “earnings growth >
dilution” by deploying the rest of the fund to future M&A.
We ensure below 3 points as M&A discipline to maintain “earnings growth > dilution”
①M&A at an appropriate valuation
②Appropriate debt financing (to control an increase in number of shares)
③Maximize Post-merger-integration → for details, page 15 and after
After the transformational growth, did the theoretical stock price increase?
Earnings grows as a matter of course, as we acquire profitable companies
Adjusted Cash EPS
EPS (¥) based on net income before
amortization of goodwill (net income under
IFRS) after being adjusted (intrinsic
performance before M&A-related expenses
are deducted)
20%
CAGR
Result Target
Note: Figures before taking into account the 2-for-1 stock split with April 1, 2025 as the effective date.
(¥)
10
47.23
56.5
68.24
81.36
98.69
2022/1 2023/1 2024/1 2025/1 2026/1
10
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
2025/1 2026/1 2027/1
2025/1 2026/1 2027/1
Our estimate on EBITDA
EV / EBITDA and P/E multiple drop sharply due to Continuous Transformational Growth
For a company with a high growth rate, valuation multiple goes down inverse multiple of the growth rate.
Unlike ordinary companies, it would be difficult to gauge such high growth company only using the FY1 multiple.
Actually, in our estimated multiple, EV/EBITDA will drop from 18.7x to 11.1x (▲7.6x), PER (IFRS basis) from 40.1x to 27.1x (▲13.0x).
We aim for further transformational growth in FY2027/1 too, and multiple will further drop down in that case.
After the transformational growth, what is the valuation level?
Transformational growth
EV / EBITDA
Our estimate on Net income before amortization of goodwill
(Net income under IFRS)
General business growth Transformational growth
General business growth
PER (IFRS basis)EV / EBITDA PER (IFRS basis)
2025/1 2026/1(E) 2027/1(E)
18.7x
2025/1 2026/1 2027/1
40.1x
40.1x
27.1x
(E)
18.7x
11.1x
(E) (E) (E) (E) (E)
(¥bn) (¥bn) (¥bn) (¥bn)
1.3 1.3
2.2
5.4 5.4
8.0
11
11
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Financial Discipline – Summary of Consolidated Balance Sheet
Ready for the next M&A with financial soundness by abundant cash and debt capacity
12
1. To approach the discussion with financial institutions in view of the actual debt capacity as of today, the EBITDA used in the calculation of Net Debt / EBITDA is ¥22.0bn expected for the next fiscal year. The reason for not using the LTM
results is that, in M&A, the debt is fully consolidated on the closing date, while the full-year contribution of the EBITDA of the target company, which is the main source of repayment of that debt, is one year later. Using our LTM results,
the EBITDA of the relevant target company is not included, and the ability to repay debt within one year, which is the purpose of this indicator, cannot be measured. In addition, in the calculation of Net Debt, HALOS and ActPro occurred
after the end of 4Q is reflected, and the figure is as close as possible to the Net Debt as of today after all the disclosed M&As.
1
(¥ in millions) FY2024/1
End of Full-year FY2025/1
End of Full-year Difference Remarks
Current assets 23,567 45,646 +22,078 Increase in cash and deposit
Of which, cash and deposits +
short-term securities 12,379 25,649 +13,270 Started smoothly deploying the pending fund for M&A raised by equity
(¥10.0bn) from this year.
Fixed assets 28,573 68,722 +40,148 Mainly increase in tangible asset by opening new stores and M&As
Of which, goodwill 4,992 18,136 +13,144
Secured huge buffer (c.¥17.5bn) against net assets with an increase in net
assets.
Total assets 52,141 114,368 +62,227 Increased because of the above reasons
Total liabilities 32,476 78,678 +46,201 Mainly increase in interest-bearing debt due to M&A financing.
Of which, interest-
bearing debt
18,993 52,473 +33,480 Low Net Debt / EBITDA (1.7x1), with enough room for debt capacity
Net assets 19,664 35,690 +16,025 Mainly increase in equity capital
Of which, shareholders’ equity
19,427 35,478 +16,051 Increased by follow-on offering, stock-based M&A, accumulated income
Net Debt / EBITDA 0.8 x1.7 x+0.9 xBy follow-
on offering, still have enough debt capacity even after increased
debt due to closing of M&As (Note shows the detail of calculation).
Capital adequacy ratio 37.2 %31.0 %▲6.2 %Maintaining capital efficiency by leverage even after the follow-on offering
12
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
13
Laon from numerous banks and investment-grade rating are the fruits of our financial discipline
Loan Approval by creditors based on “details of M&A, not disclosed to the stock market”
Tie domestic and overseas entertainment platforms, and work together to spread world-class IP such as anime to the world
Downside of our investment
centered on M&A is deemed “safe”
by financial institutions and a
rating agency which evaluate
mainly risks based on undisclosed
details of M&A, we believe this will
reassure our shareholders who will
enjoy the upside.
63 financial institutions (incl. 43 banks of 112 belonging to Japanese Bankers Association (“JBA”)) + acquired an investment-grade rating (BBB+)
As of January 31, 2025
GENDA’s outstanding borrowings ¥52.4bn
(43 banks + 20 leasing companies etc. = 63)
As of January 31, 2025
Total amount of loaned money in banks in Japan Approx. ¥607tn
(112 banks are members of JBA) 2024
Corporate bond market in Japan Approx. ¥15tn
Plan to issue straight bond as soon as we are
ready. While we start with small amount (¥5.0 to
¥10.0bn) as we need to discover bond investors’
demand as Debt IPO, we expect to issue regularly
after the launch of the initial straight bond
Source: Japanese Bankers Association as of January 31, 2025)
13
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Mainly impairment of ¥0.07bn in “GAGA” of Entertainment Contents, which
a certain volatility is inevitable (risk-off by impairment of all goodwill)
On the other hand, GAGA is venerable in the entertainment industry.
Its joining of GENDA has greatly contributed to the GENDA’s presence in
the industry and produced values which cannot be measured by operating
results, including M&A sourcing.
Impairment of goodwill limited to 0.5% of all by thorough M&A discipline x
PMI growth and achieved the fast speed conducting a record number of
M&A for the second year in a row as a listed company.
14
FY2025/1
Total Impairment of
Goodwill
¥0.09bn(0.5%)
FY2025/1
GENDA consolidated
goodwill
¥18.1bn
Minimize Impairment loss by M&A with discipline
Impairment of Goodwill limited to 0.5% of total goodwill amount
FY2025/1
Total of Impairment
(Stores)
¥0.51bn(1.6%)
FY2025/1
GENDA consolidated
tangible fixed assets
¥31.4bn
Goodwill (For reference) Tangible fixed assets
Holding down the store impairment to 1.6% of all, while operating store
business at 11,800 locations including stores who have been operating
for more than some decades. Maintain discipline by carefully selecting
investment in organic growth, limited to investments which passed the
same IRR hurdle as M&A.
Note: In line with GAGA’s impairment of goodwill, GENDA Inc. has recorded a GAGA’s appraisal loss of subsidiary shares on a non-consolidated basis. However, since this is recorded only on the non-consolidated financial statements and is eliminated in the
consolidated financial statements, there is no impact on consolidated results. (The appraisal loss of subsidiaries is ¥0.3bn (1.3%) compared to the subsidiary shares of ¥22.9bn at the end of January 2025 on a non-consolidated basis for GENDA Inc.)
14
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
15
M&A / PMI
15
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
16
64%
9%
7%
17%
3%
GiGO Historical High! Karaoke BanBan Historical High! FUKUYA Historical High!
Without synergies, it would be too difficult to explain how entertainment companies in different business categories hit the historical high earnings
(operating income) in their 12-year / 35-year/71-year history at the same time after joining the same group through M&A. This embodies “conglomerate
premium” in entertainment that entertainment is contiguous and business grows more managed by the same group than individually.
Simultaneous historical high earnings by 3 different entertainment companies is an evidence of Synergies
35-year
history
Highest
¥2.0bn
71-year
history
Highest
¥0.7bn
12-year
History
Highest
¥7.2bn Others
Karaoke (Karaoke BanBan, ONTSU)
Prize related (FUKUYA, Ares)
Overseas AM (mainly in U.S., China)
Domestic AM (GiGO, others)
FY2025/1
Breakdown of EBITDA
Hit the highest income in
the first year in GENDA
Hit the highest income in
the first year in GENDA
Hit the highest income for the 4th
straight year since joining GENDA
Top 3 earnings contributors (after full year consolidation) recorded historical high
16
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Originally, Karaoke BanBan solely operated in a two-story building in Kuwana city, Mie.
Renewed the building and opened again with GiGO on the first floor and Karaoke BanBan on the second
floor in December 2024.
Sales increased 100% and EBITDA increased 54% in the same place for the first 2 months after opening.
Plan to renew and open more stores in the similar format in the future
Combined store of GiGO x Karaoke BanBan – Synergies expected at M&A is becoming evident in numbers
Combined store of GiGO x Karaoke BanBan
doubled the sales of the same building
14,139
28,316
100%
+
(¥1,000)
3,756
5,784
54%
+
Revenue EBITDA
(Repost) “FY2025/1 3Q Earnings Presentation”
dated December 10, 2024
17
17
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
1. GiGOアプリをゲーム機にタッチ 2. GiGOアプリでプレイ金額を設定 3. 瞬時にゲーム機に反映されプレイ開始！
Existing GiGO App needed to be mediated by the physical “terminal” and we had to connect the app to the terminal every time we played a game.
As a result, many customers played games by directly touching the terminal with Suica card, etc. and this was a hurdle to maximize the GiGO App.
Therefore, our tech team, which is a PMI special unit, built “GiGO Link,” on which you can choose the amount for playing just by touching the game machine
with GiGO App once (without being mediated by settlement terminal).
In operation, by consolidating customers’ data by usage of GiGO App, possible to send a notification according to customers’ preference and deliver coupons
to invite them to our stores again. Besides, since we can see customers’ situations since the arrival till the leave in real time, it becomes possible to serve
them attentively and properly, which contributes to improvement of customer satisfaction.
Promote DX in the Entertainment Industry in Japan by GENDA Tech team which compose 70% of holding company GENDA
Launch “GiGO Link,” dramatically evolves GiGO App (to be introduced during 2025)
Touch a game machine with GiGO App Immediately reflect on the game machine and
you can start playing!
Set the amount for playing on GiGO App
18
18
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
19
Demonstration video of “GiGO Link”
19
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
20
Post-merger-integration (PMI) has been steadily executed at NEN in the U.S.
Replacing NEN locations with Kiddleton-style prize games and Japanese prizes
PMI measures to replace prize games and Japanese prizes with “Kiddleton-style mini crane games x Japanese-style Kawaii prizes” at NEN’s locations
Implemented the replacement at 194 locations from the commencement of consolidation in November 2024 till the end of February 2025
First, promote the replacement at bigger locations, and then plan to implement the replacement at smaller ones. After
Before
“Kawaii” prizes
Mini crane games
Replacement with Kiddleton style
20
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
21
Incredible results from the replacement with Kiddleton’s style
Phenomenal results with same store sales growth “average +201%” !!
Note: Compare data at 67 locations which had operated for 14 days or more among 101 locations where we replaced game machines and prizes in November and December 2024.
In other words, same store sales tripled on average. For comparison, even with PMI in Japan, same store sales growth is c.+50% “at most”.
Now replacing machines at approx.10,000 locations of NEN across the U.S. as quickly as possible, with inbound inquiries of new store openings.
Number of stores by growth rate by PMI
In our analysis, this implies the nationwide “supply-demand gap” of Japanese IP contents, now available only in a few cities such as NY and LA.
Besides, this result is made only by Japanese-style “Kawaii” stuffed animals, such as bears or rabbits, without real popular Japanese anime IP.
Further upside exists by real popular anime IP fully implemented in the future. (to next page)
A B C D E F G H I J K L M N O P Q S T U
+ 0 %
+ 100 %
+ 200 %
+ 300 %
+ 400 %
+ 500 %
A B C D E F G H I J K L M N O P Q R S T U
Average
+201%
…
564%
+
486%
+455%
+445%
+435%
+433%
+425%
+396%
+374%
+
331%
+300%
+292%
+275%
+272%
+271%
+265%
+259%
+248%
+245%
+242%
+
…
Same store sales
before & after
the acquisition
Before & After the
replacement with
Kiddleton’s style at
NEN’s location in the
U.S.
Before & After the
amusement arcades
in Japan joined via
roll-up M&As
~ 0% - -
+ 0 ~ + 99% 19 9
+ 100 ~ + 199% 15 -
+ 200 ~ + 299% 22 -
+ 300 ~ + 399% 4 -
+ 400 ~ + 499% 6 -
+ 500% ~ 1-
Top 20 stores in Revenue Growth Rate after the replacement
21
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Now that GENDA, a Japanese company, has acquired the long-desired entertainment platform with individual consumers across the U.S., we will gradually sell
famous Japanese anime IP prizes directly to anime fans across the U.S. through the NEN platform (many lined up for 2025, we plan to announce them in series).
GENDA is a global platformer of Japanese Anime IP
Japan as one to spread world-class anime IP to fans (GENDA serves as an offline platformer)
Popular IPs in Japan GENDA serves as the Global Entertainment Platform
×
Fan
Fan
Fan
Fan
Fan
Popular IP Contents
Successively Coming to U.S.!
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
????
Fan
22
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© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Promptly sell business not related to entertainment, entertainment business but too difficult to operate, real estate below cost of shareholder’s equity,
securities for non-business
Selection and Concentration essential for M&A strategy – Focus on Entertainment Businesses
Thoroughly sort out portfolio by sale behind continuous M&A
Sold daycare business
to a local company
operated by an amusement
arcade we acquired through
roll-up M&A
Daycare Business
Sold a total of 11 stocks held by
the acquired target companies.
Convert the proceeds into cash
and use them for higher yield
investments including M&A.
Securities
Closed loss-making stores
of an amusement arcade we
acquired through roll-up
M&A immediately after
consolidation
Closure of loss-making stores
Have the sellers carve out its real
estate before our acquisition.
Will try to liquidate our remaining
real estate (book value c.¥2.0bn)
to convert into higher yield
investment including M&A.
(not expect hidden profit as they
are mainly in rural areas)
Real estate
Sold cinema business to a
close entertainment company,
originally operated by an
amusement arcade we
acquired through roll-up M&A
Cinema Business
Sold the fitness club operation
business operated by an
amusement arcade we
acquired through roll-up M&A
Fitness Club Business
23
23
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
24
FY2026/1 Earnings Forecast
24
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
5.6 6.2
8.1
14.2
18.5
20.0
21.2
22.0
Keep “Continuous Transformational Growth” in this fiscal year again
25
38.1 46.1 55.6
111.7
140.0
150.0 156.0
2.7
3.5
4.3 4.6
7.0 7.0
7.4
8.0
12/10
Upward
revision
12/24
Upward
revision
9/9
First
release
2025/12024/12023/12022/1 2025/3/12
Further
Revision
today
(¥bn)
EBITDA
2026/1E
12/10
Upward
revision
12/24
Upward
revision
9/9
First
release
2025/12024/12023/1 2025/3/12
Further
Revision
today
2026/1E
The 4th upward revision to FY2026/1 forecast
+ 71 %
+ 54 %
+ 40 %
157.0
YoY YoY YoY
Revenue ¥157.0bn YoY +40% I EBITDA ¥22.0bn YoY +54% I Net income before amortization of goodwill ¥8.0bn YoY +71%
These earnings assume zero M&A going forward. Also, expenses of -¥0.4bn deducted for M&A already announced
(In another words, adjusted EBITDA is ¥22.4bn, adjusted net income before amortization of goodwill is ¥8.4bn)
(ref.) OP income: ¥10.5bn YoY +31% / Net income: ¥5.0bn YoY +51%
(ref.) Under IFRS: OP income: ¥13.5bn YoY +69% / Net income: ¥8.0bn YoY +142% (amortization of goodwill is ¥3.0bn in this fiscal year. Scheduled to transfer to IFRS in FY2027/1)
Revenue Net income before
amortization of goodwill
(¥bn)
12/10
Upward
revision
12/24
Upward
revision
9/9
First
release
2025/12024/12023/12022/1 2025/3/12
Further
Revision
today
2026/1E
(¥bn) 2022/1
25
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
5.7 6.3
8.2
15.4
22.4
2022/1 2023/1 2024/1 2025/1 2026/1
(E)
2.8
3.6
4.5
5.9
8.4
2022/1 2023/1 2024/1 2025/1 2026/1
(E)
Evaluate the M&A consideration in comparison with the cash flow from the target, and enhance cash flow after consolidation with post-merger-integration
Transformational Growth in Cash Flow
Disciplined M&A & PMI cycle to achieve transformational growth in Cash Flow
Adjusted Net Income
before Amortization of Goodwill
IFRS based Net Income before one-off M&A costs
32%
CAGR
Adjusted Operating Cash Flow
Operating Cash Flow before one-off M&A costs
Adjusted EBITDA
EBITDA before one-off M&A costs
- Interest
- Tax
- Depreciation
- Impairment
However,
Depreciation and
Impairment are
non-cash items
Although no company
estimate for 2026/1
operating cash flow
available,
company estimate of
major items in operating
cash flow are;
1. Net income before
goodwill amortization
¥8.0bn
2. Depreciation ¥8.5bn
3. Impairment ¥0.5bn
4. M&A costs for M&As
already announced
¥0.4bn
1+2+3+4＝¥17.4bn
Then, change in WC etc.
will be deducted from
above
40%
CAGR
(¥bn) (¥bn) (¥bn)
Organic
growth only
due to IPO
preparation
Started paying tax
therefore nominal
growth rate lower
than EBITDA
Growth boost
with same tax
rate YoY
+ Depreciation
+ Impairment
+/- change in WC
Adding back
depreciation and
Impairment to
show pure cash
flow generating
capabilities
Transformational
Growth via M&A
4.7
6.4
7.6
9.9
2022/1 2023/1 2024/1 2025/1 2026/1
(E)
26
26
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
We are proud that we have the same or even stricter investment perspective as our external shareholders
Shareholders’ perspective of GENDA officers and employees
We intentionally maintain negative free cash flow
Our operating cash flow is increasing linearly, but we are using more
investment cash flow than that.
As a result, we maintain negative free cash flow.
We would like to explain our thoughts behind this.
First of all, our officers and employees own c.25% of the company's shares.
In other words, those who hold shares have experience of transferring
money directly from their own bank accounts to GENDA’s bank account.
(For those with families, they made such decisions after family meetings).
As a result, we have seen the cash we have saved for life through our
careers, directly deposited into GENDA’s bank account.
Besides, because the company has no obligation to return this cash, it can
only be justified through dividends, share repurchases, or capital gains.
Moreover, unlike external shareholders, since it cannot be easily sold, even
if we suddenly need cash, we cannot convert it into cash in the short term.
Therefore, we are proud to say that we have the same or even stricter eye
on how to use such cash as our external shareholders.
Since we have transferred the cash from our own bank account and is no
longer accessible, we want to keep the cash working at ALL times without
letting it sleep, or if there is no “good way” to use it, we want to
immediately return it to the shareholders (including ourselves).
The decision on “good way” to use is based on the cost of equity
(of which hurdle higher than WACC).
Because if there is a project that exceeds that, in theory we should invest
even if we issue new shares, which is the most “expensive” cost of capital.
Fortunately, from the industrial revolution to GenAI, human leisure time
has increased, and in the entertainment industry, also benefiting from
Japanese anime, there are many “good ways” for both organic and M&A.
Thus, we are not only using the cash from operating CF, but also raising
funds through financial CF, deploying the cash together through
investment CF. As a result, we are making FCF negative, but all of this is
an activity to maximize “long-term” FCF.
We will try as hard as possible and share the destiny with our
shareholders to take on the challenge of becoming the world’s No.1
entertainment company in 2040.
We would be grateful if you could support us with a long-term perspective. 27
27
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
To increase the incentive grant rate for the employee stock ownership plan covering employees of all companies so that those who newly joined GENDA
through M&A or career move can have the same perspective as our external shareholders. In GENDA Inc. (a pure holding company), more than half of the
employees are members of the plan (63% as of the end of January 2025).
Transformational enhancement of shareholders’ perspective of employees
Increase the incentive subsidy for Employee Stock Ownership Plan from 5%→30%
28
Name GENDA Employee Stock Ownership Plan
Eligibility Employees of GENDA and its consolidated subsidiaries (voluntary enrollment)
Incentive subsidy Before revision 5% →After revision 30%
Contribution 1 unit ¥1,000 (upper limit 50 units)
28
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Maintain the program of the benefits while conducting a 2-for-1 stock split, resulting in a doubling of benefit yield
Aim to increase the liquidity of the shares by split in the same way as last year, not to increase the minimum amount to purchase GENDA stock
To be a more attractive share for individual shareholders by leveraging the characteristics of B2C business
2-for-1 Stock Split, but maintained the program to double the yield from 1.5% to 3.0%!!
Shareholder Benefit Program Determined! Designated App available now
Kleiner to be added to the lineup of benefits from the next record date!
After logging in “GENDA Shareholder Benefit App,” you can
change your points to coupon which you can use to play at
amusement arcades or karaoke. Plan to enclose a login ID and
password with the Convocation Notice of the General Meeting
of Shareholders early in April to eligible shareholders.
For shareholders who will be confirmed to be eligible at the end
of July 2025 and after, you can choose Kleiner Feigling, in
addition to existing service tickets for GiGO and Karaoke
BanBan! You can redeem points with a value of ¥5,000 for one
box of Kleiner Feigling (20 bottles). The lineup is planned to be
several types of regular flavors!
Note: The benefit yield is calculated by dividing the content of benefits which you can get with 100 shares (¥4,000) by the amount required to buy the share unit based on the closing price on March 11, 2025.
29
29
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
30
To be the World’s No.1 Entertainment Company
30
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
We believe the current business environment surrounding the entertainment industry is to deliver the “IP Contents” such as animation to the “fans” through
entertainment “platforms.”
In this context, we will first position “Platform” as our main growth driver, while entering into the “IP Contents” domain in the mid-to-long term.
The Big Picture of the Current Entertainment Industry
IP Contents × Platform
31
IP CONTENTS FANSPLATFORMS
31
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Based on a foundation of continuous growth brought about by the steady expansion of our domestic business and aggressive overseas business
development, we aim to build a “GENDA Entertainment Ecosystem” that will expand globally by accumulating M&A in both the entertainment platform and
entertainment content areas. In this way, we believe that we will be able to overcome the volatility of the ever-changing entertainment business by building a
solid business portfolio.
Our growth strategy = “M&A in the Entertainment industry”
Completion of the Entertainment Ecosystem
32
Note: Diagram of our envisioned growth strategy.
32
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
M&A and capital transactions track record
33
June 2018
Share Acquisition
(100%)
1
Note: The acquired ratio and the number of acquired properties are as of the date of the announcement of the project. Entertainment Contents Entertainment Platform
July 2019
Joint Venture (50%)
2
15
October 2023
Fixed assets
Acquisition
September 2023
Assets Acquisition
14
September 2023
100% ownership
Acquisition
16
October 2023
Share Acquisition
(66.0%)
September 2023
100% ownership
Acquisition
13 17
October 2023
Share Acquisition
(100%)
April 2021
Business
Acquisition
4
October 2021
Capital Alliance
5
November 2023
Equity Acquisition
(100%)
20
December 2023
Absorption-type split
21
December 2023
Share Acquisition
(100%)
23
January 2024
Share Acquisition
(100%)
24
November 2023
Share Acquisition
(78.05%)
18
December 2020
Share Acquisition
(85.1%)
3
January 2022
100% ownership
Acquisition
7
January 2022
Share Acquisition
(100%)
8
February 2024
Share Acquisition
(78.59%)
26
May 2024
Share Acquisition
(100%)
27
June 2024
Share Acquisition
(100%)
28
June 2024
Business
Acquisition
29
November 2024
Equity Acquisition
(100%)
30
July 2024
100% ownership
Acquisition
31
February 2024
Share Acquisition
(82.45%)
25
December 2021
Business
Acquisition
6
October 2022
Business
Acquisition
10
October 2022
Absorption-type split
11
August 2024
Share Acquisition
(72.92%)
32
June 2022
Capital Alliance
9
November 2023
Fixed assets
Acquisition from
Global Solutions
19
117 mini-
locations
December 2023
Management right
Acquisition
12
22
1 AM arcade
(China)
October 2024
Absorption-type split
(Matahari
Entertainment)
33
AM
1 store Karaoke
1 store
February 2025
Absorption-type split
・・・
September 2024
Absorption-type split
(ATOM)
34
December 2024
Fixed assets
Acquisition from
KARATEZ
Karaoke
2 stores
35 36
Completed 40 M&A in total, 11 before IPO and 29 after IPO
38 40
39
37
March 2025
Share Acquisition
(100%)
March 2025
Share Acquisition
(100%)
March 2025
Absorption-type split
March 2025
Share Acquisition
+ Share Exchange
(100%)
33
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
GENDA Group Overview
GENDA is a pure holding company of amusement centric entertainment companies
34
Entertainment Platforms
Amusement F&B Contents & Promotion
Character MD
Entertainment Contents
GENDA Inc.
GENDA
Games Inc.
Online crane games
100%
Film
distribution
GAGA
Corporation
78.05%
VR contents,
virtual attractions
Dynamo
Amusement, Inc.
100%100%
C’traum
inc.
Import and
wholesale of
alcoholic
beverages
Pure Holding Company
JAPAN
100% ENTERRIUM
(US)
100% National Entertainment Network,
LLC
(US)
Kiddleton,
Inc.
(US)
GiGO Taiwan
Inc.
(Taiwan)
100%
GiGO VIETNAM
Co., Ltd.
(Vietnam)
100%
100%
GENDA GiGO
Entertainment Inc.
Operation of AM arcades
AM
1 store
GS社の
ミニロケ
Karaoke
ONTSU
Co., Ltd.
Distribution
of karaoke
equipment
100%100%
Shin Corporation
Co., Ltd.
Operation of karaoke
Karaoke
1 store
Karaoke
2 stores
Note: Organizational chart as of March 12, 2025. AM arcades in the chart refer to amusement arcades. The chart is intended to present mainly our consolidated subsidiaries.
Planning and sales of
prizes for AM
arcades
Ares Company
Limited
100%
Tourism
100%
Planning,
manufacturing and
sales of prizes
Fukuya Holdings
Co., Ltd.
100%
Tokyo Character
Makers Co., Ltd.
100%
100%
FUKUYA
HONKONG
LIMITED
(Hong Kong)
100%
FUKUYA
TAIWAN
LIMITED
(Taiwan)
100%
FUKUYA
USA INC.
(US)
100%
Fukuya Co., Ltd.
100%
100%
SMART
EXCHANGE Inc.
Foreign currency
exchange machine
business
NEW
Sweet Pixels
inc.
Planning, production
and sales of HillValley
brand popcorn and
sweets
NEW
SANDAI Co., Ltd.
100%
Five Colors
Inc.
(China)
93%
(UK)
GENDA Europe
Ltd.
100%
LEMONADE
Lemonica Inc.
Production and
sales of
Lemonade
66%
LEMONADE
Lemonica UK Limited
(UK)
100%
100%
D-eight CO., LTD.
NEW
HALOS Corporation
100%
ABROAD
34
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
The Big Picture of the Current Entertainment Industry
35
VisionAspiration
More fun for your days To be the World’s No.1 Entertainment
Company in 2040
Speed is King, GRIT and GRIT, Enjoy our Journey
With these three values, we take on new challenges and
aim to be the world’s number one entertainment company
We believe that “fun” is essential for human beings
“More fun for your days” is our “Aspiration”
35
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
36
Appendix
36
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
13.1
4.2
1.4
4.9
3.3
82.2
24.7
14.0
30.6
14.7
37
¥22.0bn
¥157.0bn
Amusement arcade
related business:
c.70%
GENDA’s Business Portfolio – 2026/1 Company Estimate (Initial Target)
Amusement Centric + Peripheral Areas
Over 95% of GENDA’s Revenue and EBITDA
as of today are amusement arcades and karaoke
We continue to focus on M&As on platform area
While entering into the contents area in the mid-to-long term
Revenue EBITDA
Note: The graphs for Revenue and EBITDA do not include "Consolidation Adjustments," which is why their total values (¥166.2bn and ¥26.9bn, respectively) do not match the company’s forecast (¥157.0bn and ¥22.0bn), with the Revenue
Consolidation Adjustment at -¥9.4bn, primarily due to internal transactions, and the EBITDA Consolidation Adjustment at -¥4.9bn, mainly consisting of GENDA’s standalone corporate expenses (-¥4.5bn) and M&A-related expenses (-¥0.4bn)
that have already been announced and are confirmed to be recorded in the FY2026/1 period; for reference, the actual consolidation adjustments for FY2025/1 were -¥7.8bn for revenue and -¥3.6bn for EBITDA.
Others
Karaoke (Karaoke BanBan, Ontsu)
Prize-related (Fukuya and Ares)
Overseas Amusement (Mainly U.S. and China)
Domestic Amusement (GiGO etc.)
49%
15%
8%
18%
9%
49%
16%
5%
18%
12%
37
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
We disclose adjusted indicators because intrinsic performance of existing businesses cannot be gauged because of one-off M&A-related expenses
How to read “Tanshin” – Summary of Financial results
“Adjusted” ＝Earnings excluding one-off M&A-related expenses
To be solved by applying IFRS in FY2027/1.
Amortization of goodwill is approx. ¥3.0bn in FY2025/1 full-year, and approx.
¥3.0bn is added on operating income, ordinary income and net income.
2Yet, all indicators increase YoY even after amortization of goodwill
Operating income is +66% YoY (+43% in 3Q), accelerate growth in 4Q
Hurdle higher for net income because (a) “Corporate tax incurred” from this year,
(b) amortization of goodwill is “not tax deductible.”¹
4Higher YoY than 3Q, even greater than strong 1Q and 2Q
EBITDA +87% YoY / +¥7.1bn (+64% YoY in 3Q)
Net income before amortization of goodwill +31% YoY / +¥1.4bn (+21% YoY in 3Q)
→ Excl. corporate tax incurred from this year +97% YoY / +¥4.6bn (+47%YoY in 3Q)
5Cash EPS is +19%, expanding YoY margin against double headwind
First, corporate tax incurred from this year as stated above. Second, increase in
number of shares due to follow-on offering. Although ¥10.0bn from follow-on offering
deployed to M&A, the contribution to earnings in FY2025/1 is almost zero as it will
fully contribute from FY2026/1 due to the timing of start of consolidation.
→ Cash EPS already increased +19% YoY (+10% YoY in 3Q) by strong organic
performance, in spite of the hurdle both in numerator and denominator of Cash EPS
→ Besides, in FY2026/1, the earnings forecast without M&A is ¥98.59, another
+20% increase (Tanshin shows ¥49.29, which reflects the 2-for-1 stock split)
2’ Besides, (c) “M&A-related expenses” being not tax deductible is additional
burden on GAAP results
45
2
2’
¹ Since the absolute amount of net income is smaller than operating income and ordinary income (because it is after tax), the impact of “amortization of goodwill and M&A-related expenses” is larger than that of operating income and ordinary income.
This is because the above expenses are non-taxable expenses and are deducted “in equal amounts” from all operating income, ordinary income and net income.
Profits before amortization of goodwill = Our KPI
Profits after amortization of goodwill = figures for reference
1
3
38
38
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Quarterly results – Intrinsic Performance excluding M&A-related expenses
39
FY2024/1 FY2025/1
(¥
in millions) 1Q 2Q 3Q 3Q
YTD 4Q 4Q
YTD 1Q 2Q 3Q 4Q 4Q
YTD 4Q
YTD(E) YoY
Revenue
11,994
12,520
14,293
38,808
16,888
55,697
24,685
24,846
28,096
34,158
111,786
110,000
+100.7%
Gross profit
3,182
2,609
3,368
9,160
3,798
12,958
5,286
5,075
6,506
8,590
25,458
-
－%
Margin (%)
26.5%20.8%23.5%23.6%22.4%23.2%21.4%20.4%23.1
％
25.1%
22.7%
-
-
EBITDA
2,197
1,712
2,218
6,128
2,072
8,201
3,301
2,817
3,958
5,313
15,391
13,000
+87.6%
Margin (%)
18.3%13.6%15.5%15.8%12.3%14.7%13.4%11.3%
14.1%
15.5%
13.7%
11.8%-
Operating income
1,670
1,096
1,475
4,242
1,226
5,469
2,084
1,518
2,478
3,040
9,122
7,000
+66.7%
Margin (%)
13.9%8.7%10.3%10.9%7.3%9.8%8.4%6.1%
8.8%
8.9%
8.1%
6.3%-
Net income before
amortization of goodwill
1,618
465
1,462
3,546
969
4,516
1,536
935
1,841
1,618
5,931
5,400
+31.3%
Margin (%)
13.5%3.7%10.2%9.1%5.7%8.1%6.2%3.8%
6.6%
4.7%
5.3%
4.9%-
Net income attributable to
owners of the parent
1,585
432
1,427
3,445
889
4,334
1,303
655
1,495
1,128
4,582
4,300
+5.7%
Margin (%)
13.2%3.5%10.0%8.9%5.3%7.8%5.3%2.6%
5.3%
3.3%
4.1%
3.9%-
Note that GENDA has different businesses mix on a fiscal year, or even quarterly basis
As GENDA being an M&A company, when comparing EBITDA margins over time, it is essential to do so on the same business, apples-to-apples basis.
The largest difference between previous and current fiscal year is the consolidation of the karaoke business (which has lower margins than amusement
arcades) and thus overall consolidated P/L margins appear to have declined. However, Shin Corporation (Karaoke) and all amusement arcade companies
joined through roll-up have improved the margin, therefore each business are performing well.
Karaoke consolidation + Start of tax payment
Note: Please refer to the detailed M&A-related expenses in page 12.
Margin mix change due to karaoke consolidation
39
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
Quarterly results – GAAP actuals including M&A-related expenses
40
FY2024/1 FY2025/1
(¥
in millions) 1Q 2Q 3Q 3Q
YTD 4Q 4Q
YTD 1Q 2Q 3Q 4Q 4Q
YTD 4Q
YTD(E) YoY
Revenue
11,994
12,520
14,293
38,808
16,888
55,697
24,685
24,846
28,096
34,158
111,786
110,000
+100.7%
Gross profit
3,182
2,609
3,368
9,160
3,798
12,958
5,286
5,075
6,506
8,590
25,458
-
+96.4%
Margin (%)
26.5%20.8%23.5%23.6%22.4%23.2%21.4%20.4%23.1
％
25.1%
22.7%
-
-
EBITDA
2,197
1,712
2,140
6,050
2,051
8,102
3,277
2,423
3,716
4,818
14,234
13,000
+75.6%
Margin (%)
18.3%13.6%14.9%15.5%12.1%14.5%13.2%9.7%
13.2%
14.1%
12.7%
11.8%-
Operating income
1,670
1,096
1,397
4,164
1,205
5,370
2,059
1,124
2,235
2,545
7,965
7,000
+48.3%
Margin (%)
13.9%8.7%9.7%10.7%7.1%9.6%8.3%4.5%
7.9%
7.4%
7.1%
6.3%-
Net income before
amortization of goodwill
1,618
422
1,384
3,426
933
4,359
1,456
461
1,595
1,139
4,653
5,400
+6.7%
Margin (%)
13.5%3.3%9.6%8.8%5.5%7.8%5.9%1.8%
5.6%
3.3%
4.1%
4.9%-
Net income attributable to
owners of the parent
1,585
390
1,348
3,324
853
4,178
1,223
182
1,249
649
3,304
4,300
-20.9%
Margin (%)
13.2%3.1%9.4%8.5%5.0%7.5%4.9%0.7%
4.4%
1.9%
2.9%
3.9%-
GAAP data, including M&A-related expenses from the previous page
M&A-related expenses themselves are indifferent from the organic business performance.
These expenses will be some burden to GAAP financials but will serve as growth investment to fuel our transformational growth
This area shows GAAP figures incl. M&A-related expenses Margin mix change due to karaoke consolidation + M&A expenses
Note: Please refer to the detailed M&A-related expenses in page 12.
Karaoke consolidation + Start of tax payment + M&A expenses
40
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
41
Stock split
Schedule
Shareholder Benefit
Benefit program
Coupon which you can use at “stores of GiGO group” and “Karaoke BanBan”
Method of Stock split
With Monday, March 31, 2025 as the record date, 2-for-1 stock split of common
shares held by shareholders of record as of the same date to be carried out.
Expansion of the program
Since we will maintain the scope and content of the current shareholder benefit
program after the stock split, this will effectively lead to an expansion of the
shareholder benefit program.
Specifically, shareholders who hold 200 shares as of January 31, 2025 and are
recorded as holding 400 shares (200 shares before the split) or more with the
same shareholder number in the shareholder register as of July 31, 2025 will
receive shareholder benefits for 400 shares around autumn 2025.
Details of stock split and shareholder benefits
1
Date of Public Notice of
Record Date
Monday, March 17, 2025
(scheduled)
2
Record Date
Monday, March 31, 2025
3
Effective Date
Tuesday, April 1, 2025
Note: The benefit yield is calculated by dividing the content of benefits which you can get with 100 shares (¥4,000) by the amount required to buy the share unit based on the closing price on March 11, 2025.
Number of shares held Benefit program
100 ~ 299 shares Worth ¥2,000 (Twice a year, worth ¥4,000 / year)
300 ~ 499 shares Worth ¥6,000 (Twice a year, worth ¥12,000 / year)
500 shares or more Worth ¥10,000 (Twice a year, worth ¥20,000 / year)
41
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document to is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content o the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use of
this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the reason
thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgement of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
Disclaimer
42
42
© GENDA Inc. FY2025/1 Earnings ResultsGENDA IR
43
Thank you
43
GENDA IR © GENDA Inc. 2 M&As announced today
2024.12.24
GENDA IR
2 M&As announced today
44
© GENDA Inc. 2 M&As announced todayGENDA IR
2
01. Investment highlights
45
© GENDA Inc. 2 M&As announced todayGENDA IR
1. GENDA GiGO Entertainment Inc. to acquire all shares of HALOS Corporation
53 HALOS’ stores to join GiGO, ready to become No.1 market share of amusement arcades in Japan!
3
53/63
Every single domestic arcade joined GENDA achieved earnings growth post-M&A – introducing the established PMI measures to HALOS.
Leverage GiGO “339 arcades” to increase sales by having IP collaboration exclusive to GiGO and promoting limited-edition prizes of “GiGO PRIZE” laterally.
Besides, make the cost more efficient by bulk purchase/order of machines, prizes, repair, cleaning, uniform, equipment etc., which is the core of roll-up M&A.
Furthermore, streamline the store operation by implementing innovative DX measures by our tech team occupying 70% of pure holding company GENDA.
Domestic amusement arcades 339/ Domestic mini-locations 821
GiGO HALOS
October 2023
Fixed assets etc.
Acquisition
September 2023
Assets Acquisition September 2023
100% ownership
Acquisition
April 2021
Business
Acquisition
December 2023
Absorption-type split
December 2020
Share Acquisition
(85.1%)
January 2022
Share Acquisition
(100%)
May 2024
Share Acquisition
(100%)
June 2024
Share Acquisition
(100%)
February 2024
Share Acquisition
(82.45%)
December 2021
Business
Acquisition
October 2022
Business
Acquisition
October 2022
Absorption-type split
November 2023
Assets Acquisition
(Global Solutions)
117 mini
locations
December 2023
Management right
Acquisition
AM arcade
1 store
(China)
October 2024
Absorption-type split
(Matahari Entertainment)
AM
1店舗
February 2025
(planned)
Absorption-type split
+
November 2024
Equity Acquisition
(100%)
Domestic
amusement arcades Domestic
mini-locations
Domestic amusement arcade 392/ Domestic mini-location 884
46
© GENDA Inc. 2 M&As announced todayGENDA IR
As a pioneer in foreign currency exchange machines,
ActPro installed a foreign currency exchange machine,
“SMART EXCHANGE,” a platform for inbound tourists in 650+ locations.
”SMART EXCHANGE" is available in 10 languages and
compatible with 12 foreign currencies around the world.
Automated currency exchange, saved space and realized convenience.
Respond to inbound tourists’ immediate demand for cash at
stations, airports, hotels and stores etc.
2. Acquisition of foreign currency exchange machine business operated in 650+ locations in Japan
Expand Entertainment Ecosystem by leveraging knowhow of mini-location business
Target company’s valuation is EV / EBITDA 4.7x, PER 8.7x on the latest actual results basis.
EBITDA to FCF is c.50% for amusement arcades whereas this business is superior with c.70%, with limited maintenance capex once machines are installed.
Therefore, above EV / EBITDA 4.7x is equivalent to 3.4x in terms of M&A of amusement arcades.
Besides, above actual figures are investment recoup period for the M&A is by “existing” locations, whereas actual recoup depends on future cash flow.
Macro tailwind from government’s target to double the inbound visitors to Japan, in addition to the business growth exceeding the amusement arcades.
In addition, investment recoup period by one “new” machine is c.1.4yrs, sooner than M&A recoup period, making the overall recoup period even sooner.
The target shares acquired through 70% with GENDA shares + 30% in cash.
Cash EPS quite accretive, as P/E 8.7x shares will be exchanged with, 70% by GENDA shares of P/E 38.7x + 30% by funds from public offering of then P/E 29x.
Acquiring a fast-growing business by using GENDA shares with upside potential, while saving debt capacity and maintaining the valuation discipline.
Long-awaited second success in stock deal M&A. Best finishing for Continuous Transformational Growth targeted by GENDA.
Agreed on the best valuation/price for continuous transformational growth
ActPro’s foreign currency exchange machine business
4
Note: The above “EBITDA to FCF” denotes FCF divided by EBITDA, as the actual source of investment recoup is not precisely EBITDA but FCF, from which taxes and maintenance capex are deducted.
We consider the investment recoup on cash flow basis as most important in an M&A transaction, while actual FCF fluctuates greatly depending on the capex in a single year, thus EV/EBITDA is generally used as a simple reference.
P/E 38.7x is based on the company‘s forecast of ¥5.4bn of net income before amortization of goodwill, based on the closing price on December 23, 2024, the day before the announcement.
190
851
1,660
2022/1期2023/1期2024/1期
24
570
1,052
2022/1期2023/1期2024/1期
+348%
+95%+85%
Revenue
Transition
(¥mn)
EBITDA
Transition
(¥mn)
FY2022/6 FY2023/6 FY2024/6 FY2022/6 FY2023/6 FY2024/6
24
569
1,051
+2,258%
47
© GENDA Inc. 2 M&As announced todayGENDA IR
2. Acquisition of foreign currency exchange machine business operated in 650+ locations in Japan (continued)
5
0.3 0.6
0.8
1.0 1.0 1.2 1.2 1.3 1.5
1.6 1.8 2.0 2.1 2.2
2.5 2.4
2.7 2.9
2014 2015 2016 2017 2018 2019 2020 2021 2022
海外
国内
Inbound visitors hit historical record
Inbound visitors YTD 2024 exceeded the highest record of 2019.
Travelling to Japan is now an entertainment for people around the world.
Besides, Japanese government aims to double that to 60mn in 2030.
This business enjoys both macro and the boost by the national policy.
Inbound visitors in Japan
(¥tn)
(million
people)
Anime market size Prize game market size
(¥bn)
Japanese anime x Amusement arcades
Global anime market continues to grow consistently, topping ¥3tn in 2023
Especially, “overseas” market size finally overtook “domestic” in 2022
At the same time “prize games” as offline platforms of anime also expanded
One of the purposes of inbound travel is to experience Japanese anime culture
Jan-Nov
YTD Government
Target
＝ × × × ×
Inbound
Tourists Japanese
Anime Amusement
Arcades Mini-
locations Foreign currency
exchange machines
Affinity with
GENDA
Source: The Association of Japanese Animations
“Animation Industry Report 2023”
Source: JNTO. Full-year for 2023 and before.
For 2024, the result in the period from January to November.
Source: Japan Amusement Industry Association
“Survey on the Amusement Industry”
13
20 24 29 31 32
4 0 4
25
33
60
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2030
179.4189.6209.6
254.0
281.3298.8
242.5
306.2
325.0
2014 2015 2016 2017 2018 2019 2020 2021 2022
Overseas
Domestic
48
© GENDA Inc. 2 M&As announced todayGENDA IR
2. Acquisition of foreign currency exchange machine business operated in 650+ locations in Japan (continued)
6
GiGO Osaka Dotonbori Main Store
Mini locations x Foreign exchange machines
Domestic mini-locations 821
Foreign exchange machines 650+ Overseas mini-locations 10,478
Foreign currency exchange machine business is similar to
GENDA’s mini-location in business model
Expect an increase in earnings for both by
sharing GENDA’s sales network and know-how etc.
Amusement arcade x Inbound
GiGO Osaka Dotonbori Main Store, with 90% inbound tourists, recorded historical
high monthly sales, even including the period before GiGO joined GENDA.
GiGO has installed this foreign currency exchange machine in 14 locations which
have a lot of foreign visitors (as of November 30, 2024)
＝ × × × ×
Inbound
Tourists Japanese
Anime Amusement
Arcades Mini-
locations Foreign currency
exchange machines
Affinity with
GENDA
49
© GENDA Inc. 2 M&As announced todayGENDA IR
M&A and capital transactions track record
M&A track record reached 38 in total
7
June 2018
Share Acquisition
(100%)
1
July 2019
Joint venture
(50%)
2
15
October 2023
Fixed assets etc.
Acquisition
September 2023
Assets Acquisition
14
September 2023
100% ownership
Acquisition
16
October 2023
Share Acquisition
(66.0%)
September 2023
100% ownership
Acquisition
13 17
October 2023
Share Acquisition
(100%)
April 2021
Business Acquisition
4
October 2021
Capital Alliance
5
November 2023
Equity Acquisition
(100%)
20
December 2023
Absorption-type split
21
December 2023
Pino Pino Zaurus Limited
Share Acquisition
(100%)
23
January 2024
Share Acquisition
(100%)
24
November 2023
Share Acquisition
(78.05%)
18
December 2020
Share Acquisition
(85.1%)
3
January 2022
100% ownership
Acquisition
7
January 2022
Share Acquisition
(100%)
8
February 2024
Share Acquisition
(78.59%)
26
May 2024
Share Acquisition
(100%)
27
June 2024
Share Acquisition
(100%)
28
June 2024
Business Acquisition
29
November 2024
Equity Acquisition
(100%)
30
July 2024
100% ownership
Acquisition
31
February 2024
Share Acquisition
(82.45%)
25
December 2021
Business Acquisition
6
October 2022
Business Acquisition
10
October 2022
Absorption-type split
11
August 2024
Share Acquisition
(72.92%)
32
June 2022
Capital Alliance
9
November 2023
Assets Acquisition
(Global Solutions)
19
117 mini-
locations
December 2023
Management right
Acquisition
12
22
AM arcade
1 store (China)
October 2024
Absorption-type split
(Matahari Entertainment)
33
AM
1 store Karaoke
1 store
February 2025
(planned)
Absorption-type split
September 2024
Fixed assets
Acquisition
(ATOM)
34
December 2024
Fixed assets
Acquisition
(KARATEZ)
Karaoke
2 stores
35 36
Entertainment Contents Entertainment Platform
37 NEW 38 NEW
March 2025
(planned)
Share Acquisition
(100%)
・・・
Note: The ratio of acquisition and the number of acquired properties are as of the date of the announcement of the project.
March 2025
Share Acquisition
& Share Exchange
(100%)
50
© GENDA Inc. 2 M&As announced todayGENDA IR
8
02. FY2026/1 earnings forecast
51
© GENDA Inc. 2 M&As announced todayGENDA IR
5.6 6.2
8.1
13.0
18.5 20.0
21.2
The reason for showing FY2026/1 forecast is our intrinsic performance after announcing M&As differ from our initial target which factors in no M&A.
The reason for another upward revision is we have added full-year expected contribution by 2 new M&As announced today.
M&A-related expense of ¥0.16bn for the 2 M&As will be recorded in FY2026/1, thus EBITDA and Net income shown below are figures after reducing the ¥0.16bn.
Further upward revision expected upon future M&As towards the end of FY2025/1 and 4Q earnings releases, as this assumes zero M&A going forward.
FY2026/1 earnings forecast
Another upward revision to FY2026/1 earnings forecast
9
38.1 46.1 55.6
110.0
140.0 150.0
156.0
2.7
3.5
4.3
5.4
7.0 7.0
7.4
+98%
+42%
+60%
+63%
+24%
+37%
FY2026/1E
2025/1E2024/12023/12022/1 2025/1E2024/12023/12022/1 2025/1E2024/12023/12022/1
Revenue
(¥ in billions) EBITDA
(¥ in billions) Net income before
amortization of goodwill
(¥ in billions)
Current
FY Current
FY
Current
FY
9/9
Released
in 2Q
earnings
12/10
Revised
in 3Q
earnings
12/24
Another
Revision
Today
FY2026/1E
9/9
Released
in 2Q
earnings
12/10
Revised
in 3Q
earnings
12/24
Another
Revision
Today
FY2026/1E
9/9
Released
in 2Q
earnings
12/10
Revised
in 3Q
earnings
12/24
Another
Revision
Today
52
© GENDA Inc. 2 M&As announced todayGENDA IR
10
Appendix
53
© GENDA Inc. 2 M&As announced todayGENDA IR
M&A – F&B : Acquisition of C’traum (80% Equity + 20% Debt financing)
To increase “Cash EPS” by M&A through Stock Deal, it is important that
“PER of GENDA” > “PER of Target”
11
To “increase Cash EPS”in M&A, it is necessary to have “(1) Cash EPS before M&A < (2) Cash EPS after M&A”. When Cash EPS increases in an M&A in which new shares are issued,
that translates to “increase in the number of shares < increase in profit”i.e., “the number of shares increases, but the profit increases even more".
Thus, there are M&As that increase Cash EPS (as a result of a further increase in earnings) even when the number of shares increases due to M&As from GENDA's new stock issuance.
The final criterion is whether the PER of the company is greater than the PER of the target company (see Appendix for details). The following three categories are illustrative examples.
11
Cash EPS is maximized because the denominator "number of new GENDA shares to be issued" is zero and only the numerator "Net income before amortization of goodwill" of the subject company increases.
However, an overpriced M&A cannot be justified only because the entire consideration is debt. If the entire consideration is financed by debt to an M&A that is significantly overpriced relative to the target
company's profit, the absolute interest burden will offset the increase in profit, and in the first place, financial institutions will not provide full debt financing for an M&A that is significantly overpriced.
Cash EPS is maximized when M&A consideration is “Debt only”
The denominator “number of new GENDA shares to be issued”is determined by “the value of the subject company‘s shares (divided by GENDA’s share price). Therefore, the threshold is
whether the “equity value of Target”relative to the ”net income before amortization of goodwill of Target", which translates to the “PER of Target" is lower than the "PER of GENDA".
If the M&A consideration is “Stock only”, Cash EPS will increase if "PER of GENDA” >“PER of Target”
For example, if the acquisition consideration is "60% stock + 40% debt," the increase in GENDA shares determined by the "value of the target company's equity (divided by GENDA's share price)"
is limited to only 60%, unlike in the case of 100% equity and 0% debt, and as a result, the threshold is "PER of Target x 60%" is lower than the "PER of GENDA”.
If the M&A consideration is “Stock + Debt“, Cash EPS will increase if the ”PER of GENDA”> “PER of Target × % of Stock consideration”
Note: NI+A refers to Net income before amortization of goodwill. Assumptions do not take into account one-time M&A-related costs. Assumption is that borrowing costs are sufficiently low. Assumptions remain unchanged as long as the current
domestic financial and market environment remains within the current outlook (including a certain level of interest rate hikes). For PER, to inspect the Cash EPS, the comparison is based on Cash EPS-based PER, i.e., PER based on Net income
before amortization of goodwill.
NI+A of GENDA
Cash EPS
Before M&A Number of existing GENDA shares
①+NI+A of Target
+Number of newly issued GENDA shares
②
＝ ＝
Cash EPS
After M&A
NI+A of GENDA
Number of existing GENDA shares
(Repost)
“Latest Announced M&As”
Dated June 27, 2024
54
© GENDA Inc. 2 M&As announced todayGENDA IR
Therefore, even if the number of shares increases via stock deal M&A, Cash EPS will not be diluted but rather increase if the target PER is lower than our PER
Approach to Stock Deal M&A
Cash EPS will increase if PER of GENDA > PER of Target, even for Stock Deal M&A
12
①
Therefore, if “PER of GENDA > PER of Target", then "① ＜ ②", Cash EPS will increase.
# of GENDA shares outstanding
# of GENDA shares newly issued ＞NI+A of Target
NI+A of GENDA
GENDA
Share Price
# of GENDA shares
outstanding GENDA
Share Price ＞
NI+A of GENDA
# of GENDA shares
newly issued
NI+A of Target
GENDA PER Target PER
＜
# of GENDA shares newly issued
# of GENDA shares outstanding
NI+A of GENDA NI+A of Target
＞
...
Organize numerator and denominator
Swap the numerator of the left-hand side and the denominator of the right-hand side
...
＜
Cash EPS
before M&A
# of GENDA shares outstanding ＜NI+A of GENDA
# of GENDA shares outstanding +
+NI+A of Target
# of GENDA shares newly issued
NI+A of GENDA
NI+A of Target
Target Market CapGENDA Market Cap
GENDA NI+A ＞
# of GENDA shares newly issued
# of GENDA shares outstanding ＜NI+A of GENDA
NI+A of Target
Turn over the numerator and denominator
Note: NI+A refers to Net income before amortization of goodwill. Assumptions do not take into account one-time M&A-related costs. Assumes that the subject company's Net income before amortization of goodwill is in the black. For PER, to
inspect the Cash EPS, the comparison is based on Cash EPS-based PER, i.e., PER based on Net income before amortization of goodwill.
# of GENDA shares outstanding
NI+A of GENDA +NI+A of Target
# of GENDA shares
outstanding # of GENDA shares
newly issued NI+A of GENDA
＜
+
# of GENDA shares outstanding
# of newly issued GENDA shares
NI+A of GENDA
+NI+A of Target
1
＜
+
1
NI+A of GENDA
Cash EPS
Before M&A # of GENDA shares outstanding
①NI+A of Target
+# of GENDA shares newly issued
②
＝ ＝
Cash EPS
After M&A NI+A of GENDA
# of GENDA shares outstanding
GENDA market cap = Number of GENDA shares x GENDA share price
Target market cap = Number of newly issued GENDA shares x GENDA share price
Divide both sides by GENDA share price
Swap the denominator of the left-hand side and the numerator of the right-hand side
Cash EPS
after M&A
②
Add 1 to both sides
(Repost)
“Latest Announced M&As”
Dated June 27, 2024
55
© GENDA Inc. 2 M&As announced todayGENDA IR
We have countless synergies within our group and we have verbalized them in detail. Below is the latest table of our group synergies that we use in our
internal management meetings. (Note: the table is presented on the previous page)
This is just an example for your reference.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q2. What kind of synergies have been generated specifically?
13
For example, although amusement arcades and karaoke seem to be different businesses and customer segments, the concept
of opening new stores is the same, and the amount of information on available tenants is critical. While we used to collect tenant
information as an operator of about 330 amusement arcades, the addition of about 360 karaoke premises has improved our store
development capabilities by integrating store development with tenant information on the karaoke side.
This has also made it possible that it is possible to open an amusement arcade even if it is unprofitable to open karaoke (or vice
versa). Even among existing stores, we have changed a store which is too big only for karaoke to an amusement arcade and
improved the profitability. In areas where store locations overlap, we attract new customers by distributing discount coupons for both.
Fukuya, which designs prizes, is located on the upstream of value chain of amusement arcades. Its volume of transactions has
dramatically increased not only because of the expansion of GiGO’s operation, but also the creation of huge demand for Japanese
Kawaii products in North America through Kiddleton and NEN as GENDA. There is a big effect of increasing the equity value just to
take in the profits by making it consolidated, which would flow away outside if we did not conduct the M&A. Besides, we share the
information on sales of each product in a timely manner and this makes us possible to make minor changes. The same effect has
arisen for Ares, too, which has a function as a trading company of prizes.
(to next page)
(Repost)
“FY2025/1 3Q Earnings
Presentation”
Dated December 10, 2024
56
© GENDA Inc. 2 M&As announced todayGENDA IR
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q2. What kind of synergies have been generated specifically? (continued)
14
These are just a few of the verbalized synergies, but the reason for the various synergies is that although the entertainment industry seems to be broad, from
a broad perspective, it is connected from the upstream "Contents" to the downstream "Platform" from the customers’ (entertainment fans’) perspective. Based
on the structure of entertainment industry, which is "IP→platform→fans," there are countless cross-selling synergies.
Of course, there are synergies from roll-up M&A of amusement arcades. However, there is much room to create synergies in M&A focused on the
entertainment field which is contiguous, more than in M&A limited to amusement arcades. From these perspectives above, we believe that the formation of an
entertainment conglomerate through GENDA's unique Entertainment Ecosystem has many advantages.
(Repost)
“FY2025/1 3Q Earnings
Presentation”
Dated December 10, 2024
As for Lemonade and Kleiner, the sales functions have dramatically improved, that was difficult when they stood alone. By joining in the group,
products of Lemonade and Kleiner are distributed on the grand menus of all 360 Karaoke BanBan premises, and they have opened new stores in
existing amusement arcades, too. In addition, it is possible for them to share the opportunity when we open a new amusement arcade in a
shopping center.
Furthermore, since ONTSU, which is a distributor of karaoke equipment, joined us, the volume of business with Karaoke BanBan has increased
and this has enabled our group to take in the profits which were supposed to flow away outside of the company. In addition, it is now possible to sell
Kleiner for the night market which is ONTSU’s customer base. C'traum, which sells Kleiner, did not have any employee or sales function before the
M&A. But now it is possible to access to sales channels on a number of fronts without any additional cost.
GAGA, which is a movie distribution company, has also created countless cross-selling synergies that were difficult to achieve on its own, such as
extensive advertising of its movies on digital signage at GiGO Flagship Store facing Ikebukuro Sunshine 60 Street, staff of amusement arcades
wearing a T-shirt with movie ads, and offering rooms with movie characters and food and beverages at karaoke etc.
57
© GENDA Inc. 2 M&As announced todayGENDA IR
Our management policy on M&A Strategy
We believe that earnings results for each fiscal year end is an essential as a screenshot observation as
a listed company. However, in order to best reward the investors who have chosen to invest in GENDA
Inc., which advocates "Continuous Transformational Growth," from among the numerous listed
companies and entrusted their valuable assets to us, we believe that it is essential to make our
corporate decisions that maximize medium-to-long term performance, rather than instantaneously
maximizing our single-year performance.
Therefore, we must avoid placing too much emphasis on maximizing single-year performances,
resulting in the opportunity loss of medium-to-long term transformational growth by not investing in M&A
deals right in front of us. If there is an opportunity to maximize medium-to-long term performance, we
believe it is important to venture ahead with timely and appropriate action, to avoid resulting in failure to
seize opportunities.
Although we are already generating abundant cash flow, we are only in our seventh year since
foundation, having the above-mentioned aspirations. This makes us similar to a typical "start-up
company." In other words, we are not in a mature, steady state, but rather in a state where we can
envision a clear growth path by reinvesting our cashflow to a level that greatly exceeds such invested
capital.
Therefore, rather than saving cash in pursuit of short-term profit maximization, we are now in the
process of growing to become the world's number one entertainment company by 2040 and envision to
reward shareholders with cashflow when we achieve a stable state in the future. And to all the investors
who support us on that journey, we envision to return ample capital gains through growth returns
generated by our reinvestment of our annual cash flow in M&A deals.
Also, as our primary investment vehicle is M&A, this fact explains why we place importance on making
appropriate investment decisions based on the "M&A discipline." When it comes to M&A, cash flow, not
nominal profit, is the most important indicator. We only execute M&A deals where the expected cash
flow we receive from the target company exceeds the cash flow we pay for the company (taking into
account the present value based on the cost of capital). Therefore, as a company that applies J-GAAP
and places importance on cash flow indicators, we use EBITDA, net income before amortization of
goodwill, and Cash EPS as KPIs.
Based on the above way of thinking, we will continue to announce M&A deals during the remaining 5
months of the current fiscal year. Worth noting is that, in case, the target company's performance, after
deducting one-time costs, does not contribute positively to our consolidated performance in the “current
fiscal year” because the timing of the M&A is close to the end of the fiscal year, but can significantly
grow our consolidated performance in the “next fiscal year and beyond,” we will choose to execute such
M&As.
As previously reported, the Post Merger Integration has been more successful than expected, and
while each business itself is solid, we are actively engaged in our mainstream business of M&A activities.
In particular, our debt capacity has expanded significantly following the recent public offering of
approximately 10.0 billion yen, and our M&A pipeline is the largest in our history. We will strive to pursue
these deals at the soonest possible timing and deliver the achievements of our "Continuous
Transformational Growth" to our investors.
(Reference) Excerpts from“Notice of Upward Revision of Full-Year Earnings Forecasts”
(Repost)
“FY2025/1 3Q Earnings
Presentation”
Dated December 10, 2024
15
58
© GENDA Inc. 2 M&As announced todayGENDA IR
As we aim to become the world's No. 1 entertainment company, our M&A targets are not limited to
the amusement arcade industry, which has a market size of 540 billion yen, but rather target the whole
entertainment industry. As individual companies of the entertainment industry formed a group of
companies, countless cross-selling synergies have been actually generated, resulting in significant
growth in business performance after joining in the group even outside of amusement arcades.
Fukuya and Shin Corporation are specific examples of non-amusement arcade companies that have
had a significant impact on consolidation. In this fiscal year, which is the first one after M&A, it is
already ensure that they will achieve a record income in their corporate history, 71 years of Fukuya
and 35 years of Shin Corporation. We believe that it is difficult to explain this without synergies.
On that condition, synergies and PMI are only means, not goals, in M&A. In order to make M&A
succeed, the goal should be that “the total amount of cash flow acquired through M&A exceeds the
consideration for M&A paid.” On the other hand, we think that having synergies and PMI as their goal,
which means “having means as the goal,” is a typical example of failure in M&A. The details are
explained below.
⚫Our definition of failure in M&A is a reduction in capital as a result of M&A
First, let me explain our definition of failure in M&A. Our definition of failure in M&A is that "the total
amount of cash flow acquired through M&A is less than the consideration for M&A paid," which means
that we have decreased our capital as a result of M&A. The reasons for this are as follows.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q1. You have conducted many M&As outside of amusement arcade, which is your main.
Are synergies and PMI all right?
As a listed company, it is required to maximize its equity value. Maximizing equity value requires
maximizing enterprise value. Maximizing enterprise value requires maximizing cash flow. Nevertheless,
if "the amount paid for M&A > the total amount of cash flow acquired through M&A," the equity value
will be damaged because cash flow is lost as a result of the M&A.
We define a M&A which damages equity value, which means “the total amount of cash flow acquired
through M&A is less than the consideration for M&A paid,” as "a failure in M&A.” In other words, the
definition of success in M&A is that "the total cash flow acquired through M&A exceeds the
consideration for M&A paid (on a present value basis)," and we have this as our goal.
⚫Typical example of failure in M&A is "having means as the goal," which means having
synergies and PMI as the goal.
The goal of M&A is as stated above, and synergies and PMI are just means to increase cash flow.
However, we believe that having “synergies and PMI” which are means as a goal, which means
“having means as the goal,” is a typical example of failure in M&A. Specifically, this means "to conduct
M&A (regardless of the acquisition price) because synergies are likely to be generated with the existing
business and increase by PMI.”
When a company has been conducting M&A aggressively in a particular field, if it continues to
conduct M&A without caring the acquisition price only because it is likely to generate synergies, even if
synergies are actually generated, the acquisition price may be higher than the synergies and it could
fail to recover the investment. We should have cash flow as our goal, and having synergies or PMI as
the goal is a typical example of failure in M&A.
(to be continued to next page)
16
(Repost)
“FY2025/1 3Q Earnings
Presentation”
Dated December 10, 2024
59
© GENDA Inc. 2 M&As announced todayGENDA IR
⚫Background factors behind the likelihood of failure in M&A by having synergies as a goal.
We believe that the following characteristics of M&A are behind the likelihood of such failures.
- It is easy to conduct M&A just by paying a high price and we can increase PL immediately afterwards.
- On the other hand, it takes some years to find out if the acquisition price was right.
- In M&A, the sunk cost is high because it has a lot of person-hours. People on the line want to
complete the M&A if possible.
- To solve this issue, the function to check the acquisition price deteriorates in the cause of synergies
.
These are the characteristics of M&A. We have analyzed that the cause of typical failure is having
means as the goal, which means that "Let's carry out M&A because it looks like we can generate
synergies (even at a slightly higher price).”
⚫The premise of the doubt that synergies and PMI are all right is a thought that “M&A = overpriced."
When it comes to M&A, there is a common doubt that "synergies and PMI are all right.” A cause
underlying this doubt is a mind that “basically, the acquisition price in M&A is relatively high compared
to the cash flow of the target company on its own, and M&A will fail if the cash flow of the target
company does not increase through synergies and PMI because we cannot recover the investment in
the first place.”
However, the premise that M&A = relatively expensive is not correct. In the entertainment industry,
which is our target, there are structures which are suitable for M&A, such as stable business conditions
with a long business history, balance sheets of net cash and needs for business succession etc. For
more information, please see the following sponsored research report. (For reference: “Capital Growth
Strategies (Initial Report)” dated October 18, 2024)
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q1. You have conducted many M&As outside of amusement arcade, which is your main.
Are synergies and PMI all right? (continued)
⚫GENDA is an operating company which conducts M&A specializing in the entertainment field
by using an investment firm’s perspective of M&A.
We firmly emphasize M&A at the right price, not conducting M&A based on synergies or PMI. M&A
will fail if the goal is not to increase cash flow, and the axis of investment decisions is whether this can
be secured or not.Acknowledging the aforementioned temptation, we avoid having means as the goal
and make investments which are faithful to the theory of equity value.
On that basis, countless cross-selling synergies have been generated. Let me explain specific
examples of the synergies that have actually occurred in Q2, that is why GENDA is an operating
company, not an investment firm in Q3, the rationality of conglomerate in Q4 and the connection
between GENDA’s strategy and its Aspiration “More fun for your days” in Q5.
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In conclusion, we believe that GENDA's Entertainment Ecosystem can realize a "conglomerate
premium" that more than offsets the conglomerate's discount for complexity. We provide more details
below.
⚫What is conglomerate discount?
This is a phenomenon in which the enterprise value of a company with multiple businesses is valued
lower than the sum of the business values of the individual businesses. This basically occurs because
investors dislike "incomprehensibility.”
⚫Why GENDA believes that a conglomerate premium can be achieved.
GENDA hopes to achieve the exact opposite: a "conglomerate premium". In other words, a state in
which the value of the whole group continues to be valued higher than the sum of the values of the
individual businesses. The following five points explain why we can achieve this.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q3. Does an entertainment conglomerate have any rationality?
The closer GENDA gets to an entertainment conglomerate, the more conglomerate discount will occur?
(1) Suppression of Volatility: Increase in Enterprise value (and increase in equity value by that)
“Individual entertainment companies are undervalued.”
Entertainment is ever-changing, ups and downs and tends to be valued low by investors who avoid
volatility from the perspective that “Will what is accepted by the world now be accepted next year and
the year after?” “Will it be able to maintain sales profits?” Even if individual businesses are volatile,
GENDA will transcend this volatility by forming an appropriate business portfolio. In other words, we
aim to create a situation where "we keep growing strongly every year as a group even though an
individual business might have a bad year.”
→As it is necessary to tolerate volatility when you invest in each company itself, the expected return
goes up and the capital cost is high, too. However, by forming an entertainment conglomerate, the
volatility will be reduced as whole GENDA and the capital cost will decrease. The decrease in capital
cost, which is the discounted rate of cash flows, will increase the present value of total amount of cash
flows and the enterprise value will increase.
(to be continued to next page)
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(2) Optimization of capital structure: Increase in Equity value
“Individual entertainment companies have unnecessary cash.”
For the same reason as (1), individual entertainment companies themselves often have cash which
they do not need for the time being to prepare for "future volatility." GENDA, by managing funds on a
group-wide basis, will put the remaining funds into investments for the next growth while preparing for
sudden capital needs.
→Based on the "Modigliani-Miller Proposition (MM Proposition)," the first proposition of the MM
Proposition theoretically proves that "capital structure has no effect on enterprise value in a perfect
capital market.”
On the other hand, even if the enterprise value remains constant, we can increase the equity value
by capital structure. We can do that by utilizing excess funds and debt properly and making the stock
structure more appropriate (In reality, the capital market is not perfect, and taxes and bankruptcy risks
exist. Therefore, the pursuit of the best capital structure will increase the enterprise value as well). In
addition, it is possible to do business on a consolidated basis with financial institutions that each
company could not meet on their own, making it possible to effectively utilize debt with low capital cost
compared to the equity, which also leads to an increase in enterprise value.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q3. Does an entertainment conglomerate have any rationality?
The closer GENDA gets to an entertainment conglomerate, the more conglomerate discount will occur? (continued)
(3) PL synergies: Increase in Enterprise value (and increase in equity value by that)
Realization of countless and cross-selling synergies within the group
As stated in Q2, countless cross-selling synergies are generated, which occur in the contiguous
entertainment industry.
→Improved PL of each subsidiary increases cash flow and the enterprise value will increase.
(4) Communications with investors: Increase in Enterprise value (and increase in Equity value
by that) and detailed and sincere explanations to investors
GENDA is committed to explaining our business to investors around the world. We will continue to
make efforts to give investors whom we could not meet if we remained an individual company a better
understanding of the attractiveness of each business and that of the group.
→As we expand our investor base around the world, we will be able to meet investors and funds
with lower capital cost, and as the capital cost decreases, enterprise value will increase.
(to be continued to next page)
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(5) Branding: Increase in Enterprise value (and increase in equity value by that)
We will increase the number of fans of GENDA. By doing that, we will achieve greater effects as a
group than if each individual company acted individually in all aspects, including recruitment, opening
new stores, purchasing, sales, business tie-ups, M&A, fundraising etc.
→Enterprise value will increase due to the improvement of PL and decrease in capital cost of each
company in points other than (1) through (4).
With GENDA’s becoming a conglomerate, the occurrence of a conglomerate discount due to
certain complexities may be unavoidable. However, we believe that there will be effects of increasing
enterprise value and equity value as described in (1) though (5) above, including reasons specific to
entertainment, and these effects will more than offset the discount, resulting in a conglomerate
premium that will keep the value of the whole group valued higher than the sum of the values of the
individual businesses.
.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
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Q3. Does an entertainment conglomerate have any rationality?
The closer GENDA gets to an entertainment conglomerate, the more conglomerate discount will occur? (continued)
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We are an operating company, not an investment firm. Although we are an operating company, we
place M&A at the center of our strategy as same as an investment firm does, and conduct M&A based
on the same judging criteria as an investment firm. However, we limit our target domain to the
entertainment domain, and in reality, countless synergies are generated in the entertainment domain,
and we consider ourselves an operating company, not an investment firm.
First, since it is necessary to define an investment firm and an operating company, let me provide a
definition based on our ideas.
⚫Our definition of "investment firm"
Regardless of synergies, an investment firm will choose M&A if it comes into existence as an
investment, in other words, if cash flow increases through M&A. No one asks a question about
Company A and Company B, with which the investment firm has conducted M&A, "Why did the
investment firm conduct M&A with each of these two companies, although they were not related in any
way?" This is because it is obvious for the investment firm that there is an assumption that "Company
A and Company B, each of them comes into existence as an independent investment (we can recover
cash flow compared to the invested capital).
⚫Our definition of "operating company”
We consider a company to be in a state where it operates business in a specific area, each creating
synergies and creating more value than if it existed as a stand-alone company. Although operating
companies may also conduct M&A, they are not considered as an investment firm only because they
conduct M&A. If an operating company continues to conduct M&A in an industry that is too unrelated
to its own, it may be considered as an investment firm. However, if there are more synergies by doing
business together as a group than by doing that independently, then we believe that the company can
be considered as an operating company.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q4. I am wondering if GENDA is an investment firm.
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⚫GENDA is an operating company that conducts M&A based on the same judging criteria as
an investment firm.
Although we are an operating company, we place M&A at the center of our strategy as same as an
investment firm does, and conduct M&A based on the same judging criteria as an investment firm.
However, our target domain is limited to the entertainment domain, and in reality, countless synergies
are generated in the entertainment domain, and we believe that we are an operating company, not an
investment firm.
When you hold several companies which are completely unrelated as an investment firm, there are
cases where the value of the whole group is lower than the sum of the enterprise values of each group
of companies due to the usual conglomerate discount. On the other hand, GENDA will benefit from the
advantages of conducting M&A as an operating company through the conglomerate premium
described above.
Besides, since multiple indexes such as PER are calculated based on the growth rate in theory, we
would like to justify it by maintaining a high growth rate through M&A.
.
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The relationship between GENDA's strategy and our Aspiration based on the description of this
document is as follows.
.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q5. How does GENDA’s strategy connect to its Aspiration, “More fun for your days”?
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GENDA believes that "fun" is essential for human beings to live life in their own way and has set
"More fun for your days" as our Aspiration.
To achieve this Aspiration, GENDA's vision is to "become the World's No.1 Entertainment Company by
2040," and we aim to “complete GENDA’s unique Entertainment Ecosystem” by keeping making
“Continuous Transformational Growth” through “M&A in the entertainment industry” as a growth
strategy to achieve it.
GENDA will transcend the volatility of the ever-changing, ups and downs entertainment business
by diversifying our business portfolio, and at the same time, GENDA’s becoming an entertainment
conglomerate will create countless synergies for each entertainment company and we will continue to
create new values..
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Mr. Nobuzane, Representative Director and President of CGS, who has a career as a foreign
institutional investor mainly in Fidelity, prepared this report for the purpose of verbalizing to investors
the reality of our roll-up M&A strategy and the resulting transformational growth in equity value
(through increased enterprise value by increased cash flow).
As a result, while the index of “investment recovery” relative to “invested capital” (=Incremental
ROI), which is important for the company which conducts M&A, was at the highest level compared to
other companies in the same industry, the EV/EBITDA multiple, which took growth rate into account,
was discounted by approximately 70%to 80% compared to other companies in the same industry.
While the selection and the forecast for growth rate by other companies in the same industry are
based on CGS, the above analysis is a mechanical calculation based on actual market value, and we
believe that we have quantitatively presented the upside to investors. We present the specific
summary below.
As a company whose core business is M&A, we have consistently emphasized "M&A at
appropriate valuations" since we got listed. Specifically, we have emphasized the importance of
"investment recovery" (EBITDA of the target company) relative to "invested capital" (EV of the target
company) through M&A.
However, we focused only on EBITDA growth of the target company after the M&A in IR to date.
While it is true that an increase in cash flow of the target company promotes the investment recovery
is good, this is only a means, not an end. We were not able to measure the effect of "investment
recovery" relative to "invested capital," which was the main objective.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS).
Therefore, in this report, in order to measure the effect of "investment recovery" against "invested
capital," we measured the increase in operating cash flow (≒EBITDA) ÷the increase in invested
capital (=”Incremental ROI”) by using the increase (due to M&A) in GENDA’s consolidated balance
sheet (≒EV), not the one of the target company itself, as “invested capital” and the increase in
operating cash flow (due to M&A) (≒EBITDA) as “investment recovery” and compared it with other
companies in the same industry.
The other companies in the same industry are defined as "companies from a boarder range of
industries that similarly employ roll-up M&A strategies within mature markets (p21 of CGS Report)”.
There are a number of companies that are engaged in this industry on a large scale in the U.S. Among
those companies, the report mentions Waste Management, which conducts roll-up M&A in industrial
waste services (Incremental ROI is about 20%), Service Corp International (about 8-9%), which
conducts roll-up M&A in funeral services, Rollins (about 25%), which conducts roll-up M&A in pest
control industry, and Danaher (about 10%), a leading company that achieves growth through M&A.
In contrast, the result of the analysis shows that our index is approximately 25%, which is the
highest level in comparison to other companies in the same industry ("This expected performance
compares favorably with global companies in other sectors following a roll-up M&A growth strategy (p.
20)"). Therefore, it is quantitatively shown that it is justified even if valuations are relatively high
compared to other companies in the same industry.
However, it is noted that when calculating the EV/EBITDA multiple relative to growth rate, our
company is 0.3x while Waste Management is 1.5x, Service Corp International is 1.1x and Rollins is
2.5x (“…at an approx. 70-80% discount. This suggests a strong sense of undervaluation per growth,
from an objective standpoint (p.1)”)
(to be continued to next page)
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EV/EBITDA multiple compared to growth rate is calculated as "EV/EBITDA multiple divided by
EBITDA growth rate.” A similar approach is commonly used for PEG (Price/Earnings-to-Growth), which
is calculated by dividing P/E multiple by EPS growth rate, but this analysis is performed for EBITDA.
The idea behind this approach is that a higher multiple is justified for a company with a higher growth
rate. Following is a concrete example.
If Company A and Company B have the same EBITDA (e.g., 10 billion yen), and Company A
grows at 10% (11 billion yen, 12.1 billion yen, 13.3 billion yen…) annually while Company B grows at
20% (12 billion yen, 14.4 billion yen, 17.3 billion yen…) annually, even over 3 years alone, EBITDA
growth of Company A is 1.3x and that of Company B is 1.7x, which is a large difference, justifying
Company A < Company B in enterprise value. As a result, even if Company A = Company B in the
current EBITDA, it is justified that Company A < Company B in EV/EBITDA multiple calculated by
dividing because it is Company A < Company B in enterprise value.
In addition to growth rates, higher multiples are also justified if there are higher figures measuring
cash flow generation capacity (such as Incremental ROI, ROIC and operating CF conversion rate etc.
in the CGS report).
This is because, although EBITDA is a concept similar to cash flow, in reality, it is steady free cash
flow from which (taxes and) investments necessary to maintain the business (maintenance CAPEX)
are taken into account that affects the theoretical enterprise value. In other words, even if EBITDA is
the same amount, a company with a higher conversion rate from EBITDA to cash flow will have a
higher theoretical enterprise value.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS). (continued)
From this perspective, the CGS report states, "From FY21 to FY23, GENDA’s invested capital has
increased by approx. ¥15.5bn, with cumulative operating CF over the same period totaling around
¥2.9bn (¥3.8bn if including FY24 estimates by CGS). This results in their incremental ROI of 20-25%,
which CGS considers an impressive figure based on our long-time investment experience (p. 20).”
Based on that assumption, he added, "Based on the CGS forecast, GENDA’s expected FCF
generation per profit growth may not reach the level of Rollins (given differences in organic CapEx
requirements and Cash ROIC) but is relatively comparable to Waste Management’s figure. (snp) The
EBITDA multiple currently assigned to GENDA per 1% projected growth (0.3x) appears undervalued in
light of GENDA’s long-term FCF generation potential. Given GENDA’s expected growth rate, CGS
thinks there is considerable upside potential in its current EV/EBITDA multiple from an objective
standpoint. (p22).”
(to be continued to next page)
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The CGS report makes an evaluation based on the capacity to generate cash flow right down the
line, centered on EV/EBITDA multiple. We believe that EV/EBITDA, which is a valuation based on cash
flow, is more appropriate to evaluate companies which core business is M&A (compared to general
PER).
This is because a roll-up M&A style company repeats M&A by relying on its own cash flow or the
one of the target company and financing, however, if it cannot raise funds, it cannot conduct M&A and
as a result, the growth in corporate and equity value suspends.
In other words, cash flow itself is a source of growth and an indicator of potential for future growth.
We will keep showing investors EBITDA, the most common indicator to show cash flow simply, as a
KPI which we emphasize.
Regarding PER, since we believe it is show the reality better to use PER based on "current income
before amortization of goodwill" (which is a pseudo current income under IFRS) from the viewpoint of
cash flow-based valuation and comparison with overseas companies, we present the PER on our
website for your reference.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS). (continued)
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The Definition of Growth
Growth is growth in "Cash EPS," and we use "EBITDA," which is a common index to show cash
flow simply, as the KPI.
Reproducibility of GENDA's growth
①Appropriate invested capital: M&A at appropriate valuations
②Maximize investment recovery: Growth of each company's cash flow through synergy effects
→”Flywheel effect" resulting from (1) and (2)
③Leverage effect: Raising debt by taking advantage of low interest rates
We believe that GENDA's growth of "Cash EPS” can be replicated in the future due to the above
three factors. We will explain each of them in detail below.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q2. Please explain the GENDA’s definition of growth and its reproducibility.
①Appropriate invested capital: M&A at appropriate valuations
There are various approaches to stock price calculation, but one of theoretical approaches is the
DCF method, which calculates the "equity value per share," or the theoretical value of the stock price,
by “dividing equity value calculated by deducting net interest bearing liability from (current value of) the
total amount of future cash flow by the number of stock.”
Of these, the explanatory variable that has the greatest impact on equity value is "the total amount
of future cash flows.” There are two main ways of thinking about future cash flows. Specifically, one is
to grow future cash flows at the expense of immediate cash flows by making additional investments,
and the other is to maximize immediate cash flows by restraining additional investments and return
them to shareholders so that future cash flows will be stable.
As in the former case, when additional investment is made at the expense of immediate cash flow, it
is meaningless unless the investment recovery by generating cash flow in the future equal to or greater
than the invested capital (invested capital < investment recovery). Furthermore, since it must be equal
to or greater even after it adds the cost of capital which a listed company is required, the absolute
amount must be significantly greater than the invested capital (invested capital < investment recovery).
There are two main means of increasing future cash flow through additional investment: organic
growth (opening new stores) and inorganic growth (M&A). Although these two seem to be different,
they theoretically have the same economic effect in terms of "economic activity that recovers
investment against invested capital.”
(to be continued to next page)
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Therefore, we measure the effect by regarding investing one unit of capital for organic growth
(opening new stores, etc.) and investing one unit of capital for inorganic growth (M&A) as the same
"additional investment.” Specifically, we use IRR to measure capital efficiency (≒a profitability indicator
that takes into account the speed of return on invested capital). In order to accurately determine the
return to shareholders, we also use Equity IRR, which takes into account the leverage effect of
utilization of debt.
However, M&A, which is especially inorganic growth, has the advantage of pursuing the "scale" of
the investment. In other words, when considering investment, not only IRR but also "size" that is the
absolute amount of increased cash flow (= the size of NPV) is important.
Because of the big "scale" of a single unit of investment, M&A can have the same effect of
increasing equity value as opening [100] new amusement arcades or karaoke stores in one year, for
example. We believe that you can understand how significant meanings M&A has, considering that it is
impossible to open [100] new stores in one year in reality.
Furthermore, in most cases, inorganic growth through our M&A activities results in not only a
revenue amount (NPV) but also a rate of return (IRR) that is higher than organic growth. However, we
are currently able to achieve both investments in organic growth (new store openings, etc.) and
inorganic growth (M&A) because the absolute IRR values for both are well above the expected rate of
return for a listed company, and we are able to raise funds for each.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q2: Please explain the GENDA’s definition of growth and its reproducibility. (continued)
We will continue to invest the funds entrusted to us by our shareholders, both organic and inorganic,
in investment projects that we expect will exceed our expected rate of return as a listed company, after
making appropriate leverage on the funds. This is because reinvestment of funds is more conducive to
maximizing share value than returning them to shareholders as long as it exceeds the expected rate of
return.
Therefore, even if the cash flow of the target company does not grow after the M&A, it is possible to
increase Cash EPS simply by conducting M&A at an appropriate valuation. The reproducibility of M&A
at an appropriate valuation itself has been well documented in the CGS report ("Equity Story 1:
GENDA's M&A strategy shows strong potential for success (P3)").
(to be continued to next page)
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(ii) Maximize investment recovery: Growth in cash flow of each company through synergy effects
Increased cash flow of the target company after M&A will further accelerate the investment recovery,
increase IRR and NPV, and ultimately enable GENDA to achieve the growth that GENDA should aim
for. This is the synergy effect, which is the best part of a roll-up M&A.
In addition to the aforementioned (1), it has already been announced that the cash flow (EBITDA) of
each target company after M&A has grown and is highly reproducible. By combining (1) and (2), we
have shown the "flywheel effect,"which is a cycle in which the initial capital investment (M&A) is
appropriate and the subsequent growth in cash flow of the target company further maximizes the
investment recovery.
Specifically, in the "M&A Progress and FY2025/1 Q1 Outlook" released on April 23, we disclosed
that it had already established a PMI pattern in amusement arcade M&A, and had successfully
increased EBITDA (YoY +20% to + 2,970%) on all projects for Takarajima, Sugai Dinos, Avice, Amuzy,
YK Corporation and PLABI.
In addition to amusement arcades, Fukuya HD, which designs prizes for prize games, Ares
Company, which runs the wholesale of prizes, and Shin Corporation, which runs karaoke business,
also increased their EBITDA (YoY +142%, +305% and +85%, respectively), as shown in the
"FY2025/1 Q1 Earnings Presentation" released on June 11, showing that it is possible to improve the
business performance by generating synergies within the group through the cross-selling of countless
products in the entertainment industry by utilizing our Entertainment Ecosystem.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q2: Please explain the GENDA’s definition of growth and its reproducibility. (continued)
(iii) Leverage effect: Debt financing by taking advantage of low interest rates
The flywheel effect of (1) and (2) up to this point alone is sufficient to increase growth in equity value.
However, we are thoroughly committed to maximizing the growth of "Cash EPS," which is the
Company's goal, through the use of debt with low interest rates.
We proactively approach financial institutions and initiate borrowing transactions in “normal times,”
and currently we actually borrow from a total of 52 banks and leasing companies. This enables us to
raise funds promptly in case of contingency (M&A). We are taking appropriate steps to ensure that
financing will not become a bottleneck in our M&A activities, while we also have an option of issuing
corporate bonds after the recent capital increase through a public offering.
As described above, we believe that our goal of "growth" can be achieved with reproducibility
through M&A at appropriate valuations ×growth of each company's cash flow by synergy effects after
M&A ×debt financing that takes advantage of low interest rates.
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This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document to is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content o the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use of
this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the reason
thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgement of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
Disclaimer
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Thank you
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GENDA IR
FY2025/1 3Q Earnings Presentation
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2
About us
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© GENDA Inc. IR | Earnings PresentationGENDA IR
The Big Picture of the Current Entertainment Industry
3
VisionAspiration
More fun for your days To be the World’s No.1 Entertainment
Company in 2040
Speed is King, GRIT and GRIT, Enjoy our Journey
With these three values, we take on new challenges and
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We believe the current business environment surrounding the entertainment industry
the mid-to-long term.
The Big Picture of the Current Entertainment Industry
IP Contents Platform
4
IP CONTENTS FANS
PLATFORMS
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© GENDA Inc. IR | Earnings PresentationGENDA IR
Based on a foundation of continuous growth brought about by the steady expansion of our
platform and entertainment content areas. In this way, we believe that we will be able to overcome
the volatility of the ever-changing entertainment business by building a solid business portfolio.
Our growth strategy = “M&A in the Entertainment industry”
Completion of the Entertainment Ecosystem
5
Note: Diagram of our envisioned growth strategy.
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© GENDA Inc. IR | Earnings PresentationGENDA IR
M&A and capital transactions track record
6
June 2018
Share Acquisition
(100%)
1
Note: The number of acquired properties is as of the date of the announcement of the project. Entertainment Contents Entertainment Platform
July 2019
Joint Venture (50%)
2
15
October 2023
Fixed assets
Acquisition
September 2023
Assets Acquisition
14
September 2023
100% ownership
Acquisition
16
October 2023
Share Acquisition
(66.0%)
September 2023
100% ownership
Acquisition
13 17
October 2023
Share Acquisition
(100%)
April 2021
Business
Acquisition
4
October 2021
Capital Alliance
5
November 2023
Equity Acquisition
(100%)
20
December 2023
Absorption-type split
21
December 2023
Share Acquisition
(100%)
23
January 2024
Share Acquisition
(100%)
24
November 2023
Share Acquisition
(78.05%)
18
December 2020
Share Acquisition
(85.1%)
3
January 2022
100% ownership
Acquisition
7
January 2022
Share Acquisition
(100%)
8
February 2024
Share Acquisition
(78.59%)
26
May 2024
Share Acquisition
(100%)
27
June 2024
Share Acquisition
(100%)
28
June 2024
Business
Acquisition
29
November 2024
Equity Acquisition
(100%)
30
July 2024
100% ownership
Acquisition
31
February 2024
Share Acquisition
(82.45%)
25
December 2021
Business
Acquisition
6
October 2022
Business
Acquisition
10
October 2022
Absorption-type split
11
August 2024
Share Acquisition
(72.92%)
32
June 2022
Capital Alliance
9
November 2023
Fixed assets
Acquisition from
Global Solutions
19
117 mini-
locations
December 2023
Management right
Acquisition
12
22
1 AM facility
(China)
October 2024
Absorption-type split
(Matahari
Entertainment)
33
AM
1 store Karaoke
1 store
February 2025
(planned)
Absorption-type split
September 2024
Fixed assets
Acquisition from
ATOM
34 NEW
December 2024
Fixed assets
Acquisition from
KARATEZ
Karaoke
2 stores
35 NEW 36 NEW
Completed 36 M&A in total, 11 before IPO and 25 after IPO
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© GENDA Inc. IR | Earnings PresentationGENDA IR
GENDA Group Overview
GENDA is a pure holding company of amusement centric entertainment companies
7
Note: Organizational chart as of December 10, 2024. AM arcades in the chart refer to amusement arcades. The chart is intended to present mainly our consolidated subsidiaries. Absorption-type split of DORAMA is scheduled to be
completed in February 2025.
Entertainment Platform
Amusement
100%
100%
Five Color
Inc.
(China)
100%
Kiddleton,
Inc.
(US)
National Entertainment Network,
LLC
(US)
ENTERRIUM
(US)
100%
GiGO Taiwan
Inc.
(Taiwan)
GiGO VIETNAM
Co., Ltd.
(Vietnam) (UK)
GENDA Europe
Ltd.
F&B
Karaoke Contents & Promotion
Character MD
Design and sales of
Prizes for AM arcades VR Contents and
Hands-on attractions
Design, production
and sales of prizes Film distribution
Shin Corporation
Co., Ltd.
Ares Company
Limited Dynamo amusement,
Inc.
GAGA
Corporation
Fukuya
Co., Ltd. Tokyo Character Makers
Co., Ltd.
ONTSU
Co., Ltd.
Operation of
Karaoke etc.
Japan Popcorn
Co.
Design, production
and sales of
HillValley brand
popcorn
Distribution of
karaoke
Equipment etc.
LEMONADE
Lemonica UK Limited
LEMONADE
Lemonica
Inc.
Production
and sales of
lemonade
(UK)
inc.
Import and
wholesale
of alcoholic
beverages
Entertainment Contents
Karaoke
1 Store
Karaoke
2 Stores
GENDA Inc.
100% 100% 100%
100% 100% 93% 100%
100% 66% 100% 100% 100% 78.05% 100%
100%
100% 100%
FUKUYA
HONGKONG
LIMITED
100% 100%100%
FUKUYA
TAIWAN
LIMITED FUKUYA
USA INC.
(Hong Kong) (Taiwan) (US)
Pure Holding Company
Japan
Overseas
100%
NEW
NEW
NEW
GENDA GiGO Entertainment
Inc.
Operation of AM Arcades
AM
1 store
Mini-
location
from GS
SANDAI
Co., Ltd.
GENDA Games
Inc.
Online crane game
Fukuya Holdings
Co., Ltd.
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0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
8,000
8,500
9,000
9,500
10,000
10,500
11,000
11,500
0
50
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
850
900
Number of Entertainment Platforms
Number of GENDA “Entertainment Platforms” reached 12,158 (as of November 30)
8
Note
Mini-locations are game areas that are not staffed.
Number of
stores
Domestic AM339 stores
Domestic Karaoke366 stores
Domestic F&B60 stores
Domestic others30 stores
Overseas AM63 stores
Overseas F&B1 store
※ As of November 30, 2024
859 stores
(Stores) Number of
mini-locations
Domestic821 locations
Overseas10,478 locations
11,299 locations
※ As of November 30, 2024
(Locations)
2021 2022 2023 2024 2021 2022 2023 2024
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9
Executive Summary
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Executive Summary
10
3Q results resulted in even greater YoY growth than the strong 1Q and 2Q (on adjusted basis excluding M&A-related expenses)
Adjusted EBITDA, excluding M&A related expenses, was +64% / +¥4.0bn YoY, even greater than +56% YoY of 2Q and +50% YoY of 1Q, further expanding YoY growth.
Equally, adj. net income before amortization of goodwill was +21% / +¥0.8bn YoY, even greater than +18% YoY of 2Q and -9% YoY of 1Q, further expanding YoY growth.
Adj. net income before amortization of goodwill before taxes was +47% / +¥2.1bn YoY, robust growth excluding the corporate tax starting to incur from this fiscal year.
As a result, adj. Cash EPS already +10% YoY even before deploying ¥10.0bn of follow-on offering, embodying the M&A discipline.
By deploying ¥10.0bn going forward, Cash EPS will increase unilaterally with every M&A of profit-making companies.
Existing businesses well overachieving, ALL adjusted income resulted in YoY increase, and even ALL accounting actuals (after M&A expenses) beat the initial plan.
01
Upward revision to FY2026/1 EBITDA forecast to ¥20.0bn, reflecting the above robust organic growth
The reason for the upward revision is (not M&A but) greater than expected organic growth of existing businesses.
The reason for showing FY2026/1 forecast is our intrinsic performance after announcing M&As differ from our initial FY2025/1 forecast which factors in no M&A.
EBITDA grows from ¥13.0bn to ¥20.0bn, with +¥7.0bn / +54% increase, subliming the M&A-related expenses burden on this fiscal year into a transformational growth.
Further upward revision expected upon future M&As announcements towards the end of FY2025/1 and 4Q earnings releases, as this assumes zero M&A going forward.
02
M&A progressing towards fiscal year end and full-year earnings release. Countless cross-selling synergies in PMI
By this 3Q earnings release, announced roll-up M&As of amusement arcades and karaoke, steadily promoting our roll-up strategy.
Pipeline has been the largest-ever after we had to suspend M&A activities temporarily for follow-on offerings.
M&A activities are progressing towards the end of 4Q (Jan) and announcement of financial results (Mar).
Besides, countless cross-selling synergies are arising
04
IFRS application initiated backed by strengthened corporate function, targeting FY2027/1
To be how a M&A company should be, the adoption of IFRS officially resolved at the Board meeting, application targeted at FY2027/1.
This is because admin function strengthened post IPO by improved recruiting capabilities, accumulated M&A know-hows, and incremental resources by acquired companies.
Easier to compare with global roll-up M&A comps, and no need to explain the gap between the real cashflow vs the current JGAAP based results.
Global expansion to be accelerated by applying IFRS, with the impact of sales increase by converting existing NEN stores into Kiddleton-style exceeded our expectation.
03
1
¹ It is true that if we deploy the ¥10.0bn from the follow-on offering to M&As of profit making companies, the absolute Cash EPS will increase, but strictly speaking, since the Cash EPS-based P/E multiple that we raised through the follow-on
offering in July 2024 was 29x, the increase in Cash EPS of the target company will only be justified if its P/E multiple is less than 29x. Therefore, we do not believe that all M&A activities in the future are acceptable only because the company is
profitable, and we will execute M&A activities with the highest emphasis on valuations. While it is our executives and employees who screen target companies from our M&A pipeline and execute M&A transactions, these executives and
employees are also shareholders of the company with more than 25% diluted basis ownership, and same as our outside shareholders, we are very much cautious about Cash EPS dilution.
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11
01. 3Q Earnings Results
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M&A-related expenses makes it -related expenses
Consolidated Statements of Income
Expanded disclosure of “Tanshin” – “intrinsic performance” shown by “adjusted” basis
12
Disclosing “actual earning capability” by deducting “one-off expenses which would not incur without M&A”
(1) M&A execution fees: Deducting brokerage fees, legal fees, DD fees, FA fees, and appraisal fees for the current and previous fiscal year.
(2) M&A financing fees: Deducting M&A financing fees for current and previous fiscal year (only M&A financing fees, not deducting
financing fees for existing businesses).
(3) Equity offering fees: Deducting follow-on offering fees in 2024 (UoP: M&A). Also deducting IPO fees in 2023 (UoP: capex) although
IPO was not related to M&A, in order to stay conservative comparison, as income of previous fiscal year is
adjusted upward and the comparison hurdle increases.
0
02
3
5
4
3Income before amortization of goodwill = our KPI
Cashflow is important for us being an M&A company.
Therefore, indicators before amortization of goodwill are of most importance.
1Profits after amortization of goodwill = figures for reference
Although disclosed based on the disclosure rule, we do not regard these figures
appropriate to gauge an M&A company as amortization of goodwill is not related to
cashflow and as a result not related to enterprise value or equity value, either.
→ To be solved by IFRS.
4In KPI, achieved higher YoY income growth ratio than strong 1Q and 2Q
EBITDA +64% YoY / +¥4.0bn (growth even greater than strong 1Q&2Q).
Have become an organization earning ¥10.0bn+ cashflow in 3Q YTD.
Net income before amortization of goodwill +21% YoY / +¥0.8bn (growth even greater than 1Q&2Q).
Significant growth enough to offset corporate tax incurred from this quarter.
5Cash EPS turns upward although “M&A is not announced yet”
Although only the denominator of EPS increased as ¥10.0bn of follow-on offering is yet to be spent,
Cash EPS already increased +10% YoY owing to the strong performance.
When we use the ¥10.0bn going forward, because only the numerator of EPS will increase,
Cash EPS will increase unilaterally upon every M&A of profit-making companies²
Next page shows the summary of the above.
1
2Yet, all indicators increase YoY even after amortization of goodwill
Hurdle higher for net income than ordinary income or above because of (a) corporate tax
incurred from this year, (b) amortization of goodwill is not tax deductible¹.
-
¹ Since the absolute amount of net income is smaller than operating income and ordinary income (because it is after tax), the impact of “amortization of goodwill and M&A-related expenses” is larger than that of operating income and ordinary income.
This is because the above expenses are non-taxable expenses and are deducted “in equal amounts” from all operating income, ordinary income and net income. ² Please refer to note on page 10.
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3Q resulted in even greater YoY growth than the strong 1Q and 2Q (adjusted basis excluding M&A-related expenses)
M&A-related expenses
a
EBITDA
Net income before
amortization of goodwill
c
b
Showing intrinsic performance excluding one-time M&A-related expenses. M&A-related operating expenses were ¥240mn in 3Q / ¥660mn YTD, affecting EBITDA and below.
M&A-related non-operating expenses were ¥10mn in 3Q / ¥220mn YTD. Making this together with the above, ¥880mn in 3Q YTD affected ordinary income and below.
3Q YTD Full-year
Adjusted
(excluding M&A-related expenses) Results in accounting
(including M&A-related expenses) Accounting results / Earnings forecasts
(including M&A-related expenses)
(¥
in millions) FY2024/1 FY2025/1 YoY FY2024/1 FY2025/1 YoY FY2024/1
FY2025/1 (E)
YoY
Revenue
38,808 77,627 +100 %38,808 77,627 +100 %55,697 110,000 +97 %
EBITDA
6,128 10,078 +64%6,050 9,416 +56%8,102 13,000 +60%
(%
)16%13 %16%12%15%12%
Net income before amortization of goodwill
3,546 4,313 +21%3,426 3,513 +3%4,359 5,400 +24%
(%
)9%5 %9%5%8%5%
(Ref.)
Net income before amortization of goodwill
(before tax)
4,558 6,684 +47%4,419 5,805 +31%4,577 7,425 +62%
Operating
income 4,242 6,081 +43%4,164 5,420 +30%5,370 7,000 +30%
(%
)11%8 %11%7%10%6%
a
d
b
3Q YTD was +64% / +¥4.0bn YoY, even greater than +56% YoY of 2Q and +50% YoY of 1Q, further expanding YoY growth.
Successful summer holiday season with TWICE LOVELYS campaign. GiGO Osaka Dotonbori Main Store recording historical high sales including the period prior to joining GENDA.
3Q YTD was +21% / +¥0.8bn YoY, even greater than +18% YoY of 2Q and -9% YoY of 1Q, further expanding YoY growth.
More than offsetting the normalization of corporate tax incurred from this fiscal year. In view of intrinsic performance excludi-
3Q YTD was +47% / +¥2.1bn YoY. Even though the ¥10.0bn through follow-on offerings for M&A is yet to be deployed, Cash EPS is already +10%.
(Ref) Operating income
d3Q YTD was +43% / +¥1.8bn YoY, even greater than +30% YoY of 2Q and +25% YoY of 1Q.
e
GAAP results
eAs a result, ALL GAAP actuals achieved the initial target that does not excluding M&A-related expenses, owing to the robust YoY growth even greater than 1Q and 2Q.
c
13
Consolidated Statements of Income
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Our main, domestic amusement and karaoke, grew drastically compared to the initial target. Shortfall in overseas amusement was because
we decelerated new store opening after acquiring NEN, switching our strategy to PMI of NEN, which will be consolidated from the next 4Q.
Differences from the initial target by each sector
3Q YTD EBITDA by sector was up +¥1.0bn to the initial target
14
9,000
(¥ in mn)
Analysis of differences in EBITDA by sector between 3Q YTD and the initial target set at the beginning of the year
Domestic
amusement
Overseas amusement
Prize related
Karaoke
Others
Domestic
amusement
Overseas amusement
Prize related
Karaoke
Others
Domestic amusement
GiGO along with each
other acquired stores via
roll-up M&A grew
strongly with synergies
Overseas amusement
Shortfall to the initial target was
because we suddenly decelerated
new store opening of Kiddleton.
This was because we succeeded in
acquiring NEN and now we have
10,000+ locations in the US.
Switching strategy of
opening new stores (1,000 in total)
to focusing on PMI of NEN, which
is to be consolidated from next 4Q.
Prize related
Strong growth with
strong amusement
arcade performance.
Fukuya (planning of
prizes) will surely hit
the highest earnings
record in its 71 years
history, in its very first
year joining GENDA.
Karaoke related
Considerable income
growth compared to
the initial target with
PMI quite successful.
Shin Corporation
(Karaoke BanBan) will
surely hit the highest
earnings record in its
35 years history, in its
first year in GENDA.
9,000
(Initial
target)
M&A expenses
Extra-budgetary,
but a growth
investment.
Burden on GAAP
results, but lead to
a transformational
growth in FY2026/1
(More details in the
next chapter)
+¥1.0bn compared
to the initial target
Achieved the initial target even
including extra-budgetary M&A-
related expenses
3Q YTD
Budget Domestic
amusement Overseas
amusement Others
Prize Karaoke Consolidated
adjustment 3Q YTD
Adjusted results M&A-related
expenses 3Q YTD
Accounting
results
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Consolidated Balance Sheet
Ready for the next M&A with financial soundness by abundant cash and debt capacity
15
1. To approach the discussion with financial institutions in view of the actual debt capacity as of today, the EBITDA used in the calculation of Net Debt / EBITDA is ¥20.0bn expected for the next fiscal year. The reason for not using the LTM
results is that, in M&A, the debt is fully consolidated on the closing date, while the full-year contribution of the EBITDA of the target company, which is the main source of repayment of that debt, is one year later. Using our LTM results,
the EBITDA of the relevant target company is not included, and the ability to repay debt within one year, which is the purpose of this indicator, cannot be measured. In addition, in the calculation of Net Debt, the NEN closing ($29mn) and
the ONTSU squeeze-out (¥1.8bn) occurred after the end of 3Q is reflected, and the figure is as close as possible to the Net Debt as of today after all the disclosed M&As.
1
(¥ in millions) FY2024/1
End of Full-year FY2025/1
3Q Difference Remarks
Current assets 23,567 44,738 +21,170 Increase in cash and short-term investment securities (+¥17.0bn in total)
Of which, cash and deposits +
short-term securities 12,379 29,313 +16,934 Managing part of fund pending for M&A in short-
term investment securities
Fixed assets 28,573 61,749 +33,175 Mainly increase in tangible asset by opening new stores and M&As
Of which, goodwill 4,992 16,752 +11,760 Secured huge buffer (c.¥20.0bn) against net assets.
(Amount of goodwill about ¥18.5bn after NEN acquisition is completed)
Total assets 52,141 106,487 +54,346 Increased because of the above reasons
Total liabilities 32,476 70,874 +38,397 Mainly increase in interest-bearing debt due to M&A financing.
Of which, interest-
bearing debt
18,993 48,616 +29,623 Low Net Debt / EBITDA (1.3x1), with enough room for debt capacity
Net assets 19,664 35,613 +15,948 Mainly increase in equity capital
19,427 34,315 +14,888 Increased by follow-on offering, stock-based M&A, accumulated income
Net Debt / EBITDA 0.8 x1.3 x+0.5 xBy follow-
on offering, still have enough debt capacity even after increased
debt due to closing of M&As (Note shows the detail of calculation).
Capital adequacy ratio 37.2 %32.2 %5.0 %Maintaining capital efficiency by leverage even after the follow-on offering
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16
02. Earnings forecast
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How to measure M&A-related expenses against FY2026/1 EBITDA forecast
Expected M&A-related expenses of ¥1.0bn in FY2025/1 will sublime to +¥7.0bn in FY2026/1
17
FY2025/1
4.0
▲[1.0]
3Q YTD Initial target: ¥9.0bn
3Q YTD GAAP results: ¥9.4bn
3Q YTD M&A-related expenses : ¥0.66bn
Intrinsic performance prior to M&A-related expenses: ¥10.0bn
→ +¥1.0bn surplus in 3Q YTD to the original target
Expect ¥1.0bn of M&A-related
expenses for full-year YTD
→ Expect ¥13.0bn +[α] GAAP results
13.0
+1.0
+1.0+[α]
FY2026/1
Initial target for 4Q accounting period: ¥4.0bn
(= full-year target ¥13.0bn 3Q YTD target ¥9.0bn)
such as extra-budgetary TWICE LOVELYS Second campaign
→ Expect ¥14.0bn+[α] in full-year intrinsic performance
+[α]
¥1.0bn of M&A-related expenses will be
burden on GAAP results in FY2025/1
→ But this will sublime to transformational
growth with +¥7.0bn / +54% growth
0.66
+¥7.0bn
54%
9.0
Note: Regarding the +¥7.0bn, to be exact, the concurrent upward revision from ¥13.0bn to ¥20.0bn compared to what was released at the 2Q earnings release (¥13.0bn to ¥18.5bn, +¥5.5bn increase), the +¥1.5bn difference between
previous ¥18.5bn (+¥5.5bn) and current ¥20.0bn (+¥7.0bn) is based on the strong organic growth as already stated.
3Q YTD (Results) Full-year (Initial Target) Full-year (Assumption)
(¥ in bn)
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The reason for the upward revision is (not M&A but) greater than expected organic growth of existing businesses.
The reason for showing FY2026/1 forecast is our intrinsic performance after announcing M&As differ from our initial target which factors in no M&A.
Further upward revision expected upon future M&As towards the end of FY2025/1 and 4Q earnings releases, as this assumes zero M&A going forward
FY2026/1 earnings forecast
Upward revision to FY2026/1 forecast to generate ¥20.0bn cashflow on a consolidated basis
18
38.1 46.1 55.6
110.0
150.0
2022/1 2023/1 2024/1 2025/1E 2026/1E
2.7
3.5
4.3
5.4
7.0
2022/1 2023/1 2024/1 2025/1E 2026/1E
5.6 6.2
8.1
13.0
20.0
2022/1 2023/1 2024/1 2025/1E 2026/1E
Revenue EBITDA Net income
before amortization of goodwill
Note: The reason for leaving the forecast for net income before amortization of goodwill unchanged from the previous forecast is that because, it is not expected in reality that the forecast for corporate tax rate for the next fiscal year
as of today will match the actual result at the end of the next fiscal year, thus conservatively set a certain buffer in our forecast as of today.
+98%
+36%
+60%
+54%
+24%
+30%
Current
Fiscal Year Next
Fiscal Year Current
Fiscal Year Next
Fiscal Year
Current
Fiscal Year Next
Fiscal Year
(¥ in bn) (¥ in bn) (¥ in bn)
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19
03. IFRS
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To be how a M&A company should be, the adoption of IFRS officially resolved at the Board meeting, application targeted at FY2027/1.
This is because admin function strengthened post IPO by improved recruiting capabilities, accumulated M&A know-hows, and incremental resources by acquired companies.
Easier to compare with global roll-up M&A comps, and no need to explain the gap between the real cashflow vs the current JGAAP based results.
Global expansion to be accelerated by applying IFRS, with the impact of sales increase by converting existing NEN stores into Kiddleton-style exceeded our expectation.
Change of Accounting Standards to IFRS aiming to apply in FY2027/1
Start preparations to apply IFRS
20
FY2027/1 FY2028/1 and after
1Q 2Q 3Q 4Q
Consolidated Earnings Forecast JGAAP IFRS
Consolidated Earnings JGAAP IFRS
1. The effect is not determined at this moment, because we will see the actual effects on P/L in amortization of goodwill in FY2027/1.
2. Since amortization of goodwill is not tax deductible, the amount of effect on net income by the decrease of amortization of goodwill due to the change in accounting standards will be the same as operating income and ordinary income.
3. Financing fee in FY2027/1 is similarly not determined yet.
J-GAAP Amortized (Ref.) Expected amortization of goodwill for one year via M&As announced as of today = c.¥1.8bn
IFRS Not amortized
Goodwill
Depreciation method will be changed from declining-balance to straight-line.
For assets which we already acquired and used a declining-balance method, it will be changed retroactively to straight-line.
The impacts on our PL is expected to be limited.
Depreciation of
tangible fixed assets
Changes associated with transition to IFRS
1
2
3
J-GAAP Collectively recorded as expenses at execution (Ref.) Expected fee FY2025/1 (full-year): ¥130mn
IFRS Recorded as expenses on a pro rata basis during the loan period by effective interest method
Financing fee
Expected schedule of transition to IFRS
1
If this is actually ¥1.8bn,
our operating income,
ordinary income, and net
income would all be +¥1.8bn2
3
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21
04. M&A / PMI
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May 2024
Share Acquisition
(100%)
February 2024
Share Acquisition
(82.45%)
In addition to the top priority roll-up M&As of amusement arcades, we conducted roll-up M&A of Karaoke boxes, along with even more attention to the
valuation discipline, with Karaoke BanBan growing far beyond our initial target. GENDA emphasizes the valuation the most, while enjoying generic
synergies in roll-up M&A. Created high repeatability coupled with unique identity of the entertainment industry
Latest roll-up M&A
Keep focusing on roll-up M&A, mainstay of our strategy
22
October 2023
Fixed assets etc.
Acquisition
September 2023
Assets Acquisition September 2023
100% ownership
Acquisition
April 2021
Business
Acquisition
December 2020
Share Acquisition
(85.1%)
January 2022
Share Acquisition
(100%)
June 2024
Share Acquisition
(100%)
December 2021
Business
Acquisition
October 2022
Business
Acquisition
October 2022
Absorption-type split
November 2023
Assets Acquisition
(Global Solutions)
117
mini-
location
December 2023
Absorption-type split December 2023
Management rights
Acquisition
AM arcade
1 store
(China)
October 2024
Absorption-type split
(Matahari Entertainment)
AM
1 store
September 2024
Fixed assets Acquisition
(ATOM)
Karaoke
1 store
February 2025
(scheduled)
Absorption-type split
December 2024
Fixed assets Acquisition
(KARATEZ)
Karaoke
2 stores
February 2024
Share Acquisition
(78.59%)
Amusement arcades Karaoke
NEW
NEW
NEW
November 2024
Equity Acquisition
(100%)
from
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With ONTSU joining GENDA, updated the yellow highlighted areas at the latest group management meeting in November 2024.
Entertainment industry is contiguous and countless synergies, something more efficient when it is operated as the same group than as a single one, arise.
With 30+ consolidated subsidiaries, top decision makers of each get together at a monthly meeting, and examine synergies and promote measures with immediate decisions.
Verbalization and embodiment of synergies
GENDA synergy table (excerpted from the latest group management meeting in November 2024)
23
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We have countless synergies within our group and we have verbalized them in detail. Below is the latest table of our group synergies that we use in our
internal management meetings. (Note: the table is presented on the previous page)
This is just an example for your reference.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q2. What kind of synergies have been generated specifically?
24
For example, although amusement arcades and karaoke seem to be different businesses and customer segments, the concept of opening
new stores is the same, and the amount of information on available tenants is critical. While we used to collect tenant information as an operator of
about 330 amusement arcades, the addition of about 360 karaoke premises has improved our store development capabilities by integrating store
development with tenant information on the karaoke side.
This has also made it possible that it is possible to open an amusement arcade even if it is unprofitable to open karaoke (or vice versa). Even
among existing stores, we have changed a store which is too big only for karaoke to an amusement arcade and improved the profitability. In areas
where store locations overlap, we attract new customers by distributing discount coupons for both.
Fukuya, which designs prizes, is located on the upstream of value chain of amusement arcades. Its volume of transactions has dramatically
increased not only because of the expansion of GiGO operation, but also the creation of huge demand for Japanese Kawaii products in North
America through Kiddleton and NEN as GENDA. There is a big effect of increasing the equity value just to take in the profits by making it
consolidated, which would flow away outside if we did not conduct the M&A. Besides, we share the information on sales of each product in a timely
manner and this makes us possible to make minor changes. The same effect has arisen for Ares, too, which has a function as a trading company
of prizes.
(to next page)
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(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q2. What kind of synergies have been generated specifically? (continued)
25
As for Lemonade and Kleiner, the sales functions have dramatically improved, that was difficult when they stood alone. By joining in the group,
products of Lemonade and Kleiner are distributed on the grand menus of all 360 Karaoke BanBan premises, and they have opened new stores
in existing amusement arcades, too. In addition, it is possible for them to share the opportunity when we open a new amusement arcade in a
shopping center.
Furthermore, since ONTSU, which is a distributor of karaoke equipment, joined us, the volume of business with Karaoke BanBan has increased
and this has enabled our group to take in the profits which were supposed to flow away outside of the company. In addition, it is now possible to
sell Kleiner for the night market which is ONTSUC'traum, which sells Kleiner, did not have any employee or sales function
before the M&A. But now it is possible to access to sales channels on a number of fronts without any additional cost.
GAGA, which is a movie distribution company, has also created countless cross-selling synergies that were difficult to achieve on its own, such as
extensive advertising of its movies on digital signage at GiGO Flagship Store facing Ikebukuro Sunshine 60 Street, staff of amusement arcades
wearing a T-shirt with movie ads, and offering rooms with movie characters and food and beverages at karaoke etc.
These are just a few of the verbalized synergies, but the reason for the various synergies is that although the entertainment industry seems to be broad, from
men Based
on the structure of entertainment industry, which is "IPplatformfans," there are countless cross-selling synergies.
Of course, there are synergies from roll-up M&A of amusement arcades. However, there is much room to create synergies in M&A focused on the
entertainment field which is contiguous, more than in M&A limited to amusement arcades. From these perspectives above, we believe that the formation of an
entertainment conglomerate through GENDA's unique Entertainment Ecosystem has many advantages.
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Scheduled to open a combined store of karaoke and amusement arcade in Kuwana city, Mie, in late December.
The long-awaited first store in a style expected as a synergy since Karaoke BanBan joined our group.
Although Karaoke BanBan was originally on both first and second floor, however, the area was too big to operate
GiGOBanBan
It is expected that the sales of karaoke will not change but the store income will increase drastically.
Furthermore, for our customers, it will evolve to a place where they can experience multiple entertainments, for
example, they can enjoy playing in the amusement arcade while waiting to be called for karaoke.
Open a combined store of GiGO and Karaoke BanBan
First combo store of Karaoke BanBanGiGO
26
dated January 22, 2024
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201 215 242 277 295 349 393 441 476 516 563 592 617 636 657 676 693 715 738 776 813 851 916 962 1,001 1,008
0
200
400
600
800
1,000
1,200
c.100,000 increase
during TWICE LOVELYS campaign
The number of members of GiGO App has been increasing since its renewal in December 2022 and the cumulative enrollment figure exceeded one million.
People who came to the stores for GiGO limited prizes including TWICE LOVELYS campaign in August and September 2024 enrolled one after another.
Invite more customers to GiGO even in ordinary times without a campaign by increasing the customer loyalty.
Number of GiGO App members exceeded 1 million
Acquired customers by strong campaigns such as TWICE LOVELYS
27
(thousand
people) GiGO App members
Transition of cumulative enrollment figures
Exceeded 1million!
Renewal of
GiGO App
2022 2023 2024
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Had a campaign of GiGO exclusive prizes of TWICE LOVELYS, characters born from
and confirmed the potentiality of campaign with popular artists etc.
Just launched a similar campaign for winter holiday season to record another huge
success on the weekend just before the announcement of this financial results.
Plan to have collaboration campaigns with other IPs as well from now on to the New
Year holiday season.
TWICE LOVELYS Campaign only available in GiGO
Launch a new campaign of TWICE LOVELYS,
a big hit last summer, for winter holiday season
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GiGO Osaka Dotonbori Main Store is going quite well
Historical high monthly sales as a single store backed by strong “Inbound” demand
29
Inside the store on
the opening day
GiGO Osaka Dotonbori Main Store, opened in August 2024, is located in the tourist
area of Osaka. Because of that, 90% of the customers are foreign tourists,
As a result, the store recorded historical high monthly sales as a single store,
including the period before GiGO joined GENDA.
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Started collaboration with Fuji Kyuko, which has formed a large economic zone
in the Mt. Fuji area where demand from foreign tourists is strong.
Especially, demand for night market from foreign tourists
is strong in Fuji Yoshida area.
GiGO
new VR attraction designed by Dynamo Amusement
-
The first GiGO store in Yamanashi prefecture.
Start collaboration with FUJI KYUKO
Develop GiGO and VR attraction in Fuji-Q Highland
30
Note: The names of business category are tentative.
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Announced a business collaboration with U-NEXT HOLDINGS on November 12. Aim to expand the business and increase the enterprise value each other by
sharing the customer base, sales channels and know-how etc. in the entertainment business domain.
Business collaboration with U-NEXT HOLDINGS
Started collaboration to provide services with added value in the entertainment domain
31
Alignment of DX solutions and contents for distribution developed by U-NEXT HOLDINGS
and the Entertainment Platform developed by GENDA Inc.
1
2Investigate the possibility of developing new products and increasing the value provided to
customers by sharing and utilizing know-how and knowledge related to DX and operation of
facility and store owned by U-NEXT HOLDINGS and GENDA Inc.
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32
Appendix
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Quarterly results – Intrinsic Performance excluding M&A-related expenses
33
FY2024/1 FY2025/1
(¥
in millions) 1Q 2Q 3Q 3Q
YTD 4Q 4Q
YTD 1Q 2Q 3Q 3Q
YTD 4Q 4Q
YTD(E) YoY
Revenue
11,994
12,520
14,293
38,808
16,888
55,697
24,685
24,846
28,096
77,627
-
110,000
197.5%
Gross profit
3,182
2,609
3,368
9,160
3,798
12,958
5,286
5,075
6,506
16,868
-
-
%
Margin (%)
26.5%20.8%23.5%23.6%22.4%23.2%21.4%20.4%23.1
21.7%
-
-
-
EBITDA
2,197
1,712
2,218
6,128
2,072
8,201
3,301
2,817
3,958
10,078
-
13,000
158.5%
Margin (%)
18.3%13.6%15.5%15.8%12.3%14.7%13.4%11.3%
14.1%
13.0%
-
11.8%-
Operating income
1,670
1,096
1,475
4,242
1,226
5,469
2,084
1,518
2,478
6,081
-
7,000
128.0%
Margin (%)
13.9%8.7%10.3%10.9%7.3%9.8%8.4%6.1%
8.8%
7.8%
-
6.3%-
Net income before
amortization of goodwill
1,618
465
1,462
3,546
969
4,516
1,536
935
1,841
4,313
-
5,400
119.6%
Margin (%)
13.5%3.7%10.2%9.1%5.7%8.1%6.2%3.8%
6.6%
5.5%
-
4.9%-
Net income attributable to
owners of the parent
1,585
432
1,427
3,445
889
4,334
1,303
655
1,495
3,454
-
4,300
99.2%
Margin (%)
13.2%3.5%10.0%8.9%5.3%7.8%5.3%2.6%
5.3%
4.5%
-
3.9%-
Note that GENDA has different businesses mix on a fiscal year, or even quarterly basis
As GENDA being an M&A company, when comparing EBITDA margins over time, it is essential to do so on the same business, apples-to-apples basis.
For amusement arcades, ALL until PLABI improved profits and margins (as previously reported). SANDAI and AMEX, announced later, also recorded improved profits and margins.
The largest difference between previous and current fiscal year is the consolidation of the karaoke business (which has lower margins than amusement arcades) and thus
overall consolidated P/L margins appear to have declined. However, Karaoke margin has improved from 9.2% to 11.3%, therefore each business are performing well.
Karaoke consolidation + Start of tax payment
Note: Please refer to the detailed M&A-related expenses in page 12.
Margin mix change due to karaoke consolidation
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Quarterly results – GAAP actuals including M&A-related expenses
34
FY2024/1 FY2025/1
(¥
in millions) 1Q 2Q 3Q 3Q
YTD 4Q 4Q
YTD 1Q 2Q 3Q 3Q
YTD 4Q 4Q
YTD(E) YoY
Revenue
11,994
12,520
14,293
38,808
16,888
55,697
24,685
24,846
28,096
77,627
-
110,000
197.5%
Gross profit
3,182
2,609
3,368
9,160
3,798
12,958
5,286
5,075
6,506
16,868
-
-
%
Margin (%)
26.5%20.8%23.5%23.6%22.4%23.2%21.4%20.4%23.1
21.7%
-
-
-
EBITDA
2,197
1,712
2,140
6,050
2,051
8,102
3,277
2,423
3,716
9,416
-
13,000
160.4%
Margin (%)
18.3%13.6%14.9%15.5%12.1%14.5%13.2%9.7%
13.2%
12.1%
-
11.8%-
Operating income
1,670
1,096
1,397
4,164
1,205
5,370
2,059
1,124
2,235
5,420
-
7,000
130.3%
Margin (%)
13.9%8.7%9.7%10.7%7.1%9.6%8.3%4.5%
7.9%
6.9%
-
6.3%-
Net income before
amortization of goodwill
1,618
422
1,384
3,426
933
4,359
1,456
461
1,595
3,513
-
5,400
123.8%
Margin (%)
13.5%3.3%9.6%8.8%5.5%7.8%5.9%1.8%
5.6%
4.5%
-
4.9%-
Net income attributable to
owners of the parent
1,585
390
1,348
3,324
853
4,178
1,223
182
1,249
2,655
-
4,300
102.9%
Margin (%)
13.2%3.1%9.4%8.5%5.0%7.5%4.9%0.7%
4.4%
3.4%
-
3.9%-
GAAP data, including M&A-related expenses from the previous page
M&A-related expenses themselves are indifferent from the organic business performance.
These expenses will be some burden to GAAP financials but will serve as growth investment to fuel our transformational growth
This area shows GAAP figures incl. M&A-related expenses
Margin mix change due to karaoke consolidation + M&A expenses
Note: Please refer to the detailed M&A-related expenses in page 12.
Karaoke consolidation + Start of tax payment + M&A expenses
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As we aim to become the world's No. 1 entertainment company, our M&A targets are not limited to
the amusement arcade industry, which has a market size of 540 billion yen, but rather target the whole
entertainment industry. As individual companies of the entertainment industry formed a group of
companies, countless cross-selling synergies have been actually generated, resulting in significant
growth in business performance after joining in the group even outside of amusement arcades.
Fukuya and Shin Corporation are specific examples of non-amusement arcade companies that have
had a significant impact on consolidation. In this fiscal year, which is the first one after M&A, it is
already ensure that they will achieve a record income in their corporate history, 71 years of Fukuya
and 35 years of Shin Corporation. We believe that it is difficult to explain this without synergies.
On that condition, synergies and PMI are only means, not goals, in M&A. In order to make M&A
succeed, the goal should be that total amount of cash flow acquired through M&A exceeds the
consideration for M&A paid. On the other hand, we think that having synergies and PMI as their goal,
which means means as the is a typical example of failure in M&A. The details are
explained below.
⚫Our definition of failure in M&A is a reduction in capital as a result of M&A
First, let me explain our definition of failure in M&A. Our definition of failure in M&A is that "the total
amount of cash flow acquired through M&A is less than the consideration for M&A paid," which means
that we have decreased our capital as a result of M&A. The reasons for this are as follows.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q1. You have conducted many M&As outside of amusement arcade, which is your main.
Are synergies and PMI all right?
As a listed company, it is required to maximize its equity value. Maximizing equity value requires
maximizing enterprise value. Maximizing enterprise value requires maximizing cash flow. Nevertheless,
if "the amount paid for M&A > the total amount of cash flow acquired through M&A," the equity value
will be damaged because cash flow is lost as a result of the M&A.
"a failure in M&AIn other words, the
definition of success in M&A is that "the total cash flow acquired through M&A exceeds the
consideration for M&A paid (on a present value basis)," and we have this as our goal
⚫Typical example of failure in M&A is "having means as the goal," which means having
synergies and PMI as the goal.
The goal of M&A is as stated above, and synergies and PMI are just means to increase cash flow.
However, we believe that having and which are means as a goal, which means
means as the is a typical example of failure in M&A. Specifically, this means "to conduct
M&A (regardless of the acquisition price) because synergies are likely to be generated with the existing
business and increase by PMI.
When a company has been conducting M&A aggressively in a particular field, if it continues to
conduct M&A without caring the acquisition price only because it is likely to generate synergies, even if
synergies are actually generated, the acquisition price may be higher than the synergies and it could
fail to recover the investment. We should have cash flow as our goal, and having synergies or PMI as
the goal is a typical example of failure in M&A.
(to be continued to next page)
35
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⚫Background factors behind the likelihood of failure in M&A by having synergies as a goal.
We believe that the following characteristics of M&A are behind the likelihood of such failures.
- It is easy to conduct M&A just by paying a high price and we can increase PL immediately afterwards.
- On the other hand, it takes some years to find out if the acquisition price was right.
- In M&A, the sunk cost is high because it has a lot of person-hours. People on the line want to
complete the M&A if possible.
- To solve this issue, the function to check the acquisition price deteriorates in the cause of synergies
.
These are the characteristics of M&A. We have analyzed that the cause of typical failure is having
means as the goal, which means that "Let's carry out M&A because it looks like we can generate
synergies (even at a slightly higher price).
⚫The premise of the doubt that synergies and PMI are all right is a thought that “M&A = overpriced."
When it comes to M&A, there is a common doubt that "synergies and PMI are all right. A cause
underlying this doubt is a mind that the acquisition price in M&A is relatively high compared
to the cash flow of the target company on its own, and M&A will fail if the cash flow of the target
company does not increase through synergies and PMI because we cannot recover the investment in
the first place.
However, the premise that M&A = relatively expensive is not correct. In the entertainment industry,
which is our target, there are structures which are suitable for M&A, such as stable business conditions
with a long business history, balance sheets of net cash and needs for business succession etc. For
more information, please see the following sponsored research report. (For reference: Growth
Strategies (Initial dated October 18, 2024)
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q1. You have conducted many M&As outside of amusement arcade, which is your main.
Are synergies and PMI all right? (continued)
⚫GENDA is an operating company which conducts M&A specializing in the entertainment field
by using an investment firm’s perspective of M&A.
We firmly emphasize M&A at the right price, not conducting M&A based on synergies or PMI. M&A
will fail if the goal is not to increase cash flow, and the axis of investment decisions is whether this can
be secured or not. Acknowledging the aforementioned temptation, we avoid having means as the goal
and make investments which are faithful to the theory of equity value.
On that basis, countless cross-selling synergies have been generated. Let me explain specific
examples of the synergies that have actually occurred in Q2, that is why GENDA is an operating
company, not an investment firm in Q3, the rationality of conglomerate in Q4 and the connection
between strategy and its Aspiration fun for your in Q5.
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In conclusion, we believe that GENDA's Entertainment Ecosystem can realize a "conglomerate
premium" that more than offsets the conglomerate's discount for complexity. We provide more details
below.
⚫What is conglomerate discount?
This is a phenomenon in which the enterprise value of a company with multiple businesses is valued
lower than the sum of the business values of the individual businesses. This basically occurs because
⚫Why GENDA believes that a conglomerate premium can be achieved.
GENDA hopes to achieve the exact opposite: a "conglomerate premium". In other words, a state in
which the value of the whole group continues to be valued higher than the sum of the values of the
individual businesses. The following five points explain why we can achieve this.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q3. Does an entertainment conglomerate have any rationality?
The closer GENDA gets to an entertainment conglomerate, the more conglomerate discount will occur?
(1) Suppression of Volatility: Increase in Enterprise value (and increase in equity value by that)
“Individual entertainment companies are undervalued.”
Entertainment is ever-changing, ups and downs and tends to be valued low by investors who avoid
volatility from the perspective that what is accepted by the world now be accepted next year and
the year it be able to maintain sales Even if individual businesses are volatile,
GENDA will transcend this volatility by forming an appropriate business portfolio. In other words, we
aim to create a situation where "we keep growing strongly every year as a group even though an
individual business might have a bad year.
As it is necessary to tolerate volatility when you invest in each company itself, the expected return
goes up and the capital cost is high, too. However, by forming an entertainment conglomerate, the
volatility will be reduced as whole GENDA and the capital cost will decrease. The decrease in capital
cost, which is the discounted rate of cash flows, will increase the present value of total amount of cash
flows and the enterprise value will increase.
(to be continued to next page)
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(2) Optimization of capital structure: Increase in Equity value
“Individual entertainment companies have unnecessary cash.”
For the same reason as (1), individual entertainment companies themselves often have cash which
they do not need for the time being to prepare for "future volatility." GENDA, by managing funds on a
group-wide basis, will put the remaining funds into investments for the next growth while preparing for
sudden capital needs.
Based on the "Modigliani-Miller Proposition (MM Proposition)," the first proposition of the MM
Proposition theoretically proves that "capital structure has no effect on enterprise value in a perfect
capital market.
On the other hand, even if the enterprise value remains constant, we can increase the equity value
by capital structure. We can do that by utilizing excess funds and debt properly and making the stock
structure more appropriate (In reality, the capital market is not perfect, and taxes and bankruptcy risks
exist. Therefore, the pursuit of the best capital structure will increase the enterprise value as well). In
addition, it is possible to do business on a consolidated basis with financial institutions that each
company could not meet on their own, making it possible to effectively utilize debt with low capital cost
compared to the equity, which also leads to an increase in enterprise value.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q3. Does an entertainment conglomerate have any rationality?
The closer GENDA gets to an entertainment conglomerate, the more conglomerate discount will occur? (continued)
(3) PL synergies: Increase in Enterprise value (and increase in equity value by that)
Realization of countless and cross-selling synergies within the group
As stated in Q2, countless cross-selling synergies are generated, which occur in the contiguous
entertainment industry.
Improved PL of each subsidiary increases cash flow and the enterprise value will increase.
(4) Communications with investors: Increase in Enterprise value (and increase in Equity value
by that) and detailed and sincere explanations to investors
GENDA is committed to explaining our business to investors around the world. We will continue to
make efforts to give investors whom we could not meet if we remained an individual company a better
understanding of the attractiveness of each business and that of the group.
As we expand our investor base around the world, we will be able to meet investors and funds
with lower capital cost, and as the capital cost decreases, enterprise value will increase.
(to be continued to next page)
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(5) Branding: Increase in Enterprise value (and increase in equity value by that)
We will increase the number of fans of GENDA. By doing that, we will achieve greater effects as a
group than if each individual company acted individually in all aspects, including recruitment, opening
new stores, purchasing, sales, business tie-ups, M&A, fundraising etc.
Enterprise value will increase due to the improvement of PL and decrease in capital cost of each
company in points other than (1) through (4).
certain complexities may be unavoidable. However, we believe that there will be effects of increasing
enterprise value and equity value as described in (1) though (5) above, including reasons specific to
entertainment, and these effects will more than offset the discount, resulting in a conglomerate
premium that will keep the value of the whole group valued higher than the sum of the values of the
individual businesses.
.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
39
Q3. Does an entertainment conglomerate have any rationality?
The closer GENDA gets to an entertainment conglomerate, the more conglomerate discount will occur? (continued)
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We are an operating company, not an investment firm. Although we are an operating company, we
place M&A at the center of our strategy as same as an investment firm does, and conduct M&A based
on the same judging criteria as an investment firm. However, we limit our target domain to the
entertainment domain, and in reality, countless synergies are generated in the entertainment domain,
and we consider ourselves an operating company, not an investment firm.
First, since it is necessary to define an investment firm and an operating company, let me provide a
definition based on our ideas.
⚫Our definition of "investment firm"
Regardless of synergies, an investment firm will choose M&A if it comes into existence as an
investment, in other words, if cash flow increases through M&A. No one asks a question about
Company A and Company B, with which the investment firm has conducted M&A, "Why did the
investment firm conduct M&A with each of these two companies, although they were not related in any
way?" This is because it is obvious for the investment firm that there is an assumption that "Company
A and Company B, each of them comes into existence as an independent investment (we can recover
cash flow compared to the invested capital).
⚫Our definition of "operating company”
We consider a company to be in a state where it operates business in a specific area, each creating
synergies and creating more value than if it existed as a stand-alone company. Although operating
companies may also conduct M&A, they are not considered as an investment firm only because they
conduct M&A. If an operating company continues to conduct M&A in an industry that is too unrelated
to its own, it may be considered as an investment firm. However, if there are more synergies by doing
business together as a group than by doing that independently, then we believe that the company can
be considered as an operating company.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q4. I am wondering if GENDA is an investment firm.
40
⚫GENDA is an operating company that conducts M&A based on the same judging criteria as
an investment firm.
Although we are an operating company, we place M&A at the center of our strategy as same as an
investment firm does, and conduct M&A based on the same judging criteria as an investment firm.
However, our target domain is limited to the entertainment domain, and in reality, countless synergies
are generated in the entertainment domain, and we believe that we are an operating company, not an
investment firm.
When you hold several companies which are completely unrelated as an investment firm, there are
cases where the value of the whole group is lower than the sum of the enterprise values of each group
of companies due to the usual conglomerate discount. On the other hand, GENDA will benefit from the
advantages of conducting M&A as an operating company through the conglomerate premium
described above.
Besides, since multiple indexes such as PER are calculated based on the growth rate in theory, we
would like to justify it by maintaining a high growth rate through M&A.
.
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The relationship between GENDA's strategy and our Aspiration based on the description of this
document is as follows.
.
(Reference) Repost “Frequently Asked Questions and Answers (November 2024)” released on November 29
Q5. How does GENDA’s strategy connect to its Aspiration, “More fun for your days”?
41
GENDA believes that "fun" is essential for human beings to live life in their own way and has set
"More fun for your days" as our Aspiration.
To achieve this Aspiration, GENDA's vision is to "become the World's No.1 Entertainment Company by
strategy to achieve it.
GENDA will transcend the volatility of the ever-changing, ups and downs entertainment business
by diversifying our business portfolio, and at the same time, becoming an entertainment
conglomerate will create countless synergies for each entertainment company and we will continue to
create new values..
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Mr. Nobuzane, Representative Director and President of CGS, who has a career as a foreign
institutional investor mainly in Fidelity, prepared this report for the purpose of verbalizing to investors
the reality of our roll-up M&A strategy and the resulting transformational growth in equity value
(through increased enterprise value by increased cash flow).
As a result, while the index of relative to (=Incremental
ROI), which is important for the company which conducts M&A, was at the highest level compared to
other companies in the same industry, the EV/EBITDA multiple, which took growth rate into account,
was discounted by approximately 70% to 80% compared to other companies in the same industry.
While the selection and the forecast for growth rate by other companies in the same industry are
based on CGS, the above analysis is a mechanical calculation based on actual market value, and we
believe that we have quantitatively presented the upside to investors. We present the specific
summary below.
As a company whose core business is M&A, we have consistently emphasized "M&A at
appropriate valuations" since we got listed. Specifically, we have emphasized the importance of
"investment recovery" (EBITDA of the target company) relative to "invested capital" (EV of the target
company) through M&A.
However, we focused only on EBITDA growth of the target company after the M&A in IR to date.
While it is true that an increase in cash flow of the target company promotes the investment recovery
is good, this is only a means, not an end. We were not able to measure the effect of "investment
recovery" relative to "invested capital," which was the main objective.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS).
Therefore, in this report, in order to measure the effect of "investment recovery" against "invested
capital," we measured the increase in operating cash flow (≒ EBITDA) ÷ the increase in invested
capital by using the increase (due to M&A) in consolidated balance
sheet (≒EV), not the one of the target company itself, as and the increase in
operating cash flow (due to M&A) (≒EBITDA) as and compared it with other
companies in the same industry.
The other companies in the same industry are defined as "companies from a boarder range of
industries that similarly employ roll-up M&A strategies within mature markets (p21 of CGS Report)”.
There are a number of companies that are engaged in this industry on a large scale in the U.S. Among
those companies, the report mentions Waste Management, which conducts roll-up M&A in industrial
waste services (Incremental ROI is about 20%), Service Corp International (about 8-9%), which
conducts roll-up M&A in funeral services, Rollins (about 25%), which conducts roll-up M&A in pest
control industry, and Danaher (about 10%), a leading company that achieves growth through M&A.
In contrast, the result of the analysis shows that our index is approximately 25%, which is the
highest level in comparison to other companies in the same industry ("This expected performance
compares favorably with global companies in other sectors following a roll-up M&A growth strategy (p.
20)"). Therefore, it is quantitatively shown that it is justified even if valuations are relatively high
compared to other companies in the same industry.
However, it is noted that when calculating the EV/EBITDA multiple relative to growth rate, our
company is 0.3x while Waste Management is 1.5x, Service Corp International is 1.1x and Rollins is
2.5x (“…at an approx. 70-80% discount. This suggests a strong sense of undervaluation per growth,
from an objective standpoint (p.1)”)
(to be continued to next page)
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EV/EBITDA multiple compared to growth rate is calculated as "EV/EBITDA multiple divided by
EBITDA growth rate. A similar approach is commonly used for PEG (Price/Earnings-to-Growth), which
is calculated by dividing P/E multiple by EPS growth rate, but this analysis is performed for EBITDA.
The idea behind this approach is that a higher multiple is justified for a company with a higher growth
rate. Following is a concrete example.
If Company A and Company B have the same EBITDA (e.g., 10 billion yen), and Company A
grows at 10% (11 billion yen, 12.1 billion yen, 13.3 billion yen) annually while Company B grows at
20% (12 billion yen, 14.4 billion yen, 17.3 billion yen) annually, even over 3 years alone, EBITDA
growth of Company A is 1.3x and that of Company B is 1.7x, which is a large difference, justifying
Company A < Company B in enterprise value. As a result, even if Company A = Company B in the
current EBITDA, it is justified that Company A < Company B in EV/EBITDA multiple calculated by
dividing because it is Company A < Company B in enterprise value.
In addition to growth rates, higher multiples are also justified if there are higher figures measuring
cash flow generation capacity (such as Incremental ROI, ROIC and operating CF conversion rate etc.
in the CGS report).
This is because, although EBITDA is a concept similar to cash flow, in reality, it is steady free cash
flow from which (taxes and) investments necessary to maintain the business (maintenance CAPEX)
are taken into account that affects the theoretical enterprise value. In other words, even if EBITDA is
the same amount, a company with a higher conversion rate from EBITDA to cash flow will have a
higher theoretical enterprise value.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS). (continued)
From this perspective, the CGS report states, "From FY21 to FY23, GENDA’s invested capital has
increased by approx. ¥15.5bn, with cumulative operating CF over the same period totaling around
¥2.9bn (¥3.8bn if including FY24 estimates by CGS). This results in their incremental ROI of 20-25%,
which CGS considers an impressive figure based on our long-time investment experience (p. 20).
Based on that assumption, he added, "Based on the CGS forecast, GENDA’s expected FCF
generation per profit growth may not reach the level of Rollins (given differences in organic CapEx
requirements and Cash ROIC) but is relatively comparable to Waste Management’s figure. (snp) The
EBITDA multiple currently assigned to GENDA per 1% projected growth (0.3x) appears undervalued in
light of GENDA’s long-term FCF generation potential. Given GENDA’s expected growth rate, CGS
thinks there is considerable upside potential in its current EV/EBITDA multiple from an objective
standpoint. (p22).”
(to be continued to next page)
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The CGS report makes an evaluation based on the capacity to generate cash flow right down the
line, centered on EV/EBITDA multiple. We believe that EV/EBITDA, which is a valuation based on cash
flow, is more appropriate to evaluate companies which core business is M&A (compared to general
PER).
This is because a roll-up M&A style company repeats M&A by relying on its own cash flow or the
one of the target company and financing, however, if it cannot raise funds, it cannot conduct M&A and
as a result, the growth in corporate and equity value suspends.
In other words, cash flow itself is a source of growth and an indicator of potential for future growth.
We will keep showing investors EBITDA, the most common indicator to show cash flow simply, as a
KPI which we emphasize.
Regarding PER, since we believe it is show the reality better to use PER based on "current income
before amortization of goodwill" (which is a pseudo current income under IFRS) from the viewpoint of
cash flow-based valuation and comparison with overseas companies, we present the PER on our
website for your reference.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q1. Please tell us about the report by Capital Growth Strategies (CGS). (continued)
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The Definition of Growth
Growth is growth in "Cash EPS," and we use "EBITDA," which is a common index to show cash
flow simply, as the KPI.
Reproducibility of GENDA's growth
①Appropriate invested capital: M&A at appropriate valuations
②Maximize investment recovery: Growth of each company's cash flow through synergy effects
③Leverage effect: Raising debt by taking advantage of low interest rates
three factors. We will explain each of them in detail below.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q2. Please explain the GENDA’s definition of growth and its reproducibility.
①Appropriate invested capital: M&A at appropriate valuations
There are various approaches to stock price calculation, but one of theoretical approaches is the
DCF method, which calculates the "equity value per share," or the theoretical value of the stock price,
by equity value calculated by deducting net interest bearing liability from (current value of) the
total amount of future cash flow by the number of stock.
Of these, the explanatory variable that has the greatest impact on equity value is "the total amount
of future cash flows. There are two main ways of thinking about future cash flows. Specifically, one is
to grow future cash flows at the expense of immediate cash flows by making additional investments,
and the other is to maximize immediate cash flows by restraining additional investments and return
them to shareholders so that future cash flows will be stable.
As in the former case, when additional investment is made at the expense of immediate cash flow, it
is meaningless unless the investment recovery by generating cash flow in the future equal to or greater
than the invested capital (invested capital < investment recovery). Furthermore, since it must be equal
to or greater even after it adds the cost of capital which a listed company is required, the absolute
amount must be significantly greater than the invested capital (invested capital < investment recovery).
There are two main means of increasing future cash flow through additional investment: organic
growth (opening new stores) and inorganic growth (M&A). Although these two seem to be different,
they theoretically have the same economic effect in terms of "economic activity that recovers
(to be continued to next page)
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Therefore, we measure the effect by regarding investing one unit of capital for organic growth
(opening new stores, etc.) and investing one unit of capital for inorganic growth (M&A) as the same
≒a profitability indicator
that takes into account the speed of return on invested capital). In order to accurately determine the
return to shareholders, we also use Equity IRR, which takes into account the leverage effect of
utilization of debt.
However, M&A, which is especially inorganic growth, has the advantage of pursuing the "scale" of
the investment. In other words, when considering investment, not only IRR but also "size" that is the
absolute amount of increased cash flow (= the size of NPV) is important.
Because of the big "scale" of a single unit of investment, M&A can have the same effect of
increasing equity value as opening [100] new amusement arcades or karaoke stores in one year, for
example. We believe that you can understand how significant meanings M&A has, considering that it is
impossible to open [100] new stores in one year in reality.
Furthermore, in most cases, inorganic growth through our M&A activities results in not only a
revenue amount (NPV) but also a rate of return (IRR) that is higher than organic growth. However, we
are currently able to achieve both investments in organic growth (new store openings, etc.) and
inorganic growth (M&A) because the absolute IRR values for both are well above the expected rate of
return for a listed company, and we are able to raise funds for each.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q2: Please explain the GENDA’s definition of growth and its reproducibility. (continued)
We will continue to invest the funds entrusted to us by our shareholders, both organic and inorganic,
in investment projects that we expect will exceed our expected rate of return as a listed company, after
making appropriate leverage on the funds. This is because reinvestment of funds is more conducive to
maximizing share value than returning them to shareholders as long as it exceeds the expected rate of
return.
Therefore, even if the cash flow of the target company does not grow after the M&A, it is possible to
increase Cash EPS simply by conducting M&A at an appropriate valuation. The reproducibility of M&A
at an appropriate valuation itself has been well documented in the CGS report ("Equity Story 1:
GENDA's M&A strategy shows strong potential for success (P3)").
(to be continued to next page)
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(ii) Maximize investment recovery: Growth in cash flow of each company through synergy effects
Increased cash flow of the target company after M&A will further accelerate the investment recovery,
increase IRR and NPV, and ultimately enable GENDA to achieve the growth that GENDA should aim
for. This is the synergy effect, which is the best part of a roll-up M&A.
In addition to the aforementioned (1), it has already been announced that the cash flow (EBITDA) of
each target company after M&A has grown and is highly reproducible. By combining (1) and (2), we
have shown the "flywheel effect," which is a cycle in which the initial capital investment (M&A) is
appropriate and the subsequent growth in cash flow of the target company further maximizes the
investment recovery.
Specifically, in the "M&A Progress and FY2025/1 Q1 Outlook" released on April 23, we disclosed
that it had already established a PMI pattern in amusement arcade M&A, and had successfully
increased EBITDA (YoY +20% to + 2,970%) on all projects for Takarajima, Sugai Dinos, Avice, Amuzy,
YK Corporation and PLABI.
In addition to amusement arcades, Fukuya HD, which designs prizes for prize games, Ares
Company, which runs the wholesale of prizes, and Shin Corporation, which runs karaoke business,
also increased their EBITDA (YoY +142%, +305% and +85%, respectively), as shown in the
"FY2025/1 Q1 Earnings Presentation" released on June 11, showing that it is possible to improve the
business performance by generating synergies within the group through the cross-selling of countless
products in the entertainment industry by utilizing our Entertainment Ecosystem.
(Reference) Repost “Frequently Asked Questions and Answers (October 2024)” released on October 31
Q2: Please explain the GENDA’s definition of growth and its reproducibility. (continued)
(iii) Leverage effect: Debt financing by taking advantage of low interest rates
The flywheel effect of (1) and (2) up to this point alone is sufficient to increase growth in equity value.
However, we are thoroughly committed to maximizing the growth of "Cash EPS," which is the
Company's goal, through the use of debt with low interest rates.
We proactively approach financial institutions and initiate borrowing transactions in
and currently we actually borrow from a total of 52 banks and leasing companies. This enables us to
raise funds promptly in case of contingency (M&A). We are taking appropriate steps to ensure that
financing will not become a bottleneck in our M&A activities, while we also have an option of issuing
corporate bonds after the recent capital increase through a public offering.
As described above, we believe that our goal of "growth" can be achieved with reproducibility
through M&A at appropriate valuations × growth of each company's cash flow by synergy effects after
M&A × debt financing that takes advantage of low interest rates.
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This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document to is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content o the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use of
this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the reason
thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgement of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
Disclaimer
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49
Thank you
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GENDA IR
FY2025/1 2Q Earnings Presentation
September 9, 2024
1
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About Us
2
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Embracing Our New Corporate Logotype
“Golden Smile” as a symbol that embodies GENDA's aspiration of
“More Fun For Your Days”
To embody our business identity as an entertainment company and our ambition to achieve “More Fun For Your Days,” we have
incorporated “Golden Smile” as a charming symbol into our new corporate logo.
The logotype uses an authentic and sonorous serif typeface, conveying an impression of intelligence and professionalism, while using an
Emoticon (a globally used smiley face mark symbol) to generate a distinctive and innovative impression, and likewise to express affinities
with contemporary culture.
3
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The Big Picture of the Current Entertainment Industry
4
More fun for your days To be the World’s No.1
Entertainment Company in 2040
VisionAspiration
Speed is King, GRIT and GRIT, and Enjoy our Journey
With these three values, we take on new challenges and
aim to be the world’s number one entertainment company
We believe that “fun” is essential for human beings
“More fun for your days” is our “Aspiration”
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The Big Picture of the Current Entertainment Industry
IP Contents × Platform
We believe the current business environment surrounding the entertainment industry
is to deliver the “IP Contents” such as animation to the “fans” through entertainment “platforms”.
In this context, we will first position “Platform” as our main growth driver, while entering into the “IP Contents” domain in the mid-to-long term.
5
IP CONTENTS PLATFORM FAN
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Our growth strategy = "M&A in the Entertainment industry"
Completion of the Entertainment Ecosystem
Based on a foundation of continuous growth brought about by the steady expansion of our
domestic business and aggressive overseas business development, we aim to build a “GENDA
Entertainment Ecosystem” that will expand globally by accumulating M&A in both the entertainment
platform and entertainment content areas. In this way, we believe that we will be able to overcome
the volatility of the ever-changing entertainment business by building a solid business portfolio.
6
Note: Diagram of our envisioned growth strategy.
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M&A and capital transactions track record "33”
77
・・・
Pre-IPO #M&A
11 22
1 2
345
6 7 8
910 11
12 13 14 15
18 19 20
26 27
3129 30 32
Note: The number of acquired properties is as of the date of the announcement of the project. (planned)" indicates a project prior to closing.
28
16
17 21 22
23 24 25
Post-IPO #M&A
Entertainment Contents Entertainment Platform
33 NEW
June 2018
Acquisition (100%)July 2019
Joint Venture (50%) September 2023
Transfer of Assets September 2023
Becoming a wholly
owned subsidiary
September 2023
Becoming a wholly
owned subsidiary
October 2023
Transfer of Fixed assets October 2023
Acquisition (66.0%)
December 2020
Acquisition (85.1%)
April 2021
Acquisition of
the business
October 2021
Capital Alliance October 2023
Acquisition (100%)November 2023
Acquisition (78.05%) November 2023
Assets transferred from
Global Solutions
November 2023
Acquisition (100%)
December 2023
Acquisition
of Stores
#117 mini-
location AM Arcade
1 store (China)
December 2023
Acquisition of
management rights
December 2021
Acquisition January 2022
Acquisition January 2022
Acquisition (100%)December 2023
Acquisition (100%)January 2024
Acquisition (100%)February 2024
Acquisition (82.45%) February 2024
Acquisition (78.59%)
May 2024
Stock acquisition
(100%)
June 2024
Stock acquisition
(100%)
June 2022
Capital Alliance October 2022
Acquisition October 2022
Acquisition June 2024
Acquisition of the
business
Within 2024
(planned)
Acquisition (100%)
July 2024
Becoming a wholly
owned subsidiary
August 2024
Acquisition (72.92%) October 2024 (planned)
Acquisition of Stores
・・・
One
Amusement
Arcade
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GENDA Group Overview
GENDA is a pure holding company of amusement centric entertainment companies
8
Amusement F&B
Karaoke Contents & Promotion
Character MD
99.16% 66.0% 100% 78.05% 100%100%
Distribution of Prize of
Prize Games
VR Contents and
Experiential Attractions
Prize Planning,
manufacturing
and Sales
Film distribution
Planning, manufacturing
and sales of prizes Character
planning and
Development
100%
100%
100%
72.92%
100% 100%
GENDA GiGO Entertainment
Shin Corporation Ares Company
Dynamo
Amusement
Fukuya HD GAGA
LEMONADE
Lemonica UK Limited Fukuya and
2 other companies Tokyo Character
Makers
ONTSU
AM Arcades
Five Color
AM machine
planning and sale
and Prize
Wholesaling (China)
Karaoke
Store Operation
100%
Japan Popcorn
HillValley brand
Popcorn production
and sales
LEMONADE
Lemonica Inc.
Lemonade
Manufacturing
And sales
Lemonade
Manufacturing and
sales (UK)
Kiddleton
AM Arcades
(U.S)
Distribution of
karaoke equipment
100%100%
National Entertainment
Network
Mini-location (Planned in 2024) (U.S.)
ENTERRIUM
AM Arcades Complex (U.S.)
AM Arcades
SANDAI
100%
100%
GiGOTaiwan
AM Arcades
GENDA Games
Online crane game
100%
C’traum
Import and wholesale
of alcoholic beverages,
GiGO
VIETNAM
AM Arcades
(Vietnam)
100%
Entertainment Platforms Entertainment Contents
Note: Organizational chart as of September 9, 2024. AM arcades in the chart refer to amusement arcades. The chart is intended to present mainly our consolidated subsidiaries. NEN is scheduled to be completed in 2024,
and the deal to acquire stores from MATAHARI-ENTERTAINMENT Co.,Ltd. is scheduled to be completed in October.
Mini-
location
from GS
AM
1 store
NEW
Pure Holding Company
GENDA Inc.
93.0% 100%
GENDA Europe
100%
AM Arcades
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Number of Entertainment Platforms
Number of GENDA “Entertainment Platforms" reached 2,228 (as of the end of August)
9
Note: Mini-locations are game areas that are not staffed.
0
100
200
300
400
500
600
700
800
2021 2022 2023 2024
779 stores
Number of
stores
(Stores)
Domestic AM: 333 stores
Karaoke in Japan: 366 stores
Domestic F&B: 59 stores
Domestic others: 2 stores
Overseas AM: 18 stores
Overseas F&B: 1 store
Number of
mini-locations 1,449 locations
Domestic: 880 locations
Overseas: 569 locations
(Locations)
*As of August 31, 2024
*As of August 31, 2024
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
2021 2022 2023 2024
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Executive Summary
10
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Executive Summary
11
2Q results significantly exceeded our initial business plan, alike strong 1Q results
Excluding one-time M&A expenses, 2Q YTD EBITDA was up +56% YoY, and net income before amortization of goodwill was up +18% YoY. Both exceeded the 1Q YoY%.
Although our initial business plan assumed OP to “decrease” YoY, both 2Q and 2QYTD ended up securing YoY “increase” even “including” above M&A expenses.
Furthermore, even “including” ¥540mn one-time expenses (M&A ¥410mn + follow-on offering ¥130mn), ALL indicators from revenue to net income beat the 1H budget.
TWICE LOVELYS campaign sold out within only a week, and GiGO Osaka Dotonbori flagship store recorded historical high 1day sales, both of which for 3Q earnings.
01
FY2026/1 Earnings forecast: Revenue ¥140.0bn │ EBITDA ¥18.5bn │ NI before goodwill amortization ¥7.0bn
For FY2025/1, only revenue has been revised upwards, while income forecast remain intact as they fluctuate subject to M&As, with 5 months left until the end of the fiscal year.
Adjusted earnings basis, which indicates the actual profitability of the core business, our KPI EBITDA is approx. ¥15.0bn (OP income approx. ¥9.0bn).
Similarly, we have also announced earnings forecast for the next fiscal year. Revenue ¥140.0bn, EBITDA ¥18.5bn (OP ¥10.5bn), NI before goodwill amortization ¥7.0bn.
Above forecast assumes NO M&As from today and forever. In reality, our M&A pipeline is the largest ever in size owing to the follow-on offerings and expanded debt capacity.
04
PMI of DX for Amusement Arcade – “Project PAO” an AI-powered DX measures
With the rapid growth of prize games, it has been beyond human power to “optimally allocate prizes in accordance with the ordering budget while meeting all the conditions“
since that requires simulation of hundreds of prizes x hundreds of stores x numerous parameters, resulting in a large discrepancy between store budget and actual allocation.
The AI's machine power implemented to verify countless patterns to derive optimal solution by brute force, achieved 90% stores successful in falling within the 96-100% range.
Although M&A is our core business at GENDA, 71 out of the 105 personnels belonging to the pure holding company GENDA, are Tech personnel engaged in PMI.
03
PMI started for NEN, replacing existing amusement machines by Kiddleton’s
We began location testing to replace the amusement machines in NEN, which has 8,000 mini-locations in the U.S., by Kiddleton’s Japanese-style machines and “kawaii” prizes.
As previously reported, Kiddleton’s sales per store were about 3x that of NEN, so we plan to roll it out immediately without waiting for the deal close.
Furthermore, the registration of GENDA Europe Ltd., which will serve as our European base, has been completed.
The group-wide mini location business, with “Five Colors for amusement machine exports, Ares and Fukuya for prize exports," will be implemented in Europe as well.
02
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01. 2Q Earnings Results for FY2025/1
12
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Consolidated Statements of Income
Following the 1Q, 2Q significantly exceeded the initial business plan (excl. M&A expenses)
Achieved all the financial targets from revenue to net income of the initial business plan, even “including” ¥410mn of M&A expenses and Follow-on offering expenses of ¥130mn
13
2Q YTD Full-year
Excluding M&A and
follow-on offering expenses Including M&A and
follow-on offering expenses Including M&A expenses
(Yen in millions)
FY2024/1 FY2025/1 YoY FY2025/1 YoY FY2024/1 FY2025/1
(forecast) YoY
Revenue
24,515 49,531 +102 % 49,531 +102 % 55,697 110,000 +97 %
EBITDA
3,909 6,115 +56%5,700 +45%8,102 13,000 +60%
（%
）15%12%11%15%12%
Net income before amortization of goodwill
2,041 2,413 +18%1,918 ▲6%4,359 5,400 +24%
（
%）8%4%3%8%5%
(Reference)
2,787 3,720 +33%3,177 +13%4,577 7,425 +62%
Net income before amortization of goodwill
(pre
-tax basis)
Operating income
2,767 3,598 +30%3,184 +15%5,370 7,000 +30%
（
%）11%7%6%10%6%
M&A and follow-on expenses
a
EBITDA
(Reference) OP Income
Net income before
amortization of goodwill
c
d
a
d
b
Showing Intrinsic performance excluding one-time expenses. M&A expenses were ¥390mn in the 2Q and ¥410mn in YTD, affecting EBITDA and
below. Follow-on offering expenses were ¥130mn in the 2Q, making the total LTM expenses of ¥540mn, affecting ordinary income and below.
2Q YTD was +56% YoY, exceeding the 1Q YoY of +50%. The "absolute amount" was "1Q > 2Q", which is in line with our initial business plan, and
1Q and 2Q were around the same achievement "rate" to our initial business plan, maintaining a strong performance throughout the first half.
2Q YTD was +30% YoY, exceeding the 1Q YoY of +25%. In the initial business plan, OP income was expected to decrease YoY in both 1Q and
2Q, but the actual results were up YoY in both 1Q and 2Q, even including M&A-related expenses of 410 million yen.
YoY of +18% offset the normalization of the corporate tax from the current fiscal year, significantly higher than YoY of -9% in 1Q.
The “rate” of achievement compared to the initial business plan exceeded that of the EBITDA.
b
c
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Consolidated Balance Sheet
Balance Sheet Indicators Improved owing to the Follow-on Equity Offering
14
(¥ in millions) FY2024/1
End of Full-year FY2025/1
End of 2Q Difference Remarks
Current assets 23,567 40,837 +17,269 Due mainly to increase in cash and deposits
Of which, cash and deposits 12,379 25,252 +12,873 Increase due to equity financing (¥10.0bn) and cash from M&A targets
For the first time, there is an abundance of M&A reserve funds
(in the past, debt financing was required for each M&A)
Fixed assets 28,573 52,240 +23,666 Due mainly to increase in tangible assets by new store openings and M&A
Of which, goodwill 4,992 13,616 +8,623 Significant buffer of approx. ¥20bn in net assets from equity financing
(Goodwill amount after close of NEN expected to be around ¥
15.5bn in 2H)
Total assets 52,141 93,077 +40,936 Increase due to above factors
Total liabilities 32,476 59,432 +26,956 Due to increase in interest-bearing debt mainly led by M&A financing
Of which, interest-bearing debt 18,993 40,056 +21,063
Even after closings of ONTSU and NEN deals, our borrowing capacity has
improved significantly, including available alternatives such as corporate
bond issuance, due to the recent ¥10.0bn equity offering
Net assets 19,664 33,644 +13,979 Due mainly to increase in equity capital
Of which, shareholders' equity 19,427 33,190 +13,763 Increase due to new share issuance, stock-based M&A,
and profit accumulation
Net Debt / EBITDA 0.8 x1.1 x+0.3 xAdditional borrowing capacity further increased due to equity financing
Capital adequacy ratio 37.2 %35.6 %▲1.6 %Earnings are assumed to be concentrated in 2H of the current fiscal year,
and profit accumulation is expected to accelerate for the full year
Note: EBITDA in the calculation of Net Debt / EBITDA is presented using the current year's estimate of 13 billion yen, to be consistent with discussions with financial institutions.
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Breakdown of 2Q Consolidated EBITDA's YoY Change by Factors
EBITDA excl. M&A expenses was +56% YoY, embodying "Continuous Transformational Growth"
Excluding M&A expenses recorded by 2Q, EBITDA grew by 56% YoY, and even including these expenses, by 45% YoY. EBITDA, which is a KPI indicating the profitability of
GENDA Inc., whose core business is M&A, has increased by 1.5 times from previous fiscal year, embodying "Continuous Transformational Growth" through M&A.
15
(¥ in bn)
YoY+56%
YoY+45%
Note: Shin Corporation and PLABI Co., EBITDA are shown as M&A deals in FY2025/1, as their closing were February 1, 2024.
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Topics
Campaign featuring TWICE LOVELYS
16
©JYP Entertainment. ©2024 Warner Music Japan Inc.
Successful campaign with characters “TWICE LOVELYS,” by Asia's No.1 girls’ group “TWICE.”
Launched rollout of the campaign’s GiGO-exclusive prizes available only at GiGO stores.
(Phase 1 from Aug 6 to Sep 5, and phase 2 from Sep 6 to Oct 6, earnings contribution to be 2H)
Many customers including those who do not usually visit amusement arcades came to the store.
Although phase 1 assumed for one month period, popular prizes were sold out within a few days, and
all prizes were sold out in only one week later. Ongoing phase 2 is also gaining huge popularity.
We have confirmed the great potential of collaborative campaigns involving not only anime characters,
the main drivers of popularity of prize games, but also the potential with popular artists, etc.
GiGO Fukuoka Tenjin GiGO Shinjuku Kabukicho GiGO Shinjuku Kabukicho
GiGO Smark Isesaki
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Topics
GiGO Osaka Dotonbori Flagship Store │ Resulting in Historical High Daily Sales
17
Note: Daily sales in real stores after December 30, 2020, when the former SEGA Entertainment joined the GENDA Group.
On August 30, 2024, GiGO Osaka Dotonbori Store opened,
the second flagship store following GiGO Sohonten Store (Ikebukuro)
condensing the GENDA Group's entertainment on its three floors.
300 crane games, “fanfancy+ with GiGO,” the first store in the Kansai region,
“KOTOBUKIYA with GiGO,” the Group's first store specializing in figurines and anime goods,
“Bushiroad Creative Store in GiGO LEMONADE by Lemonica,”
‘Hill Valley,’ a gourmet popcorn brand originating in Japan, and ‘GiGO's Taiyaki’.
On the first day of the opening, despite the stormy weather
with an approaching typhoon, approximately 200 customers
lined up before the store opened, resulting in the
highest daily sales in GiGO's history*, surpassing the
first-day sales of GiGO’s flagship store (Ikebukuro).
Located in the Dotonbori area, which is lined with
popular restaurants that attract a large flow of people,
and inbound demand is also expected.
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02. PMI: Location testing of NEN
18
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M&A of NEN Corporation
“Dream Deal” we have envisioned since the launch of Kiddleton's U.S. operations
19
NEN, with approximately 8,000 locations including Walmart, was the
biggest breakthrough to accelerate Kiddleton's largest focus of business in
the U.S. tenant development
Deploy Kiddleton's ability to generate about 3x greater sales per location, by
replacing U.S.-style prizes with Japanese-style prizes
GENDA Group will export Japanese “Kawaii” to all over the U.S., with
FUKUYA and Ares providing the prizes and Five Colors in China providing
the machines
NEN Company Profile
Entertainment company founded in 1995 and Headquarters
in Colorado, USA
Financial Results (FY2023/12)
Facilities
Valuation
GENDA actively proposed the acquisition of NEN, which had been a
“dream” of Kiddleton since its inception in the U.S.
29 years of incorporation with 67 minority shareholders seeking to exit,
GENDA provided the liquidity to secure an attractive valuation
Enterprise value $29m, EV / EBITDA 3.6x (based on FY2023/12 actual).
With our debt capacity, M&A to be fully financed by debt, same as in the
previous year. Cash EPS increases unilaterally by increasing profit with
unchanged number of shares
Investment Highlights
Reprinted from “FY2025/1 1Q Earnings Presentation” disclosed on June 11, 2024
Approx 8,000 mini-location
Sales $100.3m, EBITDA $8.0m
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Investment Highlights continued
Establish the network throughout the U.S.
Explosive increase in sales coverage area
In addition to the sales office, Kiddleton’s current three-person repairment team
can be done through NEN's nationwide maintenance network
20
Approx.
8,800
End of May
2024 Within 2024
(planned)
443
# of location
added
TOTAL
Approx.8,000
Reprinted from “FY2025/1 1Q Earnings Presentation” disclosed on June 11, 2024
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PMI of NEN
Location tests in progress in various shops
As explained in the NEN M&A announcement, we have begun location tests to replace the game machines and prizes in NEN's existing stores with
Japanese-style game machines and “Kawaii” prizes developed by Kiddleton. Since Kiddleton's sales per store were about three times that of NEN,
we are earnestly making all arrangements to expand even before the deal closes.
21
One of NEN's actual locations (Image) Kiddleton's Little Tokyo store in Los Angeles
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Investment Highlights continued
Japanese "Kawaii" is now available in the U.S!
Pursuing uniqueness by offering products and experiences that are only available here. Expand globally by leveraging synergies within the group.
The chassis will be provided by Five Colors, prizes will be exported from Ares and Fukuya, and Japanese "Kawaii" will be provided by Kiddleton and NEN to
8,800 locations in the U.S.
22
“Kawaii” to the U.S
Note: The photo is an image.
Reprinted from “FY2025/1 1Q Earnings Presentation” disclosed on June 11, 2024
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Expanding the Rapidly Growing Mini-Location Business into Europe
GENDA Europe Ltd. established, ready to make a full-scale entry into Europe area
Established GENDA Europe Ltd. as our European base on August 30, 2024. Following “LEMONADE by Lemonica,” the registration of our European base for
amusement has been completed. The same across-the-Group scheme for the U.S. expansion of “Kawaii” will be applied in Europe likewise, with “Five Colors”
for game machine exports, and “Ares and Fukuya” for prize exports.
23
“Kawaii” “Kawaii”
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Leaderships of Mini-Location business in Europe and the U.S.
Contributing to GENDA Group's worldwide network development
Expanding into the European region following the U.S. and Asia in order to build a global entertainment network, which represents the origin of GENDA's
corporate name. Mr. Ohtomi, former CEO of Ares Company, a prize wholesaling company, has been appointed as the head of our European business.
Mr. Iyoda, who already has extensive experience in the U.S. market, will bring his know-how and expertise to Europe, GENDA Inc.'s first foray into the
European market.
24
Mr. Otomi graduated from Hitotsubashi University and completed the university's MBA course.
In 2017, he joined Mitsubishi Corporation. Participated in projects such as turnaround projects for subsidiaries in Thailand.
In 2020, he joined Bain & Company, where he provided a wide range of management support and recommendations to several major Japanese companies as a consultant.
In 2022, he joined Ares Company, Ltd. After serving as Vice President and Representative Director, and in February 2023,he was appointed President and Representative Director. He
assumed his current position in September 2024.
GENDA Head of Europe Business
Ryo Ohtomi
In 2004, My. Iyoda joined Aeon Fantasy Co. Store manager, district maintainer after working as a sales manager, he was responsible for the purchase and development of game
machines, as well as product sales in various countries overseas. Engage in port operations.
In 2015, he became the company's ASEAN Development Manager. Vietnam, Cambo Responsible for operational support of Zia franchise stores.
In 2017, became Representative Director of AEON FANTASY VIETNAM CO.,LTD. Inauguration 2018, Representative Director, AEON FANTASY GROUP PHILIPPINES, INC. Also
serves as a director.
In 2019, he joined GENDA Inc., and in July of the same year, Kiddleton, Inc. He founded and became CEO & President. Current position since September 2023.
GENDA Executive Officer, Head of U.S. Operations, Kiddleton, Inc. CEO / President
Atsushi Iyoda
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03. PMI: DX of Amusement Arcades
25
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15
14
44
71
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2024/9
GENDA Tech Team
70% of the members at the pure holding company GENDA Inc., are Tech members engaged in PMI
GENDA, Inc. is a pure holding company engaged in M&A. What makes us different is, 71 out of the 105 employees are tech members engaged in PMI,
which account for more compared to the number of members pursuing M&A execution. After M&A deals close, tech professionals who have gained specialized experience in
their previous jobs support PMI from the perspective of DX. The pure holding company hires tech talents, and after M&A is completed, they are seconded to each subsidiary to
implement DX measures as part of the PMI, and after the project is complete, they move on to the next M&A target, which is a scheme performed in a repetitive manner.
26
・・・
Admin side
34
members
Tech side
71
members
・・・
Turnover rate of tech members
since incorporation
0%
Members at GENDA Inc. as the pure holding company Number of tech members since incorporation
M&A
Finance
IT Strategy
Product Development
Note: The number of employees is as of September 1st, 2024
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Introducing the GENDA Tech Team
Experienced Technology Team Leading the DX of Amusement Arcades
GENDA Inc. has a large team of talented engineers, led by our CTO, Daisuke Kajiwara, who has recently been appointed as Director of Japan CTO Association.
This time, we will introduce measures led by GENDA's engineering team to take a Deep Dive into the DX of game arcades. These are most represented by the
launch of GENDA GiGO Entertainment's new division, the "R&D Marketing Headquarters," including key personnels assigned from GENDA Inc.
27
Executive Officer, CTO and Head of IT Strategy Department
Executive Officer, CTO and General Manager of IT Strategy Division
Daisuke Kajiwara
After graduating from graduate school (master's degree) in March
2019, he worked as a research assistant at the Department of
Data Science at Yokohama City University. Since June 2020, he
has worked in analysis and research and development at a
venture company that handles data from X (formerly Twitter).
He is an expert in areas such as machine learning, natural
language processing, network analysis, and statistical modeling.
He joined GENDA Inc. in August 2023.
Data Scientist, IT Strategy Department, GENDA Inc.
Shintaro Tomatsu
Joined CyberAgent Inc. in 2012. After working in sales and advertising
product development, he was temporarily transferred to the affiliated company
Abema TV Inc. in 2016 and experienced launching of advertising businesses.
In 2017 he joined The Walt Disney Company (Japan) Ltd. as "Manager -
Analysis DTC", for strategy and analysis of Disney+ in the APAC region.
In 2023, he joined GENDA Inc., where he was involved in setting up the
business development and data analysis organization of the group companies,
and since 2024 at GENDA GiGO Entertainment concurrently serves as
Director of Marketing, R&D and Marketing Division.
Manager, GENDA BizDev & Analysis
General Manager, Marketing, GENDA GiGO Entertainment
Yusuke Matsunuma
Joined DeNA Co., Ltd. in 2011. Experienced as an infrastructure engineer and
server engineer. While working for the second company, FiNC Technologies, he
was in charge of data-related work as a data engineer and analyst.
In 2021, he joined GENDA Co., Ltd., where he is responsible for building the data
infrastructure and promoting data utilization for the amusement business. In
recognition of his contributions to the Snowflake community, he was selected as
one of the 2023 Snowflake Data Superheroes.
Manager, IT Strategy Department, GENDA Inc.
Kohei Komiyama
In 2006, he joined Yahoo Japan Corporation.
In 2007, he joined GREE, Inc. and was appointed as its Executive Officer.
In 2014, He served as General Manager of the Development Division and
General Manager of the Business Division.
In October 2021, he joined GENDA Inc., where he was appointed CTO
GENDA SEGA Entertainment (currently, GENDA GiGO Entertainment
Inc.) Executive Officer, CTO and General Manager of IT Strategy
Division. Current position since December 2023.
Appointed as Director of Japan CTO Association in 2024.
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DX of Prize Procurement Operational Flow
Project PAO: DX for procurement of “Prizes” for prize games
A DX initiative for prize game's prize procurement, which is important for prize games, that account for about 70% of game arcade sales.
Since prize games have been growing rapidly since 2015, on-site operations have not kept pace, and manual operations have reached their limits.
Under these circumstances, as the first step in DX, we rolled out our “Project PAO (Prize Allocation Optimizer),” a measure that applies AI to solve the final
procedure in the prize procurement flow, which is the allocation of procured prizes to stores nationwide.
28
3. Optimal Allocation
Prize Procurement Operational Flow
List of thousands of
prizes sent from
manufacturers
Decide which prizes to purchase
from the list of prizes and their
sum for all stores
Decide the order lots according
to prize demand, inventory
status, and store plans
Decide how many
cartons to allocate
to which store?
2. How Many Cartons to purchase1. What to Purchase0. Prize List
Scope of this DX initiative
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Thousands of items are needed to be purchased in bulk at the head office from among thousands of items. Traditionally, an Excel sheet is created for each of these prizes,
and the allocation to several hundred stores throughout Japan is calculated by multiplication by the number of items. Therefore, “several hundred rows / sheet” x “several
hundred sheets” of data are required to organized and managed in “tens of thousands of rows.” This means there are limitations depending on human-hand operation of the
most important “parameters of prize allocation to each store.” In particular, with machines in stores across the country being replaced flexibly, there is limitation to manually
update the parameters of “how many machines of what size are currently in which store,” which can lead to situations where stores are faced with “we've received a large
number of large prizes, but we don't have big-enough machines to fit them all in...” There may be cases where prizes that have been purchased with great care have
possibilities ending up being “discarded as is” after being delivered to the store.
Prize Allocation DX – Issue
Limitations of Prize allocation depending on manual procedures
29
Allocation unit size
(1 or 0.5 or 0 boxes)
- Parameters cannot reflect the game machine situation of each
store, so there were situations where "A large number of large prizes
arrived, but there are no game machines to place them in."
- Occurs especially in large, powerful stores with high sales and
many prizes are allocated
- Popular prizes are often not allocated to stores with weak sales
power, so the stores fill up their game machines with standard
prizes, resulting in opportunity loss
- Event that tends to occur at small stores
- Unable to deliver in small quantities in just the right amount, with
discards due to excess inventory / opportunity loss due to shortage
of inventory frequently occur
- Events that tend to occur at mid-sized stores
Prize Allocation
Parameters
1. Stores’ sales capacity
2. Prizes’ popularity
3. Location characteristics ×About 320 stores Determining store allocation＝
Discards
Discards /
Opportunity loss
Store A
Opportunity loss
Although these issues have been recognized, manual operation could not
increase the number of parameters any further and was at its limit.
Excess
Shortage
Shortage
Store B
Store C
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Prize Allocation DX – Solution
AI's machine power verified countless patterns that were beyond human power
The number of parameters that determine the allocation logic has been increased from three to six, and the machine power of AI verifies countless allocation
patterns to derive the optimal solution by brute force. In addition, a separate distribution center was also devised, making it possible to deliver in small
packages (0.75 / 0.25 boxes), which was not possible before, and increasing flexibility in terms of operations. It is now possible to “satisfy a large number of
conditions simultaneously while allocating orders according to the order budgets of stores nationwide,” which was previously impossible to do manually.
This enables the automatic calculation of optimal solutions for prize game allocation and minimizes prize disposal and opportunity losses.
30
1. Stores’ sales capacity
2. Prizes’ popularity
3. Location characteristics ×About 320 stores Determining store allocation＝
Prize Allocation
Parameters +4. Order budget
5. Number and type of game machines in stores
6. Size of prizes
Automation through
AI-based Systems
Automatic calculation until the budget for each store
can be digested, while satisfying numerous conditions
all at the same time.
Increased parameters enable calculation of allocation
ratios that take into account the type and number of
game machines in stores and the size of prizes
(A brute force calculation that cannot be verified by
human labor)
Allocation unit size
(1 or 0.75 or 0.5
or 0.25 or 0 boxes)
Offset
excess and
shortages
Store A
Store B
Store C
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Prize Allocation DX – Achievements
AI-based prize allocation enables execution according to the prize order plan
Previously, manual operations were made in Excel to match the “actual allocation of prizes” to the “prize order plan* for each store,” but as a result, as shown in the “Before”
figure, the discrepancy rate for the same index varied widely, resulting in “lost opportunities (shortage of popular items)” and “waste (excess delivery of prizes).
In contrast, in May 2024, when the current initiative was implemented, the “prize ordering plan per store” and “actual prize allocation” were within the range of 96-100% at 227
stores (more than 90% of 244 stores). The company expects the AI will enable it to improve sales by reducing opportunity losses and decrease prize disposal and nationwide
operation has begun in the middle of 2Q.
31
19
34
57 46
28 18 12 10 4
25
0
Standard deviation：32.6
227
5
7
1
4
0 0 0 0 0 0 0
Number of stores
Opportunity loss
Shortage of popular prizes was compensated for with standard prizes
Before After
Deviation rate of planned vs. actual allocation for each store (%)
Standard deviation：4.9
80
70
-
70%
-
85
81
-
90
86
-
95
91
-
100
96
-
105
101
-
110
106
-
115
111
-
120
116
-
125
121
-
126+
80
70
-
-
85
81
-
90
86
-
95
91
-
100
96
-
105
101
-
110
106
-
115
111
-
120
116
-
125
121
-
126+
Distribution of deviation rate of “actual allocation” from “prize ordering plan” for each store
70%
Discarded
because over-allotted prizes were delivered
Note: A plan for a certain store that "in order to create this sales plan, we need to order this many prizes." Actual results for May.
Deviation rate of planned vs. actual allocation for each store (%)
Number of stores
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(Reference) DX of Prize Procurement Operational Flow
Action/Details of measures FY2025/1 FY2026/1
32
We aim to further improve other tasks in the prize procurement operational flow
There are many issues to be addressed in the future, such as more appropriate calculation of allocation unit quantities, improvement of delivery to each store
to enable swift delivery of prizes, etc., as well as starting DX in the upstream process of prize procurement.
3. Size match budget optimization
4. Consolidation of prize orders
Change of budgeting logic Execution
Verification of effects with each
department and consideration of transfer Budget transfer response
Development / implementation
5. Automation of preliminary
calculation of prize order
1. Allocation logic tuning
2. Earlier prize delivery
Item count control
Minimum allocation unit size
Trial Negotiation with delivery companies, human
error reduction by DX
Improve
accuracy / logistics
Target budget
Broaden selection of
prizes
Upstream
process
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04. Earnings Forecast: FY2025/1 and FY2026/1
33
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Only revenue revised upwards for the current fiscal year
Ref: “adjusted” EBITDA is approx. ¥15.0bn (“adjusted” OP approx. ¥9.0bn)
Current fiscal year forecast (FY2025/1)
34
(¥ in millions,
excluding per share figures) Revenue EBITDA
Operating
Income Ordinary income
Net income before
amortization of
goodwill
Net income
attributable to
owners of the
parent
Net income before
amortization of
goodwill
per share Earnings
per share
FY2025/1
Previous Forecast (A) 100,000 13,000 7,000 6,600 5,400 4,300 74.10 yen 59.01 yen
FY2025/1
Revised Forecast (B) 110,000 13,000 7,000 6,600 5,400 4,300 74.10 yen 59.01 yen
Difference
(B-A) 10,000 - - - - - - -
Difference
(%) +10% - - - - - - -
(Ref.) FY2024/1
Actual Result 55,697 8,102 5,370 5,216 4,359 4,178 65.95 yen 63.20 yen
Reason of revision: Amusement and karaoke exceeded our initial plan, and M&A deals that were not included in the initial budget closed
Income remains as is: Because earnings forecasts vary depending on the timing of announcement / closing of M&A deals in progress, and arbitrariness
cannot be eliminated. In addition, even if we were to make forecasts using multiple assumptions, earnings will have to be revised
every time the assumptions for the timing of M&A deals in progress change, which would cause unnecessary confusion
“Adjusted” earnings: When adding existing businesses (earnings contribution full 12 months) + announced M&A deals (earnings contribution less than 12
months), and deducting one-time M&A expenses, our “adjusted” EBITDA is approx. ¥15.0bn (ref: “adjusted” OP approx. ¥9.0bn)
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(Reference) Excerpts from“Notice of Upward Revision of Full-Year Earnings Forecasts”
Reasons for NOT revising our income forecast
35
First, referring to our core business, which is M&A deals in the entertainment industry, we are further
accelerating our M&A activities in terms of both speed and scale during the second half of the current
fiscal year. One of our driving forces to accelerate these activities are due to the capital increase through
our public offering of approximately 10.0 billion yen in July 2024.
Under these circumstances, we have possibilities to incur one-time M&A-related expenses if the M&A
deals currently in process are announced or completed from today to the end of the current fiscal year,
January 31, 2025. Moreover, while earnings contribution of the M&A target companies will be realized
only after the consolidation, particularly the M&A deals closed in the second half of the fiscal year will be
preceded by one-time M&A-related expenses in relation to the current fiscal year's performance. This
indicates that full-scale contributions to business performance will be made only after the following fiscal
year.
Therefore, if we want to accurately forecast our income indices, we need to estimate which of the M&A
deals in process will be announced or closed, and at which timing, but this involves various uncertainties,
and therefore we cannot eliminate the arbitrariness.
On the other hand, even if we were to revise our income forecasts as of today by factoring in multiple
assumptions, we would have to revise our forecasts again every time the assumptions change
depending on the timing of the announcement or closing of pending M&A deals. These are issues we
would like to avoid causing unnecessary confusion among investors.
For these reasons, we have decided not to revise our full-year income forecast as of today, when there
are still five months left in the current fiscal year and M&A activities are still active.
But at the same time, based on the common perception of “adjusted income,” it is possible to estimate
with a certain degree of reasonableness of our financial reports that represent the actual status of the
business, excluding one-time M&A-related expenses. Although we do not provide a full-year forecast of
such “adjusted income” in order to avoid including undisclosed M&A deals in our earnings forecast, we
present the following information for your reference so that investors are able to fairly assess our actual
business status.
For example, if we add the earnings contribution of M&A targets that have already been announced as
of today (contribution to full-year results less than 12 months) to our existing businesses that existed at
the beginning of the current fiscal year (contribution to full-year results for full 12 months), and deduct the
one-time M&A-related expenses for the M&A deals that have already been announced as of today, our
KPI, to measure profitability of our core businesses, EBITDA will be approximately 15.0 billion yen (for
reference: operating income is approximately 9.0 billion yen).
Furthermore, in cases that the M&A deals already announced as of today contribute to our financial
reports for the full 12 months, in other words, our earnings forecast for the next fiscal year, which we
believe is also essential for investment decisions and is likely to be of great interest to our investors, we
have provided details on page 36 of our financial results presentation materials released today,
indicating that our EBITDA will be 18.5 billion yen (for reference: operating income will be 10.5 billion
yen).
The above figures do not include undisclosed M&A deals, so these are earnings forecasts assuming
that there is zero M&A deal in the future from today and onwards.
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38.1
46.1
55.6
110.0
140.0
2022/1 2023/1 2024/1 2025/1E 2026/1E
2.7
3.5
4.3
5.4
7.0
2022/1 2023/1 2024/1 2025/1E 2026/1E
5.6 6.2
8.1
13
18.5
2022/1 2023/1 2024/1 2025/1E 2026/1E
Next fiscal year forecast (FY2026/1)
Revenue ¥140.0bn │ EBITDA ¥18.5bn (OP ¥10.5bn)│ Net income before goodwill amortization ¥7.0bn
36
We have so far achieved the "Continuous Transformational Growth" through M&A that we pledged to investors at our IPO.
In addition, the above earnings forecast assumes that there will be no closing M&A deals in our current fiscal year from today onwards.
In reality, our M&A pipeline is the largest ever in terms of size, owing to the follow-on offering of new shares of ¥10.0bn and our increased debt capacity.
GENDA Inc. is accelerating M&A activities to further boost our medium-to-long term earnings.
Revenue
(¥ in billions) EBITDA
(¥ in billions) Net income
before goodwill
amortization
(¥ in billions)
+98%
+27%
+60%
+42%
+24%
+30%
IPO IPO IPO
Growth rate appears low due to
normalization of corporate tax
payments from FY2025/1
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Our management policy on M&A Strategy
37
We believe that earnings results for each fiscal year end is an essential as a screenshot observation as
a listed company. However, in order to best reward the investors who have chosen to invest in GENDA
Inc., which advocates "Continuous Transformational Growth," from among the numerous listed
companies and entrusted their valuable assets to us, we believe that it is essential to make our
corporate decisions that maximize medium-to-long term performance, rather than instantaneously
maximizing our single-year performance.
Therefore, we must avoid placing too much emphasis on maximizing single-year performances,
resulting in the opportunity loss of medium-to-long term transformational growth by not investing in M&A
deals right in front of us. If there is an opportunity to maximize medium-to-long term performance, we
believe it is important to venture ahead with timely and appropriate action, to avoid resulting in failure to
seize opportunities.
Although we are already generating abundant cash flow, we are only in our seventh year since
foundation, having the above-mentioned aspirations. This makes us similar to a typical "start-up
company." In other words, we are not in a mature, steady state, but rather in a state where we can
envision a clear growth path by reinvesting our cashflow to a level that greatly exceeds such invested
capital.
Therefore, rather than saving cash in pursuit of short-term profit maximization, we are now in the
process of growing to become the world's number one entertainment company by 2040 and envision to
reward shareholders with cashflow when we achieve a stable state in the future. And to all the investors
who support us on that journey, we envision to return ample capital gains through growth returns
generated by our reinvestment of our annual cash flow in M&A deals.
Also, as our primary investment vehicle is M&A, this fact explains why we place importance on making
appropriate investment decisions based on the "M&A discipline." When it comes to M&A, cash flow, not
nominal profit, is the most important indicator. We only execute M&A deals where the expected cash
flow we receive from the target company exceeds the cash flow we pay for the company (taking into
account the present value based on the cost of capital). Therefore, as a company that applies J-GAAP
and places importance on cash flow indicators, we use EBITDA, net income before amortization of
goodwill, and Cash EPS as KPIs.
Based on the above way of thinking, we will continue to announce M&A deals during the remaining 5
months of the current fiscal year. Worth noting is that, in case, the target company's performance, after
deducting one-time costs, does not contribute positively to our consolidated performance in the “current
fiscal year” because the timing of the M&A is close to the end of the fiscal year, but can significantly
grow our consolidated performance in the “next fiscal year and beyond,” we will choose to execute such
M&As.
As previously reported, the Post Merger Integration has been more successful than expected, and
while each business itself is solid, we are actively engaged in our mainstream business of M&A activities.
In particular, our debt capacity has expanded significantly following the recent public offering of
approximately 10.0 billion yen, and our M&A pipeline is the largest in our history. We will strive to pursue
these deals at the soonest possible timing and deliver the achievements of our "Continuous
Transformational Growth" to our investors.
(Reference) Excerpts from“Notice of Upward Revision of Full-Year Earnings Forecasts”
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Appendix
38
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© GENDA Inc. GENDA IR | Earnings Presentation
Consolidated Statements of Income (Quarterly Results)
39
FY2024/1 FY2025/1
1Q 2Q 2Q
YTD 3Q 4Q 4Q
YTD 1Q 2Q 2Q
YTD 3Q 4Q 4Q
YTD YoY
(¥ in millions)
Revenue
11,994
12,520
24,515
14,293
16,888
55,697
24,685
24,846
49,531
-
-
110,000
197.5%
Gross profit
3,182
2,609
5,791
3,368
3,798
12,958
5,286
5,075
10,361
-
-
-
－%
Margin (%)
26.5%20.8%23.6%23.5%22.4%23.2%21.4%20.4
％
20.9%
-
-
-
-
EBITDA
2,197
1,712
3,909
2,140
2,051
8,102
3,277
2,423
5,700
-
-
13,000
160.4%
Margin
(%) 18.3%13.6%15.9%14.9%12.1%14.5%13.2%
9.7%
11.5%
-
-
11.8%-
Operating income
1,670
1,096
2,767
1,397
1,205
5,370
2,059
1,124
3,184
-
-
7,000
130.3%
Margin (%)
13.9%8.7%11.2%9.7%7.1%9.6%8.3%
4.5%
6.4%
-
-
6.3%-
Net income before
amortization of goodwill
1,618
422
2,041
1,384
933
4,359
1,456
461
1,918
-
-
5,400
123.8%
Margin (%)
13.5%3.3%8.3%9.6%5.5%7.8%5.9%
1.8%
3.8%
-
-
4.9%-
Net income attributable to
owners of the parent
1,585
390
1,975
1,348
853
4,178
1,223
182
1,405
-
-
4,300
102.9%
Margin (%)
13.2%3.1%8.0%9.4%5.0%7.5%4.9%
0.7%
2.8%
-
-
3.9%-
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Disclamer
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content of the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use
of this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the
reason thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgment of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
.
40
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IR | Earnings Presentation © GENDA Inc. GENDA
41
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© GENDA Inc. GENDA IR Latest Announced M&As
GENDA IR
Latest Announced M&As
June 27, 2024
1
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About GENDA
2
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© GENDA Inc. GENDA IR Latest Announced M&As
Our Aspiration and Vision
3
More fun for your days The World’s No.1
Entertainment Company in 2040
VisionAspiration
Speed is King, GRIT and GRIT, and Enjoy our Journey
With these three values, we take on new challenges and
aim to be the world’s number one entertainment company
We believe that “fun”is essential for human beings
“More fun for your days” is our “Aspiration”
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© GENDA Inc. GENDA IR Latest Announced M&As
The Big Picture of the Current Entertainment Industry
IP Contents × Platform
We believe the current business environment surrounding the entertainment industry
is to deliver the “IP Contents”such as animation to the “fans” through entertainment “platforms”.
In this context, we will first position “Platform”as our main growth driver, while entering into the “IP Contents”domain in the mid-to-long term.
4
IP CONTENTS PLATFORMS FANS
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Our growth strategy = "M&A in the Entertainment industry"
Completion of the Entertainment Ecosystem
5
Note: Diagram of our envisioned growth strategy.
Based on a foundation of continuous growth brought about by the steady expansion of our
domestic business and aggressive overseas business development, we aim to build a “GENDA
Entertainment Ecosystem” that will expand globally by accumulating M&A in both the entertainment
platform and entertainment content areas. In this way, we believe that we will be able to overcome
the volatility of the ever-changing entertainment business by building a solid business portfolio.
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© GENDA Inc. GENDA IR Latest Announced M&As
M&A and capital transactions track record "32"
6
・・・
11 21
1 2
345
6 7 8
910 11
12 13 14 15
18 19 20
26 27
3129 30 32
28
16
17 21 22
23 24 25
NEWNEW
July 2019
Joint Venture (50%)
June 2018
Acquisition (100%)
December 2020
Acquisition (85.1%)April 2021
Acquisition of
the business
October 2021
Capital Alliance
January 2022
Acquisition (100%)
January 2022
Acquisition
December 2021
Acquisition
June 2022
Capital Alliance October 2022
Acquisition
October 2022
Acquisition
Note: The number of acquired properties is as of the date of the announcement of the project. (planned)" indicates a project prior to closing.
Entertainment Contents Entertainment Platform
September 2023
Becoming a wholly
Owned subsidiary
September 2023
Transfer of Assets September 2023
Becoming a wholly
owned subsidiary
October 2023
Transfer of Fixed assets October 2023
Acquisition (66.0%)
November 2023
Acquisition (78.05%)
October 2023
Acquisition (100%)November 2023
Acquisition (100%)
November 2023
Assets transferred from
Global Solutions
December 2023
Acquisition
of Stores
December 2023
Acquisition of
management rights
AM Arcade
1 store (China)
#117 mini-
location
February 2024
Acquisition (82.45%)
January 2024
Acquisition (100%)
December 2023
Acquisition (100%)May 2024
Stock acquisition
(100%)
February 2024
Acquisition (78.59%)June 2024
Stock acquisition
(100%)
June 2024
Acquisition of the
business
Within 2024
(planned)
Acquisition (100%)
2024 July
(planned)
Acquisition (100%)
2024 August (planned)
Acquisition
[66.7-100]%
Pre-IPO #M&A Post-IPO #M&A
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GENDA Group Overview
GENDA is a pure holding company of amusement centric entertainment companies
7
F&B
100% 91.75% 92.3% 100% 66.0% 100% 78.05% 100%100%
Distribution of Prize of
Prize Games
VR Contents and
Experiential Attractions
Prize Planning,
manufacturing
and Sales
Film distribution
Planning, manufacturing
and sales of prizes Character
planning and
Development
100%
100%
100%
[66.7-100]%100%100%
100% 100%
GENDA GiGO Entertainment
Five Color Shin Corporation Japan Popcorn Ares Company
Dynamo
Amusement
Fkuya HD
GENDA Games GAGA
LEMONADE
Lemonica UK Limited Fukuya and
2 other companies Tokyo Character
Makers
ONTSU C’traum
AM Arcades
AM machine
planning and sale
and Prize
Wholesaling (China)
Karaoke
Store Operation HillValley brand
Popcorn production
and sales
LEMONADE
by Lemonica
Lemonade
Manufacturing
And sales
Lemonade
Manufacturing and
sales (UK)
Online crane game
Kiddleton
Distribution of
karaoke equipment
(Planned in August
2024)
Import and wholesale
of alcoholic beverages,
(Planned on
Jul. 30, 2024)
GiGOTaiwan 100%100%
NEW NEW
National Entertainment
Network
Mini-location (Planned in 2024) (U.S.)
ENTERRIUM
AM Arcades Complex (U.S.)
Note: Organizational chart as of June 27, 2024. AM arcades in the chart refer to amusement arcades. The figure shows mainly our consolidated subsidiaries.
The acquisition of C’traum will be completed in July 30. The acquisition of ONTSU will be completed in August 2024. The acquisition of National Entertainment Network will be completed during 2024.
Entertainment Platforms Entertainment Contents
Amusement Karaoke Character MD Contents & Promotion
Mini-
location
from GS
AM Arcades
(U.S) AM Arcades
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© GENDA Inc. GENDA IR Latest Announced M&As
GENDA's Business Portfolio
Amusement Centric + Peripheral Areas
Over 95% of GENDA’s Revenue and EBITDA
as of today are amusement arcades and karaoke
We continue to focus on M&As on platform area
While entering into the contents area in the mid-to-long term
8
8
¥63.0bn ¥8.8bn
¥4.0bn ¥0.6bn
¥10.0bn ¥1.0bn
¥20.0bn ¥1.9bn
¥3.0bn¥0.7bn
¥13.0bn¥100.0bn
Businesses related to
amusement arcades
Other Total
Karaoke (Karaoke BanBan)
Prize-related (Fukuya and Ares)
Amusement in U.S.(Kiddleton)
Amusement in Japan (GiGO, etc.)
Note: Breakdown of full-year plan at the beginning of the period.
EBITDARevenue
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© GENDA Inc. GENDA IR Latest Announced M&As
Sourcing by Inner Circle in the Entertainment Industry
M&A sourcing route mostly from extensive contacts in the entertainment industry
Of the 32 M&As, the majority of projects have been directly sourced, utilizing our group‘s human network, rather than through intermediary brokers.
Sourcing by inner-circle members in the entertainment industry facilitates not only price negotiation but also post-merger-integration.
9
Representative Director and Chairman of GENDA
Former Representative Director and President of Aeon Fantasy and
Former Representative Director and President of Aeon Entertainment
Nao Kataoka
Director, CCO and
Head of Contents & Promotion Business of GENDA
Former Executive Officer of Hakuhodo, and
President and CEO of TBWA＼HAKUHODO
Yuzo Sato
Chairman of GENDA GiGO Entertainment
Former President of GENDA GiGO Entertainment
(formerly Sega Entertainment)
Satoshi Ueno
Representative Director and President of GAGA
Former Representative Director, Chairman and President of Avex Inc.
Tatsumi Yoda
Founder of Fukuya Holdings Co.
Keiichiro Tanaka
Executive Officer, Head of Character MD Business of GENDA, and
Representative Director and President of Fukuya Holdings Co.
Executive Officer, Head of Amusement Arcade Business of GENDA, and
Representative Director and President of GENDA GiGO Entertainment
Former Executive Officer of Namco Bandai Amusement Inc.
Kazuhiro Ninomiya
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Executive Summary
10
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Summary of Today's Presentations
11
M&A – F&B : Acquisition of C’traum │ 80% Stock + 20% Debt financing
Import and sales of "Kleiner Fiegling", an easy-to-drink shot party drink popular among young people.
Latest actual results for FY2023/11: Revenue of ¥2.29bn and EBITDA of ¥1.10bn. Strong CF generation capability with an OP margin of 47%.
Entry EV/EBITDA of 1.8x with ample cash on hand. First stock M&A deal to preserve debt capacity and take advantage of the large PER gap.
Cash EPS to increase significantly by acquiring 80% of target shares of 5.9x PER with GENDA shares at 20.6x PER (20% already acquired via debt).
Stock deal M&A to a net cash company practically equals quasi equity financing, and in the case of C’traum, it simultaneously increases Cash EPS.
M&A – Karaoke : Tender Offer to ONTSU │ 100% Debt financing
A leading distributor of karaoke equipment whose existing business is expected to increase sales and profits for the fifth consecutive year.
Latest actual results for FY2024/3: Revenue of ¥4.41bn and EBITDA of ¥1.01bn.
Aiming to pursue synergies with our Karaoke BanBan through vertical integration in the upstream of the karaoke industry.
EV / EBITDA 5.6x, FY1 CE basis, and Cash EPS maximized by full debt financing with higher FCF generation compared to amusement arcades.
01
02
Note: For PER, PER based on Cash EPS(PER based on Net income before amortization of goodwill), is shown from the perspective of inspecting the increase or decrease in Cash EPS. The EBITDA forecast for Ondoku is the sum of the company's operating income
forecast plus the company's most recent actual depreciation and amortization of goodwill.
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01. M&A – Karaoke: Tender Offer to ONTSU
12
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© GENDA Inc. GENDA IR Latest Announced M&As
1.6 1.7 2.0 2.4
1.3 1.6 1.6 1.60.6 0.5 0.5 0.4
FY2021/3 FY2022/3 FY2023/3 FY2024/3 FY2025/3(E)
Sports business IP business
0.15 0.23 0.25 0.37
-0.17
0.05
0.11
0.18
0.01
0.04
0.05
0.05
0.30
-0.01
0.26
0.16
0.29
0.46
0.54
M&A – Karaoke: Tender Offer to ONTSU
Outline of ONTSU Co., Ltd.
Major distributor of karaoke equipment, with existing business expected to increase sales and profits for the fifth consecutive year.
Established in March 1981, the company's business is centered on the rental and sale of karaoke equipment.
13
“Food and household goods retail business” was sold in October 2021.
Wholesale of karaoke equipment also generated solid profits even under Covid era, and have grown through improved business efficiency and roll-up M&As.
The sports business is a franchise operation of fitness clubs and, with the exception of the one-time loss from the Covid-19, is a stable source of income.
Affinity with GENDA Group's entertainment platform as a physical platform as well.
IP business is coin-operated parking, etc., which the company acquired through M&A in the past based on affinity with location business
a
c
d
b
Operating Income
Food and household
goods retail business
Karaoke related
business
c
b
d
Revenue
13.0 8.1 4.0 4.4
(¥ in bn)
FY2021/3 FY2022/3 FY2023/3 FY2025/3(E)
FY2024/3
4.5
a
(¥ in bn)
Food and household
goods retail business
Karaoke related
business
IP businessSports businessOperating
income
Segment Profit
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© GENDA Inc. GENDA IR Latest Announced M&As
The Tender Offeror will conduct the Tender
Offer for all the Target Company's shares
(excluding treasury shares held by the Target
Company and the Non-Tendering Shares).
M&A – Karaoke: Tender Offer to ONTSU
Outline of the Tender Offer
14
TOB Outline
Offeror GENDA Inc.
Target ONTSU Co., Ltd.
Tender Offer Price 33 yen per share
Premium One day prior to announcement: 17.86%
Simple average of past 6 months: 22.22%
Transaction Value Equity Value: ¥6.7bn, EV: ¥6.2bn
Valuation
EV / EBITDA: 5.6x (EV is based on purchase price,
EBITDA is based on the company forecast)
Financing 100% Debt financing
Tender Offer Period From Jun.28 to Aug.13, 2024 (31 business days)
Lower Limit
Upper Limit Lower limit: 38.55%, Upper limit: none
(The lower limit is set at the number of shares equivalent to
more than two-thirds of the voting rights by the Offeror)
Policy on
Reorganization Plans to conduct squeeze out procedure to make
the target a wholly owned subsidiary of the Offeror
Tendering
Agreement
Shareholders
Kunihiko Okamura (President), Susumu
Nakagawa (Vice President), Mamoru Kobayashi
(Senior Managing Director), total of 4.03%
(7.33% less restricted shares)
Non-Tendering
Agreement
Shareholders
Digiunit
(24.83%), an asset management company
by Okamura, Nakagawa and Kobayashi’s.
Agreed to transfer to the Offeror on the settlement
date upon completion of the TOB
Tender Offer
After the completion of the Tender Offer, the
Target Company will be taken private
through the Share Transfer and the
Squeeze-out Procedures.
This share transfer and
This squeeze-out procedure
After the Transaction
Structure
Note: ONTSU's EBITDA forecast is based on the company's operating income forecast plus the company's most recent actual depreciation and amortization of goodwill.
The shareholders who have agreed to tender their shares refer to Mr. Okamura, Mr. Nakagawa, and Mr. Kobayashi, who will sign the tender agreement.
Tender Offer
Transfer of Shares
Squeeze-out
100%
Minority Shareholders
K.K. Digiunit
24.83 %67.84%
100%
Tendering Agreement
Shareholders
K.K. Digiunit
24.83 %67.84%
K.K. Digiunit
24.83 %75.17%
7.33 %
3.30 %
100%
Minority Shareholders
Tendering Agreement
Shareholders
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M&A – Karaoke: Tender Offer to ONTSU
Synergies in various areas by joining the GENDA Group
15
Synergies in various areas by joining the GENDA Group
Promotion of equipment installation to Karaoke BanBan
Increase the number of karaoke machines that ONTSU handles by introducing
new or upgraded karaoke machines at Karaoke BanBan through ONTSU.
a
Distributor of
Karaoke Equipment
Competitors
Karaoke
Operator
Day market Night market
Economies of scale in the Night market
By switching the karaoke equipment of Karaoke BanBan to new rentals from
ONTSU and having ONTSU collect used karaoke rental equipment no longer
needed by Karaoke BanBan at the end of the rental period, we will promote the
replacement of karaoke equipment in the night market and improve transaction
terms by rejuvenating the equipment age of karaoke equipment. Improved
conditions for transactions by rejuvenating the age of karaoke equipment.
b
Dealer roll-up M&A associated with network expansion
and increase in the number of units handled
In the karaoke market, which is in a mature business environment, business
integration among karaoke equipment dealers is expected to accelerate in the
future. By utilizing the resources of GENDA's M&A team, ONTSU will be able
to implement a growth strategy that it could not have done alone.
c
c
a
Snack Bar
Company
ACompany
B
NEW old NEW old
b
Karaoke Equipment
Manufacturer
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02. M&A – F&B : Acquisition of C’traum (80% Equity + 20% Debt financing)
16
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© GENDA Inc. GENDA IR Latest Announced M&As
To “increase Cash EPS”in M&A, it is necessary to have “(1) Cash EPS before M&A < (2) Cash EPS after M&A”. When Cash EPS increases in an M&A in which new shares are issued,
that translates to “increase in the number of shares < increase in profit”i.e., “the number of shares increases, but the profit increases even more".
Thus, there are M&As that increase Cash EPS (as a result of a further increase in earnings) even when the number of shares increases due to M&As from GENDA's new stock issuance.
The final criterion is whether the PER of the company is greater than the PER of the target company (see Appendix for details). The following three categories are illustrative examples.
M&A – F&B : Acquisition of C’traum (80% Equity + 20% Debt financing)
To increase “Cash EPS” by M&A through Stock Deal, it is important that
“PER of GENDA” > “PER of Target”
17
Cash EPS is maximized because the denominator "number of new GENDA shares to be issued" is zero and only the numerator "Net income before amortization of goodwill" of the subject company increases.
However, an overpriced M&A cannot be justified only because the entire consideration is debt. If the entire consideration is financed by debt to an M&A that is significantly overpriced relative to the target
company's profit, the absolute interest burden will offset the increase in profit, and in the first place, financial institutions will not provide full debt financing for an M&A that is significantly overpriced.
Cash EPS is maximized when M&A consideration is “Debt only”
The denominator “number of new GENDA shares to be issued”is determined by “the value of the subject company‘s shares (divided by GENDA’s share price). Therefore, the threshold is
whether the “equity value of Target”relative to the ”net income before amortization of goodwill of Target", which translates to the “PER of Target" is lower than the "PER of GENDA".
If the M&A consideration is “Stock only”, Cash EPS will increase if "PER of GENDA” >“PER of Target”
For example, if the acquisition consideration is "60% stock + 40% debt," the increase in GENDA shares determined by the "value of the target company's equity (divided by GENDA's share price)"
is limited to only 60%, unlike in the case of 100% equity and 0% debt, and as a result, the threshold is "PER of Target x 60%" is lower than the "PER of GENDA”.
If the M&A consideration is “Stock + Debt“, Cash EPS will increase if the ”PER of GENDA”> “PER of Target × % of Stock consideration”
Note: NI+A refers to Net income before amortization of goodwill. Assumptions do not take into account one-time M&A-related costs. Assumption is that borrowing costs are sufficiently low. Assumptions remain unchanged as long as the current domestic financial and
market environment remains within the current outlook (including a certain level of interest rate hikes). For PER, to inspect the Cash EPS, the comparison is based on Cash EPS-based PER, i.e., PER based on Net income before amortization of goodwill.
NI+A of GENDA
Cash EPS
Before M&A Number of existing GENDA shares
①+NI+A of Target
+Number of newly issued GENDA shares
②
＝ ＝
Cash EPS
After M&A
NI+A of GENDA
Number of existing GENDA shares
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C'traum
C'traum to become a wholly owned
subsidiary of GENDA
18
Import and sales of "Kleiner Feigling," popular among
young people as an easy-to-drink shot party drink.
About C'traum
The company has already acquired 20% of the company through debt on May 1, 2012.
This is the acquisition of the remaining 80% of GENDA by way of a partial share exchange
Structure
Consensus reached on EV of ¥1.98bn and EV/EBITDA of 1.8x.
With no Capex, EBITDA to FCF is around 70%, and cash recoup is expected in FCF 2.5 years.
Cash EPS increased significantly by acquiring 80% of the Target with
GENDA shares at a PER of 20.6x, compared to Citrum's PER of 5.9x.
The representative of C’traum, who is also the seller, has high expectations for GENDA's growth
and will join GENDA as the same role with GENDA shares as upside incentives
With no debt and 2.02 billion yen in cash and cash equivalents, the M&A by stock issuance to
C’traum, a net cash company, is a “quasi equity financing" economic effect. Practically, this is one
way for GENDA to improve Cash EPS while raising funds through equity.
Valuation
Note: From the perspective of inspecting the increase in Cash EPS, GENDA's PER is presented on a Cash EPS basis, i.e.,
on a Net income before amortization of goodwill basis. EV/EBITDA is based on FY2023/11 results.
Most recent results for FY2023/11
Net sales: ¥2.29bn, EBITDA: ¥1.10bn
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© GENDA Inc. GENDA IR Latest Announced M&As
153,330
193,020
2023 2027
137,330
175,940
2022 2028
Investment Highlights
Stable and growing spirits market
19
Note: Prepared by us based on articles from ResearchAndMarkets.com, "Spirits Global Market Report 2023," The IWSR, and BevAlc Insight; prepared by us based on articles from Expert Market Research, "Global Liqueur Market Report" and articles by global drinks intel.
Similar to amusement arcades, CAGR about 5%.
01
($ in mn)
Market Size Forecast for
Global Spirits
5.9%
+4.2%
+
Strengthen retail sales channels
The participation of C’traum, with major retail distribution channel,
will strengthen the GENDA Group's retail sales in the future.
02
Market Size Forecast for
Global Liqueurs
($ in mn)
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Investment Highlights
20
C’traum products, which have many collaborations with IP such as
dramas and animations, have the characteristics of products
developed on GENDA's definition of an entertainment platform, and by
strengthening sales of alcoholic beverages in our group, we can
expand the entertainment experience we can offer to our customers.
03
While Karaoke BanBan is scheduled to start handling lemonade on
July 1, Kleiner is already handled by 370 Karaoke BanBan stores,
unifying the GENDA Group's supply chain functions will optimize the
Group's supply chain in the F&B area. The unification of GENDA
Group's supply chain functions will lead to optimization of the
Group's F&B supply chain.
04
Accelerate IP Collaboration Supply Chain Optimization
Lemonade and Lemon Sour and other items will be listed starting
July 1 on the Grand Menu at BanBan Karaoke in about 370 locations
nationwide.. Kleiner has already been listed since last year.
©四葉タト・小川亮・講談社／「パリピ孔明」
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M&A F&B : PMI Results
21
Note: The comparison period is from the start of each company's consolidation with us to the end of the first quarter of FY2025/1. To ensure an accurate comparison of actual values, Lemonade by Lemonica excludes the confectionery export business,
which was terminated prior to the acquisition, and the latest overseas business start-up costs.
36
52
EBITDA
223 261
Revenue
HillValley brand of popcorn.
Planning, manufacturing and sales
Japan Popcorn
5 months prior to M&A (December 2022 - April 2023)
5 months after M&A (December 2023 - April 2024)
Production and sale of lemonade
Lemonade by
Lemonica
6 months prior to M&A (November 2022 - April 2023)
6 months after M&A (November 2023 - April 2024)
47 57
EBITDA
215 208
Revenue
(¥in mn)
20%
+
3%
▲17%
+44%
+
(¥in mn)
185
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Appendix
22
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Excerpts from FAQ (June 2024) released today
The Net Debt/EBITDA was 1.6x at 1Q FY2025/1 and is expected to be 1.8x after NEN's M&A,
which is approaching the upper limit of 3.0x, but can the company maintain its M&A pace going forward?
Even if Net Debt/EBITDA rises temporarily due to M&A, Deleveraging will proceed rapidly due to the utilization of the target company's Debt Capacity, EBITDA growth through PMI of the target company,
and ample cash flow from existing businesses. With the M&As announced today, we expect that the ratio will temporarily be 2.0x at the end of this fiscal year, but if there are no additional M&A in the
future, the deleverage will accelerate and we expect the ratio to go down to 1.5x at the end of the next fiscal year and 1.1x at the end of the year after that.
The wholly owned subsidiary of C'traum through partial share exchange announced today is the first M&A project utilizing GENDA shares. This has the following advantages, which we will take
advantage of this opportunity.
(1) M&A can be conducted while preserving Debt Capacity.
At the time of our IPO, the Company's Net Debt/EBITDA was 0.1x, which meant that it was virtually unable to utilize its debt, resulting in a low level of capital efficiency. From this point on, we have
achieved a certain level of improvement in capital efficiency by utilizing appropriate leverage through debt-financed M&A. However, from this point on, we will need to manage M&A activities while
controlling debt capacity rather than focusing solely on borrowing. As an intermediate method between debt and equity financing, we believe that M&A with stock deal is an effective way to
promote M&A while preserving our debt capacity.
However, from Cash EPS standpoint, entry valuation is more important for stock deal M&A than M&A solely with debt. This point is explained in section (2) below.
(2) If PER of GENDA is higher than the PER of target, Cash EPS will increase even with stock deal M&A.
The above is our approach to PER and Cash EPS in stock deal M&A, which is described in detail in the appendix of M&A materials released today. In addition, when the M&A consideration is a mix of
stock and cash (borrowings), the PER of the target company multiplied by the percentage of the acquisition via stock is compared with our PER, and the hurdle for increasing Cash EPS is lowered. For
example, for the C'traum acquisition, Cash EPS will increase significantly by acquiring 80% of C'traum's PER of 5.9x by acquiring GENDA shares at a PER of 20.6x (20% of the shares have
already been acquired through debt).
As we place importance on Cash EPS in M&A, we will limit our stock deal M&A to companies with lower PER (after taking into account the acquisition ratio) compared to our own PER. In the
future, we will continue to consider M&A by way of shares as an effective means to (1) preserve Debt Capacity while pursuing our M&A strategy, and (2) improve Cash EPS if our PER is high compared
to the PER of the target company.
In addition to (1) and (2), the M&A of the partial share exchange to C'traum has further advantages. (Continued on next page)
Note: Assumptions do not take into account one-time M&A-related costs. For PER, to inspect the Cash EPS, the comparison is based on Cash EPS-based PER, i.e., PER based on Net income before amortization of goodwill.
187
© GENDA Inc. GENDA IR Latest Announced M&As
The Net Debt/EBITDA was 1.6x at 1Q FY2025/1 and is expected to be 1.8x after NEN's M&A,
which is approaching the upper limit of 3.0x, but can the company maintain its M&A pace going forward?
(Continued from previous page)
(3) It will also be an incentive after participation in GENDA.
The representative of C'traum, which is also the seller, will continue to be the representative of C'traum after the participation in GENDA. Therefore, this M&A with GENDA shares can be used as an
incentive to increase the value of the shares after joining GENDA. Thus, if the seller of the target company's shares continues to promote its business in GENDA after the completion of the M&A, it
will be able to enjoy an upside by receiving GENDA shares as consideration, and will have an incentive to increase the value of GENDA's shares after the M&A is completed.
(4) A partial share exchange to C'traum, which is largely net cash, is effectively funded by equity.
In a typical M&A transaction, since the target company usually has interest-bearing debt, even debt minus cash will be positive (net debt position), and thus even a stock deal M&A will usually result in the
addition of incremental target company's debt.
However, in this M&A of C’traum via partial share exchange, the subject company was “debt free”as of the end of the most recent fiscal year with cash on hand of ¥2.02bn, and had negative net debt
(net cash position). As a result, the EV of the target company was ¥1.98bn and a equity value of ¥4bn. Therefore, with regard to the ¥4bn equity value of C‘traum’s shares, the 20% cash consideration
on May 1 plus the current 80% acquisition via new GENDA shares, ¥1.98bn is the consideration for the acquisition of C’traum’s business, and the rest of ¥2.02bn is effectively consideration for the
company‘s cash and deposits itself.
This has the same economic impact as if GENDA had completed equity financing. Furthermore, in this case, GENDA will be able to improve its Cash EPS while, practically raising funds
through equity. In addition, from the subject company owner's perspective, it is more reasonable from a tax perspective to sell the target company's cash, rather than withdrawing the cash as dividends
from the target, and we believe that this will have a certain level of replicability in the future.
We will continue to utilize equity M&A from the perspective of (1) and (2) alone, but we will also make good use of projects like this one, which have all the elements of (3) and (4), to control Debt
Capacity. We will continue to manage our business with an awareness of "continuous and discontinuous growth" and Cash EPS through M&A.
Note: Assumptions do not take into account one-time M&A-related costs. For PER, to inspect the Cash EPS, the comparison is based on Cash EPS-based PER, i.e., PER based on Net income before amortization of goodwill.
Excerpts from FAQ (June 2024) released today
188
© GENDA Inc. GENDA IR Latest Announced M&As
①
Approach to Stock Deal M&A
Cash EPS will increase if PER of GENDA > PER of Target, even for Stock Deal M&A
Therefore, even if the number of shares increases via stock deal M&A, Cash EPS will not be diluted but rather increase if the target PER is lower than our PER
25
Therefore, if “PER of GENDA > PER of Target", then "① ＜ ②", Cash EPS will increase.
# of GENDA shares outstanding
# of GENDA shares newly issued ＞NI+A of Target
NI+A of GENDA
GENDA
Share Price
# of GENDA shares
outstanding GENDA
Share Price ＞
NI+A of GENDA
# of GENDA shares
newly issued
NI+A of Target
GENDA PER Target PER
＜
Add 1 to both sides
# of GENDA shares newly issued
# of GENDA shares outstanding
NI+A of GENDA NI+A of Target
＞
...
Organize numerator and denominator
Swap the numerator of the left-hand side and the denominator of the right-hand side
...
＜
Cash EPS
before M&A
# of GENDA shares outstanding ＜NI+A of GENDA
# of GENDA shares outstanding +
+NI+A of Target
# of GENDA shares newly issued
NI+A of GENDA
NI+A of Target
Target Market CapGENDA Market Cap
GENDA NI+A ＞
# of GENDA shares newly issued
# of GENDA shares outstanding ＜NI+A of GENDA
NI+A of Target
Turn over the numerator and denominator
Note: NI+A refers to Net income before amortization of goodwill. Assumptions do not take into account one-time M&A-related costs. Assumes that the subject company's Net income before amortization of goodwill is in the black. For PER, to inspect the Cash EPS, the
comparison is based on Cash EPS-based PER, i.e., PER based on Net income before amortization of goodwill.
# of GENDA shares outstanding
NI+A of GENDA +NI+A of Target
# of GENDA shares
outstanding # of GENDA shares
newly issued NI+A of GENDA
＜
+
# of GENDA shares outstanding
# of newly issued GENDA shares
NI+A of GENDA
+NI+A of Target
1
＜
+
1
NI+A of GENDA
Cash EPS
Before M&A # of GENDA shares outstanding
①+NI+A of Target
+# of GENDA shares newly issued
②
＝ ＝
Cash EPS
After M&A NI+A of GENDA
# of GENDA shares outstanding
GENDA market cap = Number of GENDA shares x GENDA share price
Target market cap = Number of newly issued GENDA shares x GENDA share price
Divide both sides by GENDA share price
Swap the denominator of the left-hand side and the numerator of the right-hand side
Cash EPS
after M&A
②
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Disclamer
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content of the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use
of this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the
reason thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgment of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
.
26
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© GENDA Inc. GENDA IR Latest Announced M&As
27
More fun for your days
191
IR | 決算説明資料 © GENDA Inc. GENDA
GENDA IR
FY2025/1 1Q Earnings Presentation
June 11, 2024
1
192
IR | Earnings Presentation © GENDA Inc. GENDA
About Us
2
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IR | Earnings Presentation © GENDA Inc. GENDA
Our Aspiration and Vision
3
The World’s No.1
Entertainment Company in 2040
VisionAspiration
Speed is King, GRIT and GRIT, and Enjoy our Journey
With these three values, we take on new challenges and
aim to be the world’s number one entertainment company
We believe that “fun”is essential for human beings
“More fun for your days” is our “Aspiration”
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The Big Picture of the Current Entertainment Industry
IP Contents × Platform
We believe the current business environment surrounding the entertainment industry
is to deliver the “IP Contents”such as animation to the “fans” through entertainment “platforms”.
In this context, we will first position “Platform”as our main growth driver, while entering into the “IP Contents”domain in the mid-to-long term.
4
PLATFORMS FANS
195
IR | Earnings Presentation © GENDA Inc. GENDA
Our growth strategy = "M&A in the Entertainment industry"
Completion of the Entertainment Ecosystem
5
Based on a foundation of continuous growth brought about by the steady expansion of our
domestic business and aggressive overseas business development, we aim to build a “GENDA
Entertainment Ecosystem” that will expand globally by accumulating M&A in both the entertainment
platform and entertainment content areas. In this way, we believe that we will be able to overcome
the volatility of the ever-changing entertainment business by building a solid business portfolio.
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M&A and capital transactions track record "30
6
store (China)
#117 mini-
location
Pre-IPO #M&A Post-IPO #M&A
June 2024
Acquisition of the
business
Within 2024
(planned)
Acquisition (100%)
...
11 19
1 2
3 4 5
6 7 8
910 11
12 13 14 15
16 17 18 19 20
21 22 23 24 25
2926 27 28 30
Note: The number of acquired properties is as of the date of the announcement of the project. (planned)" indicates a project prior to closing.
July 2019
Joint Venture (50%)
June 2018
Acquisition (100%)
December 2020
Acquisition (85.1%)
April 2021
Acquisition of
the business
October 2021
Capital Alliance
January 2022
Acquisition (100%)
January 2022
Acquisition
December 2021
Acquisition
June 2022
Capital Alliance
October 2022
Acquisition
October 2022
Acquisition
September 2023
Becoming a wholly
Owned subsidiary
September 2023
Transfer of Assets
September 2023
Becoming a wholly
owned subsidiary
October 2023
Transfer of Fixed assets
October 2023
Acquisition (66.0%)
November 2023
Acquisition (78.05%)
October 2023
Acquisition (100%)
November 2023
Acquisition (100%)
November 2023
Assets transferred from
Global Solutions
December 2023
Acquisition
of Stores
December 2023
Acquisition of
management rights
February 2024
Acquisition (82.45%)
January 2024
Acquisition (100%)
December 2023
Acquisition (100%)
May 2024
Stock acquisition
(100%)
February 2024
Acquisition (78.59%)
June 2024
Stock acquisition
(100%)
Entertainment Contents Entertainment Platform
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GENDA Group Overview
GENDA is a pure holding company of amusement centric entertainment companies
7
June 1, 2024. AM arcades in the chart refer to amusement arcades. The figure shows mainly our consolidated subsidiaries. The acquisition of National Entertainment Network will be completed during 2024.
F&B
Entertainment Platforms Entertainment Contents
AM Arcades and Online Crane Game
GENDA GiGO Entertainment AM Arcades and
Prize Wholesaling
(China)
Five Color
Karaoke
Store Operation
Shin Corporation
HillValley brand
Popcorn
production and
sales
Japan Popcorn
Lemonade
Manufacturing
and sales
LEMONADE by
Lemonica
Distribution of Prize of
Prize Games
Ares Company
VR Contents and
Experiential Attractions
Dynamo
Amusement
Prize Planning,
manufacturing
and Sales
Fukuya
HD
100% 91.75% 92.3% 100% 66.0% 100% 78.05% 100%100%
Online crane game
GENDA Games
Film
distribution
GAGA
Kiddleton
AM Arcades
(U.S.)
AM Arcades
GiGOTaiwan
AM Arcades
SANDAI
AM Arcades Complex
ENTERRIUM
AM Arcades
AMEX
LEMONADE
Lemonica UK Limited
Planning,
manufacturing and
sales of prizes
Fukuya and
2other companies
Character
planning and
Development
Tokyo Character
Makers
100% 100% 100%
100% 100% 100% 100%
100% Mini-location
National Entertainment
Network
100%
Amusement Karaoke Character MD Contents &
Promotion
Mini-
location
from GS
Lemonade
Manufacturing
and sales
100%
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GENDA's Business Portfolio
Amusement Centric + Peripheral Areas
Over 95% of GENDA’s Revenue and EBITDA
as of today are amusement arcades and karaoke
We continue to focus on M&Ason platform area
While entering into the contents area in the mid-to-long term
8
¥63.0bn ¥8.8bn
¥4.0bn
¥0.6bn
¥10.0bn
¥1.0bn
¥20.0bn ¥1.9bn
¥3.0bn¥0.7bn
¥13.0bn¥100.0bn
Businesses related to
amusement arcades
Other Total
Karaoke (Karaoke BanBan)
Prize-related (Fukuya and Ares)
Amusement in U.S.(Kiddleton)
Amusement in Japan (GiGO, etc.)
Note: Breakdown of full-year plan at the beginning of the period.
EBITDARevenue
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Number of Entertainment Platforms
Number of GENDA “Entertainment Platforms" reached 1,998 (as of the end of May)
9
0
100
200
300
400
500
600
700
800
2021 2022 2023 2024
Number of
stores
Domestic AM: 322 stores
Karaoke in Japan: 366 stores
Domestic F&B: 55 stores
Others: 5 stores
Overseas AM: 11 stores
*As of May 31, 2024
759 stores
0
200
400
600
800
1,000
1,200 Number of
mini-location
Domestic: 796 locations
Overseas: 443 locations
1,239 locations
*As of May 31, 2024
2021 2022 2023 2024
(Store) (Location)
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IR | Earnings Presentation © GENDA Inc. GENDA
Executive Summary
10
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Executive Summary
11
results were significantly higher than the business plan
sales was +106%, +¥12.7bn, KPI EBITDA was +49%, +¥1.08bn, resulted in a transformational growth.
YoY at the time of the full-year results announcement
YoY profit of +23%, +¥0.39bn owing to the solid organic growth in amusement arcade and karaoke.
Shareholder benefits to launch
Launched a special benefit program that can be used at GiGO and Karaoke BanBan with a condition of six-month holding period.
The yield of the shareholder benefit is 2.5% at the previous (June 10, 2024) close, owing to the stock split. GENDA plans to ensure
transformational stock price
growth as well as solid shareholder benefit yields, to expand its shareholder base and reduce stock price volatility to lower its cost of capital.
01
PMI for character MD and karaoke even exceeded that of amusement arcades
FUKUYA, a prizes planning company, achieved dramatic growth with EBITDA of +142%, and Ares, a prizes wholesaler, EBITDA of +305%.
Karaoke BanBan succeeded in turning a profit in February for the first time since its incorporation, ensuring the achievement of
historical high profits in the first fiscal year of the Group’s operation. EBITDA was +85% YoY, with various synergies steadily materialized.
M&A of NEN, a long-cherished dream in the U.S. mini-location business
Breakthrough in tenant development across the U.S., which had been the greatest focus, with the addition of approximately
8,000 locations to the existing 443 U.S. mini-locations. Replace the old / U.S. style prize games with new / Japanese-style
“Kawaii”prizes at 8,000 locations. Entry valuation at 3.6x EV/EBITDA, resulting in M&A financing expected to be fully bankrolled.
02
03
04
Note: PMI stands for post-merger-integration.
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01. 1Q Earnings Results for FY2025/1
12
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IR | Earnings Presentation © GENDA Inc. GENDA
Consolidated Statements of Income
Organic growth and PMI of amusement arcade and karaoke
significantly exceeded the original business plan
13
1Q Total Full year
Excluding M&A expenses Including M&A expenses Including M&A expenses
(Yen in millions) FY2024/1 FY2025/1 YoY FY2025/1 YoY FY2024/1 FY2025/1
(forecast)YoY
Revenue 11,994 24,685 +106 %24,685 +106 %55,697 100,000 +80 %
EBITDA 2,197 3,301 +50 % 3,277 +49 %8,102 13,000 +60 %
(%) 18 %13 %13 %15 %13 %
Net income before amortization of goodwill 1,618 1,480 ▲9 %1,456 ▲10 % 4,359 5,400 +24 %
(%) 13 %6 %6 %8 %5 %
(Reference)
Net income before amortization of goodwill
(pre-tax basis)
1,679 2,176 +30 %2,152 +28 %4,577 7,425 +62 %
Operating income 1,670 2,083 +25 %2,059 +23 %5,370 7,000 +30 %
(%) 14 % 8 %8 %10 %7 %
a
EBITDA
(Reference) OP Income
Net income before
amortization of goodwill
c
d
a
d
c
b
b
As an M&A company, we are disclosing the intrinsic performance excluding one-time M&A expenses. M&A-related expenses in 1Q was ▲¥23mn.
Achieved a transformational growth as an M&A company, with net sales +106% YoY and EBITDA +50% YoY.
Contribution not only from M&A, but also from organic growth of amusement arcade and karaoke with significant excess in PMI
Expect +24% for the full year, with growth from M&A offsetting the tax burden that began in the current FY (effective tax rate of approx. 35%)
For comparison purpose of actual performance, net income before amortization of goodwill pre-tax is +30% YoY in 1Q, and +62% for the full year,
the largest growth rate among all profit indicators.
At the time of the full-year results announcement in March, GENDA was expecting YoY "profit decline" in 1Q due to goodwill amortization (the full-
year results were expected to be profitable due to the bias toward the second half of the year). However, as a result, significant increase of 25%
YoY due to better-than-expected PMI performance in amusement arcades and karaoke.
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Full-Year Earnings Forecasts
Despite strong 1Q results, full-year forecast remains unchanged at this moment
ahead of the coming summer season, one of our sales peaks
The 1Q results were significantly higher than the original plan in the amusement and karaoke businesses, which account for more than 95% of GENDA‘s
consolidated EBITDA. Although amusement arcade, karaoke, and prize businesses have been performing well across the board, GENDA will make a
decision on its earnings forecast based on July-August results, which is the peak season for sales.
14
Track Record
Consolidated Results
- OP income to "decrease" YoY due to amortization of goodwill
- EBITDA to "increase significantly" YoY
Aamusement Arcade
- Existing store sales growth rate for amusement arcades in the
low single-digits
Karaoke
- Karaoke plans an existing store sales growth of 0%
- Shin Corporation posted a single month loss in February for the 35th
consecutive year since its establishment
Initial forecast
Consolidated Results
- Even after goodwill amortization cost, OP income increased (+23%) YoY
- EBITDA increased even more (+49%) YoY
Amusement Arcade
- Existing store sales growth for amusement arcades was in the
high single digits (+7%)
Fukuya, Ares
- PMI of FUKUYA (prize planning) and Ares (wholesale of prizes)
has been successful with synergies
- EBITDA of Fukuya was "+142%", Ares "+305%"
Karaoke
- Existing store sales growth rate for karaoke was "+12%"
- Shin Corp. achieved its first profit surplus in Feb since incorporation
- EBITDA was "+85%" YoY as PMI along with synergies were more
successful than planned
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Consolidated Balance Sheet
Continue to maintain a sound balance sheet with financial discipline
15
(Millions of yen)
FY2024/1
End of Full-year
FY2025/1
End of 1Q Difference Remarks
Current assets 23,567 32,351 +8,784 Mainly increase in cash and deposits
Of which, cash and deposits 12,379 17,638 +5,259 Increase by cash from M&A targets. Maintain rich cash on hand
Fixed assets 28,573 46,830 +18,257 Increase in property, plant and equipment by new store openings
Of which, goodwill 4,992 11,100 +6,108 Maintained at about half of net assets (assume +¥2.0bn by NEN M&A)
Total assets 52,141 79,181 +27,040 Increase due to above factors
Total liabilities 32,476 57,833 +25,357 Increase mainly due to interest-bearing debt
Of which, interest-bearing debt 18,993 39,245 +20,252 Increase due to M&A financing (assume +5.5bn, with ¥3.5bn by NEN
M&A financing and +¥2.0bn by consolidation of NEN debt)
Net assets 19,664 21,348 +1,684 Mainly increase in equity capital
Of which, shareholders' equity 19,427 20,827 +1,400 Increase due to profit accumulation
Net Debt / OP Income before DA 0.8 x1.6 x+0.8 x Sufficient debt capacity maintained (assume 1.8x after NEN M&A)
Capital adequacy ratio 37.2 %26.3 %▲10.9 %To increase by profit with seasonality weighted towards fiscal year end
EBITDA in the calculation of Net Debt / EBITDA is presented using the current year's estimate of 13 billion yen, to be consistent with discussions with financial institutions.
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Breakdown of 1Q EBITDA Transition (YoY)
Contribution from M&A target companies is in full swing
Achieved 10% growth in existing businesses + 50% growth through M&A, and +50% YoY growth after taking into account the increase in company-wide costs
due to the expansion of scale. (Shin Corporation and PLABI are consolidated from February 1, 2024, so they are shown as M&A in FY25/1)
16
2
4
8
-2
22
33
2024/1期
Q1
既存会社 24/1期
M&A
25/1期
M&A
全社コスト 2025/1期
Q1
0
5
10
15
20
25
30
35
40
¥in bn)
FY2024/1
1Q
Existing
Company
FY2024/1
M&A
FY2025/1
M&A Company Cost FY2025/1
1Q
207
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151
121 129 126
111
80
100
120
140
160
180
24/1期
1Q
24/1期
2Q
24/1期
3Q
24/1期
4Q
25/1期
1Q
104
96 93 97 100
80
90
100
110
120
130
24/1期
1Q
24/1期
2Q
24/1期
3Q
24/1期
4Q
25/1期
1Q
157
116 120 122
112
80
100
120
140
160
180
24/1期
1Q
24/1期
2Q
24/1期
3Q
24/1期
4Q
25/1期
1Q
116
107 106
101
107
90
100
110
120
130
24/1期
1Q
24/1期
2Q
24/1期
3Q
24/1期
4Q
25/1期
1Q
Existing stores growth rate (YoY)
17
Note: Existing stores are defined as stores that have not been closed and have not had any floor space expansion or reduction in each quarter. For 1Q FY2024/1 data for karaoke, the compared 1Q FY2023/1 includes stores that were forced to close or to operate short-time due to the COVID act.
Amusement arcade sales
Number of karaoke customers Karaoke per customer
Karaoke sales
*
*
FY2024/1
Q1
FY2024/1
Q2
FY2024/1
Q3
FY2024/1
Q4
FY2025/1
Q1
FY2024/1
Q1
FY2024/1
Q2
FY2024/1
Q3
FY2024/1
Q4
FY2025/1
Q1
（％） （％）
FY2024/1
Q1
FY2024/1
Q2
FY2024/1
Q3
FY2024/1
Q4
FY2025/1
Q1
FY2024/1
Q1
FY2024/1
Q2
FY2024/1
Q3
FY2024/1
Q4
FY2025/1
Q1
（％） （％）
208
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5,075
7,040
Average User
Progress of DX measures
Confirm formation of GiGO loyalty for "Prize Pass" members
“Prize Pass”allows users to earn prize game tickets by paying a monthly subscription fee.
In particular, light users have a greater effect to improve the frequency of store visits and the amount of monthly charges.
GENDA will continue to focus on acquiring new members, as the increase in "Prize Pass" members will contribute to the formation of stable cash flow.
18
# of monthly visits
2.5
3.1
Average User
Monthly spending
(Excluding the monthly fee for the Prize Pass)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2023 2024
Number of Prize Pass members
1.3
2.1
Light User
7,925
1,652
3,759
Light User
Yen)
(times)
(persons)
Note: The light user refers to users with an average monthly usage frequency of 0~4 times. Comparison of 30days before and after subscription. Before After
+24% +61% +39% +127%
209
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02. PMI: Non-amusement arcade PMI outcomes
19
210
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Non-amusement arcade PMI - character MD area
PMI measures for prize related companies "FUKUYA" and "Ares"
FUKUYA plans the most important prizes in today's amusement arcades, and Ares is responsible for the wholesale function of the prizes.
GENDA's entertainment platforms contribute to the expansion of each company in the character MD area.
20
Increase in sales volume of prizes at Fukuya and Ares
Increased sales volume as a manufacturer and wholesaler by leveraging GENDA Group platform.
As a result, they gain scale economies, negotiating power, and new initiatives to fuel growth.
Cross-selling of customers and products at Fukuya and Ares
Collaborate with character merchandising companies and F&B to introduce each company's
existing customers and cross-sell each company's products. Enables a multilayered procurement
network that cannot be achieved by standalone basis
To be
execu
ted
Development of new prizes at Fukuya and Ares
GiGO's expertise and nationwide network of stores enables joint location testing of prizes.
Develop value-added prizes by reflecting new ideas and end-user feedbacksthrough interaction.
To be
execu
ted
Fukuya to jointly develop stores with GiGO
Sharing tenant information and opening of fanfancy+ as a joint store with GiGO, and facilitating
the smooth progress of new expansion initiatives to strengthen customer contact points
To be
execu
ted
Expanding the channel for wholesale of prizes in Ares
GENDA Group has a diverse network of stores, including GiGO, karaoke BanBan, and overseas,
so that Ares can attract prize makers that currently do not have any business yet
Decrease in unit production cost
Benefit from scale economies by being able to manufacture in quantities as we can count on GiGO
and GENDA group amusement arcades
Consolidation of SG&A and utilization of GENDA resources
Not only reducing SG&A by consolidating corporate functions, but also enabling the functions such
as legal, IT, PR/brand creative, etc., dramatically improved in terms of quality
Acceleration of copyright licensing
The increase in sales volume by the GENDA Group and its credibility as a publicly traded group of
companies, enabled smoother copyright permission from attractive copyright holders
Sharing procurement channels
Character MD companies share the same suppliers,thus immediately after joining the GENDA
Group, transactions with top-quality suppliers become possible
Improvement of transaction credit as a group of listed companies
Secondary effects of improved credit at the time of transaction, such as increased focus on core
business and improved business efficiency
Cost Reduction Measures
211
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PMI Results in the Character MD
21
19
79
EBITDA
1,139
1,534
Sales
663
1,394
Sales
100
242
EBITDA
Fukuya
3 months before M&A (Feb 2023 -Apr 2023)
3 months after M&A (Feb 2024 -Apr 2024)
(¥ in millions)
Planning and wholesale of
prizes for amusement arcades
Ares Company
6 months before M&A (Nov 2022 -Apr 2023)
6 months after M&A (Nov 2023 -Apr 2024)
(¥ in millions)
Note: YoY comparison before and after M&A.
+110% +142% +35% +305%
212
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Non-amusement arcade PMI - Karaoke
PMI measures using the GENDA Group platform
The key point is that the GENDA platform can be used to implement measures that contribute not only to cost reduction but also to sales improvement.
Furthermore, the marginal profit for karaoke is "90%" and the effect of PMI on increasing the amount of profit and profit margin is higher than that of
amusement arcades, which have a marginal profit of 70%.
22
Pricing optimization
Appropriate price revisions in some stores. Large impact on profits due to high marginal profit margin
Karaoke x amusement arcades reciprocal sales promotion
Increased customer traffic at neighboring stores of GiGO and Karaoke BanBan by distributing promotional
tickets and displaying posters at both stores
Karaoke x IP collaborations
Utilize GiGO's business network to collaborate with IPs that could not be done by karaoke BanBan alone
and increase in customer spending by offering collaborative menus
To be
execu
ted
Karaoke x amusement arcades joint shop opening
Enables expansion into properties that could not be considered for store openings with either GiGO or
BanBan karaoke alone
To be
execu
ted
Karaoke x GENDA Group F&B
Adding food and beverage items from the GENDA Group's F&B domain to the karaoke grand menu,
contributing to an increase in the unit price per customer and sales growth of the Group's businesses
To be
execu
ted
Karaoke x DX
Improve customer satisfaction by revamping customer applications and increase operational efficiency by
deploying IT tools for internal use
Closing of unprofitable stores
Close examination of each store after the Covid-19, and apply optimal store management
Production costs for karaoke promotional materials
Sales promotion materials such as store pop-ups and decorations can be completed within the GENDA Group
Joint procurement of consumables and other supplies in the GENDA Group
Negotiate prices for consumables, etc. by mutually introducing existing suppliers within the group
Reduction of financing costs
CMS utilization of GENDA Group surplus funds contributes to the Group-wide reduction of financing costs
Sales Improvement Measures Cost Reduction Measures
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4,615 5,172
Net sales
366
677
EBITDA
PMI Achievements in the Karaoke Domain
23
Note: Comparative figures are for all Shin Corporation companies that operates Karaoke BanBan. Note: YoY comparison before and after M&A.
Karaoke BanBan
3 months before M&A (Feb 2023 -Apr 2023)
3 months after M&A (Feb 2024 -Apr 2024)
© Inio Asano / Shogakukan / DeDeDeDe Committee
+85%
(¥ in millions)
214
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03. M&A: Regarding the NEN M&A announced today
24
215
IR | Earnings Presentation © GENDA Inc. GENDA
M&A of NEN Corporation
"Dream Deal" we have envisioned since the launch of Kiddleton's U.S. operations
25
NEN Company Profile
Sales $100.3m, EBITDA $8.0m
Entertainment company founded in 1995 and Headquarters
in Colorado, USA
Financial Results (FY2023/12)
Facilities
Approx. 8,000 mini-location
Valuation
GENDA actively proposed the acquisition of NEN, which had been a
“dream” of Kiddleton since its inception in the U.S.
29 years of incorporation with 67 minority shareholders seeking to exit,
GENDA provided the liquidity to secure an attractive valuation
Enterprise value $29m, EV / EBITDA 3.6x (based on FY2023/12 actual).
With our debt capacity, M&A to be fully financed by debt, same as in the
previous year. Cash EPS increases unilaterally by increasing profit with
unchanged number of shares
Investment Highlights
216
IR | Earnings Presentation © GENDA Inc. GENDA
Investment Highlights
Utilize NEN's business network with major chain stores
NEN already has relationships with major GMSs and restaurants across the U.S.,
which enables Kiddleton to gain a network of new client locations that Kiddleton does not currently have access
26
217
IR | Earnings Presentation © GENDA Inc. GENDA
Investment Highlights continued
Establish the network throughout the U.S.
Explosive increase in sales coverage area
In addition to the sales office, Kiddleton’s current three-person repairment team
can be done through NEN's nationwide maintenance network
27
Approx. 8,000
Approx.
8,800
TOTAL
May
2024
Within 2024
(planned)
443
# of location
added
218
IR | Earnings Presentation © GENDA Inc. GENDA
Investment Highlights continued
Japanese "Kawaii" is now available in the U.S!
Pursuing uniqueness by offering products and experiences that are only available here. Expand globally by leveraging synergies within the group.
The chassis will be provided by Five Colors, prizes will be exported from Ares and Fukuya, and Japanese "Kawaii" will be provided by Kiddleton and NEN to
8,800 locations in the U.S.
28
Note: The photo is an image.
219
IR | Earnings Presentation © GENDA Inc. GENDA
Investment Highlights continued
Many synergies expected in Kiddleton's mini-location operations
29
To be
execut
ed
Lower procurement costs for amusement machines
Exporting from the GENDA Group‘s Chinese subsidiary (Five Colors) will increase the volume of
transactions by companies within the group, with flexible and agile response
To be
execut
ed
Expansion of maintenance network
Establish an efficient repair system by leveraging NEN's unique maintenance network across the U.S.
To be
execut
ed
Streamlining of sales operation team
Combining NEN's robust sales operation team, with its own staff covering all locations, and Kiddleton's
flexibility, with its area supervisory staff consisting mainly of part-timers, enables the creation of an
optimal management structure tailored to each location.
・・・・・
Cost Reduction Measures
To be
execu
ted
Procurement of prizes
Japanese Kawaii prizes that can be procured owing to the GENDA platform can be spread to NEN's
approximately 8,000 U.S. locations
To be
execu
ted
Improved quality of amusement machines
Improve the atmosphere of your store by placing cool design amusement machines
To be
execu
ted
Horizontal development of DX
Accelerate digital expansion with GENDA's tech team
・・・・・
220
IR | Earnings Presentation © GENDA Inc. GENDA
04. Other: shareholder benefits program
30
221
IR | Earnings Presentation © GENDA Inc. GENDA
GENDA shareholder benefits program
Coupon for GiGO and Karaoke BanBan
Coupons that can be used at both GiGO and Karaoke BanBan stores to be given twice a year. 3 plans based on the number of shares.
Note: Shareholders who are listed in the Company's shareholder registry as of the last day of January and the last day of July of each year as holding one unit (100 shares) or more, and who have continuously held such shares for
six months or more are eligible. Shareholders who have continuously held the shares for six months or longer are defined as those shareholders who have been listed or recorded as holding one trading unit (100 shares) or more
under the same shareholder number in the Company's shareholder registry as of the last day of January and the last day of July for two or more consecutive times.
Invitation to
be sent
Shareholders’
register listing
Last day for
Entitlement
31st
Jul.
Coupons are valid for 6 months and can be used at GiGO stores up to 500 yen per day. No limit for usage at Karaoke BanBan.
Interim
Year-end
31
500
100
299
〜
300
499
〜
×＝20,000yen
10,000yen
×＝12,000yen
6,000yen
×＝4,000
Per
Annum yen
2,000yen Twice
a year
COUPON
shares
shares
shares
shares
shares
Twice
a year
Twice
a year
Per
Annum
Per
Annum
End of
Jul. Late
Oct. 31st
Jan.
End of
Jan. Late
Apr.
Invitation to
be sent
Shareholders’
register listing
Last day for
Entitlement
222
IR | Earnings Presentation © GENDA Inc. GENDA
Q&A
32
do I become eligible for the first shareholder benefit?
must hold at least 100 shares of our company's stock by Monday, July 29, 2024,
hold at least 100 shares continuously as of Wednesday, January 29, 2025.
Q1
When will the first shareholder benefit be offered?
Around late April 2025.
Q2
223
IR | Earnings Presentation © GENDA Inc. GENDA
Appendix
33
224
© GENDA Inc. GENDA IR | Earnings Presentation
Consolidated Statements of Income (Quarterly Results)
34
FY2024/1 FY2025/1
1Q 2Q 2Q
YTD 3Q 4Q Full
year 1Q 2Q 2Q
YTD 3Q 4Q Full
Year YoY
(Millions of yen)
Revenue 11,994 12,520 24,515 14,293 16,888 55,697 24,685 ----100,000 179.5%
Gross profit 3,182 2,609 5,791 3,368 3,798 12,958 5,286 ------%
Margin (%) 26.5%20.8%23.6%23.5%22.4%23.2%21.4%------
EBITDA 2,197 1,712 3,903 2,140 2,051 8,102 3,277 ----13,000 160.4%
Margin (%) 18.3%13.6%15.9%14.9%12.1%14.5%13.2%----13.0%-
Operating income 1,670 1,096 2,767 1,397 1,205 5,370 2,059 ----7,000 130.3%
Margin (%) 13.9%8.7%11.2%9.7%7.1%9.6%8.3%----7.0%-
Net income before
amortization of goodwill 1,618 422 2,041 1,384 933 4,359 1,456 ----5,400 123.8%
Margin (%) 13.5%3.3%8.3% 9.6%5.5%7.8%5.9%----5.4%-
Net income attributable to
owners of the parent 1,585 390 1,975 1,348 853 4,178 1,223 ----4,300 102.9%
Margin (%) 13.2%3.1%8.0% 9.4%5.0%7.5%4.9%----4.3%-
225
IR | Earnings Presentation © GENDA Inc. GENDA
Disclamer
This document has been translated from the Japanese original for reference purposes only.In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.
The purpose of this document is to provide shareholders, investors, and others with information on our management policies, plans, and financial condition,
and is not intended as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials posted on this document, no guarantee is made as to the accuracy
of the content of the information or the timing of updates. In no event shall we be liable for any damage or trouble arising out of or in connection with the use
of this website, including, but not limited to, the downloading of any information or data contained in this website, or any errors therein, regardless of the
reason thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that are not historical facts are forward-looking statements about
future business performance, etc. These statements are based on the judgment of our management in light of the information currently available to it and
involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including economic
conditions and competition in the entertainment industry.
.
35
226
IR | Earnings Presentation © GENDA Inc. GENDA
36
227
© GENDA Inc.
M&A Progress and
FY2025/1 Q1 Outlook
April 23, 2024
228
© GENDA Inc. 2
World’s No.1
Entertainment
Company in
2040
=
Aspiration Vision
More fun
for
your
days
229
© GENDA Inc. 3
Our growth strategy = "M&A in the Entertainment industry"
Entertainment Ecosystem
Note: Diagram of our envisioned growth strategy.
Broadly rooted in the Entertainment Field
Building a Global Entertainment Network
Global
Entertainment
Network for
Dreams and
Aspiration
230
© GENDA Inc. 4
IP Contents × Platform
A "platform" that connects "IP content" with fans of IP contents
“Entertainment Contents” “Entertainment Platform”
The Big Picture of Current Entertainment Industry
Platform connecting
IP contents and the Fans
IP Contents
such as Anime Fans of the
IP contents
231
© GENDA Inc. 5
The Center of our Strategy
“Amusement Arcade Roll-up”
15th deal
Announced a second roll-up M&A
during the first quarter of the ongoing term
Acquisition of 100% stake of AMEX (announced on April 23, 2024)
Mini-location
117 locations
AM Store
Operation
from Kaku
•AMEX Co., Ltd. operates three
amusement arcades in the Tokai
region under “FANTASIAN” logo
•Sharing human resources and
DX tools, and the GiGO-exclusive
prizes ("Campaigns")
Note: The number of acquired properties is as of the date of project announcement. Five colors is not counted in the 15 deals because it was established by GENDA.
232
© GENDA Inc. 6
Entertainment
Platforms
27
May 2024 (scheduled)
Stock acquisition (100%)
Note: The number of acquired properties is as of the date of the announcement of the project (scheduled)" indicates a project prior to closing.
Entertainment Platform
July 2019
Joint Venture (50%) December 2020
Acquisition (85.1%) April 2021
Acquisition of the business October 2021
Capital Alliance
June 2022
Capital Alliance
January 2022
Acquisition (100%)
September 2023
Becoming a wholly
Owned subsidiary
January 2022
Acquisition
December 2021
Acquisition October 2022
Acquisition
September 2023
Transfer of Assets September 2023
Becoming a wholly
owned subsidiary
October 2023
Transfer of Fixed assets October 2023
Acquisition (66.0%)
June 2018
Acquisition (100%)
October 2022
Acquisition
November 2023
Acquisition (78.05%)
October 2023
Acquisition (100%)November 2023
Acquisition (100%)December 2023
Acquisition
of Stores
Entertainment Platform Entertainment Platform Entertainment Contents Entertainment Platform Entertainment Platform
Entertainment Platform
Entertainment Contents Entertainment Platform Entertainment Platform Entertainment Platform Entertainment Contents
Entertainment Platform
Entertainment Platform Entertainment Contents Entertainment Platform Entertainment Platform
Entertainment Contents Entertainment Contents Entertainment Platform Entertainment Platform Entertainment Platform
2345
6
20 21
11
1
19
18
8910 11
7
14 1513
November 2023
Assets transferred from
Global Solutions
Mini-location
117 locations
December 2023
Acquisition of
management rights
22
AM Arcade
1 store
(China)
February 2024
Acquisition (82.45%)
Entertainment Platform
Entertainment Contents 25
January 2024
Acquisition (100%)
24
12 16
17
Entertainment Platform
26
February 2024
Acquisition (78.59%)
1〜11
17
12 〜28
Post-IPO #M&A
Pre-IPO #M&A
December 2023
Pino Pino Zaurus Limited
Acquisition (100%)
Entertainment Platform
23
“28” M&A and Capital Transactions Track Record
Entertainment
Platforms
28
June 2024 (scheduled)
Stock acquisition (100%)
・・・
233
© GENDA Inc. 7
LEMONADE Lemonica
UK Limited
GENDA GiGO Entertainment
GENDA Games
Kiddleton
100% 100% 91.75% 78.59% 100% 66.0% 100% 78.05% 100%
100% 100%
100%
100%
100%
100%
100%
ENTERRIUM
100%
Note: Assumption as of 1 June 2024. “AM arcade” in the figures refer to amusement arcades. Shows mainly consolidated subsidiaries of the Company.
The acquisition of Sundai shares and the transfer of Kiddleton shares will be completed on 1 May 2024, while the acquisition of AMEX shares and the absorption of PLABI will be completed on 1 June 2024.
100%
Mini
Locations
from GS
GENDA Group Overview
GENDA is a Pure Holding Company of
Entertainment Companies centered in Amusement Industry
Entertainment Platform Entertainment Contents
Amusement F&B Contents &
Promotion
Character MDKaraoke
AM Arcades and Online Crane Game
AM Arcades AM Arcades
(scheduled for
1 June 2024)
AM Arcades
(scheduled for
1 June 2024)
AM Arcade
Complex
GiGO Taiwan SANDAI AMEX
AM Facility
Management
(U.S.)
Online Crane Game AM Arcade and
Prize Wholesaling
(China)
Five Color
Karaoke Store
Operation
Shin
Corporation HillValley brand
Popcorn production
and sales
Japan
popcorn Lemonade
Manufacturing
and sales
Lemonade
By Lemonica Planning,
manufacturing
and wholesale of
prizes
Lease and sales
biz of AM-related
products
Ares
Company
Prize Planning,
manufacturing
and Sales
Fukuya HD
Prize Planning,
Manufacturing
and Sales
Fukuya and
2 other companies
Character
Planning and
Development
Tokyo Character
Makers
Film
distribution
GAGA
VR Contents and
Experiential
Attractions
Dynamo
Amusement
Lemonade
Manufacturing
and sales
234
© GENDA Inc. 8
Amusement Centric + Peripheral Areas
Accelerate M&A in amusement industry and
steadily advance into peripheral areas in the entertainment field
GENDA GiGO
Entertainment
M&A announced
Pre-IPO &
existing businesses
“Entertainment Contents”
“Entertainment Platform”
Pre-IPO M&A and
existing business
Karaoke
Mini-location
117 locations AM Facilities
1 store (China)
M&As announced
post-IPO ~ Dec. 2023 M&A of PLABI
Character
MD
Note: The number of locations acquired is as of the date of the announcement of the project. Character MD means Character Merchandising.
F&B
M&A announced
Post-IPO~
December 2023
GENDA’s Status Today (as of April 23, 2024)
Contents &
Promotion
M&A announced
after 2024
Amusement
M&A announced
after 2024
235
© GENDA Inc. 9
PMI Results
of Amusement arcade
Whether the amusement arcades
acquired at an appropriate valuation
is growing with synergies
236
© GENDA Inc. 10
PMI results of Amusement Arcades
Whether Acquired Amusement Arcades are Growing through
Post Merger Integration (PMI) based on Synergies
◼Previously, we have emphasized "appropriate entry valuation" as our M&A strategy
→ Today, our focus is whether acquired arcades are "growing through PMI based on synergies
◼We believe that if target companies acquired with “appropriate valuation” grows through PMI
based on synergies, it is an ideal form of the “Flywheel Effect" creating a positive spiral
―Especially in M&A, if the target company acquired at an appropriate price will further grow through PMI based on
synergies, that will be able to create a positive spiral that will generate cash flow for the next M&A
◼The growth of the target company through PMI based on synergies after the M&A will mean that
the entry EBITDA multiple was, an even lower multiple in reality, which will accelerate the
originally expected payback period of the investment
―For example, when the entry EBITDA multiple at the time of the M&A is 4.0x, and if the target company's EBITDA
grows by 2x after the M&A, this means the cash generation ability of the target doubles, and also means that the
payback period is reduced by 1/2, which is the same effect as if the Entry EBITDA Multiple had been 2.0x in real
terms
◼From the next page, we will examine whether the amusement arcades acquired at an appropriate
price is growing through PMI based on synergies, and then, we will show you the return on
investment as a result
―EBITDA is described as "operating income before depreciation and amortization" from this disclosure
237
© GENDA Inc. 11
List of PMI Measures in Amusement Arcades
PMI know-how in amusement arcades accumulated through previous roll-up M&As
Sales Enhancement Measures
Prize line-up, incl. GiGO-exclusive prizes
GiGO-exclusive prizes (including campaigns) and an optimal line-
up of prizes that can be stocked because GiGO has 320 shops,
are also offered to acquired amusement arcades
Increase in prize game machines
Investment in equipment for prize games, etc. and equipment
sharing within the Group to ensure an appropriate game mix based
on GiGO's database
Horizontal deployment of operation manuals
Horizontal deployment of GiGO's manuals and layout know-how
improves quality of service
Horizontal deployment of DX measures
Utilize tools used in GiGO stores, such as customer apps (GiGO
apps) and employee apps (GiGO NAVI) and Digi-Chaim
Renovations (incl. GiGO rebranding)
The effectof the above mentioned giveaways, equipment, and
interior and exterior renovations in combination with the rebranding
alone is significant.
Cost Reduction Measures
◼The key point is that it is possible to implement measures that not only reduce costs but also contribute to improving sales
―Effective PMI measures implemented based on GiGO's database
―Profit growth is greater than the sales growth in the amusement arcade business, where marginal profit margins are 70%
Cost
synergies of amusement machines
By joining the GiGO Group, acquired amusement arcades are able
to purchase amusement machines directly from manufacturers,
which would otherwise be difficult
Cost synergies of prize
s
Group-wide bulk purchasing enables us to lower not only the
purchase price of prizes, but also distribution costs
Equipment repair
ment expenses
Repairs that were previously sent to the manufacturer can now be
completed within the group
Periodic cleaning
costs
Outsourcing to cleaning companies contracted collectively by GiGO
reduces costs compared to contracting with individual companies
Cost of supplies (uniforms, prize bags, etc.)
Not only cost reduction through simultaneous ordering, but also
customer satisfaction through quality improvement
238
© GENDA Inc. 12
TAKARAJIMA Co.,Ltd.
Note: Operating income before D&A (depreciation and amortization) refers to EBITDA, which is the sum of operating income plus depreciation and amortization and goodwill amortization, excluding stores closed by the end of FY1/2024.
Before
Sales Improvement Measures Cost Reduction Measures
Prize line-up
incl. GiGO-exclusive prizes
Cost synergies of
amusement machines
Increase in
prize game machines
Cost synergies of
prizes
Horizontal deployment of
operation manuals
Equipment repair
ment
expenses
Horizontal deployment of
DX measures
Periodic cleaning costs
Some
unexe
-cuted
Renovations
(incl. GiGO rebranding)
Cost of supplies
(uniforms, prize bags, etc.)
After
OP Income
before D&A
133%
Revenue
122%
(Millions of yen)
Compared stores: 20 stores (acquired on January 31, 2022)
Compared period: 12 months prior to M&A (Feb 2021 - Jan 2022) vs.
12 months of the latest period (Apr 2023 - Mar 2024)
2,094 2,561
521 695
12-month
comparison
239
© GENDA Inc. 13
SUGAI DINOS, Inc.
Before After
Sales Improvement Measures Cost Reduction Measures
Prize line-up
incl. GiGO-exclusive prizes
Cost synergies of
amusement machines
Increase in
prize game machines
Cost synergies of
prizes
Horizontal deployment of
operation manuals
Equipment repair
ment
expenses
Horizontal deployment of
DX measures
Periodic cleaning costs
Renovations
(incl. GiGO rebranding)
Cost of supplies
(uniforms, prize bags, etc.)
Note: Operating income before D&A (depreciation and amortization) refers to EBITDA, which is the sum of operating income plus depreciation and amortization and goodwill amortization, excluding stores closed by the end of FY1/2024.
1,443 1,939
359
OP Income
before D&A
546%
Revenue
134%
(Millions of yen) 12-month
comparison
66
Compared stores: 18 stores (acquired on October 1, 2022)
Compared period: 12 months prior to M&A (Oct 2021 - Sep 2022) vs.
12 months of the latest period (Apr 2023 - Mar 2024)
240
© GENDA Inc. 14
Note: Operating income before D&A (depreciation and amortization) refers to EBITDA, which is the sum of operating income plus depreciation and amortization and goodwill amortization.
Formerly AM Jam Jam (Avice Corporation)
Before After
239 282
16
OP Income
before D&A
+19mn
turned positive
Revenue
118%
(Millions of yen)
12-month
comparison
▼3
Sales Improvement Measures Cost Reduction Measures
Prize line-up
incl. GiGO-exclusive prizes
Cost synergies of
amusement machines
Increase in
prize game machines
Cost synergies of
prizes
Horizontal deployment of
operation manuals
Equipment repair
ment
expenses
Horizontal deployment of
DX measures
Periodic cleaning costs
Renovations
(incl. GiGO rebranding)
Cost of supplies
(uniforms, prize bags, etc.)
Compared stores: 4 stores (acquired on October 1, 2022)
Compared period: 12 months prior to M&A (Oct 2021 - Sep 2022) vs.
12 months of the latest period (Apr 2023 - Mar 2024)
241
© GENDA Inc. 15
Sales Improvement Measures Cost Reduction Measures
Prize line-up
incl. GiGO-exclusive prizes
Cost synergies of
amusement machines
Increase in
prize game machines
Cost synergies of
prizes
Horizontal deployment of
operation manuals
Equipment repair
ment
expenses
Some
unexe
-cuted
Horizontal deployment of
DX measures
Some
unexe
-cuted
Periodic cleaning costs
Renovations
(incl. GiGO rebranding)
Cost of supplies
(uniforms, prize bags, etc.)
Note: Operating income before D&A (depreciation and amortization) refers to EBITDA, which is the sum of operating income plus depreciation and amortization and goodwill amortization.
Former MAXIM HERO (Amuzy corporation)
Before After
40 51
7
OP Income
before D&A
3,070%
Revenue
128%
(Millions of yen)
5-month
comparison
0.2
Compared stores: 1 store (reopening on October 5, 2023)
Compared period: 5 months prior to M&A (Nov 2022 - Mar 2023) vs.
5 months of the latest period (Nov 2023 - Mar 2024)
242
© GENDA Inc. 16
Sales Improvement Measures Cost Reduction Measures
Prize line-up
incl. GiGO-exclusive prizes
Cost synergies of
amusement machines
Increase in
prize game machines
Cost synergies of
prizes
Some
unexe
-cuted
Horizontal deployment of
operation manuals
Equipment repair
ment
expenses
Some
unexe
-cuted
Horizontal deployment of
DX measures Unexe
-cuted
Periodic cleaning costs
Unexe
-cuted
Renovations
(incl. GiGO rebranding) Unexe
-cuted
Cost of supplies
(uniforms, prize bags, etc.)
Note: Operating income before D&A (depreciation and amortization) refers to EBITDA, which is the sum of operating income plus depreciation and amortization and goodwill amortization.
Former SUPER NOVA (YK Corporation)
Before After
386 396
80 97
Revenue
102%
OP Income
before D&A
121%
(Millions of yen)
3-month
comparison
Compared stores: 6 stores (acquired on December 26, 2023)
Compared period: 3 months prior to M&A (Jan 2023 - Mar 2023) vs.
3 months of the latest period (Jan 2024 - Mar 2024)
243
© GENDA Inc. 17
PLABI CORPORATION
Sales Improvement Measures Cost Reduction Measures
Prize line-up
incl. GiGO-exclusive prizes Unexe
-cuted
Cost synergies of
amusement machines
Unexe
-cuted
Increase in
prize game machines Unexe
-cuted
Cost synergies of
prizes
Unexe
-cuted
Horizontal deployment of
operation manuals Unexe
-cuted
Equipment repair
ment
expenses
Unexe
-cuted
Horizontal deployment of
DX measures Unexe
-cuted
Periodic cleaning costs
Unexe
-cuted
Renovations
(incl. GiGO rebranding) Unexe
-cuted
Cost of supplies
(uniforms, prize bags, etc.)
Net sales
111%
OP Income
before D&A
120%
(Millions of yen)
786 873
76 92
Note: Operating income before D&A (depreciation and amortization) refers to EBITDA, which is the sum of operating income plus depreciation and amortization and goodwill amortization.
The comparison of 51 stores includes 42 amusement arcades, 5 playgrounds, and 4 other stores.
Compared stores: 51 stores (acquired on February 1, 2024)
Compared period: 2 months prior to M&A (Feb 2023 - Mar 2023) vs.
2 months of the latest period (Feb 2024 - Mar 2024)
2-month
comparison
244
© GENDA Inc. 18
All Arcades achieved Increases in Revenue and Income
Note: Operating income before D&A (depreciation and amortization) refers to EBITDA, which is the sum of operating income plus depreciation and amortization of goodwill. Cumulative operating income before amortization is the cumulative amount of
operating income before depreciation and amortization generated since the subject company was consolidated into the GENDA Group. Although it is more accurate to judge the return on investment by free cash flow, the actual amount of operating
income before depreciation and amortization is almost the same because no income taxes were paid during the period of accumulated operating income before write-offs and amusement arcade CAPEX was limited due to the loss carried forward.
Therefore, the operating income before depreciation and amortization is used for the simplified estimation.
Summary of PMI Results
As a result, Recoupment of the Initial Investment progressed Dramatically
◼Simplified return on investment assessment by operating income
before depreciation and amortization (EBITDA) for the 3-amusement
arcade M&As (Takarajima, Sugai Dinos, and Avice) where synergies
and PMI are fully realized, and more than 12 months have passed
since the M&A
◼The total enterprise value of 1,505 million yen as invested capital and
258 million yen as cash on hand (excluding borrowings), while the
accumulated operating income before depreciation and amortization
since the completion of the M&A is 1,802 million yen
◼M&A of Takarajima completed 2 years ago, and of Sugai dinos and
Avice 1.5 years ago, have already recouped the total investment,
including debt, and moreover the leverage effect has already more
than doubled the cash flow attributable to shareholders
◼All current and future cash flows have a one-way upside for existing
shareholders
◼◎indicates sales growth exceeds 110% / ooperating income before D&A exceeds 120% (including return to profitability);
○indicates sales growth exceeds 100% / amortization exceeds 100%
◼The largest arcade M&A since SEGA Entertainment PLABI, and the two most recent companies are about to introduce PMI measures
Net Debt and
Debt financing
at M&A
1,247
Net Debt and
Debt financing
at M&A
1,247
(Millions of yen)
Total
Enterprise
Value
1,505
Cumulative
OP Income
before D&A
1,802
Recoupment of
Total Investment
120%
Cash from GENDA
258
Recoupment of
Cash from GENDA
215%
Cash Flow
attributable to
Shareholders
555
Sales
◎◎◎◎◎◎・・・ ・・・
OP Income
before D&A
◎◎◎◎○◎・・・ ・・・
245
© GENDA Inc. 19
FY2025/1 Q1 Outlook
The latest status in consideration of
robust amusement arcades
as well as the karaoke business,
performing better than the original plan
246
© GENDA Inc. 20
Amusement arcade
⚫Planned amusement arcade existing stores growth is
in the 'low single-digit %'
FY2025/1 Q1 Outlook
Amusement arcade
⚫Amusement arcade existing stores growth is in the ‘high single-
digit %’
⚫The main reason is the ‘double-digit %’ amusement arcade
existing stores growth rate in urban stores, which is GiGO's forte
Original Plan at FY2024/1 Earnings Announcement on March 11 February and March Results
Karaoke
⚫Karaoke business will be consolidated from 1
February 2024
⚫Shin Corporation, which operates Karaoke BANBAN,
has recorded a single-month loss for February for 35
consecutive years since its foundation
⚫Karaoke plans an existing shop growth rate of 0%
⚫On the other hand, the highest profit for the full year
since the company's foundation is planned
Karaoke
⚫PMI along with synergies more successful than expected
⚫In February, the first month as GENDA group, Shin Corporation
succeeded in turning to a profit in February for the first time in
35 years since its foundation
⚫As a result, the karaoke existing store growth rate was "13%“
⚫The probability of the highest full-year profit since the
company's foundation is further increased
Fukuya, Ares company
⚫These two companies which are upstream in the value chain of
amusement arcade are also achieving good PMI due to synergies
Outlook for the FY2025/1 Q1
⚫YoY “Operating income” to “decrease” due to
amortization of goodwill
⚫YoY “Operating income before depreciation and
amortization (EBITDA)” to “increase significantly”
Outlook for the FY2025/1 Q1
⚫YoY “Operating income” to “increase” even after taking the
amortization of goodwill into consideration
⚫YoY “Operating income before depreciation and amortization
(EBITDA)” to “further increase significantly”
⚫YoY Net income (after amortization of goodwill) is expected to
continue to decrease due to the start of income tax payment,
which was almost nonexistent in the previous year, and
goodwill amortization expenses
247
© GENDA Inc. 21
Implemented 17 M&As in 9 months since IPO, while flexibly reorganizing the group
→ Reorganized command and control structure to accelerate decision making and
optimize for realization of synergies
Agile Group Reorganizing (announced April 23, 2024)
Rental and sales
business of
amusement-
related products
Mini- locations
business
Online crane
game business
Rental and sales
business of
amusement-
related products
Mini-locations
business Online crane
game business
Before Reorganization After Reorganization
◼Consolidation of PLABI, the game arcade and Kiddleton, the U.S. mini-location operator, into GENDA GiGO Entertainment to further
accelerate synergies and PMI in PLABI, while launching the U.S. expansion of the amusement arcade of “GiGO” together with Kiddleton
◼Accelerate synergies by consolidating the amusement machine rental business mainly to small and medium-sized game arcades to Ares
Company, which acts as a trading company function for prizes with channels also focused on small and medium-sized game arcades
AM Facility
Management
(U.S.)
AM Arcades
AM Arcades
Distribution of Prize
of Prize Games
248
© GENDA Inc. 22
Appendix
249
© GENDA Inc. 23
1
Record Date Date of Public Notice
Wednesday, May 15, 2024 (scheduled)
2
Reference Date
Friday, May 31, 2024
3
Effective date
Saturday, June 1, 2024
Resolved to implement a 1:2 stock split with an effective date of June 1, 2024
By reducing the amount per investment unit of GENDA's shares, GENDA aims to create an environment
in which investors can more easily invest in GENDA's shares, to increase the liquidity of GENDA's shares,
and to expand its investor base
Stock Split (Timely disclosure on April 23, 2024)
Excerpts from "Notice of Stock Split and Partial Amendments to the Articles of Incorporation Accompanying the Stock Split", April 23, 2024
2. Outline of Stock Split
(3) Schedule for Stock Split
(1) Method of stock split
The Company will carry out a 2-for-1 stock split of common shares held by shareholders of record as of May 31, 2024 (Friday)
1
Total number of shares outstanding before stock split
34,529,000
shares
2
Number of shares to be increased by this stock split
34,529,000
shares
3
Total number of shares issued and
outstanding after stock split 69,058,000
shares
4
Total number of authorized shares after stock split
254,000,000
shares
(2) Number of shares to be increased by stock split
(Note) The total number of authorized shares issued and the number of shares to be increased above may increase in the future due to
the exercise of stock options before the record date of the stock split.
250
24
© GENDA Inc.
This document has been translated from the Japanese original for reference purposes only.
In the event of any discrepancy between this translated document and the Japanese original,
the original shall prevail.
The purpose of this document is to provide shareholders, investors, and others with
information on our management policies, plans, and financial condition, and is not intended
as a solicitation to buy, sell, or otherwise invest in our stock.
While every effort has been made to ensure the accuracy of the information and materials
posted on this document, no guarantee is made as to the accuracy of the content of the
information or the timing of updates. In no event shall we be liable for any damage or trouble
arising out of or in connection with the use of this website, including, but not limited to, the
downloading of any information or data contained in this website, or any errors therein,
regardless of the reason thereof.
Any statements on this document regarding our current plans, forecasts, and strategies that
are not historical facts are forward-looking statements about future business performance, etc.
These statements are based on the judgment of our management in light of the information
currently available to it and involve risks and uncertainties. Actual results may differ materially
from these forward-looking statements due to various factors, including economic conditions
and competition in the entertainment industry.
251
© GENDA Inc. 25
More fun
for your days
252
© GENDA Inc.
March 11, 2024
GENDA’s Business Strategy
and Growth Potential
253
© GENDA Inc. 2
Note: All figures are based on consolidated results for the fiscal year ended January 31, 2024. OP stands for Operating Income and NI does for Net Income.
Company Name: GENDA Inc.
Listing: July 28,2023 on the TSE Growth Market
Date of Establishment: May 2018
Revenue: ¥55.6bn | EBITDA: ¥8.1bn | OP: ¥5.3bn | NI before Amortization of Goodwill: ¥4.3 bn
# of Employees: 5,007 (FY2024/1)
Group companies: 19 consolidated subsidiaries
GENDA at a Glance
254
© GENDA Inc. 3
Board members
Representative Director and Chairman of the Board Nao Kataoka
―Former President of Aeon Fantasy, and led the company to become the World’s No.1 amusement arcade
―Increased operation profit by 2.4x, from ¥ 2.5bn to ¥6.0bn and increased the market cap by 5.5x,
from ¥23.7bn to ¥131.0bn
Representative Director and President Mai Shin
―Former Managing Director of Goldman Sachs (then youngest Managing Director)
―Combined skills in financial professionality and managerial skills through founding business
Director CFO Taiju Watanabe
―Former Vice President at Investment Banking Division of Goldman Sachs
―Professional expertise in M&A and financing
Director, CCO and Head of of Contents& Promotion Business Yuzo Sato
―Former Corperate Officer of Hakuhodo, President & CEO of TBWA＼HAKUHODO
―Extensive knowledge and network in the advertising, media and entertainment fields
Management Team
Source: Operating income of AEON Fantasy Co., Ltd. refers to operating income of 2,536 million yen for the fiscal year ended February 2014, the year to which Hisashi Kataoka
belonged on March 1, 2013, when he became president and representative director, and 5,970 million yen for the fiscal year ended February 2018, the year immediately preceding
May 15, 2018, when he stepped down. The market capitalization of AEON FANTASY Co., Ltd. refers to March 1, 2013, when Hisashi Kataoka assumed the position of President and
Representative Director, and May 15, 2018, the date of his resignation. “The world’s largest amusement facility operator” is based on the numbers of stores of AEON Fantasy Co.,
Ltd., ROUND 1, Bandai Namco Amusement Inc., Taito Corporation and Dave & Busters, Chuk E. Cheese, published by each company for the fiscal year 2017, the fiscal year
immediately preceding Nao Kataoka’s stepping down from the President and Representative Director of Aeon Fantasy Co., Ltd. The number of stores of Bandai Namco Amusement
Inc. excludes the number of revenue shared stores.
255
© GENDA Inc. 4
Executive Officer CSO / CPA Kohei Habara
―Passed the CPA exam while in college and worked at KPMG AZSA & Co. and previously at PwC Advisory
―Served as financial advisor on more than 30 M&A projects, including projects for entertainment companies
Executive Officer, CTO and Head of IT Strategy Dept. Daisuke Kajiwara
―Formerly Executive Officer of Yahoo Japan and GREE, General Manager of Development Division / General
Manager of Business Division, Formerly CTO of Every
―Also serves as Executive Officer CTO of IT Strategy Division at GENDA GiGO Entertainment
Executive Officer, Head of Amusement Arcade Operations Kazuhiro Ninomiya
―Previously, at Bandai Namco Amusement, he served as Executive Officer in charge of domestic amusement
arcade business and Overseas Business Division Manager
―Also serves as Representative Director and President at GENDA GiGO Entertainment
Executive Officer, Head of Character MD Business,Keiichiro Tanaka
―Also serves as the Representative Director and Chairman of the Board of Fukuya Holdings Co., Ltd. and Ares
Company, Ltd. and Chairman of the Board of Directors of Tokyo Character Makers, Ltd.
―After managing stores at Namco,he joined Fukuya and established Fukuya Holdings in 2017
Executive Officer, Head of U.S. Operations, Atsushi Iyoda
―Formerly worked at Aeon Fantasy, where he also served as representative director of the company's Vietnam
and Philippines subsidiaries
―Also serves as the CEO / President of Kiddleton Inc, a U.S. subsidiary
Executive Officer, Head of F&B Business, Tomoki Nagae
―Previously worked at PwC Advisory, where he was involved in advisory and PMI work on M&A projects
―Conducted research on sake breweries at the University of Tokyo's Faculty of Agriculture, graduating at the
top of his department
Management Team
Executive Officers
256
© GENDA Inc. 5
ENTERRIUM
100%
LEMONADE Lemonica
UK Limited
GENDA is a Pure Holding Company of
Entertainment Companies centered in Amusement Industry
Note: Assumptions as of March 11 2024. “AM arcade” in the figures refer to amusement arcade. SANDAI plans to complete the project in May 1, 2024.
GENDA Group Overview
GENDA Games
Kiddleton
GENDA GiGO
Entertainment
100% 100% 100% 91.75% 78.59% 100% 66.0% 100% 78.05% 100%
100% 98.04%
100%
100% 100%
100%
100%
AM Arcades and
Online Crane Game
AM Lease
and Online
Crane Game
AM Arcade and
Prize Wholesaling
(China)
Five Color
Karaoke Store
Operation
Shin
Corporation
HillValley brand
Popcorn production
and sales
Japan
popcorn
Lemonade
Manufacturing
and sales
Lemonade
By Lemonica
Distribution of
Prize of Prize
Games
Ares
Company
Film
distribution
GAGA
VR Contents and
Experiential
Attractions
Dynamo
Amusement
Prize Planning,
manufacturing
and Sales
Fukuya HD
AM Facility
Management
(U.S.)
AM Store
Operation
from Kaku
AM Arcades
GiGO Taiwan
AM Arcades
PLABI
AM Arcades
SANDAI
AM Arcade
Complex
Prize Planning,
Manufacturing
and Sales
Fukuya and
2other companies
Character
Planning and
Development
Tokyo Character
Makers
Lemonade
Manufacturing
and sales
Entertainment Platform Entertainment Contents
Amusement F&B Contents &
Promotion
Character MDKaraoke
Mini-location
from GS
257
© GENDA Inc. 6
Business Model
258
© GENDA Inc. 7
Note: GENDA's envisioned growth strategy.
M&A in the Entertainment Industry
Continuous Transformational
Growth through M&As
Our growth strategy is "M&A in the Entertainment Industry"
259
© GENDA Inc. 8
Our growth strategy is "M&A in the Entertainment industry"
Entertainment Ecosystem
Note: Diagram of our envisioned growth strategy.
Broadly rooted in the Entertainment Field
Building a Global Entertainment Network
Global
Entertainment
Network for
Dreams and
Aspiration
260
© GENDA Inc. 9
Focusing on amusement arcade operations
with Food & Beverage (F&B) business,
which connects IP contents and the fans
Divided into Character Merchandising (MD) and
Contents& Promotion and positioned in the
Upstream business domain of Entertainment
Platform Business of Entertainment Ecosystem
The current entertainment industry consists of "IP contents" such as animation and "platforms" that connect IP content fans
GENDA continues to expand and solidify its "Entertainment Platform" while gradually expanding into "Entertainment Contents"
Using M&A to incorporate both areas into our portfolio and create an "Entertainment Ecosystem".
IP Content × Platform
Overview of Today's Entertainment Business
...
“Entertainment Contents” “Entertainment Platform”
Platform connecting
IP contentsand the Fans
IP Contents
such as Anime
Fans of the
IP contents
261
© GENDA Inc. 10
Amusement Centric + Peripheral Areas
Accelerate M&A in amusement and steadily advance into peripheral areas
GENDA GiGO
Entertainment
M&A announced
Pre-IPO &
existing businesses
Amusement
“Entertainment Contents”
“Entertainment Platform”
Pre-IPO M&A and
existing business
Karaoke
Mini-location
117 locations
AM Facilities
1 store (China)
M&As announced
post-IPO ~ Nov. 2023
M&As announced
since Dec. 2023
Character
MD
Note: The picture is an image created based on the sales of each segment. The number of locations acquired is as of the date of the announcement of the project. Character MD means Character Merchandising.
F&B
M&A announced
Post-IPO~
November 2023
GENDA’s Status Today (as of May 11, 2024)
Contents&
Promotion
262
© GENDA Inc. 11
Large
Industry
Store
Independent
Store
Dependent
Small
Industry
TAM of Existing Biz Domain TAM of Other Entertainment Industries (Japan)
Amusement Arcade
540.0 bn
Movie
260.0 bn
Karaoke
380.0 bn
+
Huge TAM left in Japan alone
and by adding the fast-growing
overseas markets, there is plenty
of room for growth until 2040
Amusement Arcade +
Karaoke + Movie
Over 1tn
TAM as the room for M&As in the Entertainment Industry
SAM of Existing Biz Domain
Note: The image shows an overview of the entertainment industry based on our perceptions. Amounts indicating the size of the market are estimates of sales in the fact-finding reports
issued by the respective industry associations.
M&A in peripheral areas
(expansion of TAM)
Fitness
¥580 bn
Theme park
¥1,000 bn
Golf course
¥760 bn
Karaoke
¥380 bn
Toys & Baby
specialty store
¥470 bn
Internet cafe
¥100 bn
bowling
¥60 bn
Hotel
¥4,000 bn
Bicycle and
horse racing
¥5,900 bn
Broadcast
¥3,100 bn
Publication
¥1,500 bn
Animation Planning
and Production
¥2,500 bn
Mobile game
¥1,200 bn
Toy
¥810 bn
Ticket Handling
Business Video
Distribution Service
¥560 bn each
Home PC Games
¥440 bn
Video and
commercial production
¥390 bn
Music Record
Production
¥230 bn
Music distribution
service
¥70 bn
Event planning
and management
¥570 bn
Entertainment
Production
¥1,500 bn
Amusement
Machine
¥160 bn
Movie
¥260 bn
Amusement
arcade
540 bn
263
© GENDA Inc. 12
15
9
4
1
GENDA Company A Company B Company C
0.3
0.6
5.6
6.2
8.1
13.0
0+1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +11
GENDA advocates “Continuous Transformational Growth“
through M&As in the Entertainment Industry
Note: GENDA and Company A data for sales and EBITDA are set to zero for the fiscal year in which sales exceed 1 bn yen; Company B and Company C data are set to zero
for the fiscal year preceding the listing year for which data can be collected.The number of M&As is the number announced during the fiscal year.
Shaded data for sales and EBITDA are forecasts for the ongoing period. Sales and EBITDA (GENDA, Companies A and C) are based on company forecasts,
while EBITDA (Company B) is based on IBES data.
3 companies that continuously conduct M&As in a specific industry, and subsequently grow in a transformational manner
Each company has a "Continuous Transformational Growth" trajectory, which differs from a typical organic growth company
GENDA continuously acquires companies that grow organically, and as a result GENDA grows inorganically
1.2 1.5
38.1
46.1
55.6
100.0
0+1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +11
Sales (yen in billions)EBITDA (yen in billions)
#of M&As in the last fiscal year
Comparable Comps engaged in M&As as Serial Acquiror
264
© GENDA Inc. 13
Mainly operating Amusements Arcades throughout Japan,
with expansion in the United States and Taiwan (323 stores)
Domain Business Overview
Karaoke
Food &
Beverage
(F&B)
Character MD
Amusement
Content &
Promotions
Promotion
Entertainment Platforms
Entertainment Contents
Business Overview of Major Subsidiaries – Amusement
Prize
Acquisition
Costs
Purchase
Prizes
Machine
Procurement
Lease Expenses
Purchase/Leas
e Machines
Game Play Fees
(Cash/Electronic Money)
Provision of Various
Gaming Machines
Tenant fee
Of Arcades
Arcade
Lease
Prize Sales
Company
Amusement Machine
Sales Company
Owner of
Arcades
Customers Visiting Amusement Arcades
265
© GENDA Inc. 14
Copyright
fee
Equipment
Purchasing
Lease Costs
Purchase
Equipment
/ Lease
Charge
Provide
Karaoke
Rooms
Tenant fee of
Facilities
Facilities
Lease
Copyright
management
organization
Karaoke equipment
Manufacturers
Facility
Owners
Customers visiting Karaoke
Usage of
Copyrighted
Songs
Domain Business Overview
Karaoke
Food &
Beverage
(F&B)
Character MD
Amusement
Content &
Promotions
Promotion
Business Overview of Major Subsidiaries – Karaoke
Karaoke Chain under “Karaoke BanBan" brand by Shin Corporation
Japan's third largest karaoke business in terms of number of stores
Entertainment Platforms
Entertainment Contents
266
© GENDA Inc. 15
Advertising
Costs
Expense Purchase
Products
Premiums and
products charge Delivery of goods
Rent License
Agreement
Media
Factories and trading
companies
IP copyright
holder
Amusement arcades, capsule toy vendors, retail stores
Product
PR
Domain Business Overview
Karaoke
Food &
Beverage
(F&B)
Character MD
Amusement
Content &
Promotions
Promotion
Business Overview of Major Subsidiaries – Character MD
Fukuya Holdings, the core company of Character MD domain,
is a vendor of prizes and capsule toys for amusement arcades
Entertainment Platforms
Entertainment Contents
267
© GENDA Inc. 16
Market Environment
268
© GENDA Inc. 17
256.7 231.4 199.0 182.2 190.4 177.1 183.9 188.6 179.4 189.6 209.6 254.0 281.3 298.8
242.5
306.2
702.9 678.1
573.1
504.3 495.8 487.5 470.0 456.4
422.2 433.8
462.0 485.9
520.1 540.8
418.7
449.2
-
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Prize Game Video Game Token Coins Game Others
Market Size of ¥540.0 bn in 2019 by Rapid Growth of Prize Games
Source: "Survey of the Amusement Industry Industry," Japan Amusement Industry Association
Note: Monthly sales are the sum of the sales of stores that existed in the previous year and the current year in the month in question.
(¥bn)
Latest data for 2022-2023 (although industry data has not been compiled yet)
Monthly sales from October onwards of GENDA GiGO Entertainment in FY2022/1 have consistently surpassed the
monthly sales figures of the pre-COVID-19 year of 2019 (compared to monthly sales from October 2019 to January 2020).
In FY2023/1, sales are expected to exceed those pre Covid-19 in all locations, including stores in front of urban stations,
where the recovery of human flow has been slow, and exceed those in 2019
Transition of Amusement Arcade Market in Japan
Even in 2021 when
COVID-19 was widespread,
prize game sales were
Highest in the past
16 years
Transition from Video / Token Coin Games to
Internet / Smartphone Games
had hit the bottom
Prize games have grown
1.7x in 5 years pre-covid
Temporary short-time sales
and Impact of the closure
by Covid-19
269
© GENDA Inc. 18
Three Trends are Driving the Growth of Prize Games
Rapid Growth of Prize Games
In the Store
If I can sell it, I can stick
to it a bit more!
I want to get that prize!
I’ll just throw them away
after all…
I’m bored – I think I’ll go
to the amusement arcade
Exit for Prizes Allowed more
Challenges
Psychological Hurdles
Lowered Psychological
Hurdles
Before Arrival
Japanese Anime
Boosted Prize Demand
Clear Purpose to Visit
Weal Motivation
Nowadays Old Days
After Leaving
SNS
Excitement Ends
Boast the Prizes Globally
Excitement Continues
I don’t have anyone
to show them off…
Uploaded the prize and
got more followers!
Excitement Continues
3
Used Market Services
2
Streaming Services
1
270
© GENDA Inc. 19
“Online”anime market is expanding globally
Fans increasingly want to feel anime “offline” as "Oshi-Katsu" boom
Source: Dentsu Media Innovation Lab "Information Media White Paper 2023
3,265
5,833
7,676
9,948
10,092
12,009
12,394
13,134
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2014 2015 2016 2017 2018 2019 2020 2021
443
591
709
815
943
1,444
1,668
1,940
0
500
1,000
1,500
2,000
2,500
2014 2015 2016 2017 2018 2019 2020 2021
Anime Streaming Market Size in Japan
(¥bn) (¥bn)
Overseas Japanese Anime Market
Amusement Arcade Boom is driven by Animation
Streaming Services and
Smartphone using Spare Time
Japanese anime market overseas is
now worth ¥1.3tn
4.4x
for 7 years from
2014
4.0x
for 7 years from
2014
271
© GENDA Inc. 20
Boost of “Offline”
Anime Consumption
Increase in online
anime consumption
Spread of updates
on anime prize on
SNS
Increase in
transaction of
anime prize in
used markets
Providing a place where you can
meet your “Fave”in real life in the
entertainment platform
Entertainment Platform as a place to experience animation
and other IP content in the real offline world
With the environment for viewing animation online, a variety of IP content is provided to fans on a daily basis
Amusement arcades and food and beverage are places where you can have real contact with those IP contents
Growing demand from IP content fans for a platform that allows them to experience anime consumption as "Oshi-Katsu"
“Entertainment Platform” serves as “Offline Anime Platform”
272
© GENDA Inc. 21
Growth Strategy
273
© GENDA Inc. 22
GENDA Group aims to be the world's No.1 entertainment company
Professional talents in three areas to support our growth strategy
Note: GENDA's envisioned future business development.
1
2 3
Professional Talents in 3 Major Areas
274
© GENDA Inc. 23
Extensive Management Experience in the Entertainment Industry
1Entertainment Top Leadership
Representative Director and Chairman of the Board,
Nao Kataoka
Graduated from Faculty of Economics, Keio University
1995, Joined Jusco K.K. (currently Aeon Co., Ltd.)
2004, transferred to Aeon Fantasy Co.
2013, President and Representative Director of Aeon Fantasy
2017, President and Representative Director of Aeon Entertainment
May 2018, founded GENDA and became Chairman
Current position from September 2019
GENDA GiGO Entertainment, Chairman of the Board of
Directors, Satoshi Ueno
1982, Joined SEGA Enterprises, Inc.
2000, President of SEGA AMUSEMENT West Japan Co.
2015, Executive Vice President of SEGA Entertainment Inc.
2017, President of SEGA ENTERTAINMENT INC (Currently GENDA GiGO
Entertainment Inc.)
Current position from April 2023
Executive Officer, Head of of Amusement Arcade Business
and Representative Director and President, GENDA GiGO
Entertainment, Kazuhiro Ninomiya
Graduated from Faculty of Management Information, Tama University
1996,Joined NAMCO CORPORATION,
2018, Executive Officer, Facility Sales Division Manager, Bandai Namco Amusement
2020, served as Managing Director of Namco UK Ltd. and Director of Namco USA Inc.
April 2021, joined GENDA and became CSO
August 2021, became Director, General Manager, Product Planning Division of GENDA
SEGA Entertainment (Currently GENDA GiGO Entertainment Inc.
Current position from April 2023
Director, CCO, Head of Content & Promotion
Business
Yuzo Sato
Bachelor of Education, Waseda University
Joined Hakuhodo Inc. in 1986
Appointed President and CEO of TBWA＼HAKUHODO Inc. in 2015
Appointed as Executive Officer of Hakuhodo Inc.
Appointed as Corporate Officer of Hakuhodo Products Inc. in 2018
April 2022, joined GENDA Inc. and became Director
Appointed Chief Communication Officer (CCO) in September 2023
Assumed current position (concurrently) in December 2023
Executive Officer, Head of of Character MD Business and
Representative Director and President, Fukuya Holdings
Co., Keiichiro Tanaka
1993, Joined NAMCO LTD.
1996: Joined Fukuya Co., Ltd. and became Director and Sales Manager
Appointed Senior Managing Director in 1999
Appointed Representative Director and President in 2002
Established Fukuya Holdings Co., Ltd. in 2017 and became Representative Director
Appointed Representative Director and President in 2002
Current position from February 2024
GAGA Representative Director and President CEO,
Tatsumi Yoda
Appointed Advisor to Avex D.D. Inc. (currently Avex Inc.) in 1988.
1993, Representative Director and Chairman of the Board (also serving as
Representative Director and President since January 1995, retiring in August 2004)
Appointed non-executive Director of GAGA Communications Corporation (currently
GAGA Corporation) in 1999
Appointed Representative Director and Chairman of the Board in 2004
Appointed Representative Director and Chairman of the Board, Dolly Music Inc. in
2005. (Director and Chief Advisor since March 2017)
In 2006, appointed as Director of Philosophia Entertainment Alliance Inc. (current
position)
In 2008 Representative Director and Chairman of the Board, T.Y. Entertainment, Inc.
Current position since June 2020
275
© GENDA Inc. 24
PMI of the former SEGA Entertainment, Inc.
PMI team with management experience from three industry leaders
―Kataoka, former President of Aeon Fantasy (Currently Chairman of GENDA)
―Former President, former Sega Entertainment Ueno (Current Chairman, GENDA GiGO Entertainment)
―Former Executive Officer, BANDAI NAMCO AMUSEMENT Ninomiya (Current President, GENDA GiGO Entertainment)
Shopping center-type store reform ("Musamura Serious Project") using as an experimental store
GiGO AEON Mall Musashi Murayama
As a result of horizontal deployment of the know-how and cost reductions, operating profit recovered
significantly in the first fiscal year after becoming GENDA Group (see graph at the bottom)
FY2019/1
¥1.4 bn
¥3.8 bn
0
1.0
2.0
3.0
4.0
FY2020/1
¥0.1 bn
FY2021/1
December 2020
joined GENDA Group
¥-3.2 bn
April 2020
Declaration of Emergency
FY2022/1
Operating Income Transitions (GENDA GiGO Entertainment / former Sega Entertainment)
Covid-19
(¥ in bn)
1Entertainment Professional – Amusement Arcade PMI
276
© GENDA Inc. 25
PMI after Roll-up M&As of Small and Mid-sized Amusement Arcades
Note: From the viewpoint of fair comparison, the effectiveness of PMI results was measured after GENDA grouping in, using the latest and longest period of time for which comparisons could be made over
the same period. For Takarajima, the figures compare sales from February 2021 to January 2022 (12 months) before GENDA grouping in and November 2022 to October 2023 (latest 12 months).
Figures for Sugai Dinos and Avice compare sales from October 2021 to September 2022 (12 months) before joining the GENDA Group and from November 2022 to October 2023 (latest 12 months).
The figures for MAXIM HERO are the sales figures for the 4th week of October compared to the previous week.
PMI know-how in various roll-up M&A formats (stock acquisition, business transfer, absorption-type demerger, fixed asset acquisition)
Increase the prize gamesratio
Development of exclusive GiGO giveaways (“Campaign”)
Layout changes by replacing amusement machines to match the clientele
MAXIM HERO (fixed assets acquisition) 1 storeAvice (absorption-type demerger) 3 stores
Sugai Dinos (business transfer) 18 storesTakarajima (stock acquisition) 20 stores
Sales
151%*
Sales
107%*
Sales
120%*
Sales
121%*
PMI
PMI
PMI
PMI
Improve operational efficiency through horizontal deployment of DX
Amusement machines and prizes can be purchased in bulk as a
Group of 318 stores
1Entertainment Professional – Amusement Arcade PMI
277
© GENDA Inc. 26
2M&A / Finance Team
Established an Internal Professional Team that enables flexible M&A and Financing
Director and CFO, Taiju Watanabe
Graduated from Hitotsubashi University, Faculty of Commerce and Management.
2011, joined Mizuho Corporate Bank, Ltd. (currently Mizuho Bank, Ltd.) and
served as the Wholesale Relationship Manager at the Corporate Banking Division.
2015, joined Goldman Sachs & Co. and served as the Vice President in the
Advisory Group of the Investment Banking Division, involved in M&A advisory and
equity / bond financing transactions. June 2021, joined GENDA and August 2021
appointed as Executive Officer, CFO. Current position since April 2023.
Head of Corporate Strategy Dept./ US CPA,
Toshiharu Shiima
Graduated from the University of Tokyo, Faculty of Law
Joined Sumitomo Mitsui Banking Corporation, 2007
Engaged in M&A advisory work in the Corporate Information Department and
affiliated companies
2015 Joined PwC Advisory LLC, engaged in M&A advisory services
2018 Stationed at an overseas subsidiary to engage in PMI at Nippon Pulp & Paper
Trading Co.
In November 2023, he joined GENDA Inc.
Head of Finance Dept., Yorikazu Hattori
Graduated from faculty of Commerce, Keio Unversity
2011, Mizuho Corporate Bank, Ltd. (currently Mizuho Bank, Ltd.)
Engaged in originating syndicated loan for corporate clients in Syndicated
Finance Department and M&A Finance
November 2021, joined GENDA and currently holds the position
Head of IR Dept., Mika Ito
B.A. in Social Sciences, School of Social Sciences, Waseda University
Joined Mizuho Securities Co.
Engaged in M&A and fund-raising in the investment banking division
Joined GENDA Inc. in August 2021
Current position from June 2023
Representative Director and President,Mai Shin
Graduated from the University of Tokyo, Faculty of Economics. 2007, joined Goldman Sachs & Co. and engaged in bond sales in the Financial Institutions
Sales Division. 2010, at the Financial Products Development Department, in charge of a wide range of activities including product development and
proposals for interest rate and foreign exchange derivatives and advising on global financial regulations. 2016, Director, Financial Products Development
Department. November 2017, Managing Director. Aug 2018, joined GENDA as Director. Current position since June 2019.
Executive Officer CSO / CPA, Kohei Habara
Graduated from Kobe University, Faculty of Economics. Passed the Certified
Public Accountant Examination while still a university student, and worked at
KPMG AZSA LLC auditing mainly listed companies. 2017, joined PwC Advisory
LLC, and involved in over 30 M&A deals as financial advisor, including deals for
entertainment companies. September 2019, joined GENDA and August 2021
appointed as Executive Officer. Current position since September 2023. He was
appointed to the Head of F&B Business. In November 2023, he was appointed to
the Representative Director and President of GENDA capital.
Head of Accounting Dept./ CPA,Yusaku Kitada
Graduated from Faculty of Business Administration, Kobe University
2015, passed the Certified public Accountant Examination while still a university
student
2015, joined Deloitte Touche Tohmatsu LLC Osaka Office
Current position from August 2021
Head of Group Management Dept. / CPA,
Atsushi Kawata
Graduated from Waseda University Graduate School of Accounting
Passed the Certified Public Accountant Examination while still in graduate school
Joined KPMG AZSA LLC in 2009
Seconded to KPMG Mexico in 2018
Joined GENDA Inc. in July 2022 and assumed current position
Head of Legal Dept./ Attorney,Misato Fujimoto
Graduated from Faculty of Law, Chuo University
Passed the Bar Examination while still a university student.
2008, joined Nishimura & Asahi Law Office. Mainly engaged in M&A legal advice
and other corporate legal affairs
2017, joined TOMY Company, Limited
In January 2022, joined GENDA and currently holds the position.
278
© GENDA Inc. 27
Entertainment
Platforms
27
May 2024 (scheduled)
Stock acquisition (100%)
2M&A / Finance Team – “27” M&A and Capital Transactions
...
Note: The number of acquired properties is as of the date of the announcement of the project. (planned)" indicates a project prior to closing.
Entertainment Platform
July 2019
Joint Venture (50%)
December 2020
Acquisition (85.1%)
April 2021
Acquisition of the business
October 2021
Capital Alliance
June 2022
Capital Alliance
January 2022
Acquisition (100%)
September 2023
Becoming a wholly
Owned subsidiary
January 2022
Acquisition
December 2021
Acquisition
October 2022
Acquisition
September 2023
Transfer of Assets
September 2023
Becoming a wholly
owned subsidiary
October 2023
Transfer of Fixed assets
October 2023
Acquisition (66.0%)
June 2018
Acquisition (100%)
October 2022
Acquisition
November 2023
Acquisition (78.05%)
October 2023
Acquisition (100%)
November 2023
Acquisition (100%)
December 2023
Acquisition
of Stores
Entertainment Platform Entertainment Platform Entertainment Contents Entertainment Platform Entertainment Platform
Entertainment Platform
Entertainment Contents Entertainment Platform Entertainment Platform Entertainment Platform Entertainment Contents
Entertainment Platform
Entertainment Platform Entertainment Contents Entertainment Platform Entertainment Platform
Entertainment Contents Entertainment Contents Entertainment Platform Entertainment Platform Entertainment Platform
2345
6
20 21
11
1
19
18
8910 11
7
14 1513
November 2023
Assets transferred from
Global Solutions
Mini-location
117 locations
December 2023
Acquisition of
management rights
22
AM Arcade
1 store
(China)
February 2024
Acquisition (82.45%)
Entertainment Platform
Entertainment Contents
25
January 2024
Acquisition (100%)
24
12 16
17
Entertainment Platform
26
February 2024
Acquisition (78.59%)
1〜11
15
12 〜26
Post-IPO #M&A
Pre-IPO #M&A
December 2023
Pino Pino Zaurus Limited
Acquisition (100%)
Entertainment Platform
23
279
© GENDA Inc. 28
1
5
14
44
2019年1月2020年1月2021年1月2022年1月2023年1月2024年1月
*The 0% turnover rate indicates that 0 Tech Engineers who have joined the company in the past have left as of the end of January 2024.
As a result of thorough referral hiring
as well as a post-employment environment,
“Zero” tech engineer has ever left GENDA
in spite of the highly fluid recruiting market
Leadership in Tech Team Number of Tech Engineers at GENDA
Excellent Tech Engineers have joined GENDA via referral hiring
Tech
Engineers
Job Turnover
0%
3Technology Team
Executive Officer, CTO and Head of IT
Strategy Dept., Daisuke Kajiwara
Completed Graduate School of Engineering, Hiroshima University
2006, joined Yahoo Japan Corporation
2007, joined GREE, Inc.
2014, Executive Officer, held positions of General Manager of
Development Division and General Manager of Business Division
2018, joined every, inc. Director and CTO
2021, joined GENDA and currently holds position
VPoE Yusuke Arai
Department of Information Engineering, faculty of Engineering,
Tokyo University of Technology
2006, joined Yahoo Japan Corporation
2011, joined VASILY
In charge of front-end development as front-end development
business manager
2018, Tech Lead, ZOZO Technologies Inc.
2021, joined GENDA and currently holds position
CPO Hiroki Shigemura
2016, joined FiNC Technologies, Inc.
In charge of product management of healthcare app “FiNC”
2020, joined GENDA
2021, CPO of GENDA
280
© GENDA Inc. 29
#of members
676K
Total Number of Registrations Number of Prize Pass Members
1,830
2,267
2,7052,8052,9503,270
3,7733,964
4,407
5,163
5,925
6,266
6,606
7,024
7,124
2022 2023 2024
2022 2023 2024
3Technology Team – Progress of DX | External Customers
215,417
242,127
277,012
295,464
349,439
392,710
441,348
475,510
515,558
563,005
592,453
616,788
636,263
657,107
676,189
Cumulative number of members of "GiGO App",
a membership application for customers, exceeds 60K
•Steady increase in membership since renewal in December 2022
•The "GiGO App" can be linked to cashless payment functions, such as coupon
distribution, service ticket distribution, and “Prize Pass”services, enabling the
development of a wide variety of services
•“Prize Pass”is a subscription service that allows users to earn prize game tickets
by paying a monthly subscription fee
•Steady growth in the number of "GiGO App" members is expected to contribute to the
formation of loyalty to GiGO stores
281
© GENDA Inc. 30
Intermittent Updates to the in-house GiGO NAVI app
Employee Apps
GiGO NAVI
released
3Technology Team – Progress of DX | Internal Operation
•In amusement arcade industry where there are still manual-intensive work left,
GENDA developed the revolutionary “GiGO NAV I” application
•Results from “GiGO NAVI”
•Free from paper and Excel work when taking inventory of prizes, etc.,
significantly reducing work time and increasing accuracy
•Only 0.2% error rate from the theoretical value at GiGO’s flagship store, the
largest store in the GENDA Group
•Visualization of optimal order quantities by creating a database of the past
sales data of the prizes
•Continue to utilize the system to streamline cumbersome operations and
improve operational efficiency, and increase customer service hours to improve
customer satisfaction
Hours required for
Inventory Count reduced
approximately 62% at test stores
Database of Prizes to
support Optimal Ordering
Note: Based on the fact that at GiGO Tachikawa, a test inventory store, total man-hour required for inventory count was reduced by approximately 62% (56 man-hours → 21 man-
hours) before and after implementation. The breakdown of the reduction were, storage warehouse counting (20 man-hours → 8 man-hours), replenishment warehouse
counting (10 man-hours → 4 man-hours), and machine counting (24 man-hours → 8 man-hours) and input table creation (2 man-hours → 1 man-hours)
282
© GENDA Inc. 31
“Continuous Transformational Growth”via the Trinity System
Note:
“
Roll-up M&A" refers to acquiring many companies in the same industry in order to expand market share. As for "sourcing.
“
It refers to the process of finding a target company that
matches the company's desired conditions in an M&A. The logo shown at the bottom indicates the logo of an amusement arcade operated by GENDA GiGO Entertainment.
Entertainment
Professional
M&A /
finance
Technology
Initiatives Going Forward
• Enhancements to the “GiGO App” for external
customers and “GiGO NAVI” for internal operations
•Horizontally applying GiGO NAVI to newly acquired
companies as PMI to improve operational efficiency
• Maintenance of IT infrastructure and systems for an
ever-increasing number of group companies through
M&As
•Continuation of "roll-up M&A" in the amusement
arcade industry, where there are still many small
and medium-sized operators with significant room
for operational efficiency
•M&A of businesses that will generate synergies in
the GENDA Group's Entertainment Ecosystem
•Expand sourcing capabilities through GENDA's
management connections and strengthen
relationships with M&A brokers
Illustrative Image of Trinity Efforts in the 3 Areas
1 2 3
3 2
1
Initiatives Going Forward: Realize synergies and deploy industry know-how and expertise within the Group
Injection of Know-how from Day 1
Industry-innovative DX
Immediately Deployed
in New Stores
Continuous M&A
Transformational
Store Growth
Biz Domain
Expansion
Margin
Improvement
Store
Increase
Initiatives Going Forward
283
© GENDA Inc. 32
Business plan
284
© GENDA Inc. 33
Revenue
100.0bn
EBITDA
13.0bn
Net Income
before Amortization of Goodwill
5.4bn
Note: Normalization of income tax payments means that income tax payments, which were reduced by tax loss carryforwards until FY01/2024, will return to normal from FY01/2025.
Figures for FY2019/1~FY2021/1 are for reference only, as consolidated financial statements have not been prepared for FY2019/1~FY2021/1.
Consolidated Revenue Consolidated EBITDA Consolidated Net Income before
Amortization of Goodwill
(Current FY)
+80%
Increase
+60%
Increase
+24%
Increase
Significant growth
offsetting the normalized
tax payments
from FY2025/1
Highlights of FY2025/1 Earnings Forecast (¥ in billions)
This forecast does NOT include M&As not announced as of today (in other words, the forecast assumes zero M&A after today)
(Current FY)(Current FY)
0.5 1.2 1.5
38.1
46.1
55.6
100.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
0.1 0.3 0.6
5.6
6.2
8.1
13.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
0.0 0.0
3.5
2.7
3.5
4.3
5.4
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
One-time extraordinary
gain due to
negative goodwill
285
© GENDA Inc. 34
(¥ in millions)
FY2024/1
Actual
FY2025/1
Full Year Forecast
YoY Comparison
(Percentage change)
Revenue 55,697 100,000 44,302
+80 %
EBITDA 8,102 13,000 4,897
Margin (%) 14.5 %13.0 %+60 %
Operating income 5,370 7,000 1,629
Margin (%) 9.6 %7.0 %+30 %
Ordinary income 5,216 6,600 1,383
Margin (%) 9.3 %6.6 %+27 %
Net income
before amortization of goodwill 4,359 5,400 1,040
Margin (%) 7.8 %5.4 %+24 %
Net Income
attributable to owners of the parent 4,178 4,300 121
Margin (%) 7.5 %4.3 %+3%
Simplified Indicator of
Net Income under IFRS
CF index closest to business operating reality
and the most important CF indicator in
GENDA’s M&A strategy
FY2025/1 Earnings Forecast
286
© GENDA Inc. 35
KPI - Amusement Arcade Operations
KPI FY2021/1
Actual
FY2022/1
Actual
FY2023/1
Actual
FY2024/1
Actual
FY2025/1
Target
#of
Amusement
arcades
202
stores
227
stores
250
stores
323
stores
335
stores
KPI FY2023/1
Actual
FY2024/1
Actual
FY2025/1
Target
#of M&A
Sourcing 40 cases 170 cases 200 cases
KPI - M&A related
340% vs
FY target of 50
Note: The actual number of amusement arcades includes the increase in the number of amusement arcades due to M&A, but the target does not include the increase in the number of
amusement arcades due to M&A. The definition of "M&A sourcing" is the number of direct and indirect (introductions by M&A brokers, financial institutions, etc.) capital transaction
proposals from target companies in M&A transactions. 323 amusement facilities as of the end of FY01/2024, of which 47 are to be consolidated from February 1, 2024. The
number of amusement arcade stores of PLABI Corporation, which will be consolidated from February 1, 2024, is included in the "323 stores" as of the end of FY01/2024.
KPI - EBITDA and Net income
before Amortization of Goodwill
From a performance perspective, as we being a company that focuses on
M&A as a pillar of its growth strategy, we place the greatest importance on
"EBITDA (operating income + depreciation and amortization + amortization
of goodwill)," which represents the Group's consolidated annual cash flow
generation capacity, and "Net income before amortization of goodwill,"
an indicator similar to net income under IFRS
Currently, we are executing a large number of M&A projects. However, in
light of the fact that all of the target companies in past projects have adopted
Japanese GAAP, a trend that is likely to continue, we have adopted
Japanese GAAP rather than IFRS in order to ensure flexibility in our M&A
and accounting practices. Therefore, we will incur a certain amount of
"goodwill amortization expense" (which does not occur under IFRS) as our
M&A strategy progresses in the future.
If we change to IFRS, our operating income and net income will increase by
the amortization of goodwill, but this will not increase our intrinsic corporate
value.
Since enterprise value is only the sum of future free cash flow (after adding
back goodwill amortization and other non-cash items) discounted by the time
value, and since we repeatedly finance each M&A project based on the
target company's ability to generate cash flow.
We believe that it would be more appropriate for investors to focus on our
ability to generate cash flow when judging the fair value of our company,
which is growing through M&A, and we believe this is important in order to
more accurately convey our company's situation. For this reason, we
disclose "EBITDA" and "Net income before amortization of goodwill" in
our earnings announcements and forecasts, including our financial
statements, in addition to the usual step-by-step profit and loss.
Key Performance Indicators
125% vs
FY target of 258
287
36
© GENDA Inc.
Note: Percentage of shares held is the ratio including the number of latent shares due to stock acquisition rights, as stated in “Securities Report (Part I), Section 3 [Status of
Shareholders]” in the “Annual Securities Report for Initial Listing Application. EPS
”
refers to
“
earnings per share. FCF" refers to "free cash flow," which is operating CF minus
investment CF. PMI" refers to the integration process and management to ensure the integration benefits of M&A.
We will conduct M&A mainly in industries where we have confidence in PMI, but we believe that we
should avoid grabbing high prices based on PMI.
In Addition to Maximizing Shareholder Value, we also seek to Maximize Per Share Value
→ Specifically, we pursue “Maximization of Cash EPS (earnings per share before amortization of goodwill)”
(Cash EPS is an indicator that is CF-oriented and net income per share under quasi IFRS with no goodwill amortization)
We believe “Growth via M&A” does NOT always lead to the increase in Per Share Value
→ We access M&A deals whether that will “Increase the Cash EPS”
Entry Valuation
1
We believe the entry valuation is a very important factor in M&A, and we try hard not to enter with wrong price
Financing
2
Leverage ample FCF to minimize the amount of equity, limit dilution, and pursue the maximization of equity returns
PMI
3
Representative
Director &Chairman
Nao Kataoka:
16.85%
The five committee members hold more than 1/4 of the total shares – thus we will examine whether the M&A deal
contributes to the maximization of “per share value”, as the representative of all the shareholders
Investment Committee
4
Representative
Director and President
Mai Shin:
8.62%
Director
CFO
Taiju Watanabe:
1.36%
Executive Officer
Head of AM Business
Kazuhiro Ninomiya:
0.09%
Executive
Officer CSO
Kohei Habara:
0.15%
4 Key Factors in the Pursuit of Maximizing Per Share Value / EPS
We conduct M&As mainly in areas where we have confidence in PMI, but we would not hold on to a high price by
counting too much on our PMI prospects
The Discipline of M&A" in GENDA
288
© GENDA Inc. 37
2.62 2.09
149.25
93.58
109.99
126.41
-
20.00
40.00
60.00
80.00
100.00
120.00
FY2019/1 FY2020/1 FY2021/1 FY2022/1 FY2023/1 FY2024/1
5-year CAGR
117%
Special gain on
negative goodwill
(Yen)
Note: Figures for FY2019/1-FY2021/1 are for reference because consolidated financial statements have not been prepared for FY2019/1-FY2021/1.
EPS Transition since Incorporation
EPS grew 48x despite 115x sales growth was driven mainly through M&A
Continue to pursue the maximization of “share value” as well as “per share value”
Cash EPS to become the KPI after FY2025/1, when amortization of goodwill will increase,
and the PL structure as a company specializing in M&A will come into full swing
289
© GENDA Inc. 38
2040
M&A Acquisition Store
Opening of new stores
Opening of new stores
Transfor
mational
M&A
Existing stores
T+1 period
T-1 period T period
M&A Acquisition Store
Growth
of existing
stores
1
Opening of new
stores during T-1
contributes full
year
2
M&A acquired
New stores during T-1
contributes full year
3
Opening of new
stores during T
contributes X months
4
M&A acquired
new stores during T
contributes X months
5
Transformational
M&A in the
entertainment
industry
6
Becomes
existing
stores
From T+1
World’s No.1 Entertainment company in 2040
Illustrative Diagram of GENDA's Growth
290
© GENDA Inc. 39
Status of Use of Proceeds
raised at the time of IPO
and Risk Information
291
© GENDA Inc. 40
Deployed 1,118 million yen for funds raised at the time of IPO
Use of Proceeds Original
Plan
Revised
Plan
FY2024/1
Actual
FY2025/1
Plan
Launch of
New Amusement Arcades1,730 1,730 550 1,180
Renovation of
Existing Amusement Arcades400 400 57 343
Purchase of
Amusement Arcade Machines 3,343 2,000 511 1,489
Total 5,473 4,130 1,118 3,012
(Millions of yen)
Investment plan generally executed as planned
Deployment of Funds raised at the time of IPO
Note: The difference between the original plan appropriation and the revised plan appropriation is the result of the exercise of the greenshoe option.
292
© GENDA Inc. 41
Recognized
risk
Likelihood
of
manifestat
ion
Degree
of
Impact
Potential
timeframe for
manifestation Details if manifested Response to risk
Risk related to
M&A and other
similar activities
Low large
(e.g.
serving
size)
No specific time
period
GENDA Group aims to enhance existing businesses and efficiently
enter new businesses through M&As and business partnerships
targeting both domestic and global entertainment companies.
GENDA Group utilizes its management expertise to create
synergies in business with acquired or partnered companies.
However, the following reasons may have an impact on the
financial condition and business performance of GENDA Group.
(i)Progress of business plan after acquisition:
GENDA Group conducts sufficient due diligence and carefully
consider risks related to the business, finance, and laws during the
process of M&As. However, if the business plan assumed at the
time of acquisition does not progress as planned, there is a
possibility that it could affect the financial position and business
performance of the GENDA Group, for example due to impairment
of goodwill, etc.
(ii)Occurrence of unexpected debt and unrecognized debt:
When executing M&A, the GENDA Group conduct due diligence
on the target company's businesses, finances, legal affairs, and
taxes in advance, to make decisions after sufficiently identifying
risks and analyzing ordinary earning power. However, if problems
arise that were unable to identify during the prior investigation,
such as the occurrence of unexpected debt or the identification of
unrecognized debt, it could affect the financial position and
business performance of the GENDA Group.
(Cont.)
In the execution of M&A
projects, the company
maintains a team of
experienced officers and
employees who can lead a
series of procedures
related to M&A, including
business planning that
incorporates synergies,
various due diligence
procedures, corporate
value calculation,
negotiation of transaction
terms, contract execution,
closing, and fundraising in
the direct and indirect
markets. The company has
a team composed of
experienced executives
and employees who are
capable of leading a series
of procedures related to
M&A, such as business
planning, various due
diligence, corporate
valuation, negotiation of
transaction terms, closing,
and direct and indirect
market financing.
Note: For risk information other than the above, please refer to "2. Business and Other Risks" in the Annual Securities Report (Part I) for GENDA's initial listing application.
Risk Information
293
© GENDA Inc. 42
Recognized
risk
Likelihood
of
manifestat
ion
Degree
of
Impact
Potential
timeframe for
manifestation Details if manifested Response to risk
Risk related to
M&A and other
similar activities
Low large
(e.g.
serving
size)
No specific time
period
(Cont.)
(iii)Asset restructuring associated with integration:
In the post-M&A management integration process, there is a
possibility that extraordinary profits or losses may occur through
business reorganization or the sale of idle assets, which could
affect the financial position and business performance of the
GENDA Group.
(iv)Financing arrangements for M&As:
GENDA Group is considering M&As of related businesses as one
of the effective means to accelerate business expansion. In
addition to new financial burdens and dilution and changes in
equity capital, if new borrowing is used, depending on the situation
of market interest rate changes, the burden of borrowing interest
may increase, which could affect the financial position and
business performance of the GENDA Group.
(v)Consolidated financial statement system due to increase in
consolidated subsidiaries:
Currently, GENDA as the holding company works closely with
each of its subsidiary to ensure the timely and appropriate closing
of accounts. However, if it fails to settle the accounts in a timely
and appropriate manner due to inadequate management systems,
it may not be able to close its consolidated financial statement in a
timely and appropriate manner.
Note: For risk information other than the above, please refer to "2. Business and Other Risks" in the Annual Securities Report (Part I) for GENDA's initial listing application.
Risk Information (continued)
294
© GENDA Inc. 43
Note: For risk information other than the above, please refer to "2. Business and Other Risks" in the Annual Securities Report (Part I) for GENDA's initial listing application.
Recognized
risk
Likelihood
of
manifesta
tion
Degree
of
Impact
Potential
timeframe for
manifestation Details if manifested Response to risk
Deterioration in
performance due
to decline in the
amusement
industry
Low large
(e.g.
serving
size)
No specific
period
While the market size of the amusement industry in Japan
has expanded since 2015, driven by the popularity of prize
games related to Japanese animation, there is a risk that the
performance of GENDA GiGO Entertainment Inc. and
GENDA Games Inc., which conducts machine lease
business for amusement arcades, may deteriorate due to the
diversification of leisure markets, the expansion of home and
social games, and the further decline in the birthrate.
Additionally, it is considered that the entry of new
manufacturers in the amusement machine industry is limited
due to the monopolization by major companies, resulting in
fewer opportunities to create innovative game machines and
the possibility that the entire industry may become inactive.
We plan to import amusement
machines from game machine
makers overseas, design and
develop game machines by our
Group Company, and develop
new business in amusement
arcades
Raise of
consumption tax
Low large
(e.g.
serving
size)
No specific time
period
In the circumstance where consumption tax rate increase
occurs, it will have an impact on the cost due to the rise in
prices including tax, as well as on the business profit due to
the increase in consumption tax payment on the sales of our
group.
We will take measures to
minimize the impact on our
customers by implementing
further cost reduction initiatives.
If that becomes challenging, we
may implement price
adjustments in our play fees.
However, our group has been
actively introducing amusement
machines equipped with
cashless payment systems.
This provides us with greater
flexibility in pricing compared to
machines that only accept cash
payments.
Risk Information (continued)
295
© GENDA Inc. 44
Note: For risk information other than the above, please refer to "2. Business and Other Risks" in the Annual Securities Report (Part I) for GENDA's initial listing application.
Recognized
risk
Likelihood
of
manifestat
ion
Degree
of
Impact
Potential
timeframe for
manifestation Details if manifested Response to risk
Other contingent
risks
Low large
(e.g.
serving
size)
No specific
period
In the regions where our Group operates, natural disasters
such as major earthquakes, heavy rains, or widespread
outbreaks of infectious diseases like the COVID-19
pandemic, as well as major catastrophes, social or political
events, or turmoil, can potentially have adverse effects such
as the suspension of headquarters functions, damage or
closure of our stores, and other disruptions. These events
have the potential to impact the financial condition and
business performance of our Group. Currently, the ongoing
global spread of novel infectious diseases like COVID-19
has led to reduced customer visits to amusement facilities,
shortened operating hours, temporary closures, and
requests for voluntary restrictions on outings by local
government authorities. As a result, the operational activities
of our operated stores may be affected.
We have implemented a
system for prompt information
gathering on a daily basis, and
in times of emergency, we
have established a crisis
management headquarters to
respond swiftly and effectively
to mitigate the situation and
ensure a swift recovery. We
have built a unified structure
that allows the entire company
to work together in addressing
the crisis.
Risk Information (continued)
296
© GENDA Inc. 45
More fun
for your days
Note: The next disclosure of business plan and growth potential is scheduled to be made at the time of the announcement of financial results for the fiscal year ended January 31, 2025
(around March 2025).
297
© GENDA Inc.
FY2024/1Earnings Results
and FY2025/1Earnings Forecasts
March 11, 2024
© GENDA Inc. 2
Aspiration Vision
=
More fun
for
your
days
World’s No.1
Entertainment
Company in
2040
© GENDA Inc. 3
Our growth strategy = "M&A in the Entertainment industry"
Entertainment Ecosystem
Note: Diagram of our envisioned growth strategy.
Broadly rooted in the Entertainment Field
Building a Global Entertainment Network
Global
Entertainment
Network for
Dreams and
Aspiration
© GENDA Inc. 4
IP Contents × Platform
A "platform" that connects "IP content" with fans of IP contents
“Entertainment Contents” “Entertainment Platform”
Platform connecting
IP contents and the Fans
The Big Picture of Current Entertainment Industry
IP Contents
such as Anime Fans of the
IP contents
© GENDA Inc. 5
ENTERRIUM LEMONADE Lemonica
UK Limited
GENDA is a Pure Holding Company of
Entertainment Companies centered in Amusement Industry
Note: Assumptions as of March 11 2024. “AM arcade” in the figures refer to amusement arcade. SANDAI plans to complete the project in May 1, 2024.
GENDA Group Overview
GENDA Games
Kiddleton
GENDA GiGO
Entertainment
100% 100% 100% 91.75% 78.59% 100% 66.0% 100% 78.05% 100%
100% 98.04%
100%
100%
100%
100%
AM Arcades and
Online Crane Game
AM Lease
and Online
Crane Game
AM Arcadeand
Prize Wholesaling
(China)
Five Color
Karaoke Store
Operation
Shin
Corporation
HillValley brand
Popcorn production
and sales
Japan
popcorn
Lemonade
Manufacturing
and sales
Lemonade
By Lemonica
Distribution of
Prize of Prize
Games
Ares
Company Film
distribution
GAGA
VR Contents and
Experiential
Attractions
Dynamo
Amusement
Prize Planning,
manufacturing
and Sales
Fukuya HD
AM Facility
Management
(U.S.)
AM Store
Operation
from Kaku
AM Arcades
GiGO Taiwan
AM Arcades
PLABI
AM Arcades
SANDAI
AM Arcade
Complex Prize Planning,
Manufacturing
and Sales
Fukuya and
2 other companies Character
Planning and
Development
Tokyo Character
Makers
Lemonade
Manufacturing
and sales
Entertainment Platform Entertainment Contents
Amusement F&B Contents &
Promotion
Character MDKaraoke
Mini-location
from GS
100%100%
© GENDA Inc. 6
Amusement Centric + Peripheral Areas
Accelerate M&A in amusement industry and
steadily advance into peripheral areas in the entertainment field
GENDA GiGO
Entertainment
M&A announced
Pre-IPO &
existing businesses
Amusement
“Entertainment Contents”
“Entertainment Platform”
Pre-IPO M&A and
existing business
Karaoke
Mini-location
117 locations
AM Facilities
1 store (China)
M&As announced
post-IPO ~ Nov. 2023 M&As announced
since Dec. 2023
Character
MD
Note: The number of locations acquired is as of the date of the announcement of the project. Character MD means Character Merchandising.
F&B
M&A announced
Post-IPO~
November 2023
GENDA’s Status Today (as of May 11, 2024)
Contents &
Promotion
© GENDA Inc. 7
1. FY2024/1 Earnings Results
2. FY2025/1 Earnings Forecast
3. M&A-related Materials
4. Other Topics
© GENDA Inc. 8
FY2024/1 Earnings Results Highlights
YoY
Revenue
120%
YoY
Operating income
126%
YoY
Existing stores sales
108%
Number of
Amusement Arcade
stores
# 273
Number of M&A
Sourcing cases
#170
Debt capacity
Net Debt
/ EBITDA
0.8X
Record High
Revenue Record High
Op. Income
323 combined with
PLABI consolidated
from Feb. 1st
Well Above
the Initial Plan
of “100%”
Note: Net Debt is total interest-bearing debt minus cash and cash equivalents; EBITDA refers to operating income plus depreciation and amortization and goodwill amortization. The
formula for 1.5x is: {(GENDA’s debt + debt of PLABI and Shin Corp.) - (cash and cash equivalents of PLABI and Shin Corp.) } / GENDA‘s consolidated EBITDA forecast (including
PLABI and Shin Corporation) for FY2025/1 of 13.0 billion yen.
3.4x of the
Full-year Target
of 50 Cases
1.5x as of Feb. 1st
after consolidating
PLABI / Shin Corp.
© GENDA Inc. 9
(
¥ in millions)
FY2024/1
Full Year Results
FY2024/1
Full Year CE
(after upward revision
on November 20, 2023)
Achievement Rate
Revenue
55,697
53,000
105.0 %
Growth rate (%)
20.8
%
14.9
%
-
EBITDA
8,102
7,800
103.8 %
M
argin (%) 14.5
%
14.7
%
-
Operating income
5,370
5,000
107.4 %
Margin
(%) 9.6
%
9.4
%
-
Ordinary income
5,216
5,000
104.3 %
Margin
(%)
9.3 %
9.4 %
-
Net income
before amortization of goodwill
4,359
4,180
104.3 %
Margin
(%) 7.8
%
7.8
%
-
Net income
to the shareholders of the parent
4,178
4,000
104.4 %
Margin
(%) 7.5
%
7.5
%
-
RECORD
HIGH
Consolidated Statements of Income
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
© GENDA Inc. 10
FY2023/1 FY2024/1
(
¥ in millions) Q1 Q2 Q3 Q4 Full
year Q１Q2 Q3 Q4 Full
year YoY
Revenue
9,730
11,020
12,309
13,032
46,091
11,994
12,520
14,293
16,888
55,697
120.8%
Gross profit
2,090
2,580
3,309
2,879
10,860
3,182
2,609
3,368
3,798
12,958
119.3%
(%)
21.4%23.4%26.8%22.1%23.5%26.5%20.8%23.5%22.4%23.2%-
EBITDA
1,099
1,580
2,255
1,336
6,272
2,197
1,712
2,140
2,051
8,102
129.1%
(%)
11.3%14.3%18.3%10.2%13.6%18.3%13.6%14.9%12.1%14.5%-
Operating income
593
1,099
1,784
766
4,244
1,670
1,096
1,397
1,205
5,370
126.5%
(%)
6.1%9.9%14.5%5.8%9.2%13.9%8.7%9.7%7.1%9.6%-
Net income
b
efore
amortization of
goodwill
630
789
1,706
449
3,576
1,618
422
1,384
933
4,359
121.8%
(%)
6.4%7.1%13.8%3.4%7.7%13.5%3.3%9.6%5.5%7.8%-
Net income
to the
shareholders of
the parent
616
775
1,686
417
3,494
1,585
390
1,348
853
4,178
119.5%
(%)
6.3%7.0%13.7%3.2%7.5%13.2%3.1%9.4%5.0%7.5%-
Number of Stores
As of the end of
the period
230
234
254
250
-
254
256
263
273
-
-
Consolidated Statements of Income (Quarterly Results)
© GENDA Inc. 11
Net income (¥ in billions)
4.00 4.18 4.30
First of all, the 4 Avice stores are profitable in terms of
gross profit / CF. As a matter of course, after the M&A,
total store gross profit / cash flow will increase by the
increase in GP / CF of the 4 Avice stores
Since Avice M&A was an acquisition of the business,
Headquarters SG&A remain unchanged. (Thus, total
GP / OP / CF will increase in line with (1) above
However, as the headquarters SG&A expenses are
“apportioned” to each store on a sales basis, the 4 former
Avice stores became negative income after such
apportionment to incur goodwill impairment (Simply put,
Avice’s margin were lower than GiGO existing stores)
Conversely, existing GiGO stores will bear less SG&A
expenses, in the same amount SG&A apportioned to Avis
in (3) above, resulting in an increase in store profit on a
managerial accounting basis
Anyways, since the total SG&A from the acquisition of
Avice remain unchanged, the absolute total GP / OP / CF
increased after the Avice M&A
Most importantly, the acquisition price is recoupable
by the 4 Avice store profit / CF – therefore there is NO
issue in terms of actual return on investment
1
2
3
4
5
Fixed assets related to amusement arcade 537 million yen
Goodwill related to the amusement arcade business split off
from Avice Co. 134 million yen
Fixed assets related to online crane games 227 million yen
Fixed assets related to amusement machine lease 95 million yen
Before the M&A of Avice
SG&A Per Store
Profit after
SG&A Prorated
Total
Operating
Income
GiGO
Existing
stores
The goodwill impairment loss of Avice (4 stores)* was due to “structural”reasons below
It is highly important to note there is NO actual problem from an M&A standpoint
◼As a result of the total impairment loss of ¥990 million, even after the upward revision,
net income forecast was “Achieved” and in addition, our FY2025/1 guidance is,
“Increase”in the net income forecast, offsetting the following negative factors;
―Negative factor (1): Increase in amortization of goodwill
(Amortization of goodwill will affect the FY2025/1)
―Negative factor (2): Increased corporate tax burden
(Corporate tax had been reduced by the NOL until FY2024/1, which will return to normal from FY2025/1)
◼Moreover, uncertainty in future cash flows has been eliminated, resulting in healthier B/S and lower
amortization burden in FY2025/1
Gross Profit
of Each Store
GiGO
Existing
stores
After the M&A of Avice
Plan Actual Forecast
2
45
Avice
1
GiGO
Existing
stores
GiGO
Existing
stores
Avice
3
FY2024/1 FY2025/1
▲0.99
Achieved
SG&A Per Store
Profit after
SG&A Prorated
Total
Operating
Income
Gross Profit
of Each Store
Extraordinary Loss (Impairment Loss) (Disclosure on March 11, 2024)
Increase
Note: Avice is an amusement arcade of four stores originally operated under the AM Jam Jam brand at the time of acquisition by absorption-type demerger in October 2022.
PMI is progressing as shown in the p15 of the disclosure on January 22, 2024.
© GENDA Inc. 12
(
¥ in millions)
FY2024/1
As of the end
of the fiscal year
FY2023/1
As of the end
of the fiscal year Remarks
C
urrent assets 23,567 12,723 Mainly increase in cash and
deposits
of which, cash and deposits 12,379 7,086 Increase via cash flows from
operation and IPO proceeds
Non
-current assets 28,573 18,310 New store openings
of which, goodwill 4,992 1,225 Approx. ¥10.0 bn as of Feb 1
(in the process of finalizing)
T
otal assets 52,141 31,033 Increase due to above factors
T
otal liabilities 32,476 19,792 Continuous repayment via
cash flows from operation
of which, interest-bearing debt 18,993 11,091 Borrowing for capital
expenditures and M&A
N
et assets 19,664 11,240 Increase in shareholders'
equity
of which, shareholders' equity 19,427 11,224 Increase due to profit and IPO
Net Debt / EBITDA
0.8 x0.6 xApprox. 1.5x as of Feb. 1
Still plenty of debt capacity
Capital adequacy ratio
37.2 %36.2 %Approx. 33.0% as of Feb. 1
Adequate financial soundness
Consolidated Balance Sheet
Note:
“
Net Debt” is total interest-bearing debt minus cash and cash equivalents; “EBITDA” refers to operating income plus depreciation and amortization and goodwill amortization.
The formula for 1.5x is: {(GENDA’s debt of PLABI and Shin Corp’s debt ) - (cash and cash equivalents of PLABI and Shin Corp.) } / GENDA's consolidated forecast for FY01/2025.
Calculated using "EBITDA (including PLABI and Shin Corp.) 13 billion yen".
© GENDA Inc. 13
Increase in the number of
stores in this fiscal year
X months contribution
Increase in stores in the
previous year
Full year contribution
Amusement related
(in ¥bn) Amusement-related + ¥8.1bn
Entertainment Platforms Entertainment
Contents
Strong “organic growth”+¥7.0bn
Significant contribution from existing stores sales increase of ¥3.2bn
New stores sales increase of ¥2.8bn from FY2023/1 and FY2024/1,
and ¥1.0bn from AM-related and others
Despite the IPO, inorganic growth secured +¥2.6bn
¥2.6bn from M&A in FY1/2023 and FY1/2024
Flexible store closure with highest priority on profit / CF
Close stores that do not contribute much to profit and cash flow,
without sticking too much on the number of stores
PLABI consolidated on Feb. 1, 2024
No contribution to earnings in FY2024/1 – full contribution in FY2025/1
GAGA and Ares
Full contribution will be made in the
next fiscal year as those M&As
were near the end of the fiscal year
Fukuya Holdings Co.
No PL contribution in FY2024/1 as
consolidated as of Jan. 31, 2024
Breakdown of Consolidated Revenue(YoY)
0
55.6
© GENDA Inc. 14
Profit increase due to strong "organic growth
Continued "increase in gross profit with increase in number of stores" >
"increase in fixed costs with increase in number of stores
Achieved profit growth, mainly organic growth, that fully offsets the
increase in Tech engineers and M&A personnel at GENDA, a pure holding
company.
(Due to the IPO in July 2023, M&A activities in FY01/2024 will be limited to
the second half of the year and M&A companies acquired during the
period will contribute only limitedly to the company's performance in
FY01/2024).
Breakdown of Consolidated OP(YoY)
(in ¥bn)
© GENDA Inc. 15
Amusement Arcade Existing Stores Sales (YoY)
(in ¥bn)
0
YoY
108%
Strong Recovery in Urban Stores
Throughout the year, the recovery from Covid-19 in "urban stores," GiGO's
strongest area drove strong performance
Sales in shopping centers and roadside stores, where recovery of human flow
from Covid-19 was earlier than in urban stores, has already recovered from Covid,
and they are one step ahead of the steady state growth rate.
Urban store sales assumed to be closer to the steady state in FY2025/1
© GENDA Inc. 16
0
100
200
300
400
500
600
700
800
0
100
200
300
400
500
600
700
800
900
Number of stores Number of mini-location sites
Note: Mini-locations are game areas that are not staffed.
2021 2022 2023 2024
Domestic AM: 312 stores
Overseas AM: 11 stores
Domestic F&B: 55 stores
Karaoke in Japan: 370 stores
Others: 9 stores
*As of the end of February 2024
757 stores
Japan: 569 locations
Overseas: 329 locations
898 locations
*As of the end of February 2024
Number of GENDA “Entertainment Platforms" reached 1,655
2021 2022 2023 2024
Number of Entertainment Platforms
© GENDA Inc. 17
1. FY2024/1 Earnings Results
2. FY2025/1 Earnings Forecast
3. M&A-related Materials
4. Other Topics
© GENDA Inc. 18
0.1 0.3 0.6
5.6 6.2
8.1
13.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
0.0 0.0
3.5
2.7
3.5
4.3
5.4
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
EBITDA
13.0bn
Net Income
before Amortization of Goodwill
5.4bn
Note: Normalization of income tax payments means that income tax payments, which were reduced by tax loss carryforwards until FY01/2024, will return to normal from FY01/2025.
Figures for FY2019/1~FY2021/1 are for reference only, as consolidated financial statements have not been prepared for FY2019/1~FY2021/1.
Consolidated Revenue Consolidated EBITDA Consolidated Net Income before
Amortization of Goodwill
(Current FY)
+60%
Increase +24%
Increase
Significant growth
offsetting the normalized
tax payments
from FY2025/1
Highlights of FY2025/1 Earnings Forecast (¥ in billions)
This forecast does NOT include M&As not announced as of today (in other words, the forecast assumes zero M&A after today)
(Current FY)(Current FY)
Extraordinary
one-time gain due
to negative goodwill
+80%
Increase
Revenue
100.0bn
0.5 1.2 1.5
38.1
46.1
55.6
100.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
© GENDA Inc. 19
(
¥ in millions)
FY2024/1
Actual FY2025/1
Full Year Forecast YoY Comparison
(Percentage change)
Revenue
55,697
100,000
44,302
+80
%
EBITDA
8,102
13,000
4,897
M
argin (%) 14.5
%
13.0
%
+60
%
Operating income
5,370
7,000
1,629
M
argin (%) 9.6
%
7.0
%
+30
%
Ordinary income
5,216
6,600
1,383
M
argin (%) 9.3
%
6.6
%
+27
%
Net income
before amortization of goodwill
4,359
5,400
1,040
M
argin (%) 7.8
%
5.4
%
+24
%
Net Income
attributable to owners of the
p
arent
4,178
4,300
121
M
argin (%) 7.5
%
4.3
%
+3
%
Simplified Indicator of
Net Income under IFRS
CF index closest to business operating reality
and the most important CF indicator in
GENDA’s M&A strategy
FY2025/1 Earnings Forecast
© GENDA Inc. 20
FY2025/1 Onward: How to Assess Profitability and Quarterly Results
GENDA’s approach to profitability,of which industry is “M&A”
◼EBITDA, which excludes the impact of goodwill amortization (and net income before goodwill amortization) will be the most important indicator from FY2025/1
onward, when "goodwill amortization" an accounting expense that does NOT involve cash outflow, will increase and the PL structure as a company
specializing in M&A will be in full swing
Comparison of FY2025/1 with FY2024/1 (in terms of profitability and seasonality)
◼Profitability perspective: Since the assumption of goodwill amortization expense is completely different between FY2024 and FY2025, operating
income affected by goodwill amortization expense is misleading for a proper comparison of GENDA's business reality
◼Seasonality perspective: The karaoke business, which will be consolidated from this fiscal year, even has stronger seasonal bias toward the second half of
the year, with the year-end and New Year sales season being more heavily weighted toward the second half of the year than game centers
Based on the above, the quarterly plan for FY2025/1, and appropriate comparisons with FY2024/1
◼Revenue
―For FY2025/1, our plan estimates linear increase in quarterly sales from Q1 towardsQ4,sameas in the previous fiscal year, with all quarters
expected to significantly exceed the previous fiscal year's level
◼EBITDA
―EBITDA shows GENDA’s ability to generate cash flow (≒monthly increase in consolidated cash and deposit account), which indicates the health
of the business and is the closest to the actual situation
―EBITDA is also expected to be significantly higher than the previous year in every single quarters, although EBITDA also has accelerating bias
toward the second half than it did in the previous year
◼(Reference) Operating income
―While the second half of the FY2025/1 is expected to significantly exceed FY2024/1 due to the accelerating bias toward the second half of FY2025/1, the first
half of FY2025/1 is expected to fall short of FY2024/1, a situation that deviates significantly from the essential business reality for the following reasons;
―This is because amortization of goodwill, which was almost nonexistent in FY2024/1, will be incurred from FY2025/1 due to the acceleration of M&A activities
in the second half of FY2024/1
―This is because amortization of goodwill, almost nonexistent in FY2024/1, will be incurred from FY2025/1 due to the acceleration of M&A, which will
accelerate the bias in the second half of FY2025/1, as fixed costs without cash outflow are recorded in accounting and the break-even point is increased
―For these reasons, in assessing GENDA's actual business and growth potential, and thus GENDA's valuation, the use of operating income (or net income)
net of goodwill amortization, which is an accounting expense that does not involve a cash outflow, leads to erroneous judgments
―Therefore, GENDA repeatedly emphasizes "EBITDA" and "net income before amortization of goodwill" to investors
In any case, while we expect EBITDA of ¥13.0bn(+60%) and operating income of ¥7.0bn(+30%) for FY2025/1,
which is a significant increase over the previous year, we will continue to manage our forecast
not on a quarterly basis but on a full-year basis, same as we did in FY2024/1
(1) To ensure management to make appropriate judgments about GENDA's business conditions, and
(2) In order for the capital market to appropriately assess GENDA’s performance and its valuation
GENDA will identify EBITDA (and net income before amortization of goodwill) as our vital KPIs
© GENDA Inc. 21
1. FY2024/1 Earnings Results
2. FY2025/1 Earnings Forecast
3. M&A-related Materials
4. Other Topics
© GENDA Inc. 22
Recent Projects and Future Growth
Potential on GENDA's M&A Strategy
1. FY2024/1 Earnings Results
2. FY2025/1 Earnings Forecast
3. M&A-related Materials
4. Other Topics
© GENDA Inc. 23
The Center of our Strategy
“Amusement Arcade Roll-up”
14th deal
Announced in the first 1.5 months of FY2025/1
Unlike the previous fiscal year when
M&A were limited by the IPO,
GENDA can engage in
M&A from the beginning
of this fiscal year
Acquisition of 100% stake of SANDAI (announced on March 11, 2024)
Mini-location
117 locations
AM Store
Operation
from Kaku
•Amusement arcade in Kyushu area
9 "Smile Station" stores and 192
mini-locations in operation
•Sharing human resources and
DX tools, and the development of
GiGO-exclusive prizes
("Campaigns") to be implemented
Note: The number of acquired properties is as of the date of project announcement. Five colors is not counted in the 14 deals because it was established by GENDA.
© GENDA Inc. 24
Entertainment
Platforms
27
May 2024 (scheduled)
Stock acquisition (100%)
...
Note: The number of acquired properties is as of the date of the announcement of the project. (planned)" indicates a project prior to closing.
Entertainment Platform
July 2019
Joint Venture (50%) December 2020
Acquisition (85.1%) April 2021
Acquisition of the business October 2021
Capital Alliance
June 2022
Capital Alliance
January 2022
Acquisition (100%)
September 2023
Becoming a wholly
Owned subsidiary
January 2022
Acquisition
December 2021
Acquisition October 2022
Acquisition
September 2023
Transfer of Assets September 2023
Becoming a wholly
owned subsidiary
October 2023
Transfer of Fixed assets October 2023
Acquisition (66.0%)
June 2018
Acquisition (100%)
October 2022
Acquisition
November 2023
Acquisition (78.05%)
October 2023
Acquisition (100%)November 2023
Acquisition (100%)December 2023
Acquisition
of Stores
Entertainment Platform Entertainment Platform Entertainment Contents Entertainment Platform Entertainment Platform
Entertainment Platform
Entertainment Contents Entertainment Platform Entertainment Platform Entertainment Platform Entertainment Contents
Entertainment Platform
Entertainment Platform Entertainment Contents Entertainment Platform Entertainment Platform
Entertainment Contents Entertainment Contents Entertainment Platform Entertainment Platform Entertainment Platform
2345
6
20 21
11
1
19
18
8910 11
7
14 1513
November 2023
Assets transferred from
Global Solutions
Mini-location
117 locations
December 2023
Acquisition of
management rights
22
AM Arcade
1 store
(China)
February 2024
Acquisition (82.45%)
Entertainment Platform
Entertainment Contents 25
January 2024
Acquisition (100%)
24
12 16
17
Entertainment Platform
26
February 2024
Acquisition (78.59%)
1〜11
15
12 〜26
Post-IPO #M&A
Pre-IPO #M&A
December 2023
Pino Pino Zaurus Limited
Acquisition (100%)
Entertainment Platform
23
“27” M&A and Capital Transactions Track Record
© GENDA Inc. 25
M&As announced in FY2024/1 and start contribution from FY2025/1
M&As announced prior to IPO
M&As announced in FY2024/1
FY2023/1 FY2024/1 FY2025/1 (forecast)
・・・
46.0bn 53.0bn
70.0bn
30.0bn
2.6bn
Note: Each block represents an estimated amount of sales; therefore, there is an error from the sales figures in the financial statements.
・・・
26%
54%
15%
6%
Through continuous M&As of companies with “organic growth”
to achieve transformational growth of “inorganic growth”
GENDA is committed to a Continuous Transformational Growth trajectory by M&A
and continue to aim such trajectory until it becomes the world’s No.1
entertainment company in 2040
Growth Trajectory to 2040 with “Organic×Inorganic Growth”
© GENDA Inc. 26
Large
Industry
Store
Independent
Store
Dependent
Small
Industry
TAM of Existing Biz Domain TAM of Other Entertainment Industries (Japan)
Amusement Arcade
540.0 bn
Movie
260.0 bn
Karaoke
380.0 bn
+
Huge TAM left in Japan alone
and by adding the fast-growing
overseas markets, there is plenty
of room for growth until 2040
Amusement Arcade +
Karaoke + Movie
Over 1tn
TAM as the room for M&As in the Entertainment Industry
SAM of Existing Biz Domain
Note: The image shows an overview of the entertainment industry based on our perceptions. Amounts indicating the size of the market are estimates of sales in the fact-finding reports
issued by the respective industry associations.
M&A in peripheral areas
(expansion of TAM)
Fitness
¥580 bn
Theme park
¥1,000 bn
Golf course
¥760 bn
Karaoke
¥380 bn
Toys & Baby
specialty store
¥470 bn
Internet cafe
¥100 bn
bowling
¥60 bn
Hotel
¥4,000 bn
Bicycle and
horse racing
¥5,900 bn
Broadcast
¥3,100 bn
Publication
¥1,500 bn Animation Planning
and Production
¥2,500 bn
Mobile game
¥1,200 bn
Toy
¥810 bn
Ticket Handling
Business Video
Distribution Service
¥560 bn each
Home PC Games
¥440 bn
Video and
commercial production
¥390 bn
Music Record
Production
¥230 bn
Music distribution
service
¥70 bn
Event planning
and management
¥570 bn
Entertainment
Production
¥1,500 bn
Amusement
Machine
¥160 bn
Movie
¥260 bn
Amusement
arcade
540 bn
© GENDA Inc. 27
Financial Discipline in M&A Finance
◼The basic line of financing for large M&A is to raise funds through debt
•Three recent large M&As (Fukuya, PLABI, and Shin) were financed entirely with interest-bearing debt
•Diversifying funding sources and establishing a strong supporting base with financing from 40 financial institutions
◼Debt Capacity is disciplined by Net Debt / EBITDA
•The indicator roughly measures "years to pay off debt including repayment with cash on hand”, assuming EBITDA is the
ability to generate CF for one year
•Currently 1.5x (≈1.5yrs), with debt capacity to increase by adding the EBITDA of M&A target companies
GENDA’s Financial Discipline in M&A
(Shareholders' equity:
¥19.4 bn)
Interest-bearing debt
¥ 18.9 bn
Other liabilities
¥ 13.4 bn
Net assets
¥ 19.6 bn
Cash equivalent
¥12.3 bn
Other assets
¥ 34.7 bn
Goodwill ¥4.9 bn
Equity ratio 37.2%
Net Debt / EBITDA 0.8x
•Build a relationship that enables
flexible financing relationship with
the main bank
•As of February 1, with PLABI and
Shin Corp. combined: 1.5x with
EBITDA assumption of 13.0bn)
•Maintain a level of investment grade
rating by an external rating agency
•Currently, we do not expect to return
profits to shareholders in cash, so
we imagine that profits will increase
every year by the amount of net
income (target of 4.3bn for this fiscal
year)
Cash and cash equivalents
•Manage cash and deposits held for
working capital and investment funds
for M&A, etc.
•The group CMS has already been
implemented, Efficient use of funds
within the group
•Yet to be finalized until the completion
of the annual securities report, but as
of Feb. 1 after PLABI and Shin are
consolidated, goodwill is expected to
be approximately 10.0bn
•Handling closely with financial
institutions to discipline finances by
balancing in accordance with net
assets
Goodwill
Note: Actual cash flow to be used for repayment is free cash flow, which is EBITDA minus taxes and capital expenditures.
© GENDA Inc. 28
Measures to Maximize Synergies among
GENDA Group and Case Examples
1. FY2024/1 Earnings Results
2. FY2025/1 Earnings Forecast
3. M&A-related Materials
4. Other Topics
© GENDA Inc. 29
ENTERRIUM LEMONADE Lemonica
UK Limited
GENDA is a Pure Holding Company of
Entertainment Companies centered in Amusement Industry
Note: Assumptions as of March 11 2024. “AM arcade” in the figures refer to amusement arcade. SANDAI plans to complete the project in May 1, 2024.
GENDA Group Overview
GENDA Games
Kiddleton
GENDA GiGO
Entertainment
100% 100% 100% 91.75% 78.59% 100% 66.0% 100% 78.05% 100%
100% 98.04%
100%
100%
100%
100%
AM Arcades and
Online Crane Game
AM Lease
and Online
Crane Game
AM Arcadeand
Prize Wholesaling
(China)
Five Color
Karaoke Store
Operation
Shin
Corporation
HillValley brand
Popcorn production
and sales
Japan
popcorn
Lemonade
Manufacturing
and sales
Lemonade
By Lemonica
Distribution of
Prize of Prize
Games
Ares
Company Film
distribution
GAGA
VR Contents and
Experiential
Attractions
Dynamo
Amusement
Prize Planning,
manufacturing
and Sales
Fukuya HD
AM Facility
Management
(U.S.)
AM Store
Operation
from Kaku
AM Arcades
GiGO Taiwan
AM Arcades
PLABI
AM Arcades
SANDAI
AM Arcade
Complex Prize Planning,
Manufacturing
and Sales
Fukuya and
2 other companies Character
Planning and
Development
Tokyo Character
Makers
Lemonade
Manufacturing
and sales
Entertainment Platform Entertainment Contents
Amusement F&B Contents &
Promotion
Character MDKaraoke
Mini-location
from GS
100%100%
© GENDA Inc. 30
Manage synergies at monthly GENDA Group Management Meetings
⚫Top executives from each company physically gather to discuss measures to realize synergies
⚫Embodying “Speed is King”, one of the GENDA Values, we immediately execute
management decisions that generate synergies “on the spot”(specific examples are shown on the following pages)
Desk
Measures to Maximize Synergies
(Head of Contents
& Promotion
Business)
(Head of Amusement
Arcade Business)
(Head of Character
MD Business)
（Head of
F&B Business）
/ /
(Seating chart at the February 2024 Group Management Meeting)
CFO
Watanabe Chairman
Kataoka President
Otomi
President
Yasukouchi President / Chairman
Tanaka Executive Director
Murota
Director / President
Nagae
Director
Shoji
President
Ogawa
CSO
Habara
CCO
Sato
President
Shin
President / President
Ninomiya
Vice President
Kawaguchi
Director
Imanishi
/
President
Iyoda
Online
Participation
from the U.S (Head of U.S.
Operations)
© GENDA Inc. 31
Excerpts from actual group management meeting materials for Feb. 2024
Synergies managed in a "GIVE & TAKE" round-table
Each company creates a "GIVE (contribute by X) & TAKE (receive by X)" matrix to verbalize mutual synergies
© GENDA Inc. 32
Open 350 Mini-locations at Karaoke BanBan’s store
Purchase
Prize Purchase
Amusement
Machine
Purchase Prize
Operate mini-location
Synergy Case 1: BanBan×Ares×Fukuya×GENDAGames×Five Colors
⚫GENDA Games' mini-location business to open 350 stores at once
⚫GENDA Games will operate mini-locations and Ares and Fukuya will purchase prizes,
Chinese subsidiary Five Colors will be in charge of purchasing the machines,
and the offline karaoke platform BanBan will be used to increase the number of contacts with anime fans
⚫By completing transactions within the group, profits that would have previously flowed outside the group
now stay within the group
Shin Corporation, which operates BanBan Karaoke, in its FY2024/5
expects to achieve record profits in the 35 years since its establishment, without assume synergies above
© GENDA Inc. 33
“DEAD DEAD DEMONS DEDEDEDE DESTRUCTION”
Movie part 1 to be released in Japan on March 22, 2024
Inio Asano (“solanin” “GOODNIGHT PUNPUN”) × Lilas Ikuta × ano
Witness the unpredictable destruction on screen!
The two stars are Lilas Ikuta, a singer-songwriter (Kadode Koyama) and ano, the multi talent (Oran Nakagawa),
The main cast includes Atsumi Tanezaki, Miyu Irino, Kouki Uchiyama, Junichi Suwabe, and Kenjiro Tsuda!
Synergy Case 2:GAGA×GiGO×Japan Popcorn×BanBan
Note: Information on films is as of March 11, 2024.
“DEAD DEAD DEMONS
DEDEDEDE DESTRUCTION”
- Part1 3/22（Fri） / Part2 4/19（Fri）
Roadshow
©Inio Asano/Shogakukan/DeDeDeDe Committee
Starring
Lilas Ikuta
(the LHS of the photo)
ano
(the RHS of the photo)
© GENDA Inc. 34
×××
•Provision of GiGO store-exclusive prizes and limited-edition
capsule toys
•Implementation of in-store jacks at stores adjacent to movie
theaters
- Broadcasting on large screens, staff uniforms, in-store BGM, etc.
•Sale of limited-edition popcorn at the flagship GiGO store
- Development of different flavors for each character
•Collaboration rooms decorated with the concept of the movie
"DEAD DEAD DEMONS DEDEDEDE DESTRUCTION" opened
at Karaoke BanBan’s store at Ikebukuro and Shibuya
•Collaboration drinks featuring images of Kadode Koyama,
Oran Nakagawa, and Isobeyan, the main characters in the film,
are also on sale
Campaigns to promote “DEDEDEDE”
across the GENDA Group Platform
A variety of campaigns are planned to deliver "DEDEDEDE" IP Contents to fans through the group’s offline
“Entertainment Platform"
Synergy Case 2:GAGA×GiGO×Japan Popcorn×BanBan (Cont’d)
Note: Information on films and Campaign are as of March 11, 2024.
© GENDA Inc. 35
First month sales
vs business plan
220%
Synergy Case 3: GiGO×Sugai Dinos×Takarajima
× ×
× ×
Accelerate store network in Hokkaido
⚫GiGO CoconosSkino Grand opening on January 31, 2024
―Directly connected to Susukino Station, opened on the 3rd floor of COCONO SUSUKINO.
―The “GiGO Slot”is a slot machine that allows users to spin slots using tickets earned by playing games in the arcade corner,
the first installation at a GiGO store, and other new challenges
Takarajima Hakodate store changes its trade name to GiGO brand
⚫Former Takarajima store, Takarajima Hakodate store, rebranded as GiGO MEGA Don Quijote Hakodate
First installation of
“GiGO Slots”at GiGO stores
GiGO COCONO SUSUKINO Grand Opening on Jan 31, 2024
The day of grand opening Steady progress
in rebranding
© GENDA Inc. 36
Anime collaborated lemonade / New store openings
⚫The first "Character Collaboration Project" at all GiGO stores
―Collaborate with “Love Live! Hasu-no-Sora Jogakuin School Idol Club”
―Knowledge shared by GENDA GiGO Entertainment, which already has
extensive experience and knowhows in such collaborations
⚫New store openings at flagship GiGO store and Accelerate overseas expansion
―The opening will be at the GiGO Flagship Store,
the first store to be opened in an amusement arcade operated by GiGO
―New store openings in the Middle East and the U.K.
Collaboration project with Popular Character “Love Live!”Accelerated New Store Opening
Rendering
GiGO
Flagship
Store
2024.4.1
Kuwait by
Apr. 2024
England
Apr.10, 2024
Opened a store in A5Mall,
a large commercial complex in Kuwait
Synergy Case 4: GiGO×LEMONADE by Lemonica
×
Steadily implement the measures in the
document published on November 20, 2023
© GENDA Inc. 37
“VSPO!”×Campaign at GiGO’s store
⚫Popular Vtuber “VSPO! and GiGO Group stores tie-up project
⚫Former SPSS handled the wrapping installation for GiGO Akihabara #1, Akihabara #3, and Akihabara #5
⚫About 400 fans lined up at the 4 Akihabara stores before opening on the first day of the campaign
×
GiGO Akihabara #1GiGO Akihabara #3
Print Sticker Machine Collaboration
Prize machine wrapping
Synergy Case 5: former SPSS（currently GAGA）×GiGO
© GENDA Inc. 38
1. FY2024/1 Earnings Results
2. FY2025/1 Earnings Forecast
3. M&A-related Materials
4. Other Topics
© GENDA Inc. 39
GENDA is Selected
Top 10 Mergers and Acquisitions Services Companies in APAC - 2024
by Business Management Review Magazine
⚫Global Recognition for Continuous M&A, Financing, and PMI Performance in the Entertainment Domain
(Click here for link to article)
⚫GENDA, along with SHIFT, recorded “No.1 # of M&A deals in Japan in 2023 (10 deals)”
⚫GENDA's M&A activity in 2023 was only 5 months from August to December due to the IPO,
while M&A activity has been steadily progressing since the beginning of this fiscal year
Selected as one of the Top 10 M&A Companies in APAC
Note: "No.1 # of M&A deals in Japan in 2023 (10 deals)" refers to the number of timely disclosures of subsidiary transfers or business acquisitions, etc. (excluding intra-group
restructuring) between January 1, 2023 and December 31, 2023.
© GENDA Inc. 40
“Anatomy of a Fall” wins the Oscar
for best original screenplay at the 96th Academy Awards ®
©2023 L.F.P. –Les Films Pelléas / Les Films de Pierre / France 2 Cinéma / Auvergne
‐
Rhône
‐
Alpes Cinéma
80 awards and 226 nominations
in this year's film awards race!
A masterpiece of psychological mystery, acclaimed around the world.
A man falls to his death in a remote snowy mountain lodge. At first it is thought to be an accident,
but gradually, his wife Sandra (Sandra Hüller), a best-selling author, is suspected of the murder.
The only person present at the scene is their visually impaired 11-year-old son. As the couple's
secrets and lies are revealed in the pursuit of the truth, the "truth" emerges in every character in
the film.
The film won the Palme d'Or at the Cannes International Film Festival, where it received
unprecedented acclaim from the brilliant director Ruben Östlund who served as the president of
the jury, The film won the Golden Globe for Best Screenplay, the Best Non-English Language Film,
and finally, the Academy Award® for Best Screenplay. This is a masterpiece of human mystery
that has made the world swoon!
⚫Nominated for five 2024 Academy Awards®: Best Picture / Best
Director(Justine Triet) / Best Actress Oscar(Sandra Hüller) / Best Original
Screenplay (Justine Triet, Arthur Harari) / Best Film Editing
⚫“Anatomy of a Fall" is also the winner of the Palme d'Or, the best film
award at the 2023 Cannes Film Festival and has won the Golden Globe
Awards 2024 for best original screenplay and best non-English language
movie
⚫This film is distributed by GAGA in Japan and now Now showing in
theaters nationwide to rave reviews
Breaking
News GAGA’s film has just won the Best Original Screenplay Oscar
© GENDA Inc. 41
“FLIPS Shinjuku” is one of the largest amusement poker rooms in Japan
⚫One of the largest facilities in Japan with an area of 660m2
⚫With YouTuber and well-known professional poker player “Worldwide Yokosawa”
planned in collaboration with POKER ROOM Co.
⚫ Approx. 5,000 applications for the Jan.31 – Feb.4 pre-opening play trial and over 7,000 for the Feb.17 – 29 pre-opening
⚫On the day of the grand opening, 200 people waited in spite of bad weather, and on the first weekend
The first weekend was also off to a great start, with a waiting list of about 400 people
Grand
Opening
on Mar.5
“FLIPS Shinjuku” Amusement Poker Room Grand Opening
•Poker played with in-store exclusive game chips without betting cash
•Enjoying poker as a card game, not as gambling
What is
Amusement Poker?
© GENDA Inc. 42
# of members
676K
Total Number of Registrations Number of Prize Pass Members
1,8302,2672,7052,8052,9503,2703,7733,9644,407
5,163
5,9256,2666,6067,0247,124
2022 2023 20242022 2023 2024
215,417
242,127
277,012
295,464
349,439
392,710
441,348
475,510
515,558
563,005
592,453
616,788
636,263
657,107
676,189
Cumulative number of members of “GiGO App”,
a membership application for customers, exceeds 60K
•Steady increase in membership since renewal in December 2022
•The "GiGO App" can be linked to cashless payment functions, such as coupon
distribution, service ticket distribution, and “Prize Pass”services, enabling the
development of a wide variety of services
•“Prize Pass”is a subscription service that allows users to earn prize game tickets
by paying a monthly subscription fee
•Steady growth in the number of "GiGO App" members is expected to contribute to the
formation of loyalty to GiGO stores
Progress of DX measures for Customers
© GENDA Inc. 43
50
100
150
200
250
300
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
FY2024/1
FY2023/1
FY2022/1
FY2021/1
FY2020/1
(¥ in millions)
⚫Graph below shows the total amount spent by users who downloaded the GiGO app, by the cohort of timing of installation
⚫The data suggests that customers who have joined the program continue to visit and play with us
⚫Notably high in FY2023/1, one year after the "GiGO App" project, and especially so after the GiGO App switchover in Dec.2022
Quantitative Results Prove Stickiness of Amusement Arcade Customers
PMI Growth Potential from DX in Roll-Up M&A Strategies Suggested
Total amount spent by users by time of admission (excluding coupon use)
FY2021/1 FY2022/1 FY2023/1 FY2024/1
Customer Sales Stickiness Observed via GiGO App
Timing of Installation December 25, 2022
GiGO App
Switching
April 2021
GiGO App
Project Launched
October 2022
Tech Engineer
Recruitment
in full swing
December 2020
Acquisition of
former SEGA
Entertainment
© GENDA Inc. 44
Appendix
© GENDA Inc. 45
Note: Percentage of shares held is the ratio including the number of latent shares due to stock acquisition rights, as stated in “Securities Report (Part I), Section 3 [Status of
Shareholders]” in the “Annual Securities Report for Initial Listing Application. EPS
”
refers to
“
earnings per share. FCF" refers to "free cash flow," which is operating CF minus
investment CF. PMI" refers to the integration process and management to ensure the integration benefits of M&A.
We will conduct M&A mainly in industries where we have confidence in PMI, but we believe that we
should avoid grabbing high prices based on PMI.
In Addition to Maximizing Shareholder Value, we also seek to Maximize Per Share Value
→ Specifically, we pursue “Maximization of Cash EPS (earnings per share before amortization of goodwill)”
(Cash EPS is an indicator that is CF-oriented and net income per share under quasi IFRS with no goodwill amortization)
We believe “Growth via M&A” does NOT always lead to the increase in Per Share Value
→ We access M&A deals whether that will “Increase the Cash EPS”
Entry Valuation
1
We believe the entry valuation is a very important factor in M&A, and we try hard not to enter with wrong price
Financing
2
Leverage ample FCF to minimize the amount of equity, limit dilution, and pursue the maximization of equity returns
PMI
3
Representative
Director & Chairman
Nao Kataoka:
16.85%
The five committee members hold more than 1/4 of the total shares – thus we will examine whether the M&A deal
contributes to the maximization of “per share value”, as the representative of all the shareholders
Investment Committee
4
Representative
Director and President
Mai Shin:
8.62%
Director
CFO
Taiju Watanabe:
1.36%
Executive Officer
Head of AM Business
Kazuhiro Ninomiya:
0.09%
Executive
Officer CSO
Kohei Habara:
0.15%
4 Key Factors in the Pursuit of Maximizing Per Share Value / EPS
We conduct M&As mainly in areas where we have confidence in PMI, but we would not hold on to a high price by
counting too much on our PMI prospects
The Discipline of M&A" in GENDA
© GENDA Inc. 46
2040
M&A Acquisition Store
Opening of new stores
Opening of new stores
Transfor
mational
M&A
Existing stores
T+1 period
T-1 period T period
M&A Acquisition Store
Growth
of existing
stores
1
Opening of new
stores during T-1
contributes full
year
2
M&A acquired
New stores during T-1
contributes full year
3
Opening of new
stores during T
contributes X months
4
M&A acquired
new stores during T
contributes X months
5
Transformational
M&A in the
entertainment
industry
6
Becomes
existing
stores
From T+1
World’s No.1 Entertainment company in 2040
Illustrative Diagram of GENDA's Growth
47
© GENDA Inc.
Q1: Do you plan to disclose your mid-term management plan?
GENDA does not plan to announce its medium-term management plan for the following reasons
While we place M&A at the core of our growth strategy, we believe that if we announce a medium-term management plan that
incorporates M&A, there is a risk that we may carry out unreasonable M&A to achieve our business performance, resulting in a
high price tag, while on the other hand, if we announce a medium-term management plan that only incorporates organic growth,
we believe that the disclosure of a medium-term management plan that incorporates only organic growth would increase the
possibility of presenting a growth trajectory that differs significantly from that of our group, which places M&A at the core of its
growth strategy. For these reasons, we refrain from disclosing our medium-term management plan.
Please refer to page 31 of "M&A Progress and Earnings Forecasts after December 2023" for the growth image up to 2040.
https://ssl4.eir-parts.net/doc/9166/ir_material_for_fiscal_ym5/148590/00.pdf#page=31"
(Ref.) Frequently Asked Questions and Answers (disclosed on Feb.27, 2024)
48
© GENDA Inc.
Q2. What are the KPIs?
The number of amusement arcade stores and the number of M&A sourcing are disclosed as KPIs. For details, please refer to
page 3 of the "Financial Results for the Third Quarter of the Fiscal Year Ending January 31, 2024.
https://ssl4.eir-parts.net/doc/9166/ir_material_for_fiscal_ym3/145597/00.pdf#page=3
On the other hand, from a performance perspective, as a company that focuses on M&A as a pillar of its growth strategy, we place
the greatest importance on "EBITDA (operating income + depreciation and amortization + amortization of goodwill)," which
represents the Group's consolidated annual cash flow generation capacity, and "Net income before amortization of goodwill,"
an indicator similar to net income under IFRS.
Currently, we are executing a large number of M&A projects. However, in light of the fact that all of the target companies in past
projects have adopted Japanese GAAP, a trend that is likely to continue, we have adopted Japanese GAAP rather than IFRS in
order to ensure flexibility in our M&A and accounting practices. Therefore, we will incur a certain amount of "goodwill amortization
expense" (which does not occur under IFRS) as our M&A strategy progresses in the future.
If we change to IFRS, our operating income and net income will increase by the amortization of goodwill, but this will not increase
our intrinsic corporate value.
Since enterprise value is only the sum of future free cash flow (after adding back goodwill amortization and other non-cash items)
discounted by the time value, and since we repeatedly finance each M&A project based on the target company's ability to
generate cash flow.
We believe that it would be more appropriate for investors to focus on our ability to generate cash flow when judging the fair value
of our company, which is growing through M&A, and we believe this is important in order to more accurately convey our
company's situation. For this reason, we disclose "EBITDA" and "Net income before amortization of goodwill" in our earnings
announcements and forecasts, including our financial statements, in addition to the usual step-by-step profit and loss.
(Ref.) Frequently Asked Questions and Answers (disclosed on Feb.27, 2024)
49
© GENDA Inc.
Q3. What are the relevant industry sectors or comparables?
We advocate "Continuous Transformational Growth" as we consider M&A in the entertainment industry to be a pillar of our growth
strategy. Therefore, we consider "companies that grow discontinuously through repeated M&A in a specific industry" to be
our comparable companies.
Companies that engaged specifically in the "M&A" industry have long existed in Europe and the U.S., engaging in dozens to
hundreds of M&A transactions per year, and are generally classified as “Serial Acquiror”.
However, as shown on page 25 of the "M&A Progress and Earnings Forecasts from December 2023 onward" disclosed on
January 22, 2024, GENDA expects net sales to exceed 53.0 billion yen, EBITDA to exceed 7.8 billion yen, and operating
income to be 5 billion yen in the fiscal year ending January 31, 2024. As shown on page 25 of the "M&A Progress and Earnings
Forecast after December 2023" disclosed on January 22, 2024, we expect net sales to exceed 90 billion yen, EBITDA to
exceed 12.0 billion yen, and operating income to exceed 6.5 billion yen in the fiscal year ending January 31, 2024, as a
result of the contribution to earnings of companies acquired through M&A during fiscal year of January 31, 2024.
https://ssl4.eir-parts.net/doc/9166/ir_material_for_fiscal_ym5/148590/00.pdf#page=25
This is significantly different from the organic growth rates in the amusement arcade industry, which accounts for a large portion of
our sales, which is centered on new store openings and existing store sales growth, and from the organic growth rates in the
general entertainment industry. This is significantly different from organic growth in the arcade industry, which accounts for a large
portion of our sales, and from organic annual growth in the entertainment industry in general.
This simply translates to YoY growth of +70% in sales, +54% in EBITDA, and +30% in operating income. This is significantly
different from the organic growth rate in the amusement arcade industry, which is driven mainly by new store openings and
existing store sales growth. This is also significantly different from the organic annual growth rate in the entertainment industry in
general.
As stated above, we assume that we will continue to accumulate Continuous Transformational Growth through M&A in the
entertainment industry, and therefore, the industry in which we are engaged is "companies that grow through repeated M&A in
a particular industry" as a comparative company. We believe that the industry in which we are engaged is "M&A”.
(Ref.) Frequently Asked Questions and Answers (disclosed on Feb.27, 2024)
© GENDA Inc. 50
More fun
for your days
© GENDA Inc.
M&A Progress since December 2023 and
Earnings Forecasts
January 22, 2024
2
© GENDA Inc.
Aspiration Vision
=
More fun
for
your
days
World’s No.1
Entertainment
Company in
2040
© GENDA Inc. 3
Note: Diagram of our envisioned growth strategy.
Our growth strategy = "M&A in the Entertainment Industry"
M&A in the Entertainment Industry
Continuous Transformational
Growth through M&As
© GENDA Inc. 4
Our growth strategy = "M&A in the Entertainment industry"
Entertainment Ecosystem
Note: Diagram of our envisioned growth strategy.
Broadly rooted in the Entertainment Field
Building a Global Entertainment Network
Global
Entertainment
Network for
Dreams and
Aspiration
© GENDA Inc. 5
IP Contents ×Platform
A "platform" that connects "IP content" with fans of IP contents
“Entertainment Contents” “Entertainment Platform”
Platform connecting
IP contents and the Fans
The Big Picture of Current Entertainment Industry
IP Contents
such as Anime Fans of the
IP contents
© GENDA Inc. 6
Entertainment Platform
July 2019
Joint Venture (50%) December 2020
Acquisition (85.1%) April 2021
Acquisition of the business October 2021
Capital Alliance
June 2022
Capital Alliance
January 2022
Acquisition (100%)
September 2023
Becoming a wholly
Owned subsidiary
January 2022
Acquisition
December 2021
Acquisition October 2022
Acquisition
September 2023
Transfer of Assets September 2023
Becoming a wholly
owned subsidiary
October 2023
Transfer of Fixed assets October 2023
Acquisition (66.0%)
June 2018
Acquisition (100%)
October 2022
Acquisition
November 2023
Acquisition (78.05%)
October 2023
Acquisition (100%)November 2023
Acquisition (100%)December 2023
Acquisition
of Stores
Entertainment Platform Entertainment Platform Entertainment Contents Entertainment Platform Entertainment Platform
Entertainment Platform
Entertainment Contents Entertainment Platform Entertainment Platform Entertainment Platform Entertainment Contents
Entertainment Platform
Entertainment Platform Entertainment Contents Entertainment Platform Entertainment Platform
Entertainment Contents Entertainment Contents Entertainment Platform Entertainment Platform Entertainment Platform
2345
6
20 21
11
1
19
18
8910 11
7
14 1513
November 2023
Assets transferred from
Global Solutions
Mini-location
117 locations
December 2023
Acquisition of
management rights
22
AM Arcade
1 store
(China)
February 2024 (planned)
Acquisition (82.45%)
Entertainment Platform
Entertainment Contents 25
January 2024 (planned)
Acquisition (100%)
24
12 16
17
Entertainment Platform
26
February 2024 (planned)
Acquisition (78.59%)
1〜11
15
12 〜26
Post-IPO #M&A
Pre-IPO #M&A
...
December 2023
Pino Pino Zaurus Limited
Acquisition (100%)
Entertainment Platform
23
M&A and Capital Transactions Track Record of "26"
Note: The number of acquired properties is as of the date of the announcement of the project. (planned)" indicates a project prior to closing.
© GENDA Inc. 7
Amusement Centric + Peripheral Areas
Accelerate M&A in amusement and steadily advance into peripheral areas
GENDA GiGO
Entertainment
M&A announced
Pre-IPO &
existing businesses
Amusement
“Entertainment Contents”
“Entertainment Platform”
Pre-IPO M&A and
existing business
Karaoke
Mini-location
117 locations
AM Facilities
1 store (China)
M&As announced
post-IPO ~ Nov. 2023 M&As announced
since Dec. 2023
Character
MD
Note: The number of locations acquired is as of the date of the announcement of the project. Character MD means Character Merchandising.
F&B
M&A announced
Post-IPO~
November 2023
GENDA’s Status Today (as of January 22, 2024)
Contents &
Promotion
© GENDA Inc. 8
Food & Beverage (F&B)
Providing Food and Beverage
as entertainment
M&A Strategies in the Entertainment Industry
Amusement
Operation of Amusement Arcades
Contents & Promotion
Upstream access to IP including
Anime Production and Publishing
Character MD
Provide products and Services
based on IP
Pre-IPO (M&A + existing business) Post-IPO (M&A)
Mini-
location
from GS
Entertainmen
Platform
Entertainment
Contents
AM Store
Operation from
Kaku (China)
Karaoke
Operation of Karaoke Stores
M&A deals Organized by Segments
Note: The number of acquired properties is as of the date of the announcement of the project.
© GENDA Inc. 9
GENDA is a Pure Holding Company of
Entertainment Companies centered in Amusement Industry
Mini-
location
from GS
AM Store
Operation
from Kaku
100%. 100%. 100%. 91.75% 78.59% 100% 66.0% 100%. 78.05% 100%.
Entertainment Platform Entertainment Contents
AM Arcades and
Online Crane Game
GENDA GiGO
Entertainment
100%.
AM Rental
and Online
Crane Game
GENDA Games
AM Arcades
GiGO Taiwan
Kiddleton
100%.
AM Arcade
Complex
ENTERRIUM
AM Arcadeand
Prize Wholesaling
(China)
Five Color
Karaoke Store
Operation
Shin
Corporation
HillValley brand
Popcorn production
and sales
Japan
popcorn
Lemonade
Manufacturing
and sales
Lemonade
By Lemonica
Distribution of
Prize of Prize
Games
Ares
Company Film
distribution
GAGA
VR Contents and
Experiential
Attractions
Dynamo
Amusement
82.45%
AM Arcades
PLABI
Amusement F&B Contents &
Promotion
Character MD
Karaoke
100%
SPSS
Promotion business to
be merged with GAGA
(plannedon Feb 1, 2024)
Prize Planning,
Manufacturing
and Sales
Fukuya and
2 other companies
100%.
Note: Assumptions as of February 2024, when all announced M&A deals are completed. “AM arcade” in the figures refer to amusement arcade. The figures are mainly for our consolidated subsidiaries. The number of locations acquired is as of
the date of the project announcement. Fukuya HD plans to complete the project in late January 2024. PLABI and Shin Corporation are planned to complete their projects on February 1, 2024.
100%.
Prize Planning,
manufacturing
and Sales
Character
Planning and
Development
Tokyo Character
Makers
Fukuya HD
AM Facility
Management
(U.S.)
GENDA Group Overview
LEMONADE Lemonica
UK Limited
100%
Lemonade
Manufacturing
and sales
100%
Prize business to be
transferred to Fukuya
(plannedon Jan 31, 2024)
Prize business,
Promotion business
10
© GENDA Inc.
Highlights
of M&A Transactions
© GENDA Inc. 11
45 Amusement Arcades + 363 Mini-locations Nationwide
(PLABI, Marine Garden, MINAMI ASOBI SHOTO, etc.)
Amusement
Arcades
+45
stores
Mini-location
+363
locations
PLABI
Marine Garden
MINAMI ASOBI ISLANDS
Acquisition of PLABI (82.45%)
Largest Amusement Arcade Roll-up M&A since the acquisition of the former Sega Entertainment
© GENDA Inc. 12
# of Amusement Arcades #r of Mini-locations
By roll-up M&A
The number of amusement arcades is
also increasing rapidly
The growth potential of GENDA is
not only the growth rate of
amusement arcades but the
M&As in Entertainment Industry
to achieve “Continuous
Transformational Growth”
mini-location
117 locations
Steady Progress in
"Amusement Arcade Roll-up”
The Center of our Strategy
1
AM arcade
1 store
(China)
Investment Highlights
Note: The number of locations acquired is as of the date the project was announced, and is estimated by adding up the previoues planned to close in February 2024. Mini-locations refer to game areas with no permanent staff.
# of Amusement Arcades Facilities
FY2021 FY2022 FY2023
(Planned)
227
250
26 54
12
202
FY2020
879
locations
318
store
FY2021 FY2022FY2023
(Planned)
FY2020
© GENDA Inc. 13
Strengthened Bargaining Power
Strengthened bargaining power of amusement machines
and prizes with 318 amusement arcades and 879 mini-locations
2
More Enjoyable Amusement Arcades
3
Sharing the Best Operation Practice
4
Mini-location Operational Synergies
5
Strengthened
Bargaining
Power
Improved
Store
Operation
Investment Highlights (continued)
GiGO NAVI, the industry's unique employee operation app and
Improve efficiency through the deployment of our DX operation
“Campaigns”(GiGO exclusive prizes) at 318
GENDA group stores will be possible now
Further variety of prizes and amusement
machines, we will make the facility even more
enjoyable for our customers.
Achieve much more efficient operations
by integrating PLABI’s 363 mini-location
operations to GENDA Games, currently in
charge of GENDA Group’s mini-locations
© GENDA Inc. 14
PMI of the former SEGA Entertainment, Inc.
⚫PMI team with management experience from three industry leaders
―Kataoka, former President of Aeon Fantasy (Currently Chairman of GENDA)
―Former President, former Sega Entertainment Ueno (Current Chairman, GENDA GiGO Entertainment)
―Former Executive Officer, BANDAI NAMCO AMUSEMENT Ninomiya (Current President, GENDA GiGO Entertainment)
⚫Shopping center-type store reform ("Musamura Serious Project") using as an experimental store
GiGO AEON Mall Musashi Murayama
⚫As a result of horizontal deployment of the know-how and cost reductions, operating profit recovered
significantly in the first fiscal year after becoming GENDA Group (see graph at the bottom)
(Ref.) GENDA’s Amusement Arcade PMI Records
FY2019/1
¥1.4 bn
¥3.8 bn
0
1.0
2.0
3.0
4.0
FY2020/1
¥1.7 bn
FY2021/1
December 2020
joined GENDA Group
¥-3.2 bn
April 2020
Declaration of Emergency
FY2022/1
Operating Income Transitions (GENDA GiGO Entertainment / former Sega Entertainment)
Covid-19
(¥ in bn)
© GENDA Inc. 15
PMI after Roll-up M&As of Small and Mid-sized Amusement Arcades
Note: From the viewpoint of fair comparison, the effectiveness of PMI results was measured after GENDA grouping in, using the latest and longest period of time for which comparisons could be made over the same period. For Takarajima, the
figures compare sales from February 2021 to January 2022 (12 months) before GENDA grouping in and November 2022 to October 2023 (latest 12 months). Figures for Sugai Dinos and Avice compare sales from October 2021 to September
2022 (12 months) before joining the GENDA Group and from November 2022 to October 2023 (latest 12 months). The figures for MAXIM HERO are the sales figures for the 4th week of October compared to the previous week.
PMI know-how in various roll-up M&A formats (stock acquisition, business transfer, absorption-type demerger, fixed asset acquisition)
⚫Increase the prize games ratio
⚫Development of exclusive GiGO giveaways (“Campaign”)
⚫Layout changes by replacing amusement machines to match the clientele
MAXIM HERO (fixed assets acquisition) 1 storeAvice (absorption-type demerger) 3 stores
Sugai Dinos (business transfer) 18 storesTakarajima (stock acquisition) 20 stores
Sales
151%*
Sales
107%*
Sales
120%* Sales
121%*
PMI
PMI
PMI
PMI
(Ref.) GENDA’s Amusement Arcade PMI Records (continued)
⚫Improve operational efficiency through horizontal deployment of DX
⚫Amusement machines and prizes can be purchased in bulk as a
Group of 318 stores
© GENDA Inc. 16
Operation of Karaoke chain "Karaoke BANBAN" with 372 stores
⚫Similar to amusement arcades, karaoke market is rapidly recovering toward pre-Covid levels (Ref.: FY2022 market size is 168% YoY)
⚫Operating income to be above pre-Covid levels in the current fiscal year of FY2024/5
⚫Similar business model with a fixed cost centric and high marginal profit margins (amusement arcades: c.70%, karaoke: c.90%)
Acquisition of Shin Corporation (78.59%)
Shin Corporation Financial Transitions
2019/5 2020/5 2021/5
(Actual) 2022/5 2023/5 2024/5
(Forecast)
April 2020
Declaration of Emergency February 2024
to join GENDA Group
Sales
(¥bn) EBITDA
and OP
(¥bn)
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
EBITDA
OP
Sales
© GENDA Inc. 17
Pre-transaction Post-transaction
Sharing
Customers
Strengthened New Store Opening Format
by Amusement Arcade x Karaoke
⚫GiGO’s characteristics is the urban area locations
but it has been difficult to open new stores in typical
high buildings in the urban area, since it would not be
easy to attract customers to the upper floors
⚫This bottleneck will be solved after this deal, by the
combination of an amusement arcade in the lower
floors and karaoke in the upper floors, since karaoke
customers generally come to stores with purposes
⚫Effective use of waiting time for karaoke would also
be possible
1
Investment Highlights
Sharing
Customers
© GENDA Inc. 18
Operational Synergies
⚫Regarding part-time workers, there is plenty of flexibility
with neighborhood stores, and even further synergies can
be envisioned if they are located in the same building
⚫Synergies can be expected in terms of resource allocation
and other operations with similar sales seasonality
2Strengthen IP x Real Platform
⚫Surging orders in SPSS for decorating Karaoke Room
Wallpapers with Anime and Idols
⚫Realize group synergies including amusement arcade
know-how via IP (animation) in GiGO x Real platform
⚫Contributed to mini-locations in karaoke rooms and
expansion of F&B's sales channels
3
Similarity of the P&L
⚫Karaoke business has similar business model to
amusement arcade, fixed cost centric with high
marginal profit
⚫After Covid-19, the company‘s management structure
became even leaner with EBITDA now at pre-Covid
levels and OP income much higher than pre-Covid
4Attractive investment opportunities
⚫Stable and ample FCF, even at stand-alone valuations and
regarded as a very attractive investment by GENDA's
Investment Committee
⚫Overcome the concerns about an increase in the cost of
capital due to the fact that the entire amount is debt-
financed and only profits are consolidated without
changing shareholders’ equity therefore improving ROE
and multiple to improve with higher EPS growth
5
street stall building
Investment Highlights (continued)
© GENDA Inc. 19
Vertical Integration of Major Prizemakers upstream of the Value Chain
A manufacturer that has had a close relationship with the GENDA Group since its inception
⚫Strengths in planning related to original prizes and licensed character prizes
⚫Develop and sell products that take "cute" one step further in both concept and quality under original brands such as "fanfancy
+", a specialty store for "Oshi-Katsu"
⚫Rapid growth of prize games in the amusement arcade industry, and rapid growth in business performance as an upstream
player in the value chain fanfancy + with GiGOPlanning and sales of prizes
Acquisition of 100% stakes of Fukuya HD
© GENDA Inc. 20
More “Campaigns”
by Strengthened Prizes
⚫Fukuya, a company with strengths in
planning original prizes and licensed
character prizes, to collaborate with
GiGO to plan GiGO-exclusive prizes,
"campaigns*”, which has significant
contribution to earnings
⚫GENDA Group to be able to
establish connections with IP
copyright holders that it could not
reach in the past, enabling it to plan
a wide range of prize lineups
1Increase in Purchasing
Volume and Cost Reduction
⚫By concentrating the purchasing
volume of prizes from GiGO group
and Kiddleton, USA
⚫Similarly, the GENDA Group’s
increase in the purchasing volume
of Fukuya to contribute to the
Fukuya’s earnings
2Integration of Value Chains
to Capture External Profit
⚫Fukuya has been enjoying rapid growth
of prize games in the amusement arcade
industry as an upstream player in the
value chain
⚫By vertically integrating the upstream of
the value chain, the excess profit paid to
external vendors is captured by the
GENDA Group at attractive valuations
based on friendly relationships
3
Investment Highlights
Note: "Campaign" means that the GENDA Group negotiates with IP publishers and other parties to purchase unique prizes to be handled exclusively by the GENDA group.
By handling prizes that other companies do not have, the Group usually makes a significant contribution to business performance.
© GENDA Inc. 21
Affinity between IP fans and "Oshi-Katsu" goods
⚫The customer demographics of amusement arcades, which are visited by fans of anime and idol IP, and fanfancy+,
which sells "Oshi-Katsu" merchandise, overlap and have a high affinity for each other
⚫Ikebukuro store No.3 consists of the amusement arcade on the 1st through 6th floors, fanfancy + with
GiGO Ikebukuro on the 7th floor, and GiGO‘s Taiyaki on the 8th floor, a popular gathering place for IP fans
⚫fanfancy + with GiGO ikebukuro's per-square sales are 2.5x greater than GiGO's amusement arcade
4
Investment Highlights (continued)
Note: Indicates that per square sales of fanfancy + with GiGO ikebukuro are 3.7 times the per square sales of GiGO's existing amusement arcades.
Per-square
Sales
3.7x*
© GENDA Inc. 22
GAGA Fukuya HD
Fukuya
100%.
100%. 100%.
78.05%
Fukuya
Overseas
(SPSS)
(SPSS)
Agile Group Restructuring
Reorganization of promotion and prize business of SPSS
SPSS promotion business
⚫Leading the promotion business inside and outside of the group
as a division of GAGA, using GAGA brand
⚫Aiming for further business expansion by leveraging GAGA’s
brand recognition
⚫In particular, cinema advertisement business, in which SPSS
has been actively involved, has a high affinity with GAGA's
existing business.
SPSS prize business
⚫By integrating the prize businesses of Fukuya and SPSS,
the efficiency of prize procurement and
the development of new prizes will be enhanced
⚫In addition, we will collaborate with Ares Company, a
wholesale trading company of plies that joined our group in
October of this year, to strengthening competitiveness in the
Character MD domain
Reorganized with GAGA and Fukuya to strengthen "Entertainment Contents Business" area
SPSS
Prize
business
Promotion
business
© GENDA Inc. 23
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Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
GENDA Group’s Entertainment Platform Network reaches 1,625
Note: The number of stores and offices for "January 2024" and "February 2024" are estimated figures as of January 22, 2024.
⚫The amusement arcade market is not an oligopolistic market, and we will continue to roll-up M&A as our core strategy
⚫Focusing on entertainment Platform that deliver IP to customers, while gradually expanding into entertainment contents
Number of Mini-locations
Number of Stores
Domestic AM: 307
Overseas AM: 11
Domestic F&B: 56
Domestic Karaoke: 372
746 stores
0
Domestic: 570
Overseas: 309
879 locations
*Expected as of the end of February 2024
*Expected as of the end of February 2024
GENDA Group’s Entertainment Platform Network
2021 2022 2023 2024 2021 2022 2023 2024
24
© GENDA Inc.
Earnings Forecast
© GENDA Inc. 25
0.1 0.3 0.6
5.6 6.2
7.8
-
2.0
4.0
6.0
8.0
10.0
12.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
0.5 1.2 1.5
38.1
46.1
53.0
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
Note: Figures for FY2019/1-FY2021/1 are for reference, as consolidated financial statements have not been prepared for the period from FY2019/1 to FY2021/1.
◼Contribution of the three most recently announced M&As (Fukuya, PLABI, and Shin Corporation) to earnings
―Current fiscal year: only the M&A transaction cost of ¥0.03bn (as Fukuya to be closed on Jan.31, and PLABI and Shin Corporation on Feb.1)
―Next fiscal year: Sales +¥30.0bn, EBITDA +¥2.7bn, Operating income +¥1.0bn (operating income after deducting goodwill amortization)
Sales EBITDA OP Income (after deducting goodwill amortization)
Existing Business Forecast TBD
(Next)
3 M&As announced from
December 2023 to today
+¥30.0bn
◼Provide attractive returns to shareholders with appropriate entry and leverage, the cornerstone of GENDA's M&A governance
―Based on the Company's relationships with financial institutions, the 3 M&As to be financed entirely through Debt Financing,
utilizing the debt financing capacity of GENDA and the target companies
―Additional EBITDA +¥2.7bn combined without GENDA cash nor additional equity, therefore zero cost from the shareholders
(¥ in bn)
"Continuous Transformational Growth" as an M&A Company
GENDA only spent cash of ¥1.8bn in 15 the M&As this fiscal year to earn incremental EBITDA of +¥4.5bn
Existing Business Forecast TBD
(¥ in bn) (¥ in bn)
3 M&As announced from
December 2023 to today
+¥2.7bn
M&As from IPO (July 2023)
to November 20, 2023
+¥1.8bn
(Same as the November 20th)
M&As from IPO (July 2023)
to November 20, 2023
+¥2.7bn
(Same as the November 20th)
M&As from IPO (July 2023)
to November 20, 2023
+¥13.0bn
(Same as the November 20th)
M&As from IPO (July 2023)
to November 20, 2023
+¥0.2bn
(Same as the November 20th)
(Current) (Next)(Current) (Next)(Current)
Existing Business Forecast TBD
0.1 0.1
-0.3
4.0 4.2
5.0
-0.5
0.5
1.5
2.5
3.5
4.5
5.5
6.5
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
3 M&As announced from
December 2023 to today
+¥1.0bn
M&As from IPO (July 2023)
to November 20, 2023
+¥0.8bn
(Same as the November 20th)
M&As from IPO
(July 2023) to
November 20, 2023
+¥0.07bn
(Same as the
November 20th)
© GENDA Inc. 26
GENDA’s Debt Financing for the 15 M&As in 6 months
40 Financial Institutions to be providing financing to GENDA at closing
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Japan Finance Corporation
Resona Bank, Ltd.
The Shoko Chukin Bank, Ltd.
The Bank of Mitsubishi
UFJ, Ltd.
Johoku Shinkin Bank
The Bank of East Japan, Ltd.
Joyo Bank, Ltd.
The Chiba Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Aozora Bank, Ltd.
The Kiriboshi Bank, Ltd.
The Bank of Yokohama, Ltd.
The Shizuoka Bank, Ltd.
Funds Lending, Inc.
The Toho Bank, Ltd.
SBI
Shinsei Bank, Ltd.
Asahi Credit Bank
The Senshu Ikeda Bank, Ltd.
The Musashino Bank, Ltd.
The Ashikaga Bank, Ltd.
Kansai Mirai Bank, Ltd.
Yamanashi Chuo Bank, Ltd.
NEC
Capital Solutions, Ltd.
Tokushima Taisho Bank, Ltd.
The Gunma Bank, Ltd.
The Bank of Nagoya, Ltd.
Tsukuba Bank, Ltd.
The Kagawa Bank, Ltd.
Tokyo Higashi Shinkin Bank
Mito Shinkin Bank
As a result, GENDA succeeded in financing three large M&A transactions "entirely" with interest-bearing debt
Assumes 1.5x Net Debt / EBITDA after 3 M&As, with sufficient additional Debt Capacity in close consultation with existing banks
Without additional M&A debt financing, the financial projection indicates that deleverage will proceed at a rapid pace
As GENDA Group, which had almost zero Net Debt after the IPO,
succeeded in realizing capital improvement by managing IPO funds with appropriate leverage
List of Financial Institutions with Loan Transactions
Note: Includes some financial institutions that are expected to have outstanding transactions as of February, including Previ and Shin Corporation, which are planned to close in February 2024. Also includes loans through social lending from
Funds Lending Co. In addition, NEC Capital Solutions Limited is duplicated because of the existence of loan and lease transactions, but is counted as one company in the calculation of the 40 companies.
GENDA have proactively approached financial institutions during normal times to develop potential syndicated loan participants for M&As
⚫GENDA actively contacts domestic mega banks / metropolitan banks / regional banks / leasing companies / shinkin banks
⚫As a first step, the company started transactions with “new loans”in anticipation of WC or CAPEX to obtain internal ratings, etc.
⚫That enables smooth structuring of club-type syndicated loans as an "existing bank" (rather than a new bank) in the event of large M&As
List of Financial Institutions with Lease Transactions
List of Financial Institutions with which GENDA Group expects to have financing / leasing transactions at the closing of the 3 M&As
Mizuho Leasing Co.
Sumitomo Mitsui Finance and Leasing Co.
Sumitomo Mitsui Trust Panasonic Finance Co.
NEC
Capital Solutions, Ltd.
Chiba Bank Leasing Co.
Fuyo General Lease Co.
Showa Lease Co.
Ricoh Leasing Company, Ltd.
Metropolitan Leasing Co.
27
© GENDA Inc.
Appendix
28
© GENDA Inc.
Note: "Leverage" represents debt financing. FCF" represents free cash flow.
Macrotrend "Leisure Time"
Strategic Rationale (Qualitative Aspect)
Rationale of M&A Strategy (Quantative Aspect)
AI accelerates the downward trend of working hours
Leisure time goes to consumption of entertainment
“Ever-changing” Entertainment
Diversified and accelerated cycles of entertainments
Conquering the volatility by owning a platform
along with a portfolio of entertainment contents
Optimal “Capital Efficiency"
By creating an entertainment ecosystem through M&A,
GENDA can provide each group company’s
excess cash with growth investment opportunities
Adequate equity returns through appropriate leverage
“Returns of M&A” to Shareholders
Along with appropriate entry and leverage in M&A,
FCF value of the target company is revealed and
reflected in the equity value of GENDA
Providing M&A returns for GENDA shareholders
Rationale for Entertainment Ecosystem of GENDA
29
© GENDA Inc.
Note: Percentage of shares held is the ratio including the number of latent shares due to stock acquisition rights, as stated in “Securities Report (Part I), Section 3 [Status of Shareholders]” in the “Annual Securities Report for Initial Listing
Application. EPS
”
refers to
“
earnings per share. FCF" refers to "free cash flow," which is operating CF minus investment CF. PMI" refers to the integration process and management to ensure the integration benefits of M&A.
We will conduct M&A mainly in industries where we have confidence in PMI, but we believe that we
should avoid grabbing high prices based on PMI.
In Addition to Maximizing Shareholder Value, we also seek to Maximize Per Share Value
→ Specifically, we pursue “Maximization of Earnings per Share (EPS)“
(Cash EPS will become more important after the acceleration of M&As, which will reflect cash flow and quasi IFRS Net Income)
We believe “Growth via M&A” does NOT always lead to the increase in Per Share Value
→ We access M&A deals whether that will “Increase the EPS”
(resulting in 42x EPS since inception despite M&A-centric growth)
Entry Valuation
1
We believe the entry valuation is a very important factor in M&A, and we try hard not to enter with wrong price
Financing
2
Leverage ample FCF to minimize the amount of equity, limit dilution, and pursue the maximization of equity returns
PMI
3
Representative
Director & Chairman
Nao Kataoka:
16.85%
The five committee members hold more than 1/4 of the total shares – thus we will examine whether the M&A deal
contributes to the maximization of “per share value”, as the representative of all the shareholders
Investment Committee
4
Representative
Director and President
Mai Shin:
8.62%
Director
CFO
Taiju Watanabe:
1.36%
Executive Officer
Head of AM Business
Kazuhiro Ninomiya:
0.09%
Executive
Officer CSO
Kohei Habara:
0.15%
4 Key Factors in the Pursuit of Maximizing Per Share Value / EPS
We conduct M&As mainly in areas where we have confidence in PMI, but we would not hold on to a high price by
counting too much on our PMI prospects
The Discipline of M&A" in GENDA
30
© GENDA Inc.
Note: Figures for FY2019/1-FY2021/1 are for reference because consolidated financial statements have not been prepared for FY2019/1-FY2021/1.
2.62 2.09
149.25
93.58
109.99
-
20.00
40.00
60.00
80.00
100.00
120.00
FY2019/1 FY2020/1 FY2021/1 FY2022/1 FY2023/1
4-year CAGR
154%
Special gain on
negative goodwill
(Yen)
⚫EPS grew 42x despite 115x sales growth was driven mainly through M&A
⚫Continue to pursue the maximization of “share value“ as well as “per share value"
EPS Transition since Incorporation
31
© GENDA Inc.
2040
M&A Acquisition Store
Opening of new stores
Opening of new stores
Transfor
mational
M&A
Existing stores
T+1 period
T-1 period T period
M&A Acquisition Store
Growth
of existing
stores
1
Opening of new
stores during T-1
contributes full
year
2
M&A acquired
New stores during T-1
contributes full year
3
Opening of new
stores during T
contributes X months
4
M&A acquired
new stores during T
contributes X months
5
Transformational
M&A in the
entertainment
industry
6
Becomes
existing
stores
From T+1
World’s No.1 Entertainment company in 2040
Illustrative Diagram of GENDA's Growth
32
© GENDA Inc.
More fun
for your days
December 11, 2023
FY2024/1 Q3
Earnings Presentation
© GENDA Inc.
1. FY2024/1 Q3 Earnings Results
2. Topics
Appendix: M&A Strategy and Earnings Forecast
(Reposted from November 20, 2023)
© GENDA Inc. 3
FY01/2024 3rd Quarter Highlights
YoY
Q3 YTD
Revenue
117%
YoY
Q3 YTD
Operating Income
119%
YoY
Q3 YTD
Existing stores sales
109%
Number of
Amusement
Arcade Stores
#263
Number of
M&A Sourcing
Cases
#102
Debt Capacity
Net Debt
/ EBITDA
0.2X
Record High
Revenue
Already Achieved
Full-year target 258
202% of Full-year
Target of 50 cases
On Track for the
Full-year Target
Note: EBITDA in Net Debt / EBITDA is based on LTM at the end of Q3. LTM" refers to the "most recent 12 months. Net Debt" refers to "Net Debt," which is interest-bearing debt minus
cash and cash equivalents. EBITDA is the sum of operating income plus depreciation and amortization and goodwill amortization.
M&A Financing
mainly during Q4
Record High
Op. Income
© GENDA Inc. 4
Consolidated Statements of Income
(Millions of yen)
FY2024/1
YTD Q3
FY2024/1
Full-year CE
(11/20 revision)
Progress Rate
to Full-year CE
Revenue 38,808 53,000 73.2 %
Growth rate (%) 17.3 %14.9 %-
EBITDA 6,050 7,800 77.5 %
Margin (%) 15.5 %14.7 %-
Operating income 4,164 5,000 83.2 %
Margin (%) 10.7 %9.4 %-
Ordinary income 4,126 5,000 82.5 %
Margin (%) 10.6 %9.4 %-
Net income before
amortization of goodwill 3,426 4,180 81.9 %
Margin (%) 8.8 %7.8 %-
Net income to the shareholders of
the parent 3,324 4,000 83.1 %
Margin (%) 8.5 %7.5 %-
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
© GENDA Inc. 5
Consolidated Statements of Income (Quarterly Results)
FY2023/1 FY2024/1
(Millions of yen) Q1 Q2 Q3 Q3 YTD Q4 Q1 Q2 Q3 Q3 YTD YoY
Net sales 9,730 11,020 12,309 33,059 13,032 11,994 12,520 14,293 38,808 117.3%
Gross profit 2,090 2,580 3,309 7,980 2,879 3,182 2,609 3,368 9,160 114.7%
(%) 21.4%23.4%26.8%24.1%22.1%26.5%20.8%23.5%23.6%-
EBITDA 1,099 1,580 2,255 4,935 1,336 2,197 1,712 2,140 6,050 122.5%
(%) 11.3%14.3%18.3%14.9%10.2%18.3%13.6%14.9%15.5%-
Operating income 593 1,099 1,784 3,477 766 1,670 1,096 1,397 4,164 119.7%
(%) 6.1%9.9%14.5%10.5%5.8%13.9%8.7%9.7%10.7%-
Net income before
amortization of
goodwill 630 789 1,706 3,127 449 1,618 422 1,384 3,426 109.5%
(%) 6.4%7.1%13.8%9.4%3.4%13.5%3.3%9.6%8.8%-
Net income to the
shareholders of the
parent 616 775 1,686 3,077 417 1,585 390 1,348 3,324 108.0%
(%) 6.3%7.0%13.7%9.3%3.2%13.2%3.1%9.4%8.5%-
Number of Stores
As of the end of the
period
230 234 254 -250 254 256 263 --
© GENDA Inc. 6
Consolidated Balance Sheet
(Millions of yen)
FY2024/1
End of Q3
FY2023/1
End of Full-year Remarks
Current assets 16,733 12,723 Mainly increase in cash and
deposits
of which, cash and deposits 10,182 7,086 Increase via cash flows from
operation and IPO proceeds
Non-current assets 24,179 18,310 New store openings
of which, goodwill 2,800 1,225 Goodwill increase restrained
with disciplined M&A entries
Total assets 40,913 31,033 Increase due to above factors
Total liabilities 22,126 19,792 Continuous repayment via
cash flows from operation
of which, interest-bearing debt 11,910 11,091 Diversification of funding
sources using leases
Net assets 18,787 11,240 Increase in shareholders'
equity
of which, shareholders' equity 18,666 11,224 Increase due to profit and IPO
Net Debt / EBITDA 0.2 x0.6 xPlenty debt capacity
for future M&A
Capital adequacy ratio 45.6 %36.2 %Adequate financial soundness
Note: EBITDA in Net Debt / EBITDA is based on LTM at the end of Q3. LTM
“
refers to the
”
most recent 12 months. Net Debt
“
refers to
”
Net Debt,
“
which is interest-bearing debt
minus cash and cash equivalents. EBITDA is the sum of operating income plus depreciation and amortization and goodwill amortization.
© GENDA Inc. 7
Breakdown of Consolidated Revenue (YoY Comparison of Q3 YTD)
Q3 YTD Amusement Arcade + 5.4bn yen
Amusement Arcade
(Billions of yen)
X months contribution
from the new stores
in this fiscal year
Full-year contribution
from the new stores
of the previous fiscal year
0
© GENDA Inc. 8
Breakdown of Consolidated OP (YoY Comparison of Q3 YTD)
Number of stores increased due to progress in roll-up strategy from the past
The increase in gross profit due to increase in number of stores
greater than
The increase in fixed costs due to increase in number of stores
Our number one priority roll-up M&A strategy steadily progressing
with Increasedsales of acquired stores
while controlling fixed costs and securing synergies
(Billions of yen)
© GENDA Inc. 9
Amusement Arcade Existing Stores Sales (YoY Comparison of Q3 YTD)
(Billions of yen)
YoY
109%
0
Strong performance driven by recovery from Covid-19 in urban stores
However, since all stores have exceeded sales before Covid-19 level since last October,
the growth rate of comparable stores since October of this year
is expected to return to a steady state of low single-digit growth,
as the temporary sales growth factor of the recovery from Covid-19 will be eliminated.
© GENDA Inc. 10
Number of Stores Number of Mini-locations
0
20
40
60
80
100
120
140
160
180
200
220
240
260
280
300
320
340
360
380
400
420
440
460
170
180
190
200
210
220
230
240
250
260
270
280
290
300
310
320
330
Number of Stores
2021 2022 2023
Note: November 2023 store includes LEMONADE by Lemonica stores. Mini-locations are non-staffed game areas.
2021 2022 2023
Domestic: 312 Stores
Overseas: 9 Stores
Estimated end of November 2023
321 stores
Domestic: 205 locations
Overseas: 245 locations
450 locations
Estimated end of November 2011
0
LEMONADE by Lemonica 58 stores
SUPER NOVA 6 stores
Global Solutions, Inc.
112 locations
© GENDA Inc.
1. FY2024/1 Q3 Earnings Results
2. Topics
Appendix: M&A Strategy and Earnings Forecast
(Reposted from November 20, 2023)
© GENDA Inc. 12
#of members
600,000
220,792247,368
282,204
300,678
354,503
397,766
446,443
480,619
520,735
568,305
597,956622,535
642,241
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Progress of DX measures ~ for Customers
2022 2023
Total Number of Registrations Number of Prize Pass Members
1,830
2,267
2,705 2,805 2,950
3,270
3,773 3,964
4,407
5,163
5,925
6,266 6,606
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
2022 2023
(Person) (Person)
•Steady increase in membership since renewal in December 2022
•The "GiGO App" can be linked to cashless payment functions, such as coupon
distribution, service ticket distribution, and "Prize Pass" services, enabling the
development of a wide variety of services
•Prize Pass" is a subscription service that allows users to earn prize game tickets
by paying a monthly subscription fee
•Steady growth in the number of "GiGO App" members is expected to contribute to the
formation of loyalty to GiGO stores
Cumulative number of members of "GiGO App",
amembership application for customers, exceeds 600,000
© GENDA Inc. 13
Progress of DX measures ~ for Internal Operations
Hour required for Inventory
Count reduced approximately
62% at test stores
Database of Prizes to
support Optimal Ordering
Intermittent Updates to the in-house GiGO NAVI app
•In amusement arcade industry where there are still manual and manual-intensive,
GENDA developed the revolutionary "GiGO NAVI" application
•Results from GiGO NAVI
•Free from paper and Excel work when taking inventory of prizes, etc., significantly reducing
work time and increasing accuracy.
•0.2% error rate from the theoretical value at GiGO's main store, the largest store in the
GENDA Group
•Visualization of optimal order quantities by creating a database of past sales data of prizes
•Continue to utilize the system to streamline cumbersome operations and improve
operational efficiency, and increase customer service hours to improve customer
satisfaction
Employee Apps
GiGO NAVI
Released
Note: Based on the fact that at GiGO Tachikawa, a test inventory store, total man-hour required for inventory count was reduced by approximately 62% (56 man-hours → 21 man-hours)
before and after implementation. The breakdown of the reduction were, storage warehouse counting (20 man-hours → 8 man-hours), replenishment warehouse counting (10 man-hours
→ 4 man-hours), and machine counting (24 man-hours → 8 man-hours) and input table creation (2 man-hours → 1 man-hours)
© GENDA Inc. 14
Collaboration with the "CHIBAJETS" Café & Bar opened
November 29, the day of the grand opening
“GiGO LaLa Terrace TOKYO-BAY” in
LaLa Terrace TOKYO-BAY Opened
•Collaboration Café & Bar with the men's professional basketball team "CHIBAJETS”
• “CHIBAJETS" games are televised on
game days, and you can enjoy eating
and drinking while cheering for the team
•Original menu and official CHIBAJETS
goods available
•On the opening day, the restaurant was
so popular that there was a line of
people waiting for the opening
2023
11.29
GRAND OPEN
© GENDA Inc. 15
Co-production with Tsuburaya Productions
“ULTRASEVEN, the Fastest Ever Operation”
•Dynamo Amusement's newest VR attraction has been operating at Tokyo Dome City Attractions to rave reviews
since December 1, 2023
•The first interactive VR attraction of "ULTRASEVEN" jointly developed with Tsuburaya Productions Co., Ltd.
•MX4D + VR immersive ride attraction with Vive Focus 3 VR headset
•3D space and hand-tracking capabilities provide a more immersive experience than ever before
© TSUBURAYA PRODUCTIONS Co., Ltd./ © Dynamo Amusement, Inc.
MX4D
+VR
Vive Focus 3
© GENDA Inc. 16
Collaboration with “ICHINANA LIVER EXPO 2023”
Original prizes of 17LIVE prize games tickets
distributed to the Fans
ICHINANA LIVER
EXPO 2023
X
GiGO
GiGO Akihabara #1 GiGO Akihabara #3
•17LIVE (ICHINANA LIVE) is one of the largest live-streaming apps in Japan, and at “ICHINANA
LIVER EXPO 2023”, there will be performances, awards, and booths for each of the live performers
•At the event, tickets to play a crane game with “17 original goods" as prizes were distributed at the
GiGO Akihabara #1 and #3. Crane game play tickets were distributed at the event, contributing to the
excitement of the event
© GENDA Inc. 17
“FLIPS”poker room to open this winter
One of the largest amusement poker room in Japan
•Under the Aspiration of “More fun for your days", we aim to provide a place where poker can be enjoyed
in a disciplined way
•The global player population is estimated to be over 100 million, and the main event of the World Series
of Poker (WSOP), the world's largest poker tournament in 2023, attracted 10,043 players, the largest
attendance in its history
•FLIPS is one of the largest facilities of its kind in Japan, boasting an area of 660m2,
where many people can easily enjoy themselves
•Poker played with in-store exclusive game chips without betting cash
•Enjoying poker as a card game, not as gambling
What is
Amusement Poker?
One of the
Largest in Japan
660m2
© GENDA Inc. 18
GAGA’s line-up includes international film awards winners
Anatomy of a Fall © LESFILMSPELLEAS_LESFILMSDEPIERRE
February 2024 TOHO CINEMAS CHANTER and other theaters in Japan
•The New York Film Critics Circle Awards, established in 1935, is a historic award and is considered as one of the the
Academy Awards precursors.
•“Anatomy of a Fall" is also the winner of the Palme d'Or, the best film award at the 2023 Cannes Film Festival,
and has attracted worldwide attention.
•To be distributed in Japan by GAGA and scheduled for nationwide roadshow this winter at TOHO CINEMAS Chanter
and other theaters
“Anatomy of a Fall” won the Best International Film
for the New York Film Critics Circle Award
© GENDA Inc. 19
“Continuous Transformational Growth" by M&A
M&A from today to within this fiscal year
Assumes M&A activity to accelerate transformational growth to next year's sales / cash flow / earnings
―M&A sourcing progressed well above expectations, with 102 M&A sourcing cases compared to the initial target of 50 cases
―Further Accelerate Realization of "Continuous Transformational Growth" in the Next Fiscal Year as an
"M&A Company in the Entertainment Industry" due to Better-than-expected Progress in M&A Activities
―GENDA believes that all of the assumed M&A projects from today through the current fiscal year can be financed through
debt by utilizing GENDA's ample debt financing capacity and the balance sheets and cash flows of the target companies
―Continued to actively cultivate relationships with existing and new financial institutions, GENDA has increased the number of
financial institutions to 29 as of today
0.5 1.2 1.5
38.1
46.1
53.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
Net Sales EBITDA Operating Income
Announced M&As this fiscal year: ¥13.0bn
Unconfirmed M&A as of today
(Current) (Next)
(¥ bn)
Announced M&As this fiscal year: ¥0.2bn
Announced M&As this fiscal year: ¥1.8bn
Unconfirmed M&A as of today
(¥ bn) (¥ bn)
Announced M&As this fiscal year: ¥2.7bn Announced M&As this fiscal year:
¥0.07bn
Announced M&As this fiscal year: ¥0.8bn
Unconfirmed M&A as of today
(Current) (Next) (Current) (Next)
0.1 0.3 0.6
5.6
6.2
7.8
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
0.1 0.1 -0.3
4.0 4.2
5.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
Existing Business Forecast TBD
Existing Business Forecast TBD
Existing Business Forecast TBD
Note: Figures for FY2019/1-FY2021/1 are for reference because consolidated financial statements have not been prepared for FY2019/1-FY2021/1.
M&A resumed in the 2nd half of the current Fiscal Year,
Leading to the Transformational Growth in the Next Fiscal Year
Financial Contribution of M&As announced this fiscal year
―Current fiscal year: Sales +¥2.7bn, EBITDA +¥0.2bn, Op income +¥0.07bn (short PL consolidation / one-time M&Acosts)
―Next fiscal year: Sales+¥13.0bn, EBITDA +¥1.8bn, Op income +¥0.8bn (estimated as of today) (*)
(*) Further M&A activities are expected within this fiscal year, but those not announced today not taken into account
Reiteration of the material
published on Nov. 20, 2023
© GENDA Inc.
1. FY2024/1 Q3 Earnings Results
2. Topics
Appendix: M&A Strategy and Earnings Forecast
(Reposted from November 20, 2023)
© GENDA Inc.
2023 / 11 / 20
M&A Strategy and
Earnings Forecast
Reiteration of the material
published on Nov. 20, 2023
Aspiration Vision
=
More fun
for
your
days
World’s No.1
Entertainment
Company in
2040
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© GENDA Inc. 23
Note: Diagram of our envisioned growth strategy.
Our Growth Strategy = "M&As in the Entertainment Industry"
M&As in the Entertainment Industry
Continuous Transformational
Growth through M&As
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© GENDA Inc. 24
Our Growth Strategy = "M&As in the Entertainment Industry"
Entertainment
Ecosystem
Broadly rooted in the entertainment field
Building a Global Entertainment Network
Note: Diagram of our envisioned growth strategy.
Global
Entertainment
Network for
Dreams and
Aspiration
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© GENDA Inc. 25
Rationale for Entertainment Ecosystem of GENDA
“Ever-changing”Entertainment
Diversified and accelerated cycles of entertainments
Conquering the volatility by owning a platform
along with a portfolio of entertainment contents
Optimal “Capital Efficiency"
By creating an entertainment ecosystem through M&A,
GENDA can provideeach group company’s
excess cash with growth investment opportunities
Adequate equity returns through appropriate leverage
Macrotrend "Leisure Time"
AI acceleratesthe downward trend of working hours
Leisure time goes to consumption of entertainment
“Returns of M&A”to Shareholders
Along with appropriate entry and leverage in M&A,
FCF value of the target company is revealed and reflected in the
equity value of GENDA
Providing M&A returns for GENDA shareholders
Strategic Rationale (Qualitative Aspect)
Rationale of M&A Strategy (Quantative Aspect)
Note: "Leverage" represents debt financing. FCF" represents free cash flow.
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© GENDA Inc. 26
The Big Picture of Current Entertainment Industry
IP Contents & Platforms
A platform that connects IP contentswith fans of the IP contents
“Entertainment Contents” “Entertainment Platform”
Fans of the
IP contents
IP Contents
such as Anime
Platform connecting
IP contents and the Fans
Increasing
“Leisure time"
“Ever-changing”
Entertainment
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© GENDA Inc. 27
GENDA GiGO
Entertainment
M&As announced
pre-IPO
GENDA's Status Today
Amusement Centric + Peripheral Areas
Accelerate M&A in amusement and steadily advance into peripheral areas
Character MD
Contents &
Promotion
M&As
announced
post-IPO
Amusement
Amusement
F&B
“Entertainment Contents”
“Entertainment Platform”
Mini-location
117 locations
Note: Effective from the third quarter of the fiscal year ending January 31, 2024, the "Entertainment Contents" business and the "Entertainment Platform" business will be the two
reporting segments.
(GENDA Games)
Reiteration of the material
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© GENDA Inc. 28
M&A deals Organized by Segments
Amusement
Operation of
Amusement Arcades
Food & Beverage (F&B)
Providing Food and Beverage
As entertainment
Contents& Promotion
Upstream access to IP including
Anime Production and Publishing
Character MD
Provide products and Services
based on IP
Pre-IPO (M&A + existing business) Post-IPO (M&A)
M&A Strategies in the Entertainment Industry
mini-
location
117
locations
Note: Character MD means Character Merchandising.
Entertainment
Platform
Entertainment
Contents
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© GENDA Inc. 29
M&A and Capital Transactions Track Record of "21"
July 2019
Joint Venture
(50%)
December 2020
Acquisition
(85.1%)
April 2021
Acquisition of
the Business
October 2021
Capital Alliance
June 2022
Capital Alliance
January 2022
Acquisition
(100%)
September 2023
Becoming a Wholly
Owned Subsidiary
January 2022
Acquisition
(100%)
December 2021
Acquisition
October 2022
Acquisition
September 2023
Transfer of Assets
September 2023
Becoming a Wholly
Owned Subsidiary
October 2023
Transfer of
Fixed assets
October 2023
Acquisition
(66.0%)
June 2018
Acquisition
(100%)
October 2022
Acquisition
November 2023
(scheduled)
Aacquisition
(78.05%)
October 2023
Acquisition
(100%)
November 2023
(scheduled)
Acquisition
(100%)
December 2023
(scheduled)
Acquisition of Stores
Entertainment
platform
Entertainment
platform Entertainment Content Entertainment
platform
Entertainment
platform
Entertainment
platform
Entertainment Content Entertainment
platform
Entertainment
platform
Entertainment
platform Entertainment Content
Entertainment
platform
Entertainment
platform Entertainment Content Entertainment
platform
Entertainment
platform
Entertainment Content Entertainment Content Entertainment
platform
Entertainment
platform
Entertainment
platform
2 3 4 5
6
20 21
Pre-IPO
#M&As
11
1
19
18
8 9 10 117
14 15 16
17
1312
Post-IPO
#M&As
10
...
November 2023
(scheduled)
Asset Transfer from
Global Solutions
Mini-location
117 locations
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© GENDA Inc. 30
GENDA Group Organization Chart
100%
Note: The 117 mini-location locations, Japan Popcorn and GAGA to be completed at the end of November, and YK corporation (Super Nova) at the end of December.
SPSS
Sales
Promotion
Dynamo
Amusements
VR CContent,
Experiential
Attraction
Nihon
Popcorn
Popcorn of
HillValley brand
planning,
production and
sales
GAGA
Film
Distribution
LEMONADE
by Lemonica
Lemonade.
Manufacturing
and sales
Ares
company
Distribution of
Prize of Prize
Games
Tokyo
Character
Makers
Character
Planning and
Development
Five Colors
Amusement
Arcade and
Prize
Wholesaling
(China)
100%.
Enterrium
Amusement Arcade
Complex
Kiddleton
Amusement
Arcade (U.S.A.)
GENDA
Games
Amusement
Rental and
Online Crane
Game
Amusement
Arcade and Online
Crane Game
100%.
GiGO Taiwan
Amusement
Arcade
GENDA GiGO
Entertainment
Amusement F&B
Entertainment Platform Entertainment Contents
Content & Promotion
Character MD
GENDA is a Pure Holding Company of Entertainment Companies centered
in Amusement Industry
80.75% 100% 66.0% 100% 51.0% 78.05% 100% 100%100% 100%
Mini-
location
of 117
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© GENDA Inc.
Highlights
of M&A Transactions
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© GENDA Inc. 32
Acquisition of 78.05% stake of GAGA
About GAGA
Seven Oscar Best Picture winning films in the last 15 years,
and four in the last six years Palme d‘Or, the highest award
at the Cannes Film Festival. The world's top brand of
independent film distributors, unparalleled in the world
Based on its strong position in the visual content industry, GAGA plans and produces Japanese films, animation, and
game content, sells domestic productions (including TV animation) overseas, and provides productions to distribution
companies, and is also involved in e-commerce businesses such as "Plus GAGA" and "GAGA ★ ONLINE STORE"
GAGA is engaged in the distribution business in the film industry, and has distributed many foreign films such as “La
La Land”and “Green Book”, and Japanese films such as “Shoplifting Family”and “Monster”directed by Kore-eda
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© GENDA Inc. 33
Market Size of Movie and Amusement Arcade
Market size of Movie (Oku-yen) Market size of Amusement Arcade (Oku-yen)
2,070 2,171
2,355 2,286 2,225
2,612
1,433
1,619
2,131
2014 2015 2016 2017 2018 2019 2020 2021 2022
4,222 4,338
4,620
4,859
5,201 5,408
4,187
4,492
2014 2015 2016 2017 2018 2019 2020 2021 2022
Industry
Data
N/A
Source: Data from Motion Picture Producers Association of Japan (Eiren); Japan Amusement Industry Association (JAIA), "Survey of the Amusement Industry".
Movie Market Trends are Similar to Amusement Arcades
In recent years, the market peaked in 2019 and temporarily shrank in size after FY2020 due to COVID-19.
The market has since reversed course, recovering to almost pre-Corona levels as of FY2022.
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© GENDA Inc. 34
GAGA -Investment Highlights
1. Entry Ticket of IP toward the World’s No.1 Entertainment Company
Major entertainment companies hold or leverage IP, they are primarily
associated with the film, animation, game, and publishing businesses
GAGA's entry into the group is not merely limited to the film industry,
GENDA's entry into the GAGA group is an opportunity to build strong ties
with the television, publishing, and music industries
In addition to the attractiveness of GAGA on its own, the current manager,
Tatsumi Yoda, has a very strong presence within the entertainment industry
As GENDA is aiming to become the world’s No.1 entertainment company,
GENDA intends to organize its businesses into two major segments, "Entertainment Platform" and "Entertainment
Contents" and to build a portfolio of businesses in each segment.
GAGA is positioned in the Entertainment Content segment
GENDA expects GAGA to play an important role in the "Entertainment Contents" segment
2) Frontrunner of the “Next Hit" in the Prize Games
While GENDA‘s main business of prize games account for 70% of amusement arcade sales, determining the
"next hit" for prizes is extremely important
The planning and development of prize games has been extremely
intense among the competitors, but the new ties with companies
in the publishing, broadcasting, and music industries that have
joined the GAGA group could work very well
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© GENDA Inc. 35
GAGA -Investment Highlights (continued)
3. PMI Potential with synergies by "IP x Amusement Arcades"
Possibility of developing routes for aggressive sales of mini-locations, lemonade, and popcorn to movie theaters
Various other PMI opportunities exist, such as expanding options for approaching IP copyright holders for the
purpose of making animation and games available as prizes, etc
4. Involvement by Experience Management from GENDA
Current Representative Director Tatsumi Yoda to become Chairman of the Board, and Yuzo Sato (GENDA
Director and CCO) is the newly appointed Representative Director and President,and Nao Kataoka (GENDA
Representative Director and Chairman of the Board) as Director (non-executive)
5. Attractive Valuations and Back-financing
Attractive entry and leverage, including effective use of loss carryforwards
The previous fiscal year was a one-time loss caused by a specific work, and the company expects to land in the
surplus for the current and next fiscal years
New Director (Non-executive):
Nao Kataoka
(Concurrently Representative Director and
Chairman of the Board of GENDA)
Served as president of AEON Entertainment Co. from
2017-18, that operates AEON Cinema, a cinema
complex (the largest in Japan, 90 theaters and 765
screens at the time)
New Representative Director:
Yuzo Sato
(Concurrently Director and CCO of GENDA)
Representative Director and President of TBWA＼
HAKUHODO Inc. and Executive Officer of Hakuhodo Inc.
and Director and Managing Executive Officer of Hakuhodo
Products Inc. His family business of birth is a movie theater
operation
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© GENDA Inc. 36
Steady Progress in
"Amusement Arcade Roll-up“
The Center of our Strategy
Amusement Arcade Roll-up M&A
Acquired 6 Stores of
Amusement arcade "Super Nova
from Y.K. Corporation, Inc.
Acquired 117
Mini-locations
From Global
Solutions, Inc.
Two new amusement-related projects
announced today as roll-up M&As
Mini-location
117 locations
Super Nova Store in Tendo
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© GENDA Inc. 37
Organic Store openings in GiGO + Roll-up M&A
The amusement arcade market is not an oligopolistic market, with the top five amusement arcade
operators holding merely over 40% of the market share, and there are more than 100 small and
medium-sized amusement arcade operators
In addition to opening approximately 10 new stores per year in GiGO, we actively conduct roll-up M&A
while horizontally expanding DX tools for amusement arcades
Number of Mini-locationsNumber of Stores
Amusement Arcade Roll-up M&A (continued)
Note: Mini-locations are amusement arcades that are not staffed.
2021 2022 20232021 2022 2023
0
Domestic: 204
Overseas: 254
Estimated end of November 2023
458 Locations
Domestic: 254
Overseas: 9
Estimated end of November 2023
263 Locations
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© GENDA Inc. 38
0
5,000
10,000
15,000
開店～
12
13
～
17
18
～
20
21
～閉店
Renewal of MAXIM HERO
Amusement Arcade Roll-up M&A (continued)
500 people lined up on the opening day,
with current one-month sales 15% above the original plan
July 2023
Grand Opening of the Flagship Store (Ikebukuro)
Sales for the first 30 days after opening totaled approximately 200
million yen
Prize games account for about 80% of sales, with prizes of popular IPs
Becoming one of the largest amusement arcades in the world
The situation of GiGO
Flagship Store Ikebukuro
in the weekend
August 21:
Acquired MAXIM HERO
October 5:
Renovated as “GiGO Sapporo
Station West Exit Store”
October 25: Implemented a major layout change resulting
in 151% sales in October 4 compared to last week
“Urban Stores" exceeded 2019
GiGO Urban Existing Store Sales for September and
October 2023 exceeded 2019 for the first time since the
COVID-19
(SC and suburban stores exceeding 2019 since last fiscal year)
Sales, especially during the nighttime hours (6pm to close),
recovered and exceeded the 2019 point in October for all
time periods
開店～
12
13
～
17
18
～
20
21
～閉店
2019
2022
2023
October 2023
PMI
Existing urban stores Sales by time zone (million yen)
First
30days
¥200mn
Sales
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© GENDA Inc. 39
Aims and Initiatives of Food & Beverage (F&B)
More Options for “Oshi-katsu" Activities
Providing IP fans with a variety of media options for their “Oshi-katsu”(supporting my fave activities),
including F&B, in addition to plush toys and figurines
Japanese anime boom drives Historical Record Sales of Prize Games in amusement arcades
Prize Game is an entertainment platform through the medium of plushies and figurines.
There are very strong track recordsin food acting as such medium (→ some examples on the next page)
Realizing the potential of "food as entertainment" where "IP attractiveness" is the name of the game
IP Contents such as AnimeFans of the IP contents
Platform connecting
IP contents and the Fans
Entertainment Contents
Plushies
Drinks
Taiyaki
Popcorns
Entertainment Platform
Figures
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published on Nov. 20, 2023
© GENDA Inc. 40
An example of Food & Beverage (F&B)
→ c.700 people lined up at
Akihabara Store No.5
Collaboration with Dozle
at GiGO Ikebukuro Flagship
Store
Queue waiting for the
opening of
c.100 people
Cueue of
c.1,400
peolple
@Ikebukuro
Genshin x Taiyaki
Cueue of
c.500
people
@Akihabara
From now on
Utilize GiGO's sales force to open
stores throughout Japan, including
opening stores in shopping malls for
GiGO tenants
Active collaboration with animation / IP
→ Collabo CAFE in full swing
DOZLE x Collabo CAFEIP x Drink & Merchandize
Japan Popcorn LEMONADE by Lemonica
At Acquisition
Full-time sales staff: None
Collaboration with IP:
None
Promotion: None
Realizing Synergies
in Entertainment F&B
Leveraging the potential of collaboration with
IPs in addition to GiGO's in-store sales force
Embodying the potential of "food as
entertainment”
Already in collaboration
with IP at GiGO
The company is a Hill Valley
brand of popcorn company
Accelerate the already existing
IP collaboration at GiGO
Note: Due to the relationship with the IP publisher, some of the information disclosed is limited.
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© GENDA Inc. 41
Realization of synergies in the procurement of prizes,
expansion of sales and profit scale of Ares
Shared sales channel with GENDA Games, which does
business with small and medium-sized amusement
arcade operators
Implement common projects for new prizes and
strengthen sales network
Introduce amusement arcade operators and prize
companies that have business relationships with the
GENDA Group
Ares Company to become a Wholly owned Subsidiary
Selling
Wholesale "trading company" of prizes for prize games
Stocking
Synergies in many areas with GENDA Group
Vertical integration of the value chain in the most important prize game in the amusement industry today
SynergiesBusiness Model
What is Character Merchandising (Character Merchandising)?
Categorized as the Character MD division within
Entertainment Contents segment
Provide products and other services based on the IP, utilizing the character's worldview
IPs will be recouped through character MDs -> IPs will be developed in a variety of ways other than visual works
Entering into that business stream is a stepping forward to becoming the "world's number one entertainment company”
(GENDA Games)
Prize Makers
Amusement Arcades
Reiteration of the material
published on Nov. 20, 2023
Full-year Forecast of the
Current and Next Fiscal Year
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© GENDA Inc. 43
Upward Revision of Full-year Forecasts for the Current Fiscal Year
Background of the Upward Revision;
Amusement Arcade operations are currently Performing Very Well
During the current fiscal year, GiGO's existing amusement arcade operations continued to perform very well, particularly in
the area of prize games
―Due to the IPO completed in July of this year, M&A activities were restricted for a total of 10 months from the end of last fiscal year to the first half of this
fiscal year –this fiscal year is the only year since GENDA's founding in which organic growth has been the main driver of growth
On the other hand, next fiscal year is expected to be generally flat in terms of profit growth for existing GiGO stores (profit
growth will resume from the fiscal year after next)
―The main factor is that the preferential treatment of “All.Net (Note)”usage fees, which had been under review in stages since the acquisition of the
former Sega Entertainment Co, is likely to be revised in the next fiscal year ahead of schedule due to the current strong performance of the company
―However, since the review of preferential measures such as All.Net usage fees will be completed, GiGO sales growth and profit growth are expected to
resume in FY2026/1 and beyond
Note: All.Net refers to the Internet service for amusement machines provided by SEGA Corporation, which has lower transaction terms than arm's length transactions until
December 31, 2025. For details, please refer to "Significant Management Agreements, etc." on p.35 of the "Annual Securities Report for Application for Initial Public Offering"
(¥ in millions of yen,
excl. per share figures) Net sales EBITDA
Operating
income
Ordinary
income
Net income +
amortization of
goodwill
Net income
to the
shareholders
of the parent
Earnings per
share (before
amortization of
goodwill)
Earnings per
share
Previous forecast (A) 47,500 4,300 4,250 3,500 105.89 yen
Revised forecast (B) 53,000 7,800 5,000 5,000 4,180 4,000 126.47 yen 121.02 yen
Increase (Decrease) (B-A) 5,500 700 750 500
Increase (Decrease) (%) 11.5 16.2 17.6 14.2
(Ref) Fiscal year ending
January 31, 2023 full-year
consolidated results
46,091 6,272 4,244 4,011 3,576 3,494 112.57 yen 109.99 yen
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© GENDA Inc. 44
0.5 1.2 1.5
38.1
46.1
53.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
Transformational Growth for the Next Fiscal Year by M&A
Note: Figures for FY2019/1-FY2021/1 are for reference because consolidated financial statements have not been prepared for FY2019/1-FY2021/1.
M&A resumed in the 2nd half of the current Fiscal Year,
Leading to the Transformational Growth in the Next Fiscal Year
Financial Contribution of M&As announced this fiscal year
―Current fiscal year: Sales +¥2.7bn, EBITDA +¥0.2bn, Op income +¥0.07bn (short PL consolidation / one-time M&Acosts)
―Next fiscal year: Sales+¥13.0bn, EBITDA +¥1.8bn, Op income +¥0.8bn (estimated as of today) (*)
(*) Further M&A activities are expected within this fiscal year, but those not announced today not taken into account
GENDA adopts JGAAP to maintain smooth M&As, thus “amortization of goodwill”is gradually incurred with M&A growth
Going forward, Cash Flow Indices such as “EBITDA” and “Net Income before Goodwill Amortization (quasi IFRS Net Income)”
are expected to grow more significantly
Attractive returns to Shareholders with appropriate Entry and Leverage, the GENDA’s disciplined M&A
―GENDA to earn EBITDA +¥1.8bn with actual total cash out of ¥1.4bn (total enterprise value 6.2 billion yen)
―Leverage achieved through remaining interest-bearing debt of the target company and group-wide financing
Net Sales EBITDA Operating Income
Announced M&As this fiscal year: ¥13.0bn
Unconfirmed M&A as of today
(Current) (Next)
(¥ in bn)
Announced M&As this fiscal year: ¥0.2bn
Announced M&As this fiscal year: ¥1.8bn
Unconfirmed M&A as of today
(¥ in bn) (¥ in bn)
Announced M&As this fiscal year: ¥2.7bn Announced M&As this fiscal year:
¥0.07bn
Announced M&As this fiscal year: ¥0.8bn
Unconfirmed M&A as of today
(Current) (Next) (Current) (Next)
0.1 0.3 0.6
5.6
6.2
7.8
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
0.1 0.1 -0.3
4.0 4.2
5.0
2019/1 2020/1 2021/1 2022/1 2023/1 2024/1 2025/1
Existing Business Forecast TBD
Existing Business Forecast TBD
Existing Business Forecast TBD
Reiteration of the material
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Appendix
Reiteration of the material
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© GENDA Inc. 46
(Reference) Disclosure on ALL.Net
Note: Excerpts from
“
Important Management Contracts, etc.
”
on p. 35 of the
“
Annual Securities Report for Initial Listing Application. This is merely an English translation for reference
purpose of the original document in Japanese therefore original Japanese version always prevails in case of discrepancy.
Contracting Party Counterparty Domicile Contract Signing Date Period
GENDA SEGA
Entertainment
(Current
GENDA GiGO
Entertainment)
SEGA
Corporation Japan
This agreement stipulates the use of the
“ALL.Net” network service for amusement
machines operated by GENDA GiGO
Entertainment and the license to use the
software.
The agreement will remain in effect until
December 31, 2025. The terms and
conditions of the agreement are lower than
those of a third-party transaction.
However, if the sales of the existing store in
a sales computation period (the period from
April 1 of each year to the end of March of
the following year) exceed the sales of the
same store from April 1, 2018 to March 31,
2019, the same terms and conditions as for
third-party transactions will apply for the
sales computation period following such first
excess sales computation period and
thereafter.
“ALL.Net” is a network service provided by
SEGA Corporation that allows arcade games
to be connected to the Internet, enabling
communication games to be played and play
data to be saved.
December
29, 2020
Effective after
December 29, 2020,
unless both parties
agree to terminate
or the termination
event does not
occur.
Contracts regarding usage of ALL.Net network services
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© GENDA Inc. 47
We will conduct M&A mainly in industries where we have confidence in PMI, but we believe that we
should avoid grabbing high prices based on PMI.
The Discipline of M&A" in GENDA
In Addition to Maximizing Shareholder Value, we also seek to Maximize Per Share Value
→ Specifically, we pursue “Maximization of Earnings per Share (EPS)“
(Cash EPS will become more important after the acceleration of M&As, which will reflect cash flow and quasi IFRS Net Income)
We believe “Growth via M&A” does NOT always lead to the increase in Per Share Value
→ We access M&A deals whether that will “Increase the EPS”
(resulting in 42x EPS since inception despite M&A-centric growth)
Entry Valuation
1
We believe the entry valuation is a very important factor in M&A, and we try hard not to enter with wrong price
Financing
2
Leverage ample FCF to minimize the amount of equity, limit dilution, and pursue the maximization of equity returns
PMI
3
The five committee members hold more than 1/4 of the total shares – thus we will examine whether the M&A deal contributes to
the maximization of “per share value”, as the representative of all the shareholders
Investment Committee
4
4 Key Factors in the Pursuit of Maximizing Per Share Value / EPS
Note: Percentage of shares held is the ratio including the number of latent shares due to stock acquisition rights, as stated in "Securities Report (Part I), Section 3 [Status of
Shareholders]" in the "Annual Securities Report for Initial Listing Application. EPS" refers to "earnings per share. FCF" refers to "free cash flow," which is operating CF minus
investment CF. PMI" refers to the integration process and management to ensure the benefits of M&A integration.
We conduct M&As mainly in areas where we have confidence in PMI, but we would not hold on to a high price by counting too
much on our PMI prospects
Representative Director &
Chairman
Nao Kataoka:
16.85%
Representative Director
& President
Mai Shin:
8.62%
Director
CFO
Taiju Watanabe:
1.36%
Executive Officer
CSO
Kohei Habara:
0.15%
Executive Officer, Head
of Head AM Business
Kazuhiro Ninomiya:
0.09%
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© GENDA Inc. 48
EPS grew 42x despite 115x sales growth was driven mainly through M&A
We will continue to pursue the maximization of “share value“
as well as “per share value"
Note: Number of shares is based on the average number of shares during the period.
2.62 2.09
149.25
93.58
109.99
-
20.00
40.00
60.00
80.00
100.00
120.00
FY2019/1 FY2020/1 FY2021/1 FY2022/1 FY2023/1
4-year CAGR
154%
Special gain on
negative goodwill
(Yen)
Note: Figures for FY2019/1-FY2021/1 are for reference because consolidated financial statements have not been prepared for FY2019/1-FY2021/1.
EPS Transition since Incorporation
Reiteration of the material
published on Nov. 20, 2023
© GENDA Inc. 49
2040
Illustrative Diagram of GENDA's Growth
Transform
ational
M&A
World’s No.1 Entertainment
company in 2040
6 Growth Drivers
Becomes
existing
stores
From T+1
T+1 periodT-1 period T period
Transformational
M&A in the
entertainment
industry
Opening of new
stores during T-1
contributesfull year
M&A acquired
New stores during T-1
contributesfull year
Growth
of existing
stores
Opening of new
stores during T
contributes X months
M&A acquired
new stores during T
contributes X months
2
1
3
4
5
6
M&A Acquired Stores
Opening of new stores
Opening of new stores
Existing stores
M&A Acquired Stores
Reiteration of the material
published on Nov. 20, 2023
© GENDA Inc.
September 8, 2023
FY2024/1 Q2
Earnings Presentation
© GENDA Inc. 2
1. Company Profile / Business Overview
2. FY2024/1 Q2 Earnings Results
3. Topics / M&A Transactions
4. Appendix
© GENDA Inc. 3
Introduction of Representative Director
Message from the President
GENDA is an Entertainment tech company. We believe "fun" is essential for people to live a
fulfilling life. That is why our Aspiration is to “More fun for your days”.
With members that share our Aspiration, we aim to become the world's No.1 entertainment
company by pursuing new challenges every day following the three GENDA values of "Speed
is King," "GRIT and GRIT," and "Enjoy our Journey" as guiding principles.
Representative Director and President
Mai Shin
Graduated from the University of Tokyo, Faculty of Economics
April 2007, joined Goldman Sachs & Co.
April 2016, Director, Financial Products Development Department
January 2018, Managing Director (youngest at the time)
August 2018, joined GENDA as Director
Current position since June 2019
© GENDA Inc. 4
FY2023/1 Consolidated Actual Results Basis
Company Name: GENDAInc.
Headquarters: Tokyo ShiodomeBldg.
Date of Establishment: May 2018
Sales: ¥46.1bn / Operating Income: ¥4.2bn / ROE: 36% / 4 years EPS CAGR: 154%
# Employees: 4,164(367 employees; average annual temporary employment: 3,797)
Group Companies: 6Consolidated subsidiaries, 2 Equity-method affiliates
Note: All figures are based on consolidated results for the fiscal year ending January 31, 2023. “EPS" refers to "earnings per share”.
GENDA at a Glance
© GENDA Inc. 5
Overview of GENDA Group
GENDA Inc.
50.0%100% 80.75%100%100% 51.0%
GENDA GiGO
Entertainment Inc.
Amusement
arcade
business and
Online crane
game
management
100%
20.8%
Two companies to be
wholly owned subsidiaries
by the end of September
GENDA is a Pure Holding Company of Entertainment Companies centered in
Amusement Industry
GENDA Games
Inc.
Amusement
machine lease
and Online crane
games
SPSS Co., Ltd.
Entertainment
sales
promotion
support
Tokyo Character
Makers Inc.
Character
planning,
development,
Design sales,
Rights
management, and
Investments in
movies and
animation
Five Colors Inc.
Amusement arcade,
machine lease,
sales of prize for
amusement arcade
and amusement
arcade business in
China
Kiddleton
, Inc.
Amusement
arcade business in
the United States
Dynamo
Amusement Inc.
VR Contents
Planning,
production and
sales of physical
theater
attractions, VR,
etc.
GSE Taiwan Inc.
Amusement
Arcade business
(Affiliate accounted for
by the equity method) (Affiliate accounted for
by the equity method)
Aspiration Vision
=
More fun
for
your
days
World’s No.1
Entertainment
Company in
2040
© GENDA Inc. 7
M&A in the Entertainment Industry
Continuous Transformational
Growth through M&As
Note: A conceptual diagram regarding our envisioned growth strategy. PMI refers to the integration process and management to ensure the integration benefits of M&A.
Continuous
Growth Overseas
Continuous
Growth in Japan
Growth Strategy
= M&A in the Entertainment Industry
Japanese Anime
Boom Overseas
Amazing PMI
Accelerated by DX
© GENDA Inc. 8
12
13
M&A Track Record of 15 Transactions
14
15
1Jun. 2018 Acquisition 100% stake of SPSS
3Dec. 2020 Acquisition of SEGA Entertainment (85.1%)
4Apr. 2021 Acquisition of Bandai Namco’s North American store
5
Dec. 2021 Acquisition of amusement arcade business of SEGA TAIWAN
AMUSEMENT
6
Oct. 2021 Capital Alliance with Dynamo Amusement (VR business)
7Jan. 2022 Acquisition of SEGA Entertainment (100%)
2Jul. 2019 Established Kiddleton, a JV in the US with ROUND ONE
8Jan. 2022 Acquisition of Takarajima (100%)
Oct. 2022 Acquisition of amusement arcade business of Avice
11
9Jun. 2022 Capital alliance with Hashilus and Dynamo Amusement
Oct. 2022 Acquisition of amusement arcade business and bowling center business or, and
investment in cinema operation business of Sugai Dinos
10
Kiddleton becomes wholly owned subsidiary (100%) (planned)
Making Dynamo Amusement a wholly owned subsidiary (100%) (planned)
Assets transferred from WASD
Acquisition of fixed assets, etc. from Amuzy (planned)
Sept. 2023
Oct. 2023
Sept. 2023
Sept. 2023
© GENDA Inc. 9
Growth through M&A with emphasis on
Maximizing “Per Share Value”
The result of continued avoidance of EPS dilutive financing methodologies,
despite sales growth of 115x mainly through M&A, EPS also grew to 42x
Based on the focus on EPS, we will continue to pursue the maximization of
not only “Equity Value” but also “Per Share Value” in the future
FY2019/1 FY2023/1
FY2019/1 FY2023/1
(Time of
establishment)
¥0.4bn
¥46.1bn
¥2.62
¥109.99
115x
Revenue EPS
42x
(Time of
establishment) Note: EPS refers to earnings per share.
© GENDA Inc. 10
2040
Illustrative Diagram of GENDA's Growth
Opening of new
stores during T-1
contributes full year
M&A acquired
New stores during T-1
contributes full year
M&A Acquired Stores
Opening of new stores
Opening of new stores
Transformational
M&A
Existing stores
Growth
of existing
stores
World’s No.1 Entertainment company in 2040
6 Growth Drivers
Becomes
existing
stores
From T+1
T+1 periodT-1 period T period
M&A Acquired Stores
Opening of new
stores during T
contributes X months
M&A acquired
new stores during T
contributes X months
3
2
1
4
5
Transformational
M&A in the
entertainment
industry
6
© GENDA Inc. 11
43.1bn
93%
16
4%
8
2% 6
1%
Consolidated
Revenue
46.1bn 1
23 4
Consolidated Revenue FY2023/1
4 Businesses centered with the main Business of Amusement Arcades
Business Segments Subsidiaries
Amusement Machine Lease Others
Amusement Arcade Operation Online Crane Game Operation
Business Overview of GENDA Group
Online Crane Game
Amusement
Machine Lease
Others
Amusement Arcade
GENDA Games
GENDA Games
Equity-method affiliates
Equity-method affiliates
1
2
3
4
© GENDA Inc. 12
Urban Stores Shopping Center Stores Suburban Roadside Stores
Primarily located in station fronts and
downtown districts in the metropolitan
area of Tokyo and Kansai. Offer
excellent accessibility from train
stations and various forms of
entertainment including latest games
and collaboration cafes.
Primarily located in large suburban
commercial facilities and offer a wide
range of universally appealing game
genres that can be enjoyed by people
of all ages, from small children to adults.
Situated along major national
highways, occupying standalone
premises on their own grounds. Offer
excellent accessibility by car with
ample parking facilities. Designed to
be family-friendly.
Note: Number of stores as of August 2023.
GiGO Tenjin
Fukuoka
GiGO
Akihabara 5th
GiGO Mirai Nagasaki
COCOWALK
GiGO Aeon Mall
Takaoka
GiGO Irima
GiGO Hiwada
Operation of 251 Stores Nationwide through 3 different Store Formats
Amusement Arcade Business
© GENDA Inc. 13
73.6
42.4
26.5
22.7 20.9 19.2
15.5 14.9
8.9 7.6 6.4
1.0
0
10
20
30
40
50
60
70
80
Claw Crane Token Coins
Game Video Game Prize Game
other than
Claw Crane
Music Game Drive Game Shooting
Game Air Hockey,
Basket Ball,
Whack a Mole
Machine
Photo Stickers TCAG Ride Fortune Telling
Machine
JAIA201911232020223
%Q. Which Game do you like the Best in Amusement Arcades?
“Crane Game”
“Claw Crane”
“Prize Game”
Prize Games are very popular in Amusement Arcades Today
Amusement Arcade Business(cont’d)
Source: Japan Amusement Machine (JAIA), "Questionnaire on amusement arcades" (from November 23, 2019 to February 23, 2020) (Multiple choices allowed)
Note: Place: JAIA "Game Day" official website" and "Number of respondents: 1,677 (1,218 game center users, 459 non-game center users).
© GENDA Inc. 14
256.7 231.4 199.0 182.2 190.4 177.1 183.9 188.6 179.4 189.6 209.6 254.0 281.3 298.8 242.5 306.2
702.9 678.1
573.1
504.3 495.8 487.5 470.0 456.4 422.2 433.8 462.0 485.9 520.1 540.8
418.7 449.2
-
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Prize Game Video Game Token Coins Game Others
Influence of
COVID-19
◼Monthly sales from October onwards of GENDA GiGO Entertainment in FY2022/1 (Feb.2022 to Jan.2023)
have consistently surpassed the monthly sales figures of the pre-COVID-19 year of 2019
◼The amusement arcade market is expected to grow to a scale surpassing the levels seen in 2019 in the future
Source: "Survey of the Amusement Industry Industry," Japan Amusement Industry Association
Note: Monthly sales are the sum of the sales of stores existing in the previous year and the current year in the month in question.
Even in 2021 when
COVID-19 was widespread,
prize game sales were
Highest in the past
16years
Rapid Growth of Prize Games has resulted in a Market Size of ¥540.0bn in 2019
Latest data for 2022 (although industry data has not been compiled yet)
(¥bn)
Transition from Video / Token Coin Games to
Internet / Smartphone Games
had hit the bottom Prize games have grown
1.7xin 5 years pre-covid
Amusement Arcade Business(cont’d)
© GENDA Inc. 15
Rapid Growth of Prize Games
3 Trends are Driving the Growth of Prize Games
3
In the Store
If I can sell it, I can stick
to it a bit more!
I want to get that prize!
I’ll just throw them away
after all…
I’m bored – I think I’ll go
to the amusement arcade
Exit for Prizes Allowed more
Challenges
Psychological Hurdles
Lowered Psychological
Hurdles
Before Arrival
Japanese Anime
Boosted Prize Demand
Clear Purpose to Visit
Weal Motivation
Nowadays Old Days
After Leaving
SNS
Excitement Ends
Boast the Prizes Globally
Excitement Continues
I don’t have anyone
to show them off…
Uploaded the prize and
got more followers!
Excitement Continues
3
Used Market Services
2
Streaming Services
1
© GENDA Inc. 16
Boost of Anime Consumption(cont’d)
Combination of “Online Streaming Services” and the
‘Trend of Viewing during Spare Time’ is accelerating Online Anime Consumption
In the past
“Certain Date” “Certain Place”
“Certain Time” “Certain Story”
Today
“Anytime” “Anywhere”
“Again and Again” “Any Stories”
Online
Streaming
Only limited viewers who can
physically stay in front of the TV
for a certain amount of time
passively digested the TV schedule
Anyone can easily watch anime
even in a short period of time and
viewers can make active choices
© GENDA Inc. 17
2021
Online Anime Consumption is Rapidly Growing both in Japan and Globally
44.3
59.1 70.9 81.5 94.3
144.4
166.8
194.0
0.0
50.0
100.0
150.0
200.0
250.0
2014 2015 2016 2017 2018 2019 2020 2021
(¥bn)
326.5
583.3
767.6
994.8 1,009.2
1,200.9 1,239.4
1,313.4
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
2014 2015 2016 2017 2018 2019 2020 2021
(¥bn)
Source: Dentsu Media Innovation Lab, "Information Media White Paper 2023”
(
P98
)
Streaming Services and Smartphone using Spare Time
Anime Streaming Market Size in Japan Overseas Japanese Anime Market
Japanese anime market overseas is now worth ¥1.3tn
Boost of Anime Consumption
4.4x
for 7 years from
2014
4.0x
for 7 years from
2014
© GENDA Inc. 18
Fans
Anime
Online Platform
Anime & Amusement Arcades
Amusement Arcades Act as the Offline Platform of Anime Consumption
Streaming Services
Offline Platform
© GENDA Inc. 19
1. Company Profile / Business Overview
2. FY2024/1 Q2 Earnings Results
3. Topics / M&A Transactions
4. Appendix
© GENDA Inc. 20
YoY
Q2 YTD
Revenue
118%
YoY
Q2 YTD
Operating Income
163%
YoY
Q2 YTD
Existing Stores Sales
111%
Number of
Amusement
Arcade Stores
#256
Number of
M&A Sourcing
Cases
#51
Debt Capacity
Net Debt
/ EBITDA
0.1X
FY2024/1 Q2 Earnings Highlights
Record High
Revenue Record High
OP. Income
Note: YTD refers to “Year to Date”, during which is the beginning of the fiscal year to the end of the quarter. EBITDA in Net Debt / EBITDA is based on LTM at the end of Q2. LTM" refers
to the "most recent 12 months". EBITDA is the sum of operating income plus depreciation and amortization and goodwill amortization. Figures for FY2023/1 are for reference only,
since we do not have quarterly consolidated financial statements for FY2023/1.
Almost Achieving
Full-year Target of 258 Already Achieved
Full-year Target of 50 Procured through IPO
Expanding Reserves
On Track for the
Full-year Target
© GENDA Inc. 21
(Millions of yen)
FY2024/1
YTD Q2 FY2024/1
Full-year CE Progress Rate
to Full-year CE
Revenue
24,515
47,500
51.
6%
Growth rate (%)
18.
1%
3.
0%
-
Gross profit
5,791
11,616
49.
8%
Margin
(%) 23.
6%
24.
4%
-
EBITDA
3,909
-
-
Margin
(%) 15.
9%
-
-
Operating income
2,767
4,300
64.
3%
Margin
(%) 11.
2%
9.
0%
-
Ordinary income
2,723
4,250
64.
0%
Margin
(%) 11.
1%
8.
9%
-
Net income attributable to
owners of the parent
1,975
3,500
56.
4%
Margin
(%)
8.0%
7.
3%
-
Consolidated Statements of Income
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
RECORD
HIGH
Revenue, GP, EBITDA, OP, Ordinary Income, Net Income, are All Record Highs
On Track Progress toward the Full-year Target for All the Profit Metrics
Note: EBITDA is the sum of operating income plus depreciation and amortization and goodwill amortization.
© GENDA Inc. 22
(bn ¥)
Breakdown of Consolidated Revenue
(YoY Comparison of Q2 YTD)
Q2 YTD Amusement Arcade +3.5bn yen
Amusement Arcade
X months contribution
from the new stores
in this fiscal year
Full-year contribution
from the new stores
of the previous fiscal year
The last 4 M&As
were Q3 closing,
thus no contribution
to the Q2 earnings
Note: Figures for FY2023/1 are for reference only, since we do not have quarterly consolidated financial statements for FY2023/1.
YoY
118%
© GENDA Inc. 23
Breakdown of Consolidated OP
(YoY Comparison of Q2 YTD)
(bn¥)
Mainly the upfront
tech team hiring cost
in GENDA
To be covered by
store DX expansion
YoY
163%
Note: Figures for FY2023/1 are for reference only, since we do not have quarterly consolidated financial statements for FY2023/1.
© GENDA Inc. 24
Amusement Arcade Existing Stores Sales
(YoY Comparison of Q2 YTD)
(bn ¥)
Remarkable “Urban
Stores” sales growth
where not only GiGO
excels but also capture
inbound demand
YoY
111%
Note: Figures for FY2023/1 are for reference only, since we do not have quarterly consolidated financial statements for FY2023/1.
© GENDA Inc. 25
Seasonality of Sales
"Campaigns"
◼"Campaigns" mean that when GENDA Group negotiates with IP publishers, to purchase
unique prizes to be placed exclusively in GiGO amusement arcades
◼Because in those Campaigns GiGO will offer prizes that competitors don’t, Campaigns tend
to cause fluctuations in the sales performance that differ from normal sales seasonality
→Sales in Q1 were strong compared to previous years due to the concentration of campaigns in
Q1 of this fiscal year.
Summer
Vacation Winter Vacation /
New Year’s Holidays
Golden
Week
“Seasonality of Sales” and “Campaigns”
→Since GENDA's fiscal year end is January, major vacations are concentrated in the
second half of the fiscal year, thus the sales trend tend to be Q1 < Q2 < Q3 < Q4 every year
1
2
© GENDA Inc. 26
(Millions of yen)
FY2024/1
End of Q2 FY2023/1
End of Full-year Remarks
Current assets
16,904 12,723 Mainly increase in cash and
deposits
of which, cash and deposits 10,903 7,086 Increase via cash flows from
operation and IPO proceeds
Non
-current assets 21,401 18,310 New store openings
of which, goodwill 1,160 1,225 Goodwill increase restrained
with disciplined M&A entries
Total assets
38,305 31,033
Increase due to above factors
Total liabilities
21,455 19,792 Continuous repayment via
cash flows from operation
of which, interest-bearing debt 11,773 11,091 Diversification of funding
sources using leases
Net assets
16,849 11,240 Increase in shareholders'
equity
of which, shareholders' equity 16,832 11,224 Increase due to profit and
IPO
Net Debt / EBITDA
0.1 x0.6 xPlenty debt capacity
for future M&A
Capital adequacy ratio
43.9 %36.2 %
Adequate financial soundness
Balance Sheet
Maintain Financial Soundness Ready for Further Successive M&A
Note: EBITDA in Net Debt / EBITDA is based on LTM at the end of Q2. LTM" refers to the "most recent 12 months". EBITDA is the sum of operating income plus depreciation and
amortization and goodwill amortization.
© GENDA Inc. 27
0
10
20
30
40
50
60
70
80
90
100
170
180
190
200
210
220
230
240
250
260
2021 2022 2023
Domestic: 85 locations
Overseas: 10 locations
As of August 31, 2023
95 locations
Domestic: 251 stores
Overseas: 5 stores
As of August 31, 2023
256 stores
Number of Stores
Number of Stores Number of Mini-locations
Note: Mini-locations are amusement arcades that are not staffed. The number of mini-locations does not include the number of Kiddleton locations.
2021 2022 2023
Steady Increase in the number of Stores through New Store Openings and M&As, and a
Rapid Increase in the number of “Mini-locations“, amusement arcades where there is no staffed
© GENDA Inc. 28
1. Company Profile / Business Overview
2. FY2024/1 Q2 Earnings Results
3. Topics / M&A Transactions
4. Appendix
© GENDA Inc. 29
Acquisition of MAXIM HERO
(announced on Aug. 21)
Further Strengthening the Store Network in Hokkaido Area
New Store Opening in
“COCONO SUSUKINO”, which is
a commercial complex to be opened in
Susukino, the centric city of Sapporo,
the prefectural capital of Hokkaido
Acquisition from Amuzy
of “MAXIM HERO”
in Sapporo
Acquired in October 2022.
Accelerated PMI in Sugai Dinos
Note: PMI refers to the integration process and management to ensure the effectiveness of integration through M&A.
© GENDA Inc. 30
Acquiring 100% Stake of Kiddleton U.S.
(announced on Aug. 31)
2021 2022 2023
7
53
140
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
Overwhelming Mini-locations Growth, driven by Japanese Anime Boom in the U.S.
Potential to be the Next GiGO and GENDA’s Main Source of Organic Growth
Monthly Number of Mini-locations Store Image
U.S. Network
U.S.A.: 140 locations
As of August 31, 2011
140 locations
© GENDA Inc. 31
Acquisition of the Assets of “Digi-Chime”
(announced on Sep. 1)
Digi-Chime allows customers to call store staff by reading codes via smartphones
Adopted in 200+ GiGO stores and Highly Supported by Customers and Store Staffs
Quick and Courteous Response to Customers, mainly in the Prize Games
Service Overview Effects of introduction
Improving
Customer
Satisfaction
and
Cost Reduction
etc.
© GENDA Inc. 32
2019
11
23
2020
2
23
※
(%)
48
30 29
26 23
19
14 13
8 8 8 6 4
0
10
20
30
40
50
VR)
Claw crane
Prize Game other
than Claw Crane
Token Coins
Games
Video Game
Video Game
Music Game
Drive Game
Shooting
Game
Ride
Air Hockey,
Basketball,
Whack a mole…
TCAG
Photo
Stickers
Fortune
Telling
Machine
Source: Japan Amusement Machine (JAIA), "Questionnaire on amusement arcades" (from November 23, 2019 to February 23, 2020)
Notes; Multiple choices allowed
Acquiring 100% Stake of Dynamo Amusement
(Anounced on Sep. 8)
VR Technology Providing New Surprises through Comprehensive Production Capabilities
Next most popular VR game after prize games Representative works of the company
Q. Of the arcade games, which type of
arcade game do you like?
© Dynamo Amusement, Inc. / © Hashilus Co., Ltd. © CAPCOM CO., LTD. ALL RIGHTS RESERVED.
© Dynamo Amusement,inc
© SHOCHIKU Co.,Ltd. All Rights Reserved.
© GENDA Inc. 33
We conduct M&As mainly in areas where we have confidence in PMI, but we would not hold on to a high price by
counting too much on our PMI prospects
“The Discipline of M&A” in GENDA
In Addition to Maximizing Shareholder Value, we also seek to Maximize Per Share Value
→ Specifically, we pursue “Maximization of Earnings per Share (EPS)”
We believe “Growth via M&A” does NOT always lead to the increase in Per Share Value
→ We access M&A deals whether that will “Increase the EPS” (in fact, EPS became 42x since inception despite M&A-centric growth)
Entry Valuation
1We believe the entry valuation is a very important factor in M&A, and we try hard not to enter with wrong price
Financing
2Leverage ample FCF to minimize the amount of equity, limit dilution, and pursue the maximization of equity returns
PMI
3
Representative Director
and Chairman
Nao Kataoka:
16.85%
The five committee members hold more than 1/4 of the total shares –thus we will examine whether the M&A deal
contributes to the maximization of “per share value”, as the representative of all the shareholders
Investment Committee
4
Representative Director
and President
Shin Mai:
8.62%
Director CFO
Taiju Watanabe:
1.36%
Director and CCO
Yuzo Sato:
0.37%
Executive Officer CSO
Kohei Habara:
0.15%
4 Key Factors in the Pursuit of Maximizing Per Share Value / EPS
Note: Percentage of shares held is the ratio including the number of latent shares due to stock acquisition rights, as stated in "Securities Report (Part I), Section 3 [Status of
Shareholders]" in the "Annual Securities Report for Initial Listing Application. EPS" refers to "earnings per share. FCF" refers to "free cash flow," which is operating CF minus
investment CF. PMI" refers to the integration process and management to ensure the benefits of M&A integration.
© GENDA Inc. 34
1. Company Profile / Business Overview
2. FY2024/1 Q2 Earnings Results
3. Topics / M&A Transactions
4. Appendix
© GENDA Inc. 35
Consolidated Statements of Income
(Quarterly Results)
FY2023/1 FY2024/1
(Millions of yen)
Q1 Q2 Q2YTD Q3 Q4 QQ2 Q2YTD YoY
Net sales
9,730
11,020
20,750
12,309
13,032
11,994
12,520
24,515
118%
Operating income
593
1,099
1,692
1,784
766
1,670
1,096
2,767
163%
EBITDA
1,099
1,580
2,679
2,255
1,336
2,197
1,712
3,909
145%
Net income
attributable to
owners of the
parent
616
775
1,391
1,686
417
1,585
390
1,975
142%
Number of Stores
230
234
-
254
250
254
256
-
-
1
2
3
1
2"Campaigns" was concentrated in Q1, resulting in a strong sales in Q1
3
Record high OP on Q2 basis if excluding IPO-related expenses
Income tax adjustments were recorded on the expense side due to the 50% limit on the utilization of the
subsidiary's net operating loss carryforwards as a result of the capital increase due to GENDA's listing (as
expected on a full-year forecast basis)
Note: Figures for FY2023/1 are for reference only, since we do not have quarterly consolidated financial statements for FY2023/1.
© GENDA Inc. 36
Introduction of New Management Team
(announced on Sep. 1)
◼Nao Kataoka, Representative Director and Chairman of the Board
―Formerly President of AEON FANTASY, a Tokyo Stock Exchange Prime listed company
―Developed the company into the worlds number one amusement arcade, and increased operating
income 2.4x from ¥2.5bn to ¥6.0bn and market capitalization 5.5x from ¥23.7bn to ¥131.0bn
Note: Operating income of AEON FANTASY Co., Ltd. refers to operating income of 2,536 million yen for the fiscal year ended February 2014, the year to which Hisashi
Kataoka belonged on March 1, 2013, when he assumed the position of President and Representative Director, and 5,970 million yen for the fiscal year ended February
2018, the year immediately preceding May 15, 2018, when he stepped down. Market capitalization of Aeon Fantasy, Inc. refers to March 1, 2013, when Hisashi Kataoka
assumed the position of President and Representative Director, and May 15, 2018, the date of his retirement. The "world's largest amusement center operator" refers to
the number of stores announced by each company for Aeon Fantasy, Round One, Namco Bandai Amusement, Taito, Dave & Busters, and Chuk E. Cheese in fiscal 2017,
the fiscal year immediately prior to Kataoka's resignation. The number of stores for Taito, Dave & Busters, Chuk E. Cheese, and Taito Co. Excluding the number of
revenue-sharing stores for Namco Bandai Amusement Inc.
◼Mai Shin, Representative Director and President
―Former Managing Director of Goldman Sachs (then youngest MD)
―Combined skills in financial professionality and managerial skills through founding business
◼Taiju Watanabe, Director, CFO
―Former Vice President of Goldman Sachs
―Professional in M&A and financing through Investment Banking Division
◼Yuzo Sato, Director, CCO
―Former Director and Managing Executive Officer of Hakuhodo Product’s, Inc.
―Extensive knowledge and network in the advertising, media and entertainment fields
Board Members
© GENDA Inc. 37
◼Kohei Habara, Executive Officer, CSO Manager of Corporate Planning Division / CPA
―Passed the CPA exam while still in college and worked at KPMG AZSA LLC and previously at PwC Advisory
―Involved as a financial advisor in more than 30 M&A transactions, including some for entertainment companies
◼Daisuke Kajiwara, Executive Officer CTO
―Formerly Yahoo Japan and Executive Officer, General Manager of Development Division / General Manager of
Business Division of GREE, Inc., and previously CTO of every, Inc.
―Also Executive Officer, CTO and General Manager of IT Strategy Division at GENDA GiGO Entertainment
◼Kazuhiro Ninomiya, Executive Officer, Head of Amusement Arcade Business
―Previously, he served as Executive Officer of at Bandai Namco Amusement Inc., where he was in charge of the
domestic amusement center business and overseas business division Manager
―Also Representative Director and President at GENDA GiGO Entertainment
◼Atsushi Iyoda, Executive Officer, Head of U.S. Operations
―Formerly worked at Aeon Fantasy, where he also served as representative director of the company's Vietnam
and Philippines subsidiaries
―CEO / President of Kiddleton Inc, a U.S. subsidiary
◼Tomoki Nagae, Executive Officer, Head of F&B Business
―Previously worked at PwC Advisory, where he was involved in M&A advisory and PMI work
―Graduated from the University of Tokyo, Faculty of Agriculture with the highest honors in the department,
conducting research on the theme of sake breweries
Executive Officers
Note: PMI refers to the integration process and management to ensure the effectiveness of integration through M&A.
Introduction of New Management Team
(announced on Sep. 1)
© GENDA Inc.
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