The following two characteristics lead to this second-half-heavy concentration

①Seasonality of sales

  The amusement arcade-related and karaoke-related businesses, which account for approximately 90% of our sales and earnings, have the following seasonality.

・1Q (February, March, April): Farewell and welcome party season (short term)

・2Q (May, June, July): Golden Week holidays (short term)

・3Q (August, September, October): Summer vacation + Silver Week holidays (long term, sales season)

・4Q (November, December, January): Winter vacation + New Year holidays (long term, peak sales season)

Due to the long holidays falling within 3Q and 4Q, sales typically increase during these quarters, consequently leading to a concentration of earnings in the second half of the fiscal year.

②Fixed-cost heavy business model

Our core business operates on “a fixed-cost heavy model.” This means that nearly consistent expenses arise each quarter (and even daily or monthly), regardless of sales fluctuations (regardless of sales seasons). For amusement arcade operations, fixed costs represent about 70% of total costs, while for karaoke, they comprise roughly 90%. The breakdown is detailed below:

・Rent

・Labor cost

・Depreciation (mainly for game machines and karaoke equipment)

・(For reference) Amortization of goodwill (based on Japanese GAAP)

  In a business model heavily reliant on fixed costs, almost all revenue exceeding the break-even point directly contributes to earnings. As a result, earnings increase substantially in quarters with higher sales (which typically align with the peak sales seasons in the second half of the fiscal year).

Here is an illustrative diagram showing the profit structure for a hypothetical company with 100% fixed costs.