On May 15, 2025, one of our key portfolio companies, AlphaPolis Co., Ltd. (hereinafter referred to as “the company”), released its earnings results and held an earnings presentation meeting on the 23rd. We would like to share our thoughts on the announcement and highlight key points we intend to focus on as investors.
Hibiki continues encouragement-type engagement!
Based on this earnings release, we have identified three key points.
The first point is the Company’s strong business performance. For FY3/25, revenue and ordinary profit increased significantly, by 30% and 40% YoY¹, respectively. As shown in Figure 1, the outlook for FY3/26 also remains strong, with projected increases of approximately 18% in revenue and 15% in ordinary profit. The outlook signals a robust recovery, dispelling prior concerns over the slowdown through FY3/24 and suggesting that the company is now poised to scale new heights.
Figure 1: Trends in business performance
(Source: The company’s earnings presentation materials)
One of the key drivers behind the Company’s solid performance is the steady growth of its comic(manga) business, which accounts for approximately 75% of total revenue. This segment has been building momentum with the strength which can be described as a bulldozer, and upon first reviewing the results, we were frankly impressed, even thinking, “This is an incredible earnings report” (see Figure 2). In FY3/25, the number of published titles increased by 28 from the previous year to a total of 215. Popular series have continued to perform well—for example, “Tsuki ga Michibiku Isekai Dōchū”, which has surpassed 5 mn copies in total circulation, and “Karei ni Rien Shite Misemasuwa!”, whose fourth volume was released in January and won the “Digital Comic Award” from Comic CMOA. Looking ahead to FY3/26, we expect continued strong performance from popular series, including “Kanchigai no Kōbōshu”, which began airing as an anime in April 2025. In addition, we believe there is potential for new hit titles to emerge.
Figure 2: Manga business
(Source: The company’s earnings presentation materials)
As shown in Figure 3, the Company has consistently produced hit titles that go on to be adapted into anime. The foundation of this strength lies in its user-generated content platform, Alphapolis, where anyone can freely post and read novels and comics (manga). By leveraging the feedback and ratings collected directly from readers and combining them with the discerning eye of skilled editors who carefully select works for publication, the Company has achieved both a high hit rate and minimized the risk of major flops. Rooted in strong network effects, this robust and efficient business model is a core driver of the Company’s consistent performance and enduring competitive advantage, which we hold in high regard. As President Kajimoto remarked during the earnings briefing, “Only the Big Four publishers and a handful of others are truly above us. We aim to surpass the milestone as soon as possible.” Based on what we’ve seen, we believe it won’t be long before the Company stands shoulder to shoulder with the industry’s top publishers—and our expectations for its future continue to grow!
Figure 3: TV anime broadcast schedule
(Source: The company’s earnings presentation materials)
Regarding new pillars of future business growth, what we particularly expect from the company is its overseas business and the anime business mentioned above. At the briefing session, our CIO Yuya Shimizu, asked about the company’s track record in overseas operations and the future outlook for its anime business. The Company noted that it already acts as the licensing representative for overseas distribution of certain anime titles through direct contracts with Crunchyroll, and that there has been a notable increase in projects involving joint representative of licensing arrangements. Regarding the anime business, the investment has been increasing as there are projects that have started on the premise that the company will contribute a significant amount of capital. In some cases, projects with 100% investment by the company have also started. For FY3/25, the profit has grown 1.8 times compared to the previous year. This confirms that the company’s medium-term strategic priorities are steadily progressing, which we are pleased to see.
CIO Yuya Shimizu also asked about the current outlook for M&A, such as regarding the potential acquisition of production companies, during the earnings briefing. In response, it was explained that several concrete discussions are already underway, with three deals currently in negotiation—two of which are related to anime. This gave a strong sense of the company’s future growth potential through the inorganic strategies.
We feel that the expansion of overseas distribution and the anime business is precisely at the stage where the seeds that were planted are beginning to sprout. In order to grow these sprouts into full-blooming flowers with speed and momentum, we believe that the use of inorganic strategies such as M&A and capital contributions is essential, especially from the standpoint of resources and know-how. We sincerely hope the company will continue to actively pursue such initiatives.
Figure 4: Promotion of Medium-Term Key Strategies
(Source: The company’s earnings presentation materials)
The second point we are paying close attention to is shareholder returns.In response to the company’s continued practice of not paying dividends, we submitted a Proposal to Enhance AlphaPolis Corporate Value on March 1, 2024, which included three key recommendations, one of which was “Improved Shareholder Returns.” Subsequently, in its May earnings announcement of the same year, the company declared its first-ever dividend. In the latest earnings announcement one year later, the company announced an approximately 70% dividend increase—from 14 yen to 24 yen per share. Reflecting this, the stock price rose from 1,308 yen at the close on May 15 (just before the earnings release) to 1,584 yen at the close on May 23, marking a 21% increase. We sense that investors are showing increased expectations toward the company, as well as a renewed sense of trust.
Through these developments and ongoing engagement efforts, we strongly feel that the company is steadily reassessing and evolving its approach to the capital markets. As shareholders, we highly value and appreciate these initiatives.
Figure 5：Shareholder Returns
(Source: The company’s earnings presentation materials)
Lastly, we would like to share our thoughts on one area we intend to continue monitoring closely: the efficiency of the balance sheet. Frankly speaking, amid an otherwise outstanding business performance, this was the only point that struck us as a missed opportunity.
We recognize that the company already possesses a level of cash generation capacity that exceeds what can be fully utilized through organic strategies alone. As a result, we believe that cash and net assets have accumulated to levels beyond what is necessary.
Specifically, as FY3/25, the company holds a very large amount of cash on its balance sheet. Cash and deposits amount to approximately 10 months’ worth of monthly revenue, net cash stands at 11.5 bn yen (a 19% increase from the previous year), cash and deposits account for 68% of total assets, and the equity ratio is 81%—indicating an arguably excessive level of net assets. We strongly hope that this cash will be more swiftly and effectively allocated toward growth investments, leading to profit growth that significantly outpaces the increase in net assets.
As stated in our public letter to portfolio companies titled Merits and Challenges of Being Publicly Listed in the Era of Unsolicited Takeovers (October 2024), we believe that the most important purpose of being publicly listed is to serve as a powerful tool for winning in a highly competitive environment. Specifically, it means raising the valuation of one’s own stock to gain a comparative advantage, thereby securing the support of the market and enabling dynamic growth strategies through M&A and capital raising.
Therefore, we encourage the company to go one step beyond relying solely on cash on hand for M&A and other purposes, and to aim for a leaner balance sheet by reducing excess cash holdings. This would help earn overwhelming trust from shareholders, enhance corporate value, and, using that trust as leverage, consider more aggressive financing strategies—including the use of treasury shares.
As shareholders, we continue to have high expectations for the company’s future, including the creation of successive hit titles and the pursuit of corporate value growth through inorganic strategies. Going forward, we intend to maintain our engagement with the company—supportive yet, at times, candid and constructive.
(Shimizu)
¹FY3/25 Q4 Earnings Report
For relevant posts on the company, please see the documents linked below.
27/Dec/2024 – Discussion with AlphaPolis Co., Ltd.
10/Mar/2024 – Proposal Letter to AlphaPolis Co.,Ltd.
While every effort has been made to ensure the accuracy of the data and information contained in this post, the accuracy cannot be guaranteed. This post does not constitute a solicitation to subscribe for, or a recommendation to buy or sell, any specific securities, nor does it constitute investment, legal, tax, accounting, or other advice.