U-NEXT HOLDINGS (9418) Q3 2024 earnings summary

Executive summary

• Earnings for the first three quarters exceeded 80% of revised FY2024 forecasts, with expectations to surpass full-year targets despite higher 4Q marketing expenses.

• Net sales for the nine months ended May 31, 2024, rose 16.5% YoY to ¥235,537 million, with operating profit up 51.2% to ¥23,533 million and profit attributable to owners of parent up 55.5% to ¥13,014 million.

• All major business segments except Energy posted double-digit operating profit growth; Energy saw a decline in sales but a significant profit increase.

• Record-high sales and operating income in Store Services, Communications, and Business Systems segments in 3Q.

• The company is progressing with its medium-term management plan and will implement an organizational restructuring on September 1, 2024, to drive further growth.

Financial highlights

• 3Q FY2024 net sales reached ¥235.5bn, up 17% YoY; operating income rose 51% YoY to ¥23.5bn.

• EBITDA for the nine months was ¥30,994 million, up 37.1% YoY.

• Ordinary income increased 57% YoY to ¥23.0bn; profit attributable to owners of parent up 56% YoY to ¥13.0bn.

• Net income per share (adjusted) rose to ¥255.72, up from ¥179.47 YoY.

• SG&A expenses increased YoY but remained below 30% of sales.

Outlook and guidance

• Full-year forecast for FY2024 remains unchanged: net sales of ¥316,000 million (+14.3% YoY), operating profit of ¥28,500 million (+32.2%), and profit attributable to owners of parent of ¥14,700 million (+34.1%).

• Full-year EBITDA forecast is ¥39,000 million (+24.5% YoY), with adjusted EPS projected at ¥296.89 (+26.0%).

• FY2024 earnings are expected to surpass revised forecasts, though 4Q will see increased marketing spend.

• All segments are on track to exceed full-year targets.