GungHo Q2 FY2026: operating profit up 27% on Ragnarok, Puzzle & Dragons

In the six months ended June 30, 2026, GungHo posted revenue of ¥51,759 million, up 2.3% year-on-year. Operating profit rose 27.1% to ¥6,380 million, ordinary profit climbed 47.2% to ¥7,878 million, and net income attributable to parent shareholders surged 40.4% to ¥3,460 million. The strong profit growth was driven by steady sales of Puzzle & Dragons and a robust contribution from Gravity's Ragnarok Origin Classic, launched in South Korea, Taiwan, and Southeast Asia. Cost of sales increased to 28,881 million, but selling, general and administrative expenses were reined in at 16,497 million, down 10.5% year-on-year, boosting operating profit. A ¥446 million foreign-exchange gain and higher interest income also buoyed ordinary profit.

Although GungHo reports as a single segment, its performance is driven by the following key titles.

• Puzzle & Dragons: Domestic cumulative downloads surpassed 64 million, with seasonal events and popular character collaborations sustaining solid revenue and user engagement.
• Ragnarok titles: Gravity's Ragnarok Origin Classic, launched in March 2026, got off to a strong start in South Korea, Taiwan, and Southeast Asia. In June, Ragnarok: Twilight was released in Europe, North America, and Latin America, accelerating global expansion.
• New pipeline: 9 new titles are in development, including "Ninjala 2: Unknown Planet" scheduled for next spring. Front-loaded development costs pushed up the cost ratio, but they represent future growth drivers.

Single segment results:

(Units: millions of yen; margin % calculated by author)

Total assets at end-June stood at ¥165,141 million, down ¥4,332 million from the prior fiscal year-end, mainly due to a decrease in cash and deposits. Liabilities rose to ¥19,452 million (up ¥1,310 million), reflecting higher unpaid corporate taxes. Net assets were ¥145,689 million (down ¥5,643 million). The equity ratio slipped to 69.3% from 71.9% but remains high. On shareholder returns, the interim dividend was set at nil, with the full-year dividend forecast undecided. The company carried out a ¥4,999 million share buyback (1,981,500 shares) based on a February 2026 board resolution. Additionally, GungHo canceled 16,000,000 treasury shares on June 30, reducing both retained earnings and treasury stock by ¥46,579 million, which is expected to enhance per-share value.

• Intense market competition: The domestic mobile game market is flat, with consumers dividing time among video streaming and other entertainment. Retaining users for existing titles is a key challenge.
• Development risk: Heavy spending on nine new titles, with the success of "Ninjala 2" critical for the earnings trajectory.
• Forex and geopolitical risks: Global operations expose GungHo to currency volatility and overseas market shifts; while yen depreciation was a tailwind this period, the outlook is uncertain.
• Macroeconomic environment: Rising global inflation and interest rates could dampen consumer spending on games.

GungHo announced in June 2026 that "Ninjala 2: Unknown Planet," sequel to the 12-million-download Ninjala series, will launch next spring. Building on the original's Nintendo Switch connectivity and action gameplay that won family audiences, the new title is expected to raise the bar. With nine pipeline titles in development, R&D costs are climbing, but they are seen as mid-term growth drivers. Meanwhile, in the Ragnarok franchise, the company is diversifying revenue by bringing new releases to untapped markets including Europe, the Americas, and Latin America. As the mobile game market matures, globalizing IP and creating new IP are becoming keys to growth.