U-NEXT FY2026 Full Year: Revenue Hits Record High, Dividend Payout Raised to 17 Yen Amid Strategic Expansion

U-NEXT delivered a record-breaking performance for the fiscal year ended August 2026. Revenue surged by 20.4 percent year-on-year to reach a new high of 469,957 million yen. This growth was fueled by the expansion of its content distribution business and the integration of new segments through mergers and acquisitions.

Despite the top-line growth, the company reported a profit squeeze. Operating profit fell 4.2 percent to 30,255 million yen, while net income dropped more sharply by 18.7 percent to 14,959 million yen. The decline in core earnings was primarily attributed to soaring power procurement costs in the telecommunications and energy sector due to adverse geopolitical conditions in the Middle East.

Cash flow remained robust despite the profit dip. Operating cash flow increased to 23,743 million yen, and financing activities generated an inflow of 25,633 million yen through corporate bond issuances. The company ended the period with a healthy cash balance of 628,360 million yen. In response to its strong financial position, U-NEXT raised its annual dividend by 1.50 yen to 17 yen, increasing the payout ratio to 20.5 percent.

The content distribution segment continued to show strength, with revenue rising 12.5 percent year-on-year to 144,460 million yen. Operating profit in this segment grew by 16.9 percent to 11,276 million yen. The growth was supported by an expanded lineup of video and electronic books, as well as awards for content like the golf streaming service 'World Golf Pack' and the children's program 'Ugo Sakko'.

To further diversify its intellectual property (IP) business, U-NEXT accelerated partnerships and mergers. These include a collaboration with Rakuten Mobile launching the 'Rakuten Strongest U-NEXT' service, joint ventures with CJ ENM and TBS, and the acquisition of an animation production company as a wholly-owned subsidiary. Additionally, a strategic partnership with NBCUniversal has strengthened content supply capabilities.

The store and facility solution segment also posted gains. Revenue grew 14.0 percent to 110,614 million yen, while operating profit increased by 3.0 percent to 16,849 million yen. The company drove these results through DX solutions, including the launch of 'USEN AI Manager' for restaurants and self-order kiosks, building on its existing USEN POS and internet services.

Conversely, the telecommunications and energy segment saw a sharp profit decline. While revenue surged 23.7 percent to 199,459 million yen, operating profit fell by 27.7 percent to 9,533 million yen. The surge in power costs linked to Middle East tensions negatively impacted the second half of the fiscal year. U-NEXT is currently executing a recovery plan to improve its revenue structure in this segment.

The financial and real estate segment emerged as a high-growth area, with revenue jumping 118.4 percent to 24,277 million yen. Operating profit rose significantly by 45.3 percent to 2,156 million yen. This acceleration was driven by synergies from acquiring a cashless payment business and making the home guarantee related company a wholly-owned subsidiary.

Total assets increased significantly to 354,335 million yen at the end of the period. The consolidated net asset ratio stood at 30.9 percent, supported by changes in consolidation scope due to M&A and capital raising through bond issuance.

Regarding shareholder returns, U-NEXT raised its annual dividend by 1.50 yen year-on-year to 17 yen. The payout ratio increased to 20.5 percent, reflecting a stronger commitment to returning value to investors. At the end of the period, the company held no treasury shares.

Looking ahead, U-NEXT aims to enhance corporate value through sustainable profit growth. The strategy leverages its stable customer base to maximize group synergy and promote DX. A key focus is talent investment, including wage increases for younger employees, to build a sustainable organizational structure.

Geopolitical risks remain a primary concern. The escalation of tensions in the Middle East led to volatile energy prices, which directly impacted the profitability of the telecommunications and energy business. U-NEXT cautions that future exchange rates, interest rate environments, and resource price fluctuations could further affect performance.

In the content sector, competition from global streamers like Netflix and domestic rivals is intensifying. The company faces the challenge of building a unique IP business and securing independent content supply lines. Successfully integrating the knowledge gained through M&A and realizing synergies will be the ultimate test of its execution capabilities.

For the fiscal year ending August 2027, U-NEXT has set aggressive targets based on the recovery of its energy business and continued growth in content and solution segments. The forecast includes revenue of 524 billion yen, operating profit of 32.5 billion yen, and net income of 16.5 billion yen.

These projections represent year-on-year growth rates of 11.5 percent for revenue, 7.4 percent for operating profit, 9.0 percent for ordinary profit, and 10.3 percent for net income. EBITDA is also projected to reach 53.1 billion yen, signaling steady improvement in underlying profitability.

The critical focus moving forward is stabilizing power costs and effectively managing the expanded portfolio of businesses acquired through M&A.

U-NEXT actively pursued external cooperation and M&A to expand its business scope during this fiscal year. Strategic moves included the collaboration with Rakuten Mobile, joint ventures with CJ ENM and TBS, and the full acquisition of an animation studio.

In the energy sector, the company is accelerating the transition to renewable energy. It expanded 'GREEN Home', a power service corresponding to a decarbonized society. This initiative strengthens its BtoB position as a business supporting ESG management while also broadening the market by providing green power to individual consumers.

A key strategic point is leveraging M&A-acquired financial assets, such as cashless payment and home guarantee services, in conjunction with its existing store and facility network to drive further business expansion.

U-NEXT highlights the vulnerability of external environmental changes. Geopolitical risks, particularly those affecting the Middle East, directly impact energy costs and can destabilize the profitability of its telecommunications and energy segment.

Additionally, the company faces a highly competitive labor market for IT talent across the industry. While U-NEXT is taking measures such as raising wages for junior employees, securing and nurturing excellent human resources remains essential for sustained growth.