Genda Inc.’s aggressive acquisition strategy drove revenue growth but severely crimped profitability in the second quarter, highlighting the costs of the Japanese entertainment company’s rapid expansion across global markets.
The operator of arcade chains and karaoke venues reported revenue of ¥73.97 billion ($493.7 million) for the six months ended July, up 49.3% from a year earlier. However, operating profit edged up just 0.9% to ¥3.21 billion ($21.4 million), while net income plummeted 77.8% to ¥310 million ($2.1 million).
The stark disconnect between revenue and profit growth reflects the financial burden of Genda’s deal-making spree. The company completed 15 acquisitions during the period, adding seven consolidated subsidiaries to bring its total to 37. The buying binge generated substantial depreciation and goodwill amortization costs that offset gains from expanded operations.
Genda now operates approximately 400 domestic amusement facilities and 200 overseas locations, alongside roughly 1,000 domestic mini-game locations and 13,000 international sites. The company also runs about 400 karaoke stores domestically.
The revenue surge came from growth at existing amusement facilities, new store openings, and overseas business expansion, particularly in North America. The company’s prize supply and virtual reality operations also contributed to growth, along with its movie distribution business.
However, acquisition-related expenses weighed heavily on margins. Interest payments and stock exchange costs from deals further pressured ordinary profit, which declined 17.5% to ¥2.38 billion ($15.9 million). The sharp drop in net income was attributed to increased tax obligations.
For the full fiscal year ending January 2026, Genda projects revenue of ¥157 billion ($1.05 billion), up 40.4% from the previous year. The company expects operating profit to rise 32.6% to ¥10.5 billion ($70.1 million) and net income to jump 53.7% to ¥5 billion ($33.4 million).
Based on current progress, Genda has achieved 47.1% of its full-year revenue target and 30.6% of its operating profit goal through the first half.
