Marvelous Entertainment reported a mixed first quarter as surging sales from its new Rune Factory game and arcade business couldn’t offset hefty development expenses and currency headwinds.
The Tokyo-based gaming company posted revenue of ¥8.74 billion ($58.7 million) for the three months ended June 30, jumping 50.5% from the prior year. Operating profit more than tripled to ¥243 million ($1.6 million), yet net income declined 43.2% to ¥112 million ($751,000) as foreign exchange losses reversed gains recorded in the same period last year.
The star performer was Marvelous’s amusement division, where revenue climbed 64.8% to ¥2.64 billion ($17.7 million) on continued popularity of Pokemon-branded arcade machines. Segment profit increased 57.7% to ¥757 million ($5.1 million), demonstrating the unit’s strong margins.
Digital content revenue rose 62.8% to ¥5.21 billion ($34.9 million), driven largely by June’s launch of “Rune Factory: Guardians of Azuma.” The farming simulation game, which debuted simultaneously on Nintendo Switch and the new Switch 2 console, received positive reviews but carried significant upfront development costs that resulted in a ¥349 million ($2.3 million) segment loss.
Management maintained its full-year forecast calling for ¥35 billion ($234.9 million) in revenue, representing 25.2% growth, alongside ¥2 billion ($13.4 million) in operating profit. However, the company’s ambitious projections face scrutiny given the gaming industry’s increasing development costs and competitive pressures.
Marvelous shares have declined 29.5% over the past year, reflecting investor skepticism about the company’s ability to consistently monetize its intellectual property portfolio.
