Sun Corporation reported modest revenue declines in its fiscal second quarter, unable to offset weakness in Japanese gaming operations as the company increasingly relies on its investment in digital forensics software firm Cellebrite for profitability.
The Japanese equipment maker posted revenue of ¥4.701 billion (US$30.4 million) for the six months ended September 30, down 19 percent from a year earlier. An operating loss of ¥144 million highlighted deteriorating conditions in its pachinko machine component business, where sales fell as parlor operators contracted and demand for aging technology equipment ebbed.
But investment gains from Cellebrite—in which Sun Corporation maintains a significant stake—more than compensated. The company reported ¥2.206 billion in equity method investment gains and another ¥2.234 billion from revaluation gains related to the Israeli digital forensics company, pushing net profit to ¥4.442 billion (US$28.7 million), up 1,008 percent from the prior year period.
This dependency on a single asset highlights the vulnerability of Sun Corporation’s portfolio. Japan’s pachinko market has contracted for years amid demographic shifts and regulatory pressures. Cellebrite, meanwhile, reported Q3 revenue of $126 million, growing 18 percent annually with expanding margins, but stock market volatility has periodically pressured valuations.
For the full year, San Denshi projected revenue of ¥162.47 billion and net profit of ¥42.96 billion, though guidance incorporates continued reliance on Cellebrite’s performance rather than revival of its core business.
