Konami Q4 ended strongly, with the World Cup and eFootball as core catalysts for the next phase

Overview

This report is Bernstein's review of Konami Group Corporation's Q4 FY3/26 results. The core conclusion is that Konami clearly beat consensus on revenue, gross margin, operating profit, and net profit, with Digital Entertainment as the main driver, and meaningful contributions from eFootball, trading cards, and console/PC. The company’s FY3/27E guidance points to only 7% operating profit growth, but Bernstein views this as template-like guidance and says it does not reflect the potential World Cup tailwind for eFootball, so further upward revisions should be watched closely.

Core views

Bernstein's core views include three points: first, Q4 FY3/26 was a strong close, with revenue at JPY140.7bn and operating profit at JPY34.1bn, 9.2% and 15.8% above consensus, respectively. Second, eFootball revenue was about JPY40.7bn, up about 50% year-over-year, with about JPY33.7bn from mobile and about JPY7bn from console/PC, and billing momentum after the event remains strong. Third, the World Cup, expansion of football in emerging markets, improving user retention, and lower Google platform fees in 2027 could together support medium-term profit expansion and valuation repricing.

Analysis framework

The report combines earnings component analysis, consensus-versus-actual comparison, segment trend analysis, and multiple-based valuation. In the short term, it focuses on the gap between Q4 FY3/26 actuals and Bernstein forecasts and Bloomberg consensus. In the medium term, it focuses on sub-business trends in Digital Entertainment, including eFootball, trading cards, console/PC, and mobile games. In valuation, a 26x P/E multiple on FY+1 EPS is used as the basis for the target price.

Methodology notes

• Performance ComparisonActual Results versus Consensus and Bernstein Forecast

  earnings beat

  By comparing differences between Q4 FY3/26 actual revenue, gross margin, operating profit, net profit, and EPS against Bloomberg consensus and Bernstein forecasts, the magnitude of the earnings beat is assessed.

• Segment AnalysisDigital Entertainment Platform and Product Breakdown

  segment decomposition

  Digital Entertainment revenue is split into mobile, console/PC, trading cards, in-game purchases, full-game downloads, and physical boxed game sales to identify growth contributions.

• Catalyst AnalysisWorld Cup and User Retention Framework

  event-driven user monetization

  The report treats the World Cup as a short-term traffic and monetization catalyst for eFootball, while emphasizing that post-event user retention is more important for the quality of medium-term revenue.

• Valuation methodsForward P/E Multiple Valuation

  26x P/E multiple of FY+1 EPS

  Bernstein takes future quarter 5 to 8 EPS as the base, applies 26x P/E, and derives a target price of JPY26,800 per share.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Konami Group Corporation (9766.T)

  Core covered security

  Strengths

  Q4 revenue and operating profit significantly beat expectations, with strong Digital Entertainment momentum; eFootball, trading cards, and console/PC all contributed, and the target price implies about 40% upside.

  Weaknesses

  Share performance has been choppy during the year, FY3/27 company guidance is relatively conservative and lacks explicit catalyst capture, and the business still depends on the performance of key games and live-service products.

  Comparison

  Q4 revenue was 9.2% above consensus and operating profit was 15.8% above consensus; relative to the JPL index, stock performance over the past year has been more volatile and lagged.

  Risks

  Key live-service products such as eFootball, baseball, and Yu-Gi-Oh! may underperform expectations; a single major game launch could miss, operating leverage could fall short, and macro slowdown could suppress gaming spend.

• eFootball

  Core growth driver and World Cup catalyst asset

  Strengths

  Q4 revenue was about JPY40.7bn, up around 50% year-over-year; DAU doubled during the 2022 World Cup, and billing in April and May continued to accelerate.

  Weaknesses

  Revenue is sensitive to event-driven attention, user retention, and monetization conversion, so World Cup-driven momentum may be cyclical.

  Comparison

  The company’s FY3/27E guidance does not include potential incremental contribution from the World Cup, so Bernstein believes official growth assumptions likely underestimate the product's contribution.

  Risks

  Post-World Cup retention may miss, billing acceleration may fade, and competing games may siphon users.

• Digital Entertainment

  Primary profit-contributing segment

  Strengths

  Q4 segment revenue was about JPY104.5bn, up 37.2% year-over-year; growth was supported jointly by mobile, console/PC, and trading cards.

  Weaknesses

  Segment revenue is subject to volatility from game release timing, in-game spending intensity, and physical card product cycles.

  Comparison

  Q4 Digital Entertainment revenue was ahead of Bernstein's expectations by a similar magnitude, with segment operating profitability outperforming market expectations.

  Risks

  Key product delays or weak sales, cooling in-game purchases, and platform policy changes not materializing as expected.

Key data

• Q4 FY3/26 RevenueJPY140.7bn / JPY141bnYear-over-year growth of 27.0%, about 9.2% above Bloomberg consensus estimate of JPY129bn.
• Q4 FY3/26 Digital Entertainment Revenueapproximately JPY105bn / JPY104.5bnYear-over-year growth of about 37.2%, the core source of the quarter's beats versus expectations.
• Q4 FY3/26 Operating ProfitJPY34.1bnAbout 15.8% above consensus estimate of JPY29.4bn, and about 21.6% above Bernstein's estimate of JPY28.0bn.
• Q4 FY3/26 Gross Margin49.8%Gross profit was JPY70.0bn, with gross margin up about 320 bps year-over-year.
• eFootball Q4 RevenueJPY40.7bnYear-over-year growth of about 50%, about JPY33.7bn from mobile and about JPY7bn from console/PC.
• Trading Cards Q4 RevenueJPY15.9bnYear-over-year growth of 31%, rebounded sequentially after Q3 weakness, supported by the launch of Limit Over Collection.
• FY3/27E Company Guidance7% Operating Profit GrowthBernstein believes this guidance has limited predictive value because it does not include potential World Cup-driven uplift for eFootball.
• Target PriceJPY26,800Based on 26x P/E on FY+1 EPS, implying about 40% upside.
• Impact of Google Platform Fee ReductionNormalized profit accretion of 5%-6%Bernstein expects the 2027 platform fee reduction to be additive to Konami's own off-platform monetization efforts.

Impact & implications

The investment implication for Konami is constructive. In the near term, the Q4 beat and post-World Cup acceleration in eFootball billing are expected to support upward revisions to FY3/27 earnings expectations. In the medium term, expansion of football into emerging markets, improving user retention, and lower platform fees may boost normalized profitability. From a valuation perspective, while shares have been volatile during the year and have caused investor frustration, Bernstein believes continued upward revisions can still support the stock.

Risks

• Success of key live-service games such as eFootball, baseball, and Yu-Gi-Oh! is lower than expected.
• A major new game release performs poorly, resulting in weaker than forecast elasticity of revenue and profit.
• Operating leverage is below expectations, and revenue growth does not fully translate into profit growth.
• A sharp macro slowdown could suppress consumer willingness to spend on video games.
• If the World Cup boost to eFootball is not supported by post-event retention, short-term growth may be hard to sustain.
• There is execution and timing uncertainty in Google platform fee reductions and off-platform monetization contribution.

What to watch

• Changes in eFootball DAU, billing, and retention around and after the World Cup.
• Whether Sensor Tower data after April and May continues to confirm acceleration in eFootball.
• Whether FY3/27E profit forecasts are revised higher due to World Cup, trading cards, and Digital Entertainment performance.
• The actual profit accretion from the 2027 Google platform fee reduction to Konami's normalized profitability.
• Sustainability of post-release sales for new trading card products and Limit Over Collection.
• Whether Konami shares improve relative performance versus the Bloomberg Japan Large and Mid Cap Price Return Index USD (JPL).