[Summary]
U-NEXT HOLDINGS (9418) is a little narrow when viewed as just a video distribution stock. The current investment issue is whether it can be reevaluated as a "hybrid stable growth stock" that combines the growth of U-NEXT's paying users, USEN's stock revenue for stores and facilities, communications/energy, finance/real estate/global, and M&A.
In the fiscal year ending August 2025, sales will be 390.4 billion yen and operating profit will be 31.57 billion yen, the highest ever for the 9th consecutive period. The company's plan for the fiscal year ending August 2026 is sales of 424 billion yen and operating profit of 33.5 billion yen. As of 2Q of the fiscal year ending August 2026, sales are 212.8 billion yen and operating profit is 18.12 billion yen, with a progress rate of 50.2% in sales and 54.1% in operating profit.
However, it is too strong to think that the operating profit margin will suddenly reach 10%. The medium-term plan "Road to 2030" targets sales for the fiscal year ending August 2030 of 600 to 645 billion yen, operating profit of 45 to 51.5 billion yen, and operating profit margin of 7.5 to 8.0%. Looking ahead to 2027, we will be looking at sales growth, an increase in paying users, the high profitability of store DX, and the quality of M&A rather than a sharp rise in profit margins.
First, the conclusion
The way we look at U-NEXT HOLDINGS has changed considerably.
Previously, I had a strong impression that they were the company behind the video distribution service U-NEXT. It was compared to Netflix, Amazon Prime Video, Disney+, etc., and it was easy to see it as a B2C service that required heavy content investment.
However, if you look at the current 9418 on its own, you will be disappointed.
The company has a customer base for stores and facilities that continues from USEN. The company has quite a range of BtoB products, including store background music, POS registers, cameras, Wi-Fi, serving robots, automatic checkout machines, repeat visitor reception machines, hotel management systems, communication lines, electricity, payments, and real estate-related services.
This is the point.
Video distribution is growing rapidly, but content investment is heavy. BtoB stock is not flashy, but the contract base and cross-selling are effective. M&A accelerates growth, but also brings goodwill and PMI risks.
U-NEXT HOLDINGS is a company that runs these three at the same time.
Performance is strong, but don't look only at profit margins
For the fiscal year ending August 2025, sales will be 390.4 billion yen and operating income will be 31.57 billion yen. Sales and operating income set new record highs for the ninth consecutive year.
The company's plan for the fiscal year ending August 2026 is sales of 424 billion yen and operating income of 33.5 billion yen. According to the 2Q financial results briefing materials released on April 13, 2026, cumulative sales for 2Q were 212.8 billion yen and operating income was 18.12 billion yen. Progress against the full-year plan was 50.2% in sales and 54.1% in operating income.
| Indicators | Results for the fiscal year ending August 2025 | Plans for the fiscal year ending August 2026 | 2Q results for the fiscal year ending August 2026 |
|---|---|---|---|
| Sales | 390.4 billion yen | 424 billion yen | 212.8 billion yen |
| Operating income | 31.57 billion yen | 33.5 billion yen | 18.12 billion yen |
| Operating profit margin | 8.1% | 7.9% | 8.5% |
| Progress rate | - | - | Sales 50.2%, operating profit 54.1% |
The numbers are good. If you just look at the progress in profits as of 2Q, it is easy to expect an upside.
However, it is a little rough to say that we are going straight to operating profit margin of 10%. The company's medium-term plan targets an operating profit margin of 7.5% to 8.0% for the fiscal year ending August 2030. The plan is to increase sales to 600 to 645 billion yen and increase operating income to 45 to 51.5 billion yen, but it is not a plan to dramatically increase profit margins.
What the market should be looking at is not whether a company can rapidly expand its profit margins, but whether it can increase its operating income while continuing to invest.
Strengths of business portfolio
The fun of U-NEXT HOLDINGS lies in the combination of businesses.
| Segment | Key points for investors |
|---|---|
| Content distribution | U-NEXT paying users, ARR, ARPU, content investment burden |
| Store and facility solutions | High operating profit margin, DX for stores, hotels, and medical care, cross-selling |
| Communications/Energy | Number of contracts, electricity demand, communication lines, stability of profit margin |
| Finance/Real Estate/Global | Payment, Rent Guarantee, Real Estate, Overseas Expansion, M&A Synergy |
In the second quarter of the fiscal year ending August 2026, the operating profit margin for store and facility solutions was 18.4%. Although sales and profits decreased compared to the same period last year due to the drop in demand for replacement of automatic payment machines that had been in the previous fiscal year, the company explained that profits increased by 14% on a pro forma basis after adjusting for temporary factors.
This segment is modest, but the quality of profits is high.
If you only distribute videos, you will be involved in competition for content acquisition. Sports, movies, anime, and original works are effective in acquiring users, but the investment burden is heavy. The fact that the company has revenue from stores, facilities, communications, and payments on the BtoB side gives the company peace of mind.
How to view U-NEXT member growth
Content distribution remains a growth driver.
According to the 2Q materials for the fiscal year ending August 2026, the number of U-NEXT users is 5.15 million. With a net increase of 480,000 people in YoY and 110,000 people in QoQ, the company is said to have almost achieved its full-year plan in the first half.
It's really strong here.
However, the operating income of content distribution was 5.78 billion yen in cumulative 2Q, which is almost unchanged compared to the same period last year. The reason is easy to understand: there is a burden to strengthen content centered on sports.
It's not as simple as saying that just because the number of members is increasing, it all becomes a profit.
The KPIs to look at when evaluating U-NEXT are not only the number of members, but also ARPU, churn rate, content investment, advertising expense ratio, and ARR. In 2Q 2026, content distribution ARR is expected to increase by 14.2 billion yen year-on-year and 3.7 billion yen QoQ. If this area grows, the ability to absorb content investment will increase.
Store and facility solutions compensate for the weakness of “video stocks”
U-NEXT HOLDINGS' strength is its deep BtoB customer contact.
The 2026 2Q materials show a customer base of 860,000 stores and 30,000 facilities. For stores, we provide music distribution, POS registers, cameras, Wi-Fi, and serving robots, and for facilities, we provide automatic payment machines, repeat visitor reception machines, and hotel operation management systems.
This is quite different from a Netflix-type video distribution company.
Video streaming is a world of content competition and the user's disposable time. Store/facility solutions are a world that improves business efficiency, payments, communications, reception, accounting, and responds to labor shortages. It depends on the economy, but once you get into it, it's easy to continue, and it's easy to sell additional products.
This cross-selling scope is easy for investors to evaluate.
It doesn't end with store BGM. Expanding to POS, communications, cameras, electricity, payments, and meal delivery robots. In hospitals and hotels, it will be expanded to automatic payment machines, reception equipment, and operation management. There is room to increase sales per customer.
Because of this BtoB foundation, 9418 is seen not as a ``high growth stock that only specializes in video distribution,'' but as a ``company that combines entertainment growth and store DX stock.''
M&A is a weapon for growth, but it also comes with risks
The Road to 2030 indicates over 100 billion yen in external procurement capacity and over 100 billion yen in growth investment capacity. This is a very aggressive financial strategy.
In fact, M&A and capital alliance activities have continued recently.
| Project | Investment issues |
|---|---|
| Make Xing a consolidated subsidiary | Strengthen contact with commercial karaoke shops such as JOYSOUND |
| Capital and business alliance with XYREON | Kiosks, automation, expansion in Southeast Asia |
| Making GoHands a wholly owned subsidiary | Anime production, IP creation, content in-house production |
| Payment and rent guarantee related | Expansion of services for stores and real estate |
M&A can help raise the company's reputation. In particular, making an anime production company like GoHands a subsidiary is likely to be linked to U-NEXT's content strategy. Xing has the potential to be effective for both store/facility solutions and entertainment touchpoints.
However, you can't buy this place based on expectations alone.
If the acquisition price is too high, there will be a goodwill burden. If PMI is delayed, synergies will not be reflected in the numbers. In-house content production is also powerful if it hits the mark, but it comes with the problems of production risk and hit probability.
9418's M&A is both a growth accelerator and a point that investors regularly question.
Sports and publicly managed competitions have option value
Sports content, live streaming, and peripheral services are effective in acquiring U-NEXT members.
On the other hand, at present it is more natural to treat areas surrounding sports betting and publicly managed competitions as option value rather than factoring them into the mainstay valuation.
The reason is that there are many hurdles to overcome before commercialization, such as regulations, permits, social acceptability, advertising regulations, payments/identity verification, and measures against addiction.
In the market, expectations tend to run high for this type of theme. However, at a stage where the stock price has not yet been factored into official plans, it is better to limit the stock price to ``room for upside.''
Stock price drivers towards 2027
Looking ahead to 2027, the points that investors should look at are quite clear.
| Driver | Check points |
|---|---|
| U-NEXT paying users | Will the net increase continue even after reaching 5 million users |
| ARPU/ARR | Does increased membership lead to sales and recurring billing |
| Content investment | Can sports/anime investment be absorbed with profits |
| Store/facility DX | Can we grow again after the decline in automatic payment machines? |
| Communications/Energy | Is it possible to expand sales and maintain profit margins at the same time? |
| M&A | Acquisition price, goodwill, PMI, and synergies visible |
| Cash flow | Can EBITDA-CAPEX maintain an improving trend |
In the short term, operating income progress of 54.1% as of 2Q supports expectations for an upward trend.
However, the stock market has already begun to view the company as a ``good company.'' From here on, simply increasing sales and profits is not enough. Only when U-NEXT membership growth, BtoB profit margins, and M&A quality are in place will it be easy to continue reevaluating.
Bullish scenario
The bullish scenario is that U-NEXT's membership continues to increase and ARR increases while absorbing content investment.
At the same time, if we can reduce the backlash from automatic checkout machines with store and facility solutions and horizontally deploy DX products to hotels, hospitals, small and medium-sized medical institutions, restaurants, and retail, profits will become more stable.
Furthermore, if M&A such as Xing and GoHands is not just an acquisition, but is effective in creating content, store contact points, IP creation, and expanding the sales network, the company will be seen as ``one of the largest VOD + store DX platforms in Japan.''
In this case, it is easy to appreciate the fact that it has BtoB stock income while being a growth stock.
Bearish scenario
A bearish scenario is one in which content investment becomes too heavy.
Sports and anime are effective in acquiring members, but it takes time to recover the investment. Even if the number of members increases, ARPU does not increase, the cancellation rate increases, and content costs increase due to competition. In this case, the profit margin of content distribution will be difficult to increase.
There are also risks on the B2B side. Although store and facility solutions are highly profitable, temporary factors such as the demand for replacement of automated checkout machines in the previous fiscal year can cause the year-on-year comparison to be distorted. While communications and energy have large sales, they are affected by electricity demand and the procurement environment.
The same goes for M&A. The more acquisitions occur, the more difficult it becomes to deal with goodwill, integration, human resources, and system coordination. At first, the market evaluates the company as a growth investment, but as soon as the numbers don't show up, people quickly start to think that they're just accumulating acquisition targets.
Summary
U-NEXT HOLDINGS is not just a video distribution stock.
High-growth U-NEXT, high-margin store and facility solutions, communications and energy contract infrastructure, financial, real estate, and global expansion, and discontinuous growth through M&A. This combination of these makes it a rather unique growth stock.
The numbers up to 2Q of August 2026 are good. Sales and profits are progressing smoothly, so it would not be surprising if there are expectations for an improvement.
However, what we should be looking at toward 2027 is not an easy-to-understand dream like a 10% operating profit margin, but rather the ability to accumulate profits while continuing to invest.
Number of paying users, ARPU, content investment, store DX profit margin, M&A PMI, cash flow. If these aspects are met, there is room for 9418 to be further evaluated as a hybrid stable growth stock of "entertainment x BtoB stock x M&A growth" from a "video distribution stock".
Source
- U-NEXT HOLDINGS “Financial results for the fiscal year ending August 2025 and new medium-term management plan Road to 2030 briefing”, published in 2025
- U-NEXT HOLDINGS “Road to 2030”, published in 2025
- U-NEXT HOLDINGS “Explanation material for the second quarter of the fiscal year ending August 2026”, published on April 13, 2026
- U-NEXT HOLDINGS, Notice regarding making Xing Co., Ltd. a consolidated subsidiary through stock acquisition
- U-NEXT HOLDINGS, U-NEXT HOLDINGS and XYREON HOLDINGS sign strategic capital and business alliance agreement
- U-NEXT HOLDINGS, Notice regarding making GoHands Co., Ltd. a wholly owned subsidiary through stock acquisition