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Sanrio will continue to evolve by taking on new
challenges to bring smiles to people around the world.
President and CEO Tomokuni Tsuji
As our accumulated efforts begin to bear fruit, new challenges are essential
I begin by offering my sincere apologies to our shareholders, investors, business partners, and all other stakeholders for the significant inconvenience and concern caused by the improper compensation received by a former managing director of the Company, as announced on May 29, 2026. We take this matter seriously and are thoroughly implementing measures to prevent recurrence across the Sanrio Group and strengthen our governance as we work to restore trust.
Our results for FY3/2026 reached a record high for the second consecutive year. In FY3/2025, we achieved our targets of 1 trillion yen in market capitalization and 50.0 billion yen in operating profit, ten years ahead of schedule. We received warm encouragement and words of hope from many of our stakeholders. We are deeply grateful for that support. Yet as we reflect on these achievements, the challenges facing our next stage of growth weigh on me more than the joy of reaching our goals.
We see this year’s strong performance not as a one-time boost from specific events or initiatives, but as the result of our brand strength building steadily over recent years, combined with the strength of our organization and the frameworks that support it. Our business once relied heavily on Hello Kitty, but we have steadily shifted to a portfolio-based model built on multiple characters. In Asia in particular, other characters now contribute a meaningful share of revenue. We can clearly feel a shift in momentum compared with the previous Medium-Term Management Plan (MTMP) FY3/2022–FY3/2024.
At the same time, we have not yet fully escaped volatility, and we remain convinced that we need to further diversify our character portfolio. We are also conscious that, in realizing our 10-year Long-Term Vision of becoming a global IP platform provider, which we announced last year, we are still only at the starting point. Even as we delivered strong results, this past year underscored just how many challenges lie ahead. As the pace of change accelerates, we must take on new challenges, particularly in the digital domain. To realize our long-term goal of becoming a global IP platform provider, we must continue to expand the pillars of our business by developing new businesses and new content. With that resolve, we intend to take steady, concrete steps toward realizing our Long-Term Vision.
Everyday “time feeling close to Sanrio” grows into highly immersive “time deeply absorbed in Sanrio”
What matters in the IP business is how we cultivate brand value and translate it into business growth. We see the answer in three streams. First, under “value creation,” we use social media exposure and real-world touchpoints to introduce our characters to a broad audience and create new entry points for fans. Next, under “value accumulation,” we deepen fans’ understanding of and attachment to our characters through highly immersive experiences such as games and digital content. The brand value built through this process then flows into “value expansion”—purchases of products and use of services—and returns to us as revenue. Neither exposure alone nor deeper experiences alone are sufficient. At the core of our brand-building philosophy is the belief that we must take an integrated approach that both expands our reach and deepens emotional connections.
How Sanrio’s Brand Value Drives Sustainable Growth
How do we demonstrate the results of putting this approach into practice? The KPI we developed for this purpose is “Sanrio Time.” “Sanrio Time” measures the total time customers spend engaging with our characters, products, and services. It captures the depth and breadth of the relationship between customers and Sanrio in ways that financial metrics such as sales and profit alone cannot. We have placed it at the center of our business operations. We originally targeted a cumulative 300.0 billion hours of Sanrio Time over the period from FY3/2025 to FY3/2031. Having exceeded that target in FY3/2025, we have raised the bar and now aim to generate 300.0 billion hours of Sanrio Time annually by FY3/2035, the final year of our 10-year Long-Term Vision.
Sanrio Time can be broken down into two main indicators. One is “time feeling close to Sanrio,” and the other is “time deeply absorbed in Sanrio.” “Time feeling close to Sanrio” refers to time arising from everyday touchpoints such as picking up a product or catching sight of a character. “Time deeply absorbed in Sanrio” refers to time spent drawn into the Sanrio world through deeper immersive experiences, such as games and interactive facilities. Time feeling close to Sanrio serves as the entry point and accounts for the larger share of Sanrio Time overall. We believe that as this time feeling close to Sanrio grows into time deeply absorbed in Sanrio, our relationships with fans deepen and the foundation of our brand strengthens.
Considering at the planning stage how much Sanrio Time a product or service will generate has become an established internal benchmark. Increasing time spent smiling comes first, and developing characters and products is the means to that end. We feel confident that this belief is steadily taking root across our entire organization.
We sometimes receive questions from stakeholders about the relationship between Sanrio Time and profitability. While directly demonstrating a numerical correlation between the two is not straightforward, we have a clear causal roadmap showing how Sanrio Time translates into monetization. The more customers purchase our products and build up experiences, the more their Sanrio Time grows. The more their Sanrio Time grows, the deeper their attachment becomes, and that attachment leads to subsequent purchases and interest in new experiences. We believe this cycle contributes to profitability through an expanding customer base, higher IP value, and growing lifetime value.
Our past business model will not deliver our Long-Term Vision. “Three approaches” will drive steady growth
The engine connecting the expansion of Sanrio Time to steady growth is our “three approaches” strategy, set out in our current MTMP (FY3/2025–FY3/2027). We consider our previous MTMP largely achieved, but we believe we need to evolve our current framework further to realize our Long-Term Vision. We position the three approaches as action plans for advancing our Long-Term Vision in concrete terms.
The 1st Approach is to “review marketing and sales strategies to make Evergreen global IP.” Going forward, we will further strengthen our characters’ global exposure and expand our fan base. Hello Kitty in particular has been gaining traction across a broad consumer base. We will further raise the global market exposure of characters such as Cinnamoroll and Kuromi as well, with the aim of increasing our overseas revenue share.
The 2nd Approach is to “develop a foundation for global growth.” We do not believe our current organization, as it stands today, can achieve our ten-year goals. There is no such thing as a perfect HR initiative; our basic stance is to maintain an 80-point level while continuously working to address the remaining 20 points. We update these challenges every year. At present, we recognize securing specialist professionals, such as for the expansion of functions in the digital domain, as one such challenge. We also plan to make active use of M&A and strategic job rotation as tools for addressing these challenges.
The large-scale mid-career hiring we pursued as part of our post-2021 reforms has significantly changed the internal culture and further increased the diversity of our workforce. Changes in the working environment are drawing out the full potential of our employees and driving growth across the Company. That said, we feel that our top-tier leaders need to play a more active role in driving this forward. We remain confident in the results of our ongoing transformation and will continue to invest in the organization.
The 3rd Approach is to “expand IP portfolio and monetize in multiple layers.” Beyond merchandise sales, we will expand the touchpoints and engagement opportunities our characters offer across multiple layers, including digital, gaming, and education. We aim to create a world where broader touchpoints generate new encounters with fans and deepen relationships with existing ones.
Furthermore, the 1st Approach and the 3rd Approach are not independent measures; they work in concert with each other. By expanding the platforms in which our characters perform and increasing opportunities for audiences worldwide to engage with them, we draw people to a diverse range of content and services. Overseas fans grow into more deeply devoted fans. This multi-layered approach both deepens our engagement with the existing fan base and creates new touchpoints with audiences who have had no prior connection to Sanrio. We believe that expanding these diverse touchpoints forms the foundation for Sanrio’s long-term growth.
Strengthening the foundation that supports our global IP platform provider “lighthouse”—making it taller and wider, so that its light reaches farther
By continuing to advance our efforts centered on these three approaches, we move closer to our vision of becoming a global IP platform provider. We see this as building an entertainment foundation that starts with our characters and spans diverse fields, such as merchandise, digital content, gaming, experiences, and education, while deepening engagement among fans around the world. We picture this vision as a lighthouse. As fans enter through one window and move across levels of diverse entertainment, deepening their relationship with Sanrio, the number of smiling faces grows. The more Sanrio Time accumulates, the taller and wider the lighthouse becomes.
It has been one year since we announced the “global IP platform provider” concept in our Long-Term Vision, and we recognize that a long road still lies ahead before we can fully achieve this vision. Realizing our global IP platform provider vision requires a foundation that spans the physical and digital worlds, connects touchpoints with our customers, and continuously deepens those relationships. At the heart of this foundation is the ID strategy behind Sanrio+, the Group’s integrated membership service. Sanrio+ ID is a shared customer platform that spans Sanrio’s diverse services, including games, stores, and digital channels. With this ID at the core, we are working to integrate our relationships with customers currently spread across individual touchpoints. We are building a foundation through which customers can freely explore Sanrio’s many services and deepen their engagement with the Sanrio world.
A key part of this effort is Sanrio Games, our first dedicated game brand, announced in April 2026. Games are an especially immersive form of entertainment, so they can generate a great deal of time deeply absorbed in Sanrio. Beyond deepening relationships with existing fans, games can also serve as an entry point to the Sanrio world for a broad audience regardless of gender or age, including families enjoying Sanrio together. We are confident that games also hold significant potential as a new way to reach audiences who have had relatively limited contact with Sanrio, such as boys. We are also exploring the development of IP that originates from games. Our aim is to cultivate a cycle within the platform in which new IP attracts new customer segments, and the Sanrio+ ID converts those relationships into ongoing engagement.
The major force driving and further enriching this ecosystem is the power of co-creation. By drawing on the planning and design capabilities we have built over many years, primarily through merchandise creation, we will breathe new value into partner IPs and create new reasons to buy. Reproducing a character’s artwork on merchandise as-is, for example, will only reach existing fans. Through collaborations with Sanrio, however, our design capabilities add a new dimension of “kawaii” to that character, making it appealing to audiences who would not previously have engaged with it.
Because we can create this kind of value, we believe Sanrio can build relationships of co-creation with other companies’ IPs rather than competing with them. We see fans of other companies’ IPs entering the Sanrio world through collaborations, with new touchpoints and relationships expanding, and we view this as a path toward our evolution into a global IP platform provider.
This global IP platform provider “lighthouse” is not something we complete in 2035 and consider finished. We see 2035 instead as a milestone at which we begin a new chapter as a global IP platform provider. To keep projecting that light ever farther, we must continually strengthen the organizational foundation that supports the lighthouse. Alongside our business growth, we must steadily build the management foundation that underpins it, including governance.
We see becoming a global IP platform provider as the future of Sanrio—a company that has been part of people’s lives for many years and will continue to grow over the next decade and beyond. We will continue to move steadily forward, building the lighthouse ever higher and projecting its light ever farther.
Only by growing can Sanrio bring smiles to even more people
The corporate philosophy we have upheld since our founding is “Minna Nakayoku” (Getting Along Together). This phrase embodies our answer to a question: What is true human happiness? No one can live entirely on their own. We believe that true human happiness lies in supporting one another, helping one another, trusting the companions we live alongside, and living together in harmony. This belief underpins all of our businesses and is a distinctive strength unique to Sanrio, even by global standards.
The “Minna” (everyone) in our philosophy extends far beyond those closest to us—our family and friends—to include our classmates, colleagues, and ultimately people around the world. As Sanrio grows, so too does our ability to bring smiles to more people. This aspiration is captured in our vision, “One World, Connecting Smiles. (Creating as many smiles as possible and extending the circle of happiness even further afield).” Our pursuit of further growth ultimately serves one purpose: to realize the “Minna Nakayoku” (Getting Along Together) philosophy on an ever-larger scale.
At the heart of Sanrio’s values lies the culture of giving small gifts. Our products and services are designed not only to bring joy to those who receive a gift, but also to those who give it—creating smiles from the very moment they being choosing the perfect gift. Every smile inspired by the act of giving becomes the beginning of another, creating a chain of smiles that continues to grow. We believe this enduring cycle is the reason Sanrio has remained close to people’s hearts for so many years.
Unlike food, clothing, and shelter, entertainment may not be a necessity. Yet we believe smiles are something people need. As geopolitical uncertainty and social division deepen, we believe entertainment has an even greater role to play in the world. Demand for something that connects people across language, cultural, and generational barriers and brings them smiles may well grow stronger as the world around us becomes more challenging. The world needs companies that can deliver value across every barrier. That is why Sanrio, as a global entertainment company, will work toward a society that values human connection across languages, cultures, and generations—through both physical and digital channels.
Our specific action guidelines for realizing both “Minna Nakayoku” (Getting Along Together) and our vision are defined in the Sanrio Materiality framework, which sets out 10 global key issues. One embodiment of that philosophy is our social contribution activity, the Sanrio Nakayoku Project. Through this initiative, we pursue ways to bring smiles to people—including Hello Kitty hospital visits, donations, and activities that share the joy of creativity—in a context separate from our business. We are expanding these efforts globally.
To us, business growth and contributing to society are not competing goals—they go hand in hand. Only by growing as a company can we bring smiles to more people. We will continue to thoughtfully consider how we can deliver value that expands the circle of happiness even further afield.
To remain a vibrant and inspiring company, we must keep embracing change—especially during periods of growth.
Six years have passed since I became President and CEO, and I believe we have moved from a period of transformation into one of growth. Yet it is during periods of growth that we must continue to evolve. It is precisely because we have this momentum today that we should pursue the next wave of new transformations with the coming decade in mind. To achieve this, we must foster a culture that encourages people to take on challenges throughout the organization.
A culture of taking on challenges cannot take root unless it starts at the top. If I, as President, am not willing to take on new challenges myself, it will become much harder for our employees to do the same. It was with that conviction in mind that we explicitly made “challenge” one of our core values when we established our Vision, Mission, and Values. Every challenge, even one that does not succeed, yields experience and learning that carries us forward. It is also because we are performing well today that we have the confidence to embrace those challenges. While the change has been gradual, I can already see our culture evolving into one where taking on challenges is recognized and celebrated.
However, a vision and strategy have little meaning if they exist only on paper. Realizing our Long-Term Vision requires not just me as President, but every member of the executive team to move forward together, aligned in direction and perspective. With that in mind, this year we held our executive retreat over two nights for the first time. Focusing on our Long-Term Vision, the entire executive team discussed how we will grow our “lighthouse” toward 2035. By working backward from that vision, we were able to have in-depth discussions about the priorities and actions needed to achieve it. The result was an engaging and highly rewarding experience. It also gave us the opportunity to share perspectives and aspirations that are often difficult to uncover in the course of our regular, shorter, meetings, strengthening the sense of unity among our nearly twenty executives. Rather than simply serving as a forum for building consensus, the retreat united our leadership team around a shared commitment to realizing our Long-Term Vision. I am confident that this unity will be the driving force behind the transformation ahead.
One of our greatest strengths is our portfolio of character IP, including Hello Kitty, that has resonated with people across generations. The foundation of our competitive strength is not simply that our characters are popular, but that they continue to be a constant presence in people’s everyday lives across generations. A generation that grew up with Hello Kitty now gives Sanrio characters to their own children and grandchildren. This continuity across generations has been the foundation of our brand’s enduring strength. In fact, I often find myself thinking, “It’s hard to find anyone who doesn’t love Hello Kitty.” That is how widely loved Sanrio’s characters are. Whether someone is a lifelong Hello Kitty fan or simply thinks, “That’s cute,” one of Sanrio’s unique strengths is our ability to create products that people feel are worth picking up and making part of their lives. Beyond professional creativity, our organizational culture is one in which employees continuously generate new ideas. That is another major source of our competitive strength.
Building on these strengths, we are committed to achieving the medium-term management plan target of 10-year average annual operating profit growth of more than 10%. At the same time, we recognize that sustained growth requires investment, and growth will not be linear year after year. There will be years when we invest for the future and years when those investments deliver significant returns. By navigating these cycles while maintaining sustainable growth over the medium to long term, we will fulfil our commitment to our stakeholders.
What we aspire to be is not a rigid, set-in-its-ways company, but one that is vibrant and dynamic—always delivering surprise and delight. We recognize that achieving this requires both creating an environment where employees can work with a smile and building a strong organizational foundation that includes sound governance.
We will continue to grow alongside our characters and take on new challenges, all in pursuit of bringing smiles to as many people as possible. I hope you will look forward to what Sanrio has in store as we continue to take on new challenges.