Mixed signals; potential hints of year end miss

Q3 delivered a mixed result picture with increased foreshadowing of risk over the next 6 weeks. Total revenue fell short of analyst forecasts while forecasted EPS beat its target. However, this was likely due to the exit of 5 higher contracted talent over the past 12 months. Spending has continued to increase in staff, development and merchandise manufacturing which underpins growing concerns Cover has been silently sunsetting their HoloEarth project with little to show for the multiyear investment. Adding further to the mixed signals sent out to investors are the progress points made in their earnings report material hinting the company is prepping to close FY2026 below their forecast without telegraphing it direction with a downward forecast revision.

Despite anticipation hints, Yagoo and Co have announced yet another in a series of baffling projects that suggest the company's further investment into a costly project that would see their record label segment hire independent talent solely to record songs under the Hololive Records brand. This strikes me as extremely odd as past Earnings calls and annual shareholder meetings suggested the recording studio was already running above 80% capacity and staffing has already seen a dramatic weight straining margins. Signing additional talent would effectively fill the 5 vacant slows of graduated talent and return the bottom line to under 10%. This is a development to keep a close eye on between now and the Q4 release.