1Summary

Sony reported a net loss of ¥326,865m for the year ended 31 March 2026, against net income of ¥1,141,600m the year before. Its total assets fell from ¥35.29tn to ¥15.68tn. Almost nothing in either of those sentences is about the operating business, and a reader who stops there will draw exactly the wrong conclusion.

In the same year, revenue rose 3.7% to ¥12,479,620m and operating profit rose 13.4% to ¥1,447,507m. On the company's own continuing-operations basis, net income attributable to shareholders was ¥1,030.9bn — down 3.4% on the prior year, not down 128.6%. The gap between that and the headline loss is the financial services business, which Sony classified as a discontinued operation following its partial spin-off, and which took roughly ¥20tn of insurance and banking assets off the balance sheet on the way out.

This is the single most consequential thing to understand about Sony's filing this year, and it is the reason the equity ratio jumped from 23.2% to 51.8% while net assets barely moved (¥8,510,151m to ¥8,513,589m). Sony did not deleverage. It stopped consolidating a life insurer.

What is left is an entertainment and semiconductor group in five segments. Two of them set records: Image Sensing set records in both revenue and operating profit, and Game & Network Services set a record segment profit despite absorbing a ¥120.1bn impairment on Bungie. Music segment profit rose 25.1%. Pictures and Entertainment Technology both went backwards.

The first quarter of the current year, disclosed on 31 July 2026, was strong on the same continuing basis: revenue up 8.2% to ¥2,837,771m and operating profit up 40.2% to ¥476,499m.

Sony reports under IFRS, so its income statement has no ordinary profit line — between operating profit and net income sits profit before tax. If you are comparing Sony with a Japanese-GAAP company such as Sanki Engineering (1961), that difference matters before you compare anything else.

2Business

Five reported segments plus "Other", with 1,485 subsidiaries and 148 affiliates at 31 March 2026 (1,453 consolidated, 132 equity-method).

Game & Network Services (G&NS) — digital software and add-on content, network services, and console hardware. Music — recorded music, music publishing, and a visual media and platform business that includes anime. Pictures — motion pictures, television production, and media networks. Entertainment, Technology & Services (ET&S) — imaging (interchangeable-lens cameras and professional video), sound, network services and displays. Image Sensing Solutions (I&SS) — image sensors. Other — disc manufacturing, recording media and assorted activities.

The financial business is no longer here. Following the partial spin-off, Sony reclassified financial services as a discontinued operation. Every continuing-operations figure in this review therefore excludes it, and the prior year has been restated on the same basis — which is why continuing revenue for the prior year reads ¥12,034.9bn rather than a larger number including insurance premiums.

The segments are not independent. I&SS supplies image sensors to G&NS and ET&S; Music and the disc-manufacturing operation in Other supply packaged media to G&NS and Pictures.

3Results

Full year to 31 March 2026 (consolidated, IFRS)

Read the net income row together with the next section, not on its own. The figures above are the machine-verified consolidated extract, which includes discontinued operations. Sony's own continuing-operations presentation is different, and both are correct.

What management said

The figures in this section come from the company's own MD&A in the same securities report (docID S100YE2C) rather than from the machine-verified headline extract.

On a continuing-operations basis, Sony reports:

So the operating company earned ¥1,030.9bn, down ¥36.5bn or 3.4%. Continuing-operations basic EPS was ¥172.51 against ¥176.45. (Per-share figures reflect a 5-for-1 stock split effective 1 October 2024 and are restated for the prior year; they are not comparable with pre-split coverage.)

The bridge from operating profit to the bottom line, as management sets it out:

• Cost of sales ¥8,635.2bn, or 69.2% of revenue, improved from 70.7%. SG&A ¥2,298.6bn, 18.4% from 18.8%. R&D, included in cost of sales, was ¥762.0bn — 6.1% of revenue, unchanged as a ratio.
• Other operating income and expense was a net loss of ¥34.1bn against a ¥11.2bn gain. Three items drive it: a ¥120.1bn impairment on Bungie intangibles in G&NS; a ¥43.9bn realisation of previously unrealised profit on land transferred to Sony Life in earlier years, triggered by executing the spin-off; and a ¥34.7bn revaluation gain on increasing the stake in Peanuts Holdings, in Music.
• Equity-method result was a ¥64.2bn loss against a ¥7.9bn loss, including ¥44.9bn of additional losses at Sony Honda Mobility on the cancellation of an EV model.
• Financial income and expense netted to a ¥25.1bn expense against ¥66.6bn of income, mainly a smaller valuation gain on Spotify shares.
• Tax was ¥367.1bn at an effective rate of 25.8%, up from 19.2%. Management attributes the increase to the non-recurrence of two prior-year items: a ¥48.4bn tax reduction on a return of capital from a subsidiary, and a ¥35.3bn reduction on a subsidiary liquidation.

By segment (segment revenue includes inter-segment transactions; segment profit excludes unallocated corporate costs):

I&SS is the growth story: revenue up ¥352.5bn and segment profit up ¥96.2bn, both records, on larger and higher-specification mobile image sensors and higher unit volume — achieved despite restructuring costs, a ¥19.9bn loss on selling the stake in Sony Semiconductor Israel, and a ¥16.5bn impairment on display-device fixed assets.

G&NS revenue was essentially flat, with network services and third-party software growth offsetting lower hardware units, but segment profit still set a record at ¥463.3bn — after the ¥120.1bn Bungie impairment. Management attributes the profit to the installed PS5 base driving network and software revenue rather than to hardware.

Music grew segment profit 25.1% on streaming, live performance and merchandise, plus the anime and visual-media business, where the company specifically credits the theatrical releases of Demon Slayer: Infinity Castle Chapter 1 and Kokuho.

Pictures and ET&S both declined, ET&S on lower revenue across the segment.

First quarter to 30 June 2026 (disclosed 31 July 2026)

Japanese quarterly reporting is cumulative from the start of the fiscal year; these are three-month figures and are not annualised.

Company forecast for the full year to March 2027: revenue ¥12,500,000m, operating profit ¥1,720,000m, profit before tax ¥1,710,000m, net income ¥1,210,000m. Japanese listed companies publish their own full-year forecast under Tokyo Stock Exchange practice; it is management's number, not an analyst consensus, and revising it is itself a disclosable event.

Against that forecast, Q1 revenue is 22.7% of the full year, operating profit 27.7% and net income 28.3%. Operating profit running ahead of a straight-line quarter while revenue runs behind it means the forecast assumes margin gives way over the remaining nine months — worth reading against the market-wide median first-quarter operating progress of 24.3%.

4Valuation context

At ¥3,777 per share (the 20 August 2026 close) with 5,965,316,326 shares outstanding and a market capitalisation of ¥22,531,000m (Nikkei):

• Trailing PER is not meaningful on reported EPS, which is negative at −¥54.70 because of the discontinued operation. On continuing-operations EPS of ¥172.51 it is 21.9x.
• Forward PER on company guidance: the ¥1,210,000m net income forecast against the share count gives forecast EPS of about ¥203, or 18.6x. Nikkei quotes 18.2x, using a share count net of treasury stock.
• PBR: ¥22,531,000m ÷ ¥8,513,589m net assets = 2.65x. Nikkei quotes 2.64x.
• Dividend yield: 0.92% forecast (Nikkei). Sony is not a yield stock; the shareholder-return argument here is buybacks and the spin-off, not the dividend.
• Forecast ROE 14.9% (Nikkei).

The valuation question that follows from the accounts is narrow. Sony now trades at 2.65x a book value that no longer contains an insurance balance sheet, on a forecast ROE of 14.9%. Before the spin-off, both the numerator and the denominator of that ratio contained a business with a completely different return profile and a completely different asset base. Any comparison of Sony's PBR or ROE with its own history before this year is comparing two different companies, and screens that pull multi-year averages will be wrong about this for another four years.

5What to watch

1. I&SS segment margin. ¥357.3bn on ¥2,151.5bn is 16.6%, up from 14.5%, with both revenue and profit at records — set while absorbing restructuring costs and two separate write-downs. Whether that margin holds without one-off drags is the clearest read on the segment Sony is betting on.
2. G&NS profit without the impairment. A record ¥463.3bn after ¥120.1bn of Bungie impairment implies roughly ¥583bn of underlying segment profit. Hardware units are falling and management flags memory-price inflation and supply constraints. The question is whether network and software revenue keeps growing fast enough to carry a shrinking hardware line.
3. Pictures. Segment profit fell to ¥104.9bn from ¥117.3bn on flat revenue, and this is the segment where the company recognised goodwill impairment in its annual test. The sensitivity disclosure puts the terminal-value profit multiple at 8.9–11.0 and shows headroom under a one-point discount-rate increase, but this is the segment with the least of it.
4. Sony Honda Mobility. ¥44.9bn of additional equity-method losses on a cancelled EV model, inside a ¥64.2bn total equity-method loss. A small line that moved a lot.
5. The shape of the post-spin-off balance sheet. Equity ratio 51.8% at year end and 52.2% at the June quarter, against 23.2% a year ago. What Sony does with a balance sheet that now looks like an entertainment company's rather than an insurer's is the medium-term capital-allocation question.

Scheduled catalysts. Second-quarter (six-month cumulative) results in early November 2026, third quarter in early February 2027, and full-year results in late April or May 2027. Sony's exact dates were not retrieved for this note; check the company's IR calendar rather than relying on the pattern.

6Risks the company discloses

The items most connected to the numbers above are the accounting estimates Sony names as critical.

Impairment of non-financial assets. Goodwill and indefinite-lived intangibles are tested annually in the fourth quarter. This year Sony recognised goodwill impairment in a Pictures cash-generating unit; every other unit's recoverable amount exceeded carrying value, with significant units clearing by at least 10%. Post-tax discount rates run 6.0%–15.5%; a one-point increase would not have triggered further material impairment. Terminal growth is 2.0% for G&NS, ET&S and I&SS, 1.0%–3.4% for Music, and −5.0% to 10.0% for Pictures.

Business combinations. Purchase price allocation depends on fair-value estimates that may prove wrong, which can force later goodwill impairment. Given the Bungie write-down and the Peanuts step-up in the same year, this is a live rather than a theoretical risk.

Estimated total revenue in Pictures. Film accounting requires management to estimate a title's lifetime revenue, which drives both the amortisation of capitalised production costs and the accrued participation liability. Sony states plainly that if opening-weeks box office disappoints and the estimate is not revised down, amortisation is understated.

Deferred tax asset valuation. Recognised only to the extent future taxable profit is probable, and sensitive to tax-rate changes, transfer-pricing outcomes and plan shortfalls in each jurisdiction.

7Sources

• EDINET annual securities report, docID S100YE2C, filed 2026-06-18 (year ended 31 March 2026). All consolidated headline figures, segment figures, the continuing and discontinued split, MD&A and critical accounting estimates.
• Q1 results release (決算短信) for the year ending March 2027, disclosed 2026-07-31, via EDINET DB.
• Share price ¥3,777, shares outstanding, market capitalisation, PBR, forward PER, dividend yield and forecast ROE: Nikkei company page, retrieved 2026-08-20.
• The market-wide first-quarter progress figure is this site's own measurement across 103 companies reporting 3–9 August 2026.

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This is a review of reported results. It contains no investment recommendation, no price target and no valuation model. Multiples are stated as arithmetic on disclosed figures and a stated share price.