CyberAgent (4751) FY2026 Q1 Earnings Report

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Executive Summary

Both revenue and profit grew significantly, resulting in higher revenue and earnings. Revenue was ¥2,323.8B (+14.0% YoY), Operating Income was ¥233.9B (+181.8%), Ordinary Income was ¥242.1B (+174.9%), and Net Income was ¥159.8B (+166.6%). The primary drivers of the earnings increase were the improvement in the gross profit margin (32.3%, improving from 26.5% in the previous year, rather than being equivalent to the previous year's 32.3%) and the sharp recovery in the Games Business. In addition, the increase in SG&A expenses (+12.9%) was below the revenue growth rate (+14.0%), which functioned as operating leverage.

Factors Behind Performance Changes

【Revenue】Revenue increased 14.0% YoY to ¥2,323.8B. The Games Business expanded significantly to ¥647.2B (+69.2% YoY), driving revenue growth, while the core Internet Advertising Business declined to ¥1,146.4B (-2.7%) due to the loss of one major customer. The Media & IP Business also expanded to approximately ¥587.5B, supported by AbemaTV achieving profitability on a standalone basis.

【Profit and Loss】Operating Income increased sharply by 181.8% YoY to ¥233.9B, while the gross profit margin improved from 26.5% to 32.3%. Although extraordinary losses included an impairment loss of ¥0.8B, the amount was small and the impact of temporary factors was limited. In the same period of the previous year, the Games Business recorded an impairment loss of ¥12.7B, and the absence of this loss in the current period also contributed to the earnings increase. The gap between Ordinary Income of ¥242.1B and Net Income of ¥159.8B was attributable to income taxes and other taxes (¥80.0B) and profit attributable to non-controlling interests (¥35.2B). Overall, the results can be characterized as higher revenue and higher earnings.

Segment Analysis

The core business is the Internet Advertising Business, which accounts for 49.3% of revenue composition, but the Games Business was the primary driver of performance changes. The Games Business generated revenue of ¥647.2B and Operating Income of ¥176.8B, representing a 27.3% margin—the highest profitability among all segments—and recorded a significant earnings increase from ¥27.5B in the same period of the previous year. The core Internet Advertising Business posted Operating Income of ¥43.8B, with a 3.8% margin, down 27.2% YoY. The Investment Development Business recorded a loss of ¥5.5B, deteriorating from a profit of ¥0.9B in the previous year. The significant differences in margins among segments indicate a structure in which the high profitability of the Games Business drives consolidated earnings.

Key Financial Indicators

Profitability: Annualized ROE of 23.9%; Operating Margin of 10.1% (4.1% in the previous year)
Cash flow quality: Not assessable because OCF data was not provided
Investment efficiency: Capital expenditure/depreciation data was not provided
Financial soundness: Equity Ratio of 51.0%; Current Ratio of 233.5%

Cash Flow Analysis

This report does not provide specific figures for cash flow details (OCF, investing CF, and financing CF). Cash and deposits decreased to ¥1,891.6B, down approximately 17.7% compared with ¥1,891.6B in the same period of the previous year. Cash exceeded current liabilities of ¥1,527.2B, indicating sound short-term payment capacity.

Earnings Quality

The gap between Ordinary Income of ¥242.1B and Net Income of ¥159.8B is approximately 34%; the primary factors were income taxes and other taxes of ¥80.0B and profit attributable to non-controlling interests of ¥35.2B. This reflects structural allocation of consolidated profit and loss rather than temporary factors. Non-operating income of ¥10.5B was approximately 0.5% of revenue and was immaterial. Comprehensive income of ¥147.9B was slightly below Net Income of ¥159.8B, primarily due to a valuation difference on securities of -¥12.6B. Extraordinary losses included an impairment loss of ¥0.8B and a valuation loss on investment securities of ¥1.0B, but both were small in scale.

Earnings Forecast and Guidance

Q1 progress toward the full-year revenue forecast of ¥8,800.0B was 26.4%, slightly above the standard progress rate of 25%, indicating a solid start. Operating Income is forecast in a range of ¥500–600B, and Q1 Operating Income of ¥233.9B represents progress of 39.0%–46.8% relative to the lower end of the range. The range-based forecast was established because of the significant volatility in the Games Business.

Shareholder Returns

The full-year dividend forecast is ¥19.00 per share. Based on the average number of shares outstanding during the period of 506,810 thousand shares, the total annual dividend is estimated at approximately ¥96.3B. Calculating the Payout Ratio against Net Income would require the full-year Net Income forecast; however, this is not specified in the report, so it is not calculated.

Catalysts

【Short Term】Continued recovery in customer trends in the Advertising Business; progress in the release of existing and new game titles, including hololive Dreams and a sequel to GRANBLUE FANTASY
【Long Term】Establishment of an integrated system spanning original works, anime, theatrical releases, and merchandise in the Media & IP Business; transition toward higher profitability through expanded overseas development of the Games Business

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Within the industry, both the Operating Margin and Net Profit Margin are below the median, positioning the company's profitability below the industry average.

Growth and Capital Efficiency

Revenue growth exceeded the industry median, indicating a relatively favorable position within the industry in terms of growth.

※Source: Compiled by the Company

Risk Factors

1. Increased dependence on the Games Business: Segment profit of ¥176.8B accounted for 75.6% of consolidated Operating Income of ¥233.9B and fluctuates depending on the popularity and operating period of content. If the margin of the Games Business declines, the impact on consolidated earnings will be significant.

2. Declining profitability of the core Advertising Business: Revenue in the Internet Advertising Business declined 2.7% YoY (PDF figure), while segment profit declined 27.2% YoY. The decline was caused by the loss of one major customer. Although the business is currently showing signs of recovery, customer trends require ongoing monitoring.

3. The Investment Development Business becoming loss-making: The Investment Development Business recorded a segment loss of ¥5.5B, deteriorating from a profit of ¥0.9B in the previous year. Its structure makes profit susceptible to fluctuations in the valuation of portfolio investments.

Key Points from the Earnings Results

1. Operating Margin was 10.1%, improving by approximately 600bp from 4.1% in the previous year. However, this improvement depended heavily on the sharp recovery in the Games Business, and the margin remains below the industry median of 12.1%.

2. While the core Internet Advertising Business experienced declines in both revenue and earnings, the Games Business drove consolidated earnings as a highly profitable segment. This structure indicates an uneven distribution of profit contributions among segments.

3. The ¥12.7B impairment loss recorded by the Games Business in the same period of the previous year did not recur in the current period. The resulting absence of this temporary factor contributed to part of the earnings increase and should be considered when assessing the sustainability of profit growth.

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This report is an automatically generated earnings analysis document created by AI through an integrated analysis of XBRL earnings summary data and PDF earnings presentation materials. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.

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