CyberAgent,Inc. FY2026 Q3 Earnings Report

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Executive Summary

This was a results period in which the Company achieved higher revenue and income, with profit growth significantly exceeding revenue growth, primarily due to substantial increases in revenue and profit in the Games Business. Revenue was ¥7,092.7B (+12.2% year on year), Operating Income was ¥674.5B (+38.2%), Ordinary Income was ¥691.8B (+42.3%), and Net Income attributable to owners of the parent for the quarter was ¥360.4B (+49.5%). Both the gross margin and Operating Income margin improved, indicating operating leverage, with the rate of profit growth exceeding the rate of revenue growth.

Factors Affecting Performance

【Revenue】Revenue was ¥7,092.7B, up +12.2% year on year. The Games Business led overall performance with revenue of ¥1,933.9B (+37.8%), while Internet Advertising generated ¥3,636.9B (+4.9%), representing limited revenue growth. Investment Development decreased to ¥2.4B (-83.1%). The revenue composition was 51.3% Internet Advertising, 27.3% Games, and 0.03% Investment Development. Although the Advertising Business is the largest segment, its growth rate significantly lags that of the Games Business.

【Profit and Loss】Operating Income was ¥674.5B (+38.2%), Ordinary Income was ¥691.8B (+42.3%), and Net Income attributable to owners of the parent was ¥360.4B (+49.5%). The gross margin improved to 31.0% from 29.0% in the previous year due to a decline in the cost-of-sales ratio, while the Operating Income margin expanded by 180bp to 9.5% from 7.7% in the previous year. By segment, the Games Business’s 26.3% profit margin lifted the Company-wide profit margin, while Internet Advertising had a 4.2% profit margin and recorded a slight year-on-year decline in profit. Extraordinary losses of ¥24.1B, including impairment losses of ¥13.2B, decreased from ¥41.4B in the previous year, contributing to the increase in the Net Income growth rate. In conclusion, the Company achieved higher revenue and profit, with profit growth exceeding revenue growth as a distinguishing feature.

Segment Analysis

Internet Advertising generated revenue of ¥3,636.9B (+4.9%) and Operating Income of ¥154.2B (-1.7%), with a profit margin of 4.2%. Although it has the largest revenue scale, its profit margin remains low and has been deteriorating year on year. The Games Business generated revenue of ¥1,933.9B (+37.8%) and Operating Income of ¥509.2B (+44.8%), with a profit margin of 26.3%, making it the primary driver of Company-wide profit. Investment Development generated revenue of ¥2.4B (-83.1%) and recorded an Operating Income loss of ¥16.5B, with the loss expanding. Although small in scale, it warrants monitoring as a factor affecting earnings volatility. The Games Business makes a substantial contribution to Company-wide profit, while profitability improvement in the Advertising Business remains an issue to be monitored going forward.

Key Financial Indicators

【Profitability】The Operating Income margin was 9.5%, improving by 180bp from 7.7% in the same period of the previous year. The Net Profit margin was 6.5% (Net Income of ¥460.1B ÷ Revenue of ¥7,092.7B). The gross margin was 31.0%, up 200bp from 29.0% in the previous year, with the decline in the cost-of-sales ratio being the primary factor behind the improvement in profitability.【Cash Flow Quality】Non-operating income and expenses resulted in a net gain of ¥17.3B, including interest income of ¥5.1B and foreign exchange gains of ¥9.7B, indicating a low degree of reliance on non-core operating income. Extraordinary losses of ¥24.1B include impairment losses of ¥13.2B and have decreased from the previous year’s extraordinary losses (reference value).【Investment Efficiency】ROE (annualized) was 20.6%. Given the consolidated net assets structure, including ¥99.7B in profit attributable to non-controlling interests, evaluation on a basis attributable to owners of the parent is important. Basic EPS was ¥71.07 (+49.3%), while diluted EPS was ¥67.10, 5.6% below basic EPS, confirming the dilutive impact associated with ¥402.4B in convertible bonds with stock acquisition rights.【Financial Soundness】The Equity Ratio was 54.0% (net assets divided by total assets, including non-controlling interests), a high level. The Company held net assets of ¥2,979.0B and cash and deposits of ¥2,120.8B against total assets of ¥5,511.7B. Cash exceeded long-term borrowings of ¥546.2B, and the financing structure is primarily long term.

Cash Flow Analysis

As data from the statement of cash flows is not included in the disclosed information, cash trends are reviewed based on changes in the balance sheet. Cash and deposits were ¥2,120.8B, a decrease of ¥177.7B from ¥2,298.5B in the same period of the previous year, while retained earnings increased by ¥273.5B to ¥1,736.2B, reflecting the accumulation of Net Income for the current period. Property, plant and equipment increased to ¥398.5B, while intangible assets increased to ¥639.0B, suggesting that investments in equipment and content-related assets may have been one factor behind the decline in cash. Short-term borrowings increased to ¥20.0B; however, as cash significantly exceeded this amount, the impact on liquidity is considered limited.

Earnings Quality

Profit growth in the current period had a low degree of reliance on non-operating income. Operating Income of ¥674.5B constituted the majority of Ordinary Income of ¥691.8B, indicating that improved core earning power was the primary driver of profit growth. Non-operating income of ¥25.1B included foreign exchange gains of ¥9.7B and dividend income of ¥4.8B, but these represented approximately 0.4% of Revenue, indicating limited reliance on non-recurring factors. Extraordinary losses of ¥24.1B included impairment losses of ¥13.2B associated with the decline in profitability of certain services, which may be recognized as a temporary factor. Extraordinary losses decreased from approximately ¥41.4B in the same period of the previous year (reference value), and the downward impact of extraordinary gains and losses on Net Income was smaller in the current period. Comprehensive income was ¥424.2B, close to Net Income of ¥460.1B; valuation differences on securities of -¥37.0B exerted downward pressure and can be identified as a factor contributing to the divergence between the two figures.

Earnings Forecasts and Guidance

The full-year Company forecast calls for Revenue of ¥9,500.0B (+8.7% from the previous fiscal year), Operating Income of ¥770.0B (+7.4%), and Ordinary Income of ¥780.0B (+8.7%). The Q3 cumulative progress rates were 74.7% for Revenue, 87.6% for Operating Income, and 88.7% for Ordinary Income. Profit indicators were therefore above the standard progress line (75%). This indicates that the profit growth pace since the first half has been higher than the Company’s forecast assumption of single-digit year-on-year profit growth. Attention should be paid to the Q4 profit level and the seasonality of expense recognition, both of which may affect the full-year outcome. In addition, revisions to the earnings forecast and dividend forecast were made during the current quarter.

Shareholder Returns

The full-year dividend forecast is ¥20.00 per share. The Q2 dividend was ¥0, and the annual dividend plan assumes a single year-end payment. Based on the forecast Net Income attributable to owners of the parent of ¥410.0B, the Payout Ratio is approximately 24.7%, calculated from total annual dividends of approximately ¥10.14B based on 507,105 thousand shares outstanding. This is below the generally cited sustainability benchmark of 60%. Information regarding share repurchases is not included in the disclosed data.

Risk Factors

1. Reliance on the Games Business for earnings: The Games Business accounts for a central share of Company-wide profit, with revenue of ¥1,933.9B, Operating Income of ¥509.2B, and a profit margin of 26.3%. Trends in monetization of specific titles and the success or failure of new title launches could have a significant impact on Company-wide performance.

2. Profitability of the Internet Advertising Business: Despite being the largest revenue segment (¥3,636.9B), Operating Income declined by -1.7% year on year and the profit margin remained at 4.2%. Margin pressure arising from advertising market conditions and the competitive environment could constrain profit growth.

3. Evaluation of impairment losses, goodwill, and intangible assets: The Company recorded impairment losses of ¥13.2B due to declining profitability and the discontinuation of certain services. The Company holds intangible assets of ¥639.0B and goodwill of ¥138.5B, creating a risk of additional impairment losses if service profitability deteriorates in the future.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

The Company exceeds the industry median, but remains below the level of high-profitability companies when compared with the upper bound of the IQR (18.6%).

Growth and Capital Efficiency

The Company’s growth rate exceeds the industry median, but it does not rank among the highest-growth companies when compared with the upper bound of the IQR.

※Source: Compiled by the Company

Key Points from the Financial Results

1. The Operating Income margin improved to 9.5%, and the profit growth rate of +38.2% exceeded the revenue growth rate of +12.2%. The decline in the cost-of-sales ratio was the primary factor behind the improvement in the profit margin, while the high margins of the Games Business support the Company-wide earnings structure.

2. Progress against the full-year forecast was 87.6% for Operating Income and 88.7% for Ordinary Income, both exceeding the standard level (75%). The fact that the profit growth pace since the first half is higher than the Company’s full-year assumption (Operating Income +7.4%) provides useful information when monitoring Q4 performance trends.

3. Although the Internet Advertising Business is the largest segment by revenue, its profit margin has declined from the previous year. The concentration of earnings in the Games Business and profitability trends in the Advertising Business are key points to monitor when evaluating the Company’s future earnings structure.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥672–¥713 at cost of equity ±1%; ¥690–¥696 at ω±0.1.

Notes:

• As progress of Net Income against the full-year forecast (88%) exceeds the standard level (75%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies ahead of their progress targets tend to exceed forecasts. The adjustment may be excessive for businesses with strong seasonality).
• Net Income is significantly compressed relative to Operating Income due to tax burden, acquisition-related expenses, and non-controlling interests, among other factors (Net Income ÷ Operating Income 53%). This figure reflects that compression at face value, and underlying earning power may be higher if these factors are temporary.
• Net assets as of the end of the quarter are used (there is a timing difference relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market stock price or a recommendation of any specific investment action, and does not forecast or guarantee future stock prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional advisor as necessary.

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