CyberAgent,Inc. FY2026 Q3 Earnings Report

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Executive Summary

CyberAgent’s cumulative 3Q FY2026 results accelerated in both revenue and earnings growth, primarily driven by the increased profitability of the Games Business. Revenue was ¥7,092.7B (previous year: ¥6,319.9B, +12.2%), Operating Income was ¥674.5B (same period of previous year: ¥488.0B, +38.2%), and Ordinary Income was ¥691.8B (same period of previous year: ¥486.3B, +42.3%). Consolidated Net Income, including the portion attributable to non-controlling interests, was ¥460.1B (+53.3%), while Net Income attributable to owners of the parent was ¥360.4B (previous year: ¥241.0B, +49.5%); both expanded at a pace exceeding revenue growth. The primary driver of earnings growth was the simultaneous expansion of revenue and profit margins in the Games Business, with the gross profit margin improving to 31.0% (approximately 29.0% in the previous year) and the Operating Income margin improving to 9.5% (7.7% in the previous year).

Factors Affecting Business Performance

【Revenue】Revenue was ¥7,092.7B, representing a year-on-year increase of +12.2%. By segment, Internet Advertising was ¥3,636.9B (+4.9%), accounting for 51.3% of the composition and remaining the largest segment, although growth was moderate. Games continued to post strong growth at ¥1,933.9B (+37.8%), increasing its proportion of total revenue. Investment Development continued to contract, recording ¥2.4B (-83.1%). The change in revenue composition indicates that, while the Company remains highly dependent on advertising, the center of profit contribution is shifting toward Games.

【Profit and Loss】Operating Income was ¥674.5B (+38.2%), and the Operating Income margin improved to 9.5% (7.7% in the previous year). Games secured a high margin, with Operating Income of ¥509.2B (+44.8%, margin of 26.3%), driving the majority of Company-wide earnings. In contrast, Internet Advertising posted Operating Income of ¥154.2B (-1.7%), representing a slight decline in earnings despite top-line growth, as promotional investments and other factors pressured margins. Investment Development recorded an Operating Loss of ¥16.5B, with the loss narrowing year on year. Ordinary Income was ¥691.8B (+42.3%); non-operating income and expenses contributed positively, with income of ¥25.1B and expenses of ¥7.7B, including ¥9.7B in foreign exchange gains, although the net contribution was limited to approximately 0.35% of revenue. Extraordinary losses of ¥24.1B, including ¥13.2B in impairment losses, were recorded, but this was down from the previous year’s impairment loss of ¥38.9B, reducing the impact of temporary factors. Due to the tax burden (income taxes and other taxes of ¥208.6B and an effective tax burden of approximately 31.2%) and the deduction of ¥99.7B in profit attributable to non-controlling interests, the reduction from Ordinary Income to Net Income attributable to owners of the parent was relatively significant. Overall, the results can be evaluated as showing both revenue and earnings growth, accompanied by a structural improvement in profit margins.

Segment Analysis

The Games Business was positioned at the center of Company-wide earnings, with revenue of ¥1,933.9B (+37.8%) and Operating Income of ¥509.2B (+44.8%, margin of 26.3%), serving as the primary engine of earnings growth. Internet Advertising was the largest segment by revenue, at ¥3,636.9B (+4.9%), but its Operating Income was ¥154.2B (-1.7%) and its margin was 4.2%, substantially below Games in terms of profitability. Investment Development remained small in scale but continued to record a loss, with revenue of ¥2.4B and an Operating Loss of ¥16.5B. The margin gap between segments—26.3% for Games versus 4.2% for Advertising—has contributed to raising the Company-wide Operating Income margin through an improved business mix.

Key Financial Indicators

【Profitability】The Operating Income margin improved by +179bp to 9.5% (7.7% in the previous year), while the gross profit margin improved to 31.0% (approximately 29.0% in the previous year), with the increased high-margin contribution from the Games Business driving Company-wide profitability. The SG&A expense ratio rose slightly to 21.5% (21.3% in the previous year), but the improvement in gross profit absorbed this increase and operating leverage took effect.【Cash Flow Quality】Non-operating income was small, at approximately 0.35% of revenue, and recurring operating business earnings accounted for the majority of profit. Extraordinary losses of ¥24.1B, including ¥13.2B in impairment losses, declined from the previous year’s impairment losses of ¥38.9B, reducing the impact of one-time factors.【Investment Efficiency】ROE was 15.4%, supported by the accumulation of Net Income attributable to owners of the parent of ¥360.4B and an expansion of equity. Basic EPS was ¥71.07 (previous year: ¥47.59, +49.3%), while diluted EPS was ¥67.10.【Financial Soundness】The Equity Ratio increased to 54.0% (approximately 49.5% in the previous year), and the Company maintained ample liquidity, with cash and deposits of ¥2,120.8B. Total assets declined slightly to ¥5,511.7B, while net assets increased to ¥2,979.0B, indicating a strengthened capital base.

Cash Flow Analysis

Although detailed disclosure of the statement of cash flows is not available, cash trends can be assessed from balance sheet movements. Cash and deposits were ¥2,120.8B, a slight decrease from ¥2,298.5B in the previous year, while retained earnings accumulated to ¥1,736.2B (previous year: ¥1,462.6B, +18.7%), confirming progress in the internal retention of current-period earnings. Accounts receivable were ¥878.2B (previous year: ¥885.1B), remaining broadly flat, while accounts payable declined slightly to ¥761.0B (previous year: ¥817.5B), indicating that working capital soundness was maintained. Long-term borrowings increased slightly to ¥546.2B (previous year: ¥524.2B), suggesting a stable financing structure centered on long-term capital.

Quality of Earnings

The quality of earnings can generally be evaluated as being based on the Company’s core operating business. Non-operating income of ¥25.1B, including interest income of ¥5.1B, dividend income of ¥4.8B, and foreign exchange gains of ¥9.7B, was small at 0.35% of revenue and made only a limited contribution to Ordinary Income. Extraordinary losses of ¥24.1B, including ¥13.2B in impairment losses, modestly reduced Net Income, but the impact of one-time factors narrowed compared with the previous year’s impairment losses of ¥38.9B. Net Income attributable to owners of the parent was ¥360.4B versus Ordinary Income of ¥691.8B, representing a significant gap; this was primarily due to the tax burden of ¥208.6B in income taxes and other taxes and the deduction of ¥99.7B in profit attributable to non-controlling interests, rather than factors undermining the underlying quality of earnings. Comprehensive Income was ¥424.2B, including ¥324.2B attributable to owners of the parent. Compared with Net Income, this reflected the impact of valuation differences on securities of -¥37.0B, while other components were limited.

Earnings Forecast and Guidance

Progress toward the full-year forecast was 74.6% for Revenue (¥7,092.7B/¥9,500.0B), 87.6% for Operating Income (¥674.5B/¥770.0B), and 88.7% for Ordinary Income (¥691.8B/¥780.0B). Compared with the standard progress rate of 75% at the cumulative 3Q stage, Revenue was progressing broadly in line with the standard pace, while profit items were more than 10 percentage points ahead of schedule. This was supported by the high-margin contribution of the Games Business and improvements in the gross profit margin. During the current quarter, revisions were made to the earnings forecast and dividend forecast, and the progress indicates potential upside relative to the full-year earnings plan.

Shareholder Returns

The Company’s full-year dividend forecast is ¥20.00 per share. Based on 507,105 thousand issued shares, the implied annual total dividend is approximately ¥10.14B, resulting in a Payout Ratio of approximately 24.7% against the full-year forecast of ¥410.0B in Net Income attributable to owners of the parent. Given the financial base of cash and deposits of ¥2,120.8B and an Equity Ratio of 54.0%, the Company has a commensurate financial foundation to support dividend payments. It should be noted that the dividend forecast was revised during the current quarter.

Risk Factors

1. Business concentration risk: The Internet Advertising segment accounts for 51.3% of Revenue, creating a structure that is susceptible to changes in advertising market conditions and platform policies. Operating Income in this segment declined by -1.7%, indicating structural pressure on profitability.

2. Earnings dependence on the Games Business: Of the Company’s Operating Income of ¥509.2B, the Games segment accounts for the majority, meaning that the life cycles of hit titles and the launch status of new titles have a relatively significant impact on Company-wide performance.

3. Net Income compression due to the tax burden and profit attributable to non-controlling interests: Income taxes and other taxes of ¥208.6B (burden rate of approximately 31.2%) and profit attributable to non-controlling interests of ¥99.7B were recorded against Ordinary Income of ¥691.8B, resulting in a conversion rate to Net Income attributable to owners of the parent of only 72.9%.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Both the Operating Income margin and Net Income margin exceed the industry median, indicating that profitability is relatively favorable within the industry.

Growth and Capital Efficiency

The Revenue growth rate exceeds the industry median but remains below the upper bound of the IQR (19.9%).

※Source: Compiled by the Company

Key Takeaways from the Results

1. The increased high-margin contribution of the Games Business (margin of 26.3%) has pushed the Company-wide Operating Income margin up to 9.5%. The shift in the center of profit contribution within the business portfolio from Advertising to Games represents a structural change.

2. Progress toward the full-year forecast is approximately 88% for both Operating Income and Ordinary Income, exceeding the standard progress rate of 75%. This is consistent with the revisions made to the earnings forecast and dividend forecast during the current quarter.

3. The conversion rate from Ordinary Income to Net Income attributable to owners of the parent was only 72.9%, indicating a structure in which the tax burden and profit attributable to non-controlling interests constrain the growth in Net Income.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson type, with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥672–¥713 at ±1% for the cost of equity, and ¥690–¥696 at ±0.1 for ω.

Notes:

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

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This figure does not predict or guarantee future share prices)

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings release 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, after consulting a professional as necessary.

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