CTW Class A Ordinary Shares 2026 H2 Earnings Call

Please be aware that today's discussion may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These statements reflect management's current expectations and involve risks and uncertainties that could cause actual results to differ materially. CTW undertakes no obligation to update these statements except as required by law. For a detailed discussion of risks and uncertainties, please refer to our Form 20-F filed yesterday and our other filings with the SEC. We will also discuss certain non-GAAP financial measures. These measures should not be viewed as a substitute for GAAP results and may differ from those used by other companies. Reconciliations to the most comparable GAAP measures can be found in our earnings release and our Form 6-K filed yesterday and on the investor section of our website. With that, I will now turn the call over to Ryuichi.

皆様、本日はCTWの決算説明会にご参加いただき、誠にありがとうございます。2026年7月期は、CTWにとって上場企業として初めての決算期であり、重要な1年となりました。同時に、経営として明確な選択をした1年でもあります。売上を伸ばすことだけを追うのではなく、成長の質と投下資本に対するリターンを優先しました。 今回の決算には、その判断の両面が表れています。売上高は前期を下回り、業績予想を下回る結果となりました。一方で、広告費を大幅に削減しながら、広告費に対するゲーム内課金額の比率であるROASを基準とする100%以上に維持いたしました。また、セグメント利益を増加させ、有利子負債のない財務体質を維持いたしました。 そして、2026年7月期に進めた取り組みは、2026年7月期以降、より力強く、規律を持って成長を目指すための基盤を構築するものであったと考えております。 初めて当社の説明をお聞きになる皆様に、事業の概要をご紹介します。CTWは、日本のアニメIPの正式なライセンスを取得した、基本プレイ無料のゲームを提供するブラウザゲームプラットフォーム「G123」を運営しています。 モバイルユーザーを中心に、アプリをダウンロードすることなく、ブラウザが使える様々な端末から、わずか数秒でゲームを始められるサービスです。アニメのIPホルダーや外部のゲーム開発会社と連携し、世界中のアニメファンにゲームを届けています。 また、社内のデータシステムを活用して、各タイトルの実績を評価し、コンテンツやマーケティングへの投資配分を判断しています。それでは、当期の業績と事業の状況についてご説明します。2026年7月期には、『学園黙示録 High School of the Dead Day 0』や『薬屋のひとりごと～後宮異聞録～』など15本の新作ゲームをリリースしました。 期末時点の稼働タイトルは42本で、さらに16本がリリース待ち、または事前登録の段階にありました。しかし、上期にリリースした複数のタイトルが計画を下回りました。また、一部の既存タイトルでは、運営期間が長くなるにつれて成長が緩やかになりました。これらがユーザーの利用状況と売上の両方に影響しました。 こうした状況に対し、社内の実績基準を満たしていないタイトルへの積極的な広告投資を続けることはしませんでした。その代わりに、ユーザー獲得費用を意図的に抑え、より高いリターンが期待できる機会へ資金を振り向けました。このように、実績に応じて投資を調整する規律は、当社のビジネスモデルの重要な要素です。 当期の広告費は、前期比で$11.4百万、率にして22%削減しました。この削減率は、売上高の減少率の2倍以上です。ROASを基準の100%以上に保つため、広告費を抑えました。当期のROASは105.8%となり、獲得したユーザーによるゲーム内課金額が、そのユーザーの獲得に要した広告費を上回りました。 各タイトルをROASに基づいて評価し、その結果に応じてユーザー獲得費用を増減させることが、当社のマーケティング戦略の基本です。ユーザー基盤の質という点では、前向きな動きも見られました。当期のユーザー動向には、広告費削減の影響と改善すべき課題の両方が表れています。 全体の利用は減少しましたが、月間課金ユーザー数はおおむね安定しており、月間アクティブユーザーに占める課金ユーザーの割合は上昇しました。一方、日次の課金動向と月間課金ユーザー1人当たりの平均支出は軟調に推移いたしました。これには、上期にリリースしたタイトルの低調な実績が一部影響したと考えております。 こうした動向を踏まえ、今後のタイトルラインアップを充実させ、ユーザーの継続的な利用を促しながら、持続的な成長につなげることが重要だと考えています。 その一方で、月間アクティブユーザー1人当たりの平均収益を示すARPMAUと、日次課金アクティブユーザー1人当たりの平均収益を示すARPPDAUは、いずれも前期から改善しました。2026年7月期は、ユーザー数の拡大という点では厳しい1年でしたが、プラットフォームの収益化を支える基盤は引き続き健全であると考えています。 投資の規律はセグメントの収益性向上にもつながりました。セグメント利益は、前期比3%増の$3,230万となりました。ゲーム内課金額に対するセグメント利益の割合は、前期の29.3%から33.4%に改善しました。同時に、CTWの次の成長段階に向けた投資も続けました。 今後数年間の事業運営を支えられる持続可能な水準まで人員体制を整え、ニューヨークのOne World Trade Centerに当社初の北米拠点を開設しました。また、G123への投資を継続するとともに、上場企業として必要な管理基盤の整備を進めました。 こうした投資に加え、プラットフォームの拡充や海外展開に向けた取り組み、サーバーおよびプラットフォームの運営費用の増加、上場企業としての運営費用などにより、当期は営業損失を計上しました。ただし、調整後EBITDAは$3.5百万のプラスを維持しました。また、期末の現金残高は$14.4百万で、有利子負債はありません。 北米の売上高は当期に減少しました。主な要因は、当社のリターン基準を満たしていないタイトルのユーザー獲得費用を抑えたことです。これは、規律ある資本配分に伴う一時的な影響と捉えており、北米市場に対する長期的な見方は変わっていません。 北米は引き続き、CTWにとって大きな成長機会のある市場です。2月に発足したニューヨークのチームは、パートナーシップ、ローカライゼーション、ユーザー獲得、企業広報に取り組んでいます。北米のユーザーやパートナーに対するCTWの認知と存在感を高めていきます。 当社のブラウザを通じた提供モデルは、海外市場で特に魅力を発揮できると考えています。従来のアプリのダウンロードや登録に伴う手間を減らし、様々な端末からすぐにゲームを楽しんでいただけるためです。 事業面での取り組みに加え、この1年はCTWにとって重要な節目が続きました。2025年8月には、NASDAQ Capital Marketへの新規上場を果たしました。2026年2月には、One World Trade Centerに北米での活動の中核となるニューヨーク拠点を開設しました。5月には、CTW CaymanからCTWへの社名変更が株主総会で承認されました。 そして8月には、米国東海岸最大のアニメイベントであるAnime NYCに来場者登録スポンサーとして参加しました。今後に目を向けると、2027年7月期に最も重要となるのは、新作タイトルラインアップの質だと考えています。 世界中で親しまれ、高い知名度を持つアニメIPを題材としたタイトルを含め、16本がリリース待ち、または事前登録の段階にある状態で新しい期を迎えました。 中でも『少年魔法少女 High School DxD ZERO』は、2026年4月下旬のリリース後、3ヶ月以内に月間ゲーム内課金額で当社トップのタイトルとなりました。2026年7月期の終盤にリリースされたため、通期業績に反映された成果はまだ限定的でした。G123でのリリース以降、欧米市場では同タイトルに対する強い関心と活発な利用が見られました。 ここで得られた知見やユーザーの嗜好に関するデータは、今後、北米で新作タイトルを展開する際のターゲティングに役立ちます。アジア市場でも手応えを得ています。 このタイトルの実績に加え、今後のタイトルラインアップ全体と規律あるユーザー獲得への取り組みが、持続的な成長への回帰に対する私たちの自信を支えています。2027年7月期の重点方針は以下の通りです。第1に、新作タイトルラインアップの質を高め、継続して良質なゲームを提供していきます。 第2に、日本のIPに対する需要が強い海外市場で当社の事業を拡大していきます。第3に、効率よく事業を拡大し、コンテンツやマーケティングについて迅速に判断するため、技術とデータシステムへの投資を続けます。 そして第4に、成長そのものを目的とするのではなく、持続可能なリターンを重視し、規律ある資本配分を維持します。世界各地で働く従業員の皆さんには、CTWの成長を支える日々の努力と献身に心から感謝しています。2026年7月期は、タイトルが期待通りの成果を上げられない場合にも、迅速に対応できることを示した1年でした。 支出を削減し、投資リターンを守り、調整後EBITDAのプラスと有利子負債のない健全な財務基盤を維持しました。2026年7月期はこの規律を土台に、タイトルラインアップの充実と海外市場での事業拡大を進め、上場企業としての最初の1年で得た学びを生かしていきます。 これにより、CTWは持続的な成長への回帰に向けて、より強固な基盤を築くことができていると考えております。株主の皆様には、CTWのさらなる発展に向けて引き続きご支援をいただいていることに心よりお礼申し上げます。本日はお時間をいただき、またCTWにご関心を寄せいただき、誠にありがとうございました。 それでは、最高財務責任者のPatrick Liuに業績説明を引き継ぎます。 Thank you, Ryuichi.

Good morning and good evening, everyone. As Ryuichi mentioned, prioritizing returns over top-line growth is central to our strategy. From a financial standpoint, that ongoing discipline guided our full priorities in fiscal year 2026: moving quickly on new titles that underperformed, keeping our advertising spend above our return threshold, investing selectively in our platform and global expansion, and maintaining a strong debt-free balance sheet. The results reflect those choices. Revenue declined, but segment profits grew. ROAS stayed above our 100% benchmark. Adjusted EBITDA remained positive, and we ended the year with $14.4 million in cash and cash equivalents and no debt. Revenue for fiscal year 2026 was $82.5 million, compared with $90.4 million in fiscal year 2025, a decrease of 8.7%. Gross in-game purchases were $96.8 million, down 9.5% year over year. We launched 15 new games during the year and ended fiscal year 2026 with 42 active titles. However, the titles we launched in the first half performed below our expectations, and several mature titles continued moving through the later stages of their life cycle. We saw success in the launch of High School of the Dead Day 0, which was released toward the end of April, meaning slightly over three months of contribution was recognized in fiscal year 2026. The strong user traction we have seen to date in Asia and North America with this title is only partially realized in these results. Within our user base, the decline in activity was concentrated among non-paying users. Monthly active users declined 33% to approximately 2.26 million from approximately 3.38 million last year, while paying monthly active users increased slightly to approximately 89.1 thousand, compared with approximately 88.5 thousand last year. As a result, the ratio of paying monthly active users to monthly active users improved to 3.95% from 2.62%. Paying daily active users declined 13%, compared with a 7% decrease in overall daily active users, while average revenue per paying monthly active users declined to $90.60 from $100.74. We believe these trends partially reflect the weaker performance of our first half launches. ROAS was 105.8% in fiscal year 2026, compared with 116.4% in fiscal year 2025. While lower than last year, ROAS remained above our 100% benchmark, meaning the in-game purchases generated by newly acquired users continued to exceed the advertising spend used to acquire them. This supports our long-term ROAS-focused marketing strategy. We also continued to make progress on geographic diversification. Revenue from users outside of Japan increased 8.2% to $29.7 million, or 36% of our total revenue, up from 30.4% last year. Revenue from users in South Korea increased 12.4% to $10.5 million, and revenue from users in Taiwan, Hong Kong, and Macau collectively increased 71.2% to $8 million. It is encouraging to see this momentum in Asia outside of Japan. Combined revenue from users in these markets grew 31.9% to $18.5 million, or 22.4% of total revenue, up from 15.5% last year. We believe the appeal of anime across the region gives us room to build on this growth. Revenue from users in North America, which includes the United States and Canada, was $6.2 million, compared with $7.5 million last year. Our results have reflected reduced user acquisition spending on underperforming titles. Building our presence in North America is a long-term effort, and our New York team, established in February 2026, is focused on partnerships, user acquisition in that region, localization efforts, and corporate communications. We expect to see a return to growth as we issue new titles and continue to implement our presence and growth initiatives in the region. Revenue from users in Japan decreased 16.1% to $52.8 million. Japan remains our largest market, but expanding our international mix remains a key strategic priority. Turning to expenses and profitability, cost of revenue increased 29.2% year over year to $28.5 million, driven largely by higher personnel, outsourcing, and server and software costs, along with higher revenue share to IP holders and amortization, partly offset by lower payment processing fees and the absence of the prior year prepaid royalty impairment. These increases reflect our continued investment in the team, infrastructure, and external creative resources that support our platform and game operations. General and administrative expenses increased 37.9% to $11.7 million, primarily reflecting the buildup of our corporate and administrative functions as a public company, the opening of our New York City office, and approximately $0.5 million of Taiwan business tax expense, a portion of which related to prior periods. We believe the core infrastructure required of a public company is now largely in place, and we expect general and administrative expenses to increase only modestly in absolute terms over time as the business scales. Research and development expenses decreased 31.2% to $3.8 million. Sales and marketing expenses decreased 17.2% to $45.9 million, driven by an $11.4 million, or 21.7%, reduction in advertising expense to $41 million. Advertising declined at more than twice the rate of revenue. This reduction was intentional. When titles did not meet our internal performance thresholds, we scaled back marketing rather than pursue top-line growth at unattractive returns. As a result, segment profits increased 3% to $32.3 million, or 33.4% of in-game purchases, compared with $31.3 million, or 29.3% of in-game purchases in fiscal year 2025, as lower advertising expense more than offset lower in-game purchases and higher server costs. We reported an operating loss of $7.3 million, compared with an operating loss of $1.1 million in fiscal year 2025. Net loss was $4.1 million, or $0.07 per share, compared with net income of $3.8 million, or $0.06 per share last year. Fiscal year 2025 net income included a $4.7 million contingent gain on recovery of previously impaired assets, and fiscal year 2026 included an income tax benefit of $1.7 million. There are also two items worth noting for the year. First, we recorded $2 million of non-cash share-based compensation expense compared to none in fiscal year 2025, most of which related to share options granted to directors, executive officers, and certain employees in December 2025 in recognition of their long-term commitment to the company and efforts in successfully launching our IPO. Second, following our early adoption of ASU 2025-06, effective August 1st, 2025, we capitalized $4.1 million of internal-use software development cost for our G123 platform. Both items are relevant to understanding the year-over-year financial profile and the level of ongoing investment in the business. On a non-GAAP basis, adjusted EBITDA was $3.5 million, or 4.2% of revenue, compared with $8 million, or 8.8% of revenue in fiscal year 2025. We remained adjusted EBITDA positive while reducing advertising spend and continuing to invest in headcount, platform development, and our global expansion initiative. Turning to cash flow and balance sheet, net cash used in operating activities was $3.2 million, compared with $0.1 million of cash provided in fiscal year 2025. This change reflected our net loss and working capital movements, including $6 million of advances to our game developers as we invest in future content. Net cash used in investing activities was $4.7 million, including the $4.1 million of capitalized software development cost. We ended fiscal year 2026 with $14.4 million in cash and cash equivalents, up from $12.2 million at July 31st, 2025, and supported by $10.6 million of net proceeds received at the closing of our IPO. We believe this positions us to continue investing selectively in content, systems, and international growth while maintaining strong liquidity and financial discipline. Overall, fiscal year 2026 was a year of softer top-line performance, but also one that demonstrated the responsiveness of our operating model. We acted quickly when new title performance did not meet expectations, reduced advertising significantly while keeping ROAS above our 100% benchmark, grew segment profits, and maintained positive adjusted EBITDA and a debt-free balance sheet, with a vision to return to sustained growth in fiscal year 2027. Thank you for your time and interest in CTW. I will now turn the call back to Pat for our Q&A session.

Thank you, Patrick. We're now going to open up the Q&A session. From Zoom, there are two ways that you can participate. The first is to use the Raise Your Hand icon, which is at the bottom of your screen. Clicking this will alert us that you want to be called on to ask a live question, and you'll be placed into a queue and then called on from there. Just note that participants will remain on mute and called on in order that they file into the queue. The second way to participate in today's Q&A is to use the Q&A widget, which will allow you to type in and submit a question. We will take questions from there as well, but just note if we run into a time constraint, we'll be sure to get back to you if your question is not asked on today's call. With that, we'll now take a quick pause and allow the queue to build. Okay, looks like we have a few questions here. We're going to begin with Vincent Fernando from Zero One Research. Vincent, you should now be on the line.

Thank you very much, Vincent. I'm going to respond to this question. First of all, I do want to let you know, from our perspective, we do not necessarily view newer anime IP or established catalog titles or original games as inherently more attractive than the other ones. I think each anime title, each anime IP has its unique characteristics, cost structures, and potential audiences. From the company perspective, when we evaluate content opportunities, we consider a range of factors, including the popularity and engagement of the underlying fan base, expected monetization relative to the cost of licensing and launching the game, which includes the prepaid royalties, the royalty rate, revenue share rate, and advance to the game developers. As of the end of fiscal year '26, we had partnerships with 38 anime IP holders and have 48 IP licenses. I think from our prior experiences launching the IP-based games, we see that the age or the recency of an IP does not necessarily determine its commercial potential. For example, High School of the Dead Day 0, which is based on a manga first serialized back in 2006 and adapted for television in 2010, generated approximately $6 million in its first three-plus months launch. The game itself actually became the highest revenue-generating game on our platform over that period. I think this is actually a great example that demonstrates that established catalog IPs with dedicated fan communities can continue to offer meaningful opportunities, even though the manga and the TV adaptation of this anime was almost over 10 years old. Beyond the popularity of the original IP, we also learned that successful game performance also depends heavily on how well the game captures the characteristics that fans appreciate about original content. Beyond that, users also care a lot about overall quality of the gameplay, the overall user engagement, and monetization. That means sometimes even a very highly popular IP may not necessarily translate into a very successful game if the game experience does not meet the users' expectations. We also recognize that sometimes different genres and different gameplay mechanics may appeal to different audiences and geographic markets. Looking ahead, we intend to maintain a diversified approach to content selection, balancing well-known anime IPs and properties, established catalog IPs and opportunities involving original games or different game genres. From the company side, we will continue working closely with our IP and developer partners to evaluate the commercial potential of each opportunity and draw on our experiences from prior launches and game operations to help us continue to grow the platform and grow the business. The objective is very clear. We don't just want to secure the most recognizable IPs, but we want to identify the content that can deliver attractive user engagement and sustainable monetization relative to the investments required.

Thank you. Thank you for the question.

From our perspective, after a game is launched, in the very first few weeks after launch, we look closely at engagement and monetization data, something like user acquisition and character creation data, the first-day retention, paying user conversion, and some other early monetization trends, and also most importantly, the expected ROAS of our advertisement spending on the new launches. We believe that these indicators help us assess how well a game is attracting and retaining users, and also, most importantly, how effectively it converts interest into actual spending and whether its performance supports additional marketing investments. We typically try to form an initial view of a new launch within the first few weeks. But after the game launches and operates on the platform, we definitely will continue to monitor the performance of the games and refine our assessment as more operating data became available to us. From a company perspective, our approach to user acquisition is basically, as you said, and also we talked about this a lot during the earnings call, we approach user acquisition driven by the actual performance of individual games rather than a single platform-wide advertising decision. Basically, that means for each individual title that launched and operated on the platform, we actually evaluated actual and expected ROAS and other operating KPIs to determine whether we want to invest additional marketing investment and whether those additional investments are actually justified. When a game demonstrates attractive returns, we generally seek to increase advertising investment to capture additional monetization opportunities. But sometimes, we do see, for whatever reason, some of the games are not performing as we expected, the performance falls below the expectation. At that moment, we will adjust the spending accordingly. I think this is actually exactly what we have experienced for fiscal year '26, and also we do believe this discipline will continually carry us into fiscal year '27.

Thank you. This is actually a quite interesting question. We have actually talked with a lot of industry players, especially on the gaming studio and game development partner side. We believe over the past few years, we have observed some increasing interest from game developers and publishers in distribution channels outside of the traditional App Store ecosystem. Through today, we still believe that app stores remain as one of the important distribution channels for a lot of the game distributors and the gaming studios. But the App Store has become increasingly competitive today, especially considering the large number of games right now available through app stores. As a result of that, we do see more and more developers are actually increasingly interested in exploring some alternative ways to reach users, improve some distribution efficiencies, and manage platform costs. We believe that the recent regulatory developments, as you mentioned, actually further support this broader trend that we observed from our side. I think this actually gives some unique advantages to our browser-based platform, because G123 was designed from the beginning as a browser-based gaming platform and operating independently from the traditional App Store ecosystem. Our games can be accessible globally across devices, and we don't need app downloads, and we process in-game purchases through established third-party payment providers that are connected directly with our platform. Beyond just the global accessibility, we also offer some additional benefits to game developers and game studios. Beyond just the distribution, we also offer our game development partners user acquisition and marketing capabilities, and we also support game developers in designing their games, and we provide localization services, and we also give them access to established anime and manga IPs. From our perspective, we believe these in combination represent some very attractive value for all the game developers and publishers in the world. This basically also means that from the company side, from CTW's side, we believe the growing interest in alternative distribution models and channels actually creates some additional opportunities for CTW to expand our developer and publisher relationship networks. In particular, I think it may allow us to engage with some larger and more established game developers that have traditionally focused more on just the native app distribution. I think that's actually what we expect to see in the near future.

From our side, based on our observation, we do see there are more and more IP holders that became more interested in exploring other potential monetization channels and distribution channels. From our side, we don't necessarily think that there are direct connections or incentives for the IP holders to seek distribution channels outside of traditional App Stores, just because of the recent regulatory updates. From our perspective, we have been seeing — and I think this is actually what will continue to be part of the truth — that from the IP holder side, they always want to have diversified monetization channels and approaches. That means because the platform we have built is totally outside of the traditional App Store ecosystems, that's always going to be something valuable for the IP holders to consider when they explore the different monetization opportunities beyond the traditional App Store distribution channels. From that perspective, from our side, we will continually contact and connect with new IP holders whenever opportunities come, and beyond just the traditional Japanese manga IP holders and anime IP holders. We may, from time to time, depending on market conditions and opportunities, also explore other IP holders outside of Japan as well.