CTW Class A Ordinary Shares Fireside chat
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Transcript
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Patrick, thanks so much for joining us.
Thank you, Aaron. Thank you for having me, and also thank you to AGP for hosting us here. I think before we begin, for today's discussion, there are going to be some forward-looking statements about the company, so the app results may differ. And those are the things that we have in our SEC filings and since. I am looking forward to also the company CTW and the platform we are building here.
Absolutely. And those should be popping up on the screen. Patrick, maybe to start things off, could you give a brief overview of the CTW story, as some of the listeners may be new to the name?
Yeah, sure. CTW, we turn licensed Japanese anime and manga IP into free-to-play games. You can play instantly in the browser with no downloads, no App Store, and no registration. Our platform is actually called the G123, the domain name g123.jp, which launched in Japan in 2018, and we did add English to the platform in 2021. We work with anime IP holders and third-party game developers. We secure the IP rights with the IP holders, and we have the developers build the games. We then distribute, market, and operate the games through the platform. We share the in-game purchases with both the IP holders and the game developers. Roughly net of the revenue share with both parties, we retain around 80% of the gross in-game purchases. This model, I think, keeps us asset light.
For early August of 2026, we had licenses with around 30 IP holders, and we have around 42 live games on the platform. We have paying users from more than 180 countries in the world, and also we completed our listing on Nasdaq in August last year. For FY 2025, we have gross in-game purchases around $107 million, and we reported revenue around $90.4 million. That number is actually up by 32% from last fiscal year we reported. We focus on the licensed anime IP and the instant browser access. I think those are the two major differentiators of our platform with all the other gaming platform out there. I think that's the overview of CTW, our story, who we are, what we do.
No, really appreciate that overview, Patrick. And for anyone in the audience, if you have any questions, go ahead and type in the chat box, or you can email me at agray@allianceg.com, and we'll get those questions answered either during or at the end. Maybe let's take a step back and talk about the broader H5 browser game category. How large is it globally? How does it compare to the native mobile gaming, and why do you see it as maybe underexploited relative to App Store gaming?
Yeah. I think from my side, I'm probably going to separate those into what mattered from what our view is, right? Frost & Sullivan cites the top 10 H5 platforms as roughly JPY 954 million of gross billings in 2023. And we ranked the third behind Tencent Games and NetEase Games. Our deck also cites much larger mobile gaming estimates for 2026. But I think that is a very different source here in the definition. I would not calculate an actual market share from the two figures. I won't hand you a precise global H5 market size because all those third-party estimates vary a lot from the actual figure. I think our view is actually very different. Our view is why it fits anime and why it fits our business model.
From our perspective, a fan who sees a clip or a post can play the game actually in a second on any device, and we don't really pay App Store commissions. Our payment processing costs run about 5% of gross in-game purchase amounts. The trade-off is discovery, right? Apps gets the building store traffic, and we buy ours. The underexploited is our thesis, right? Rather than a matter of statistics. We believe anime is going mainstream globally, and our focus is combining licensed anime IP with instant access to the games and a direct distribution relationship with the users who actually love the anime IP content.
Okay, great. I appreciate that, Patrick. You partially answered this, but would ask a little bit further because your games run entirely on the browser with no app presence.
Yep. Maybe speak more to why you built the business this way, which you kind of alluded to, but maybe more in terms of what it means for the economics versus what you would be doing with a typical mobile publisher that gives a cut to the App Store.
Yeah, sure. I think if we are going to go a little bit deeper into this question and talking about economics and the numbers. Firstly, as I think in today's world, we do see for app stores, they could charge commissions up to around 30%, right? That is very typical in today's world in the industry. For us to hosting our own platform without relying any app stores, we basically just immediately waive that 30%. What that 30% could possibly equivalent to is think about our model. So we pay roughly 20% in combination to game developers and the IP holders. Plus on top of that, we also pay roughly 5% to the payment processors, right? So that is around 25%, which is still lower than the straight 30% commissions paid directly to the app stores.
What that gives to us is we do not really pay that 30%, so we are able to retain that 30% for additional reinvestments in pay-to-use acquisition, which is going to be owned by us through our own platform. Also we can use those actual money for continued investment in future titles, future IPs, future games, which going to help us to continue the growth, right? Also beyond that, I think from our perspective, I think over the time, it means we have more resources, more cash we are able to, or we are free to use to actually enhance the platform we own, enhance the relationship with users that we actually own.
I think that actually makes. Yes, number is one thing, but more importantly is actually the fact that through building up this platform, not relying on app stores, make our own platform not reliance on any third-party sources or app stores. I think that is the most important thing.
Well, appreciate that. Going further in terms of that enhanced user experience, another thing you have elected to do is you have chose not to run in-game advertising and more so relying on in-game purchases. Why forgo that revenue stream, and how do you think about the trade-offs and potential incremental average revenue per user that it could unlock?
Yeah. I think from that is actually a very good question. I think for that, it is actually a product and IP decision as much as a financial one. For most of our players, they come to our platform, they come to the games for the characters and the stories. Beyond that, our licensors, the IP holders, they also care very much about their IP and especially how their IP is presented. Interruptive advertisements on our platform in any of the games could possibly chip that experiences and create distractions and shorter user visit times on our platform on the actual in-game content. That is why we rely on in-game purchases where free players can progress meaningfully with optional spending, and also from the economics perspective.
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