What specific metrics does CTW monitor in the first few weeks after a game launch to decide on increasing or decreasing advertising spend?

Post-launch, CTW closely monitors engagement and monetization data, including user acquisition, character creation, first retention, paying user conversion, early monetization trends, and expected ROAS. These indicators help assess user attraction, retention, conversion to spending, and justify additional marketing investment. Ad spend decisions are game-specific, increasing for attractive returns and adjusting for underperformance. “we look closely at engagement and monetization data, something like user acquisition and character creation data, the first 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.”

Are recent regulatory changes regarding app store payments increasing interest from publishers and IP owners in CTW's browser-based game distribution platform?

CTW has observed increased interest from game developers and publishers in distribution channels outside traditional app stores due to rising competitiveness. Regulatory developments further support this trend. CTW's browser-based G123 platform offers global accessibility, no app downloads, and direct third-party payment processing, providing unique advantages. This creates opportunities to expand developer relationships and engage larger, more established game developers. “we do see some of the more and more developers who are actually increasingly interested in exploring some alternative ways to reach users improves some distribution efficiencies and manage platform with the cost.”

Did Anime NYC lead to any noticeable changes in website traffic or business development opportunities, and what types of professionals attended?

Anime NYC was CTW's first active participation in a large North American convention, aimed at brand awareness and understanding local market needs. While specific website traffic metrics were not disclosed, the event provided valuable interactions with Anime fans and industry professionals (licensing, gaming) to gain insights into North American audience preferences. These initiatives contribute to long-term growth in the region. “From our side, we don't really disclose event-specific website traffic metrics or anything quantifying immediate impact at the current state.”

CTW

CTW (CTW) FY26 earnings call: guidance and Q&A

Earnings call· Jul 2026 (FY26)· Oct 16, 2026

Source: earnings call transcript

Executive summary

CTW FY26 — Strategic Shift to Profitability and International Growth Amidst Revenue Decline

CTW strategically pivoted to prioritize returns over top-line growth in fiscal year 2026, resulting in a revenue decline but improved segment profitability and efficient marketing spend. The company maintained a strong balance sheet and focused on international expansion and platform development, while navigating challenges from underperforming new titles and a shrinking overall user base. Management anticipates a return to sustained growth in the upcoming fiscal year, driven by new titles and global initiatives.

Highlights

Segment profit increased 3% to $32.3 million, representing 33.4% of in-game purchases, up from 29.3% in FY25.
Return on Ad Spend (ROAS) remained above the 100% benchmark at 105.8%, indicating efficient user acquisition.
The company ended the fiscal year with $14.4 million in cash and cash equivalents and no debt.
Revenue from users outside of Japan increased 8.2% to $29.7 million, now comprising 36% of total revenue, up from 30.4% last year.
Paying monthly active users (PMAU) increased slightly to approximately 89,100, compared with 88,500 last year.

Concerns

Revenue for fiscal year '26 was $82.5 million, a decrease of 8.7% compared with $90.4 million in fiscal year '25.
Monthly active users (MAU) declined 33% to approximately 2.26 million from 3.38 million last year.
The company reported an operating loss of $7.3 million, compared with an operating loss of $1.1 million in fiscal year '25.
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.
CTW recognized approximately $2.6 million in impairments for advances to game developers in FY26.

Guidance & targets

Category	Target	Timeline	Confidence
General and administrative expenses	Increase only modestly in absolute terms medium materiality	Long-term	Medium
North America revenue growth	Return to growth medium materiality	Future	Medium
Total revenue growth	Return to sustained growth high materiality	FY27	High
Capitalized software amortization	Roughly $1 million annually low materiality	Next 2 fiscal years · FY27, FY28	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Outside of Japan Reflects progress in geographic diversification. Percentage of total revenue: 36% (up from 30.4% last year)	$29.7M	8.2%	—	—
South Korea Contributed to overall Asian market growth outside Japan.	$10.5M	12.4%	—	—
Taiwan, Hong Kong, Macau Strong growth in these collective markets.	$8M	71.2%	—	—
Combined Asia (ex-Japan) Encouraging momentum in Asian markets outside of Japan. Percentage of total revenue: 22.4% (up from 15.5% last year)	$18.5M	31.9%	—	—
North America Revenue declined due to reduced user acquisition spending on underperforming titles; building presence is a long-term effort. Revenue last year: $7.5M	$6.2M	—	—	—
Japan Remains the largest market, but international expansion is a key strategic priority.	$52.8M	-16.1%	—	—

Product announcements

Product	Type	Timeline	Details
High School of the Dead, Day Zero	launch	end of April FY26
G123 platform development	update	—

Deals & partnerships

38 Anime IP holders Partnerships for game development and distribution based on Anime IP.

As of the end of fiscal year '26, CTW had partnerships with 38 Anime IP holders and had 48 IP licenses.

Risks & headwinds

Revenue Decline FY26

Total revenue decreased 8.7% to $82.5 million in FY26.

Mitigation:Strategic shift to prioritize returns over top-line growth, reducing advertising for underperforming titles.

Underperforming New Titles FY26

Titles launched in the first half of FY26 performed below expectations.

Mitigation:Quickly scaled back marketing for underperforming titles; ROAS-focused marketing strategy.

Monthly Active User (MAU) Decline FY26

Monthly active users declined 33% to 2.26 million.

Mitigation:Decline concentrated among non-paying users; focus on converting free users to paying users and retaining them; exploring new user acquisition channels.

Operating and Net Loss FY26

Operating loss increased to $7.3 million (from $1.1 million loss in FY25); net loss was $4.1 million ($0.07 per share).

Mitigation:Continued investment in headcount, platform development, and global expansion while maintaining positive adjusted EBITDA.

Impairment Risk on Developer Advances FY26

Recognized $2.6 million in impairments for advances to game developers in FY26.

Mitigation:Selective evaluation of IP appeal, developer capabilities, and historical track record; managing advances as part of a broader portfolio strategy.

Average Revenue Per Paying Monthly Active User (ARPMAU) Decline FY26

ARPMAU declined to $90.60 from $100.74.

Mitigation:Partly attributed to weaker performance of first-half launches; focus on game quality, user engagement, retention, and monetization.

What to watch next

Sustained growth

FY27

Current Revenue declined 8.7% in FY26

Target Return to sustained growth

Why it matters

This is the core strategic objective for the company's future performance and overall investment thesis.

with a vision to return to sustained growth in fiscal year 2027.

Find out whether CTW delivers this. Inve re-checks your case every morning.

Q&A highlights

How does CTW evaluate new vs. old Anime IP and original games for licensing, and what factors determine success relative to cost?

CTW does not view new or old IP as inherently superior; evaluation considers fanbase, monetization potential relative to cost (royalties, advances), and game quality. Successful games capture IP characteristics and offer good gameplay. An older Manga-based game, 'High School of the Dead, Day Zero,' generated $6 million in three months, demonstrating the potential of established catalog IP. The company maintains a diversified content approach.

“I think this is actually a great example that demonstrates that establishes catalog IP with dedicated fund communities, can continue to offer meaningful opportunities, even though the Manga, the TV adoption of this Anime was almost over 10 years ago from right now.”

asked by Vincent Fernando · answered by Patrick Liu

2 min read 7 chapters

Detailed narrative

Strategic Shift to Profitability

CTW implemented a strategy in FY26 prioritizing returns over top-line growth, leading to a revenue decline of 8.7% to $82.5 million. This approach involved quickly scaling back advertising for underperforming titles, maintaining ROAS above 100%, and investing selectively. Despite the revenue dip, segment profit grew 3% to $32.3 million, and adjusted EBITDA remained positive at $3.5 million, demonstrating the responsiveness of their operating model.

Geographic Diversification

The company made significant progress in international markets, with revenue from users outside Japan increasing 8.2% to $29.7 million, now representing 36% of total revenue. South Korea revenue grew 12.4% to $10.5 million, and Taiwan, Hong Kong, and Macau collectively saw a 71.2% increase to $8 million.

Combined, these Asian markets grew 31.9% to $18.5 million, indicating strong momentum and room for further growth based on Anime appeal.

User Base Dynamics

While overall Monthly Active Users (MAU) declined 33% to 2.26 million, this reduction was concentrated among non-paying users. Paying Monthly Active Users (PMAU) slightly increased to 89,100, improving the ratio of PMAU to MAU from 2.62% to 3.95%. Average Revenue Per Paying Monthly Active User (ARPMAU) declined to $90.60 from $100.74, partly attributed to weaker performance of first-half game launches.

Content and IP Strategy

CTW launched 15 new games in FY26, ending the year with 42 live titles. The company maintains a diversified approach to content selection, balancing well-known Anime IPs, established catalog IPs, and original games. The success of "High School of the Dead, Day Zero," based on an older Manga, which generated approximately $6 million in just over three months, demonstrated that established IPs with dedicated fan bases can still offer significant commercial potential.

Marketing and User Acquisition Discipline

The company's ROAS-focused marketing strategy led to a 17.2% decrease in sales and marketing expenses, with advertising spend reduced by 21.7% to $41 million. This reduction was intentional for titles not meeting internal performance thresholds, ensuring that in-game purchases from newly acquired users continued to exceed advertising costs.

CTW is also exploring new marketing channels like OEM distribution and collaborations with content creators to diversify reach.

Platform and Technology Investment

CTW capitalized $4.1 million in internal use software development costs for its G123 platform, reflecting ongoing investment in infrastructure, features, and automation. These developments aim to streamline workflows, support larger operations with existing resources, and improve efficiency in game launches, user acquisition, and performance monitoring, including future AI-enabled tools and data analytics capabilities.

Browser-Based Platform Advantage

Recent regulatory developments regarding app store payments are increasing interest from game developers in alternative distribution channels. CTW's browser-based G123 platform, operating independently from traditional app stores, offers global accessibility without app downloads and direct third-party payment processing. This unique positioning creates opportunities for CTW to expand its developer and publisher network, potentially engaging larger, more established game developers.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.