CTW (CTW) Q4 2026 earnings review
CTW kept its paying users, but new games earned less
CTW's new games earned less than last year's, so it cut advertising and lost money for the year. Revenue fell 9% and the company swung to a $4.1 million loss. Chief executive Ryuichi Sasaki said several releases "did not achieve the engagement and monetization we expected". The exception, High School of the Dead Day 0, became the platform's best seller within three months.
| Revenue | $82.5M −9% from a year ago |
|---|---|
| Net result | $4.1M loss $3.8M profit a year ago |
| Segment profit as a share of player purchases | 33.4% 29.3% a year ago |
| Outlook for fiscal 2027 | None given |
⚖️ Verdict: 🔴 Bearish
The story got worse because CTW's results now depend on one game, and its fourteen other launches this year showed how often a launch fails. The bad news: staff and server costs grew while sales fell, so the business consumed cash. One positive: paying users held at about 89,000 even as the company bought far fewer ads.
The question now is whether CTW can repeat the April launch or whether it was a one-off. Either tighter game selection makes hits more frequent, or the hit rate stays at one in fifteen and the loss widens. Revenue per new game in the first-half report, covering August to January, will tell.
🐂 Bull Case
One April Launch Became CTW's Best-Selling Game
CTW runs G123.jp, a website where people play games based on Japanese anime without downloading anything. High School of the Dead Day 0 launched on April 28 and earned about $6.0 million by the end of July. That is roughly $2.0 million a month, and it passed Vivid Army as the platform's top earner.
Chief executive Ryuichi Sasaki said the title showed what "the right combination of recognizable IP, compelling gameplay, and effective execution" can do. When a game sells, Sasaki said, "we direct marketing investment toward it to scale its audience". By our math the game produced about 14% of second-half revenue.
This matters because a few games decide CTW's results: fifteen launched this year, and this one brought in more than a quarter of their combined sales by our math. Sasaki said the lesson is to become "more focused on the games we bring to G123", so the next launches will test that promise.
What to watch: monthly revenue from High School of the Dead in the first-half report. A figure near $2 million would mean the game can fund the marketing behind the 16 titles in backlog.
Advertising Cuts Lifted Profit Despite Lower Sales
CTW buys online ads to bring players to its games and tracks what those players spend against the ad bill. When new games fell short, "we reduced advertising spending quickly", Sasaki said, and the cut was larger than the loss of sales.
Segment profit is what remains of player purchases after developer shares, payment fees, advertising and server costs. It rose for the year despite lower sales, because advertising dropped 22% while player purchases slipped 10%.
- Advertising: $41.0 million, down $11.4 million from a year ago
- Segment profit: $32.3 million, up 3%
- Segment profit as a share of purchases: 33.4%, from 29.3%
- Second-half share: 29.6%, as CTW spent again behind its new hit, by our math
What to watch: segment profit as a share of purchases in the first-half report. A reading back above a third would show the renewed marketing behind High School of the Dead is paying for itself.
Sales Outside Japan Grew While Japan Shrank
CTW's games come from Japanese anime, and most of its players live in Japan. That base is shrinking: Japanese revenue fell 16% to $52.8 million by our math. Players elsewhere offset part of the drop.
- Revenue outside Japan: $29.7 million, up 8%
- Share of total revenue: 36%, from 30%
- South Korea: up 12%
- Taiwan, Hong Kong and Macau: up 71% together
In February CTW opened its first North American office, in New York. Sasaki said the office gives "greater ability to localize our content and marketing in Western markets". This matters because international sales grew in a year when total revenue fell, so it is the one line that grew without a new hit.
What to watch: the share of revenue from outside Japan in the first-half report. A figure above 40% would show the New York team is winning players, not only adding cost.
🐻 Bear Case
Paying Users Stayed, but Each One Spent Less
Sasaki said "our paying users remained remarkably resilient", and the count supports him: 89,053 people paid in an average month, up slightly from 88,503. CTW bought fewer ads, so free players left and monthly active users fell 33%.
The company's own table tells a weaker story about those paying users. Each spent less, logged in less often, and fewer stayed after a first purchase, so the base held in number but not in value.
- Monthly spend per paying user: $90.60, down 10% from a year ago
- Second half alone: $78.47, down 18% from the same half a year earlier, by our math
- Daily paying users: 15,152, down 13%
- Paying users who return the day after a first purchase: 57.4%, from 59.6%
This cuts against the resilience claim, because a customer who pays less and visits less is a weaker one. Sasaki acknowledged that "daily engagement, spending per monthly paying user and early-stage retention among paying users were softer". The 35% rise in spend per active user he cites is arithmetic: similar purchases divided by far fewer free players.
What to watch: monthly spend per paying user in the first-half report. A number back above $90 would mean the second-half drop came from launch timing rather than a weaker customer base.
Fifteen New Games Earned Less Than Seven Did
CTW's revenue depends on new game launches, and this year it more than doubled their number. The launches did not deliver, and Sasaki said several releases "did not achieve the engagement and monetization we expected". By our math the problem is the average title, not the count.
- New games launched: 15, from 7 a year earlier
- Revenue from new games: $22.0 million, from $32.3 million
- Revenue per new game: about $1.5 million, from $4.6 million, by our math
- Excluding High School of the Dead: about $1.1 million per game, by our math
This matters because every launch carries an upfront cost: CTW pays developers advances and licence fees before a game earns anything, and writes them off when a game fails. Games already on the platform grew 4.1%, so the shortfall sits entirely in what the company added.
What to watch: revenue from the first games out of the 16-title backlog, in the first-half report. Average revenue per launch above this year's $1.5 million would show the tighter selection Sasaki promised is working.
Staff and Server Costs Turned Profit Into Loss
CTW's advertising cut protected segment profit, but the costs below that line grew. The company hired, rented more servers and took on the overhead of a listed business, so the operating loss widened to $7.3 million from $1.1 million.
- Cost of revenue: 34.5% of revenue, up 10.1 percentage points
- General and administrative: 14.2% of revenue, up 4.8 points, including about $0.5 million of Taiwan business tax
- Payroll: $17.3 million, up 27%
- Servers hosting the games: $3.9 million, up 86%
- Share-based pay: $2.0 million, none a year earlier
This matters because profit before interest, tax, depreciation and one-offs, which CTW calls Adjusted EBITDA, fell 56% to $3.5 million and turned negative in the second half. CTW said the public-company infrastructure is now largely in place and "expects general and administrative expenses to increase only modestly in absolute terms". That promise covers one line; cost of revenue, the larger mover, got none.
What to watch: cost of revenue as a share of revenue in the first-half report. A reading below 30% would show the server and staff build-out has stopped outrunning sales.
Cash Rose Only Because of the Share Listing
CTW ended the year with $14.4 million in cash and no debt, up from $12.2 million. The increase came from the stock market listing, which brought in $10.6 million; the business itself consumed cash.
Operations used $3.2 million, and the company spent a further $4.7 million on investing, mostly capitalised game development. By our math that leaves free cash flow of about minus $7.7 million. The operating figure also got help from timing: unpaid advertising bills rose to $4.8 million from $0.5 million, cash that leaves in the new year.
What to watch: net cash from operations in the first-half report. A figure near zero or better would show the business can fund its launches without drawing on the listing money.
👓 Other Themes
CTW Now Capitalises Development Pay
Research and development expense fell 31% to $3.8 million. CTW said the decrease reflected recording qualifying development payroll as an asset under a new accounting rule, ASU 2025-06, "rather than a reduction in development activity". Capitalised software reached $4.1 million in the cash flow statement, so part of the cost moved from the income statement to the balance sheet.
💲 Other KPIs
Money CTW pays developers up front before their games earn, growing faster than the business: up 23% from a year ago while revenue fell 9%. The company paid $6.0 million of new advances, from $3.9 million. It also wrote off $2.6 million of earlier advances on games that did not pay back.
Purchases by newly acquired players divided by the advertising that brought them, down from 116.4% a year ago. The ratio has fallen in each of the last three half-years, reaching 102.3% in the second half. Above 100% each ad dollar still pays back, but the cushion is thinner.
Up 4% after the listing added 2.4 million Class A shares during the year. A further 2.1 million shares sit in a reserve for staff awards and do not yet count as outstanding. More shares spread any future profit thinner, so per-share results will lag the company's totals.
❓ Key Questions
Will CTW give an outlook for fiscal 2027?
The release contains no revenue, profit or cash forecast for the year ahead. With fifteen launches that fell short, sixteen games in backlog and free cash flow of about minus $7.7 million by our math, readers cannot judge the year without a number.
How much will CTW spend on ads behind its hit?
Unpaid advertising bills rose to $4.8 million at year end from $0.5 million as CTW pushed High School of the Dead. Second-half profit excluding one-offs was already negative, so the size of that push decides whether the loss grows.
Why did spend per paying user fall 18% in the second half?
Monthly purchases per paying user dropped to $78.47 from $96.14 a year earlier, by our math the lowest half on record. Launch timing, weaker games or a changed player mix each imply a different fix, and Sasaki named none.
When will the sixteen backlog games launch?
The backlog is CTW's pipeline, but the company gave no release dates or pace. This year's fifteen launches earned $22.0 million, so the timing and quality of the next batch decide fiscal 2027.
Which costs fall if revenue keeps declining?
Cost of revenue rose 29% and overhead 38% in a year when sales fell. CTW promised only modest growth in overhead; it said nothing about the staff and server costs that drove most of the increase.