Ateam Holdings Co.,Ltd. Q2 FY2026 earnings call

• Overall Consolidated Financial Performance

  • Reported total consolidated revenue of 5.789 billion yen, adjusted EBITDA of 228 million yen, which was broadly in line with management expectations. Net profit decreased year-over-year due to higher common expenses including shareholder benefit costs, and both ordinary profit and net quarterly profit turned negative due to cryptocurrency price fluctuations: ordinary loss of 19 million yen, net quarterly loss of 65 million yen.
  • Progress against the full-year FY2026 consolidated forecast is 46.2% for revenue and 34.4% for adjusted EBITDA, which is aligned with the company's typical full-year skew, as the third quarter is the peak season for its media and solutions business.
  • Cryptocurrency price fluctuation impact: Bitcoin fell from approximately 17 million yen to 12 million yen between Q1 and Q2 FY2026. The price drop created a 186 million yen reversal of sales promotion reserve, reducing operating expenses and leading to an operating profit of 319 million yen. However, a 321 million yen valuation loss on held cryptocurrency resulted in an ordinary loss of 19 million yen.

• Financial Strategy & Capital Structure Policy

  • The company maintains a long-term strategy to drive growth by leveraging leverage to create a cycle of capital raising, growth investment via M&A, and earnings improvement to hit mid-term management plan targets. The company aims to move from an current D/E ratio of 0.3x and cost of capital of 6.5% to a target D/E ratio of 1.4x and cost of capital of 3.5% by increasing borrowing, compressing shareholder equity, and investing in M&A to grow adjusted EBITDA.
  • The company executed 1 billion yen in new borrowings to fund the acquisition of Signity completed on November 20, 2025, advancing the target capital structure as planned, and will continue to execute on this capital policy going forward. If the strategy progresses as planned, the company expects to reach 100 billion yen in interest-bearing debt, 170 billion yen in other non-cash assets (driven by intangible assets including goodwill from M&A), and reduced net equity from ongoing shareholder returns.

• Recent M&A & Acquired Company Updates

  • microCMS (acquired headless SaaS CMS provider): microCMS has grown strongly post-acquisition, with monthly recurring revenue (MRR) increasing 67% since joining the group. The number of client companies has surpassed 13,000, partner agency count has grown to over 100, and corporate sales expansion has driven this strong growth.
  • Paddle (cryptocurrency reward mobile app operator): Paddle launched a U.S. version of its app in July 2025 as part of global expansion, and grew revenue 54% year-over-year following various new tie-up initiatives. Both acquired companies are growing on track post-M&A.

• D2C Business Operational Updates

  • lujo (skincare brand): lujo has delivered strong revenue growth, with cumulative unit sales exceeding 1.8 million units. The brand sells via its own e-commerce site, major e-commerce marketplaces including Rakuten and Amazon, and has recently launched sales through physical retail locations. The company also launched a new hair care brand, Retispa, featuring a popular non-lathering cream shampoo that has seen strong early demand.
  • OBREMO (dog food brand): OBREMO launched a new seasonal vegetable-based wet topping product, "Toro Toro Vegetable Stew", which it sells alongside its core dry kibble product. The line rotates vegetable varieties by season (spring potato, summer paprika, autumn sweet potato, winter pumpkin) to offer seasonal variety for pet dogs.

• Media Business Operational Updates

  • Qiita (engineer technical information sharing platform): Qiita's annual Christmas Advent Calendar event hit all-time records, with 10,645 unique participants and 23,260 submitted articles. AI, machine learning, and data science were the most popular topics in 2025, with participant count growing 2.5x year-over-year and calendar count growing 2x year-over-year for these categories. The platform now has approximately 1.5 million total members.
  • Hikkoshi Samurai (moving comparison and booking site): The service launched a new TV commercial featuring the third generation of its popular "Yoyakyun♡" idol concept, reintroduced as a 9-member idol group "Yoyakyuns♡♡♡♡♡♡♡♡♡". The commercial's original track is now available on karaoke services.

1. Digital Marketing Segment: Revenue of 4.778 billion yen, adjusted EBITDA of 464 million yen, operating profit of 572 million yen. It accounts for 82.5% of total consolidated revenue. The segment saw slight year-over-year and quarter-over-quarter revenue growth: strong performance from D2C skincare and dog food brands offset underperformance at some media assets and the exclusion of Ateam Financy from consolidation following its share transfer. Three additional companies (WCA, Strainer, Signity) were added to the consolidated group via M&A year-over-year, and adjusted EBITDA was flat year-over-year, supported by profit growth from the expanding D2C business.
2. Entertainment Segment: Revenue of 1.011 billion yen, adjusted EBITDA of 158 million yen, operating profit of 158 million yen. It accounts for 17.5% of total consolidated revenue. The segment saw a year-over-year revenue decline due to the downtrend of existing game titles, but revenue increased quarter-over-quarter due to the year-end and New Year holiday peak season. Efficient operation of existing titles and partnership projects offset the downtrend, and the segment maintained overall profitability despite some partnership contracts ending due to external factors. As of the quarter, partnership revenue makes up 18% of total segment revenue, and overseas revenue accounts for 39% of total segment revenue.

• Full-year FY2026 consolidated guidance is maintained at 24.5 billion yen in total revenue and 1.5 billion yen in adjusted EBITDA, with no upward or downward revision from prior forecasts.
• Full-year dividend guidance: The company plans to pay 14.0 yen per share for both the interim and final dividend, for a total annual dividend of 28.0 yen per share, representing an increase from the prior year's total of 22.0 yen per share.
• The company remains on track to hit its mid-term management plan (FY2025-FY2028) shareholder return targets: a total shareholder return of 40 billion yen to 50 billion yen and an average total payout ratio of 100%. It has implemented progressive dividends and will continue to consider opportunistic share buybacks going forward.
• Management expects that both microCMS and Paddle will continue to contribute positively to earnings and gradually expand their contribution from the third quarter onward, even though individual business forecasts are not disclosed publicly.
• The company reaffirmed that its positive long-term expectation for Paddle's business remains unchanged despite ongoing cryptocurrency price declines.

• Cryptocurrency price volatility creates significant swings in reported earnings for the Paddle business, as the company must hold cryptocurrency to cover future user redemptions and valuation changes directly impact ordinary profit. Management cannot predict how long the current downtrend will last or when prices will reverse, as this depends entirely on broader market movements.
• There is indirect risk that escalating geopolitical tensions following the U.S.-Israel strike on Iran could lead to higher crude oil prices. For Hikkoshi Samurai, higher fuel costs may lead partner moving companies to raise moving rates, but this is expected to have only a limited direct impact on Ateam Holdings' earnings, as the company's business model is focused on lead generation for partners.
• Geopolitical volatility could also create yen exchange rate fluctuations, which would impact the yen translation of overseas revenue for the entertainment segment.
• There is potential for positive indirect impact from higher fuel prices for Navikuru, the company's car valuation and buying service, as higher fuel costs may push more users to sell their vehicles, increasing demand for the platform's services.

Q: What is your outlook for the earnings contribution of microCMS and Paddle from the third quarter onward?

A: The company does not disclose individual business earnings forecasts, but both microCMS and Paddle are growing smoothly. Management expects both companies to continue contributing to earnings and gradually expand their contribution in quarters starting from Q3.

Q: Cryptocurrency prices have been on a downward trend. Can we confirm that your expectation for the long-term potential of Paddle, your cryptocurrency-related business, remains unchanged?

A: Due to Paddle's business model, the company is required to accrue the value of points scheduled for future user redemption as sales promotion expense, and purchase and hold cryptocurrency such as Bitcoin to match future redemptions based on user activity. This means cryptocurrency price fluctuations directly impact performance metrics such as operating profit and ordinary profit. Management cannot make specific forecasts about how long the current price decline will last or when prices will start rising, as these outcomes depend entirely on market trends. However, there has been no change to the company's positive expectation for the Paddle business.

Q: What impact do the U.S.-Israel strikes on Iran have on your business?

A: At present, the company does not see any material direct risk to its business or earnings from this event, including the widely discussed risk of higher crude oil prices pushing up costs. For context on individual businesses: for moving comparison site Hikkoshi Samurai, it is possible that higher fuel costs for partner moving companies will lead to higher moving prices, but because Ateam's business model is primarily focused on generating customer referrals for partners, any direct impact on the company's own earnings is expected to be limited. For car assessment and buying site Navikuru, higher fuel costs could actually have a positive impact: if more users consider selling their cars due to higher fuel expenses, this will increase demand for the service and could benefit the business. As an indirect impact, exchange rate volatility from geopolitical unrest could impact the yen conversion of overseas revenue for the entertainment segment. The company will continue to closely monitor global events and market trends, and will promptly disclose information if any material impact on business or earnings is expected.