CTW Cayman H1 2026 Earnings Report

CTW Cayman EPS Results

• Actual EPS: -$0.01
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

CTW Cayman Revenue Results

• Actual Revenue: $20.47 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

CTW Cayman Announcement Details

• Quarter: H1 2026
• Date: 5/13/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 13, 2026
• Conference Call Time: 8:30AM ET

CTW Cayman (NASDAQ:CTW) Corp. is a blank check company incorporated in the Cayman Islands. The company was formed to pursue a business combination, such as a merger, share exchange, asset acquisition, share purchase, reorganization or similar transaction, with one or more operating businesses.

CTW Cayman has not identified a specific target or established ongoing commercial operations. Its activities are focused primarily on evaluating potential acquisition opportunities and completing an initial business combination.

The company’s intended target industry and geographic focus have not been publicly specified. Additional information about its operating business, products or services, and leadership is limited because CTW Cayman was established as a special purpose acquisition company.

CTW Cayman H1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: CTW said first-half fiscal 2026 results came in softer than expected, with revenue of $41.0 million and gross in-game purchases of $43.6 million, both slightly below last year. Management blamed weaker-than-expected launches, title maturation, and lower overall user activity.
• Negative Sentiment: The company reported a GAAP operating loss of $1.7 million and a net loss of $1.2 million, versus a net profit in the prior-year period. Results were pressured by lower revenue, new-title spending, public-company costs, and FX effects.
• Positive Sentiment: Despite softer top-line performance, CTW highlighted improved monetization efficiency: paying monthly active users were stable at about 75.7 thousand, while conversion rate rose to 3.82%, ARPDAU increased to $18.90, and ROAS improved to 109%.
• Positive Sentiment: Management said it reacted quickly to underperforming launches by cutting sales and marketing spend 15% and reducing advertising by 24%. The company emphasized disciplined capital allocation and a willingness to scale back titles that do not meet performance thresholds.
• Positive Sentiment: CTW ended the period with a strong liquidity position, including $90.5 million in cash and cash equivalents after the IPO. Management also said its international push is gaining traction, with revenue outside Japan rising to 31.6% and a New York office opened to expand in North America.

Presentation

[Matt Chesler, Partner at FNK IR]

Good morning and good evening. Thank you for standing by. Welcome to the CTW earnings conference call for the first half of fiscal 2026, representing the six months ended January 31st, 2026. Please note that today's conference may be recorded. My name is Matt Chesler from FNK IR. Hosting today's call is Ryuichi Sasaki, CTW's founder, CEO and Chairman, and Patrick Liu, CTW's CFO. Before we begin, 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 and other filings with the SEC.

[Matt Chesler, Partner at FNK IR]

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 Form 6-K, our earnings release, and on the investor section of our website. With that, I'd now like to turn the call over to Ryuichi for a video and prepared remarks.

[Ryuichi Sasaki, Founder, CEO, and Chairman at CTW]

[Non-English content]

[Patrick Liu, CFO at CTW]

Thank you, Ryuichi, and good morning, everyone. As Ryuichi discussed, the first half of fiscal year 2026 was a softer period than we expected from a content performance standpoint. Financially, our priorities were clear: respond quickly to underperforming game launches, allocate capital with discipline, product monetization efficiency, and preserve balance sheet flexibility as we continue investing for long-term growth. Revenue for the first half was $41 million compared with $41.2 million in the prior year period, a decrease of 0.7%. Gross in-game purchases were $43.6 million, down 1.1% year-over-year. These year-over-year changes were relatively modest on the surface. Yet they reflect an important shift in the underlying drivers of performance during the half.

[Patrick Liu, CFO at CTW]

We launched seven new games during the period, but as Ryuichi noted, those launches performed below our expectations, and at the same time, several mature titles continued moving through later stages of their lifecycle and overall user activity declined. That said, one of the more important takeaways from the first half is that even in this softer revenue environment, the quality of monetization across the platform remained resilient. Monthly active users declined to approximately 2.0 million from approximately 3.3 million last year. However, paying monthly active users remained stable at approximately 75,700, compared with approximately 76,700 last year. As a result, the conversion rate improved to 3.82% from 2.35%. In addition, we also saw improvements across key monetization and efficiency metrics. ARPDAU increased to $18.90 from $16.31.

[Patrick Liu, CFO at CTW]

ARPU increased to $4 from $2.50. ROAS improved to 109% from 106%. In practical terms, traffic declined primarily among non-paying users, while the platform continued to attract and retain a higher quality paying audience and generate more efficient returns on advertising spend. We also continued to make gradual progress on geographic diversification. Revenue from users outside Japan increased to 31.6% of total revenue, up from 28.8% last year. Japan remains our largest market. Expanding our international mix remains a key strategy priority. Turning to expenses and profitability. Cost of revenue increased at 39.6% year-over-year to $13.9 million.

[Patrick Liu, CFO at CTW]

General and administrative expenses increased 13.6% to $5.1 million, and research and development expenses increased to 25.3% to $1.7 million, reflecting on ongoing investments in platform capabilities and organizational infrastructure and additional costs associated with operating as a public company. At the same time, sales and marketing expenses declined 15.2% to $22 million, driven primarily by a $5.9 million reduction in advertising spend. This reduction was intentional, reflecting the disciplined response Ryuichi described earlier. When new titles did not meet our internal performance thresholds, we quickly scaled back, making marketing rather than pursuing top-line growth at unattractive returns. This responsiveness is a core strength of our operating model. As a result, we report an operating loss of $1.7 million compared with a half million loss in the first half of 2025.

[Patrick Liu, CFO at CTW]

Net loss was $1.2 million compared with a net income of $0.6 million last year. While we are not satisfied with reporting a loss, it is important to view the net result in the context of a period in which revenue underperformed expectations, combined with the continued investment in infrastructure and long-term capabilities while maintaining minimal cost flexibility. There are also two period-specific items of note. First, we recorded approximately $1.9 million of share-based compensation expense related to stock options granted in December 2025. Second, following early adoption of ASU 2025-06, we capitalized approximately $2.1 million of qualifying confirmed new software and cloud implementation costs. Both items are relevant to understanding the period-over-period financial profile and the level of ongoing investments in the business. On a non-GAAP basis, performance remained solid.

[Patrick Liu, CFO at CTW]

Adjusted EBITDA increased to $4.3 million from $3.7 million, representing a 10.5% margin, and segment profit increased to $18 million from $11.6 million. These metrics highlight that the core economics of the platform remain healthy and responsive to disciplined cost management despite softer revenue and a GAAP net loss. Turning to cash flow and the balance sheets. Net cash used in operating activities was $0.4 million, compared with $2.6 million of cash generated in the prior year. This change was driven primarily by working capital movements, including additional advances made to game developers and higher pre-paid royalties as we invest in future content and platform support.

[Patrick Liu, CFO at CTW]

We ended the period with $90.5 million in cash and cash equivalents, up from $12.2 million at July 31st, 2025, supported by the proceeds from our IPO. We believe this positions us well to invest in selectively content, systems, and international growth while maintaining strong liquidity and financial discipline. Overall, the first half of fiscal year 2026 was a period of softer top-line performance, but also one that demonstrated the responsiveness of our operating model and the robustness of our financial monitoring systems. We acted quickly when new title performance did not meet expectations. We improved key monetization and efficiency metrics. We maintained positive adjusted EBITDA. We ended the half with a solid cash position and the flexibility to continue investing for the long term. Thank you. I will now turn the call back to the operator for the Q&A sessions.

[Matt Chesler, Partner at FNK IR]

Thank you, Patrick. We're now going to open up the call to question and answers. 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 the screen. Clicking this alert will alert us that you want to be called on to ask a live question, and then you'll be placed in queue and called upon in turn. Just note you're gonna be on mute until you are called upon. The second way to participate in Q&A is to use the Q&A widget, which will allow you to type in and text the question. We'll take questions from there as well, but just note if we run into a time constraint, we'll get back to you if your question is not asked on today's call.

[Matt Chesler, Partner at FNK IR]

With that, we'll now pause for a moment to build the queue. The first question is going to be from Steve Silver from Argus Research. Steve, go ahead.

[Steve Silver, Analyst at Argus Research]

Everybody, thanks for taking the questions. I was hoping you guys could discuss a little bit about how the company's using technology to build in the capabilities of reacting quickly to changing user behavior. Just trying to get a sense as to any of the metrics you look at and how much time you give to a new title before making the determination that a title is underperforming and requires a change in the marketing strategy.

[Patrick Liu, CFO at CTW]

Okay, thank you. Thank you very much for the question, Steve. In regards of your question, I think you asked about how our technology works and how we actually monitor new game launches and how we react in regards to the early performance indicators of a new game after it was initially launched, right? Basically, I think we have been communicated with the market before the company. We have internally developed a set of AI-backed systems and tools to help us monitor the performance of each new launch games as well as every live games that is our live our G123 platform.

[Patrick Liu, CFO at CTW]

One of the very important system that we are using internally is the AI-backed advertisement amendment system, and also the user data monitoring tool that we are able to see the real-time performance of each individual game that is actually live on G123 platform. For example, for each of the new games that launch on our platform, we basically, most of the time we do a relatively soft launch. Means we may spend a small amount of advertisement in day zero to day three, immediately after the game is launched.

[Patrick Liu, CFO at CTW]

During that period of time, we're gonna continually monitor the performance, including, you know, paying user retention, paying user conversion rates, and all those key KPIs that we believe indicates the, you know, potential of any new game launched on the platform. Based on the results of those games basically between day zero to day three, we, the marketing team of the company gonna decide, is this really a hit title or this is somehow performed not as expected. Based on that result, we will further adjust advertisement spending as well as strategies for day four and seven, and we're gonna continue monitor the performance of that game through that period of time.

[Patrick Liu, CFO at CTW]

Eventually, we're gonna roll into day seven to day 14, and then, you know, continue adjusting the advertisements proactively. I would say that is how internally we use our AI-backed tools to monitor game performance and adjust our advertisement marketing cost allocation and spending.

[Steve Silver, Analyst at Argus Research]

Great. Thanks. In, in the context of the trend in terms of active users, do you get a sense as to whether a lot of that has been attributable to the customer excitement over some of these new underperforming launches? Or do you get a sense of whether there's any macroeconomic trends affecting those results as well?

[Patrick Liu, CFO at CTW]

In regarding of these new titles that launched for the first half of the fiscal year 2026, I don't think it's as simple as say, "Oh, it's a bad IP," or, "It's a single game format problem." I think broadly speaking, we believe the first half underperformance was primarily related to monetization quality and unit economics rather than traffic acquisition or initial user interest. I think several of the new titles generated reasonable engagement and user acquisition metrics initially, but the payer conversion, monetization depths, and long-term return on advertisement spends profile were below our internal expectations. I think in some cases we believe certain titles attracted broader casual audiences with lower monetization behavior relative to several of our stronger performing historical launches.

[Patrick Liu, CFO at CTW]

As a result, while top of funnel traffic and engagement were acceptable, the long-term monetization efficiency did not justify aggressively scaling advertising investment. Also, we think that it is actually very important to recognize gaming performance can vary significantly by timing, audience fit, monetization design, live operations execution, and broader market conditions, even while underlying IP awareness is strong. I think basically that is the, you know, the observation we have been seeing from the first half of the current fiscal year.

[Steve Silver, Analyst at Argus Research]

Great. One more, if I may. The prepared remarks or the press release cited 20 titles in the backlog.

[Steve Silver, Analyst at Argus Research]

I'm curious as to whether there's any context around the number within that 20 in terms of maybe titles that might move into pre-registration in the back half of the fiscal year.

[Patrick Liu, CFO at CTW]

Yeah. Basically regarding of the future releases, the pipeline we have, so far you will be able to see on our website we have, I believe six games that is actually five or six game that is actually in pre-registration. For the remaining of those titles, we are still working very actively with the app holders, with the game developers to assure that the game is actually under development and also is actually in a or we're making the progresses in the correct way.

[Patrick Liu, CFO at CTW]

Because the factor that for any of those games that we haven't really released their pre-registration for the game, so we are because of the contract we have with the app builders, we are still not able to explicitly disclose the specific name or IP related to those games. We would say that a lot of those games are associated with very popular anime IPs, and some of them are very, also, like, recently popular in North American region. We do have a lot expectations when those games are ready to be released to the public.

[Steve Silver, Analyst at Argus Research]

Great. Thank you for taking my questions.

[Patrick Liu, CFO at CTW]

Thank you, Steve.

[Matt Chesler, Partner at FNK IR]

Our next question is from Vincent Fernando from Zero One Research. Vincent, please go ahead with your question.

[Vincent Fernando, Analyst at Zero One Research]

Hi. I see that, you know, your segment margin expanded from 23.7% to about 37%, you know, despite flat in-game purchases. That shows there's some operating leverage in the platform. I'm just wondering, can you walk us through maybe the dynamics behind that? Like, is it that, you know, you're able to detect where certain products and in-game purchases are doing well and you divert resources into that? Just wanna understand the dynamics. Like, how are you able to increase, you know, the percent of the margin from the in-game purchases? Thank you.

[Patrick Liu, CFO at CTW]

Okay. Got it. In regard of the margin of the in-game purchases versus the revenue, the main factor of that is actually reflecting the new combination or mix of all the games that is actually on our platform. Historically, I believe you probably see that we have been disclosed that, well, there's a significant portion of our revenue is actually generated by the game which is called Vivid Army. For that game, we historically has a slightly higher revenue share percentage with the game developer of that game.

[Patrick Liu, CFO at CTW]

Because the fact that along the way of along the half, fiscal half year of fiscal year 2026, we actually launched, you know, historically, we have been launching, continually launching new games and the product mix, the game mix has actually changed slightly. Right now, Vivid Army is actually not the-- I mean, it's still the largest game by itself, but the game developer of that game is actually not the largest game developers that generates revenue for us. For the newer games, we tend to give a slightly lower revenue share to the game developers. You know, because of the change of the revenue proportion generated by higher revenue share games, the overall average revenue share percentage has actually declined year-over-year.

[Patrick Liu, CFO at CTW]

That explained why you see, yes, even though the top line softer, but, the, you know, from in-game purchases to revenue, we actually see a slightly improved margin.

[Vincent Fernando, Analyst at Zero One Research]

Great. Thank you. Another question. You know, I see that, you know, your ROAS was 109%, and obviously you've optimized your marketing title by title. This kind of maybe goes back to the question the previous asked a bit, but I just want to understand, like, how do you know, what is that kind of the level that's like kind of a target, and then your engine is kind of optimizing to make sure you maintain that level? And how quickly does it respond to that? And just want to understand how the engine operates relative to ROAS.

[Patrick Liu, CFO at CTW]

Yeah. Basically, in regards of the ROAS, internally we do try to set up a target for each individual game. Overall, I think if we just do a quick calculation of the average ROAS target we set for all the games, I think we do expect to see return on advertisement spending over 100% from the platform in total overall. To monitor that, I think I kind of explained that earlier one, Steve asked about how we monitor new game launches. Basically, it's a step-by-step procedures, when we launch a new game, we monitor the first, basically from day zero to day three to see, you know, the early performance indicators.

[Patrick Liu, CFO at CTW]

Based on those, we adjust our advertisement spending, basically proactively and then continue to monitor the, you know, return, ROAS plus other, you know, key KPIs that indicate the performance of the game and adjust the advertisement spending allocation accordingly. I think that is the way how we maintain a relatively high ROAS compared to, you know, industry average.

[Vincent Fernando, Analyst at Zero One Research]

Got it. The other thing I want to go into is basically, you know, despite your top line being a little softer, you've had paying monthly active users, you know, sustained. How does the engine look at paying monthly users? Are you, do you market to them when you see that they're paying so that you, like, redirect spend to the people who are paying? Do you have loyalty programs, things like that? Just want to understand the dynamic, how the engine maintains the paying active users.

[Patrick Liu, CFO at CTW]

In regard of the Paying Monthly Active Users, I would say, the main efforts where, you know, we put as the company to maintain their activity within the games and within our platform is actually not through a lot of the advertisements. For those Paying Monthly Active Users, a lot of time they have already spent a significant amount of times as well as money in the game on our platform. They kind of like know us already a while before. To maintain the active activity level for those Paying Monthly Active Users, we tend to work a lot with the game developers and ask them to continually update the game content.

[Patrick Liu, CFO at CTW]

Every single time when the user come back to the game, they are seeing something new, and they still, you know, basically keep the interest up, right? In regards to the online advertisements, a lot of times, the online advertisements is mainly to attract the new users and the new paying users. That is also explains a little bit about, you know, while we do see advertisement expense go down a lot because we're actively monitoring how we should spend the advertisement money. The paying monthly active user doesn't really change much, but you see MAUs is down a lot, and that is actually a factor of, you know, a lot of those new users or non-active users are attracted by those online advertisements.

[Vincent Fernando, Analyst at Zero One Research]

Okay, just one more question, if I may. Revenue outside Japan rose from 29% to 32%. You've said you've opened a new New York office. I guess with, you know, anime culture being increasingly a global trend, even a huge thing in the U.S., how do you view how large the international opportunity is for CTW over the next two to three years? I mean, I guess, you know, if we think about, you know, where are you targeting, let's say, in like two to three years? Where can international revenue go, you know, as percent of total?

[Patrick Liu, CFO at CTW]

Yeah. Basically, I think one of the company's strategy regarding marketing is we definitely I think we have been continuously saying this, is that we are aggressively expanding into the North American region, U.S. markets in particular. The rationale behind of that decision is we realize that there is a lot of marketing potentials, as you just mentioned.

[Patrick Liu, CFO at CTW]

In regarding to, you know, our expectation for the next two or three years, like how we see revenue generally from outside of Japan versus Japan, we do I mean, we do believe that, you know, as long as we are able to efficiently do the localization and, find new partners in the new regions and, you know, adapt our model to the new regions, we should be able to eventually get around, say, you know, 50%-60% of our revenue generated from regions outside of Japan. That also depends on a lot of, you know, external factors, marketing trends and everything.

[Vincent Fernando, Analyst at Zero One Research]

Great. Thank you. I'll leave the queue for other questions.

[Patrick Liu, CFO at CTW]

Thank you. Thank you, Vincent.

[Matt Chesler, Partner at FNK IR]

At this time, there are no more questions in the queue, so I am going to turn the call back to Patrick for some concluding remarks.

[Patrick Liu, CFO at CTW]

Okay. All right. Thank you everyone for joining today's earnings release for the first half of fiscal year 2026 of CTW. We are looking forward to keeping everybody informed as we progress. Again, thank you, everybody.

[Matt Chesler, Partner at FNK IR]

Thank you everyone for joining us today. You may now disconnect your lines.

[Patrick Liu, CFO at CTW]

Thank you.

Participants

Analysts

• Matt Chesler, Partner at FNK IR
• Patrick Liu, CFO at CTW
• Ryuichi Sasaki, Founder, CEO, and Chairman at CTW
• Steve Silver, Analyst at Argus Research
• Vincent Fernando, Analyst at Zero One Research