CTW Traded Growth for Paying Users. Now It Needs the App Stores to Crack.
The anime browser-gaming platform shrank revenue 8.7% but kept its paying base—and is betting regulatory pressure on app stores can open a new distribution lane.
CTW · Earnings Call · 2026-10-16
A smaller platform, by design
CTW’s fiscal 2026 call is a case study in choosing profit over vanity. Revenue fell 8.7% to $82.5 million, and gross in-game purchases fell 9.5% to $96.8 million. But segment profit rose 3% to $32.3 million, or 33.4% of in-game purchases, and adjusted EBITDA stayed positive at $3.5 million. The mechanism is simple: advertising expense fell 21.7% to $41 million, more than twice the rate of revenue. Management did not chase user acquisition into titles that failed return thresholds. The result is a lower top line and a better mix: “Revenue declined, but segment profits grew.” — Patrick Liu, Unknown (likely senior management or finance executive) · 2026-10-16 The headline divergence is users. Monthly active users fell 33% to roughly 2.26 million from 3.38 million, while paying monthly active users rose slightly to about 89,100 from 88,500. The paying ratio jumped to 3.95% from 2.62%. Patrick Liu was explicit that “the decline in activity was concentrated among non-paying users.” — Patrick Liu, Unknown (likely senior management or finance executive) · 2026-10-16 That is the cleanest defense of the model: ad-funded tourists left when ads were cut, while paying users stayed. Liu added that nonpaying users are more sensitive to advertising, so “when we change our user acquisition investment, it's going to have a greater impact on overall active users than our paying user base” — Patrick Liu, Unknown (likely senior management or finance executive) · 2026-10-16. That supports the idea that the payer core is stickier than the MAU line suggests. But it is not a clean bill of health: average revenue per paying monthly active user fell to $90.60 from $100.74. The retained payers are spending less.The hit-driven IP math
CTW launched 15 games during the year and ended with 42 active titles. The first-half launches underperformed, and several mature titles kept moving through the later stages of their life cycle. The bright spot was High School of the Dead: Day 0, released in late April, which generated roughly $6 million in its first three-plus months and became the highest revenue-generating game on the platform over that period. Management argued that the age of an IP does not determine its commercial potential, noting partnerships with 38 anime IP holders and 48 licenses. The keyword set reflects that emphasis: Anime IP, IP holders, and game developers are all central to the quarter’s narrative. The risk is that this is a portfolio-underwriting business with imperfect predictors. Advances to game developers rose to $17.9 million net, including $6 million of new advances, and CTW recognized about $2.6 million of impairments in fiscal 2026 after roughly $3.1 million the prior year. Even management conceded that “the actual game performance after its launch is inherently very, very difficult to predict.” — Patrick Liu, Unknown (likely senior management or finance executive) · 2026-10-16 One hit can cover several misses, but the timing and magnitude are hard to forecast. That is why the absence of numeric fiscal 2027 guidance matters. Management said it has a vision to return to sustained growth, but with about 2.5 months already elapsed in the next fiscal year, it offered no quarter-to-date trend and no formal revenue or EBITDA range. The new game pipeline is the growth driver; investors just cannot yet size it.The app-store crack is the fresh angle
The most interesting part of the call was not the fiscal 2026 cleanup. It was the distribution-channel question. An analyst asked about Japan’s new smartphone rules and U.S. court rulings loosening App Store payment controls, and whether publishers previously locked into app stores are now more open to browser-based distribution. Management said it has observed increasing interest from developers and publishers in channels outside the traditional app-store ecosystem, and that regulatory developments support that trend. This is the strategic pivot that could make CTW more than a shrinking anime game operator.The upside case is that CTW becomes a distribution alternative for larger, established game developers that historically focused on native app distribution. Management said the shift “may allow us to engage with some larger and more established games developers.” — Patrick Liu, Unknown (likely senior management or finance executive) · 2026-10-16 That is company-unique optionality, not sector boilerplate. It also connects to the quarter’s App Store keyword and the broader distribution channels theme. Management was careful, though: IP holders want diversified monetization generally, not necessarily because of recent regulatory changes. And Anime NYC, where CTW participated in August 2026 with over 170,000 attendees, generated useful industry contacts but no disclosed traffic metrics. The Anime NYC brand-building effort is real but unquantified.G123 was designed from the beginning as a browser-based gaming platform and operating independently from the traditional app store ecosystem. Our games can be accessible globally across devices, and we don't need app downloads, and we process in-game purchases through established third-party payment providers that are connected directly with our platform.