Celsys (3663) Q2 FY2026 Earnings Deep Dive Report

Celsys, Inc. , the developer of the illustration, manga, and animation software "CLIP STUDIO PAINT," has announced its financial results for the second quarter of the fiscal year ending December 2026. Driven by the acceleration of its subscription model and the success of its major version upgrade, the company has delivered strong results that significantly exceed its initial forecasts. This report provides a comprehensive analysis of the company's performance, growth strategy, financial policy, and AI approach, based on 10 key topics derived from their earnings materials.

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1. Q2 Performance Highlights: Significant Revenue and Profit Growth Exceeding Targets

For the second quarter of FY2026, the company reported consolidated revenue of 5.563 billion yen (+17.4% YoY) , operating profit of 2.221 billion yen (+44.8% YoY) , ordinary profit of 2.241 billion yen (+46.4% YoY) , and quarterly net profit of 1.503 billion yen (+72.6% YoY) . These figures represent substantial growth in both revenue and profit compared to the same period last year and the initial full-year plan.

For its flagship product, "CLIP STUDIO PAINT," subscription contracts increased due to strengthened marketing in emerging markets and successful initiatives for mobile users. Furthermore, the major version upgrade (Ver. 5.0) launched in March and accompanying promotional campaigns generated demand beyond expectations. On the cost side, SG&A expenses, including outsourcing and advertising, remained in line with the plan, resulting in a highly profitable operating margin of 39.9% (+7.5pt YoY) .

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2. Expansion of Subscription ARR and High Engagement

Subscription ARR (Annual Recurring Revenue) , the foundation of the company's stock-based business, reached 6.31 billion yen (+30.7% YoY) , marking record-high growth in both absolute value and growth rate. Additionally, the subscription churn rate remained at an extremely low level of 4.9% (a 0.1pt improvement YoY) , demonstrating high user retention.

The following slide illustrates the ARR trajectory of the company's subscription model and its roadmap for long-term growth.

This chart highlights the company's evolution from a PC-centric service to one supporting various mobile devices, including iPhone, Galaxy, and Android, and how it has steadily built ARR through successive major version upgrades. The company has set a goal of over 10 billion yen in ARR by 2030 , with growth strategies focused on further strengthening marketing in emerging markets, enhancing mobile functionality, and invigorating the creator community.

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3. Upward Revision of Full-Year Forecast: Reaching the "10 Billion Yen Revenue" Milestone

Based on the strong progress through the second quarter, the company has revised its full-year earnings forecast for FY2026 upward.

The revised full-year plan projects revenue of 10.81 billion yen (+14.1% YoY) , operating profit of 4.0 billion yen (+34.8% YoY) , and net profit of 2.67 billion yen (+58.8% YoY) . This makes it highly likely that the company will surpass the 10 billion yen revenue milestone for the first time since its founding .

Details of the revised forecast can be found in the comparison table below.

Factors contributing to the upward revision include stable growth in subscription revenue, the impact of the major version upgrade for the perpetual license version, and the successful implementation of a price increase (averaging 10%). The operating margin is expected to rise from the initial forecast of 33.3% to 37.0% , reflecting the significant profit contribution from revenue growth. As of the second quarter, the progress rate against the revised plan stands at 51% for revenue and 56% for operating profit, indicating a well-balanced trajectory for the second half of the year.

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4. Achieving the Mid-Term Management Plan (2025-2027) One Year Early

Driven by rapid business expansion, the company is achieving its "Mid-Term Management Plan 2025-2027" much faster than anticipated.

The final-year targets of "10.7 billion yen in revenue and 3.3 billion yen in operating profit," originally set for FY2027, are now expected to be achieved and exceeded in FY2026, one year ahead of schedule . Consequently, the company has announced that it will review its performance targets for FY2027.

The progress of the mid-term plan and the structure of this early achievement are summarized in the slide below.

This early achievement is underpinned by high management efficiency, maintaining a disciplined advertising-to-revenue ratio of 14%–16% while expanding revenue with controlled business investment. As a result, the company expects to achieve an ROE of over 50% , significantly exceeding its target of 30%, demonstrating exceptional capital efficiency.

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5. Version Upgrade Strategy and Expansion of Global Creator Base

In March 2026, the company launched "CLIP STUDIO PAINT Ver. 5.0." By shifting from a policy of free updates to a model of phased major version upgrades accompanied by price adjustments (averaging 10%) to reflect increased service value, the company has successfully bolstered its revenue base.

The user base continues to grow, with the number of platform users reaching 13.08 million (+24.7% YoY) and cumulative shipments totaling 67.04 million units (+27.5% YoY) . Notably, overseas users account for 83.0% of the total, solidifying the company's position as a global creative platform. Based on estimates derived from sources such as Adobe's research, the company believes there is still significant room for growth within the global market of approximately 130 million digital creators.

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6. Clear Stance on AI Technology and Unique Positioning

While the proliferation of generative AI has significantly impacted the content creation industry, Celsys has maintained a very clear stance on AI technology.

While the company has continued to invest in AI development to "assist creators in their creative activities" for over a decade, it has decided not to incorporate features using generative AI . This reflects its commitment to "respecting the ethics and rights of creators to the fullest extent."

According to the company's analysis, approximately 90% of "CLIP STUDIO PAINT" users are hobbyists or high-end amateurs who pay for the "creative experience" (the joy, sense of growth, and community empathy) derived from the process of drawing itself. Therefore, the company has established a structure where its service value—providing the "joy of creating oneself"—cannot be replaced, regardless of how advanced generative AI becomes.

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7. Capital Policy and Continuous Enhancement of Shareholder Returns (11 Consecutive Dividend Increases)

Celsys prioritizes shareholder returns as a key management issue and implements proactive measures in line with its improved performance.

• Dividend Policy : The company plans an annual dividend of 50 yen per share for FY2026 (20 yen interim, 30 yen year-end), a significant increase from the previous year's 36 yen. This includes a 35th-anniversary commemorative dividend (10 yen) and an increase in the ordinary interim dividend (+2 yen), marking 11 consecutive years of dividend increases .
• Share Buybacks and Cancellation : The company has conducted cumulative share buybacks totaling approximately 6.5 billion yen and cancelled 1.5 million shares in March 2026. It intends to continue considering cancellations with a target of maintaining a holding ratio of around 10%.
• Focus on TOPIX Selection Criteria : The company is actively promoting IR activities and capital policies to improve stock liquidity and ensure appropriate corporate valuation.

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8. Summary and Future Outlook

Celsys's Q2 FY2026 results demonstrate a robust management state, characterized by the maturation of its subscription model and the success of its global expansion, resulting in upward revisions, reaching the 10 billion yen revenue milestone, achieving mid-term goals early, and 11 consecutive dividend increases .

Key points to watch moving forward include:

1. Maintaining the pace of user acquisition in emerging markets and for the mobile version.
2. New long-term growth targets to be presented in the revised mid-term management plan.
3. The launch status of new services in the "Creator Platform" sector, which is being prepared as a second pillar.
4. Strengthening customer acquisition by leveraging the global penetration of entertainment content (external tailwinds).

With the expansion of the global creator economy, further progress is expected in the value of the creative infrastructure provided by the company and its highly efficient financial model.