【ibis Inc. FY2026 Q2 Financial Results Deep Dive】 Growth Trajectory Driven by Dramatic Expansion in Subscription Revenue and Strategic Upfront Investment

1. Performance Highlights: Acceleration of Recurring Revenue and Record-Breaking Sales

For the second quarter (Q2) of the fiscal year ending December 2026, ibis Inc. delivered exceptionally robust results, fueled by the rapid growth of subscription revenue in its core mobile segment.

Net sales for the second quarter (three-month period) reached 1.54 billion yen, a 27.2% increase year-on-year , marking a new quarterly record. The primary driver of this growth was subscription revenue, which surged by 66.4% year-on-year to 450 million yen .

Meanwhile, operating profit stood at 260 million yen (a 1.5% decrease year-on-year) . While this may appear to be a decline, it is not due to poor performance. Rather, it is a strategic decision: following higher-than-expected subscription acquisition efficiency in the first half, the company pre-emptively executed an additional 134 million yen in advertising investment to accelerate recurring revenue growth from Q3 onwards. On an underlying basis, operating profit would have reached 390 million yen (a 48.9% increase year-on-year), demonstrating a significant strengthening of the company's core earning power.

The slide above (PAGE 1) provides an overview of the performance structure for this quarter. As the figures in the table indicate, the number of ibisPaint subscription contracts reached 484,500 (a 59.5% increase year-on-year) , confirming the steady accumulation of recurring revenue. Although the operating profit margin declined from 21.9% in the same period last year to 17.0%, this is primarily due to the aforementioned 134 million yen in additional advertising expenses . Since acquired subscriptions generate continuous cash flow over the long term, this reflects a highly rational management decision to prioritize the accumulation of recurring revenue even at the cost of short-term profit.

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2. Cumulative Performance and Progress Against Full-Year Targets

For the first half (six months) of the fiscal year ending December 2026, all key performance indicators are progressing steadily and at a high pace relative to the full-year targets.

• Cumulative Net Sales : 3.00 billion yen (up 26.5% YoY; 55.2% progress against the 5.45 billion yen full-year target)
• Cumulative Subscription Revenue : 870 million yen (up 67.8% YoY; 50.5% progress against the 1.73 billion yen full-year target / +9.1% vs. plan)
• Cumulative Operating Profit : 630 million yen (up 11.1% YoY; 47.0% progress against the 1.35 billion yen full-year target)
• Interim Net Profit Attributable to Owners of Parent : 450 million yen (up 19.6% YoY; 48.5% progress against the 940 million yen full-year target)

Despite absorbing additional advertising investments in the first half, the company has maintained an operating profit progress rate of 47.0% . In the second half, the company plans to optimize the pace of investment (to approximately 120 million yen per quarter) and aims to exceed the full-year operating profit target (1.35 billion yen) after accounting for these upfront investments. For now, the full-year earnings forecast remains unchanged from the initial plan, reflecting a conservative outlook.

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3. Segment Analysis: A Dual-Engine Growth Model

(1) Mobile Segment: Subscription Revenue Becomes the Primary Driver

The mobile segment (development and operation of ibisPaint, etc.) recorded net sales of 1.661 billion yen (cumulative Q2), a 21.9% increase year-on-year .

Previously, revenue in this segment was heavily reliant on "in-app advertising from the free version." However, strategies to convert users to paid subscriptions using free in-house advertising have proven successful, completing a structural shift where subscription revenue has definitively surpassed in-app advertising revenue . While Q2 standalone in-app advertising revenue was 313 million yen (a 11.6% decrease year-on-year), this remains within the range of a reaction to the previous quarter, which benefited from higher-than-expected yen depreciation effects. The growth in subscription revenue (458 million yen) has more than offset this.

The gross profit margin remains at an exceptionally high level of 85.9% , demonstrating the strengths of a high-margin recurring business model.

(2) Solution Segment: Breakthrough in Contract Development and Strengthening of Engineering Base

Net sales in the solution segment reached 1.281 billion yen (cumulative Q2), a 29.9% increase year-on-year . On a quarterly basis, this marks the fourth consecutive quarter of record-high sales .

In particular, contract development sales surged by 156.7% year-on-year . This was driven by a concentration of orders in the second quarter, as well as the consolidation effect of "Zeroichi Start," which was acquired on April 1, 2026. IT engineer staffing also remained solid, and segment profit grew to 168 million yen (a 20.3% increase year-on-year) . Development efficiency has improved through the establishment of AI-driven development systems and the use of no-code tools, maintaining a high gross profit margin of over 30% .

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4. Trends in Business KPIs and Depth of Customer Base

The greatest assets supporting ibis's growth story are its vast, globally expanding user base and the highly efficient ecosystem used to monetize it.

The slide above (PAGE 8) clearly illustrates the trends in the three key KPIs (DAU, number of subscriptions, and number of IT engineers) that form the source of ibis's competitiveness.

1. DAU (Daily Active Users) : Maintains a high level of over 6.44 million . Global MAU (Monthly Active Users) has reached 40.07 million (with 90.5% from overseas), functioning as a powerful customer acquisition platform through free in-house advertising.
2. ibisPaint Subscription Contracts : Surged to 484,000 (a 59.5% increase year-on-year) . Looking at the historical trend, the number has grown approximately 6.2 times in just three years from 78,000 in June 2023 (an acceleration pace of 1.4x growth), proving the rapid speed at which the recurring revenue base is being formed.
3. Number of IT Engineers : The number of engineers supporting the solution segment reached 273 (an increase of 29 year-on-year) , a new record. The company is successfully strengthening its organizational capabilities, focusing on redefining skill sets and adapting to AI development.

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5. Mid-to-Long-Term Growth Strategy and Future Outlook

Backed by the user base of "ibisPaint," one of the world's largest mobile painting apps, ibis has set forth a clear mid-to-long-term growth roadmap.

The slide above (PAGE 21) illustrates ibis's growth vision, characterizing the period leading up to FY2035 as the "Golden Harvest Period." The company defines its history as the "Seed Sowing Period (~2015)" and the "Cultivation Period (2016–2023)," designating 2024 onwards as the "Harvest Period."

Mid-to-Long-Term Growth Pillars and Numerical Targets:

• FY2035 Consolidated Sales Target : 15 billion yen (FY2020–FY2035 CAGR of 15.0%)
• Subscription Contract Target : 2 million contracts
• Subscription Conversion Rate Target : 5.0% (a significant increase from the current ~1.0%)

To achieve this, the following approaches are being promoted:

• Strengthening Free In-App Advertising : Leveraging the 40 million+ MAU user base to allocate a portion of external ad slots to promote in-house subscriptions, driving users to paid plans at a low acquisition cost.
• Feature Expansion and Multi-Device Deployment : Enhancing pro-use features for Windows/Mac versions, adding 3D animation and AI features, and introducing the "Smart Credit" pay-as-you-go model.
• Synergy with AI Singing Synthesis Segment : Integrating creative platform value through referral links between ibisPaint users and "VoiSona," an AI singing synthesis technology developed by Technospeech Inc.

Mid-Term Financial Targets (2026–2028)

The following figures have been disclosed as consolidated financial targets for the next three years:

• Net Sales : FY2026/12 Plan 5.454 billion yen → FY2028/12 Plan 7.427 billion yen (CAGR 14.1%)
• Subscription Revenue : FY2025/12 Actual 1.202 billion yen → FY2028/12 Plan 2.791 billion yen (2.3x growth, CAGR 32.4%)
• Operating Profit : FY2026/12 Plan 1.355 billion yen → FY2028/12 Plan 1.988 billion yen (CAGR 18.3%, with operating profit margin improving to 26.8%)

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6. Shareholder Return Policy

ibis maintains a capital allocation policy that balances growth investment with shareholder returns.

• Basic Policy : Aiming for a dividend payout ratio of 20%–25% , with a policy of continuing dividend increases in line with profit growth.
• Dividend Track Record and Plan :
  • FY2024/12 Actual: 40 yen per share (pre-split basis)
  • FY2025/12 Actual: 50 yen per share (pre-split basis)
  • FY2026/12 Plan : 60 yen per share (pre-split basis) / 12 yen (based on the 1:5 stock split effective October 1, 2025)

The company also maintains high capital efficiency with a 3-year average ROE of 36.3% , successfully balancing sustainable corporate value enhancement with shareholder returns.

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7. Conclusion

ibis's FY2026 Q2 financial results demonstrate that the company's revenue model is shifting dramatically toward a recurring structure, with subscription revenue hitting a record high, up 66.4% year-on-year . The strategic additional advertising investment made in the first half serves as a foundation to further expand recurring revenue in the second half and beyond, and the growth story is progressing smoothly. Armed with a vast global user base (40.07 million MAU) and high development capabilities, the company's progress during this "Harvest Period" toward its 2028 mid-term plan and 2035 sales target of 15 billion yen warrants close attention.