Gaiax (3775) Q2 FY2026 Earnings Deep Dive: Navigating Strategic Investments and Portfolio Restructuring in a Startup Studio

Gaiax Co., Ltd. (Securities Code: 3775) reported its financial results for the second quarter of the fiscal year ending December 2026, a period characterized by the steady deepening of its core social media business alongside strategic upfront investments and structural reforms within its incubation segment. This report outlines 10 key takeaways from the disclosure materials, providing a detailed analysis of the performance drivers and the company's future growth narrative.

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1. Gaiax's Business Structure and Model

Guided by the mission of "connecting people," Gaiax operates as a startup studio with two primary business pillars:

• Social Media Services: Providing SNS operation management, consulting, creative production, influencer marketing, and HR support.
• Incubation Business: Developing entrepreneurship programs for local governments and schools, web3/DAO consulting, new business creation, and investing in/nurturing startups.

The company has established an ecosystem where capital gains from the sale of equity (gains on sales of investment securities) generated through incubation and carve-outs are reinvested into new internal ventures and emerging startups.

The slide above (page 3) illustrates Gaiax's overall business structure and its model for circulating capital and business development. To understand Gaiax, it is crucial to recognize that it is not merely a service provider, but an ecosystem that creates businesses, elevates their value, and reinvests the proceeds to drive shareholder and business value.

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2. Overview of Q2 FY2026 Consolidated Results

Consolidated financial results for the second quarter (cumulative) of FY2026 are as follows:

• Net Sales: 1,777 million JPY ( down 2.9% YoY)
• Gross Profit: 997 million JPY ( down 5.4% YoY)
• Operating Profit: 76 million JPY ( down 33.1% YoY)
• Ordinary Profit: 88 million JPY ( down 36.3% YoY)
• Net Income Attributable to Owners of Parent: 52 million JPY ( down 42.1% YoY)

For the second quarter alone (April–June), net sales were 853 million JPY (down 10.6% YoY) and operating profit was 41 million JPY (down 60.3% YoY).

The slide above (page 17) summarizes the consolidated P&L compared to the same period last year. While the results show a decline in revenue and profit, the primary cause is not a decline in core business performance, but rather the absence of gains from the sale of investment securities that were recorded in the previous year, coupled with continued upfront investment costs in new focus areas such as short-form dramas and the HR sector. Understanding these internal factors is key to interpreting the earnings results beyond the surface-level figures.

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3. Impact of Investment Securities Sale Timing

A distinct feature of Gaiax's profit structure is that operating profit and net sales fluctuate significantly based on the timing of the sale of investment securities (portfolio company shares) . While the previous year's results were bolstered by such gains, no such sales were executed in the first half of this fiscal year, resulting in a year-on-year profit decline.

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4. Financial Soundness (Consolidated B/S)

Despite being in a phase of upfront investment, the balance sheet remains robust:

• Total Assets: 2,223 million JPY (down 79 million JPY from the end of the previous fiscal year)
• Cash and Deposits: 1,184 million JPY ( up 34 million JPY from the end of the previous fiscal year)
• Net Assets: 1,301 million JPY ( up 9 million JPY from the end of the previous fiscal year)
• Equity Ratio: Increased to 57.7% from 55.4% at the end of the previous fiscal year

By avoiding unnecessary debt expansion and maintaining high levels of liquidity, the company has secured financial stability to support future growth investments and business initiatives.

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5. Social Media Services: Expansion of Integrated Marketing

In the second quarter (three months), the Social Media Services segment achieved growth in both revenue and profit, with net sales of 567 million JPY (up 4.1% YoY) and operating profit of 49 million JPY (up 47.4% YoY) . The company is successfully securing contracts for integrated marketing —which goes beyond simple account management to include strategy design, creative production, influencer utilization, and crisis management—thereby building a stable client base centered on national-level accounts.

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6. Growth of Short-Form Video/IP (CREAVE) and Snapmart

Individual products and subsidiaries within the SNS segment are showing remarkable results:

• CREAVE (Short-form video/IP): The virtual short-form drama series "Koreja Arikitarisugiru," co-produced with TV Tokyo, surpassed 1 billion total views and 450,000 followers within six months of its TikTok launch. Combined with its second IP, "Honki Dasu no wa Ashita kara," the two works have exceeded 2 billion views , and the company has begun offering tie-up products to corporate clients.
• Snapmart (Creator Platform): Celebrating its 10th anniversary, the platform has reached 350,000 registered creators . The "Ambassador Plan," which focuses on user-centric photography and content, has been adopted by over 220 companies , establishing itself as a go-to tool for generating word-of-mouth on social media.

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7. Strengthening the HR Sector and M&A (Matka & kokodear)

Against the backdrop of a tight labor market and rising Customer Acquisition Costs (CPA), Gaiax is aggressively expanding into the HR sector:

• Matka Co., Ltd.: Has begun providing referral recruitment consulting to staffing agencies, which has been well-received.
• Acquisition of kokodear Co., Ltd.: The acquisition was completed on July 1, 2026 (to be reflected in consolidated results from Q3). By combining kokodear's brand design and product development capabilities with Gaiax's SNS and community management expertise, the company aims to drive cross-selling and increase unit prices in the recruitment branding sector .

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8. Incubation Business: Government Contracts and aini Divestiture

The Incubation segment reported Q2 (three months) net sales of 286 million JPY (down 30.4% YoY) and operating profit of 69 million JPY (down 56.3% YoY).

• Entrepreneurship Education Programs: Benefiting from the government's "5-Year Startup Development Plan," contracts with local governments, such as Hyogo Prefecture, have become a stable revenue stream. Programs like the "Hyogo Entrepreneurship Seminar" are being systematized for participants ranging from elementary students to young professionals, with a design that minimizes the burden on schools.
• Divestiture of aini: The experience-sharing service "aini" was transferred to Locotabi, Inc. (excluded from the scope of consolidation starting this quarter) as part of the company's "selection and concentration" strategy.

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9. web3/DAO Initiatives and Portfolio Growth

New progress is visible in the web3/DAO space and the investment portfolio:

• Regional Revitalization DAO: Japan's first "Shopping Street DAO" was launched in Nio-cho, Mitoyo City, Kagawa Prefecture, raising 14.8 million JPY from non-resident stakeholders to open new shops and facilities.
• Stablecoin Payments: Launched an e-commerce/flea market construction service that utilizes smart contracts to eliminate the need for payment processing intermediaries.
• Portfolio Progress: Startups in the sharing economy and DX sectors, such as TRUSTDOCK (digital ID/eKYC, 3 million app downloads, adopted by SoftBank), ADDress (multi-base living), Unito (flexible rent housing, joined Keidanren), and anyCarry (last-mile logistics, partnered with Sushiro delivery), are steadily expanding their operations .

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10. Full-Year Forecast and Mid-Term Management Roadmap

The full-year forecast for FY2026 and the mid-term outlook are as follows:

FY2026 Full-Year Forecast

• Net Sales: 3,300 million JPY (down 5.7% YoY)
• Operating Profit: 250 million JPY (down 1.9% YoY)
• Ordinary Profit: 220 million JPY ( up 7.7% YoY )
• Net Income Attributable to Owners of Parent: 180 million JPY (down 17.6% YoY)

While short-term upfront investment costs in web3/DAO and HR are expected, the mid-term management policy remains unchanged. Building on the momentum of the previous fiscal year (FY2025), which significantly outperformed forecasts (Sales +6.0%, Operating Profit +27.0%), the company aims to achieve 4 billion JPY in net sales and 600 million JPY in operating profit by FY2027 .

The slide above (page 26) shows the progress of the mid-term management policy and growth targets for 2027. It outlines a long-term scenario of leaping to 600 million JPY in operating profit (2.4 times the current forecast) by FY2027, following the current phase of upfront investment and business adjustment.

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Summary

Gaiax's Q2 FY2026 results show a year-on-year decline in revenue and profit due to the timing of investment security sales and upfront investment costs. However, a deeper analysis reveals that this is a period of steady sowing of seeds for future revenue pillars , including IP expansion in the SNS business, M&A in the HR sector, and government contracts and DAO utilization in the incubation segment.

With a solid financial foundation and an equity ratio of 57.7%, the company is simultaneously pursuing "selection and concentration" (e.g., the divestiture of aini) and "investment in new areas" (e.g., the acquisition of kokodear), pushing forward with structural reforms to meet its FY2027 targets of 4 billion JPY in sales and 600 million JPY in operating profit.