CTW

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 20F filed yesterday and our other filings with the SEC. 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 earnings release and our form 6K filed yesterday and on the investor section of our website. With that, I will now turn the call over to Ryuichi.

We prioritized the return on growth quality and investment capital rather than just increasing sales. This calculation shows both sides of the judgment. The sales volume was a result of lowering the previous quarter and lowering the performance factor. On the other hand, while reducing advertising expenses to a large extent, we maintained more than 100% of the rate of spending on advertising expenses in the game, which is based on ROAS. In addition, we increased segment profits and maintained a wealth of assets that were not more negligible. In addition, the efforts that the company has made in the month of July 2026 have been more powerful since July of 2026. I think that we are building a foundation to aim for growth with discipline. For those of you who are interested in listening to our explanation for the first time, we will introduce the outline of the business. CTW is running the browser game platform G123, which provides free basic play games with a formal license of Japanese anime IP. This is a service that allows you to start a game in just a few seconds from various端末 that can be used by the browser without downloading the app, focusing on mobile users. We collaborate with anime IP holders and external game development companies to deliver games to anime fans all over the world. We also use the data system in the company to evaluate the achievements of each title and determine the share of investment in content and marketing. Now, I will explain the current business and the current business situation. In July of 2026, we released 15 new games such as High School of the Dead Day Zero and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and High School of the Dead Day Zero, and There was also a pre-registration stage. However, several titles released by Kamiki were under the plan. In addition, some existing titles grew slowly as the operating period became longer. This affected both the user's use and sales. On the other hand, we did not continue to actively invest in advertising for titles that do not meet the company's performance standards. Instead, we intentionally reduced the cost of obtaining users and turned our funds into opportunities to expect higher returns. In this way, the rate at which the investment is adjusted according to the achievement is an important element of our business model. At that time, the advertising cost was $11.4 million in total, reducing it by 22%. This reduction rate is more than twice the reduction rate of sales. We reduced the advertising cost to keep ROAS at more than 100% of the standard. ROAS at that time was 105.8%, and the amount of money earned by the user in the game exceeded the advertising cost used to get the user. We evaluated each title based on ROAS, The key to our marketing strategy is to increase user acquisition costs according to the results. In terms of the quality of the user board, we have seen some positive movements. At this time, there are two issues that should be improved, which are the effect of advertising expenses and reduction. Although the overall use has decreased, The number of monthly paid users is almost stable, and the percentage of paid users who are close to monthly active users has risen. On the other hand, the average income of monthly paid users and monthly paid users per person has been in the south. This is due to the fact that the long-term achievements of the title released by Kamiki have affected some. Based on these events, I think it is important to enrich the future title line-up, encourage the user's continuous use, and lead to continuous growth. On the other hand, ARPMAU, which shows the average income per monthly active user per person, and ARPDO, which shows the average income per daily active user per person, have all improved from the previous period. In July of 2026, it was a difficult year in terms of expanding the number of users, but we believe that the basis to support platform monetization is to continue to be healthy. The rate of investment has also led to improved profitability in the segment. Segment profits were $32.3 million, with a 3% increase in total expenses. In the game, the percentage of segment profits against interest rates improved from 29.3% to 33.4% in the previous year. At the same time, we continued to invest towards the next stage of growth of CTW. In the future, we will adjust the personnel system to a sustainable level that supports business operations for several years, and we will open our first North American base at the New York One World Trade Center. In addition to continuing to invest in G123, we have also advanced the maintenance of the necessary management platform as a top-level company. In addition to these investments, we have improved the platform and implemented efforts for overseas expansion, increased the operating cost of the server and platform, and reduced the operating cost as a top-level company. However, after adjustment, EBITDA maintained a plus of $3.5 million. In addition, the cash balance of the end of the year is $14,400,000, and there is no advantage or disadvantage. The sales value of North America decreased in the same period. The main reason is that we have reduced the user acquisition cost of the title that does not meet the return standard of the company. The long-term view of the North American market has not changed. North America continues to be a market with great opportunities for growth for CTW. The New York team, which was established in February, is engaged in partnership, localization, user acquisition, and corporate marketing. We will enhance the awareness and presence of CTW for users and partners in North America. The model provided through our browser is thought to be particularly attractive in the overseas market. We will reduce the time required to download and register traditional apps, so that you can enjoy the game immediately from various terminals. In addition to their efforts in the business field, this year has been an important milestone for CTW. In August 2025, they made a new leap to the Nasdaq Capital Market. In February 2026, they opened a New York base in New York, the center of North American activities, at the WAN World Trade Center. In May, CTW Cayman approved the change of name to CTW at the Chamber of Commerce. And in August, I joined Anime NYC, the largest anime event in the U.S. East Coast. Looking forward to the future, I think that the most important thing for the month of July, 2027, is the quality of the new title lineup. It is a title that is well known all over the world and is based on anime IP with high popularity. 16 of them have been released or have been pre-registered. Among them, Shouyuan Mo Shouluo's High School of the Dead Day Zero was released in late April of 2026. Within three months, it became the title of the top game of the month. Since it was released at the end of July of 2026, the results reflected in the regular sales were still limited. Since the release of G123, the U.S. market has seen strong interest and active use of the title. The data on the knowledge and user thinking obtained here will be useful for targeting when developing new titles in North America in the future. In addition to the achievements of this title, the entire future title line-up and the efforts to acquire stable users support our confidence in the return to sustainable growth. The focus policy for July 2027 is as follows. First, improve the quality of the new title line-up. We will continue to provide quality games. Secondly, we will expand our business in the overseas market, which has a strong demand for Japanese IP. Thirdly, we will expand our business efficiently and continue to invest in technology and data systems to quickly determine content and marketing. Fourthly, we will continue to invest in technology and data systems to quickly determine content and marketing. Thank you very much for your hard work and dedication to support the growth of CTW. July 20, 2026, the title is It was a year that showed that we could respond quickly even if we could not achieve the expected results. Reducing losses, protecting investment returns, adjusting EBITDA pluses and maintaining a healthy financial foundation without interest-free debt. In July of 2026, we will promote the fulfillment of the title line-up and business expansion in the overseas market based on this standard. In the first year, we will make the most of what we have learned. We believe that CTW will be able to build a stronger foundation for sustainable growth. We would like to thank all of you for your continued support for the further development of CTW. Thank you for your time today, and thank you very much for your interest in CTW. Now, I would like to hand over to Patrick Liu, who is in charge of the highest debt.

Thank you, Raishi, and good morning and good evening, everyone. As Raishi mentioned, prioritizing returns over top-line growth is central to our strategy from a financial standpoint. that ongoing discipline guided full priorities in FY26, moving quickly when new titles underperformed, keeping our advertising spend above our return threshold, investing selectively in our platform global expansion, and maintaining a strong debt-free balance sheet. The results reflect those choices. Revenue declined, but second profits grew. ROS stayed above our 100% benchmark, Adjusted EBITDA remained positive and we ended the year with 14.4 million in cash and cash equivalents and no debt. Revenue for FY26 was 82.5 million compared with 19.4 million in FY25, a decrease of 8.7%. Gross in-game purchases were 96.8 million down 9.5% year-over-year. We launched 15 new games during the year and ended fiscal year 26 with 42 active titles. However, the titles we launched in the first half performed below our expectations and the several mature titles continued moving through the later stages of their life cycle. We saw success in the launch of High School of the Dead, Day Zero, which was released toward end of April, meaning slightly over three months of contribution was recognized in fiscal year 26. So the strong user traction we have seen to date in Asia and North America with this title is only partially realized in these results. Within our user base, the decline activity was concentrated among non-paying users. Monthly active user declined 33% to approximately 2.26 million from approximately 3.38 million last year. While paying monthly active users increased slightly to approximately 89.1 thousand compared with approximately 88.5 thousand last year As a result, the ratio of paying monthly active users to monthly active users improved 3.95% from 2.62% Paying daily active users declined 13% compared with a 7% decrease in overall daily active users Well, average revenue per paying monthly active users declined to $19.60 from $100.74. We believe these trends partially reflect the weaker performance of our first half launch. RAS was 105.8% in FY26 compared with 116.4% in FY25. While lower than last year, ROS remained above our 100% benchmark, meaning the in-game purchases generated by newly acquired users continued to exceed the advertising spend used to acquire them. This supports our long-term, ROS-focused marketing strategy. We also continued to make progress on geographic diversification. Revenue from users outside of Japan increased 8.2% to 29.7 million, or 36% of our total revenue, up from 30.4% last year. Revenue from users in South Korea increased 12.4% to 10.5 million, and revenue from users in Taiwan, Hong Kong, and Macau collectively increased 71.2% to 8 million. It is encouraging to see this momentum in Asia outside of Japan. Combined revenue from users in these markets grew 31.9% to 18.5 million, or 22.4% of total revenue up from 15.5% last year, and we believe the appeal of anime across the region gives us room to build on this growth. Revenue from users in North America, which includes the United States and Canada, was 6.2 million compared with 7.5 million last year, a result of reduced user acquisition spending on underperforming titles. Building our presence in North America is a long-term effort, and our New York team, established in February 2016, is focused on partnerships, user acquisition in that region, localization efforts, and corporate communications. We expect to see a return to growth as we issue new titles and continue to implement our presence and growth initiatives in the region. Revenue from users in Japan decreased 16.1% to 52.8 million. Japan remains our largest market, but expanding our international mix remains a key strategic priority. Turning to expenses and profitability, cost of revenue increased 29.2% year over year to 28.5 million, driven largely by higher personnel or sourcing and server and software costs, along with higher revenue share to IP holders and amortization, partly offset by lower payment processing fees and the absence of the prior year prepaid royalty impairment. These increases reflect our continued investment in the team, infrastructure, and external creative resources that support our platform and game operations. General and administrative expenses increased 37.9% to 11.7 million, primarily reflecting the build-up of our corporate and administrative functions as a public company. The opening of our New York City office and approximately half a million of Taiwan business tax expense, a portion of which related to prior periods. We believe the core infrastructure required of a public company is now largely in place, and we expect the general and administrative expenses to increase only modestly in absolute terms over time as the business scales. Research and development expenses decreased 31.2% to 3.8 million. Sales and marketing expenses decreased 17.2% to 45.9 million, driven by an 11.4 million or 21.7% reduction in advertising expense to 41 million. Advertising declined at more than twice the rate of revenue. This reduction was intentional. When titles did not meet our internal performance thresholds, we scaled back marketing rather than pursue top-line growth and unattractive returns. As a result, Segment profits increased 3% to $32.3 million or 33.4% of in-game purchases, compared with $31.3 million or 29.3% of in-game purchases in FY25, as lower advertising expense more than offset lower in-game purchases and higher server costs. We reported an operating loss of $7.3 million compared with an operating loss of $1.1 million in FY25. Net loss was $4.1 million or $0.07 per share compared with net income of $3.8 million or $0.06 per share last year. FY25 net income included a $4.7 million contingent gain on recovery of previously impaired assets. and Fiscal Year 26 included an income tax benefits of 1.7 million. There are also two items worth noting for the year. First, we recorded 2 million of non-cash share-based compensation expense compared to none in Fiscal Year 25, most of which related to share options granted to directors, executive officers and certain employees in December 2025 in recognition of their long-term commitment to the company and efforts in successfully launching our IPO. Second, following our early adoption of ASU-2025-06 effective August 1st of 2025, we capitalized the $4.1 million of internal use software development costs for our G103 platform. Both items are relevant to understanding the year-over-year financial profile and the level of ongoing investment in the business. On a non-GAAP basis, Adjusted EBITDA was 3.5 million or 4.2% of revenue compared with 8 million or 8.8% of revenue in fiscal year 25. We remained adjusted EBITDA positive while reducing advertising spend and continuing investing in headcount, platform development, and our global expansion initiative. Turning to cash flow and balance sheet. Net cash used in operating activities was 3.2 million compared with 0.1 million of cash provided in fiscal year 25. This change reflected our net loss and working capital movements, including 6 million of advances to our game developers as we invest in future content. Net cash used in investing activities was 4.7 million, including the 4.1 million of capitalized software development cost. We ended fiscal year 26 with 14.4 million in cash and cash equivalents, up from $12.2 million at July 31, 2025, and supported by $10.6 million of net proceeds received at the closing of our IPO. We believe this positions us to continue investing selectively in content, systems, and international growth while maintaining strong liquidity and financial discipline. Overall, fiscal year 26 was a year of softer top-line performance, but also one that demonstrated the responsiveness of our operating model. We acted quickly when new title performance did not meet expectations, reduced advertising significantly while keeping ROS above our 100% benchmark, grew segment profits and maintained positive adjusted EBITDA and debt-free balance sheet, with a vision to return to sustained growth in fiscal year 2027. Thank you for your time and interest in CTW. I will now turn the call back to Pat for Q&A session.