FAN Communications (2461): FY2025 Results Summary — Operating Income Up 23.1% as A8.net Drives Margin Expansion

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

FAN Communications, Inc. (TSE Prime: 2461) released its FY2025 full-year results on February 10, 2026. Transaction volume declined 2.4% year on year to 25,131 million yen, but net sales rose 1.9% to 7,096 million yen and operating income climbed 23.1% to 1,965 million yen, as AI-driven productivity improvements and disciplined resource allocation lifted the operating income to transaction volume ratio by 1.6 points to 7.8%. Operating income and all subsequent profit lines beat the full-year forecast that had already been revised upward on August 8, 2025. Profit attributable to owners of parent, however, fell 7.9% to 1,307 million yen. Alongside the results, the company revised part of its Medium-Term Management Plan and changed its shareholder return policy to a DOE-based framework.

Consolidated Results (Full-Year Actual)

The company’s mainstay CPA Solution Business saw transaction volume contract, but a higher mix of strategic businesses with high gross profit margins kept net sales growing. Operating income rose 369 million yen year on year. Ordinary income increased 20.6% to 2,014 million yen. Profit attributable to owners of parent declined by 111 million yen, and the profit to transaction volume ratio slipped from 5.5% to 5.2%.

(Millions of yen)	FY2024 Full-year results	FY2025 Full-year results	Change	Change (%)
Transaction volume	25,753	25,131	(622)	(2.4%)
Net sales	6,961	7,096	+134	+1.9%
Operating income	1,595	1,965	+369	+23.1%
(Operating income to transaction volume ratio)	6.2%	7.8%	–	–
Ordinary income	1,670	2,014	+343	+20.6%
Profit attributable to owners of parent	1,419	1,307	(111)	(7.9%)
(Profit to transaction volume ratio)	5.5%	5.2%	–	–

Against the full-year forecast revised upward on August 8, 2025, operating income and every profit line below it were achieved. Net sales came in below plan at a 95.4% achievement rate, reflecting transaction volume that finished slightly short of plan.

(Millions of yen)	FY2025 Full-year forecast (August 8, 2025 revision)	FY2025 Full-year results	Achievement rate
Net sales	7,440	7,096	95.4%
Operating income	1,950	1,965	100.8%
Ordinary income	1,940	2,014	103.8%
Profit attributable to owners of parent	1,280	1,307	102.2%
(Earnings per share)	19.32	19.74	102.2%

On the balance sheet, total assets at the end of FY2025 were 22,927 million yen, down 429 million yen (1.8%) from the end of the previous fiscal year. Cash and deposits fell 2,223 million yen (13.1%) to 14,694 million yen, which the company attributes to dividend payments and purchases of bonds, while investments and other assets rose 2,536 million yen (169.0%) to 4,036 million yen. Net assets stood at 17,580 million yen, down 2.7%.

Overview by Business and Key Indicators

In the CPA Solution Business, A8.net transaction volume in Q4 was down 12.7% year on year as advertising budgets were revised in certain categories, even though seasonal demand was captured steadily. Overall CPA Solution transaction volume in Q4 was 5,527 million yen, down 13.2% year on year, with A8app at 299 million yen (down 24.6%). On an internal management basis, the Q4 gross profit margin was 23.9% (up 0.2 points year on year) and the operating margin was 11.7% (up 0.2 points year on year, down 0.3 points quarter on quarter). The company notes that gross profits are expected to decline going forward due to intensifying competition for existing media ad inventory driven by changes in search behavior associated with the rise of AI, and that it changed its organizational structure in January 2026 to respond to these structural changes.

Among the strategic businesses, WAND (influencer marketing support) launched NOX in August and expanded LUMOS into non-music domains, but progress lagged behind plan. N-INE has begun to produce successful cases, yet revenue is still primarily non-recurring and progress also lagged behind plan. The FAN marketing businesses GERA and YOOR both saw steady growth in recurring sales, the churn rate stayed stable at a low level, and monthly profitability was achieved for December. At FANCOMI Global, optimization of investment in advertising improved operating profit in Q4, and the transaction volume composition ratio of the advertising agency business fell from 65% in 2024 to 35% in 2025.

The company tracks three key indicators under the FY2025-FY2027 Medium-Term Management Plan: net sales of strategic businesses (FY2027 target: strategic businesses at roughly 40% of the net sales mix), operating margin (FY2027 target: 10%), and operating income per employee (FY2027 target: approximately twice the FY2024 level). In Q4 of FY2025, strategic business net sales were 326 million yen (up 16.8% year on year, down 27.8% quarter on quarter), the strategic business net sales mix was 19%, the operating income to transaction volume ratio was 8.0% (up 0.2 points year on year, up 0.9 points quarter on quarter), and operating income per employee was 1,261 thousand yen (up 3.3% year on year, up 12.1% quarter on quarter).

Business / Indicator	Metric (Q4)	FY2025 Q4	FY2024 Q4
CPA Solution — A8app	Transaction volume (millions of yen)	299	396
CPA Solution — Other	Transaction volume (millions of yen)	52	37
Strategic businesses	Net sales (millions of yen)	326	280
Company-wide	Operating income to transaction volume ratio	8.0%	7.8%
Company-wide	Operating income per employee (thousands of yen)	1,261	1,221

Partial Revision of the Medium-Term Management Plan

FAN Communications revised part of its Medium-Term Management Plan. FY2025 operating income of 1,965 million yen exceeded the initial target of 1.81 billion yen (revised upward to 1.95 billion yen in August 2025). For FY2026, the initial plan of 2.4 billion yen was revised down to 2.18 billion yen so the company can adapt to changing customer needs driven by increasing adoption of AI, implement AI in products, invest actively in AI-driven operations, and shift the strategic businesses to a recurring revenue model. The FY2027 plan remains unchanged. The final-year targets are operating income of 3.0 billion yen and an ROE of 10% or higher; the presentation shows ROE of 6.9% in FY2023, 7.9% in FY2024 and 7.4% in FY2025, with forecast values of 8.2% for FY2026 and 11.4% for FY2027.

Operating income (millions of yen)	FY2023	FY2024	FY2025	FY2026	FY2027
Measured / forecast values	2,068	1,595	1,965	2,180	3,000
Return on equity (ROE)	6.9%	7.9%	7.4%	8.2%	11.4%

On capital allocation through FY2027, the company plans 1 billion yen of investment in AI utilization and internal businesses, 6 billion yen of M&A investment, business working capital of 4 billion yen and strategic cash reserves of 8 billion yen. Cash on hand is projected to move from 17.0 billion yen at the end of FY2025 to 12.0 billion yen at the end of FY2027, with operating CF of 6.0 billion yen, investment CF of (7.0) billion yen and financing CF of (4.0) billion yen. A 15% IRR has been set as the hurdle rate for M&A investment decisions, targeting domains that maximize synergies with the company’s base of roughly 3,000 corporate clients.

FY2026 Forecast

For FY2026, the company views changes in the market environment driven by AI adoption as a growth opportunity and will invest accordingly. Reflecting revisions to plans for certain strategic businesses, it targets net sales of 7,800 million yen (up 9.9%) and operating income of 2,180 million yen (up 10.9%).

(Millions of yen)	FY2025 Full-year results	FY2026 Full-year forecast	Change (%)
Net sales	7,096	7,800	9.9%
Operating income	1,965	2,180	10.9%
Ordinary income	2,014	2,200	9.2%
Profit attributable to owners of parent	1,307	1,430	9.4%
(Earnings per share)	19.74	21.57	9.3%

FY2026 key indicators are the company-wide operating margin, operating income per employee, the number of FANCOMI customer IDs that generate sales, and the cross-selling number and rate.

Shareholder Returns

From FY2026 the shareholder return policy will be revised, replacing the former benchmark of a consolidated dividend payout ratio of approximately 50% with a dividend on equity (DOE) ratio of 8% as the indicator, and introducing an interim dividend. The company will maintain a baseline DOE of approximately 8% until FY2027, aiming both to stabilize dividends so they are not affected by earnings fluctuations and to improve capital efficiency. The dividend per share chart shows a year-end dividend of 19 yen for each year from 2020 through 2025, with an additional 8 yen A8.net 25th anniversary dividend in FY2025, which the company describes as an interim commemorative dividend paid during the fiscal year. The FY2026 forecast is 21 yen, split into an interim dividend of 10.5 yen and a year-end dividend of 10.5 yen. The company also plans to repurchase shares to implement its RS plan and will consider opportunistic share repurchases.

Issues to Be Addressed

The company lists four issues: the revenue structure for strategic businesses has not yet fully transitioned to a stock-based model and remains highly volatile; it must respond to structural changes in the digital marketing business due to AI adoption; it must respond to changing A8.net advertiser and media needs due to AI adoption; and it will promote further internal use of DX and AI. Strengthening priorities for FY2026 include investing to rebuild the revenue structure of strategic businesses such as N-INE and WAND into a low-volatility stock-based model, accelerating organizational restructuring and AI implementation in products, and establishing a company-wide unified customer management infrastructure to maximize cross-selling.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.