CyberAgent Earnings: Faster Media Breakeven but Concerns About Game Outlook

CyberAgent’s December-quarter results exceeded our expectations, mainly due to a stronger improvement in the profitability of the media segment and robust revenue growth in the advertising segment. While we view near-term results positively and believe the company is on track to surpass its fiscal-year 2024 guidance, we are still uncertain about the mid- to long-term outlook for the game business, as we believe it will be difficult to fundamentally improve margins without ramping up releases of original intellectual property, or IP, games. Therefore, although we are raising near-term margin forecasts, we maintain our fair value estimate of JPY 1,000 based on a conservative outlook for the game business. We think shares are currently fairly valued.