FAN Communications, Inc.

Business Details

An affiliate service provider business that offers the performance-based advertising service "A8.net" and the smartphone app CPI advertising service "A8app" to companies conducting marketing activities on the internet. It intermediates between advertisers and partner sites, providing integrated management of performance calculation, ad fee collection, and performance-based payment. In FY2025 (ending December 2025), net sales were ¥5,661 million, accounting for approximately 79.8% of the group's total net sales, making it the core segment. In Q1 FY2026 (ending December 2026), the segment experienced lower revenue and profit due to a decline in the number of active advertisers and a decrease in commission rates, but it is working to support profitability through cost optimization centered on personnel expenses.

Recent Overview

Net sales declined 16.8% and profit declined 18.9% due to a decrease in active advertisers and lower commission rates

In Q1 FY2026 (ending December 2026), net sales in the CPA Solutions Business were ¥1,281 million (down 16.8% year on year), and segment profit was ¥847 million (down 18.9% year on year). The main causes were a decline in the number of active advertiser IDs for A8.net from 3,084 to 2,996 and a decrease in commission rates. On the other hand, due to continued cost optimization centered on personnel expenses, the segment profit margin was maintained at nearly the same level as the prior-year quarter, at 66.2% versus 66.0%. The number of registered partner sites increased to 3,650,615 compared to the end of the previous fiscal year.

Key Products

Growth Drivers

• Continued advertiser demand due to the high cost-effectiveness of performance-based advertising
• Continued increase in the number of registered partner sites (3,650,615 sites)
• Maintenance and improvement of profit margins through cost optimization centered on personnel expenses
• Improved matching accuracy through AI utilization (accelerated AI implementation in A8.net)
• Expected increase in participation of younger generation partner sites centered on social media
• Cross-selling opportunities through collaboration with influencer marketing and other services

Risks

• Declining trend in the number of active advertiser IDs (continuous decline from 3,084 to 2,996 IDs)
• Top-line pressure from declining commission rates
• Structural change involving decreased organic traffic to SEO-dependent partner sites due to the spread of generative AI (AI Overview)
• Decline in the customer acquisition power of affiliate media due to changes in search behavior across a wide range of age groups (shift to AI-based search)
• Risk of market share decline due to intensifying competition with competitors
• Legal risks such as tightened regulation in the internet advertising market and risks related to the Act against Unjustifiable Premiums and Misleading Representations