eMnet Japan.co.ltd.

Business Details

Established in 2007 as the Japan entry of South Korea-based online advertising agency EMNET INC. The company is a dedicated internet advertising agency focused primarily on Search-Linked Advertising (Listing Ads) and Programmatic Display Advertising, while also offering Social Media Advertising, video advertising, In-House Support Service, and other services. Its main customer base is small and medium-sized enterprises, and it employs a hybrid model combining one-person, one-stop client handling with division-of-labor arrangements. Since 2021, SoftBank Corp. has been the parent company, and the company is also promoting sales expansion through collaboration with SoftBank. Its key management indicators are operating revenue, operating profit, and operating revenue per sales employee.

Recent Overview

Q1 operating revenue declined 2.4% YoY, but ordinary profit rose 18.7%, indicating improved profitability

In Q1 of FY2026 (ending December 2026) (January–March 2026), the company's core programmatic advertising business performed steadily, but continued upfront investment in personnel recruitment for future growth resulted in operating revenue of ¥414 million (down 2.4% YoY) and operating profit of ¥63 million (down 1.1% YoY), roughly in line with the same period last year. On the other hand, an increase in non-operating income (including recognition of ¥9,000 thousand in commission income) led to ordinary profit expanding to ¥74 million (up 18.7% YoY). The reversal of the ¥189,900 thousand provision for doubtful accounts (a provision related to restatement costs) recorded as an extraordinary loss in the same period of the prior year resulted in a return to profitability, with quarterly net profit of ¥61 million. The ¥156,890 thousand provision for restatement-related costs was also fully reversed by the end of this quarter. The full-year forecast announced (revised today) calls for operating revenue of ¥1,661 million (+4.2% YoY) and operating profit of ¥171 million (+10.0% YoY).

Key Products

Growth Drivers

• Expansion of collaboration based on the capital and business alliance with SoftBank Corp. (operating revenue from SoftBank in FY2024 ending December 2024 was ¥222 million, or 16.70% of total)
• Continued expansion of the Japanese internet advertising market (growing corporate DX demand, and the spread of video advertising and Social Media Advertising)
• Accelerated budget shift from traditional mass media driven by improved targeting precision through AI technology
• Continued solid demand for programmatic advertising targeting smartphones
• Active recruitment centered on new graduates combined with proprietary training programs to develop immediately productive talent

Risks

• Weakening advertising demand due to deteriorating business sentiment among small and medium-sized enterprise clients, the company's main customer base
• Risk of contraction in outsourced business from advertising media companies (the main cause of deteriorated performance in FY2024 ending December 2024)
• Risk of short-term cost increases from continued upfront investment in personnel recruitment for future growth
• Risk of market share decline due to intensifying competition with industry peers
• Regulatory risks specific to internet advertising, including ad fraud issues and cookie regulations
• Risks related to internal control systems and reliability arising from restatements of past financial results (the provision for restatement-related costs was fully resolved by the end of this Q1)
• Risk of revenue dependency on a specific customer (SoftBank Corp.)
• Risk of advertisers curbing budgets amid real wage stagnation caused by rising raw material prices, currency fluctuations, and price increases stemming from unstable international conditions