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CyberAgent Reports Full Year Results; Net Sales Rise 14.6%.

Tokyo, Nov 11, 2008 - (JCN Newswire) - CyberAgent, Inc. (TSE: 4751), a Tokyo-based leader in Internet media markets, has reported consolidated results for the full year ended September 30, 2008, with net sales rising 14.6% on the previous year to 87,097 million yen driven by solid growth in site listing (search results) advertising for the Internet advertising agency business as well as firm mobile advertising for the Internet media business.

Operating income fell 15.9% to 4,629 million yen from 5,501 million yen in the previous term. Although there were upfront investments to expand page views for Ameba, there was an increase in income as a result of greater sales for the internet advertising agency business, firm earnings from foreign exchange margin transactions and mobile advertising for the internet media business, and contributions to income from the disposal of shares in Mixi Inc. by the investment development business.

Net income fell 48.9% to 1,030 million yen from the 2,016 million yen in the previous term, following extraordinary losses of 968 million yen on the evaluation of securities held for investment purposes and tax expenses, including income tax and adjustments to income taxes.

Throughout the year, the CyberAgent Group has continued to work to strengthen its Group media, centered on the blog media Ameba, to reinforce its marketing power through its Internet advertising agency business, and to broaden its investment development business that makes use of the other two businesses.

In particular, the company will continue upfront investments and considers page views (PVs) as the most important indicator when developing the blog media Ameba, the company's core media.

1. Consolidated Financial Results for the Fiscal Year Ended September 30, 2008
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(yen millions) FY 9/30/2008 % change 9/30/2007 % change
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Net Sales 87,097 14.6 76,007 26.4
Operating Income 4,629 (15.9) 5,501 26.7
Ordinary Income 4,507 (12.4) 5,143 38.2
Net Income 1,030 (48.9) 2,016 (53.1)
Net Income/Share(y) 3,055.49 3,055.49
Fully Diluted
 Net Income/Share(y) 3,050.70 3,050.70
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Return on Equity (ROE) 4.1 7.0
Return on Assets (ROA) 8.0 9.5
Ordinary Income to
 Operating Revenue Ratio 5.3 7.2
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Consolidated Financial Position
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Total Assets 62,911 49,162
Shareholders' Equity 30,146 31,170
Shlders' Eqty Ratio (%) 38.5 51.9
Shlders' Eqty/share (y) 37,317.27 38,645.57
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Consolidated Cash Flows
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Cash Flow from
 Operating Activities 1,752 2,849
Cash Flow from
 Investing Activities (3,466) (4,631)
Cash Flow from
 Financing Activities (1,608) (102)
Cash and Cash Equivalents
 at Period End 14,487 17,848
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2) Results by Business Segment

The traditional business segments - internet media business (advertising, EC (sales), EC (commission/fee collection), and other), internet advertising agency business (company tie-up media, other company media, and other), and investment development business) - were based on business division criteria from an internal management perspective. However, internal management divisions and traditional business segment divisions were no longer consistent since the blog business, centered on the blog media Ameba, was designated the priority business; there had been a reorganization in order to develop the blog business as a core business; and advertising and earnings types had become more diversified following changes in the Internet market. Therefore, business segments were reorganized into the internet media business (blog), internet media business (advertising/fee collection/contents), internet media business (commerce), internet advertising agency business, and the investment development business, making them consistent with internal management divisions.

i. Internet Media Business - Blog

This business includes Ameba, the blog media operated by the company, the blog advertising distribution service MicroAd operated by MicroAd, and the word-of-mouth marketing business within Cyber Buzz that generates derivative word of mouth by networking influential bloggers (influencers) through blogs. The increase in page views (PVs) for Ameba is considered the most important indicator, and the number of page views for September 2008 had risen to 5.62 billion, a dramatic increase of 3.95 billion compared to the 1.67 billion for September 2007, following continued upfront investments.

Therefore, sales for the segment rose 87.4% to 3,571 million yen from 1,905 million in the previous term, and the business posted an operating loss of 1,758 million yen compared to an operating loss of 2,018 million yen for the previous term.

ii. Internet Media Business - Advertising/fee collection/content

This business segment includes mobile advertising, centered on the mobile portal ixen operated by CA MOBILE, Ltd., the price comparison site operated by EC Navi, online game fee collection service provided by GCREST Co., Ltd., and financial operations such as foreign exchange margin transaction business operated by CyberAgent FX. As a result of aggressive advertising and firm growth in the number of members, sales increased 59.2% to 27,289 million yen from 17,143 million yen in the pervious term, and the business recorded operating income of 4,134 million yen, 754.6% increase from a 483 million operating income for the previous term.

iii. Internet Media Business - Commerce

The business segment includes online shopping businesses, including the mobile and PC "gathering" (joint purchasing) operated by netprice.com, ltd., and "ONE*FESTA" operated by CA Mobile, Ltd. The CyberAgent Group worked to improve the profitability of the business, which included efforts such as reducing expenses by concentrating on particular sales locations, shrinking inventories, and structuring operations.

Therefore, sales for the segment fell 8.3% to 17,537 million yen from 19,127 million yen for the previous term, and the business was able to record operating income of 744 million yen compared to an operating loss of 159 million yen for the previous term.

iv. Internet Advertising Business

This business segment includes the Internet advertising agency business, centered on the company's Internet Advertising Management Division, the SEM (search engine marketing) business, and the Ad Network business. There are growing customer needs and a greater volume of site listing advertising, and the business has worked to capture demand for SEO (search engine optimization) which is rapidly growing.

As a result, sales for the segment increased 19.8% to 41,632 million yen from 34,754 million in the previous term, and the company posted operating income of 488 million yen, a 129.8% increase compared to the 212 million for the previous term.

viii. Investment Development Business

This business segment is composed mainly of the company's corporate venture capital business and fund management operations within CyberAgent Investment. The business has several responsibilities, including discovering, developing, and raising the value of promising venture companies with the goal of generating capital gains. For various reasons including the disposal of its holding in Mixi Inc., sales decreased 72.5% to 2,109 million yen from 7,681 million yen in the previous term, and operating income shrank 85.4% to 1,019 million yen from 6,983 million yen in the previous term.

3) Outlook for the Year Ending September 30, 2009

According to a report by Dentsu Inc. released on April 16, 2007, the Internet advertising market is projected to grow 14.2% between 2008 and 2009, and the Internet business market will likely continue to record firm growth.

Under these conditions, various components of the Internet advertising business, such as site listing (search result) advertising and search engine optimization (SEO), are projected to expand. As for the blog media (Ameba) business, which the CyberAgent Group is focusing on the most, the number of page views (PVs) grew to 5.96 billion in October 2008 - growth in the number of PVs continues to be the most important indicator - and full-scale efforts are being implemented to make this business profitable through upfront investments. Earnings from the mobile business, online game business, and foreign exchange margin transaction business were firm, and they will likely make contributions to both sales and income during the next fiscal period.

Earnings projections for the full fiscal year ending September 31, 2009, which take into consideration these conditions, are provided below. In addition, for various reasons such as the impact of the period of peak advertising demand, the end of the first half, on earnings and the substantial effect of economic and market conditions, including market trends and liquidity, on earnings from the foreign exchange margin transaction business, projections for the first half have not been released but will be quickly provided at the end of the first quarter.
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 (millions of yen)
 Fiscal Year ending September 30, 2009
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Net Sales 97,000 87,097
Ordinary Income 4,700 4,629
Operating Income 4,500 4,507
Net Income 1,200 1,030
Net Income/Share 1,850.87 yen
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4) Consolidated Financial Position and Cash Flows

Consolidated assets at the end of the fiscal year rose 13,749 million yen from the end of the previous fiscal year to 62,911 million yen because of an increase in deposits received accompanying healthy growth in assets deposited as collateral for foreign exchange margin transactions although there was a decline in cash and deposits due to share buybacks and the payment of taxes.

Liabilities rose 14,772 million yen compared to the end of the previous fiscal year to 32,764 million yen as a result of an increase in several items including the deposits for margins from customers for foreign exchange transactions. Net assets declined 1,023 million yen compared to the end of the previous fiscal year to 30,146 million yen for various reasons including share buybacks and retirement of these shares.

As a result, the equity ratio fell 13.4 percentage points from the end of the previous fiscal year to 38.5% at the end of the fiscal year.

Cash and cash equivalents ("cash") at the end of the fiscal year totaled 14,487 million yen, a decline of 3,360 million yen compared to the 17,848 million yen at the end of the previous fiscal year.

Cash flow from operating activities:

Cash flow derived from operating activities for the current fiscal year was 1,752 million yen, as compared to a 2,849 million yen inflow for the previous fiscal year. This was primarily due to the posting of income.

Cash flow from investing activities:

Cash flow used in investing activities for the current fiscal year totaled 3,466 million yen, as compared to a 4,631 million yen outflow for the previous fiscal year. This was mainly because of the payment of deposits and the acquisition of investment securities and fixed assets.

Cash flow from financing activities:

Cash flow used in financing activities for the current fiscal year was 1,608 million yen, as compared to a 102 million yen outflow for the previous fiscal year, primarily due to the share buybacks and the payment of dividends.

5) Dividends

The Group is aware that sharing profits with shareholders is an important issue and would like to continue to pay dividends that are tied to corporate earnings while increasing the medium- and long-term value of shares through various efforts including business expansion and the more efficient use of capital. In particular, with the aim of paying around 30% of the difference between consolidated net income and the sum of extraordinary loss/income and special items such as tax deductions due to losses carried forward, the Group decides the actual figure based on a comprehensive consideration of items such as internal reserves for improving the financial soundness of the Group and developing future businesses.

The Group expects to pay an annual dividend of 700 yen per share as announced on August 12, 2008.

The Group also expects to pay an annual dividend of 700 yen per share for the full year ending September 30, 2009.

* Business results forecasts represent the judgment of the Company, based on information obtainable at the time of writing; they involve contributing factors such as risk and elements of uncertainty; hence actual results may differ from the forecast results.

About CyberAgent, Inc.

CyberAgent, Inc. (TSE: 4751; ISIN: JP3311400000) is a leading on-line advertising agency and media representative company. Established in 1998, and listed on the Tokyo Mothers Exchange in 2000, the CyberAgent group is committed to contributing to a new society through its work on the Internet, not only in its fields of advertising and media, but through finding promising new business and investing aggressively in developing new business. For more information, please visit http://ir.cyberagent.co.jp/ir_e/

Source: CyberAgent, Inc.

Contact:
CyberAgent
Public and Investor Relations Division
Akiko Kashiwa
Tel: +81-3-5459-0227
Email: kashiwa_akiko[@]cyberagent.co.jp


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Date:Nov 12, 2008
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