Thinking Points

  • The Voyage Group (TSE: 3688) primarily operates internet advertising platforms and secondarily operates several media sites and a startup incubator.
  • The company has grown revenues for 18 years straight since its founding, despite going through several drastic business transformations.
  • With that said, operating performance has been all over the board, and fortunately consistently profitable so far.
  • More recently, the Voyage Group announced its merger with Cyber Communications, a subsidiary of the largest advertising company in Japan, Dentsu (TSE: 4342).
  • Given the highly competitive industry environment, unpredictable business performance, and the coming merger, investors without expertise in the internet advertising domain should steer clear of Voyage for now.


The Voyage Group (TSE: 3688) primarily operates internet advertising platforms and secondarily operates several media sites. Additionally, it has an incubation arm that invests in startups. Though the company started out with media sites, its  two internet advertising platforms, fluct and Zucks, now account for a majority of company revenues.

The company reports through three segments: Internet Ad Platforms, Point Media, and Incubation:

Source: Company filings

Voyage went public in July 2014 on the Mothers section of the Tokyo Stock Exchange. Its shares were transferred to the First section in September of 2015. In October 2018, Voyage announced its merger with Cyber Communications, a wholly owned subsidiary of Dentsu (TSE: 4324), Japan’s largest advertising firm.

The business & environment


Founded in 1999, the Voyage Group is still a young company. Looking at its historical financials, however, some may point to the stable growth and categorize the business as a late stage startup. But its story has been one of constant change, managing to turn profits by quickly adapting to its environment. And founder CEO Shinsuke Usami’s life story has been one of constant change as well.

Source: Company presentation

During his first year in college, Shinsuke got married and had a child. In Japan, that’s a rarity. According to an interview with Kigyo TV, this was a tipping point for Shinsuke. Prior to getting married, he was working to land a good job and move up. After getting married, he realized that a “normal” life was no longer available to him, and started thinking about starting up his own business.

Despite his thoughts on business ventures, Shinsuke actually muscled through college and landed a job at Deloitte Tohmatsu Consulting in 1996. Three years later, bored of his consulting job, Shinsuke started an online job board which was funded by the Japanese government. This didn’t gain traction and quickly folded, but he then moved on to start Voyage Group with a friend.

From Media to Internet Ad Platforms

The company first built MyID (now EC Navi), a website that gives users points for shopping (which can then be exchanged for other goods or cash). In 2001, Voyage entered into a capital alliance with CyberAgent (TSE: 4751), becoming its child company. Then, realizing the limitations of scale, the company started PeX (2007), a website for exchanging points.

Source: Website

It wasn’t until 2008 that Voyage stepped outside of media and into internet advertising platforms. The company founded adingo (now called fluct), an internet ad platform designed to maximize ad revenues for publishers (i.e., “supply side platform”). This is now Japan’s largest supply side ad platform.

In 2011, Voyage founded Zucks, a performance-based ad platform for smartphone advertising mainly geared toward maximizing ad-efficiency for advertisers. It is, like fluct, also used to maximize ad revenues for publishers. Today, after a decade, the two ad platforms account for more than half of the company’s operating profit.

Voyage, through an MBO in 2012, regained its independence from CyberAgent. The company went public in July 2014 on the Mothers section of the Tokyo Stock Exchange. Then its shares were transferred to the First section in September of 2015. In October 2018, Voyage announced its merger with Cyber Communications.

Some risks

The biggest risk for Voyage is if any one of the major advertising platform operators, like Google, Facebook, or Yahoo!, changes its ad policies or decides to cutoff Voyage as a partner altogether. As a recent example, Google rolled out a new ad-blocking functionality on its Chrome browser in February 2018, which blocks ads that are deemed intrusive.

Competition is also fierce. In fact, a company we covered recently,  i-Mobile (TSE: 6535), is one of Voyage’s key competitors. Recent operating performance for i-Mobile’s internet ad platform business has been pressured. Interestingly, Voyage started a local government tax donation website recently, which is also in direct competition with i-Mobile.

Recent performance

Voyage’s fiscal 2018 earnings presentation, which is also available in English, is a little peculiar.

Source: Company presentation

The striped gray area for fiscal 2017 is for operating income driven by presumably low performing publishers, which advertisers tended to avoid. The company reviewed transactions with these publishers and adjusted terms. It’s clear from the above chart that these were high margin revenues. Going forward it’s appropriate to look at fiscal 2018 margins as normalized.

Source: Company presentation

The Point Media segment saw an increase in revenues coupled with a decrease in operating margins. The company revised point redemptions rates to better position itself against competition, resulting in lower margins.

Source: Company presentation

Meanwhile, the Incubation segment dug deeper into operating losses. This isn’t particularly surprising, and this is probably Voyage’s most unpredictable segment, for better or for worse.

Overall, recent operating performance is on a declining trend at Voyage, however, revenue growth continues. While Voyage’s ability to adapt to the ever-changing business environment so far has been impressive, it’s difficult to say the company has a well-established line of business. Voyage management reserved guidance for fiscal 2019 as it plans to merge with Cyber Communications.

Merger with Cyber Communications

First things first, Voyage has had capital tie ups with Dentsu from 2007, so the fact that it is merging with a Dentsu subsidiary isn’t entirely surprising. The basic idea behind Voyage’s merger with Cyber Communications is that Voyage has the technological aptitude and Cyber Communications has the strong national client list, and that merging is mutually beneficial.

Source: announcement (Japanese), translations by author

Interestingly, Cyber Communications has 3.3 times the revenues of Voyage, but the same level of operating income. With that said, Cyber Communication’s media handling volume has been on a consistent growth trend, not all that dissimilar from Voyage:

Source: announcement (Japanese), translations by author

The 2015 drop is due to a change in fiscal reporting period, resulting in a 9-month reporting period for 2015.

How this will work is that both companies will go under one holding company, effecting January 1st, 2019. As it currently stands, the plan is to keep the holding company public. Here’s how ownership will look like:

Source: announcement (Japanese), translations by author


As of fiscal 2018 end (September 30, 2018), Voyage had 11,890,346 shares issued and no shares in treasury.

Here are the major shareholders:

Source: company filings

Shinsuke has not purchased or sold any shares in the past year. Hidenori Nagaoka is the CFO of Voyage.

There are currently 812,600 stock options outstanding, or about 6.8% of issued shares.

Financials & Valuation

  • Despite changes in the business environment, Voyage has managed to grow revenues for 18 straight years since its founding.
  • That said, operating performance has been all over the board, though still consistently profitable.
  • Given how quickly Voyage’s business has changed, it’s difficult to estimate with any degree of certainty how the company will perform in the future. The merger with Cyber Communication adds to the difficulty.
  • Investors with domain expertise in internet advertising platforms ought to take a closer look. With that said, given the unpredictability of Voyage’s business performance and the highly competitive industry environment, it is best to avoid investing in the company.

Japan’s programmatic internet advertising market (which is what Voyage is primarily engaged in) grew at 22% CAGR over the last six years. Meanwhile, the overall Japanese internet advertising market grew at 11% CAGR over the last six years.

Source: Company presentation

Current EV/EBIT, without adjusting for investment assets, is 6.3x. Adjusted EV/EBIT is 3.8x. i-Mobile and Full Speed (TSE: 2159) both trade at similar valuations while other peers like SoldOut (TSE: 6553) and Geniee (TSE: 6562) trade at 40+ and 300+ EV/EBIT, respectively.

If we take a (somewhat) conservative measure and assume Voyage’s internet ad platform business grows at half the pace of the overall Japanese internet advertising market, while maintaining current business performance and other segments keeping flat, operating income ought to come in at 1,600 million yen ($14.1 million USD) in three years. As a reference, operating income came in at 1,420 million yen ($12.5 million USD) for fiscal 2018.

Using the above scenario, purchasing at a price of 1,100 yen per share, we’re looking at an investment CAGR of 6.3% over the next three years (with stock options being fully exercised). And you should take that with a bucket of salt, considering that internet ad platforms is a hyper-competitive industry, Voyage has never maintained consistent performance, and most importantly, the company is merging.

Investors interested in Japanese internet advertising platforms should follow Voyage. With that said, it is best to avoid investing in the company without a deeper level of domain expertise as there’s no telling how the business will perform, especially with a competitive industry environment.

The bottom line

Voyage has managed to continue growing its top line for 18 years straight while making several drastic business transformations. During this process, the company built itself into one of the leading supply side internet advertising platforms in a highly competitive industry. Still, operating performance remains unpredictable, and the company is set to merge with Cyber Communications on January 1st, 2019. While the company is interesting to read about, it is best for investors without expertise in internet advertising to simply avoid investing in the company.

Kenkyo Investing
Kenkyo Investing

Kenkyo Investing applies a value investing approach to Japanese equities, providing insights that are often unavailable to non-Japanese speakers.