GMO Internet's GPU Cloud Lifts Operating Profit 46% as an April Share Sale Rebuilds the Balance Sheet

The GPU cloud has moved from cost to contributor

GMO Internet, Inc. (TSE: 4784), the Tokyo-listed operator of domain registration, hosting, internet-access and GPU-cloud services inside the GMO Internet Group, published consolidated results for the six months to June 30, 2026 on August 14, 2026 under Japanese GAAP. Revenue rose 7.2% to ¥41,279 million, operating profit 46.2% to ¥4,765 million, ordinary profit 39.5% to ¥4,543 million and interim profit attributable to owners of the parent 28.1% to ¥3,088 million, for basic earnings per share of ¥10.83 against ¥8.79. Comprehensive income was ¥3,006 million, up 16.5% — slightly below the ¥3,078 million of interim profit, because ¥109 million of unrealised losses on securities outweighed ¥38 million of favourable currency translation.

Internet Infrastructure — domains, servers, internet access and the GPU cloud, plus the overseas infrastructure business run under the Z.com brand in Vietnam, Thailand and other Asian markets — grew revenue 12.2% to ¥35,885 million and segment profit 27.0% to ¥4,539 million. That is 86.0% of the ¥41,711 million reporting-segment revenue total and 92.2% of the ¥4,923 million of segment profit. The established lines held up, with the access business concentrating on own-brand products led by GMO とくとくBB (GMO Tokutoku BB) and optimising sales mix to strengthen recurring revenue. The new line is what changed the shape of the half: GMO GPU Cloud turned profitable on a standalone basis in the fourth quarter of FY12/2025 and has now, the company says, entered a profit-contribution phase while running at a high utilisation rate. The board approved ¥6.9 billion to add 42 NVIDIA B300 units on April 10, 2026, for installation from August 2026, and the company cites a Fuji Chimera Research forecast of a 39% compound annual growth rate in the data-centre GPU-server market from 2024 to 2029. It names a strategic partnership with Turing Inc. and a sales-partner agreement with ITOCHU Techno-Solutions (CTC) as the routes to broader industry adoption. A second resolution on August 10, 2026, disclosed here as a subsequent event, commits a further ¥10.1 billion of GPU servers and peripheral equipment for installation from January 2027; the company judges the effect of both on FY12/2026 consolidated results to be minor.

Cost of sales did not move, and that is the whole margin story

Revenue grew ¥2,773 million while cost of sales fell ¥65 million, from ¥25,877 million to ¥25,812 million — down 0.3% against 7.2% more revenue. Gross profit therefore rose 22.5% to ¥15,467 million and the gross margin from 32.8% to 37.5%. Selling, general and administrative expenses rose 14.2% to ¥10,701 million, well behind gross profit, so the operating margin widened from 8.5% to 11.5%. Below the operating line the direction reverses. Net non-operating items swung from −¥4 million to −¥223 million: non-operating income fell from ¥125 million to ¥52 million as a ¥48 million foreign-exchange gain became a ¥20 million loss, while non-operating expenses rose from ¥129 million to ¥275 million on ¥124 million of share-issuance costs from the April offering and interest expense up from ¥79 million to ¥98 million. That is why ordinary profit grew 39.5% where operating profit grew 46.2%. Pre-tax profit rose only 34.2%, to ¥4,543 million from ¥3,385 million, because the prior half carried extraordinary items this one does not — a ¥1,925 million government subsidy against a ¥1,795 million asset-reduction loss. Tax expense of ¥1,465 million was 32.2% of pre-tax profit against 29.3% a year earlier, and a ¥10 million loss attributable to non-controlling interests lifted the parent's share above group net profit.

The balance sheet grew on new equity, not on earnings

Total assets rose 46.0%, from ¥51,528 million to ¥75,239 million, and net assets 143.9%, from ¥14,069 million to ¥34,316 million. Almost none of that came from trading. The company carried out a new share issuance and secondary offering in April 2026: a public offering of 30,000,000 shares, paid in on April 27, added ¥10,191 million each to stated capital and to capital reserve, raised capital surplus by ¥10,094 million and brought in ¥20,259 million of cash. Retained earnings actually fell ¥109 million, the ¥3,088 million of interim profit being more than absorbed by ¥3,197 million of dividends. Equity attributable to owners went from ¥13,686 million to ¥33,782 million and the equity ratio from 26.6% to 44.9%, a gain of 18.3 points. The company gives four purposes for the raise: funding capital investment in the GPU-cloud business, compliance with the Tokyo Stock Exchange Prime market's listing-maintenance criteria, improved liquidity, and a broader shareholder base weighted toward retail investors. It states that it satisfied the tradable-share-ratio criterion and completed compliance with all of the Prime market's listing-maintenance criteria as of April 28, 2026.

The money is visible on the asset side but not yet in fixed assets. Cash and deposits rose ¥19,604 million to ¥33,493 million and investment securities ¥4,061 million to ¥5,078 million, while tangible fixed assets rose only ¥885 million to ¥10,086 million — inside which lease assets rose ¥1,921 million to ¥4,706 million as buildings and equipment declined. Purchases of tangible fixed assets in the cash flow statement came to just ¥102 million, against ¥4,232 million spent on investment securities and ¥449 million on intangibles, so the additions to productive capacity are arriving as leased assets rather than as outright purchases. Liabilities rose ¥3,463 million to ¥40,922 million, mainly ¥5,000 million of new short-term borrowings and ¥2,173 million more lease obligations, offset by a ¥742 million fall in income taxes payable.

The share count is why the per-share line lags the profit line. Shares outstanding went from 274,698,528 to 304,698,528, and the weighted average for the half from 274,164,470 to 285,020,505 — up 4.0%, even though the new shares were on the register for barely two of the six months. Profit attributable to owners rose 28.1%, but earnings per share only 23.2%, from ¥8.79 to ¥10.83. The gap widens from here: the company's full-year guidance of ¥20.05 per share is struck on the whole 30,000,000-share increment, not on a part-period weighting. No diluted figure is disclosed for the current half; the prior half showed ¥8.77.

Advertising sold less and earned six times as much

Internet Advertising and Media did the opposite of the infrastructure business on both lines: revenue fell 14.4% to ¥5,826 million while segment profit rose 476.4%, to ¥383 million from ¥66 million, taking the segment margin from 1.0% to 6.6%. The company attributes the revenue decline to a structural change in the industry — advertisers bringing marketing in-house — and the profit recovery to organisational restructuring, principally the redeployment of staff to optimise the group-wide structure. The segment is also being pointed at the infrastructure customer base: alongside the GMO SSP delivery platform and its own web media, the group now sells customer-acquisition support to companies that have already bought a domain, led by the AI-based web marketing tool GMO AIかんたん集客 (GMO AI Kantan Shukyaku) covering SEO, social-media operation and article production, with the explicit aim of converting one-off sales into recurring revenue. On the market itself the company cites Dentsu's estimate that Japanese internet advertising spend reached ¥4.0459 trillion in 2025, up 10.8% — the first time above ¥4 trillion and, at 50.2% of total advertising spend, the first time above half.

Half the year is banked and guidance has not moved

Full-year FY12/2026 guidance is unchanged from the February 12, 2026 forecast: revenue of ¥82,000 million (+4.4%), operating profit of ¥9,460 million (+15.0%), ordinary profit of ¥9,100 million (+9.0%) and profit attributable to owners of ¥5,900 million (+6.1%), for earnings per share of ¥20.05. The half banked ¥3,088 million of that ¥5,900 million — 52.3% — with revenue at 50.3% and operating profit at 50.4% of their full-year marks. The arithmetic leaves an implied second half of ¥40,721 million of revenue, ¥4,695 million of operating profit and ¥2,812 million of attributable profit: each slightly below the half just reported, which is a conservative shape for a business that has just committed ¥17.0 billion to new capacity. The annual dividend forecast is ¥21.51, up 6.2% from ¥20.26, and is unrevised; only the annual amount is forecast, with payment made quarterly, and ¥6.02 and ¥4.85 have already been declared for the first and second quarters. Every quarterly dividend paid for FY12/2025 and both declared so far for FY12/2026 include a commemorative component — ¥7.06 of last year's ¥20.26, and ¥3.77 of the ¥10.87 declared to date. Payment of the interim dividend is due to start on September 24, 2026. Operating cash flow was ¥3,681 million against ¥6,297 million a year earlier, held back by ¥2,399 million of tax paid; the investing outflow widened to ¥4,697 million from ¥69 million and financing turned to an inflow of ¥20,674 million from an outflow of ¥2,361 million. Cash and equivalents closed at ¥33,487 million, up ¥19,657 million. There was no change in the scope of consolidation and no change in accounting policy, and as an interim tanshin the statements are not subject to audit review.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.