Visional,Inc. FY2026 FY Earnings Report

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Executive Summary

The Company secured higher revenue and earnings, primarily due to the expansion of HRTech; however, the earnings growth rate fell below the revenue growth rate because of increased expenses and expanded losses in Incubation. Revenue was ¥993.0B (+23.9% YoY), Operating Income was ¥245.6B (+14.6%), Ordinary Income was ¥267.0B (+17.5%), and Net Income attributable to owners of the parent was ¥185.7B (+16.4%). The gross profit margin remained high at 89.2%, but declined from the previous year, while increased SG&A expenses and amortization of goodwill pressured margins.

Factors Affecting Business Performance

【Revenue】Revenue of ¥993.0B increased +23.9% YoY, with the core HRTech segment driving growth at ¥938.1B (+21.9% YoY; 94.5% of total revenue). The Incubation segment delivered high growth at ¥54.9B (+74.8% YoY), although its contribution to consolidated revenue remains small.

【Profit and Loss】Operating Income increased to ¥245.6B (+14.6% YoY), securing earnings growth, although the growth rate was below that of revenue. HRTech maintained high profitability, with Operating Income of ¥286.7B (+15.9% YoY) and an Operating Income margin of 30.6%. Meanwhile, Incubation posted an Operating Loss of ¥24.3B, widening from a loss of ¥16.9B in the previous year, and an Operating Income margin of negative 44.4%, diluting the consolidated margin. SG&A expenses increased to ¥640.0B (+24.4% YoY), exceeding revenue growth, while goodwill amortization of ¥16.4B also contributed to pressure on profitability. Consequently, the Operating Income margin was 24.7%, down from 26.7% in the previous year. An impairment loss of ¥5.0B was recorded as an extraordinary loss in the Incubation segment. Ordinary Income of ¥267.0B was supported by non-operating income of ¥21.9B. Overall, the Company achieved higher revenue and earnings despite declining margins, and is therefore classified as having achieved revenue and earnings growth.

Segment Analysis

The HRTech segment is the core contributor to consolidated earnings, reporting Revenue of ¥938.1B (+21.9% YoY), Operating Income of ¥286.7B (+15.9%), and an Operating Income margin of 30.6%. Growth was driven by core services including BizReach, HRMOS, and BizReach Campus. The Incubation segment showed high growth, with Revenue of ¥54.9B (+74.8% YoY), but its Operating Loss widened to ¥24.3B, resulting in an Operating Income margin of negative 44.4%. Growth investments in logistics DX service “Trabox,” the M&A platform “M&A Succession,” and security-related services “yamory” and “Assured” preceded earnings generation, and the segment recorded an impairment loss of ¥5.0B during the period. Against total segment profit of ¥262.4B, consolidated Operating Income was ¥245.6B, with adjustments for corporate expenses and other items serving as a negative factor of ¥16.8B.

Key Financial Indicators

【Profitability】The Operating Income margin was 24.7%, down approximately 2.0pt from 26.7% in the previous year, while the Net Income margin also contracted to 18.8% from 19.9%. The gross profit margin remained high at 89.2%, although it declined from 90.9% in the previous year. ROE remained high at 21.6% but declined from the previous year’s reported figure, owing to total assets expanding at a faster pace than revenue.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥234.4B, approximately 1.26 times Net Income, indicating strong cash conversion. Contract liabilities increased by ¥34.5B YoY to ¥166.6B, with the advance-payment business model supporting cash generation.【Investment Efficiency】Investing Cash Flow was an outflow of ¥132.1B, of which ¥105.6B was attributable to the acquisition of shares in subsidiaries, reflecting capital allocation centered on M&A. Capital expenditures were modest at ¥11.8B, and Free Cash Flow totaled ¥102.3B.【Financial Soundness】The Equity Ratio was 70.9%, and interest-bearing debt was extremely low, consisting solely of ¥1.5B in long-term borrowings. Cash and deposits of ¥828.5B accounted for 67.7% of total assets. Current assets of ¥971.2B substantially exceeded current liabilities of ¥335.5B, indicating no concern regarding short-term liquidity.

Cash Flow Analysis

OCF increased +19.7% YoY to ¥234.4B, demonstrating cash generation exceeding Net Income of ¥185.7B. In working capital, the ¥10.3B increase in accounts receivable pressured OCF, but this was offset by a ¥34.5B increase in contract liabilities. Capital expenditures were modest at ¥11.8B, leaving ample financial flexibility, with Free Cash Flow—OCF less capital expenditures—at ¥102.3B. Meanwhile, Investing Cash Flow was an outflow of ¥132.1B, of which ¥105.6B was attributable to the acquisition of shares in subsidiaries, indicating that M&A investments exceeding the current period’s OCF were executed. Financing Cash Flow was a modest outflow of ¥1.9B, with no significant dividend payments or share repurchases. As a result, cash and cash equivalents increased by ¥100.7B from the previous year to ¥828.5B at period-end. While ample cash on hand indicates capacity for additional investment going forward, the monetization of intangible assets accumulated through M&A will determine the future quality of cash flow.

Earnings Quality

OCF exceeded Net Income, indicating that earnings growth during the period was supported by actual cash generation rather than the front-loaded recognition of working-capital-related earnings. Non-operating income of ¥21.9B contributed to Ordinary Income of ¥267.0B, while non-operating expenses of ¥0.6B were limited, leaving total non-operating gains and losses within a recurring range. The ¥5.0B impairment loss recorded in the Incubation segment as an extraordinary loss was a one-time factor and indicates that some business investments have not yet generated returns as expected. The ¥34.5B increase in contract liabilities supports continuous cash generation through the advance-payment business model, and earnings quality can also be assessed as favorable from an accrual perspective. Equity in earnings of affiliates of ¥2.9B made only a small contribution to Net Income, with the core consolidated businesses remaining the primary source of earnings.

Earnings Forecast and Guidance

Progress against the full-year forecast was 82.9% for Revenue of ¥993.0B versus the forecast of ¥1198.5B, 92.3% for Operating Income of ¥245.6B versus the forecast of ¥266.0B, and 95.7% for Ordinary Income of ¥267.0B versus the forecast of ¥279.4B. Revenue progress was below the progress rates for the profit indicators; however, profit progress through the Ordinary Income level was generally on track relative to a plan incorporating growth investments in Incubation and increased SG&A expenses.

Shareholder Returns

Dividends were ¥0 for both the interim and year-end payments, with the Company continuing to pay no dividends; the Payout Ratio was 0%. As no material share repurchases were identified, the Total Return Ratio was also 0%. Although the Company has sufficient dividend-paying capacity, with OCF of ¥234.4B and Free Cash Flow of ¥102.3B, capital allocation during the period prioritized M&A investments—including ¥105.6B for the acquisition of shares in subsidiaries—and retained earnings. Retained earnings increased by ¥185.7B (+36.3%) YoY to ¥697.3B.

Risk Factors

1. Business Segment Concentration Risk: HRTech accounts for 94.5% of consolidated revenue, creating a structure in which fluctuations in domestic demand for mid-career hiring and intensifying competition among recruitment platforms directly affect consolidated performance.

2. Risk of Expanding Losses in the Incubation Business: The Incubation segment achieved high growth, with Revenue of ¥54.9B (+74.8% YoY), but its Operating Loss widened to ¥24.3B, resulting in an Operating Income margin of negative 44.4%. An impairment loss of ¥5.0B was recorded in this segment during the period, creating a risk that delays in investment recovery could offset HRTech’s earnings generation.

3. Goodwill and Intangible Asset Risks Associated with M&A: Against the backdrop of ¥105.6B in acquisitions of shares in subsidiaries, goodwill increased by ¥82.9B (+221.7%) YoY to ¥120.4B. If the earnings of acquired companies fall below plan, goodwill and intangible assets may be subject to impairment risk.

Industry Benchmark (For Reference; Company Analysis)

Key Takeaways from the Financial Results

1. The Company achieved double-digit revenue and earnings growth, with Revenue of ¥993.0B (+23.9%) and Operating Income of ¥245.6B (+14.6%); however, the Operating Income margin declined by approximately 2.0pt from the previous year to 24.7%, indicating a gap between revenue growth and earnings growth as reflected in the financial results.

2. HRTech’s high profitability, with an Operating Income margin of 30.6%, forms the core of consolidated earnings, while expanded losses in Incubation, including an Operating Loss of ¥24.3B, constrain the consolidated margin.

3. OCF of ¥234.4B exceeded Net Income, indicating favorable cash conversion; however, Investing Cash Flow included outflows of ¥132.1B, including ¥105.6B for the acquisition of shares in subsidiaries, and goodwill increased to ¥120.4B. Going forward, earnings contributions from acquired assets will be a prerequisite for restoring capital efficiency.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥3,169–¥3,376 at Cost of Equity ±1%; ¥3,236–¥3,323 at ω±0.1.

Notes:

• Goodwill amortization of ¥40.5 per share is added back to earnings (due to its non-cash nature and for comparability with IFRS companies).

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-08 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market stock price or a recommendation of any specific investment action, and does not forecast or guarantee future stock prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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