VISION INC. FY2026 Q2 Earnings Report

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Executive Summary

Revenue and operating income both exceeded the same period of the previous year, resulting in higher revenue and higher profit, with improved profit margins driven by cost efficiencies. Revenue was ¥191.4B (+2.4% YoY), operating income was ¥30.5B (+5.1%), ordinary income was ¥30.5B (+4.7%), and net income was ¥20.4B (+4.9%). The operating margin improved by +0.4pt YoY to 15.9%, primarily due to a decline in the SG&A ratio to 38.4% from 39.9% in the same period of the previous year. Meanwhile, the gross margin declined from the previous year to 54.4%, indicating that the improvement in profitability was mainly attributable to cost factors.

Factors Affecting Performance

【Revenue】Revenue increased 2.4% YoY to ¥191.4B. By segment, the Information and Communications Services Business grew to ¥87.2B (+7.2%), while the Glamping and Tourism Business expanded to ¥11.5B (+43.8%). In contrast, the core Global WiFi Business declined 5.0% to ¥92.6B, restraining company-wide growth. Revenue composition was 48.4% for Global WiFi, 45.6% for Information and Communications Services, and 6.0% for Glamping, with Global WiFi remaining the largest segment.

【Profit and Loss】Operating income increased 5.1% to ¥30.5B, ordinary income increased 4.7% to ¥30.5B, and net income increased 4.9% to ¥20.4B, with all three measures recording profit growth. The gross margin declined by approximately 1.1pt YoY to 54.4%, but the SG&A ratio improved to 38.4% from 39.9%, contributing to higher profit. Segment profit remained highest in the Global WiFi Business at ¥28.5B (+2.1%; margin of 30.8%), while Information and Communications Services generated ¥10.4B (+9.3%) and Glamping generated ¥1.1B (+73.2%), both achieving strong growth. Special gains and losses were limited, at ¥0.3B each, indicating that the recurring earnings structure remains intact. Overall, the company achieved higher revenue and higher profit, with cost efficiencies and an improved segment mix serving as the primary drivers of profit growth.

Segment Analysis

The Global WiFi Business recorded revenue of ¥92.6B (-5.0%), operating income of ¥28.5B (+2.1%), and a margin of 30.8%, securing higher profit despite lower revenue and remaining the core source of company-wide profit. The Information and Communications Services Business continued its stable growth, with revenue of ¥87.2B (+7.2%), operating income of ¥10.4B (+9.3%), and a margin of 11.9%. The Glamping and Tourism Business demonstrated strong growth, with revenue of ¥11.5B (+43.8%) and operating income of ¥1.1B (+73.2%), while its margin also improved to 9.5%. Company-wide expenses allocated to segments (adjustments) amounted to -¥9.2B, expanding from -¥8.6B in the previous year and weighing on aggregate segment profit.

Key Financial Metrics

【Profitability】The operating margin improved by +0.4pt YoY to 15.9%, while the net margin increased to 10.7% from 10.4% in the previous year. The gross margin declined by approximately 1.1pt YoY to 54.4%, and the improvement in the SG&A ratio to 38.4% from 39.9% was the primary driver of improved profitability.【Cash Flow Quality】Accounts receivable amounted to ¥73.7B, slightly higher than in the previous year, while inventories remained low at ¥5.4B, limiting inventory risk.【Investment Efficiency】ROE was 10.0%, supported by the combination of net margin, total asset turnover, and financial leverage. Total asset turnover was constrained by a cash-heavy balance sheet and the accumulation of accounts receivable.【Financial Soundness】The equity ratio was high at 69.5%. With cash and deposits of ¥109.6B versus long-term borrowings of ¥16.1B, the company is effectively close to operating debt-free, and its financial foundation is strong.

Cash Flow Analysis

Although detailed disclosure of the statement of cash flows is limited, an analysis of funding trends based on balance sheet movements indicates that cash and deposits amounted to ¥109.6B, down from ¥135.6B in the previous year. This decline is believed to have been primarily caused by expanded treasury stock purchases (treasury stock of -¥15.0B, a 71.5% YoY increase) and investments in goodwill and intangible fixed assets (goodwill of +¥6.8B and intangible fixed assets of +¥6.1B). Accounts receivable increased slightly from the previous year to ¥73.7B, and any lengthening of collection periods warrants monitoring as a factor that could affect cash-generation capacity. Current assets of ¥208.7B substantially exceeded current liabilities of ¥68.4B, providing ample short-term liquidity.

Earnings Quality

Current-period profit was primarily derived from recurring income generated by operating activities. Special gains and losses were small and largely offsetting, consisting of a gain of ¥0.3B from the sale of investment securities and a loss of ¥0.3B from the disposal of fixed assets, resulting in a limited impact on net income. Non-operating items were also small, with non-operating income of ¥0.5B and non-operating expenses of ¥0.6B. Although this included a foreign exchange gain of ¥0.1B, the difference between ordinary income and income before taxes was limited. Comprehensive income was ¥20.5B, nearly in line with net income of ¥20.4B. The impact of other comprehensive income, including foreign currency translation adjustments and valuation differences on securities, was small, and earnings quality was supported by recurring business income.

Earnings Forecast and Guidance

Progress against the full-year earnings forecast was as follows: revenue was ¥191.4B against a forecast of ¥420.0B, representing a progress rate of 45.6%; operating income was ¥30.5B against a forecast of ¥75.0B, representing a progress rate of 40.7%; and ordinary income had a progress rate of 40.7% against the same forecast of ¥75.0B. Compared with the standard 50% level expected at the half-year point, progress was somewhat slow, particularly on the profit side. The company has made no revisions to either its earnings forecast or dividend forecast and appears to be maintaining its full-year plan based on seasonal demand in the second half, including travel demand.

Shareholder Returns

The interim dividend was ¥22, while the forecast year-end dividend is ¥29, resulting in a full-year forecast dividend of ¥51, including a commemorative dividend of ¥5. Based on forecast full-year EPS of ¥103.64 and the annual forecast dividend of ¥51, the payout ratio is approximately 49%. The payout ratio is calculated based on forecast full-year net income and total dividends and should be evaluated separately from the actual interim payout ratio. Treasury stock purchases are also progressing, with treasury stock holdings of ¥35.96B (+71.5% YoY), indicating a shareholder return policy combining dividends and share repurchases. However, this section limits its evaluation to the payout ratio.

Risk Factors

1. Demand volatility risk in the core business: Revenue in the Global WiFi Business declined 5.0% YoY to ¥92.6B, reflecting a business structure that is susceptible to fluctuations in overseas travel demand and foreign exchange movements. As this business accounts for more than half of operating income, demand trends have a significant impact on company-wide performance.

2. Working capital and collection risk: Accounts receivable increased slightly from the previous year to ¥73.7B, and any lengthening of collection periods could put downward pressure on operating cash generation. Inventories remained low at ¥5.4B, limiting inventory risk.

3. Future risk associated with increases in goodwill and intangible assets: Goodwill increased substantially to ¥13.4B (+89.8% YoY), while intangible fixed assets rose to ¥16.0B (+75.2%). Goodwill represents approximately 6.6% of net assets, which remains within a sound range at present; however, the earnings performance of acquired businesses requires ongoing monitoring.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

The company’s profitability is somewhat below the industry median.

Growth and Capital Efficiency

The revenue growth rate is substantially below the industry median, placing the company toward the lower end of the industry in terms of growth.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. Profitability improved modestly through SG&A efficiencies. The operating margin was 15.9% (+0.4pt YoY), with cost control absorbing the decline in the gross margin (-approximately 1.1pt).

2. The segment mix is changing. While the core Global WiFi Business experienced lower revenue, Information and Communications Services and Glamping continued to grow, advancing diversification of the business portfolio.

3. At the half-year point, progress toward the full-year plan was 45.6% for revenue and 40.7% for operating income. Compared with the standard 50% progress level, profit progress was somewhat slow. The extent to which seasonal demand is captured in the second half will be a key focus in assessing achievement of the full-year plan.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥612–¥648 for a ±1% change in the cost of equity, and ¥625–¥638 for a ±0.1 change in ω.

Notes:

• Net assets as of the quarter-end were used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly available data; this is not a forecast of market prices or a recommendation of any specific investment action, nor does it predict 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. The 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 professionals as necessary.

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AI Financial Analysis

Executive Summary

Vision delivered a solid FY2026 Q2 result, with modest top-line growth converted into faster operating and net-profit growth. Revenue increased 2.4% year on year to ¥19.14bn. Operating income rose 5.1% to ¥3.05bn. Profit attributable to owners of parent increased 4.8% to ¥2.04bn. The operating margin improved by 40bp year on year to 15.9%, placing profitability above the 15% excellent benchmark. Net profit margin improved by approximately 25bp to 10.7%, also exceeding the 10% excellent benchmark. Gross margin declined by approximately 108bp to 54.4%, indicating some pressure in the direct cost base or business mix. However, SG&A expense declined 1.4% year on year despite revenue growth, more than offsetting gross-margin compression. This points to favorable operating leverage and disciplined overhead management. The Global WiFi business remained the principal earnings contributor, generating ¥2.85bn of segment profit. Information and communications services was the main growth engine among the larger businesses, with sales up 7.2% and segment profit up 9.3%. Glamping and tourism expanded rapidly, with sales up 44.1% and segment profit up 73.2%, albeit from a substantially smaller base. Company-wide unallocated expenses rose 6.9% to ¥0.92bn, partially diluting segment-level profit growth. Ordinary income of ¥3.05bn was broadly equivalent to operating income, underscoring that earnings were principally generated by operations rather than non-operating items. Small gains on securities sales and losses on disposal of fixed assets broadly offset at the pre-tax level, limiting the effect of non-recurring items on reported profit. The balance sheet remains conservatively funded, supported by ¥10.96bn of cash and a 305.0% current ratio. The Q2 operating-income progress rate is 40.7% against full-year guidance, below the standard 50% H1 pace, while revenue progress is closer to plan at 45.6%. Delivery of the full-year target therefore depends on a material acceleration in second-half operating profit, consistent with management maintaining its guidance.

Profitability Analysis

Annualized DuPont ROE is 20.1%, comprising a 10.7% net profit margin, 1.308x asset turnover, and 1.44x financial leverage. The strongest element of the return profile is the net margin, which exceeds the 10% excellent benchmark while leverage remains modest. Financial leverage is conservative rather than a primary driver of shareholder returns, so ROE is predominantly supported by operating profitability and asset utilization. The operating margin expanded 40bp year on year to 15.9% as operating income growth of 5.1% exceeded revenue growth of 2.4%. This improvement occurred despite gross margin falling to 54.4% from approximately 55.4% in the prior year. SG&A declined to ¥7.35bn from ¥7.45bn, equivalent to a reduction of about 1.4% year on year, demonstrating favorable cost absorption. Segment profit before corporate costs rose 4.4% to ¥4.00bn, while unallocated corporate expense increased 6.9% to ¥0.92bn. The Global WiFi business is the core business by segment-profit contribution, accounting for ¥2.85bn, or about 72% of aggregate reported-segment profit before corporate cost allocation. Its segment margin improved from 28.6% to 30.8%, despite sales declining 5.0% to ¥9.26bn. Information and communications services produced a 7.2% sales increase to ¥8.72bn and a segment-margin improvement of approximately 10bp to 11.9%. Glamping and tourism achieved the largest growth, with segment margin rising from 7.9% to 9.5%. The tax burden of 0.668 reflects an effective tax rate of 33.1%, somewhat higher than a normalized 30% range and modestly constraining conversion of pre-tax income to net income. Interest burden was effectively neutral at 1.000 and interest coverage was an exceptionally strong 838.7x, confirming that financing costs do not meaningfully affect profitability.

Growth Assessment

Revenue growth of 2.4% was moderate, but the composition was constructive because information and communications services and glamping/tourism more than compensated for a decline in Global WiFi revenue. Global WiFi sales declined 5.0% year on year to ¥9.26bn, making stabilization of demand in this largest business important for sustainable consolidated growth. Its segment-profit growth of 2.1% nevertheless indicates improved operating efficiency and pricing or mix resilience. Information and communications services added ¥0.58bn of revenue year on year and increased segment profit by ¥0.09bn, making it the largest absolute growth contributor among the reported segments. Glamping and tourism added ¥0.35bn of sales and ¥0.05bn of profit, providing a high-growth but still smaller diversification lever. Consolidated segment sales increased 2.4% to ¥19.13bn, while total segment profit increased 4.4% to ¥4.00bn. Full-year guidance calls for revenue of ¥42.00bn, up 7.7% year on year, and operating income of ¥7.50bn, up 16.0%. H1 revenue has reached 45.6% of the full-year forecast, 4.4 percentage points below the standard 50% progress rate. H1 operating income has reached 40.7% of guidance, 9.3 percentage points below the standard pace. H1 profit attributable to owners has reached 40.0% of the ¥5.10bn forecast, 10.0 percentage points below the standard pace. The second half must therefore generate ¥22.86bn in revenue and ¥4.45bn in operating income, implying a 19.5% second-half operating margin versus 15.9% in H1. This required margin expansion makes the outlook reliant on revenue acceleration, mix improvement, continued SG&A discipline, or seasonal earnings concentration. Management has not revised either earnings or dividend guidance.

Financial Health

Liquidity is very strong, with current assets of ¥20.87bn against current liabilities of ¥6.84bn. The current ratio is 305.0% and the quick ratio is 297.0%, providing a substantial short-term liquidity buffer. Cash and deposits of ¥10.96bn alone exceed total interest-bearing debt of ¥1.61bn by roughly ¥9.34bn. Working capital is ¥14.03bn, supporting normal operating obligations without reliance on refinancing. The balance sheet is conservatively capitalized, with total equity of ¥20.33bn representing 69.5% of total assets. Debt-to-equity is 0.44x and debt-to-capital is 7.4%, both comfortably within conservative solvency ranges. Long-term loans of ¥1.61bn are limited relative to equity and cash, while the current portion of long-term loans is only ¥0.07bn, indicating no material maturity mismatch. Interest coverage of 838.7x confirms ample debt-service capacity. Goodwill increased ¥0.63bn year on year to ¥1.34bn and intangible assets increased ¥0.69bn to ¥1.60bn, consistent with an increased role for acquired or separately recognized intangible assets. Nevertheless, goodwill represents only 6.6% of equity and 4.6% of total assets, well below levels associated with elevated balance-sheet dependence on acquisition value retention. Treasury stock increased by ¥1.50bn to negative ¥3.60bn, reducing reported equity and increasing the importance of monitoring future cancellation, reissuance, or shareholder-return usage. Accounts receivable increased 1.2% to ¥7.37bn while revenue rose 2.4%, but receivable collection efficiency remains a key monitoring point.

Notable B/S Changes

Goodwill: +¥0.63bn (+89.8%) to ¥1.34bn - indicates increased acquisition-related asset exposure; goodwill remains modest at 6.6% of equity, but underlying business performance should be monitored for impairment risk. Intangible assets: +¥0.69bn (+75.2%) to ¥1.60bn - reflects a materially larger intangible-asset base; concentration remains contained at 5.5% of total assets. Treasury stock: -¥1.50bn (-71.5%) to negative ¥3.60bn - materially reduces reported equity and warrants monitoring as part of capital-allocation and shareholder-return policy.

Cash Flow Quality

Dividend Sustainability

The declared Q2 dividend is ¥22.00 per share. The calculated interim payout ratio is 55.0%, which is below the 60% sustainability benchmark and is therefore reasonable relative to H1 earnings. Full-year guidance indicates a ¥51.00 per-share dividend and forecast EPS of ¥103.64, implying a forecast dividend payout ratio of approximately 49.2%. This suggests management expects to retain more than half of forecast earnings after ordinary dividends. The maintained dividend forecast is consistent with positive earnings growth guidance and the company’s substantial cash position. Treasury stock increased by ¥1.50bn year on year, but a total return ratio cannot be calculated from the available information because the period’s share-repurchase cash outlay is not reported.

Risk Assessment

Business risks include Global WiFi revenue declined 5.0% year on year to ¥9.26bn. As the core business and largest segment by profit contribution, continued demand weakness, travel-volume volatility, pricing pressure, or competitive intensity could constrain consolidated growth., The FY2026 forecast requires a pronounced second-half improvement: operating income progress is 40.7% at H1 and the implied H2 operating margin is 19.5%. Execution risk is elevated if anticipated seasonal demand or cost leverage does not materialize., Information and communications services and glamping/tourism are growing, but their profitability and demand may be exposed to competition, customer spending conditions, service-quality requirements, and operating execution., The company’s travel-related Global WiFi operations are exposed to changes in international travel volumes, foreign-exchange movements, geopolitical disruptions, and airline or tourism-industry conditions..

Financial risks include HIGH_RECEIVABLE_DAYS: DSO of 70 days exceeds the 60-day alert threshold. This indicates a relatively long cash-collection cycle, which can tie up capital and create potential cash-conversion pressure if customer payment behavior weakens., Goodwill rose 89.8% to ¥1.34bn and intangible assets rose 75.2% to ¥1.60bn. Although their current balance-sheet proportions remain low, future performance shortfalls in the underlying acquired businesses could create impairment exposure under JGAAP., Treasury stock increased 71.5% to negative ¥3.60bn. The reduction in equity is manageable given strong capitalization, but continued repurchases should be assessed against operating investment needs and earnings delivery..

Key concerns include Monitor whether receivable days decline from 70 days, particularly given accounts receivable of ¥7.37bn, equivalent to 25.2% of total assets. The root cause may include customer mix, settlement terms, or timing of billings; regardless of cause, persistently extended collection periods reduce cash efficiency., Monitor Global WiFi revenue recovery versus its improved segment margin. A continuation of revenue contraction would test the durability of margin gains achieved through cost discipline., Monitor H2 earnings cadence against the ¥7.50bn operating-income target, especially whether growth segments and corporate-cost control can support the required second-half margin expansion..

Investment Implications

Key takeaways include Operating income grew faster than revenue, supported by a 40bp operating-margin expansion to 15.9% and lower SG&A expense., The core Global WiFi segment remains highly profitable but recorded a 5.0% sales decline, while information and communications services and glamping/tourism supplied the principal growth., The company has strong liquidity, net cash, low leverage, and exceptional interest coverage., The maintained full-year forecast requires stronger second-half earnings delivery than the H1 run rate implies., The interim dividend payout ratio of 55.0% and forecast full-year payout ratio of about 49.2% appear aligned with earnings and balance-sheet capacity..

Metrics to watch include Global WiFi revenue trend and segment margin, Information and communications services revenue and segment-profit growth, H2 operating margin relative to the 19.5% level implied by full-year guidance, DSO and accounts-receivable balance, Goodwill and intangible-asset performance, including any impairment indicators, Treasury stock movements and their relation to capital allocation.

Regarding relative positioning, Vision combines above-benchmark profitability, with a 15.9% operating margin, 10.7% net margin, and annualized 20.1% ROE, with a conservative balance sheet characterized by a 305.0% current ratio and 0.44x debt-to-equity. Its relative positioning is therefore supported by strong capital efficiency without material balance-sheet leverage, although the near-term comparison will depend on whether the core Global WiFi business returns to growth and whether H2 profit acceleration validates full-year guidance.