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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