VALUE GOLF Inc. Q4 FY2025 earnings call

Recent Acquisitions and Strategic Investments

• Completed two acquisitions in FY2025: Esprit Golf (high-end travel, February 2024) and Noah Inc. (DX/AI services, May 2024), expanding group capabilities and product lines across both core and new business segments.
• Made the group's first external strategic investment: a capital commitment to STEAM Sports Laboratory, a firm that runs children's education programs through sports.
• Maintained a strong balance sheet with a 42.4% equity ratio at period end, keeping the firm in a solid financial position.

Cost and Operational Management

• Despite broad global inflation, rising wages, and persistent yen depreciation that drove overall price increases, product cost of goods sold remained flat year-over-year due to proactive and disciplined inventory management.
• Travel and other product costs saw slight increases driven by recent M&A activity, but selling, general and administrative expenses remained flat year-over-year despite expanded operational scale, thanks to continuous cost control initiatives.

Core Product Innovation for Golf Business

• Launched Rimi Zoukun DX, a new golf course operation management tool that includes booking and check-in functionality to streamline course operations and improve user convenience, which has begun operations at its first partner course.
• Released the 100 Club (working title), a new members-only salon operated by Esprit Golf that offers exclusive access to rounds at famous courses, competitions, special tours, dining events, and professional golf lessons for high-net-worth customers.
• Expanded the JYPER'S pro shop chain, with one new location opened in Chiba Prefecture in December 2024 bringing the total to 6 in-course pro shop locations, with further expansion planned.

Cross-Group Synergy from AI Capabilities

• Noah Inc. has established a research lab to develop AI tools for golf course client growth, leveraging Value Golf's existing user data combined with external data (weather forecasts, local area information) to deliver data-driven customer acquisition tools.
• Noah will lead group-wide AI initiatives including analyzing purchase and tour customer data, automating IT system operations, improving overall business efficiency, and managing all group social media marketing activities.

Value Golf is structured into three operating segments: Golf Business, Travel Business, and Other Business. For the full FY2025 January Term, consolidated net sales reached 4.127 billion yen, with consolidated operating profit of 90 million yen, representing 46.0% year-over-year profit growth.

1. Golf Business: The core segment, anchored by the 1nin Yoyaku Land single-golfer booking ASP service, delivered revenue and profit growth. 1nin Yoyaku Land grew total bookings 17.3% year-over-year even amid a slight industry-wide decline in golf course usage, driven by growing popularity of single-booking and steady registered member growth. A 2025 price revision improved profitability for the service. Golf equipment sales increased revenue after shifting product mix to reduce reliance on imported goods (to mitigate yen depreciation impacts), improved profit margins, and captured growing inbound demand via in-store duty-free sales. Lesson services saw temporary revenue declines amid ongoing business restructuring. This segment contributed the largest share of consolidated revenue, driven by growth in core booking and equipment lines.
2. Travel Business: Revenue grew significantly, boosted by the February 2024 acquisition of Esprit Golf (a high-end travel service provider) which added its full-year revenue to the segment. Core domestic golf tours performed steadily, while inbound tour operations grew the number of departures 188.8% year-over-year amid a surge in foreign visitor numbers to Japan. The segment opened a new stable sales route for Malaysian visitors, expanded its product lineup to include high-value rare experiences (such as Masters tournament tours, Dodgers game viewing, luxury cruises, and rounds at famous domestic and international golf courses) via the Esprit Golf acquisition, and improved overall profit margins. This segment is the second-largest contributor to consolidated revenue and profit.
3. Other Business: Revenue grew sharply following the May 2024 addition of Noah Inc., a DX and AI technology firm, to the group. The existing advertising media production business remains small-scale but operates efficiently with a small team, though it saw temporary profit declines amid a major client website restructuring that is currently being addressed. Noah's AI and DX capabilities have high synergy with Value Golf's core operations, and it already contributes incremental profit to the segment. This segment is the smallest contributor to consolidated revenue, but is expected to grow rapidly.

• For the FY2026 January Term, management guides consolidated net sales of 4.5 billion yen, operating profit of 180 million yen, ordinary profit of 160 million yen, and net income attributable to shareholders of 120 million yen. This represents double-digit percentage growth in both revenue and profit from the prior fiscal year.
• Growth expectations are based on continued steady expansion of both the Golf and Travel segments, incremental revenue and profit contributions from new M&A and DX/AI new business lines, and profit gains from improved efficiency, speed, and quality of existing services delivered by AI adoption.
• Management will continue pursuing M&A to drive revenue and profit expansion, with the goal of delivering sustained revenue growth and increasing long-term corporate value.

• Persistent yen depreciation increases input costs for imported golf equipment, though the business has partially mitigated this risk via product mix shifts to domestic goods.
• Broad global inflation and rising wage pressures increase overall operating costs across the business.
• Structural industry headwinds include long-term population decline in Japan, which is expected to increase the number of underutilized or surplus golf courses.
• Adverse weather conditions (extreme heat, heavy snowfall) can reduce overall golf course utilization and hurt booking volume.

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