VALUE GOLF Inc. Q2 FY2026 earnings call

Overall Financial Results

• Consolidated revenue for the 2026 January Term second quarter totaled 2.35 billion yen, with operating profit of 51 million yen, representing 13% YoY revenue growth. All business segments delivered year-over-year revenue growth.
• Cost of sales and SG&A increased YoY due to: inclusion of Noah Co., Ltd. from the prior year period, higher costs tied to revenue growth in golf equipment sales and travel services, one-time expenses from new business investments (AI research institute, real estate business), and the relocation of Gipers Shinbashi store.
• On the balance sheet, inventory increased due to new product launches, sales channel expansion, and inventory stocking to avoid opportunity cost in golf equipment sales, plus land acquisition for the new real estate business. Prepaid travel deposits and unearned travel revenue decreased following the execution of large tours (including the Masters tour) in the first quarter.

New Business Launches

• Entered the real estate business in May 2025, focused on effective utilization of idle land at golf courses to stabilize golf course operations and activate the golf industry. Acquired the first site for a grid-scale energy storage facility in Mie Prefecture in June 2025, with multiple interested operators already lined up for transfer once contracts are finalized.
• Started development of an AI-powered marketing tool that analyzes golfer preferences and interests from online data, and established an AI research lab under Noah Co., Ltd. to develop innovative golf industry marketing approaches. AI testing is already underway in Ripi Zoukun DX, with future expansion to golf equipment sales planned.

Full-Year Strategic Initiatives (2026 January Term)

• Golf Business Core Initiatives: Host 15th anniversary promotions for 1-nin-yoyaku RAND (including cashback, giveaways, events) to drive further booking growth. Expand adoption of Ripi Zoukun (golf course in-house customer growth tool) and Ripi Zoukun DX (full DX golf course operation tool), with the new checkout function launching soon after completing testing. Build an integrated customer funnel leveraging combined print and online media strengths, and cross-promote with travel products and other services to grow ad revenue.
• Golf Equipment Sales Initiatives: Develop an AI-powered system to optimize sales promotion and product assortment using multi-channel customer purchase data, with full deployment starting in the 2026 January term to cut costs and reduce opportunity loss. Launch a new high-margin shaft customization service, increase the share of original in-house designed products to improve differentiation and margins, and drive higher average order value and repeat purchases to strengthen brand value.
• Travel Business Initiatives: Expand custom-tailored tours with a new dedicated website and AI-powered personalized recommendation systems. Strengthen inbound tour growth through deeper partnerships with travel agencies in Southeast Asia (Malaysia, Thailand, Indonesia), build out a dedicated inbound team with native-speaking staff, and launch new medical tourism products in partnership with top Japanese hospitals. Launch two new membership salon businesses: 100 Club (executive-focused member community with exclusive golf, tours, and events) and Le Lien (social matching golf salon for single adults aged 40-90, with cross-collaboration with golf equipment sales for image consulting and apparel recommendations).
• Group-Wide Initiative: Strengthen branding and awareness across the group's diverse service offerings by expanding from existing web advertising to taxi out-of-home ads and social media ads. Management expects secondary benefits including improved share price performance and stronger recruiting outcomes.

1. Golf Segment: Total revenue grew year-over-year, driven by solid performance across core sub-segments. The core 1-nin-yoyaku RAND service saw total bookings grow 16% YoY, with May 2025 hitting an all-time high booking volume amid an overall industry decline in golf course attendance. Contract growth for Ripi Zoukun DX, the golf course DX management service, was steady with strong future order pipeline, and VG WEB portal ad revenue grew significantly. Golf equipment sales delivered revenue growth, supported by strong pre-orders for new products and expansion into European, American, and Asian online retail, with improved profit margins after shifting to a product mix less exposed to yen depreciation and tariff impacts. The segment faced temporary profit pressure from investments in AI development, Ripi Zoukun DX development, and the relocation of the Gipers Shinbashi store. It is the largest segment by revenue contribution.
2. Travel Segment: Revenue grew sharply YoY, driven by a 199.1% YoY surge in inbound tour revenue, solid demand for sold-out premium golf tours (including the Masters spectator tour and St Andrews play tour), and rapid growth in group tour sales. Profit grew significantly on the back of growing inbound tourism (projected 40 million+ visitors to Japan in 2025, an all-time high) and strong performance from large package tours and golf combination tours. The only soft spot was stagnant demand for airline tickets for Japanese and resident foreign outbound travelers, as outbound departures saw only a minor YoY increase. It is the second-largest segment by revenue contribution.
3. Other Business Segment: Revenue grew sharply YoY following the addition of Noah Co., Ltd. (DX/AI services) to the group in May 2024. The segment consists of two core businesses: existing advertising media production (which maintains stable revenue from long-standing major client relationships, though saw temporary profit decline due to a client's web media renewal, with recovery expected from new client acquisition) and Noah's AI/DX promotion services, which already sees rapidly growing demand and has high growth prospects. The segment contributed incremental profit from Noah's operations after the acquisition. It is the smallest segment by revenue contribution.

• Management updated and raised full-year 2026 January Term guidance, projecting: 4.5 billion yen in consolidated revenue, 180 million yen in operating profit, 160 million yen in ordinary profit, and 120 million yen in net profit. This operating profit represents approximately 100% YoY growth (roughly double the prior year's result).
• Guidance assumes continued solid performance from existing golf and travel segments, with new businesses (DX services, real estate) expected to contribute meaningful revenue and profit in the second half of the fiscal year.
• Management expects that expanded advertising and AI-driven efficiency, acceleration, and quality improvements for existing services will further drive profit growth across all segments, and will continue pursuing M&A to accelerate group growth.

• Yen depreciation continues to create cost pressure for imported golf equipment, though the business has partially mitigated this through product mix shifts to less exposed goods.
• Outbound travel demand from Japan remains sluggish, with departures only seeing minor YoY growth and airline ticket demand stagnating, creating pressure on that portion of the travel business.
• Long-term demographic decline in Japan is expected to create excess golf course capacity and pressure on golf course operations, which is the key driver behind the company's entry into the idle land real estate business to address this industry-wide challenge.
• The existing advertising media production business saw temporary profit declines due to a major client's shift to web media, with recovery dependent on successful new client acquisition.

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