VELTRA Corporation Q4 FY2025 earnings call

Overall Performance Summary

• 2025 marked a major turning point for ベルトラ, achieving full-year net profit for the first time in 5 fiscal years (since 2019).
• Consolidated operating revenue reached 4.58 billion yen, a 6.4% increase year-over-year; operating income hit 105 million yen, a dramatic 280 million yen improvement from the prior fiscal year.
• The profitability improvement is not solely driven by market recovery, but is the result of a strategic reset that prioritized profitability and organizational efficiency over short-term scale expansion. The company has transformed into a structure where operating leverage works, allowing all incremental revenue from top-line growth to flow directly to profit while maintaining operating expenses at the prior year's level.

Profit Improvement Drivers

• In addition to positive effects from revenue growth, optimization of fixed and semi-fixed costs such as personnel expenses and advertising expenses was the core driver of the return to profitability.
• Leveraging AI and process automation allowed the company to build an efficient system that improves profit margin without increasing headcount, advancing the transition to a lean profit structure that generates large added value with limited resources. This cost optimization will continue in the next fiscal year.

Segment-Specific Operational Initiatives

• OTA Business: Focused on entrenching profitability, achieved structural cost reduction through thorough organizational consolidation and efficiency optimization, including marketing cost optimization and business process review. Beyond the existing personal independent travel (FIT) business, the company has launched full-scale operations of the cruise business and begun developing new business segments for corporate and government clients, transitioning to a phase of maximizing existing profitability while cultivating the next pillars of revenue.
• LINKTIVITY: Prioritizes upfront investment in systems, human resources, and networks over near-term profit to build infrastructure for capturing dominant market share. It has expanded beyond basic ticket sales to build partnerships with transportation infrastructure (e.g., Go Taxi, Tokyo City Pass) and is accelerating horizontal expansion into East Asia. Prior investments have already laid the foundation for expected strong sales growth in the coming fiscal year.

Balance Sheet and Cash Flow Performance

• Operating cash flow turned to a large positive of 920 million yen. Cash on hand increased by 520 million yen year-over-year, securing sufficient liquidity for future growth investment.
• Equity ratio saw a slight decrease driven by increased accounts payable from business expansion, which management views as a healthy trend that proves LINKTIVITY's deep penetration as a B2B platform, as its transaction volume already far exceeds that of the OTA business.

Governance and Management Structure Refresh

• The company withdrew its existing fixed three-year mid-term management plan, and shifted to a rolling plan framework that reflects updated market conditions each period. This change is not a retreat from growth targets, but a decision to make the commitment to steady profit growth and shareholder return more effective.
• The company is currently rebuilding governance as its top urgent priority following a reported fund outflow incident at a subsidiary, and aims to restore shareholder trust through enhanced internal controls and more transparent investor relations.

ベルトラ operates two business segments with clear role divisions under a dual-engine structure:

1. OTA Business (cash generation core): Achieved an operating profit margin of 23.2%, representing a 12 percentage point improvement from the prior fiscal year. It has transformed into a high-profit business that stably generates cash for group growth, after cutting operating expenses by 11.6% through efficiency optimization. It accounts for approximately 80.6% of total consolidated operating revenue (36.9 billion yen out of 4.58 billion yen total).
2. LINKTIVITY (growth engine): Recorded sales of 890 million yen, a 24% increase from the prior year, continuing strong growth that outpaces the expansion of the inbound travel market. It contributes approximately 19.4% of total consolidated operating revenue.

• For the 2026 December fiscal year, ベルトラ forecasts 9% year-over-year revenue growth to 5 billion yen, and 262% year-over-year operating profit growth to 380 million yen. The company aims to transition to a phase where profit generates more profit, based on the lean business structure built in 2025.
• The forecast includes one-time withdrawal costs associated with the closure of the Malaysian subsidiary, which will reduce future fixed cost burden and help complete structural reforms to reliably increase operating margin.
• To achieve the 2026 targets, the company has laid out three core strategic pillars:
  1. Improve organizational agility: Integrate the Malaysian subsidiary's functions back to domestic operations and consolidate development hubs to strengthen governance and speed up decision making. Fully introduce an autonomous cross-functional model with small integrated teams that combine planning, development and operation to enable faster development and rapid adaptation to uncertain environmental changes, maximize per-employee productivity and suppress future fixed costs.
  2. Concentrate resources on high-profit areas: Implement optimal reallocation of domestic development personnel to areas that generate higher added value based on strategic priorities, to maximize the return on investment across the entire organization.
  3. Monetize prior growth investment: Transition LINKTIVITY to a phase where accumulated past investments start generating profit, and establish a system that can stably generate high profits.

• The recovery of the overseas travel market is progressing at a slower pace than the company's initial expectation, which led to the decision to abandon the fixed three-year mid-term management plan.
• A fund outflow incident was discovered at a subsidiary, which has harmed shareholder trust. The company has acknowledged the incident and is working to rebuild governance to eliminate internal control vulnerabilities.
• The operating environment remains uncertain, requiring the company to build a more agile organizational structure to adapt to rapid changes.

No question and answer section is included in the provided transcript.