SKY Perfect JSAT Corporation Q1 FY2026 earnings call

Overall Financial Results

• 1Q consolidated net profit hit a record high of 5.5 billion yen, representing 26.2% progress toward the full-year target of 21.0 billion yen, marking a solid start to the fiscal year.

Organizational Restructuring

• An absorption merger of 100% owned core subsidiary SKY Perfect JSAT Co., Ltd. is scheduled for April 1, 2026, to eliminate the dual holding-company/operating-company structure, streamline organizational operations, and speed up decision-making.
• The holding company will rename itself SKY Perfect JSAT Co., Ltd. after the merger. Foreign shareholder voting rights will be capped at one-third per radio law regulations, but dividend payments will still be provided to restricted shareholders per amended articles of incorporation. Preparations are proceeding on schedule.

Capital Allocation (FY2025 - FY2027)

• The 3-year plan accelerates investment to support future Space Business growth from 2030 onward, including 3 new communication satellites and 10 low-orbit constellation satellites.
• Total planned annual investment is ~70.0 billion yen per year for 2025, 2026, and 2027, for a cumulative 220.0 billion yen in total investment: 140.0 billion yen for revenue base strengthening, 60.0 billion yen for business evolution, and 20.0 billion yen for new market development.
• Combined with cumulative shareholder returns of at least 31.5 billion yen, aligned with the new dividend policy of minimum 50% payout ratio and a 38 yen per share lower bound, total cash outflow over 3 years is projected at ~250.0 billion yen.
• Cash inflow is projected as: 150.0 billion yen from cumulative operating cash flow (~50.0 billion yen per year), at least 70.0 billion yen from existing cash reserves (maintaining a minimum 30.0 billion yen cash balance), and 30.0 billion yen in new external borrowing from FY2026 onward, matching total projected outflow.

Space Business Strategic Updates

• Japan's Ministry of Defense released a new Space Domain Defense Guideline emphasizing the growing importance of space for national security, calling for public-private cooperation and increased private sector investment in relevant technology. SKY Perfect JSAT is advancing multiple initiatives aligned with the guideline, including resilient multi-orbit satellite communication, space situational awareness, and optical data relay.
• The company is preparing a bid for the Ministry of Defense's PFI satellite constellation development and operation project: it has formed a consortium with partner companies, submitted first-round application materials, and is finalizing proposals ahead of the October 2025 bidding deadline and December 2025 award. This is a high-priority strategic project for national security.
• Space Intelligence growth strategy targets 13.0 billion yen in revenue this fiscal year and 30.0 billion yen in revenue by FY2030, with a target of 7.0 billion yen in net profit by FY2030. The three core pillars of the strategy are: owning own earth observation satellites to enable flexible, rapid response; building a 100-satellite network combining own and partner satellites to enable high-frequency global monitoring; and integrating multi-source satellite data with advanced proprietary analytics to deliver real-time intelligence.

Media Business Strategic Updates

• Traditional broadcasting is optimizing operations to maintain a stable revenue base amid declining subscriber counts, focusing on improving average monthly revenue per user by prioritizing core products like the SKY Perfect! Professional Baseball Package. The company targets 2.0 billion yen in annual cost reduction at the SKY Perfect Tokyo Media Center via lower depreciation, streamlined monitoring and operating costs.
• Recent group restructuring has consolidated overlapping operations: a partial stake sale of the call center subsidiary to Bell System 24 made it an equity-method affiliate, and overlapping broadcast subsidiary SKY Perfect Broadcasting was dissolved, with its core operations taken in-house. Both changes have a minimal impact on overall earnings.
• Hikari Alliance, the high-growth growth pillar for Media Business, includes two services: 1) Hikari retransmission service, which delivers broadcast content via NTT FTTH lines, which has grown to 2.89 million connected households with ~100,000 net new households per quarter. A price increase from 300 yen to 450 yen per month (excluding tax) for 2 million single-family households will take effect December 2025. 2) B2B2C pass-through service for CATV operators, which uses existing satellite assets to deliver multi-channel service and reduce CATV operator capital requirements, with 51 operators already contracted and a target of 75 operators by year-end. Hikari Alliance is projected to grow revenue 15% year-over-year to 13.8 billion yen in FY2025 and 17% year-over-year to 16.2 billion yen in FY2026, with net profit growing 25% to 1.5 billion yen in FY2025 and 67% to 2.5 billion yen in FY2026.

1. Space Business: Operating revenue was 15.5 billion yen, a decrease of 0.2 billion yen year-over-year. Segment profit was 3.8 billion yen. Domestic satellite communication saw solid growth from rising line demand, while aircraft Wi-Fi revenue grew, but ongoing pricing pressure in the global mobile segment (most notably at the North American subsidiary) dragged down overall results. Operating costs fell 0.3 billion yen including lower depreciation.

2. Media Business: Operating revenue was 16.0 billion yen, a decrease of 0.4 billion yen year-over-year. Segment profit was 1.9 billion yen, an increase of 0.4 billion yen year-over-year. Sustained declines in subscription viewing fee revenue were partially offset by solid growth from the Hikari Alliance business, which narrowed the overall revenue decline. Cost optimization efforts cut operating costs by 1.0 billion yen year-over-year.

Total combined revenue across both segments is 31.5 billion yen, with Space Business accounting for ~49.2% of total revenue and Media Business accounting for ~50.8% of total revenue.

• Management confirmed the full-year net profit guidance of 21.0 billion yen remains unchanged, after 1Q delivered 26.2% progress which management calls a solid start.
• Full-year cash balance is projected to decline by more than 50.0 billion yen, with an ending cash balance of ~61.0 billion yen, as the company deploys existing cash to fund planned growth investment.
• The 3-year FY2025-FY2027 investment plan of 70.0 billion yen per year remains on track, with 1Q 2025 investment progressing as planned.
• Space Intelligence revenue is expected to return to year-over-year growth from 2Q onward after 1Q's decline from a temporary timing difference of revenue recognition.
• Media Business full-year cost reduction guidance remains unchanged, with 2.0 billion yen of annual cost reduction at the SKY Perfect Tokyo Media Center on track.
• Hikari Alliance revenue and profit guidance for FY2025 and FY2026 is maintained, with the pass-through service on track to hit 75 contracted CATV operators by year-end.

• Ongoing price competition in the Asia-Oceania region for global mobile satellite communication, driven by low-orbit constellation entrants, continues to put downward pressure on average selling prices. Management is addressing this by deploying new higher-capacity satellites (Superbird-9 and JSAT-31) to improve cost competitiveness, but the pressure remains an ongoing headwind.
• The 1Q decline in Space Intelligence revenue is the result of temporary revenue recognition timing differences; while management expects this to reverse in the following quarters, there is still risk of further timing delays that could impact full-year results.
• Growing competitor activity in the Japanese space intelligence market, including new partnerships and entrants, creates increased competitive pressure. Management believes its existing combination of high-resolution satellite capacity and pricing gives it a competitive advantage, but new entrants could still pressure market share and margins.
• Winning the Ministry of Defense PFI satellite constellation project is not guaranteed, even after the company has invested significant preparation resources.

Q: Global mobile revenue is down 0.4 billion yen, with Space Intelligence down 0.3 billion yen – what is driving the global mobile decline, and will Space Intelligence return to growth in subsequent quarters? / A: The revenue decline for the global mobile segment stems primarily from price competition across the Asia-Oceania region (not just North America, which the segment is named for). Overall satellite communication demand remains strong, and JSAT International's near-term operating metrics are solid, so management expects to offset the 1Q decline in coming quarters. The Space Intelligence decline is purely a temporary timing difference of revenue recognition, and already contracted revenue will be recognized starting in 2Q, so growth will resume in the second half of the fiscal year.

Q: For the Ministry of Defense PFI constellation project, which requires mostly domestic satellites, how will your partnership with Planet Labs PBC. fit in, and are you pursuing the existing 25.0 billion yen annual satellite image contract in parallel with the PFI project? / A: The project guidelines require the use of domestic satellites as the core, so we will primarily use domestic satellites, with Planet Labs' Pelican satellites used only as complementary capacity when needed. The existing 25.0 billion yen annual satellite image supply contract is an entirely separate program, and we will continue to pursue that business independently of the PFI project. For Pelican imagery sales outside Japan, Planet Labs will lead marketing (since SKY Perfect JSAT does not yet have established overseas sales capacity), while we work to build our own overseas sales capabilities over the project term.

Q: What priority areas will SKY Perfect JSAT focus on under the new Ministry of Defense Space Domain Defense Guideline? / A: The core priority is ensuring resilient satellite communication networks, which is SKY Perfect JSAT's core business: this means avoiding dependency on a single satellite or frequency by building out multi-orbit, multi-frequency networks to ensure communication continuity. The second priority is space situational awareness: we will contribute to real-time space environment monitoring using the optical camera onboard our ETS-9 satellite. Finally, we are also advancing optical data relay (which enables faster real-time data downlink from space) through our Space Compass joint venture with NTT, which already won a related demonstration project contract last year.

Q: How has the company achieved lower customer acquisition cost via digital shift in the Media Business, and what specific steps have been taken? / A: There has been no change to how customer acquisition costs are calculated. The majority of cost reduction comes from digital process optimization: we have expanded self-service via website FAQs, chatbots for first-tier customer inquiry resolution, and fully digital end-to-end processing for new signups, contract changes, and cancellations. Over 50% of customer transactions are now completed digitally, which has reduced call center volume and associated labor costs. We also use customer viewership preference data gathered from signups to deliver targeted personalized content recommendations, improving marketing efficiency relative to traditional mass marketing.