SKY Perfect JSAT Corporation Q2 FY2026 earnings call

Overall Consolidated Performance

• Consolidated net profit for the first half was 11.8 billion yen, a 21.1% increase year-over-year, representing 56.0% progress against the full-year forecast of 21 billion yen, putting the company on track to meet full-year targets.
• The absorption merger of 100% subsidiary SKY Perfect JSAT Corporation was confirmed via signed merger agreement, with preparations progressing on schedule for an April 1, 2026 completion.

Space Business Operational Highlights

• Security Domain: The company submitted a bid for Japan's Ministry of Defense (MoD) satellite constellation PFI project (with ~300 billion yen in total government budget) in the second round of evaluations, with bid finalization underway ahead of the December 2025 tender opening. The company secured an 8.853 billion yen contract with the MoD for satellite imagery this fiscal year, a large increase from prior years. In-orbit deployment of the company-owned Pelican satellite constellation will begin in the second half of next fiscal year, with systems preparation on track. A satellite quantum key distribution (QKD) development and demonstration project was selected for JAXA funding, which the company is executing with NICT to target early commercialization. First half security segment revenue was 5 billion yen, a 300 million yen increase year-over-year, representing 40% progress against the full-year target of 13 billion yen, in line with plan.
• Global Mobile Segment: Despite partial foreign exchange impact, transaction volume increased year-over-year, led by growing demand for inflight Wi-Fi. The company signed a large contract to provide the full Ku-band capacity of Superbird-C2 to SES for aeronautical Wi-Fi use, with revenue contribution starting in the second half of this fiscal year, and further capacity expansion planned with upcoming fully digital satellite launches. The aeronautical Wi-Fi market is projected to grow at over 30% CAGR from 2023 to 2030, and the company targets over 20% revenue growth in the Global Mobile segment by 2030.
• Partnerships & New Initiatives: Orbital Lasers, a portfolio company, was selected as front-loading partner for JAXA's altitude lidar satellite development, with initial concept design awarded for 500 million yen, and the company targeting a 5 billion yen full development mission contract expected in FY2026. The Near-Earth Tracking Network Service for JAXA launched in September 2025, delivered in partnership with Norway's KSAT, with commercial expansion of the ground station network to private customers planned for new revenue growth. The company invested in the JAXA-anchored Frontier Innovations 1 fund for deep tech startups, and entered a capital and business alliance with Green Carbon to develop carbon credit generation via satellite data, bringing cumulative startup-related investment to over 15 billion yen.

Media Business Operational Highlights

• Broadcast Strategy: To offset declining subscriber counts, the company focuses on raising ARPU and lengthening contract terms, with prioritization of the high-ARPU, low-churn SKY Perfect! Basic Plan. The company has increased contracting for high-value content to reduce early churn, and the share of core products in total subscriptions continues to rise annually.
• Initiative Updates: The company ended the SKY Perfect! Plus connected TV business pilot after determining that standalone scaling would require 10 million device deployments and hundreds of billions of yen in cost with no viable partner found, so standalone deployment carried excessive business risk.
• Anime IP Business: Subsidiary SKY Pictures has 8 anime titles in production as lead producer, and is accelerating global IP expansion leveraging growing overseas demand for anime content. Its next title, The Magician Knon Sees All, ranked #1 overall on Japan's largest web novel platform and will launch broadcast in January 2026 across multiple Japanese and global networks.

1. Space Segment: Operating revenue of 32.2 billion yen, an 800 million yen increase year-over-year, driven by growth in solution services using domestic and overseas ground infrastructure (including the JAXA Near-Earth Tracking Network Service) and rising demand for aeronautical inflight Wi-Fi services in the Global Mobile segment despite foreign exchange headwinds. Operating expenses decreased by 300 million yen including lower depreciation, resulting in segment profit of 8.4 billion yen, a 900 million yen increase year-over-year. This segment accounts for approximately 50.1% of total combined operating revenue of the two reported segments.
2. Media Segment: Operating revenue of 32.1 billion yen, a 900 million yen decrease year-over-year, as declining subscription viewing revenue offset steady growth in the Optical Alliance business. Operating expenses decreased by 3.1 billion yen year-over-year, driven by 1.5 billion yen in one-off savings from exiting Bundesliga broadcasting and moving the customer center subsidiary to equity method accounting, plus 900 million yen in lower depreciation. The company recorded an 800 million yen special loss for ending the SKY Perfect! Plus connected TV pilot, with a 500 million yen negative impact on segment profit. Net segment profit was 3.6 billion yen, an 1.1 billion yen increase year-over-year. This segment accounts for approximately 49.9% of total combined operating revenue of the two reported segments.

• Consolidated Guidance: The company maintains its full-year consolidated net profit guidance of 21 billion yen, with first half results delivering 56% progress, putting the company on track to meet the target.
• Cash Flow & Capital Expenditure: Full-year capital expenditure is guided at approximately 70 billion yen, in line with prior plan. Cash and cash equivalents are projected to decline by over 50 billion yen full-year, ending at approximately 60 billion yen, as the company deploys cash for growth investments.
• Security Medium-Term Target: The company targets 30 billion yen in annual security segment revenue by FY2030, driven by the MoD satellite constellation project and expanding satellite imagery business.
• Global Mobile Medium-Term Target: The company targets over 20% revenue growth in the Global Mobile segment by FY2030, supported by growing inflight Wi-Fi demand and new capacity from upcoming satellite launches.

• The standalone connected TV device business carried too high risk due to required large upfront capital expenditure for mass deployment and inability to find a suitable joint venture partner amid the growing penetration of native smart TVs, leading management to terminate the pilot.
• Growing competition from low-earth orbit (LEO) satellite providers like Starlink and Project Kuiper in the aeronautical Wi-Fi market is expected to put downward pressure on pricing.
• Declining traditional broadcast subscription revenue continues, with uncertain timing for when declines will stabilize, requiring ongoing cost control discipline.
• Large future growth opportunities in the Japanese security space sector depend on the content of the upcoming Next Defense Force Improvement Plan, which has not yet been finalized.

Q: What is driving the 800 million yen revenue increase in domestic satellite communications, and what is the revenue timeline for the new JAXA service? / A: The growth comes from the new JAXA Near-Earth Tracking Network service, plus steady growth in other ground infrastructure-based solutions for video distribution, especially for low-orbit satellite operators. Only the September 2025 one-month portion of the JAXA 10-year contract is recognized in Q2, and full quarterly revenue will be recognized from Q3 onward, with full annual recognition starting next fiscal year.

Q: Why has Global Mobile, previously a declining segment, returned to growth in Q2, and what has changed in the market? / A: Growth is driven by two key factors: the new large Superbird-C2 capacity contract with SES, and a fundamental market shift where airlines have now enabled streaming inflight, causing massive growth in demand for satellite capacity. The company's existing satellite capacity is well positioned to meet this growing demand, which is what led to the new large SES contract.

Q: How will competition from LEO satellite providers like Starlink affect pricing and market share for the company's aeronautical Wi-Fi business? / A: Competition from LEO providers is expected, and the company has already factored competitive pricing dynamics into its current forecasts and strategy. The bit per unit cost of the company's upcoming Superbird-9 and JSAT-31 satellites is competitive with LEO provider pricing. In addition to price, the company differentiates via 24/7/365 network monitoring and reliable customer support, which is highly valued by customers and supports long-term customer retention.

Q: What is the profit impact of the upcoming price increase for optical retransmission services? / A: The price increase is driven by inflation in labor and maintenance costs, and the underlying leased line cost that the company pays is also increasing at the same time, so the full price increase does not flow directly to gross profit. Even so, management expects the net impact on full-year profit to be material, with the full year benefit realized next fiscal year, and the optical FTTH business will continue to grow as a core media segment revenue driver.

Q: What competitive advantages does SKY Perfect JSAT have in the upcoming Next Defense Force Improvement Plan, and what opportunities is the company targeting? / A: Beyond core satellite communication services, the company is positioning to grow in satellite imagery (space intelligence), space domain awareness (SDA), optical data relay for satellite imagery, and satellite QKD. The company is already working to integrate these emerging technology opportunities into the defense plan, leveraging its existing space asset base and decades of experience delivering satellite services to the Japanese government to capture new growth.