VISION INC. Q4 FY2024 earnings call

• Corporate Update and Shareholder Action

  • The company revised its previous QUO card / digital gift shareholder benefit program, consolidating all benefits into dividend distributions after the program saw costs that were more than double the original forecast. The 2024 unadjusted operating profit was 5.777 billion yen, but 410 million yen in unexpected benefit costs reduced reported operating profit to 5.365 billion yen, and cut net income to 3.375 billion yen. Management issued an apology for the forecasting error.
  • The newly established New York subsidiary has obtained all necessary visas and is ready to begin full operations to accelerate overseas expansion.

• Global WiFi Business Operational Highlights

  • Inbound travel recovered to 132% of 2019 levels in Q4 2024, while outbound personal travel recovered to only 68% of 2019 levels. Corporate outbound travel has maintained 120% growth, with corporate clients now accounting for 54.6% of total usage volume (up from 50.2% in 2023) and 67.4% of total revenue (up from 60.4% in 2023).
  • Unlimited data plans have high adoption: 62% for individual users and 76% for corporate users, though 5G unlimited plan adoption remains 16% with room for growth.
  • World eSIM reached 171 million yen in Q4 revenue and 77,000 usage units, with repeat users accounting for 26.7% of users. Lower average revenue per unit in Q4 was driven by short trips to nearby destinations, which management expects to normalize in future quarters.
  • Clear product segmentation is being developed: World eSIM is positioned for single-device single-user use, while hardware Global WiFi is positioned for multi-device sharing and cross-country roaming, which avoids battery drain issues common with eSIM tethering.

• Information and Communications Services Business Operational Highlights

  • OA equipment, mobile communications device sales, and eco solutions all performed well, with consistent growth in recurring stock services that supports stable long-term revenue growth. Total company annual recurring revenue (ARR) reached 2.18 billion yen in 2024, with Global WiFi for Biz alone reaching 620 million yen in basic recurring revenue.

• Glamping & Tourism Business Operational Highlights

  • The business maintained high utilization driven by strong Japanese domestic bookings and growing foreign guest numbers. The inbound tourism operation segment recently turned profitable after over a year of investment, and will drive future growth alongside existing glamping operations, with strong synergies with the Global WiFi business.

• Vision 3.0 Mid-Term Management Strategy Core Focus

  • The new mid-term plan (2025-2028) is built on prior strategic evolutions: Vision 1.0 established national phone-based sales, Vision 1.5 shifted to digital marketing for customer acquisition, and Vision 2.0 built dedicated customer loyalty teams to reduce churn and accelerate cross-selling. Vision 3.0 focuses on data-driven sales enabled by BPO and bookkeeping services, leveraging AI and OCR technology advances to improve profitability.
  • The core strategy continues to focus on niche market deepening, price/quality optimization, and cross-selling/upselling to existing customers to reduce customer acquisition costs and improve margins.

1. グローバルWiFi (Global WiFi) Business: 2024 full-year revenue was 19.875 billion yen, up 17.6% year-over-year. Segment operating profit was 5.987 billion yen, up 33.6% year-over-year. Revenue contribution to total consolidated revenue was 56%.
2. 情報通信サービス (Information and Communications Services) Business: 2024 full-year revenue was 14.49 billion yen, up 19.7% year-over-year. Segment profit was 1.693 billion yen, up 62.7% year-over-year. Revenue contribution to total consolidated revenue was 41%.
3. グランピング・ツーリズム (Glamping & Tourism) Business: 2024 full-year revenue was 1.155 billion yen, up 26.6% year-over-year. Segment profit was 0.119 billion yen, up 35% year-over-year. Revenue contribution to total consolidated revenue was 3%.

• 2025 Full-Year Guidance:

  • Consolidated revenue is targeted at 40.002 billion yen (new all-time high), operating profit at 6.439 billion yen, and net income attributable to parent shareholders at 4.382 billion yen. The 2025 forecast is weighted towards investment for future growth, with acceleration of revenue and profit growth expected in the second half of the mid-term plan (2027-2028).
  • Segment-level 2025 targets: Global WiFi: 22.7 billion yen revenue, 6.4 billion yen profit; Information and Communications Services: 15.6 billion yen revenue, 1.86 billion yen profit; Glamping & Tourism: 1.576 billion yen revenue, 0.15 billion yen profit.
  • Guidance assumes an exchange rate of 1 USD = 150 JPY, and full-year outbound travel recovery of 81.1% vs 2019 pre-pandemic levels.

• 2025-2028 Mid-Term Guidance:

  • Consolidated revenue will grow from 35.5 billion yen (2024) to 63.4 billion yen (2028), and operating profit will double from 5.365 billion yen (2024) to 10 billion yen (2028). Net income will also roughly double, with ROE maintained above 20%.
  • Payout policy: For the 2025-2026 period, the company will commit to a 50% payout ratio, as the company holds almost no net debt and can simultaneously fund aggressive investment and increased shareholder returns.
  • Segment-level 2028 targets: Global WiFi: 34.1 billion yen revenue, 8.4 billion yen profit (42% profit growth over 2024); Information and Communications Services: 3.5 billion yen profit, more than doubling 2024 levels; Glamping & Tourism: 5.4 billion yen revenue, driven by growth in the inbound tourism operation (no additional glamping sites are planned beyond the one already announced for Kansai).
  • Total recurring revenue is targeted to grow from 2.18 billion yen (2024) to 3.9 billion yen (2028), with recurring revenue expected to account for ~60% of total 2028 operating profit, driving faster growth after the 10 billion yen profit target is achieved. Cumulative investment in World eSIM will reach 1.187 billion yen by 2028, with consistent profit growth alongside investment.

• Unpredictable cost volatility from the previous shareholder benefit program created risks to earnings predictability, accurate disclosure, and investor confidence, which led to the decision to eliminate the program and consolidate benefits into dividends.
  • Personal outbound travel recovery remains slower than expected, at only 68% of 2019 levels as of Q4 2024, with continued yen depreciation and demographic headwinds limiting near-term recovery.
  • Large swings in foreign exchange rates could impact profitability for the Global WiFi business.
  • Unexpected changes to global travel trends or geopolitical conditions could impact travel demand recovery projections.
  • High levels of competition for talent may impact hiring plans for the growing BPO/information communications business.

Q: Can you confirm the new 50% payout policy, and what is your stance on share buybacks? / A: Management commits to a 50% payout ratio for the next two years, and this is feasible given the company's low debt and investment requirements. For share buybacks, management says it will keep all options open, including using holdings for M&A or capital reduction, and will act at the appropriate time. Management's current priority is growing operating profit to improve the company's standing in the prime market, so it will continue to evaluate options dynamically.

Q: How achievable is the 2028 mid-term plan target, and how much of the projected growth relies on M&A? What is your current share of the corporate global WiFi market? / A: No M&A-related growth is included in the current plan, any M&A would add incremental growth to the base targets. For Global WiFi, consistent corporate customer acquisition even through the pandemic has already delivered consistent growth, and adding a gradual recovery in personal travel will deliver the targeted 140 billion yen in top-line growth over four years. Management estimates it currently holds roughly 30% of the business travel global WiFi market, so there is significant remaining market share to capture, with almost no competitor focus on corporate sales, and low churn after customers adopt the service.

Q: Is the mid-term plan intentionally aggressive on sales and conservative on profit, and how is the planning process designed? / A: Management says the plan is not intentionally aggressive or conservative; it is built from bottom-up targets that each business unit believes is achievable. However, the team culture emphasizes avoiding misses, so the outcome often ends up being more conservative than not, matching this general understanding.

Q: Why does the plan forecast accelerating sales growth starting in 2026, and what incremental costs are needed to achieve this acceleration? / A: Acceleration will come from data-driven marketing improving cross-selling efficiency, and scaling of the BPO business. As bookkeeping services scale with AI and DX improvements, productivity will increase, and clients will demand additional back-office services, leading to very low incremental customer acquisition costs and accelerating margin growth. Investment will be limited to ongoing hiring, technology, and office expansion that matches the business' natural growth rate, with no large lumpy incremental investments required.