Vision Inc. (9416) Earnings Call Transcript & Summary

Hello, everyone. I'm Sano, Vision Inc. Today, I would like to explain the financial results for the fiscal year ending in December 2021. First of all, I would like to explain the consolidated financial results for the fiscal year ending in December 2021. Sales increased by JPY 1,446 million from JPY 16,654 million in the fiscal year ending December 2020 to JPY 18,100 million in the fiscal year ending in December 2021. Regarding the operating profit, it increased by JPY 1,001 million from JPY 103 million to JPY 1,105 million with a profit margin of 6.1%. The quarterly net income belonging to shareholders of the parent company, which was negative JPY 1,183 million last year, partly due to extraordinary losses. -- increased by JPY 1,913 million to JPY 729 million this year. I will move on to the performance trends of our global WiFi business to meet various domestic WiFi needs, we are implementing every kind of initiatives possible for during and after the COVID-19 pandemic environment. There have been many factors that have impacted our business, such as remote work and the declaration of the state of emergency. But this, in turn, has led to an increase in extensions of rentals. We have also seen strong sales of our permanent corporate solution, global WiFi for bids as many clients have chosen it for their remote work needs. Sales and profits are also increasing as we can capture the needs of clients requiring access to the Internet sharing remote work, moving, hospitalization or business trips as well as those seeking a stable connection using both fixed line and mobile WiFi since the fixed line alone tends to be easily overloaded when multiple people use it at home. In addition, sales and profits are increasing, thanks to contract businesses such as the implementation of apps for border control measures by airport quarantine stations. Also, during the fourth fiscal quarter, we began preparations for the revival of global WiFi by purchasing devices in various extras in anticipation of the next fiscal year. In terms of sales over time, their breakdown has changed from a peak of $17,000 million in 2019 to $7,200 million and then $9,000 million, but a gradual recovery has been seen. In addition, the segment's profit, which has reached a peak of JPY 3,300 million fell to negative JPY 90 million. The last year, it rose JPY 1,033 million, indicating a tendency toward recovery. Next are the performance trends of the information and communications service business -- within the Information and Communication Services business, we combined several products and services to provide solutions for different office requirements. Although there have been various changes in the external environment, such as the ability to procure semiconductor chips and the rapid increase in the purchase price of electricity for retailing, we are actively pursuing a subscription-based business model that is expected to grow from now over a period of 5 to 10 years. As you can see, sales were segment and profits were lower than last year. But we were able to build up medium- to long-term recurring revenue and achieve a gross profit of JPY 1,000 million for the year. Next, I would like to discuss the 3 prerequisites for the full year earnings forecast of this fiscal year. Firstly, regarding the external environment and business policy, it is still very difficult to predict the future as COVID-19 infections are still spreading. However, as one of the prerequisites, we are committed to realize business growth, while at the same time, developing new businesses and new services, whether in an environment where COVID-19 is still present or in a post-pandemic world. The prerequisite for our global WiFi business is the same as last year, but we think that it will be complicated to travel overseas, both from and to Japan partly because between January and September, the Omicron variant is still spreading. We estimate that it will be possible to travel overseas again from October on and predict a performance of about 25% compared to 2019. Also, we expect that our contract business at the airport quarantine stations will continue until December as border control measures will need to be carried on. Besides, we have also included figures that will result from proactive sales as our second prerequisite is that domestic needs for our global WiFi for bids will rise in anticipation of the revival of outbound travels. Thirdly, regarding the information and communications service business, many changes are taking place in the external environment. On one hand, despite the challenging times we are in, there was a steady increase in startups. However, there is a global shortage of semiconductors and chips needed for telecommunications equipment due to the COVID-19-related restrictions in factories -- in view of this, we are taking a variety of measures, but there are also some unpredictable aspects. Next, I would like to talk about Vision Denki. We decided to start the electricity retail business in August 2021. However, the purchase price of electricity has been soaring. So we have stopped acquiring new customers for this business and are developing it into an agency. The above 3 points are the prerequisites of the full year earnings forecast. I will next explain the full year earnings forecast based on these prerequisites. We are expecting sales to increase from JPY 18,100 million to JPY 22,736 million, which is an increase of about $4,600 million or 25.6%. Regarding the operating profit, we are aiming for an increase by 27.4% to JPY 1,407 million from last year's JPY 1,105 million. Also, concerning this year's net income attributable to shareholders of the parent company, we are foreseeing an increase by JPY 192 million from JPY 729 million to JPY 921 million. Next, I will talk about the full year earnings forecast by segment. As for the sales of the global WiFi business, which amounted JPY 9,070 million last year, we expect JPY 10,815 million, which is an increase by JPY 1,744 million or 19.2%. On the other hand, please note that the profits will stay at the same level given the current situation. In addition, sales of Information and Communication Services, which were JPY 8,804 million last year are expected to increase by JPY 2,332 million or 26.5% to JPY 11,137 million, and operating profit is also expected to increase by JPY 309 million or 27.8% from JPY 1,116 million to JPY 1,426 million. Thus, we anticipate an increase of both sales and profit. I will now move on to talk about our lending business, which we developed on the third pillar of Vision Group. On January 1 of this year, we introduced Koshika no Onsen located in Kirishima City, Takashima Prefecture to our group. As of now, we have 5 sites and 4 more will be added by the end of the month as the demand for blending is significantly growing. We are still working hard on this process of actively building several bases. We are aiming for a grand opening in April. Regarding the second series of glamping sites, we are very excited to be building new bases in spectacular locations expected to complete this summer, we are preparing to build a similar location to Koshika no Onsen at Lake Yamanaka, where a beautiful view of Mount Fuji can be seen. Next. Concerning the mobile network business within the information and communication services business. It has grown significantly since last year. Firstly, due to the increase in remote working, it has become a standard among companies that previously used both personal and company mobile phones together to keep them separate to create a more secure environment as well as to avoid financial issues. In fact, we have been developing [ holgenkatie.com ] for more than a decade now. Back in the days, the term business mobile phone [ holgenkatie ], didn't even exist, which has now become widely used. And therefore, we have been able to provide them in large numbers. In addition, since smartphones are delicate devices, we have been providing our own support services for a long time, for which the subscription rate is very high, contributing to the JPY 1,000 million in recurring earnings previously mentioned. How about obtaining mobile phones after installing a phone line to promote loyalty among various departments in the company. This is a business that can be linked to a variety of other products and services. And since it's still steadily growing to become one of our core businesses, we decided to focus on it. Next, I would like to discuss the gross profit ratio of our information and communication services. As you can see from the graph, the mobile network business is growing from 2020 to 2021, as explained earlier. And the OA equipment sales business in purple is growing as well. Although there have been changes in the demands, our strength lies in the fact that we have several products to offer, which allows us to shift our focus to a certain product when the demands increase in a specific area. -- the gross profit ratio will continue to fluctuate in the future, but we are determined to do our best to increase our performance. Lastly, our recurring earnings, including those from subscription services have surpassed JPY 1,000 million. I am mainly speaking about the information and communications business, where we have gradually increased the ratio of in-house services, which led to a slight decrease in sales and profits, as mentioned earlier, when explaining the performance trends. On the other hand, however, medium- to long-term profits are increasing, and I would like to stress the importance of our recurring earnings, particularly in these times of major changes. However, we believe that the reason we have been able to increase our earnings is because we have been continuously doing business with our customers, and these figures reflect our CRM and trusted relationships with them. As for the future, we would like to maintain a solid relationship with our customers and keep developing services that are beneficial to them. Thank you very much for your precious time today -- it has been a very tough year for us. And when we started out in January, we were wondering how things will evolve throughout the year. But the COVID-19 pandemic had already started the year before that, and we had all been working hard to lay the foundation. We still haven't been able to grow at a pace that can be described as significant, but we have certainly increased the strength of Vision Group over the past 2 years. When global WiFi will make it come back, we will be able to generate even more profit. And in addition to that, new services and new partners will be continuously introduced, and we will all do our best to make Vision Group even stronger. Therefore, I would be very appreciative of your continued support. Thank you very much for listening today.