VISION / 9416
COVERAGE INITIATED ON:

2016.09.01

LAST UPDATE:

2021.07.20

Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is toprovide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate,
objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will
always present opinions from company management as such. Our views are ours where stated. We do not try toconvince or influence, only inform. We appreciate your suggestions and feedback. Write to us at
sr_inquiries@sharedresearch.jp or find us on Bloomberg.

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INDEX
How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent
earnings. First-time readers should start at the business section later in the report.

Executive Summary ----------------------------------------------------------------------------------------------------------------------------------- 3
Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 5
Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 7
Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------7
Trends and outlook ----------------------------------------------------------------------------------------------------------------------------------- 8
Quarterly trends and results -----------------------------------------------------------------------------------------------------------------------------------8
Business ------------------------------------------------------------------------------------------------------------------------------------------------ 21
Business segments ---------------------------------------------------------------------------------------------------------------------------------------------- 26
Key group companies------------------------------------------------------------------------------------------------------------------------------------------ 34
Profitability analysis --------------------------------------------------------------------------------------------------------------------------------------------- 35
Market and value chain ---------------------------------------------------------------------------------------------------------------------------------------- 36
Strengths and weaknesses------------------------------------------------------------------------------------------------------------------------------------ 40
Historical performance and financial statements------------------------------------------------------------------------------------------ 41
Historical performance ---------------------------------------------------------------------------------------------------------------------------------------- 41
Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 52
Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 53
Cash flow statement -------------------------------------------------------------------------------------------------------------------------------------------- 55
Other information ---------------------------------------------------------------------------------------------------------------------------------- 56
History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 56
News and topics ------------------------------------------------------------------------------------------------------------------------------------------------- 56
Major shareholders (as of December 31, 2020)------------------------------------------------------------------------------------------------------- 58
Shareholder returns--------------------------------------------------------------------------------------------------------------------------------------------- 58
Corporate governance and top management --------------------------------------------------------------------------------------------------------- 59
Employees --------------------------------------------------------------------------------------------------------------------------------------------------------- 59
By the way --------------------------------------------------------------------------------------------------------------------------------------------------------- 59
Profile---------------------------------------------------------------------------------------------------------------------------------------------------------------- 60

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Executive Summary
Business overview◤ Vision has two main businesses: Global WiFi, in which it rents out mobile WiFi routers, and Information and Communications

Service, in which it provides telecommunications services and sells office equipment. Global WiFi accounted for 44% of sales
and -9% of operating profit in FY12/20 (65% and 75% in FY12/19), and Information and Communications Service accounted
for 53% of sales and 147% of operating profit in FY12/20 (33% and 31% in FY12/19). From its launch in 2012 throughFY12/19, Global WiFi’s share of sales and operating profit had been growing, but in FY12/20 it was hit by the COVID-19’s
impact on outbound and inbound demand, which were reduced to essentially zero.
◤ In the Global WiFi business, Vision rents out mobile WiFi routers* to both outbound (Japanese travelers going overseas) andinbound (people visiting Japan) travelers. The company procures mobile network access directly from telecommunications
companies in Japan and abroad, enabling it to offer high-quality internet services at low prices. In FY12/20, 65.5% of rental
customers (overseas contracts) were individuals (roughly 63% in FY12/19), and 34.5% were companies (roughly 37%).
46.4% (roughly 45% in FY12/19) were new customers and 53.6% (roughly 55%) were repeat customers. In FY12/20, thecompany rented out approximately 960,000 routers (2,830,000 in FY12/19). 640,000, or roughly two-thirds, were for use inJapan (590,000, or 21%).
*Wireless LAN (WiFi) routers enable direct connection to mobile networks on the go via smartphones, tablets, laptops, or game consoles.

◤ In the Information and Communications Service business, the company mainly targets new businesses (startups). It arranges

telephone lines and other information and communication services, and sells office equipment. Main sources of revenue:
equipment sales, commissions from telecommunications companies, and revenue from office equipment maintenance. The
company initially provides equipment at low prices, aiming to grow revenue per customer by expanding the number ofservices provided in line with customers’ growth. Under this business model, most revenues are recurring monthly revenues(monthly fee revenue on the company’s proprietary DX services is also growing). The company’s marketing activities focus
on customers who have demonstrated interest by reaching out to the company, and leverage customer referrals from otherdivisions as well as web marketing, call centers, and a Customer Loyalty Team (CLT; supporting existing customers).
Marketing can be seen as effective: for example, sales of copiers per salesperson were roughly four times the industry
average.
◤ Vision celebrated its 25th anniversary in June 2020. There are now 400,000 companies using its services (as of May 31, 2020)

and an aggregate 15mn individual customers using its Wi-Fi router rental service (as of August 2020).

Trends and outlook◤ In FY12/20, sales were JPY16.7bn (-39.0% YoY), operating profit was JPY104mn (-96.9% YoY), recurring profit was JPY228mn(-93.2% YoY), and net loss attributable to owners of the parent was JPY1.2bn (net income of JPY2.2bn in FY12/19). Results
were in line with the revised forecasts announced on November 9, 2020. While the Global WiFi business was hit by the effectsof the COVID-19 pandemic, the Information and Communications Service business generally did well, and maintained
operating profitability even amid the pandemic (the company effectively diversified its risks).
◤ At its Q1 FY12/21 earnings announcement, the company upwardly revised its 1H forecast and withdrew its full-year forecast

due to the difficulty of accurately calculating the impact of the COVID-19 pandemic on its business activities. The company’s
initial FY12/21 forecast called for full-year sales of JPY15.2bn (-9.0% YoY), operating profit of JPY407mn (+291.7% YoY),
recurring profit of JPY397mn (+74.2% YoY), and net income attributable to owners of the parent of JPY245mn (net loss of
JPY1.2bn in FY12/20). The company plans to focus on the Wi-Fi rental business and Information and Communications Service
business in Japan in line with the new normal era, and to expand sales of in-house services (monthly fee) and various
maintenance services for communication products.
◤ Vision does not release a medium-term plan, but it aims for sharp expansion in profit alongside sustained investment in future

growth. It had positioned the Global WiFi business as the growth driver. The company recognizes the Information andCommunications Service business as a source of stable growth, and is pursuing expansion in its operations accordingly. It
aims to grow its earnings by conducting various investments and making maximum use of its experience and expertise,

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including its three-legged team approach to winning new customers (online marketing, sales, and customer loyalty team),cross-marketing between its businesses, and pursuing business models designed to create recurring revenue streams. In its
two existing business segments (Global WiFi and Information and Communications Service), the company intends to makeuse of such tools as online sales negotiations to further improve productivity. It says that it will further enhance up-selling andcross-selling. Vision also plans to tune up its earnings structure and work to enhance and expand its in-house services. In
addition, the company looks to leverage its customer base, sales channels, and business framework to cultivate a third pillar of
business to complement its two existing segments.

Strengths and weaknesses
Shared Research believes that Vision has three strengths: a niche market focus, an efficient marketing model using web
marketing, and direct network access from major telecom carriers that allows it to provide high-quality internet service at low
prices. Weaknesses: little technological differentiation, limited time to prove itself to clients, and relationships with telecom
carriers in the Information and Communications Service business. (See Strengths and Weaknesses section for details.)

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Key financial data
Income statement

FY12/11

FY12/12FY12/13

FY12/14

FY12/15

FY12/16

FY12/17

FY12/18

FY12/19

FY12/20

FY12/21

Par.

Par.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Est.

Sales

6,999

6,527

9,204

10,185

12,485

14,844

17,55521,50427,31816,654

n.a.

YoY

8.3%

-6.7%

41.0%

10.7%

22.6%

18.9%

18.3%

22.5%

27.0%

-39.0%

-

5,199

5,652

6,910

8,622

10,161

12,65015,690

8,794

n.a.
-

(JPYmn)Gross profit
YoY

-

8.7%

22.3%

24.8%

17.8%

24.5%

24.0%

-44.0%

GPM

56.5%

55.5%

55.3%

58.1%

57.9%

58.8%

57.4%

52.8%

-

10

286

805

1,290

1,789

2,484

3,325

104

n.a.

YoY

-

2742.1%

181.2%

60.3%

38.6%

38.9%

33.8%

-96.9%

-

OPM

0.1%

2.8%

6.4%

8.7%

10.2%

11.6%

12.2%

0.6%

-

Operating profit

Recurring profit

57

285

30

324

808

1,298

1,795

2,500

3,359

228

n.a.

YoY

-83.5%

399.6%-89.5%

987.9%

149.3%

60.8%

38.3%

39.3%

34.4%

-93.2%

-

RPM

0.8%

4.4%

0.3%

3.2%

6.5%

8.7%

10.2%

11.6%

12.3%

1.4%

-

1

-216

75

275

585

814

1,209

1,529

2,226

-1,184n.a.

Net income attributable to owners of the parent
YoY
Net margin-99.1%--

264.9%

112.6%

39.0%

48.5%

26.5%

45.6%

-

-

0.0%

-3.3%

0.8%

2.7%

4.7%

5.5%

6.9%

7.1%

8.1%

-7.1%

-

33,858.0

35,427.0

35,427.0

35,427.0

48,712.2

48,712.2

48,834.0

48,834.0

49,027.2

49,027.8

0.04

-6.20

2.13

7.77

16.32

16.71

24.77

31.40

46.05

-25.07

-

-

-

-

-

15.98
-

16.48
-

24.21
-

24.21
-

44.49
-

-

-

43.63

43.02

22.28

26.81

66.68

75.05

175.40200.95226.80185.79Per-share data (split-adjusted; JPY)
Shares issued (year-end; '000)
EPS
EPS (fully diluted)
Dividend per share
Book value per share
Balance sheet (JPYmn)
Cash and cash equivalents
Total current assets

-

-

1,328

1,546

5,774

6,242

6,256

7,563

8,485

6,650

-

-

2,835

2,777

7,404

8,130

8,995

10,455

11,792

8,872

Tangible fixed assets

-

-

70

229

282

481

859

1,072

1,200

343

Investments and other assets

-

-

458

626

516

901

1,038

1,541

1,515

1,901

Intangible assets
Total assets
Short-term debt
Total current liabilities

-

-

319

286

327

423

591

677

667

197

2,962

3,283

3,683

3,917

8,528

9,935

11,484

13,552

15,174

11,313

-

-

328

313

27

37

22

2

40

16

-

-

1,879

1,904

2,019

2,600

2,895

3,749

4,222

2,508

Long-term debt

-

-

213

100

13

23

2

0

38

31

Total fixed liabilities

-

-

225

113

13

23

2

0

46

36

Total liabilities

-

-

2,104

2,017

2,032

2,623

2,897

3,749

4,268

2,544

1,477

1,524

1,579

1,899

6,496

7,312

8,586

9,803

10,905

8,769

-

-

541

413

40

60

25

2

78

46

Cash flows from operating activities

-

-

317

553

799

1,493

1,617

2,889

3,550

-396

Cash flows from investing activities

-

-

83

-312

-629

-473

-1,416-1,458-1,436-375

Cash flows from financing activities

-

-

26

-128

3,667

-38

-8

-312

-1,165-1,036

ROA (RP-based)

2.0%

9.1%

0.9%

8.5%

13.0%

14.1%

16.8%

20.0%

23.4%

1.7%

ROE

0.1%

-

5.0%

15.8%

13.9%

11.8%

15.2%

16.7%

21.5%

-12.1%

Equity ratio

49.9%

46.4%

42.9%

48.5%

76.2%

73.6%

73.6%

72.2%

71.7%

77.3%

Total net assets
Total interest-bearing debt
Statement of cash flows (JPYmn)

Financial ratios

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Consolidated data from FY12/13
Note: The company issued a 100-for-1 stock split in December 2014, a 2-for-1 stock split in July 2017 and a 3-for-1 stock split on October 1, 2019. Per share data havebeen retroactively restated.

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Segment earnings
Performance by segment(JPYmn)Sales
Global WiFi
Information and Communications Service
Other

FY12/13 FY12/14 FY12/15 FY12/16 FY12/17 FY12/18 FY12/19 FY12/20
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
9,204
10,185
12,485
14,844
17,55521,50427,31816,654
1,887
7,312
5

YoY

3,756
6,411
18

6,035
6,440
10

7,882
6,948
13

10,392
7,104
58

13,506
7,774
224

17,733
8,955
631

7,278
8,797
579

10.7%

22.6%

18.9%

18.3%

22.5%

27.0%

-39.0%

Global WiFi

99.0%

60.7%

30.6%

31.8%

30.0%

31.3%

-59.0%

Information and Communications Service-12.3%

0.5%

7.9%

2.2%

9.4%

15.2%

-1.8%

Other

278.7%-46.9%

33.5%

345.8%

283.8%

181.5%-8.1%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%% of sales

100.0%

Global WiFi

20.5%

36.9%

48.3%

53.1%

59.2%

62.8%

64.9%

43.7%

Information and Communications Service

79.4%

62.9%

51.6%

46.8%

40.5%

36.2%

32.8%

52.8%

Other

0.1%

0.2%

0.1%

0.1%

0.3%

1.0%

2.3%

3.5%

10
-184
566
-8
-364

286
180
724
8
-626

805
594
904
-12
-681

1,290
1,141
1,025
-54
-821

1,789
1,593
1,173
-103
-874

2,484
2,414
1,219
-194
-954

3,325
3,302
1,363
-267
-1,073

104
-91
1,520
-393
-933

2,741.8%

181.2%

60.3%

38.6%

38.9%

33.8%

-96.9%-197.8%230.5%

92.2%

39.7%

51.5%

36.8%

-

27.9%

24.8%

13.4%

14.4%

3.9%

11.9%

11.5%

Operating profit
Global WiFi
Information and Communications Service
Other
Adjustment
YoY
Global WiFi
Information and Communications Service
Other
Operating profit (excl. adjustments)

0.1%

-

-

-

-

-

-

-

2.8%

6.4%

8.7%

10.2%

11.6%

12.2%

0.6%

Global WiFi

-9.7%

4.8%

9.8%

14.5%

15.3%

17.9%

18.6%

-1.2%

Information and Communications Service

7.7%

11.3%

14.0%

14.7%

16.5%

15.7%

15.2%

17.3%

Other

-

45.8%

-

-

-

-

-

-

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Global WiFi

-49.1%

19.7%

40.0%

54.0%

59.8%

70.2%

75.1%

-8.7%

Information and Communications Service

151.3%

79.4%

60.8%

48.5%

44.0%

35.4%

31.0%

146.6%

-2.2%

0.9%

-0.8%

-2.6%

-3.9%

-5.6%

-6.1%

-37.9%% of OP (incl. adjustments)

Other

Global WiFi usage(units)
Total
Overseas use

FY12/13 FY12/14 FY12/15 FY12/16 FY12/17 FY12/18 FY12/19 FY12/20
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
241,737

516,199

783,050

1,144,045

1,650,969

2,231,775

2,830,000

960,000

223,706

462,953

648,475

886,824

1,302,646

1,759,514

2,160,000

300,000

Domestic use

7,511

35,51290,906

190,665

285,708

407,517590,000

640,000

Overseas business (excl. domestic use)

10,52017,734

43,66966,556

62,61564,74470,00010,000Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

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VISION / 9416
LAST UPDATE: 2021.07.20

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Recent updates
Highlights
On July 20, 2021, Shared Research updated the report following interviews with Vision Inc.

On May 13, 2021, the company announced earnings results for Q1 FY12/21, revised its 1H forecast, and withdrew its full-year
forecast; see the results section for details.

On the same day, the company announced the launch of its new glamping business.

▷

The company’s growth strategy centers on policies such as adapting to the “new normal” of the COVID-19 economy, utilizing
sales channels and business structures, leveraging customer bases, providing services that incorporate customer feedback, anddeveloping regional areas.

▷

Vision has decided to launch its glamping business in 1H FY12/22 (tentative). The company believes it will be able to grow thebusiness into a third earnings pillar based on a business model featuring the company’s strengths: namely, its ability to utilize
IoT to minimize contact during the “new normal” created by the pandemic (in acquiring customers, building a customer base,at airport counters, and in other applications), and its ability to realize low-cost operations. These advantages will help thecompany achieve high customer satisfaction and efficient operations in the business.

▷

New business: Operation of accommodation facilities featuring dome-shaped tents, wooden deck barbeque facilities, andopen-air baths.

▷

The total planned expenditure for the launch of the business is approximately JPY1.2bn for the acquisition of land for the
project (including leasing) and the acquisition and installation of dome-shaped tents and other facilities. The company iscurrently considering locations across Japan for the installation of facilities (along with the number of facilities to be installed),
and has yet to accurately determine the amount of expenditure that will be needed for the rollout of nationwide operations.

▷

Vision expects the business to have a negligible impact on FY12/21 results.

For previous releases and developments, please refer to the News and topics section.

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Trends and outlook
Quarterly trends and results
Quarterly(JPYmn)Sales
YoY
Gross profit
YoY
GPM
SG&A expenses
YoY
SG&A ratio
Operating profit
YoY
OPM
Recurring profit
YoY

Q1
6,470

FY12/19
Q2
Q3
6,467
7,610

Q4
6,771

Q1
5,989

FY12/20
Q2
Q3
3,641
3,478

Q4
3,546

Q1
3,939

31.4%

31.1%

27.7%

3,798

3,699

4,474

29.6%

28.0%

58.7%

57.2%

FY12/21
Q2
-

19.1%

-7.4%

-43.7%-54.3%-47.6%-34.2%

-

-

-

3,720

3,253

1,570

2,002

1,970

2,177

-

-

-

25.0%

14.4%

-14.4%-57.6%-55.3%-47.0%-33.1%

-

-

-

58.8%

54.9%

54.3%

43.1%

57.6%

55.5%

55.3%

-

-

-

Q3
-

Q4
-

FY12/21
1H Est.
48.3%
8,148

% of Est.

-15.4%

2,818

2,988

3,194

3,365

2,765

2,073

1,928

1,924

1,891

-

-

-

28.4%

25.1%

19.2%

15.9%

-1.9%

-30.6%-39.6%-42.8%-31.6%

-

-

-

43.6%

46.2%

42.0%

49.7%

46.2%

56.9%

55.4%

54.2%

48.0%

-

-

-

980

710

1,280

355

488

-503

73

46

286

-

-

-

33.1%

42.0%

42.2%

1.9%

-50.2%--94.3%-87.1%-41.4%

-

-

-

-

15.1%

11.0%

16.8%

5.2%

8.1%

-

2.1%

1.3%

7.3%

-

-

-

6.2%

507

56.4%

981

693

1,338

347

496

-430

101

60

314

-

-

-

31.6%

38.6%

48.6%

-1.9%

-49.4%--92.4%-82.7%-36.8%

-

-

-

RPM
Net income attributable to owners of the parent
YoY
Net margin
Cumulative
Sales
YoY
Gross profit

15.2%

10.7%

17.6%

5.1%

8.3%

-

2.9%

1.7%

8.0%

-

-

-

669

406

911

240

116

-1,468

126

42

232

-

-

-

30.2%

37.5%

46.3%

147.1%-82.6%--86.2%-82.3%

99.4%

-

-

-

10.3%

6.3%

12.0%

3.5%

1.9%

-

3.6%

1.2%

5.9%

-

-

-

Q1
6,470

Q2
12,937Q3
20,547Q4
27,318

Q1
5,989

Q2
9,630

Q3
13,108Q4
16,654

Q1
3,939

Q2
-

Q3
-

Q4
-

31.4%

31.3%

29.9%

27.0%

-7.4%

-25.6%-36.2%-39.0%-34.2%

-

-

-

3,798

7,496

11,971

15,690

3,253

4,822

6,824

8,794

2,177

-

-

-

YoY
GPM
SG&A expenses
YoY
SG&A ratio
Operating profit
YoY

29.6%

28.8%

27.4%

24.0%

-14.4%-35.7%-43.0%-44.0%-33.1%

58.7%

57.9%

58.3%

57.4%

54.3%

50.1%

52.1%

52.8%

55.3%

-

-

-

2,818

5,806

9,000

12,365

2,765

4,838

6,766

8,690

1,891

-

-

-

28.4%

26.7%

23.9%

21.6%

-1.9%

-16.7%-24.8%-29.7%-31.6%

-

-

-

43.6%

44.9%

43.8%

45.3%

46.2%

50.2%

51.6%

52.2%

48.0%

-

-

-

980

1,690

2,970

3,325

488

-15

58

104

286

-

-

-

33.1%

36.7%

39.0%

33.8%

-50.2%--98.0%-96.9%-41.4%

-

-

-

-

OPM
Recurring profit
YoY
RPM
Net income attributable to owners of the parent
YoY
Net margin

15.1%

13.1%

14.5%

12.2%

8.1%

-

0.4%

0.6%

7.3%

-

-

-

-

Sales

% of Est.
-

-

-

3,359

496

67

168

228

314

-

-

-

34.4%

-49.4%-96.0%-94.4%-93.2%-36.8%

-

-

-

-

15.2%

12.9%

14.7%

12.3%

8.3%

0.7%

1.3%

1.4%

8.0%

-

-

-

-

669

1,075

1,987

2,226

116

-1,352-1,226-1,184

232

-

-

-

32.9%

38.7%

45.6%

-82.6%

-

-

-

99.4%

-

-

-

-

10.3%

8.3%

9.7%

8.1%

1.9%

-

-

-

5.9%

-

-

-

-

Q3

Q4

Q1

Q3

Q4

Q1

Q2

Q3

Q4

Q2

Q3

Q4

FY12/19
Q1

Q2

FY12/20Q2

FY12/21

7,610

6,771

5,989

3,641

3,478

3,546

3,939

4,463

3,348

1,286

1,273

1,372

1,516

Information and Communications Service

2,302

2,207

2,330

2,116

2,515

2,004

2,145

2,133

2,358

92

151

195

193

127

352

60

42

65

980

710

1,280

355

488

-503

73

46

286
118

Global W iFi

871

725

1,275

431

326

-347

-28

-42

Information and Communications Service

482

350

342

189

517

300

368

336

410

Other, adjustments

-374

-365

-337

-265

-356

-456

-267

-248

-242
7.3%

15.1%

11.0%

16.8%

5.2%

8.1%

-

2.1%

1.3%

Global W iFi

21.4%

17.6%

25.1%

9.7%

9.8%

-

-

-

7.8%

Information and Communications Service

20.9%

15.9%

14.7%

8.9%

20.6%

15.0%

17.1%

15.7%

17.4%

n.a.

-

FY12/21

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

6,470

12,937

20,54727,318

5,989

9,630

13,10816,654

3,939-

Global W iFi

4,076

8,185

13,27017,733

3,348

4,634

5,907

7,278

1,516

-

Information and Communications Service

2,302

4,509

6,839

8,955

2,515

4,518

6,664

8,797

2,358

-

92

243

438

631

127

478

538

579

65

-

Operating profit

980

1,690

2,970

3,325

488

-15

58

104

286

-

Global W iFi

871

1,596

2,871

3,302

326

-21

-48

-91

118

-

% of Est.

Information and Communications Service

482

832

1,175

1,363

517

817

1,185

1,520

410

-

Other, adjustments

-374

-738

-1,075-1,340-356-811-1,078-1,326

-242

-

OPM

n.a.

-

30.2%

5,085

Other

n.a.

-

3,012

6,467

Sales

FY Est.
n.a.

40.3%

4,109

Cumulative

-

1,674

6,470

OPM

376

34.4%

4,076

Operating profit

6.5%
61.7%

981

Global W iFi
Other

-

698.5%

31.6%

Quarterly(JPYmn)

-

532

59.0%

15.1%

13.1%

14.5%

12.2%

8.1%

-

0.4%

0.6%

7.3%

-

Global W iFi

21.4%

19.5%

21.6%

18.6%

9.8%

-

-

-

7.8%

-

Information and Communications Service

20.9%

18.5%

17.2%

15.2%

20.6%

18.1%

17.8%

17.3%

17.4%

-

FY Est.
n.a.

n.a.

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Quarterly earnings data for FY12/15 are for reference purposes only; the company has not officially compiled quarterly data for the period.
Note: Company estimates are latest figures.

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Q1 FY12/21 results (out May 13, 2021)
Summary▷

Sales:

JPY3.9bn (-34.2% YoY)▷

Operating profit:

JPY286mn (-41.4% YoY)▷

Recurring profit:

JPY314mn (-36.8% YoY)▷

Net income*:

JPY232mn (+99.4% YoY)*Net income attributable to owners of the parent
When observing YoY changes, the reader should note that these figures have been influenced by comparisons with the monthsof January and February 2020, when the company was facing no negative impact from the COVID-19 pandemic (and benefitingfrom demand from inbound and outbound travelers).

Progress versus forecast
Q1 sales reached 48.3% of revised 1H FY12/21 forecast* announced May 13, 2021 (Q1 FY12/20 sales reached 62.2% of 1H
FY12/20 results), operating profit reached 56.4% (versus an operating loss in Q1 FY12/20), recurring profit reached 59.0%(744.9%), and net income attributable to owners of the parent reached 61.7% (versus a net loss in Q1 FY12/20).

*Upward revisions made to the company’s 1H FY12/21 forecast
When it announced its financial results for Q1 FY12/21, the company released the following revisions to its 1H FY12/21 forecast.
Amid impact from states of emergency, the company acquired COVID-19-related demand (teleworking-related demand,
demand for the establishment of online learning environments, etc.) from entities such as companies and commercial facilities inboth segments. As a result, the company now projects higher sales and profit than it had initially expected.

▷

Sales:▷

Operating profit: JPY507mn (JPY126mn)▷

Recurring profit: JPY532mn (JPY121mn)▷

Net income*:

JPY8.1bn (previous forecast was JPY7.3bn)

JPY376mn (JPY71mn)*Net income attributable to owners of the parent

Withdrawal of the company’s full-year FY12/21 forecast
The company has withdrawn its full-year FY12/21 forecast because the impact of the COVID-19 pandemic on business activities
remains uncertain and the business environment differs from the assumptions made in the previous forecast (February 15, 2021),
making it difficult to make accurate forecasts. The previous forecast assumed a 25% recovery in overseas travelers in Q4 FY12/21
compared to Q4 FY12/19.

Sales
Sales were JPY3.9bn (-34.2%, or JPY2.1bn, YoY). The Global WiFi business generated sales of JPY1.5bn (-54.7% YoY), while theInformation and Communications Service business generated (external) sales of JPY2.4bn (-6.2% YoY).
Sales in the Global WiFi business declined 54.7% YoY primarily because these sales figures were compared to earlier numbers
generated prior to the COVID-19 pandemic’s spread in Japan, when the company was benefiting from demand from outboundand inbound travelers. However, the company put for aggressive efforts to capture domestic WiFi demand, and Q1 FY12/21 saw
the highest quarterly sales since before the impact of the pandemic became apparent in Q2 FY12/20 (Q1 sales were JPY1.5bn,
versus a quarterly low of JPY1.3bn in Q3 FY12/20).
Sales in the Information and Communications Service business decreased 6.2% YoY. This decline was the result of a decrease insales due to sales promotions focusing on monthly subscription services with an eye to future earnings growth, and a decrease in

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sales from new power brokerage services caused by a temporary surge in electricity trading prices. Moving forward, thecompany will record sales generated by services for which customers are billed monthly (subscription services) in fixed amounts
each month rather than recording them collectively, as before.

Operating profit
Operating profit was JPY286mn (-41.4%, or JPY202mn, YoY). Operating profit declined 63.9%, or JPY118mn, in the Global WiFi
business and 20.7%, or JPY410mn, YoY in the Information and Communications Service business. Operating profit in the Global
WiFi business showed the highest quarterly performance since before the impact of the pandemic became apparent in Q2
FY12/20 (the quarterly low was operating loss of JPY347mn in Q2 FY12/20).

Factors affecting YoY change in operating profit▷

Upward impact: a JPY974mn decline in cost of sales, a JPY200mn decrease in personnel expenses*1, a JPY123mn downturn inadvertising expenses*2, and a downward slide of JPY549mn in other SG&A expenses*3▷

Downward impact: JPY2.1bn decrease in sales*1:Primarily due to the expiry of contracts for temporary staff, including those employed at shipping centers and airport counters*2:

Due in part to cutbacks on expenditures such as website listing ad costs in accordance with demand*3:

Primarily resulting from reviews and subsequent reductions of various costs and a decline in sales-linked expenses (shipping expenses, travel
expenses, supplies expenses, fees paid, etc.)

GPM increased 1.0pp YoY to 55.3% while the SG&A-to-sales ratio rose 1.8pp YoY to 48.0%, causing OPM to fall 0.9pp YoY to
7.3%. In the Global WiFi business, overseas communication costs fell sharply due to pay-as-you-go contracts that accumulate
charges based on communication usage. The cost ratio increased in the Information and Communications Service business,where the increase in mobile phone sales contributed to a higher sales ratio of products incurring purchasing costs. Despite
lower SG&A expenses on the review and reduction of various expenses, reduced sales resulted in the SG&A-to-sales ratio moving
higher.

Recurring profit and net income attributable to owners of the parent
Recurring profit was JPY314mn (-36.8% YoY). The company booked JPY16mn in forex gains (versus JPY7mn in Q1 FY12/20).
Net income attributable to owners of the parent was JPY232mn (+99.4% YoY).

Trends by segment
Global WiFi▷

Segment sales were JPY1.5bn (-54.7% YoY) and segment profit was JPY118mn (-63.9% YoY).

▷

Q1 FY12/21 saw the highest quarterly sales since before the impact of the pandemic became apparent in Q2 FY12/20 (Q1 sales
were JPY1.5bn, versus a quarterly low of JPY1.3bn in Q3 FY12/20).

Conditions remain severe both overseas and in Japan due to the impact of the COVID-19 pandemic. On the other hand, thespread of COVID-19 has had a major impact on business activities and people’s lifestyles, and teleworking and online sales havebecome more widespread among companies due to changes in work styles. In education, the Ministry of Education, Culture,
Sports, Science and Technology (MEXT) has fast-tracked the implementation of the GIGA School concept, and demand for online
education environments is increasing. In addition, demand for GLOBAL WiFi for Biz, a permanent in-house mobile WiFi router for
offices with a domestic use option was also strong as the company responded to various needs such as moving, hospitalization,business trips, and other events.

Information and Communications Service▷

Segment sales (external sales) were JPY2.4bn (-6.2% YoY) and segment profit was JPY410mn (-20.7% YoY).

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The combined total of sales generated by the company’s monthly subscription services and recurring sales revenue was
JPY230mn (9.8% of segment sales).

The main activities in this business are for arranging landline, mobile, and broadband telecommunications services, selling andleasing office equipment, and building websites for startups and SMEs. The company is working to improve stability andprofitability by increasing recurring revenues and implementing highly efficient sales strategies, centered on an upstream
strategy targeting key customers (startups and venture firms) as well as cross-selling and up-selling according to the growthstage of its customers.
Amid an increase in the number of companies embracing telework, sales of mobile communications equipment have been
robust, as have sales of the VWS cloud-based monthly subscription work flow service and Vision Crafts!, a simple website
production service that allows users to reduce their initial costs. However, both sales and segment profit were down YoY due to a
decline in sales resulting from sales promotions focusing on monthly subscription services with an eye to increasing future
earnings, a decline in sales of new power brokerage services due to a temporary surge in electricity trading prices*1, and the factthat demand was relatively strong in Q1 FY12/20 because the COVID-19 pandemic was not yet a factor.
*1:

The company sells electric power as an agent for electric power business (and has therefore not entered the electricity retail business).
Accordingly, it does not incur a corresponding procurement risk.

The Eco Solution business accounted for 7.5% of Q1 GPM in the Information and Communications Service segment (down from
10.1% in Q1 FY12/20). The decline in this ratio occurred primarily because commissions received declined to about 50% of
previous levels due to rising electricity prices. Vision responded with efforts to recover this lost revenue, relocating employees
primarily into its mobile communications business. The mobile communications business accounted for 25.6% of segment GPM(up from 18.0% in Q1 FY12/20).
In Q1, the combined total of sales generated by the company’s monthly subscription services (JPY140mn) and recurring sales
revenue (JPY80mn) was JPY230mn (9.8% of segment sales). The company is endeavoring to strengthen its sales and services toachieve a full-year combined total of JPY1.0bn in FY12/21 (versus JPY830mn in FY12/20).

For details on previous quarterly and annual results, see the Historical financial statements section.

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FY12/21 company forecast
Consolidated

FY12/19(JPYmn)Sales
YoY
Gross profit
YoY
GPM
SG&A expenses
SG&A ratio
Operating profit
YoY
OPM
Recurring profit
YoY
RPM
Net income
YoY

1H
12,9372H
14,381

31.3%

7,496
28.8%
57.9%

FY12/20

FY12/21FY
27,318

1H
9,630

2H
7,024

FY
16,654

1H Est.
8,148

23.5%

27.0%

-25.6%-51.2%-39.0%

8,194

15,690

4,822

3,971

8,794

20.0%
57.0%

24.0%
57.4%

-35.7%
50.1%-51.5%
56.5%-44.0%
52.8%

7,262

5,103

12,365

5,806

2,883

8,690

56.1%

35.5%

45.3%

60.3%

41.1%

52.2%

2H Est.
-FY Est.
n.a.

-15.4%

-

-

1,690

1,635

3,325

-15

119

104

507

-

n.a.

36.7%
13.1%

31.0%
11.4%

33.8%
12.2%

-0.2%

-92.7%
1.7%-96.9%
0.6%

6.2%

-

-

1,674

1,685

3,359

67

161

228

532

-

n.a.

34.4%
12.9%

34.4%
11.7%

34.4%
12.3%

-96.0%
0.7%-90.4%
2.3%-93.2%
1.4%

698.5%
6.5%

-

-

1,075

1,151

2,226

-1,352168-1,184

376

-

n.a.

32.9%

59.8%

45.6%

-

-85.4%----

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Quarterly earnings data for FY12/15 are for information purpose only; the company has not officially compiled quarterly data for the period.

Overview
The company revised its 1H forecast* at the time of its Q1 earnings announcement, and withdrew its full-year forecast, citingpresent difficulty in accurately calculating the impact of the COVID-19 pandemic on business activities. The initial company
forecast (February 15, 2021) called for full-year sales of JPY15.2bn (-9.0% YoY), operating profit of JPY407mn (+291.7% YoY),
recurring profit of JPY397mn (+74.2% YoY), and a net income attributable to owners of the parent of JPY245mn (net loss of
JPY1.2bn in FY12/20).

*1H FY12/21 full-year forecast▷

Sales:▷

Operating profit: JPY507mn (JPY126mn)▷

Recurring profit: JPY532mn (JPY121mn)▷

Net income*:

JPY8.1bn (previous forecast was JPY7.2bn)

JPY376mn (JPY71mn)*Net income attributable to owners of the parent

Reasons for the revision
The company’s 1H FY12/21 forecast exceeds the previous forecast in terms of both sales and profit, as the company is confident each segment will beable to capture COVID-19-related demand (such as for telework and equipment for online classes) from companies and stores amid the reissuance ofthe state of emergency declaration.
The company has withdrawn its full-year FY12/21 forecast because the impact of the COVID-19 pandemic on business activities remains uncertain andthe business environment differs from the assumptions made in the previous forecast (February 15, 2021), making it difficult to make accurate
forecasts. The previous forecast assumed a 25% recovery in overseas travelers in Q4 FY12/21 compared to Q4 FY12/19.

Basic policy
The company will focus on the WiFi rental business and Information and Communications Service business in Japan in line with
the new normal era, and expand sales of in-house services (monthly fee) and various maintenance services for communication
products.

Factors impacting financial results in FY12/21
The company believes that the following factors must be thoroughly analyzed.

▷

Negative impact on profit: COVID-19-related impact and sustainable growth initiatives▷

Positive impact on profit: upward revision to the company’s forecast for 1H FY12/21

COVID-19 pandemic▷

Impact of increasing availability and effect of vaccines against the spread of COVID-19 (and its variants)

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Impact of state of emergency declarations and extensions on corporate activities▷

Possible YoY recovery of 25% in inbound and outbound travel starting in Q4 (assumed when the company formulated its fullyear forecast for FY12/21, which was released on February 25, 2021)

Sustainable growth initiatives▷

Efforts aimed at achieving sustainable growth through changes to the company’s earnings model▷

Enhancement of recurring revenue sources and the company’s monthly subscription services

Upward revision to 1H FY12/21 forecast▷

Strong Q1 results generated as the company minimized external environmental impact stemming from state of emergency
declarations and other factors

Growth strategy
Existing businesses
The company will aim to increase productivity. Specifically, the company will adapt to the spread of online operations (the postCOVID-19 “new normal”) and provide products and services that are appropriate in terms of both its customers and current
needs. At the same time, it will strengthen its up-selling and cross-selling efforts through the construction and enhancement of asales system that involves online negotiations. Furthermore, Vision will strengthen and expand its services.

Building new businesses and services
The company will establish a three-pillar business structure by promptly developing a third business to complement its
Information and Communications Service and Global WiFi businesses. This third business will need to adapt to conditions
prevalent both during and after the COVID-19 pandemic (the “new normal”) and must provide services that incorporate
customer feedback while taking advantage of the company’s sales channels, business structure, and customer base. Furthermore,
the company will ensure that this business contributes to regional revitalization.

Entry into the luxury camping (“glamping”) business
The company will enter the luxury camping (“glamping”) business and aim to make it commercially viable within FY12/22. Total
investment will be about JPY1.2bn. As of end-Q1 FY12/21, the company had identified some plots of land it could potentiallypurchase for this business but had not acquired any yet. Heading into this business, Vision will primarily invest in dome tents,
land, construction, electrical equipment, and various equipment and fixtures. The company plans to launch its glamping businessin 1H FY12/22 and indicates that participation in this business will have nearly no impact on its financial results in FY12/21. Vision
made the decision to enter the glamping business partly because its president, Kenichi Sano, is well-versed in glamping due tohis family’s activities within the hotel business* and partly because it believes that this business will synergize with existing
businesses.
*Koshika no Onsen (https://koshikano-onsen.com/stay/); 2625 Matsunaga, Hayato-cho, Kirishima-shi, Kagoshima Prefecture, Japan

Customers of the company’s Global WiFi business are characterized by their love for travel. The company will be able to securesales channels for its glamping business thanks to its various means of attracting customers (partner travel agencies [both online
and conventional], airport counter stores, websites, etc.). Vision believes that its glamping business will be compatible withcustomer bases and sales channels associated with its existing businesses. Furthermore, the company does not anticipate any
major competition. Glamping sites are not as large as hotels equipped with several hundred rooms per building, and thecompany believes that it can attract enough customers to make the business viable.

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Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp(Reference: Initial company forecast) Segment outlook
Global WiFi
The company had forecast sales of JPY5.8bn (-20.1% YoY) and operating profit of JPY77mn (operating loss of JPY91mn in
FY12/20).
From January 2021 onward, the company expects the number of overseas visitors to Japan and the number of Japanese travellingabroad to be similar to that from March 2020 onward, with demand from Q4 (October 2021 onward) to recover to 25% of thatfrom October 2019 onward. The company is forecasting teleworking demand conservatively due to uncertainties about the
impact of the COVID-19 pandemic on business activities.

Information and Communications Service
The company had forecast sales of JPY8.9bn (+1.5% YoY) and operating profit of JPY1.4bn (-8.1% YoY).
The company expects that the number of new startup companies starting operations will either be flat or down YoY, and that the
impact of the COVID-19 pandemic on the number of sales visits will be minimal due to the use of online sales tools.

(Reference): Vision’s take on global data roaming services offered by MNOs
Vision’s Global WiFi service allows multiple users to connect to a single WiFi router, whereas with global data roaming services
provided by mobile network operators (MNOs), connection is limited to only the subscriber (i.e., Wi-Fi tethering is notsupported). With Vision’s service, with daily charges in the JPY600–1,000 range, three travelers sharing a router pay around
JPY200–330 apiece and still have high-speed connection. Business travelers might use an MNO’s global roaming service, butthey can quickly max out their monthly data while abroad, or soon after returning home.
Previously, when Softbank Corp. launched its free voice and data service in the US, none of the negative effects anticipated by
the stock market ever emerged. NTT Docomo’s new “ahamo” plan offers 20 gigabytes (GB) a month. Limits on connection
speeds kick in on overseas roaming after 15 days, and subscribers who use up all of their 20-GB monthly data can purchaseadditional 1GB at a time. Vision says that while it will keep its eye on ahamo activity, it does not consider it much of a threat.

Medium-term outlook
Raising productivity in existing businesses and cultivating a third-pillar business
Vision does not release a detailed medium-term business plan. The company looks to achieve substantial profit expansion while
continuing to invest in future growth. To this end, it had positioned the Global WiFi business as the growth driver and theInformation and Communications Service business as a source of stable growth (details discussed below). The company’s current
medium-term strategy hit a temporary roadblock in 2020 as the worldwide COVID-19 pandemic hit its Global WiFi business inparticular. It also ended up liquidating the chauffeured car sharing service, which it had been incubating as a new business.
Against this backdrop, the company focused on renting WiFi routers in Japan to capitalize on growing teleworking demand. It
also worked to reduce procurement costs of mobile network access, and achieved operating profitability in its Global WiFi
business in December 2020. In FY12/21, the company plans to achieve full-year operating profitability. Meanwhile, itsInformation and Communications Service business provides a steady revenue and profit source.
In its two existing business segments (Global Wifi and Information and Communications Service), the company says it will work
to further raise productivity by leveraging such tools as online business negotiations to enhance up-selling and cross-selling. It
aims to improve stability and profitability by tuning up its earnings structure and working to enhance and expand its in-houseservices (details discussed below). In addition, it plans to leverage its customer base, sales channels, and business framework tocultivate a third pillar of business to complement its two existing segments. The company’s customer base consists of startup
businesses in the growth phase, corporate customers with international B2B transactions, central and local government entities,
schools, and individual frequent traveler customers. Vision intends to adapt to the changing environment in the COVID-19
pandemic and beyond, cultivating new services to meet its customers’ needs. The company also says it will contribute toregional revitalization.

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Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp(Reference): Focusing upfront spending and growth
The exercise conditions for the share subscription rights (paid-in stock options) offered to its directors (excluding external
directors), employees, and subsidiary employees (163 people in total) on December 29, 2017, show the company is committed
to sustaining strong profit growth. Owing to its failure to meet some of those conditions*, it partially extinguished those
subscription rights on March 29, 2021 (see comments in the box below), but this was due to the force majeure circumstances
posed by the global COVID-19 pandemic. The conditions are as follows.
◤ Exercise of 30% of the rights: If operating profit exceeds JPY2.1bn in FY12/18 and JPY2.6bn in FY12/19. (Note: The company

reported operating profit of JPY2.5bn in FY12/18 and operating profit of JPY3.3bn for FY12/19, fulfilling the conditions forexercise of 30% of the rights).
◤ Exercise of 30% of the rights: If operating profit exceeds JPY3.1bn in FY12/20. (Note: FY12/20 operating profit was JPY104mn)◤ Exercise of 100% of the rights: If operating profit exceeds JPY3.6bn in any of the financial years from FY12/18 to FY12/21.

(Note: The initial FY12/21 company forecast is operating profit of JPY407mn)* Irrespective of the above, if the operating profit for any fiscal year from the FY12/18 to FY12/21 falls below JPY1.6bn, the sharesubscription rights holder may not exercise these share subscription rights thereafter, except for the share subscription
rights that have already become exercisable pursuant to the above.

In order to enhance cohesion, motivation and morale for the purpose of increasing the company’s earnings and enterprise value over the long term,
Vision has resolved to issue share subscription rights as stock options to directors and employees of the company, and employees of the company’s
subsidiaries at the Board of Directors meeting to be held on November 13, 2017.
The total number of the company’s common stock that will increase when all options are exercised is equivalent to 8.3% of outstanding shares. The
announcement stated that it will be possible to exercise 30% of the stock options if FY12/18 operating profit exceeds JPY2.1bn and FY12/19 operating
profit exceeds JPY2.6bn, or if FY12/20 operating profit exceeds JPY3.1bn: It will also be possible to exercise 100% of all stock options if operating profit
exceeds JPY3.6bn in any financial year from FY12/18 to FY12/21.
Since there are exercise conditions that prevent the exercise of all stock options in the event that Vision does not achieve operating profit of JPY3.6bn,
which is regarded as a high level in light of past earnings, the company views achieving the target as a commitment to enhancing enterprise andshareholder value. The company believes that the dilution impact on shares will be reasonable.
▷

Exercise period of share subscription rights: April 1, 2019 to March 31, 2025▷

Amount to be paid in upon exercise of share subscription rights: JPY863▷

Number of share subscription rights issued: 13,340 units (4,002,000 shares)▷

Number of share subscription rights as of March 29, 2021 (prior to extinguishment): 13,325 units (3,997,500 shares)▷

Number of share subscription rights after extinguishment: 3,987 units (1,196,100 shares)

Expanding in-house services
Vision plans to expand into business fields it can pursue independently, increasing its ratio of in-house services. In-housedevelopment is expected to accelerate its business and facilitate price control. Services the company is already operating will be
used and improved internally, and provided as services to customers.
For example, we understand Vision is actively pursuing external sales of its expertise in sales force automation (SFA), which wasdeveloped in-house and is presently used for its own sales. Having also built up in-house expertise and completed optimizationof its RPA currently deployed for in-house call centers, the company intends to provide such solutions to other companies andmonetize them accordingly.
The cloud-based work attendance management system “VWS” and the business-oriented SNS “JANDI” are services that Visiondeveloped in-house and that it now provides to its customers on a monthly-rate basis. The company employs an upstream
strategy targeting key customers (startups and venture firms) as well as cross-selling and up-selling in line with the growth stageof its customers. Vision operates the “Vision Business Market” general corporate support site for startup companies, which
introduces and provides services required when starting or opening a business, services required for office or store operations,

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services required for moving, and other support services. The company arranges, rents and sells copiers, telephone lines,
communication terminals, WiFi routers, and other telecommunications services. It also develops proprietary apps for functions
such as sales support, which the company simultaneously offers to its customer as in-house services. As such, the company
accumulates recurring revenue-type earnings by developing original teleworking and DX services and providing them over the
cloud on a monthly fee basis (see details below).
FY12/20 was a good year for orders for the company’s “Vision Crafts!” simple website production service. The service is poweredby Vision’s copious experience in website development, having developed more than 100 sites a month. Vision Crafts! is a more
economical alternative to hiring a standard website development service, which can run from JPY0.2mn to over JPY1mn including
the cost of original site design (Source: LISKUL). The cost of service (not including tax) consists of an initial setup fee of
JPY10,000, monthly fees of either JPY4,980 for the one-year plan or JPY3.980 for two-year plan, and a development support fee of
JPY20,000. The service enables customers to easily build visually appealing websites, and the company says it has won theendorsement of customers in a wide range of industries including restaurants and retailing.

(Reference): Global WiFi as growth driver
The following represents Vision’s basic perspectives before the outbreak of the COVID-19 pandemic. The company sees growthpotential in the market where the Global WiFi business operates. Vision divided the segment into three areas, and plans to
expand operations in stages. In addition, the company plans to offer media services (through a media service platform) providing
information on various countries and creating more value for customers.
Global WiFi business - growth model

Source: Shared Research based on data released by the company, the United Nations World Tourism Organization (UNWTO), and the Japan National Tourism
Organization (JNTO)

In the first growth stage the company aims to target the outbound market (travelers from Japan going abroad). The number ofJapanese traveling abroad is roughly 17–19mn per annum and smartphone uptake is growing rapidly. In 2019, the number
reached about 20.08mn (+5.9% YoY). Assuming a unit price of JPY7,000 per user puts the potential market size at roughly
JPY140.6bn (JPY7,000 in unit price x 20.08mn users). In 2020, amid the COVID-19 crisis, the number of Japanese traveling abroad
dropped to roughly 3.17mn (-84.2% YoY).

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The target of the second growth stage is the inbound market (overseas visitors to Japan). In 2015, the number of travelers toJapan exceeded 19.7mn thanks to a series of measures by the government to encourage tourism (such as a relaxation of visa
requirements and an expansion of the duty-free system). It reached a record 31.9mn (+2.2% YoY) in 2019. The government
wants to increase the number of visitors to Japan to 40mn by 2020 and 60mn by 2030. Vision, which estimates that the size ofthe potential market is now roughly JPY220.0bn (JPY7,000 in unit price x 31.9mn), expects that the market will continue toexpand.
The target of the third stage is the overseas market (travelers going from one overseas country to another). According to theUnited Nations World Tourism Organization (UNWTO), on a global basis, the number of such travelers now exceeds 1.3bn
travelers per annum. Assuming a unit price of JPY7,000 per user puts the potential market size at over JPY9tn (JPY7,000 X 1.4bn
users). The company has overseas subsidiaries for developing the business and procuring network access in regions with strong
travel demand including in popular tourist destinations such as South Korea, Hawaii, Hong Kong, Singapore, Taiwan, the UK,
Vietnam, Shanghai, France, and Italy. It also began operations in New Caledonia and the US (California) from 2016. Vision notedthat presently Verizon Communications, Inc., a major US mobile carrier, has not rolled out overseas roaming services at a low flatrate. Therefore, Vision believes that if customers become increasingly aware that they can use Vision’s flat-rate service overseas, it
could see an uptick in user numbers.
The company said that going forward it wants to tap into demand in Asian markets and major cities in the US and Europe by
expanding its network of subsidiaries and franchises at various locations overseas. Vision expects that gaining even a small
portion of this market could substantially contribute to earnings.
While these markets are enormous, the company’s Global WiFi business only rented out 2,830,000 routers in FY12/19 (2,160,000
for customers traveling overseas; 590,000 for visitors to Japan; and 70,000 for those traveling from one foreign country toanother). Thus, the company sees ample room for growth in each of these markets. Total number of rental contracts in FY12/20
came to 960,000 (300,000 for customers traveling overseas; 640,000 for users in Japan; and 10,000 for those traveling from one
foreign country to another).
As part of an effort to expand into these markets (inbound, outbound, and overseas markets) and increase the number of endusers, in the Global WiFi business the company aims to strengthen ties with telcos in each country, increasing locations at airport
counters where customers can rent Vision’s equipment to increase convenience and improve quality.
Specific measures that the company is implementing are as follows.

Introduction of “Smart Pickup” lockers and “Smart Entry” kiosks to improve customer convenience
The company has “Smart Pickup” points where customers receive mobile WiFi routers from lockers installed at airports and otherlocations. Users can easily unlock the lockers by tapping their smartphones––registered on the web beforehand. This service ismore cost-effective and efficient (no waiting time for customers) than the company’s conventional face-to-face services. The newservice also allows the company to dedicate service counters to walk-in customers, along with other benefits.
According to Vision, Smart Pickup lockers at Haneda Airport counters can service a maximum of 184 pickups per day (as of endDecember 2020, total 92 boxes with each box allowing for a morning and evening pickup; two rotations a day), with a pick up
taking less than ten seconds. The company initially set up Smart Pickup points only at Haneda Airport but has since expanded to
Narita Airport, Haneda Airport, Chubu Centrair International Airport, Kansai International Airport, Itami Airport, Komatsu Airport,
New Chitose Airport, Fukuoka Airport, Kitakyushu Airport, Kagoshima Airport, and Miyako Shimojishima Airport for a total of 11
airports and 36 pickup points (as of end-December 2020) and is looking to continue expanding the number of Smart Pickup
points going forward.
Vision stated that Smart Pickup had resulted in shorter lines at staffed counters, and increased the number of walk-in contracts itprocesses by improving the utilization rate at counters. In light of the results, the company stated that it planned to install
additional Smart Pickup lockers going forward.

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Further, the company said that it was continuing to introduce “Smart Entry” (self-service kiosks that allow tourists wishing to rent
WiFi routers to process applications and make payments themselves; services available in six languages). The kiosks are initially forrenting NINJA WiFi® and are installed at counters in Haneda Airport, but going forward Vision plans to add GLOBAL WiFi® rentals
and install additional terminals, with increased functions. In conjunction with Smart Pickup, the service enables Vision to utilize
vending machines to further automate service counter services
Counters and Smart Pickup points /Smart Entry/Smart Check
Smart Pickup points (automated lockers for

Smart Entry (self-service kiosks: multi-lingual/includes

WiFi router pickup and return)payment features)

Smart Pickup user guide 1

Smart Pickup user guide 2

Smart Check (instant customer recognition counter: QR(unlock with your smartphone after preregistering)(Retrieve device)code reception counter)

Haneda Airport counter

Source: Shared Research based on company data

Increasing customer contact points to attract more inbound customers (visitors to Japan)
As of the end of December 2020, in Japan, Vision had a total of 39 contact points (pickup/drop-off counters), including those at
18 major airports (New Chitose Airport, Asahikawa Airport, Sendai Airport, Narita Airport, Haneda Airport, Niigata Airport,
Komatsu Airport, Kansai International Airport, Chubu Centrair Airport, Itami Airport, Mt. Fuji Shizuoka Airport, Fukuoka Airport,
Kitakyushu Airport, Oita Airport, Miyazaki Airport, Kagoshima Airport, Naha Airport, and Miyako Shimojishima Airport) and otherlocations (counters at Shibuya Chikamichi and JR Miyazaki Station and automated lockers for WiFi router pickup and return).
There are four counters in Narita Airport and two in Haneda Airport. Already possessing such counters in the limited space of an
airport not only improves the convenience for customers, but also impedes entry by competitors, serving as a strength for thecompany.
Going forward, the company plans to expand the number of domestic contact points and strengthen initiatives to attract
inbound customers (visitors to Japan) and initiatives with local governments and municipalities.

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Travel-related services platform
In addition to the three growth stages in the Global WiFi business, the company aims to develop a new business area as it targets
future opportunities: a travel-related service platform that will provide useful information (media service) and offer useful services
for travelers.
In FY12/19, users of the company’s Global WiFi® and NINJA WiFi® totaled roughly 4.5mn (outbound roughly 3.5mn and inboundroughly 1.0mn), and the total number of stays was 31.2mn (outbound 24.3mn and inbound 6.9mn). Generating an additional
JPY100 per day in ARPU from such users through a travel-related service platform would have boosted annual revenue by
JPY3.1bn (31.2mn stays multiplied by JPY100/stay). This would have raised FY12/19 sales (JPY17.7bn) in the Global WiFi businessby about 18%.
The company said a media business would provide information tailored to travelers’ destinations. For example, according to thecompany, many travelers visiting Japan are high net worth individuals (with plenty of purchasing power) that are not on group
tours. Most Japanese companies, tourist areas and facilities have not worked out how to approach these individuals. Because
Vision rents mobile WiFi routers (NINJA WiFi®) to those visiting Japan, it can reach out directly to such individuals. Further, thisallows the company to collect information directly from the travelers and in turn supply information to shops, companies, andregional tourism destinations to draw travelers to these spots.
Being able to obtain accurate information is critical in order to take full advantage of one’s travel destination. As such, Visioncontinues to roll out several services that are useful for travelers, including ili and Pocketalk, a new wearable translation device(the company plans to gradually improve sophistication as a travel-assistance device) and an overseas restaurant reservation
service capable of handling several languages, including Japanese. By combining these services, Vision will continue to provide
services to tourists before, during and after their travels.
Travel-related service platform

Source: Company data

Information and Communications Service as a source of stable growth
Recurring-revenue business model
In the Information and Communications Service segment, the company aims to continue its strategy of targeting startups. As
these client companies grow, it will be able to offer the appropriate additional or expanded (solutions) services in line with their
growth.

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Gross profit on recurring revenue from commissions from telecommunications companies as well as from office equipment
maintenance fees in the office equipment sales business shrank from JPY470mn in FY12/15 to JPY360mn in FY12/20. However,gross profit on revenue from proprietary monthly fee-based services grew from JPY50mn in FY12/15 to JPY470mn in FY12/20. The
combined total grew from JPY530mn in FY12/15 to JPY830mn in FY12/20. In FY12/20, this accounted for 17.6% (up 1.5pp from
16.1% in FY12/19) of the JPY4.7bn gross profit (53.4% GPM) in the Information and Communications Service business.
The company aims to deepen ties between its websites, which attract customers, and its Customer Loyalty Team (CLT), which
supports existing customers, to further improve marketing efficiency and boost revenue per customer by expanding the lineup of
products that it handles and proprietary products.
The Information and Communications Service is distinguished by its stable, recurring-revenue business model, which depends
on the closely coordinated efforts of its web marketing, sales team, and CLT to win orders by providing the optimal solutions(products and services) for companies at their particular growth stage.
Continuous stock model for Information and Communications Service business

Source: Company data

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Business
Business overview▷

The company has two main businesses: the Global WiFi business, and the Information and Communications Service business.

▷

In the Global WiFi business, it rents out mobile WiFi routers*, targeting the outbound (travelers from Japan to overseas) andinbound (travelers to Japan from overseas) markets. Vision is the largest of the three major Japanese companies that rent out
mobile WiFi routers for use overseas, with a market share (sales basis) of more than 50% (as of FY12/20, Shared Research
survey).

▷In the Information and Communications Service business it targets mainly startups, and arranges telephone lines and othertelecommunications services, sells office equipment, and builds websites. The main source of revenue is sales commissions
from telecoms and office equipment manufacturers.

* Refers to wireless LAN (WiFi) routers able to connect to mobile networks. Using these mobile WiFi routers, it is possible to connect to the internet via
smartphones, tablets, notebook computers and game consoles that have WiFi capability while on the move.

▷

In FY12/20, Global WiFi accounted for 44% (previous year: 65%) of sales, and Information and Communications Service 53%(33%), with the former accounting for -9% of operating profit (previous year: 75%) and the latter 147% (31%). From its
launch in 2012 through FY12/19, Global WiFi’s share of sales and operating profit had been growing, but in FY12/20 it was hit
by COVID-19’s impact on outbound and inbound demand, which were reduced to essentially zero, and its share of sales andoperating profit consequently shrank.

Business model

Source: Shared Research based on company data

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Sales by segment
Global WiFi
Other

40,000Information and Communications Service
Global WiFi as % of total sales

35,00030,00048.3%

25,00036.9%

20,00015,00053.1%

12,48510
6,440

14,844
13
6,948

5,000

20.5%
9,204
5
7,312

10,185
18
6,411

1,887

3,756

6,035

7,882

0
(JPYmn)

Cons.

Cons.

Cons.

FY12/13

FY12/14

FY12/15

10,00059.2%

17,555
58
7,104

62.8%

21,504
224

80.0%

64.9%
27,318
631
8,955

7,774

60.0%
43.7%
16,654579
8,797

17,733

10,392

13,506

Cons.

Cons.

Cons.

Cons.

Cons.

FY12/16

FY12/17

FY12/18

FY12/19

FY12/20

40.0%

20.0%

7,278
0.0%

Source: Shared Research based on company data

Operating profit by segment
Global WiFi
Other
Global WiFi as % of total OP

5,000

Information and Communications Service
Adjustments
75.1%
3,325
70.2%

4,000

54.0%
1,290

2,000
1,000
0
-1,000(JPYmn)

1,789

40.0%

3,000

10
566
-364

-184

19.7%

805

286
724
180
-626

904
594
-681

59.8%

2,484

-821

60%
50%

1,219

1,025
1,141

70%

1,363

40%

1,173
1,593

80%

2,414

3,302

-874

-954

-1,073

30%

104

20%
1,520

10%

-8.7%
-91

0%

-933

-20%

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

FY12/13

FY12/14

FY12/15

FY12/16

FY12/17

FY12/18

FY12/19

FY12/20-10%

Source: Shared Research based on company data
Note: The Global WiFi business ratio reflects the share of total segment profit before adjustments.

Business development
Origins: understanding customer needs
The company’s origins lie in discovering and meeting customer needs. After current company CEO Sano worked for Hikari
Tsushin (TSE1: 9435) for four years, he set up Vision LLC in Fujinomiya, Shizuoka, in April 1996. He discovered from some
Brazilian people that international calls were expensive, and started arranging and selling low-priced international telephoneservices to South American residents in Japan. Global WiFi® was launched in February 2012 in response to demand for affordable
and easy-to-use internet environments for people traveling overseas. The company has been renting out mobile WiFi routers inJapan since 2010, and used the expertise gained in this business to launch the Global WiFi service just six months after the idea
was born.

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Evolution of sales and service lineup

Source: Shared Research based on company data

Corporate services: improvements in marketing efficiency using websites
As the internet became more widespread from 2000, the focus of this business shifted to the corporate sector, and now almost
all customers in the Information and Communications Service business are corporate clients. An issue in providing services to thecorporate sector was improving selling efficiency, and the company has responded by adopting a new marketing strategy,
including the use of websites such as copyki.com.
Previously the company’s marketing strategy primarily involved telemarketing, which would then lead to in-person sales, which
was inefficient, and so many salespeople became frustrated and quit. Aware that the internet would become a commonplacemeans to gather information, Vision started to use websites in marketing activities from 2003. In 2004, the company launched a
website called copyki.com to attract customers by selling copiers. It started making appointments and meeting with potential
customers who sent enquiries and requested quotes through the website, and because these web customers have a highpropensity to purchase products, contract rates were improving.

Creates a number of websites following the success of copyki.com
Reflecting the success of copyki.com, the company launched a number of websites offering telephone line subscription (denwakanyuken.com), business phones (bizphone.com), corporate mobile phones (houjinkeitai.com) and phone lines (denwahikari.com) (in 2008). In addition to sites such as these (named after products), the company also created satellite sites
specifically related to demand for related search keywords to reach even more customers.
As a result, the ratio of telemarketing-based appointments is dropping (before the launch of these websites, these accounted for
all contracts won). Now, over half of contracts come from concierge operations for handling website enquiries and continuingbusiness with existing customers (CLT, explained later), add-ons from existing customers introduced by the sales team(upselling), and additional purchases of other products (cross-selling). According to the company, more efficient marketing alsomeans that marketing staff turnover has declined dramatically, leading to accumulated sales expertise among staff.

Core strategy
The three main strategies the company is following are outlined below.

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Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp◤ Focused, niche market strategy:

Target: Overseas travelers and startup companies



Develop new markets by finding and serving the needs of those left behind by advances in information andcommunications technology

Focus management resources and services on carefully selected target markets◤ Price and quality leadership strategy:Emphasize productivity, superior pricing, and reputation for service quality

Relentlessly pursue increases in productivity by increase speed of organization and operations

Demonstrate superior price competitiveness while maintaining high quality service◤ Up-selling and cross-selling strategy:

Focus on in-house CRM as recurring-revenue business

Find new needs in information and communications services and consistently provide the right services at the right priceat the right timeEstablish long-term relationships with customers

Key characteristics of two businesses
Global WiFi
The key feature of the company’s Global WiFi business is the ability to offer low-price and high-quality service, as Vision has direct
negotiations and contracts with overseas telcos.

Information and Communications Service
There are three key features of the Information and Communications Service business.

Mainly targeting startups
The main targets of the Information and Communications Service business are startups. According to Vision, this is because they
have more growth potential than major corporations. It is difficult for major corporations to double the number of employees,
but if a startup’s business goes well, there is plenty of scope for employee numbers to double or even grow by 10x. The
company said that the number and variety of services it can offer these startups can also grow.

Initial prices held low; recurring revenue model entails offering multiple services to each customer
In order to lighten the burden on startups, Vision sets low initial prices for equipment and other products. It aims to boost
revenue per customer by providing an increasing number and variety of services in line with the growth of its startup clients. Thisbusiness model means a relatively high proportion of ongoing monthly revenues in addition to one-time sales. The company
supplies pre-owned as well as new phones to startups. Although there are concerns about bankruptcy for startups, according to
Vision, its customers are highly cost-conscious, so the percentage that goes bankrupt is extremely low compared to the averagefor startups.

Leveraging web marketing and Customer Loyalty Team (CLT) to boost marketing productivity
The Information and Communications Service business targets corporate customers. In general, contracts are entered throughface-to-face marketing, so a challenge is how to reduce marketing staff costs. The company made sales activities more efficient bypromoting website-based marketing and conducting in-person sales focused on clients with high latent needs. The company has
an extremely high success rate of gaining contracts from inquiring clients who came from the company’s websites after searchingfor a service to fulfill their needs. For example, average copier sales per marketing employee for Vision are roughly 3x the industry
average.

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The call center is another important marketing channel: the Customer Loyalty Team is involved in after-sales support for existingclients, and follows up with client companies as they reach certain growth stages.
* In addition to sites named after products, the company also created satellite sites specifically related to demand for search keywords relevant to the
products, to spread its customer acquisition net. Per the company, its websites are operated by teams, which has resulted in powerful customer
attraction through SEO** results. The keywords that the users input in their searches are not just single words, but mostly strings of words that combine
various needs. As a result, the company is able to tap into demand across a wide front and increase the number of users.
** SEO (Search Engine Optimization) refers to technology that positions a website in the upper rankings of search results on search engines such asYahoo! and Google.

Company’s major marketing channels and overview
Web channels

The company attracts customers by developing websites specific to certain products, such as copyki.com,
Denwakanyuken.com, Houjinkeitai.com, Bizphone.com, and SEOTaisaku.com. Information regarding customers who haverequested an estimate via the website is transferred to the call center.

Call center

Makes phone calls to customers with information obtained from the websites. Also uses telemarketing using client lists to tap
into customers with a high propensity to purchase products. Arranges sales visits by marketing staff responsible for relevant
product.

Customer
Loyalty Team
(CLT)

Responsible for after-sales support for existing clients. Taps into product purchasing needs through regular telephone callswith existing customers. If a certain item is in high demand, the team makes an appointment for the marketing person in
charge to make a sales call. When marketing staff learn on a visit that the customer wishes to purchase products from anotherdivision, they telephone the CLT, which makes an appointment for the responsible staff to make a sales call. The CLT is incharge of after-sales support for existing customers. This lowers marketing staff turnover and avoids missed business
opportunities in case of telephone calls from customers when the marketing staff are unavailable. It also becomes possible tohave marketing staff dedicated to customer acquisition activities. It appears that telephone calls from customers are
responsible for more sales than the company initially anticipated.

Marketing staff

Based on appointments set up by the call center or CLT, sales staff visit clients and conduct marketing activities.

Source: Shared Research based on company data

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Business segments
Global WiFi segment
Global WiFi

FY12/13

FY12/14

FY12/15

FY12/16

FY12/17

FY12/18

FY12/19

FY12/20

FY12/21(JPYmn)No. of rental contracts

Cons.
241,737Cons.
516,199Cons.
783,050Cons.
1,144,045

Cons.
1,650,969

Cons.
2,231,775

Cons.
2,830,000Cons.
960,000

Est.

YoY
Overseas use

335.5%
223,706

113.5%
462,95351.7%
648,475

46.1%
886,82444.3%
1,302,646

35.2%
1,759,514

26.8%
2,160,000-66.1%
300,000

n.a
n.a

Domestic use
Overseas business (excl. domestic use)

7,511
10,52035,512
17,73490,906
43,669190,665
66,556

285,708
62,615407,51764,744590,000
70,000640,000
10,000

n.a
n.a

-

-

-

50.8%

43.6%

37.4%

36.9%

.
34.5%

n.a

1,887

3,756

6,035

49.2%
7,882

56.4%
10,392

62.6%
13,50663.1%
17,733

65.5%
7,278

n.a
n.a.

20.5%

99.0%
36.9%

60.7%
48.3%

30.6%
53.1%

31.8%
59.2%

30.0%
62.8%

31.3%
64.9%

-59.0%
43.7%

-

-

-

-

54.4%

50.4%

46.4%

45.8%

46.0%

n.a

7,806

7,276

7,707

45.6%
6,890

49.6%
6,295

53.6%
6,052

54.2%
6,266

54.0%
7,582

n.a
n.a

YoY
Companies

-

-6.8%
-

5.9%
-

-10.6%
-

-8.6%
7,276

-3.9%
7,508

3.5%
7,777

21.0%
10,109

n.a
n.a

YoY
Individuals

-

-

-

-

5,536

3.2%
5,182

3.6%
5,382

30.0%
6,250

n.a
n.a

-184

180

594

1,141

1,593

-6.4%
2,414

3.9%
3,302

16.1%
-91

n.a
n.a.

-9.7%

4.8%

230.5%
9.8%

92.2%
14.5%

39.7%
15.3%

51.5%
17.9%

36.8%
18.6%

-

-

-

19.7%

40.0%

54.0%

59.8%

70.2%

75.1%

-8.7%

-

Customer breakdown (% of Global WiFi)
Companies
Individuals
Sales
YoY
% of total sales
Customer breakdown (% of Global WiFi)
Companies
Individuals
Customer spend per unit (JPY)YoY
Operating profit
YoY
OPM (excl. adjustments)% of total OP (incl. adjustments)

n.a

Source: Shared Research based on company data

Segment overview
The Global WiFi business accounted for 43.7% of consolidated sales and -8.7% of operating profit in FY12/20 (64.9% and 75.1%
in FY12/19). In FY12/20, the COVID-19 crisis reduced both outbound and inbound travel to essentially zero from March 2020
onward, and total number of contracts fell 66.1% YoY to 960,000. Of overseas rental contracts, 34.5% were corporate customers
and 65.5% were individuals. In contrast, total number of contracts in FY12/19 were 2,830,000, up 26.8% YoY, with overseas
rental contracts consisting of 36.9% corporate customers and 63.1% individuals.
In this segment, the company procures local network access (mobile phone data access) by negotiating with telcos in countries
around the world in order to develop its usable data volume, connection quality (speed, etc.), and other proprietary services,and rents out mobile WiFi routers and other devices that provide access for people traveling to these countries. In addition to
Vision (parent company), consolidated subsidiaries Best Link, Vision Mobile Korea Inc., Vision Mobile Hawaii Inc., and Vision
Mobile Taiwan Ltd. carry out this business.
The company is expanding its service offerings rapidly in line with burgeoning demand for mobile access from travelers. Despite
only starting in FY12/12, the Global WiFi business had grown through FY12/19 to account for over half of the company’s sales.
After turning the corner into the black in FY12/14, the segment continued to see steady profit growth, and in FY12/19, it
accounted for roughly 75% of total segment profit before adjustments.

Services
Classifications
The Global WiFi segment can be broadly broken down into overseas business (travelers from Japan to overseas and overseas-tooverseas travelers) and domestic business (overseas visitors to Japan and domestic travelers). Services are provided under the
Global WiFi® brand overseas, and primarily under the NINJA WiFi® brand in Japan. With the help of partner companies, thecompany provided overseas coverage in more than 200 different countries and regions (as of the end of December 2020).

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Global WiFi service overview
Overseas (Global WiFi®)

Domestic (mainly NINJA WiFi®, WiFi
Rental.com)

TargetServices

Charges (fixed)

Travelers from Japan overseas and overseas-to-

Travelers from overseas visiting Japan (inbound)

overseas

Japan’s domestic market (relocation, temporary
repatriation, hospitalization, teleworking, etc.)

Mobile WiFi router rental (connected to the telco
network at the destination)

Mobile WiFi router rental (connected to domestic
telco network)

Ancillary services (repairs, batteries and accessories)

Ancillary services (repairs, batteries andaccessories)<4G High-speed plan (standard pricing)>
JPY500–3,170/day (single country plan).

JPY440–1,430/day* Maximum price is for unlimited plan
* JPY1,470–3,180/day (multi-country plan)
Procurement method

Usage of data telecommunications services in each

Usage of data telecommunications services incountry (usage limits apply)
domestic market (usage limits apply)
Routers purchased from manufacturers or as a set with Routers as a set with network accessnetwork access
Sales channels

Direct websites, smartphone apps, airport counters,
corporate sales, partners, affiliates

Direct websites, airport counters, partners,
affiliates

Operations

Procurement optimized by region, based on demand forecasts.
Total procurement of telco data managed based on individual data usage volumes

Inventory optimized at individual shipping centers (collection ⇒setup ⇒shipping)
Source: Shared Research based on company data

Overseas (Global WiFi®) business features
The company has direct contracts with telcos worldwide. This enables it to provide a low-price, high-quality internet
environment for the mobile WiFi rental service it offers to outbound travelers (going from Japan to overseas). Per the company, inorder to boost customer satisfaction and capture repeat customer demand, it is important to pay attention not only to price, butalso to quality. As a result, Vision mainly obtains internet access overseas from major telcos, as it places importance oncommunication speed and breadth of coverage.
The company has subsidiaries in regions with strong travel demand including South Korea, Hawaii, Hong Kong, Singapore,
Taiwan, the UK, Vietnam, Shanghai, France, and Italy. These overseas subsidiaries primarily work to procure network access foreach respective region, but the subsidiaries in South Korea, Hawaii, and Taiwan—like in Japan—provide the Global WiFi® service toboth outbound and inbound customers. The company also opened offices in New Caledonia and the US (California) in 2016.
There are four steps in the process to rent a mobile WiFi router: web application/payment (credit card payment), device
handover, usage, and device return.
Devices may be picked up and returned at 43 locations around the world (19 directly operated airport counters, 12 in Japan, 12
overseas). In Japan, the company has 34 pickup/drop-off counters in major airports. There is a home courier service for customers
who cannot pick up or return the device to the airport. Local pickup and return are available in Hawaii and Korea. Further, thecompany has a 24-hour/365-day support system via AI chat support, telephone, email, and social media. In certain overseas
countries, it has help desks with Japanese-speaking staff.
According to the company, it offers the lowest prices in the industry. It also said that it operates in the most countries with accessto high-speed 4G-LTE communications and large data volumes (unlimited plan was available in 91 countries as of March 31,2021). Further, Vision says that it offers the most pickup points in the industry. As such, over 50% of the company’s contracts arefrom repeat clients, although there is some seasonal variation.

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Domestic (NINJA WiFi®, WiFi Rental.com) business features
The domestic and overseas operations are similar. The company procures domestic telecommunications access from threecompanies: NTT DoCoMo (TSE1: 9437), KDDI (TSE1: 9433), and Softbank, a unit of Softbank Group (TSE1: 9984). The service
flows are similar both in Japan and overseas (web registration and credit card payment) and is available in five languages:
Japanese, English, traditional Chinese, simplified Chinese, and Korean. The pickup and drop-off points are 18 airports in Japan,
with courier services to clients’ hotels as well as the company’s Shinjuku office and partner hotels and tourist information centers.

Competition
Telco companies’ roaming services* compete with Vision’s services. Compared to roaming services, Vision said it had several
advantages: lower prices (up to 89.9% lower than fixed price international roaming plans), faster speeds (contracts andcollaboration with high-quality local telcos), ease of connection (merely requires switching power on), multi-device connectivity(possible to connect simultaneously with multiple people/devices). Compared with WiFi hot spots**, the company argues that it
has a wider coverage area (usable even on the move), faster speeds, ease of connectivity, and increased security. In particular,
corporations have strong security needs and this is a major factor in customer acquisition.
*Roaming service: refers to ability to access infrastructure of another telecommunications company that partners with a telco service provider outside
the contracted service provider’s service area.
**A WiFi hotspot is a shop or other public space where it is possible to connect to the internet using a wireless LAN (WiFi).

Post-COVID plans
The following describes the strategies the company had employed prior to the COVID-19 outbreak, and it is the understandingof Shared Research that it will re-engage in those strategies once the pandemic is overcome. The company aims to capture
demand from overseas visitors to Japan and Japanese travelers going overseas, the number of whom it expects to grow over the
medium term. It plans to leverage its customer data to expand media services (ads linked to the destination, local information for
inbound travelers) and data supply services (offer retail operators big data analysis based on location data). Through suchinitiatives, the company aims to increase user convenience and boost revenues. The company also said that it is putting a great
deal of effort into developing ancillary services (such as tablet services, 360° camera services, translation device, and suitcase
rentals) to boost ARPU.

Business model
The revenue of this business is a function of the number of mobile WiFi routers shipped multiplied by average revenue per user
(ARPU)*. Costs are the sum of data telecommunications charges in individual countries + the cost of procuring mobile WiFi
routers + ancillary equipment procurement costs.
The company is focused on increasing customer numbers and improving procurement volumes, terms and conditions based onregional or seasonal demand forecasts. It also aims to increase turnover rates (utilization rates) for its mobile WiFi router rentals.

*ARPU: (telecommunications charges/day + ancillary service charges) times number of days

Number of contracts
In FY12/20, the business had 960,000 contracts (total rental deals), a decline of 66.1% YoY. Of these, roughly 33% were forcustomers traveling overseas and roughly 67% were for users in Japan. In FY12/19 (before outbreak of the COVID-19 pandemic),
the business had 2,830,000 contracts (total rental deals), increasing 26.8% YoY. Of these, roughly 76% were for travelers fromJapan going overseas. According to the company, 65.5% of overseas rental contracts in FY12/20 were individuals (previous year:
63.1%) and 34.5% companies (previously year: 36.9%).

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Global WiFi business rental contracts('000)

Overseas use

3,000

Domestic use

Overseas business (excl. domestic use)
2,830
70

2,500
2,232
65
2,000

590

408
1,651
63

1,500

286

1,000

500

56
6
0

0

49
FY12/12

516
18
36

242
11
8
224
FY12/13463
FY12/14

783
44
91
648

1,144
67
191

2,160
1,760
1,303

960
10
640

887
300

FY12/15

FY12/16

FY12/17

FY12/18

FY12/19

FY12/20

Source: Shared Research based on company data

Vision’s global WiFi usage rate by overseas travelers

Vision's overseas share (outbound: Japan to overseas)

20.0%

17.3%

Vision's domestic share (inbound: overseas to Japan)
Total share in Japan (outbound + inbound)

15.3%

14.9%

15.0%
11.7%
10.0%

8.6%

8.3%
6.4%
4.4%

5.0%
2.0%
0.4%

1.4%

2.7%
0.7%

3.5%
1.2%

4.7%

7.1%

7.8%

5.8%

2.1%

2.2%

2.5%

FY12/16

FY12/17

FY12/18

3.1%

2.9%

FY12/19

FY12/200.0%
FY12/12FY12/13

FY12/14

FY12/15

Source: Shared Research based on company data

ARPU
ARPU averages approximately JPY7,500 (daily charge is roughly JPY1,000, and average rental period is around seven to eightdays). ARPU for individuals is lower than that for businesses. Sales to individuals tend to be concentrated in the spring andsummer holidays. Corporate demand is somewhat slow in the July–September quarter, but relatively stable throughout the year.
Q3 is the busiest period as it benefits from overlapping demand from both summer vacations and business trips.
ARPU tends to increase with distance and number of days users travel. ARPU is high in Europe and the US, lower in Southeast
Asia, with inbound users in Japan somewhere in the middle. Sales from Japanese people traveling abroad are highest in the US,
Korea, and China, followed by Taiwan. Business expansion in the relatively low ARPU regions of Asia is a factor in the falling
average ARPU. However, from 2019, the company introduced an unlimited traffic plan in response to customer feedback thatthey did not want to worry about daily usage caps, available in 91 countries as of end-March 2021. This is making average ARPU
rise. ARPU had been on a downward trend through FY12/18 due to an increase in individual users, but turned up YoY in FY12/19,
and increased further in FY12/20.
The company aims to improve ARPU by expanding its plans and enhancing its optional services.

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Cost structure
Around two thirds of cost of sales are network-usage payments to telcos, with the remainder being device depreciation. The
company said that it was able to keep network utilization rates at nearly 100% through effective management. Devices are
expensed on a two-year depreciation schedule. Note that the company is able to maintain its profit levels by controlling the costof sales, since it utilizes a system that adjusts network usage in line with busy or quiet periods, which in turn affects the cost ofusing those networks. The company created this system by developing a proprietary management system and negotiating withtelcos.
The company aims to reduce costs by improving operations and reducing procurement costs by expanding its business scale. It
achieved even further cost reductions in FY12/20 by switching to pay-as-you-go contracts with telecommunications companies
worldwide. It also minimized any losses stemming from the drop in demand due to COVID-19 by reassigning some of its
workforce to other lines of business that expected to see demand, and cutting spending on outsourcing in airport and logisticsrelated processes.

Reducing telecommunications CoGS▷

Improve procurement contract terms by securing volume discounts*1 (lower rates as well as terms unique to Vision)▷

Utilize next-generation telecommunications technology that utilizes SIMs in the cloud*2▷

Reduce surplus inventory (including line accounts) with more accurate order forecasting*3*1 According to the company, Vision is the largest procurer of network access in the world. Through successful negotiations with network providers
around the world, it has worked to lower its network procurement costs.
*2, 3 The company indicated that as of end-FY12/20, roughly 94% of its total rental contracts made use of cloud WiFi routers. Conventional WiFi routersneed different SIM cards for each country in which WiFi service is used (in other words, a WiFi router with a maximum of nine SIM-card slots, can only
be used in nine countries). Conversely, server-based management of SIM cards ensures SIM cards are switched automatically to the appropriate
country as users travel around. This not only improves the efficiency of shipping operations, but also contributes to an increase in network usage (while
reducing surplus inventory). Vision presently operates a global IoT platform that allows it to monitor usage conditions for its customers across virtually
the entire world. This in turn allows the company to take various types of action in response to customer usage conditions.

Improving operational efficiency▷

Use AI systems to help reduce call centers’ operating costs▷

Increase use of automated systems, such as “Smart Pickup” (automated lockers for WiFi router pickup and return)*4 and “Smart
Entry” (self-service kiosks) *5 in some locations as well as install additional terminals (reduce service counter operation costs)
Increase operational efficiency of manned service counters to improve sales ratio for optional services*4 Within a matter of seconds, users can pick up and drop off a router from a locker that is automatically assigned to them online. The locker is opened
by tapping a QR code displayed on the screen of a user’s smartphone.
*5 The self-service kiosks feature multi-language support that is developed by the company. They have access to customers’ usage patterns andrequests (e.g., first time or tenth time using the service, previous requests made to call centers), which contributes to superior service.

Sales channels
End users can apply to use the services through websites, apps, corporate sales, partners (companies that have concluded sales
agent contracts or franchise contracts), and airport counters.
Global WiFi (NINJA WiFi®) sales channels
Sales channel

Direct websites

Overview

Apply for Global WiFi® on the internet. The application website attracts users through the company’s homepage and web
marketing through product specialist websites

Apps

Apply via the company’s smartphone app downloaded by the end-user

Affiliates

Applications via websites operated by affiliates

Corporate sales

Ongoing applications for services by registered corporate users, such as government agencies, companies with frequent
overseas travel and other corporate users. (Price discounts and corporate billing services available.)Partners

Apply via partner companies (travel agents, insurance agents, credit card companies etc.), agents and franchisees

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Airport counters

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Apply at airport counters

Source: Shared Research based on company data

Service flows

Source: Shared Research based on company data

Information and Communications Service segment
Information and Communications Service(JPYmn)Sales
YoY% of total sales

Operating profit
YoY
OPM (excl. adjustments)% of total OP (incl. adjustments)

FY12/13

FY12/14

FY12/15

FY12/16

FY12/17

FY12/18

FY12/19

FY12/20

FY12/21

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Est.

7,312

6,411

6,440

6,948

7,104

7,774

8,955

8,797

n.a.

-

-12.3%

0.5%

7.9%

2.2%

9.4%

15.2%

-1.8%

-

79.4%

62.9%

51.6%

46.8%

40.5%

36.2%

32.8%

52.8%

-

566

724

904

1,025

1,173

1,219

1,363

1,520

n.a.
-

-

27.9%

24.8%

13.4%

14.4%

3.9%

11.9%

11.5%

7.7%

11.3%

14.0%

14.7%

16.5%

15.7%

15.2%

17.3%

-

151.3%

79.4%

60.8%

48.5%

44.0%

35.4%

31.0%

146.6%-

Source: Shared Research based on company data

Segment overview
The Information and Communications Service segment accounted for 52.8% of consolidated sales and 146.6% of operating
profit in FY12/20 (32.8% and 31.0% in FY12/19). It targets mainly startups and ventures as well as SMEs, and arranges telephonelines and other types of telecommunications services, mobile communication device sales, office equipment sales, and builds
websites for its customers. The company and consolidated subsidiary Best Link are involved in this business.
Sales in the segment fell temporarily in FY12/14 as the company changed the weightings of products it handled. Due to a rising
share of highly profitable products and increased productivity, profits have continued to rise.

Services and business model
Sales structure
As information and telecommunications technology continues to evolve, the segment makes use of web marketing activities as atool to target startups and general corporations. The idea is to grasp customer needs to offer the best products and services atthe optimal timing. The company also conducts door-to-door sales leveraging its headquarters, 12 sales offices across thecountry, and numerous partner corporations, which have given it a nationwide marketing presence.

Customers
Almost all of the segment’s customers are corporate clients. There are roughly over 30,000 new signups per year. Around 60% of
these new contracts are with startups, which numbered 16,000 in FY12/20. According to Ministry of Justice statistics, 118,532
new companies were established in 2020. This means Vision does business with one out of every ten of the newly created

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companies every year. The company is focusing on capturing more startup clients. The aim is to increase the number and type ofservices it provides them as their business grows. Per the company, bankruptcies amongst startups are declining, and its clientstend to be particularly cost-conscious, so bankruptcy rates are lower than in the general market.

Revenue
Revenues in this segment can be broadly divided into sales revenue from selling devices and office equipment, fees from telcosand power companies for arranging services (one-time commissions, and monthly commissions or “stock incentives”), andrevenue from office equipment maintenance services. When contracts are signed, revenue from devices and office equipment
and one-time commissions are booked as sales; subsequent monthly revenues comprise the monthly stock incentives and officeequipment maintenance revenues.
The company’s business model entails setting low prices for devices and office equipment and collecting monthly revenues, tolighten the burden on startups. While the company has not disclosed details, we understand that monthly revenues such asmonthly commissions (“stock incentives”) and office equipment maintenance revenue significantly contribute to profits as thecompany’s business model emphasizes continued business with its clients.

CoGS
Costs for signing up mobile phone subscribers include handset cost (no CoGS related to fixed-line telecommunications andelectric power businesses). Costs for office equipment and security businesses include hardware and software, and outsourcing
costs (commissions paid to sales agencies, etc.). According to the company’s FY12/20 earnings presentation materials, theInformation and Communications Service segment had gross profit of JPY4.7bn (53.4% GPM; compared to FY12/19 gross profitof JPY4.5bn, 50.6% GPM). The breakdown of sales by subsegment (detailed below) is as follows:▷

FY12/20 Information and Communications Service segment gross profit of JPY4.7bn (53.4% GPM) breaks down to 15.3% for
fixed telecommunications, 20.8% mobile communications, 11.2% broadband, 27.6% office equipment sales, 10.5% internet
media, 11.7% eco solutions, 2.2% construction related, and 0.7% other.

▷

FY12/19 Information and Communications Service segment gross profit of JPY4.5bn (50.6% GPM) breaks down to 21.9% for
fixed telecommunications, 14.5% mobile communications, 10.9% broadband, 30.5% office equipment sales, 9.3% internet
media, 10.5% eco solutions, 2.4% construction related, and 0.0% other.

SG&A expenses
Typical SG&A expenses are personnel expenses, advertising and promotional spending, and rent for call centers and otherfacilities.

Subsegments
The revenue breakdown for subsegments in the Information and Communications Service segment are high for office equipment
sales, mobile (cell phone) communications, and fixed telecommunications (landline) businesses, followed by the broadband(internet) business, and the internet media business (website development, etc.). Recently, the company has been adding new
products to meet customer needs, such as the electric power service Haluene Denki (power sales agent; eco solutions
subsegment).

Telecommunications access intermediary services
In this market, the company operates mobile, landline, and broadband businesses. It involves the sale of devices and obtaining
network access (from telcos) for mobile phone, landline, and internet connections, as well as installations. Revenue comes fromhandset sales of landline and mobile phones (one-time revenue) and commissions for arranging network access (either one-timecommissions when contracts are signed or monthly commissions*).
*Monthly commissions: Payable by the telco, and based on monthly payments made by the customer to telcos. When handsets are upgraded, thepayment period is extended. When the customer cancels the contract, payments stop.

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Office equipment sales and after-sales support
The office equipment sales business’s main source of selling copy machines (one-time revenue), and providing after-sales
services (monthly revenues). The company procures copiers from manufacturers, which it sells to customers. While some sales
involve a single payment, they are typically five-year leases. For leasing sales, the company sells the copier to a leasing company
and receives revenue. The customer signs a contract with the leasing company, as well as an after-sales service contract for the
copier with Vision.
In addition to monthly base fees for using after-sales services, customers pay additional fees depending on frequency of use. The
company sets copier prices low to reduce the burden on customers, and recoups revenues through after-sales service fees. As aresult, revenue from copier sales comprises a substantial share of sales, but after-sales service revenues are a big contributor to
profits.

Website services
The internet media business provides MORPH, a service which develops PC and smartphone compatible websites as its mainstay
business. The company provides clients with the expertise it has built up operating its own websites to support their businesses(development of over 100 sites a month). While the contribution to profits is small, this business helps stabilize customers’
businesses, and contributes to expanding sales of Vision’s other products. Initial fees for creating a website start from JPY100,000,
with monthly charges starting from JPY50,000 (both as of December 2020 and excluding tax).
The company also launched its “Vision Crafts!” simple website development service in FY12/20. Vision Crafts! is a more
economical alternative to hiring a standard website development service, which can run from JPY0.2mn to over JPY1mn including
the cost of original site design (Source: LISKUL). The cost of service (not including tax) consists of an initial setup fee of
JPY10,000, monthly fees of either JPY4,980 for the one-year plan or JPY3.980 for two-year plan, and a development support fee of
JPY20,000. The service enables customers to easily build visually appealing websites.

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Key group companies
Group companies and business areas
Vision and group companies

Reporting segment

Sub segment

Business description

VisionBest Link Inc.
Vision Mobile Korea Inc.

Global WiFi

Overseas business

Mobile WiFi router rental business. Access tooverseas telco networks aimed at travelers fromJapan to overseas and overseas-to-overseas travelers.

Vision Mobile Hawaii Inc.
Vision Mobile Taiwan Ltd.
Vision Mobile Hong Kong Limited
GLOBAL WIFI.COM PTE. LTD.

Domestic business

GLOBAL WIFI.UK LTD
Vision Mobile Shanghai Ltd.

Mobile WiFi router rental business. Access todomestic telco networks aimed at travelers fromoverseas to Japan and domestic tourists and businesstravelers.

Global WiFi France SAS
Vision Mobile Italia S.r.l.
Vision Mobile USA CORP.
(US; incorporated in California)
Vision Mobile New Caledonia SAS
VisionMembers Net Inc.
VisionInformation and

Fixed telecommunications

Arranges access to Softbank’s Otoku Line landline

Communications
Servicebusiness

services

Mobile telecommunications Arranges sale of Softbank’s mobile handsets andbusiness
access to mobile phone services

VisionBest Link Inc.
Member Net Inc.

Broadband business

VisionAlpha Techno Inc.

Office equipment sales

Arranges access to broadband services such as
FLET’S, offered by Nippon Telegraph and Telephone
East Corporation (NTT East) and Nippon Telegraphand Telephone West Corporation (NTT West).
Sales of MFPs*, business phones and UTM** devices
primarily from CanonBOS Inc.
Internet media business

VisionSales of advertising materials (website development)on the internet

VisionVision Ad Inc.

OtherMedia business. Agent for ASKUL Corp.’s ASKUL
telecommunication sales business

Vision Digital Marketing Inc.
Source: Shared Research based on company data
Note: Vision Vietnam One Member Limited Liability Company is involved in systems development and database construction for the company.
Note: Sales from other segments comprise less than 1% of the total, so are not included above.

*MFP (multifunction printer): umbrella term for digital copier or laser facsimile, with several functions such as copying, printing, facsimile and scanning** UTM (Unified Threat Management): security measure available to companies, whereby one security device has multiple functions and whose use
enables all-inclusive, integrated solutions. Security devices used for these purposes are known as UTM devices

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Profitability analysis
Profit margins(JPYmn)Sales
Cost of sales
Cost ratio
Gross profit
GPM
SG&A expenses
SG&A ratio
Operating profit
OPM
EBITDAEBITDA margin
Net margin

FY12/11 FY12/12 FY12/13 FY12/14 FY12/15 FY12/16 FY12/17 FY12/18 FY12/19 FY12/20
Par.
Par.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
6,999
6,527
9,204
10,185
12,485
14,844
17,55521,50427,31816,654
4,005
4,533
5,575
6,221
7,394
8,854
11,628
7,861
43.5%
44.5%
44.7%
41.9%
42.1%
41.2%
42.6%
47.2%
5,199
5,652
6,910
8,622
10,161
12,65015,690
8,794
56.5%
55.5%
55.3%
58.1%
57.9%
58.8%
57.4%
52.8%
5,189
5,366
6,105
7,332
8,372
10,166
12,365
8,690
56.4%
52.7%
48.9%
49.4%
47.7%
47.3%
45.3%
52.2%
10
286
805
1,290
1,789
2,484
3,325
104
0.1%
2.8%
6.4%
8.7%
10.2%
11.6%
12.2%
0.6%
117
423
984
1,608
2,267
3,335
4,414
636
1.3%
4.2%
7.9%
10.8%
12.9%
15.5%
16.2%
3.8%
0.0%
0.8%
2.7%
4.7%
5.5%
6.9%
7.1%
8.1%
-

Financial ratios
ROA (RP-based)
ROE
Total asset turnover
Working capital (JPY'000)
Current ratio
Quick ratio
OCF / Current liabilities
Net debt / Equity
OCF / Total liabilities
Change in working capital

2.0%
0.1%
2.45

9.1%
2.09

0.9%
5.0%
2.64
555
150.9%
120.7%
0.17
0.15
555

8.5%
15.8%
2.68
470
145.8%
129.9%
0.29
0.27
-85

13.0%
13.9%
2.01
649
366.7%
344.6%
0.41
0.39
179

14.1%
11.8%
1.61
704
312.7%
289.5%
0.65
0.57
55

16.8%
15.2%
1.64
745
310.7%
268.3%
0.59
0.56
41

20.0%
16.7%
1.72
1,167
278.9%
255.0%
0.00
0.00
422

23.4%
21.5%
1.90
1,156
279.3%
255.3%
0.00
0.00
-10

1.7%
-12.1%
1.26
842
353.8%
324.9%
0.00
0.00
-314

Source: Shared Research based on company data
Note: Figures may not match company numbers due to differences in rounding methods.
Note: Debt ratios calculated based on net debt.

Cost structure
After launching the Global WiFi business (mobile WiFi router rental services), the company posted double-digit sales increases
from FY12/13 to FY12/19. The CoGS ratio rose slowly between FY12/13 and FY12/15, but held steady at around 42% from
FY12/16 to FY12/19. In FY12/20, in spite of the substantial drop in sales, the company contained the CoGS ratio to 47% by
switching to pay-as-you-go contracts, which dramatically reduced procurement costs of overseas network access. The SG&A
expense ratio has also been declining steadily due in part to implementation of web-based efficient marketing and improved
operations as it improves the efficiency of device delivery (Smart Pickup, Smart Entry, Smart Check) and establishes a system thatmanages SIMs in the cloud in its Global WiFi business. The SG&A expense ratio was 45.3% in FY12/19, 11.1pp lower than in
FY12/13. In FY12/20, depressed demand brought down costs in most categories, while the company reduced other cost items as
well, but due to the precipitous drop in sales, the SG&A ratio rose to 52.2%.
Cost structure(JPYmn)Sales
Cost of sales
Cost ratio
SG&A expenses
SG&A ratio
Personnel expenses
Promotion expenses
Commission fee
Provisions for doubtful accounts
Provision for bonuses
OthersOperating profit
OPM

FY12/13
Cons.
9,204
4,005
43.5%
5,189
56.4%
1,300
1,150

FY12/14Cons.
10,185
4,533
44.5%
5,366
52.7%
1,436
782

FY12/15Cons.
12,485
5,575
44.7%
6,105
48.9%
1,577
873

FY12/16Cons.
14,844
6,221
41.9%
7,332
49.4%
1,810
983

FY12/17Cons.
17,555
7,394
42.1%
8,372
47.7%
1,999
1,131

FY12/18
Cons.
21,504
8,854
41.2%
10,166
47.3%
2,196
1,681

FY12/19
Cons.
27,318
11,62842.6%
12,365
45.3%
n.a.
n.a.

FY12/20Cons.
16,654
7,861
47.2%
8,690
52.2%
n.a.
n.a.

47
19
2,673
10

498
27
21
2,602
286

673
21
77
2,884
805

839
22
161
3,518
1,290

1,062
34
210
3,937
1,789

1,625
51
225
4,389
2,484

n.a.
n.a.
n.a.
n.a.
3,325

n.a.
n.a.
n.a.
n.a.
104

0.1%

2.8%

6.4%

8.7%

10.2%

11.6%

12.2%

0.6%

Source: Shared Research based on company data
Note: Figures may not match company numbers due to differences in rounding methods.

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Market and value chain
Market overview
The company receives fees from outbound (from Japan to overseas), inbound (from overseas to Japan) and overseas-to-overseas(travelers from a region where the company has an office to other countries abroad) travelers in its Global WiFi business. Startups
are the main target of the Information and Communications Service business.
The company said that in the Global WiFi business the key indicators are foreign and domestic traveler numbers, and in the
Information and Communications Service business, the number of companies established.

Japanese travelers abroad▷

From 2010 through 2015, the number of Japanese travelers abroad was influenced by various external factors: the Tohoku
earthquake in 2011, yen strength in 2012, and yen weakness in 2013. After bottoming out at 16,214,000 in 2015, the numberof Japanese travelers going overseas had been rising up through FY12/19.

▷

According to statistics compiled by the Japan National Tourist Organization (JNTO), the number of Japanese travelers goingoverseas hit 20,081,000 in 2019, up 5.9% over the previous year and the highest figure recorded for two years running sincerecord-keeping began back in 1964. The previous record was 18,490,000 set in 2012, when the number of overseas travelers
jumped sharply. The rise in overseas travel is attributed to a number of factors, including strong corporate earnings that
permitted more overseas business travel and promotion of work style reform that increased the amount of leisure time and led
to more individuals traveling overseas as well. In 2020, Japanese travelers going overseas plunged 84.2% YoY to 3,174,000
due to the impact of the COVID-19 pandemic.

▷

Notwithstanding, the rate of smartphone ownership is expected to continue rising steadily in 2018. As shown in the graphbelow, the household penetration rate for smartphone in Japan was stuck around 72% through 2016 then jumped to 79.2% in2018 and 83.4% in 2019.

Japanese travelers abroad and smartphone penetration

Number of travelers('000)

Household penetration of smartphones (right axis)

25,000100.0%

20,000

72.0%
62.6%

15,000

75.1%

79.2%

75.0%

64.2%

49.5%

50.0%

29.3%

10,000
16,637

5,000

71.8%

83.4%

16,994

18,49017,472

16,903

16,214

17,116

17,88918,95420,081

25.0%

9.7%
3,174

0
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

0.0%

2020

Source: Shared Research based on JNTO materials, and Ministry of Internal Affairs and Communications, 2016 Communications Usage Trend Survey (released June 8,
2017)

Number of overseas travelers to Japan▷The number of foreign visitors to Japan in 2019 was 31.9mn (+2.2% YoY). The increase comes even as a series of natural
disasters worked to hold down the number of travelers coming to Japan during part of the year, as by the end of the year thenumbers had bounced back. The number of foreign visitors has now increased for eight consecutive years starting in 2011,
and in 2019 reached the highest level it has ever been since the Japan National Tourist Organization (JNTO) started tracking

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foreign visitor numbers in 1964, but the number plummeted by 87.1% YoY in 2020 due to the impact of the COVID-19
pandemic.
Foreign visitors to Japan(mn)

Tourists visiting Japan

YoY

47.0%

80.0

22.0% 19.4%

60.0

40%
8.7%

20%

2.2%

0%

40.0
20.0
5.2

6.1

2003

04

7.3

6.7

8.4

8.4

6.8

8.6

6.2

8.4

10.4

13.4

19.7

24.0

28.7

31.2

-20%

31.9

-40%
-60%

-87.1%

4

0.0
05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

-80%
-100%

20

Source: Shared Research based on Japan National Tourist Organization (JNTO) materials and the Japanese government’s Council for the Development of a Tourism Vision
to Support the Future of Japan meeting (held in March 2016)

Global tourism numbers▷

According to the United Nations World Tourism Organization (UNWTO), the number of travelers between countries had
been rising globally until 2019, representing a substantial market of over 1.4bn persons.

▷

Although it currently does not cover parts of Africa, the company’s Global WiFi service can be used in over 200 regions
worldwide, so if it opens an office in a given region, it already has the base to meet demand of that area.

▷

In addition to its current market expansion in Asia (Taiwan and South Korea), Vision aims to continue expanding its
presence by increasing the number of local bases beyond North America and other locations with many overseas travelers,
to capture burgeoning demand.

International tourist arrivals
(mn)

1,500

1,000

500

0

949

993

1,039

2010

2011

2012

1,195

1,240

1,401

1,133

1,326

1,087

2013

2014

2015

2016

2017

2018

Source: Shared Research based on UNWTO and other materials

Number of registered companies▷

According to Ministry of Justice figures, the number of companies being established in Japan has been on a rising trend since2009. In 2019, 118,532 companies were established (87,871 joint stock companies and 30,566 limited lability* companies).
Compared to 2009, when the number bottomed, the number of registered companies increased 1.38x (1.10x for joint stockcompanies and 5.30x for limited liability and other types of companies).

▷

Vision said that its main targets in the Information and Communications Service business are startup companies, because
startups need more information and communications services as their business grows. Vision aims to maximize profits byoffering low-priced telecommunications services including pre-owned equipment in the initial stages, and subsequently
providing various additional services as the startup grows.

▷

The company figures that it does business with one out of every ten of the new companies started each year.

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Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp*A new company format established in the 2006 corporate law revisions. The key advantages versus joint stock companies and individually owned
businesses are low setup costs and limited liability. As a result, the number of small startups and SMEs has been on a rising trend.

Company registrations('000）

Limited liability company

Stock company

Other

140.0
120.0
106.6

101.4

100.0

6.1

80.0

80.0
3.4

60.0

76.6

91.6
5.4

95.4

86.2

91.9

96.7

19.8

111.2

114.3

22.2

23.8

118.8

27.3

116.2

118.5

29.1

30.6

85.7

87.9

89.7

5.8

7.2

9.1

10.9

79.9

80.5

80.2

80.9

81.9

86.6

88.8

90.4

91.4

87.0

87.9

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

14.6

40.0
2006

2007

2008

Source: Shared Research based on Ministry of Justice materials

Competition
Global WiFi
Operators involved in mobile WiFi router services for the outbound market similar to Vision include Telecom Square, Inc. (notlisted) and XCom Global (formerly Inter Communications, not listed). In the past, competitors oftentimes procured networks
through intermediaries. In contrast, Vision has been—and prioritizes—directly negotiating with local telcos to procure network
access since it first started its business. The company says that this gives it an advantage over its two competitors, as it purchases
network access based on its own terms, allowing the company to control costs and develop original services such as largevolume plans. Vision’s sales are higher despite being a late entrant. In FY12/15, Vision’s Global WiFi segment sales were over 1.6x
sales of its two main competitors, giving it clout to negotiate prices. Other competition is primarily roaming services offered bymajor telcos, but Vision’s prices are roughly one third of these services.
Free WiFi hotspots also compete, but Vision’s advantages are broad coverage and connectivity on the go. Further, there is no
hacking risk due to the way it is set up, and having highly secure connections helps capture the corporate user market.
Comparison of major mobile internet services
Connection

PriceService area

Free WiFi hotspots

Communication

Management

Security

Good

Poor

Good

Good

Poor

Good

speed

methodology
Good

Poor

Average

Security concerns. Usable in limited areas, and slow speeds in some places.
Internationalroaming (overseas
packet)SIM (local
procurement)
Global WiFi® (NINJA
WiFi®)

Poor

Average

Average

Pricey (JPY980–2,980) and quality can be patchy. Risk of usurious charges.
Average

Average

Good

Knowledge needed to purchase locally. Operation complex with regular recharges necessary on cheap plans.
Good

Good

Good

Good

Good

Procures quality network access in collaboration with local telcos as a rule. This means low prices and fastest local
service speeds. Mobile WiFi routers already set up, so use is simple and no trouble to operate.

Source: Shared Research based on company data

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Information and Communications Service
There are many companies involved in selling telecommunications access and office equipment. Some of the majors are Otsuka
Corp. (TSE1: 4768) and Hikari Tsushin (TSE1: 9435). However, Otsuka Corp. targets major corporations while Hikari Tsushincovers a broad range of customers including individuals. Vision differentiates itself by targeting startups.

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Strengths and weaknesses
Strengths◤ Niche market focus: The company operates two key businesses: the Global WiFi business, which rents WiFi routers, and theInformation and Communication Service business, which sells office equipment and provides IT and communications services.
In the Global WiFi business, the company possesses more than 50% share of the market, boasting an advantage by procuringcommunication lines with the support of scale merit. In the Information and Communication Service business, the company iscultivating its key customer base among newly established companies and SMEs. This is a distinctly different segment thanthe large corporations targeted by major competitors. Because Vision’s customers are startups and SMEs, sales of a single
product to any one customer are low. However, by selling multiple additional services to customers as they grow, Vision has
been able to increase revenue per customer. Startups and SMEs are attracted by the low initial setup costs, enabling Vision to
expand its customer base and achieve stable growth.
◤ Highly efficient sales model using Web marketing: The company conducts sales visits focusing on customers that havedemonstrated interest. In 2003, it gradually shifted from telemarketing-focused sales to utilization of web marketing, and has
been able to conduct efficient sales activities to potential customers who make enquiries from the website. Customers
acquired from websites tend to be more active and have a strong propensity to contract, which has increased the contract
rate. (For example, copier sales per employee are roughly 3x the industry average). This leads to a virtuous cycle of reduced
employee turnover and accumulated sales knowledge by marketing staff. The company’s concierge operations (CLT) for
continuing business with existing customers and the sales team’s ability to create demand for other products lead to effective
upselling and cross-selling.
◤ Direct network access allows provision of high-quality internet service at low prices: In the Global WiFi business, thecompany offers unique low cost and high quality (faster and more data) telecommunications services compared tocompetitors. This is because Vision has been procuring mobile network access directly from major telcos in Japan and abroad
since the inception of its business, while competitors often purchased networks through intermediaries. In order todistinguish itself from companies who entered the business before it, Vision negotiates directly with telcos to expand its
services and lower costs. To achieve this, the company has been establishing local subsidiaries to acquire telecom businesspermits in different countries. The company also benefits from having the leading market share and purchasing clout. This ispartly because Vision used cash flow from its Information and Communications Service business to help it get the Global WiFi
business up and running in a short period of time.

Weaknesses◤ Limited time to prove itself to clients: The company is cultivating its key customer base among startups and SMEs. This isa distinctly different segment than customers targeted by major competitors (large corporations). The company’s core
strategy in the Information and Communications Service business is to focus on startups, and as these companies grow,increase the number of provided services. However, Vision will ultimately have to compete in the same arena as major rivals
as startups grow into medium and large companies. The company aims to maintain continuous customer contact throughCRM initiatives, primarily through the efforts of its Customer Loyalty Team (CLT), a concierge for customers.
◤ Relationships with telcos in the Information and Communications Service business: Vision receives commissions ascompensation for its work as an agent arranging telecoms services provided by telcos. However, commission terms arechanging as this market matures. Telcos’ management policies could change, and they may make major changes to theirterms. In such a case, the company would be unable to avoid an impact on its earnings and finances. For this reason, Vision is
working to expand its range of products, including proprietary products, and improve marketing efficiency.

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Historical performance and financial statements
Historical performance
Full-year FY12/20 results (out February 15, 2021)
Summary▷

Sales:

JPY16.7bn (-39.0% YoY)▷

Operating profit:

JPY104mn (-96.9% YoY)▷

Recurring profit:

JPY228mn (-93.2% YoY)▷

Net loss*:

JPY1.2bn (net income of JPY2.2bn in FY12/19)*Net income/loss attributable to owners of the parent▷

Against its revised full-year FY12/20 forecast* (announced November 9, 2020), progress rates were 99.7% for sales, 179.1% foroperating profit, and 136.5% for recurring profit.

▷

Sales down 39.0% YoY: Sales declined 59.0% YoY in the Global WiFi business. Due to the COVID-19 outbreak, there werebasically no outbound or inbound rentals from March 2020 onward, but the business moved back into the black on a monthly
basis on aggressive efforts to capture domestic WiFi demand. Segment sales (external sales) in the Information andCommunications Service business decreased 1.8% YoY. Sales were favorable in cost-saving products and mobile
communications equipment, including equipment used for teleworking. However, sales declined YoY on a drop in the numberof leasing contracts for office equipment as leasing volume declined eight months in a row (according to the Japan Leasing
Association).

▷

Operating profit down 96.9%: The Global WiFi business posted a segment loss of JPY91mn (versus segment profit of JPY3.3bn
in FY12/19). Operating profit rose 11.5% YoY in the Information and Communications Service business. GPM declined 4.6pp
YoY to 52.8% while the SG&A-to-sales ratio rose 6.9pp YoY to 52.2%, causing OPM to fall 11.6pp YoY to 0.6%. In the Global
WiFi business, overseas communication costs fell sharply due to pay-as-you-go contracts that accumulate charges based oncommunication usage. The cost ratio increased in the Information and Communications Service business, where the increase inmobile phone sales contributed to a higher sales ratio of products incurring purchasing costs. Despite lower SG&A expenses
on the review and reduction of various expenses, reduced sales resulted in the SG&A-to-sales ratio moving higher. However,the business returned to profitability in Q3, and posted operating profit in Q4 as well.

▷

Recurring profit down 93.2% YoY: The company booked JPY124mn in subsidy income (versus JPY67mn in FY12/19).

▷

Net loss attributable to owners of the parent of JPY1.2bn: In Q2, the company booked an impairment loss of JPY1.4bn on rental
assets and other assets related to the Global WiFi business. It also booked JPY357mn in loss on valuation of investment
securities in certain investee companies.

Revised FY12/20 full-year forecast (announced November 9, 2020)▷

Sales:▷

Operating profit: JPY58mn (operating loss of JPY320mn)▷

Recurring profit: JPY167mn (recurring loss of JPY213mn)▷

Net loss*:

JPY16.7bn (previous forecast was JPY16.7bn)

JPY1.2bn (net loss of JPY1.6bn)*Net loss attributable to owners of the parent

Reasons for the revision
Based on a comprehensive review of the impact of the COVID-19 pandemic on its business activities and performance in Q3 FY12/20, the company
now expects profits to exceed the previous forecast due to various cost efficiency efforts.

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The revised forecast assumes that the sharp drop in international travelers (both outbound and inbound) will continue even after end-FY12/20 despite
the phased lifting of restrictions on business travel, but not tourism, and that there will be no further emergency declarations or other social restrictions
within Japan.

Impairment loss▷

In Q2, the company booked an extraordinary impairment loss of JPY1.4bn as it reduced the recoverable amount of assets(including goodwill) where it was unlikely to recoup its investment due to lower margins to their recoverable value on its
books. Segment impairment losses booked are as shown below.

▷

Global WiFi: JPY1.2bn (WiFi routers, options, software, equipment)▷

Chauffeur-driven car sharing service included in Other segment: JPY186mn

Trends by segment
Global WiFi▷

FY12/20 segment sales were JPY7.3bn (-59.0% YoY) and segment loss was JPY91mn (segment profit of JPY3.3bn in FY12/19).

▷

The global increase in COVID-19 infections resulted in many countries issuing moving restrictions such as stay-at-homedirectives and immigration restrictions. As a result, in FY12/20, the number of Japanese travelling abroad fell 84.2% YoY, while
the number of overseas visitors to Japan fell 87.1% YoY, according to the Japan National Tourism Organization (JNTO) data.
The company’s outbound and inbound WiFi rentals have remained at almost zero since March 2020.

▷

On the other hand, the spread of COVID-19 has had a major impact on business activities and people’s lifestyles, andteleworking and online sales have become more widespread among companies due to changes in work styles. In education,
the Ministry of Education, Culture, Sports, Science and Technology (MEXT) has fast-tracked the implementation of the "GIGA
School" concept, and demand for online education environments is increasing.

▷In addition, demand for “GLOBAL WiFi for Biz,” a permanent in-house mobile WiFi router for offices with a domestic use option
was also strong as the company responded to various needs such as moving, hospitalization, business trips, and other events.

▷

In anticipation of a prolonged fight against COVID-19, the company minimized segment losses through thoroughimplementation of low-cost operations. Specific measures included temporarily shrinking the outbound and inbound rentals
business, restraining communications costs through the use of pay-as-you-go contracts, reducing airport and logistics
outsourcing, and reassigning some employees to other businesses where demand was anticipated.

Information and Communications Service▷

Segment sales (external sales) were JPY8.8bn (-1.8% YoY) and segment profit was JPY1.5bn (+11.5% YoY).

▷

The main activities in this business are for arranging landline, mobile, and broadband telecommunications services, selling andleasing office equipment, and building websites for startups and SMEs.

▷

The company is working to improve stability and profitability by increasing recurring revenues and implementing highly
efficient sales strategies, centered on an upstream strategy targeting key customers (startups and venture firms) as well as
cross-selling and up-selling according to the growth stage of its customers.

▷

Amid an increase in the number of companies embracing telework, sales of mobile communications equipment have been
robust, as have orders for Vision Crafts!, a simple website production service that allows users to reduce their initial costs.
However, there was a drop in sales for office equipment as leasing volume declined eight months in a row from May 2020(according to the Japan Leasing Association).

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In line with the change in work styles brought on by COVID-19, the company worked to reduce business opportunity losses
and cut operating costs by shifting to video conferencing instead of visiting clients and gradually incorporating teleworking
into its marketing activities and responses to web-based inquiries.

▷

As a result, segment sales fell slightly while segment profit rose YoY.

Cumulative Q3 FY12/20 results (out November 9, 2020)
Summary▷

Sales:

JPY13.1bn (-36.2% YoY)▷

Operating profit:

JPY58mn (-98.0% YoY)▷

Recurring profit:

JPY168mn (-94.4% YoY)▷

Net loss*:

JPY1.2bn (net income of JPY2.0bn in cumulative Q3 FY12/19)*Net income/loss attributable to owners of the parent▷

Against its revised full-year FY12/20 forecast* (announced November 9, 2020 with upward adjustments to profit projections),
progress rates in cumulative Q3 were 78.5% for sales (versus 75.2% of full-year FY12/19 results in cumulative Q3 FY12/19),
100.3% for operating profit (89.3%), and 100.5% for recurring profit (89.7%).
 After previously recording operating loss, the company reported operating profit of JPY73mn in Q3 (July–September2020). Improvement was significant in comparison to Q2 (April–June 2020), when the company incurred an operating
loss of JPY503mn. The company revised its FY12/20 profit projections upward as various measures and cost control efforts
proved successful.
 The company does not expect to record operating profit in Q4 (October–December 2020) after subtracting cumulative
Q3 results from the full-year FY12/20 earnings forecasts. This view is based on a conservative outlook regarding
uncertainties caused by the COVID-19 pandemic and anticipated spending on new businesses and other investments in
the runup to FY12/21.

▷

Sales down 36.2% YoY: Sales declined 55.5% YoY in the Global WiFi business. Due to the COVID-19 outbreak, as in Q2, there
were basically no outbound or inbound rentals in Q3 (July–September 2020), but the business nearly moved back into theblack on a monthly basis on aggressive efforts to capture domestic WiFi demand. Segment sales (external sales) in the
Information and Communications Service business decreased 2.6% YoY. Sales were favorable in cost-saving products andmobile communications equipment, including equipment used for teleworking, but declined YoY on a drop in the number ofleasing contracts for office equipment as leasing volume declined nine months in a row (according to the Japan Leasing
Association).

▷

Operating profit down 98.0%: The Global WiFi business posted a segment loss of JPY48mn (versus segment profit of JPY2.9bn
in cumulative Q3 FY12/19). Operating profit rose 0.9% YoY in the Information and Communications Service business. GPM
declined 6.2pp YoY to 52.1% while the SG&A-to-sales ratio rose 7.8pp YoY to 51.6%, causing OPM to fall 14.1pp YoY to
0.4%. Despite lower SG&A expenses on the review and reduction of various expenses, reduced sales resulted in the SG&A-tosales ratio moving higher. However, the business posted operating profit of JPY73mn in Q3 (July–September 2020), putting itback in the black (the company reported profit on a monthly basis beginning in July 2020).
 In the Global WiFi business, the company curtailed communication costs through pay-as-you-go contracts, and overseas
communication costs fell as a result (more details below).
 The cost ratio also increased in the Information and Communications Service business, where the increase in mobile
phone sales contributed to a higher sales ratio of products incurring purchasing costs.

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Recurring profit down 94.4% YoY: The company booked JPY106mn in subsidy income (versus JPY67mn in cumulative Q3
FY12/19). It booked JPY20mn in share buyback expenses in cumulative Q3 FY12/19 but just JPY1mn in cumulative Q3
FY12/20.

▷

Net loss attributable to owners of the parent of JPY1.2bn: In Q2, the company booked an impairment loss of JPY1.4bn on
rental assets and other assets related to the Global WiFi business (detailed discussion follows). It also booked JPY188mn in loss
on valuation of investment securities in certain investee companies.

▷

COVID-19 impact and countermeasures: The decrease in overseas travelers contributed to a sharp decline in the number ofrentals in the Global WiFi business. While suffering from sluggish volume in the outbound and inbound rentals business, thecompany made efforts to minimize the impact by temporarily shrinking the business and reducing costs, including byrestraining communications costs through the use of pay-as-you-go contracts and reducing airport and logistics outsourcing.
The company has also relocated excess staff to areas expected to show favorable demand going forward. Sales in the
Information and Communications Service business were affected by a temporary halt to office equipment customer leasing
assessments.

Revised FY12/20 full-year forecast (announced November 9, 2020)▷

Sales:▷

Operating profit: JPY58mn (operating loss of JPY320mn)▷

Recurring profit: JPY167mn (recurring loss of JPY213mn)▷

Net loss*:

JPY16.7bn (previous forecast was JPY16.7bn)

JPY1.2bn (net loss of JPY1.6bn)*Net loss attributable to owners of the parent

Reasons for the revision
Based on a comprehensive review of the impact of the COVID-19 pandemic on its business activities and performance in Q3 FY12/20, the company
now expects profits to exceed the previous forecast due to various cost efficiency efforts.
The revised forecast assumes that the sharp drop in international travelers (both outbound and inbound) will continue even after end-FY12/20 despite
the phased lifting of restrictions on business travel, but not tourism, and that there will be no further emergency declarations or other social restrictions
within Japan.

Impairment loss▷

In Q2, the company booked an extraordinary impairment loss of JPY1.4bn as it reduced the recoverable amount of assets(including goodwill) where it was unlikely to recoup its investment due to lower margins to their recoverable value on its
books. Segment impairment losses booked are as shown below.
 Global WiFi: JPY1.2bn (WiFi routers, options, software, equipment) Chauffeur-driven car sharing service included in Other segment: JPY186mn

Trends by segment
Global WiFi▷

Cumulative Q3 FY12/20 segment sales were JPY5.9bn (-55.5% YoY) and segment loss was JPY48mn (segment profit of
JPY2.9bn in cumulative Q3 FY12/19).

▷

The increase in COVID-19 infections resulted in many countries, including Japan, issuing restrictions on overseas travel as well
as stay-at-home directives, which contributed to a global slump in travel-related demand. According to the Japan National
Tourism Organization (JNTO) data, the number of Japanese travelling abroad fell 79.6% YoY in cumulative Q3, while thenumber of overseas visitors to Japan fell 83.7% YoY.

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Amid such an environment, new applications dropped sharply from February 2020, majority of existing applications werecancelled, and overseas subsidiaries were forced to suspend operations by local governments, all of which contributed toboth sales and profit in the business declining. Due to the COVID-19 outbreak, as in Q2 (April–June 2020), there werebasically no outbound or inbound rentals in Q3 (July–September 2020).

▷

The company made efforts to minimize the impact by temporarily shrinking the outbound and inbound rentals business andreducing costs, including by restraining communications costs through the use of pay-as-you-go contracts, reducing airportand logistics outsourcing, and reassigning some employees to other businesses where demand was anticipated.
 The company reported JPY271mn in monthly overseas communication costs in February 2020, but this figure plummeted
to JPY2–3mn in July and August of the same year.
 Depreciation costs began decreasing in Q3 due to the recording of impairment loss (JPY1.2bn reported in the Global WiFi
business) associated with rental assets and other fixed assets attributed to the business.

▷

On the other hand, there are an increasing number of companies heeding government requests and introducing telework inorder to ensure the safety of their employees and prevent the further spread of COVID-19. At the same time, online learning istaking hold with the progress of the government’s GIGA school program. This has contributed to an increase intelecommunications-related demand in Japan and a sharp expansion in sales in the domestic WiFi rental business, which
posted record cumulative Q3 sales.
 Demand associated with remote work expanded in response to the state of emergency declaration issued by theJapanese government in Q2. However, the state of emergency was lifted in Q3, and the company expressed concernthat Wi-Fi contract cancellations might increase as employees resumed commuting to work in higher numbers. Despite
this concern, the company did not encounter as many cancellations as it had anticipated.
 Rentals of the company’s Wi-Fi units are expanding in a varied range of municipalities (currently rented out at a rate ofseveral thousand units per municipality), including Osaka (3,300 units), and these units are being provided at a wider
range of clients, including companies and educational corporations. When the state of emergency was in effect, remote
work was being pushed primarily by large companies, but recently, an increasing number of small- to medium-sizedcompanies are implementing remote work. The company indicates that, as a result, results generated by its domestic WiFi rental business continue to rise on a net basis.

▷

Due to these circumstances, operating loss reported in the Global WiFi business shrank from JPY347mn in Q2 (April–June2020) to JPY28mn in Q3 (July–September 2020) as results recovered to the point at which the business was just shy ofgenerating monthly operating profit.

▷

Although outbound demand is gradually increasing as business and resident travel has resumed between some countries, thecompany aims to remain flexible in its approach as it carefully watches market trends and the impact of the pandemic.

Information and Communications Service▷

Segment sales (external sales) were JPY6.7bn (-2.6% YoY) and segment profit was JPY1.2bn (+0.9% YoY).

▷

The main activities in this business are for arranging landline, mobile, and broadband telecommunications services, selling
and leasing office equipment, and building websites for startups and SMEs.

▷

Vision makes cross-selling and upselling proposals suited to the growth stages and needs of its key target customers (startups
and venture firms). The company worked to offset business opportunity losses caused by stay-at-home requests by shifting tovideo conferencing instead of visiting clients and gradually incorporating teleworking into its marketing activities andresponses to web-based inquiries.

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Amid an increase in the number of companies embracing telework, sales of mobile communications equipment have been
robust, as have orders for Vision Crafts!, a simple website production service that allows users to reduce their initial costs.
However, there was a drop in the number of leasing contracts for office equipment as leasing volume declined nine months ina row (according to the Japan Leasing Association). As a result, segment sales were down 2.6% YoY. Nevertheless, segment
operating profit was up 0.9% YoY as the company reduced costs by moving equipment installation work and website
production in-house and curtailing non-urgent and unnecessary spending.
 In addition to the website production service (HomePage.com) it offered previously, the company introduced Vision
Crafts!, a simplified website production service, in June 2020 for monthly fees starting at JPY3,980. The Vision Crafts!
subscription service offers lower introductory costs and is therefore gaining support from client startup companies.
Having produced websites at rate of 100 or more sites per month, Vision has accumulated a wealth of relevant expertise,
which it uses to meet the needs of its customers.

1H FY12/20 results (out August 17, 2020)
Summary▷

Sales:

JPY9.6bn (-25.6% YoY)▷

Operating loss:

JPY15mn (versus operating profit of JPY1.7bn in 1H FY12/19)▷

Recurring profit:

JPY67mn (-96.0% YoY)▷

Net loss*:

JPY1.4bn (versus net income of JPY1.1bn in 1H FY12/19)*Net income/loss attributable to owners of the parent▷

Sales down 25.6% YoY: Sales declined 43.3% YoY in the Global WiFi business. Due to the COVID-19 outbreak there werebasically no outbound or inbound rentals in Q2 (April–June), but the number of domestic rentals increased on an
improvement in WiFi demand. Sales in the Information and Communications Service business increased 0.2% YoY. Sales werefavorable in cost-saving products and mobile communications equipment, including equipment used for teleworking.
However, office equipment sales were up just slightly YoY, due to a temporary halt to new contracts and potential leasing
customer assessments (the company ceased conducting customer assessments amid calls for self-restraint).

▷

Operating loss of JPY15mn: The Global WiFi business posted a segment loss of JPY21mn (versus segment profit of JPY1.6bn in
1H FY12/19). Operating profit fell 1.8% YoY in the Information and Communications Service business. GPM declined 7.8pp
YoY to 50.1% while the SG&A-to-sales ratio rose 5.3pp YoY to 50.2%, resulting in an operating loss of JPY15mn (OPM of 13.1%
in 1H FY12/19). In the Global WiFi business, the cost ratio increased as sales fell. The cost ratio also increased in the Information
and Communications Service business, where the increase in mobile phone sales contributed to a higher sales ratio of
products incurring purchasing costs. Despite lower SG&A expenses on the review and reduction of various costs, lower sales
resulted in the SG&A-to-sales ratio moving higher. Still, in the Global WiFi business the company managed to reduce its cost of
sales and SG&A expenses from a combined total of JPY1.2bn in the month of February 2020 to JPY545mn in June 2020. As
detailed below, depreciation will decline going forward due to the impairment losses booked in Q2.

▷

Recurring profit down 96.0% YoY: The company booked JPY74mn in subsidy income. It booked JPY20mn in share buyback
expenses in 1H FY12/19 but just JPY1mn in 1H FY12/20.

▷

Net loss attributable to owners of the parent of JPY1.4bn: The company booked impairment losses of JPY1.4bn as it reduced
the recoverable amount on assets where it was unlikely to recoup its investment due to lower margins to their recoverable
value on its books (detailed discussion follows).

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Full-year company forecast: On May 12, 2020, when it announced Q1 FY12/20 results, Vision left its 1H and full-year FY12/20
forecasts “undetermined,” citing mounting difficulty in forecasting the future business environment. It, however, announced
full-year forecast with the 1H results announcement on August 17, 2020. The company forecast for FY12/20 calls for sales of
JPY16.7bn (-38.9% YoY), an operating loss of JPY320mn (operating profit of JPY3.3bn in FY12/19), a recurring loss of JPY213mn(recurring profit of JPY3.4bn), and a net loss attributable to owners of the parent of JPY1.6bn (net income of JPY2.2bn). The
company assumes that due to the COVID-19 pandemic, the steep decline in overseas travel numbers (both outbound andinbound) is likely to persist beyond FY12/20, and that there will not be social restrictions such as a second emergency
declaration in Japan.

▷

Company growth strategy to address mid-pandemic and post-pandemic challenges: With the number of overseas travelers
down sharply, rentals to both inbound and outbound travelers at the company’s Global WiFi business were severely
depressed. Vision has worked to minimize the hit to earnings on this front by temporarily shrinking its rental business directed
at international travelers and focused instead on expanding its domestic WiFi rental business. At the same time, it is working to
reduce costs, by cutting communications costs by switching to pay-as-you-go contracts, reducing the use of contractors at
airports and for logistics functions, and relocating excess staff to areas where demand is expected to grow in the future. These
efforts to bring the Global WiFi business back into the black as quickly as possible have thus far reduced monthly operating
losses from the peak of JPY182mn in April 2020 to JPY88mn in June, with the company expecting its depreciation burden to belower in the months ahead following the impairment losses booked in Q2 FY12/20. The company aims to accelerate growth atits Information and Communications Service business, a growing business that has been a stable source of earnings. Having
largely finished putting in place the loss-reduction measures by the end of Q2, Vision is switching from playing defense and toplaying offense in Q3 by returning its focus to new earnings growth opportunities. Toward this end, the company is planningvarious new investments and intends to make maximum use of the experience and the expertise it has built up over the 25
years since its founding, including its three-legged team approach to winning new customers (online marketing, sales, andcustomer loyalty team), cross-marketing between its businesses, and pursuing business models designed to create recurring
revenue streams.

Impairment losses▷

In Q2, the company booked an extraordinary loss of JPY1.4bn to cover impairment losses booked in connection with
reductions in its estimates for the recoverable amount of assets (including goodwill) in those cases where it determined that it
was unlikely to recoup the value of assets carried on its books. Impairment losses by segment are as shown below.
 Global WiFi: JPY1.2bn for WiFi routers, options, software, and equipment. The routers used by the Global WiFi business
are normally depreciated over two years, but the company decided to write off all the remaining depreciation in a single
charge; this did not result in any cash outflow.
 Other segment: JPY186mn for write-down of assets related to its chauffeur-driven car sharing service

Solid financial position▷

After some financing initiatives, the company effectively had cash on hand of about JPY9.0bn (cash and deposits of JPY5.7bn at
end-June 2020, established commitment lines of JPY3.0bn as of May 2020, and overdraft facility of JPY250mn).

▷

Assuming the company did draw down the entire amount of its commitment lines and overdraft, it would still be in a soundfinancial position, with an equity ratio of about 60% (based on consolidated balance sheet as of end-1H FY12/20). The equity
ratio as of end-1H FY12/20 was 78.4%.

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Global WiFi▷

1H FY12/20 segment sales were JPY4.6bn (-43.4% YoY) and segment loss was JPY20mn (segment profit of JPY1.6bn in 1H
FY12/19).

▷

The increase in COVID-19 infections resulted in many countries, including Japan, issuing restrictions on overseas travel as well
as stay-at-home directives, which contributed to a global slump in travel-related demand. According to the Japan National
Tourism Organization (JNTO) data, the number of Japanese travelling abroad fell 68.7% YoY in the January–June 2020 period(corresponding to the company’s 1H FY12/20), while the number of overseas visitors to Japan fell 76.3% YoY.

▷

Amid such an environment, new applications dropped sharply in February 2020, majority of existing applications werecancelled, and overseas subsidiaries were forced to suspend operations by local governments, all of which contributed to bothsales and profit in the business declining.

▷

The company worked to minimize the hit to earnings by temporarily shrinking its rental business directed at outbound andinbound travelers and focusing instead on expanding its domestic WiFi rental business. At the same time, it worked to reduce
costs, by cutting communications costs by switching to pay-as-you-go contracts with no base charges, reducing the use ofcontractors at airports and for logistics functions, and relocating excess staff to areas where demand is expected to grow in the
future.
 In the Global WiFi business, the company managed to reduce its cost of sales and SG&A expenses from a combined total of
JPY1.2bn in the peak month of February 2020 to JPY545mn in June 2020. (The February figure of JPY1.2bn represents thesum of JPY313mn in cost of sales, JPY271mn in international communications costs, and JPY572mn in SG&A expenses. The
June figure of JPY545mn represents the sum of JPY223mn in cost of sales, JPY7mn in international communications costs, andJPY314mn in SG&A expenses.) Although some of the communications costs the Global WiFi business incurs are fixed, such as SIM cards, the company
managed to get the fixed costs associated with overseas SIM cards down to around JPY4mn a month (having eliminated fixed
costs for SIM cards that were temporarily suspended). As a result, monthly international communications costs fell from
JPY271mn in February 2020 to JPY7mn in June 2020.
 In the Global WiFi business, monthly operating losses narrowed from JPY182mn in April 2020 to JPY88mn in June 2020.
Depreciation will decline going forward due to the impairment losses booked in Q2.

▷

The domestic WiFi rental business saw 1H sales set a new record high. The sales growth was aided by growing demand forcommunications in Japan as more companies moved to remote-work arrangements to ensure the health and safety of theiremployees due in part to government guidelines, as well as a pickup in use of online learning at schools in conjunction withthe rollout of the government’s GIGA school program.

Attributes of outbound customers in 1H FY12/20◤ Individuals vs. corporate users: In 1H FY12/20, individual users accounted for 67.3% of rentals (versus 65.9% in 1H FY12/19)

and corporate users 32.7% (34.1%). In terms of revenue generated, individual users accounted for 58.7% (57.1%) andcorporate users 41.3% (42.9%). In Q2 FY12/20 (April–June 2020), individual users accounted for 13.4% of rentals (versus
62.8% in Q2 FY12/19) and corporate users 86.6% (37.2%). In terms of revenue generated, in Q2 individual users accounted
for 23.0% (53.5%) and corporate users 77.0% (46.5%). In Q2, the percentage of corporate users grew both in rentals andrevenue generated.
◤ New users vs. repeat users: In 1H FY12/20, new users accounted for 46.9% of rentals (versus 53.9% in 1H FY12/19) andrepeat users 53.1% (46.1%). In terms of revenue generated, new users accounted for 49.2% (52.6%) and repeat users 50.8%(47.4%). In Q2 FY12/20 (April–June 2020), new users accounted for 21.6% of rentals (versus 56.8% in Q2 FY12/19) and

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repeat users 78.4% (43.2%). In terms of revenue generated, in Q2 new users accounted for 41.2% (55.4%) and repeat users
58.8% (44.6%). In Q2, the percentage of repeat users increased both in rentals and revenue generated.

Information and Communications Service▷

Segment sales (external sales) were JPY4.5bn (+0.2 YoY) and segment profit was JPY817mn (-1.8% YoY).

▷

The main activities in this business are for arranging landline, mobile, and broadband telecommunications services, selling andleasing office equipment, and building websites for startups and SMEs.

▷

Vision makes cross-selling and upselling proposals suited to the growth stages and needs of its key target customers (startups
and venture firms). The company worked to offset business opportunity losses caused by stay-at-home requests by shifting tovideo conferencing instead of visiting clients and gradually incorporating teleworking into its marketing activities andresponses to web-based inquiries.

▷

Amid an increase in the number of companies embracing telework, there were strong sales of cost-cutting and teleworking
merchandise driven by higher demand for mobile communications equipment and broadband. Earnings were also
underpinned by increases in SaaS products, including its Vision Workflow System (VWS) series, its JANDI social media tool forbusinesses, its “meet in” online conferencing and online sales meeting service, and its “tele receptionist” telephone answering
service. However, segment sales were up only 0.2% YoY, due to a temporary halt to new contracts and potential leasing
customer assessments for office equipment sales (the company ceased conducting customer assessments amid calls for selfrestraint).

▷

Segment profit finished down 1.8% YoY. The company managed to lower cost of sales by moving more equipment installation
and website production work in-house and curtailed non-urgent and unnecessary spending. However, this was not enough tooffset the impact of rising cost ratio caused by a growth in mobile phone sales (as purchases of products, which incur
purchasing costs, increased as a percent of sales).

Q1 FY12/20 results (out May 12, 2020)
Overview▷

Sales:

JPY6.0bn (-7.4% YoY)▷

Operating profit:

JPY448mn (-50.2% YoY)▷

Recurring profit:

JPY496mn (-49.4% YoY)▷

Net income*:

JPY116mn (-82.6% YoY)*Net income attributable to owners of the parent▷

Sales down 7.4% YoY: Sales decline 17.9% YoY in the Global WiFi business. While the COVID-19 outbreak contributed to a
sharp drop in the number of outbound and inbound rentals from mid-February, the number of domestic rentals increased on
an improvement in WiFi demand. Sales in the Information and Communications Service business increased 9.3% YoY. Crossselling and upselling remained firm. Sales were also favorable in cost-saving materials and mobile communications equipment,
including equipment used for teleworking.

▷Operating profit down 50.2% YoY: Operating profit fell 62.5% YoY in the Global WiFi business, but improved 7.3% YoY in the
Information and Communications Service business. GPM declined 4.4pp YoY to 54.3% while the SG&A-to-sales ratio rose 2.6pp
YoY to 46.2%, resulting in OPM falling 7.0% YoY to 8.1%. In the Global WiFi business, the cost ratio increased as sales fell. The
cost ratio also increased in the Information and Communications Service business, where the increase in mobile phone sales

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contributed to an increased sales ratio for products incurring purchasing costs. Despite lower SG&A expenses on the review andreduction of various costs, reduced sales resulted in the SG&A-to-sales ratio moving higher.

▷

Revision to earnings forecast: When announcing Q1 FY12/20 results on May 12, 2020, the company revised its 1H and full-year
forecasts to “undetermined” in light of the increased difficulty of reasonably forecasting operating conditions moving forward*.

▷

COVID-19 impact and countermeasures: The decrease in overseas travelers contributed to a sharp decline in the number ofrentals in the Global WiFi business. While suffering from sluggish volume in the outbound and inbound rentals business, thecompany is seeking to minimize the impact by temporarily shrinking the business and reducing costs, including by restraining
communications costs through the use of pay-as-you-go contracts and reducing airport and logistics outsourcing. The company
is also relocating excess staff to areas expected to show favorable demand going forward. Nevertheless, it appears possible thatthe impact of Japanese government’s declaration of a state of emergency on business activity could extend through and beyond
Q2 (the company’s response to the COVID-19 pandemic is detailed in the FY12/20 company forecast section).

Revised 1H FY12/20 forecast (out May 12, 2020)
Sales:

Undetermined (previous forecast was JPY15.1bn)

Operating profit:

Undetermined (JPY1.9bn)

Recurring profit:

Undetermined (JPY1.9bn)

Net income*:

Undetermined (JPY1.3bn)*Net income attributable to owners of the parent
Revised FY12/20 full-year forecast (out May 12, 2020)
Sales:

Undetermined (previous target was JPY31.4bn)

Operating profit:

Undetermined (JPY4.0bn)

Recurring profit:

Undetermined (JPY4.0bn)

Net income*:

Undetermined (JPY2.7bn)*Net income attributable to owners of the parent
Reasons for the revisions▷

When announcing its earnings forecast on February 12, 2020, Vision did not include the expected impact from the spread of COVID-19, as
uncertainty over when domestic and overseas infections would slow made it difficult for the company to reasonably calculate the impact onearnings.

▷

The company believes the spread of the COVID-19 is likely to continue to have an impact its businesses throughout FY12/20. Moreover, amid
ongoing uncertainty over when the number of infections will decline in Japan, the company believes the impact on corporate operations and thenumber of overseas travelers is likely to extend beyond FY12/20.

▷

With the goal of minimizing the impact from such an environment, the company is implementing a variety of measures, including promoting theflexible transfer of personnel, converting fixed costs to variable costs, and reducing costs. That said, the company revised its earnings forecast to“undetermined” in light of the increased difficulty of forecasting operating conditions moving forward. The company indicated that it would
announce earnings forecast once there were signs that conditions were settling and reasonable forecast could be made.

Global WiFi▷

Q1 FY12/20 segment sales were JPY3.3bn (-17.9% YoY) and segment profit was JPY326mn (-62.5% YoY).

▷

The increase in COVID-19 infections resulted in many countries, including Japan, issuing restrictions on overseas travel as well as
stay-at-home directives, which contributed to a global slump in travel-related demand. According to the Japan National Tourism
Organization (JNTO) data, the number of Japanese in Q1 travelling abroad fell 39.6% YoY, while the number of overseas visitors
to Japan fell 51.1% YoY.

▷

Amid such an environment, new applications dropped sharply in February 2020, majority of existing applications were cancelled,
and overseas subsidiaries were forced to suspend operations by local governments, all of which contributed to both sales andprofit in the business declining.

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The company is seeking to minimize the impact by temporarily shrinking the outbound and inbound rentals business andreducing costs, including by restraining communications costs through the use of pay-as-you-go contracts and reducing airportand logistics outsourcing. The company is also relocating excess staff to areas expected to show favorable demand moving
forward.

▷

On the other hand, there are an increasing number of companies heeding government requests and introducing telework inorder to ensure the safety of their employees and prevent the further spread of COVID-19. This has contributed to an increasein telecommunications-related demand in Japan and a sharp expansion in sales in the domestic WiFi rental business.

Information and Communications Service▷

Segment sales were JPY2.5bn (+9.3% YoY) and segment profit was JPY517mn (+7.3% YoY).

▷

The main activities in this business are for arranging landline, mobile, and broadband telecommunications services, selling andleasing office equipment, and building websites for startups and SMEs.

▷

Vision makes cross-selling and upselling proposals suited to the growth stages and needs of its key target customers (startups
and venture firms). The company worked to offset business opportunity losses caused by stay-at-home requests by shifting tovideo conferencing instead of visiting clients and gradually incorporating teleworking into its marketing activities and responses
to web-based inquiries.

▷

Amid an increase in the number of companies embracing telework, the business saw sales and profit improve on enhanced
mobile communications equipment and broadband demand, as well as cost reductions in line with the in-house handling of
office equipment installation work and website production, and curtailment of non-urgent and unnecessary spending.

Topics▷

Decision to sell off the ProDrivers business and the recording of impairment loss: In March 2020, the company decided to sell
off the ProDrivers business by changing the way it runs the business from employing its own chauffeurs and owning its own
vehicles, to sending customers to its tie-up partners. Vision says it has not yet transferred the business, nor has it decided towhom it will transfer the business (it says there are several interested parties). In Q1, the company recorded impairment lossesof JPY186mn associated with its decision to transfer the ProDrivers business.

▷

Stock repurchase: Based on a resolution at a Board of Directors meeting held on February 21, 2020, the company bought back
909,000 shares of its stock via market tender offer. As a result, during Q1, treasury stock increased by JPY986mn and totaled
JPY2.4bn at end-Q1.

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Income statement
Income statement(JPYmn)Sales

FY12/13

FY12/14

FY12/15

FY12/16

FY12/17

FY12/18

FY12/19

FY12/20

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

9,204

10,185

12,485

14,844

17,55521,50427,31816,654

YoY

41.0%

10.7%

22.6%

18.9%

18.3%

22.5%

27.0%

-39.0%

Cost of sales

4,005

4,533

5,575

6,221

7,394

8,854

11,628

7,861

Gross profit

5,199

5,652

6,910

8,622

10,161

12,65015,690

8,794

YoY

-

8.7%

22.3%

24.8%

17.8%

24.5%

24.0%

-44.0%

GPM

56.5%

55.5%

55.3%

58.1%

57.9%

58.8%

57.4%

52.8%

SG&A expenses

5,189

5,366

6,105

7,332

8,372

10,166

12,365

8,690

SG&A ratio

56.4%

52.7%

48.9%

49.4%

47.7%

47.3%

45.3%

52.2%

Operating profit

10

286

805

1,290

1,789

2,484

3,325

104

YoY

-

-

181.2%

60.3%

38.6%

38.9%

33.8%

-96.9%

OPM

0.1%

2.8%

6.4%

8.7%

10.2%

11.6%

12.2%

0.6%

Non-operating income

20

38

3

8

7

15

34

124

Financial income

-6

-4

-0

7

1

2

16

8

Subsidy income

33

42

48

5

4

0

67

124

Other

-7

0

-45

-4

1

14

-49

-8

30

324

808

1,298

1,795

2,500

3,359

228

YoY

-89.5%

987.9%

149.3%

60.8%

38.3%

39.3%

34.4%

-93.2%

RPM

0.3%

3.2%

6.5%

8.7%

10.2%

11.6%

12.3%

1.4%

194

70

120

-53

-41

-308

161

1,822

Recurring profit

Extraordinary gains (losses)
Income taxes
Implied tax rate

148

119

343

432

546

667

973

-239

66.3%

30.1%

36.9%

34.7%

31.1%

30.4%

27.6%

-11.6%Net income attributable to non-controlling interests

-

-

-

-

-

-4

0

-1

Net income attributable to parent company shareholders

75

275

585

814

1,209

1,529

2,226

-1,184-264.9%

112.6%

39.0%

48.5%

26.5%

45.6%

-153.2%

0.8%

2.7%

4.7%

5.5%

6.9%

7.1%

8.1%

-

YoY
Net margin

Source: Shared Research based on company data
Note: Figures may not match company numbers due to differences in rounding methods.

Since the launch of the Global WiFi business in FY12/12, sales had been expanding steadily. Earnings dipped due to launchingcosts of the Global WiFi business, but after this segment became profitable in FY12/14, profits had been expanding steadily up till
FY12/19. Consolidated OPM rose from 0.1% in FY12/13 to 12.2% in FY12/19. The Global WiFi earnings were hard hit in FY12/20
by the force majeure circumstances of the COVID-19 pandemic.
Subsidies booked as non-operating income mainly relate to subsidies from public authorities for the opening of the Vision Future
Business Center in Saga. However, the subsidies were finished in FY12/15. There have also been receipts from public authorities
relating to language training for employees, but the amount is negligible and this item is likely to shrink considerably from
FY12/16. With the start of its day care facility for employees in FY12/19, the company received subsidies totaling JPY67mn,
topping JPY40mn for the first time in four years. In FY12/20, the company took in JPY124mn in subsidies, primarily consisting of
employment adjustment subsidies.

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Balance sheet
Balance sheet

FY12/13

FY12/14

FY12/15

FY12/16

FY12/17

FY12/18

FY12/19

FY12/20

Cons.

Par.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cash and deposits

1,328

1,546

5,774

6,242

6,256

7,563

8,485

6,650

Accounts receivable

896

875

1,144

1,229

1,485

1,967

2,219

1,429

(JPYmn)ASSETS

Inventories

80

73

59

83

64

78

140

130

Other

567

303

446

602

1,228

895

1,015

725

Allowance for doubtful accounts

-36

-19

-19

-26

-38

-47

-67

-62

Total current assets

2,835

2,777

7,404

8,130

8,995

10,455

11,792

8,872

Buildings (net)

42

67

63

71

214

259

337

231

Tools, furniture and fixtures (net)

28

36

32

45

52

83

90

27

Rental assets (net)

0

126

186

325

543

650

651

37

Lease assets (net)

0

0

0

39

13

2

64

-

Total tangible assets

70

229

282

481

859

1,072

1,200

343

Software

187

206

327

423

591

563

488

162

Goodwill

132

80

-

-

-

113

178

35

319

286

327

423

591

677

667

197

Investment securities

124

206

103

518

616

566

428

303

Long-term loans receivable

20

20

48

-

-

-

28

25

Deferred tax assets

33

87

31

26

35

448

477

823

Other

302

360

355

372

410

570

616

799

Allowance for doubtful accounts

-21

-47

-22

-16

-22

-42

-35

-48

Investments and other assets

458

626

516

901

1,038

1,541

1,515

1,901

847

1,140

1,124

1,805

2,488

3,290

3,381

2,441

3,683

3,917

8,528

9,935

11,484

13,552

15,174

11,313717

Total intangible fixed assets

Total fixed assets
Total assets
LIABILITIES
Accounts payable

420

478

554

608

805

877

1,203

Short-term debt

328

313

27

10

2

-

-

-

Lease obligations

-

-

-

27

20

2

40

16

Other

1,131

1,113

1,438

1,955

2,068

2,869

2,980

1,775

1,879

1,904

2,019

2,600

2,895

3,749

4,222

2,508

Long-term debt

213

100

13

2

-

-

-

-

Lease obligations

-

-

-

21

2

-

38

31

Total current liabilities

Other
Total fixed liabilities
Total interest-bearing debt

12

14

-

-

-

0

8

5

225

113

13

23

2

0

46

36

541

413

40

60

25

2

78

46

2,104

2,017

2,032

2,623

2,897

3,749

4,268

2,544

Capital stock

300

300

2,337

2,337

2,347

2,360

2,364

2,364

Capital surplus

332

332

2,370

2,370

2,380

2,393

2,396

2,396

Retained earnings

882

1,157

1,765

2,579

3,788

5,317

7,543

6,359

Total liabilities
NET ASSETSTreasury stock
Total shareholders' equity
Valuation difference on securities
Non-controlling interests
Total net assets

-

-

-

-

-2

-311

-1,431-2,417

1,514

1,790

6,472

7,285

8,513

9,759

10,872

8,703

64

110

25

-

-

-8

-8

48

-

-

-

-

-

-

-

-

1,579

1,899

6,496

7,312

8,586

9,803

10,905

8,769
842

Working capital

555

470

649

704

745

1,167

1,156

Total interest-bearing debt

541

413

40

60

25

2

78

46

Net debt-787-1,133-5,734-6,182-6,231-7,561-8,407-6,604

Source Shared Research based on company data
Note: Figures may not match company numbers due to differences in rounding methods.

Assets
The company’s Information and Communications Service business is involved primarily in intermediary services and equipment
purchase and sales, so tangible fixed assets form a small proportion of total assets. Rental assets booked as tangible fixed assets

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are mobile WiFi routers for rent in the Global WiFi business. Previously, the entire amount was expensed when mobile WiFi
routers were rented out, but from FY12/13, in addition to being accounted for as rental assets in tangible fixed assets,
depreciation was changed to the straight-line method over two years. In FY12/15, current assets grew rapidly year-over-year. Thiswas due to an increase of JPY4.2bn in cash and deposits accompanying the issue of shares upon listing on the stock market.
Since then, the company’s growing business led to further increases in current assets extending into FY12/19, driven for the mostpart by increase in cash and deposits and trade accounts receivable. In FY12/20, current assets decreased YoY on declines in cash
and deposits and trade accounts receivable as the Global WiFi business performed poorly due to the COVID-19 pandemic.

Liabilities
Since the company began consolidated earnings reporting in FY12/13, cash and deposits have exceeded interest-bearing
liabilities (i.e., the company has been in a net cash position). Interest-bearing liabilities have consisted of lease liabilities only
since FY12/18. In FY12/15, there was a large increase in cash and deposits due to the issue of shares accompanying the stock
market listing. Meanwhile, a decline in corporate bonds and long-term borrowings meant that the net cash position grew byroughly 5x from the previous year to JPY5.7bn. In FY12/19, robust earnings contributed to net cash of JPY8.4bn. In FY12/20 as
well, in spite of the YoY declines in sales and operating profit due to the COVID-19 crisis, the company maintained ample net
cash of JPY6.6bn.

Net assets
The share of valuation and translation adjustments in net assets is negligible, with shareholders’ equity the main component.
Shareholders’ equity has been rising due to accumulated retained earnings. The dramatic increase in net assets in FY12/15 wasdue to the issuance of new shares accompanying Vision’s stock market listing in December 2015. As a result of this fundraising,capital and capital reserves rose by JPY2.0bn each as of end December 2015.
The funds raised were earmarked for investments related to the overseas expansion of the Global WiFi business, development
expenses for databases and business systems, training of new recruits, debt repayments and working capital to support businessexpansion and to accelerate business growth. As of the end of FY12/19 net assets were up to JPY10.9bn, thanks in large part toadditions to internal reserves and the resulting increase in shareholders equity. Net assets as of end-FY12/20 shrank to JPY8.8bn
due to the recording of impairment losses and the repurchase of stock.

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Cash flow statement
Cash flow statement(JPYmn)Cash flows from operating activities (1)Cash flows from investing activities (2)Free cash flow (1+2)
Cash flows from financing activities
Depreciation and amortization (A)Capital expenditures (B)Working capital changes (C)Simple FCF (NI + A - B - C)FY12/13
Cons.
317
83
400
26
107
-100
555
-273

FY12/14
Cons.
553
-312
241
-128
137
-251
-85
749

FY12/15
Cons.
799
-629
170
3,667
179
-408
179
994

FY12/16
Cons.
1,493
-473
1,020
-38
318
-572
55
1,649

FY12/17Cons.
1,617-1,416201-8479-1,25341
2,899

FY12/18Cons.
2,889-1,458
1,431
-312
850
-863
422
2,821

FY12/19Cons.
3,550-1,436
2,114-1,165
1,089-1,323-10
4,648

FY12/20
Cons.
-396
-375
-771
-1,036
532
-390
-314
52

Source: Shared Research based on company data
Note: Figures may not match company numbers due to differences in rounding methods.

Cash flows from operating activities
The main components of operating cash flows are net income and depreciation. Operating cash flows had been on a rising trend
through FY12/19 due to growth in net income and increased depreciation expenses on growing tangible fixed assets. In FY12/20,
however, operating activities resulted in a net cash outflow of JPY396mn as the COVID-19 pandemic took a toll on the Global
WiFi business.

Cash flows from investing activities
The main elements affecting investing cash flows are the purchase of tangible fixed assets and inflows to term deposits. In
FY12/14 and FY12/15, investing cash flows were negative (outflows) due to the acquisition of fixed assets in the Global WiFi
business and term deposits. In FY12/16, despite revenue (JPY486mn) from funds recouped from term deposits, investing cash
flows were negative due to cash outlays to acquire fixed assets and marketable securities. In three fiscal years from FY12/17 to
FY12/19, investing activities (including the acquisition of fixed assets, purchases of investment securities) resulted in net outflows
of more than JPY1.4bn.

Cash flows from financing activities
The key element in financing cash flows is increases and decreases in interest-bearing liabilities. In FY12/14, financing cash flows
were negative (outflows), primarily due to the repayment of long-term loans and redemption of corporate bonds. In FY12/15,
the company repaid long-term loans, but the issue of shares raised JPY4.1bn, so financing cash flows were positive (inflows).
Note that as of the end of FY12/15, the shareholders’ equity ratio had risen to 76.2% (from 48.5% previous year) due tofundraising. In FY12/16, though the shortfall was narrow due to the repayment of short and long-term loans (outflows), it turned
negative. In FY12/17, outflows widened modestly, reflecting the exercise of stock options and proceeds from issuance ofsubscription rights to shares, alongside repayments of long-term loans, repayments of lease obligations, and listing related costs.
In FY12/19 and FY12/20, financing activities resulted in a net outflow of more than JPY1.0bn, most of which went to sharebuybacks.

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Other information
History
June 1995

Current CEO Sano established Vision LLC, the backbone of the company

April 1996

Vision Co., Ltd. founded to act as an agency for international telephone subscription

December 2001

Established subsidiary Vision Business Solutions Inc. to sell office equipment

December 2003

Started Internet advertising business (Internet media business)

November 2004

Vision Business Solutions Inc. merged with Vision Co., Ltd. and trade name changed to Vision Inc.

February 2007

Started corporate cellphone business

January 2008

Established Members Net Inc., a subsidiary (now consolidated subsidiary)

July 2008

Established Best Communications (now consolidated subsidiary Best Link Inc.)
Started agency service for broadband subscription

January 2010

Started “e-ca” mobile WiFi router rental service for inbound business travelers and tourists

June 2011

Started “Vision WiMAX” high-capacity mobile WiFi router rental service for domestic business travelers and inboundtourists

July 2011

Opened helpdesk/call center Saga Vision Future Business Center (VFBC) in Saga city, Saga

February 2012

Started “GLOBAL WiFi®” mobile WiFi router rental service for overseas travelers

December 2012

Started “WIFI-HIRE” short-term rental service for inbound business travelers and tourists

October 2013

Transferred consumer broadband business from Best Link

December 2013

Started MVNO (mobile virtual network operator) business for inbound business travelers and tourists

March 2015

Started “NINJA WiFi®” rental service for inbound business travelers and tourists (merged with WI-FI HIRE)

December 2015

Listed on Tokyo Stock Exchange Mothers Index

December 2016

Moved to the First Section of the Tokyo Stock Exchange

February 2018

Established subsidiary Alpha Techno Inc. in Shinjuku-ku, Tokyo

March 2018

Established subsidiary BOS Inc. in Shinjuku-ku, Tokyo

May 2018

Established Vision Ad Inc. (joint venture with Wiz Co., Ltd.) in Shinjuku-ku, Tokyo

August 2019

Made ProDrivers Inc. a subsidiary

March 2020

Established subsidiary Vision Digital Marketing Inc. (currently a consolidated subsidiary)

Source: Shared Research based on company data

News and topics
October 2020
On October 6, 2020, the company announced the transfer of HORIZON WiFi businesses to its subsidiary Vision Taiwan.
Vision Taiwan (Vision Mobile Taiwan Inc.), a subsidiary of the company, acquired the Wi-Fi rental and prepaid SIM sales
businesses of HORIZON WiFi (HORIZON International Enterprises, head office: Taiwan).

Background of the business transfer▷

The company started offering Global WiFi®, its Wi-Fi router rental service for overseas use, in 2012, and in the same year
established Vision Taiwan (Vision Mobile Taiwan Inc.) as an overseas subsidiary. The subsidiary provides rental mobile Wi-Fi
routers for use all over the world, mainly to travelers from Taiwan to Japan. HORIZON WiFi, meanwhile, was established in
March 2013 in accordance with the provisions of the Companies Act of the People’s Republic of China, and mainly provides

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rental Wi-Fi routers for use in Japan, South Korea, Europe, the US, and Southeast Asia, along with selling SIM cards. It occupies
the top position in Taiwan in terms of sales among peers in the industry.

▷

The company expects this business transfer to contribute to business growth and corporate development due to Vision Taiwan
further expanding services and sales through the operation of HORIZON WiFi.

July 2020
On July 31, 2020, the company announced that it had entered a business alliance with Chuco Co., Ltd.

Background for the alliance▷

Vision Web Service (VWS) is a business management tool developed by Vision and provided mainly to startup companies.
VWS provides users with all-in-one functions, including employee attendance management, internal company calendar
sharing, internal document approval, and expense calculation.

▷

In addition, with the COVID-19 pandemic stimulating demand for faster business playback speeds and requiring significant
changes in the way business negotiations and meeting are conducted, the company has expanded sales of its JANDI social
media tool for businesses as a specialized communication tool for companies that enables smooth communication while
teleworking or working remotely.

▷

Chuco is a general advertising company that began publishing and distributing to households its Happy Media® local lifestylemagazines in 1994, with the first edition distributed in Kani, Gifu Prefecture. With the cooperation of VC* member companies,
it publishes and distributes these local magazines in all of Japan’s prefectures. Seeking to publish magazines that are directly
distributed to every home and provide local information and peace of mind for all generations and achieve a high response
from readers, Chuco’s magazines feature advertisements and sales promotions with close links to the local communities being
served. Chuco aims to become a global company by developing and operating local businesses together with local residents
and companies and expanding them nationwide.

▷

Through tie-ups, user referrals, and other joint efforts, the two companies will support the dissemination of various information
throughout the community being served and comprehensively support optimal information and communication-related
products and services, contributing to the further expansion of sales and services. At the same time, the two companies expect
this alliance will contribute to business growth and corporate development.

▷

Vision and Chuco decided to form this business alliance with the objective of contributing to the digital transformation of local
communities by combining their advertising, media, and information service businesses that are closely tied to local
communities.

VC contract refers to a voluntary chain contract. Under this contract, Chuco publishes a free information magazine distributed to households under its
Happy Media® trademark. The contract recognizes the freedom of Chuco and affiliate companies, and entitles Chuco to receive a trademark usage fee
and a publishing site (C-side) usage fee from VC affiliate companies.

June 2020
On June 16, 2020, the company announced that Osaka Prefecture had decided to use mobile WiFi routers provided by thecompany as part of its online schooling program.

▷To prepare for a second or third wave of COVID-19, Osaka Prefecture has committed itself to equipping its public high schools
and other schools for online teaching by the end of June. As part of that effort, it solicited companies to provide mobile routers
for loan to households that do not have telecommunications environments set up. Of the 20 companies who responded,

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Vision was selected. The deal consists of the purchase of 3,300 mobile routers equipped for 30 days of internet
communications traffic (20GB).

▷

Vision has experience providing mobile WiFi routers to universities and vocational schools, and it has determined to engage inthe spread of online education as a provider of mobile WiFi routers.

▷

The emergency economic measures that the government has compiled in response to COVID-19 include the fast-tracked
implementation of the “GIGA School” concept, and the government announced the acceleration of infrastructure such as “onedevice for every student” and installing the communications environments required for at-home online learning (see“Guarantee of learning based on acceleration of the GIGA School concept”).

▷

Vision has experience collaborating with regional municipalities to provide rental mobile WiFi routers as part of the efforts tomeet inbound demand with proper internet communications environments for foreign tourists visiting Japan. Going forward,
the company says that, by providing solutions to society’s challenges, it will contribute to the development of a sustainable
society as well as contribute to the world’s information communication industry revolution.

Major shareholders (as of December 31, 2020)
Top shareholders
Kenichi Sano
The Master Trust Bank of Japan, Ltd. (Trust account)
Custody Bank of Japan, Ltd. (Trust account)Northern Trust Co. (AVFC) Re HROO
(Standing proxy: The Hongkong and Shanghai Banking Corporation, Ltd. Tokyo Branch)
Goldman Sachs International(Standing proxy: Goldman Sachs Securities Co., Ltd.)
Government of Norway(Standing proxy: Citibank N.A. Tokyo Branch)
State Street Bank and Trust Company 505001(Standing proxy: Mizuho Bank, Ltd. Settlement Department)
BNY GCM Client Account JPRD AC ISG (FE-AC)(Standing proxy: MUFG Bank, Ltd.)The Nomura Trust and Banking Co., Ltd. (Trust account)
CGML PB Client Account/Collateral(Standing proxy: Citibank N.A. Tokyo Branch)
SUM

Shares held('000)
12,377
4,025
3,474

Shareholding
ratio
26.29%
8.55%
7.38%

1,323

2.81%

1,252

2.66%

1,197

2.54%

1,155

2.45%

1,052

2.23%

1,050

2.23%

991

2.11%

27,89959.26%

Source: Shared Research based on Bloomberg and company data

Shareholder returns
The company is currently prioritizing strengthening its balance sheet and growing the business as it thinks that further
improvement of corporate value will generate the most returns for shareholders. As a result, it has not paid a dividend yet but
recognizes shareholder returns as a key management priority. The company intends to enact a stable and continuous program of
returning profits to shareholders while retaining enough internal reserves to strengthen its financial structure and grow thebusiness, with due consideration to the operating environment. Per the company, the possibility of paying a dividend andpotential timing is still undetermined.

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Corporate governance and top management
Top management
CEO Kenichi Sano (born in 1969) joined Hikari Tsushin (TSE1: 9435) in 1990 after graduating from Kagoshima Commercial HighSchool. He became a leading salesperson and after heading the key sales division founded Vision LLC as CEO in 1995. The
company was reorganized to its current status as Vision Co., Ltd. in 1996.
Corporate governance system (as of March 31, 2021)
Organization and capital structure
Controlling interests

None

Parent company ticker-

Directors
Organizational typeCompany with Audit & Supervisory Board

Number of directors under Articles of Incorporation

8

Directors' terms under Articles of Incorporation

2 years

Number of directors

6

Number of independent outside directors

3

Voluntary committee equivalent to Nomination Committee or Compensation Committee

None

Number of Audit & Supervisory Board members under Articles of Incorporation

4

Number of Audit & Supervisory Board members

4

Number of independent outside members of Audit & Supervisory Board

4

Independent officers (outside directors and Audit & Supervisory Board members)

7

Other
Participation in electronic voting platform

None

Disclosure of directors' compensation

No disclosure on individual remuneration

Disclosure of executive officers' compensation

None

Policy on determining amount of compensation and calculation methodology

In place

Corporate takeover defenses

None

Source: Shared Research based on company data

Employees
Employees by segment

Employee countFY12/12Par.

FY12/13Cons.

FY12/14Cons.

FY12/15Cons.

FY12/16Cons.

FY12/17Cons.

FY12/18Cons.

FY12/19Cons.

FY12/20Cons.

229 (88)

325 (153)

356 (164)388 (149)

452 (139)

497 (136)

563 (145)

649 (146)

616 (120)

Employees by segment
GLOBAL WiFi Service--

117 (72)

116 (72)

164 (74)

202 (73)220 (75)

237 (74)215 (52)

Information and Communications Service--

196 (74)

198 (73)

196 (62)202 (59)

231 (66)259 (68)281 (65)

Other

-

-

5 (-)

5 (-)

3 (-)

13 (1)

22 (1)

58 (-)

24 (-)

Company-wide--

62 (4)

69 (4)

89 (3)

80 (3)

90 (3)

95 (4)

96 (3)

Source: Shared Research based on company data
Note: Numbers in brackets are average number of temporary employees.

Employees (unconsolidated, as of December 31, 2020)

Employee countAvg. age

Avg. years of service

Avg. annual salary (JPY'000)

535 (109)

33.0

6.3

4,896

Source: Shared Research based on company data
Note: Numbers in brackets are average number of temporary employees.

By the way
The company name, VISION, was chosen for a sense of being future-oriented, and easy to remember. It also ties in with thecompany’s current corporate slogan: More vision, More success.

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ProfileCompany
VISION INC.

Head office
5F Shinjuku i-Land Tower,
6-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo

Phone

Listed on+81-3-5325-0344

Tokyo Stock Exchange First Section

EstablishedExchange listing

December 4, 2001

December 21, 2015

WebsiteFinancial year-end

https://www.vision-net.co.jp/en/

December

IR Contact

IR Web

-

-

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MATSUI SECURITIES CO., LTD.

Seikagaku Corporation

AnGes Inc.

FIELDS CORPORATIONMedia Do Co., Ltd.

Seria Co.,Ltd.

Anicom Holdings, Inc.

Financial Products Group Co., Ltd.

Medical System Network Co., Ltd.

Serverworks Co.,Ltd.

Anritsu Corporation

First Brothers Co., Ltd.

MEDINET Co., Ltd.

SHIFT Inc.

Apaman Co., Ltd.

FreeBit Co., Ltd.

MedPeer,Inc.

Shikigaku Co., Ltd.

ARATA CORPORATION

Gamecard-Joyco Holdings, Inc.

Mercuria Holdings Co., Ltd.

SHIP HEALTHCARE HOLDINGS, INC.

Artspark Holdings Inc.

GameWith, Inc.

Metaps Inc.

SIGMAXYZ Inc.

AS ONE CORPORATIONGCA Corporation

Micronics Japan Co., Ltd.

SMS Co., Ltd.

Ateam Inc.

Good Com Asset Co., Ltd.

MIRAIT Holdings Corporation

Snow Peak, Inc.

Aucfan Co., Ltd.

Grandy House Corporation

Monex Goup Inc.

Solasia Pharma K.K.

AVANT CORPORATIONGiG Works Inc.

MORINAGA MILK INDUSTRY CO., LTD.

SOURCENEXT Corporation

Axell Corporation

Hakuto Co., Ltd.

Mortgage Service Japan Limited.

Space Value Holdings Co., Ltd.

Azbil Corporation

Hamee Corp.

MRT Inc.

Star Mica Holdings Co., Ltd.

AZoom, Co., Ltd.

Happinet Corporation

NAGASE & CO., LTD

Strike Co., Ltd.

Base Co., Ltd

Harmonic Drive Systems Inc.

NAIGAI TRANS LINE LTD.

Sunnexta Group Inc.

BEENOS Inc.

HENNGE K.K.

NanoCarrier Co., Ltd.

SymBio Pharmaceuticals Limited

Bell-Park Co., Ltd.

Hosokawa Micron Corporation

NEC Networks & System Integration Corporation

Synchro Food Co., Ltd.
TAIYO HOLDINGS CO., LTD.

Benefit One Inc.

Hope, Inc.

Net Marketing Co., Ltd.

B-lot Co.,Ltd.

HOUSEDO Co., Ltd.

Net One Systems Co.,Ltd.

Takashimaya Company, Limited

Broadleaf Co., Ltd.

H2O Retailing Corporation

Nichi-Iko Pharmaceutical Co., Ltd.

Take and Give Needs Co., Ltd.

CanBas Co., Ltd.

IDOM Inc.

NIHON CHOUZAI Co.,Ltd.

TEAR Corporation

Canon Marketing Japan Inc.

IGNIS LTD.

Nihon Denkei Co., Ltd.

Tenpo Innovation Inc.

Career Design Center Co., Ltd.

i-mobile Co.,Ltd.

Nippon Commercial Development Co., Ltd.

3-D Matrix, Ltd.

Carna Biosciences, Inc.

Inabata & Co., Ltd.

Nippon Koei Co., Ltd.

The Hokkoku Bank,Ltd.

CARTA HOLDINGS, INC

Infocom Corporation

NIPPON PARKING DEVELOPMENT Co., Ltd.

TKC Corporation

CERES INC.

Infomart Corporation

NIPRO CORPORATIONTKP Corporation

Chiyoda Co., Ltd.

Intelligent Wave, Inc.

Nisshinbo Holdings Inc.

Tsuzuki Denki Co., Ltd.

Chori Co., Ltd.

ipet Holdings CO., Ltd.

Nisso Corporation

TOCALO Co., Ltd.

Chugoku Marine Paints, Ltd.

Itochu Enex Co., Ltd.

NS TOOL CO., LTD.

TOKAI Holdings Corporation

cocokara fine Inc.

ItoKuro Inc.

OLBA HEALTHCARE HOLDINGS,Inc.

Tokyu Construction Co., Ltd.

COMSYS Holdings Corporation

JAFCO Co.,Ltd.

OHIZUMI MFG. CO., LTD.

TOYOBO CO., LTD.

COTA CO.,LTD.

JMDC Inc.

Oisix ra daichi Inc.

Toyo Ink SC Holdings Co., Ltd.

CRE, Inc.

JSB Co., Ltd.

Oki Electric Industry Co., Ltd.

Toyo Tanso Co., Ltd.

CREEK & RIVER Co., Ltd.

JTEC Corporation

ONO SOKKI Co., Ltd.

Tri-Stage Inc.

Daiichi Kigenso Kagaku Kogyo Co., Ltd.

J Trust Co., Ltd

ONWARD HOLDINGS CO.,LTD.

TSURUHA Holdings

Daiki Axis Co.,Ltd.

Japan Best Rescue System Co., Ltd.

Pan Pacific International Holdings Corporation

VISION INC.

Daiseki Co., Ltd.

JINS HOLDINGS Inc.

PARIS MIKI HOLDINGS Inc.

VISIONARY HOLDINGS CO., LTD.

Daiwabo Holdings Co.,Ltd.

JP-HOLDINGS, INC.

PCA CORPORATION

V-cube,Inc.

Demae-Can CO., LTD.

KAMEDA SEIKA CO., LTD.

PIGEON CORPORATIONWorld Holdings Co., Ltd.

DIC Corporation

Kanamic Network Co., LTD.

P3, inc.

WOW WORLD Inc.

Digital Arts Inc.

KANEMATSU CORPORATIONQB Net Holdings Co., Ltd.

YELLOW HAT LTD.

Digital Garage Inc.

kaonavi, inc.

RACCOON HOLDINGS, Inc.

YOSHINOYA HOLDINGS CO., LTD.
ZAPPALLAS, INC.

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