Vtech (303) Q2 2026 earnings summary

Executive summary

• Revenue for the six months ended 30 September 2025 declined 9.0% year-over-year to US$991.1 million, with decreases across all regions and product lines except for some growth in European ELPs and TEL products.

• Gross profit margin improved to 31.9% from 31.5%, driven by lower material costs, favorable product mix, and currency effects, despite higher tariffs and labor costs.

• Operating profit dropped 10.8% to US$92.9 million, and net profit attributable to shareholders decreased 14.5% to US$74.7 million, mainly due to lower revenue, higher operating expenses as a percentage of revenue, and a higher effective tax rate.

• Basic EPS declined 14.7% to US29.5 cents; interim dividend declared at US17.0 cents per share, unchanged from the prior year.

• Strong financial position maintained, with no bank borrowings and US$147.9 million in cash as of 30 September 2025.

Financial highlights

• Gross profit fell 8.1% to US$315.8 million, while gross margin rose to 31.9% from 31.5% year-over-year.

• Operating profit margin decreased to 9.4% from 9.6% due to higher operating expenses as a percentage of revenue.

• Net profit margin fell to 7.5% from 8.0%, impacted by a higher effective tax rate from BEPS Pillar 2 rules.

• Basic EPS dropped to US29.5 cents from US34.6 cents.

• Net cash balance as of 30 September 2025 was US$147.9 million, down from US$335.6 million at 31 March 2025.

Outlook and guidance

• Full-year revenue is forecast to decline, but second-half sales are expected to improve, especially for ELPs and TEL products.

• Gross profit margin for FY2026 is expected to remain stable year-over-year.

• ELPs revenue is projected to rebound in the US and continue growing in Europe in the second half, though full-year sales will be lower than last year.

• TEL products are set for full-year growth, led by new launches and expanded product lines in Europe and the US.

• CMS revenue is forecast to decrease for the full year, with several product categories expected to remain in decline; expansion of manufacturing capacity in Malaysia is underway, with a new building to be completed by mid-2027.