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.

• Profit attributable to shareholders fell 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.

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

• 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.

Financial highlights

• Operating profit decreased 10.8% year-over-year to US$92.9 million; operating margin slipped to 9.4%.

• Net profit margin declined to 7.5% from 8.0% year-over-year.

• Basic earnings per share dropped 14.7% to US29.5 cents.

• Total operating expenses fell to US$224.0 million, but increased as a percentage of revenue to 22.6%.

• Research and development expenses decreased 9.8% to US$41.4 million.

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 anticipated to remain stable year-over-year.

• ELPs revenue expected to rebound in the US and continue growing in Europe in the second half; Asia Pacific sales to decline slightly.

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

• CMS revenue projected to decrease for the full year due to weak global sentiment and US tariff volatility; expansion planned in Malaysia.