Digital Garage, Inc.

Business Details

This segment centers on a payment processing service that provides all forms of electronic payment methods—credit card payments, QR code payments, convenience store payments, etc.—for e-commerce and brick-and-mortar merchants. In addition to expanding payment-related services for merchants (fraud detection, EC marketing tools, etc.), the segment offers digital marketing and CRM solutions for financial institutions such as credit card companies, and is advancing the construction of an ecosystem specialized in the financial fintech domain. Under the group strategy "DG FinTech Shift," the segment is promoting the development of a structure to comprehensively support the entire value chain of commerce operators.

Recent Overview

Payment transaction volume expanded 21.1% year on year to ¥9.1 trillion, driven by the operation of large-scale projects for the KDDI Group, among other factors

In FY2026 (ending March 2026), in addition to the growth of the common QR code payment solution "Cloud Pay," contributions from the operation of large-scale projects for the KDDI Group and other factors expanded payment transaction volume by 21.1% year on year to ¥9.1 trillion. Segment revenue was ¥25,193 million (up ¥2,549 million, or 11.3%, year on year), and profit before tax was ¥9,074 million (up ¥317 million, or 3.6%, year on year). Additionally, part of the Financial Marketing Business was transferred to the Payment Business due to a change in business management classification. Note that the earnings forecast for FY2027 (ending March 2027) has not been disclosed because the new medium-term management plan is still under formulation.

Key Products

Growth Drivers

• Sustained growth in payment transaction volume through the expansion of QR code payments (Cloud Pay) and the promotion of collaboration with strategic partners
• Revenue contribution from the operation and expansion of large-scale strategic partner projects such as those for the KDDI Group
• Strengthening and expansion of payment-related businesses such as EC marketing support and fraud detection solutions (DG FinTech Shift strategy)
• Structural tailwind from the rising cashless payment ratio in Japan (market expansion toward the government's 80% target)
• Expansion of the financial fintech ecosystem through strengthened collaboration with digital marketing and CRM solutions for financial institutions
• Growth in face-to-face payment transaction volume accompanying the increase in inbound visitors to Japan

Risks

• Risk of slowing growth in payment transaction volume: if the progress of cashless adoption falls short of expectations, revenue growth may slow
• Risk of intensifying competition: downward pressure on fee rates due to intensifying competition with domestic and overseas payment providers and fintech companies
• System failure/security risk: impact on merchants and consumers and loss of trust due to payment infrastructure failures or unauthorized access
• Regulatory risk: increased business operating costs due to changes in laws and regulations such as the Payment Services Act and the Installment Sales Act
• Risk of non-disclosure of earnings forecasts: segment earnings forecasts are not disclosed due to the new medium-term management plan being under formulation, making it difficult for investors to form earnings outlooks
• Limits to profitability improvement: the rate of increase in profit before tax (up 3.6%) is lower than the rate of increase in revenue (up 11.3%), with downward pressure on profit margins from increased SG&A expenses (¥23,492 million, versus ¥21,643 million in the prior period)