First full-year profit since listing; structural reforms through AI-driven server cost optimization and addition of 10+ new payment brands lay the foundation for growth from FY2027 onward

Summary

FY12/2025 marked the company's first full-year profit since listing, with operating income of JPY 293M and recurring profit of JPY 443M both exceeding guidance. GPV surpassed JPY 2.1T (+33.2% YoY), driving payment-related revenue growth of +30.0%, while AI-driven server cost containment and lower personnel cost ratios boosted profitability. The CFO characterized FY2025 as "the year structural reforms bore fruit," with FY2026 targeting 20% growth in both GPV and revenue alongside operating income expansion to JPY 500M. Management also signaled an acceleration of initiatives in new domains including stablecoins, off-app game payments, and non-face-to-face payments.

Key Takeaways (Earnings Highlights And Growth Actions)

• Business Strategy And Market Outlook
  • FY2026 is positioned as a "transition to profitable growth," with the focus shifting from maintaining profitability to expanding it
  • The impact of declining Chinese inbound traffic is limited at just ▲1.2% of total GPV, with domestic demand growth more than offsetting the shortfall
  • Management expects fewer large-scale replacement deals in the market in FY2026 compared to FY2025, suggesting a bigger pipeline building for FY2027–2028
  • Japan's cashless penetration stood at 42.8% in 2024 versus METI's revised 2030 target of 65%, implying ample runway for continued growth
• Near-Term Business Progress And Key Drivers
  • While GPV grew +33%, USD-denominated server costs remained nearly flat in absolute terms, underscoring significant cost structure improvement through AI
  • The 4Q Gross Profit Margin decline to 71.3% was a temporary effect from a large terminal sale (several thousand units)
  • Payment-related revenue (excluding terminal sales) now accounts for 81.8% of total revenue, cementing a fee-income-centric earnings structure
• Strategic Initiatives And Inflection Points
  • Established subsidiary StarPay-Entertainment to enter the off-app game payment market, leveraging Japan's new smartphone legislation
  • Launched a USDC in-store payment proof-of-concept at Haneda Airport; management noted transaction volumes exceeded expectations
  • Announced the addition of 10+ new payment brands in FY2026, diversifying across both Web2 and Web3
  • Launched at Expo 2025 as the sole switcher for JPQR Global, with integrations already live in Indonesia and Cambodia

Outlook And Strategy

• FY12/2026 guidance calls for revenue of JPY 5,760M (+20.3%), operating income of JPY 500M (+70.8%), and recurring profit of JPY 707M (+59.7%)
• POS modification costs related to a future large client acquisition are expected to be booked in 1Q, with revenue contributions spanning from this fiscal year into FY2027 onward
• The 2030 vision targets GPV exceeding JPY 6T, total revenue exceeding JPY 12B, and OPM above 25%
• Targeting "first-in-Japan" entry into underpenetrated cashless verticals including healthcare, insurance, real estate, and education
• Stablecoins are positioned as a medium- to long-term growth driver rather than a FY2026 P&L assumption, reflecting management's ambition to evolve from payments into broader financial services
• No dividend planned for FY12/2026, with continued prioritization of growth investment

Positive Factors

• GPV 7-year CAGR of +162% continues to trend upward, with churn rates remaining low and stable
• Gross Profit Margin of 76.6% ranks at the top among major PSP peers, and revenue growth of 22.7% is also industry-leading
• AI deployment enabled flat server costs despite +33% GPV growth, demonstrating strong scalability
• In a rising rate environment, interest income is increasing from JPY 142M to JPY 216M (forecast), with GPV-linked escrow balances contributing to recurring profit
• ~700K onboarded accounts and the largest QR brand coverage in Japan provide a significant competitive moat
• Qatar merchant count exceeded 3,000 (+112.2%), with overseas operations reaching an early buildout stage

Concerns / Risks

• Declining Chinese inbound traffic impacts total GPV by ▲1.2%; however, cross-border QR fee rates are roughly double domestic rates, so the revenue impact is disproportionately larger than the GPV hit
• FY2026 COGS are expected to rise +41.7%, compressing Gross Profit Margin to the low-70% range, weighed by new domain development costs
• DX/mini-app revenue has trended below plan for two consecutive years, declining ▲12.1% YoY in FY2025
• FY2025 net income of JPY 485M includes a one-time uplift from deferred tax asset recognition; the statutory effective tax rate will apply from FY2026 onward
• Retained earnings remain in deficit, raising the risk of a prolonged no-dividend policy
• Macro/geopolitical risks (FX, Japan-China relations, etc.) could impact server costs and inbound revenue

Key Financial Highlights

FY12/2025 revenue came in at JPY 4,788M (+22.7% YoY), achieving the first full-year profit since listing with operating income swinging to JPY 293M (vs. ▲JPY 84M in the prior year). GPV reached a record JPY 2.1228T, with payment-related revenue growth of +30.0% driving the top line.

• GPV (Gross Payment Volume): JPY 2.1228T (+33.2% YoY)
• Gross Profit Margin: 76.6% (+0.3pt YoY)