GPV Missed Plan but Revenue Grew +26.6% YoY with a Swing to Operating Profitability, Underpinned by Cost Efficiency Gains Including AI Adoption

Summary

In 1Q FY12/2026, the company posted revenue of JPY 1,331M (+26.6% YoY) and operating income of JPY 116M, achieving a quarterly swing to profitability. GPV of JPY 549.7B marked a 1Q all-time high but came in at -3.1% vs. plan, reflecting weakened consumer spending at retail chains and gas stations. On the call, management discussed multiple growth initiatives not covered in the earnings release, including the launch of an early settlement service leveraging a JPY 6B credit facility, stronger-than-expected self-checkout terminal shipments, multi-chain expansion of stablecoin payments, and the start of a proof-of-concept for a healthcare-sector-specific product. Full-year guidance was maintained.

Key Points (Earnings Highlights and Growth Actions)

• Management Strategy and Market View
  • The primary driver of the GPV shortfall was a slowdown in same-store GPV growth at retail chains and gas stations amid rising prices and higher crude oil costs
  • Management noted that price inflation per se (higher transaction values) is a positive under a stable take-rate assumption
  • The decline in Chinese inbound traffic was already factored in; diversification is being pursued through connections to overseas Pay brands not yet available in Japan
• Near-Term Business Progress and Drivers
  • The operating income beat vs. plan (+JPY 82M) was driven by the deferral of POS system renovation costs into 2Q, as well as structural containment of server and development costs through AI adoption
  • Self-checkout terminals expanded into university cafeterias, fitness gyms, and other venues, contributing to the DX/mini-app revenue beat vs. plan
  • Terminal sales continued to benefit from large-lot orders for a specific industry carried over from 4Q, with the revenue mix expanding to 16.1%
• Strategically Important Initiatives and Inflection Points
  • Signed a JPY 6B overdraft facility agreement with Sumitomo Mitsui Banking Corporation, securing seed capital for the early settlement service
  • Stablecoin payments are progressing beyond the Haneda Airport PoC and SMB pilots toward commercial launch at multiple merchants
  • Co-developing a medical accounts receivable solution with Daisybell Japan and JIMCA, with proof-of-concept deployment planned from May onward

Outlook and Strategy

• Full-year guidance maintained: revenue JPY 5,760M, operating income JPY 500M, GPV JPY 2,547.4B
• The early settlement service will initially target SMB merchants; revenue will be captured through a multi-layered take-rate structure
• Over 10 additional payment brands are planned for integration during the current fiscal year, with development on track; overseas Pay brands not yet in Japan will be rolled out on a staggered basis
• Under the StarPay-X initiative, multi-chain development has commenced with Aptos, Circle Gateway, and others, targeting dual-currency connectivity for USDC and a JPY-denominated stablecoin
• Healthcare, real estate, and education are positioned as priority verticals, with lateral expansion to be accelerated through partnerships with sector-specific players
• The 2030 vision targets consolidated revenue exceeding JPY 12B and an OPM above 25%; growth investment remains the priority, with no dividend planned for the current fiscal year

Positive Factors

• AI adoption enabled flat USD-denominated server costs despite a +33% increase in GPV; AI is also being deployed across internal systems including sales operations
• Gross profit margin of 72.7% remains best-in-class among major PSPs
• Interest income of JPY 46M (+18% YoY), with further upside as BOJ rate hikes flow through to deposit rates
• Payment processing success rate of 99.999% and TPS capacity of 800 on a cloud-native platform, ensuring scalability
• External sales of non-payment AI services have begun, including VoxAI Agent deployment at Aeon Delight Connect
• Japan's cashless penetration stands at 46.3% (2025), with significant room for market expansion toward the 2030 target of 65%

Concerns and Risks

• GPV came in -3.1% vs. plan; consumer spending trends at retail chains and gas stations warrant continued monitoring from 2Q onward
• The deferral of POS renovation costs into 2Q means 2Q operating income is guided at JPY 106M, implying a QoQ decline from 1Q
• Gross profit margin has been trending down from 76.9% to 72.7% as the terminal sales mix rises
• The early settlement service utilizes a credit facility, making credit assessment, collection, and fraud prevention operational frameworks a key checkpoint
• Stablecoin and Web3-related initiatives still face regulatory uncertainty, with the timing of revenue contribution yet to be determined
• The no-dividend policy continues into FY12/2026 as growth investment remains the priority

Performance Highlights

Consolidated revenue in 1Q FY12/2026 was JPY 1,331M (+26.6% YoY), driven by payment-related revenue of JPY 1,192M. Operating income swung from a loss of JPY 2M in the prior-year period to JPY 116M. Recurring profit was JPY 161M and net income was JPY 137M, with profitability achieved across all line items. GPV of JPY 549.7B was a 1Q record high but -3.1% vs. plan.

Revenue By Service

• Gross Payment Volume (GPV): JPY 549.7B (+17.6% YoY, -3.1% vs. plan)
• Gross Profit Margin: 72.7% (76.9% in prior-year period)
• Operating Income: JPY 116M (+JPY 118M YoY, +JPY 82M vs. plan)
• Recurring Profit: JPY 161M (+JPY 109M YoY, +JPY 84M vs. plan)
• Interest Income: JPY 46M (JPY 39M in prior-year period)
• Active Merchant Accounts: ~700K
• QR Brand Coverage: Among the largest in Japan (40+ QR brands, 6 credit card brands, 7+ e-money brands)