Summary
Having achieved quarterly profitability every quarter since 2Q last year—including its first-ever operating profit in a Q1—Net Stars' key checkpoint in 2Q is the continuation of revenue growth (accounting for seasonality) and stability of profit levels. GPV growth of +17.6% YoY has been underpinned by Japan's domestic cashless penetration reaching 58.0% and expanding inbound tourism demand; whether these growth drivers persist into 2Q is critical. Additionally, the series of strategic partnerships around the "StarPay-X" Web3 payments initiative announced since Q1 warrants attention—specifically whether these begin translating into tangible revenue contributions. The consolidation impact of new subsidiary StarPay-Entertainment and the ramp-up of early settlement services for merchants leveraging a JPY 6B overdraft facility are also essential topics for gauging the platform's value-add enhancement as a payment infrastructure provider.
Key Points for Next Quarter
| Key Points & Focus | Implications |
|---|---|
Revenue GrowthH1 cumulative revenue progress vs. full-year guidance of JPY 5,760M | Q1 achievement rate of 23.1% is on track. If H1 reaches 46-48%, upside expectations will emerge |
ProfitabilityOPM trend YoY and COGS ratio trajectory | Q1 OPM was 8.7% (vs. -0.3% in prior year period), while COGS ratio rose to 27.3% (vs. 23.1% in the prior-year period). Need to determine whether the COGS increase is transitory or structural |
Gross Payment VolumeQuarterly GPV growth rate and take rate trend | Q1 GPV was JPY 549.7B (+17.6%). Stable maintenance of take rate (our estimate: Revenue ÷ GPV ≈ 0.24%) is a prerequisite for earnings growth |
New BusinessProgress of StarPay-X partnerships and Stablecoin Pay merchant adoption | Stablecoin payments at a 0.98% fee rate offer clear merchant advantages vs. existing payment methods. Initial metrics on store count and transaction volume will be a litmus test for medium-term growth |
Capital EfficiencyEquity ratio and pace of accumulated deficit reduction | Equity ratio at 19.3%, retained earnings at -JPY 4,548M. At the current quarterly net income run rate of JPY 137M, clearing the accumulated deficit would take ~8 years, making profit growth acceleration the key to improving capital efficiency |
Financial StrategyUtilization of overdraft facility (JPY 6B) and early settlement service ramp-up | Early settlement services for merchants could become a new fee income stream, but careful attention is needed on the balance between increased working capital from payment advances and borrowing costs |
Key Issues from Previous Results (FY12/2026 Q1)
Q1 delivered +26.6% revenue growth and an operating profitability turnaround (JPY 116M), recording 23.2% progress against full-year operating income guidance of JPY 500M. The quarter can be characterized as one where scale advantages as a payment platform began to materialize, driven by structural expansion of the cashless market. In 2Q, the central issues will be earnings sustainability and progress of Web3-related new business initiatives.
1. Sustainability of Payment-Related Revenue Growth
- Prior Quarter: Q1 GPV of JPY 549.7B (+17.6% YoY), revenue of JPY 1,331M (+26.6%). Revenue growth outpacing GPV growth suggests gains from merchant base expansion and improved service mix
- This Quarter Check: Q2 (Apr–Jun) is seasonally a period of increased inbound tourist arrivals. Whether GPV growth sustains at +15% or above YoY is critical
- Key Metrics: Q2 standalone GPV growth rate, revenue progress vs. full-year guidance (target: >46% on H1 cumulative basis)
2. Operating Margin Stability and Cost Structure Shifts
- Prior Quarter: COGS of JPY 363M (COGS ratio 27.3%, vs. 23.1% prior year), SG&A of JPY 851M (SG&A ratio 64.0%, vs. 77.2% prior year). The COGS ratio increase was absorbed by SG&A ratio improvement, securing an 8.7% OPM
- This Quarter Check: Determining whether the COGS ratio increase stems from structural changes in payment fee rates or transitory factors such as product sales. Whether operating leverage—SG&A growth lagging revenue growth—is sustained
- Key Metrics: Q2 OPM (improvement trajectory from Q1's 8.7%), H1 cumulative progress vs. full-year operating income target of JPY 500M
3. StarPay-X Initiative and Web3 Payment Commercialization Progress
- Prior Quarter: Established and consolidated new subsidiary StarPay-Entertainment. Included within the single fintech segment, but aimed at extending payment solutions into the entertainment space
- This Quarter Check: Initial adoption status of Stablecoin Pay (0.98% fee) announced in July 2026. Progress on concretizing partnerships with Canton Foundation, Startale Group, AllScale, and Bitget Wallet
- Key Metrics: Number of merchants supporting stablecoin payments, whether Web3-related revenue has begun to materialize
4. Early Settlement Service Ramp-Up and Financial Strategy
- Prior Quarter: Executed an overdraft agreement (limit: JPY 6B) with Sumitomo Mitsui Banking Corporation on April 30, 2026. Financial covenants include maintaining recurring profitability and net assets at ≥75% of prior year level
- This Quarter Check: Launch timing and initial utilization of the early settlement service. Balance between interest expense from drawdowns and service fee income
- Key Metrics: Outstanding overdraft balance, interest expense recognized in non-operating expenses, fee income from merchant services
5. Growth in Deposits Held and Payment Platform Scale Expansion
- Prior Quarter: Deposits held of JPY 32,121M (+JPY 1,990M vs. prior fiscal year-end), interest income of JPY 46M (vs. JPY 39M in prior year period). Interest income from deposit management is a primary non-operating income item
- This Quarter Check: Trajectory of deposit balances and yield fluctuations amid changing interest rate environment. Whether deposit growth continues in tandem with GPV expansion
- Key Metrics: QoQ change in deposit balances, interest income levels (our estimate: ~0.15%/quarter yield on deposits)
Timely Disclosure & Industry Trends
- 2026/07/13Stablecoin Pay full-scale launch — Rolled out stablecoin payments supporting USDC, USDT, and JPYC to StarPay merchants at a 0.98% fee rate. Expected to drive merchant adoption as a new payment method alongside existing code-based payments. Japan's first* stablecoin payment service "Stablecoin Pay" full-scale launch
- 2026/07/07MOU with Canton Foundation — Signed a memorandum of understanding with Canton Foundation, operator of Canton Network, for social implementation of Web3 payments. Positioned as a technology infrastructure partner for the StarPay-X initiative. Net Stars signs MOU with Canton Foundation for Web3 payment social implementation
- 2026/06/15MOU with Startale Group — Signed MOU with Startale Group, which is developing the JPY-denominated stablecoin "JPYSC" with the SBI Group. Aims to commercialize digital currency payments under the StarPay-X initiative. Net Stars signs MOU with Startale Group to promote Web3 payment adoption
- 2026/06/04MOU with Bitget Wallet — Partnered with the global wallet platform with 90M+ users to explore expanding in-store payment usage in Japan for overseas wallet users, including inbound tourists. Net Stars signs MOU with Bitget Wallet
Previous Quarter Results (FY12/2026 Q1 Actuals)
Net Stars is a fintech company operating "StarPay," a multi-payment gateway centered on QR code and barcode payments. Benefiting from Japan's domestic cashless penetration reaching 58.0% and government targets (65% by 2030, ultimately 80%), the company has been expanding its merchant base and growing GPV. Q1 simultaneously delivered +26.6% revenue growth and an operating profitability turnaround, with operating leverage materializing through SG&A ratio improvement. Progress against full-year guidance was broadly in line with expectations, and no guidance revision was issued.
| Item | Amount | YoY | vs. Guidance | Notes |
|---|---|---|---|---|
| Revenue | JPY 1,331M | +26.6% | 23.1% achievement | Growth outpacing GPV +17.6% |
| Operating Income | JPY 116M | Turnaround (vs. -JPY 2M prior year) | 23.2% achievement | OPM 8.7% |
| Recurring Profit | JPY 161M | +207.8% | 22.8% achievement | Interest income of JPY 46M contributed |
| Net Income | JPY 137M | +204.6% | 27.8% achievement | No extraordinary losses |
| EPS | JPY 8.14 | +201.5% | - | Diluted EPS: JPY 8.02 |
Guidance Achievement Rate vs. Full-Year Plan: Revenue 23.1%, Operating Income 23.2%, Recurring Profit 22.8%, Net Income 27.8%
Company Information
- Company Name: Netstars Co., Ltd.
- Ticker: 5590
- Listing: Tokyo Stock Exchange Growth Market
- Fiscal Year-End: December
- Core Business: Fintech operations centered on "StarPay," a multi-payment gateway supporting QR code, barcode, and other payment methods (payment processing, DX-related services, Web3 payments)
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