GPV set a new quarterly record and recurring profit rose 41%. Full-year guidance was revised, with net income raised and revenue cut; the ramp-up of new terminal sales is now the key focus.

Key Positives From The 3Q Results

9M cumulative GPV reached JPY 1,741B (+13.7% YoY). 3Q standalone GPV of JPY 612B set a new quarterly record, reflecting continued growth in the merchant base. Lower promotional spending held back SG&A growth, while interest income on deposits received also increased. As a result, recurring profit expanded to JPY 432M (+41.2% YoY). The company showed a cost structure that can protect profits even when revenue falls short of plan.

• 3Q Standalone GPV:
  JPY 612B, up +11.1% YoY and +5.7% QoQ (our estimates). Management described new merchant acquisition as "on plan."
• SG&A Ratio:
  71.0%, down 2.4pt YoY (our estimate). A JPY 102M reduction in promotional expenses and a JPY 20M decline in depreciation more than offset higher personnel costs.
• Interest Income:
  JPY 174M (+59.5% YoY), including JPY 79M in 3Q alone. Both higher GPV and rising policy rates contributed.
• Gross Profit Margin:
  3Q standalone margin was 81.4%, up from 72.7% in 1Q. The mix shifted back toward fee-based revenue as the share of low-margin terminal sales declined.
• Channel Expansion:
  The company added 7 payment brands in 3Q. It was also adopted on Sumitomo Mitsui Card's "stera terminal light" and connected to Stripe, broadening its sales channels.

Key Concerns From The 3Q Results

9M revenue was 11.5% below the initial plan, and operating income was 25.5% below. The central issue is that payment-related revenue growth lagged GPV growth. Several headwinds hit at once: lower inbound tourism, weak transaction volumes at retailers and gas stations amid higher crude oil prices, and a gap in terminal sales. Full-year revenue guidance was cut to JPY 5,050M (-12.3%).

• Take Rate Compression:
  Payment-related revenue (excl. terminal sales) grew only +5.3%, well below GPV growth of +13.7%. Revenue as a percentage of GPV fell from 0.188% to 0.174% (our estimate).
• 3Q Standalone Profit Decline:
  Operating income was JPY 104M (-14.0%). SG&A rose +4.4% against revenue growth of just +0.6%, and additional server costs for security measures added to the pressure.
• Inbound Weakness:
  GPV from Chinese inbound tourists was 15% below the initial plan on a 9M basis and 30% below in 3Q alone. Management acknowledged that the timing of a recovery is "difficult to forecast."
• Conservative Implied 4Q:
  Implied 4Q revenue backed out of the revised plan is JPY 1,368M, below the prior-year 4Q figure of JPY 1,420M (our estimate).
• "Other" SG&A:
  This line rose JPY 225M YoY and was the largest drag on profit. Its breakdown and sustainability warrant closer scrutiny.

Focus Areas / Items To Monitor Going Forward

• New Terminal Ramp-Up:
  The new terminal launched in September. Terminal revenue in 2Q and 3Q fell short of the normal run-rate (JPY 40M per quarter) by JPY 28M and JPY 24M, respectively. The extent of the 4Q recovery is key to meeting the full-year plan.
• GPV-to-Revenue Conversion:
  It remains unclear whether GPV growth is translating adequately into payment-related revenue. Investors should check whether large merchant wins or shifts in payment brand mix are diluting revenue as a percentage of GPV.
• Sustainability of Interest Income:
  Non-operating income now accounts for a growing share of recurring profit. The rate environment and the trend in deposits received will drive profit levels.

Key Financial Highlights

• 3Q Standalone:
  Revenue JPY 1,215M (+0.6%), operating income JPY 104M (-14.0%), recurring profit JPY 189M (+21.9%), and net income JPY 160M (+73.9%). All figures are our estimates.
• Vs. Initial Plan (Company Disclosure):
  Revenue -11.5%, operating income -25.5%, recurring profit -13.9%, net income +3.7%, and GPV -5.3%.
• Terminal Sales:
  The 9M revenue increase came from a large order in 1Q. 2Q and 3Q were a sales gap during the transition to the new terminal.
• Extraordinary Items:
  The prior-year period included a JPY 40M extraordinary loss from closing the Beijing branch of a Chinese subsidiary. No extraordinary losses were booked this period.

Performance By Business Segment

The company operates a single Fintech segment. Revenue growth was driven mainly by higher payment-related revenue on GPV expansion. In 3Q standalone, payment-related revenue recovered +11.7% QoQ. DX/Mini-Apps and Other, however, both declined in 3Q standalone.

Progress Rate Versus Full-Year Guidance

Revenue progress against the revised plan stands at 72.9%. This is above the 70.3% pace recorded in the same period last year against full-year actuals (our estimate). However, implied 4Q revenue of JPY 1,368M, backed out of the remaining plan, is below the prior-year 4Q figure of JPY 1,420M, a conservative level. Operating income progress is 64.8%, and the JPY 141M required in 4Q exceeds the 3Q standalone figure of JPY 104M. Achievement hinges on a recovery in new terminal sales and on booking JPY 136M of DX/Mini-App revenue in 4Q, versus JPY 85M in 3Q standalone (all our estimates).

Changes To Guidance

The company revised its full-year guidance. Net income was raised, while revenue, operating income and recurring profit were lowered. The revision reflects payment-related revenue now expected to fall short of the initial plan. Drivers include sluggish transaction volumes at some retailers and gas stations, macro conditions such as fewer visitors from China, and the transition to the new terminal. Costs are broadly expected to come in below the initial plan but will not fully offset the revenue shortfall.

• Revenue:
  Previous JPY 5,760M → New JPY 5,050M (-12.3%)
• Operating Income:
  Previous JPY 500M → New JPY 400M (-20.0%)
• Recurring Profit:
  Previous JPY 707M → New JPY 643M (-9.2%)
• Net Income:
  Previous JPY 493M → New JPY 546M (+10.8%)
• Reasons For Revision:
  The decline in transaction volumes linked to higher crude oil prices was not anticipated in the initial plan. Management initially expected a limited impact, but recovery has been slower than expected. A more cautious approach to new terminal sales has also made revenue recognition within the fiscal year uncertain. Payment-related revenue was therefore cut from JPY 5,150M to JPY 4,445M (-JPY 705M). Costs were also lowered: cost of goods sold from JPY 1,590M to JPY 1,111M (-JPY 479M) and SG&A from JPY 3,668M to JPY 3,538M (-JPY 130M).

Commentary On Shareholder Returns

The annual dividend forecast remains unchanged at JPY 0. The earnings presentation highlighted a new shareholder benefit program as a shareholder return measure. The company prioritizes growth investment and will consider dividends in light of its financial position. No share buyback was mentioned.

Financial Position

The company has no interest-bearing debt, and net assets grew +5.7% from the prior fiscal year-end on accumulated earnings. Most total assets consist of cash backing payment proceeds not yet remitted to merchants (deposits received). The 20.6% equity ratio therefore reflects the structure of the business.

Disclosures Released Alongside The Earnings Announcement

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

• LUN PARTNERS CAPITAL LIMITED: 9.4%→6.8% (2026/05/18) - Pure investment aimed at capturing returns from the issuer's growth (amendment report)
• LUN PARTNERS CAPITAL LIMITED: 6.8%→5.3% (2026/06/12) - Pure investment aimed at capturing returns from the issuer's growth