4051.T

• Core Business & Growth Drivers

  • The company operates as a payment infrastructure provider for various industries and business types, and has re-mapped its win-win business model with member merchants.
  • Strong growth in recurring revenue was driven by acquisition of high-utilization life segment merchants and ARPU expansion; the 31% YoY growth of recurring revenue is the result of successful active ID acquisition in Q3 and Q4 of the previous fiscal year.
  • Initial sales saw a year-over-year decline due to natural quarterly volatility, but commercial facility projects have finally launched, and SME business has achieved a steady baseline increase after promotional improvements, both progressing as planned.
  • Spread sales returned to growth above 20% after stagnation in the first half of the previous fiscal year, driven by strategic expansion into leisure/amusement and B2B wholesale food service segments, and collaboration with industry-specific alliance partners focused on dining and healthcare.

• KPI Performance

  • Total active IDs reached 448,000, an increase of 55,000 YoY. Terminal-less payments, originally focused on SMEs, are now also being sold to large customers; unmanned/IoT segment grew due to acquisition of a large fast food chain; manned SME segment recovered after promotional campaigns and package product sales; manned large customer segment grew steadily from commercial facility operations.
  • Quarterly ARPU reached 5,800 yen, on track to hit the full-year target of over 20,000 yen annual ARPU, which management judges as acceptable progress.
  • Total payment processing volume reached 310 million transactions, +34.8% YoY, driven by strong growth from high-utilization large and unmanned/IoT merchants.
  • Among the top 30 merchants by GMV, 5 new merchants were added YoY. The number of life segment merchants in the top 30 grew from 11 (1Q 2024 September fiscal year) to 15 (1Q 2026 September fiscal year), and life segment's GMV share among the top 30 rose from 42% to 65%.

• Strategic Growth Initiatives

  • Management updated the maximum recurring revenue strategy into a 4-quadrant framework segmented by merchant size (SME vs large) and solution customization level (standard packaged vs customized):
    • Lower-left (SME, standard): Close collaboration with industry-specific partners, actively acquire small businesses/startups with terminal-less credit payment solutions.
    • Upper-left (SME, customized): Expand DX and customer acquisition support via offerings like "Digital Restaurant byGMO"; solve crime prevention/labor saving needs for amusement facilities and ticket/vending machine merchants by integrating with existing devices to promote cashless adoption.
    • Lower-right (large established merchants with existing cashless): Support expansion of economic scope via DX, existing POS integration, point utilization and economic zone expansion, and pursue terminal-less payment acquisition where demand exists.
    • Upper-right (large enterprise groups/commercial facilities, customized): Address needs for group management, new store opening support and data-driven customer acquisition; already has established track records in vending machines and parking lots, with flexible design per location.
  • The company prioritizes building a win-win ecosystem, with demonstrated successful cases: (1) Supermarket merchant: Added core payment options, transaction inquiry web portal, full self-checkout and house money support, lifted the company's ARPU from 27,000 yen to 40,000 yen while growing the merchant's revenue; (2) General goods store: Improved data visibility and freshness, lifted ARPU alongside merchant revenue growth; (3) Long-term parking lot client: Resolved regulatory compliance issues for card payments, enabled near-real-time sales data visibility and location-level profitability analysis to support land use decisions, building a long-term win-win relationship, with future plans to add pre-booking, pre-payment and point promotion services for commercial facility parking.
  • The company is expanding into the mobility segment: It will support the new cross-company touch payment interoperability service launched by 11 Kanto railway operators starting March 25, which addresses domestic cashless demand and improves convenience, and the company has prepared full operational redundancy to support this critical social infrastructure.

• Short-term (FY2026 September fiscal year): (1) Full-year recurring ARPU is on track to clear the 20,000 yen target; (2) Active ID target is 513,000, and progress is on schedule; (3) Management confirms it is committed to achieving at least 25% YoY operating profit growth for the full year, and is targeting upside above this target; (4) Full-year selling, general and administrative expenses are expected to see only a minor increase YoY; (5) First quarter progress against plan: 57.2% of half-year total revenue target, 25.1% of full-year total revenue target, 68.7% of half-year operating profit target, 34.1% of full-year operating profit target, which is ahead of plan. The main large commercial facility launches are still expected to be concentrated in Q3 and Q4 as originally scheduled, with no change to the overall pipeline timeline.
  • Medium-term: (1) 2027 September fiscal year: Pipeline is already building to very high levels as of the first quarter, supported by the current recurring revenue base uplift; (2) Long-term target of 10 billion yen operating profit by 2033 is currently on track to be achieved one year ahead of schedule; (3) Long-term target of 1 million total active IDs by 2033, with progress on track; (4) Recurring gross margin target of 70% long-term, with current 1Q FY2026 recurring margin at 55.5%, and the company is working to gradually move toward 60% first; (5) Total addressable market (TAM) including core payment, payment DX and payment activation is estimated at 10 trillion yen, with potential for further expansion.

1. Recurring Revenue (total): 2.64 billion yen, +31% YoY, accounting for 53.44% of total revenue. It is broken down into three sub-segments: (1) Stock Sales: 572 million yen, +20.1% YoY; (2) Fee Sales: 1.604 billion yen, +37.9% YoY; (3) Spread Sales: 466 million yen, +23.4% YoY. 2. Initial Sales: 2.299 billion yen, -10.4% YoY, accounting for 46.56% of total revenue. 3. Total Revenue: 4.94 billion yen, +7.8% YoY. 4. Gross Profit: 1.8 billion yen, +13.2% YoY. 5. Operating Profit: 950 million yen, +15.3% YoY. 6. Pre-tax Profit: 951 million yen, +14.8% YoY.

No specific operational failures or material risks were discussed in the available transcript content.

Q: GMO Financial Gate noted large commercial facilities contributed to Q1 results, but there has been no prior update on the large commercial facility pipeline. Were projects originally planned for the second half moved forward, is this related to existing merchants, and is there any change to the overall pipeline? Will large contributions from commercial facilities still come in the second half?

A: There is no change to the overall pipeline. Rollout happens in phases starting with new store openings, so full-scale deployment has not begun yet, but progress remains on schedule. Large commercial facility contributions will still be concentrated in Q3 and Q4 as previously expected, which has not changed.

Q: What drove the recovery in terminal sales to SMEs, and what impact will the Sumitomo Mitsui Card / Fiserv partnership have on the company's SME terminal business in the long term? Will new stera product line launches happen in the second half of this fiscal year?

A: The company's priority is growing active IDs and active utilization (non-dormant IDs) to drive recurring growth, regardless of whether the company participates in the terminal commercial flow. Regarding the Sumitomo Mitsui Card/Fiserv partnership, the company will continue to lead infrastructure for the stera platform as its core focus. The recovery in SME business is primarily driven by strengthened promotional campaigns. New stera product lines are planned, and the company will strengthen promotions further while collaborating with Sumitomo Mitsui Card to expand the market. The project is still in the design phase, so the launch timing cannot be confirmed yet, but it is an active ongoing project.

Q: What are the differences in the profit model between manned SME projects and manned large merchant projects, specifically in terms of average terminal unit price, margin for initial sales, and average GMV/ARPU for recurring sales?

A: Detailed numerical breakdowns cannot be shared, but SME projects have lower average unit price than large projects, due to product design and the packaged nature of SME offerings, plus the product mix that includes terminal-less solutions. For ARPU, larger merchants that can accommodate more of the company's ecosystem services have more monetization opportunities and therefore higher ARPU.

Q: The Q2 operating profit plan looks muted, how should we interpret selling, general and administrative expense expectations for the half-year and full year?

A: The company will continue to make future investments based on progress as in previous years. Current profit achievement probability for the half-year is high, and the team is working to deliver upside beyond the plan. For the full year, the company is committed to delivering at least 25% YoY operating profit growth, and will target upside above that. Based on this, full-year SG&A is expected to be only slightly higher YoY.

Q: Can we expect more M&A/partner acquisitions to grow recurring revenue after the Digital Restaurant byGMO acquisition?

A: The company refers to acquisitions as "building the team/partner network", and is actively conducting due diligence on potential companies that can create synergy beyond just payment, including potential alliances, and holding one-on-one discussions with management. No specific transactions can be announced at this stage, but timely disclosures will be made when appropriate.