Transaction Media Networks Inc. Q4 FY2025 earnings call

• Company Mission & Strategic Direction

  • Mission is "Accomplish the impossible", focused on solving broad societal social problems including labor shortage and declining productivity driven by population aging and digital transformation trends.
  • Long-term vision is to transition from an electronic payment gateway company to an information processing company, and become a gateway for all digital data, enabling new digital lifestyles.
  • Core business is split into two complementary segments: all-in-one cashless payment services, and information processing that monetizes consumer behavior, purchase, and movement data captured from payment infrastructure. Currently expanding into supply chain management DX (SCM-DX).

• Terminal & Payment Service Expansion

  • TMN has sustained 10,000+ new terminal connections per month for 5 consecutive years, the fastest pace of terminal deployment in the industry. Total active terminals now exceed 1.1 million.
  • Market size for addressable terminals is estimated at 8 million units: TMN holds a 25% share (1.08 million units) of the 4 million unit POS/credit card terminal (CCT) market, and has only captured 20,000 of the 4 million unit unattended terminal (vending machines, self-checkout) market, leaving large room for growth.
  • Recent key new client wins include deployment on all Tokaido and Sanyo Shinkansen services, and rollout at the Welcia drugstore group, in addition to existing partnerships with Square and Yamanaka supermarkets.
  • Usage-based (volume-based) revenue now accounts for 40% of total revenue, exceeding the 30% target set at IPO 3 years ago, driven by QR/barcode growth. Fixed subscription revenue provides downside protection during economic downturns, and management maintains a balanced mix of the two revenue models.
  • TMN is expanding cross-selling of credit card and QR/barcode payment services alongside existing electronic money offerings to increase per-terminal payment volume.

• Information Processing & New Market Expansion

  • Management aims to expand from core B2C retail payment services into untapped B2B supply chain payment between wholesalers and manufacturers, then move into data monetization of aggregated purchase, movement, and supply chain data, and eventually end-to-end marketing and promotion services.
  • TMN leverages its existing strength in transportation sector payments to combine transportation passenger flow data with retail payment data to capture full consumer journey patterns, creating new unique business model opportunities.

• M&A & Capital Strategy

  • Management will actively pursue M&A to fill gaps in capabilities, personnel, and service offerings, targeting the payment and information processing sectors, with industry roll-up consolidation as a long-term goal.
  • TMN deepened its capital alliance with GC Kikaku, acquiring an additional 5% stake to become the largest shareholder. GC Kikaku's strength in large merchant credit card processing fills TMN's gap in credit payment expansion, supporting the firm's plan to grow credit and QR/barcode revenue.
  • Management will propose transferring the full 3.1 billion yen capital reserve to other capital surplus at the June shareholder meeting to increase financial flexibility for future flexible capital policies.

• Data Center Relocation Update

  • The relocation to a new expanded data center is not a simple move, but a full overhaul of the system architecture to support future growth, with expanded capacity to handle non-payment data. The project was originally scheduled to complete in March 2025, but partial defects and outages pushed completion to June 2025. As of the call, over 90% of relocation is complete, with payment processing relocation fully done and merchant connection reconfiguration ongoing. Final demolition and restoration of the old data center will start after full completion.
  • Expected benefits from the project include unified infrastructure to support accelerated growth, improved internal large project management capabilities, elimination of existing failure points to restore customer trust and reduce operating costs, and sufficient capacity to support growth through 2030.

• Long-Term Target

  • TMN targets 100 billion yen in total revenue by 2030, driven by continued payment service expansion and growing contribution from the information processing business.

Consolidated total revenue for the 2025 March fiscal year hit a new all-time high of 12.3 billion yen. The firm reports two core revenue types: 1) Stock revenue: 8.1 billion yen, up 15.2% year-over-year, accounting for 66% of total standalone revenue. QR/barcode settlement fees are the fastest growing segment within stock revenue, with its revenue contribution share increasing steadily. 2) Flow revenue: 2.8 billion yen, down 15.3% year-over-year, dragged by a 300 million yen decline in development revenue that offset stable payment terminal sales. Subsidiary Webspace recorded revenue of 1.3 billion yen, reaching 98% of plan and meeting expectations broadly. Operational metrics include 1.1 million connected active terminals (up 140,000 year-over-year), total processed payment volume of 4.9 trillion yen, and 2.5 billion processed payment transactions. Within total processed volume, electronic money accounts for 52%, credit for 31%, and QR/barcode for 17%.

• For the 2026 March fiscal year, management guides consolidated total revenue of 15 billion yen, representing a 22.6% year-over-year increase, driven by continued growth in stock revenue (QR/barcode settlement fees and center usage fees).
• Revenue breakdown guidance: stock revenue is projected to grow from 8.1 billion yen to 9.8 billion yen, flow revenue from 2.8 billion yen to 3.6 billion yen, and Webspace revenue from 1.3 billion yen to 1.6 billion yen.
• Due to delayed data center relocation costs shifting into the current fiscal year, management expects an operating loss in the first half (especially Q1), with full year operating profit returning to positive as relocation costs fall off in the second half.

• Unplanned issues and outages during data center relocation pushed project completion back 3 months from the original schedule, and generated 300 million yen in unplanned outage response and maintenance costs on top of the 538 million yen planned relocation cost.
• Data center relocation costs led to a full year consolidated operating loss of 500 million yen and net loss of 682 million yen for the 2025 March fiscal year, below the firm's initial forecast (though above the revised latest forecast).
• Selling, general and administrative costs increased 700 million yen year-over-year for the 2025 March fiscal year, primarily driven by outsourced project management costs for the data center relocation, which increased 160% year-over-year.

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