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Core Infrastructure Milestones

• Data center relocation completed on September 16, after being a key multi-year priority project. The new facility is now operating stably, with enhanced infrastructure availability, scalability, speed, and flexibility. Total relocation costs recognized reached 345 million yen, which came in under the original 400 million yen budget estimate, helping contain the quarterly net deficit.
• The new data center meets high-level security standards comparable to facilities used by financial institutions, and uses environmentally friendly energy. It provides the processing capacity required for the firm's growing data aggregation and new business initiatives.

Payment Service Business Expansion

• The firm pursues two core growth priorities: geographic expansion of connected terminals, and growth in total payment volume.
  • Terminal expansion: Partners including JCB, Sumitomo Mitsui Card, and Square include TMN's services as a standard offering, supporting broad adoption. Direct sales to large retail distributors have recently led to the launch of transit IC card acceptance at large supermarkets based in Tokyo and Osaka. TMN targets the 8 million unit total domestic addressable market, including 4 million POS/CCT terminals and 4 million vending machine/self-checkout terminals. TMN will accelerate expansion into the fast-growing vending machine segment, where it currently only has 20,000 connected terminals.
  • Payment volume expansion: TMN terminals successfully operated for six months at a recent international exposition. It continues expansion into the public transit segment, particularly for regional/local transit, with ongoing pilot deployments with Sotetsu Bus and two additional regional projects in development. TMN has added new payment brands including JR West's Wesmo! and enabled SAPICA (Sapporo Municipal Transit) acceptance at all Lawson stores in Hokkaido.
• TMN is shifting its business model to increase the weighting of usage-based (variable) pricing alongside its traditional subscription (fixed) pricing model to capture more growth from the expanding cashless market. Fixed pricing provides stable revenue and downside protection during recessions, while variable pricing drives growth from QR/barcode adoption. This balanced model will support scalable long-term growth.

New Business Initiatives

• TMN has announced entry into the B2B (inter-company) payment business. The total domestic B2B payment market is estimated at 780 trillion yen, with a 300 trillion yen addressable market opportunity. Current cashless B2B penetration is only 5 trillion yen, leaving large room for growth. TMN will leverage its shareholder connections and Webspace's existing distribution VAN order management system, which connects thousands of businesses, to target the market. The service improves cash flow for buyers and accelerates settlement for sellers, and is positioned to benefit from upcoming regulatory changes tightening payment terms for small and medium enterprises.
• Information Processing Business Expansion: TMN aggregates purchase data from existing payment partnerships with companies including Mitsubishi Food, Co-op Kobe, and Kusuri no Aoki into its Xinfony DataHub. It is currently developing data visualization and AI-powered promotion tools to monetize the aggregated data, filling a gap between fragmented payment and retail solution verticals. Many mid-sized Japanese retail enterprises lack sufficient in-house IT talent to handle internal digital transformation initiatives, creating demand for TMN's end-to-end cross-functional services.

M&A and Talent Strategy

• TMN has fully acquired Four J, a system engineering service (SES) staffing firm, to address the domestic IT engineer shortage known as the "2025 Cliff." The acquisition secures critical engineering talent to support TMN's growth, and adds capabilities to pursue larger client projects that TMN could not handle previously. TMN will continue to pursue strategic M&A in the payment, data, and information processing verticals to scale its business. TMN holds weekly M&A strategy meetings and has multiple candidate targets under evaluation.

• TMN targets achieving 40 billion yen in revenue from the core payment business by 2030, with inter-company payments and existing payment business expansion serving as core growth drivers.
• The information processing business, which currently requires more time to reach profitability, will continue to be advanced steadily, with TMN aiming to create new cross-functional businesses that span both payment and data verticals to drive long-term growth.
• TMN plans to continue evaluating additional shareholder return initiatives after completing a large 20% outstanding share buyback in the first half of the fiscal year.
• Management expects profitable growth from the B2B payment entry, with a large expansion of TMN's total addressable market from the new segment.

1. Stock-based Revenue: 16% YoY growth. QR/barcode settlement fees grew ~30% YoY. GMV-based usage pricing grew ~30% YoY, transaction count-based pricing grew over 20% YoY. Stock revenue accounts for 80% of the first half total revenue (single entity level), and is the core growth driver for the firm, growing steadily year over year.
2. Flow-based Revenue: 0.3% YoY growth (0.8% YoY growth at single entity level). Terminal sales and development revenue reached 1.09 billion yen, nearly flat YoY. Development revenue saw slight growth, but a large prior-year project dropped off leading to a net minor increase overall. Flow revenue progress is behind budget due to high levels of project uncertainty, accounting for 20% of first half total revenue (single entity level).
3. Webspace (Subsidiary): Revenue was 710 million yen, a 20 million yen decrease YoY.
4. Overall Consolidated Performance: Consolidated revenue was 6.345 billion yen, 10.6% YoY growth. Operating loss was 160 million yen, a narrower loss than the prior year period. Net quarterly loss was 193 million yen, down from a 198 million yen loss in Q1, with the deficit shrinking quarter over quarter. EBITDA was 970 million yen, ~30% YoY growth. Active connected terminals reached 1.15 million units, an increase of 50,000 units from the previous fiscal year end and 140,000 units YoY, growing at ~10,000 units per month.

• Flow revenue has high project uncertainty and is currently behind budget targets.
• Long-term, the core retail electronic payment business is expected to face declining profitability as it matures into a social infrastructure, and will eventually reach terminal saturation, requiring new revenue streams to offset this trend.
• Domestic IT engineer shortage creates a constraint on growth, which TMN is addressing via the Four J acquisition but remains an ongoing industry-wide risk.
• B2B payment entry is a late-market entry against established competitors, though TMN cites its existing distribution network connections as a competitive advantage.

Q: What customer segment does TMN target for its new inter-company payment business? / A: TMN prioritizes small and medium enterprises (SMEs) rather than large corporations. Key target industries include construction, healthcare/elder care, and seasonal sectors like food services, where businesses face cash flow pressure from lumpy demand or delayed payments. Upcoming revisions to subcontracting regulations will require cash payments within 60 days of service/product delivery with no discounting, increasing demand for the service to help SMEs manage cash flow while meeting new compliance requirements. TMN expects the new business to meaningfully expand its total addressable market.

Q: How does TMN view the stagnating electronic money market, and what impact will this have on its business? / A: It is true that overall market growth has slowed. TMN has already proactively diversified into credit card and QR payment businesses to reduce reliance on legacy electronic money, aligning with its strategy to build more reliable revenue streams outside its founding business. Despite overall market stagnation, TMN's own electronic money transaction volume continues to grow annually, meaning TMN is gaining market share in the segment. TMN will continue to grow electronic money as a core competency, and will adapt to the ongoing shift from prepaid card interfaces to QR code-based access to capture new growth.

Q: Why will the information processing business eventually become profitable, and what is TMN's competitive position in the space? / A: TMN is investing in information processing today to prepare for the eventual saturation of the terminal installation growth curve in its core payment business, avoiding the need to pivot suddenly when saturation hits. Historically, POS vendors handled both payment processing and retail operations in-house, but growing regulatory complexity and new payment brand entry have fragmented the market, splitting payment and retail solution operations. TMN's unique position straddling both payment processing and cloud POS systems allows it to aggregate retailer data with bank-level security, a position no other firm occupies. Many mid-sized Japanese retailers lack sufficient in-house IT resources to implement ongoing digital transformation, so TMN can offer end-to-end services to fill this gap, creating a clear path to revenue growth.

Q: What is M&A strategy for the information processing business, and what is the current progress? / A: Reaching 60 billion yen in information processing revenue is a significant long-term goal, and TMN is open to large-scale acquisitions if the right opportunity arises. It will also pursue smaller tuck-in acquisitions to build capability incrementally alongside organic growth. TMN cannot share details of specific pending deals due to confidentiality requirements, but confirms it holds weekly M&A strategy meetings and has multiple candidate targets under active review.