NETSTARS Co.,Ltd. Q3 FY2025 earnings call

• Core Financial Performance

  • Total revenue grew 23.6% year-over-year, driven by record high Q3 single-quarter GPV of 550.8 billion yen.
  • Cumulative 9-month GPV reached 1.5312 trillion yen, a new all-time high, up 35.7% year-over-year.
  • Cumulative operating income turned positive at around +200 million yen, a 400 million yen improvement from a -200 million yen deficit in the prior year period, as strong payment growth and cost efficiency more than absorbed higher payroll and lower DX revenue.
  • Cumulative ordinary profit exceeded 300 million yen, and net profit reached approximately 220 million yen, with the profit margin expanding sequentially quarter-over-quarter.

• Operational Capabilities & Cost Efficiency

  • AI implementation across core business processes (customer support, merchant onboarding, settlement, container infrastructure optimization) is nearly complete, delivering significant cost savings. Server cost held nearly flat year-over-year even as transaction volume grew 35%, driven by AI-enabled efficiency gains.
  • New large top-tier merchant acquisition is proceeding slightly ahead of plan, with very low merchant churn year-to-date. The most notable new win is Meiji Yasuda Life Insurance, which added StarPay-enabled PayPay QR payment for insurance premiums, marking entry to the largely untapped insurance industry.
  • Partnership network continues to expand: existing partnerships with global payment players like Stripe have deepened, with StarPay selected as the QR payment gateway for both Stripe's existing online business and new offline Stripe Terminal in-store solution, aligned with the company's gateway-focused strategy that avoids low-margin terminal hardware sales.

• New Business & International Expansion

  • Supported Qatar National Bank to connect India's UPI unified payment interface in Qatar, enabling Indian expatriates to use their home payment service across Qatar. While still in early stages with remaining rollout work to reach local retail stores, this deployment is already contributing to incremental transaction growth, and serves as a template for future emerging market expansion. The company will continue to cost-effectively expand into fast-growing cashless markets through partnerships with large local players.
  • Launched JPQR Global at the Osaka Expo, currently operational for QR payments from Indonesia and Cambodia, allowing inbound tourists to pay with their home country payment methods directly in Japan. The service will expand to additional countries and roll out broadly across retail, and is expected to become a meaningful future revenue source while reinforcing the company's position in Japan's national cashless initiative.

1. Payment-related segment (dominated by payment processing fees): Accounts for approximately 85% of total adjusted revenue. This segment is the company's core growth driver, with fee revenue growing steadily on the back of increasing gross payment volume (GPV). Cumulative Q3 operating profit from this segment is strong enough to fully offset the revenue shortfall from the DX development segment, and its high gross margin contributes to overall company profitability. 2. DX contracted development segment: Missed revenue targets due to insufficient project volume in the reporting period. However, recurring fee revenue from delivered DX products (such as self-checkout systems) remains solid, partially offsetting the development revenue shortfall.

• Full-year 2025 ordinary profit and net profit guidance have been upwardly revised, driven by stronger-than-expected growth in interest income. Rising interest rates and higher-than-planned transaction volume have increased customer deposit balances, leading to materially higher interest income that was not incorporated in prior guidance.
  • The full-year GPV target of over 2 trillion yen is almost certain to be achieved, with cumulative GPV already exceeding target levels through the third quarter, if steady transaction growth is maintained in the fourth quarter holiday selling season.

• DX contracted development revenue is behind plan due to insufficient project volume.
  • Inbound promotion-related revenue has seen slower growth compared to the post-pandemic boom period, due to softer customer budget allocation, though this delay is expected to gradually resolve through the end of the year.
  • The UPI deployment in Qatar is still in the early stage, with remaining rollout barriers including point-of-sale system modifications and merchant education required to expand to regional retail locations.

The full Q&A section is hosted separately in an external document linked in the call materials, and no Q&A content is included in the provided transcript.