5590.T

• Core 2025 Milestone Achievement

  • Achieved first full-year net profit since listing, marking a clear transition point from prioritizing merchant network expansion to a growth phase that combines scale expansion with profitability.
  • The profitability improvement is structural, driven by GPV expansion, cost optimization of raw costs, and strict fixed cost management, rather than one-off factors.
  • AI integration drove large efficiency gains: combined cloud container technology with in-house developed AI to optimize back-end operations including server efficiency management and customer service. While GPV grew over 30% year-over-year, absolute USD-denominated server costs remained flat across 2024 and 2025, and SG&A growth came in below the previously projected 10% annual increase, creating a scalable low-cost growth foundation.

• Core Competitive Strengths

  • Largest number of connected payment brands in Japan, currently between 50 and 60 sub-categorized brands. Completed Japan's (and likely the world's) first in-store USDC stablecoin payment implementation pilot at Haneda Airport, which requires no exchange registration, no new card issuance, no new terminal hardware, and works with existing QR code scanners, keeping implementation costs low. This gives the company first-mover advantage in the emerging stablecoin payment market.
  • Extensive partner base: expanded partnerships with major players including Stripe in 2025, and plans to deepen collaboration with large payment companies, vendors, and sector-specific specialized firms in 2026.
  • Outperforms peer payment service providers (PSPs) on both revenue growth rate and gross profit margin, and maintained this leading performance in 2025.

• Key 2025 Operational Milestones

  • Cumulative full-year GPV broke through 2.1 trillion yen, hitting an all-time high.
  • Launched the USDC stablecoin payment pilot at Haneda Airport, with consistent transaction volume during the trial that exceeded internal expectations.
  • Entered the off-device mobile game billing market following Japanese regulatory changes that enabled multi-provider payment options for this segment, and established a dedicated subsidiary to pursue this high-margin opportunity.
  • Reached over 3,000 merchant locations in Qatar, more than doubling from launch in 2023, and added support for India's UPI payment system in the Qatar market.

• Top-line growth guidance: Expects 20.3% year-over-year revenue growth in FY2026, aligned with a 20% year-over-year GPV increase to ~2.5 trillion yen.
  • Payment-related revenue is projected to grow ~20% year-over-year, while DX/mini-app revenue is expected to return to slight growth above 2024 levels, driven by increased self-checkout implementation projects and local government wallet initiatives.
• Profitability guidance: Expects operating profit to expand on improved cost control, with gross profit margin remaining above 70% (the modest decline from 2025's near 80% level is expected due to planned development costs for new business segments, which management views as a temporary dynamic). SG&A growth is projected to come in below the 10% target, supported by ongoing AI-driven efficiency gains.
  • A one-time tax impact is expected in FY2026: after the deferred tax asset recognition from 2025's first profit year, the company will pay corporate tax at a rate close to the statutory effective tax rate in 2026, which will reduce reported net profit relative to operating profit, and management notes this should be separated from core operating performance.
• 2026 Focus Areas
  • Multi-cashless payment expansion: Target expansion into underpenetrated sectors including healthcare/insurance, real estate, and education, while continuing to grow share in existing sectors like retail and distribution. Plans to add 10+ new payment brands across Web2, Web3, domestic and international markets to reduce churn, maximize revenue, and improve competitive positioning. Will focus on niche high-potential online segments (starting with off-device mobile game billing) rather than entering the saturated general e-commerce backend payment market.
  • DX solution expansion: Will prioritize self-checkout sales (focused on cinemas, gyms, university cafeterias, to drive payment fee upsell and reduce churn) and local government wallet promotion to capture new revenue from planned local economic stimulus measures.
  • Global expansion: Will accelerate cross-border payment expansion via the national JPQR Global initiative, adding connections to additional Southeast Asian markets beyond existing Cambodia and Indonesia deployments to generate new offshore revenue. Will continue expanding merchant base and adding payment brands in the Qatar market.
  • Stablecoin strategy: USDC is positioned as a mid-term growth driver, and will not be counted as a core contributor to 2026 earnings. Management will continue building out use cases and exploring full commercial launch, with a long-term goal of building a business model that combines stablecoin payments with integrated financial services.
• Capital return policy: No change from previous policy. Dividend implementation is not currently feasible as retained earnings remain negative, but management will continue evaluating shareholder return options and will update the market when there is progress.

NETSTARS operates as a single fintech segment, with three sub-segments broken out by revenue: 1. Payment-related services (centered on payment processing fees): accounts for 81.8% of total adjusted revenue, and outperformed internal revenue expectations in FY2025 driven by strong domestic demand growth. 2. Terminal sales: accounts for 8.2% of total adjusted revenue, with the increase coming from a large one-time bulk order that closed in Q3 FY2025. 3. DX/mini-apps: accounts for 6.6% of total adjusted revenue, and missed internal revenue targets in FY2025, though overall demand for DX services remains high. On a group level, net transaction volume (GPV) reached 2.1 trillion yen in FY2025, growing 33.2% year-over-year. Operating profit hit 293 million yen (0.293 billion yen), beating plan by 60 million yen. Ordinary profit reached 443 million yen (0.443 billion yen), 52 million yen above the level after the previous upward guidance revision. Net profit was 208 million yen (0.208 billion yen) above plan, driven by a one-time deferred corporate tax adjustment stemming from the company's first full-year profit after listing.

• The decline in Chinese inbound tourism had a measurable negative impact on results: the impact reduced full-year GPV by just over 1%, and reduced total revenue by approximately 2% (due to the higher fee rate on inbound QR payment compared to domestic QR payment), though the negative impact was far smaller than some investor concerns, and was more than offset by strong domestic demand growth. Going forward, the company recognizes that macro-related risks to payment volume from specific geographies or payment brands are always possible, so diversification of payment brands is a key priority to mitigate this exposure.
• 2026 is expected to have a lower volume of large new merchant acquisition opportunities (including replacement deals from competitors) compared to 2025, even though the company has already secured multiple large new deals for 2026.
• New product development and entry into new business segments requires upfront development costs that will pressure near-term gross margin, though management expects these investments to drive long-term growth.

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