This article first appeared on GuruFocus .
Release Date: August 14, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue and operating profit grew 14.3% and 24.2% year-on-year, respectively, in the first nine months of fiscal 2026, with Q3 alone seeing a 16.8% revenue increase and a 26.9% operating profit surge.
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The company's core payment business achieved approximately 20% growth, while other segments grew 6.9%, aligning with the long-term target of 25% profit growth (20% from core, 5% from others).
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The recurring revenue model is expanding, with a 26.7% increase in recurring sales, and the company is actively acquiring large projects, adding 7 major projects in Q3 alone (PG: 9, FG: 4 in FY2026; PG: 10, FG: 3 in FY2027).
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Global operations are performing strongly, with sales up 80.9% and operating profit up 114.3% year-on-year, driven by robust growth in the U.S. (MSB) and Asia (over 50% growth), and a 47% increase in cross-border payment volume.
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The company is making strategic investments in AI and digital transformation, including initiatives to enhance operational efficiency and customer experience, while maintaining a strong financial position with successful bond issuances and a focus on sustainable growth.
Negative Points
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The company faces challenges in the SME segment, with sales growth slowing to 2.7% in the latest quarter, indicating a need for more aggressive measures to revive this customer base.
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The overall market growth rate for online payments was only 2.4% in April-June, significantly below the historical average of 7%, suggesting a temporary slowdown in the e-commerce market.
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The company acknowledges that the 'Vision' segment (including new businesses) is a challenge, with sales growth of only 5.3% and operating profit growth of 36.5%, indicating that some initiatives are not yet fully contributing to the bottom line.
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There is a noted dependency on the FG (Financial Group) segment for growth, with a 21.5% increase in recurring revenue, but the company recognizes the need to diversify beyond this to sustain long-term growth.
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The company is facing increased competition and market saturation in the payment industry, as evidenced by the need to actively pursue large projects and the pressure to maintain growth rates in a mature market.
Q & A Highlights
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Q: What were the key financial results for the third quarter of fiscal year 2026, and what is the outlook for the full year? A: The company reported strong results for the first three quarters of fiscal year 2026, with sales of 69.7 billion yen (up 14.3% year-on-year) and operating profit of 29.1 billion yen (up 24.2% year-on-year). For the third quarter alone, sales grew 16.8% and operating profit increased 26.9% year-on-year. The company noted that the shift to a higher profit structure is progressing as planned.
Q: How is the company's payment processing volume (GMV) performing, and what is driving the growth? A: For the April-June period, total payment processing volume grew 2.4% year-on-year, which is lower than the historical average of around 7%. However, the company's core payment business grew 17.3% for online EC and 16.6% for physical EC, significantly outperforming the market statistics of 3.1% and 1.8%, respectively. The lower overall growth was attributed to a high base effect from the previous year and specific factors such as a major client's pricing changes affecting GMV.
Q: What is the company's long-term growth strategy and its target for operating profit? A: The company has a long-term target of achieving 100 billion yen in operating profit by fiscal year 2030-2031. This is based on a formula that includes market expansion, share gains, and productivity improvements. The company expects to achieve this through a 22% or higher annual profit growth rate. The strategy involves growing the core payment business by approximately 20% and other businesses by around 5%, with a focus on acquiring large projects and expanding into new areas like BtoB payments.
Q: Can you elaborate on the company's initiatives in the "Infrastructure" and "Solutions" segments, particularly regarding new projects and partnerships? A: The company is actively expanding its infrastructure and solutions offerings. In the infrastructure segment, they have seen significant growth in "Apple Pay" adoption, with 184 business operators now using it, up from 35 a year ago. They are also preparing for the launch of new payment methods in November. In the solutions segment, they have added 7 new large projects in the past 3 months, including 9 PG and 4 FG projects in the first half of 2026, and have a strong pipeline for 2027. These projects are expected to contribute significantly to future revenue.
Q: What is the company's strategy for the "Global" business, and how is it performing? A: The global business is a key growth driver, with sales up 80.9% year-on-year and operating profit up 114.3%. The US MSB (Money Service Business) segment has more than doubled year-on-year, and Asia has grown by over 50%. The company is focused on acquiring global licenses and expanding its payment infrastructure, with a target of achieving over 5 billion yen in operating profit from this segment. They are also diversifying their business to reduce reliance on the domestic PSP market.
Q: How is the company addressing the challenge of low growth in the SME (Small and Medium Enterprise) segment? A: The company acknowledges that the SME segment is a challenge, with growth of only 2.7%. They are implementing proactive measures to increase sales and revive inactive merchants. The company recognizes that while large clients are performing well, the SME segment requires more attention and targeted strategies to improve growth. They are focusing on operational improvements and are confident that these efforts will yield results in the medium to long term.
Q: What is the company's financial strategy, particularly regarding capital allocation and shareholder returns? A: The company has a clear financial strategy focused on growth investment and shareholder returns. They have issued 20 billion yen in straight bonds and plan to issue another 10 billion yen in July to secure funding for large-scale payment projects and M&A. They are also committed to maintaining a balance between capital efficiency and shareholder returns, with a focus on increasing corporate value. The company has been selected for multiple ESG indices, including the GPIF's major ESG indices for four and five consecutive years.
Q: Can you provide more details on the company's "Productivity" initiatives and its impact on profitability? A: The company is focused on improving productivity, with a target of increasing the operating profit margin from the current 38% to 43% by fiscal year 2030-2031. This will be achieved through a combination of AI-driven solutions, operational efficiencies, and a focus on high-margin businesses. The company has already seen a 55.3% increase in productivity, which has contributed to the overall improvement in profitability. They are also investing in human capital and technology to support these initiatives.
Q: What are the key drivers of the company's strong performance in the "FG" (Financial Group) segment? A: The FG segment, which includes financial services, is performing exceptionally well, with sales up 26.7% year-on-year. The company is seeing a shift in the sales mix towards recurring revenue, which is more profitable. The growth is driven by strong demand for payment services, particularly in the BtoB space, and the successful acquisition of large projects. The company expects this trend to continue, with recurring revenue becoming an increasingly important part of the business model.
Q: How is the company managing the impact of new regulations and market changes, such as the "UCP" (Universal Card Platform) and other industry shifts? A: The company is proactively adapting to regulatory changes and market shifts. They are investing in new technologies and platforms to ensure compliance and maintain their competitive edge. The company views these changes as opportunities to strengthen their market position and expand their service offerings. They are also closely monitoring the competitive landscape and are prepared to adjust their strategies as needed to maintain growth and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
