PayPay Corp (PAYP) Q4 2026 Earnings Call Transcript

Good morning and good evening, everyone, and welcome to the evening call for the first quarter of fiscal 2026. I'm Kotari Mai, Head of Investor Relations. Joining me on today's call are Nakayama-san, our President and CEO, Kagechika-san, our CFO, and Motoda-san, Head of Finance and Corporate Strategy. As a reminder, today's call is being broadcast live, and a replay will be available on our website at a later date. Before we begin, please note that today's discussion includes forward-looking statements, non-IFAS financial measures and unaudited financial data. Actual results may differ materially from our expectations. For more details, including risk factors and non-IFAS reconciliations of non-IFAS measures to the most directly comparable IFAS measures, please carefully review the disclaimer on page 2 of our web presentation. We ask for your understanding of these terms as we proceed. With that, I will now turn the call over to Nakayama-san.

Hi, hello everyone. This is Nakayama speaking. So before we begin the presentation, I would like to say a few words in Japanese.

Before we begin today's presentation, I'd like to express my deepest sympathies to everyone affected by the recent earthquake in Kumamoto. We sincerely pray for your safety and a swift recovery and reconstruction of the affected areas.

So let's start. Now let me turn to our financial results. Following a strong finish in Q4, we delivered another strong quarter in Q1. Total revenue increased 27% YOY, driven by continued growth in the payment segment and and even faster growth in the financial service segment. RLTC increased 26% YOY. The margin declined by 1% to 77%, mainly due to higher funding costs for bank deposits after policy rate increase. Adjusted EBITDA increased 59% YOY, and the margin expanded to 34% as both segments delivered operating leverage. Our rule of X reached 61%, showing solid growth in both revenue and profitability. Today, we announced our Capital and Business Alliance with 7i Holdings. I would now like to explain how these partnerships support our growth strategy. First of all, our vision remains clear to build one of the largest digital financial platforms in Japan. We focus on two areas. The first is products and customer touch points. We started with payments and expanded into credit cards, bankings, and securities. In June, we announced the planned acquisition of shares in T&D financial life insurance. This will add life insurance to our platform and help us meet needs such as protection, wealth buildings, and asset succession. Our partnership with Sam and I will expand our reach further by connecting with users in their daily shopping The second area is data The more data we gather, the better we understand our users The blue circles show static data, such as user profiles and financial assets. The red circles show real-time data, such as payments and shopping activity. By combining them, we can better understand who our users are and what they need at the moment. This allows us to offer the right financial service to the right user at the right time. This personalized approach is very different from the mass marketing often used by traditional financial institutions. We have consistently invested in products, customer touch points, and data capabilities. Our direction has not changed and our execution remains strong. Let me now explain the T&D financial life insurance acquisition in more detail. Life insurance sits between bank deposits and securities and will expand our financial services line-up. By combining it with PayPal's daily payment touch points, we plan to offer new digital life insurance products to our user base. We also aim to strengthen asset management, expand revenue opportunities, and improve profit margins. By bringing the life insurance balance sheet into our group, we will build a stronger hybrid model that combines flow-based revenue from payments with stock-based revenue from financial services. This will help us benefit from rising interest rates and build a stronger foundation for sustainable growth even as the external environment changes. We will continue to prepare steadily for the completion of the acquisition. Next, I would like to highlight our capital and business alliance with the 7-day holdings we announced today. First, let me explain the strategic purpose of the partnership. Our goal is more than a payment link. We want to connect in-store and digital customer touchpoints and improve the everyday shopping experience. 7-Eleven Japan has about 22,000 stores and around 20 million customers visit each day. PayPay has about 75 million users and handles around 30 million payments each day. By bringing together two industry leaders, we can make better use of the large amount of data generated every day. This is the core value of the partnership. 7-Eleven Japan has strong capability in product development, logistics, store operations, membership programs promotions and apps at 7-eleven transform its business model paper will lead the renewal of its digital customer touch points we reconnect memberships ids date point apps and promotion on the paper platform and add digital capabilities to its towards. This clear vision of loads will help us build stronger and broader customer connections. In the mid to long term, we place the greatest value of our continuous real-time data. Every day payments generate fresh data without asking users to enter extra information as the data grows. AI can keep running and offer more personalized suggestions to each user. This is a key long-term strategy to increase lifetime value in the age of AI. Looking ahead, Pepe will explore opportunities to expand its payment service outside Japan, including in the United States. We have no specific plans at this stage. However, we believe that the success we achieve with this partnership in Japan would support Pepe's further global growth. At the same time, we will create near-term growth from the partnership. by combining services such as 7Now and mobile ordering with PayPage customer base and data. We can reach potential customers more effectively by improving customer experience. We will drive near-term growth and put this model into practice. These initiatives will help us build a one-stop digital financial platform that supports users at every stage of life. Financial needs change at each stage of life. Younger users mainly need payments and credit cards as they get older. their needs become broader and more diverse-fired. By combining payments, shopping, and behavioral data, we can better understand these changes and offer services that fit each user's needs. This helps us increase lifetime value while keeping customer acquisition costs low. We hope our investors will share our vision and excitement as we increase the cross-user use of our services and grow revenue per user. One key measure of this progress in ARPU, cross-use between payments and finance creates growth on both sides. It increases revenue in the financial service segment, while greater use of financial services also increases payment engagement, GMV, and ARPU in the payment segment. Our growth strategy has not changed. We expand customer touchpoints, gather more data, and use the data to order the right financial service to each user. We will continue to invest for growth, increase cross-use, and build greater corporate value over the medium to long term. This concludes my presentation. I will now hand over to our CFO, Kagechika-san. Thank you.

Thank you, Nakayama-san. I will now walk you through our earnings highlights. Let me first highlight our operational and financial performance for the first quarter. fiscal 2026 is off to an excellent start building on this strong momentum we are raising a full year financial guidance for fiscal 2026 which i will touch upon later while the top line growth is quite healthy i want to specifically highlight the quality of growth we are seeing across both our payment and financial service segments. Looking at the payment segment, the usage of PayPay card is further accelerating and continues to be a key growth driver. Through the expanded use of PayPay card, we will increase the monthly GMV per MTU and strengthen PayPay's position as our users main wallet further our unit economics consistently improved supported by gmv growth of our higher margin online gmv in the financial service segment we are working on establishing a foundation for future growth alongside the steady expansion of our user base in the first quarter Tanida-san, the former president of PeiPay Card until last fiscal year, assumed the role of new president at PeiPay Bank Under his leadership, we are refining our growth strategy and accelerating its execution At the same time, we are redesigning our technology architecture to fully leverage the opportunities created by AI The number of PayPayBank accounts has now exceeded 10 million, demonstrating steady growth in our customer base. Next page, please. This slide shows our consolidated total revenue. Sorry. Now I'd like to highlight some of our key business developments for the first quarter and our recent progress. As announced in February, we implemented a comprehensive revision to our rewards program in June. Of the various changes we introduced, the most significant financial impact came from restricting rewards point eligibility only to EKYC verified users. To build a secure and reliable financial infrastructure, we've been actively promoting EKYC. Through these efforts, the number of EKYC-verified users has exceeded 42.5 million. As an added benefit, from a financial perspective, the initiative led to 1 billion Japanese yen in cost saving in June alone. Next page, please. This slide shows our consolidated total revenue. Since Nakayama-san already covered this, I will skip the detail. This shows our adjusted EBITDA. Similarly, I will skip the details here as well. As mentioned earlier, PayPay Credit and PayPay Card, the primary engines of our GMV growth, continue to perform strongly. Furthermore, our tech rates continue to expand, primarily driven by favorable shifts in our GMV mix. Please turn to the next page. MTUs increased 10% year-on-year to approximately 42 million, driven by the growth in our registered user base and a higher active user rate. GMV per MTU, which represents the monthly spending per active user, continue to increase primarily driven by an increase in monthly transaction frequency. For PayPay card, we will we continue to see strong new customer acquisition. In addition, new gold card acquisitions increase significantly driven by the launch of new PayTalk 2 pricing plan for SoftBank mobile users furthermore revolving and installment loan balances including the pay in installment radar launched in the second half of the previous fiscal year grew 25 percent year-on-year cash advance usage also continued to expand strongly increasing 57 percent year-on-year Please turn to the next slide. Moving on to the credit metric for PayPayCard. Starting this quarter, we are replacing the net charge off rate disclosing in previous earnings presentation with a new metric, the delinquency transition rate. This metric measure the annualized ratio of receivables that migrated to stage 3 during the quarter, relative to the opening receivable balance. The annualized rate is calculated based on the cumulative transitions over the most recent four quarters. For this quarter, the rate was 2.7%. It continues to trend downwards, indicating that the credit quality of our portfolio remains sound. Let me turn to the financial service segment. Customer acquisition through the PayPay app continues to be highly effective for both our banking and securities business, supporting double-digit growth in the number of accounts. The number of PayPay bank accounts has exceeded 10 million. Furthermore, PayPay Securities, leveraging zero customer action costs, achieved a 29% year-on-year growth in accounts, moving its ranking up from 6th to 5th among Japan's online brokerages. Despite intense competition for deposits across the banking sector, our deposit balance grew 17% year-on-year to reach 2.3 trillion Japanese yen. Our loan balance reached 1.3 trillion yen, up 37% year-on-year, bringing our loan-to-deposit ratio to 57%. The interest rate margin, the spread between the loan yield and the deposit costs, narrowed slightly, reflecting an increase in corporate loans driven by the diversification of our borrower base to include large enterprises. This slide shows our balance sheet and the key matrix. Six, our ROE was 22.5% and continued to improve the number. Lastly, let's turn to our financial guidance. There are three main reasons why we comfortably beat our Q1 guidance. First, GMV in our payment business performed better than expected. Second, our merchant business saw strong performance And last, we benefited from favorable external environment Including a strong equity market Regarding our four-year guidance Reflecting the strong business momentum confirmed in Q1 We are raising our forecast First, we expect total revenue to be between 467 billion yen and 473 billion yen, representing a 22% to 24% year-on-year growth, and adjusted EBITDA to be between 149 billion yen and 155 billion yen. The adjusted EBITDA margin is expected to be around 32% at the midpoint. For our Q2 guidance, we project total revenue to be between 114 billion yen and 116 billion yen, up approximately 24% year-on-year growth. We forecast adjusted EBITDA to be between 37.5 billion yen and 39.5 billion yen, with an adjusted EBITDA margin of around 34%. You may notice a modest year-on-year growth in the total revenue compared to Q1. We consider this to be driven primarily by two factors. The absence of the one-time benefit related to favorable external environment in Q1 And the tough comp from the prior year period Which saw a last-minute demand ahead of the rule changes to Home Tax Donation Japan's municipal donation program But let me be clear our underlying business momentum is as strong as ever and we are fully confident in our ability to continue delivering robust growth. This concludes our presentation. We will now open the line for your questions. Thank you.

Thank you. We will now move on to the Q&A session. Then, we will take questions from the participants who have registered in advance and are connected via Zoom.

If you have questions, please click the raise hand button on Zoom. If you'd like to withdraw your questions, please click the raise hand button again. When we call on you, we will announce your company name and your name. and at that time we'll ask you to unmute yourself so please unmute on zoom after asking your question please remain unmuted until our corporate response is completed so we now take the questions the first question is from Goldman Sachs, Mr. Makoto Kuroda. Please unmute yourself and ask us a question.

Hi, this is Kuroda from Goldman Sachs. Thank you Nakayama-san and Kagechiko-san for your presentations and congratulations on delivering a beat and raise. I have one question for Nakayama-san. Your strategy vision is very inspiring and this quarter we have also had investments in TND Financial and SEVEN. My question is, in order to realize your vision of the future, where would you invest capital from here? Are there any missing pieces on your mind now? Thank you very much.

Well, this slide that we are sharing on the screen, this is a vision that I have. this is a world view that I would like to realize therefore we will need we have various options to grow organically and in organically to realize our business growths and to grow our profits there are various plans that we have but it's not that we will get this type of great opportunity like the ones that we have right now all the time so in accordance when the opportunity arises based on our investment

governance we'll make appropriate decision and carry them out that is very clear thank you thank you we'd like to move on to the next question for morgan's study we'd like to ask Mia Nagasaka to unmute and ask your question. Yes, this is Nagasaka from Morgan Stanley MUFG. Can you hear me? Yes, thank you for your presentation today. I have two questions, if I may. The first point is regarding entering into the insurance business. So I understand that they will be closed next year, But over the medium term, when will the insurance business start to contribute to your overall profit? And by onboarding the live business, how would your balance sheet and P&L change? The reason why I'm asking this is because there are assets and liberties that's unique to insurance companies as a structure. So over the medium term, what is your KPI and the target? Which KPIs are you going to prioritize? And you may be adopting a different KPI with insurance business as part of a group. So please elaborate on that. And my second question is the alliance with 7NI Holdings. I thought that this was a very good deal. and in promoting for the data utilization, how would you exert governance in managing the data? And also, for reinforcing the governance, would that impact the speed of the data usage or the timing of monetizing the opportunities? So to the extent possible, if you could respond to the questions, that would be great.

Yes.

First, regarding the insurance business, Yes, I will first take that question. The strength of PayPay is that we have the flow business merely focusing on the payment service, but recently we are also entering the stock-based business using a balance sheet with the bank and the security business. Life business, I think, is typical of the balance sheet based business. So we want to pursue balance where we are not impacted by just the market. So we want to have both a strong flow-based business and a stock-based business. The data which we build with the flow business can be collected and personalized to lead to the stock business opportunity. So we see great synergies between the two. And we believe that this is second to none, and this is a very unique business model that we can only deliver. So we would like to pursue a business model where we can accommodate to the changing external environment. And to that extent, when will the life business start to contribute to the earnings? Regarding the life business, as we have already announced, we will be communicating with FSA to get the approval for the deal, and we will also have to accommodate to IFRS. So we are looking about a year and a half to close the deal and bring the entity into And that said, so for ARPU, this may not be directly responding to your question, but including the insurance business, the current ARPU is 900 yen, and we would like to double that as our target. So not just with the insurance business, but in the last eight years or so, we have built up this upper growth, and we would like to repeat that with the new opportunities. And for balance sheet and the P&L, we will manage that appropriately. And by including their balance sheet, the balance sheet will get larger, much larger. But we believe that it is manageable for us. Also, Motoda-san will make some additional comments. Yes, Nagasaka-san, thank you for your question. I'm Motoda from the Finance Division. Regarding the TND Financial Life acquisition, I would like to make one additional comment. Until closing, the closing date is October 1st next year, as Nakaya Musa mentioned. So there will be some time. And in order for us to discuss about the strategic initiatives, we are going to set up the integrated committee. Ourselves, TND Financial Life, and also 1IM will be joining this committee. So even before the integration, if we see initiatives where it will be beneficial mutually, then we would like to embark on those activities. So the integration impact will be after the closing of the deal, but we are going to make a thorough preparation so that we can start very strongly as we reach October 1st next Yes, that's very clear. Thank you very much. So that's the response to your insurance business question and the other question around the data governance with 7NI. So of course we have to get the concept first from the users in regards to how we can use the data. So we will first get the concept from the users and under that scope we will be using the data. So 7i has 7iD And prior to integrating that to PeiPay ID We have always upheld that policy So that will remain unchanged So in terms of governance We will have the appropriate governance to control I see, thank you very much Thank you very much Next question from mizuho securities dan live please unmute yourself and ask us a question hi can you hear me yeah i can hear me i can hear you okay uh congrats uh kagechika-san nakayama-san excellent

quarter. I have two quick questions. First one is on the June point reward revamp. Very nice to see boosting profitability by 1 billion in the month and the contained impact on retention of GMV. Can you maybe give us some color on how things are trending in July and down the road? and then my second question is on the guidance very very strong beat on EBITDA but it looks like the second half is still very conservative just wanted to get a sense of um what is embedded in in your guidance in terms of reinvestment seasonality on the EBITDA side given such a strong Q1 or are you simply being very conservative here which is our assumption thank you and congrats again thank you for asking me those two question the first one

regarding the June reward change that we made reward points revisions we have been quite cautious in planning this initiative and we just carried it out as as planned in June time. In July, we are seeing a similar trend as we saw in June. But July is a big campaign time for PeiPay, the summer big campaign. So this cost side improvement is not the only benefit that we're getting. actually with there's a big campaign we are going to see a uptick in the revenue in GMB as well so there will be a nice balance so it will come down later on down the road that we can share with you so I would like to keep this comment to this level at the moment and the second point regarding guidance a bit the outlook we have made a revision to the guidance and we are making a upward revision this time and as Dan mentioned we don't think our guidance is anything conservative we are making revisions where it's appropriate where it's needed so I hope you see our guidance this way as well and we hope needless to say that we would like to of course continue to achieve the guidance level that's all from me thank you very much thank you and congratulations again on a great quarter thank you for your question we will take the next question

from Darlene Piller from Of Research. Please unmute and ask your question.

All right. Good morning. Thank you for the time. Just want to touch on the mix of the business for a minute. I know you mentioned you saw strength in mortgage loans, primarily with other strengths seen in consumer and business loans. Should we expect similar trends going forward? How do you expect the mix to change over time? And maybe just how does that contribute you going forward to the economics of the business in terms of both what you can generate on a per-user basis and the profitability levels when you consider the different mix that we might see?

Yes. So, the loan growth, especially the mortgage loan, grew quite strongly. And we are not just seeing a strong growth in the mortgage loan, but we are also focusing on the business loans and the consumer loans because we have some new product launches in Q1. So we want to develop the loan business with a good balance. So we're not just trying to drive the loan business simply by the mortgage book. So that's the response to your first question. And regarding the economics, are you asking about the unit economics per user or the cross use it can I confirm your question again was trying to figure out what the impact from the different unit economics of each product each type of loan product could be on the overall business going forward so the overall profitability levels so that will be answered by Kagechika-san yeah explain their answer for your second

question and yet even though the the so far we have been growing the mortgage wrong than the other assets but the using our power over user base and data and the when thinking about the the margin spread on each type of loan the Our primary focus is rather the business loan and consumer loan that are utilizing the consumer data for the credit evaluation and where we can secure higher margin. But volume-wise, the mortgage loan provides us the higher opportunity to build the loan asset. So going forward, we want to keep the current, the profitability and the growth rate so that we will balance the profitability and the asset building at the same time and to provide the satisfactory results or the financial results or performance to the investors. understood congratulations on a good quarter thank you thank you very much next question

is from jp morgan koki sato please unmute yourself and ask us your question yes hello sato from jp morgan here i have two questions first one is upward revision of four-year guidance. Direction of upward revision is understandable, but against your beginning of the year plan, top line will increase by 11 billion yen. EBITDA will increase by 14.5 billion. So the EBITDA increase will be more than the marginal profit together with upward, you know, doing better in the top line. The second is about F&D financials and your investments. And, of course, as a listed company, you need to generate the profit after tax above your investment's accountability, in other words. So what kind of return index, what kind of hurdle rate that you are using in order to confirm the rationale against these investments? Of course, based on various investment projects, risk return characteristics varies quite a bit. But I would like us, I would like you to please explain so that we understand your rationale of this investment. I'm not sure whether this will be the answer to your question, but as you can see, we already in the middle is revenue less transaction costs, which is really our gross profit margin, RLOTC. Actually, there isn't much change year on year, but to the right, our adjusted EBITDA has improved quite a bit, significantly from 27% and passed to 34%. So we have applied this increase, this momentum on the four-year guidance. That's a rationale. And why? There are two reasons. The first reason is from this June time, as Dan asked us, saying from Mises of Securities, we have revised our reward program from June time, and that's going quite well from June time, and that's been a significant contributor to EBITDA, and we will see a positive impact for the rest of the year, and GMB is increasing, so we are scaling, so we can benefit from operating leverage. So, those are the two drivers, and we have reflected this positive momentum to our four-year guidance, and that's why we made an upward revision. That's the answer to your first question. And to your second question, you have a point. We have calculated quite in precise IRR calculations, of course. We can, I need to refrain from disclosing that mechanism, But we also have studied with 7-Eleven, too, based on what we are good at, like data usage or through a personalization of the benefit from a big user base, we will make more push-type announcements. And we've been working together with them and studying in the long term for the midterm and also a short term too on the right hand of this page we would like to grow they are saying that they would like to grow with us they believe that they can grow together with a pay pay better in terms of improve their profitability and growth you know that's what led to this times investment thank you very much and this times i wanted a billion yen investment to seven and the next year's 130 billion investment to uh fnd financials about your liquidity cash on hand regarding that capacity paper corporations uh cash alone or the level of your cash balance is that something that we need to study from current account at The Bank of Japan, held by the bank? Let me have our CFO answer that. Of course, we are also providing financial services, and we have a separate management for our customers' money and our own money. So, that being said, our company's money, our money is listed here as net debt. Currently, we have 1 to 7 billion Japanese yen level, and together with that, of course, we have cash on hand, the cash position is, when we did, following our recent IPO, I mean we still do have cash that we were able to get from capital raise in hand and from last year onwards we've been generating solid profits so we have more operating cash flow so with those two pools if you can add those two you can presume how much money fund we have. for our company. I think that would give a good estimation. Thank you very much. Thank you very much.

We will take the next question from Ernest Spencer from Deutsche Securities. Please unmute and ask your question.

Hi, thank you for the question and congrats on the nice results. I had two questions. I'll ask them together. The first is just on online GMB growth and the benefits to take rate that you're seeing. Something that you've talked about on both of your earning calls here saw 44% GMB growth in online, which is really strong. So maybe you could talk about what's driving that strength and how long you think this level of growth can be sustainable. Is this being driven by specific merchant or platform partnerships, or is this more of a secular trend with higher e-com adoption in Japan that is helping you out? And then my second question is just on the one-time benefits that you called out for 1Q. I think you specifically referred to a strong equity market. So I would be interested to hear what the size of that benefit was in 1Q and whether there's any sustained benefit from these factors contemplated in the guide. I know you called out part of the step down from 1Q to 2Q top line growth was related to those one-time factors, but just wondering if there's any ancillary benefits included in there.

Yes, so I will take the first question and the second question will be covered by RCFO. Regarding the first question, like you pointed out, the online GMB is growing very strongly by 44 percent YOY, and there are three reasons behind that. The first being that for PayPay, the offline payment, so we started the offline merchant first because the users can be be available anywhere. So users were first starting to use their service for offline payment with the merchants, and then came the peer-to-peer, and then later we started to exploit the online payment service. So now the users that were using the offline payment are now using the service online. So that's the first reason. The second reason is that we are now making efforts to increase the merchant for the online payment. So the larger pool of merchant is the second reason. And thirdly, we are strong with the younger generation, so they have a high usage. And for the online payment, it suits the young people's needs. So the fact that we are strong with the younger segment is uplifting and driving the online GMB growth. So that's my response to your first question. The second question will be covered by Kagechika-san. So looking at the first quarter top revenue, the year-on-year growth was 27 percent for the first quarter for the total revenue. And this included the impact of the buoyant equity market. Also with PayPay Securities, the Commission on Trading with SpaceX IPO, we took a sizable chunk for that deal and that helped to uplift the total revenue. And another reason is we don't have a big exposure, but at PayPal Bank, we have equity-based ETF, and the sales gain also contributed to the top-line growth. So the contribution of the market-related profits on the year-on-year growth would be like 1 to 2 percent from the good market.

Thank you very much.

Thank you very much. Next question from Cantor Fitzgerald. Ryan Campbell, please unmute yourself and ask us your question.

Hi, congrats on the strong results and thank you for taking my question today. PayPay card growth was impressive this quarter, both the new cards issued and financing balance as well as GMV. Can you talk a bit about what's driving that? You mentioned SoftBank mobile plans. Should we expect that to continue at this pace? and what other levers can you pull on to improve adoption of PayPayCard? Thank you.

Well, thanks for everybody's support. PayPayCard is experiencing significant momentum right now, a growth rate. I'd like to elaborate what in the context PayPayCard started as Yahoo! Japan card. It was linked with Yahoo! Japan's e-commerce. That's how this credit card started. But now that it belongs to PayPay, and about three years ago, it rebranded itself to call it a PayPay card. And at that time, it was no longer online dedicated, Yahoo! e-commerce dedicated. We had our vision to convert these cards to be the card that they can carry with for everyday payment. So there were certain functions that we had to augment about 30 plus, and we developed them so that now we have this card usable to all. And that is resonating among especially younger generations. So they are PayPay users to start out with, and now they have PayPay credit card as well. So they're using both, and that is boosting the card usage year on year. And furthermore, SoftBank users, by using PayPay card, receive cashback incentives. It's more beneficial to them, better value. So that's also a synergy effect that we are benefiting. So those two initiatives is really driving this business. So we would like to continue to allocate management resources to grow this credit card business. よろしいでしょうか。ありがとうございました。

Thank you very much. It's almost a schedule time to end. So we'd like to take the last question from B of A Securities. Please, we would like to have Nagao-san mute and ask a question. Yes, this is Nagao from BOV Securities. I have two questions. My first question is regarding the investment into T&D financial life. So if I may talk about the peer, after LifeNet Life, the online life companies have tried to attack the market for about 20 years, but the life product is not something that people will purchase passively. It has to be promoted by the sales agents. So that's why the online companies have not been able to pave their ways fully into the market competing against the incumbents. So how do you plan to approach this more structural issue? So if you are just going to be similar with the strategy of the previous online insurance, it may be just like an insurance shop that you can find on the street. So what is going to be your differentiating strategy? And the second question is regarding your alliance with 7-Eleven. The 7th total revenue, I think, is about 5 trillion yen per annum. And the pay-pay penetration, how much is that? that within the seven's revenue and by interacting the ID and establishing a close relationship, how do you expect the pay pay penetration to go up? Even if it's only 10 percent of 5 trillion yen, it will be 500 billion. So if successful, I think the contribution to GMB could be significant. And furthermore, if possible, can you tell me? because I understand that there are 20 million visitors to 7-Eleven and by integrating ID you have the MTU of 40 million people. How much of that would you expect to see as an incremental growth on top of the current MTU with the collaboration with 7-Eleven to integrate the ID? Yes, so regarding the T&D financial, the first question, I will be repeating my previous answer, but the closing will be about 18 months, so we have a lot of time to prepare. And first, looking at the track records, we have a PeiPay mini-app. On the home screen of PeiPay, you can buy insurance products. It's a small-ticket, short-term insurance, but most of that is what we offer as the insurance product line-up. But by just placing that on the platform, the 75 million users will be looking for different types of insurance products, such as the insurance to cover for the heat stroke and also for bicycles. Because we already have a track record of selling 10 million policies. So we are not a life insurance company, but we already have the track record of having sold 10 million policies. And I think this is unprecedented in Japan. So I understand your point, but compared to the online players that have challenged the market, I want to say that we are different because we already have built a track record. And on the second point, if you look at the graph on the right, it's a licensed business. So we have the PP Bank deposits and also PP Securities Mutual Funds, and then going forward with T&D Financial Life, we will have the savings type insurance products. And that's how we will explain to the professionals but to the users. Rather than where the products are coming from, we will look at the life stage of each user. Are they looking for low return, low risk, or middle return, or middle risk, or high return or high risk? So how can we build a portfolio for that particular individual to optimize and serve their needs? So we are planning to make a proposal to offer the optimal solution, so we're not just going to push the bank's ordinary deposit or time of deposit or just propose equity trading or ETF from PayPay Securities or just offer the saving-type life product from the life entity. So we will look at what is going to be the optimal solution, optimal investment portfolio that suits that person's life stage. And I think that is going to be the competitive edge for PayPay and how we'll be able to achieve achieve that with UX. So I think this is a challenge that is totally different from what the others have done. So I hope that you will be patient to see what we can deliver and achieve. So on the second question regarding alliance with Seven and I, we cannot offer you the actual penetration rate of pay-based service vis-a-vis their revenue. But the very reason why 7 is willing to partner with us on this deal is because they saw a good penetration rate of our service within their sales. So with the usage of 7 and 11, that will increase the daily usage of the payment services. So I think this will also have a ripple effect to other merchants. That's been the successful business model that we have built in the last eight years with Seven and I, and we want to increase the market share at the cash wrap so that we can also use that data to leverage that for our stock business. That's the new business model that we would like to establish. Yes, thank you very much for such a detailed answer. I have now a better understanding of your strategy. look forward to your further progress. Thank you.

Thank you. So this concludes the Q1 earnings announcement. Thank you again for joining us today. Thank you.