PayPay Corp (PAYP) Q2 2027 Earnings Call Transcript

Good morning, and good evening, everyone. Welcome to PayPay's earnings call for the second quarter of fiscal 2026. I'm Keita Oishi, Head of Investor Relations. This earnings call will be led by Nakayama-san, our President and CEO. Later, we will also host a separate investor briefing with Kagechika-san, our CFO. Joining Nakayama-san on this call are Kagechika-san and Motoda-san, Head of Finance Group. Please note this call. It will be broadcast live, and replay will be available on our website at a later date. Before we begin, please note today's discussion includes four looking statements, non-IFERS financial measures, and unaudited financial data. Actual results may differ materially from our expectations. For more details, including risk factors and non-IFERS reconciliations of non-IFERS measures to the most directly comparable IFERS measures, please carefully review our disclaimer on page 2 of our presentation. We'll ask for your understanding of these terms as we proceed. With that, I will now turn the call over to Nehriyama-san.

Hi, good morning and good evening. I am Nakayama. Today, I will explain our FY2026 Q2 results. I will also cover the steps for our further growth. I have a 13th slide. Let me start with the business highlights. Since Pepe launched in 2018, we have expanded payment use, business scale, and revenue. At the same time, operating leverage and better cost control have helped adjusted EBITDA grow. As a result, first half revenue and profit have grown for seven straight years. Adjusted EBITDA is now growing faster than revenue. This is Pepe's growth path since launch. Based on our strong first half results, we are raising our full year guidance again. This is our second increase in this physical year after the change announced in Q1. Both payment and financial services segments continue to grow strongly. First half, consolidated revenue rose 28% year-on-year to 227.9 billion yen. Revenue in Q2. A loan reached 118.1 billion yen, up 28% year-on-year, maintaining strong growth. In the payment segment, higher GMV and transaction fee rates lifted transaction and service income end. As a 25% and interest income rose 28%. As revolving, instrument, and cash advance balances continue to grow. In the financial services segment, revenue grew 41% to 45.4 billion yen. Higher deposit and loan balance along with higher interest rates drove this growth. First half-adjusted EBITDA rose 57% year-on-year to 79.5 billion yen. The margin also rose from 28% to 35%. Profitability improved as revenue grew in both payments and financial services. We also reviewed our point benefits in June and took other steps to keep costs under control. Next, let me turn to the key measures for the payment segment. Q2 GMV grew 20% year-on-year to 5.6 trillion yen. Many rainy days in September affected offline payments. Also, last year's rush-in hometown tax donations made the year-on-year comparison tough. However, even with these headwinds, GMV continued to grow. Net decorate, which is payment segment revenue divided by payment segment GMV. Loss by 0.1% from 1.64% to 1.74%. The main drivers were growth in online payments and credit card financing balances. Next, I will explain our guidance for physical 2026. Based on our strong first half results, we are raising our full-year guidance. We expect full-year revenue of 474 to 478 billion yen, up from 465 to 478 billion yen. As for adjusted EBITDA, we expect 159 to 163 billion yen, up from 149 to 155 billion yen. 4Q3 We expect revenue of 121 to 123 billion yen and adjusted EBITDA of 41.5 to 43.5 billion yen. Now, let me explain our next stage of growth. I have one clear message. Growth in payment creates the next stage of growth in financial services. First, let me show where PayPal stands today. These shares are based on the cashless promotion council's code-based payment usage trends survey. The council was formed following a proposal from METI. The survey uses actual transaction data reported by each provider. Within code-based payment services, PayPay accounts for about 70% of both code payment value and transactions, and 1980% of the payment value. of peer-to-peer money transfers, Pepe is by far the market leader in all three measures. This scale brings a huge number of payment transactions into PayPay every day. It gives PayPayCard, PayPayBank, and PayPaySecurities a strong base for growth. This tree shows a paper growth model. The trunk is everyday payments. Payments give us far more frequent touch points with customers than banking or securities. People use paper to pay and send money each day. So, a huge number of transactions flow into PayPay. As PayPay becomes a part of money, more daily activities, users pay more often and spend more. This expands transaction volume and makes the payment trunk stronger. As the trunk grows, card financing balance also grow. We can also bring more users into our other financial services. This gives our card, banking, and securities business more customer contact and more room to grow. PayPayCard already showed that growth in payments can lead to growth in finance. We use daily payment touchpoint to bring users into card use. The number of active cards issued rose by 3.5 million year-on-year to 18.7 million. While card payment value and financing balances continue to grow, financing balances to lose 26% year-on-year to 600 billion yen. This wider use also adds to our revenue base. We also now extend this path to PayPay Bank and PayPay Securities. Our large payment user PayBase is the entry point. Through the PayPay app, we can help users more from account opening to active use. This will help us grow deposits, loans, and investment balances. PayPay Bank and PayPay Securities are still at an early stage than PayPayCard. We will use our PayPayCard experience to bring in customers and deepen use. This will help make banking and securities our next growth energies. Next, let me explain how our payment base has grown. Some people who knew PeiPay in its early days may still see it as a service for micropayments. But in about 8 years since our launch in October 2018, Pepe has become a part of daily life. People now use it in more places and for larger payments. As a result, the active users rate or MTU as a share of registered users rose from 36% in FY 2019 Q2 to 56%. Monthly spent per user grew almost four times over the same period. Monthly spent per user has grown as both payment size and payment frequency increased. Average transaction value rose to 1,930 yen in this quarter. Monthly payments per user rose almost three times. This growth came from expansion. of use cases and wider acceptance of PayPay, including online payments. Wider use of PayPay credit and PayPay card also supported the growth. Payments already from a large rank. We will keep moving more users to PayPay credit and PayPay card. We will also grow payments at online merchants and other places where payment values are higher. This will help us keep high payment frequency while raising payment value. The next step to raise payment frequency and value per payment is to cross-sell our financial services. We use FI 2023 Q1 as a starting point. After PPECard became a consolidated subsidiary, since then, The state share of users with two or more PayPay group services has rising from 27% to 38%. The data shows a clear pattern. Users spend more through PayPay as they add more services. Users who use all four services spent about five times as much as users who only use PayPal. Monthly spent also grew year-on-year in every group. This shows a positive cycle. Payments bring users into financial services. Financial services then lead them to use PayPayMoa. Wheels expand cross-use to increase lifetime value and users. Average revenue per user shows this growth model in one number. APU has grown each year on reached 1,050 yen this quarter. This represents a 3-year CAGR of 60%. Up from financial services grew at Kega of 33%, faster than total up. Three drivers support this growth. The first is deeper use of everyday payments. More payments and higher monthly spend per user are driving up today. The second is a shift to PayPay Credit. Active user payments value and financing balance are growing. This is already a major source of growth. The third is deeper use of paper bank and paper securities. Three businesses are still at an early stage. We have a lot of room to grow active accounts, deposits, and assets under management. Next, I will update you on the partnerships and investments that support this growth. This is the last slide. The partnership and investment we announced this year are both on track. The partnership with Seven and I hold this out is already underway. We launched a joint campaign on November 1st. This is the first step to increase paper use in stores. In the second half of FY2027 or later, we also, we plan to integrate our IDs and start the full rollout. We will link stores with digital services. This will make Shopping easier and create more chance to use Pepe in daily life. Our investment in T&D financial life is also on track for closing on October 1st in the line with our original plan, to start delivering business synergies soon after closing. We have set up a PMI selling committee. The work needed for closing, increase IFRS work, is also moving ahead well. We will keep putting each plan into action and turn it into results. This concludes my presentation. Thank you.

We will now move on to the Q&A session. We will take questions from participants who have registered in advance and are connected via Zoom. Please limit your questions to two per person and wait for our response before asking your second question. We will begin with questions from members of the media.

For any of you with questions, please click the raise hand button on Zoom. If you'd like to withdraw your question, 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 refrain unmuted until our response is completed. We will now take the question. The first question is from Bloomberg. MJ, MJ-sama, please unmute yourself and ask us your question. Hello, I am MJ from Bloomberg News. I have two questions. First question is regarding deployment of global services. If you have any comments about the expanding of global services, please. Yes, global service is our the United States business. Together with Visa, we have established a JV partnership, and we already have dispatched our people. And within this fiscal year, we will conclude the feasibility studies together with market research. Thank you very much for your answer. My next, my second question, please. Great performance and upward revisions of your guidance. Despite that, all the positive momentum, the impact to your share prices is rather limited relatively. How do you see, how do you view these market reactions? And in order to further raise your valuation in the market going forward, what kind of initiatives do you think are necessary, please? Yes, you're right. The reaction is rather modest. For us, we aim for sustainable performance growth and also steadily improved profitability. And through this kind of RR communications, we would deepen everybody's understanding of our business so that we can be evaluated properly. That's what we are working toward. Thank you very much. よろしいでしょうか?

We would like to take next question. If you have any questions. If you are to raise your question, please press raise hand button on zoom. We still have time to take questions. If you have any question, please press raise hand button on zoom. Next person is Kyodo Press. Kuashima-san, please unmute and ask your question.

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Our IR department will contact you later. Public relations department will contact you later. We would like to move on to the next question. Next person, journalist Suzuki-san. Please unmute and ask your question. This is Suzuki. I'm a freelance journalist. My first question, you talked about overseas business and also in Japan as well. The collaboration with Visa, flexible creation was mentioned. Do you have any progress update? We are currently We're finally making the preparation, and the progress is steady at the right timing. We would like to announce. What about the timing? Any comments you can give us? So far, no. I would like to refrain from commenting on the timing. My second question, this is more of a confirmation related to overseas business. Seven and I, ID integration was referred to. In countries other than Japan, any actions have been taken? Do you have any comments? There are no concrete progress, but we are still discussing including that possibility. Thank you very much.

Next, we would like to take the next question. Next question from Nikin. Aotsubo-sama. Please unmute yourself and ask us a question.

Nikin Ootsubo-sama.

Hello, Ootsubo-sama from Nikin. Please unmute yourself and ask us a question. We still are not able to recognize you our comments, so if you could please unmute yourself on the Zoom and ask us your questions, please. Can you hear me now? Yes, we can hear you. Please start your question. Thank you. I apologize. I am Otsubo from Nikim. Thank you for taking my question. I would like to ask you about Japan. Thank you, everyone. You are offering PeiPay bank provides loans with a credit guarantee. And now it's available nationwide, and I've heard some comments, voices, saying some are a bit cautious. So I would like you to know how you see the opportunity to work with regional financial institutions. We are not really receiving too many opportunities, direct talk, from those. So we are very much interested in talking with the Shinkin Bank Association. So if Otsubo-san, if you can contact us, if you can facilitate our relationship building, that would be great. Well, I understand that from thinking this particular type of Loan was their own domain, and I hear that there's a concern that their main initiative is now being eroded because of your entries. So I wonder whether you have any initiatives to work together with Shinkin Trust Bank or regional banks, regional financial institutions. I don't mean to repeat myself, but I don't have particular contact directly, so we are not doing any particular activity that is referring to what you're mentioning. If they're interested in talking to us, we would be more than happy to talk to them as well. We are very interested in possible collaboration. Thank you very much.

I'm Tanaka from IT Media. I have two questions. Right now, in various industries, there are unauthorized information access incidents. We haven't heard anything related to PeiPay. The countermeasures for the unauthorized access is fully implemented at PeiPay. I think this applies not just to PeiPay, but it applies to all companies on this topic. The interest level is very high, and internally, CISO, CIO, CTO, and including CEO, the countermeasures are being implemented on a day-to-day basis, and AI is used by Peipei to analyze the vulnerability and identify the risks early on in implementing the countermeasures, reviewing the contract, confirming the network. So, we are doing the full-scale checkup. We do the checkup. and implement measures wherever necessary. That is constantly being worked on. In each company, I think, the overall checkup and countermeasures are being done, but that is not the end of the story. On day-to-day, monitoring is continued, and countermeasures are to be implemented continuously. This applies not just to PeiPay, but at all companies. This is an area that needs to be worked on in the future. Thank you very much. One more question I may have missed. In September, there was a prolonged rain, and offline payment was impacted. The traffic was reduced in physical stores. Is that the Correct understanding. Compared to last year, I think members of the media have felt that this year, September, was a very rainy month. So offline settlement and payment, I think retail stores all struggled, and we also received a similar impact. Do you have a numerical analysis? No, we don't disclose any numbers, But the impact was felt worthy of mentioning in this presentation.

We'd like to take the next question. Next question is Autonomic Payment Magazine, Tatara-sama. Please unmute yourself and ask us your question. Hello, I am from Denshi Ke Sai Magazine, Autonomic Financial Payment Magazine, Tatara. Last month, from October end, From transportation operator, started offering QR code payment services, called Tepe, and I understand that they are going to launch a major campaign from this year. From Mr. President, if you could please share a comment or your opinion about the newly emerging rival. Well, every... Companies are leveraging their own strengths to offer this kind of payment services, but QR payment or smartphone payments, there are more and more choices available, and that would be a positive for the market growth. We do recognize that this particular operator is a strong player, can be a strong competitor, but them joining our market is positive to us. We would like to leverage our strong user base as a starting point for offering a variety of payment services and to offer more values to our users and merchants. Thank you very much.

Moving on to the next question. We still have some time. So, please feel free to press raise hand button on Zoom. You'll be ready. A newspaper, Sugimoto-san, please unmute yourself and ask your question. I'm Sugimoto from Yomiuri. Can you hear my voice? Yes. Thank you. Your company in March this year was listed on NASDAQ, and it's been six months or so. As of today, the listing in the U.S. market, Nakayama-san, how do you evaluate this, especially the share prices are not rising? Thank you so much. And overall, Nasdaq market is focused on the AI credit risks. And overall market environment, is your company be impacted by the market environment? That is my first question. And also, TSE listing possibility in the future. You said that you don't deny the possibility. Currently, what is the situation? Thank you for the question. Firstly, on your first question, in March, we listed on Nasdaq, and it's been six months or so. As of today, this option has been a success. That is my perception. TSC or Nasdaq or NICE or There are various stock exchanges where we can list. And regardless of the exchange that we list, we will continue to have dialogue with the market. And that is how the share price will be formed. So we listed on Nasdaq and through dialogue and through our business performance, we believe it's important that we will have market understand our business. And the U.S. market is very competitive, and we are... Devoting our effort. With regards to DSC, we have made the judgment list on NASDAQ in March, and so far we have not revoked that decision. But it's not that we will deny any future possibilities. That's all.

Thank you very much. Thank you. I'd like to take the next question. Next, from Iketani-sama from Payment Navi, please unmute yourself and ask us your question. Hello, I am Iketani from Payment Navi. Can you hear me? Yes, we can hear you. As CEO Nakayama mentioned about the... By promoting our cross-sales, you would offer multiple different services to enhance that value per customer, and I think we are seeing some results, as you've shown in the positive performance, but at the same time, players like Rakuten or Docomos, they are also focusing on driving more synergy with financial services. How do you position yourself versus other players when it comes to promoting cross sales? And if you could please compare how you are faring against the others who have similar focus. Well, other companies are also doing their best in order to win support from stakeholders, users, and merchants. We need to do better in order to continue to produce the value that we provide. Just, we just keep at it, and I think that's the only thing we can do. I would like to refrain from evaluating how we are faring against the others. We are closely listening to how you are evaluating us and to continue to reflect our findings to our business management.

We still have time to take questions from the members of the media. If you have a question, please press raise hand button on Zoom. We have time to take more questions. Next, from Nikkei Yoshimi-san. Please unmute and ask your question. I'm Yoshimi from Nikkei. Can you hear my voice? Yes. Please go ahead. Thank you. I have two questions. First question on page five. You talked about the cumulative results of the first half. The financial service revenue is growing strongly on an year-on-year basis. And what is the background? The asset expansion on the investment side contributed, or the yield enhancement was a larger contribution? In the first quarter, the deposit rose, but the loan balance growth The growth has slowed down, and the interest differential shrunk. The investment asset, the credit card asset is growing, and that is the major factor. Thank you very much. My second question, the payment segment. Offline, high ticket size payment are to be captured. The size of the payment, the share has grown, and profitability is now the key focus. Can you talk about the concrete measures on these areas? Yes, the profitability is important, and at the same time, we also are focused on achieving growth. I think we said online payment, the online payment is actually growing, and take rate is higher online compared to offline. That is impacting. Thanks to the weight of Online payment growing, that contributed to the outperformance. We're not going to dedicate on online. In the past, PayPay was stronger in offline, but we're now going to expand in online transaction. So wherever users spend, they can use PayPay. So that is the basic direction Thank you very much.

Thank you. We'd like to take the next questions. Is there anyone else who has questions? If you have questions, please press the raise hand button. We still have time for the questions from the media representatives. So, now, we would like to provide an opportunity for those who have already asked questions. Freelance journalist, Suzuki-sama, if you could please unmute yourself and ask us a question. Hello, this is Suzuki. Thank you for taking my questions again. My question is about technology. I understand that you will be increasing your net presence. For example, agentic commerce. It's not in the mainstream yet in Japan or world either. What kind of thinking do you have for investment into this kind of futuristic technology? We are researching various agentic use. We would like as long as we can leverage agentic AI to provide something that are very convenient for our users, we will. Second question, this is also about new technology too. The current source is a deposit from a bank or the cash or pay pay card. In other words, you do have a source. But something totally different like stable coins, crypto assets, how are you thinking about handling them for the future? That is in a similar context with my comment about agentic AI use. We are continuing our studies for stable coins, not only about issuing them, but if we can develop a product where our user-based merchants can actually use their stable coins, then we would make announcements. And please. Wait a moment, please, while we're working on it. Thank you very much. Do you have any other questions? Anybody with any other questions? If you do, please click, raise the hand button on your Zoom platform.

We still have some time to take questions from the media. Question, news picks. Ito-san, please unmute yourself and ask your question. Thank you. Can you hear my voice? Yes, please go ahead. Thank you for giving me the opportunity. I'm Ito from Newspix. My question is on application development in the future. In the past, we asked your PR person on the PayPay Securities and PayPay Bank. Growing the accounts through PayPay app and super app topic comes up often from PayPay app, how are you going to expand the users? If you have a development strategy along those lines, could you explain development strategy? You mean business development strategy? Yes, super app. How do you envision the evolution as a super app? I assume that, Ito-san, you use PayPay. There's a home screen, top screen. And at the lower part, each company's service entry point gateway is being created. And from that, users will sign up. And through KYC, they can start to use. And we are polishing this experience. And actually, from that gateway, many traffic is coming in and actually being used. That is the experience that we can offer from that screen. All banks and securities and card services can be used on seamless basis. That experience we already provide. The user who signed up recognized a certain value and continued to use. That is already happening. The numbers related to that were explained in the slides, And we do see success. My second question, in the future, how do you plan to develop the development strategy? Do you have any plans? Or are you going to follow the present direction? The current way of doing things are being highly valued. So further polishing the current service would be the way to go. Thank you.

Now, we'd like to take next question from freelance journalist Koyama-sama. Please tell me yourself and ask us your question, please. Can you hear me? Thank you. You mentioned about the U.S. expansions. What other regions or countries are you thinking of about overseas expansions, including actual use of pay-pay in overseas? Do you have any plans for overseas expansions? Our PayPay service is already available in Korea and Taiwan, and we'd like to expand one country at a time. And that's quite important for overseas expansions. The U.S., we are taking a more cautious approach because we are establishing our own JV entity locally. Thank you. We are reaching the end of the time. We would like to take the next question as a final question from the media. Anybody with any question, please? それでは、2回目となります。

PayPay banks and PayPay Securities and utilization of the mobile phone shops of SoftBank, is that part of your strategy? Any measures you can share? The measure that you mentioned is not part of the plan. So our focus is through our app, too. Expand the user base and deepen the touchpoint with users. That is the basic strategy we are pursuing. Understood.

Thank you very much. from cell-side analysts and investors.

For anyone with questions, please use the raise hand button on Zoom. If you would like to withdraw your question, please click the raise hand button again. When we call on you, we will announce your company name and your name. At that time, we will ask you to unmute yourself. So, please unmute on Zoom. After asking your question, please remain unmuted until our response is completed. Now the first question from JP Morgan, Sato-sama, please unmute yourself and ask us your questions. Hello, I'm Sato from J.P. Morgan Securities. I have two questions. My first one. In the financial service segment, second quarter performance, how do you evaluate it? The first quarter for financial service segment for security area, there was a surplus in demand. It's a one-off. It has fallen from this second quarter, and also because of the policy interest rate hike, and I think there's been some... So, based on such a context, how do you evaluate this quarter's performance and how are you forecasting financial segments contributing for the full year at this upper revision? I do agree with your assessment for the market surrounding environment, and especially credit card balance, credit card loan balance, is quite strong, continuing growing. So, in this regard, Q2 was by any means about performance, and we believe that this trend will continue going forward. And within the financial service segment, so your assessment is the card balance is quite strong? Well, sorry, both, actually. For banking, loan balance is increasing, but… I mean, there's one way to look at it that we could grow only to this extent, and we are doing, we are revisiting our product offering so that we can grow even stronger. So, this growth is not a spectacular growth, and I do agree with you that there's still a room to improve. Understood. I would like to ask you more in detail about your premises. On another opportunity. Second question, this is all from your core business regarding the loss from your shareholding in the equity method affiliates. Let's say if this was contributed from Binance Japan and Binance Global had issues with security, cybersecurity issues. So did that impact you? That impact is there or not? Please comment. Regarding the relationship between Binance Global and Binance Japan, in that regard, this incident of Binance Global had no impact to Binance Japan. That's what's announced by Binance Japan, so no relations in that part. And all the other part, as you mentioned, We have revisited our business plan because of changes in market environment. That's the reason. Thank you very much.

Moving on to the next person from Morgan Stanley Securities, Mia Nagasaka. Please unmute yourself and ask your question. I'm Nagasaka from Morgan Stanley.

Can you hear my voice?

Thank you for the opportunity. I would like to ask related to the assumptions. The core business is very robust, and you revised upward. And looking at the future plan, the top line will grow, but the profitability will likely to decline. What is the basic concept? Are there any seasonality or any special assumptions you are setting? Thank you, Nagasaka-san. The first point will be addressed by our CFO. Nagasaka-san, thank you for the question. On the guidance, as you say, very strong first and second quarter results were achieved, but as you know, every year End of the year and end of the fiscal year, we ran campaigns. The campaign expenses will be recognized. So in response to that, the profitability will decline. This investment will drive the future growth from the following year. So these investments are very important and we intend to continue. And also for the fourth quarter in the past, As you can see our record, you can see that there are financial closing related expenses, for example, business tax. And employee compensation. Those expenses will be recognized in the fourth quarter. So from the profitability perspective, fourth quarter compared to other quarters will be worse. That is the usual pattern of the year. Thank you very much. My second question. In the financial service business, how do you respond to the interest rate environment? The market environment will likely to further go up, and the funding cost,

including

pass-through rate, any changes in your strategy? And also, the profitability of the financial What social service segment can you maintain at high level? The impact of the interest rate CFO will address that question. Thank you for the question. The financial service segment includes our bank and securities, but the majority is PayPay Bank. For PayPay Bank business, the interest rate rise is a positive contribution. That is we have loan business and we make securities investment and the yield will go up. On the other hand, pass-through rate of the deposit is more or less the same as other banks, roughly around 40 percent, and the spread will go up. On top of that, the credit spread itself. Wherever we can capture, we will take credit spread. So the interest rate rise for the financial service segment will contribute positively, impact positively. But in payment segment, we have credit card business and the funding cost will the interest rate rise will negatively impact. So totally for PayPay consolidated, it's a small positive. That is the current Thank you. Thank you very much.

Thank you. I'd like to take the next question. Next is from Macaulay Securities. Please unmute yourself and ask us your question. Can you hear me? Yes, please. Go ahead. I have two questions. First, about your cost. In a payment segment, Your cost for that loan is actually growing quite a bit. Is that something that you are allowing to that extent strategically? At what pace do you think it is going to expand? And another question is your interest rate cost.

Next, I wonder.

I want to confirm how much of that is from a climate exchange or interest increase. If you could please give us a detail. Let me answer the first one regarding the loan cost. See if I would answer. We are controlling of our landing, so we are... Testing it, and nothing is a surprise to us. These numbers, as long as we are in lending business, there are some, sometimes that are good, sometimes that are no good, ups and downs gets repeated, and this is how much we had incurred in terms of this balance-related cost. Second point, let me have a CFO answer. In principle, the impact is from a market interest rate hike. We did not change any of the lending mix. Okay, thank you. Second question is related to agentic commerce. Your payment service and your securities are becoming more and more important for your business. And... I wonder whether you have a very strong pipeline relationship, your group company and OpenAI. I wonder whether you are studying a... Use of API or by engaging with open AI more strategically to a deeper level. I wonder your relationship with other players like Anthropic or other large LNM players gets impacted. I would like to please elaborate your API strategy or when it comes to security measures. Please talk about your strengths. Well, first of all, we are agnostic to any LN players. We are not limiting our use to OpenAI alone. So we use... What we find the most effective, considering various different factors to decide on with whom we work with, and regarding agent and commerce, you are absolutely right about the importance of security. We can't just simply offer the functionality to the market and everything else fall apart, fall behind. So we need to secure security first, then to offer products with great convenience to our users. That's our challenge, and we are proceeding cautiously in that regard. Let me follow up with questions. Are you considering an integration with a line agent? No, not at the moment. We will continue the discussion, but we don't have any specific measures or initiatives. Okay, thank you very much.

We would like to take the next question from Nomura Securities. Harahata-san, please unmute yourself and ask your question. Thank you. I'm Hara from Nomura. I have one question. The possibility of the business change going forward in June, Nakayama-san became the board member of SoftBank KK, and SoftBank business overall business optimization is what I expect. Looking from the PayPay side, what kind of business change and group synergy can you expect as much as possible if you could explain? In the past, as well, on group-wide basis, we have been working on enhancement of user value, and from this year, I joined as the board member, and that will be further accelerated and expanded and strengthened. I don't have a concrete example I can share, but we are going to strengthen the commitment and further pursue. So please stay, keep your expectations high. Thank you.

Thank you. I would like to take the next question. If you have any questions, please click the raise hand button on your Zoom platform. Mr. Kirk, you raised your hand, but you cancelled it. If you still have questions, please click the raise hand button again. Thank you. So, next. Kirk-sama, please unmute yourself. There's no company name here, but please ask your questions.

Hi, can you hear me? Yeah. Hi, thank you. This is Kirk Boudry from Bloomberg Intelligence. I have one question. I'm wondering if you can talk about the impact of the tachikesai feature for credit cards on your business, both in the code payment side and on the credit card side.

Thank you for your question. Regarding touch決済, that's available on our PayPay credit card, so we do have a good understanding of the benefit to our users about the convenience of using that functionality. But at the moment, The volume is not so significant for the overall business. Gradual increase is what we are seeing for the Tachikesai. So how are we going to incorporate Tachikesai is a topic that we are always discussing amongst the management. So when there's some necessary measures that we need to deploy, we will. And whenever we are able to share something through this kind of opportunity, we would like to communicate with you. We are constantly looking at data to think of what would be the good initiative for PeiPay to take.

Okay, thank you. Thank you.

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For the second quarter of fiscal 2026, thank you again for joining us today.