Digital Garage (4819) Q1 2026 earnings summary

Executive summary

• Recorded a consolidated loss before tax of ¥1.3B in 1Q FY26.3, mainly due to non-cash valuation loss on investees from forex fluctuations, despite strong segment profit growth in core businesses.

• Revenue for the quarter ended June 30, 2025, was ¥9,569 million, down 23.0% year-over-year.

• Net loss attributable to owners was ¥673 million, compared to a profit of ¥3,170 million a year earlier.

• Payment transaction volume grew 14% year-over-year, with large-scale projects in financial marketing driving profit growth.

• Strategic alliances, especially with Resona Group and KDDI, are advancing, with new payment platforms and digital finance services for SMEs in development.

Financial highlights

• Consolidated profit before tax was -¥1.3B, down from ¥4.7B in 1Q FY25.3, due to forex-related valuation losses in the GII segment.

• Operating loss before tax was ¥1,345 million, compared to a profit of ¥4,744 million year-over-year.

• PS segment profit before tax rose 27% year-over-year to ¥2.2B, with payment profit up 13% and marketing profit up 104%.

• LTI segment profit before tax increased 23% year-over-year to ¥625M, driven by strategic business growth and reduced losses.

• Basic business revenue grew 21.8% year-over-year to ¥9.6B; basic business profit rose 37.7% to ¥1.2B.

Outlook and guidance

• PS segment is guiding for 20% year-over-year profit growth in FY26.3, with annual payment transaction volume expected to exceed ¥10T as large-scale projects launch.

• Platform Solutions segment is expected to achieve over 20% profit before tax growth for the full year, driven by payment business expansion and strategic partnerships.

• Profits are expected to cluster in 2H due to upfront investments in 1H, with strong growth anticipated from new payment solutions and BNPL business.

• Dividend per share forecast for FY26.3 is ¥47, with a progressive dividend policy and payout ratio target of 30% of base business cash flow.

• No consolidated financial results forecast disclosed due to difficulty in estimating fair value of startup investments.