Coincheck Group N.V.

Please stand by, your program is about to begin. If you need audio assistance during today's program, please press star zero. Good afternoon and welcome to CoinCheck Group's NV Fiscal Year 2026 First Quarter Earnings Conference Call, covering the period from April 1st, 2025 to June 30th, 2025. With us today are Gary Simonson, Chief Executive Officer of CoinCheck Group, and Jason Sandberg, Chief Financial Officer of Coincheck Group. Before we begin our prepared remarks, I'd like to remind everyone that our discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are discussed in more detail in our filings with the SEC, including our filings related to the first quarter of fiscal 2026. Such factors may be updated from time to time in our periodic filings with the SEC, and we do not undertake any obligation to update forward-looking statements. Additionally, throughout this conference call, we will also present and discuss nine IFRS financial measures. Reconciliations of our non-IFRS financial measures to their most directly comparable IFRS financial measures appear in today's earnings press release, which are available on our investor relations website and on the SEC's website. Our functional currency is the Japanese yen. During today's call, we'll be referring to certain rounded figures and certain figures that we've translated from yen to U.S. dollars, solely for the convenience of the reader into the U.S. dollar. For more details on these figures and the convenience foreign currency translation we have used, please see our earnings release that was issued earlier today and furnished on a form 6K, as well as our fiscal 2026 first quarter financial statements and MD&A, which we will furnish with SECs on a form 6K. I would now like to turn the conference over to your first speaker for today, Gary Simonson. You may begin.

Good afternoon. And thank you for joining us on our fiscal 2026 first quarter earnings call. I appreciate your interest in CoinCheck Group. I am very pleased to be here and for the opportunity to share our story and provide some further color regarding our fiscal 2026 first quarter. A lot has happened in the crypto space globally and with our company since our last quarterly report. From the Trump administration's further embrace of crypto and the regulatory agencies and Congress's efforts to provide regulatory and legal clarity in its development, use and adoption, leading to an accelerated pace of change both in the U.S. and globally, to new avenues of ways for investors to invest in the space, such as expanded ETFs, publicly traded capital-backed treasury strategies, a number of newly listed public or soon to be publicly traded crypto-focused operating companies, and the blending of offering both TradFi and DeFi crypto products on mainstream exchanges such as Coinbase and Robinhood. And an abundance of both high-level and low-level mergers and acquisitions as companies look to enhance their products and standing to improve their global competitiveness in the space. we have seen an incredible and unprecedented rate of change in a very short period of time. On our prior earnings call in February 2025, we made our corporate strategy as a newly NASDAQ-listed public company headquartered in the Netherlands quite clear, to be a leading global crypto financial services and Web3 holding company through core growth and the expansion of the Coincheck franchise in Japan and mergers and acquisitions globally. Consistent with this strategy, we acquired Next Finance Tech, a staking and node operator headquartered in Japan, offering its services globally, in March 2025, and began offering staking to CoinCheck Inc.' 's customers in our fiscal 2025 fourth quarter. A few days ago, we announced CoinCheck Inc. has entered into a partnership with Mercoin, a group company of Makari, a leading C2C platform in Japan. to provide crypto services to Mercoin's customers through the Makari app platform. With Makari currently having over 23 million monthly active users, 3 million of which have Mercoin accounts, we believe this to be a game changer in delivering enhanced crypto services to a broader segment of Japanese consumers. We continue to look for opportunities outside of Japan and are hopeful the strategic efforts will continue to pay off in the near future. We are especially pleased with the strategic results to diversify and expand given the recent softening in crypto trading globally during our fiscal 2026 first quarter and the improved monthly KPIs we recently reported for July 2025. Here are a few more business highlights for the quarter. Firstly, we didn't make money. In the first quarter of fiscal year 2026, Coincheck Group reported total revenue of 84 billion yen, or 583 million USD, a 27% decrease from the previous quarter, primarily reflecting a subdued cryptocurrency trading environment globally that led to a 33% decline in marketplace trading volume. This downturn in trading activity materially impacted transaction-based revenues and and, along with increased holding company expenses, resulted in a net loss of 1.377 billion yen, or 9.5 million USD. While our selling, general, and administrative expenses continue to remain fairly constant from the prior quarter to this quarter, in pursuing the above strategy and incurring its execution costs, combined with the additional costs of being a public company and building out our corporate infrastructure, we had higher overall expenses for the quarter. This combined with lower revenues, as detailed above, led to a negative adjusted EBITDA of 399 million yen or 2.8 million USD. Despite this, the company achieved strong momentum in key growth indicators. Customer assets exceeded 1 trillion yen or 6.9 billion USD, marking a 16% increase quarter-over-quarter while verified user accounts rose to 2.35 million, 3% quarter-over-quarter growth. We believe our continued product innovation and sustained user engagement through related product offerings, global expansion, and segment diversification will make us less impacted by market volatility and better positioned to weather future volatility over time. Ethereum staking, a strategic growth initiative, also delivered meaningful progress with revenue increasing to 381 million yen, or 2.6 million USD, more than six times the previous quarter. This sharp increase was fueled by heightened customer participation and favorable staking yields. As briefly mentioned above, earlier this week, Coincheck Inc. announced a strategic partnership with Mercoin Inc., a group company of Macari, Japan's largest marketplace app. Again, we are very excited about this partnership. With 23 million active users, Macari is one of the most recognized C2C platforms in Japan. By combining Coincheck's strong trading system with Macari's large user base, This partnership enables users of Macari to open a Coincheck account and trade a wide range of crypto assets in addition to Bitcoin, Ethereum, and XRP directly with Macari app. Here are some facts. As of July 2025, Coincheck manages over 1.2 trillion yen or 8.3 billion in customer assets. Over 3 million Macari users have tried Bitcoin trading through Mercoin since its launch in 2023. In 2024 alone, Mercoin opened 1.72 million new accounts, about 58% of all new crypto accounts in Japan that year. The favorable U.S. regulatory tailwinds, Genius Act being signed, Stable Clarity Act now before Congress, are driving a race to rapid adoption and change around the world. with strong momentum that is not likely to be reversed as TradFi moves deeper into the crypto space. We anticipate that Ethereum staking through Next Finance Tech will become a larger driver of revenue going forward as Coincheck begins to onboard Next Finance Tech staking services for its customers. Finally, let me briefly touch on the regulatory environment in Japan. In June, the Financial Services Agency, released a policy proposal that could mark a significant step forward for the digital asset industry. The proposal calls for the reclassification of certain crypto assets under the Financial Instruments and Exchange Act, aligning them with the same regulatory framework as traditional securities. This would introduce enhanced disclosure, governance, and investor protection standards. we believe we are well positioned to take advantage of this opportunity. In parallel, Japan's ruling coalition is also reviewing potential changes to the tax treatment of crypto asset gains. Under current rules, individual investors may face a marginal tax rate of up to 55%. The proposal under discussion would shift to a flat 20% rate consistent with the treatment of capital gains on listed securities. and introduce a three-year loss carry forward provision. We believe the natural impact of this change would be to dramatically increase the velocity of trading crypto in Japan. While these reforms may remain under consideration and most likely would not take effect until early 2027, we view them as a constructive signal toward greater regulatory clarity. As one of the largest crypto asset trading platforms in Japan, Coincheck continues to engage with regulators and industry participants. We welcome initiatives that promote transparency, investor protection, and responsible innovation. And we believe we are well positioned to benefit from these changes. I will now turn it over to Jason Sandberg, our Chief Financial Officer, to provide commentary on the numbers and to provide some more detailed color.

Thank you, Gary. I'm Jason Sandberg, Coincheck Group CFO, and I appreciate the opportunity to share with you today our fiscal 2026 first quarter financial results. I will start with some year-over-year comparisons. The total revenue increased 12% to 84 billion yen, or 583 million USD in the first quarter of fiscal 2026, from 75.3 billion yen, or 522 million USD in the first quarter of fiscal 2025. Gross margin decreased 13% to 2.7 billion yen or 19 million USD in the first quarter of fiscal 2026 and 3.1 billion or 22 million USD in the first quarter of fiscal 2025, mostly as a result of a decrease in marketplace trading volume. Verified accounts increased 14% to 2.35 million accounts as of June 30th, 2025, up from 2 million accounts as of June 30th, 2024. Our customer assets increased 34% to 1 trillion yen or 6.93 billion USD as of June 30th, 2025 from 747.9 billion yen or 5.18 billion USD as of June 30th, 2024. Our marketplace trading volume decreased 16% to 61.5 billion or 427 million USD for the first quarter of fiscal 2026. from 73 billion yen or 506 million USD for the first quarter of fiscal 2025. Please note that fluctuations in our marketplace trading volume are usually driven a lot by crypto asset industry market volume and conditions generally, and that was no different in the first quarter of fiscal 2026. Our net loss was 1.37 billion yen or 9.5 million USD in the first quarter of fiscal 2026. compared to a net profit of 436 million yen or 3 million USD in the first quarter of fiscal 2025. Components contributing to net loss results in the first quarter included share-based compensation, a new expense for us, 298 million yen or 2.1 million USD, a loss from the change in the fair value of a warrant liability of 223 million yen or 1.5 million USD, and total transaction expenses of 143 million yen or 1.0 million USD. Adjusted EBITDA was negative 399 million yen or 2.8 million USD in the first quarter of fiscal 2026, compared to 1 billion yen or 7 million USD in the first quarter of fiscal 2025. Please note that as explained in more detail in our earnings release published this morning, we decided to take a different approach to adjusted EBITDA. beginning with the fiscal 2026 first quarter, mainly by taking into account further adjustments, share-based compensation, and the change in the fair value of our warrant liability.