Coincheck Group N.V.

Please stand by, your program is about to begin. If you need assistance on today's program, please press star zero. Good afternoon and welcome to Coin Check Group's NV Fiscal Year 2026 Second Quarter Earnings Conference Call covering the period from April 1st, 2025 through September 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 second 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 non-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 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 convenient foreign currency translation we have used, please see our earnings release that was issued earlier today and furnished on Form 6-K as well as our fiscal 2026 second quarter financial statements and MD&A. which we will furnish with SECs on a Form 6-K. 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 for our fiscal 2026 second quarter earnings call. I am pleased to report that we have a strong quarter of operational excellence and financial performance. Coincheck Group delivered total revenue of 133.1 billion yen, or 899.5 million USD, for the quarter ended September 30, 2025, representing 58% quarter-over-quarter growth. This growth was driven primarily by a 54% increase in marketplace trading volume combined with consistent spreads throughout the quarter. We also had solid customer growth with our verified user accounts growing 15% year over year. This represents strong annualized growth and demonstrates the continued expansion of our customer base and validates our platform's market appeal. Most important, we made money. Our disciplined approach to operational efficiency combined with increased revenue has yielded positive results with net profit reaching 355 million yen or 2.4 million USD for our fiscal 2026 second quarter. as compared to a net loss of 1.38 billion yen or 9.3 million USD in our fiscal 2026 first quarter. A net improvement of 1.73 billion yen or 11.7 million USD or an approximately 12 million improvement on an adjusted EBITDA quarter over quarter basis. This strong increase in profitability reflects not only the growth in our core marketplace trading volumes and revenue, but also a strategic focus on cost optimization, as evidenced by our quarter-over-quarter reduction in selling, general, and administrative expenses. Our Ethereum staking award initiative represents a significant strategic milestone and continues to demonstrate strong momentum. Revenue for this growth vertical reached 794 million yen, or 5.4 million USD, for the quarter, more than 108% growth from the prior quarter. This performance was driven by increases in our custodied Ethereum, as well as a higher average percentage of staked Ethereum. As we've communicated in previous quarters, continued expansion in Japan, as well as international expansion, remains the focus of our growth agenda. We continue to execute on our plan. Building upon the successful closing of our acquisition of Next Finance Tech Company Limited in the first quarter of fiscal 2026, we recently successfully completed our previously announced acquisition of Applo SAS. a leading digital asset prime brokerage headquartered in Paris, France, serving institutional cryptocurrency investors globally. Apple has grown rapidly and today serves more than 60 active institutional clients, including hedge funds, asset managers, banks, and sovereign funds. This acquisition represents the first step of an important and ongoing component of CoinCheck Group's stated mission. to be a disciplined global allocator of capital, and to make strategic acquisitions of retail and institutional crypto businesses outside of Japan, including Europe. The transaction was completed through the issuance of 5,007,500 common shares of CoinCheck Group ordinary shares, reflecting our commitment to strategic equity-based growth. We continue to evaluate acquisition opportunities consistent with our stated growth plans while seeking to create strong alignment with potential acquisition counterparties and to structure potential transactions in such a way as to provide further opportunities for institutional and retail investors to have greater access to and enhance liquidity in shares of our publicly traded common stock. We remain excited about our strategic partnership with Mercoin Inc., a group company of Makari, Japan's largest marketplace app. Makari is one of the most recognized C2C platforms in Japan. By combining Coincheck's strong trading system with Makari's large user base, this collaboration will enable Mercoin customers direct access within the Macari app to open a Coincheck account and trade a wide range of crypto assets through our platform. We will have more to share regarding this partnership in the coming months. We continue to actively pursue additional strategic collaborations across Japan's institutional landscape. Our objective is to enable leading financial institutions to integrate Coincheck's cryptocurrency solutions into their existing service offerings, thereby expanding digital asset accessibility throughout the Japanese market. We are particularly encouraged by our ongoing discussions with other Japanese institutions, which represents a significant opportunity to broaden Coincheck Group's market reach and accelerate our growth trajectory. Finally, we continue to monitor Japan's proposed comprehensive tax reforms and the reclassification of select cryptocurrency assets under the Financial Instruments and Exchange Act. While implementation is anticipated in early 2027, we view these reforms as a significant catalyst. We believe these changes will ultimately enhance market transparency, increase institutional participation, increase overall trading velocity, and create substantial growth opportunities for well-positioned market leaders like Coincheck. With that, I now turn it over to Jason Sandberg, our Chief Financial Officer, to provide commentary and more color on our numbers for the quarter.

Thank you, Gary. Let me take you through our second quarter of fiscal 2026 performance. I will start with some year-over-year comparisons. Total revenue increased 89% to 133.1 billion yen or 900 million USD in the second quarter of fiscal 2026, up from 70.3 billion yen or 475 million USD in the second quarter of fiscal 2025. Gross margin increased 92% to 3.9 billion yen or 26 million USD in the second quarter of fiscal 2026. up from 2 billion yen, or 14 million USD, in the second quarter of fiscal 2025, as a result of an increase in our verified user accounts, customer assets, and overall increases in our marketplace trading volume. Our verified accounts increased 15% to 2.4 million accounts as of September 30, 2025, up from 2.1 million accounts as of September 30, 2024, Our customer assets increased 78% to 1,189 billion yen or 8.04 billion USD as of September 30th, 2025, up from 669 billion yen or 4.5 billion USD as of September 30th, 2024. Our marketplace trading volume increased 72% to 94.7 billion yen or 640 million USD for the second quarter of fiscal 2026, up from 55.1 billion yen, or 373 million USD, for the second quarter of fiscal 2025. Please note that fluctuations in marketplace trading volume are usually driven by crypto asset industry market volumes and conditions generally, and the size and level of trading activity at Coincheck specifically, as well as market price fluctuations in the crypto assets frequently traded. Net income increased to 355 million yen, or 2.4 million USD, in the second quarter of fiscal 2026, compared to a net profit of 15 million yen, or 0.1 million USD, in the second quarter of fiscal 2025. The primary drivers of this increase were the improvement in our gross margin, which is driven by higher trading volumes, as well as higher average of custody of Ethereum staked. These improvements were partially offset by higher year-over-year selling general and administrative expenses. Adjusted EBITDA was 1,486 million yen or 10 million USD in the second quarter of fiscal 2026 compared to 250 million yen or 1.7 million USD in the second quarter of fiscal 2025. As I mentioned, our total revenue increased 89% year-over-year. we saw our verified user accounts grow by 15% and our customer assets grew by 78%, which we believe helped drive our total revenue growth despite the market volatility throughout the year. Our staking revenue for the second quarter increased to 794 million yen or 5.4 million USD versus 381 million yen or 2.6 million USD to the second quarter fiscal 2025. With 523 million yen or 3.5 million USD, of related costs for this quarter. Those costs essentially being the amounts remitted to our customers. Staking revenue is primarily driven by the amount of Ethereum our customers elect to be staked and the existing market rate for staking rewards. As Gary mentioned, we increased the average Ethereum stake from 53.2 billion yen, or 360 million USD during Q1, to 113.1 billion yen, or 764 million USD during Q2. During the first quarter of fiscal 2026, we acquired Next Finance Tech, a staking platform service company, and are currently working towards utilizing Next Finance's staking platform to reduce the amount of the staking rewards currently shared with a third-party provider. Additionally, we are in ongoing discussions with various third parties exploring separate revenue generating business opportunities for Next Finance Tech. Moving on now to our operating expenses. Total selling general and administrative expenses increased to 3.4 billion yen or 23 million USD in the fiscal 2026 second quarter compared to 2 billion yen or 14 million USD in the fiscal 2025 second quarter. Selling general and administrative expenses in the fiscal 2026 second quarter increased year over year primarily as a result of additional professional fees and other costs associated with being a public company. As well as share-based compensation expense of 321 million yen or 2.2 million USD for the fiscal 2026 second quarter compared to zero expense for the fiscal 2025 second quarter and 298 million yen or 2 million USD for the fiscal 2026 first quarter. We ended the fiscal 2026 second quarter with cash and cash equivalents of 9 billion yen or 60.6 million USD. In summary, we are pleased with our results, including having successfully completed our second acquisition, our enhanced earnings and profitability, continued progress in expense control, steady growth of our customer accounts and customer assets, the revenue traction of our relatively new staking rewards program, and our new strategic partnership with Mercari, which should help us expand our customer base and customer assets further. I would now like to hand the call back to Gary.

Thank you, Jason. Before I conclude my comments and open it up for questions, I would like to take a moment to welcome our new team members from Next Finance and Applo and share my deep appreciation for the strong depth of talent and industry expertise, shared common vision of excellence, sense of teamwork, and the energy and enthusiasm that they have brought to our group as we continue to build a global crypto financial services holding company and explore further synergies and opportunities for growth. A final note about this quarter's performance and recent accomplishments. As many of you may have observed, there's been a tremendous amount of volatility, uncertainty, and market pullback in the crypto markets lately, combined with some specific market moving events. While we cannot predict the future or believe when taking into account our second quarter fiscal 2026 financial performance as well as our recently released October KPIs, as well as what we are currently seeing, I continue to be encouraged and hopeful about our progress in both our near-term and long-term future. Having worked with many financial institutions in my career, and seeing firsthand the challenges and complexities of being a newly public-traded company and all that that entails, while also focusing on operating and growing a business profitably and sustainably in a space as fast-moving, dynamic, and at times volatile as any new and emerging technology, in this case, crypto, I'm especially proud and deeply appreciative of the entire Global Coin Check team for having accomplished so much at both the holding company and subsidiary levels in such a short period of time. The professionalism and steady thoughtfulness and execution that they have brought and continue to bring to everything we do, I believe bodes extremely well for the company's continued success and delivering on our paramount mission of being a leader in the industry and consistently enhancing shareholder value. Thank you again for your support and for joining our call. We now open it up to questions and look forward to continuing the dialogue.

At this time, if you would like to ask a question, please press star 1 now on your telephone keypad. To withdraw yourself from the queue, you may press star 2.

We'll take a question from Alex Markgraf of KeyBank Capital. Your line is open. Please go ahead.

Hi, Gary. Hi, Jason. Nice to speak with you both. A few questions, if I can. First, Gary, just on Applo, would you maybe talk about what the acquisition brings to Coincheck and how you think about integration priorities with the deal recently closed? And then maybe just speak to sort of competitive positioning of Applo versus some of the other digital asset prime brokers out there.

Sure. It's clearly our first entry into Europe. We deemed it as a highly compelling and lower risk opportunity. We believe it's an incredibly experienced, sophisticated, and committed team that knows the space very well, has very deep relationships with their customer base, and with banks in France, institutions, and that means a lot to us. Where we see that area going in crypto, which is really the prime brokerage area, institutional servicing, is all about liquidity and capability and executing better than anyone else. We think that they've got a tech stack that is highly competitive and capable in that regard. We are more focused right now in synergies than integration. When people talk about integration, they typically think about integrating data systems or different parts of the back office. And we believe they're a quality standalone company that offers synergies with CCI and NFT going forward. And one of the areas, of course, to look at is further liquidity providing. But we do believe there'll be some other synergies between the companies and also perhaps a sister company, 3IQ, Monix. So that's kind of the rationale. And then you ask where their competitive advantage is. It's really the relationships they have. The quality of what they bring is a word of mouth. And having the close relationships with the sovereign fund and

France and other banks we think bodes well for future opportunities. Thanks, Gary.

Maybe just to follow up on one of the comments you ended with around the volatility in October, the liquidation event. Curious to get your perspective on any sort of learnings or changes that you think need to sort of work their way through the ecosystem. having done a postmortem around that event or if, you know, things sort of function properly in your view.

Yeah, it's interesting. And one could probably write a book or talk for hours on what occurred in a couple of these different events. It's always disconcerting when someone experiences a cyber breach or other penetration of their network, and everybody needs to be just continuously vigilant. And you wish that some of the entities out there were doing that perhaps with more vigilance. With respect to the other event that occurred that led to, you could say, liquidity issues and liquidations, there's still a lot of conversation going on whether DeFi handled it better than traditional FI or centralized Sylvus Mornum, where exactly what happened. There's a question of how much transparency they'll fully be with how some participants in the market handled the event. But clearly, there's further work to be done to make sure that things that are supposedly stable and won't break the PAR don't break PAR. And with respect to our companies directly, when I say our, whether it was NFT, Next Finance, or CCI, Coincheck Inc., or Applo, we really saw no impact from those events, which I think is part of why I made a comment about the quality of people and professionalism of the company, but also one could look to perhaps While every market has its volatility, because of the regulatory structure in Japan, there might be more stability in some areas than you might find in other markets.

Great.

I appreciate the color there. Maybe just if I can squeeze one more in for Jason on gross margin percentage. Just looking at the sort of sequentially lower level, Help me understand that, Gary. I heard your comments on, I think, consistent spread through the quarter. Also, presumably, some benefit from staking in there, but, you know, did see that percentage step down. So, just maybe help me understand the nuance or the mechanics of that in the second quarter.

Yeah. So, to answer one of the questions, or at least a component, are – our average take rate for the quarter was 3.3%. So pretty consistent quarter over quarter. We have a little bit of noise if you're looking at our total revenue number versus kind of the marketplace trading volume figure. The revenue number might have some hedging transactions and other zero margin transactions, which really aren't, which we really don't consider as part of our, you know, sort of our net revenue amount. But we had a relatively consistent take rate, really just a composite of the coin mix for the quarter.

Okay, great. Thank you. I appreciate all the color here. And there are no further questions at this time.

This does conclude our question and answer session as well as our conference call for today. You may now disconnect your lines. And everyone, have a good evening.