Coincheck Group N.V.

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Good afternoon, and welcome to the CoinCheck Group Fiscal Year 2026 Fourth Quarter Earnings Conference Call, covering the quarter ended March 31, 2026. With us today are Pascal St. Jean, Chief Executive Officer, and Jason Sandberg, Chief Financial Officer. Before Pascal and Jason begin their prepared remarks, we'd like to remind everyone that the discussion today will include several forward-looking statements including statements about plans, goals, expectations, and aspirations of the company. Such forward-looking statements are not guarantees of future performance or success, and actual results may and often do differ materially from those expressed or implied in the forward-looking statements. These differences may be driven by factors discussed in the company's filings with the SEC, which may be updated from time to time. The company undertakes no obligation to update its forward-looking statements, except as may be required by law. Also, throughout this conference call, non-IFRS financial measures may be presented or discussed. Reconciliations of these non-IFRS financial measures to their most directly comparable IFRS financial measures appear in today's earnings press release. which is available on the company's Investor Relations website and on the SEC website. And finally, CoinCheck Group's functional currency is the Japanese yen. During today's call, for your convenience, figures may be expressed in U.S. dollars, using a translation from yen to U.S. dollars. Please see the company's earnings release issued earlier today for detail on how the currency translation was done. I would now like to turn the conference over to your first speaker, Pascal St. Jean. You may begin.

Good afternoon, and thank you for joining us for our fiscal fourth quarter and year-end 2026 earnings call. This Q1 fiscal 2027 is my first quarter as CEO of CoinCheck Group. And I'm truly excited about the opportunity to lead our company into its next stage of growth as we work to become one of the leading global crypto financial services companies. Today, I want to share an important evolution in our strategy. Our current thinking is to no longer view ourselves as a holding company with a collection of independent businesses, but rather to build one unified synergistic platform of products and solutions that serve both retail, and institutional clients. We plan to build this platform on three connected initiatives. First, Japan Retail, the anchor of trust, liquidity, users, and brand. Second, the institutional platform, the bridge to higher quality revenue, broader capability, and strategic relevance. And third, on-chain innovation, the edge that extends future growth and long-term upside. Our strategic focus is clear. We will build comprehensive capabilities across custody, asset management, staking, trading, and execution, serving retail customers and institutional clients with the same level of excellence. The reason we're leaning into this now is that the question institutions are asking has fundamentally shifted. The boundaries between traditional financial services and digital assets are converging. And institutions of consequence are no longer asking if they should engage with digital assets. They're asking who they can trust to engage with at scale. The deliberate, disciplined work we've been doing across regulation, infrastructure, and institutional capability is what makes Coinship Group an answer to that question. Now, you might ask, why is now the right time for this strategic shift? The answer is straightforward. Japan is entering a more constructive phase for digital assets. We're seeing meaningful progress on several fronts in Japan, potential tax reform, accelerated product development, and growing institutional participation in the market. This convergence of regulatory progress and market maturation creates a significant opportunity, and we believe CoinShare Group is uniquely positioned to capitalize on it. Now, let me explain why. First, we have a defensible consumer leadership in Japan. This matters because Japan is highly regulated, trust sensitive, and operationally demanding market. We've maintained our position as the number one downloaded crypto app in Japan for seven consecutive years. Our local relevance and strategic position is not easily replicated. Second, we've been deliberately building institutional capabilities through our strategic acquisition of 3iQ. 3iQ provides immediate institutional credibility, deep solution capabilities, and a meaningful AUM base. 3iQ's clients range from established Canadian banks to an Abu Dhabi-based sovereign wealth fund, the kind of institutional validation that opens doors globally. And we're not just talking about strategy, we're executing on it. Two recent partnerships make this point very clear. In March, Dynamic Funds, a Scotiabank subsidiary, selected 3iQ as sub-advisor on their new dynamic multi-crypto ETF listed on CBO Canada. It's a Tier 1 Canadian bank. They chose Poinsett Group's institutional capability to bring crypto exposure to their clients at scale. And today, we announce our strategic partnership with KDDI Corporation, one of Japan's largest telecommunications companies. KDDI is taking a 14.9% equity investment in Coincheck Group, and our Japanese subsidiary, Coincheck Inc., has entered into a business alliance with KDDI that includes mutual customer referrals across both companies' ecosystems. Most of all, we're excited about what this partnership means for people in Japan. Millions of consumers gaining easier, more trusted access to digital assets through an institution they already know and rely on every day. These two partnerships are not isolated wins. They're a signal. Institutions are no longer asking if they should enter digital assets. They're asking who they should enter it with. Two months, two institutions, two markets. One platform of choice. CoinShed Group. Our land and expand strategy is also gaining traction more broadly. Our pipeline is growing as it reflects the same logic that drew KDDI and Scotiabank to us. Institutions want to partner with regulatory standing, infrastructure, and proven institutional capability. And that is a platform we're building. Now, let's dive a little deeper into our strategic roadmap. Japan is one of the world's most important regulated crypto markets. If we can demonstrate success here by deepening our retail leadership, building institutional relevance, and monetizing our platform through higher value products like staking, lending, custody, and overtime derivatives, we believe we can replicate this model in other markets around the world. Success in Japan proves our model works in a demanding, regulated environment. That proof becomes our competitive advantage as we look to expand globally. And the fact that institutions like KDDI or choosing to enter digital assets through Coincheck Group is the strongest confirmation that the institutional bridge we're seeking to build is actually real. Now, let me be clear about our approach. This strategy is not built in one leap. It's built on a deliberate sequence. Let me talk about our three phases. In phase one, we've got to prove the model works. That means demonstrating tangible integration progress across our acquired businesses. showing real institutional traction in the market, deepening our platform capabilities in Japan, and making our recurring and non-trading revenue streams more visible to investors. In phase two, we scale what we've already proven. The plan is to cross-sell across the platform, improve our revenue mix and operating leverage, and significantly increase the contribution from institutional and platform-style revenues. In phase three, we expand beyond our core, We will seek to extend this proven model into new markets, deepen monetization and product breadth, and broaden the group's strategic and valuation relevance on a global stage. As we close fiscal 2026 and look to the year ahead, let me leave you with a few key takeaways. One, our leadership position in Japan is real and defensible. Seven consecutive years as the number one crypto app downloaded in Japan is not luck. It's the result of operational excellence and deep customer trust. Two, our institutional strategy is deliberate, commercially meaningful, and has begun to be visibly proven. KDDI in Japan, Dynamic Funds and Scotiabank in Canada, and the pipeline behind both, institutions are no longer asking whether to engage with digital assets. They're asking who they can trust to do it with, and they're choosing Coinship Group. And three, Our revenue quality should improve over time as we shift towards institutional and platform-style revenues while maintaining and growing our retail strength in Japan. I'm confident in our strategy. I'm excited about the opportunity ahead, and I'm committed to delivering value to our shareholders as we build CoinShare Group into the global platform of choice for digital finance. And with that, I'll turn it over to our CFO, Jason Sandberg, for highlights of our financial results. Thank you.

Thank you, Pascal. Let me take you through our fourth quarter fiscal 2026 performance. I will start with some year-over-year comparisons. Total revenue increased 4% to 119.7 billion yen or 752 million USD in the fourth quarter fiscal 2026, up from 114.6 billion yen or 720 million USD in the fourth quarter fiscal 2025. For the fiscal 2026 full year, total revenue increased 25% to 480.2 billion yen or 3 billion USD from 383.3 billion yen or 2.4 billion USD in the fiscal 2025 full year. Growth was primarily driven by increases in transaction revenue, specifically institutional and revenue from covered counterparty transactions. Adjusted revenue for the fourth quarter fiscal 2026 decreased 18% to 2.9 billion yen or 18 million USD from 3.5 billion yen or 22 million USD in the fourth quarter fiscal 2025. The decrease was driven primarily by a decline in marketplace trading volume, partially offset by an increase in staking revenue of 622 million yen, or 3.9 million USD, and investment management fee revenue of 140 million yen, or 900,000 USD. We introduced adjusted revenue this quarter to provide a clearer view of our core transactional and fee-based business. For the fiscal 2026 full year, adjusted revenue decreased 8%, 13.1 billion yen, or 82 million USD, from 14.2 billion yen, or 89 million USD, in the fiscal 2025 full year, driven primarily by a decline in marketplace trading volume, partially offset by an increase in staking revenue and investment management fee revenue. Our verified accounts increased 10% to 2.5 million accounts as of March 31, 2026, up from 2.3 million accounts as of March 31, 2025. Even though the quality of digital tokens held by customers remained relatively stable during the fiscal 2026 full year, customer assets decreased, primarily due to the decline in the market price of crypto assets, including Bitcoin and XRP. Our assets under management were 128.8 billion yen, or 810 million USD as of March 31st, 2026, due to the acquisition of 3iQ. Our marketplace trading volume decreased 29%, 65.7 billion yen or 413 million usd for the fourth quarter of fiscal 2026 down from 92 billion yen or 578 million usd compared to the fourth quarter fiscal 2025 and decreased eight percent to 309.6 billion yen or 1.9 billion usd in the fiscal 2026 full year from 337.5 billion yen or 2.1 billion usd in the fiscal 2025 full year 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 CoinShed specifically, as well as market price fluctuations in the crypto assets that are frequently traded. Our net loss was 1.2 billion yen, or 7.6 million USD, for the fourth quarter of fiscal 2026. compared to a net profit of 642 million yen, or 4 billion USD in the fourth quarter of fiscal 2025. The swing to a net loss was driven partially by a fourth quarter fiscal 2026 decline in marketplace trading volumes and an increase in selling general and administrative expenses, consisting mainly of, one, employee severance expenses of 334 million yen, or 2.1 million USD, related primarily to the March 31, 2026 departure of the company's former CEO, Two, professional fees of 261 million yen or 1.6 million USD related to a potential transaction with which the company decided not to move forward. And three, capitalized software impairment costs of 197 million yen or 1.2 million USD relating to a particular software development project. For the fiscal 2026 full year, Net loss was 1.8 billion yen or 11.5 million USD as compared to a net loss of 14.35 billion yen or 90.2 million USD in the fiscal 2025 full year. Note, the significant net loss in fiscal 2025 is primarily due to the transaction costs related to the public transaction. Turning now to adjusted EBITDA, we reported a loss of 863 million yen or 5.4 million USD in the fourth quarter fiscal 2026 compared to adjusted EBITDA income of 719 million yen or 4.5 million USD in the fourth quarter of fiscal 2025. The fiscal 2026 full year adjusted EBITDA decreased 61% to 1.7 billion yen or 10.5 million USD from 4.3 billion yen or 26.9 million USD in the fiscal 2025 full year. These declines were related mainly to lower adjusted revenue, driven mostly by declines in marketplace trading volume and increased selling general and administrative expenses, consisting mainly of this certain specific fourth quarter 2026 expenses. Now let's move on to our operating expenses. Our total selling general and administrative expenses increased to 4.3 billion yen or 27 million USD in the fiscal 2026 fourth quarter compared to 3.6 billion or 22.4 million USD in the fiscal 2025 fourth quarter due to several expenses, higher professional fees, and capitalized software impairment costs discussed earlier. We ended the fiscal 2026 fourth quarter with cash and cash equivalents of 9.5 billion yen or 59.5 million USD compared In summary, the fourth quarter reflects a difficult market environment, but the strategic building blocks are in place, growing accounts, institutional traction with KDDI and Scotiabank, and a full year of positive adjusted EBITDA. We look forward to updating you on our progress.

With that, operator, please open the line for Q&A.

Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star one to ask a question. We'll pause for just a moment to allow everyone a chance to join the queue.

Again, that is star one for your questions.

We'll move first to Ed Engel with CompassPoint. Your line is open.

Hi, thanks for taking my question, and congrats, Pascal, for finishing your first full quarter as CEO. Just wanted to touch on, I guess, the tax reform over in Japan. Just kind of curious of where that legislation is kind of tracking here and whether there's still a chance it could happen in 2026. Thanks.

Yeah, thank you. Thank you for the comment. So, so far we operate on the original timeline that is proposed by the regulators in Japan and the politicians in general, which is basically the FIEA rule. So, the basically, you know, exchange and investment act that's coming in for crypto in 2027. And then after that, tax reform starting in 2028, primarily for crypto and crypto ETFs. That may compress over time if progress gets made. But so far, these are the guidelines we've been provided and we operate towards that. But in terms of our efforts in Japan, we see partnerships, distribution, and essentially the land grab happening this year. And so that's our focus. And I think the deal with KDI is just one example. And of course, we're working on other things, but this is the year where the land grab is in place. in preparation for the regulatory change that's coming in the coming year.

Great. Thanks. And would that include, I guess, crypto ETFs in Japan? Or could that still happen independently? And then, I guess, how are you guys going to position yourselves, I guess, for that opportunity?

Yeah. So they're both together on the tax reform side. In terms of the crypto regulation that's coming in this year, it's all the beginning of the positioning. In other words, the regulatory requirements, the regulatory capital, et cetera. Right now, there's a lot of planning going ahead in Japan across the entire industry on the custody model, liquidity model, governance model for these ETFs. I could tell you I've been spending 60 of the past 120 days in Japan. not because we have a lot of work internally. It's because there's a lot of demand for discussions with, as you can imagine, a lot of the large institutions, as well as with regulators. And we are at the forefront of those discussions as a group. And so our plan, as described in our press release, as well as in our online presentation, is to tackle both the retail and the institutional market, which means the change in regulation coming for these changes and the changes coming with the opening of the ETFs. So we are playing for both.

Great. And then one, just last one, housekeeping. Did you provide the average spread on the exchange for the first quarter?

We didn't have it in the earnings release. It was relatively consistent quarter over quarter. We're still, you know, between 3.2 and 3.3% for the quarter ended.

Great. Thank you.

We'll move next to Brett.

no block with cantor fitzgerald your line is open hi guys thank you for taking my questions i guess maybe to start on you know you want to build a platform i think in the prepared remarks for the three initiatives um first question you know i guess i've been kind of active i feel like kind of acquiring you know different businesses over the last year kind of to build this platform When would you expect maybe everything to come together and we would start seeing it in the financials? I know it's somewhat dependent on, you know, kind of the crypto markets and how those are trending. So just curious on the timing for kind of everything coming together. And then the third point was on kind of on-chain innovation. Could you maybe elaborate there? Like, what are you looking to do in terms of on-chain? Thank you.

Yeah, absolutely. So in terms of the platform, so I think you're starting to see the results in the report number as we add what we call engines like 3iQ, so we're diversifying revenue streams. In terms of some of the other companies we acquired, we acquired great companies that have technology and great individuals. And those integrations have already begun, whether it's utilizing Applo's technology over at 3iQ on the hedge fund side or NFT staking capabilities for both engines. And so we see those as internal optimizers to increase margins, as well as to deliver better services And as we start, you know, getting distribution deals like those that were announced today, you know, today, Scotiabank and KDDI and others in the future, you know, depending on what the customer needs, we are well versed to be able to service those demands regardless of what they're looking for. And so whether it is trade execution, whether it's staking in the future or asset management services, we could deliver all that. So when we talk about a platform, I want to be very clear, it's a financial platform. It's not a technology platform, but it's essentially delivering those services in a united way to our partners and potential distributors in different regions. So in terms of it all coming together, it's happening in the background. We're starting to see optimization take place. That being seen in the numbers, I believe Jason reported some benefit of adding some of these companies when we were looking at essentially how staking revenue and how asset management revenue has diversified the revenue mix. So I could pass it to Jason to talk about that, but right before that, maybe I can answer your second question, which is on-chain innovation. I think if you see, there are two things. There's tangible things right now, and then there's things we're trying to make sure we stay ahead of. So in the press release with our partnership with KDDI, there are two angles to this. The first one is a distribution of our current capabilities. And the second is a joint venture company that was created where we will be working together to create on-chain capabilities, primarily through Web3 wallets for the Japanese consumers. You can imagine what could be built on top of that. I'm not going to forecast exactly what they are because we are developing them. Imagine a self-hosted retail wallet that can be distributed to the masses with the various types of products that can be developed on top of that. So that's one example of making sure we stay on track of what your future retail and where future institutional demand would come from. The second is with our brand presence. and our credibility and our size in Japan. You can imagine there's a lot of projects, foundations looking to come into Japan, as well as we are also very well connected globally with a lot of projects. So you're seeing, as you can see, trading volume derivatives on hyperliquid. You're seeing a lot of things happening globally. on-chain, you're seeing a lot of vault activities. So all of these things, when we talk about on-chain, it's that next generation edge. And we see ourselves being very well positioned to bring various types of partnerships into Japan, as well as to leverage our engineering capabilities to make sure that we stay ahead of the curve to deliver those services there as well. And of course, into the future in different markets. And so as you start hearing us report on on-chain innovation, It has to do with those kind of opportunities, including potential tokenization. So I know it's a lot, but these are tangible things we're working on in the background, and we're looking forward to announcing some future partnerships as they develop. But I'll turn it to Jason to maybe talk about sort of the impact on revenue mix that we're already seeing.

Sure. I mean, if you look through the press release that went out this morning, you can see just year over year and even quarter over quarter, a more diversified mix within revenue as we've added staking revenue year over year, additional staking revenue through the acquisition of 3IQ. And then, of course, one month of 3IQ, we also have investment management fee revenue coming from that merger as well.

Perfect. Thank you, guys. We're looking forward to it. Thank you.

And once more, that is star one for your questions. We'll move next to Alex Markgraf with KeyBank Capital Markets. Your line is open.

Hey, guys. Appreciate you taking my questions. I wanted to maybe follow up on the KDDI partnership a little bit, just understand the scope of opportunity here more. Pascal, I know you just sort of commented on that, but the structure of it, I think, a bit unique as far as partnerships go with the ownership stake. Maybe just speak to the uniqueness of this opportunity. And then, Jason, if there's any way for us to think about the sort of economic structure of this between revenue sharing, referrals, and such, that would be helpful. Thanks. I'll have a follow-up after that.

Absolutely. So a big part of our growth strategy, whether it is for retail in Japan or institutional, generally speaking, I think is very clear in these two partnerships that were announced. I think we see our capabilities as being very diversified for partnerships. That doesn't mean that we don't want to continue growing, of course, our user base on the retail side, but our brand and our capabilities and our institutional capabilities drive very well for distribution. And so, you know, Phase one, as described with KDDI, is literally the beginnings of a cross-marketing opportunity. So they are looking to get more and more into financial services, and they see crypto as being a prime source of what they want to deliver to their clients. And they chose Coincheck Group as sort of that prime partner. And so phase one, it's really a business alliance where they will be referring customers to us, and I'll let Jason talk about what we can or can't share today. on the partnership revenue mix, but it's a distribution deal, uh, you know, that's powered by coin check groups, you know, existing platform. And then, you know, the phase two of that, which is more of the business alliance JV. So we want to make sure that we have people understand the difference between the two phase one starts immediately. Phase two is more around developing, uh, new progressive technologies together that could service, uh, their, uh, their growing user base. In terms of total user count, they are one of the largest telcos in Japan. And so we are sitting on millions of potential prospects. I can't say how many we're targeting on day one, but essentially they see finance as a key part of their growth as a whole company. And so we're very proud of this partnership. And of course, we'll be sharing more details as development of that integration takes place in the coming quarters.

Yeah, and Alex, appreciate the question. And of course, as you might imagine, we haven't put out publicly the, you know, the economics of the relationship and certainly haven't launched yet. So really unable to share too much. Of course, as Pascal mentioned, we're pretty optimistic on the potential magnitude and number of users that existed at KDDI and what that offers up to us from CoinCheck Group perspectives.

And I know you had a question around the strategic allocation. So I think to imagine the conversations we're having with institutions globally, you've seen this in with other companies where as you partner and as the large distributor is going to power and impact the company that's providing the services. This is often very standard where essentially the distributor wants to play on both sides. And we're very happy to add strategic institutional partners to the cap table when and where it makes sense. And this one in the discussions made total sense for their presence and their vision that KDDI had in Japan, very much aligned with where we're going as a company. So we were very happy to have those discussions and very proud of today's announcement.

Got it. That's helpful. Thank you. And then maybe just a follow-up, stepping back, same topic, just sort of around customer growth or account growth. I guess maybe just any perspective on how we should be thinking about account growth from here, obviously a bit more challenging of a backdrop across the ecosystem, but you do have, you know, partnerships coming online, not just KDDI, but I think AmeriCoin as well. So just I don't know. Any thoughts as to how we should be thinking about the trajectory of account growth from here, given the backdrop and scaling of partnerships would be helpful. Thanks. Just kind of relative to 26.

I can't provide specific numbers. You can imagine these partnerships are new in the industry at large, but our strategic perspective is, again, I know I'm repeating the answer several times, but I think it's very important to drive the point is that We're not letting go of our marketing efforts. I think we're, again, we're number one downloader crypto app for a reason. But as the industry continues to expand and more and more institutions are looking to enter the space, they're looking for partners, we're calling this crypto as a service. That's one of multiple things, essentially providing our platform to others. So we are very highly focused on these types of applications. call it Parker referral and distribution deals. You know, Merck was announced last year, KDDI. There are others in the works, not just for retail trading, but for some of the other services that we have on our platform as well, which includes asset management, staking and execution. So this is our main focus right now from a BD perspective is lining up these types of partnerships because they do have, you know, it's a, It's a one-to-one B2B relationship that leads to a high volume of potential B2B2C opportunities. And we see, again, leveraging the brand and the trust that we have in Japan to execute those.

Understood. Thank you, Pascal. I appreciate it.

And I show no further questions at this time.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.