Coincheck Group N.V.

Good afternoon and welcome to the Coin Check Group first quarter fiscal 2027 conference call covering the quarter ended June 30th, 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, coin check group 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 call over to your first speaker, Pascal St. Jean. You may begin.

Good afternoon, and thank you for joining us for our first quarter fiscal 2027 earnings call. Last quarter, I laid out an evolution in how we think about the company. From a holding company with a collection of independent businesses to one unified synergistic business serving both retail and institutional clients. In this quarter, I want to show you that this is no longer just a concept, but it's actually happening. The clearest way to see it is through our three-legged stool. Our platform stands on three connected legs. Crypto as a service, which embeds our rails inside trusted partners. Asset Management, which seeks to convert customer balances into higher value, institutional great revenue, and custody, the trust layer that underpins the whole thing. Three legs, one stool. And critically, all three are anchored to the same opportunity, to fully unlock the Japanese crypto market. Let me take you each in turn. Our first leg is crypto as a service, and this is where our momentum is most visible today. Our partnership with Mercari remains our first production crypto as a service deployment. Millions of customers can now access digital assets. 15 supported cryptocurrencies directly inside a consumer marketplace app they already open every day. It's been running live since June. This is the model working exactly as designed. Trust of Partner brings the customers and we power the flow underneath. Our partnership with KDDI has advanced further. Following their 14.9% equity investment in Coincheck Group, we're now moving forward on mutual customer referrals across both ecosystems as contemplated in our business alliance agreement with KDDI that was signed in May at the time of the investment agreement. KDDI is one of Japan's largest telecommunications companies, and its AU mobile brand serves an ecosystem of nearly 40 million users. representing one of the most significant consumer on-ramps to digital assets in the country. And we recently added Credit Saison, one of Japan's most established financial institutions, with a customer base of approximately 33 million. And together, we intend to give Saison card members new ways to access crypto through points and loyalty programs, integrated payments, and jointly developed products. Because we don't compete with any of our crypto as a service partners, core businesses, They could easily plug in without handing an advantage to a rival, and every channel we add could ultimately make us more valuable. This is crypto as a service compounding in real time. Our second leg is asset management, where our wins have demonstrated genuine institutional leadership. In Canada, Dynamic Funds, a Scotiabank subsidiary, selected 3iQ as sub-advisor on their dynamic, active multi-crypto ETF listed on Cibo Canada. This means that a tier one Canadian bank shows our institutional capability to bring crypto to their clients at scale. In Asia, 3IQ has been appointed to manage a portion of Bhutan's Bitcoin treasury. Being entrusted with a sovereign nation's reserves is a significant responsibility and one we take seriously. It is also a clear signal of our credibility 3IQ brings to the group, the kind of mandate that can open doors globally. From a Canadian bank to a sovereign initiative, These are mandates that establish us as a trusted institutional manager. It's the second leg of our stool. The third leg is custody. And the most important development this quarter is the clarity taking shape in Japan's regulatory and market structure around institutional custody. We think Japan is building one of the clearest institutional custody frameworks in the world for digital assets. Custody of consumer assets already sits within a well-defined regulatory structure. With that said, the regulators are now actively working to raise the bar. Following the JFSA's April 2026 policy for strengthening cybersecurity in crypto asset exchange services, an FSA commission study published this quarter is now informing of revisions to the supervisory guidelines. It's deepening the standards for key management, wallet operations, and third-party risk, and aligning them with international frameworks. For institutions, this is exactly the signal they've been waiting for. Custody in Japan is becoming a more regulated, auditable, trust-bank-grade discipline. This plays directly in our strengths. We've operated a licensed, security-first exchange in Japan since 2019. We are built around the segregation and key management standards these guidelines are raising. and we are actively working and seeking to develop the institutional grade custody capability that lets a Japanese trust bank or qualified institutional investor engage with digital assets with confidence. As the framework crystallizes, custody shifts from a barrier to a bridge and we intend to be on the right side of it. With crypto as a service driving volume, asset management proving our leadership and custody clarity arriving in Japan, the platform's third leg is coming into place. Let me explain why all three legs converge on Japan, and why the position we seek to establish in Japan should be difficult to replicate. Let's start with how things in Japan are today. Japan is one of the world's most important regulated crypto markets. But it's also a cash-heavy economy. Nearly half of households' financial assets, over 1,100 trillion yen, still sit in cash and deposits. Government policy over two decades has been slowly pushing households from savings towards investments. That enormous pool of capital may only now be beginning to move. What's changing now is more regulatory clarity, and we think this is the primary catalyst. Japan is moving from a Payment Service Act to the Financial Instrument and Exchange Act, the FIEA. In plain terms, this free positions crypto from a payment instrument to a financial product. It's aligned with Japan's national agenda of asset formation. Think of it as a three-stage roadmap. Stage one is developing a path for traditional financial institutions to be able to participate through revised rules and guidelines. Stage two opens institutional product channels, spot crypto ETFs, and inclusion in investment trusts and fund wrappers. And stage three brings tax treatment closer to other financial assets which will be significantly more favorable to crypto investors than the current tax rates which apply. Crucially, as lower separate tax rates make it more advantageous to trade, we would expect it to lift the trading activity in volumes across the market. So the question is no longer whether Japan regulates crypto. It is what may open next and when. Here's why we think we win as those doors open. We've held the number one downloaded crypto app in Japan for seven consecutive years. That's not a populatory contest. It's proof that we've cleared Japan's highest barrier to entry and we've stayed. And we did so in a market where global majors entered and pulled back. We built our base before the doors actually fully opened so that when household money begins to move into crypto, the home is already there. On the institutional side, appetite is churning as well. In a recent Nomura Affiliate survey, roughly 79% of Japanese institutions said they plan to invest in digital assets within three years with diversification, not speculation, as their primary driver. The potential inflow could reach a trillion yen order. Now connect this back to our stools. Over the next 18 months, our plan is to build and strengthen all three legs specifically to capture this unlock we're seeing unfold. Crypto as a service, together with our organic growth, should capture the retail flow as household money moves. Asset management should capture institutional allocations as product channels open. And custody should capture the trust that lets Japan's regulated institutions participate. One large asset pool, three legs in. That's the deliberate sequence I described last quarter. Move the model, scale what we've proven, then expand beyond our core. And everything I've walked through today is phase one starting to become visible. It brings me to where we go from here. We came into this year as four businesses. We're leaving this quarter closer to being one diversified platform offering. The integration of Apple and NFT is nearly complete, and that work has moved faster than we expected back when we set the plan in April. This means to us that we need one unifying name and brand. And so we're also working this quarter on a new name and brand for our unified platform offering that is coming together. and we expect it to be revealed and rolled out later this calendar year. To close, our three legs are all in place and all pointed at the same goal. Crypto as a service is compounding across trusted partners today. Asset management is winning institutional mandates from Canada to Bhutan. And on custody, Japan's regulatory and structural framework is maturing in exactly the direction that favors a licensed, security-first operator like us. Japan's regulatory arc is moving in our favor. and we've cleared the initial barrier to entry years ago. I'm confident in the strategy, excited about the opportunity ahead and committed to delivering value to our shareholders as we build Quenching Group into the global platform of choice for digital finance. With that, I'll turn it over to Jason, our CFO, for a review of our financial results. Thank you.

Thank you, Pascal. Let me take you through our first quarter fiscal of 2027 performance. I will start with some year-over-year comparisons. Total revenue increased 36% to 114.3 billion yen or 703 million USD in the first quarter fiscal 2027, up from 84 billion yen or 517 million USD in the first quarter fiscal 2026. Growth was primarily driven by increases in transaction revenue, specifically institutional revenue and revenue from covered counterparty transactions. Adjusted revenue for the first quarter fiscal 2027 increased 19% to 2.92 billion yen or 18 million USD from 2.445 million yen or 15 million USD in the first quarter fiscal 2026. The increase was driven primarily by an increase in staking revenue of 176 million yen, or 1 million USD, and investment management fee revenue of 404 million yen, or 2.5 million USD, both of which related to having a full quarter of the 3 IQ-related staking and investment management fee revenue. Our verified accounts increased 12% to 2.63 million accounts as of June 30th, 2026, up from 2.35 million accounts as of June 30th, 2025, while our customer assets decreased 37% to 631.6 billion yen, or 3.9 billion USD, as of June 30th, 2026, from 1,000.3 billion yen, or 6.152 billion USD, as of June 30th, 2025. Customer assets decreased due primarily to the decline in the market price of certain crypto assets, including Bitcoin, Ethereum, and XRP. Our assets under management were 105.5 billion yen, or 649 million USD, as of June 30, 2026, compared to zero yen as of June 30, 2025. This increase reflects the AUM added to our acquisition of 3IQ, which closed effective March 1, 2026. Our marketplace trading volume decreased 4% to 59.1 billion yen or 363 million USD for the first quarter fiscal 2027, down from 61.5 billion yen or 378 million USD in the first quarter fiscal 2026. 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 and the crypto assets frequently traded. Our net loss was 1.18 billion yen, or 7.2 million USD, in the first quarter of fiscal 2027, compared to a net loss of 1.37 billion yen, or 8.5 million USD, in the first quarter of fiscal 2026. The improvement in net loss was driven primarily by a decrease in the loss from the change in fair value of the warrant liability and a net tax benefit in the first quarter of fiscal 2027 compared to a tax expense in the first quarter of fiscal 2026. Partially offset by an increase in operating loss due primarily to an increase in selling general and administrative expenses. Turning now to adjusted EBITDA, we reported a loss of 516 million yen or 3.2 million USD in the first quarter of fiscal 2027 compared to an adjusted EBITDA loss of 398 million yen or 2.4 million USD in the first quarter of fiscal 2026. The increase in this loss related primarily to the increase in our selling general administrative expenses partially offset by an increase in adjusted revenue. Let's now move on to our operating expenses. Our total selling general and administrative expenses increased 4.3 to 4.3 billion yen or 26.4 million USD in the first quarter of fiscal 2027 compared to 3.6 billion yen or 22 million USD in the first quarter of fiscal 2026. Majority of this increase relates to a full quarter of 3IQ's operational results versus the prior year. We ended the first quarter of fiscal 2027 with cash and cash equivalents of 16.1 billion yen or 98.9 million USD. In summary, we remain focused on executing on our three-legged stool strategy, growing crypto as a service partnerships for the retail business, winning new asset management mandates globally, and developing solutions for Japan's evolving regulatory landscape. Together, these efforts position us well to grow platform assets and capitalize on opportunities in Japan and globally. With that, operator, please open the line for Q&A.