Coincheck Group Stock

Good afternoon, and welcome to the Coincheck Group First Quarter Fiscal 2027 Conference Call covering the quarter ended June 30, 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 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 3-legged stool. Our platform stands on 3 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 grade revenue; and custody, the trust layer that underpins the whole thing, 3 legs, 1 stool. And critically, all 3 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. Trusted 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 can easily plug in without handing an advantage to a rival and every channel we add should 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-adviser on their dynamic active multi-crypto ETF listed on Cboe Canada. This means that a Tier 1 Canadian bank chose 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 the 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. Now 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, audit operations and third-party risk and align 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.

Now let me explain why all 3 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 JPY 1,100 trillion, still sit in cash and deposits. Government policy over 2 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 Services Act to the Financial Instrument and Exchange Act, the FIEA. In plain terms, this repositions 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 3-stage road map. Stage 1 is developing a path for traditional financial institutions to be able to participate through revised rules and guidelines. Stage 2 opens institutional product channels, spot crypto ETFs and inclusion in investment trust and fund wrappers. And Stage 3 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 and 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 #1 downloaded crypto app in Japan for 7 consecutive years. That's not a popularity 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 turning as well. In a recent Nomura-affiliate survey, roughly 79% of Japanese institutions said they plan to invest in digital assets within 3 years, with diversification, not speculation as their primary driver. The potential inflow could reach JPY 1 trillion order. Now connect this back to our stools. Over the next 18 months, our plan is to build and strengthen all 3 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, 3 legs in. That's a deliberate sequence I described last quarter, prove the model, scale what we've proven then expand beyond our core.

And everything I've walked through today is Phase 1 starting to become visible. It brings me to where we go from here. We came into this year as 4 businesses. We're leaving this quarter closer to being diversified platform offering. The integration of Aplo 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 unified 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 3 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 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 Coincheck 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 2027 performance. I will start with some year-over-year comparisons. Total revenue increased 36% to JPY 114.3 billion or USD 703 million in the first quarter of fiscal 2027, up from JPY 84 billion or USD 517 million in the first quarter of 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 of fiscal 2027 increased 19% to JPY 2.92 billion or USD 18 million from JPY 2.445 million or USD 15 million in the first quarter of fiscal 2026. The increase was driven primarily by an increase in staking revenue of JPY 176 million or USD 1 million and investment management fee revenue of JPY 404 million or USD 2.5 million, both of which related to having a full quarter of the 3iQ-related staking and investment management fee revenue.

Our verified accounts increased 12% to 2.63 million accounts as of June 30, 2026, up from 2.35 million accounts as of June 30, 2025, while our customer assets decreased 37% to JPY 631.6 billion or USD 3.9 billion as of June 30, 2026, from JPY 1,000.3 billion or USD 6.152 billion as of June 30, 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 JPY 105.5 billion or USD 649 million as of June 30, 2026, compared to JPY 0 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 JPY 59.1 billion or USD 363 million for the first quarter of fiscal 2027, down from JPY 61.5 billion or USD 378 million in the first quarter of 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 in the crypto assets frequently traded. Our net loss was JPY 1.18 billion or USD 7.2 million in the first quarter of fiscal 2027 compared to a net loss of JPY 1.37 billion or USD 8.5 million 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 JPY 516 million or USD 3.2 million in the first quarter of fiscal 2027 compared to an adjusted EBITDA loss of JPY 398 million or USD 2.4 million in the first quarter of fiscal 2026. The increase in this loss related primarily to the increase in our selling, general and 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 to JPY 4.3 billion or USD 26.4 million in the first quarter of fiscal 2027 compared to JPY 3.6 billion or USD 22 million in the first quarter of fiscal 2026. A 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 JPY 16.1 billion or USD 98.9 million. In summary, we remain focused on executing on our 3-legged stool strategy, growing Crypto-as-a-Service partnerships with our 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.

[Operator Instructions] And we'll take our first question from Ed Engel with Compass Point.

Congrats on all these recent partnerships. I guess just given a lot of these recent partnerships have kind of been more focused on the exchange business, I was wondering if there's any active discussions within the asset management business and partnerships in Japan. And I guess within any asset management partnership opportunities in Japan, would that just be related to ETFs? Or could there potentially be some trust structure that you could potentially launch with a partner even before ETFs?

Yes. Thank you, Ed, for the question. So there have been some deals outside Japan signed this quarter that are not publicly announced. We announced Bhutan as one, and there will be a lot more announcements linked to that in terms of what that road map looks like. But there have been some distribution channels signed in Switzerland as well as increased distribution in Canada and Abu Dhabi. They're just private partnerships. And at this point in time have not been disclosed, but you'll start seeing results from an AUM base across those. So we continue to build out distribution channels well beyond just retail in Japan on the asset management front.

Now to answer your question specifically on Japan itself, the answer is yes, much more beyond just ETFs. As you know, 3iQ coming in is a fully diversified crypto asset manager. ETF capabilities, of course, are one, our hedge fund platform, our SMA platform, we've just been testing our first few vaults. So we are a fully diversified asset manager with global distribution licenses and capabilities in several jurisdictions. And so nothing public can be announced yet, but conversations are happening with individuals that we feel will be key distribution partners, and they will go beyond ETFs.

Great. Super helpful. And then just to understand some of these B2B partnerships on the trading side, acknowledge that you're obviously it's going to be sensitive in terms of the economics for each of these, but overall, are the economics in terms of your take rate on any of these B2B2C volumes, are they closer to maybe what you're doing today, which may be not quite there, but like a 3%? Or are they closer to like what Aplo is doing, which is just maybe a couple of basis points or somewhere in the middle?

So I'll let Jason to be more specific. So without disclosing exactly the terms of the deals, the end take rate, so the end customers take rate is between the joint partnerships is closer to what we make on the retail side. Now the split between us and our partners are individual deals, not to be disclosed on the call. But overall, the economics of the deals for both parties is closer to what we have with retail than it is what we have with, for example, an Aplo or what you'd see with Hashdex or someone else that's just powering underlying flow. So it's closer to the retail take rate. But of course, there's a partner involved and so there are shared economics on it.

And our next question comes from Alex Markgraff with KeyBanc Capital Markets.

I appreciate all of the new material on regulatory updates. I guess maybe just looking at the stages of development on Page 5 of the deck that you provided. I'd be curious if you could just sort of pair these stages with your sort of perception or interpretation of model impact. Pascal, I think you talked about trading activity sort of aligning with the tax treatment change. But maybe just speaking to the other 2 stages, if you could sort of pair that with potential model impact, not so much in numbers, but just sort of revenue type and composition would be helpful.

Sure. So, first of all, thank you for diving into that deck. We've put a lot of time and effort, and we will be continuing to progress on our education on what's going on in Japan to make sure people understand that it's not -- nothing is happening until 2028, and it's also nothing happening right now. There's actually activity quarter-over-quarter.

So the first one that was recently voted was, that actually passed in the 2026 by just before the summer in Japan, was the official move to the FIEA sort of licensing. And so from a model impact, I know we had announced Mercari last year, and there were questions on whenever you're going to start seeing that partnership get activated. And then last quarter, we announced KDDI. The reality is this license or this final shift was needed for all parties. And essentially, what this unlocks the first phase of the unlock is basically the introducing broker type of agreement where we can act as that underlying infrastructure, which we call Crypto-as-a-Service. So this is now unlocked. And so what this means is these partnerships can be established, users can be referred, APIs can be integrated, custody, KYC, trading activities, all of that.

So now of course, we can talk about volumes globally. Volumes globally are lower as we speak in the last quarter. So that will, of course, impact short-term models. But in terms of user growth, we're seeing positive impact from these partnerships that we wanted to see. Then our job is, of course, is work with those partners to educate them on these new features, these new trading capabilities, et cetera. But that is live today, and we expect to see positive impact from that in, of course, in the coming quarters because it is live.

In terms of the next bigger unlock, it's the institutional unlock on the asset management side. This will not be for another year, which means that at that point in time, but you can imagine that vendor selection, partnership creations, agreement signing, all of that is being done as we speak, which is why we're spending, of course, a lot of time in Japan as the Coincheck Group management team as well as with our local team on boots on the ground. Nothing that we publicly announced just yet, but there's a lot of conversations and planning for that because to launch these products, to get operations ready to do all that in time for a year from now when these trust structures become ready, work is happening on a weekly basis with partners that we've come together with that will be announced.

That from a modeling perspective, won't get unlocked until those product launch, which is going to be towards the end of 2027. I wish it would be earlier, but we are just positioning ourselves to be at least in line, if not ahead of what's in line. So we're building ahead of the unlock. So that when the unlock happens, we're the leaders.

And then finally, on the tax reform, it doesn't mean that there's no trading happening today. It just means that as the tax reform of crypto changes, we would expect that the trading culture that we see with Forex and U.S. equities and others in Japan make their way to digital assets as well just because the tax treatment will be better. That will also lead to the opening of other products that can be pushed through our Crypto-as-a-Service channels. Without disclosing which ones, it will be much more than just spot crypto. And so think of it as today as partners are live, accounts are being opened, education is being done as we speak. Next phase is preparing the institutional unlock to be -- to get ready for next summer. You'll start seeing the impact of that at the end of next year. And then the ultimate unlock, which is complete regulatory reform, tax reform and additional products that could be pushed through our retail channels beyond spot crypto.

Got it. That's helpful detail, and it's great to see the proactive approach and being ready when the time comes. Helpful. Maybe one more just on sales and marketing spend and account growth. I'm just sort of curious as you -- and maybe this applies more to the sort of retail side of things. But as we think about the sequence of events here and the unlocks to come. Is there a desire or any opportunity to sort of lean into account growth? Just sort of curious what the posture is there on spend. And then, Jason, just kind of from a disclosure standpoint, remind me on some of these partnerships, Mercari, et cetera, are those captured in verified accounts? Or are those counted separately?

Yes. Yes, I can start. Those are captured and verified accounts. So you'll see those in our verified account numbers and the KPIs we released. And from an overall spend perspective, I'll let Pascal answer as well. But our -- we've been pretty disciplined on the customer acquisition per account side. I think we're continuing to think through that methodically and trying to stay disciplined as well. The new distribution partners we're targeting is allowing us to be pretty efficient economically as well. So...

Yes. So at a high level, if we think about the access of crypto in Japan, it's still primarily linked to crypto exchanges as what we're seeing in North America, right, with Robinhood entering crypto aggressively, even testing out different tokenized sort of assets and launching their L2. And then on the flip side, Coinbase calling themselves now the everything exchange. So they're trying to bridge the gap to provide more services to their users. Japan as a whole is still, call it, in the old model where if you're going to get your equities, you're going to go open a brokerage account. And if you want your crypto, you'd going to open an exchange account. That world -- those worlds will collide over time as these new regulations come into place.

And so for us, right now, our marketing on the Coincheck Inc. retail app is more focused for the, call it, the OG retail experience for crypto. And so we continue to see organic growth. Our digital marketing team is consistently excellent at driving growth, organic growth through digital marketing forms. The brand is very strong, and we plan to continue to invest responsibly to grow that user base because it is a different user base than what we're seeing with our distribution partners. So a user that's coming from Mercari or KDDI or Credit Saison is a different user than what we are doing organically. So we're making sure that no one is stepping on each other's toes. And so yes, we will continue to invest in that because we want to cater to those diverse user groups.

Now what products and services get offered to each of those channels will be based on our user segmentation and user surveys. But in terms of what we are building to offer those users, it is a unified platform of additional trading tools and capabilities as well as asset management products and services over time that will be enabled as regulation continues to evolve. And so today, that's not possible, but we've already invested the time, the tech and the resources to get ready for that. So just think about different channels, not stepping on each other's toes and then pushing proper products in those channels to meet those users' needs. But yes, Coincheck Inc. continues to grow organically. Hopefully, that answers your question.

Yeah. Okay, great. I appreciate the thoughtful responses. Thanks, guys.

[Operator Instructions] Our next question comes from Devin Ryan with Citizens Bank.

It's Neil on for Devin. So similar to Alex, I found some of the new regulatory road map materials very useful. One data point I found particularly interesting was that Japanese households still hold roughly 48.5% of their financial assets in cash. Historically, that allocation has remained pretty stable and has only come down incrementally kind of over the past 2 decades. But more recently, we've obviously seen some great adoption in equities. As you think about the evolution, what kind of gives you confidence that crypto can become a meaningful beneficiary of that next wave of asset allocation? And what do you see as kind of the key catalyst that ultimately moves crypto into the mainstream investment for Japanese households?

Absolutely. So from that perspective, that slide is bang on. It is the opportunity at hand compared to other jurisdictions outside of crypto. And what you've seen is policymakers and government as you've seen from the deck, are purposefully creating new rules and regulations and education and encouragement. And one of their big successful accounts was the NISA account, which is an investment savings account, very similar to your Roth IRAs or your TFSAs in Canada. So that's seen a lot of success and has created to a lot more of the younger generation opening accounts.

Now again, to be clear from our perspective, think of us as a unified digital platform. So today, our primary offering is crypto spot volume. You will hear more in terms of what's coming into the pipeline in the coming quarters. We will be offering much more than just that. And so for us, as our brand, as the younger generation are looking for a digital-first native experience and digital-first native products. Now whether that's spot crypto, whether that's tokenized products, whether that is on-chain derivatives or access to DeFi, these are things that are not currently available based on current regulation, but the road map points to that direction. And so we are hoping to leapfrog legacy technology to new on-rail technology to capture that change in behavior.

And so as basically the policies continue to be pushed by the regulators and government to encourage more investment as the younger population get more educated and comfortable with direct investing and crypto as a whole and a digital-first experience, we feel that we're super well positioned not only because of the app we have, but also the channels that we have to give that experience to the emerging users in Japan. So this is not a 1-quarter solution, but it is a longer-term tailwind that as that shifts over time, we want to be right there to capture that. In terms of how long or how fast that is -- that's the trillion dollar question or the trillion-yen question to your point. But we're confident and has been seeing movements because of policy change and a push by government to move from cash to investing.

Awesome. And then maybe one more question just on the Credit Saison partnership. Obviously, this gives you access to one of Japan's largest consumer financial ecosystems, with roughly like 33 million members. As you think about executing on the opportunity, should we view the rollout as occurring in waves with certain products or use cases launching first? And is there any timeline you can share around how investors should think about the rollout over the next few quarters?

Yes. So yes. So thank you. So one thing, again, that may not be clear in the deck that we want to continue educating is we're all comfortable globally with credit card points or loyalty points in general. But in Japan, it is on another scale. And so what can be done is those points can be utilized for more than just redeeming for an airplane ticket or redeeming for a gift card. You can do much more. And so companies are competing to not only offer more points to their users for loyalty, but also better experiences of what you can do with those points.

And so what we've actually done with Credit Saison and what we're doing with other partners is the rollout of using your points to be able to invest. So it's not just about getting crypto rewards, it's actually being able to use your loyalty points to invest and trade in crypto. And so we power the flow in the back end. And so there are 2 legs into our Crypto-as-a-Service sort of offerings. One is, of course, the cash inflow. So a user will fund their accounts in cash and trade for crypto. But the other side is the point avenue. And that's what the first unlock with Credit Saison has been is through the points. Mercari has been through cash trading. So they're all coming in from a different vector. But over time, the desire of these partnerships is to grow what we can do with them. But everyone has to start with one first product. And so yes, Credit Saison was on the points trading capability.

And at this time, we have no further questions in queue. We'd like to thank everybody for joining today's conference call. This does conclude the call, and we appreciate your participation, and you may now disconnect.

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 company.

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 3 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 are 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 Coincheck 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 Coincheck 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 #1 downloaded crypto app in Japan for 7 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-adviser on their new Dynamic multi-crypto ETF listed on Cboe Canada. It's a Tier 1 Canadian bank. They chose Coincheck Group's institutional capability to bring crypto exposure to their clients at scale.

And today, we announced 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 2 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, 2 months, 2 institutions, 2 markets, 1 platform of choice, Coincheck 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 road map. 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 over time 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 are 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 3 phases. In Phase 1, we're going 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 nontrading revenue streams more visible to investors.

In Phase 2, 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 3, 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. 7 consecutive years as the #1 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 Coincheck 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 Coincheck 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 JPY 119.7 billion or USD 752 million in the fourth quarter of fiscal 2026, up from JPY 114.6 billion or USD 720 million in the fourth quarter of fiscal 2025.

For the fiscal 2026 full year, total revenue increased 25% to JPY 480.2 billion or USD 3 billion from JPY 383.3 billion or USD 2.4 billion in the fiscal 2025 full year. Growth was primarily driven by increases in transaction revenue, specifically institutional and revenue from cover counterparty transactions.

Adjusted revenue for the fourth quarter of fiscal 2026 decreased 18% to JPY 2.9 billion or USD 18 million from JPY 3.5 billion or USD 22 million in the fourth quarter of fiscal 2025. The decrease was driven primarily by a decline in marketplace trading volume, partially offset by an increase in staking revenue of JPY 622 million or USD 3.9 million and investment management fee revenue of JPY 140 million or USD 900,000.

We introduced adjusted revenue this quarter to provide a clear view of our core transactional and fee-based business. For the fiscal 2026 full year, adjusted revenue decreased 8% to JPY 13.1 billion or USD 82 million from JPY 14.2 billion or USD 89 million 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 JPY 128.8 billion or USD 810 million as of March 31, 2026, due to the acquisition of 3iQ. Our marketplace trading volume decreased 29% to JPY 65.7 billion or USD 413 million for the fourth quarter of fiscal 2026, down from JPY 92 billion or USD 578 million compared to the fourth quarter of fiscal 2025, and decreased 8% to JPY 309.6 billion or USD 1.9 billion in the fiscal 2026 full year from JPY 337.5 billion or USD 2.1 billion 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 Coincheck specifically as well as market price fluctuations in the crypto assets that are frequently traded. Our net loss was JPY 1.2 billion or USD 7.6 million for the fourth quarter of fiscal 2026 compared to a net profit of JPY 642 million or USD 4 million 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 JPY 334 million or USD 2.1 million related primarily to the March 31, 2026 departure of the company's former CEO; two, professional fees of JPY 261 million or USD 1.6 million related to a potential transaction with which the company decided not to move forward; and three, capitalized software impairment costs of JPY 197 million or USD 1.2 million relating to a particular software development project.

For the fiscal 2026 full year, net loss was JPY 1.8 billion or USD 11.5 million as compared to a net loss of JPY 14.35 billion or USD 90.2 million in the fiscal 2025 full year. Note, the significant net loss in fiscal 2025 was primarily due to the transaction costs related to the public transaction. Turning now to adjusted EBITDA. We reported a loss of JPY 863 million or USD 5.4 million in the fourth quarter of fiscal 2026 compared to adjusted EBITDA income of JPY 719 million or USD 4.5 million in the fourth quarter of fiscal 2025.

The fiscal 2026 full year adjusted EBITDA decreased 61% to JPY 1.7 billion or USD 10.5 million from JPY 4.3 billion or USD 26.9 million 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 the certain specific fourth quarter 2026 expenses.

Now let's move on to our operating expenses. Our total selling, general and administrative expenses increased to JPY 4.3 billion or USD 27 million in the fiscal 2026 fourth quarter compared to JPY 3.6 billion or USD 22.4 million 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 JPY 9.5 billion or USD 59.5 million.

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.

[Operator Instructions] We'll move first to Ed Engel with Compass Point.

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.

Yes. Thank you for the comment. So, so far, we operate on the original time line that is proposed by the regulators in Japan and the politicians in general, which is basically the FIEA rule, so the basically 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 KDDI 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. 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?

Yes. 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 can 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 the exchanges 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 fourth quarter?

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

We'll move next to Brett Knoblauch with Cantor Fitzgerald.

I guess maybe to start on -- you want to build a platform, I think, in the prepared remarks for the 3 initiatives. First question, you guys have been kind of active, I feel like kind of acquiring 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 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. Can you maybe elaborate there? Like what are you looking to do in terms of on-chain?

Yes, absolutely. So in terms of the platform, so I think you're starting to see the results in the reported 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 Aplos technology over at 3iQ on the hedge fund side or NFTs taking capabilities for both engines.

And so we see those as internal optimizers to increase margins as well as to deliver better services to clients. And as we start gaining distribution deals like those that were announced today, Scotiabank and KDDI and others in the future, 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 taking future -- encompassing 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. In terms of that being seen in the numbers, I believe Jason reported some benefit of adding some of these companies when we were looking at essentially taking 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 what we're -- if you see -- there are 2 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 2 angles to this. The first one is the 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 can be built on top of that. I'm not going to forecast exactly what they are because we are developing them. But 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 the 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 on-chain. You're seeing a lot of vault activity.

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.

[Operator Instructions] We'll move next to Alex Markgraff with KeyBanc Capital Markets.

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. So 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. And I 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 it is very clear in these 2 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 Phase 1, 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 those -- of what they want to deliver to their clients. and they chose Coincheck Group as sort of that prime partner.

And so Phase 1, 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 on the partnership revenue mix. But it's a distribution deal that's powered by Coincheck Group's existing platform. And then the Phase 2 of that, which is more of the business alliance JV, so we want to make sure that people understand the difference between the 2.

Phase 1 starts immediately. Phase 2 is more around developing new progressive technologies together that could service 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 1, but essentially is a -- 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.

Yes. And Alex, I appreciate the question. And of course, as you might imagine, we haven't put out publicly 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 exist at KDDI and what that offers up to us from Coincheck Group perspective.

And I know you had a question around the strategic allocation. So as you can 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 of the discussions made total sense for their presence and their vision that KDDI has 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. 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 partnerships coming online, not just KDDI, but I think Mercoin 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, 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 #1 downloaded 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, call it, partner referral and distribution deals. Mercoin 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 -- 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.

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.