PayPay Corporation (NASDAQ: PAYP) boosts Q1 profit 83% and raises 2027 outlook

Rhea-AI Filing Summary

PayPay Corporation reported a strong quarter for the three months ended June 30, 2026. Total Revenue rose 27% year-on-year to ¥109.8 billion, while profit for the period increased 83% to ¥19.7 billion. Adjusted EBITDA grew 59% to ¥37.4 billion, lifting the Adjusted EBITDA margin to 34%.

In the Payment segment, revenue reached ¥88.6 billion, up 25%, with GMV of ¥5.39 trillion and PayPay MTU of 41.7 million, a 10% increase. The Financial Service segment generated ¥22.5 billion in revenue, up 44%, supported by PayPay Bank deposits of ¥2.3 trillion and loans of ¥1.3 trillion, plus a 65% gain in income from financial instruments.

eKYC-verified users reached 42.5 million, helped by revised point reward programs that improved June profitability by ¥1 billion. PayPay also announced a planned acquisition of a 70.2% stake in T&D Financial Life Insurance Company, targeting the ¥45 trillion Japanese life insurance market. On this backdrop, it raised guidance for the year ending March 31, 2027 to ¥465–¥473 billion in Total Revenue and ¥149–¥155 billion in Adjusted EBITDA and provided Q2 guidance.

Positive

• Q1 revenue up 27%, profit up 83%, Adjusted EBITDA margin 34%.
• Raised FY 2027 guidance to ¥465–¥473B revenue and higher EBITDA.
• Planned 70.2% T&D Financial Life stake enters ¥45T life market.

Negative

• None.

Filing Explained

The acquisition remains pending, while quarterly profit coexisted with negative operating cash flow of ¥54,252 million.

Form 6-K is an interim report used by a foreign private issuer to furnish material information published in its home market. The filing shows that the planned acquisition of a 70.2% stake in T&D Financial Life Insurance Company remains pending, so it has not yet changed PayPay’s ownership structure; closing is expected on October 1, 2027, subject to regulatory approval.

The filing gives no purchase price or financing terms for the acquisition, so its immediate economic effect cannot be sized from this disclosure.

Although the release describes the quarter as strong, its unaudited IFRS cash-flow statement reports net cash used in operating activities of ¥54,252 million for the three months ended June 30, 2026. This means reported quarterly profit did not coincide with positive operating cash flow in the period.

Cash and cash equivalents were ¥491,087 million at June 30, 2026, while the filing also reports ¥757,093 million of borrowings.

Key Figures

Q1 2026 Total Revenue: ¥109,788 million Q1 2026 Profit for the period: ¥19,749 million Q1 2026 Adjusted EBITDA: ¥37,395 million +5 more

8 metrics

Q1 2026 Total Revenue ¥109,788 million For the three months ended June 30, 2026; 27% year-on-year growth

Q1 2026 Profit for the period ¥19,749 million For the three months ended June 30, 2026; profit up 83% year-on-year

Q1 2026 Adjusted EBITDA ¥37,395 million Non-IFRS measure; three months ended June 30, 2026; margin 34%

Total GMV ¥5.49 trillion Consolidated gross merchandise value for the three months ended June 30, 2026

PayPay MTU 41.70 million users Monthly Transacting Users as of June 2026; 10% year-on-year growth

FY 2027 Revenue guidance ¥465,000–¥473,000 million Total Revenue guidance for the year ending March 31, 2027

FY 2027 Adjusted EBITDA guidance ¥149,000–¥155,000 million Adjusted EBITDA guidance for the year ending March 31, 2027

Total assets ¥5,493,719 million Condensed consolidated statement of financial position as of June 30, 2026

Key Terms

Adjusted EBITDA, Gross Merchandise Value, eKYC, Take Rate, +2 more

6 terms

Adjusted EBITDA financial

"Adjusted EBITDA surged 59% year-on-year to ¥37.4 billion, with margins expanding"

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

Gross Merchandise Value financial

"GMV (Gross Merchandise Value) reached ¥5.39 trillion—a 23% year-on-year increase"

Total dollar value of all goods and services sold through a marketplace or e-commerce platform during a set period, before deducting fees, returns or costs. Think of it as the total amount rung up at the register across an entire shopping mall: it shows the platform’s sales volume and user activity. Investors watch it to gauge growth and marketplace traction, but must pair it with metrics like revenue share and margins to assess profitability.

eKYC regulatory

"The number of eKYC-verified users reached 42.5 million as of the end of June"

eKYC is the digital process companies use to verify a customer’s identity using electronic documents, biometric checks, or live video instead of paperwork. It matters to investors because faster, secure onboarding can lower costs, speed growth, and reduce fraud and regulatory fines—much like an automated passport control that lets trusted travelers through quickly while keeping impostors out. Strong eKYC systems can protect revenue and reputation.

Take Rate financial

"Take Rate continued to expand to 1.64%—an increase of 0.02 percentage points"

Take rate is the share of a platform’s total transaction volume that the platform keeps as revenue, usually expressed as a percentage of the money that passes through it. Investors watch take rate because it shows how well a business converts activity into income — like a marketplace owner keeping a slice of every sale — and changes in the take rate can signal improving monetization, pricing power, or margin pressure.

FVTOCI financial

"Changes in the fair value of debt instruments at FVTOCI were included in OCI"

Anti-Money Laundering (AML) regulatory

"reinforcing Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) measures"

Anti-money laundering (AML) is the set of laws, checks and internal controls that financial firms and other regulated businesses use to detect and stop criminals from disguising illegal money as legitimate. Like locks and ID checks at an airport, AML systems track where money comes from and who is using it to reduce fraud, corruption and financing of crime. For investors, strong AML compliance lowers the risk of heavy fines, operational disruption and reputational damage that can hurt a company’s value.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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FAQ

How did PayPay (PAYP) perform in the quarter ended June 30, 2026?

PayPay delivered strong growth, with Total Revenue of ¥109.8 billion (up 27%) and profit of ¥19.7 billion (up 83%). Adjusted EBITDA reached ¥37.4 billion, a 59% increase, and the Adjusted EBITDA margin expanded to 34%.

What were PayPay (PAYP)'s key segment results for Q1 FY 2027?

The Payment segment generated ¥88.6 billion in revenue (up 25%) on GMV of ¥5.39 trillion. The Financial Service segment produced ¥22.5 billion in revenue (up 44%), with PayPay Bank deposits of ¥2.3 trillion and loans of ¥1.3 trillion.

What financial guidance did PayPay (PAYP) give for the year ending March 31, 2027?

PayPay raised full-year guidance, expecting Total Revenue of ¥465,000–¥473,000 million and Adjusted EBITDA of ¥149,000–¥155,000 million. It also guided Q2 Total Revenue to ¥114,000–¥116,000 million and Adjusted EBITDA to ¥37,500–¥39,500 million.

What is PayPay (PAYP)'s plan to acquire T&D Financial Life Insurance Company?

PayPay plans to acquire a 70.2% stake in T&D Financial Life Insurance Company, with closing expected on October 1, 2027 subject to regulatory approval. The move targets the ¥45 trillion Japanese life insurance market and supports a hybrid payments–financial services model.

How is PayPay (PAYP) growing its user base and engagement?

PayPay MTU reached 41.7 million, up 10% year-on-year, and registered users totaled 74.6 million, lifting the active rate to 56%. Payment Segment monthly GMV per MTU increased 11% to ¥43,261, supported by cross-use of PayPay Balance, PayPay Credit and PayPay Card.

What are PayPay (PAYP)'s key balance sheet figures as of June 30, 2026?

Total assets were ¥5,493,719 million, with cash and cash equivalents of ¥491,087 million. Deposits stood at ¥3,112,287 million, loans and advances to customers at ¥2,631,267 million, and total shareholders’ equity at ¥449,927 million.

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of July 2026

Commission File Number 001-43184

PayPay Corporation

(Translation of registrant’s name into English)

Yotsuya Tower, 1-6-1 Yotsuya
Shinjuku-ku

Tokyo 160-0004 Japan

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Table of Contents

Exhibit Index

Exhibit 99.1 — First Quarter ended June 30, 2026 Financial Results

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: July 31, 2026
PAYPAY CORPORATION
By:		/s/ Wataru Kagechika
Name:		Wataru Kagechika
Title:		Managing Corporate Officer and CFO

Exhibit 99.1

PayPay Corporation Reports

First Quarter Ended June 30, 2026 Financial Results

Another strong quarter, with Total Revenue up 27% year-on-year, Profit for the period reaching ¥19.7 billion (up 83%) and Adjusted EBITDA margin of 34%, exceeding guidance

Raised guidance for the fiscal year ending March 31, 2027, expecting Total Revenue of ¥465 to ¥473 billion and Adjusted EBITDA of ¥149 to ¥155 billion

TOKYO, Japan, July 31 (July 30 EDT), 2026 – PayPay Corporation (NASDAQ: PAYP) ("PayPay" or the "Company") today released its unaudited financial results for the first quarter ended June 30, 2026, prepared in accordance with IFRS Accounting Standards, as well as managerial results.

Financial Highlights

First Quarter ended June 30, 2026

•Total Revenue - Total Revenue grew 27% year-on-year to ¥109.8 billion, demonstrating our self-sustaining flywheel in full motion. By becoming an integral part of our users' daily and lifetime infrastructure, we unlocked compounding growth in payment engagement and financial services adoption.

oPayment Segment - Our Total Revenue reached ¥88.6 billion, representing a 25% year-on-year increase and continuing its high-velocity growth. GMV (Gross Merchandise Value) reached ¥5.39 trillion—a 23% year-on-year increase fueled by growth in online channel GMV, PayPay Credit GMV (payments made by linking a PayPay Card to the PayPay app) and PayPay Card GMV (payments made using a physical PayPay Card), which increased by 44%, 30%, and 28% year-on-year, respectively. In particular, the increased use of the PayPay Card alongside PayPay Credit contributed to GMV growth, supported by our continued execution of promotional initiatives such as "Super PayPay Festival" and collaboration with SoftBank mobile plans. Furthermore, credit card financing balances built up steadily, led by revolving and installment payment balances (up 25% year-on-year on a combined basis) and cash advances (up 57% year-on-year). Take Rate continued to expand to 1.64%—an increase of 0.02 percentage points year-on-year—underpinned by a favorable shift in the GMV mix of online and offline. Specifically, the ratio of high-margin online payments within the combined PayPay Balance and PayPay Credit GMV rose to 18%, up 3 percentage points year-on-year. As outlined in the “Business Updates,” performance following our comprehensive review of point reward programs in June has been broadly in line with expectations. While the impact on user retention and GMV has remained contained, the resulting cost reduction has also contributed to improved profitability overall.

•PayPay MTU (Monthly Transacting Users) - Reached 41.7 million. This 10% year-on-year growth (an increase of 4 million) outpaced the 7% year-on-year growth in registered users, which totaled 74.6 million, signaling a steady increase in the active rate—calculated as PayPay MTU divided by PayPay registered users—standing at 56%, up 1.7 percentage points year-on-year.

•Payment Segment Monthly GMV per MTU - Stood at ¥43,261, representing an 11% year-on-year increase. This expansion was driven by two factors: increased transaction frequency and a higher average ticket size, fueled by deepening customer engagement as our cross-use strategy for PayPay Credit and PayPay Card alongside PayPay Balance makes steady progress.

oFinancial Service Segment - Total Revenue grew by 44% year-on-year to ¥22.5 billion. The number of PayPay Bank Deposit Accounts hit 10.2 million, reflecting effective cross-use within the ecosystem. Balance of Deposits grew 17% year-on-year to ¥2.3 trillion. Building on this solid funding base, the balance of loans stood at ¥1.3 trillion, up 37% year-on-year. This growth was steadily driven by a robust increase in mortgages that outpaced the broader market, as well as growth in consumer and business loans. Consequently, we achieved a strong 78% year-on-year increase in interest income, driven by this business growth as well as increased interest income from securities and other investments amid rising interest rates. Furthermore, Gains on Financial Instruments surged to ¥3,293 million, representing a 65% year-on-year increase. This rapid growth was primarily supported by fee income driven by increased

1

trading activity at our securities brokerage business amid favorable market condition. The number of PayPay Securities accounts expanded to 1.82 million, up 29% year-on-year. Additionally, during the first quarter, PayPay Bank Corporation transitioned to a new management structure, including a change in its Representative Director and President. Through the revamping of its next-generation system plans and a comprehensive review of business strategies encompassing UI/UX, products, and pricing, the bank will accelerate initiatives aimed at rapid business expansion.

•Total Transaction Cost - Total Transaction Cost (comprising the sum of settlement-related costs, provision for loss allowance, and interest expenses) as a percentage of Total Revenue rose slightly to 23%, up from 22% in the same period of the previous fiscal year.

•Structural Margin Expansion - Profit for the period reached ¥19.7 billion, representing an 83% increase year-on-year. Adjusted EBITDA surged 59% year-on-year to ¥37.4 billion, with margins expanding to 34% as a result of the operating leverage in both segments.

2

Business Updates

Evolution into a Leading Digital Financial Platform

•Expansion of eKYC (electronic Know-Your-Customer)-Verified User Base and Revision of Our Point Reward Programs - The number of eKYC-verified users reached 42.5 million as of the end of June 2026—one of the largest digital customer bases in Japan. Promoting eKYC is positioned as a major strategic initiative aimed at preventing fraudulent activities and reinforcing Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) measures. Furthermore, eKYC acts as a critical enabler for seamless cross-use across our expanding financial ecosystem. By leveraging verified identity information, the friction typically associated with onboarding for new services—such as bank account opening or securities brokerage—is reduced, offering users a streamlined and frictionless experience. Reflecting the fundamental importance of eKYC within the PayPay ecosystem, we comprehensively revised our point reward programs on June 2, 2026, by making identity verification a prerequisite for point rewards and benefit increases, discontinuing point rewards for payments made using PayPay Points, and transitioning from the "PayPay Card Gold +0.5% point benefit on transaction volume" to an "Annual Usage Benefit", which awards 11,000 PayPay Points to members with an annual transaction volume of ¥1 million or more. To foster understanding, we thoroughly communicated the benefits of eKYC to our users, including enhanced conveniences such as higher transaction limits and a full reimbursement for fraudulent transactions, subject to applicable terms and conditions. Following the implementation of this program, the growth of eKYC-verified users has accelerated, yielding a quarter-on-quarter increase of 1.9 million. Importantly, the impact on user retention and GMV remained well within our expectations, while the resulting cost reductions improved profitability by ¥1 billion for the month of June.

Acquisition of T&D Financial Life Insurance Company

On June 4, we announced the planned acquisition of a 70.2% stake in T&D Financial Life Insurance Company, expected to close in October 1, 2027, subject to regulatory approval. We are enthusiastic about expanding our customer touchpoints through life insurance and entering the ¥45 trillion Japanese life insurance market(1), a vast total addressable market with significant untapped potential for digitalization. Strategically, incorporating a life insurance balance sheet accelerates our evolution into a resilient hybrid model that balances flow-based payment revenues with recurring, balance-sheet-driven revenue from financial services. This allows us to capture the benefits of the current rising interest rate environment while ensuring sustainable growth opportunities regardless of future changes in the external environment. While our current strength is anchored in daily payment touchpoints with users across all generations (especially those in their 20s and 30s) through PayPay, life insurance plays an important role in supporting customers throughout various life stages, including risk protection, wealth accumulation, and asset succession. By incorporating the life insurance business into our group, we will create customer touchpoints across all life stages, from youth through retirement, further enhancing our customer understanding through data accumulation, and thereby accelerating our evolution into a digital financial platform.

The strategic rationale for this acquisition focuses on three key areas:

1.Offering Unique Products - Life insurance covers functions ranging from protection to savings. As a first step, we can create products positioned between bank deposits and investment products by leveraging T&D Financial Life Insurance Company’s competitive edge in savings-type insurance. Further, we envision developing data-driven products tailored to our users, leveraging the advantages of an acquisition rather than a partnership.

2.Strengthening Customer Touchpoints - With an 89% life insurance penetration rate(2) among households with two or more members in Japan, the market offers diverse protection and investment features. Since these products are re-evaluated during life stage changes or financial shifts, they represent an essential component for expanding our customer reach and building long-term customer relationships.

3.Maximizing Revenue Opportunities - T&D Financial Life Insurance Company currently cedes a substantial portion of the risks associated with new single-premium policies to reinsurers. We aim to enhance our asset management capability to expand profit margins.

(1)Represents the total annual premium and other income across all 41 member companies for the one-year period from April 2025 to March 2026, as reported in the "2025 Summary of Life Insurance Business" by The Life Insurance Association of Japan.

(2)Represents the percentage of households with life insurance policies (including individual annuity insurance) among households with two or more members, as reported in the "2024 National Survey on Life Insurance" by the Japan Institute of Life Insurance.

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Key Financial and Operating Metrics

The following table sets forth a summary of key financial and operating metrics for the three-month periods ended June 30, 2026 and 2025, and the three-month periods ended March 31, 2026 and 2025.

		For the three-month period ended March 31,								For the three-month period ended June 30,
		2025				2026				2025				2026
		(in millions of yen, unless otherwise indicated)
Total Revenue		¥	78,631			¥	102,184			¥	86,154			¥	109,788
Settlement related costs		¥	11,193			¥	12,383			¥	11,572			¥	13,190
Provision for loss allowance		¥	6,701			¥	7,527			¥	5,240			¥	8,314
Interest expenses		¥	1,531			¥	3,343			¥	2,203			¥	3,540
Total Transaction Cost		¥	19,425			¥	23,253			¥	19,015			¥	25,044
Operating profit		¥	7,326			¥	19,074			¥	15,964			¥	29,865
Operating profit margin			9	%			19	%			19	%			27	%
Profit for the period		¥	10,200			¥	14,473			¥	10,809			¥	19,749
Profit for the period margin			13	%			14	%			13	%			18	%
Non-IFRS Financial Measure:
Adjusted EBITDA(1)		¥	14,003			¥	28,593			¥	23,506			¥	37,395
Adjusted EBITDA Margin(2)			18	%			28	%			27	%			34	%
Operating Metrics:		(in trillions of yen, unless otherwise indicated)
Consolidated
Total GMV(3)		¥	4.12			¥	5.07			¥	4.46			¥	5.49
Payment segment
PayPay Balance GMV(4)		¥	2.34			¥	2.79			¥	2.52			¥	2.98
PayPay Credit GMV(5)		¥	0.94			¥	1.22			¥	1.08			¥	1.40
PayPay Card GMV(6)		¥	0.76			¥	0.97			¥	0.79			¥	1.01
Payment Segment GMV(7)		¥	4.05			¥	4.98			¥	4.39			¥	5.39
Take Rate(8)			1.60	%			1.65	%			1.62	%			1.64	%
Cost Rate(9)			1.45	%			1.38	%			1.29	%			1.23	%
PayPay MTU (millions of users)(10)			37.23				40.97				37.84				41.70
PayPay Number of Transactions (millions of transactions)(11)			1,996				2,359				2,168				2,544
Financial service segment
PayPay Bank Balance of Deposits (billions of yen)(12)		¥	1,841.0			¥	2,269.1			¥	2,007.3			¥	2,342.3
PayPay Bank Balance of Loans (billions of yen)(13)		¥	926.9			¥	1,238.6			¥	970.9			¥	1,334.8

Notes:

(1) Adjusted EBITDA is defined as profit for the three-month period plus income tax expense (benefit), share of loss of investments accounted for using the equity method, depreciation and amortization, loss on disposal of property and equipment and intangible assets, share-based payment expense, amortization of contract cost, listing-related expenses, M&A-related expenses and net interest expense (income) from corporate borrowings and treasury assets. Share of profit (loss) of investments accounted for using the equity method includes share of loss of a joint venture accounted for using the equity method.

(2) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue.

(3) Total GMV, or gross merchandise value, is defined as the total of PayPay Balance GMV, PayPay Credit GMV, PayPay Card GMV and PayPay Bank Visa Debit Card GMV, excluding the GMV of cancelled transactions. PayPay Bank Visa Debit Card GMV is defined as payments made using PayPay Bank Visa Debit Card (physical card) and Cardless Visa Debit transaction volume for both personal and corporate use, excluding the GMV of PayPay Debit and ATM withdrawal amounts when using the cash card function, excluding the GMV of any cancelled transactions.

(4) PayPay Balance GMV is defined as payments made using PayPay Balance, PayPay Debit, PayPay Balance Card, other credit card payment linked to the PayPay app and payments made through other payment services and networks such as Alipay+ and HIVEX® via PayPay code payment, excluding top-ups to PayPay Balance with PayPay Card and excluding the GMV of cancelled transactions.

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(5) PayPay Credit GMV is defined as payments made using PayPay Credit, top-ups to PayPay Balance made using PayPay Card and GMV made by linking a PayPay Card to the PayPay app without linking a PayPay account, excluding the GMV of cancelled transactions.

(6) PayPay Card GMV is defined as payment made using PayPay Card (physical card), excluding top-ups to PayPay Balance with PayPay Card and excluding the GMV of cancelled transactions.

(7) Payment Segment GMV is defined as the total of PayPay Balance GMV, PayPay Credit GMV and PayPay Card GMV, excluding the GMV of cancelled transactions.

(8) Take Rate is defined as Payment Segment’s Total Revenue divided by Payment Segment GMV (which includes PayPay Balance, PayPay Credit, and PayPay Card GMV).

(9) Cost Rate is defined as Payment Segment’s operating expenses divided by Payment Segment GMV (which includes PayPay Balance, PayPay Credit, and PayPay Card GMV).

(10) PayPay MTU is defined as the number of unique users who completed at least one payment per month that contributes to PayPay Balance or PayPay Credit GMV, but excluding P2P (peer-to-peer) money transfers and cancelled transactions. PayPay MTU over a quarterly or annual period represents the figure from the last month in the relevant period.

(11) PayPay Number of Transactions is defined as the total number of completed transactions that contribute to PayPay Balance GMV or PayPay Credit GMV, but excluding P2P (peer-to-peer) money transfers and cancelled transactions.

(12) PayPay Bank Balance of Deposits is defined as the sum of demand deposit and time deposit.

(13) PayPay Bank Balance of Loans is defined as the sum of mortgage loans, overdraft and other.

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The following table reconciles profit—the most directly comparable financial measure calculated and presented in accordance with IFRS—to Adjusted EBITDA from profit for the three-month periods ended March 31 and June 30, 2026 and 2025. The adjustments presented below are primarily depreciation expenses that do not result in a cash outflow, temporary expenses and non-operating income and expenses.

		For the three-month period ended March 31,								For the three-month period ended June 30,
		2025				2026				2025				2026
		(in millions of yen, except percentages)
Profit for the three-month period		¥	10,200			¥	14,473			¥	10,809			¥	19,749
Add: Income tax expense (benefit)			(3,040	)			4,363				5,050				10,056
Add: Share of loss of investments accounted    for using the equity method(1)			166				238				105				60
Add: Depreciation and amortization			5,607				6,208				5,729				6,125
Add: Share-based payment expenses(2)		-					1,730			-					229
Add: Amortization of contract cost			349				481				386				522
Add: Loss on disposal of property and equipment and    intangible assets			207				811				182				248
Add: Listing-related expenses(3)			302				286				939				27
Add: M&A-related expenses(4)			153				162				274				483
Add: Net interest expense (income) from corporate    borrowings and treasury assets(5)			59				(159	)			32				(103	)
Adjusted EBITDA		¥	14,003			¥	28,593			¥	23,506			¥	37,395
Divided by: Total Revenue		¥	78,631			¥	102,184			¥	86,154			¥	109,788
Adjusted EBITDA Margin(6)			18	%			28	%			27	%			34	%

Notes:

(1) Share of loss of investments accounted for using the equity method includes share of loss of a joint venture accounted for using the equity method.

(2) Share-based payment expenses represent compensation granted to directors, officers, and employees in exchange for their services, consisting of equity-settled awards (non-cash expenses) and cash-settled awards (expenses involving future cash outflows). These expenses are recognized by allocating the fair value of each award over its respective vesting period. Following the completion of PayPay’s IPO, the cumulative amount relating to prior periods was recognized in a lump sum in the fourth quarter ended March 31, 2026. Notably, in the calculation of Adjusted EBITDA, only equity-settled share-based payment expenses are adjusted as non-cash items, while cash-settled expenses are not adjusted.

(3) Listing-related expenses consist of the fees and expenses of the professional advisors that we hired in connection with the preparations for our initial public offering.

(4) M&A-related expenses consist of the fees and expenses of the professional advisors that we hired in connection with acquisitions and investments and accrued expenses related to holdbacks in connection with a prior acquisition.

(5) Net interest expense (income) from corporate borrowings and treasury assets comprises interest expense on borrowings from LY Corporation, offset by interest income derived from guarantee deposits, cash and cash equivalents, and government securities within the Payment Segment.

(6) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue.

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Financial Guidance

Following a strong start to the fiscal year, we are raising our full-year financial guidance based on the expectation of continued strong momentum from the second quarter onwards, and providing our financial guidance for the three-month period ending September 30, 2026.

		For the year ending March 31,								For the three-month period ending  September 30,
		2027								2026
		(in millions of yen)
Total Revenue		¥	465,000		to	¥	473,000			¥	114,000		to	¥	116,000
Adjusted EBITDA		¥	149,000		to	¥	155,000			¥	37,500		to	¥	39,500

Conference Call

PayPay will host a conference call to discuss earnings at 7:30 a.m. Eastern Time, 8:30 p.m. JST on Friday, July 31, 2026. The conference call will be live on PayPay's investor relations website at https://ir.paypay.ne.jp/. A replay of the call will be available on the same website following the call.

Participating on the call will be:

•Ichiro Nakayama, Representative Director President, Corporate Officer, Chief Executive Officer,

•Wataru Kagechika, Managing Corporate Officer, Chief Financial Officer,

•Toshiki Motoda, Corporate Officer, Head of Corporate Strategy Division and Finance Division,

•Kotaro Emae, Head of Investor Relations

Contact

Investor Relations: investor.relations@paypay-corp.co.jp

Public Relations: pr@paypay-corp.co.jp

7

Cautionary Note Regarding Forward-Looking Statements and Financial Guidance

This release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve risks and uncertainties. Forward-looking statements generally relate to future events or future financial or operating performance. In some cases, you can identify these statements by forward-looking words such as “expectation,” “forecast,” “anticipation,” “intention,” “plan,” “possibility,” “may,” “will,” “should,” “anticipate,” “could,” “would,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “goal,” “objective,” “seek,” or “continue,” the negative of these terms and other comparable terminology. Forward-looking statements in this release may relate to, but are not limited to, expectations of future results of operations or financial performance of the Company, including expectations related to full-year and quarter Total Revenue growth and Adjusted EBITDA, expectations regarding certain of our key financial and operating metrics, our business and growth strategy, including future product development plans, our market opportunity, the performance of newly launched products and innovations, our technological capabilities, the demand for the Company’s products and services, our expectations and management of future growth and acceleration, and our expectations regarding our industry and traditional banks, as well as assumptions relating to the foregoing. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include risks related to our ability to manage our growth effectively; our ability to attract new users, retain our active users and expand the scope of our relationship with our active users; our ability to attract new merchants to utilize our services, grow our relationships with our existing merchants, and increase transaction volumes across our payment settlement services; our ability to maintain and expand synergies between our code-based payment settlement services and our credit card payment services; our ability to maintain and strengthen the ecosystem effects of our platform; our alliances with the shareholders of our consolidated subsidiaries and equity-method affiliates; changes in the expansion and development of the cashless payments industry and the digital financial services industry in Japan; our ability to implement pricing strategies and expand our service offerings; our ability to maintain, protect, and enhance our strong and trusted brand; our ability to maintain or improve our technology infrastructure; and the complex and evolving laws and regulations applicable to our business and the banking ecosystem. Statements regarding our financial guidance and targets are forward-looking and involve known and unknown risks and uncertainties that may cause actual results to differ materially from those projected. Moreover, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this release. These forward-looking statements reflect the Company’s views with respect to future events as of the date of this release and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Further information on these risks and other factors that could affect our financial results are set forth in our regulatory filings and periodic reports. Except as required by law, the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this release.

Non-IFRS Financial Measures and Key Metrics

This release includes financial information prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”). This release also includes non-IFRS financial information, which should be considered supplemental to, not a substitute for, or superior to, the financial measures calculated in accordance with IFRS. Some of the non-IFRS financial measures that are included in this release are Adjusted EBITDA and Adjusted EBITDA Margin. We use these non-IFRS financial measures in conjunction with IFRS measures to evaluate our operating performance, formulate business plans, prepare budgets and forecasts, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. We believe that these non-IFRS financial measures provide useful information to investors, analysts, and others about our business and financial performance, enhance their overall understanding of our performance, and can assist in providing a more consistent and comparable overview of our financial performance across periods. There are a number of limitations related to the use of these non-IFRS financial measures and their nearest IFRS equivalents. For example, the Company’s definitions of non-IFRS financial measures may differ from non-IFRS financial measures used by other companies. For reconciliations to the most directly comparable IFRS measure, see the financial tables attached to this release. However, the Company is unable to provide a reconciliation of certain non-IFRS guidance measures to the corresponding IFRS measures on a forward-looking basis without unreasonable effort due to the unpredictability of the amounts and timing of events affecting the items we exclude from the non-IFRS measures. Notwithstanding the foregoing, it is important to note that material changes to reconciling items could have a significant effect on future IFRS results. Additionally, this release includes key operating metrics that we use to evaluate our operating performance, formulate business plans, and make strategic decisions.

Unaudited Financial Information

Please note that the financial information for the periods presented in this release is unaudited and derived from the Company's management accounts.

Industry and Market Data

This release may contain information, estimates and other statistical data derived from third-party sources. While the Company believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and the Company has not independently verified such data.

8

TABLE OF CONTENTS

Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Statements of Financial Position (Unaudited)	10
Condensed Consolidated Statements of Profit or Loss for the three months (Unaudited)	11
Condensed Consolidated Statements of Comprehensive Income for the three months (Unaudited)	11
Condensed Consolidated Statements of Changes in Equity for the three months (Unaudited)	12
Condensed Consolidated Statements of Cash Flows for the three months (Unaudited)	13
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Segment Information	14
2. Cash and Cash Equivalents	15
3. Guarantee Deposits	15
4. Loans and Advances to Customers	16
5. Securities	16
6. Deposits	17
7. Borrowings	17
8. Revenue	18
9. Operating Expenses	19

9

Condensed Consolidated Statements of Financial Position (Unaudited)

		(In millions of yen)
		Notes		March 31, 2026				June 30, 2026
Assets
Cash and cash equivalents		2			363,083				491,087
Guarantee deposits		3			74,139				57,727
Call loans					40,014				14
Accounts receivable					150,372				210,339
Loans and advances to customers		4			2,512,851				2,631,267
Securities		5			1,736,835				1,791,867
Other financial assets					32,293				46,735
Property and equipment					14,879				15,141
Right-of-use assets					12,175				11,379
Intangible assets					66,466				66,441
Goodwill					15,157				15,157
Investments accounted for using the equity method					12,762				12,761
Deferred tax assets					107,275				103,076
Other assets					37,711				40,728
Total assets					5,176,012				5,493,719
Liabilities
Deposits		6			2,952,495				3,112,287
Accounts payable					1,122,338				1,080,710
Income tax payables					13,073				5,917
Borrowings		7			564,956				757,093
Other financial liabilities					48,116				51,681
Provisions					7,403				7,447
Lease liabilities					9,549				8,910
Deferred tax liabilities					206				223
Other liabilities					27,115				19,524
Total liabilities					4,745,251				5,043,792
Shareholders’ equity
Issued capital					200,635				201,041
Share premium					86,730				87,220
Retained earnings					109,869				128,299
Accumulated other comprehensive loss					(3,055	)			(3,143	)
Equity attributable to owners of the parent company					394,179				413,417
Non-controlling interests					36,582				36,510
Total shareholders’ equity					430,761				449,927
Total liabilities and shareholders’ equity					5,176,012				5,493,719

See Notes to Condensed Consolidated Financial Statements (Unaudited)

10

Condensed Consolidated Statements of Profit or Loss (Unaudited)

				(In millions of yen)
				For the three months ended
		Notes		June 30, 2025				June 30, 2026
Transaction and service income					56,816				69,961
Interest income					25,435				35,144
Gains (losses) on financial instruments					3,561				3,804
Other operating income					342				879
Total revenue		1, 8			86,154				109,788
Point expenses					(13,153	)			(16,041	)
Settlement related cost					(11,572	)			(13,190	)
Employee benefit expenses					(10,783	)			(11,766	)
Provision for loss allowance					(5,240	)			(8,314	)
Professional and outsourcing services expenses					(7,737	)			(6,518	)
Other operating expenses					(21,705	)			(24,094	)
Total operating expenses		1, 9			(70,190	)			(79,923	)
Operating profit		1			15,964				29,865
Share of loss of investments accounted for using the equity method					(105	)			(60	)
Profit before tax					15,859				29,805
Income tax expense					(5,050	)			(10,056	)
Profit for the period					10,809				19,749
Attributable to
Owners of the parent company					10,511				18,428
Non-controlling interests					298				1,321
								(In yen)
Earnings per share
Earnings per share attributable to owners of the parent company (1)
Basic earnings per share					16.66				27.21
Diluted earnings per share					16.66				27.02

(1)The share split occurred and became effective on November 15, 2025 and earnings per share for the three months ended June 30, 2025 has been retrospectively adjusted.

See Notes to Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

		(In millions of yen)
				For the three months ended
		Notes		June 30, 2025				June 30, 2026
Profit for the period					10,809				19,749
Other comprehensive income (loss) for the period, net of tax
Items that may be reclassified subsequently to profit or loss
Changes in the fair value of debt instruments at FVTOCI					870				(109	)
Exchange differences on translation of foreign operations					(11	)			6
Total other comprehensive income (loss) for the period, net of tax					859				(103	)
Total comprehensive income for the period, net of tax					11,668				19,646
Total comprehensive income for the period, net of tax attributable to
Owners of the parent company					11,047				18,339
Non-controlling interests					621				1,307

11

Condensed Consolidated Statements of Changes in Equity (Unaudited)

For the three months ended June 30, 2025
		(In millions of yen)
				Equity attributable to owners of the parent company
		Notes		Issued capital				Share premium				Retained earnings (Accumulated deficit)				Accumulated other comprehensive income (loss)				Total				Non- controlling interests				Total shareholders’ equity
Balance as of April 1, 2025					91,434				13,727				(4,887	)			(379	)			99,895				123,836				223,731
Profit for the period					—				—				10,511				—				10,511				298				10,809
Other comprehensive income					—				—				—				536				536				323				859
Total Comprehensive income for the period					—				—				10,511				536				11,047				621				11,668
Dividends paid to non-controlling interests					—				—				—				—				—				(2,909	)			(2,909	)
Dividends paid to the ultimate parent company					—				—				(311	)			—				(311	)			—				(311	)
Issuance of new shares					60,971				60,360				—				—				121,331				—				121,331
Changes due to business combinations of    entities under common control    - PayPay Securities Corporation and    PayPay Bank Corporation					—				(36,827	)			—				—				(36,827	)			(86,358	)			(123,185	)
Other					—				—				34				(31	)			3				3				6
Total transactions with owners and other transactions					60,971				23,533				(277	)			(31	)			84,196				(89,264	)			(5,068	)
Balance as of June 30, 2025					152,405				37,260				5,347				126				195,138				35,193				230,331

For the three months ended June 30, 2026
		(In millions of yen)
				Equity attributable to owners of the parent company
		Notes		Issued capital				Share premium				Retained earnings				Accumulated other comprehensive income (loss)				Total				Non- controlling interests				Total shareholders’ equity
Balance as of April 1, 2026					200,635				86,730				109,869				(3,055	)			394,179				36,582				430,761
Profit for the period					—				—				18,428				—				18,428				1,321				19,749
Other comprehensive loss					—				—				—				(89	)			(89	)			(14	)			(103	)
Total Comprehensive income for the period					—				—				18,428				(89	)			18,339				1,307				19,646
Dividends paid to non-controlling interests					—				—				—				—				—				(1,379	)			(1,379	)
Issuance of new shares					406				213				—				—				619				—				619
Share-based payments transactions					—				277				—				—				277				—				277
Other					—				—				2				1				3				—				3
Total transactions with owners and other transactions					406				490				2				1				899				(1,379	)			(480	)
Balance as of June 30, 2026					201,041				87,220				128,299				(3,143	)			413,417				36,510				449,927

12

Condensed Consolidated Statements of Cash Flows (Unaudited)

		(In millions of yen)
				For the three months ended
		Notes		June 30, 2025				June 30, 2026
Cash flows from (used in) operating activities
Profit before tax					15,859				29,805
Adjustments for:
Depreciation and amortization					6,115				6,648
Loss on disposal of property and equipment and intangible assets					182				247
Share-based payment expenses				—					167
Other income and costs					(87	)			(877	)
Changes in assets and liabilities:
Guarantee deposits		3			16,190				16,412
Call loans					33,000				40,000
Accounts receivable					(42,378	)			(59,813	)
Loans and advances to customers		4			(68,484	)			(118,416	)
Securities		5			(24,643	)			(54,838	)
Deposits		6			211,300				159,792
Accounts payable					(50,337	)			(43,716	)
Other financial assets					(1,815	)			(7,854	)
Other financial liabilities					2,799				2,362
Provisions					(55	)			52
Other					(3,098	)			(10,587	)
Cash provided by (used in) operations					94,548				(40,616	)
Income tax paid					(7,602	)			(13,636	)
Income tax refunded					45				—
Net cash provided by (used in) operating activities					86,991				(54,252	)
Cash flows from (used in) investing activities
Purchases of securities		5			(175,246	)			(74,531	)
Proceeds from sales/redemption of securities		5			45,415				74,386
Purchases of property and equipment					(2,067	)			(1,709	)
Purchases of intangible assets					(4,668	)			(4,172	)
Other					(1,506	)			(3,131	)
Net cash used in investing activities					(138,072	)			(9,157	)
Cash flows from (used in) financing activities
Net increase in short-term borrowings		7			150,000				177,037
Proceeds from long-term borrowings		7			314,565				123,500
Repayments of long-term borrowings		7			(250,340	)			(108,400	)
Repayments of lease liabilities					(764	)			(587	)
Proceeds from issuance of new common shares					121,624				(146	)
Payments for the purchase of the equity interest of subsidiaries,    through business combinations of entities under common control					(130,185	)			—
Dividends paid to non-controlling interests					(2,909	)			—
Dividends paid to the ultimate parent company					(311	)			—
Net cash provided by financing activities					201,680				191,404
Effect of exchange rate changes on cash and cash equivalents					(46	)			9
Increase in cash and cash equivalents					150,553				128,004
Cash and cash equivalents at the beginning of the period		2			369,811				363,083
Cash and cash equivalents at the end of the period		2			520,364				491,087

See Notes to Condensed Consolidated Financial Statements (Unaudited)

13

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Segment Information

Profit or Loss for the Group's Reportable Segments

For the three months ended June 30, 2025
		(In millions of yen)
		Payment				Financial service				Inter-segment eliminations				Consolidated
Transaction and service income
Revenue from external customers			49,643				7,173				—				56,816
Inter-segment revenue			247				188				(435	)			—
Total transaction and service income			49,890				7,361				(435	)			56,816
Interest income			19,261				6,174				—				25,435
Gains (losses) on financial instruments			1,563				1,998				—				3,561
Other operating income			305				37				—				342
Total revenue			71,019				15,570				(435	)			86,154
Operating expenses (1)			(56,523	)			(14,102	)			435				(70,190	)
Segment profit			14,496				1,468				—				15,964
(Reconciliation to profit before tax)
Share of loss of investments accounted for using the equity method															(105	)
Profit before tax															15,859

For the three months ended June 30, 2026
		(In millions of yen)
		Payment				Financial service				Inter-segment eliminations				Consolidated
Transaction and service income
Revenue from external customers			62,180				7,781				—				69,961
Inter-segment revenue			410				263				(673	)			—
Total transaction and service income			62,590				8,044				(673	)			69,961
Interest income			24,708				11,004				(568	)			35,144
Gains (losses) on financial instruments			511				3,293				—				3,804
Other operating income			774				122				(17	)			879
Total revenue			88,583				22,463				(1,258	)			109,788
Operating expenses (1)			(66,061	)			(15,078	)			1,216				(79,923	)
Segment profit			22,522				7,385				(42	)			29,865
(Reconciliation to profit before tax)
Share of loss of investments accounted for using the equity method															(60	)
Profit before tax															29,805

(1)For details of operating expenses, refer to Note 9, Operating Expenses.

14

2. Cash and Cash Equivalents

Cash and cash equivalents are as follows:

		(In millions of yen)
		March 31, 2026				June 30, 2026
Payment:
Cash and demand deposits			53,439				74,896
Restricted cash related to transfers of credit card receivables			697				697
Subtotal			54,136				75,593
Financial service:
Cash and demand deposits			16,322				19,937
Deposits with the Bank of Japan			292,622				395,557
Other			3				—
Subtotal			308,947				415,494
Total			363,083				491,087

3. Guarantee Deposits

Guarantee deposits are as follows:

		(In millions of yen)
		March 31, 2026				June 30, 2026
Payment:
Guarantee deposits under Payment Services Act (1)(2)(3)			49,734				35,855
Subtotal			49,734				35,855
Financial service:
Other			24,405				21,872
Subtotal			24,405				21,872
Total			74,139				57,727

(1)In accordance with the Payment Services Act of Japan, the Company is required to implement prescribed safeguarding measures for unused prepaid balances held by users of PayPay settlement services. The balance is required to cover 100% of the total unused prepaid balance of PayPay Money and 50% of the total unused prepaid balance of PayPay Money Lite. The Company has implemented the prescribed safeguarding measures by (i) making a security deposit (the "guarantee deposit") with the Legal Affairs Bureau, (ii) depositing Japanese government bonds with the Legal Affairs Bureau, (iii) establishing a trust and reporting the trust arrangement to the Kanto Local Finance Bureau, and (iv) entering into a guarantee agreement and reporting the agreement to the Kanto Local Finance Bureau. The trust is included in the scope of consolidation. During the three months ended June 30, 2026, the Company entered into a guarantee agreement with a financial institution and implemented an additional method for safeguarding the unused prepaid balances.

(2)The total amount of the guarantee deposits, the Japanese government bonds, and assets held by the trust amounts to 306,747 million yen and 297,890 million yen as of March 31, 2026 and June 30, 2026, respectively. Under the trust arrangement, the Company has deposited 196,500 million yen and 208,800 million yen with PayPay Bank Corporation as of March 31, 2026 and June 30, 2026, respectively, and the funds are managed in the normal course of the banking business.

(3)The balance also includes regulatory safeguarding assets maintained in connection with digital wage payment services pursuant to the Ordinance for Enforcement of the Labor Standards Act of Japan. The balance amounts to 5,011 million yen as of both March 31, 2026 and June 30, 2026.

15

4. Loans and Advances to Customers

Loans and advances to customers are as follows:

		(In millions of yen)
		March 31, 2026				June 30, 2026
Payment:
Credit card receivables			1,321,827				1,349,072
Loss allowance			(45,312	)			(50,096	)
Subtotal			1,276,515				1,298,976
Financial service:
Mortgage loans (1)			909,483				978,262
Overdraft			312,255				327,755
Other			16,879				28,798
Loss allowance			(2,281	)			(2,524	)
Subtotal			1,236,336				1,332,291
Total			2,512,851				2,631,267

(1)Mortgage loans include the loans acquired from a financial institution with a guarantee provided by the seller up to 1% of the transferred loan balance. The remaining balances of acquired loans are 175,950 million yen and 172,837 million yen as of March 31, 2026 and June 30, 2026, respectively.

5. Securities

Securities are as follows:

		(In millions of yen)
		March 31, 2026				June 30, 2026
Payment:
Japanese government bonds			65,612				58,246
Subtotal			65,612				58,246
Financial service:
Japanese government bonds and municipal bonds			713,244				732,464
Corporate and other debt securities			416,121				409,734
Asset backed securities			337,685				330,339
Exchange traded funds			202,879				259,754
Equity securities			1,294				1,330
Subtotal			1,671,223				1,733,621
Total			1,736,835				1,791,867

16

6. Deposits

Deposits are as follows:

		(In millions of yen)
		March 31, 2026				June 30, 2026
Payment:
PayPay Users' deposits (1)(2)			451,263				483,824
Subtotal			451,263				483,824
Financial service:
Deposits from customers in the banking business
Demand deposits			2,090,486				2,219,176
Time deposits			178,594				123,121
Deposits from customers in the securities intermediary business			221,374				274,907
Other			10,778				11,259
Subtotal			2,501,232				2,628,463
Total			2,952,495				3,112,287

(1)PayPay Users' deposits are PayPay Balance and Other Items held by PayPay Users in PayPay Settlement Services.

(2)PayPay Users' deposits include PayPay Money which PayPay Users can withdraw at users' discretion. The balance of PayPay Money amounts to 212,179 million yen and 224,112 million yen as of March 31, 2026 and June 30, 2026, respectively.

7. Borrowings

Components of Borrowings are as follows:

		(In millions of yen)
		March 31, 2026				June 30, 2026
Payment:
Loan payables			280,825				302,925
Commercial papers			73,000				87,000
Subtotal			353,825				389,925
Financial service:
Loan payables			211,131				367,168
Subtotal			211,131				367,168
Total			564,956				757,093

17

8. Revenue

(1) Disaggregation of Revenue

(i) Revenue recognized from contracts with customers and other sources

		(In millions of yen)
		For the three months ended
		June 30, 2025				June 30, 2026
Revenue from contracts with customers
Transaction and service income			56,816				69,961
Revenue from other sources
Interest income (1)			25,435				35,144
Gains (losses) on financial instruments			3,561				3,804
Other operating income			342				879
Total			86,154				109,788

(1)The Group pays guarantee fees to third-party financial institutions to mitigate the credit risk of loans and advances to customers. These guarantee fees are an integral part of the loan arrangement. In accordance with IFRS 9 “Financial Instruments”, these guarantee fees are included in the calculation under the effective interest rate method and therefore reduce interest income. The guarantee fees were 5,212 million yen and 5,709 million yen for the three months ended June 30, 2025 and 2026, respectively.

(ii) Disaggregation of revenue from contracts with customers by type of service

For the three months ended June 30, 2025
		(In millions of yen)
		Payment				Financial service				Total
Payment Settlement Services
PayPay Settlement Services			44,196				—				44,196
Credit Payment Settlement Services and Acquiring Services (1)			10,072				—				10,072
Debit Payment Settlement Services			—				1,277				1,277
Payment settlement services deduction			(11,160	)			(332	)			(11,492	)
Subtotal			43,108				945				44,053
Financial services			—				5,984				5,984
Other (2)			6,535				244				6,779
Total			49,643				7,173				56,816

For the three months ended June 30, 2026
		(In millions of yen)
		Payment				Financial service				Total
Payment Settlement Services
PayPay Settlement Services			67,834				—				67,834
Credit Payment Settlement Services and Acquiring Services (1)			13,063				—				13,063
Debit Payment Settlement Services			—				1,565				1,565
Payment settlement services deduction			(26,841	)			(382	)			(27,223	)
Subtotal			54,056				1,183				55,239
Financial services			—				6,229				6,229
Other (2)			8,124				369				8,493
Total			62,180				7,781				69,961

(1)Revenue from Credit Payment Settlement Services and Acquiring Services is presented net of interchange fees charged by the credit card issuer in respect of Acquiring Services, as the Group recognizes revenue based on the settlement amount of the purchase transaction and the predetermined rate, less such interchange fees. The interchange fees were 2,669 million yen and 3,060 million yen for the three months ended June 30, 2025 and 2026, respectively.

(2)Other in the Payment segment includes revenues primarily earned from a monthly paid subscription plan for PayPay Merchants, and is presented net of a revenue deduction, which amounts to 735 million yen and 1,486 million yen for the three months ended June 30, 2025 and 2026, respectively. These deductions mainly relate to consideration payable to customers in connection with annual membership fees for a certain type of PayPay Card.

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9. Operating Expenses

Operating expenses by nature are as follows:

For the three months ended June 30, 2025
		(In millions of yen)
		Payment				Financial service				Inter-segment eliminations				Consolidated
Point expenses (1)			13,153				—				—				13,153
Settlement related cost (2)			8,837				2,895				(160	)			11,572
Employee benefit expenses			8,473				2,310				—				10,783
Provision for loss allowance			5,087				153				—				5,240
Professional and outsourcing services expenses (3)			5,279				2,525				(67	)			7,737
Other operating expenses
Depreciation and amortization			4,041				1,688				—				5,729
License fees			4,283				—				—				4,283
Interest expenses			764				1,464				(25	)			2,203
Advertising and promotion expenses			1,411				1,065				(88	)			2,388
Tax and charges			624				613				—				1,237
Amortization of contract cost			386				—				—				386
Other			4,185				1,389				(95	)			5,479
Subtotal			15,694				6,219				(208	)			21,705
Total			56,523				14,102				(435	)			70,190

For the three months ended June 30, 2026
		(In millions of yen)
		Payment				Financial service				Inter-segment eliminations				Consolidated
Point expenses (1)			16,041				—				—				16,041
Settlement related cost (2)			10,303				3,106				(219	)			13,190
Employee benefit expenses			9,101				2,670				(5	)			11,766
Provision for loss allowance			8,046				268				—				8,314
Professional and outsourcing services expenses (3)			4,782				1,783				(47	)			6,518
Other operating expenses
Depreciation and amortization			4,537				1,588				—				6,125
License fees			5,142				253				—				5,395
Interest expenses			1,159				2,588				(207	)			3,540
Advertising and promotion expenses			1,864				482				(105	)			2,241
Tax and charges			682				491				—				1,173
Amortization of contract cost			522				—				—				522
Other			3,882				1,849				(633	)			5,098
Subtotal			17,788				7,251				(945	)			24,094
Total			66,061				15,078				(1,216	)			79,923

(1)Point expenses are incurred primarily when the Group grants reward points to PayPay Users through various reward programs, which PayPay Users can use reward points at the merchants to pay off balance due in a purchase transaction.

(2)Settlement related cost includes fees paid to banks for users to charge their PayPay Balance from their bank accounts and brand or network fees paid to international card brands. Settlement related cost also includes interbank transaction fees.

(3)Professional and outsourcing services expenses include customer service related costs, system development labor, and other professional services.

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