GMO Payment Gateway,Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥82.50B
• Operating Income: ¥31.34B
• Net Income: ¥22.54B
• EPS: ¥287.79

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

GMO Payment Gateway (IFRS, consolidated) delivered strong FY2025 Q4 results with double-digit top-line growth and outsized profit expansion, consistent with an asset-light payments platform model. Revenue rose 11.8% YoY to 824.99, while operating income grew 24.4% to 313.40, indicating material operating leverage and disciplined cost control. Gross profit of 481.03 implies a robust 58.3% gross margin, while EBITDA of 346.87 translates to a 42.0% EBITDA margin, reflecting high scalability and limited capex intensity. Net income advanced 16.7% to 218.29, with an effective tax rate of 25.9%, close to the statutory range. DuPont metrics show a healthy ROE of 18.8%, driven by a high net margin of 26.5%, modest asset turnover of 0.203 (typical for gateway models with large settlement assets), and financial leverage of 3.50x. The reported operating margin (0.4%) and reported ROE (0.2%) are inconsistent with the income statement and appear to be XBRL label/scaling artifacts; we rely on the internally consistent figures provided. Operating cash flow was very strong at 537.59, 2.46x net income, pointing to high earnings quality and favorable working capital dynamics. Free cash flow of 464.31 easily covered dividends (FCF coverage 4.89x), underscoring solid cash generation and dividend capacity. The balance sheet shows total assets of 4,068.00 with current assets of 2,980.96 and significant cash & equivalents of 2,200.40, consistent with settlement cash typical for payment processors. Total liabilities of 2,388.83 and an equity ratio of 27.8% indicate leverage, but the risk is tempered by ample liquidity and the nature of settlement balances. Interest-bearing debt includes short-term loans of 243.40 and long-term loans of 89.15; interest expense was unreported, so interest coverage cannot be calculated from disclosed data. Owners’ equity is 708.46 within total equity of 1,161.77, implying sizable non-controlling interests (NCI), which is relevant for distributable profit and ROE attribution. Growth looks broad-based given revenue and operating income expansion, with margin improvement suggesting mix/take-rate management and scale benefits. Capex was minimal at 4.95, reinforcing the asset-light profile and sustaining high FCF conversion. Dividends appear well covered; calculated payout ratio is 43.5% per provided metric, although cash dividends paid imply a lower cash payout ratio (~31%) against consolidated net income—this discrepancy likely reflects basis differences (owners’ profit vs consolidated, timing, or XBRL tags). Data gaps (e.g., current liabilities, DPS detail, non-operating items, interest costs) limit precision in some ratios, especially liquidity and coverage metrics. Overall, profitability, cash generation, and balance sheet liquidity support a constructive fundamental view, while attention is warranted on settlement-related leverage optics, NCI attribution, and competitive/regulatory dynamics.

Profitability Analysis

ROE_decomposition: DuPont: Net margin 26.5% x Asset turnover 0.203 x Financial leverage 3.50x = ROE 18.8%. The high net margin and leverage offset low turnover, typical for payment platforms holding settlement assets. margin_quality: Gross margin 58.3% (GP 481.03 on revenue 824.99) points to resilient take-rate economics and scale. Operating income 313.40 implies an operating margin of ~38.0% (vs reported 0.4%, likely a reporting artifact). EBITDA margin at 42.0% corroborates strong underlying profitability. Tax rate at 25.9% is reasonable and suggests no outsized one-offs. operating_leverage: Revenue +11.8% YoY vs operating income +24.4% YoY indicates positive operating leverage, aided by SG&A discipline (SG&A 232.32 vs GP 481.03). D&A is modest at 33.47, enhancing EBITDA expansion relative to revenue.

Growth Assessment

revenue_sustainability: Revenue growth of 11.8% appears healthy for a mature gateway, likely reflecting higher transaction volumes and stable or slightly improved take rates. The asset-light model and recurring nature of payment processing fees suggest reasonable sustainability, subject to consumer spending and merchant acquisition trends. profit_quality: Operating income growth outpaced revenue, driven by scale benefits and cost control; net income +16.7% reflects normal tax and modest non-operating impacts (ordinary income 294.05 slightly below operating income). EBITDA growth aligns with operating income, indicating broad-based improvement. outlook: With high cash generation and limited capex needs, the company is positioned to invest in product, risk, and sales while maintaining margins. Key swing factors include merchant mix, competitive pricing pressure, and regulatory changes in payments/AML. Absent shocks, margin retention looks achievable near current levels.

Financial Health

liquidity: Cash & equivalents 2,200.40 and current assets 2,980.96 provide strong liquidity. Current and quick ratios are not calculable due to unreported current liabilities, but available cash suggests comfortable short-term coverage. Note: the reported working capital figure equals current assets, implying current liabilities were not disclosed; interpret with caution. solvency: Total liabilities 2,388.83 vs total equity 1,161.77 (equity ratio 27.8%) shows leverage that is likely influenced by settlement-related balances. Debt consists of short-term loans 243.40 and long-term loans 89.15; with strong cash, net financial leverage appears manageable. capital_structure: Debt-to-equity is 2.06x on reported figures, but economic leverage is mitigated by high cash and the nature of settlement liabilities. Owners’ equity is 708.46 with material NCI (~453), relevant for shareholder returns and ROE attribution.

Cash Flow Quality

earnings_quality: OCF 537.59 is 2.46x net income (218.29), indicating robust conversion and limited accrual risk. This is typical of transaction-fee businesses with favorable working capital cycles. FCF_analysis: FCF 464.31 after modest investing outflows (capex only 4.95) underscores the asset-light model and supports reinvestment and distributions. Investing CF at -73.28 suggests some strategic/financial investments beyond maintenance capex. working_capital: Specific components are partly unreported; however, high cash and moderate receivables (211.10) with small inventories (31.82) suggest a low inventory intensity business. Settlement-related swings can impact OCF period-to-period; monitoring payables/settlement liabilities would be prudent when disclosed.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 43.5% per provided metric; cash dividends paid of 67.46 against net income of 218.29 imply a cash payout of ~31%. The discrepancy likely stems from basis differences (owners’ NI vs consolidated, timing, or undisclosed DPS). FCF_coverage: FCF coverage of 4.89x indicates ample capacity to fund dividends from organic cash generation. policy_outlook: Given strong OCF, minimal capex, and healthy ROE, the company appears capable of maintaining or gradually increasing shareholder returns over time, subject to growth investments, regulatory capital needs in payments, and NCI considerations. DPS details were unreported, so explicit policy calibration cannot be confirmed.

Risk Assessment

Business Risks:

• Competitive intensity from domestic wallets and gateways (e.g., mega-tech payment platforms) and global processors pressuring take rates
• Merchant mix shifts and pricing negotiations reducing blended margins
• Macroeconomic sensitivity affecting transaction volumes and cross-border payments
• Regulatory and compliance changes (payments, AML/CFT, data privacy) increasing cost and complexity
• Technology and cybersecurity risks, including system outages and fraud/chargebacks
• Dependence on key ecosystem partners and networks; potential fee changes by card schemes
• Execution risk in new services or adjacent products that may carry credit/collection exposure

Financial Risks:

• Apparent leverage from settlement-related liabilities, which can inflate reported leverage ratios
• Interest rate and funding risks on short-term loans (243.40) and long-term loans (89.15), with interest expense undisclosed
• NCI share of earnings and equity diluting returns to parent shareholders
• Working capital volatility linked to settlement timing impacting OCF
• Concentration risk in large merchants, if present (not disclosed)

Key Concerns:

• Data gaps in current liabilities and interest expense obscure precise liquidity and coverage analysis
• Reported XBRL ratios (e.g., ROE 0.2%, operating margin 0.4%) are inconsistent with the income statement, requiring careful normalization
• Sustaining elevated operating margins amid competitive pricing pressure

Investment Implications

Key Takeaways:

• Strong FY2025 Q4 with revenue +11.8% and operating income +24.4% demonstrates operating leverage
• High-quality earnings: OCF/NI 2.46x and FCF 464.31 support reinvestment and dividends
• ROE of 18.8% reflects robust margins and moderate leverage typical of payment platforms
• Balance sheet liquidity is strong with cash & equivalents of 2,200.40, offsetting reported leverage
• Dividends appear well covered; FCF coverage 4.89x despite DPS not disclosed
• Material NCI affects attribution of earnings and equity to parent shareholders

Metrics to Watch:

• Total payment volume growth and blended take rate (implied via revenue/volume when disclosed)
• Operating margin sustainability and SG&A efficiency
• OCF/NI conversion and settlement working capital swings
• Composition of current liabilities and disclosure of interest expense for coverage analysis
• NCI share of profit vs owners’ profit for payout capacity
• Capex and investment CF related to new products/platform enhancements

Relative Positioning: Within Japanese payment gateways, the company exhibits strong margins, high FCF conversion, and robust ROE, supported by an asset-light model and ample cash, though reported leverage is elevated due to settlement balances and NCI is sizable relative to total equity.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis