EX-99.1

Condensed Consolidated Statements of Financial Position (Unaudited)


	(In millions of yen)
	Notes	March 31, 2026			June 30, 2026
Assets
Cash and cash equivalents	6		363,083			491,087
Guarantee deposits	7		74,139			57,727
Call loans			40,014			14
Accounts receivable	8		150,372			210,339
Loans and advances to customers	9,20		2,512,851			2,631,267
Securities	10,20		1,736,835			1,791,867
Other financial assets	20		32,293			46,735
Property and equipment			14,879			15,141
Right-of-use assets			12,175			11,379
Intangible assets	11		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	12,20		2,952,495			3,112,287
Accounts payable	13		1,122,338			1,080,710
Income tax payables			13,073			5,917
Borrowings	14,20		564,956			757,093
Other financial liabilities	20		48,116			51,681
Provisions			7,403			7,447
Lease liabilities	14		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	15		200,635			201,041
Share premium	15		86,730			87,220
Retained earnings	15		109,869			128,299
Accumulated other comprehensive loss	15		(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

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	5,16		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	5,17		(70,190	)		(79,923	)
Operating profit	5		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	18		16.66			27.21
Diluted earnings per share	18		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

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	15		870			(109	)
Exchange differences on translation of foreign operations	15		(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

See Notes to Condensed Consolidated Financial Statements

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 declared to non-controlling interests			—		—		—		—			—			(1,379	)		(1,379	)
Issuance of new shares	15		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

See Notes to Condensed Consolidated Financial Statements

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	7		16,190			16,412
Call loans			33,000			40,000
Accounts receivable	8		(42,378	)		(59,813	)
Loans and advances to customers	9		(68,484	)		(118,416	)
Securities	10		(24,643	)		(54,838	)
Deposits	12		211,300			159,792
Accounts payable	13		(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	10		(175,246	)		(74,531	)
Proceeds from sales/redemption of securities	10		45,415			74,386
Purchases of property and equipment			(2,067	)		(1,709	)
Purchases of intangible assets	11		(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	14		150,000			177,037
Proceeds from long-term borrowings	14		314,565			123,500
Repayments of long-term borrowings	14		(250,340	)		(108,400	)
Repayments of lease liabilities	14		(764	)		(587	)
Proceeds from (payments for) 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	6		369,811			363,083
Cash and cash equivalents at the end of the period	6		520,364			491,087

See Notes to Condensed Consolidated Financial Statements

Notes to Condensed Consolidated Financial Statements (Unaudited)

Reporting Entity

PayPay Corporation (the “Company”, “we”, “us”, or “our”) was incorporated in June 2018 in Japan as a corporation (kabushiki kaisha) in accordance with the Companies Act of Japan (the “Companies Act”). The Company’s registered office is located at 1-3, Kioicho, Chiyoda-ku, Tokyo, Japan. The Company’s condensed consolidated financial statements are comprised of the Company and its subsidiaries (collectively, the “Group”). The Group is composed of two reportable segments: Payment segment and Financial service segment. Payment segment includes payment settlement services and related services through our PayPay app, and credit payment settlement services such as revolving and installment payment options and cash advances. Financial service segment includes internet banking services, securities intermediary services and PayPay Point investment-related services, and loan management services.

The Company is 47.1% owned directly by B Holdings Corporation, 28.5% by SVF II Piranha (DE) LLC, 7.5% by LY Corporation, and 7.5% by SoftBank Corp. The ultimate parent company of the Company is SoftBank Group Corp. (“SBG”).

The intermediate parent of the Company is B Holdings Corporation, which is owned by SBG through the following entities:　LY Corporation, A Holdings Corporation, and SoftBank Corp.

Basis of Preparation

(1)

Compliance with International Accounting Standards 34 “Interim Financial Reporting” (“IAS 34”)

The Group’s condensed consolidated financial statements have been prepared on a going concern basis in accordance with IAS 34 issued by the International Accounting Standards Board (“IASB”).

The Group’s condensed consolidated financial statements do not contain all the information required in the annual consolidated financial statements and should be read in conjunction with the consolidated financial statements as of and for the fiscal years ended March 31, 2025 and 2026, which have been prepared in accordance with IFRS Accounting Standards as issued by the IASB.

(2)

Basis of Measurement

The Group’s condensed consolidated financial statements have been prepared on a historical cost basis except for items such as financial instruments measured at fair value, and business combinations under common control accounted for using the book value in the ultimate parent company's consolidated financial statements.

(3)

Functional Currency and Presentation Currency

Unless otherwise indicated, the Group’s condensed consolidated financial statements are presented in Japanese yen, which is both the functional currency of the Company and presentation currency of the Group, and amounts are rounded to the nearest million Japanese yen.

Material Accounting Policies

The material accounting policies applied in the Group’s condensed consolidated financial statements are consistent with those of the consolidated financial statements as of and for the years ended March 31, 2025 and 2026, except for the following.

Income tax

Income tax expense for interim periods is determined by applying the estimated annual effective tax rate to profit before tax, in accordance with IAS 34. The estimated annual effective tax rate reflects management’s current expectations for the full fiscal year, based on assessments performed at each group company, and is subject to change as new information becomes available. Any revisions to these estimates are recognized in the interim period in which the changes occur.

Use of Estimates and Judgments

The preparation of the Group’s condensed consolidated financial statements requires the management to make judgments, estimates, and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. These estimates and assumptions are based on the best judgment of the management considering historical experience and various factors deemed to be reasonable as of the end of reporting period. Given their nature, uncertainty about these estimates and assumptions could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The estimates and assumptions are continuously reviewed by the management, as these estimates may change as new events occur. The effects of a change in estimates and assumptions are recognized in the period of the change and in any future periods affected.

The condensed consolidated financial statements are prepared based on the same material judgments, estimates, and assumptions as those applied and described in the consolidated financial statements as of and for the years ended March 31, 2025 and 2026.

Segment Information

(1)

Overview of Reportable Segments

The Group’s operating segments are components of the Group that engage in business activities from which they may earn revenues and incur expenses, and those components' discrete financial information is available. Such operating segments engage in business activities that earn revenues and incur expenses and the operating segments are subject to regular review by the Chief Executive Officer (“CEO”), who is the Group’s Chief Operating Decision Maker (“CODM”), in deciding how to allocate resources and in assessing performance. Accordingly, the Group has two operating segments, Payment segment and Financial service segment, which are also reportable segments that are determined based on the Group's corporate structure and the nature of services as described below.

(i)

Payment segment

The Payment segment mainly consists of PayPay Corporation and PayPay Card Corporation. This segment includes payment settlement services and related services offered through our PayPay app and credit payment settlement services such as revolving and installment payment options and cash advances.

(ii)

Financial service segment

The Financial service segment mainly consists of PayPay Bank Corporation, PayPay Securities Corporation, and Credit Engine, Inc. This segment includes financial service such as internet banking services, securities intermediary services and PayPay Point investment-related services, and loan management services.

(2)

Profit or Loss for the Group's Reportable Segments

The Group's CODM primarily uses revenue and operating profit or loss to allocate resources and assess performance. The Group's segment profit for each reportable segment is prepared on the same basis as the Group's condensed consolidated financial statements. The total of individual segment profit is equivalent to operating profit presented on the Group's Condensed Consolidated Statements of Profit or Loss.

Segment financial information presented below does not include assets or liabilities, as the Group's CODM does not allocate resources or assess performance based on such information.

Inter-segment transaction prices are determined in the same manner as arm's length transactions with external customers.


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 17, Operating Expenses.

6. 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 (1)		292,622		395,557
Other		3		—
Subtotal		308,947		415,494
Total		363,083		491,087

(1)

The Company's banking subsidiary, PayPay Bank Corporation, is required by the Act on the Reserve Deposit Requirement System to deposit with the Bank of Japan an amount exceeding a certain ratio of deposits (legal reserve), and it deposits an amount exceeding the legal reserve.

7. 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)(4)		49,734		35,855
Subtotal		49,734		35,855
Financial service:
Other (4)(5)		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 "PayPay Users"). 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.

(4)

Guarantee deposits are classified as financial assets measured at amortized cost.

(5)

These are mainly cash segregated as reserve deposits for customers.

8. Accounts Receivable

Accounts receivable are as follows:


	(In millions of yen)
	March 31, 2026			June 30, 2026
Receivables from financial institutions (1)		34,872			81,207
Settlement receivables (2)(3)		91,343			96,250
Other receivables (3)		24,943			33,660
Loss allowance		(786	)		(778	)
Total		150,372			210,339

(1)

The comparative amount of 34,872 million yen for "Receivables from financial institutions" has been reclassified from "Other receivables". This reclassification was made because the financial significance of this item increased due to the timing of settlement dates and the calendar effect during the current period.

(2)

Settlement receivables are primarily due from external payment service providers, who collect the amount equivalent to PayPay Balance and Other Items charged by PayPay Users through their payment methods on behalf of the Group. Refer to Note 12, Deposits for definition of PayPay Balance and Other Items.

(3)

These assets are classified as financial assets measured at amortized cost.

9. 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.

10. Securities

Securities are as follows:


	(In millions of yen)
	March 31, 2026		June 30, 2026
Payment:
Japanese government bonds (1)		65,612		58,246
Subtotal		65,612		58,246
Financial service:
Japanese government bonds and municipal bonds (2)		713,244		732,464
Corporate and other debt securities (2)		416,121		409,734
Asset backed securities		337,685		330,339
Exchange traded funds (3)		202,879		259,754
Equity securities		1,294		1,330
Subtotal		1,671,223		1,733,621
Total		1,736,835		1,791,867

(1)

Japanese government bonds within Payment segment are purchased for the purpose of meeting the deposit requirement under the Payment Services Act. Refer to Note 7, Guarantee Deposits for details.

(2)

These securities include assets pledged as collateral at the Bank of Japan, for repurchase transactions, and Japanese Banks’ Payment Clearing Network.

(3)

Exchange traded funds are mainly held for PayPay Point investment-related business.

11. Intangible Assets

Changes of intangible assets are as follows:


	(In millions of yen)
	For the three months ended
	June 30, 2025			June 30, 2026
Balance as of April 1		65,672			66,466
Additions		4,353			4,270
Amortization		(3,708	)		(4,206	)
Other		(199	)		(89	)
Balance as of June 30		66,118			66,441

12. 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 which consists of deposits by PayPay Users and points accrued by PayPay Users.

(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.

13. Accounts Payable

Accounts payable are as follows:


	(In millions of yen)
	March 31, 2026		June 30, 2026
Settlement payable (1)		1,069,525		1,031,043
Credit card payable (1)		30,867		26,257
Other payables(1)		21,946		23,410
Total		1,122,338		1,080,710

(1)

These accounts payable are classified as financial liabilities measured at amortized cost.

14. Borrowings and Lease Liabilities

Components of Borrowings and lease liabilities are as follows:


	(In millions of yen)
	March 31, 2026		June 30, 2026
Borrowings
Payment:
Loan payables		280,825		302,925
Commercial papers		73,000		87,000
Subtotal		353,825		389,925
Financial service:
Loan payables (1)		211,131		367,168
Subtotal		211,131		367,168
Total		564,956		757,093

Lease liabilities
Payment		9,096		8,493
Financial service		453		417
Total		9,549		8,910

(1)

The balance of loan payables in the Financial service segment consisted of borrowings under repurchase agreements and borrowings from the Bank of Japan as of March 31, 2026 and June 30, 2026.

15. Issued Capital and Reserves

(1)

Authorized Shares and Issued Capital

The movement of authorized shares and shares issued is as follows:


	(In thousands of shares)
		Number of authorized shares		Number of shares issued (2)(3)
Common shares (1)
April 1, 2026			1,600,000		676,956
Increase during the period (2)			—		387
Decrease during the period			—		—
June 30, 2026 (3)			1,600,000		677,343

(1)

Holders of common shares are entitled to receive dividends. Each common share carries one vote at general meetings of shareholders. All shares issued by the Group have no par value and the Group holds no Treasury Shares of the Company. Common shares are reserved for issue under outstanding share options.

(2)

During the period, stock options issued by the Company were exercised, resulting in an increase in the number of issued shares.

(3)

All common shares are fully paid as of June 30, 2026.

(2)

Share Premium and Retained Earnings

(i)

Share Premium

Legal capital reserve

Under the Companies Act, at least 50% of the proceeds of certain issuances of share capital shall be credited to issued capital. The remaining proceeds shall be credited to share premium. The Companies Act permits, upon approval at the general shareholders’ meeting, the transfer of amounts from share premium to issued capital.

(ii)

Retained Earnings

Legal earnings reserve

The Companies Act requires that an amount equal to at least 10% of dividends from surplus, as defined under the Companies Act, shall be appropriated as capital reserve (part of share premium), or appropriated for legal earnings reserve (part of retained earnings) until the aggregate amount of capital reserve and legal earnings reserve is equal to 25% of share capital. The legal earnings reserve may be used to eliminate or reduce a deficit or be transferred to other retained earnings upon approval at the general shareholders’ meetings.

(3)

Accumulated other comprehensive income (loss)

Changes in accumulated other comprehensive income (loss) are as follows:


	(In millions of yen)
		Changes in debt instruments measured at FVTOCI			Exchange differences on translation of foreign operations
Balance as of April 1, 2026			(3,039	)		(16	)
Other comprehensive income (loss) (attributable to owners of the parent company)			(95	)		6
Other			—			1
Balance as of June 30, 2026			(3,134	)		(9	)

16. 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, 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 (2)		(11,160	)		(332	)		(11,492	)
Subtotal		43,108			945			44,053
Financial services		—			5,984			5,984
Other (3) (4)		6,535			244			6,779
Total (5)		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 (2)		(26,841	)		(382	)		(27,223	)
Subtotal		54,056			1,183			55,239
Financial services		—			6,229			6,229
Other (3) (4)		8,124			369			8,493
Total (5)		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)

Payment settlement services deduction mainly consists of rewards given to customers, all the deductions is related to Payment Settlement Services only.

(3)

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.

(4)

Other in the Financial service segment includes revenues primarily earned from system platform services provided by Credit Engine, Inc.

(5)

Almost all revenues from external customers of the Group were generated in Japan, which is the Company’s country of domicile.

17. 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)(4)		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)		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.

(4)

The amount of inter-segment eliminations for the three months ended June 30, 2025 has been revised to correct errors identified during the current period.

18. Earnings Per Share

(1)

Basis for Calculation of Basic Earnings Per Share

The profit for the period attributable to owners of the parent company and the weighted average number of shares used in the calculation of basic earnings per share (“EPS”) are as follows:


	For the three months ended
	June 30, 2025		June 30, 2026
Profit for the period attributable to owners of the parent company (Million yen)		10,511		18,428
Weighted average number of issued common shares during the period (Thousand shares) (1)		631,007		677,151
Basic earnings per share (Yen) (1)		16.66		27.21

(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.

(2)

Basis for Calculation of Diluted Earnings Per Share

The calculation of the diluted earnings per share is based on the following data:


	For the three months ended
	June 30, 2025		June 30, 2026
Profit for the period attributable to owners of the parent company (Million yen)		10,511		18,428
Weighted average number of issued common shares during the period (Thousand shares) (1)		631,007		677,151
Effects of dilutive potential common shares (Thousand shares) (2)		—		4,917
Weighted average number of common shares adjusted for the effect of dilution (Thousand shares) (1)		631,007		682,068
Diluted earnings per share (Yen) (1)		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.

(2)

The potential dilutive effect of the 1st series of Stock Options is not disclosed as the estimated difference between basic and diluted earnings per share was determined not to be material. The 2nd through 46th series of Stock Options, for which the IPO condition was satisfied on March 12, 2026, were included in the computation of diluted earnings per share until June 11, 2026, on which date they were automatically extinguished due to the trigger of the knockout condition.

19. Share-Based Payments

On June 11, 2026, the knockout condition applicable to the trust-type stock option plan was triggered. Out of the stock options representing 3,807 thousand shares outstanding under the 2nd through 46th Series Stock Option plans as of March 31, 2026, options over 387 thousand shares were exercised prior to the trigger event, resulting in the automatic extinguishment of the remaining options over 3,420 thousand shares with a weighted-average exercise price of 1,300 yen. Because this condition represents a non-vesting condition, the probability of the condition being triggered was taken into account when estimating the fair value of the options at the grant date, and the Group continues to recognize the services received regardless of whether the condition is triggered. Consequently, these movements had no material impact on the condensed consolidated financial statements as of and for the three months ended June 30, 2026. There have been no other significant events, new grants, or material modifications regarding the Group's other share-based payment arrangements since March 31, 2026.

20. Financial Instruments

Fair Value of Financial Instruments

(i)

The Group referred to the levels of the fair value hierarchy for financial instruments measured at fair value in the condensed consolidated financial statements based on the following inputs:

•

Level 1 inputs are quoted prices in active markets for identical assets or liabilities.

•

Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

•

Level 3 inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable, which reflect the reporting entity’s own assumptions that market participants would use in establishing a price.

Transfers between levels of fair value hierarchy are recognized as if they occurred at each reporting date. There were no material transfers between the levels as of March 31, 2026 and June 30, 2026.

(ii)

The following table presents financial instruments measured at fair value on a recurring basis by level within the fair value hierarchy.


As of March 31, 2026	(In millions of yen)
	Fair value
	Level 1		Level 2		Level 3		Total
Securities
Financial assets measured at FVTPL
Debt instruments
Exchange traded funds		202,879		—		—		202,879
Equity instruments
Equity securities		306		24		964		1,294
Financial assets measured at FVTOCI
Debt instruments
Japanese government bonds and municipal bonds		55,949		2,725		—		58,674
Corporate and other debt securities		3,118		77,736		6,732		87,586
Asset backed securities		—		—		335,214		335,214
Other financial assets
Financial assets measured at FVTPL
Derivative assets		203		2,107		—		2,310
Total		262,455		82,592		342,910		687,957
Other financial liabilities
Financial liabilities measured at FVTPL
Derivative liabilities		100		1,268		—		1,368
Total		100		1,268		—		1,368


As of June 30, 2026	(In millions of yen)
	Fair value
	Level 1		Level 2		Level 3		Total
Securities
Financial assets measured at FVTPL
Debt instruments
Exchange traded funds		259,754		—		—		259,754
Equity instruments
Equity securities		315		24		991		1,330
Financial assets measured at FVTOCI
Debt instruments
Japanese government bonds and municipal bonds		54,152		2,728		—		56,880
Corporate and other debt securities		786		74,137		6,728		81,651
Asset backed securities		—		—		328,004		328,004
Other financial assets
Financial assets measured at FVTPL
Derivative assets		291		2,604		—		2,895
Total		315,298		79,493		335,723		730,514
Other financial liabilities
Financial liabilities measured at FVTPL
Derivative liabilities		136		1,154		—		1,290
Total		136		1,154		—		1,290

(iii)

The following table compares the fair value and carrying amount of the financial assets and financial liabilities. These are not measured at fair values in the Group’s Condensed Consolidated Statements of Financial Position, but for which fair values are disclosed. Certain financial instruments with short-term maturities are not included as their carrying amounts approximate their fair value.


As of March 31, 2026	(In millions of yen)
			Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets measured at amortized cost
Loan and advances
Mortgage loans		909,483		—		—		908,513		908,513
Overdraft		312,255		—		—		337,479		337,479
Other		16,879		—		—		16,841		16,841
Securities
Debt instruments
Japanese government bonds and municipal bonds		720,182		264,985		439,089		—		704,074
Corporate and other debt securities		328,535		—		319,545		—		319,545
Asset backed securities		2,471		—		—		2,480		2,480
Total		2,289,805		264,985		758,634		1,265,313		2,288,932
Financial liabilities measured at amortized cost
Deposits
Demand deposits		2,090,486		—		2,090,486		—		2,090,486
Time deposits		178,594		—		178,319		—		178,319
Borrowings
Loan payables		491,956		—		208,150		278,056		486,206
Total		2,761,036		—		2,476,955		278,056		2,755,011


As of June 30, 2026	(In millions of yen)
			Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets measured at amortized cost
Loan and advances
Mortgage loans		978,262		—		—		976,953		976,953
Overdraft		327,755		—		—		365,202		365,202
Other		28,798		—		—		28,739		28,739
Securities
Debt instruments
Japanese government bonds and municipal bonds		733,830		272,737		445,810		—		718,547
Corporate and other debt securities		328,083		—		319,458		—		319,458
Asset backed securities		2,335		—		—		2,343		2,343
Total		2,399,063		272,737		765,268		1,373,237		2,411,242
Financial liabilities measured at amortized cost
Deposits
Demand deposits		2,219,176		—		2,219,176		—		2,219,176
Time deposits		123,121		—		122,900		—		122,900
Borrowings
Loan payables		670,093		—		364,473		301,499		665,972
Total		3,012,390		—		2,706,549		301,499		3,008,048

(iv)

Fair value of financial instruments is measured as follows:

(A)

Debt instruments

Fair values of the debt instruments that consist of Exchange traded funds are evaluated at quoted prices for the identical assets in active markets and those are classified as Level 1.

Fair values of the debt instruments that consist either of Japanese government bonds and municipal bonds or of Corporate and other debt securities are classified as Level 1 when they are evaluated at quoted prices for the identical assets in active markets. They are classified as Level 2 when they are evaluated at quoted prices for the identical assets

in markets that are not active with an adjustment or further corroboration that these prices are representative of fair value.

The debt instruments within Corporate and other debt securities that are classified as Level 3 consist of repackaged notes. The debt instruments within Asset backed securities include residential mortgage backed, credit card asset backed, installment receivables backed, and other asset backed securities. The fair values of repackaged notes and asset backed securities are evaluated with broker or dealer quotations of identical or similar securities where the significant inputs are expected cash flows and discount margin/spreads. Because such significant inputs are unobservable, they are classified as Level 3. The Group evaluates the methods and the significant inputs the brokers or dealers use in measuring the fair values through inquiries against brokers or dealers. The Group independently validates the fair values and compares them to the quotations provided by the brokers or dealers with certain reasonable thresholds. This control activity is designed and operated by the Risk Management Department on a quarterly basis.

(B)

Equity instruments

These securities include listed shares and private investment trust. Fair values of listed shares are evaluated at quoted prices for the identical assets in active markets and those are classified as Level 1. Fair values of private investment trust that are measured using market-observable inputs such as interest rates reflecting external credit ratings are classified as Level 2, and those that use significant unobservable inputs such as unobservable real estate risk premium are classified as Level 3. The fair values of the private investment trust that are classified as Level 3 were determined using broker or dealer quotes. The broker or dealer quotes used are non-binding and reflect indicative pricing based on proprietary models and assumptions. The Group does not have access to the specific inputs used by the brokers or dealers by considering the fact that the amount invested is still immaterial.

(C)

Derivative instruments

Fair values of the derivative instruments that consist of listed derivatives are evaluated at quoted prices for the identical derivatives in active markets and those are classified as Level 1. Fair values of the derivative instruments that consist of over-the-counter foreign currency derivatives are evaluated using broker or dealer quotations derived by discounted future cash-flow method where the significant inputs are future foreign exchange rates and interest rates. These are classified as Level 2.

(D)

Loans and advances

Fair values of the loans and advances are measured based on the discounted cash flow model using an interest rate considering the credit spread that is based on the internal rating and loan terms. Because the credit spread is a significant unobservable input, these are classified as Level 3.

(E)

Deposits

Fair values of the on-demand deposits that are paid immediately upon demand on the statement of financial position date are measured at fair value at that amount. Fair values of the time deposits are measured based on the discounted present value obtained by discounting future cash flows applying current rates for deposits of similar remaining maturities. For those with a short remaining maturity (six months or less), fair value is approximately equal to book value, so the book value is recorded as fair value. These are classified as Level 2.

(F)

Borrowings

Fair values of the borrowings are measured based on the discounted cash flow model using an interest rate considering the Group's own credit spread that would be used for borrowing with the same terms and maturity. The borrowings mainly consist of those classified as Level 3 since the Group’s own credit spread is used for fair value measurement which is unobservable. Other financial instruments not listed above, such as call loans, are settled mainly within one year and book value approximates their fair value.

(v)

The changes in financial instruments categorized as Level 3

The changes in financial instruments categorized as Level 3 are as follows:


For the three months ended June 30, 2025	(in millions of yen)
	Financial assets measured at FVTOCI
	Asset backed securities			Corporate and other debt securities		Total
Fair value as of April 1,2025		279,442			8,200		287,642
Purchases		19,800			—		19,800
Total gains (losses) for the period:
Included in other comprehensive income (loss)		978			55		1,033
Sales and settlements		(18,635	)		—		(18,635	)
Fair value as of June 30, 2025		281,585			8,255		289,840


For the three months ended June 30, 2026			(in millions of yen)
	Financial assets measured at FVTPL			Financial assets measured at FVTOCI
	Equity Securities			Asset backed securities			Corporate and other debt securities			Total
Fair value as of April 1,2026	964				335,214			6,732			342,910
Purchases		—			15,000			—			15,000
Total gains (losses) for the period:
Included in profit or loss		27			—			—			27
Included in other comprehensive income (loss)		—			409			(4	)		405
Sales and settlements		—			(22,624	)		—			(22,624	)
Other		—			5			—			5
Fair value as of June 30, 2026		991			328,004			6,728			335,723

(vi)

Valuation techniques and inputs

The valuation techniques used to measure the fair value of major assets classified as Level 3, significant unobservable inputs, and their range are as follows:


Financial assets	Valuation technique	Significant unobservable inputs	Range of inputs
Repackage notes	Discounted cash flows	Discount margin/spreads	2.13% (1)
Asset backed securities	Discounted cash flows	Discount margin/spreads	1.23%~2.14% (1)

(1)

The range of inputs include not only discount margin/spreads but also the benchmark rates that are used to discount expected cash flows provided by the brokers and dealers.

Discount margin/spreads represent the discount rates used when calculating the present value of future cash flows. In discounted cash flow models, such spreads are added to the benchmark rate when discounting the future expected cash flows. Hence, all other factors being equal, increases in discount margin/spreads would result in a decrease in fair value. They generally reflect the premium an investor expects to achieve over the benchmark interest rate to compensate for the higher risk driven by the uncertainty of the cash flows caused by the credit quality of the asset.


			(In millions of yen)
Relationship	Name	Transactions	Amount
Parent company	SoftBank Corp.	Acquisition of shares (1)		5,727
		Issuance of new shares (3)		34,889
Parent company	LY Corporation	Acquisition of shares (1)		80
		Issuance of new shares (3)		34,889
Other affiliated company	SVF II Piranha (DE) LLC	Exercise of stock options (2)		15,901
		Issuance of new shares (3)		35,944
Subsidiary of parent company	Z Financial Corporation (5) (currently LY Corporation)	Acquisition of shares (4)		117,000


				(In millions of yen)
	For the three months ended
	June 30, 2025			June 30, 2026
Interests received		34,462			46,442
Interests paid		(2,273	)		(3,189	)


Unaudited Condensed Consolidated Financial Statements	Page
Condensed Consolidated Statements of Financial Position as of June 30, 2026	1
Condensed Consolidated Statements of Profit or Loss for the three months ended June 30, 2026	2
Condensed Consolidated Statements of Comprehensive Income for the three months ended June 30, 2026	3
Condensed Consolidated Statements of Changes in Equity for the three months ended June 30, 2026	4
Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2026	5
Notes to Condensed Consolidated Financial Statements
1. Reporting Entity	6
2. Basis of Preparation	6
3. Material Accounting Policies	6
4. Use of Estimates and Judgments	7
5. Segment Information	7
6. Cash and Cash Equivalents	9
7. Guarantee Deposits	9
8. Accounts Receivable	10
9. Loans and Advances to Customers	10
10. Securities	10
11. Intangible Assets	11
12. Deposits	11
13. Accounts Payable	11
14. Borrowings and Lease Liabilities	12
15. Issued Capital and Reserves	12
16. Revenue	13
17. Operating Expenses	15
18. Earnings Per Share	16
19. Share-Based Payments	16
20. Financial Instruments	16
21. Related Party Transactions	21
22. Commitments	21
23. Supplemental Cash Flow Information	21
24. Additional Information	22
25. Subsequent Events	22
26. Approval of Condensed Consolidated Financial Statements	22