# EDGAR Filing Document

**Accession Number:** 0002080845
**File Stem:** 0001193125-26-085389
**Filing Date:** 2026-3
**Character Count:** 2227457
**Document Hash:** 2d612cc14efa2de24069b4db411c9e39
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-085389.hdr.sgml**: 20260302

**ACCESSION NUMBER**: 0001193125-26-085389

**CONFORMED SUBMISSION TYPE**: F-1/A

**PUBLIC DOCUMENT COUNT**: 57

**FILED AS OF DATE**: 20260302

**DATE AS OF CHANGE**: 20260302

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** PayPay Corp
- **CENTRAL INDEX KEY:** 0002080845
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-BUSINESS SERVICES, NEC [7389]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 000000000
- **STATE OF INCORPORATION:** M0
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** F-1/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-293410
- **FILM NUMBER:** 26707594

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** YOTSUYA TOWER, 1-6-1
- **CITY:** YOTSUYA, SHINJUKU-KU
- **NON US STATE TERRITORY:** TOKYO
- **PROVINCE COUNTRY:** M0
- **ZIP:** 160-0004
- **BUSINESS PHONE:** 81-3-6885-8181

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** YOTSUYA TOWER, 1-6-1
- **CITY:** YOTSUYA, SHINJUKU-KU
- **NON US STATE TERRITORY:** TOKYO
- **PROVINCE COUNTRY:** M0
- **ZIP:** 160-0004

##### [**Table of Contents**](#toc)
**As filed with the U.S. Securities and Exchange Commission on March 2, 2026.** 

**Registration No. 333-293410** 

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

**Amendment No. 1** 

**to** 

**Form F-1** 

**REGISTRATION STATEMENT** 

**UNDER** 

**THE SECURITIES ACT OF 1933** 

**PayPay Corporation** 

(Exact name of Registrant as specified in its charter)

**Not Applicable** 

(Translation of Registrant's name into English)

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| | | |
|:---|:---|:---|
| **Japan**  | **7389** | **Not Applicable**  |
| (State or other jurisdiction of<br>incorporation or organization) | (Primary Standard Industrial<br>Classification Code Number) | (I.R.S. Employer<br>Identification No.) |

---

**Yotsuya Tower** 

**1-6-1 Yotsuya** 

**Shinjuku-ku** 

**Tokyo 160-0004** 

**Japan** 

**+81-3-6885-8181** 

(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)

**Cogency Global Inc.** 

**122 East 42nd Street, 18th Floor** 

**New York, NY 10168** 

**+1-800-221-0102** 

(Name, address, including zip code, and telephone number, including area code, of agent for service)

**Copies to:** 

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| | |
|:---|:---|
| **Takahiro Saito**<br> **David C. Snowden<br>Simpson Thacher & Bartlett LLP<br>Ark Hills Sengokuyama Mori Tower<br>9-10, Roppongi 1-Chome<br>Minato-ku, Tokyo, 106-0032, Japan<br>+81-3-5562-6200** | **Christopher Kodama<br>Davis Polk & Wardwell LLP<br>Izumi Garden Tower 33F<br>1-6-1 Roppongi<br>Minato-ku, Tokyo 106-6033, Japan<br>+81-3-5574-2600** |

---

**Approximate date of commencement of proposed sale to the public:** 

**as soon as practicable after the effective date of this registration statement.** 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

**The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.** 

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**The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the United States Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it solicit an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.** 

**Subject to Completion. Preliminary Prospectus dated March 2, 2026.** 

**54,987,214 American Depositary Shares**![LOGO](g941409g51q72.jpg)

**PayPay Corporation** 

**Representing 54,987,214 Shares of Common Stock** 

This is an initial public offering of American depositary shares, or ADSs, representing common shares of PayPay Corporation.

We are offering 31,054,254 ADSs and the selling shareholder identified in this prospectus is offering 23,932,960 ADSs. Each ADS represents one common share, no par value. We will not receive any proceeds from the sale of ADSs by the selling shareholder.

We anticipate the initial public offering price per ADS will be between US$17.00 and US$20.00.

Prior to this offering, there has been no public market for the ADSs or our shares. We have applied to list the ADSs on the Nasdaq Global Select Market, or Nasdaq, under the symbol "PAYP."

Qatar Holding LLC, Visa International Service Association and Abu Dhabi Investment Authority (collectively, the "Cornerstone Investors") have, severally and not jointly, indicated an interest in purchasing up to an aggregate of $220 million of the ADSs offered in this offering at the initial public offering price and on the same terms and conditions as the other purchasers in this offering. Because these indications of interest are not binding agreements or commitments to purchase, the Cornerstone Investors may determine to purchase more, fewer, or no ADSs in this offering, or the underwriters may determine to sell more, less or no ADSs to the Cornerstone Investors. The underwriters will receive the same underwriting discount on any ADSs purchased by the Cornerstone Investors as they will from the other ADSs sold to the public in this offering.

**Investing in the ADSs involves risks. See "[Risk Factors](#rom941409_3)" beginning on page 25 for additional information and factors you should consider before buying the ADSs.**

**PRICE US$ PER ADS** 

**Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.** 

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| | | |
|:---|:---|:---|
|  | **Per ADS** | **Total** |
| Initial public offering price | US$  | US$  |
| Underwriting discounts and commissions<sup>(1)</sup> | US$  | US$  |
| Proceeds, before expenses, to the selling shareholder<sup>(2)</sup> | US$  | US$  |
| <br> Proceeds, before expenses, to us<sup>(2)</sup> | US$  | US$  |

---

(1) For additional information on underwriting compensation, see "Underwriting."

(2) Assumes no exercise of the underwriters' option to purchase additional ADSs.

We have granted the underwriters an option to purchase up to an aggregate of 8,248,081 additional ADSs from us at the initial public offering price less the underwriting discounts and commissions, for 30 days after the date of this prospectus to cover over-allotments, if any.

Upon the completion of this offering, 668,625,454 common shares will be issued and outstanding. Entities ultimately controlled by SoftBank Group Corp. will beneficially own common shares representing in the aggregate 91.78% of the voting power of our total issued and outstanding shares immediately after the completion of this offering, assuming the underwriters do not exercise their option to purchase additional ADSs. As a result, we expect we will be a "controlled company" within the meaning of applicable rules of Nasdaq. Under the applicable Nasdaq rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain corporate governance requirements. If we rely on these exemptions, our shareholders or the ADS holders will not have the same protections afforded to stockholders of companies that are subject to such requirements. See "Prospectus Summary—Implications of Being a Controlled Company."

The underwriters expect to deliver the ADSs against payment in U.S. dollar in New York, New York on or about , 2026.

**(*in alphabetical order*)**

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| | | | |
|:---|:---|:---|:---|
| **Goldman Sachs & Co. LLC** | **J.P. Morgan** | **Mizuho** | **Morgan Stanley** |

---

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| | | | | |
|:---|:---|:---|:---|:---|
| **Citigroup** | **Jefferies** | **BofA Securities** | **Societe Generale** | **Wolfe \| Nomura Alliance** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Cantor** | **Credit Agricole**<br> **CIB** | **Daiwa Capital**<br> **Markets** | **Deutsche Bank**<br> **Securities** | **Natixis** | **SMBC Nikko** |

---

---

| | | | |
|:---|:---|:---|:---|
|  **ING** | **Barclays** | **IMI – Intesa Sanpaolo** | **Santander** |

---

Prospectus dated , 2026

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**TABLE OF CONTENTS** 

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| | |
|:---|:---|
|  [Prospectus Summary](#rom941409_1) | 1 |
|  [Summary Consolidated Financial and Operating Data](#rom941409_2) | 21 |
|  [Risk Factors](#rom941409_3) | 25 |
|  [Special Note Regarding Forward-Looking Statements and Industry Data](#rom941409_4) | 76 |
|  [Use of Proceeds](#rom941409_5) | 78 |
|  [Dividend Policy](#rom941409_6) | 79 |
|  [Capitalization and Indebtedness](#rom941409_7) | 80 |
|  [Dilution](#rom941409_8) | 81 |
|  [Enforcement of Civil Liabilities](#rom941409_9) | 83 |
|  [Our History and Corporate Structure](#rom941409_10) | 84 |
|  [Management's Discussion and Analysis of Financial Condition and Results of Operations](#rom941409_11) | 87 |
|  [Business](#rom941409_12) | 145 |
|  [Management](#rom941409_13) | 196 |
|  [Japanese Foreign Exchange Regulations](#rom941409_14) | 206 |
|  [Regulations](#rom941409_15) | 210 |
|  [Principal and Selling Shareholders](#rom941409_16) | 229 |
|  [Related Party Transactions](#rom941409_17) | 232 |
|  [Description of Share Capital](#rom941409_18) | 238 |
|  [Description of American Depositary Shares](#rom941409_19) | 247 |
|  [Shares Eligible for Future Sale](#rom941409_20) | 256 |
|  [Taxation](#rom941409_21) | 258 |
|  [Underwriting](#rom941409_22) | 266 |
|  [Expenses Related to this Offering](#rom941409_23) | 278 |
|  [Legal Matters](#rom941409_24) | 279 |
|  [Experts](#rom941409_25) | 279 |
|  [Where You Can Find More Information](#rom941409_26) | 280 |
|  [Index to Financial Statements](#rom941409_27) | F-1 |

---

**Until , 2026 (the 25th day after the date of this prospectus), all dealers that effect transactions in these ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.**

We, the selling shareholder and the underwriters have not authorized anyone to provide you with any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you, and neither we, the selling shareholder nor the underwriters take responsibility for any other information others may give you. We are offering to sell, and seeking offers to buy the ADSs, only in jurisdictions where such offers and sales are permitted. The information in this prospectus or any free writing prospectus is accurate only as of its date, regardless of its time of delivery or the time of any sale of the ADSs. Our business, financial condition, results of operations and prospects may have changed since that date.

Neither we, the selling shareholder nor the underwriters have done anything that would permit an offering of the ADSs or the possession or distribution of this prospectus or any filed free writing prospectus in any jurisdiction where other action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus or any free writing prospectus filed with the United States Securities and Exchange Commission, or SEC, must inform themselves about, and observe any restrictions relating to, the offering of the ADSs and the distribution of this prospectus or any filed free writing prospectus outside the United States.

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![LOGO](g941409g12w12.jpg)

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**PRESENTATION OF FINANCIAL INFORMATION AND CONVENTIONS THAT APPLY TO THIS PROSPECTUS** 

In this prospectus, terms such as "we," "us," "our," "the Company" and "the Group" refer to PayPay Corporation and its consolidated subsidiaries or, if the context so requires, PayPay Corporation on a non-consolidated basis.

In this prospectus, "SoftBank Group companies" refer to companies other than us or our consolidated subsidiaries whose ultimate parent is SoftBank Group Corp., including, but not limited to our four current shareholders (B Holdings Corporation, SVF II Piranha (DE) LLC, SoftBank Corp. and LY Corporation), Yahoo Japan Corporation and LINE Corporation (prior to their merger to form LY Corporation), PayPay Insurance Service Corporation (a wholly-owned subsidiary of LY Corporation) and PayPay SC Corporation, which is also an equity-method affiliate of ours.

In this prospectus, references to "U.S. dollars," "USD" and "$" refer to the lawful currency of the United States and those to "yen," "JPY" and "¥" refer to the lawful currency of Japan.

In this prospectus, where information is presented in thousands, millions or billions of yen or U.S. dollars, as the case may be, amounts of less than one thousand, one million or one billion, as the case may be, have been rounded unless otherwise specified. In this prospectus, where information is presented as percentages, amounts less than one-tenth of one percent or one-hundredth of one percent, as the case may be, have been rounded unless otherwise specified. Accordingly, the totals of columns of figures presented in tables in this prospectus may not be equal to the totals of the individual items.

Our consolidated financial statements included elsewhere in this prospectus consist of our audited financial statements as of March 31, 2024 and 2025 and for the years ended March 31, 2023, 2024 and 2025, and our unaudited condensed consolidated financial statements as of December 31, 2025 and for the nine months ended December 31, 2024 and 2025, which have each been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board, or IFRS. Unless otherwise indicated, all financial information included in this prospectus is presented using IFRS, which differs from accounting principles generally accepted in Japan, or Japanese GAAP, and from accounting principles generally accepted in the United States, or U.S. GAAP.

On April 1, 2025 and April 11, 2025, we acquired shares of PayPay Securities Corporation and PayPay Bank Corporation, respectively, which had been under the common control of SoftBank Group Corp., and made them subsidiaries of ours. The acquisitions of shares of PayPay Securities Corporation and PayPay Bank Corporation were accounted for under the pooling of interest method as business combinations under common control. As a result, the Group's consolidated statements of financial position as of April 1, 2023 and March 31, 2024, consolidated statements of profit or loss, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years ended March 31, 2023 and 2024 were retrospectively adjusted for the consolidation of the financial statements of PayPay Securities Corporation, PayPay Bank Corporation and their respective subsidiaries from April 1, 2022.

On November 15, 2025, we effected a stock split of one share into 200 shares (the "Stock Split"). The Stock Split did not affect total equity or the proportional interests of the shareholders. Unless otherwise indicated, all numbers of shares underlying stock options, the corresponding exercise prices and fair value of those stock options, and other per-share calculations presented in this prospectus have been retroactively adjusted to reflect the Stock Split.

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**PROSPECTUS SUMMARY** 

*This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in the ADSs. You should carefully read the entire prospectus, including "Risk Factors" and the financial statements, before making an investment decision.* 

**Who We Are** 

As Japan's leading financial technology company, we are dedicated to our goal of becoming a digital finance platform for all. We strive to empower the everyday lives of users and businesses by transforming their smartphones into a comprehensive, easy-to-use, and accessible financial platform that centralizes and simplifies numerous daily activities for ultimate convenience. Through a seamless ecosystem of payment, financial and everyday services, we have served as a game-changer in driving the shift to a cashless and digitally empowered economy. Through continued innovation, we aim to redefine how millions of individuals and businesses in Japan engage with finance throughout their daily activities.

We operate a highly scalable and integrated digital finance platform that serves as an all-in-one solution for users and merchants, built on a robust two-sided network connecting tens of millions of users and millions of merchants. Our platform facilitates a shared ecosystem across payments and financial services. As a clear leader in Japan's cashless payment market, we offer one of the most comprehensive and versatile service suites in the market, spanning daily payments, banking, credit, investments, and beyond.

Our story started with our code-based cashless payments solution. We launched this service in October 2018 and it rapidly expanded to become a nation-wide leading cashless payments ecosystem that had approximately 72 million PayPay registered users as of December 31, 2025, representing a penetration of 75% among 96 million smartphone users in Japan<sup>1</sup>. With the acquisition of PayPay Card Corporation in October 2022, our platform evolved to a next-generation payments ecosystem, seamlessly integrating our code-based payment and credit card payment services through our PayPay app. We recorded Payment Segment GMV of ¥15.39 trillion based on transactions processed through our products, PayPay Balance, PayPay Credit and PayPay Card, for the year ended March 31, 2025, and we have consistently achieved over 20% annual GMV growth since the fiscal year ended March 31, 2019. Our payment service is deeply integrated in the daily lives of our users, supporting a broad range of transaction scenarios and thereby driving high user engagement. In addition, we have supported merchants through promotional tools such as PayPay Coupons, PayPay Stamp Cards and PayPay Funding solutions designed to enhance retail productivity.

We further expanded our platform to core financial services. We acquired majority voting rights in PayPay Bank Corporation and PayPay Securities Corporation in April 2025, gaining comprehensive capabilities to provide a broad range of financial services offerings, to become a convenient one-stop financial portal destination for all users. Our offerings include internet banking and lending services through PayPay Bank Corporation and smartphone-based securities brokerage and investment services through PayPay Securities Corporation along with additional value-added services for our users.

<sup>1</sup> As of January 1, 2025. Calculated by using 80.5% from the Ministry of Internal Affairs and Communications' "2024 Survey on Communication Usage Trends (announced May 30, 2025)," Materials 2 "Mobile Device Ownership (Individual)" and "Smartphone Ownership (Individual)," applied to the Japanese population aged five and over as of January 1, 2025, from the Ministry of Internal Affairs and Communications and Statistics Bureau's "Population Estimates (final figures as of January 2025 (Reiwa 6))." 

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**Overview** 

We offer a digital finance platform with services that range from easy-to-use payments services to a full-suite of financial services, designed to simplify and enrich the everyday lives of consumers and businesses in Japan. Payments services contribute to broad-based user engagement through transaction frequency, while financial services deepen and accelerate user engagement through cross-selling and long-term product relationships. Together, they function as mutually reinforcing pillars of our ecosystem and form the foundation of our user engagement strategy.

<u>Payment business</u>. Our payment business is anchored by PayPay, Japan's leading code-based mobile payment platform, and PayPay Card, our integrated credit card service. Since its launch in 2018, PayPay has become one of the most widely used digital wallets in Japan, with approximately 72 million PayPay registered users as of December 31, 2025, and approximately 40 million MTUs during December 2025. PayPay allows users to make fast, secure payments by simply scanning a code with their smartphone, while offering merchants a low-cost, easy-to-adopt digital payment solution. Our users can charge their PayPay Balance via several methods and make payments from that pre-loaded balance or utilize PayPay Credit to leverage credit extended to them by PayPay, if approved for PayPay Card credit. PayPay Card Corporation, through its more traditional credit card offerings, also offers revolving credit, cash advances, and installment plans for eligible card holders. PayPay Card had 16.0 million active cards issued as of December 31, 2025. Together, we recorded Payment Segment GMV of ¥15.39 trillion based on transactions processed through PayPay Balance, PayPay Credit and PayPay Card for the year ended March 31, 2025, reinforcing our dominant position in Japan's code-based payments market. These services support a broad range of daily transactions—both offline and online—and form the foundation of our efforts to further deepen user engagement and expand monetization across our ecosystem.

<u>Financial service business</u>. Our financial service business, anchored by PayPay Bank Corporation and PayPay Securities Corporation, complements our payment platform by offering seamless, app-based banking and investing services. PayPay Bank services are integrated into the PayPay ecosystem and, as of December 31, 2025, had 9.7 million accounts with a total of ¥2,281.9 billion in deposits and ¥1,098.3 billion in loan balances, including card loans, business loans and mortgages. PayPay Securities Corporation, with its standalone app in addition to also being embedded in the PayPay app, reached 1.54 million brokerage accounts as of December 31, 2025, and serves a broad base of primarily first-time investors through user-friendly features. Our strategy in financial services is to further deepen integration with PayPay—recently exemplified by PayPay acquiring majority stakes in both PayPay Bank Corporation and PayPay Securities Corporation in April 2025—to create a unified digital finance platform where users can effortlessly manage spending, saving, borrowing and investing all within a single mobile experience.

As we have expanded the use cases and frequency of payment transactions, our payment business has not only scaled with user growth, but also contributed meaningfully to overall profitability. In parallel, we have expanded our revenue mix by deepening financial engagement with existing users, leveraging cross-selling between our payment and financial service businesses to increase average revenue per user and improve platform monetization. This deliberate expansion of revenue streams alongside our product ecosystem has enabled us to simultaneously grow revenue and expand margins, which we believe is unique and differentiating across the broader global fintech landscape.

As we expand our service offerings and grow our business, it is important to continue maintaining constructive and transparent relationships with the regulatory authorities that supervise our business. The scope and pace of our license acquisitions underscore the depth of our regulatory engagement and serve as further validation of our role in advancing national policy objectives, particularly the Japanese government's goal of accelerating adoption of digital and cashless payments across the broader Japanese population. To date, we have expanded our business steadily and strategically through the acquisition of a comprehensive set of regulatory licenses, reflecting both our long-term commitment to compliance and the government's support for Japan's

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transition to a more digital and fintech-enabled financial ecosystem. We have obtained 13 licenses across payment and financial business domains, including licenses for banking, securities brokerage, credit card operations and funds transfer, enabling us to offer a broad range of regulated financial services directly through our platform.

As a result, for the year ended March 31, 2025, we generated total revenue of ¥299.1 billion, representing a two-year CAGR of 22%, and operating profit of ¥35.5 billion (representing a 12% operating profit margin). We transitioned from loss to profitability over the past three fiscal years, achieving profit for the year of ¥39.2 billion (representing a profit for the year margin of 13%) and Adjusted EBITDA of ¥58.7 billion (representing an Adjusted EBITDA Margin of 20%) for the year ended March 31, 2025. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS Financial Measures" for a discussion of Adjusted EBITDA and Adjusted EBITDA Margin, and a reconciliation of these figures from profit (loss) for the year. These results illustrate our strong operating leverage and the scalability of our platform as monetization accelerates. As of December 31, 2025, borrowings on our consolidated statement of financial position were ¥568,309 million (including ¥351,325 million of borrowings in the Payment segment mainly related to PayPay Card Corporation's credit card business operations).

**Our Presence and Track Record** 

Japan has historically been a cash-centric economy, with cash comprising approximately ¥182 trillion of domestic household final consumption payment out of ¥247 trillion (or 70.2%) in 2018 calculated based on statistics released by the Ministry of Economy, Trade and Industry, or the METI, on March 31, 2025, and METI's revised calculation of Japan's cashless penetration rate as of January 1, 2026 driven in part by structural factors such as high merchant onboarding costs and high transaction fees that limited the adoption of digital payments. Additionally, it reported that the ratio of cashless payments in Japan reached 51.7%<sup>2</sup> in 2024, based on statistics released on December 19, 2025.

To address the abovementioned untapped opportunity, PayPay entered the market by waiving transaction fees for up to three years (and then charging transaction fees in later years) for small and medium-sized merchants, combined with low installation and operational costs. Unlike traditional credit card networks, we operate our own merchant network, enabling us to set fee levels independently and avoid third-party acquirer or network charges. This structural difference underpins our ability to provide services at lower cost. These measures expanded merchant participation and ease-of-use for users, reinforcing the expansion of our two-sided network. As more merchants began to accept PayPay, the overall value proposition for users strengthened, leading to increased user engagement and broader ecosystem participation. As a result, PayPay emerged as a leading force in Japan's cashless transformation, achieving an extraordinary CAGR of 65% in transaction volume over the period from the year ended March 31, 2020 to the year ended March 31, 2025, reaching a Payment Segment GMV of ¥15.39 trillion based on transactions through PayPay Balance, PayPay Credit and PayPay Card for the year ended March 31, 2025.

We are distinguished by our ability to scale rapidly, serve a demographically broad user base, and sustain strong profitability. Although we had recorded loss for the year every year since our inception through the year ended March 31, 2024 due to our strict focus on the scaling of our business, we transitioned from loss to profitability starting from the year ended March 31, 2025. Our ecosystem now extends beyond payments into banking and investments, which led to a seamless integration of services through the PayPay app. Our regulated financial services reached 9.7 million bank accounts and over 20 million users for PayPay Point investment service as of

<sup>2</sup> The METI revised the method it uses to calculate the cashless penetration rate as of January 1, 2026 in its report entitled "Summary of the Cashless Promotion Study Group" issued in December 2025. Specifically, it changed the denominator of the calculation from "private final consumption expenditure" to "household final consumption expenditure excluding imputed rent from home ownership," which raised the cashless penetration rate from previously reported levels. Cashless penetration rates prior to 2019 have been calculated by us using METI's revised calculation method. 

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December 31, 2025. These achievements not only reflect our ability to scale digital finance infrastructure across both user and merchant touchpoints, but also underscore our track record of execution and continued leadership in driving Japan's digital financial transformation. By bringing PayPay Bank Corporation and PayPay Securities Corporation into our group, we are now positioned to execute a fully integrated cross-selling strategy from payments to financial services, advancing our broader mission of accelerating digital finance adoption across Japan.

**Market Opportunity** 

Japan represents a vast and rapidly evolving opportunity across our core businesses—payments, banking, and securities brokerage—as consumer behavior shifts toward digital solutions. Despite recent progress, the Japanese economy remains mainly cash-centric. Japan's consumer payments market represents a substantial and under-penetrated opportunity, with continued growth expected as digital adoption accelerates. Japan's consumer payments market represents a substantial and under-penetrated opportunity, with continued growth expected as digital adoption accelerates. In 2024, Japan's household final consumption expenditure excluding imputed rent totaled approximately ¥273 trillion (equivalent to US$1.8 trillion) according to the METI as reported in "Summary of the Cashless Promotion Study Group" released on December 26, 2025, forming the total addressable market for consumer expenditure. Of this amount, cashless payment volume reached ¥141 trillion (equivalent to US$0.9 trillion) in the same year, according to the same report, which represented a cashless penetration rate of 51.7%<sup>3</sup>, up from ¥74 trillion (equivalent to US$0.5 trillion) in 2018, or a cashless penetration rate of approximately 29.8%, reflecting a CAGR of 11.5% during the period from 2018 to 2024.

Growth has been particularly strong in mobile-first formats: of the overall cashless payment amount, code-based payments grew at a CAGR of 75% over the period from 2019 to 2024, while debit cards, credit cards and E-money expanded at CAGRs of 21%, 9% and 1%, respectively, over the same period, according to the METI as reported in the "Calculation of Cashless Payment Ratio for 2024" released on March 31, 2025 and the Cashless Promotion Council as reported in the "Survey on Code-Based Payment Usage Trends" released on March 14, 2025 (transactions made using credit cards via code are classified under "code-based payments" and are excluded from the general "credit card" category). Within this growing market, PayPay has emerged as the leading player, with a GMV CAGR of 76% over the period from 2019 to 2024. We captured approximately one-quarter of the overall incremental cashless payment volume in Japan from 2023 to 2024, which was approximately ¥2.7 trillion of approximately ¥14.3 trillion in growth. Based on information reported by industry associations, of the approximately 38.8 billion cashless transactions completed in Japan in 2024, we accounted for 20% of the total. The total transaction figure was calculated based on the following data: (i) credit card transactions reported by 26 credit card companies in a survey by the Japan Credit Association, (ii) debit card and electronic money transactions from 1,069 debit card companies and eight electronic money companies as released by the Bank of Japan and (iii) code-based payment transactions from 13 code-based payment companies, as reported by the Payments Japan Association. In the code-based payment market, we held 64% of GMV as of March 14, 2025, as reported by the Cashless Promotion Council in the Survey on Code-Based Payment Usage Trends.

The Japanese government has introduced multiple policy initiatives to promote digital finance adoption. For example, in January 2026 the Japanese government reiterated its long-term national vision of achieving 80% total cashless penetration, as well as its 65% benchmark goal by the end of 2030, both of which represent considerable increases from Japan's 51.7%<sup>3</sup> cashless penetration as of the end of 2024. We have not only benefited from the cashless transition—we have played a foundational role in creating and expanding Japan's digital payments ecosystem. We have aligned our strategy with public-sector efforts such as merchant subsidy programs and government-led campaigns to expand the use of mobile payments.

<sup>3</sup> The METI revised the method it uses to calculate the cashless penetration rate as of January 1, 2026 in its report entitled "Summary of the Cashless Promotion Study Group" issued in December 2025. Specifically, it changed the denominator of the calculation from "private final consumption expenditure" to "household final consumption expenditure excluding imputed rent from home ownership," which raised the cashless penetration rate from previously reported levels. 

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Structural inefficiencies persist not only in payments, but also across the banking and securities sectors. There is meaningful opportunity for digital platforms to scale within still-offline financial verticals, which reflects a broader macro shift toward digitalization—a trend we have successfully leveraged to capture significant shares in multiple markets and which provides a deep, multi-year runway for continued expansion.

In parallel, Japan is also undergoing a national shift "from savings to investment." This is being reinforced by the government's expansion of the Nippon Individual Savings Account, or NISA, program, a Japanese government tax-free stock investment program for individuals, which has contributed to record growth in individual investment account openings. We believe these developments will continue to support the growth of digital brokerage and asset management services.

Taken together, these macroeconomic, structural and policy trends indicate continued long-term growth potential for Japan's digital financial markets and support our expectations for the future development of our platform.

**Our Competitive Advantages** 

We operate a highly scalable, integrated digital finance platform that acts as an all-in-one solution for users and merchants, utilizing a robust two-sided network connecting tens of millions of users and millions of merchants. Our platform facilitates a unified ecosystem across payments and financial services. As a clear leader in Japan's cashless payment market, we offer one of the most comprehensive and versatile service suites in the market, spanning daily payments, banking, credit, investments, and beyond.

The foundation of our platform is the payment service, which enables deep engagement with users and merchants through network effects. As our user base expands and usage grows, it strengthens the incentive for additional merchants to adopt PayPay, further accelerating merchant acquisition. In turn, as more merchants adopt PayPay, the number of payment-acceptance locations increases, users benefit from greater convenience, driving increased usage. This mutually reinforcing dynamic between user activity and merchant participation is at the core of our two-sided network model, enabling us to scale rapidly across both sides of the platform and deepen engagement across the ecosystem. In addition, because we operate our own merchant network, we are able to process payments without relying on traditional third-party payment processors, external acquirers or brand / network providers, allowing us to retain a greater share of payment economics and minimize settlement outflows.

Our strong network effects have also driven the expansion of our financial services offerings. Greater engagement with our payment service creates natural opportunities to promote our internet banking and securities brokerage services, facilitating more efficient user acquisition. The growth of our financial services offerings generates cross-service synergies—users who adopt both payment and financial services exhibit higher average payment volume per user and stronger long-term engagement. This synergy forms a powerful feedback loop: active payment users serve as a springboard for financial product adoption, while financial services users tend to transact more payment volume. Our loyal users who also adopt financial services tend to be more engaged and may enter into transactions more frequently with higher amounts.

As our ecosystem has scaled and diversified to satisfy various financial needs of users and merchants, we can serve as a one-stop digital financial platform and create an integrated system of money circulation. This integrated approach to digital finance along with PayPay's two-sided network is unique even when compared to other cashless payment providers, positioning us as both an enabler and beneficiary of Japan's accelerating shift toward a digital finance economy.

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***Strong Value Propositions to Users and Merchants***

We offer a comprehensive value proposition that meets the evolving needs of both users and merchants in Japan's rapidly digitizing financial environment. For users, our platform delivers a seamless and intuitive experience built around smartphone-based payments, combining the ease of code-based and credit card transactions with compelling promotional incentives such as PayPay Points. These features not only facilitate everyday payments—from retail to transportation to utility bills—but also drive recurring engagement and higher transaction frequency. All services are accessible through a single mobile application that integrates payments, transfers, credit, and banking, providing users with a unified and convenient financial experience. Our user centric model allows us to weave our services into users' daily life and capture non-discretionary spending in a near-ubiquitous variety of use cases, capturing offline and online payments, bill payments and P2P transfers, unlike traditional cashless players which we believe may have more limited touchpoints and focus on high-value transactions, which may constrain their ability to gather user data and expand into non-payment services.

For merchants, we provide a compelling value proposition centered on low-friction adoption and high-impact tools for business growth. Onboarding is fast and cost-efficient, with no upfront installation fees and competitively priced payment service charges level. Unlike many companies that rely on third-party networks to operate two-sided models, we maintain a highly self-contained value chain, conducting transactions directly with merchants. This structure minimizes external intermediary fees and enables us to offer lower transaction fee rates than issuer peers. We also support merchants with integrated digital marketing functions—such as in-app coupons, promotions, and loyalty programs—designed to increase visibility and encourage user spending. Additional solutions like PayPay for Business (our merchant-facing platform that provides onboarding, sales tracking and marketing campaign tools) streamlined settlement and reporting features, and actionable data analytics further enable merchants to improve operational efficiency and optimize performance.

Our broad merchant coverage, spanning both physical retailers and an expanding network of online businesses, complements our user proposition and reinforces the utility of our platform across daily life. By creating a trusted, feature-rich environment that enhances convenience for users and lowers barriers for merchants, we have established a strong foundation for continued engagement, high transaction throughput, and long-term monetization.

***Significant Penetration of eKYC within our User Base***

Our platform has achieved exceptional penetration of electronic Know-Your-Customer (eKYC) verification among our user base. As of December 31, 2025, 38.9 million users, or approximately 54% of registered users, had completed eKYC registration within our PayPay ecosystem. This level of eKYC adoption is unparalleled in the Japanese market and reflects both the trust users place in our platform and the simplicity of our onboarding experience. This puts us in a unique position to offer a frictionless entry point into our regulated financial services. This seamless flow from payments to financial services is a unique advantage to us, since no other provider offers comparable simplicity or scale. Compared to our three-year CAGR for registered users of 10% as of December 31, 2025, our three-year CAGR for users who had completed eKYC was 38%, showing the significant penetration of eKYC within our user base. In a regulatory environment that is becoming increasingly stringent regarding identity verification, our high eKYC penetration serves as a critical enabler of expansion into licensed financial services.

We have leveraged this eKYC foundation to create a unified eKYC, a feature that allows users who have already completed identity verification in PayPay to bypass part of the identity verification process when accessing services provided by PayPay Bank Corporation and PayPay Securities Corporation. We plan to expand this feature to cover credit cards as well. This unified eKYC dramatically streamlines onboarding flows. These frictionless entry points eliminate redundancies such as repetitive document uploads and identity verification processes, making our user journey faster, more intuitive, and more conversion-friendly, providing us with an advantage over our competitors which we believe are not able to onboard new users as quickly as we can.

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Beyond efficiency, our high eKYC coverage is also a foundation for deeper user monetization. eKYC users are more likely to be eligible for and adopt financial products such as credit, loans, and investment accounts, which require users to verify their identity. The ease and simplicity of eKYC across our platform provide a foundation for the expansion of our platform across a wide array of services. With just their smartphone, our users can be onboarded onto other services using the platform they already engage with on a daily basis. Our ability to cross-leverage eKYC data across business lines increases the lifetime value of each user and supports user acquisition for financial services. In turn, this supports stronger margins and scalability as we pursue our broader mission of offering a comprehensive digital finance experience.

***Sophisticated, Modern UI/UX***

Our UI/UX design is a major reason users continue to choose our platform. We have continuously refined our UI/UX to deliver an intuitive, responsive and seamless app experience, utilizing data from our large user base and effectively applying our technology. Improving our UI/UX enables us to deepen user engagement, and the large user base we have cultivated through our PayPay app can be guided to adopt additional services throughout our broader ecosystem. We have made consistent design and functionality enhancements over time. These enhancements demonstrate our ongoing focus on user centric design, intuitive navigation, and integrated finance features, reinforcing PayPay's positioning as a modern and sticky super app platform.

In addition to functionality, our platform is designed for reliability and ease of use. Users benefit from a highly responsive interface, consistently low error rates, and fast transaction processing. Key utilities such as P2P money transfers, real-time balance tracking, and payment notifications enhance the day-to-day usability of our ecosystem, while our app-based integration of financial products allows users to access deposits, loans, and investment services without leaving the PayPay environment. These features help position our platform not only as a payment tool, but also as a core infrastructure for digital financial life.

Moreover, our app is built as a "super app," with multiple financial and non-financial mini apps accessible within the PayPay environment. By minimizing friction across services and eliminating the need for multiple apps, while still allowing users who wish to use dedicated apps with advanced features for PayPay Bank and PayPay Securities services, users can access a broad range of services in one place, saving time and enabling a smarter daily life. This design promotes the exploration by our users of new services and boosts user engagement.

***Strong Patent Portfolio Provides Differentiation***

We believe our extensive patent portfolio provides a foundational competitive moat in Japan's payment and financial services industry. According to independent patent analytics using the Biz Cruncher tool by Patent Result Co., Ltd., PayPay ranks at the top among Japanese payment and financial services companies in terms of overall patent score<sup>4</sup>, significantly outpacing both traditional financial institutions and fintech peers. Our position reflects not only the quantity but also the technical relevance and market applicability of our patents. The size and score of our patent portfolio suggest meaningful innovation leadership across mobile payments, digital identity, security, and transaction optimization technologies.

This intellectual property leadership is a key enabler of product innovation and operational scalability, particularly as we continue expanding into regulated financial services. Our patents span across both core payment technologies and adjacent areas such as credit infrastructure, fraud mitigation and data analytics.

<sup>4</sup> Patent Score is an indicator that quantifies "patent attention" as a deviation value. It is primarily quantified using examination progress information (history accumulated during the examination process). Patents with higher market attention receive a higher score, indicating greater recognition and influence. 

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In addition to strengthening our product capabilities, our strong IP position also creates barriers to entry and facilitates strategic flexibility. With a leading share of valuable patent assets, we are well-positioned to defend our market position, pursue licensing or collaboration opportunities, and ensure sustained differentiation in a rapidly evolving competitive landscape. As we continue to scale our user and merchant base and broaden our payment and financial services offerings, we expect our proprietary technology base to remain a core driver of sustainable growth and long-term value creation.

***Technology Infrastructure Supporting Continuous Innovation and Growth***

Our payment business, with Japan's leading code-based mobile payment platform at its core, is underpinned by a vertically integrated and horizontally scalable technology platform that supports high performance, low-cost operations at scale. Built as a cloud-native, microservice-based architecture, our proprietary infrastructure enables us to handle massive transaction volumes with exceptional speed and reliability, while delivering a flexible foundation for rapid product development, personalization and risk management, and horizontal scalability that enables feature expansion supporting continued business growth.

Our technology platform is bolstered by our investment in in-house engineering capabilities. This team of engineers drives continuous innovation across our services, enabling the development of features such as personalized credit assessment, dynamic risk decisioning, and the seamless integration of new financial products into our ecosystem. The combination of deep internal technical expertise and a modern, modular platform architecture ensures that we can rapidly adapt to user needs, regulatory requirements, and evolving market demands—positioning us to scale effectively as our user base and transaction volumes continue to grow.

We are accelerating product development through the adoption of generative AI, particularly in coding workflows. We are actively expanding AI-assisted tooling across additional functions to further enhance speed, efficiency, and innovation in our product development. For example, we are leveraging proprietary AI to accumulate and refine product development data over time, enabling further differentiation in tooling optimization and code quality.

Our ability to maintain high availability, transaction security, and rapid iteration cycles—while managing cost and complexity—differentiates us from many legacy financial institutions and fintech peers. This technical foundation is a key enabler of our business strategy and a core driver of our long-term competitive advantage.

***Effective Security and Fraud Prevention***

We have established a reputation for cybersecurity and fraud prevention, supported by a layered defense architecture, proprietary risk controls, and continuous investment in system integrity. Our platform is designed to meet the highest standards of security while maintaining the seamless user experience expected in modern digital finance. In addition to detecting transaction-level fraud, our system incorporates advanced anti-money laundering protocols and behavioral risk modeling to prevent misuse by bad actors, including impersonation and unauthorized use. As digital transactions scale in volume and value, our ability to offer a secure and trusted environment remains a core differentiator.

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Our fraud incidence rates are consistently well below industry averages. In 2024, the fraud incidence rate for transactions on the PayPay app was just 0.0015%, and for PayPay Card, only 0.014%. By contrast, the fraud incidence rate across 40 Japanese credit card companies stood at 0.047% in 2024, more than three times higher than that of PayPay Card, and over 30 times higher than PayPay's fraud incidence rate. Fraud loss amounts show a similarly favorable profile. In 2024, total fraud loss on the PayPay app was ¥0.17 billion for PayPay and ¥0.85 billion for PayPay Card, as compared to the average of ¥1.4 billion in losses for 40 credit card companies in Japan in the same year.

This is achieved through a sophisticated risk management system. Our system employs intricate algorithms that analyze a wide array of data, including user behavior, device characteristics, transaction details, merchant information, and location data. Our proprietary technology enables dynamic detection and prevention of suspicious activities at scale, while our security team continuously evolves our defenses to stay ahead of emerging threats. We believe our exceptional fraud prevention performance enhances both user and merchant trust, further reinforcing engagement and retention across our ecosystem.

***Strategic Advantage From Being Part of the SoftBank Group Companies' Ecosystem***

At PayPay, one of our key management policies is centered on openness and universality. Unlike certain competitors, we do not aim to confine our users and merchants within a closed ecosystem. While upholding this commitment to openness, as a core member of the SoftBank Group companies, we actively work towards mutual benefit by integrating with one of Japan's most extensive and synergistic ecosystems. We achieve this by providing payment features to services offered by our group companies. We are closely aligned with key services offered by the SoftBank Group companies, including LINE, Japan's most widely used messaging and social media, which had approximately 100 million monthly active users as of December 31, 2025<sup>5</sup>; Yahoo! JAPAN, the country's leading digital media and e-commerce platform, which had approximately 54 million monthly login user IDs as of March 31, 2025; and SoftBank Corp., Japan's third-largest mobile telecommunications provider, which had approximately 32 million smartphone subscribers as of December 31, 2025. Together, these assets allow us to embed PayPay's services natively into users' daily digital touchpoints.

Our position within the SoftBank Group companies' ecosystem gives us privileged access to infrastructure, data, user traffic, and capital—offering strategic advantages in scale, brand trust, and distribution that few standalone fintech companies can replicate. For example, our strategy to expand data-driven lending benefits from user insights gained through the rich touchpoints of SoftBank Group companies. We have been able to integrate services across the ecosystem, for example, by integrating P2P payments into the LINE app. This ecosystem synergy has been instrumental to our growth and will remain an important factor of our continued leadership in Japan's digital finance sector.

**Our Growth Strategies** 

***Drive User Growth and Engagement through Targeted, Phase-Aligned Marketing***

We intend to further expand our registered and active user base by leveraging our strong market presence and executing targeted marketing strategies tailored to each phase of our business evolution. Since our inception, we have adopted a disciplined, KPI-driven approach to marketing—aligning campaign design with business objectives and product maturity—to accelerate user acquisition, deepen engagement, and promote product adoption across our platform.

In the early phase of our growth, as a late entrant to the code-based payment market, we launched large-scale marketing campaigns to rapidly build a foundational user base and establish PayPay as a top-of-mind brand for mobile payments in Japan. These bold acquisition initiatives—unprecedented in scale—played a pivotal role

<sup>5</sup> LINE MAU is calculated based on the number of accounts, which does not equal the number of unique users.

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in jumpstarting our platform, which experienced rapid user onboarding and became a leader in Japan's emerging digital payments sector. By the end of March 2019, PayPay's registered user base had reached approximately 6 million users.

We have consistently reinforced user engagement through large-scale promotional events, including the "Super PayPay Festival." Each iteration of this campaign is tailored to reflect changes in our product portfolio and user behavior. These initiatives not only drove increases in registered users, MTUs and total payment volume—key metrics for establishing market leadership—but were also highly capital-efficient, with a majority of point-based marketing costs funded by external sources such as merchants, central government, municipalities, and strategic partners in the year ended March 31, 2025.

We began providing code-based credit payment functionality, PayPay Credit, in February 2022. Embedding credit functionality within the PayPay ecosystem enabled us to increase transaction value and expand monetization. Since 2024, as we transition toward becoming a comprehensive digital finance platform, our marketing efforts have further evolved to support new financial services. Notably, we launched targeted campaigns designed to promote adoption of PayPay Bank and PayPay Securities services ahead of their group integration in April 2025.

***Expand Monetization through Cross-Selling of Payment and Financial Services***

With a base of approximately 72 million registered users as of December 31, 2025, we have established a dominant position in mobile payments, securing one of the largest sets of user touchpoints in Japan's digital ecosystem. Our code-based payment service originally grew through high-frequency, small-ticket transactions, generating robust user engagement and paving the way for deeper monetization. As our GMV has continued to expand, we have also introduced larger-ticket payment features such as a physical PayPay card with revolving payment features, as well as value added services such as merchant marketing tools—further deepening user engagement and increasing transaction volume.

Building on this strong foundation, we have expanded into regulated financial services following the acquisition of banking and securities licenses. We offer users a full suite of financial services, including deposit, lending, and investment services. We aim to significantly expand our offerings by leveraging our large payment user base, proprietary technology, and seamless app integration to drive user acquisition and engagement across payment, banking and securities. Further, we may receive additional retail finance licenses to further enhance this growth trajectory.

Our app-based integration strategy is already yielding results. The adoption of eKYC by PayPay Bank Corporation and PayPay Securities Corporation has created a seamless user experience, allowing users to open accounts in just two steps for banking, compared to seven steps through traditional channels. With 38.9 million users onboarded via our eKYC as of December 31, 2025, we are uniquely positioned to offer a frictionless entry point into the regulated financial services. This seamless flow from payments to financial services is a unique advantage to us, since no other provider offers comparable simplicity or scale.

The next phase of our strategy is to deepen monetization by leveraging our ecosystem to unlock cross-sell opportunities between payments and financial services. Users who adopt both services exhibit higher average payment volume per user and stronger long-term engagement. We believe the more products our users adopt, the more GMV we generate. For the year ended March 31, 2025, the average Monthly GMV per PayPay App MTU was ¥35,600. Average Monthly GMV per user was higher with each additional product adopted by our users. Users who just used the PayPay payments service had an average Monthly GMV of ¥23,400, users who used both PayPay and PayPay Card had an average Monthly GMV of ¥66,900, users who also used PayPay Bank services had an average Monthly GMV of ¥83,100, while users who used all three of those and PayPay Securities

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services had an average Monthly GMV of ¥136,000. This synergy creates a powerful feedback loop: active payment users form a natural base for financial product adoption, while financial services users tend to transact more payment volume. Our loyal users who also adopt financial services tend to be more engaged and may exhibit higher transaction values. These dynamics allow us to increase revenue per user and drive lifetime value across our platform.

In recent years, we have achieved significant enhancement in monetization, reflecting both increased user activity and higher monetization per user. Notably, this growth was driven by both payment-related revenues, such as increased GMV, higher usage of revolving credit and value-added merchant services, and by financial services revenues, including interest income from loans and fee income from securities brokerage services.

Looking ahead, we see continued upside in both payments upsell—through growing transaction frequency, increased use of credit products, and broader adoption of coupons and merchant tools—and financial services cross-selling, including deposit and loan expansion, investment scaling, and new product launches. As our digital finance platform matures, we believe our ability to drive revenue through deeper engagement across our payments and financial services businesses will be a key driver of long-term growth.

***Drive Continued Revenue Growth Through Deeper Payment Engagement***

We aim to further expand our GMV by deepening user engagement across our integrated code-based and credit card payment services, while continuing to grow both our user base and merchant network. Our payment business remains the core engine of our growth, and we believe it has significant potential for long-term GMV expansion.

Revenue growth for our payment business is driven by GMV growth, increases in transaction fees and increases in interest income. To support further GMV growth, we are executing targeted initiatives across several fronts. These include expanding code-based payment adoption through offline and online campaigns, with a focus on increasing active transacting users (Monthly Transacting Users) and monthly transaction size per active transacting user (Monthly GMV per User), which are the two essential contributors to GMV growth. We are also deepening the integration of PayPay Card Corporation with code-based payments to promote larger-ticket and credit-based transactions and driving monetization through increased adoption of credit features. On the other hand, the path to long-term profitability for the payment business is also underpinned by Take Rate expansion and Cost Rate control. We intend to drive Take Rate expansion by product mix enrichment, such as increasing the share of online payments and expanding interest income from revolving balances and cash advances. This strategy has already begun to bear fruit, as our ratio of Online GMV (excluding GMV from transactions made within e-commerce services operated by LY Corporation), which has a higher Take Rate, to total GMV doubled from 7% in the year ended March 31, 2023 to 14% in the year ended March 31, 2025 and further increased to 16% in the nine-month period ended December 31, 2025. At the same time, Cost Rate control is supported by operational efficiencies and economies of scale, as well as ongoing reductions in fund sourcing costs through direct bank integration and improved deposit structures. Furthermore, we are increasing our merchant base by offering value-added services that improve merchant sales, user retention and operation funding. We believe these efforts will continue to strengthen the utility of our ecosystem for both sides of the platform.

We also observe encouraging structural indicators of growth in GMV per User. Across all periods, registered user cohorts from the three months ended December 31, 2018 through the three months ended December 31, 2025, we have seen that the longer a user remains on the platform, the higher their active rate and Monthly GMV per User—evidence of sustained engagement and lifetime value. In particular, users who adopt both code-based and credit-based payments show significantly higher spend per month, and greater adoption of additional services over time.

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As we scale, our strategy is to drive payment volume growth not only through user acquisition, but increasingly through higher transaction frequency, greater share of users' total spend, and broader credit utilization. With a proven track record of business execution and a loyal, expanding user base, we believe our payment business will continue to serve as a foundation for sustainable GMV and revenue growth.

***Accelerate Growth in Financial Services Through Platform Integration***

Our financial services model is underpinned by two key drivers: deposit volume and net interest margin, or NIM, which we calculate as net interest income divided by quarterly average total interest-earning assets. Following the acquisition of PayPay Bank Corporation, we expect to further expand NIM through reducing the guaranteed secured portion and improved loan-to-deposit ratio and efficient capital allocation. On the deposit side, we see substantial room for growth in both the number of bank accounts and average deposit balance per user, supported by initiatives such as our "Deposit Revolution" campaign launched in December 2024, which offers market-leading yields of 2.0% to individual users. For merchants, we are driving adoption through features such as payouts as early as the next day, which serve as a gateway to broader banking use cases including salary disbursement.

Our next frontier is the scaling of credit and lending services. We have developed a proprietary data-driven credit model, built on our extensive transaction and behavioral data from approximately 72 million users as of December 31, 2025 and 7.8 billion transactions via the PayPay app in the year ended March 31, 2025. This rich data set underpins our risk evaluation for revolving credit, cash advances, and merchant financing, all of which are already showing traction. Due to this data-rich model, PayPay Card Corporation's approval rate has improved, which has led to a steady increase in the number of active cards issued by PayPay Card Corporation, contributing to consolidated GMV growth. After fully acquiring PayPay Card Corporation in October 2022, we increased the number of active cards issued by 1.8 times from 9.1 million as of September 30, 2022 to 16.0 million as of December 31, 2025. Alongside our efforts to actively manage credit cost, we have also increased PayPay Card Corporation's total revolving and cash advance balance by 2.2 times from ¥214.5 billion to ¥475.1 billion over the same period. Going forward, we intend to horizontally expand this lending framework into new areas. Our PayPay Card business is continuing to grow quickly. By promoting the combined use of our integrated code-based credit payment solution "PayPay Credit" together with physical credit card payments, we were the single fastest growing card issuer in Japan for the six-month period ended September 30, 2025<sup>6</sup>. From its genesis as Yahoo! JAPAN Card in fiscal year 2015, supported by the rapid adoption of PayPay Credit, PayPay Card has delivered significant revenue growth over the years. Post-consolidation, such revenue growth has continued and operating profit has also improved, translating into improved profitability driven by operating leverage achieved through promotion standardization and cost management. Through the know-how we have accumulated from PayPay Credit and PayPay Card, particularly from revolving payments, we plan to expand our offerings in the consumer loan market. We are able to utilize this data, together with our credit models that are refined on a daily basis, to extend credit to customers with no prior credit history. Likewise, the data and insights we have gained regarding merchants' creditworthiness through our merchant financing business position us to expand into the large commercial lending and business loan market (for more information on PayPay Funding, our merchant financing offering, see "—Our Products and Services—Other Value-Added Services—To Merchants"). For instance, because approximately 75% of merchants who receive funds through PayPay Funding become repeat users, we expect to expand this offering beyond the currently limited merchant base. Our data on merchants positions us uniquely to understand their funding needs and enables us to pre-screen merchants, allowing them to obtain funds immediately when they need them. In the future, we are considering broadening this data-driven financing model

<sup>6</sup> The net increase during the relevant period was calculated by PayPay Corporation based on the number of credit cards issued as of March 31, 2025 and September 30, 2025 as disclosed by PayPay Card, Sumitomo Mitsui Card, Rakuten Card, AEON Card, d CARD, au PAY Card, EPOS Card, and Credit Saison. With respect to AEON Card, as its parent company, AEON Financial Service Co., Ltd., has a fiscal year ending in February, and the net increase was calculated based on the number of credit cards issued as of February 28, 2025 and August 31, 2025. Credit cards affiliated with Mitsubishi UFJ Financial Group, Inc. and Mizuho Financial Group, Inc. were excluded from the aggregation due to the unavailability of disclosed data on the number of credit cards issued. 

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into additional merchant loan products and, subject to regulatory requirements, consider pathways for PayPay Bank Corporation to deliver similar online financing offerings. We believe these initiatives will enable us to further monetize our data advantage, while maintaining appropriate risk discipline. Since we acquired a majority stake in PayPay Bank Corporation in April 2025, we have offered additional products, including debit QR code payment, business loans guaranteed by a credit guarantee association as well as digitalized and data-driven personal loans. We are currently in the process of fully integrating and leveraging PayPay Bank products and services with our payment system and plan to focus our immediate efforts on transitioning to an in-house cloud-native next-generation system, and increasing loan products utilizing our proprietary data-driven credit model. As these initiatives have begun to bear fruit, our deposit balance grew 19% year-over-year as of December 31, 2025, and our loan balance increased 28% over the same period, driving a substantial increase in revenue. From its genesis as Japan Net Bank in the fiscal year 2000, revenue has steadily improved with significant increases in the fiscal years following its renaming as PayPay Bank, while profitability generally remained steady. Post-consolidation, revenue has continued to climb and profitability has materially improved, driven by operating leverage and cost-efficiency measures, including reductions in temporary personnel, outsourced operations, and advertising and promotional expenses, which contributed to a significantly lower overhead ratio. Our longer term goal is to switch to a fully in-house next-generation core banking system in addition to expanding our lending business, which currently consists primarily of mortgages, by increasing our market share of SME loans, through fully effectuating our data-rich model.

Furthermore, in the two years since PayPay Corporation became the largest shareholder of PayPay Securities Corporation with a 35% shareholding and became our equity-method affiliate, the number of brokerage accounts has grown from 0.5 million to 1.54 million. From its genesis as One Tap BUY in the fiscal year 2016, revenue has also grown substantially, particularly following the renaming to PayPay Securities in 2021, supported by increased utilization of the PayPay user base through initiatives such as the PayPay point investment program and the rising number of NISA accounts. Operating losses, which remained relatively large for many years, have steadily declined over the past several years as a result of disciplined cost reduction and business portfolio optimization. Most recently, after we acquired a majority ownership position in April 2025, PayPay Securities Corporation also recorded operating profit for the first time on a non-consolidated basis for the three-month period ended September 30, 2025. Going forward, we aim to increase our PayPay Securities offerings, refine our UI/UX and further develop and integrate PayPay Securities products and offerings with our payment system.

By integrating internet banking and securities directly into our ecosystem and leveraging proprietary data for our credit model, we are building a digital finance platform with diversified revenue streams and attractive cost structure. As our financial services scale, we expect it to be a key contributor to both revenue growth and margin expansion over the medium-to-long term. We are also seeking opportunities for streamlining operations through tighter control of promotion and acquisition costs, bringing key system functions in-house, and improving workforce efficiency, all of which support improved unit economics and long-term scalability.

**Summary of Risk Factors** 

Investing in the ADSs involves significant risks. You should carefully consider all of the information in this prospectus before making an investment in the ADSs. Below is a summary of the principal risks we face, organized under relevant headings. These risks are discussed more fully in the section titled "Risk Factors."

***Risks Related to Our Business***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to manage our growth effectively, we may be unable to execute our business plan or maintain high
levels of service and satisfaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may fail to attract new users, retain our active users or expand the scope of our relationship with our
active users, our business, results of operations, financial condition, cash flows and prospects could be materially and adversely affected.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may be unable to attract new merchants to utilize our services, grow our relationships with our existing
merchants, and increase transaction volumes across our payment settlement services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may face challenges in maintaining and expanding synergies between our code-based payment settlement
services and our credit card payment services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our ability to continue to successfully operate and grow PayPay Credit is subject to several risks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Any failure to successfully integrate PayPay Bank Corporation and PayPay Securities Corporation with our group
could materially and adversely impact our future business and operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may not be able to realize the anticipated benefits, synergies and efficiencies from the integration of
PayPay Bank Corporation and PayPay Securities Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may not be able to maintain and strengthen the ecosystem effects of our platform.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• There is no assurance that our alliances with the shareholders of our consolidated subsidiaries and
equity-method affiliates will be successful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If the cashless payments industry and the digital financial services industry in Japan do not continue to
expand and develop as we expect, our business, financial condition and results of operations could be adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We had a history of losses in the past and we only recently achieved profitability, which we may not be able
to maintain, and we may record losses and negative cash flow in the future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our ability to increase revenue and profitability, particularly for our Payment segment, depends on our
pricing strategy and the expansion of our service offerings, both of which we may not be able to implement successfully.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We participate in markets that are competitive with continuously evolving technology and consumer needs, and
if we do not compete effectively with established companies and new market entrants, our business, results of operations, cash flows and financial condition could be materially and adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our business depends on a strong and trusted brand, and any failure to maintain, protect, and enhance our
brand, or any unfavorable media coverage, could materially and adversely affect our reputation, business, financial condition, results of operations, cash flows and prospects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We depend on key management, as well as our experienced and capable employees, and any failure to attract,
motivate, and retain our employees could harm our ability to maintain and grow our business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We identified material weaknesses in our internal control over financial reporting and may identify additional
material weaknesses in the future or otherwise fail to maintain proper and effective internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are exposed to credit risk and the ability of various counterparties to pay us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are exposed to interest rate risk and other market risks, including foreign exchange risk.

***Risks Related to the SoftBank Group Corp. and SoftBank Group Companies***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We collaborate with SoftBank Group companies in the provision of our services. Any failure by such companies
to continue to support our services, or a material change in our relationship with

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such companies, could adversely impact our services and could impact our overall business, financial condition, cash flows and results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• After the completion of the offering, our current shareholders will continue to collectively hold substantial
shareholdings and exercise influence over our operations.

***Risks Related to Technology, Information Systems and Intellectual Property***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to maintain or improve our technology infrastructure could harm our business and prospects and
materially and adversely affect our business and reputation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We rely on mobile operating systems and application marketplaces to make the PayPay app available to
participants that utilize our platform, and if we do not effectively operate with or receive favorable placements within such application marketplaces, our usage or brand recognition could decline and our business, financial results, cash flows and
results of operations could be materially and adversely affected.

***Risks Related to Laws, Regulations and Compliance***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to comply with the existing laws and regulations applicable to our business could subject us, or our
subsidiaries or our associates, as applicable, to enforcement actions and penalties and otherwise harm our business, as well as divert our management's attention and resources and result in increased costs.

***External Risks Related to Economic Conditions and Other Factors***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Unfavorable economic conditions in Japan could have a material adverse effect on our business, financial
condition and results of operations.

***Risks Related to Shares of our Common Stock, the ADSs and this Offering***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Investors holding less than 100 shares of our common stock, which constitutes one "unit" of shares
of our common stock, will have limited rights as shareholders.

You should also consider the additional risks disclosed under each subheading of the section titled "Risk Factors."

**Our History and Corporate Structure** 

We were established in Japan on June 15, 2018 under the corporate name of Pay Corporation, as a joint venture between SoftBank Corp. and Yahoo Japan Corporation (currently LY Corporation), with the aim of developing and offering electronic payment services. In July 2018, we changed our corporate name to PayPay Corporation. We are authorized to conduct our lines of business under Article 2 of our articles of incorporation.

On July 30, 2021, we completed an issuance of our shares (except for the conversion of Class A preferred shares into common shares described below), after which SoftBank Corp. held 960,000 shares (275,000 common shares and 685,000 Class A preferred shares), Yahoo Japan Corporation held 960,000 shares (275,000 common shares and 685,000 Class A preferred shares) and SoftBank Group Corp., the parent company of SoftBank Corp. and Z Holdings Corporation (currently LY Corporation), held 830,000 of our shares (550,000 common shares and 280,000 Class A preferred shares).

On December 21, 2021, SoftBank Group Corp. transferred all of its 830,000 shares to SVF II Piranha (DE) LLC, an investment fund ultimately controlled by SoftBank Group Corp. On August 31, 2022, Yahoo Japan

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Corporation transferred all of its 960,000 shares to Z Intermediate Holdings Corporation, Z Holdings Corporation's (currently LY Corporation) wholly-owned subsidiary, out of which Z Intermediate Holdings Corporation transferred 163,196 common shares to Z Holdings Corporation (currently LY Corporation) on the same date. On October 1, 2022, all of the remaining 796,804 shares held by Z Intermediate Holdings Corporation were transferred to a new holding company, B Holdings Corporation, in which SoftBank Corp. held 50% of the shares and Z Holdings Corporation (currently LY Corporation) indirectly held 50% of the shares. ****On the same date, SoftBank Corp. transferred 796,804 of our common shares to B Holdings Corporation. By that date, all the Class A preferred shares we had issued were converted on a one-to-one basis into common shares. On April 4, 2025, SVF II Piranha (DE) LLC exercised stock options it purchased from One97 Communications Singapore Private Limited, a subsidiary of One97 Communications Limited in December 2024, originally granted by us to One97 Communications Singapore Private Limited in September 2020, and received 159,012 common shares.

On April 10, 2025, we conducted a third-party allotment of new shares, in which we issued 94,802 shares of common stock to SVF II Piranha (DE) LLC, 92,021 shares of common stock to SoftBank Corp. and 92,021 shares of common stock to LY Corporation. Following this issuance, and as of the date of this prospectus, B Holdings Corporation, SVF II Piranha (DE) LLC, SoftBank Corp. and LY Corporation hold 49.99%, 34.00%, 8.01% and 8.01% of our shares, respectively.

On November 15, 2025, we effected a stock split of one share into 200 shares. The historical issuances of preferred shares and common shares described in this subsection have not been retroactively adjusted to reflect the Stock Split.

The following diagram illustrates our corporate structure as of the date of this prospectus. Certain entities that are immaterial to our results of operations, business and financial condition are omitted.

**Corporate Structure**![LOGO](g941409g31k31.jpg)

Note: As of end of December 2025

See "Our History and Corporate Structure" for additional information on our history and corporate structure.

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**Our Corporate Information** 

Our principal executive offices are located at Yotsuya Tower, 1-6-1 Yotsuya, Shinjuku-ku, Tokyo 160-0004, Japan. Investors should submit any inquiries to the address of our principal executive offices set forth above.

Our main website is *www.paypay.ne.jp*, and the information contained on, or that can be accessed through, this website is not a part of, or incorporated by reference into, this prospectus. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street 18th Floor, New York, NY 10168.

**Implications of Being a Foreign Private Issuer** 

We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, or the Exchange Act, and as such, we are exempted from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, such as rules regulating solicitation of proxies and certain insider reporting and short-swing profit rules. Moreover, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. In addition, we are exempted from certain Nasdaq corporate governance requirements by virtue of being a foreign private issuer and are permitted to follow the corporate governance practices of our home country that differ significantly from the Nasdaq Stock Market Rules. We intend to rely on these exemptions for so long as we maintain our status as a foreign private issuer. For example, although we have established a compensation committee and a nominating committee, those committees do not consist entirely of independent directors. See "Risk Factors—Risks Related to Shares of our Common Stock, the ADSs and this Offering—As a Japanese joint stock corporation, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to public U.S. companies, as well as from certain disclosure requirements under the Exchange Act. This may afford less protection to holders of the ADSs than they would enjoy if we complied fully with the Nasdaq corporate governance listing standards."

**Implications of Being a Controlled Company** 

Upon the completion of this offering, entities ultimately controlled by SoftBank Group Corp. will be able to exercise 91.78% of the aggregate voting power of our total issued and outstanding shares, assuming the underwriters do not exercise their option to purchase additional ADSs. As a result, we expect we will be a "controlled company" as defined under the Nasdaq Stock Market Rules, and such entities ultimately controlled by SoftBank Group Corp., may continue to influence fundamental decisions such as the appointment and removal of our directors, the approval of mergers or other business combination transactions, the sale of material assets or businesses, amendments to our articles of incorporation and the declaration of dividends. As a "controlled company," we are permitted to, and, in the event we no longer qualify as a foreign private issuer, we intend to, elect not to comply with certain corporate governance requirements. If we rely on these exemptions, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

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**The Offering** 

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| | |
|:---|:---|
|  Offering Price | We currently estimate that the initial public offering price will be between US$17.00 and US$20.00 per ADS. |
|  ADSs Offered by Us | 31,054,254 ADSs (or 39,302,335 ADSs if the underwriters exercise in full the over-allotment option). |
|  ADSs Offered by the Selling Shareholder | 23,932,960 ADSs. |
|  ADSs Outstanding Immediately After This Offering | 54,987,214 ADSs (or 63,235,295 ADSs if the underwriters exercise in full the over-allotment option). |
|  Common Shares Outstanding Immediately After This Offering | 668,625,454 common shares (or 676,873,535 common shares if the underwriters exercise in full the over-allotment option). |
|  The ADSs | Each ADS represents one common share, no par value. |
|  | The depositary will be the holder of the common shares underlying the ADSs and you will have the rights of an ADS holder as provided in the deposit agreement among us, the depositary and owners and holders of ADSs from time to time. |
|  | You may surrender your ADSs to the depositary for cancellation to withdraw the common shares underlying your ADSs. The depositary will charge you a fee for such an exchange. ADS cancellations may also require prior notification under the Foreign Exchange and Foreign Trade Act of Japan. See "Japanese Foreign Exchange Regulations." |
|  | We and the depositary may amend or terminate the deposit agreement for any reason without your consent. Any amendment that imposes or increases fees or charges or which materially prejudices any substantial existing right you have as an ADS holder will not become effective as to outstanding ADSs until 30 days after notice of the amendment is given to ADS holders. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs. |
|  | To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled "Description of American Depositary |

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|:---|:---|
|  | Shares." We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus. |
|  Total Issued and Outstanding Common Shares | As of the date of this prospectus, 637,571,200 common shares are issued and outstanding. |
|  Over-Allotment Option | We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of 8,248,081 additional ADSs at the initial public offering price, less underwriting discounts and commissions, solely for the purpose of covering over-allotments. |
|  Selling Shareholder | SVF II Piranha (DE) LLC. |
|  Use of Proceeds | We estimate that we will receive net proceeds of approximately US$555 million from this offering, or approximately US$703 million if the underwriters exercise in full the over-allotment option, assuming an initial public offering price of US$18.50 per ADS, the mid-point of the estimated range of the initial public offering price, after deducting underwriting discounts, commissions and estimated offering expenses payable by us.<br>The principal purposes of this offering are to create a public market for the ADSs and enable access to the public equity markets for us and our shareholders. We intend to use the net proceeds we receive from this offering for general corporate purposes, including working capital, sales and marketing activities, product development, general and administrative matters, and capital expenditures. Additionally, we may use a portion of the net proceeds from this offering to acquire or invest in businesses, services or technologies, although we do not currently have any agreements or commitments to enter into any material acquisitions or investments. We cannot further specify with certainty the particular uses for the net proceeds from this offering. Accordingly, we will have broad discretion in using these proceeds. Pending the use of proceeds from this offering as described above, we may hold them as cash or invest them in cash equivalents or securities.<br>We will not receive any proceeds from the sale of ADSs by the selling shareholder in this offering. |

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|:---|:---|
|  | See "Use of Proceeds" for more information. |
|  Lock-up | We and holders of substantially all of the shares of our common stock, including the selling shareholder, have agreed not to sell, transfer or dispose of any ADSs, common shares or similar securities for a period of 180 days after the date of this prospectus, subject to certain exceptions. See "Shares Eligible for Future Sale" and "Underwriting." |
|  Risk Factors | See "Risk Factors" and other information included in this prospectus for a discussion of the risks relating to investing in the ADSs. You should carefully consider these risks before deciding to invest in the ADSs. |
|  Listing | We have applied to list the ADSs on Nasdaq under the symbol "PAYP." Our common shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system. |
|  Indications of Interest | The Cornerstone Investors have, severally and not jointly, indicated an interest in purchasing up to an aggregate of $220 million of the ADSs offered in this offering at the initial public offering price and on the same terms and conditions as the other purchasers in this offering. Because these indications of interest are not binding agreements or commitments to purchase, the Cornerstone Investors may determine to purchase more, fewer, or no ADSs in this offering, or the underwriters may determine to sell more, less or no ADSs to the Cornerstone Investors. The underwriters will receive the same underwriting discount on any ADSs purchased by the Cornerstone Investors as they will from the other ADSs sold to the public in this offering. |
|  Nasdaq Trading Symbol | PAYP |
|  Payment and Settlement | The underwriters expect to deliver the ADSs against payment on , 2026, through the facilities of the Depositary Trust Company, or DTC. |
|  Depositary | The Bank of New York Mellon. |

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**SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA** 

The following summary consolidated statements of profit or loss data and summary consolidated statements of cash flows data for the years ended March 31, 2023, 2024 and 2025 and summary consolidated statements of financial position data as of March 31, 2024 and 2025 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated statements of profit or loss data and summary consolidated statements of cash flows data for the nine-month period ended December 31, 2024 and 2025 and summary consolidated statements of financial position data as of December 31, 2025 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

On April 1, 2025 and April 11, 2025, we acquired shares of PayPay Securities Corporation and PayPay Bank Corporation, respectively, which had been under the common control of SoftBank Group Corp., and made them subsidiaries of ours. The acquisitions of shares of PayPay Securities Corporation and PayPay Bank Corporation were accounted for under the pooling of interest method as business combinations under common control. As a result, the Group's consolidated statements of financial position as of April 1, 2023, March 31, 2024 and 2025, consolidated statements of profit or loss, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years ended March 31, 2023, 2024 and 2025 were retrospectively adjusted for the consolidation of the financial statements of PayPay Securities Corporation, PayPay Bank Corporation and their respective subsidiaries from April 1, 2022.

Our consolidated financial statements are prepared and presented in accordance with IFRS. Our historical results are not necessarily indicative of results to be expected for any future period. The following summary consolidated financial data for the periods and as of the dates indicated are qualified by reference to, and should be read in conjunction with, our consolidated financial statements and related notes and the information under "Management's Discussion and Analysis of Financial Condition and Results of Operations," both of which are included elsewhere in this prospectus.

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The following table presents our summary consolidated statements of profit or loss, financial position and cash flows data as of and for the periods indicated.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the nine-month period<br>ended December 31,** | **For the nine-month period<br>ended December 31,** |
|  | **2023** | **2024** | **2025** | **2024** | **2025** |
|  | **(in millions of yen, except per share amounts)** | **(in millions of yen, except per share amounts)** | **(in millions of yen, except per share amounts)** | **(in millions of yen, except per share amounts)** | **(in millions of yen, except per share amounts)** |
|  | | | | **(unaudited)** | **(unaudited)** |
| **Summary Consolidated Statements of Profit or Loss Data:** |  |  |  |  |  |
|  Transaction and service income | ¥146927 | ¥174127 | ¥203595 | ¥150745 | ¥185325 |
|  Interest income | 50285 | 73884 | 88442 | 64426 | 83551 |
|  Gains on financial instruments | 2079 | 4641 | 5529 | 3942 | 7657 |
|  Other operating income | 1903 | 1959 | 1512 | 1334 | 1945 |
|  Total revenue | 201194 | 254611 | 299078 | 220447 | 278478 |
|  Operating expenses | (221742) | (254600) | (263568) | (192263) | (217470) |
|  Operating profit (loss) | (20548) | 11 | 35510 | 28184 | 61008 |
| &nbsp;&nbsp;&nbsp;&nbsp; Share of profit (loss) of investments accounted for using the equity method<sup>(1)</sup> |  |  | (549) | (383) | 101 |
|  Profit (loss) before tax | (20548) | 11 | 34961 | 27801 | 61109 |
|  Income tax (expense) benefit | (4398) | (841) | 4196 | 1156 | 42228 |
|  Profit (loss) for the year (period) | ¥(24946) | ¥(830) | ¥39157 | ¥28957 | ¥103337 |
|  Attributable to owners of the parent company | ¥(25856) | ¥(3350) | ¥36170 | ¥26483 | ¥101521 |
|  Attributable to non-controlling interests | 910 | 2520 | 2987 | 2474 | 1816 |
|  Earnings (loss) per share attributable to owners of the parent company: |  |  |  |  |  |
|  Basic earnings (loss) per share<sup>(2)</sup> | (58.7) | (6.1) | 65.8 | 48.2 | 159.8 |
|  Diluted earnings (loss) per share<sup>(2)</sup> | (58.7) | (6.1) | 65.8 | 48.2 | 159.8 |

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Notes:

(1) In this table, share of loss of a joint venture accounted for using the equity method for the years ended
March 31, 2023, 2024, and 2025 is included as a part of share of profit (loss) of investments accounted for using the equity method.

(2) On November 15, 2025, we split our common stock at a ratio of 1:200. Basic earnings (loss) per
share and diluted earnings (loss) per share retrospectively reflect the split.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of April 1,<br>2023** | **As of March 31,** | **As of March 31,** | **As of December 31,<br>2025** |
|  | **As of April 1,<br>2023** | **2024** | **2025** | **As of December 31,<br>2025** |
|  | | **(in millions of yen)** | **(in millions of yen)** | |
|  | | | | **(unaudited)** |
|  **Summary Consolidated Statements of Financial Position Data:** |  |  |  |  |
|  Cash and cash equivalents | ¥859313 | ¥744323 | ¥369811 | ¥506230 |
|  Guarantee deposits | 282291 | 321885 | 244229 | 60097 |
|  Call loans | 98000 | 116083 | 63000 | 106000 |
|  Accounts receivable | 188111 | 137760 | 141054 | 210970 |
|  Loans and advances to customers | 1217427 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1528552 | 1927607 | 2325178 |
|  Securities | 468837 | 769157 | 1075748 | 1606245 |
|  Total assets | 3288268 | 3806382 | 4042105 | 5172163 |
|  Deposits | 1876176 | 2136577 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2385939 | 2980991 |
|  Accounts payable | 673063 | 808449 | 949397 | 1210825 |
|  Borrowings | 494540 | 603218 | 399578 | 568309 |
|  Total liabilities | 3096728 | 3615131 | 3818374 | 4851934 |
|  Total shareholders' equity | 191540 | 191251 | 223731 | 320229 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the nine-month period<br>ended December 31,** | **For the nine-month period<br>ended December 31,** |
|  | **2023** | **2024** | **2025** | **2024** | **2025** |
|  | **(in millions of yen, except per share amounts)** | **(in millions of yen, except per share amounts)** | **(in millions of yen, except per share amounts)** | **(in millions of yen, except per share amounts)** | **(in millions of yen, except per share amounts)** |
|  | | | | **(unaudited)** | **(unaudited)** |
|  **Summary Consolidated Statements of Cash Flows Data:** |  |  |  |  |  |
|  Net cash provided by (used in) operating activities | ¥(194702) | ¥49975 | ¥155849 | ¥302004 | ¥465814 |
|  Net cash provided by (used in) investing activities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;190014 | (273383) | (319977) | (238518) | (483942) |
|  Net cash provided by (used in) financing activities | 31986 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;107930 | (210325) | (116829) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;154500 |

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**Non-IFRS Financial Measures and Operating Metrics** 

In evaluating our business, we consider and use Adjusted EBITDA and Adjusted EBITDA Margin, which are non-IFRS financial measures, as supplemental measures to review and assess our operating performance. The presentation of these non-IFRS financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. We define Adjusted EBITDA as profit (loss) for the year (period) plus income tax expense (benefit), share of profit (loss) of investments accounted for using the equity method, depreciation and amortization, loss on disposal of property and equipment and intangible assets, 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. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS Financial Measures" for more details on Adjusted EBITDA and Adjusted EBITDA Margin.

The table below sets forth some of our key non-IFRS financial measures, together with the most directly comparable IFRS financial measures, and operating metrics for the periods indicated.

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|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the nine-month<br>period ended December 31,** | **For the nine-month<br>period ended December 31,** |
|  | **2023** | **2024** | **2025** | **2024** | **2025** |
|  | **(in millions of yen, unless otherwise indicated)** | **(in millions of yen, unless otherwise indicated)** | **(in millions of yen, unless otherwise indicated)** | **(in millions of yen, unless otherwise indicated)** | **(in millions of yen, unless otherwise indicated)** |
|  Operating profit (loss) | ¥(20548) | ¥11 | ¥35510 | ¥28184 | ¥61008 |
|  Operating profit (loss) margin | (10)% | 0% | 12% | 13% | 22% |
|  Profit (loss) for the year (period) | ¥(24946) | ¥(830) | ¥39157 | ¥28957 | ¥103337 |
|  Profit (loss) for the year (period) margin | (12)% | 0% | 13% | 13% | 37% |
|  **Non-IFRS Financial Measures:** |  |  |  |  |  |
|  Adjusted EBITDA<sup>(1)</sup> | ¥(3356) | ¥21078 | ¥58650 | ¥44647 | ¥82538 |
|  Adjusted EBITDA Margin<sup>(2)</sup> | (2)% | 8% | 20% | 20% | 30% |
|  | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** |
|  **Operating Metrics:** |  |  |  |  |  |
|  ***Consolidated*** |  |  |  |  |  |
|  Total GMV<sup>(3)</sup> | ¥10.47 | ¥12.73 | ¥15.68 | ¥11.56 | ¥14.29 |
|  ***Payment segment*** |  |  |  |  |  |
|  Payment Segment GMV<sup>(4)</sup> | ¥10.20 | ¥12.46 | ¥15.39 | ¥11.34 | ¥14.05 |
|  Take Rate<sup>(5)</sup> | 1.63% | 1.70% | 1.61% | 1.62% | 1.63% |
|  Cost Rate<sup>(6)</sup> | 1.83% | 1.73% | 1.42% | 1.40% | 1.27% |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the nine-month<br>period ended December 31,** | **For the nine-month<br>period ended December 31,** |
|  | **2023** | **2024** | **2025** | **2024** | **2025** |
|  | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** |
|  PayPay MTU (millions of users)<sup>(7)</sup> | 30.3 | 33.2 | 37.2 | 36.2 | 40.0 |
| PayPay Number of Transactions (millions of transactions)<sup>(8)</sup> | 5137.4 | 6367.7 | 7806.6 | 5810.7 | 6884.7 |
| ***Financial service segment*** |  |  |  |  |  |
| PayPay Bank Balance of Deposits (billions of yen)<sup>(9)</sup> |  | ¥1685.2 | ¥1841.0 | ¥1912.7 | ¥2281.9 |
| PayPay Bank Balance of Loans (billions of yen)<sup>(10)</sup> |  | 723.8 | 926.9 | 858.6 | 1098.3 |

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Notes:

(1) Adjusted EBITDA is defined as profit (loss) for the year (period) plus income tax expense (benefit), share of
profit (loss) of investments accounted for using the equity method, depreciation and amortization, loss on disposal of property and equipment and intangible assets, 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. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Our Financial Performance, Key Metrics and
Financial Highlights—Gross Merchandise Value (GMV)" for a discussion of GMV.

(4) 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.

(5) 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).

(6) 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).

(7) 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.

(8) 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.

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

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

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**RISK FACTORS** 

*Investing in ADSs representing shares of our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, including the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes, before making a decision to invest. The risks and uncertainties described below may not be the only ones we face. Our business, financial condition, results of operations or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. If any of the risks actually occur, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the market price of ADSs representing shares of our common stock could decline, and you could lose part or all of your investment. See also the sections titled "Special Note Regarding Forward-Looking Statements and Industry Data."* 

**Risks Related to Our Business** 

***If we fail to manage our growth effectively, we may be unable to execute our business plan or maintain high levels of service and satisfaction, and our business, results of operations, financial condition, cash flows and prospects could be adversely affected.***

We have experienced significant expansion of our business since the launch of our PayPay app and anticipate that we will continue to grow our merchants and our user base and to launch new services to take advantage of market opportunities. Following our acquisition of PayPay Card Corporation in October 2022 and the recent consolidation of PayPay Bank Corporation and PayPay Securities Corporation, we expect to achieve even more significant growth as we leverage newly gained synergies and expand our array of service offerings. We are investing in our operational capabilities, including by increasing our product development costs and expenses related to our internal IT systems, in order to support such growth and initiatives, but if we do not maintain our current rate of growth or realize our targeted growth, our business, results of operations, financial condition, cash flows and prospects could be materially and adversely affected. Many factors may contribute to a decline in our growth rates, including increased competition, slowing demand for our services from existing and new users, reduced market acceptance of our existing services, transaction volume and mix, lower sales by our merchants, our merchants seeking to reduce the fees we charge to them, general economic conditions, including a decline in consumer spending power as a result of rising interest rates, government actions and policies or a failure by us to continue capitalizing on growth opportunities. With the development of our business, having captured a large market share for code-based payment settlement services, we may face challenges to continue growing the scale of our business and Total GMV as we have targeted with respect to our payment settlement services business and to grow our financial services business in line with our expectations. Even if we grow as targeted, we cannot assure you that our current and planned systems, policies, procedures and controls, personnel and third-party relationships will be adequate to support our future operations. It may become increasingly difficult to manage our growth as our operations continue to grow and become increasingly complex. Our failure to manage growth effectively could seriously harm our business, results of operations, cash flows and financial condition.

To effectively manage operations and personnel growth, we will need to continue to grow and improve our operational, financial, and management controls and our reporting systems and procedures. We will require the allocation of valuable management resources to expand our systems and infrastructure, particularly in connection with hiring and training engineers and other personnel, without any assurances that our revenue will increase. We also believe our corporate culture has been and will continue to be a valuable component of our success. As we expand our business and mature as a listed company, we may find it difficult to maintain our corporate culture, including our innovative and entrepreneurial spirit. Failure to manage our anticipated growth and organizational changes while preserving our corporate culture could reduce our ability to recruit and retain personnel, innovate, operate effectively, and execute on our business strategy, potentially adversely affecting our business, results of operations, cash flows and financial condition.

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***If we fail to attract new users, retain our active users or expand the scope of our relationship with our active users, our business, results of operations, financial condition, cash flows and prospects could be materially and adversely affected.***

Our success depends, in part, on our ability to attract new users to our payment settlement and other financial services, including for our PayPay app as well as our service offerings by PayPay Card Corporation, PayPay Bank Corporation and PayPay Securities Corporation, in order to increase revenue. Our success also depends on our ability to retain our active users. We generate revenue when users use our services, such as when they transact and pay for products and services using our PayPay app. If we are not able to continue to grow our user base and retain our active users, we will not be able to continue to grow our merchant network or our business effectively. The attractiveness of our platform and services to users depends upon, among other things: the number and variety of merchants and the mix of services available through our platform; our brand and reputation; user experience and satisfaction; consumer trust and perception of our solutions, including with respect to privacy and security; consumer trust and perception of payment applications and other financial products, including credit cards, loans and securities accounts; technological innovation; the rate or return to our users with respect to PayPay Points; and products and services offered by competitors. Our marketing efforts currently include digital and print marketing and the extensive use of promotional discounts and offers to our merchants and users. In order to increase revenue, we have aggressively used financial incentives to encourage customers to use our services. While our marketing and promotion expenses as a percentage of our revenue have been decreasing, decreases in the incentives we offer could negatively impact the use of our services by customers and result in a decrease in revenue. For example, on February 4, 2026, we announced some changes to our PayPay Points reward program, which will narrow some of the ways users will be able to earn PayPay Points from June 2026. See "Business—PayPay Points—Changes to PayPay Points Rewards Program." In that event, we may need to introduce new incentives or other marketing initiatives, and our marketing initiatives may become increasingly expensive and generating a meaningful return on these initiatives may become difficult. Some of our affiliated companies, our merchants and government entities also grant PayPay Points as incentives to increase sales of their own products and services or to promote cashless payment, and as a result, the majority of the cost of PayPay Point incentives are borne by third parties (principally affiliated companies but also our merchants and local governmental agencies in Japan). If in the future such third parties decrease their use of PayPay Points as consumer incentives, our user acquisition and retention could be adversely affected. See "—We may not be able to maintain and strengthen the ecosystem effects of our platform, which could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects." for a further discussion on the network effects and risks related to collaborations with our affiliated companies. With respect to our PayPay app, because we already have acquired a user base of approximately 72 million registered users as of December 31, 2025, we may not be able to continue increasing our number of users at the same rate as previously, which may also contribute to difficulty in generating a meaningful return on new marketing initiatives. If we do not continue to attract new users to our platform or services or are unable to retain our active users, our business, results of operations, financial condition, cash flows and prospects could be materially and adversely affected. As we continue to grow our business, we expect the rate at which we increase the number of new users to decrease as we shift our focus to our active users.

Our future growth also largely depends on our ability to generate increased usage across all of our services and higher transaction volume from our active users. If we are unable to successfully implement our latest initiatives to increase the value of transaction volume utilizing our services by existing users, including incentivizing PayPay Card holders to use their cards as their primary credit card and growing PayPay Bank deposit accounts and PayPay Securities investment accounts, our revenue growth may be adversely affected. From September 2023, we started to charge an additional fee to users that load their PayPay Balance through the SoftBank/Y! Mobile mobile carrier billing service twice or more per month. As a result of such changes and similar changes in the future, we may lose a certain percentage of our existing users that are inconvenienced by these changes in our services and our fee structure. Furthermore, other external factors such as rising interest rates and as a result users electing to keep their funds in deposit accounts with other financial institutions which pay interest instead of deposited with us as PayPay Money may negatively affect our ability to increase our transaction volume.

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Our ability to retain and grow our user base depends on the willingness of users to continue using our platform and services. If we fail to retain our relationship with existing users or if we do not continually expand transaction volumes from users on our platform or services, our business, results of operations, financial condition, cash flows and prospects would be materially and adversely affected.

***If we are unable 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 business, results of operations, financial condition, cash flows and prospects could be materially and adversely affected.***

Our growth in payment settlement services substantially depends on our ability to acquire new merchants, maintain and grow our relationships with existing merchants and increase the volume of transactions processed using our services. We rely on the continuing growth of our merchant relationships and our distribution channels in order to expand our GMV and our operations. Additionally, having a diversified mix of merchants is important to mitigate risk associated with changing consumer spending behavior, economic conditions and other factors that may affect a particular type of merchant or industry. We derive revenue for our payment settlement business primarily from the fees earned from merchants for our payment settlement services. If we are not able to attract new merchants and retain existing merchants or increase transaction volumes of our payment settlement services, our payment platform may struggle to gain wider acceptance among new merchants, which in turn may impede our ability to grow our revenue. The attractiveness of our payment settlement services to merchants and their willingness to partner with us depend upon, among other things: the variety and quality of service offerings; payment options offered to users; the degree of consumer penetration; the strength of our brand and reputation; the amount of fees that we charge; our ability to sustain our value proposition to merchants for consumer acquisition by demonstrating higher conversion at checkout; the attractiveness to merchants of our technology and data-driven platform; and our competitors' offerings. Because our PayPay app is mostly used to purchase everyday items that are relatively low in price per transaction, it is critical that we continue to increase the volume of transactions processed with our services, including by leveraging revolving and installment payments provided by PayPay Card Corporation, in order to achieve our targeted GMV. In recent years, because the amount of online payments by consumers has increased as a result of the growth of e-commerce, we intend to focus in particular on increasing the volume of online transactions processed with our services. However, there is no guarantee that we will increase the volume of online transactions in the manner that we anticipate. In addition, if the average price per transaction and the frequency of transactions per user do not increase in line with our expectations, we also may not be able to achieve our targeted GMV.

Moreover, we may experience attrition of our merchant relationships due to several factors, some of which are outside our control, including business closures, bankruptcy, financial distress, transfers of merchants' accounts to our competitors, cancellations and account closures that we initiate due to heightened credit risks relating to contract breaches by merchants or a reduction in sales, which could have a material adverse effect on our business, financial condition, cash flows and results of operations. In addition, our results of operations and growth to date have been partially driven by the growth of our merchants' own businesses and the resulting growth in GMV. Should the rate of growth of our merchants' businesses slow or decline, this could have an adverse effect on transaction volumes and therefore an adverse effect on our financial condition, cash flows and results of operations.

Further, we acquire merchants both directly as well as through third-party agencies. Our contracts with merchants typically have a term of one year with automatic renewal, and the terms of such contracts allow these merchants to terminate the contracts without cause by giving notice as per the terms of the agreement. In addition, our contracts with merchants that sign up with us through third-party agencies are terminated if our agreement with the third-party agency is terminated. We have no guarantee of income under these agreements or minimum requirements for the use of our services. Merchants may seek price reductions when expanding or changing their products and services with us and/or when the merchants' businesses experience significant volume changes. In addition, because introduction costs of other payment settlement services are relatively low,

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and our contracts with merchants are non-exclusive, our merchants often have arrangements with multiple payment service providers, primarily in order to mitigate certain risks, such as downtime, delayed response time or default by a payment service provider, as well as to maximize conversion by offering a complete array of payment methods available. Therefore, these merchants could shift business away from us at any given time without necessarily terminating their contracts with us. If our contracts with our merchants are terminated or if these merchants shift business away from us, or if we are unsuccessful in achieving high renewal rates and favorable contract terms, our business, financial condition, cash flows and results of operations could be materially and adversely affected. In particular, our larger merchants, such as convenience store chains and major drug store chains may develop and prioritize the use of their own payment services, or may terminate their contracts with us and exclusively use their own payment services, in the future, which could materially and adversely affect our results of operations. With respect to our contracts with merchants of our credit card merchant acquiring business, the term is typically one year with automatic renewal for an additional year, unless terminated. If we are unable to maintain high renewal rates as well as favorable terms for these contracts, our business, financial condition, cash flows and results could also be materially and adversely affected.

If we fail to retain any of our larger merchants or a substantial number of our smaller merchants, if we do not acquire new merchants, if we do not increase transaction volumes on our platform, if merchants do not adopt payment settlement services we offer or if we do not attract and retain a diverse mix of merchants, our business, results of operations, financial condition, cash flows and prospects would be materially and adversely affected.

***We may face challenges in maintaining and expanding synergies between our code-based payment settlement services and our credit card payment services.***

As part of our efforts to increase the volume of transactions of our payment settlement services and grow our business overall, we acquired PayPay Card Corporation, including the credit card merchant acquiring business of Yahoo Japan, from Yahoo Japan Corporation (currently LY Corporation) in October 2022. PayPay Card Corporation was primarily focused on offering credit cards to users of Yahoo Japan's shopping platforms. We aim to continue expanding the synergies between our PayPay app payment settlement services and our credit card payment services. For example, upon successful completion of the application process, a virtual PayPay Card is made available to users directly on the PayPay app to give users the option of selecting credit card-based payment, and this has led to an increase in the use of our credit card payment services by PayPay app users. We expect our expanding PayPay app user base will enable us to continue increasing the number of users of PayPay Card. However, we may not be able to continue to maintain and expand these synergies or to expand our credit card business in line with our expectations or at all.

A significant portion of our targeted revenue growth is dependent on increasing consumer and business spending on credit cards issued by PayPay Card Corporation and growing the amount of revolving credit, installment sales, credit balances and cash advances. We have invested in a number of related growth initiatives, including to attract new card members, retain existing card members and capture a greater share of customers' total spending and borrowings. In order to fully execute such initiatives, for a period of time, we significantly increased the number of PayPay Card Corporation's employees. In addition, we changed our credit card approval criteria in order to increase the approval rate, and as a result, our current credit card approval rate for new applicants of PayPay Card has increased to over 70%. However, this increase in our credit approval rate could result in us extending credit to users with greater credit risk, and may increase our exposure to credit risk as well as increase the delinquency rates of our credit card receivables, which could materially and adversely affect our results of business, results of operations, cash flows and financial condition.

Despite our investments in growth initiatives, including the adoption of generative AI to increase our operational efficiency, there can be no assurance that our investments towards growing our credit card business will continue to be effective or that we will be able to achieve the targeted increase in Total GMV of our payment settlement services as a result of expanding our credit card business. In addition, if we develop new credit card

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products or offers that attract customers looking for short-term incentives rather than incentivize long-term loyalty, card member attrition and costs could increase. Further expanding our service offerings, maintaining cost synergies across all of our services, adding user acquisition channels and forming new partnerships or renewing current partnerships could increase in cost in the future, adversely impact our average discount rate or dilute our brand, any of which could have a material adverse effect on our results of business, results of operations, cash flows and financial condition.

***Our ability to continue to successfully operate and grow PayPay Credit is subject to several risks.***

PayPay Credit, our payment service integrated in our PayPay app, allows users to pay for goods and services at participating merchants by using credit extended through PayPay Card Corporation. Users of the PayPay app who have applied for and have been approved for PayPay Card can then access PayPay Credit directly in the PayPay app as one of their payment options. PayPay Credit users can opt to pay for their purchases made during a given month in a lump sum in the following month for no additional fee or can pay for their purchases on a revolving basis, in which case interest is charged to the user in the same manner as with other credit card balances. GMV of PayPay Credit accounted for 22.0% of our Total GMV for the year ended March 31, 2025, and we aim to increase the proportion of GMV generated with PayPay Credit as part of our growth initiatives to expand our credit portfolio and increase interest income. However, there can be no assurance that we will be able to continue to grow PayPay Credit and increase its contribution to total revenue in the long term.

Our ability to continue to successfully operate and grow PayPay Credit is subject to our exposure to credit risk, as described below in "—We are exposed to credit risk and the ability of various counterparties to pay us, which could have a material adverse effect on our results of operations, cash flows and financial condition" as well as the following risks:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Integration with the PayPay app*. Because PayPay Credit is integrated in our PayPay app, any issues with
our PayPay app could prevent PayPay app users from using PayPay Credit, which would negatively affect our results of operations and could damage our reputation. A decrease in the number of users of our PayPay app, whether due to issues or concerns
in the app itself or as a result of changes in user preferences, could also negatively impact our PayPay Credit user base and our results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Competition.* Our PayPay Credit payment service competes against credit card companies as well as
providers of "buy-now-pay-later" services in Japan, and such competitors may offer more convenient or attractive
services to their customers, including lower interest rates, longer installment payment periods or longer payment deferral periods. Intense competition could prevent us from attracting new users of PayPay Card, which is a condition to access PayPay
Credit, which could have a direct impact on our ability to grow our PayPay Credit user base. See "—We participate in markets that are competitive with continuously evolving technology and consumer needs, and if we do not compete
effectively with established companies and new market entrants, our business, results of operations, cash flows and financial condition could be materially and adversely affected."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Regulatory compliance risk.* In offering our PayPay Credit service, we must operate in compliance with
applicable regulatory restrictions related to permissible interest rates and other terms relating to the extension of consumer credit. Ensuring compliance with such laws and regulations can be time consuming and costly. See "—Risks
Related to Laws, Regulations and Compliance—Failure to comply with the existing laws and regulations applicable to our business could subject us, or our subsidiaries or our associates, as applicable, to enforcement actions and penalties and
otherwise harm our business, as well as divert our management's attention and resources and result in increased costs."

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***Any failure to successfully integrate PayPay Bank Corporation and PayPay Securities Corporation with our group could materially and adversely impact our future business and operations.***

In April 2025, upon the completion of a series of transactions, PayPay Bank Corporation and PayPay Securities Corporation became consolidated subsidiaries of ours. The integration of PayPay Bank Corporation and PayPay Securities Corporation into our operations may be a complex and time-consuming process and may not be successful. Potential risks stemming from these transactions include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the assumption of unknown or underestimated liabilities, including if we are unable to enforce indemnity
provisions in the transaction agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the challenge of managing larger and more complex operations and facilities, and employees from a variety of
corporate cultures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inability to hire and retain key management personnel and employees of the acquired businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inability to realize cost and operating synergies or other expected benefits;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an increase in overall cost as a result of an increase in compliance risk and costs related to the regulated
nature of the acquired businesses, especially due to the highly regulated nature of the industry the acquired businesses operate in, which could also result in the inability to achieve the integration that was anticipated; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a reduction or perceived reduction in our financial strength.

While we already collaborated with both PayPay Bank Corporation and PayPay Securities Corporation prior to these transactions, we believe that these consolidations will allow us to diversify our financial services offerings and further grow our business. However, even if we successfully integrate these businesses into our operations, there can be no assurance that we will realize the anticipated benefits and synergies resulting from the acquisitions. Our failure to successfully integrate these businesses or to realize the anticipated benefits and synergies resulting from the acquisitions as expected, or at all, may have a material adverse effect on our future business and operations.

If we fail to successfully integrate PayPay Bank Corporation and PayPay Securities Corporation into our operations, our business may be adversely affected, or we may suffer reputational damage as a result. For example, if we experience a disruption in our services that is linked to post-merger integration measures such as a significant reduction in our workforce, this could have an adverse impact on the effectiveness of our operation or our reputation. In addition, depending on the severity of the service disruption, we could receive a business improvement order from the Financial Services Agency of Japan, or the FSA, which could require us to implement costly and time-consuming remediation measures. Complying with such business improvements order could also divert our management's attention and resources and may have a material adverse effect on our business and results of operations.

***We may not be able to realize the anticipated benefits, synergies and efficiencies from the integration of PayPay Bank Corporation and PayPay Securities Corporation.***

The integration of PayPay Bank Corporation and PayPay Securities Corporation into our business is an integral part of our strategy to generate sustainable growth and expand our ability to deliver comprehensive financial services to our users. To that end, we aim to realize benefits, synergies and efficiencies related to, among other things, increases in cross-selling opportunities among our payment and financial services, increases in total revenue, increased user acquisition, the integration of the financial services offered by PayPay Bank Corporation and PayPay Securities Corporation directly in our app, and lower customer acquisition costs. See "Business—Our Growth Strategies." However, there can be no assurance that we will be able to realize the

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benefits, synergies and efficiencies that we anticipate. Specifically, the expected benefits, synergies and efficiencies resulting from the integration of PayPay Bank Corporation and PayPay Securities Corporation are subject to, among other things, the following uncertainties:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a gap between the needs of the users of our payment settlement services and the financial services offered by
PayPay Bank Corporation and PayPay Securities Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our inability to market our financial services effectively to our payment services user base in order to grow
our financial services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issues with any of our payment or financial services, whether caused by us or third parties, which could
adversely affect our users, negatively impact our reputation and discourage our users from using our other services, thereby diminishing cross-selling opportunities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a lack of competitiveness of the services that we offer through our app, which could hinder cross-selling
among our services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our failure to or any difficulty in effectively promoting the adoption of our eKYC passport in order to drive
user acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our inability to fully leverage our proprietary data-driven credit model, which could hinder our ability to
assess borrower risk in line with our expectations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• uncertainties regarding the growth of internet banking and securities brokerage services in Japan, which could
negatively impact our ability to grow our financial services; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our inability to effectively reduce customer acquisition costs, which could in turn negatively impact our
profitability.

Our failure to successfully realize the anticipated benefits, synergies and efficiencies as expected or at all could have a material adverse effect on our future business and results of operations.

***We may not be able to maintain and strengthen the ecosystem effects of our platform, which could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.***

Our users and merchants interact with each other in our ecosystem to create very strong network effects which drives our further growth. Our collaboration with LY Corporation, with respect to the LINE app as well as Yahoo! Japan's ecommerce platform, and other affiliated companies, such as SoftBank Corp., to extend PayPay Points to their user bases strengthens these effects. There can be no guarantee that these companies will maintain the same level of promotion and collaboration in the future. The extent to which we are able to maintain and strengthen these network effects depends on our ability to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• maintain a high level of engagement and activity of users and merchants on our platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• improve the quality of our consumer insights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• consistently innovate and improve the services offered on our platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increase the effectiveness of features enabling businesses and partners to engage with users on our platform,
including by enabling merchants to offer coupons and incentives in the form of PayPay Points; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide users more opportunities to receive and use PayPay Points.

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In addition, changes that we implement to our platform to improve the user and merchant experience may not have the intended effect, which could adversely impact certain groups of users or merchants. To the extent we are not able to address the needs and demands of any particular participant group, those participants may spend less time and resources on our platform and may conduct fewer transactions or use alternative platforms, any of which could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects. Changes in the level of our collaboration and cross-promotion with LY Corporation or other affiliated companies could also significantly affect the user activities of our platform. See "—Risks Related to SoftBank Group Corp. and SoftBank Group Companies—We collaborate with SoftBank Group companies in the provision of our services. Any failure by such companies to continue to support our services, or a material change in our relationship with such companies, could adversely impact our services and could impact our overall business, financial condition, cash flows and results of operations."

***There is no assurance that our alliances with the shareholders of our consolidated subsidiaries and equity-method affiliates will be successful.***

We currently have alliances with the shareholders of PayPay Bank Corporation and PayPay Securities Corporation, which are both consolidated subsidiaries of ours, and shareholders of PayPay SC Corporation, which is an equity-method affiliate of ours. Specifically, we currently hold 75.5% of the common shares of PayPay Bank Corporation, while Sumitomo Mitsui Banking Corporation, Fujitsu Ltd., Taiju Life Insurance Company Limited and Sumitomo Life Insurance Company hold 21.5%, 2.4%, 0.2% and 0.2% of the common shares, respectively. Similarly, we currently hold 75.2% of the common shares of PayPay Securities Corporation, while Mizuho Securities Co., Ltd. holds 24.8% of the common shares. In addition, we hold 34% of the common shares of PayPay SC Corporation, while SB Payment Service Corporation and SB C&S Corp. holds 33% and 33% of the common shares, respectively. PayPay SC Corporation was a joint venture that was established in 2024 to further expand the use of PayCAS, a unified cashless payment terminal with POS integration functionalities.

The success of our alliances depends on our ability to cooperate strategically with the other shareholders of PayPay Bank Corporation, PayPay Securities Corporation and PayPay SC Corporation. However, we may encounter difficulties in managing relationships with such shareholders. For example, they may have economic or business interests or goals that are inconsistent with ours; take actions contrary to our instructions, requests, policies or objectives; be unable or unwilling to fulfill their obligations; have financial difficulties; or have disputes with us as to their rights, responsibilities and obligations. In addition, because the other shareholders of PayPay Bank Corporation and PayPay Securities Corporation include major traditional financial institutions, they may be unable or unwilling to make decisions regarding our alliances quickly and efficiently. Any of these factors may have a material adverse effect on the performance of PayPay Bank Corporation or PayPay Securities Corporation. If relationships deteriorate to a level that is beyond repair, the affected alliance may need to be terminated or there may be a change in shareholding of the affected entity.

In addition, because PayPay Bank Corporation, PayPay Securities Corporation and PayPay SC Corporation are currently not wholly owned subsidiaries of ours, we may decide in the future to acquire additional shares of PayPay Bank Corporation, PayPay Securities Corporation or PayPay SC Corporation to make them wholly owned subsidiaries of ours. With respect to PayPay SC Corporation, we may first decide to acquire additional shares to make PayPay SC Corporation a consolidated subsidiary of ours, resulting in business combination under common control, which may require retrospective consolidation, in which case we may need to restate our financial statements for prior periods. We may not be successful in completing such transactions to acquire additional shares in PayPay Bank Corporation, PayPay Securities Corporation and PayPay SC Corporation if negotiations with the other shareholders do not prove to be successful. In addition, such potential acquisitions with respect to PayPay Bank Corporation and PayPay Securities Corporation may be subject to strict scrutiny by regulators, which may make the acquisitions costly and time consuming.

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***If the cashless payments industry and the digital financial services industry in Japan do not continue to expand and develop as we expect, our business, financial condition and results of operations could be adversely affected.***

Because we operate primarily in the cashless payments industry, the expansion of this industry, in terms of numbers of users using our services and numbers of and relationships with our merchants and other business partners, and the continued adoption of cashless payments by consumers and merchants are essential to our growth strategy and our ability to increase our revenue and expand our operations. Our business, financial condition and results of operations could be materially and adversely affected if the growth of the cashless payments industry in Japan does not continue in line with our expectations. In particular, the cashless payments industry may not expand or develop as we expect due to factors specific to Japan, including potentially higher resistance to the adoption of cashless payment by individual users or merchants in Japan as compared to other markets. Although the Japanese government and Japanese local governments have encouraged the use of cashless payments by both consumers and merchants and are promoting ways to further increase the adoption of cashless payments in order to promote a cashless society, some of the more significant measures implemented to promote the use of cashless payments such as MyNaPoint (a point redemption incentive to encourage the use of MyNumber social security cards—a government-issued social security card that can be used as, among other things, a health insurance card and for online income tax return filing, etc.—in Japan) have been discontinued, and Japanese users of cashless payments have generally had security concerns with respect to the adoption of such services and continue to rely on cash for a significant proportion of day-to-day transactions. As a result, Japan has a lower rate of adoption of cashless payment services as compared to other developed economies, such as South Korea, China, the United States or some countries in Europe, and there can be no guarantee that the use of cashless payment services in Japan will grow to the same extent as that seen in other advanced economies.

The termination of subsidies to promote cashless settlement may also result in a slowdown of the growth of the cashless payment industry in Japan. In addition, initiatives by the Japanese government and Japanese local governments to promote the use of cashless payments may also not result in or continue to result in the anticipated benefits. For example, the introduction of the payment of employees' wages by employers with cashless settlement may not become widely accepted. Furthermore, since April 2023, the Bank of Japan has been proceeding with a pilot program for the "digital yen," and if in the future the Bank of Japan decides to issue a central bank digital currency, this may significantly impact the cashless payments industry in Japan and force us to make significant changes to our business model. The Bank of Japan has already taken preliminary steps in considering the issuance of a central bank digital currency by establishing the Central Bank Digital Currency Forum in July 2023, which consists of 60 entities from various industries, including the banking, payment services and fintech industries. The forum held its fourth general meeting in June 2025 and continues to work on the development of a pilot program for a central bank digital currency system in Japan.

Moreover, the expansion of the digital financial services industry is also essential to our growth strategy and our ability to increase revenue. Our business, financial condition and results of operations could be adversely affected if the growth of the digital financial services industry as a whole decelerates. In particular, while we believe there is room for further growth in the digital financial services industry in Japan based on the growing number of users of the internet and smartphones generally, the industry may not expand or develop as we expect due to increasing saturation of online services markets or other factors. If growth of the digital financial services industry slows or ceases and we are unable to expand our business as a result, our results of operations and overall growth prospects could be materially and adversely affected.

The development and growth of the Japanese cashless payment industry and digital financial services industry could also be affected by regulations that inhibit the use of such services, growing concerns around information security and privacy issues, especially in relation to personal information, adverse economic trends, increasing competition, development of disruptive or competing technologies, costs incurred by merchants to introduce cashless payment systems or other factors.

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***We had a history of losses in the past and we only recently achieved profitability, which we may not be able to maintain, and we may record losses and negative cash flow in the future.***

We achieved profit for the year of ¥39.2 billion for the year ended March 31, 2025 and profit of ¥103.3 billion for the nine-month period ended December 31, 2025. However, we had recorded loss for the year every year since our inception through the year ended March 31, 2024. Historically, we invested in significant promotional expenses to expand our merchants and our user base and our business strategy is to continue to maintain a significant scale in terms of GMV, users and merchants and to achieve sustainable profitability through revenue diversification and effective cost management. Maintaining profitability will depend on our ability to continue our positive growth trajectory in terms of merchants, users and GMV while controlling our expenses, such as user acquisition costs. If we are unable to achieve our targeted GMV growth or adequately manage the level of our promotional and other expenses even if we achieve our GMV targets, there is no assurance that we will be able to maintain profitability in the future. Because the market for our payment and financial services is evolving, it is difficult for us to predict our future results of operations or the extent of our market opportunity. We expect our operating expenses to increase as we hire additional personnel, broaden our marketing efforts and promotional activities, expand our operations and infrastructure, continue to enhance our brand, expand our services, and expand and improve our interface. These initiatives may be more costly than we expect and may not succeed in achieving our targeted growth in GMV and revenue. In addition, because we have only recently acquired the shares of PayPay Bank Corporation and PayPay Securities Corporation to make them consolidated subsidiaries of ours, we are actively working on the integration of PayPay Bank Corporation and PayPay Securities Corporation with our existing operations. We have developed new initiatives in connection with the anticipated synergies from the integration of PayPay Bank Corporation and PayPay Securities Corporation, such as cross-selling opportunities, to further grow our business and increase our profitability, but these initiatives may not be successful. If these initiatives are unsuccessful, we may not be able to increase our revenue to exceed our increased operating expenses, which would have a negative impact on our overall profitability. Furthermore, when we become a listed company, we will incur additional significant legal, accounting and other expenses that we did not incur as an unlisted company. Any failure to increase our revenue sufficiently to keep pace with our initiatives, investments, and other expenses could prevent us from maintaining profitability or positive cash flow on a consistent basis in future periods and could have a material adverse effect on our ability to continue as a going concern. We cannot assure you that we will maintain our profitability and may record losses again in the future.

***Our ability to increase revenue and profitability, particularly for our Payment segment, depends on our pricing strategy and the expansion of our service offerings, both of which we may not be able to implement successfully.***

Our pricing strategy for our payment settlement services constitutes a key component of our business plan to achieve a significant scale to enable us to continue to achieve profitability. Our pricing strategy previously focused on aggressive marketing of our PayPay app in order to acquire new merchants by reducing or eliminating payment settlement fees that the merchants would normally remit to us during initial promotional periods. We allowed small- and medium-sized merchants to utilize our PayPay app payment settlement services without having to pay us any payment settlement fees until October 2021. Since then, we have started to collect payment settlement fees from all participating merchants, although we sometimes offer reduced fees to newly joining large merchants that are strategically important for our business through negotiations on a case-by-case basis, and this pricing strategy results in lower revenue than what we would recognize if we collected payment settlement fees without such reduction in fees from all newly joining merchants. Because we no longer offer the type of incentives we previously offered, higher payment settlement fees or lack of or reduced incentives upon becoming a new PayPay merchant could also negatively impact our ability to acquire new merchants, which may decide to opt for the cashless payment services of our competitors if they offer more incentives, lower payment settlement fees or are otherwise more broadly used by consumers. Some competitors, in particular those providing code-based payment settlement services similar to ours as well as those providing other forms of cashless payment services, may be able to offer lower prices to merchants for similar services by cross-

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subsidizing their payment services through other services they offer. Such competition may result in the need for us to alter the pricing we offer to our merchants and could reduce our potential revenue. In addition, as we grow, merchants may demand more customized and favorable pricing from us. Our competitors are continuously investing to innovate, grow their businesses and enhance consumer reach and engagement, and may outcompete us in any of these areas. Increased investments made, lower prices or innovative services offered by our competitors, as well as the low barriers to entry prevailing in our industry, may require us to divert significant managerial, financial and human resources in order to remain competitive, and ultimately may reduce our market share and materially and adversely impact our revenue growth, profitability, cash flows and financial condition.

We derive a majority of total revenue from our payment settlement services in our Payment segment. For the year ended March 31, 2025, revenue from payment settlement services in the Payment segment accounted for 61.7% of total revenue of our Payment segment. Our efforts to expand our sources of revenue depend on, among other things, our ability to broaden the scope of the services we offer, develop new technologies, enhance the functionality of our services and respond to the needs of our merchants and users. One element of our business strategy is to target revenue growth from the provision of additional services to our merchants and from the provision of additional financial services to our users. In particular, we have expanded the financial services we offer to our users through PayPay Bank Corporation and PayPay Securities Corporation. We aim to grow our revenue by offering convenient services to our users, such as PayPay Debit, which allows accountholders to make payments with merchants that accept PayPay code-based payments directly from their PayPay Bank deposit accounts. We also aim to grow the balance of deposit accounts for PayPay Bank Corporation by offering competitive interest rates to our users as well as the balance of investments that PayPay app users hold with various offerings through PayPay Securities Corporation, but there can be no assurance that we will be able to successfully implement such initiatives. In addition, such expansion of our financial services will increase our operating costs, which may negatively impact our profitability.

New services we introduce may be subject to technological challenges, including a shortage of engineers to build them, or regulatory requirements that are different than those for our existing businesses and with which we have limited or no experience. If we are unable to respond to those challenges or meet those requirements or we experience service disruptions, failures, or other issues, our business may be materially and adversely affected. Our failure to broaden the scope of our services that are attractive may inhibit the growth of our business, as well as increase the vulnerability of our core payments business to competitors. ****

***We participate in markets that are competitive with continuously evolving technology and consumer needs, and if we do not compete effectively with established companies and new market entrants, our business, results of operations, cash flows and financial condition could be materially and adversely affected.***

We face significant competition from companies that operate in the cashless payments industry and digital financial services industry. As the number of internet and smartphone users increase, many companies are moving into internet-related services across a wide spectrum or product categories and service formats.

*Payment Segment* 

Our code-based PayPay app had a user base of approximately 72 million registered users as of December 31, 2025 but we face intense competition from other code-based payment settlement services as well as other forms of cashless payment, including credit cards, "buy-now-pay-later" services and e-money services of major transportation companies and retailers. We believe the principal competitive factors in our markets include industry expertise, platform scale and service features and functionality, ability to build new technology and keep pace with innovation, scalability, extensibility, service pricing, security and reliability, brand recognition, agility and speed to market. We compete in markets characterized by vigorous competition, rapidly changing and disruptive technology, changing merchant and consumer needs, evolving industry standards and frequent introductions of new services. We strive to use our technical expertise in developing a high-quality user interface and user experience, or UI/UX, to remain competitive and expand our business. We expect competition to remain

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intense as existing and new market entrants seek to enhance their cashless payment services to take advantage of increasing penetration of such services in the Japanese economy. Within our industry, there are low barriers to entry and the cost of switching between offerings is low. Users may have a propensity to shift to the provider offering the largest incentives, including those engaged in aggressive promotional campaigns, or services with the best UI/UX and commonly use more than one payment service. We compete with domestic and international companies and some of these companies may have greater financial resources and broader business lines than we do, which may provide them with competitive advantages. These companies may devote greater resources to the development, promotion, and sale of services, and they may offer lower prices or more effectively introduce their own innovative services that adversely impact our growth. In addition, if major traditional financial institutions decide to pool their resources to develop a new technology that is more convenient than our code-based payment app and renders the services we offer obsolete, our business may suffer irreparable harm. Further, as we and our competitors introduce new offerings and as existing offerings evolve, we expect to become subject to additional competition. For example, collaborations between convenience store chains and telecommunication companies, such as the collaboration between the telecommunications company KDDI and the convenience store chain Lawson, which is a jointly controlled entity accounted for under the equity method of KDDI, and offers a payment settlement service called "au PAY," could negatively impact our business by reducing the use of our payment app at convenience stores that offer such collaborations due to other more attractive offerings. In addition, our current market position could change drastically if a new market entrant or any existing competitor were to introduce a new and attractive service incorporating more advanced technologies, such as biometric authentication or AI, that gains widespread acceptance. Increased competition could result in, among other things, a reduction of the revenue we generate from the use of our services, the number of participants on our platform or the frequency of use of our platform. Certain merchants have longstanding exclusive, or nearly exclusive, relationships with our competitors to accept payment cards and other services that we offer. These relationships may make it difficult or cost-prohibitive for us to conduct material amounts of business with them. On the other hand, our merchant agreements are non-exclusive, therefore allowing merchants to move to similar services offered by our competitors. Competing services tied to established brands may engender greater confidence in the safety and efficacy of their services. If we are unable to differentiate ourselves from and successfully compete with our competitors, our business, results of operations, cash flows and financial condition could be materially and adversely affected.

A major part of our business strategy is to grow the market share, GMV and Take Rate of our credit card business through PayPay Card Corporation, including through growth in use of PayPay Credit, but we face significant competition in Japan's credit card services market, including from competitors with a larger existing market share. Our competitors in the credit card services market are well-established and have strong existing customer bases and there is no assurance that we will be able to increase our market share and achieve our targeted synergies between our PayPay app payment settlement services and our credit card payment services to increase the number of PayPay Card holders and Total GMV of our credit card business. See "—We may face challenges in maintaining and expanding synergies between our code-based payment settlement services and our credit card payment services." Some of our competitors may be able to offer lower prices to merchants for similar services by cross-subsidizing their payment services through other services they offer, and such competitors may be engaged in a broader range of businesses than we are.

*Financial Service Segment* 

Our internet banking business that we operate through PayPay Bank Corporation faces significant competition from other internet banking providers as well as from traditional Japanese banking institutions, including commercial banks and regional banks, that have expanded their internet banking services and broadened their retail asset management and retail lending services. Our competitors include Rakuten Bank, Ltd., SBI Sumishin Net Bank, Ltd., Sony Bank, Inc. and au Jibun Bank Corporation. These competitors may provide loans or other products with more attractive terms than we do, such as lower interest rates, or offer a more comprehensive range of banking products than we offer and may have stronger brand recognition, larger

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customer bases, greater financial resources, more effective online or physical networks and more developed marketing, asset management and risk management capabilities relative to us.

Our online securities business that we operate through PayPay Securities Corporation faces direct competition from several other online securities firms as well as from full-service securities firms in Japan, many of which are cooperating closely with their affiliated commercial banks. We consider our primary competitors to include other online securities firms in Japan, such as Rakuten Securities, Inc., SBI Securities Co., Ltd., Matsui Securities Co., Ltd., Monex, Inc. and Mitsubishi UFJ eSmart Securities Co., Ltd. The full-service securities firms that we compete with include Nomura Securities Co., Ltd., Daiwa Securities Co. Ltd. and SMBC Nikko Securities Inc. In order to maintain and expand our user base, we must compete with other securities firms on factors such as commission rates, fees, UI/UX and the strength and attractiveness of our lineup of products and services. These competitors may provide a more comprehensive range of services and may be able to offer more competitive products, such as products with lower brokerage commissions, than we are able to provide.

In addition, while we believe that our ecosystem provides tangible benefits to our financial services customers, certain of our bank and securities firms competitors are part of corporate groups that provide similarly attractive membership and loyalty programs including point programs, including Rakuten Group, Aeon Group and NTT Docomo Group, and competition based on the attractiveness of such ecosystems is fierce.

***Our business depends on a strong and trusted brand, and any failure to maintain, protect, and enhance our brand, or any unfavorable media coverage, could materially and adversely affect our reputation, business, financial condition, results of operations, cash flows and prospects.***

We have developed a prominent brand that has contributed significantly to the success of our business. We enable participants in commercial and financial activities, including users and customers, merchants and financial institution partners to build and strengthen trust among each other. Maintaining, protecting, enhancing and promoting the trust in us, our products and services and our brand is critical to expanding the base of users and customers, merchants and financial institution partners of our products and services, as well as increasing their engagement with our products and services. Any negative publicity about our industry or us, the quality and reliability of our products and services, our risk management processes, changes to products or services, our ability to effectively manage and resolve merchant and user complaints, our privacy and security practices, litigation, regulatory activity, and the experience of merchants and buyers with our products and services, could materially and adversely affect our reputation and the confidence in and use of our products and services. In addition, because the "PayPay" brand is owned by us but used by other SoftBank Group companies pursuant to licenses or sublicenses to promote and market certain product and service offerings, any issues encountered with the provision of such offerings could potentially adversely impact our brand and reputation. For example, PayPay Insurance Service Corporation is a wholly-owned subsidiary of LY Corporation and is not under our direct control. See "—Risks Related to SoftBank Group Corp. and SoftBank Group Companies—We collaborate with SoftBank Group companies in the provision of our services. Any failure by such companies to continue to support our services, or a material change in our relationship with such companies, could adversely impact our services and could impact our overall business, financial condition, cash flows and results of operations."

Many factors could undermine or damage the trust in us, our products and services or our brand, including, failure by us or our partners to satisfy expectations of our product or service and quality; inadequate protection of sensitive information; compliance failures and claims; employee misconduct; and misconduct by our partners, service providers, or other counterparties. For example, we may receive negative user reviews as a result of our recently announced changes to our PayPay Points reward program, which will narrow some of the ways users will be able to earn PayPay Points from June 2026, and this could have an overall negative impact on user confidence and trust in our products and services. See "Business—PayPay Points—Changes to PayPay Points Rewards Program." In addition, with respect to our credit card business (including users of PayPay Credit to whom credit is extended through PayPay Card Corporation as well as credit extended through PayPay Bank Corporation), our credit collection activities could lead to reputational issues. Moreover, under the agreements

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with our merchants, the merchant is responsible for quality, quantity, timely delivery and price of the services offered by it and is further responsible for related customer support and dispute resolution services. However, instances of unsatisfactory services provided by one or more merchants may damage the trust that our users have in our brand and our services. We may receive negative reviews from users and become subject to legal notice and/or action, which may materially and adversely affect our reputation and the confidence in and use of our services. Such reputational damage can result even from incidents where we ultimately face no legal liability. If we do not successfully maintain the trust in us, our business, financial condition, results of operations, cash flows and prospects would be materially and adversely affected.

Unfavorable publicity could materially and adversely affect our reputation. Such negative publicity could also harm the size of our network and the engagement and loyalty of merchants, users and other participants that utilize our products and services, which could materially and adversely affect our business, cash flows, financial condition, and results of operations. As our products and services continue to scale and public awareness of our brand increases, any future issues that draw media coverage could have an amplified negative effect on our reputation and brand. In addition, negative publicity related to key brands we have partnered with or by any influencers may damage our reputation, even if the publicity is not directly related to us. For example, there have been news articles published about our PayPay app being used as part of certain fraud schemes. Although these fraudulent activities are completely unrelated to our business, any such negative publicity that we may receive could diminish confidence in, and the use of, our products and services and may result in increased regulation and legislative scrutiny of industry practices as well as increased litigation, which may further increase our costs of doing business and materially and adversely affect our brand. As a result, any impairment or damage to our brand, including as a result of these or other factors, could materially and adversely affect our business, reputation, cash flows, results of operations and financial condition. Many social media platforms publish their subscriber's or participant's content, often without filters on accuracy. The dissemination of inaccurate information regarding our business, brand and services online could materially and adversely affect our business, reputation, prospects, financial condition and operating results, regardless of the information's accuracy. The damage may be immediate without affording us an opportunity for redress or correction.

***We depend on key management, as well as our experienced and capable employees, and any failure to attract, motivate, and retain our employees could harm our ability to maintain and grow our business.***

Our future success is significantly dependent upon the continued service of our executives and other key employees. If we lose the services of any member of management or any key personnel, we may not be able to locate a suitable or qualified replacement, and we may incur additional expenses to recruit and train a replacement, which could severely disrupt our business and growth.

To maintain and grow our business, we will need to identify, hire, develop, motivate, and retain highly skilled employees. Identifying, recruiting, training, integrating, and retaining qualified individuals requires significant time, expense and attention. In addition, from time to time, there may be changes in our management team that may be disruptive to our business. If our management team, including any new hires that we make, fails to work together effectively and to execute our plans and strategies on a timely basis, our business could be harmed. Competition for highly skilled personnel, especially software engineers, is intense. We have established a subsidiary for product development in India, PayPay India Private Limited, in order to recruit talented software engineers, but there can be no assurance this initiative will succeed in securing qualified personnel over the long term. The rate of attrition of our software engineers is higher than our other employees, so ****we may need to invest significant amounts of cash and equity to attract and retain employees, particularly for software engineers, and we may never realize returns on these investments. As part of our efforts to attract and retain highly skilled employees, we have implemented a "Hybrid Style" policy, which in principle offers our employees the flexibility to work from anywhere in Japan. However, this remote work system may subject us to certain risks, including ineffective or inadequate training and supervision, reduced productivity, difficulty in maintaining our corporate culture and data security-related risks, among others. In addition, measures we take to reduce such risks may only be temporarily effective or not effective at all. If we are not able to add and retain employees effectively, our ability to achieve our strategic objectives will be adversely affected, and our business and growth prospects may

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be materially and adversely affected. Furthermore, compared to prior years, we have started to encourage our employees to return to the office to the extent possible, and this policy change could lead to an increase in attrition rate if our employees or candidates are not amenable to the shift away from remote work.

One tool we use to attract and retain talented and high-performing employees, including members of our senior management, is the grant of stock options under a trust-type stock option plan, which our shareholders approved in August 2022. In light of the announcement on May 30, 2023 by the National Tax Agency of Japan regarding the tax treatment of stock options under trust-type stock option plans, stock options under such plans are subject to income tax upon the exercise of the options, which may result in a higher tax rate than originally expected, which could adversely affect the effectiveness of our stock option plan as a recruiting and retention tool. In light of such potential adverse effect on trust-type stock option plans, in April 2025, our shareholders approved plans to grant stock options to our directors, corporate officers and employees through tax qualified-type stock options and one-yen-exercisable at retirement-type stock options.

***The "part-time" status of a majority of our directors or their positions in other companies may prevent them from devoting full attention to our company's affairs, which could result in conflicts of interest and hinder our corporate governance.***

The vast majority of our directors serve on a part-time basis, which means that they are not required to be constantly available to work at the company during business hours, are not subject to a duty of exclusive devotion to the company, and are responsible for monitoring the actions of executive directors and officers rather than executing business operations. In addition, the vast majority of our directors maintain significant positions in other companies. Accordingly, they do not devote their full-time attention to our company's operations. This limited commitment could make them unavailable at critical times and may result in delays in making important business decisions. In addition, their involvement in other companies creates the potential for conflicts of interest in allocating time and effort between our company and their other obligations. There can be no assurance that any such conflicts, should they arise, will be resolved in our favor. Part-time directors might also be less able to effectively monitor management and provide oversight compared to full-time executives, which could weaken our governance practices. If our directors cannot dedicate sufficient time and focus to our affairs, our decision-making processes, strategic oversight, and overall business performance could suffer, potentially materially and adversely affecting our results of operations.

***We rely on our suppliers and partners for our hardware, software and cloud services and any impediment in procuring these in a timely manner and at competitive costs, or at all, may have a material adverse effect on our business, operations, financial condition, and cash flows. We could also be subject to monetary and other penalties from payment card networks with respect to high-risk merchants.***

Our ability to remain competitive depends, in part, on our ability to source and maintain a stable and sufficient supply of hardware, software and cloud services at desired prices. Many of our key hardware devices, key software services and cloud services come from a limited number of partners and suppliers located in Japan and overseas. We also rely on SoftBank Group companies in the provision of some of these services, which subjects us to certain risks. See "—Risks Related to SoftBank Group Corp. and SoftBank Group Companies—We collaborate with SoftBank Group companies in the provision of our services. Any failure by such companies to continue to support our services, or a material change in our relationship with such companies, could adversely impact our services and could impact our overall business, financial condition, cash flows and results of operations." For example, we collaborate with SB C&S Corp., a wholly-owned subsidiary of SoftBank Corp. and the supplier of PayCAS, a unified cashless payment terminal with point-of-sale, or POS, integration functionalities, which we began leasing to select merchants in 2022 and made available to all merchants in April 2023. We also outsource the printing and delivery of our credit cards to third parties, and any production or sourcing issues could have an adverse impact on our ability to grow our credit card business. Furthermore, PayPay Bank Corporation utilizes various vendor resources for the core banking systems and data warehouse system related to its banking operations under our direction and supervision. If such vendors

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unexpectedly increased the prices for their services, this would result in an increase in costs for us and we may not be able to find an alternative vendor that offers comparable services at a lower price, which may have a material adverse effect on our financial condition and cash flows. In the event these partners and suppliers fail to provide hardware and services adequately, including as a result of errors in their systems or events beyond their control, or refuse to provide hardware and services on terms acceptable to us or at all, and we are not able to find suitable alternatives, our business may be materially and adversely affected.

In addition, our credit card business is reliant on payment card networks, which establish their own rules and standards that allocate liabilities and responsibilities among the payment networks and their participants. These rules and standards, including the Payment Card Industry Data Security Standard, govern a variety of areas, including how users may use their cards, the security features of cards, security standards for processing, data protection and information security and allocation of liability for certain acts or omissions, including liability in the event of a data breach. The payment card networks could adopt new operating rules or interpret or reinterpret existing rules that we might find difficult or even impossible to follow or costly to implement. These changes may be made for any number of reasons, including as a result of changes in the regulatory environment, to maintain or attract new participants or to serve the strategic initiatives of the networks, and may impose additional costs and expenses on or be disadvantageous to us. Such changes may impact our ongoing cost of doing business, and we may not, in every circumstance, be able to pass through such costs to our users. If we fail to make such changes or otherwise resolve the issue with the payment card networks, the networks could disqualify us from processing transactions if satisfactory controls are not maintained. If we are unsuccessful in establishing or maintaining mutually beneficial relationships with these payment card networks, banks, and acquiring processors, our business may be materially and adversely affected.

We could be subject to monetary and other penalties from payment card networks if we fail to detect that merchants are engaging in activities that are illegal, contrary to the payment card network operating rules, or considered "high risk." We must either prevent high-risk merchants from using our services or register such merchants with the payment card networks and conduct additional monitoring with respect to such merchants. Penalties could be material and could result in termination of our ability to accept payment cards or could require changes in our process for registering new merchants. This could materially and adversely affect our business.

***Acquisitions, strategic investments and entries into new businesses could disrupt our business, divert our management's attention, result in additional dilution to our shareholders, and materially and adversely affect our financial performance.***

We have completed many acquisitions and strategic investments in the past in order to grow our business and will continue to actively acquire or invest in shares, businesses, apps, or technologies in financial-related and other industries that we believe could complement or expand our services, enhance our technical capabilities, or otherwise offer growth opportunities. In the ordinary course of business, we consider a broad range of potential opportunities, which may result in our pursuing significant acquisitions or other strategic transactions, including as a means to expand our business into industries or regions in which we have limited or no prior experience. However, we may be unable to find suitable target candidates or co-investors or may be unable to complete acquisitions on favorable terms, or at all, in the future and thus be unable to achieve our strategic objectives. If we complete such acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and any acquisitions we complete could be viewed negatively by customers or investors. Moreover, an acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures, including disrupting our ongoing operations, diverting management from their primary responsibilities, subjecting us to additional liabilities, increasing our expenses and adversely impacting our business, results of operations, cash flows and financial condition. In addition, we may be exposed to unknown liabilities and the anticipated benefits of any acquisition, investment or business relationship may not be realized, if, for example, we fail to successfully integrate such acquisitions, or the technologies associated with such acquisitions, into our company. We also may not achieve the anticipated benefits from the acquired businesses due to a number of factors, including difficulties resulting from the integration of technologies, IT systems,

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accounting systems, culture or personnel; disagreements with or termination of relationships with co-investors; diversion of management's attention; litigation; use of resources; or other disruption of our operations. Regulatory constraints, particularly competition regulations, may also affect the extent to which we can maximize the value of our acquisitions or investments. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt. In general, the more significant a transaction is, including if we acquire shares or businesses of target companies with assets and liabilities that are substantial relative to our own, the more significant such challenges could become, and our results of operations and financial condition could be materially and adversely affected as a result. In addition, if an acquired business fails to meet our expectations, our business may be materially and adversely affected. From time to time, we may also explore potential strategic opportunities outside Japan. For example, we are currently in discussions with Visa Inc. ("Visa") to enter into a business alliance to explore collaboration in Japan and the United States by leveraging our QR code-based payment platform and Visa's global payment network and digital payment technologies. For more details, see "Business—Alliances with our Partners." Though basic terms have been agreed upon, there can be no assurance that discussions will progress, that we will enter into any definitive agreements, or that any such collaboration, if pursued, will be implemented on terms favorable to us or at all. The business alliance relates to new strategic business initiatives, and the outcome of any implementation of such initiatives is highly uncertain. In the event such new strategic business initiatives are successful in their initial stages, we may require a sizeable upfront investment, and the potential expansion of our business abroad could divert our management's attention and resources, which may have a material adverse effect on our business and results of operations. In addition, because our current management's experience is focused in Japan, we may be unable to fully leverage our strengths and the know-how that we have accumulated towards operating a digital finance platform outside of Japan.

On September 16, 2025, we completed the acquisition of 40.0% of the issued and outstanding shares of common stock of Binance Japan Inc., or Binance Japan, through a third-party allotment of new shares. Prior to the acquisition, Binance Japan was a wholly owned subsidiary of Binance (AP) Holdings Limited, an affiliate of Binance, which is the operator of one of the largest cryptocurrency exchanges. Binance Japan operates a cryptocurrency exchange business in Japan based on the global infrastructure offered by Binance group. We may not be able to successfully realize the anticipated strategic benefits from the acquisition, including integrating Binance Japan's business into our ecosystem, and developing compliant crypto-related services in Japan. In addition, the high volatility and uncertainty of crypto currencies could result in a loss in this business. In addition, Binance, as a group, has been the subject of various legal and regulatory actions in multiple jurisdictions, including criminal proceedings involving its founder in the United States and fines imposed by U.S. and other regulators. Although the criminal case against the founder in the United States has ended due to the issuance of a pardon, such actions and proceedings may negatively affect us or subject us to increased regulatory attention, all of which could have an adverse impact on our results of operations. Furthermore, because our investment in Binance Japan currently represents a minority interest, we have limited control or influence over Binance Japan's operations, governance and compliance practices. Pursuant to the terms of the definitive agreement that we had entered into with Binance Japan and Binance (AP) Holdings Limited, Binance Japan and Binance (AP) Holdings Limited are obligated to discuss with us in good faith for our acquisition of additional shares of common stock of Binance Japan, following which Binance Japan could become a consolidated subsidiary of ours, which would be subject to prior consultation with the FSA. There is no guarantee that we will acquire any additional shares of Binance Japan or that Binance Japan and Binance (AP) Holdings Limited would agree to such acquisition. As a result, our ability to monitor and influence Binance Japan's operations and protect our interests may be limited, and this could negatively affect the value of our investment and our results of operations.

***We may not be able to obtain financing on favorable terms or at all to support our operation and satisfy our cash requirements.***

We may require additional cash resources due to future growth and development of our business, including growth in our extension of credit to users for PayPay Card Corporation and PayPay Bank Corporation,

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or any investments or acquisitions we may decide to pursue. For example, by extending additional credit to credit cardholders of PayPay Card Corporation and users of PayPay Credit, our outflow of cash to merchants increases, which occurs before collecting those amounts from our users, which may result in us needing additional cash resources to cover such additional outflow of cash to merchants. If our cash resources are insufficient to satisfy our cash requirements, we may seek to issue additional equity or debt securities or obtain new or expanded credit facilities. With respect to PayPay Card Corporation, we consider the liquidation or securitization of receivables, the issuance of commercial papers, overdraft protection loans and short-term and long-term borrowings to supplement operating cash. With respect to PayPay Bank Corporation, we consider the issuance of corporate bonds and call money loans if deposits do not sufficiently cover its operating cash requirements.

Our ability to obtain external financing in the future is subject to a variety of uncertainties. Incurring indebtedness would subject us to increased debt service obligations and could result in operating and financial covenants that would restrict our operations. Our ability to access international and domestic capital and lending markets may be restricted at a time when we would like, or need, to do so, especially during times of increased volatility and reduced liquidity in global financial markets and stock markets, including due to policy changes and regulatory restrictions, or other financial market turmoil which could limit our ability to raise funds. Our access to external financing may also be affected by developments with respect to affiliated companies. There can be no assurance that financing, including through an equity offering, will be available in a timely manner or in amounts or on terms acceptable to us, or at all. Any failure to raise needed funds on terms favorable to us, or at all, may impact our liquidity as well as have a material adverse effect on our business, cash flows, financial condition and results of operations. In addition, a portion of our borrowings has been and may be subject to market interest rates. If market interest rates increase, the applicable interest rate on our floating interest rate debt will increase, resulting in an increase in our interest expenses. On the other hand, when market interest rates increase, our interest income in connection with certain of PayPay Bank Corporation's assets could increase, which could partially offset increases in our interest expenses. However, because we are aiming to increase the amount of credit issued and revolving payments with PayPay Card Corporation as well as increase deposits and loans with PayPay Bank Corporation, our exposure to the volatility of interest rates may increase in the future. We maintain an appropriate balance between our floating interest rate debt and fixed interest rate debt, but market interest rates could fluctuate beyond the rates we anticipate. We also access liquidity, including securitization, backed by our credit card receivables, which also subjects us to interest rate risk. Furthermore, some of our borrowings are from SoftBank Group companies and external financing with similar terms in a timely manner may not be available to us. Developments with respect to other SoftBank Group companies could also affect the availability of financing to us from sources which monitor their exposure to SoftBank Group companies in the aggregate. See "Related Party Transactions" for a discussion of our borrowings from SoftBank Group companies.

***Our indebtedness could limit the cash flow available for our operations and expose us to risks that could adversely affect our business, operating results, and financial condition.***

As of December 31, 2025, borrowings on our consolidated statement of financial position were ¥568,309 million (including ¥351,325 million of borrowings in the Payment segment mainly related to PayPay Card Corporation's credit card business operations). We may also incur additional indebtedness to meet future financing needs. Our indebtedness could have significant negative consequences for our shareholders and our business, operating results, and financial condition by, among other things: (i) increasing our vulnerability to adverse economic and industry conditions; (ii) limiting our ability to obtain additional financing; (iii) requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; (iv) limiting our flexibility to plan for, or react to, changes in our business; (v) placing us at a possible competitive disadvantage with competitors that are less leveraged than we are or have better access to capital.

Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, and our cash needs may increase in the future. In

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addition, future indebtedness that we may incur may contain financial and other restrictive covenants that limit our ability to operate our business, raise capital, or make payments under our other indebtedness. If we fail to comply with these covenants or to make payments under our indebtedness when due, we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.

***We may have to recognize impairment losses on our long-lived assets and goodwill, which could materially and adversely affect our operations and financial condition.***

As of December 31, 2025, we had ¥66,928 million in intangible assets (including ¥61,044 million in software and ¥3,819 million in software in progress), ¥18,139 million in customer incentives, ¥11,138 million in incremental costs of obtaining a contract and ¥15,157 million in goodwill, representing 1.3%, 0.4%, 0.2% and 0.3%, respectively, of our total assets. Whenever events or changes in circumstances indicate that the carrying value of a particular long-lived asset, a group of long-lived assets and/or goodwill may not be recoverable, we are required to perform an impairment test to determine whether such particular asset, group of long-lived assets and/or goodwill have become impaired, and we conduct an impairment test every year with regard to long-lived assets and goodwill, regardless of any such indication. If the amount at which we carry a group of assets, including our long-lived assets or goodwill on our statement of financial position exceeds the recoverable amount related thereto, we would be required to recognize an impairment loss. Any impairment losses and/or additional amortization expenses for long-lived assets or goodwill we recognize will increase our expenses and could materially and adversely affect our results of operations and financial condition.

We recognize deferred tax assets to the extent that it is probable that future taxable income, which we estimate on a reasonable basis, will be available against which deductible temporary differences and net operating loss carryforwards can be utilized. As of December 31, 2025, we had recognized deferred tax assets of ¥105,226 million and unrecognized deferred tax assets of ¥102,140 million. If significant changes occur that affect the estimate of future taxable income, we may need to unrecognize deferred tax assets and our results of operations would be materially and adversely affected.

***We are exposed to many types of operational risk, including the risk of misconduct and errors by our employees and other service providers.***

We are exposed to many types of operational risk, including the risk of misconduct, oversight and errors by our employees and other service providers. Our business depends on our employees and service providers to process a large number of transactions, including transactions that involve significant amounts and extensions of credit that involve the use and disclosure of personal and business information. We could be adversely affected if transactions were redirected, misappropriated, or otherwise improperly executed, personal and business information was disclosed to unintended recipients, or an operational breakdown or failure in the processing of other transactions occurred, whether as a result of human error, a purposeful sabotage or a fraudulent manipulation of our operations or systems. It is not always possible to identify and deter misconduct or errors by employees or service providers, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or losses. Our resources, technologies and fraud prevention tools may be insufficient to accurately detect and prevent fraud. Any of these occurrences could diminish our ability to operate our business, increase our potential liabilities to users and merchants, and may lead to an inability to attract future users and merchants, cause reputational damage, attract regulatory intervention, and cause financial harm, any or all of which could materially and adversely affect our business, results of operations, cash flows, financial condition, and prospects.

***We track certain operational metrics with internal systems and tools. Certain of our operational metrics are subject to inherent challenges in measurement which may materially and adversely affect our business, reputation and results of operations.***

We track certain key operational metrics, such as Total GMV, Payment Segment GMV, Take Rate, Cost Rate, PayPay MTU and PayPay Number of Transactions, among others, with internal systems and tools and

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which may differ from estimates or similar metrics published by third parties due to differences in sources, methodologies, or the assumptions on which we rely. See also "Management's Discussion and Analysis of Financial Condition and Results of Operations—Our Financial Performance, Key Metrics and Financial Highlights" for a discussion of certain operational metrics. Our internal systems and tools have a number of limitations, and our methodologies for tracking these metrics may change over time, which could result in unexpected changes to our metrics, including the metrics we publicly disclose, and we may revise or cease reporting metrics if we determine that such metrics are no longer appropriate measures of our performance. If the internal systems and tools we use to track these metrics undercount or overcount performance or contain algorithmic or other technical errors, the data we report may not be accurate. While these numbers are based on what we believe to be reasonable estimates of our metrics for the applicable period of measurement, there are inherent challenges in measuring how our products and services are used across large populations. For example, the accuracy of our operating metrics could be impacted by fraudulent use by users of our services, and further, we believe that there are users who have multiple accounts, even though this is prohibited in our terms of service and we implement measures to detect and prevent this behavior. Users using multiple accounts may cause us to overstate the number of users using our services. In addition, limitations or errors with respect to how we measure data or with respect to the data that we measure may affect our understanding of certain details of our business, which could affect our long-term strategies. If our operating metrics are not accurate representations of our business, if investors do not perceive our operating metrics to be accurate, if there are reports challenging the accuracy of our operating metrics, whether or not true, or if we discover material inaccuracies with respect to these figures, we expect that our business, reputation and results of operations would be materially and adversely affected.

***Our quarterly results of operations may fluctuate significantly and could fall below the expectations of analysts and investors, resulting in a decline in the trading price of the ADSs.***

Our quarterly results of operations fluctuate and may continue to fluctuate for a variety of reasons, many of which are beyond our control. These fluctuations may cause our quarterly results of operations to fall below the expectations of analysts or investors, which could cause the price of the ADSs to decline. As a result, you should not rely upon our past quarterly results of operations as indicators of our future performance. You should also take into account the risks and uncertainties frequently encountered by companies in rapidly evolving markets. Our financial results in any given quarter or fiscal period can be influenced by numerous factors, including the various risk factors described in this section, as well as the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fluctuations in revenue generated by sales at the merchants that offer our payment settlement services,
including as a result of the seasonal trends in consumer spending patterns in Japan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our success in retaining existing users and attracting new users of our payment settlement services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount and timing of increases in our promotional and other expenses to promote our products and services
and retain and add new users and customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the timing and success of new services and features we introduce, as well as the timing and level of
monetization;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of changes in our competition and the effectiveness of our response;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• disruptions or defects in our services, including as a result of privacy or data security breaches;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unforeseen legal developments affecting our business, such as changes in or the introduction of laws and
regulations, adverse litigation judgments, settlements or other litigation-related expenses; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• economic and market conditions, particularly those affecting the cashless payments industry and digital
financial services industry.

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***We identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain proper and effective internal control over financial reporting. If we fail to establish and maintain proper internal control over financial reporting, our ability to produce accurate financial statements or comply with applicable regulations could be impaired. As a result, shareholders could lose confidence in our financial reporting, which could result in litigation or regulatory enforcement actions and would harm our business and the trading price of the ADSs.***

We will be required to comply with the management certification requirements of Section 302 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") in our annual report on Form 20-F for our first annual report that is filed with the SEC (subject to any change in applicable SEC rules). We will be required to comply with Section 404 in full (including an auditor attestation on the effectiveness of internal control over financial reporting) in our annual report on Form 20-F for the fiscal year following our first annual report required to be filed with the SEC (subject to any change in applicable SEC rules). As a public company, we will be required to report, among other things, control deficiencies that constitute a "material weakness" or changes in internal controls that, or that are reasonably likely to, materially affect internal controls over financial reporting. A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A "significant deficiency" is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.

While preparing our consolidated financial statements for the year ended March 31, 2025, we identified the following material weaknesses related to control activities in our internal control over financial reporting at our consolidated subsidiaries, PayPay Bank Corporation and PayPay Securities Corporation, that were acquired in April 2025. These material weaknesses were related to the following controls:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the control that secures the accuracy and completeness of certain information used for financial reporting processes at PayPay Bank Corporation and PayPay Securities Corporation; (2) the control over assessment in capitalization of intangible assets arising from software development at PayPay Bank Corporation; (3) the controls that evaluate the effectiveness of controls maintained by certain service organizations we relied on in our internal controls over the financial reporting processes at PayPay Bank Corporation; and (4) the control over privileged-level access, which manages configuration and security administrations within the IT system at PayPay Securities Corporation.

To address the material weaknesses in the year ending March 31, 2026, we have developed a remediation plan and are currently taking the following actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Enhancing the guidelines that secure accuracy and completeness of certain information used in financial
reporting processes executed by PayPay Bank Corporation and PayPay Securities Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Ensuring newly developed software at PayPay Bank Corporation is reviewed for proper capitalization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Designing and implementing controls at PayPay Bank Corporation to enhance and support our ability to rely on
information provided by the service organizations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Enhancing controls over privileged-level access within the IT system at PayPay Securities Corporation.

We will not be able to fully remediate these material weaknesses until these actions have been completed and have been operating effectively for a sufficient period of time. The actions that we are taking are subject to ongoing review by our executive management and are subject to the oversight of the Audit and

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Supervisory Committee. Although we intend to complete this remediation plan as quickly as practicable, we provide no assurances to the timeline for implementing effective remedial measures, and our initiatives may not prove to be successful in remediating the material weaknesses or preventing additional material weaknesses or significant deficiencies in our internal control over financial reporting in the future.

To comply with the requirements of being a public company, we have undertaken various actions and may need to take additional actions. Further, when evaluating our internal control over financial reporting, we may identify additional material weaknesses that we may not be able to remediate in time to meet our filing deadline. If we or our auditors identify additional material weaknesses in our internal control over financial reporting, we may be required to make restatements of our historical financial statements and/or not be able to file our reports in a timely manner. As a result, investors may lose confidence in our financial statements, the price of the ADSs could decline and we may be subject to litigation or regulatory enforcement actions. In addition, if we are unable to meet the requirements of Section 404, we may not be able to remain listed on Nasdaq.

***If we fail to develop or maintain an effective system of disclosure controls and procedures, our ability to comply with applicable regulations could be impaired.***

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of the applicable listing standards of Nasdaq. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly and place significant strain on our personnel, systems, and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.

***We are exposed to credit risk and the ability of various counterparties to pay us, which could have a material adverse effect on our results of operations, cash flows and financial condition.***

We engage in consumer credit and commercial lending activities and insurance services, which exposes us to the risk that the creditworthiness of our various counterparties may deteriorate and that they may be unable to make principal or interest payments on their loans or debt securities.

*Payment Segment* 

In our Payment segment, we are exposed to individual credit risk, principally from revolving credit, installment sales credit and cash advances extended to PayPay Card holders, including users of PayPay Credit. A user's ability and willingness to repay us can be negatively impacted not only by economic, market, political and social conditions but also by a user's other payment obligations, and increasing leverage can result in a higher risk that users will default or become delinquent in their obligations to us. Other third parties may also default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. General economic factors, such as changes in gross domestic product, unemployment, inflation and interest rates, may result in greater delinquencies that lead to greater credit losses.

We rely principally on users' creditworthiness for repayment of loans or receivables and therefore often have no other recourse for collection. Although users are subject to a credit check in order to be approved for PayPay Card and use our credit card and PayPay Credit payment services, the credit check may not be sufficient to accurately assess their creditworthiness, and users may be unable or unwilling to pay for the goods and services for which we have already provided payment to the merchants through such services. Our ability to

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assess creditworthiness may also be impaired as a result of changes in our underwriting practices or if the criteria or models we use to manage our credit risk prove inaccurate in predicting future losses, which could have a negative impact on our results of operations. This may be exacerbated to the extent information we have historically relied upon to make credit decisions does not accurately portray a user's creditworthiness, including as a result of increasing inflation or an economic slowdown. In addition, we have changed our approval criteria to increase our approval rate in connection with our growth initiatives, and this could result in us extending credit to users with greater credit risk, and may increase our exposure to credit risk as well as increase the delinquency rates of our credit card receivables. Any material increases in delinquencies and losses beyond our current estimates could have a material adverse impact on our results of operations, cash flows, financial condition and reputation. Although we record a loss allowance to provide for expected credit losses in our financial assets measured at amortized cost, including credit card receivables from cardholders, our loss allowance is based on credit risk associated with those financial instruments and, as a result, in the event that the rates of default and non-payment increase unexpectedly following initial recognition, our loss allowance for financial assets may not be sufficient to cover such losses. For example, if the financial condition of financial institutions in Japan worsens due to unforeseen circumstances, such as a global financial crisis, the financial situation of our borrowers is negatively affected such that they are unable to make timely payments on the loans we extended to them, this could cause rates of default and non-payment to increase. In addition, the information we use in managing our credit risk may prove inadequate to predict future losses. Furthermore, we expect our exposure to credit risk to increase over time as we expand our credit card business through PayPay Card Corporation and the proportion of payments using the PayPay app which utilize PayPay Credit.

We are also subject to credit risk in our Payment segment for PayPay Funding, which is a merchant financing service that allows selected PayPay merchants to receive future sales proceeds that they expect to earn in advance when they are in need of operating capital. For additional information on PayPay Funding, see "Business—Our Products and Services—Other Value-Added Services—To Merchants." Because repayments from merchants for any financing received from PayPay Funding are deducted directly from merchant PayPay accounts and merchants must satisfy stringent criteria to receive PayPay Funding, we consider our exposure to credit risk related to our merchants to be relatively low.

*Financial Service Segment* 

In our Financial service segment, our internet banking business operated through PayPay Bank Corporation, is exposed to credit risk in connection with consumer and commercial lending to retail borrowers as well as business borrowers. As of December 31, 2025, the total loan amount and loss allowance of PayPay Bank Corporation was ¥1,098,277 million and ¥1,888 million, respectively. For our retail loans, we are exposed to credit risk only for the portion of the loans which are not guaranteed by a credit guarantee company, which accounted for 0.4% of the total outstanding retail loans as of December 31, 2025, and for our mortgages, we are exposed to credit risk only for the unsecured portion, which accounted for 31.1% of the total outstanding mortgage loans as of December 31, 2025. However, as we expand our retail loan and mortgage business in the future, we may reduce the portion of our loans that is guaranteed by a credit guarantee company, which will increase our exposure to credit risk. We have established an allowance for doubtful accounts in connection with loans in our banking business based on our evaluation of borrowers' creditworthiness, our historical loan loss experience, the value of collateral and other factors. We are also exposed to credit risk in connection with our securitized credit card receivables of PayPay Card as part of the investment portfolio of PayPay Bank Corporation. We are also subject to the risk of unexpectedly high levels of fund outflows in the event of a deterioration in economic conditions.

Although we review our credit exposure to specific counterparties that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to foresee or detect, such as fraud. In addition, our ability to manage credit risk or collect amounts owed to us may be adversely affected by legal or regulatory changes (such as restrictions on collections or changes in bankruptcy laws and minimum payment regulations). Increased credit risk, whether resulting from underestimating the credit losses inherent in our

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portfolio of receivables, deteriorating economic conditions, increases in the level of loan balances, changes in our mix of business or otherwise, could require us to increase our provisions for losses and could have a material adverse effect on our results of operations, cash flows and financial condition.

***We are exposed to interest rate risk and other market risks, including foreign exchange risk, that could materially and adversely affect our financial condition, cash flows and results of operations.***

We have certain financial assets and liabilities due to the nature of certain of our product and service offerings, which are affected considerably by interest rate fluctuations. We maintain an appropriate balance between our floating interest rate debt and fixed interest rate debt, but market interest rates could fluctuate beyond the rates we anticipate. In an effort to manage our exposure to interest rate risk and other market risks, including foreign exchange risk, due to our financial product and service offerings through PayPay Card Corporation and PayPay Bank Corporation, we engage in asset liability management, or ALM, which considers the long-term balance between assets and liabilities in an effort to ensure stable returns. Any failure to appropriately conduct our ALM activities, or any significant changes in market conditions beyond what our ALM could reasonably address, could have a material adverse effect on our financial condition, cash flows and results of operations. For PayPay Bank Corporation, rises in interest rates may require us to record a loss on sale or a fair value loss through either profit or loss or other comprehensive income, depending on the classification of assets, in connection with its securities portfolio. In addition, new applications for mortgage loans generally decrease when interest rates increase. For PayPay Card Corporation, because interest rates that we offer on our card loans are capped due to the legal maximum for credit card interest rates, whereas interest rates to fund our operations fluctuate with the market, in the event of a sharp increase in market interest rates, our margin could decrease significantly, which would result in a material and adverse impact on our financial condition, cash flows and results of operations. See "—Failure to comply with the existing laws and regulations applicable to our business could subject us, or our subsidiaries or our associates, as applicable, to enforcement actions and penalties and otherwise harm our business, as well as divert our management's attention and resources and result in increased costs." Furthermore, if the consumption tax rate increases, this could negatively impact the volume of transactions by our users due to the rise in overall costs of living of consumers resulting in an overall decrease in spending by our users.

***In the event that our payment processing charges payable to financial institutions increase significantly, and we are not able to pass on these higher processing charges to our merchants or users, we may not be able to improve our profitability and our business could be materially and adversely affected.***

We are required to pay payment processing charges to financial institutions, payment processing networks and card networks for processing transactions on our platform, including when our users transfer funds to their PayPay Balance or make payments using PayPay Card. These costs depend on the category of merchant and the payment instrument used by the user. From time to time, financial institutions, payment processing networks and card networks have increased, and may in the future increase, charges levied for processing transactions on our platform, or card networks may reduce the amount of interchange fees to be received by credit card issuers. These charges vary for each payment instrument and we may not be able to pass on these costs to our merchants or users. Accordingly, any increase in payment gateway charges could make our pricing less competitive, lead us to change our pricing model, or materially and adversely affect our margins and prevent us from improving our profitability. In addition, financial institutions may not agree to renew our agreements with them on commercially reasonable terms or at all, which could also adversely impact our financial condition, cash flows and results of operations. From September 2023, we started to charge an additional fee to users that load their PayPay Balance through the SoftBank/Y! Mobile mobile carrier billing service twice or more per month. The initiatives we have taken and other initiatives we may take in the future to reduce our payment-related costs may not have the desired effect of improving our profitability in the event that they result in the loss of users or a material reduction in the use of our payment settlement services.

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***We are subject to compensation liability risk in case of fraud and chargeback and refund liability risk when our merchants refuse to or are unable to reimburse transactions that are charged back and refunds resolved in favor of their customers. Any increase in compensation we provide or chargebacks and refunds not paid by our merchants may adversely affect our business, financial condition, cash flows or results of operations.***

With respect to fraudulent payments made using our PayPay app, we have a compensation policy which provides that users will be fully reimbursed and merchants will be fully paid by us unless such fraudulent payments are attributable to users' or merchants' gross negligence or willful misconduct. We also have a compensation policy for fraudulent payments made using our credit cards, under which we will either refund or not process the fraudulent charge to cardholders and will not collect chargebacks from merchants provided that certain criteria are satisfied, including a condition that transactions are verified by 3D Secure, an online payment authentication standard maintained by various payment card servicers. Such compensations are not covered by any of our insurance policies and therefore there is a risk that the amount of compensation that we will bear the loss for will increase as we expand our business.

In addition, we are exposed to certain risks associated with chargebacks and refunds in connection with fraud or relating to the products or services provided by our merchants. The majority of fraud-related chargebacks and refunds in recent years are cases in which our user's PayPay app account, a user's credit card number, expiration date and security code, which are pre-registered for PayPay app, or a PayPay Card holder's credit card number, expiration date and security code are improperly accessed and fraudulently used as a result of phishing scams.

In the event that a billing dispute between a user and a merchant is not resolved in favor of the merchant, including in situations in which the merchant is engaged in fraud, the transaction is typically "charged back" to the merchant and the purchase price is credited or otherwise refunded to the user. In certain circumstances where we are unable to collect transactions that are charged back to the merchant or refunds from the merchant's account, or if the merchant refuses to or is unable to reimburse us for a transaction charged back or refunds due to closure, bankruptcy, or other reasons, we may bear the loss for the amounts paid to the user. However, in a scenario where PayPay Card Corporation is the credit issuer, but not the acquirer, we do not bear the loss for the amounts paid to the user because the acquirer reimburses us and bears the loss. The risk of transactions being charged back is typically greater with merchants that promise future delivery of products and services rather than delivering products or rendering services at the time of payment, and any customer disputes linked to rendering of such services from our merchants may adversely impact our ability to retain and attract our users.

We do not collect and maintain reserves from our merchants to cover these potential losses, including in the case of customer and merchant disputes. For our credit card merchant acquiring business, if we are unable to maintain fraudulent transactions, billing disputes or chargebacks at acceptable levels, the payment network providers could fine us or increase our transaction fees. Any increase in our transaction fees or liability for incorrect charges could damage our business, and if we were unable to accept payment cards, our business would be negatively affected. Any increase in chargebacks not paid by our merchants could have a material adverse effect on our business, financial condition, cash flows or results of operations. Furthermore, while we believe we have been able to maintain a relatively low rate of fraudulent payments, if the rate of fraudulent payments using our PayPay app increases in the future, this could damage our reputation and the trust our users and merchants have in our services, which could result in a material adverse effect on our business, financial condition, cash flows or results of operations.

***Our risk management policies and procedures may not adequately protect us from unidentified or unanticipated risks, which could result in a material and adverse effect on our business or result in losses.***

We have organized risk management policies and procedures to address a range of risks, including market risk, credit risk, liquidity risk, counterparty risk and a variety of other risks. Many of our methods of managing risks and exposures are based on our use of observed historical market behavior or statistics based on

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historical data. We may not be able to use those methods to accurately predict future losses, which could be significantly greater than indicated by the relevant historical data. Other risk management methods depend in part on our evaluation of publicly available information regarding markets, customers or other matters, and such information may not always be accurate, complete, up-to-date or properly evaluated. In addition, our risk management procedures depend in part on information gathered from numerous other sources, and errors may be introduced during the process of gathering and compiling such information. In addition, operational risk is inherent in our business and can manifest itself in various ways, including inappropriate internal processes, human error, employee misconduct, systems malfunction and other internal or external factors. Management of operational risk requires, among other things, policies and procedures to properly record, verify and inspect a large number of transactions and events, and our policies and procedures may not be entirely effective. Any failure or ineffectiveness of our risk management policies or procedures could materially and adversely affect our business, financial condition and results of operations.

As we expand our product and service offerings, our use and merchant base and our GMV, we may have difficulty achieving the administrative, systems and risk management improvements necessary to manage the risks associated with new business activities and increased scale. The risk management policies and procedures we adopt may not be effective in preventing losses related to the various types of risks that we face in our businesses. Failure or ineffectiveness of these policies and procedures could materially and adversely affect our business or result in losses.

**Risks Related to SoftBank Group Corp. and SoftBank Group Companies** 

***We collaborate with SoftBank Group companies in the provision of our services. Any failure by such companies to continue to support our services, or a material change in our relationship with such companies, could adversely impact our services and could impact our overall business, financial condition, cash flows and results of operations.***

We collaborate with SoftBank Group companies in branding and marketing as well as for a variety of other services and arrangements, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Joint promotional activities*: we engage in joint promotions with SoftBank Group companies such as LY
Corporation and SoftBank Corp. to encourage users to utilize the PayPay app, apply for PayPay Credit card accounts and open PayPay Bank accounts, including by offering PayPay Points and other incentives. Such promotional activities with affiliated
companies are a major source of our customer referrals and help create network effects. Online shops utilizing the Yahoo! Japan e-commerce platform were also early adopters of our payment settlement services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Outsourcing of services*: we partly outsource sales and marketing efforts targeting merchants nationwide
to SoftBank Corp. and the provision of payment infrastructure and services to our participating merchants to its subsidiary, SB Payment Services. We also outsource sales and marketing efforts targeting merchants to PayPay SC Corporation, an
equity-method affiliate of ours. We hold 34% of the common shares of PayPay SC Corporation, while SB Payment Service Corporation and SB C&S Corp., both subsidiaries of SoftBank Corp., hold 33% and 33% of the common shares, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Financial services*: we offer financial services operated by SoftBank Group companies, including PayPay
Insurance Service Corporation, a wholly-owned subsidiary of LY Corporation, which have insurance agency and other licenses, to our users by entering into referral fee and revenue/profit-sharing arrangements with them. There are uncertainties as to
how to implement these arrangements to provide both a secure operating environment and compliance by our partners, and our offerings made in collaboration with them, with all applicable financial regulations, including those related to policy
opening procedures and marketing of financial products. It is possible that we will encounter

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challenges and risks that impact our users and operations that we do not currently anticipate. If we do not adequately coordinate with PayPay Insurance Service Corporation to provide financial services in compliance with all applicable regulations, it is possible we or they could be subject to regulatory action and be held liable for damages to our users, which could delay our growth initiatives and adversely affect our results of operations and financial condition. <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Loan agreements with LY Corporation*: PayPay Card Corporation and LY Corporation have entered into
certain loan agreements in order to improve funding efficiency through group financing. PayPay Card Corporation and LY Corporation have entered into six loan agreements and PayPay Card Corporation has an outstanding balance on three of those
agreements as of the date of this prospectus. See "Related Party Transactions—Loans to PayPay Card Corporation from LY Corporation (previously Z Holdings Corporation)."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Secondments and directors dispatched from SoftBank Group companies*: PayPay Corporation, PayPay Card
Corporation, PayPay Bank Corporation and PayPay Securities Corporation have employees seconded from SoftBank Group companies, including SoftBank Corp. and LY Corporation. Such seconded employees provide us with expertise in a range of areas and
therefore the termination of such secondments could negatively affect our business. See "Business—Employees." In addition, we have directors who are dispatched from SoftBank Group companies. As of the date of this prospectus, we
have four directors that were dispatched from SoftBank Group companies.

The joint promotions we engage in with SoftBank Group companies as well as the services, licenses and arrangements described above are critical to our operations and enable us to grow and retain our merchant base and user base in addition to accessing technology infrastructure, human resources and licensed financial services providers that we do not possess directly. Any change in the level of promotional activities engaged in by these affiliated companies or any failure by these affiliated companies to continue to provide services or licenses to us may impact the attractiveness of our services or interrupt our ability to provide some of the services to our merchants and users, which could have a material adverse impact on our operations and adversely affect our growth potential. In addition, because SoftBank Group Corp., SoftBank Corp. and LY Corporation are listed companies with minority shareholders, their obligations to their respective shareholders may not always be aligned with what is in our best interest. For additional information on related party transactions, see "Related Party Transactions."

***After the completion of the offering, our current shareholders will continue to collectively hold substantial shareholdings and exercise influence over our operations.***

As of the date of this prospectus, our current shareholders, B Holdings Corporation (49.99%), SVF II Piranha (DE) LLC (34.00%), SoftBank Corp. (8.01%) and LY Corporation (8.01%), will together own 91.78% of our outstanding shares upon completion of the offering (assuming full exercise of the over-allotment option). As a result, such shareholders, which are all ultimately controlled by SoftBank Group Corp., may continue to influence fundamental decisions such as the appointment and removal of our directors, the approval of mergers or other business combination transactions, the sale of material assets or businesses, amendments to our articles of incorporation and the declaration of dividends. Moreover, SoftBank Corp. and LY Corporation, each of which holds 50% of the voting rights of B Holdings Corporation, which will hold 47.67% of our voting rights upon the completion of the offering (assuming full exercise of the over-allotment option), are public companies listed on the Tokyo Stock Exchange that have fiduciary duties to their own shareholders as well.

Pursuant to an agreement between SoftBank Corp. and LY Corporation, LY Corporation is entitled to nominate a majority of the directors of B Holdings Corporation. Furthermore, pursuant to an agreement between B Holdings Corporation and us, as long as we are a consolidated subsidiary of LY Corporation, the prior written approval of B Holdings Corporation is required for us to (a) take any action to issue or grant our shares, stock

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options, convertible bonds or any other rights to acquire our shares (including disposal of treasury shares or treasury stock acquisition rights) if as a result of such action the percentage of voting rights held by B Holdings Corporation would be 50% or less (on a fully diluted basis assuming the exercise of all outstanding stock options, convertible bonds and rights to acquire our shares) and (b) sell, transfer, assign, grant a security interest in or dispose of assets, including shares and businesses owned by us or our consolidated subsidiaries, which account for 20% or more of the book value of our total assets on a consolidated basis as of the latest fiscal year-end, to a third party. As a result, LY Corporation has substantial control over us by holding the majority of our voting rights directly and indirectly. The interests of such shareholders with respect to our operations and other matters over which they may have influence may differ from the interests of our other shareholders.

We have other ongoing business transactions with our shareholders and their affiliates as described above under "—We collaborate with SoftBank Group companies in the provision of our services. Any failure by such companies to continue to support our services, or a material change in our relationship with such companies, could adversely impact our services and could impact our overall business, financial condition, cash flows and results of operations." In the future, as their shareholding level decreases, it is possible there could be changes in our business relationships with our current shareholders and their affiliates that are adverse to us.

SoftBank Group Corp. and funds it sponsors, including the SoftBank Vision Fund and SoftBank Vision Fund 2, invest in a broad range of companies, both in Japan and globally. Due to our ongoing business transactions with SoftBank Group companies, it is possible that events affecting SoftBank Group Corp. or its other investee companies, even if not directly related to our operations, could influence investor perception of us and the price of the ADSs.

**Risks Related to Technology, Information Systems and Intellectual Property** 

***Failure to maintain or improve our technology infrastructure could harm our business and prospects and materially and adversely affect our business and reputation.***

It is critical to our success that users and merchants are able to access our platform, at all times. Our systems, or those of third parties upon which we rely, may experience service interruptions or degradation or other performance problems because of hardware and software defects or malfunctions, unexpected high volume of transactions, distributed denial-of-service and other cyberattacks, infrastructure changes, human error, earthquakes, hurricanes, floods, fires, natural disasters, power losses, disruptions in telecommunications services, unauthorized access, fraud, military or political conflicts, terrorist attacks, computer viruses, ransomware, malware, or other events. Although we have a business continuity plan in place, which features the use of multiple data centers in Tokyo and redundancy provided by our backup data center in another region of Japan, there can be no assurance that our plan will be effective in the event we experience such service interruptions or degradation or other performance problems. Our systems also may be subject to break-ins, sabotage, theft and intentional acts of vandalism, including by our own employees, all of which would impact our ability to provide secure and seamless access to our platform, which would have an adverse impact on our operations and reputation. In the event we experience any such incidents, we may not be able to continue providing our services to our merchant and users.

The software underlying our platform as well as the various systems that support our financial services business is complex and may contain undetected errors or vulnerabilities, some of which may only be discovered at a subsequent stage or may not get discovered at all. Our practice is to release frequent software updates. However, any errors, vulnerabilities or infringements discovered in our code or from third-party software after release could result in negative publicity, a loss of users or loss of revenue, legal proceedings or regulatory action, and access or other performance issues. Such vulnerabilities could also be exploited by malicious actors and result in exposure of data of the users or merchants on our platform, or otherwise result in a security breach or other security incidents. Any failure to timely and effectively resolve any such errors, defects, or vulnerabilities could materially and adversely affect our business, reputation, brand, financial condition, cash

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flows and results of operations. We have experienced and will likely continue to experience system failures and other events or conditions from time to time that interrupt the availability or reduce or affect the speed or functionality of our platform. These system failures generally occur either as a result of software updates being deployed with unexpected errors or as a result of temporary infrastructure failures related to storage, network, or computing capacity being exhausted. ****However, they may be caused by other reasons. For example, in December 2018, a system overload occurred due to a large-scale promotional campaign that we were conducting, and as a result of that system overload, we experienced software failures, payment delays and some instances of duplicated payment processing. In addition, in May 2024, another system overload occurred with our relay server due to a high-intensity data verification process, and as a result of the system overload, we experienced system failures where certain users were unable to use their PayPay app for several hours. Further, in some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time.

Any failure to maintain and improve our technology infrastructure could result in unanticipated system disruptions, slower response times, impaired user experience, delays in reporting accurate operating and financial information and failures in risk management. The risks of these events occurring are even higher during certain periods of peak usage and activity, such as on or around various shopping festivals or other promotional events, when transaction volume is significantly higher on our payment network compared to other days of the year. If we experience problems with the functionality and effectiveness of our software, interfaces or platform, or are unable to maintain and continuously improve our technology infrastructure to handle our business needs, our business, financial condition, cash flows, results of operations and prospects, as well as our reputation and brand, could be materially and adversely affected. In addition, we could be subject to liability for damages as a result of system disruptions in certain scenarios.

Furthermore, our technology infrastructure and services, including our service offerings, incorporate third-party-developed software, systems and technologies, as well as hardware purchased or commissioned from outside and overseas suppliers. For example, Paytm Labs Inc., a subsidiary of One97 Communications Limited, has granted us licenses for its software, which enables us to provide our PayPay My Store Service, fraud prevention solutions for our operations and solutions for our marketing strategy while providing us with related software support services. We also intend to incorporate data-driven solutions to develop new services in collaboration with PayPay Card Corporation and incorporate AI as part of our cost reduction efforts. As our technology infrastructure and services expand and become increasingly complex, we face increasingly serious risks to the performance and security of our technology infrastructure and services that may be caused by these third-party-developed components, including risks relating to incompatibilities among these components, service failures or delays or back-end procedures on hardware and software. We also need to continuously enhance our existing technology. Otherwise, we face the risk of our technology infrastructure becoming unstable and susceptible to security breaches. This instability or susceptibility could create serious challenges to the security and uninterrupted operation of our platform and services, which would materially and adversely affect our business and reputation.

***Our use of artificial intelligence technologies may not achieve their intended benefits and may expose us to operational, legal and reputational risks.***

We increasingly integrate artificial intelligence ("AI") tools into our operations, including the use of AI-enabled coding assistants in our engineering processes, generative AI platforms to support corporate functions, such as translation and document summarization, and proprietary AI models trained on our proprietary datasets to enhance the accuracy of credit-decisioning. While these tools are intended to improve efficiency, productivity and decision-making, there can be no assurance that their use will produce consistent or reliable results. Generative AI may produce inaccurate or biased outputs, which could impair the quality of our services, increase operational risks or expose us to potential liability. In addition, our reliance on proprietary data to train AI models may raise data privacy, security and regulatory compliance concerns, particularly as laws and standards governing AI continue to evolve. The adoption of AI also introduces risks of overreliance on automated processes, potential misuse of confidential information, and heightened scrutiny from regulators, customers and other stakeholders. If we are unable to effectively manage these risks, our operations, reputation, and financial results could be materially and adversely affected.

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***We rely on mobile operating systems and application marketplaces to make the PayPay app available to participants that utilize our platform, and if we do not effectively operate with or receive favorable placements within such application marketplaces, our usage or brand recognition could decline and our business, financial results, cash flows and results of operations could be materially and adversely affected.***

We are dependent on the ability of our services to integrate with a variety of third-party operating systems, as well as web browsers that we do not control. Any changes in these third-party systems that degrade the functionality of our services, impose additional costs or requirements on us, or give preferential treatment to competitive services, including their own services, could materially and adversely affect usage of our services. In addition, we rely on app marketplaces to drive downloads of our mobile app. App marketplaces regularly make changes to their marketplaces, and those changes may make access to our services more difficult. In the event that it is difficult for our merchants to access and use our services, our business may be materially and adversely affected.

We also depend, in large part, on search engines, social media platforms, digital app stores, content-based digital marketing and other online sources for traffic to our platform. Our ability to maintain and increase the number of users directed to our platform is not entirely within our control. Search engines, social media platforms and other online sources often revise their algorithms and introduce new advertising services based on data feedback. If one or more of the search engines or other online sources on which we rely for traffic to our platform were to modify its general algorithm for how it displays our advertisements or keyword search results, resulting in fewer users clicking through to our platform, our business or results of operations may suffer. In addition, if our online display advertisements are no longer able to reach certain users due to users' use of ad-blocking software, our business or results of operations could be materially and adversely affected.

As new mobile devices and mobile platforms are released, there is no guarantee that certain mobile devices will continue to support our platform or effectively roll out updates to our applications. Additionally, in order to deliver high-quality applications, we need to ensure that our platform is designed to work effectively with a range of mobile technologies, systems, networks, and standards. We may not be successful in developing or maintaining relationships with key participants in the mobile industry that enhance users' experience. If participants that utilize our platform encounter any difficulty accessing or using our applications on their mobile devices or if we are unable to adapt to changes in popular mobile operating systems, we expect that our user growth and engagement to be adversely affected, which may materially and adversely affect our business and results of operations.

***Any privacy or data security breach, cyber-attacks or internal misconducts could damage our reputation and brand and substantially harm our business and any actual or perceived failure by us to comply with laws or regulations or any other contractual obligations relating to privacy or the protection or transfer of data relating to individuals, could materially and adversely affect our business.***

As a technology-based platform and provider of digital financial services, our business generates and processes a large quantity of personal, transaction, billing, behavioral and demographic data. We face risks inherent in handling and protecting large volumes of data, including protecting the data hosted in our system, detecting and prohibiting unauthorized data share and transfer, preventing attacks on our system by outside parties or fraudulent behavior or improper use by our employees, preventing inadvertent access to, disclosure of, or loss of data due to human error, and maintaining and updating our database. We need to manage the risk of unauthorized and fraudulent access to user accounts for our PayPay app, with PayPay Card Corporation, with PayPay Bank Corporation and with PayPay Securities Corporation. Any system failure, security breach or third-party attacks or attempts to illegally obtain the data that result in any actual or perceived release of user data could damage our reputation and brand, deter current and potential users from using our services, damage our business, and expose us to potential legal liability. We currently do not have any cybersecurity insurance policies that are intended to mitigate financial losses resulting from such cyber-attacks or data breaches.

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The techniques used to obtain unauthorized, improper, or illegal access to our systems, our or our users' data, or to disable or degrade service or sabotage systems, are constantly evolving, may be difficult to detect quickly, and may not be recognized until after they have been launched against a target. We may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventative or remedial measures. Unauthorized parties may attempt to gain access to our systems or facilities through various means, including, among others, hacking into our or our partners' or users' systems or facilities, or attempting to fraudulently induce our employees, partners, users or others into disclosing usernames, passwords, or other sensitive information, which may in turn be used to access our information technology systems and gain access to our or our users' data or other confidential, proprietary, or sensitive information. Pursuant to our internal policy, we audit our security practices and procedures for handling sensitive personal data or information, and we evaluate the related risks as part of our internal audit procedures. If our internal audit reports identify such risks, we may incur costs for addressing them, suffer the diversion of management's attention or become subject to regulatory actions.

We are also required to comply with several international standards, including the Payment Card Industry Data Security Standard (PCI-DSS), Cross-Border Privacy Rules (CBPR), Information Security Management System (ISMS) and the standards imposed by the National Institute of Standards and Technology (NIST), as applicable to the transactions undertaken on our platform. Our failure, or the failure by our third-party providers or merchant partners on our platform, to comply with applicable laws or regulations or standards or any other contractual obligations relating to privacy, data protection, or information security, may cause a leak of users' data, materially and adversely affect our reputation and lead to termination of our agreements with the affected merchants. Under our agreements with our merchants, our merchants and we are required to ensure proper encryption and security measures at our respective websites, mobile applications and billing systems to prevent any hacking into information pertaining to transactions. We are also required to protect and keep confidential all information related to the credit/debit cards, net banking facilities or other payment data of users who are carrying out transactions with such merchants through our platform. We cannot assure you that our merchants or we will be able to prevent all attempts of hacking and/or unauthorized disclosures of user data. Any future compromise of security or cyber-attack that results in unauthorized access to, or use or release of personally identifiable information or other data relating to users, or other individuals, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing users from using our platform, or result in fines, investigations, or proceedings by governmental agencies and private claims and litigation, any of which could materially and adversely affect our business, financial condition, cash flows and results of operations.

***We may be unable to sufficiently obtain, maintain, protect, or enforce our intellectual property and other proprietary rights, which could adversely affect our business, results of operations, financial condition and future prospects.***

Intellectual property and other proprietary rights are important to the success of our business. Our ability to compete effectively is dependent in part upon our ability to obtain, maintain, protect, and enforce our intellectual property and other proprietary rights, including our proprietary technology, and to obtain licenses to use the intellectual property and proprietary rights of others. We rely on a combination of trademarks, copyrights, patents, domain names, and agreements with employees and third parties to protect our intellectual property and other proprietary rights. Nonetheless, the steps we take to obtain, maintain, protect, and enforce our intellectual property and other proprietary rights may be inadequate. Despite our efforts to protect these rights, unauthorized third parties, including our competitors, may duplicate, mimic, reverse engineer, access, obtain, or use the proprietary aspects of our technology, processes or services without our permission. Our competitors and other third parties may also design around or independently develop similar technology or otherwise duplicate or mimic our services such that we would not be able to successfully assert our intellectual property or other proprietary rights against them. We cannot assure that any future patent, trademark, or service mark registrations will be issued for our pending or future applications or that any of our owned or licensed current or future patents, copyrights, trademarks, or service marks (whether registered or unregistered) will be valid, enforceable, sufficiently broad in scope, provide adequate protection of our intellectual property or other proprietary rights, or provide us with any competitive advantage.

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We may be unable to prevent competitors or other third parties from acquiring or using trademarks, service marks, copyrights, patents or other intellectual property or other proprietary rights that are similar to, infringe upon, misappropriate, dilute, or otherwise violate or diminish the value of our owned or licensed trademarks, service marks, copyrights, patents and our other intellectual property and proprietary rights. The value of our owned or licensed intellectual property and other proprietary rights could diminish if others assert rights in or ownership of our intellectual property or other proprietary rights, or in trademarks or service marks that are similar to our trademarks or service marks. In addition, we cannot guarantee that we or our licensors have entered into agreements containing obligations of confidentiality with each party that has or may have had access to proprietary information, know-how, or trade secrets owned or held by us or our licensors. Moreover, our or our licensors' contractual arrangements may be breached or may otherwise not effectively prevent disclosure of, or control access to, our confidential or otherwise proprietary information or provide an adequate remedy in the event of an unauthorized disclosure. The measures we or our licensors have put in place may not prevent misappropriation, infringement, or other violation of our or our licensors' intellectual property or other proprietary rights or information and any resulting loss of competitive advantage, and we or our licensors may be required to litigate to protect our intellectual property or other proprietary rights or information from misappropriation, infringement, or other violation by others, which may be expensive, could cause a diversion of resources, and may not be successful, even when our or our licensors' rights have been infringed, misappropriated, or otherwise violated.

As the number of services in the software industry increases and the functionalities of these services further overlap, and as we acquire technology through acquisitions or licenses, we or our licensors may become increasingly subject to infringement claims, including patent, copyright, and trademark infringement claims. We or our licensors may be accused of infringing intellectual property or other proprietary rights of third parties, including serial trademark and patent individual squatters, including their copyrights, trademarks, or patents, or improperly using or disclosing their trade secrets, or otherwise infringing or violating their proprietary rights. Our success depends in part on our ability to conduct our business without infringing the intellectual property rights of third parties. However, as the features and content of our services continue to grow, there is an increasing possibility that we may be subject to litigation involving claims of patent, copyright or trademark infringement or other violations of intellectual property rights of third parties. Existing or future claims against us, whether valid or not, may be time consuming, distracting to management and expensive to defend. Any of the foregoing could adversely affect our business, results of operations, financial condition and future prospects.

***Some aspects of our platform include open source software, and our use of open source software could negatively affect our business, results of operations, cash flows, financial condition, and prospects.***

Aspects of our platform include software covered by open source licenses. The terms of open source licenses are open to interpretation, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our platform. In such an event, we could be required to re-engineer all or a portion of our technologies, seek licenses from third parties in order to continue offering our services, discontinue the use of our platform in the event re-engineering cannot be accomplished, or otherwise be limited in the licensing of our technologies, each of which could reduce or eliminate the value of our technologies and services. If portions of our proprietary software are determined to be subject to an open source license, we could also be required to, under certain circumstances, publicly release or license, at no cost, our services that incorporate the open source software or the affected portions of our source code, which could allow our competitors or other third parties to create similar services with lower development effort, time, and costs, and could ultimately result in a loss of transaction volume for us. We cannot ensure that we have not incorporated open source software in our software in a manner that is inconsistent with the terms of the applicable license or our current policies, and we may inadvertently use open source in a manner that we do not intend or that could expose us to claims for breach of contract or intellectual property infringement, misappropriation, or other violation. If we fail to comply, or are alleged to have failed to comply, with the terms and conditions of our open source licenses, we could be required to incur significant legal expenses defending such allegations, be subject to significant damages, be enjoined from the sale of our services, and be required to comply with onerous conditions or restrictions on our services, any of which could be materially disruptive to our business.

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In addition to risks related to license requirements, usage of open source software can lead to risks because open source licensors generally do not provide warranties or other contractual protections regarding infringement, misappropriation, or other violations, the quality of code, or the origin of the software. Many of the risks associated with the use of open source software cannot be eliminated and could materially and adversely affect our business, results of operations, financial condition, and prospects. For instance, open source software is often developed by different groups of programmers outside of our control that collaborate with each other on projects. As a result, open source software may have security vulnerabilities, defects, or errors of which we are not aware. Even if we become aware of any security vulnerabilities, defects, or errors, it may take a significant amount of time for either us or the programmers who developed the open source software to address such vulnerabilities, defects, or errors, which could negatively impact our services, including but not limited to, by adversely affecting the market's perception of our services, impairing the functionality of our services, delaying the launch of new services, or resulting in the failure of our services, any of which could result in liability to us or our service providers. Further, our adoption of certain policies with respect to the use of open source software may affect our ability to hire and retain employees, including engineers.

**Risks Related to Laws, Regulations and Compliance** 

***Failure to comply with the existing laws and regulations applicable to our business could subject us, or our subsidiaries or our associates, as applicable, to enforcement actions and penalties and otherwise harm our business, as well as divert our management's attention and resources and result in increased costs.***

Our business is subject to regulation by various statutory and regulatory authorities, including, but not limited to, the FSA, the METI and other authorities responsible for enforcing compliance with privacy and data protection related laws, intellectual property laws, consumer protection laws, anti-money laundering laws and anti-corruption and anti-bribery laws. Some laws and regulations that we are subject to involve matters central to our business, including newer laws and regulations focused on our industry, internet, privacy, data protection and information security.

*Payment Segment* 

Under the Payment Services Act of Japan (Act No. 59 of 2009, as amended), or the Payment Services Act, because we are registered as a fund transfer service provider to offer PayPay Money, a refundable type of PayPay Balance deposited by users, we are required to provide guarantee deposits to the Tokyo Legal Affairs Bureau for the higher of (i) ¥5 million and (ii) the amount calculated based on the sum of (a) the amount of outstanding obligations pertaining to funds transfer transactions borne by the funds transfer service provider and (b) the expenses associated with the exercise of rights as creditors of fund transfer services. Also under the Payment Services Act, because we are registered as an issuer of prepaid payment instruments for third-party businesses to offer PayPay Money Lite, a non-refundable type of PayPay Balance pre-loaded through advance payments by users, we are also required to provide guarantee deposits to the Tokyo Legal Affairs Bureau for an amount that is at least half of the total unused balance of PayPay Money Lite as of March 31 or September 30 every year if the balance of our PayPay Money Lite on such date exceeds ¥10 million. Such guarantee deposits totaled ¥219,466 million as of March 31, 2025. For details on the calculation of our required guarantee deposits, see Note 10 to our audited consolidated financial statements included elsewhere in this prospectus. The Director of the Kanto Local Finance Bureau of the Ministry of Finance has the authority to issue a business improvement order or a business suspension order, or cancel our registration, if we fail to comply with these regulations. We may be also subject to criminal sanctions if we fail to comply with certain obligations under the Payment Services Act.

In addition, PayPay Corporation is registered as a financial instruments intermediary service provider, an electronic payment service provider and a credit card number, etc. handling contractor. Also, PayPay Corporation obtains a license of a bank agency service provider and is designated as a designated funds transfer service provider. Furthermore, PayPay Corporation and PayPay Card Corporation are designated as specified

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essential infrastructure service providers, in connection with our funds transfer business and third-party prepaid payment instruments issuing business under the Payment Services Act and in connection with PayPay Card Corporation's intermediation business of comprehensive credit purchases under the Installment Sales Act of Japan (Act No. 159 of 1961, as amended), or the Installment Sales Act, respectively.

PayPay Card Corporation is also registered as a money lender, a comprehensive credit purchase intermediary and a credit card number-handling contractor. Credit payment services provided by PayPay Card Corporation are classified as an intermediation of comprehensive credit purchases and providing cash advances requires registration as a money lender. PayPay Corporation, PayPay Card Corporation, PayPay Bank Corporation and PayPay Securities Corporation are required to perform certain verification procedures of customer identifications in accordance with the Act on Prevention of Transfer of Criminal Proceeds of Japan. Furthermore, because we have a dominant position in code-based payment settlement markets which is an important financial infrastructure in Japan, we need to comply with the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade of Japan (Act No. 54 of 1947, as amended), or the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade when we make changes to our operations and offer new services.

In Japan, both the Interest Rate Restriction Act of Japan (Act No. 100 of 1954, as amended), or the Interest Rate Restriction Act, and the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates of Japan (Act No. 195 of 1954, as amended), or the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates, regulate maximum interest rates, and any amounts exceeding these limits are deemed void and subject to sanctions. As a result of having two regulations that regulate maximum interest rates, there was a surge in cases where loans were made at interest rates that exceeded the maximum interest rate specified in the Interest Rate Restriction Act, but that did not exceed the maximum rate specified in the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates, which became to be known as a social issue called "gray-zone interest rates." To address this social issue, the Japanese government gradually lowered the maximum interest rate specified in the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates to eliminate gray-zone interest rates for newly issued card loans. PayPay Card Corporation provides cash advances services and revolving credit services. Cash advances services are regulated by the Interest Rate Restriction Act and the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates, and while revolving credit services for purchases are not regulated by either the Interest Rate Restriction Act or the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates, PayPay Card Corporation, through self-regulation, provides revolving credit services within the limits of the maximum interest rates specified in these regulations. The current maximum interest rate under the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates is 20%, and there is no guarantee that the Japanese government will not lower the maximum interest rate in the future. If the maximum interest rate is lowered, our revenue growth, profitability, cash flows and financial condition may be adversely affected.

*Financial Service Segment* 

PayPay Bank Corporation is a licensed bank and is subject to regulation by the FSA under the Banking Act of Japan (Act No. 59 of 1981, as amended), or the Banking Act. PayPay Bank Corporation's failure to comply with the terms of its banking license or applicable laws and regulations, including those for consumer protection, could lead to the cancellation of its banking license and other licenses and approvals to engage in our businesses, governmental inspections and enforcement actions, claims from or litigation with customers or business partners, including due to breach of contractual terms, or the inability to implement our business strategy.

PayPay Bank Corporation is also subject to the requirement that it maintain risk-adjusted capital adequacy ratios above the levels specified in the capital adequacy standards stipulated by the FSA, based on Basel III. As a Japanese bank that does not have overseas operations, PayPay Bank Corporation is subject to the domestic standard for capital adequacy. As of March 31, 2025, PayPay Bank Corporation's consolidated risk-adjusted capital adequacy ratio was 16.76% compared to the minimum risk-adjusted consolidated capital

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adequacy ratio of 4.0%. PayPay Bank Corporation may be unable to continue to satisfy the capital adequacy requirements if its core capital decreases or risk-weighted assets increase for any reason, including as a result of the realization of any of the risks described elsewhere in this "Risk Factors" section, or if capital adequacy standards are amended to be more stringent. If PayPay Bank Corporation's capital adequacy ratios fall below required limits, the FSA could require PayPay Bank Corporation to take corrective actions, including, depending upon the level of deficiency, submission of an improvement plan or suspension of a portion of its business operations. PayPay Bank Corporation may also need to alter its business strategy or operations if its capital adequacy ratios decline to unacceptable levels. In addition, we are subject to restrictions on the aggregate amount of loans to any single customer or customer group under the Banking Act. As a result, loans to SoftBank Group companies are subject to restrictions. For a discussion of our capital adequacy ratios and the related regulatory standards, see "Regulations" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Regulatory Capital Requirements." In addition, we voluntarily calculate metrics under certain international standards, including those related to leverage ratios, liquidity coverage ratios and interest rate risk in the banking book.

PayPay Securities Corporation is a registered financial instruments business operator and subject to extensive regulation by the FSA and self-regulatory organizations. Our online brokerage operations must comply with, among other rules, capital adequacy, customer protection and market conduct requirements. Securities regulatory agencies regularly review the operations of online brokerage companies, including PayPay Securities Corporation. Under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended), or the FIEA, and related regulations, PayPay Securities Corporation is required to meet strict capital adequacy requirements. If PayPay Securities Corporation fails to maintain the required level of regulatory capital, the FSA, may order changes in its operations or the deposit of assets, temporary suspension of its business or revocation of its registration as a securities company. As of March 31, 2025, PayPay Securities Corporation had a regulatory capital adequacy ratio of 301.7%, which was above the required minimum ratio of 120%.

We are also subject to certain regulatory restrictions as a bank's major shareholder with respect to PayPay Bank Corporation and as a principal shareholder of PayPay Securities Corporation, under which the FSA may request the submission of reports or materials from, or may conduct inspections of, us in certain circumstances, and may order us to take such measures as the FSA deems necessary, including resigning from our respective positions as shareholders of PayPay Bank Corporation and PayPay Securities Corporation, under certain limited circumstances. With respect to PayPay Bank Corporation, authorization by the FSA is required to become a bank's major shareholder so if our authorization is revoked, we will need to take measures so that we will no longer be the holder of a number of voting rights in the bank which is equal to or greater than the major shareholder threshold, within the period designated by the FSA. With respect to PayPay Securities Corporation, if it violates applicable rules and regulations, the regulatory authorities that oversee PayPay Securities Corporation's activities may exercise their broad powers to issue an order canceling PayPay Securities Corporation's registration or authorization or suspending or requiring changes in the manner of PayPay Securities Corporation's business, which may result in the removal of certain directors or corporate auditors of PayPay Securities Corporation from their positions. In addition, the Japanese government in the future may adopt new regulations that adversely affect our online banking or online securities business by imposing additional costs, exposing us to increased liability or additional supervision or monitoring. See "Regulations."

We have established a system of legal compliance including employee education and the establishment of a compliance system. There have been no events that cause revocation of our registration described above. However, if our registration were to be revoked, our overall business activities would be hindered, and our financial condition and results of operations could be materially affected. In addition, in the event that our business methods do not conform to laws and regulations, including, but not limited to, the Payment Services Act, the Installment Sales Act, the Act on Prevention of Transfer of Criminal Proceeds of Japan (Act No. 22 of 2007, as amended), or the Act on Prevention of Transfer of Criminal Proceeds, the Money Lending Business Act of Japan (Act No. 32 of 1983, as amended), or the Money Lending Business Act, the Banking Act and the FIEA, there is a possibility that we may be subject to administrative punishment or criminal punishment by the

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competent authorities. The laws and regulations related to financial services are complex, and our compliance with such laws and regulations may be subject to regular inspection by competent authorities, which may result in orders for improvement in the case of any non-compliance as well as regular reporting on the status of such improvement efforts. In particular, PayPay Bank Corporation was subject to an inspection by the FSA in 2021, which identified certain areas of improvement in PayPay Bank Corporation's anti-money laundering and countering the finance of terrorism, or AML/CFT, compliance system. PayPay Bank Corporation reported the implementation of improvement measures to the FSA and the FSA confirmed PayPay Bank Corporation's AML/CFT compliance system conformed with applicable guidelines in June 2024. However, due to the complex and evolving nature of AML/CFT compliance, there is a possibility we may face compliance issues in the future, which may result, among other things, in administrative inquiries or penalties.

We are required to spend significant costs, time and effort to comply with relevant laws and regulations. In addition, the introduction of new services or other offerings in our existing markets and the expansion of our business to other countries may subject us to additional laws and regulations. Furthermore, in Japan, financial authorities have significant discretion in financial administration. Therefore, we may sometimes be required to comply with management indicators that are not clearly defined in laws and regulations. There may also be new and increased regulation of our industry going forward. Other existing and future regulations and laws could impede the growth of our industry, internet and online services. Many of these laws and regulations are still evolving and could be interpreted or applied in ways that could limit our business, particularly in the new and rapidly evolving industry in which we operate. Unfavorable regulations and laws could diminish demand and increase our cost of doing business.

Any failure or alleged failure to comply, or failure by any of our third-party service providers or merchants to comply, with the applicable laws, regulations or requirements could subject us, or our subsidiaries, as applicable, to inspection, audit and enforcement actions by the relevant authority; suspension and revocation of the relevant license or approval; civil penalties including payment of damages; and criminal penalties including payment of fines. Also, we may in the future be subject to laws and regulations, that we currently believe do not apply to us, as a result of any amendment thereto or any changes in the interpretation of relevant regulatory authorities, which may increase our costs for compliance or otherwise materially and adversely affect our business or results of operations.

In addition, it is possible that a regulatory inquiry might force us to change our policies or practices, including those that may impact the user convenience or overall user experience of our services, or subject us to regulatory orders or consent decrees. If we were to violate such orders or decrees, we might be subject to fines or other penalties.

These actions or any failure to prevail in a possible civil or criminal litigation, may materially and adversely affect our business, results of operations, financial condition, cash flows and reputation. In addition, responding to any action or litigation may result in a diversion of our management's attention and resources and an increase in professional fees and compliance costs.

***We could be subject to regulatory scrutiny, enforcement actions or legal claims if there is unintentional loss, disclosure or misappropriation of our users' personal information or other breaches of our security.***

We make extensive use of online services and centralized data processing, including through the use of third-party service providers, so the secure maintenance and transmission of confidential information is a critical element of our operations. We also collaborate with affiliated companies that use our brand for the provision of financial services to users from whom personal and confidential information is collected. There can be no assurance that user information has not been and will not be lost or disclosed or taken without consent or that our information technology and other systems, or those of our third-party service providers or strategic business partners, will not be compromised. If we lose users' personal information or if a third party is able to penetrate our or our business partners' or service providers' network security or otherwise misappropriate our users'

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personal information, we could be subject to claims, we could be in violation of the Act on the Protection of Personal Information of Japan (Act No. 57 of 2003, as amended), or the Act on the Protection of Personal Information, and the Act on the Use of Numbers to Identify a Specific Individual in Administrative Procedures of Japan (Act No. 27 of 2013, as amended). Inadvertent loss, disclosure or misappropriation of user information by our own employees would subject us to similar risks. The Japanese media, regulators and consumers have intensified their scrutiny of incidents involving the loss, disclosure or misappropriation of personal information in recent years. Significant violations could result in a business improvement order or suspension of specific operations by regulators, among other consequences, which may materially and adversely affect our business and results of operations.

***We rely on third parties for certain aspects of our business, which creates additional risk, and the failure of third parties to comply with legal or regulatory requirements or to provide various products and services that are important to our operations could have a material and adverse effect on our business, results of operations, cash flows, financial condition, and prospects.***

We depend on third-party service providers for certain services, such as technology and other services to support our operations, including cloud-based data storage, data centers and other IT solutions, card networks, payment processing and the processing of users' and merchants' personal data. Our success depends on our ability to manage various service providers to provide reliable and satisfactory services to users on our platform. Our operations and business could be materially and adversely affected if our outsourcing service providers face any operational or system interruptions. To the extent we are unable to effectively manage these partners to provide satisfactory services to our users to address their needs on commercially acceptable terms, or at all, or if we fail to retain existing or attract new quality partners to our platform, our ability to retain, attract or engage our users may be severely limited, which may have a material and adverse effect on our business, financial condition, cash flows and results of operations. In many cases, we utilize services of affiliated companies as described under "—We collaborate with SoftBank Group companies in the provision of our services. Any failure by such companies to continue to support our services, or a material change in our relationship with such companies, could adversely impact our services and could impact our overall business, financial condition, cash flows and results of operations."

Most of our agreements with third-party service providers are terminable by the service provider at a short or no notice, and if our current third-party service providers were to terminate their agreements with us or otherwise stop providing services to us on acceptable terms, we may be unable to procure service from alternative service providers in a timely and efficient manner and on acceptable terms or at all. Furthermore, some of our service agreements are fixed-term contracts or have short duration ranging from one year to three years and are not subject to automatic renewal. If any service provider fails to provide the services we require, fails to meet contractual requirements (including compliance with applicable laws and regulations), fails to maintain adequate data privacy controls, personal information protection and electronic security systems, or suffers a cyber-attack or other security breach, we could be subject to regulatory enforcement actions, claims from third parties, including our users, and suffer economic and reputational harm that could have a material adverse effect on our business. Further, we may incur significant costs to resolve any such disruptions in service, which could materially and adversely affect our business.

***We may be materially and adversely affected by the evolving laws and regulation governing our business and the introduction of any new laws and regulation which may become applicable to our business.***

The laws and regulations governing our businesses are evolving and may be amended, supplemented or changed at any time. As a result, we may be required to seek for and follow additional procedures, modify or adjust certain activities, restructure our ownership structure, obtain new and additional licenses and incur additional expenses to comply with such laws and regulations, which could adversely affect our future development and business. New laws and regulations may be enacted from time to time to require additional licenses and approvals other than those we currently have. In order to comply with evolving laws and regulations,

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we may need to devote significant resources and efforts, including restructuring affected businesses, changing our business practices and adjusting our activities, which may materially and adversely affect our business, growth prospects and reputation. We will be affected by such changes particularly with respect to PayPay Bank Corporation and PayPay Securities Corporation due to the highly regulated nature of the industry they operate in. We cannot assure you that the relevant regulatory authorities will not introduce further new laws and regulations in the future which may require us to restructure our business, obtain new licenses, comply with additional requirements and incur additional ongoing compliance costs which may materially and adversely affect our future development, business and results of operations.

***Any failure by us or our merchants and financial institution partners who work with us to comply with applicable anti-money laundering, counter-terrorist financing and economic sanction laws and regulations could lead to penalties and may damage our reputation.***

We and our partners who work with us are required to comply with certain anti-money laundering requirements in Japan, including those related to "anti-social forces" (a reference to organized crime in Japan), and economic sanctions regimes. These requirements include the establishment of a client identification program, the monitoring and reporting of suspicious transactions, the preservation of client information and transaction records, and the provision of assistance in investigations and proceedings in relation to money laundering matters. We and our financial institution partners are also subject to various counter-terrorist financing and economic sanction laws and regulations that prohibit, among other things, any involvement in transferring the proceeds of criminal activities and any activities involving restricted countries, organizations, entities and persons that have been identified as unlawful actors or that are subject to U.S. sanctions imposed by the U.S. Department of the Treasury Office of Foreign Asset Control, or OFAC, or other international economic sanctions that prohibit us and our partners from engaging in trade or financial transactions with certain countries, businesses, organizations and individuals. These laws and regulations require us and our partners to establish sound internal control policies and procedures with respect to anti-money laundering, counter-terrorist financing and economic sanction monitoring and reporting obligations.

The policies and procedures we and our partners have adopted may not be effectively implemented in protecting our services from being exploited for money laundering, terrorist financing and other illegal purposes. If we fail to comply with anti-money laundering, anti-terrorist and economic sanction laws and regulations, we could be subject to fines, enforcement actions, regulatory sanctions, additional compliance requirements, increased regulatory scrutiny of our business, or other penalties levied by regulators, and damages to our reputation, all of which may materially and adversely affect our business operations, and results of operations. In particular, if we were publicly named as a sanctioned entity by relevant regulatory authorities or become subject to investigation, our business may be significantly interrupted and our reputation might be severely damaged. Similarly, if our partners fail to comply with applicable laws and regulations, it could disrupt our services and could result in potential liability for us and damage our reputation. We and our partners have been and will continue to be required to make changes to our and their respective compliance programs in response to any new or revised laws and regulations on anti-money laundering, counter-terrorist financing and economic sanctions, which could make compliance more costly and operationally difficult to manage.

**External Risks Related to Economic Conditions and Other Factors** 

***Unfavorable economic conditions in Japan could have a material adverse effect on our business, financial condition and results of operations.***

Our revenue from the provision of payment settlement services and financial services is and will continue to be heavily influenced by the behavior of retail customers in Japan as well as market risks, including foreign exchange risk and interest risk. Accordingly, our business and future prospects are affected by general economic conditions in Japan and trends in Japanese household consumer spending. A downturn in the Japanese economy, whether due to intensifying international trade frictions, including tariffs, geopolitical risks, such as political tensions in Asia,

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including between mainland China and Taiwan and between North Korea and South Korea and the developing conflict between India and Pakistan, and geopolitical risks and military conflicts in the Middle East, including the conflicts between Israel and Hamas and between Israel and Iran, as well as escalating military tensions in Europe as a result of Russia's invasion of Ukraine, a fluctuating yen, rising interest rates, inflation, volatility in financial markets, global economic instability or other factors, or a significant deterioration in consumer confidence or other unfavorable market conditions could have a material adverse effect on our business, financial condition and results of operations.

The outlook of the Japanese economy remains uncertain. In particular, since 2013, the Bank of Japan, or the BOJ, had implemented quantitative and qualitative monetary easing measures to overcome deflation until March 2024, when it stated that its policy framework of quantitative and qualitative monetary easing with yield curve control and its negative interest rate policy had fulfilled their roles. As the consumer price index increased and inflation has occurred in Japan in recent years, based on its view that the functioning of Japanese bond markets had deteriorated due to increased volatility in overseas financial and capital markets, the BOJ decided to modify the conduct of yield curve control in December 2022 to expand the range of 10-year Japanese government bond yield fluctuations from the target level of between around plus and minus 0.25 percentage points to around plus and minus 0.5 percentage points. In March 2024, the BOJ stated that its theretofore effective policy framework of quantitative and qualitative monetary easing with yield curve control and its negative interest rate policy had fulfilled their roles and set the uncollateralized overnight call rate to around 0 to 0.1%. Subsequently, the BOJ further raised this rate to 0.25% on July 31, 2024, to 0.5% on January 24, 2025 and to 0.75% on December 19, 2025. Despite the Japanese yen's interest rate rising after the BOJ's modification of the yield curve control and short-term interest rates rising in Japan after the BOJ's raise, interest rates in Japan are still low relative to interest rates of other currencies, which may lead to continued or increased downward pressure on the Japanese yen and which, in turn, may adversely affect consumer borrowing or spending activities. Moreover, the recent increases or further increases in Japanese yen interest rates may also have negative effects on consumers, such as through increased interest rates on home or other loans, or other negative effects on economic activity in Japan, in turn materially and adversely affecting the businesses of PayPay Bank Corporation and PayPay Card Corporation. Although the BOJ stated in its "Review of Monetary Policy from a Broad Perspective," released in December 2024, that the overall effect of these measures on the Japanese economy have been positive, future side effects from a prolonged large-scale continuation of unconventional monetary policy measures remain possible. Over the long term, demographic trends leading to population decreases could serve to depress economic growth or lead to economic contraction in Japan.

In addition, NISA a tax-deferred savings scheme targeted to significantly increase investment by Japanese individuals, was updated in January 2024 to increase the tax benefits available to Japanese taxpayers investing in both long-term mutual funds and stocks. Consumer investment has expanded significantly as a result of this update and is expected to continue to expand. This update to NISA is expected to have a positive impact on the business of PayPay Securities Corporation. However, if this tax-deferred savings scheme is further updated in the future such that consumer spending decreases as a result, this may similarly have a material and adverse impact on the financial results of PayPay Securities Corporation.

***Natural disasters, fires, epidemics, pandemics, acts of war, civil unrest and other events could materially and adversely affect our business.***

Natural disasters (such as typhoons, flooding and earthquakes), epidemics, pandemics, acts of war, terrorist attacks and other events, many of which are beyond our control, may lead to economic instability, including in Japan or globally, which may in turn materially and adversely affect our business, financial condition, cash flows and results of operations.

Our operations may be materially and adversely affected by fires, natural disasters and/or severe weather, which can result in damage to our technological infrastructure and generally reduce our productivity and may require us to evacuate personnel and suspend operations. In particular, such occurrences in the Tokyo area where our main data centers are located, which are supported by multiple AWS data centers, or in the area where our backup data center is located, could have a material adverse impact on our operations. Any terrorist attacks or civil unrest as well as other adverse social, economic and political events in Japan could have a negative effect on us.

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**Risks Related to Shares of our Common Stock, the ADSs and this Offering** 

***An active trading market for the ADSs may not develop and the trading price for the ADSs may fluctuate significantly.***

We intend to apply to list the ADSs on the Nasdaq Global Select Market. However, there is no assurance that such listing can be sustained after this offering. We have not applied for a listing of our common shares on any market. Prior to the completion of this offering, there has been no public market for the ADSs or our common shares, and we cannot assure you that a liquid public market for the ADSs will develop. If an active public market for the ADSs does not develop following the completion of this offering, the market price and liquidity of the ADSs may be materially and adversely affected. The initial public offering price for the ADSs is determined by negotiation between the underwriters, the selling shareholder and us based upon several factors, and we can provide no assurance that the trading price of the ADSs after this offering will not decline below the initial public offering price. As a result, investors in our securities may experience a significant decrease in the value of their ADSs.

***The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.***

The trading price of the ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control or unrelated to our operating or financial performance. Factors that could cause fluctuations in the market prices and trading volume of the ADSs include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• price and volume fluctuations in the global stock markets from time to time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic conditions and slow or negative growth of our markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in tax laws and regulations as well as accounting standards, policies, guidelines, interpretations or
principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated developments in our business, our competitors' businesses or the competitive
landscape generally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• rumors and market speculation involving us, our affiliated companies or other companies in our industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failure of securities analysts and credit rating agencies to maintain coverage of us, changes in financial
estimates by securities analysts and credit rating agencies who follow our company, or our failure to meet these estimates or the expectations of investors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announcements by us or our competitors of new products and services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announced or completed transactions affecting our businesses or technologies or those of our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated changes in our results of operations or fluctuations in our results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sales of shares of our common stock by us or our current shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• litigation involving us, our industry or both, or investigations by regulators into our operations or those of
our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• developments or disputes concerning our intellectual property or other proprietary rights; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any significant change in our management.

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In addition, the Cornerstone Investors have, severally and not jointly, indicated an interest in purchasing up to an aggregate of $220 million of the ADSs offered in this offering at the initial public offering price and on the same terms and conditions as the other purchasers in this offering. Because these indications of interest are not binding agreements or commitments to purchase, the Cornerstone Investors may determine to purchase more, fewer, or no ADSs in this offering, or the underwriters may determine to sell more, less or no ADSs to the Cornerstone Investors. If any of the Cornerstone Investors are allocated a portion or all of, or more than, the ADSs in which they have indicated an interest in purchasing in this offering, their election to purchase any such ADSs could reduce the available public float of our ADSs.

Any of the above or other factors, in addition to other risk factors described herein, may result in large and sudden changes in the volume and price at which the ADSs will trade.

***Fluctuations in exchange rates may affect the U.S. dollar value of the ADSs and dividends payable to holders of the ADSs.***

The conversion of Japanese yen into foreign currencies, including the U.S. dollar, is based on market exchange rates. The Japanese yen has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of the Japanese yen against the U.S. dollar and other currencies is affected by changes in global political and economic conditions, among other things. We cannot assure you that the Japanese yen will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or U.S. government policy may impact the exchange rate between the Japanese yen and the U.S. dollar in the future.

Any significant depreciation of the Japanese yen may materially and adversely affect the value of, and any dividends payable on, the ADSs in U.S. dollars. If we decide to convert our Japanese yen into U.S. dollars for the purpose of making payments for dividends on our shares of common stock or ADSs, appreciation of the U.S. dollar against the Japanese yen would have a negative effect on the U.S. dollar amount available to us. In addition, appreciation or depreciation in the value of the Japanese yen relative to the U.S. dollar would affect our financial results translated from Japanese yen into U.S. dollar terms regardless of any underlying change in our business or results of operations. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

***We will have broad discretion over the use of the net proceeds of the offering.***

We will have broad discretion in the application of the net proceeds we receive in this offering for the purposes described under "Use of Proceeds," and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from the offering and the potential returns therefrom, it is possible that a substantial portion of the net proceeds will be invested in a way that does not yield a favorable, or any, return for us. Moreover, we may decide to change the application of the net proceeds from this offering in the future. If we do not use the net proceeds that we receive in the offering effectively, our business, prospects, financial condition, results of operations, and cash flows could be materially and adversely affected, and the market price for ADSs representing share of our common stock could decline.

***We may be classified as a passive foreign investment company for U.S. federal income tax purposes, which could subject U.S. investors in the ADSs or common shares to adverse tax consequences, which may be significant.***

In general, we will be a passive foreign investment company (a "PFIC") for any taxable year in which:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• at least 75% of our gross income is passive income, or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• at least 50% of the value (generally determined based on a quarterly average) of our assets is attributable to
assets that produce or are held for the production of passive income.

For this purpose, passive income generally includes dividends, interest, royalties and rents (other than certain interest derived in the active conduct of banking business). In addition, cash and other assets readily convertible into cash are generally considered passive assets. If we own at least 25% (by value) of the stock of another corporation, for purposes of determining whether we are a PFIC, we will be treated as owning our proportionate share of the other corporation's assets and receiving our proportionate share of the other corporation's income. We do not expect to be a PFIC for our current taxable year or in the foreseeable future. However, our PFIC status is a factual determination that is made annually, and thus may be subject to change due to changes in our income or asset composition or in the value of our assets. Because the value of our goodwill may be determined based on the expected market value of the ADSs from time to time, a decrease in the price of the ADSs may also result in our becoming a PFIC for any taxable year.

If we are a PFIC for any taxable year during which you hold the ADSs or common shares, our PFIC status could result in adverse United States federal income tax consequences to you if you are a United States investor. For example, if we are or become a PFIC, you may be subject to increased tax liabilities under United States federal income tax laws and regulations, and will be subject to reporting requirements. See "Taxation—Certain United States Federal Income Tax Considerations to United States Holders—Passive Foreign Investment Company."

***Substantial future sales of our shares of common stock or ADSs, or the perception that these transactions could occur, could depress the market prices of the ADSs.***

Sales of the ADSs in the public market after this offering, including pursuant to registration rights provided to SoftBank Corp., LY Corporation, B Holdings Corporation and SVF II Piranha (DE) LLC (see "Related Party Transactions—Registration Rights Agreement"), or the perception that these sales could occur, could cause the market price of the ADSs to decline. All ADSs sold in this offering will be freely transferable without restriction or additional registration under the Securities Act. The remaining common shares issued and outstanding after this offering will be available for sale, upon the expiration of the 180-day lock-up period beginning from the date of this prospectus, subject to volume and other restrictions as applicable provided in Rules 144 and 701 under the Securities Act. Any or all of these shares may be released prior to the expiration of the lock-up period at the discretion of the representatives of the underwriters of this offering. To the extent shares are released before the expiration of the lock-up period and sold into the market, the market price of the ADSs could decline.

As of January 31, 2026, there were 12,436,600 shares of our common stock issuable upon exercise of outstanding stock options, and holders of our stock options may choose to exercise their options and sell all or a portion of their shares. Our shareholders approved a plan to grant stock options to our directors, corporate officers and employees through trust-type stock options in August 2022, under which stock options to purchase 11,636,000 shares of our common stock were initially issued to and held by a trustee. For the year ended March 31, 2023, stock options to purchase 4,589,200 common shares were distributed to directors, corporate officers and employees. As of April 30, 2025, the remaining trust-type stock options to purchase 7,046,800 common shares were forfeited and extinguished, and by May 30, 2025, the trust-type stock options to purchase 580,000 common shares that were registered were forfeited and extinguished due to retirement. In addition, in April 2025, our shareholders approved a plan to grant stock options to our directors, corporate officers and employees through tax qualified-type stock options and one-yen-exercisable at retirement-type stock options. Under this plan, on May 31, 2025, we granted stock options to purchase 8,729,400 common shares. See "Management—Compensation of Directors and Executive Officers," "Management—Stock Options" and Note 36 to our annual consolidated financial statements. Furthermore, we may require additional capital to support our operations and the growth of our business, and we cannot be certain that financing will be available on reasonable terms when required, or at all. Moreover, our board of directors will be able to issue and sell additional shares of our common stock within the unissued portion of our authorized share capital, generally without any shareholder vote. Any such sales could cause the prices of the ADSs to decline.

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***If securities or industry analysts were to adversely change their recommendations regarding an investment in us, the prices of the ADSs or their trading volume could decline.***

The trading market for the ADSs will be influenced by the research and other reports that securities or industry analysts may publish about us, our business, our market, our shareholders or our competitors. If any of the analysts who may cover us adversely change their recommendation regarding an investment in us, or provide more favorable relative recommendations about our competitors, the price of the ADSs would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the price of the ADSs or their trading volume to decline.

***We may not pay dividends for the foreseeable future.***

We have never declared or paid cash dividends on our capital stock. We currently intend to retain future earnings to finance the operation and expansion of our business, and as a result, we may not declare or pay any dividends in the foreseeable future. You may only receive a return on your investment if the market price of the ADSs increases.

***As a Japanese joint stock corporation, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to public U.S. companies, as well as from certain disclosure requirements under the Exchange Act. This may afford less protection to holders of the ADSs than they would enjoy if we complied fully with the Nasdaq corporate governance listing standards.***

As a company listed on Nasdaq, we are subject to the Nasdaq corporate governance listing standards. However, as a Japanese joint stock corporation, we are exempted from certain Nasdaq corporate governance requirements by virtue of being a foreign private issuer and are permitted to follow the corporate governance practices of our home country. For a brief description of the significant differences between our corporate governance practices and the corporate governance practices required to be followed by U.S. companies listed on Nasdaq, see "Management—Corporate Governance." The standards applicable to us are considerably different from the standards applied to public U.S. companies. For instance, we are not required to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• have a majority of our board of directors be independent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• have a compensation committee or a nominating or corporate governance committee consisting entirely of
independent directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• obtain shareholder approval of equity compensation plans, equity offerings that do not qualify as public
offerings for cash, and offerings of equity to related parties; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• have regularly scheduled executive sessions with only independent directors.

We intend to rely on these exemptions for so long as we maintain our status as a foreign private issuer. For example, although we have established a compensation committee and a nominating committee, those committees do not consist entirely of independent directors. As a result, you may not be provided with the benefits of certain corporate governance standards applicable to public U.S. companies.

Upon the completion of this offering, we expect we will be a "controlled company" as defined under the rules of Nasdaq, because the entities ultimately controlled by SoftBank Group Corp. will be able to exercise 91.78% of the aggregate voting power of our total issued and outstanding shares; the percentage is assuming the underwriters do not exercise their option to purchase additional ADSs. As a controlled company, we are eligible to, and, in the event we no longer qualify as a foreign private issuer, we intend to, elect not to comply with certain of the Nasdaq corporate governance standards, including the requirement that a majority of directors on our board of directors are independent directors and the requirement that our compensation committee and our nominating and corporate

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governance committee consist entirely of independent directors. If the underwriters exercise their option to purchase additional ADSs, and we are not a controlled company, we will not be eligible to elect not to comply with such Nasdaq corporate governance standards even when we no longer qualify as a foreign private issuer.

As a foreign private issuer, we are not subject to all of the disclosure requirements applicable to companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act. In addition, our directors and officers are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. public companies. Accordingly, there may be less publicly available information concerning our company than there is for U.S. public companies.

***We will incur increased costs as a result of being a public company.***

Upon completion of this offering, we will become a public company and expect to incur significant legal, accounting and other expenses that we did not incur as a private company. These additional costs may negatively affect our financial results. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq, impose various requirements on the corporate governance practices of public companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. We expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC. For example, as a result of becoming a public company, we will need to appoint a certain number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures, both of which we have already begun to address. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

In the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in the market price of that company's securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

***Holders of ADSs have fewer rights than shareholders under Japanese law, their voting rights are limited by the terms of the deposit agreement, and they may not be able to exercise their rights to vote the underlying shares of common stock.***

The rights of shareholders under Japanese law to take actions, including voting their shares, receiving dividends and distributions, bringing derivative actions, examining our accounting books and records, exercising appraisal rights, requesting to call shareholders meetings and submitting proposals at shareholders meetings, are available only to shareholders of record. Holders of ADSs do not have the same rights as our registered shareholders. The depositary, through its custodian, is the record holder of the shares of our common stock underlying the ADSs. Holders of ADSs will not have any direct right to attend general meetings of our

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shareholders or to cast any votes at such meetings. ADS holders will not be able to bring a derivative action, examine our accounting books and records, or exercise appraisal rights through the depositary.

Holders of ADSs will only be able to exercise the voting rights with respect to the underlying shares of common stock represented by the ADSs indirectly by giving voting instructions to the depositary in accordance with the provisions of the deposit agreement. Under the deposit agreement, holders of ADSs may only vote by giving voting instructions to the depositary. If we request the depositary to solicit voting instructions, upon receipt of voting instructions from holders of ADSs in the manner set forth in the deposit agreement, the depositary will make efforts to vote the shares underlying the ADSs in accordance with the instructions of ADS holders. Holders of ADSs will not be able to directly exercise their right to vote with respect to the underlying shares unless they cancel their ADSs, withdraw the shares of common stock and become the registered holder of such shares of common stock prior to the record date for the general meeting. Under our post-offering articles of incorporation that will become effective immediately prior to the completion of this offering, the minimum notice period required for convening a general meeting is 14 days. When a general meeting is convened, holders of ADSs may not receive sufficient advance notice to cancel their ADSs, withdraw the shares underlying their ADSs to allow them to vote with respect to any specific matter or resolution to be considered and voted upon at the general meeting. In addition, under our post-offering articles of incorporation, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a record date may prevent holders of ADSs from withdrawing the underlying shares of common stock represented by their ADSs and from becoming the registered holder of such shares prior to the record date, so that they would not be able to attend the general meeting or to vote directly. If we instruct the depositary to solicit instructions from holders of ADSs, the depositary will notify them of the upcoming vote and will arrange to deliver our voting materials to ADS holders. We cannot assure holders of ADSs that they will receive the voting materials in time to ensure that they can instruct the depositary to vote the underlying shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out their voting instructions. This means that holders of ADSs may not be able to exercise their right to vote and they may have no legal remedy if the shares underlying their ADSs are not voted as they requested. We have agreed to give the depositary notice of a general meeting at least 30 days in advance.

***Holders of ADSs may not receive distributions on shares of our common stock or any value for them if it is illegal or impractical to make them available to such holders.***

The depositary has agreed, subject to the terms of the deposit agreement, to pay holders of ADSs the cash dividends or other distributions it or the custodian for the ADSs receives on shares of common stock or other deposited securities after deducting its fees and expenses and any taxes or other governmental charges. Holders of ADSs will receive these distributions in proportion to the number of shares of our common stock that such ADSs represent. However, the depositary is not responsible for making such payments or distributions if it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act, but that are not properly registered or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution available to any holders of ADSs if any government approval or registration required for such distribution cannot be obtained after reasonable efforts made by the depositary. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, shares of common stock, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, shares of common stock, rights or anything else to holders of ADSs. This means that holders of ADSs may not receive distributions we make on our shares of common stock or any value for them if it is illegal or impractical for us to make them available to such holders. These restrictions may cause a material decline in the value of the ADSs.

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***Rights of shareholders under Japanese law may be different from rights of shareholders in other jurisdictions.***

Our articles of incorporation and the Companies Act of Japan, or the Companies Act, govern our corporate affairs. Legal principles relating to matters such as the validity of corporate procedures, directors' and executive officers' fiduciary duties and obligations and shareholders' rights under Japanese law may be different from, less extensive as or less clearly defined than, those that would apply to a company incorporated in any other jurisdiction. If you surrender your ADSs to the depositary to withdraw the common shares underlying your ADSs, you would be subject to shareholders' rights under Japanese law, which may not be as extensive as shareholders' rights under the law of other countries. For example, under the Companies Act, only holders of 3% or more of our total voting rights or our outstanding shares are entitled to examine our accounting books and records. Furthermore, there is a degree of uncertainty as to what duties the directors of a Japanese joint stock corporation may have in response to an unsolicited takeover bid, and such uncertainty may be more pronounced than that in other jurisdictions.

***Investors holding less than one "unit" of shares of our common stock will have limited rights as shareholders.***

Our post-offering articles of incorporation provide that 100 shares of common stock constitute one "unit." Under the Companies Act and our articles of incorporation, shareholders are entitled to one voting right for each unit of shares, and shares constituting less than a full unit carry no voting rights and certain other shareholder rights are limited. As a result, if you surrender your ADSs to the depositary to withdraw the common shares underlying your ADSs and you hold shares constituting less than one unit, you will not have the right to vote with respect to those shares, and your ability to influence the outcome of matters submitted to shareholders (including the election of directors and other significant corporate actions) will be materially limited. In addition, there is no exchange-based market for odd-lot shares, and holders of shares constituting less than one unit may have limited liquidity. Under the Companies Act, holders of odd-lot shares have the right to require the company to purchase such shares, and we will comply with such request. However, our articles of incorporation do not provide holders of odd-lot shares with the right to acquire additional shares from the company in order to constitute a full unit. As a result, holders of shares constituting less than one unit may have limited methods available to dispose of such shares and may incur additional time, cost or uncertainty. For a more complete description of the unit share system and its effect on the rights of our shareholders, see "Description of Share Capital—Unit Share System."

Further, although amendments to the articles of incorporation generally require approval by a special resolution of a general meeting of shareholders, pursuant to the Companies Act, our board of directors may reduce the number of shares constituting one unit or cease to use the unit share system by amendments to the articles of incorporation without shareholders' approval. Any such action could change the allocation of voting rights and other shareholder rights among holders of our common stock, including common stock underlying ADS, and could affect your ability to exercise voting rights (including through the depositary) and the relative influence of different shareholders. In addition, changes to the unit share system could require adjustments to the ADS-to-share ratio or other technical changes under the deposit agreement, which could create uncertainty for investors and may result in additional administrative steps, costs or fees.

***Holders of ADSs may be subject to limitations on transfer of their ADSs and on the ability to deposit or withdraw common shares.***

ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs or to accept surrenders of ADSs for the purpose of withdrawing common shares generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason. Moreover, even if the deposit agreement permits a withdrawal of common shares, your ability to effect such withdrawal may depend on the agreement with or operational practices of your broker, custodian or other intermediary, and in some cases you may not be able to withdraw common shares and hold them directly as a result.

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***Holders of ADSs may experience dilution of their holdings due to inability to participate in rights offerings.***

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless we indicate that we wish such rights to be made available to holders of ADSs and the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs or are registered under the provisions of the Securities Act. The depositary will try to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.

***The depositary for the ADSs may give us a discretionary proxy to vote our shares of common stock underlying the ADSs to the extent holders of ADSs do not timely provide voting instructions to the depositary in accordance with the deposit agreement, which could adversely affect the interests of ADS holders.***

Under the deposit agreement for the ADSs, if we ask the depositary to solicit your instructions at least 30 days before the meeting date but the depositary does not receive voting instructions as to a question to be voted on from you by the specified date and we confirm to the depositary that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we wish to receive a discretionary proxy to vote uninstructed common shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as of the instruction cutoff date we reasonably do not know of any substantial shareholder opposition to that
question; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that question is not materially adverse to the interests of our shareholders,

then the depositary will consider you to have authorized and directed it to give a discretionary proxy to a person designated by us to vote the number of deposited common shares represented by your ADSs as to that question.

The effect of this discretionary proxy is that if holders do not provide voting instructions to the depositary in the manner required by the deposit agreement, we may acquire the right to vote the common shares underlying their ADSs. This may make it more difficult for ADS holders to influence the management of our company. Direct holders of our common shares are not subject to this discretionary proxy.

***ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.***

The deposit agreement governing the ADSs representing our shares of common stock provides that, to the fullest extent permitted by applicable law, holders and beneficial owners of ADSs irrevocably waive the right to a jury trial of any claim that they may have against us or the depositary arising from or relating to our shares of common stock, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws. The waiver continues to apply to claims that arise during the period when a holder holds the ADSs, even if the ADS holder subsequently withdraws the underlying shares of common stock. Purchasers of ADSs in secondary transactions will be subject to the jury trial waiver provision to the same extent as purchasers of the ADSs offered in this offering. However, holders of ADSs will not be deemed, by agreeing to the terms of the deposit agreement, to have waived our or the depositary's compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. In fact, holders of ADSs cannot waive our or the depositary's compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder.

If you or any other owners or holders of the ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under U.S. federal securities laws, you or such other owners or holders may not be entitled to a jury trial with respect to such claims,

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which may have the effect of limiting and discouraging lawsuits against us or the depositary, and may lead to increased costs to bring a claim. If a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have, including outcomes that could be less favorable to the plaintiff(s) in any such action.

If we or the depositary opposed a demand for jury trial relying on the above-mentioned jury trial waiver, it is up to the court to determine whether such waiver is enforceable considering the facts and circumstances of that case in accordance with the applicable state and federal law.

If this jury trial waiver provision is prohibited by applicable law, an action could nevertheless proceed under the terms of the deposit agreement with a jury trial. To our knowledge, the enforceability of a jury trial waiver under the federal securities laws has not been finally adjudicated by a federal court or by the United States Supreme Court. Nonetheless, we believe that a jury trial waiver provision is generally enforceable under the laws of the State of New York, which govern the deposit agreement, by a federal or state court in the City of New York. In determining whether to enforce a jury trial waiver provision, New York courts will consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party has knowingly waived any right to trial by jury. We believe that this is the case with respect to the deposit agreement and the ADSs. In addition, New York courts will not enforce a jury trial waiver provision in order to bar a viable setoff or counterclaim sounding in fraud or one which is based upon a creditor's negligence in failing to liquidate collateral upon a guarantor's demand, or in the case of an intentional tort claim, none of which we believe are applicable in the case of the deposit agreement or the ADSs. If holders or beneficial owners of ADSs bring a claim against us or the depositary relating to the matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, such holder or beneficial owner may not have the right to a jury trial regarding such claims, which may limit and discourage lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary according to the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may have different outcomes compared to that of a jury trial, including results that could be less favorable to the plaintiff(s) in any such action.

Moreover, as the jury trial waiver relates to claims arising out of or relating to the ADSs or the deposit agreement, we believe that, as a matter of construction of the clause, the waiver would likely continue to apply to ADS holders who withdraw the shares of common stock from the ADS facility with respect to claims arising before the cancelation of the ADSs and the withdrawal of the shares of common stock, and the waiver would most likely not apply to ADS holders who subsequently withdraw the shares of common stock represented by ADSs from the ADS facility with respect to claims arising after the withdrawal. However, to our knowledge, there has been no case law on the applicability of the jury trial waiver to ADS holders who withdraw the shares of common stock represented by the ADSs from the ADS facility.

***We may amend the deposit agreement without consent from holders of ADSs, and, if such holders disagree with our amendments, their choices will be limited to selling the ADSs or withdrawing the underlying shares of our common stock.***

We may agree with the depositary to amend the deposit agreement without consent from holders of ADSs. If an amendment increases fees to be charged to ADS holders or prejudices a material right of ADS holders, it will not become effective until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, ADS holders are considered, by continuing to hold their ADSs, to have agreed to the amendment and to be bound by the amended deposit agreement. If holders of ADSs do not agree with an amendment to the deposit agreement, their choices will be limited to selling the ADSs or withdrawing the underlying shares of our common stock. No assurance can be given that a sale of ADSs could be made at a price satisfactory to the holder in such circumstances.

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***We are incorporated in Japan, and it may be more difficult to enforce judgments obtained in courts outside Japan.***

We are incorporated in Japan as a joint stock corporation with limited liability. Most of our directors are non-U.S. residents, and a substantial portion of our assets and the personal assets of our directors and corporate officers are located outside the United States. As a result, when compared to a U.S. company, it may be more difficult for investors to effect service of process in the United States upon us or to enforce against us, our directors or corporate officers, judgments obtained in U.S. courts predicated upon civil liability provisions of the federal or state securities laws of the United States. or similar judgments obtained in other courts outside Japan. There is doubt as to the enforceability in Japanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon the federal and state securities laws of the United States.

***Prior notification under the Foreign Exchange and Foreign Trade Act of Japan may be required in the case of acquisition by foreign investors of our shares.***

Because we are engaged in certain businesses designated by the Foreign Exchange and Foreign Trade Act of Japan (Act No. 228 of 1949, as amended), or the Foreign Exchange and Foreign Trade Act, and its related cabinet orders and ministerial ordinances, or collectively, the Foreign Exchange Regulations, such as the development of our PayPay app through which we collect certain types of personal information of one million or more people, if a foreign investor, as defined under the Foreign Exchange and Foreign Trade Act, intends to consummate an acquisition of shares of our common stock that constitutes an "inward direct investment," or IDI, under the Foreign Exchange Regulations, the foreign investor, in general, must file prior notification of such IDI with the Minister of Finance and any other competent minister, or the Ministers. IDI includes an acquisition by a foreign investor of one or more shares of our common stock. While certain exemptions from the prior notification requirements are provided for under the Foreign Exchange Regulations, ****foreign investors seeking to make any acquisition of shares of our common stock would not be eligible for such exemptions. If such prior notification is filed, the proposed acquisition may not be consummated until the prescribed screening period expires. In some cases, the Ministers may extend the screening period, and may recommend or order a modification or abandonment of such acquisition. In addition, if certain conditions including those prescribed in light of national security of Japan under the Foreign Exchange Regulations are met, the Ministers may order the disposal of the shares acquired or take other measures. Consequently, any foreign investor seeking to acquire shares of our common stock that constitutes an IDI may not consummate such acquisition on the expected timeframe, in accordance with an intended plan, or at all.

Additionally, if a foreign investor consents, at a general meeting of shareholders, to certain proposals having a material influence on our management such as the (i) election of such foreign investor or any of its related persons (as defined in the Foreign Exchange Regulations) as our directors or (ii) transfer or discontinuation of our business, such consent, subject to certain exemptions, also constitutes an "inward direct investment" requiring prior notification. If such prior notification is filed, such consent may not be given until the prescribed screening period expires. As a result, such foreign investors may have difficulties giving such consent in accordance with an intended plan, or at all.

Regarding the acquisition of ADSs, the Minister of Finance has expressed its view that, provided that it should be judged in accordance with the actual situation on a case-by-case basis, in general, in the case where a Japanese corporation that is not listed on any Japanese stock exchange, such as us, lists depositary receipts issued by a foreign depository bank backed by the shares of such Japanese corporation on any foreign stock exchange, it is considered that, while such a foreign depositary bank needs to submit a prior notification of IDI upon acquiring the shares, non-residents or foreign corporations that acquire such depositary receipts do not need to submit any prior notification of IDI because the foreign depositary bank that will acquire the shares of such Japanese corporation is required to submit a prior notification. However, there is no guarantee that the Minister of Finance will maintain this view in the future. If the Minister of Finance changes its view and requires non-residents or foreign corporations seeking to acquire the ADSs to submit a prior notification of IDI, foreign

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investors may not consummate such acquisition on the expected timeframe, in accordance with an intended plan, or at all. Also, foreign investors that intend to surrender the ADSs and thereby acquire the underlying shares of our common stock will be required to submit a prior notification to the Ministers.

The discussion above is not exhaustive of all possible foreign exchange controls considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange controls consequences of the acquisition, ownership and disposition of the ADSs, shares of our common stock or voting rights by consulting their own advisors. For a more detailed discussion on the requirements and procedures regarding the prior notifications under the Foreign Exchange Regulations, see "Japanese Foreign Exchange Regulations."

***Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.***

The initial public offering price of $ per ADS is substantially higher than the pro forma net tangible book value per share of our outstanding capital stock upon the completion of this offering. Therefore, if you purchase ADSs representing shares of our common stock in this offering, you will incur immediate dilution of $ in the net tangible book value per ADS from the price you paid. In addition, investors purchasing ADSs representing shares of our common stock from us in this offering will have contributed % of the total consideration paid to us by all stockholders who purchased shares of our common stock, in exchange for acquiring approximately % of the outstanding shares of our common stock as of , 2026, after giving effect to this offering. The exercise of outstanding options to purchase shares of our common stock and the issuance of future equity-based awards may result in further dilution.

***We may lose our foreign private issuer status in the future, which would then require us to comply with U.S. domestic reporting requirements and could impose additional regulatory burdens and costs on us.***

We currently qualify as a foreign private issuer under U.S. securities laws, which allows us to follow certain reduced reporting and governance requirements. See "—As a Japanese joint stock corporation, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to public U.S. companies, as well as from certain disclosure requirements under the Exchange Act. This may afford less protection to holders of the ADSs than they would enjoy if we complied fully with the Nasdaq corporate governance listing standards." These and other accommodations available to us as a foreign private issuer help reduce our compliance burdens. However, U.S. securities regulations require us to reassess our foreign private issuer status annually, and we will lose foreign private issuer status if more than 50% of our voting shares are held by U.S. residents and we fail to meet additional requirements regarding the nationality of our officers or directors, the location of our assets, or the primary place of administration of our business.

If we cease to qualify as a foreign private issuer, we will become subject to the full reporting and regulatory regime applicable to U.S. domestic issuers. This change would require us, among other things, to file periodic reports with the SEC on the domestic forms (Form 10-K for annual reports and Form 10-Q for quarterly reports) with more detailed disclosures and on accelerated timelines, instead of the streamlined forms we are allowed to use as a foreign private issuer. We would also have to comply with U.S. federal proxy rules and regulations, including the requirement to distribute proxy statements for shareholder meetings and to comply with U.S. executive compensation disclosure standards, from which we are currently exempt. Furthermore, our directors, officers and principal shareholders would become subject to the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act, which would require them to file reports disclosing their ownership and transactions in our stock and could expose them to liability for short-swing profits. We may also no longer be able to rely on home-country governance practices.

We would likely also need to transition our financial reporting to comply with U.S. accounting principles and standards. As a foreign private issuer, we are permitted to report our financial statements in

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accordance with IFRS or other home-country accounting standards, but if we lose foreign private issuer-status we would be required to prepare our financial statements in accordance with U.S. GAAP for all historical and future periods. Adopting U.S. GAAP could be costly and time-consuming, potentially requiring us to adjust our accounting processes, systems, and personnel to address the differences between IFRS and U.S. GAAP.

In general, complying with the U.S. domestic issuer requirements, including the more stringent reporting, disclosure and governance rules, is expected to significantly increase our legal, accounting and administrative costs. We may need to hire additional finance and legal personnel, upgrade our systems, and engage outside advisors to meet these new obligations. Management's attention may also be diverted from other business matters to focus on compliance with the additional regulatory requirements. These changes could materially and adversely affect our business, financial condition and results of operations, by increasing our expenses and regulatory risks and by imposing constraints on how we manage our corporate affairs.

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**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA** 

This prospectus contains forward-looking statements that involve risks and uncertainties, including statements based on our current expectations, assumptions, estimates and projections about us and our industry. The forward-looking statements are contained principally in the sections entitled "Prospectus Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The forward-looking statements included in this prospectus relate to, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to successfully execute our business and growth strategy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our future financial performance, including our expectations regarding our revenue, cost of revenue and
operating expenses and our ability to achieve and maintain future profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• industry landscape of, and trends in, Japan's market for electronic payment services and digital
financial services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to compete successfully against future and current competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our expectations regarding demand for, and market acceptance of, our services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to retain and grow our relationships with users and merchants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to obtain and maintain the necessary licenses to operate our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to partner with card networks, payment services providers and other participants in the payment
ecosystem;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to maintain and improve our technological infrastructure and protect it from cyber-attacks while
simultaneously continuing to innovate and develop new technologies and services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to manage risk associated with our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to comply with existing, amended or new laws, regulations and policies applicable to our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic and business conditions and uncertainties affecting the markets in which we operate, and
economic volatility that could adversely impact our business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our anticipated use of proceeds from this offering.

This prospectus also contains market data relating to the electronic payment services and digital financial services market in Japan, including our general expectations, market position, market size, and market opportunities of the markets in which we participate, that are based on industry publications and reports, in addition to brand awareness surveys that we commissioned as well as patent data we purchased. This information involves a number of assumptions, estimates and limitations. These industry publications, surveys and forecasts generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Nothing in such data should be construed as

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advice. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. The electronic payment services and digital financial services market in Japan may not grow at the rates projected by market data, or at all. The failure of this market to grow at the projected rates may have a material adverse effect on our business and the market price of the ADSs. If any one or more of the assumptions underlying the market data turns out to be incorrect, actual results may differ from the projections based on these assumptions. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate is necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors" and elsewhere in this prospectus. You should not place undue reliance on these forward-looking statements.

Certain users and merchants providing testimonials in this prospectus have been compensated for their time and reimbursed for their expenses in providing such testimonials.

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we have referred to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

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**USE OF PROCEEDS** 

We estimate that we will receive net proceeds from this offering of approximately US$555 million, or approximately US$703 million if the underwriters exercise their over-allotment option in full, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us and based upon an assumed initial public offering price of US$18.50 per ADS (the mid-point of the estimated initial public offering price range shown on the front cover of this prospectus). A US$1.00 increase (decrease) in the assumed initial public offering price of US$1.00 per ADS would increase (decrease) the net proceeds to us from this offering by US$30 million, after deducting the estimated underwriting discounts and commissions and the estimated aggregate offering expenses payable by us and assuming no change to the number of ADSs offered by us as set forth on the cover page of this prospectus.

The principal purposes of this offering are to create a public market for our ADSs and enable access to the public equity markets for us and our shareholders. We intend to use the net proceeds we receive from this offering for general corporate purposes, including working capital, sales and marketing activities, product development, general and administrative matters, and capital expenditures. Additionally, we may use a portion of the net proceeds from this offering to acquire or invest in businesses, services or technologies, although we do not currently have any agreements or commitments to enter into any material acquisitions or investments. We cannot further specify with certainty the particular uses for the net proceeds from this offering. Accordingly, we will have broad discretion in using these proceeds. Pending the use of proceeds from this offering as described above, we may hold them as cash or invest them in cash equivalents or securities.

We will not receive any proceeds from the sale of shares by the selling shareholder in this offering.

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**DIVIDEND POLICY** 

We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business and we do not expect to declare or pay any dividends in the foreseeable future. In addition, our articles of incorporation, which will be amended upon the listing of the ADSs, will authorize our board of directors, rather than our shareholders, to determine matters relating to the appropriation of surplus, including the declaration of dividends. Any future determination to declare cash dividends will be subject to such amendment and, following the effectiveness of such amendment, will be made by resolution of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, any contractual restrictions, general business conditions and other factors that our board of directors may deem relevant.

If we pay any dividends on our common shares, we will pay those dividends which are payable in respect of the common shares underlying the ADSs to the depositary, as the registered holder of such common shares, and the depositary then will pay such amounts to the ADS holders in proportion to the common shares underlying the ADSs held by such ADS holders, less the fees and expenses payable under the deposit agreement in respect of, and any Japanese tax applicable to, such dividends. See "Taxation—Japanese Taxation" and "Description of American Depositary Shares." The depositary will generally convert the Japanese yen it receives into U.S. dollars and distribute the U.S. dollar amounts to holders of ADSs. See "Description of American Depositary Shares."

We currently intend to retain any future earnings and may not pay any dividends for the foreseeable future. See "Risk Factors—Risks Related to Shares of our Common Stock, the ADSs and this Offering—We may not pay dividends for the foreseeable future."

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**CAPITALIZATION AND INDEBTEDNESS** 

The following table sets forth our capitalization and indebtedness as of December 31, 2025 presented on an actual basis and an as adjusted basis to give effect to the issuance and sale of the common shares in the form of ADSs offered hereby at an assumed initial public offering price of US$18.50 per ADS, the mid-point of the estimated public offering price range shown on the front cover of this prospectus, after deducting underwriting discounts, commissions and estimated offering expenses payable by us assuming the underwriters exercise their over-allotment option in full.

The as adjusted information below is illustrative only and our capitalization and indebtedness following the closing of this offering is subject to adjustment based on the initial public offering price of the ADSs and other terms of this offering determined at pricing. You should read this table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

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| | | |
|:---|:---|:---|
|  | **As of December 31, 2025** | **As of December 31, 2025** |
|  | **Actual** | **As Adjusted<sup>(2)</sup>** |
|  | **(in millions of yen)** | **(in millions of yen)** |
|  **Liabilities:** |  |  |
|  Borrowings (current) | ¥378084 | ¥378084 |
|  Borrowings (non-current) | ¥190225 | ¥190225 |
|  **Shareholders' equity:** |  |  |
|  Shareholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Share capital: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issued capital<sup>(1)</sup> | 152405 | 207727 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Authorized—1,600,000,000 shares; Issued—637,571,200 shares (676,873,535 shares as adjusted for the offering (assuming the over-allotment option is exercised in full)) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share premium | 37260 | 92195 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 96357 | 96357 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive loss | (1852) | (1852) |
|  Equity attributable to owners of the parent company | 284170 | 394428 |
|  Non-controlling interests | 36059 | 36059 |
|  Total shareholders' equity | 320229 | 430487 |
|  Total capitalization<sup>(3)</sup> | ¥510454 | ¥620712 |

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Notes:

(1) All of our issued shares of capital stock are fully-paid and non-assessable. On November 15, 2025, we split our common stock at a ratio of 1:200. The numbers of authorized and issued shares reflect the split.

(2) The translations from U.S. dollars to yen in the above information were made at a rate of ¥156.80 to
US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2025.

(3) Total capitalization is calculated as borrowings (non-current) plus total shareholders' equity.

There has been no material change to our capitalization and indebtedness since December 31, 2025.

A US$1.00 increase (decrease) in the assumed initial public offering price of US$18.50 per ADS (the mid-point of the estimated initial public offering price range shown on the front cover page of this prospectus) would increase (decrease) our as adjusted amount of each of issued capital, share premium, equity attributable to shareholders of the Company, total shareholders' equity and total capitalization by approximately ¥7 per ADS, assuming no change to the number of ADS offered by us as set forth on the front cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The adjusted information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing.

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**DILUTION** 

If you invest in the ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per common share is substantially in excess of the book value per common share attributable to the existing shareholders for our presently issued common shares.

Our net tangible book value as of December 31, 2025 was approximately US$848 million, or US$1.33 per common share as of that date, and US$1.33 per ADS. Net tangible book value represents the amount of our total consolidated assets, less the amount of our intangible assets, deferred tax assets, goodwill and total consolidated liabilities. Dilution is determined by subtracting net tangible book value per common share from our consolidated total assets, after giving effect to the issuance and sale by us of shares represented by ADSs in this offering at an assumed initial public offering price of US$18.50 per ADS (the mid-point of the estimated initial public offering price range shown on the front cover page of this prospectus) after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us.

Without taking into account any other changes in net tangible book value after December 31, 2025, other than to give effect to the issuance and sale by us of 54,987,214 common shares in the form of ADSs in this offering at an assumed initial public offering price of US$18.50 per ADS (the mid-point of the estimated initial public offering price range shown on the front cover page of this prospectus) after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of December 31, 2025 would have been US$1,403 million, or US$2.10 per issued common share and US$2.10 per ADS. This represents an immediate increase in net tangible book value of US$0.77 per common share and US$0.77 per ADS to the existing shareholders and an immediate dilution in net tangible book value of US$16.40 per common share and US$16.40 per ADS to investors purchasing ADSs in this offering.

The following table illustrates such dilution:

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| | | |
|:---|:---|:---|
|  | **Per Common**<br>**Share** | **Per ADS** |
|  Actual net tangible book value as of December 31, 2025 | US$1.33 | US$1.33 |
|  Pro forma as adjusted net tangible book value after giving effect to this offering | US$2.10 | US$2.10 |
|  Assumed initial public offering price | US$18.50 | US$18.50 |
|  Dilution in net tangible book value to new investors in the offering | US$16.40 | US$16.40 |

---

The amount of dilution in net tangible book value to new investors in this offering set forth above is calculated by deducting the pro forma net tangible book value after giving effect to this offering.

The following table summarizes, on a pro forma as adjusted basis as of December 31, 2025, the differences between existing shareholders and the new investors with respect to the number of common shares (in the form of ADSs or shares) purchased from us, the total consideration paid and the average price per common share and per ADS paid before deducting the underwriting discounts and commissions and estimated offering expenses. The total number of common shares does not include common shares underlying the ADSs issuable upon the exercise of the option to purchase additional ADSs granted to the underwriters.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Common Shares Total** | **Common Shares Total** | <br> **Total**<br> **Consideration** | <br> **Total**<br> **Consideration** | <br> **Total**<br> **Consideration** | **Average<br>Price per<br>Common<br>Share<br>Equivalent** | **Average<br>Price per<br>Common<br>Share<br>Equivalent** | **Average<br>Price per<br>ADS<br>Equivalent** | **Average<br>Price per<br>ADS<br>Equivalent** |
| | **Number** | **Percent** | **Amount** | **Amount** | **Percent** | **Average<br>Price per<br>Common<br>Share<br>Equivalent** | **Average<br>Price per<br>Common<br>Share<br>Equivalent** | **Average<br>Price per<br>ADS<br>Equivalent** | **Average<br>Price per<br>ADS<br>Equivalent** |
|  | | | **(in millions)** | **(in millions)** | | | | | |
|  Existing shareholders | 613638240 | 91.78% | US$ | 3135 | 84.50% | US$ | 5.11 | US$ | 5.11 |
|  New investors | 54987214 | 8.22% | US$ | 575 | 15.50% | US$ | 18.50 | US$ | 18.50 |
|  Total | 668625454 | 100.00% | US$ | 3710 | 100.00% |  |  |  |  |

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A US$1.00 increase (decrease) in the assumed public offering price of US$18.50 per ADS (the mid-point of the estimated initial public offering price range shown on the front cover page of this prospectus) would increase (decrease) our pro forma as adjusted net tangible book value after giving effect to the offering by US$30 million, the pro forma as adjusted net tangible book value per common share and per ADS after giving effect to this offering by US$0.04 per common share and US$0.04 per ADS and the dilution in pro forma as adjusted net tangible book value per common share and per ADS to new investors in this offering by US$0.96 per common share and US$0.96 per ADS, assuming no change to the number of ADS offered by us as set forth on the front cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

The pro forma information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of the ADSs and other terms of this offering determined at pricing. The translations from yen to U.S. dollars and from U.S. dollars to yen in the above information were made at a rate of ¥156.80 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2025.

The discussion and tables above do not take into consideration common shares underlying the ADSs issuable upon the exercise of the option to purchase additional ADSs granted to the underwriters. In addition, the discussion and tables above do not take into consideration the outstanding options granted under our share incentive plan. As of the date of this prospectus, there are also 12,436,600 common shares available for future issuance upon the exercise of future grants under our equity incentive plan. If any of these options are exercised, there will be further dilution to new investors.

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**ENFORCEMENT OF CIVIL LIABILITIES** 

We are a joint stock corporation incorporated with limited liability under the laws of Japan. All but one of our directors and other officers are residents of countries other than the United States. A substantial portion of our and their assets are located outside of the United States. As a result, it may not be possible for holders or beneficial owners of ADSs or shares of our common stock to effect service of process within the United States or elsewhere outside of Japan upon us or these persons, or to enforce against us or these persons judgments obtained in U.S. courts or elsewhere, whether or not predicated upon the civil liability provisions of the U.S. federal securities or other laws of the United States or any state thereof. Our legal counsel in Japan, Mori Hamada & Matsumoto, has advised us that in original actions or in actions for enforcement of judgments of U.S. federal or state courts brought before Japanese courts, there is general doubt as to the enforceability of liabilities based solely on U.S. federal and state securities laws.

We have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the federal securities laws of the United States or of any state in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

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**OUR HISTORY AND CORPORATE STRUCTURE** 

We were established in Japan on June 15, 2018 under the corporate name of Pay Corporation, as a joint venture between SoftBank Corp. and Yahoo Japan Corporation (currently LY Corporation), with the aim of developing and offering electronic payment services. In July 2018 we changed our corporate name to PayPay Corporation. Yahoo Japan Corporation later changed its corporate name to Z Holdings Corporation in October 2019 when it transformed to a holding company structure and transferred its business operation to a newly established company named Yahoo Japan Corporation and subsequently merged with its wholly-owned subsidiaries including Yahoo Japan Corporation and LINE Corporation, the operator of the LINE messaging app, in October 2023, changing its corporate name to LY Corporation. We are authorized to conduct our lines of business under Article 2 of our articles of incorporation.

The following is a summary of our key business development milestones since our establishment in 2018:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In October 2018, we began to offer our main electronic payment services under the brand "PayPay"
with the technology-related support of One97 Communications Limited, the operator of the Paytm app in India.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In September 2019, Yahoo Japan Corporation's electronic payment business, Yahoo! Money, was transferred
to us and combined with PayPay, and we registered our business under the Payment Services Act of Japan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In February 2020, we registered as a settlement business operator under the Ministry of Internal Affairs and
Communications of Japan's "MyNaPoint" campaign implemented to incentivize the use of Japanese individual number cards (known in Japan as "My Number Cards").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In October 2022, we acquired all the shares of PayPay Card Corporation from Yahoo Japan Corporation (currently
LY Corporation), making it our wholly-owned subsidiary. As part of the transaction, PayPay Card Corporation succeeded Yahoo Japan Corporation's credit card merchant acquiring business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In April 2023, we completed the acquisition of 35.0% of the shares of PayPay Securities Corporation through a
third-party allotment of new shares, making it a joint venture among us, SoftBank Corp., Mizuho Securities Co., Ltd and Z Holdings Corporation (currently LY Corporation). Upon the completion of the transaction, SoftBank Corp., Mizuho Securities Co.,
Ltd. and Z Holdings Corporation (currently LY Corporation) held 30.6%, 34.0% and 0.4% of the shares, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In July 2024, we established PayPay SC Corporation as a joint venture with SB C&S Corporation and SB
Payment Service Corporation. As of the date of this prospectus, we, SB C&S Corporation and SB Payment Service Corporation each hold 34%, 33% and 33%, respectively, of the shares of PayPay SC Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In August 2024, we were designated by the Ministry of Health, Labour and Welfare as a funds transfer service
provider for the purpose of digital wage payments, which allows employers to transfer wages directly to their employees' PayPay accounts, the first company to be so designated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In November 2024, we completed the acquisition of Credit Engine Group, Inc. (currently Credit Engine, Inc.),
an online loan management service provider, making it our wholly-owned subsidiary.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In April 2025, we acquired additional shares in PayPay Securities Corporation from SoftBank Corp. and LY
Corporation, as well as from a third-party allocation of shares conducted by PayPay Securities Corporation, making it our consolidated subsidiary. Upon the completion of the transaction, we held 75.2% of the shares of PayPay Securities Corporation,
while Mizuho Securities Co., Ltd. held 24.8%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In April 2025, we completed the acquisition of 47.1% of the common shares and 100% of the non-voting Class A preferred shares of PayPay Bank Corporation, Japan's first internet bank, from Z Financial Corporation (currently LY Corporation) and Mitsui Sumitomo Insurance Co., Ltd. Sumitomo
Mitsui Banking Corporation, Fujitsu Ltd., Taiju Life Insurance Company Limited and Sumitomo Life Insurance Company held 46.6%, 5.3%, 0.5% and 0.5% of the common shares, respectively, upon completion of the transaction. Upon the conversion of the non-voting Class A preferred shares of PayPay Bank Corporation into common shares, effective April 28, 2025, we held 75.5% of the common shares, making PayPay Bank Corporation our consolidated subsidiary.
Sumitomo Mitsui Banking Corporation, Fujitsu Ltd., Taiju Life Insurance Company Limited and Sumitomo Life Insurance Company held 21.5%, 2.4%, 0.2% and 0.2%, respectively, of the common shares, respectively, upon the conversion of the non-voting Class A preferred shares of PayPay Bank Corporation into common shares.

On July 30, 2021, we completed an issuance of our shares (except for the conversion of Class A preferred shares into common shares described below), after which SoftBank Corp. held 960,000 shares (275,000 common shares and 685,000 Class A preferred shares), Yahoo Japan Corporation held 960,000 shares (275,000 common shares and 685,000 Class A preferred shares) and SoftBank Group Corp., the parent company of SoftBank Corp. and Z Holdings Corporation (currently LY Corporation), held 830,000 of our shares (550,000 common shares and 280,000 Class A preferred shares).

On December 21, 2021, SoftBank Group Corp. transferred all of its 830,000 shares to SVF II Piranha (DE) LLC, an investment fund ultimately controlled by SoftBank Group Corp. On August 31, 2022, Yahoo Japan Corporation transferred all of its 960,000 shares to Z Intermediate Holdings Corporation, Z Holdings Corporation's (currently LY Corporation) wholly-owned subsidiary, out of which Z Intermediate Holdings Corporation transferred 163,196 common shares to Z Holdings Corporation (currently LY Corporation) on the same date. On October 1, 2022, all of the remaining 796,804 shares held by Z Intermediate Holdings Corporation were transferred to a new holding company, B Holdings Corporation, in which SoftBank Corp. held 50% of the shares and Z Holdings Corporation (currently LY Corporation) indirectly held 50% of the shares. On the same date, SoftBank Corp. transferred 796,804 of our common shares to B Holdings Corporation. By that date, all the Class A preferred shares we had issued were converted on a one-to-one basis into common shares.

On April 4, 2025, SVF II Piranha (DE) LLC exercised stock options it purchased from One97 Communications Singapore Private Limited, a subsidiary of One97 Communications Limited in December 2024, originally granted by us to One97 Communications Singapore Private Limited in September 2020, and received 159,012 common shares.

On April 10, 2025, we conducted a third-party allotment of new shares in which we issued 94,802 shares of common stock to SVF II Piranha (DE) LLC, 92,021 shares of common stock to SoftBank Corp. and 92,021 shares of common stock to LY Corporation. Following this issuance, and as of the date of this prospectus, B Holdings Corporation, SVF II Piranha (DE) LLC, SoftBank Corp. and LY Corporation hold 49.99%, 34.00%, 8.01% and 8.01% of our shares, respectively.

On November 15, 2025, we effected a stock split of one share into 200 shares. The historical issuances of preferred shares and common shares described in this section have not been retroactively adjusted to reflect the Stock Split.

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The following diagram illustrates our corporate structure as of the date of this prospectus. Certain entities that are immaterial to our results of operations, business and financial condition are omitted.

**Corporate Structure**![LOGO](g941409g31k31.jpg)

Note: As of end of December 2025

**Companies Using the PayPay Brand** 

In October 2022, Z Holdings Corporation (currently LY Corporation) transferred to us the intellectual property rights relating to the "PayPay" brand, and in exchange, we granted Z Holdings Corporation (currently LY Corporation) a perpetual, non-exclusive, non-transferable license to use the transferred intellectual property rights relating to the "PayPay" brand as well as the right to sublicense those rights to certain of its subsidiaries, including to PayPay Insurance Service Corporation, without any subsequent payment obligations owed to us. As of the date of this prospectus, PayPay Insurance Service Corporation is the only company that is not part of our group and uses "PayPay" in its company name.

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**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION** 

**AND RESULTS OF OPERATIONS** 

*You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled "Selected Consolidated Financial Data" and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this prospectus. See "Special Note Regarding Forward-Looking Statements and Industry Data."* 

**Overview** 

We offer a digital finance platform with services that range from easy-to-use payments services to a full-suite of financial services, designed to simplify and enrich the everyday lives of consumers and businesses in Japan. Payments services contribute to broad-based user engagement through transaction frequency, while financial services deepen and accelerate user engagement through cross-selling and long-term product relationships. Together, they function as mutually reinforcing pillars of our ecosystem and form the foundation of our user engagement strategy.

<u>Payment business</u>. Our payment business is anchored by PayPay, Japan's leading code-based mobile payment platform, and PayPay Card, our integrated credit card service. Since its launch in 2018, PayPay has become one of the most widely used digital wallets in Japan, with approximately 72 million PayPay registered users as of December 31, 2025, and approximately 40 million monthly transacting users, or MTUs, during December 2025. PayPay allows users to make fast, secure payments by simply scanning a code with their smartphone, while offering merchants a low-cost, easy-to-adopt digital payment solution. We believe our rapid growth has been supported by key drivers, including the launch of multiple large-scale promotional campaigns offering an aggregate of ¥10 billion in incentives, government policies designed to actively promote and encourage the use of cashless payments, as well as heightened consumer adoption during the COVID-19 pandemic as a means of avoiding physical cash handling. Our users can charge their PayPay Balance via several methods and make payments from that pre-loaded balance or utilize PayPay Credit to leverage credit extended to them by PayPay, if approved for PayPay Card credit. PayPay Card Corporation, through its more traditional credit card offerings, also offers revolving credit, cash advances, and installment plans for eligible card holders. PayPay Card had 16.0 million active cards issued as of December 31, 2025. Together, we recorded Payment Segment GMV of ¥15.39 trillion based on transactions processed through PayPay Balance, PayPay Credit and PayPay Card for the year ended March 31, 2025, reinforcing our dominant position in Japan's code-based payments market. These services support a broad range of daily transactions—both offline and online—and form the foundation of our efforts to further deepen user engagement and expand monetization across our ecosystem.

<u>Financial service business</u>. Our financial service business, anchored by PayPay Bank Corporation and PayPay Securities Corporation, complements our payment platform by offering seamless, app-based banking and investing services. PayPay Bank services are integrated into the PayPay ecosystem and, as of December 31, 2025, had 9.7 million accounts with a total of ¥2,281.9 billion in deposits and ¥1,098.3 billion in loan balances, including card loans, business loans and mortgages. PayPay Securities Corporation, with its standalone app in addition to also being embedded in the PayPay app, reached 1.54 million brokerage accounts as of December 31, 2025, and serves a broad base of primarily first-time investors through user-friendly features, such as micro-investing via "PayPay Invest" (as described in more detail below) which allows users to begin investing with as little as ¥100. The feature is often used as a sub-account for casual securities investment, and has become a gateway for users to experience investing in a more simple and accessible format. Our strategy in financial services is to further deepen integration with PayPay—recently exemplified by PayPay acquiring majority stakes in both PayPay Bank Corporation and PayPay Securities Corporation in April 2025—to create a unified digital

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finance platform where users can effortlessly manage spending, saving, borrowing and investing all within a single mobile experience.

As we have expanded the use cases and frequency of payment transactions, our payment business has not only scaled with user growth, but also contributed meaningfully to overall profitability. In parallel, we have expanded our revenue mix by deepening financial engagement with existing users, leveraging cross-selling between our payment and financial service businesses to increase average revenue per user and improve platform monetization. This deliberate expansion of revenue streams alongside our product ecosystem has enabled us to simultaneously grow revenue and expand margins, which we believe is unique and differentiating across the broader global fintech landscape.

As we expand our service offerings and grow our business, it is important to continue maintaining constructive and transparent relationships with the regulatory authorities that supervise our business. The scope and pace of our license acquisitions underscore the depth of our regulatory engagement and serve as further validation of our role in advancing national policy objectives, particularly the Japanese government's goal of accelerating adoption of digital and cashless payments across the broader Japanese population. To date, we have expanded our business steadily and strategically through the acquisition of a comprehensive set of regulatory licenses, reflecting both our long-term commitment to compliance and the government's support for Japan's transition to a more digital and fintech-enabled financial ecosystem. We have obtained 13 licenses across payment and financial business domains, including licenses for banking, securities brokerage, credit card operations and funds transfer, enabling us to offer a broad range of regulated financial services directly through our platform.

**Our Financial Model** 

We operate a technology-enabled digital finance platform with two primary business areas—payments settlement and financial services—each supported by varying yet synergistic monetization drivers. Our financial model is underpinned by a combination of GMV-driven revenue, interest income, and a highly scalable, technology-oriented and low-cost operating structure.

**Our Revenue Underpinned by "Payment" Business**![LOGO](g941409g10z10.jpg)

1. Represents proportion of total revenue of each segment. Includes inter-segment eliminations. The same applies hereafter.

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***Payments-Driven Revenue Model***

Our core business model is primarily payments-driven, with monetization centered on transaction flows between users and merchants. Our payment services include payment and related services offered through our PayPay app and payment credit services such as revolving and installment payments options and cash advances. Revenue generated from the payments services is characterized by both transaction-based revenue from merchants and users, and interest income generated from our credit products. We recorded revenue from external customers in the Payment segment of ¥176.6 billion and ¥163.3 billion, or 86.7% and 88.1% of consolidated revenue from external customers, in the year ended March 31, 2025 and the nine-month period ended December 31, 2025, respectively. Additionally, we recorded interest income in the Payment segment and the Financial service segment of ¥68.6 billion and ¥19.8 billion, respectively, in the year ended March 31, 2025, and ¥61.2 billion and ¥22.3 billion, respectively, in the nine-month period ended December 31, 2025.<sup>7</sup> In the year ended March 31, 2025, we recorded Payment Segment GMV of ¥15.39 trillion, reflecting our scale and high transaction frequency across a large user base.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Code-based Payment Settlement Services*. We offer code-based cashless payments to merchants and
consumers across Japan. Revenue is primarily derived from transaction and service income, which includes merchant discount fees and other payment-related service charges. Our ability to scale this service profitably is driven by our two-sided network model, which facilitates growth in GMV without a proportional increase in marginal costs, strong user engagement, continuous expansion of merchant coverage and higher-value use cases such as
utility bill payments, and tax settlements. In particular, we have seen momentum in online-based GMV growth, supported by increased transaction frequency and larger average ticket sizes in digital commerce settings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Credit Card Payment Services and Credit Card Merchant Acquisition*. We also generate revenue through our
credit card issuance and acquiring business operated by PayPay Card Corporation. Revenue consists of interchange fees from merchants, annual and other user fees, as well as interest income from revolving balances, cash advances, and installment
payments. We actively promote higher-margin credit usage through campaigns that encourage card registration within the PayPay app, offering users additional PayPay Points or payment flexibility tied to usage conditions. This integration has enabled
us to lower customer acquisition costs, while driving increased GMV and improved monetization through revolving and installment plans. Credit risk management is supported by our proprietary data-driven credit model that utilizes data from the large
volume of payment transactions on our platform, exceeding 7.8 billion transactions per year. We have seen continued growth in the Number of Active PayPay Card Issued, particularly among younger users, indicating the strong monetization potential of
our credit offerings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Subscription Revenue and Value-Added Services*. We also generate revenue from promotions and marketing
support provided to PayPay merchants, which are companies that our group provides the PayPay Settlement Services platform to as a method of payment in their stores. This portion of our business is currently quite limited and not a material source of
revenue.

Our most basic payment method is PayPay Balance with a merchant-presented code, in which users can easily make a payment either by scanning merchant-presented QR codes or by merchants scanning user-presented codes on their PayPay App. As illustrated in the payment flow diagram below, our revenue model typically involves the following steps: (1) a user tops up their PayPay app balance, (2) the user makes a purchase using the app at a participating merchant, and (3) we reimburse the merchant for the transaction amount, net of applicable merchant discount fees. Unlike traditional credit card networks, we operate our own merchant

<sup>7</sup> These amounts represent the total revenue of the Payment segment, including both transaction and service income and interest income, and serve as the denominator in our segment NIM calculation. 

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network, enabling us to set fee levels independently and avoid third-party network charges. In addition, because our model involves prepaid top-ups, we receive cash inflows at the outset of the transaction rather than after it has taken place, which supports a structurally cash-generative business model.

**Payment Flow (Simplified illustration<sup>1</sup>)—Top-up**![LOGO](g941409g46g46.jpg)

1. Simplified illustration of transaction when users make a payment via PayPay Balance by scanning
merchants' printed QR code. The chart does not describe payment flow, fees, or other matters.

Under this model, we derive revenue primarily from merchant discount fees, which are typically calculated as a percentage of the transaction value. These fees are paid to us by merchants in exchange for providing them with access to our scaled and active user base, which includes approximately 72 million registered PayPay app users as of December 31, 2025, 55% of which were monthly transacting users. Our seamless digital payment infrastructure and value-added tools help increase customer engagement, retention, and transaction volume, which support this model from a user standpoint. Our scale and integration of payment infrastructure and merchant tools enable efficient merchant onboarding and high-frequency payment activity, further enhancing the attractiveness of our platform to merchants. In transactions conducted via our own merchant network, we incur no intermediary, acquirer, brand, or network processing fees, which are costs typically borne under traditional credit card settlement structures. This enables us to retain a greater share of unit economics and offer more competitive pricing.

***Expansion into Financial Services***

While our business has historically been anchored in payments, we are actively expanding into other financial services domains. Our financial services include internet banking services, including loans such as mortgages and remittances through PayPay Bank Corporation, security brokerage services through PayPay Securities Corporation, PayPay Point investment services through PPSC Investment Service Corporation and loan management services through Credit Engine, Inc. The revenue derived from these services are primarily interest income and transaction and service income. We recorded revenue from external customers in Financial service of ¥27.0 billion and ¥22.1 billion, or 13.3% and 11.9% of consolidated revenue from external customers, in the year ended March 31, 2025 and the nine-month period ended December 31, 2025, respectively. Additionally, we recorded interest income in connection with Financial service of ¥19.8 billion and ¥22.3 billion

in the year ended March 31, 2025 and the nine-month period ended December 31, 2025, respectively. These

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offerings create new monetization channels and allow us to deepen our engagement with both users and merchants, providing a robust foundation for long-term revenue growth.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Internet Banking Services*. Revenue from the internet banking services is primarily derived from
interest income, calculated under the effective interest rate method. In the year ended March 31, 2025, PayPay Bank Corporation achieved a NIM of 0.88%, with interest income of ¥19,759 million and interest expenses of
¥2,248 million, reflecting disciplined asset liability management and growth in loan-to-deposit ratios. As of December 31, 2025, PayPay Bank Corporation
had total deposit balances of approximately ¥2,281.9 billion and total loan balances of ¥1,098.3 billion, highlighting ongoing user engagement and balance growth. Our banking operations also benefit from operational scalability,
allowing us to offer high-interest deposit products while preserving margin.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Securities Brokerage Business*. Revenue is earned through brokerage commissions, asset management fees,
and interest income from margin accounts. We enable users to invest small balances of accumulated PayPay Points or cash through streamlined account opening and product education features. PayPay Securities Corporation manages a growing base of
asset-under-management (AUM), supported by the national shift from savings to investment and the expanded "new NISA" program, a Japanese government tax-free stock investment program, which is
similar to the UK's Individual Savings Account (ISA) program and has further encouraged long-term investment activity among individuals.

***Cost Structure***

Our cost structure reflects the dual nature of our platform—high user engagement across payments and financial services, supported by a lean, scalable operating model. Operating expenses primarily consist of settlement related cost, provision for loss allowance and interest expenses (the sum of which we define as "Total Transaction Cost"), point expenses, employee benefit expenses, and professional and outsourcing services expenses, as well as other operating expenses including depreciation and amortization, which reflect continued investment in platform development and infrastructure. We believe that Total Transaction Cost provides meaningful insight into the variable costs of facilitating transactions, which helps evaluate our cost efficiency relative to transaction activity. We have achieved operating leverage through cost controls in marketing and fixed overhead. For example, the reduction in advertising and promotion expenses reflects a strategic shift toward lower-cost in-app engagement and more targeted user acquisition through our ecosystem. Our cost base supports continued GMV and revenue growth while preserving margin scalability across our different services.

**Our Financial Performance, Key Metrics and Financial Highlights** 

For the years ended March 31, 2023, 2024 and 2025, we generated total revenue of ¥201,194 million, ¥254,611 million, and ¥299,078 million, respectively. This growth was primarily driven by expansion in both our Payment segment and Financial service segment. The Payment segment contributed revenue of ¥165,934 million, ¥211,307 million, and ¥248,254 million for the respective years, supported by increasing code and credit card payment volume, and growth in associated interest income. The Financial service segment contributed ¥37,547 million, ¥46,208 million, and ¥53,640 million, respectively, reflecting strong momentum in deposit and loan growth at PayPay Bank Corporation and increasing securities trading activity at PayPay Securities Corporation.

Our profitability has improved significantly over the past three years. We recorded an operating loss of ¥20,548 million in the year ended March 31, 2023, which improved to an operating profit of ¥11 million in the year ended March 31, 2024, and further increased to an operating profit of ¥35,510 million in the year ended March 31, 2025. Net income attributable to shareholders of the parent company improved from a loss of ¥25,856 million in the year ended March 31, 2023 and ¥3,350 million in the year ended March 31, 2024 to a profit of ¥36,170 million in the year ended March 31, 2025. Adjusted EBITDA improved from a loss of ¥3,356 million in the year ended March 31, 2023 to a profit of ¥21,078 million in the year ended March 31, 2024

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and further improved to a profit of ¥58,650 million in the year ended March 31, 2025. These improvements reflect operating leverage achieved through revenue scale, disciplined cost management, and increased contribution from higher-margin financial services.

For the nine-month period ended December 31, 2025, we continued to observe positive trends in user growth, transaction volume, and revenue; total revenue, operating profit and profit for the period were ¥278,478 million, ¥61,008 million and ¥103,337 million, respectively, reflecting continued progress toward deepening monetization and sustaining profitable growth. Adjusted EBITDA for the nine-month period ended December 31, 2025 was ¥82,538 million.

In addition to our financial results, we use operating metrics, which our management reviews to evaluate our current and past business, measure our performance, identify trends affecting our business, and make strategic decisions. The following table presents some of our key non-IFRS financial measures, together with the most directly comparable IFRS financial measures, and operating metrics for the years ended March 31, 2023, 2024 and 2025 and the nine-month periods ended December 31, 2024 and 2025:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the nine-month<br>period ended December 31,** | **For the nine-month<br>period ended December 31,** |
|  | **2023** | **2024** | **2025** | **2024** | **2025** |
|  | **(in millions of yen, unless otherwise indicated)** | **(in millions of yen, unless otherwise indicated)** | **(in millions of yen, unless otherwise indicated)** | **(in millions of yen, unless otherwise indicated)** | **(in millions of yen, unless otherwise indicated)** |
|  Operating profit (loss) | ¥(20548) | ¥11 | ¥35510 | ¥28184 | ¥61008 |
|  Operating profit (loss) margin | (10)% | 0% | 12% | 13% | 22% |
|  Profit (loss) for the year (period) | ¥(24946) | ¥(830) | ¥39157 | ¥28957 | ¥103337 |
|  Profit (loss) for the year (period) margin | (12)% | 0% | 13% | 13% | 37% |
|  **Non-IFRS Financial Measure:** |  |  |  |  |  |
|  Adjusted EBITDA<sup>(1)</sup> | ¥(3356) | ¥21078 | ¥58650 | ¥44647 | ¥82538 |
|  Adjusted EBITDA Margin<sup>(2)</sup> | (2)% | 8% | 20% | 20% | 30% |
|  | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** | **(in trillions of yen, unless otherwise indicated)** |
|  **Operating Metrics:** |  |  |  |  |  |
|  ***Consolidated*** |  |  |  |  |  |
|  Total GMV<sup>(3)</sup> | ¥10.47 | ¥12.73 | ¥15.68 | ¥11.56 | ¥14.29 |
|  ***Payment segment*** |  |  |  |  |  |
|  Payment Segment GMV<sup>(4)</sup> | ¥10.20 | ¥12.46 | ¥15.39 | ¥11.34 | ¥14.05 |
|  Take Rate<sup>(5)</sup> | 1.63% | 1.70% | 1.61% | 1.62% | 1.63% |
|  Cost Rate<sup>(6)</sup> | 1.83% | 1.73% | 1.42% | 1.40% | 1.27% |
|  PayPay MTU (millions of users)<sup>(7)</sup> | 30.3 | 33.2 | 37.2 | 36.2 | 40.0 |
| PayPay Number of Transactions (millions of transactions)<sup>(8)</sup> | 5137.4 | 6367.7 | 7806.6 | 5810.7 | 6884.7 |
| ***Financial service segment*** |  |  |  |  |  |
| PayPay Bank Balance of Deposits (billions of yen)<sup>(9)</sup> |  | ¥1685.2 | ¥1841.0 | ¥1912.7 | ¥2281.9 |
| PayPay Bank Balance of Loans (billions of yen)<sup>(10)</sup> |  | 723.8 | 926.9 | 858.6 | 1098.3 |

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Notes:

(1) Adjusted EBITDA is defined as profit (loss) for the year (period) plus income tax expense (benefit), share of
profit (loss) of investments accounted for using the equity method, depreciation and amortization, loss on disposal of property and equipment and intangible assets, 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. See "—Our Financial Performance, Key Metrics and Financial Highlights—Gross Merchandise Value (GMV)" for a discussion of GMV.

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(4) 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.

(5) 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).

(6) 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).

(7) 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.

(8) 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.

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

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

***Gross Merchandise Value (GMV)***

One of the key business metrics for our payment settlement services is GMV, which is the yen value of total payments made (excluding cancelled transactions) and processed with our payment settlement services and financial services. Because we collect fees calculated based on the volume of payments made through our payment settlement services, including credit payment services, and our financial services, GMV is highly correlated to our revenue and we believe that it is an important business metric for investors to understand and assess our business, results of operations and growth. GMV provides useful information to investors as it represents the amount of users' spend that is being directed through our payment settlement services and financial services. GMV enables us and investors to understand, evaluate and compare the total amount of user spending that is being directed through our payment settlement services over a period of time.

The following chart shows the main sources of GMV:

**GMV Structure**![LOGO](g941409g01x18.jpg)

See "—Other Operating Metrics" for additional information on GMV.

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**Factors Driving Our Performance** 

***User Base Growth and Engagement and Merchant Base Growth***

Our financial performance is closely tied to the continued expansion and engagement of our user base. Growth in the number of registered users and MTUs, as well as increased frequency and value of transactions per user, have been key drivers of GMV, particularly in our Payment segment. Higher user engagement also increases the potential for cross-sell into financial services such as banking, investment, and credit, contributing to long-term monetization and improved unit economics.

As of December 31, 2025, we had approximately 72 million PayPay registered users, up from 67 million as of December 31, 2024 and 61 million as of December 2023. The number of MTUs increased to approximately 40 million as of December 2025, from 36 million as of December 2024 and 32 million as of December 31, 2023. The growth reflects strong brand recognition, network effects from our large merchant base, and successful marketing campaigns tailored to specific product rollouts, as well as high user engagement levels across our platform, which support frequent and repeated usage. As a result of our user activity levels, we recorded a DTU/MTU (Daily Transacting Users / Monthly Transacting Users) ratio of 34.5% as of December 2025.

We also observed sustained increases in monthly engagement per user, with the average number of transactions per MTU growing from 18.4 in the three-month period ended December 31, 2023 to 20.3 in the three-month period ended December 31, 2024 and 21.5 in the three-month period ended December 31, 2025. In parallel, Monthly GMV per User grew from ¥34,509 in the three-month period ended December 31, 2023 to ¥38,745 in the three-month period ended December 31, 2024, and further to ¥42,363 in the three-month period ended December 31, 2025, indicating a steady rise in per-user spending and platform utility.

**Monthly GMV per User—Growing Steadily Overtime**![LOGO](g941409g54a01.jpg)

1. Calculated by dividing the total Quarterly transactions for PayPay Balance, PayPay Credit, and PayPay Card by
the total Quarterly PayPay App MTU (Monthly Transacting Users).

2. Calculated by dividing the total Quarterly GMV for PayPay Balance, PayPay Credit, and PayPay Card by the
total Quarterly PayPay App MTU (Monthly Transacting Users).

3. The results of PayPay Card Corporation, which became a subsidiary in October 2022, have been retroactively
consolidated from the beginning of FY2021, in accordance with the "interest pooling method" in business combination accounting.

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Furthermore, user cohorts have exhibited strong retention and deepening usage trends over time. Across all registration cohorts from the year ended March 31, 2019 through December 31, 2025, we observed that users with longer tenures demonstrate higher active user rates and Monthly GMV per User, indicating the strength of our engagement model and the increasing relevance of PayPay's platform in daily financial activity. These patterns reinforce the long-term monetization potential of our user base.

As we continue to scale our user base and expand product offerings, we expect sustained growth in Monthly Transactions per User and Monthly GMV per User to remain a fundamental driver of top-line expansion.

The continued growth of our merchant base is also a key driver of our performance. This expansion not only broadens the reach of our ecosystem, but also enhances the utility of our platform for users by increasing the number of available payment locations, which in turn drives higher transaction frequency and payment volumes for merchants. Growth in merchant adoption is supported by our targeted onboarding campaigns, same-day settlement features, and value-added merchant tools such as coupon distribution and data analytics. As more merchants accept PayPay, the value proposition for users strengthens, contributing to a positive network effect and reinforcing user retention and engagement. Because PayPay directly manages both sides of the payment network, including users and participating merchants, our platform operates as a "two-sided" system, which enhances efficiency and supports superior economics relative to open-loop models, giving us a structural competitive advantage. This virtuous cycle between merchant adoption and user activity is central to our monetization strategy, supporting both GMV growth and margin expansion.

***GMV and Payment Mix***

GMV is a key indicator of the scale and usage intensity of our platform, particularly within our Payment segment. Growth in GMV results from both increased adoption (expansion in MTUs) and deepening engagement (more frequent usage and higher transaction values per user).

Our Payment Segment GMV grew from ¥10.20 trillion in the year ended March 31, 2023 to ¥12.46 trillion in the year ended March 31, 2024 and further to ¥15.39 trillion in the year ended March 31, 2025, representing a CAGR of 23% over the two-year period. This growth reflects both the increase in registered users and MTUs, as well as improvements in average transaction frequency and size. On a per-user basis, Monthly GMV per User rose from ¥32,410 in the three-month period ended June 30, 2023 to ¥42,363 in the three-month period ended December 31, 2025, indicating sustained upward momentum in user-level monetization.

While PayPay Balance transactions continue to account for the majority of payment volumes, the contribution of credit card GMV, including PayPay Credit, credit card functionality embedded in code usage, and PayPay Card, has substantially expanded following the consolidation of PayPay Card Corporation, resulting in increased penetration of revolving payment and cash advances options. Code-based payments tend to drive high user frequency, while physical credit payments support larger average ticket sizes and recurring interest income. We believe the combination of these two payment methods enables us to maximize user utility and revenue capture across spending categories and demographics. Initiatives to promote PayPay Credit have accelerated consolidated GMV growth and facilitated increased use of revolving and cash advances features. Additionally, marketing initiatives such as PayPay Point campaigns and PayPay Card–PayPay app integration have supported higher per-user GMV and product attach.

As we continue to enhance our product mix and user targeting, we expect the blended GMV growth to remain a key driver of our revenue, particularly in transaction and interest income lines.

***Cross-Product Penetration and Financial Services Adoption***

Our broad and comprehensive product suite is increasingly positively impacting our performance given the depth of engagement across our platform. As users adopt financial services in addition to core payments, we

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are able to generate higher revenue per user, improve retention, and unlock new monetization channels. Cross-product penetration—especially into banking, investment, and credit—has become a key driver of growth and profitability as we evolve from a payment app into a full-service digital finance platform.

We track this dynamic through user engagement and service adoption trends. Over recent years, we have experienced significant growth in payments GMV per user, increased adoption of credit and investment features, and have developed an expanded suite of financial service offerings. These trends reflect deeper monetization driven by enhanced user activity and higher utilization of value-added offerings such as point investment, securities brokerage, and credit features.

Following the consolidation of PayPay Bank Corporation and PayPay Securities Corporation in April 2025, we have seen accelerating adoption of financial services within our existing user base. As of December 31, 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Bank Corporation had 9.7 million accounts, supported by app-based customer acquisition campaigns and competitive deposit offerings (e.g., 2.0% yields for U.S. dollar and Japanese yen ordinary deposits under the "Dollar & Yen 2% Deposit" campaign;
the interest rate on Japanese yen ordinary deposits will step up from 0.2% to 0.5%, as of February 1, 2026, based on the balance under the "Step-Up Yen Deposit" campaign).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Securities Corporation continued to expand its footprint via seamless onboarding, growing cumulative
investment accounts and benefiting from strong engagement with the "new NISA" program.

Importantly, users who engage with multiple services—e.g., payments + deposits, or payments + investments—tend to exhibit significantly higher GMV per user, improved monetization, and lower churn. Internal cohort analysis indicates that GMV increases alongside the number of services used per user, reinforcing our platform strategy. ****

By simplifying the account opening process through eKYC, we facilitate smoother cross-selling into financial service offerings. Our eKYC allows PayPay users to open banking or securities accounts with as few as two to three steps—compared to seven to eight steps for users not onboarded via our ID system. As of December 31, 2025, 38.9 million users had registered for eKYC, underscoring our ability to migrate payment users efficiently into financial services.

We believe that continued cross-sell and product bundling will be a key lever in expanding our per-user monetization and platform lifetime value. Over time, we expect financial services to contribute to a growing share of both revenue and margin, complementing our payment business and reinforcing our position as Japan's leading digital finance platform.

***NIM and Credit Portfolio Performance***

Our financial results are influenced by the performance of our interest-earning assets, particularly in the areas of credit card receivables and banking loans. The profitability of these activities depends on our ability to maintain a healthy NIM, grow our credit portfolio, and manage credit losses through disciplined risk management supported by data-driven credit model.

In the year ended March 31, 2025, our consolidated interest income totaled ¥88,442 million, representing a 19.7% increase year-over-year from ¥73,884 million in the prior fiscal year. This growth was driven by expansion in credit card receivables of PayPay Card Corporation, as well as rising loan balances at PayPay Bank Corporation. Interest income attributable to the Payment segment increased to ¥68,623 million, while interest income from the Financial service segment rose to ¥19,819 million, reflecting growth in mortgage and consumer loan products.

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We achieved a consolidated NIM across both segments of 2.61% in the year ended March 31, 2025, up from 2.58% in the year ended March 31, 2024, benefiting from favorable product mix and continued optimization of our funding base. On the banking side, we are able to offer attractive yields to users while preserving spread. On the credit side, we have maintained high-yielding receivables, including revolving credit and cash advances, while limiting delinquencies through advanced risk scoring and behavioral modeling.

Our proprietary data-driven credit model, built on behavioral and transaction data from over 7.8 billion transactions per year, enables us to assess borrower risk with further precision. To date, this system has supported revolving and cash advance balances in the Payment segment. While the size of our credit portfolio is still expanding, we maintain a disciplined risk management framework to balance growth with asset quality. PayPay maintains a healthy credit portfolio with robust risk controls. The non-performing loan (NPL) ratios are 0.4% for banking and 5% for the credit card business. In banking, almost all of the loans excluding mortgage loans are backed by external guarantors, effectively minimizing the level of non-performing assets. For credit cards, although the NPL ratio stands at 5%, nearly the entire amount has already been provisioned. We utilize a rigorous, data-driven model to monitor credit quality and proactively mitigate the risk of NPL growth. We also adjust credit terms dynamically based on real-time user behavior, credit utilization, and macroeconomic signals. In addition to consumer risk assessment, our model also enables us to offer credit-related services and insights to merchants, such as installment support and cash advance solutions.

**Credit Portfolio**![LOGO](g941409g00s07.jpg)

1. Almost all of the loans are being guaranteed and thereby categorized as Performing.

2. Total amount of credit watch and at risk or default. Credit watch is defined as an account designated for
elevated attention, and at a risk or default is defined as an account where there is an increased likelihood that default may exist based on qualitative and quantitative factors.

We believe that continued NIM stability, paired with the scalable growth of our interest-earning assets, will be a key contributor to margin expansion. As our lending portfolio deepens and the ratio of loan balances to total deposits improves, we expect the Financial service segment to deliver increasing profit contribution, complementing our transaction-driven Payment segment. Currently, almost all of our loans (excluding mortgage loans) are guaranteed by third-party financial institutions, and the interest income reported reflects the net amount after deducting the cost of such guarantees. While this approach effectively mitigates credit risk, it also compresses reported interest margin. Looking ahead, we intend to gradually reduce reliance on external guarantees and assume more credit risk internally for PayPay Bank Corporation, supported by enhancements to its own credit management framework. This reduction is enabled by our proprietary data-driven credit model,

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built on behavioral and transaction data, which strengthens our ability to evaluate and price credit risk. This shift is expected to increase recognized interest income and further expand NIM over time.

***Cost Structure and Operating Efficiency***

Our ability to operate at scale while maintaining a lean cost structure has been a key contributor to our profitability and margin expansion. We actively manage our cost base across variable costs (including settlement related cost, provision for loss allowance and interest expenses, the sum of which we define as "Total Transaction Cost") and other costs (e.g., point expenses, personnel, infrastructure and advertising), with an ongoing focus on cost-to-revenue efficiency. These initiatives have allowed us to expand GMV and improve monetization without proportionate increases in spending, enhancing overall operating leverage. For example, PayPay Points expenses as a percentage of Payment Segment GMV declined significantly—from 20.6% in the second half of the year ended March 31, 2019 to 0.8% in the year ended March 31, 2025—reflecting tighter targeting and more efficient PayPay Point-based promotions. Similarly, our Fund Source Cost Rate<sup>8</sup>, which indicates the cost of sourcing funds from external partners, improved from 1.1% in the second half of the year ended March 31, 2019 to 0.3% in the year ended March 31, 2025. These improvements underscore our ability to grow GMV while enhancing cost efficiency and monetization.

We apply rigorous internal return metrics such as Life Time Value to Customer Acquisition Cost (LTV/CAC) when allocating resources to user acquisition and promotional activities. LTV represents the present value of the anticipated revenue less Total Transaction Cost, directly or indirectly generated from a user's PayPay usage by efficiently invested CAC. CAC refers to the costs incurred for user acquisition and nurturing, such as point rewards and advertising expenses. This approach drives initiatives aimed at improving LTV, such as strategically targeting more engaged users such as users verified via eKYC process to increase the conversion rate. Conversely, to reduce CAC, initiatives including shortening campaign durations, narrowing target users, introducing a "scratch-off" lottery as rewards (costs incurred only for users who actively scratch off the lottery to receive points), refining geographical targeting, and selecting specific advertising channels (such as shifting from TV commercials to connected TV, or CTV, which allows for programmatic, data-driven advertising that reaches users via internet-connected televisions, improvising precision and cost-efficiency).

Based on the internal return metrics, we have disciplined control over marketing expenditures, leveraging campaigns tailored to specific user behaviors and transaction types. Major initiatives—such as the "Super PayPay Festival," conducted three times annually—are designed to drive both user acquisition and product usage expansion. Campaign mechanics are continuously refined to reflect our product strategies, and may include reward acceleration tied to monthly activity thresholds, top-up behavior, or code/credit usage. Additionally, we have transitioned a significant portion of our customer acquisition efforts to ecosystem-based channels, including in-app cross-sell and bank-linked campaigns, which deliver cost reductions compared to standalone marketing. See "Business—Our Growth Strategies—Drive User Growth and Engagement through Targeted, Phase-Aligned Marketing" for more details for marketing initiatives.

In addition, we actively deploy targeted, regional campaigns in collaboration with municipal governments and local partners. These externally supported initiatives—such as PayPay Point-based subsidies linked to code-based public programs (whereby government or partner funding covers a portion of the rewards issued to users) or "*furusato nozei*" gift certificates—allow us to enhance local economic participation while also subsidizing the cost of PayPay Points. Our platform is also used to process gift certificate transactions, contributing to incremental fee income. By adjusting eligibility thresholds and optimizing regional targeting, we maintain high effectiveness while minimizing costs.

<sup>8</sup> Calculated by dividing fund source cost by the GMV of PayPay (non-consolidated). Fund source cost includes items expensed during the period, such as bank fees related to PayPay Balance; issuing fees for PayPay Card and other credit cards; acquiring fees for PayPay Card; and other connection costs (e.g., gateway fees, bad debt losses from carrier payments), less revenue from carrier billing. These figures are unaudited. 

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We also focus on reducing our Fund Source Cost Rate across a variety of channels involved in users topping up their PayPay Balance, which are paid to the respective financial institutions. These include costs associated with banks, ATMs, PayPay Card, other companies' credit cards, and SoftBank Carrier Billing. As costs paid to banks are the lowest, we established a dedicated team to expand our network of connected banks and negotiate lower transaction fees. As a result, we are currently connected with more than 1,000 banks, covering almost all financial institutions. The fees for other top-up methods, ordered from lowest to highest, are: ATM, PayPay Card, SoftBank and Y!mobile Carrier Billing, and other companies' credit cards. For SoftBank and Y!mobile Carrier Billing, we began applying a 2.5% fee from the second transaction onwards per month. As a result of our continuous effort to reduce our Fund Source Cost Rate, it decreased to 0.3% for the year ended March 31, 2025 from 1.1% for the second half of the year ended March 31, 2019.

Over the past several years, we have improved cost efficiency through a combination of platform automation and internalization of system development. These efficiencies are supported by our vertically integrated and horizontally scalable technology platform, which enables us to streamline operations and achieve greater leverage as we scale. One of the most impactful measures has been the progressive shift toward in-house development of key technology systems, which has enhanced control while reducing long-term development and maintenance costs. We continue to strengthen internal engineering capabilities by internalizing core functions—particularly those related to our payment infrastructure and merchant solutions—allowing us to reduce dependency on third parties and improve cost control. We also continue to pursue productivity-focused human capital strategies, such as performance-linked compensation, data-driven workforce planning and operational digitization. We rigorously apply a performance-linked approach within our job-type employment system, conducting disciplined evaluations. Furthermore, we continuously review and optimize the utilization of outsourced and temporary personnel to ensure appropriate cost management.

In July 2024, we established PayPay SC Corporation as a joint venture with SB C&S Corporation and SB Payment Service Corporation to further expand the use of PayCAS, a unified cashless payment terminal with POS integration functionalities. With the establishment of PayPay SC, we spun off the SME merchant sales function, which resulted in reducing costs and streamlining our merchant sales force by reducing reliance on outsourced operations. This implication of an independent accounting system has fostered a leaner and more efficient structure. While our current efforts focus on the sales promotion of PayCAS, we plan to introduce new models to enhance device sales, secure "on-us" contract acquisition, and offer a broader spectrum of financial services.

These efforts are already reflected in our performance: for the year ended March 31, 2025, our total operating expenses only increased by 3.5% year-over-year to ¥263.6 billion, significantly below our 17.5% revenue growth over the same period, resulting in our Operating Profit Margin improving to 11.9%, from breakeven in the prior year. Looking ahead, we expect further efficiency gains by deepening automation, simplifying user workflows, and leveraging scale effects across our credit, deposit, and securities businesses. We will continue to monitor and optimize each cost component to support sustainable margin improvement.

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**Robust Unit Economics with High Operating Leverage** 

**Unit Economics (% of Payment Segment GMV)**![LOGO](g941409g38a01.jpg)

Note: The figures presented are unaudited management accounting figures based on financial accounting figures and operating KPIs.

1. Take Rate is Payment Segment's Total Revenue divided by Payment Segment GMV (which includes PayPay
Balance, PayPay Credit, and PayPay Card GMV).

2. Cost Rate is Payment Segment's Operating Expenses divided by Payment Segment GMV (which includes PayPay
Balance, PayPay Credit, and PayPay Card GMV).

3. Total deduction for Payment segment divided by Payment Segment GMV (which includes PayPay Balance, PayPay
Credit, and PayPay Card GMV). Deduction in Payment Segment consists mainly of 1) Payment related incentives and 2) Interchange fees.

***Regulatory Framework and Licensing***

Our ability to offer a broad range of financial products and services depends on maintaining compliance with Japan's financial regulatory framework and obtaining the necessary licenses to operate across banking, credit, securities, and payment domains. Regulatory approval not only enables us to expand our service offerings, but also serves as a signal of institutional trust and operational credibility, which are especially important in a financial services context. Our licensed activities fall under the jurisdiction of multiple Japanese regulatory authorities, including the FSA for prepaid payment instruments, funds transfers services, ****lending, banking and securities brokerage; the METI for intermediation of comprehensive credit purchases; and the Ministry of Health, Labour and Welfare (MHLW) for digital salary payments.

As of December 31, 2025, we had obtained and consolidated operations under 13 financial and payment-related licenses, which support the operation of PayPay Bank Corporation, PayPay Securities Corporation, PayPay Card Corporation, and other subsidiaries across their respective verticals. In April 2025, we acquired majority stakes in both PayPay Bank Corporation and PayPay Securities Corporation, expanding our regulatory footprint and enabling consolidation of these businesses. These acquisitions allow us to integrate core infrastructure (such as deposit accounts and investment platforms) directly into the PayPay app. By embedding these services into a single interface, we are able to streamline onboarding processes, deepen user engagement across services, enable more effective cross-sell strategies, and improve customer experience.

In addition to statutory licensing, we maintain a constructive and proactive relationship with the relevant regulatory authorities and self-regulatory bodies. Our compliance framework includes internal monitoring systems, eKYC and AML protocols, and regular reporting across all regulated entities. This infrastructure supports our ability to launch new financial products, such as: PayPay Payroll – digital salary payment services (we were the first provider in Japan to receive such regulatory designation), embedded securities investment using PayPay Points, and same-day merchant settlement services via PayPay Bank Corporation.

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**Key Components of Results of Operations** 

***Transaction and Service Income***

Transaction and service income represents revenue earned from contracts with customers after deducting certain promotional incentives and rewards extended to our merchants and credit card holders and consists primarily of payment processing fees, merchant discount fees, and service charges associated with our payment settlement services, credit card issuing and acquiring, securities brokerage, and other customer-facing financial services.

For the years ended March 31, 2023, 2024 and 2025, transaction and service income was ¥146,927 million, ¥174,127 million, and ¥203,595 million, respectively, representing year-over-year growth of 18.5% in the year ended March 31, 2024 and 16.9% in the year ended March 31, 2025. The increase in transaction and service income was driven by strong growth in both the Payment and Financial service segments, reflecting expansion in user engagement, merchant adoption, and product uptake.

<u>Payment Segment</u> 

In the Payment segment, transaction and service income is primarily derived from: (i) code-based PayPay Settlement Services, in which we earn a transaction fee by acting as a principal between the merchant and the user; (ii) Credit Payment Services, including interchange fees from PayPay Card usage and merchant acquiring activity; and (iii) Subscription revenue and value-added services, including promotions and marketing support to PayPay merchants, which are companies that our group provides the PayPay Settlement Services platform to as a method of payment in their stores, based on a contract between our group and such merchants.

For the year ended March 31, 2025, transaction and service income from external customers in the Payment segment totaled ¥176,597 million, up from ¥149,310 million in the year ended March 31, 2024 and ¥123,412 million in the year ended March 31, 2023. Revenue has continued to grow steadily over the past three fiscal years, supported in particular by the expansion of revenue from PayPay Balance payments. This increase was driven mainly by growth in GMV associated with these services, which in turn reflected both an increase in MTUs and higher GMV per MTU.

<u>Financial Service Segment</u> 

In the Financial service segment, transaction and service income primarily includes: (i) Ancillary internet banking and platform usage fees through PayPay Bank Corporation; and (ii) Commissions and service fees earned through digital securities services from PayPay Securities Corporation, including revenues generated through the PayPay Invest platform (PayPay point management system).

Transaction and service income from external customers in the Financial service segment totaled ¥26,998 million in the year ended March 31, 2025, up from ¥24,817 million in the year ended March 31, 2024 and ¥23,515 million in the year ended March 31, 2023.

We believe transaction and service income will continue to grow as we further scale our two-sided network, increase financial product penetration, and deploy integrated offerings across our payment and financial services ecosystem.

***Interest Income***

Interest income consists primarily of interest earned on loans and advances to customers and other interest-bearing financial assets. Interest income is generated across both our Payment and Financial service segments, with distinct asset sources and yield dynamics.

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For the years ended March 31, 2023, 2024 and 2025, total interest income was ¥50,285 million, ¥73,884 million, and ¥88,442 million, respectively, representing year-over-year growth of 46.9% in the year ended March 31, 2024 and 19.7% in the year ended March 31, 2025. The increase in each period was driven by expansion in our loan and credit receivable balances, as well as improved loan-to-deposit efficiency within PayPay Bank Corporation.

<u>Payment Segment</u> 

In the Payment segment, interest income is primarily generated from: (i) Revolving credit, installment payments, and cash advances provided through PayPay Card Corporation; and (ii) Treasury investments and short-term placements related to settlement operations.

For the year ended March 31, 2025, interest income attributable to the Payment segment was ¥68,623 million, compared to ¥59,013 million in the year ended March 31, 2024 and ¥39,711 million in the year ended March 31, 2023. The year-over-year growth reflects the expansion of our credit card receivables, which increased from ¥805.6 billion as of March 31, 2024 to ¥1,001.9 billion as of March 31, 2025, net of allowances. Following our acquisition of PayPay Card Corporation in October 2022, we strategically raised credit limits throughout the year ended March 31, 2024 to accelerate balance growth. As credit usage and repayment data accumulated, we were able to refine credit segmentation and set annual percentage rates, or APRs, based on more tailored risk assessments. From the second half of 2024, additional measures we took to optimize credit limits contributed to increased loan adoption and user engagement, supporting stable growth in interest income.

<u>Financial Service Segment</u> 

Interest income in the Financial service segment is derived from loan management services: (i) Overdrafts (for consumers and businesses), business loans, and mortgage loans offered by PayPay Bank Corporation; and (ii) Liquidity investments and other interest-bearing assets, including government and corporate bonds.

Interest income for the Financial service segment was ¥19,819 million in the year ended March 31, 2025, up from ¥14,871 million in the year ended March 31, 2024 and ¥10,574 million in the year ended March 31, 2023. Growth in this segment reflects the increase in total loans and advances from ¥723.0 billion in the year ended March 31, 2024 to ¥925.7 billion in the year ended March 31, 2025, net of allowance. The increase in interest income was driven primarily by the expansion of loan balances of consumers, as well as the end of the Bank of Japan's negative interest rate policy in early 2024 and the subsequent rise in benchmark rates and bond yields.

Across both segments, our NIM was 2.61% in the year ended March 31, 2025, compared to 2.58% in the year ended March 31, 2024, supported by low funding costs and disciplined pricing. As we continue to scale our lending activities and optimize the mix between payment-related credit and banking loans, we believe interest income will remain a key driver of revenue and operating leverage.

***Gains (Losses) on Financial Instruments***

Gains (losses) on financial instruments primarily reflect realized and unrealized fair value movements in our investment securities, derivatives, and other financial instruments measured at fair value through profit or loss , or FVTPL, as well as dividends received on equity investments. This line item also includes gains or losses on trading portfolios for client facilitation trading at PayPay Securities Corporation and foreign exchange gains or losses and valuation adjustments on trading portfolios mainly held by PayPay Bank Corporation.

For the years ended March 31, 2023, 2024 and 2025, we recognized gains (losses) on financial instruments of ¥2,079 million, ¥4,641 million, and ¥5,529 million, respectively. The steady increase over the

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period reflects both the expansion of our investment portfolio and changes in market conditions impacting valuation of financial assets held at fair value.

This line item is more volatile and sensitive to market dynamics than our core revenue streams. We actively manage our investment risk exposures through asset diversification, duration management, and daily monitoring, with most instruments held within risk limits established by our risk management and treasury functions. While we do not consider gains on financial instruments a core component of our operating income, they provide incremental yield on capital reserves and surplus liquidity and may increase in contribution as our deposit base continues to scale.

***Other Operating Income***

Other operating income consists of ancillary income items not included in transaction and service income, interest income, or gains on financial instruments, including income that is non-recurring in nature. The items primarily include income recognized from the expiration of contractual obligations (such as unused balances and expired gift cards), expenses received related to personnel secondment and expenses, government grants, and other miscellaneous items.

For the years ended March 31, 2023, 2024 and 2025, other operating income was ¥1,903 million, ¥1,959 million, and ¥1,512 million, respectively. The year-over-year decrease in each period was due primarily to one-off factors, including fluctuations in subcontracting income and government grant income.

We do not expect other operating income to be a major driver of future growth. However, we continue to evaluate new monetization opportunities—such as enterprise platform services, remittance-based fees, and infrastructure cost sharing—that may contribute to this line item in a more material way over time.

***IFRS Revenue — additional reference context***

We present IFRS revenue as our primary revenue measure. To enhance transparency regarding items that affect period-to-period comparability, we include reference disclosures in the notes to our consolidated financial statements for amounts that are recorded as reductions of revenue under IFRS 15 or, in certain cases, are accounted for under IFRS 9. These disclosures are provided for context only and do not represent an alternative basis of revenue recognition or measurement under IFRS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Payment settlement service deduction* – recognized as a reduction of revenue under IFRS 15. See
Note 31 to our audited consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Interchange fees* – revenue from Credit Payment Settlement Services and Acquiring Services is
presented net of interchange fees. See Note 31 to our audited consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Guarantee fees (loan customers)* – within the scope of IFRS 9 and recognized using the effective
interest method, and not revenue under IFRS 15. See Note 31 to our audited consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Consideration payable to customers related to annual membership programs* – recognized as a
reduction of revenue under IFRS 15 (mainly benefits linked to annual membership fees). See Note 31 to our audited consolidated financial statements.

***Operating Expenses***

Operating expenses primarily consist of settlement related cost, provision for loss allowance and interest expenses (the sum of which we define as "Total Transaction Cost"), point expenses, employee benefit expenses,

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professional and outsourcing services expenses, as well as other operating expenses such as depreciation and amortization, license fees, advertising and promotion expenses and others. Technology related expenses are another key component of our operating expenses, depending on the nature of the systems and services, our technology-related expenses are recorded under various categories within operating expenses—such as license fees, professional and outsourcing services expenses, and depreciation and amortization. Typically, subscription-based services (such as cloud services) are classified under license fees. On the other hand, software that requires internal or external development is recorded under professional and outsourcing services expenses or, if capitalized, under depreciation and amortization. Our cost structure has improved with our business expansion, and we continue to benefit from operating leverage as our revenue base grows.

For the years ended March 31, 2023, 2024, and 2025, total operating expenses were ¥221,742 million, ¥254,600 million and ¥263,568 million, respectively. The year-over-year increase of 3.5% in the year ended March 31, 2025 was significantly lower than our 17.5% revenue growth over the same period, highlighting increased cost efficiency and margin expansion.

The following are key components of our operating expenses:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Settlement Related Cost:* These expenses include fees paid to banks for users to charge their PayPay
Balance from their bank accounts (charge costs), withdrawal fees incurred when funds are debited from users' bank accounts, and brand or network fees paid to international card brands. Total settlement related cost were
¥43,662 million in the year ended March 31, 2025, compared to ¥39,992 million in the year ended March 31, 2024 and ¥38,482 million in the year ended March 31, 2023. The increases are consistent with rising
transaction volume and expansion of financial service offerings, including increased charge costs (funding source costs) on PayPay Balance transactions, higher bank withdrawal fees associated with PayPay Card volume growth, and increased brand and
network fees paid to international brands. We have strategically managed the funding costs paid to banks through sales efforts. See "—Factors Driving Our Performance—Cost Structure and Operating Efficiency" for more details.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Provision for Loss Allowance:* We recognized ¥23,942 million in provision expenses in the year
ended March 31, 2025, compared to ¥23,006 million in the year ended March 31, 2024 and ¥15,187 million in the year ended March 31, 2023, primarily related to expected credit losses on credit card receivables and
banking loans. Provision for loss allowance generally fluctuates in tandem with changes in credit limits, and since the acquisition of PayPay Card Corporation in 2022, we have continuously adjusted credit limits in line with business conditions.
Credit risk remains within expected ranges, supported by our proprietary data-driven credit model. The provision for loss allowance remained relatively stable from the year ended March 31, 2024 to the year ended March 31, 2025, primarily
due to the optimization of credit limits in the year ended March 31, 2025 which led to a decrease in related provisions, offsetting the increase in credit card receivables.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Point Expenses:* We recorded point expenses of ¥50,362 million in the year ended March 31,
2025, up from ¥45,402 million in the year ended March 31, 2024 and ¥42,283 million in the year ended March 31, 2023. Point expenses are promotional in nature and used as a mechanism to drive user acquisition,
cross-selling and platform engagement. We can decide at our discretion the timing, targeted user groups and magnitude of the points we grant as rewards for code-based payment transactions. This discretionary nature and strategic purpose align more
closely with marketing spend than with direct revenue generation. Although the total amount of point expenses increased, we have strategically moderated the distribution of broad-based incentives, reallocating towards targeted and performance-based
campaigns to lower customer acquisition costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Employee Benefit Expenses:* Our workforce expenses, including salaries, bonuses, and welfare
contributions, totaled ¥41,483 million in the year ended March 31, 2025, up from ¥37,764 million in

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the year ended March 31, 2024 and ¥30,476 million in the year ended March 31, 2023. This increase reflects headcount growth driven by business expansion, including engineers and compliance personnel, as well as growth in headcount related to our banking and securities operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Professional and Outsourcing Services Expenses:* Professional and outsourcing services expenses were
¥28,767 million in the year ended March 31, 2025, down from ¥34,800 million in the year ended March 31, 2024 and ¥30,547 million in the year ended March 31, 2023. The decline is primarily attributable to
(i) a decline in outsourcing services expenses following the completion of PayPay Card Corporation's core system development in the year ended March 31, 2024, and (ii) a reduction in outsourcing services expenses achieved
through organizational restructuring as part of our broader cost optimization efforts including moving a part of the sales personnel to PayPay SC Corporation. See "—Factors Driving Our Performance—Cost Structure and Operating
Efficiency" for more details.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Depreciation and Amortization:* We recorded ¥20,093 million in depreciation and amortization
expenses in the year ended March 31, 2025, up from ¥17,549 million in the year ended March 31, 2024 and ¥13,852 million in the year ended March 31, 2023. These increases are primarily related to continued investment
in internally developed software supporting both core payments and financial services platforms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *License Fees:* License fees mainly consist of subscription-based services (such as cloud services). For
the year ended March 31, 2025, license fee expenses totaled ¥18,027 million, an increase from ¥15,899 million in the year ended March 31, 2024 and ¥11,133 million in the year ended March 31, 2023. License
fees primarily relate to payments made under contractual arrangements for technology infrastructure and service platforms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Advertising and Promotion Expenses:* These expenses declined to ¥10,731 million in the year
ended March 31, 2025 from ¥11,458 million in the year ended March 31, 2024 and ¥14,310 million in the year ended March 31, 2023. The reduction reflects a deliberate shift from mass-market incentive campaigns toward
lower-cost marketing channels and in-app promotional tools and ecosystem-based cross-marketing, consistent with our user engagement and monetization maturity. In addition, we have enhanced cost effectiveness
by focusing on high LTV user groups and efficient promotional campaigns. Further, certain promotions for merchants were subsidized by us only for the first transaction, thereby controlling recurring costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Other items:* Other items recorded as operating expenses include taxes and charges, interest expenses,
amortization of contract cost, and other. While these expense items are not substantial as of the year ended March 31, 2025, the interest expenses increase accompanying the growth of the deposit balance in internet banking business.

Our ability to drive top-line growth while maintaining disciplined cost control has resulted in sustained improvement in operating profitability. Our operating profit margin improved from negative 10.2% in the year ended March 31, 2023 to 0.0% in the year ended March 31, 2024, and to 11.9% in the year ended March 31, 2025. We expect continued leverage on fixed costs and scale efficiencies to support further margin expansion in the near term.

**Acquisition of PayPay Card Corporation** 

On October 1, 2022, we completed the acquisition of all of the shares of PayPay Card Corporation from Yahoo Japan Corporation, an indirect subsidiary of SoftBank Group Corp. and a fully-owned subsidiary of Z Holdings Corporation (currently LY Corporation), and, on the same date, PayPay Card Corporation also succeeded Yahoo Japan Corporation's credit card merchant acquiring business. PayPay Card Corporation is principally engaged in credit card payment services, both through physical credit cards and the PayPay app.

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The acquisition of PayPay Card Corporation was accounted for as a business combination under common control. As a business combination under common control, we account for this transaction based on the book value of SoftBank Group Corp. and, regardless of the actual date we acquired PayPay Card Corporation, retrospectively consolidate the financial statements of PayPay Card Corporation, whereby we include the operating results and financial condition of PayPay Card Corporation in our consolidated financial statements as if the acquisition had been completed on the opening balance sheet date of the comparative period. See Note 8 to our audited consolidated financial statements included elsewhere in this prospectus.

Special dividends of ¥37 billion as an economic condition to close the acquisition paid by PayPay Card Corporation in September 2022 are included in our consolidated statement of changes in equity for the year ended March 31, 2023.

**Acquisition of PayPay Securities** 

On April 10, 2023, we acquired newly issued shares of PayPay Securities Corporation with the aim to increase revenue and profit through synergies, including our track record of having over 20 million users (on a cumulative basis to date) having used PayPay Points to effect transactions with PayPay Securities Corporation. On April 1, 2025, we acquired additional shares in PayPay Securities Corporation from SoftBank Corp. and LY Corporation, as well as subscribed to a third-party allocation of shares conducted by PayPay Securities Corporation, making it our consolidated subsidiary. Upon the completion of the transaction, we held 75.2% of the total number of issued shares, while Mizuho Securities Co., Ltd. held 24.8%.

The acquisition of PayPay Securities Corporation was accounted for as a business combination under common control. As a business combination under common control, we accounted for this transaction based on the book value of SoftBank Group Corp. and, regardless of the actual date we acquired PayPay Securities Corporation, retrospectively consolidated the financial statements of PayPay Securities Corporation, whereby we reflected the operating results and financial condition of PayPay Securities Corporation in our consolidated financial statements as if the acquisition had been completed on the opening balance sheet date of the comparative period. See Note 8 to our audited consolidated financial statements included elsewhere in this prospectus.

**Acquisition of PayPay Bank** 

On April 11, 2025, we completed the acquisition of 47.1% of the common shares and all of the non-voting Class A preferred shares of PayPay Bank Corporation, Japan's first internet bank, from Z Financial Corporation (currently LY Corporation) and Mitsui Sumitomo Insurance Co., while Sumitomo Mitsui Banking Corporation, Fujitsu Ltd., Taiju Life Insurance Company Limited and Sumitomo Life Insurance Company held 46.6%, 5.3%, 0.5% and 0.5% of the common shares, respectively, upon completion of the transaction.

After the conversion of the non-voting Class A preferred shares of PayPay Bank Corporation into common shares, effective April 28, 2025, we held 75.5% of the common shares, making PayPay Bank Corporation our consolidated subsidiary. Other than the non-voting Class A preferred shares, to our knowledge, there are no outstanding potential equity interests that would dilute our ownership in PayPay Bank Corporation. Sumitomo Mitsui Banking Corporation remains a significant minority shareholder, holding 21.5% of the common shares as of December 31, 2025, and we continue to maintain a cooperative relationship with them.

The acquisition of PayPay Bank Corporation was accounted for as a business combination under common control. As a business combination under common control, we accounted for this transaction based on the book value of SoftBank Group Corp. and, regardless of the actual date we acquired PayPay Bank Corporation, retrospectively consolidated the financial statements of PayPay Bank Corporation, whereby we reflected the operating results and financial condition of PayPay Bank Corporation in our consolidated financial statements as if the acquisition had been completed on the opening balance sheet date of the comparative period. See Note 8 to our audited consolidated financial statements included elsewhere in this prospectus.

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**Critical Accounting Estimates** 

The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on historical experiences and on various other factors that are believed to be reasonable under the circumstances, the result of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenue and expenses that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions. Refer to Note 5 "Critical Accounting Judgments and Key Sources of Estimation Uncertainty" to our audited consolidated financial statements included elsewhere in this prospectus for further details on our critical accounting estimates and judgments.

Our significant accounting policies are provided in Note 4 to our audited consolidated financial statements included elsewhere in this prospectus.

**Recent Accounting Pronouncements** 

There were no new or amended IFRS that became effective during the year ended March 31, 2025 that had a material impact on our consolidated financial statements.

We assess the potential impact of new and revised accounting standards on an ongoing basis. As of the date of this prospectus, no issued but not yet effective IFRS standards are expected to have a material effect on our financial condition, results of operations, or cash flows upon adoption. For a detailed discussion of accounting standards issued but not yet effective, refer to Note 6 in our audited consolidated financial statements included elsewhere in this prospectus.

**Non-IFRS Financial Measures** 

In evaluating our business, we consider and use Adjusted EBITDA and Adjusted EBITDA Margin, which are non-IFRS financial measures, as supplemental measures to review and assess our operating performance. The presentation of these non-IFRS financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. We define Adjusted EBITDA as profit (loss) for the year (period) plus income tax expense (benefit), share of profit (loss) of investments accounted for using the equity method, depreciation and amortization, loss on disposal of property and equipment and intangible assets, 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.

These non-IFRS financial measures enable our management to assess our operating results without considering the impact of items that we do not consider to be indicative of the results of our ongoing operations, such as certain non-cash items. We also believe that the use of these non-IFRS measures facilitate investors' assessment of our operating performance and is useful to facilitate comparisons to historical performance.

These non-IFRS financial measures are not defined under IFRS and are not presented in accordance with IFRS. These non-IFRS financial measures have limitations as an analytical tool. These non-IFRS financial measures do not reflect all items of expense that affect our operations. Further, these non-IFRS measures may differ from the non-IFRS information used by other companies, including peer companies, and therefore their comparability may be limited.

We compensate for these limitations by reconciling these non-IFRS financial measures to the most directly comparable IFRS performance measure, which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

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***Adjusted EBITDA and Adjusted EBITDA Margin***

The following tables reconcile Adjusted EBITDA from profit (loss) for the year (period), which is the most directly comparable financial measure calculated and presented in accordance with IFRS, for the periods presented. The adjustments presented below are primarily depreciation expenses that do not result in a cash outflow, temporary expenses and non-operating income and expenses.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the<br>nine-month period ended December 31,** | **For the<br>nine-month period ended December 31,** |
|  | **2023** | **2024** | **2025** | **2024** | **2025** |
|  | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** |
|  Profit (loss) for the year (period) | ¥(24946) | ¥(830) | ¥39157 | ¥28957 | ¥103337 |
| &nbsp;&nbsp;&nbsp;&nbsp; Add: Income tax expense (benefit) | 4398 | 841 | (4196) | (1156) | (42228) |
| &nbsp;&nbsp;&nbsp;&nbsp; Add: Share of profit (loss) of investments accounted for using the equity method<sup>(1)</sup> |  |  | 549 | 383 | (101) |
| &nbsp;&nbsp;&nbsp;&nbsp; Add: Depreciation and amortization | 13852 | 17549 | 20093 | 14486 | 17551 |
| &nbsp;&nbsp;&nbsp;&nbsp; Add: Loss on disposal of property and equipment and intangible assets | 1486 | 1674 | 702 | 495 | 545 |
| &nbsp;&nbsp;&nbsp;&nbsp; Add: Amortization of contract cost | 803 | 1043 | 1297 | 948 | 1243 |
| &nbsp;&nbsp;&nbsp;&nbsp; Add: Listing-related expenses<sup>(2)</sup> | 520 | 286 | 302 |  | 1916 |
| &nbsp;&nbsp;&nbsp;&nbsp; Add: M&A-related expenses<sup>(3)</sup> | 116 | 17 | 330 | 177 | 431 |
| &nbsp;&nbsp;&nbsp;&nbsp; Add: Net interest expense (income) from corporate borrowings and treasury assets<sup>(4)</sup> | 415 | 498 | 416 | 357 | (156) |
|  Adjusted EBITDA | ¥(3356) | ¥21078 | ¥58650 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;44647 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;82538 |
| &nbsp;&nbsp;&nbsp;&nbsp; Divided by: Total revenue | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;201194 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;254611 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;299078 | 220447 | 278478 |
|  Adjusted EBITDA Margin<sup>(5)</sup> | (2)% | 8% | 20% | 20% | 30% |

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | |
|  | **June 30,<br>2023** | **September 30,<br>2023** | **December 31,<br>2023** | **March 31,<br>2024** | **June 30,<br>2024** | **September 30,<br>2024** | **December 31,<br>2024** | **March 31,<br>2025** | **June 30,<br>2025** | **September 30,**<br>**2025** | <br>**December 31,<br>2025** |
|  | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | |
|  Profit (loss) for the period | ¥(1265) | ¥(41) | ¥(1278) | ¥1754 | ¥5310 | ¥10044 | ¥13603 | ¥10200 | ¥10809 | ¥73220 | ¥19308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Add: Income tax expense (benefit) | 570 | 495 | 552 | (776) | 1536 | (2813) | 121 | (3040) | 5050 | (52790) | 5512 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Add: Share of profit (loss) of investments accounted for using the equity method<sup>(1)</sup> |  |  |  |  |  | 252 | 131 | 166 | 105 | 58 | (264) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Add: Depreciation and amortization | 4180 | 4274 | 4398 | 4697 | 4669 | 4806 | 5011 | 5607 | 5729 | 5755 | 6067 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Add: Loss on disposal of property and equipment and intangible assets | 139 | 242 | 718 | 574 | 210 | 154 | 131 | 207 | 182 | 174 | 189 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Add: Amortization of contract cost | 244 | 254 | 265 | 280 | 294 | 315 | 339 | 349 | 386 | 411 | 446 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Add: Listing-related expenses<sup>(2)</sup> | 263 | 23 |  |  |  |  |  | 302 | 939 | 441 | 536 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Add: M&A-related expenses<sup>(3)</sup> |  |  | 16 | 1 | 33 | 26 | 118 | 153 | 274 | 35 | 122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Add: Net interest expense (income) from corporate borrowings and treasury assets<sup>(4)</sup> | 119 | 119 | 125 | 135 | 126 | 124 | 107 | 59 | 32 | (124) | (65) |
|  Adjusted EBITDA | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4250 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5366 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4796 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6665 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12178 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12908 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19561 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14003 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23506 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27180 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31851 |

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Notes:

(1) 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) 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.

(3) M&A-related expenses, which consist of the fees and expenses of the professional advisors that we hired
in connection with acquisitions and investments, such as our acquisition of PayPay Card Corporation, PayPay Bank Corporation and PayPay Securities Corporation and accrued expenses related to holdbacks in connection with a prior acquisition.

(4) 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.

(5) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenue.

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**Other Operating Metrics** 

The following tables set forth some of our other operating metrics as of the end or for each of the 15 most recent quarterly periods.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** |
|  | **June 30,<br>2022** | **September 30,<br>2022** | **December 31,<br>2022** | **March 31,<br>2023** | **June 30,<br>2023** | **September 30,<br>2023** |
|  | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** |
|  Total GMV<sup>(1)</sup> | ¥2.31 | ¥2.45 | ¥2.89 | ¥2.82 | ¥3.02 | ¥3.05 |
|  ***Payment segment*** |  |  |  |  |  |  |
|  Payment Segment GMV<sup>(2)</sup> | ¥2.25 | ¥2.38 | ¥2.81 | ¥2.75 | ¥2.95 | ¥2.98 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Balance GMV<sup>(3)</sup> | ¥1.41 | ¥1.54 | ¥1.84 | ¥1.78 | ¥1.87 | ¥1.87 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Credit GMV<sup>(4)</sup> | ¥0.27 | ¥0.29 | ¥0.39 | ¥0.41 | ¥0.51 | ¥0.54 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Card GMV<sup>(5)</sup> | ¥0.57 | ¥0.56 | ¥0.59 | ¥0.56 | ¥0.57 | ¥0.58 |
|  PayPay registered users (millions of users)<sup>(6)</sup> | 48.7 | 51.2 | 54.0 | 56.6 | 58.4 | 60.0 |
|  PayPay MTU (millions of users)<sup>(7)</sup> | 22.5 | 25.2 | 28.2 | 30.3 | 30.2 | 30.8 |
|  Monthly Transactions per PayPay User<sup>(8)</sup> | 18.2 | 18.7 | 18.1 | 17.1 | 17.8 | 18.6 |
|  Number of Active PayPay Card Issued (millions of cards)<sup>(9)</sup> | 8.7 | 9.1 | 9.6 | 10.0 | 10.4 | 10.7 |
|  Balance of revolving payment (billions of yen)<sup>(10)</sup> | ¥192.9 | ¥202.9 | ¥230.1 | ¥259.9 | ¥294.3 | ¥317.4 |
|  Balance of cash advances (billions of yen)<sup>(11)</sup> | ¥11.6 | ¥11.6 | ¥12.0 | ¥12.9 | ¥13.4 | ¥13.6 |
|  ***Financial service segment*** |  |  |  |  |  |  |
|  PayPay Bank Visa Debit Card GMV<sup>(12)</sup> | ¥0.07 | ¥0.07 | ¥0.07 | ¥0.07 | ¥0.07 | ¥0.07 |
|  Number of PayPay Bank deposit accounts (millions of accounts)<sup>(13)</sup> | 6.2 | 6.4 | 6.7 | 7.0 | 7.2 | 7.4 |
|  Number of PayPay Securities accounts (millions of accounts)<sup>(14)</sup> | 0.35 | 0.41 | 0.47 | 0.52 | 0.58 | 0.71 |

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** |
|  | **December 31,<br>2023** | **March 31,<br>2024** | **June 30,<br>2024** | **September 30,<br>2024** | **December 31,<br>2024** | **March 31,<br>2025** | **June 30,<br>2025** | **September 30,**<br>**2025** | **December 31,<br>2025** |
|  | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** |
|  Total GMV<sup>(1)</sup> | ¥3.32 | ¥3.35 | ¥3.60 | ¥3.78 | ¥4.19 | ¥4.12 | ¥4.46 | ¥4.73 | ¥5.10 |
|  ***Payment segment*** |  |  |  |  |  |  |  |  |  |
|  Payment Segment GMV<sup>(2)</sup> | ¥3.24 | ¥3.28 | ¥3.53 | ¥3.70 | ¥4.11 | ¥4.05 | ¥4.39 | ¥4.65 | ¥5.02 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Balance GMV<sup>(3)</sup> | ¥1.99 | ¥2.00 | ¥2.12 | ¥2.19 | ¥2.42 | ¥2.34 | ¥2.52 | ¥2.68 | ¥2.85 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Credit GMV<sup>(4)</sup> | ¥0.63 | ¥0.66 | ¥0.77 | ¥0.84 | ¥0.93 | ¥0.94 | ¥1.08 | ¥1.12 | ¥1.22 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Card GMV<sup>(5)</sup> | ¥0.63 | ¥0.62 | ¥0.64 | ¥0.68 | ¥0.76 | ¥0.76 | ¥0.79 | ¥0.84 | ¥0.94 |
|  PayPay registered users (millions of users)<sup>(6)</sup> | 61.5 | 63 | 64.5 | 65.7 | 67 | 68.4 | 69.8 | 71.1 | 72.2 |
|  PayPay MTU (millions of users)<sup>(7)</sup> | 31.8 | 33.2 | 33.7 | 34.5 | 36.2 | 37.2 | 37.8 | 38.9 | 40 |
|  Monthly Transactions per PayPay User<sup>(8)</sup> | 18.4 | 18.2 | 19.3 | 20.4 | 20.3 | 19.6 | 20.5 | 21.6 | 21.5 |
|  Number of Active PayPay Card Issued (millions of cards)<sup>(9)</sup> | 11.2 | 11.6 | 12 | 12.5 | 13.1 | 13.8 | 14.5 | 15.2 | 16 |
|  Balance of revolving payment <br>(billions of yen)<sup>(10)</sup> | ¥334.7 | ¥345.9 | ¥357.5 | ¥367.7 | ¥383 | ¥403.2 | ¥420.8 | ¥439.8 | ¥451.7 |
|  Balance of cash advances <br>(billions of yen)<sup>(11)</sup> | ¥13.3 | ¥13.8 | ¥14.5 | ¥15 | ¥15.8 | ¥18.2 | ¥19.9 | ¥21.6 | ¥23.4 |
|  ***Financial service segment*** |  |  |  |  |  |  |  |  |  |
|  PayPay Bank Visa Debit Card GMV<sup>(12)</sup> | ¥0.07 | ¥0.07 | ¥0.07 | ¥0.07 | ¥0.08 | ¥0.07 | ¥0.07 | ¥0.08 | ¥0.08 |
|  Number of PayPay Bank deposit accounts (millions of accounts)<sup>(13)</sup> | 7.6 | 7.9 | 8.2 | 8.4 | 8.6 | 8.9 | 9.2 | 9.5 | 9.7 |
|  Number of PayPay Securities accounts (millions of accounts)<sup>(14)</sup> | 0.85 | 1.08 | 1.18 | 1.24 | 1.30 | 1.37 | 1.42 | 1.47 | 1.54 |

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Note:

(1) 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. See "—Our Financial Performance, Key Metrics and Financial Highlights—Gross Merchandise Value (GMV)" for a discussion of GMV.

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(2) 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.

(3) 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<sup>®</sup> via PayPay code payment, excluding top-ups to PayPay Balance with PayPay Card and excluding the GMV of cancelled transactions.

(4) 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.

(5) 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.

(6) PayPay registered users is defined as the number of registered users for PayPay, which is the number of
active users excluding those whose accounts have been frozen, suspended, cancelled or deleted as of the end of the last month of the quarter.

(7) 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.

(8) Monthly Transactions per PayPay User is defined as the number of transactions made using PayPay Balance,
PayPay Credit and PayPay Card divided by PayPay MTU. The number of transactions made using PayPay Balance and PayPay Credit divided by PayPay MTU are as follows: 16.6, 17.2, 16.8, 15.9, 16.7, 17.4, 17.2, 17.1, 18.1, 19.2, 19.0, 18.3, 19.2, 20.2 and
20.0 for the three-month periods ended June 30, 2022, September 30, 2022, December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023, December 31, 2023, March 31, 2024, June 30, 2024,
September 30, 2024, December 31, 2024, March 31, 2025, June 30, 2025, September 30, 2025 and December 31, 2025, respectively.

(9) Number of Active PayPay Card Issued is defined as members of PayPay Card, PayPay Credit, and Yahoo! JAPAN
Card, excluding members whose accounts have been suspended or who have withdrawn from the service. A single member that is issued multiple PayPay Cards since August 2024 is counted multiple times.

(10) Balance of revolving payment is defined as the total outstanding revolving payment balance of PayPay Card at
the end of the month of the applicable period.

(11) Balance of cash advances is defined as the total outstanding cash advance balance of PayPay Card at the end
of the month in the applicable period.

(12) 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 GMV and ATM withdrawal amounts when using the cash card function, excluding the GMV of any cancelled transactions.

(13) Number of PayPay Bank deposit accounts is defined as the total number of PayPay Bank regular savings accounts
as of the end of the month, for both individual and corporate accounts, excluding closed accounts and fixed deposit accounts.

(14) Number of PayPay Securities accounts is defined as the cumulative total number of PayPay Securities
comprehensive securities accounts as of the end of the quarter, excluding the number of closed or frozen securities accounts.

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**Historical Results of Operations** 

The following table shows summary consolidated statements of profit or loss data for the years ended March 31, 2023, 2024 and 2025:

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| | | | |
|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** |
|  | **2023** | **2024** | **2025** |
|  | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** |
|  Transaction and service income: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers in Payment segment | ¥123412 | ¥149310 | ¥176597 |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers in Financial service segment | 23515 | 24817 | 26998 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total transaction and service income (Consolidated) | ¥146927 | ¥174127 | ¥203595 |
|  Interest income | 50285 | 73884 | 88442 |
|  Gains on financial instruments | 2079 | 4641 | 5529 |
|  Other operating income | 1903 | 1959 | 1512 |
|  Total revenue | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;201194 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;254611 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;299078 |
|  Operating expenses | (221742) | (254600) | (263568) |
|  Operating profit (loss) | (20548) | 11 | 35510 |
| &nbsp;&nbsp;&nbsp;&nbsp; Share of loss of a joint venture accounted for using the equity method |  |  | (549) |
|  Profit (loss) before tax | (20548) | 11 | 34961 |
| &nbsp;&nbsp;&nbsp;&nbsp; Income tax (expense) benefit | (4398) | (841) | 4196 |
|  Profit (loss) for the year | ¥(24946) | ¥(830) | ¥39157 |
|  Attributable to: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Owners of the parent company | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(25856) | ¥(3350) | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;36170 |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-controlling interests | 910 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2520 | 2987 |

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***Comparison of the Year Ended March 31, 2025 with the Year Ended March 31, 2024***

*Total revenue.* Total revenue increased by ¥44,467 million, or 17.5%, from ¥254,611 million for the year ended March 31, 2024 to ¥299,078 million for the year ended March 31, 2025. Total revenue consists of the following: transaction and service income, interest income, gains (losses) on financial instruments and other operating income.

*Transaction and service income.* Transaction and service income was ¥203,595 million for the year ended March 31, 2025, an increase of ¥29,468 million, or 16.9%, from ¥174,127 million for the year ended March 31, 2024. The increase was due mainly to an increase in revenue from external customers for the Payment segment of ¥27,287 million, or 18.3%, from ¥149,310 million for the year ended March 31, 2024 to ¥176,597 million for the year ended March 31, 2025, which was driven mainly by the steady expansion of revenue from PayPay Balance payments. Because the PayPay Balance payment service was in a steady growth stage, the number of users increased at a steady rate as the service attained wider recognition, and the total amount used by a user increased as people integrated the service into their daily payment habits. As a consequence, PayPay Balance GMV increased, and GMV per MTU also rose, leading to higher revenue from PayPay Balance payments. The increase in transaction and service income also resulted from an increase in revenue from external customers for the Financial service segment of ¥2,181 million, or 8.8%, from ¥24,817 million in the year ended March 31, 2024 to ¥26,998 million in the year ended March 31, 2025. The increase in the Financial service segment was due mainly to an increase in the volume of transactions in the banking business.

*Interest income.* Interest income was ¥88,442 million in the year ended March 31, 2025, an increase of ¥14,558 million, or 19.7%, from ¥73,884 million in the year ended March 31, 2024. This increase was due mainly to an upward trend in effective interest rates and an increase in the balance of PayPay Card credit issued as well as loans offered by PayPay Bank Corporation.

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While gains on financial instruments and other operating income do not account for a significant portion of total revenue, gains on financial instruments increased by ¥888 million, or 19.1%, from ¥4,641 million for the year ended March 31, 2024 to ¥5,529 million for the year ended March 31, 2025. The increase was due mainly to an upward trend in effective interest rates and an increase in fair value of financial instruments recorded in the Financial service segment. Other operating income primarily comprises income recognized from the expiration of contractual obligations, including unused PayPay balances and expired gift cards.

*Operating expenses*. Operating expenses were ¥263,568 million for the year ended March 31, 2025, an increase of ¥8,968 million, or 3.5%, from ¥254,600 million for the year ended March 31, 2024. The following table presents a breakdown of operating expenses for the years ended March 31, 2024 and 2025. Due to our continuous cost control efforts, the increase in variable costs was only marginal compared to the revenue growth.

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| | | |
|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** |
|  | **2024** | **2025** |
|  | **(in millions of yen)** | **(in millions of yen)** |
|  Settlement related cost | ¥39992 | ¥43662 |
|  Provision for loss allowance | 23006 | 23942 |
|  Interest expenses | 1931 | 4254 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Transaction Cost | 64929 | 71858 |
|  Point expenses | 45402 | 50362 |
|  Employee benefit expenses | 37764 | 41483 |
|  Professional and outsourcing services expenses | 34800 | 28767 |
|  Depreciation and amortization | 17549 | 20093 |
|  License fees | 15899 | 18027 |
|  Advertising and promotion expenses | 11458 | 10731 |
|  Tax and charges | 6518 | 5052 |
|  Amortization of contract cost | 1043 | 1297 |
|  Other | 19238 | 15898 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;254600 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;263568 |

---

The increase in operating expenses was primarily attributable to the following major expense categories: settlement related cost, interest expenses, point expenses, employee benefit expenses, depreciation and amortization and license fees. The increase in these expenses were partially offset by a decrease in professional and outsourcing services expenses. The following provides a detailed background on the year-over-year fluctuations by expense category:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Settlement related cost: Settlement related cost increased by ¥3,670 million, or 9.2%, from
¥39,992 million for the year ended March 31, 2024 to ¥43,662 million for the year ended March 31, 2025. Settlement related cost includes fees paid to banks when users top up their PayPay Balance from their bank accounts,
withdrawal fees incurred when funds are debited from users' bank accounts, and brand or network fees paid to international card brands. Settlement related cost increased due to higher PayPay Balance GMV, PayPay Credit GMV and PayPay Card GMV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Interest expenses: Interest expenses increased by ¥2,323 million, or 120.3%, from ¥1,931 million
for the year ended March 31, 2024 to ¥4,254 million for the year ended March 31, 2025. The significant increase in interest expenses was due to an increase in the effective interest rate and an increased balance of deposits from PayPay Bank
users.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Point expenses: Point expenses increased by ¥4,960 million, or 10.9%, from ¥45,402 million for the
year ended March 31, 2024 to ¥50,362 million for the year ended March 31, 2025. We can decide at our discretion the timing, targeted user groups and magnitude of the points we grant as rewards for code-based payment transactions. Over time,
the promotional rate has declined as the Company has strengthened its market position.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Employee benefit expenses: Employee benefit expenses increased by ¥3,719 million, or 9.8%, from
¥37,764 million for the year ended March 31, 2024 to ¥41,483 million for the year ended March 31, 2025. Due to business expansion, employee benefit expenses increased by 23.9% from the year ended March 31, 2023 to the
year ended March 31, 2024. While our business continued to grow from the year ended March 31, 2024 to the year ended March 31, 2025, the increase in the year ended March 31, 2025 was largely offset by a personnel transfer for the
establishment of PayPay SC Corporation, resulting in a modest increase of 9.8%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Depreciation and amortization: Depreciation and amortization increased by ¥2,544 million, or 14.5%,
from ¥17,549 million for the year ended March 31, 2024 to ¥20,093 million for the year ended March 31, 2025. The increase in depreciation and amortization was attributable to the higher depreciable basis of the PayPay
app, which has been capitalized through its continuous development.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• License fees: License fees increased by ¥2,128 million, or 13.4%, from ¥15,899 million for
the year ended March 31, 2024 to ¥18,027 million for the year ended March 31, 2025. The increase in license fees was primarily attributable to the increased volume of cloud service usage driven by the increase in GMV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Professional and outsourcing services expenses: Professional and outsourcing service expenses decreased by
¥6,033 million, or 17.3%, from ¥34,800 million for the year ended March 31, 2024 to ¥28,767 million for the year ended March 31, 2025. This decline was primarily attributable to (i) a decline in outsourcing
services expenses following the completion of PayPay Card Corporation's core system development in the year ended March 31, 2024, and (ii) a reduction in outsourcing services expenses achieved through organizational restructuring as part of
our broader cost optimization efforts including transferring part of the sales personnel to PayPay SC Corporation.

Management also noted that while the balance of revolving payment by PayPay Card users increased from the year ended March 31, 2024, provision for loss allowance has been relatively consistent year-over-year because of credit limit optimization. Provision for loss allowance increased slightly by ¥936 million, or 4.1%, from ¥23,006 million for the year ended March 31, 2024 to ¥23,942 million for the year ended March 31, 2025. Provision for loss allowance consists primarily of loss allowance provisions related to PayPay Card advances, and are largely influenced by credit risk of PayPay Card users as well as the outstanding balance owed by such users. Shortly after the acquisition of PayPay Card Corporation in October 2022, we undertook an initiative to increase users' credit limits and assume greater credit risk, with the objective of driving higher purchase volumes and enhancing PayPay Card Corporation's market share. As a consequence, we recognized a relatively higher provision for loss allowance for the year ended March 31, 2024 due to bad debts. Having achieved sufficient market share and in light of concerns regarding excessive credit risk, we optimized users' credit limits, which resulted in a relatively mild increase in loss allowance provisions for the year ended March 31, 2025.

*Operating profit (loss).* As a result of the foregoing, operating profit was ¥35,510 million for the year ended March 31, 2025, an increase of ¥35,499 million from ¥11 million for the year ended March 31, 2024.

*Share of loss of a joint venture accounted for using the equity method.* Share of loss of a joint venture accounted for using the equity method was ¥549 million for the year ended March 31, 2025, compared with none recorded for the year ended March 31, 2024.

*Profit (loss) before tax.* As a result of the foregoing, profit before tax was ¥34,961 million for the year ended March 31, 2025, an increase of ¥34,950 million from ¥11 million for the year ended March 31, 2024.

*Income tax (expense) benefit.* Income tax benefit was ¥4,196 million for the year ended March 31, 2025 compared to income tax expense of ¥841 million for the year ended March 31, 2024. Because we did not generate

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profits in prior fiscal years, deferred tax assets were not recognized. Because we achieved profitability in the year ended March 31, 2025, we recognized deferred tax assets, leading to the recognition of substantial deferred income tax benefit.

*Profit (loss) for the year.* As a result of the foregoing, we recorded a profit for the year of ¥39,157 million for the year ended March 31, 2025, compared to a loss for the year of ¥830 million for the year ended March 31, 2024.

***Comparison of the Year Ended March 31, 2024 with the Year Ended March 31, 2023***

*Total revenue.* Total revenue increased by ¥53,417 million, or 26.6%, from ¥201,194 million for the year ended March 31, 2023 to ¥254,611 million for the year ended March 31, 2024.

*Transaction and service income.* Transaction and service income was ¥174,127 million for the year ended March 31, 2024, an increase of ¥27,200 million, or 18.5%, from ¥146,927 million for the year ended March 31, 2023. The increase was due mainly to a steady growth in user adoption, which led to higher PayPay Balance GMV and GMV per MTU.

*Interest income.* Interest income was ¥73,884 million for the year ended March 31, 2024, an increase of ¥23,599 million, or 46.9%, from ¥50,285 million for the year ended March 31, 2023. The increase was attributable to the growth of credit card receivables, resulting from our strategic decision to expand users' credit limits and take on greater credit risk with the aim of driving purchase growth and reinforcing PayPay Card Corporation's market share after its acquisition in October 2022.

While gains (losses) on financial instruments and other operating income do not account for a significant portion of total revenue, gains on financial instruments increased by ¥2,562 million, or 123.3%, from ¥2,079 million for the year ended March 31, 2023 to ¥4,641 million for the year ended March 31, 2024. The increase was due mainly to an increase in gains on financial instruments for the Financial service segment. The fluctuation also reflects the fact that we recorded a substantial loss on financial instruments in the year ended March 31, 2023, which did not recur in the year ended March 31, 2024 and thereby contributed to the increase in gains on financial instruments. Other operating income primarily comprises income recognized from the expiration of contractual obligations, including unused PayPay balances and expired gift cards.

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*Operating expenses*. Operating expenses were ¥254,600 million for the year ended March 31, 2024, an increase of ¥32,858 million, or 14.8%, from ¥221,742 million for the year ended March 31, 2023. The following table presents a breakdown of operating expenses for the years ended March 31, 2023 and 2024.

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| | | |
|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** |
|  | **2023** | **2024** |
|  | **(in millions of yen)** | **(in millions of yen)** |
|  Settlement related cost | ¥38482 | ¥39992 |
|  Provision for loss allowance | 15187 | 23006 |
|  Interest expenses | 1515 | 1931 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Transaction Cost | 55184 | 64929 |
|  Point expenses | 42283 | 45402 |
|  Employee benefit expenses | 30476 | 37764 |
|  Professional and outsourcing services expenses | 30547 | 34800 |
|  Depreciation and amortization | 13852 | 17549 |
|  License fees | 11133 | 15899 |
|  Advertising and promotion expenses | 14310 | 11458 |
|  Tax and charges | 7104 | 6518 |
|  Amortization of contract cost | 803 | 1043 |
|  Other | 16050 | 19238 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;221742 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;254600 |

---

The increase in operating expenses was primarily attributable to the following major expense categories: provision for loss allowance, employee benefit expenses, license fees, professional and outsourcing services expenses, depreciation and amortization and point expenses. The following provides a detailed background on the year-over-year fluctuations by expense category:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Provision for loss allowance: Provision for loss allowance increased by ¥7,819 million, or 51.5%,
from ¥15,187 million for the year ended March 31, 2023 to ¥23,006 million for the year ended March 31, 2024. The increase was due to higher bad debts in PayPay Card advances, resulting from our initiative to assume greater credit
risk to support purchase growth and enhancing PayPay Card Corporation's market share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Employee benefit expenses: Employee benefit expenses increased by ¥7,288 million, or 23.9%, from
¥30,476 million for the year ended March 31, 2023 to ¥37,764 million for the year ended March 31, 2024. The increase was due mainly to the expansion of our workforce to support the growth of our business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• License fees: License fees increased by ¥4,766 million, or 42.8%, from ¥11,133 million for
the year ended March 31, 2023 to ¥15,899 million for the year ended March 31, 2024. The increase was attributable mainly to higher usage of cloud services associated with PayPay Card and the PayPay app, which primarily resulted from the
increase in GMV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Professional and outsourcing services expenses: Professional and outsourcing services expenses increased by
¥4,253 million, or 13.9%, from ¥30,547 million for the year ended March 31, 2023 to ¥34,800 million for the year ended March 31, 2024. The increase resulted from non-recurring professional services from an accounting firm,
R&D support service for PayPay Card Corporation's core system and outsourcing of call center operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Depreciation and amortization: Depreciation and amortization increased by ¥3,697 million, or 26.7%,
from ¥13,852 million for the year ended March 31, 2023 to ¥17,549 million for the year ended March 31, 2024. The increase in depreciation and amortization was attributable mainly to

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higher depreciable base of PayPay's software as well as the implementation of PayPay Card Corporation's core system that was placed into service during the year ended March 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Point expenses: Point expenses increased by ¥3,119 million, or 7.4%, from ¥42,283 million
for the year ended March 31, 2023 to ¥45,402 million for the year ended March 31, 2024. The promotional rate continued to decline as market share increased, and while total expenses rose slightly due to user growth, this impact was largely
offset by the lower rate per user.

Management noted that the fluctuation of other operating expenses included immaterial fluctuations in various categories of expenses and does not reflect factors that could materially affect our financial condition or results of operations.

*Operating profit (loss)*. As a result of the foregoing, operating profit was ¥11 million for the year ended March 31, 2024, compared with operating loss of ¥20,548 million for the year ended March 31, 2023.

*Profit (loss) before tax*. Profit before tax was ¥11 million for the year ended March 31, 2024, compared with a loss before tax of ¥20,548 million for the year ended March 31, 2023. 

*Income tax expense.* Income tax expense was ¥841 million for the year ended March 31, 2024, compared to ¥4,398 million for the year ended March 31, 2023. As of March 31, 2024, we recognized deferred tax assets arising from temporary differences associated with a substantial provision for loss allowance, which resulted from increased credit limits. As a result, income tax expense decreased significantly compared with the year ended March 31, 2023.

*Loss for the year.* As a result of the foregoing, we recorded a loss for the year of ¥830 million for the year ended March 31, 2024, compared to a loss for the year of ¥24,946 million for the year ended March 31, 2023.

The following table shows selected consolidated statements of profit or loss data for the nine-month periods ended December 31, 2024 and 2025:

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| | | |
|:---|:---|:---|
|  | **For the nine-month period ended<br>December 31,** | **For the nine-month period ended<br>December 31,** |
|  | **2024** | **2025** |
|  | **(in millions of yen)** | **(in millions of yen)** |
|  | **(unaudited)** | **(unaudited)** |
|  Transaction and service income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers in Payment segment | ¥130550 | ¥163251 |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers in Financial service segment | 20195 | 22074 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total transaction and service income | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;150745 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;185325 |
|  Interest income | 64426 | 83551 |
|  Gains on financial instruments | 3942 | 7657 |
|  Other operating income | 1334 | 1945 |
|  Total revenue | ¥220447 | ¥278478 |
|  Operating expenses | (192263) | (217470) |
|  Operating profit  | 28184 | 61008 |
| &nbsp;&nbsp;&nbsp;&nbsp; Share of profit (loss) of investments accounted for using the equity method | (383) | 101 |
|  Profit before tax | 27801 | 61109 |
| &nbsp;&nbsp;&nbsp;&nbsp; Income tax benefit | 1156 | 42228 |
|  Profit for the period | ¥28957 | ¥103337 |
|  Attributable to: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Owners of the parent company | ¥26483 | ¥101521 |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-controlling interests | 2474 | 1816 |

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##### [**Table of Contents**](#toc)
***Comparison of the Nine-Month Period Ended December 31, 2025 with the Nine-Month Period Ended December 31, 2024***

*Total revenue.* Total revenue increased by ¥58,031 million, or 26.3%, from ¥220,447 million for the nine-month period ended December 31, 2024 to ¥278,478 million for the nine-month period ended December 31, 2025.

*Transaction and service income.* Transaction and service income was ¥185,325 million for the nine-month period ended December 31, 2025, an increase of ¥34,580 million, or 22.9%, from ¥150,745 million for the nine-month period ended December 31, 2024. The revenue growth was due mainly to the growth in user adoption, the number of transactions and GMV per MTU, which led to higher PayPay Balance GMV. In addition to the growth in GMV, Take Rate improved both in offline and online merchants. In particular, we strategically focused on acquiring merchants that utilize us for online payments, which generally have a higher Take Rate compared to offline merchants. The acquisition of these new merchants and the strong performance of existing online merchants led to an increase in GMV generated by online merchants and a higher share of online GMV in our PayPay App GMV. PayPay App GMV is calculated as the sum of PayPay Balance GMV and PayPay Credit GMV (including PayPay Credit, top-ups to PayPay Balance with PayPay Card and GMV made by linking a PayPay Card to the PayPay app without linking a PayPay account), excluding GMV from canceled transactions.

*Interest income.* Interest income was ¥83,551 million for the nine-month period ended December 31, 2025, an increase of ¥19,125 million, or 29.7%, from ¥64,426 million for the nine-month period ended December 31, 2024. This growth was due to growth in both our Payment Segment and our Financial Segment. For the Payment Segment, the number of credit card users increased and the balance of revolving payments expanded, resulting in higher interest income. This growth was partially driven by improvements in card approval rates, which contributed to an increase in card-related financial balances. In addition to the increase in the number of cards issued, the launch of our new product "Pay in Installments Later" has also contributed to steady growth in financial balances. For the Financial Segment, the increase in interest income mainly resulted from an increase in loan balance, mainly for mortgage loans, as well as an increase in investments in debt securities.

While gains on financial instruments and other operating income do not account for a significant portion of total revenue, gains on financial instruments increased by ¥3,715 million, or 94.2%, from ¥3,942 million for the nine-month period ended December 31, 2024 to ¥7,657 million for the nine-month period ended December 31, 2025. The significant increase in gains (losses) on financial instruments resulted from factoring debt instruments. Other operating income primarily comprises income recognized from the expiration of contractual obligations, including unused PayPay balances and expired gift cards.

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*Operating expenses*. Operating expenses were ¥217,470 million for the nine-month period ended December 31, 2025, an increase of ¥25,207 million, or 13.1%, from ¥192,263 million for the nine-month period ended December 31, 2024. The following table presents a breakdown of operating expenses for the nine-month periods ended December 31, 2024 and 2025.

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| | | |
|:---|:---|:---|
|  | **For the nine-month period ended<br>December 31,** | **For the nine-month period ended<br>December 31,** |
|  | **2024** | **2025** |
|  | **(in millions of yen)** | **(in millions of yen)** |
|  | **(unaudited)** | **(unaudited)** |
|  Settlement related cost | ¥32469 | ¥36348 |
|  Provision for loss allowance | 17241 | 17396 |
|  Interest expenses | 2723 | 7248 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Transaction Cost | 52433 | 60992 |
|  Point expenses | 37334 | 44488 |
|  Employee benefit expenses | 30616 | 32810 |
|  Professional and outsourcing services expenses | 21091 | 21300 |
|  Depreciation and amortization | 14486 | 17551 |
|  License fees | 13359 | 13984 |
|  Advertising and promotion expenses | 7000 | 7156 |
|  Tax and charges | 3430 | 3526 |
|  Amortization of contract cost | 948 | 1243 |
|  Other | 11566 | 14420 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;192263 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;217470 |

---

The increase in operating expenses was due primarily to the following major expense categories: settlement related cost, interest expenses, point expenses, employee benefit expenses and depreciation and amortization. The following provides a detailed background on the period-to-period fluctuations by expense category:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Settlement related cost: Settlement related cost increased by ¥3,879 million, or 11.9%, from
¥32,469 million for the nine-month period ended December 31, 2024 to ¥36,348 million for the nine-month period ended December 31, 2025. The increase was due mainly to higher PayPay Balance
GMV, PayPay Credit GMV and PayPay Card GMV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Interest expenses: Interest expenses increased by ¥4,525 million, or 166.2%, from
¥2,723 million for the nine-month period ended December 31, 2024 to ¥7,248 million for the nine-month period ended December 31, 2025. The significant increase in interest expenses was due mainly to an increase in effective interest
rate and an increased balance of deposits from PayPay Bank users. Management also noted that there was a policy change related to the Bank of Japan's interest rate, which contributed to the increase in effective interest rate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Point expenses: Point expenses increased by ¥7,154 million, or 19.2%, from ¥37,334 million for the
nine-month period ended December 31, 2024 to ¥44,488 million for the nine-month period ended December 31, 2025. The promotional rate has continued to decline as market share increased, and while total expenses rose slightly due to user
growth, this impact was largely offset by the lower rate per user.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Employee benefit expenses: Employee benefit expenses increased by ¥2,194 million, or 7.2%, from
¥30,616 million for the nine-month period ended December 31, 2024 to ¥32,810 million for the nine-month period ended December 31, 2025. The increase was due mainly to the increase in headcount to
support the growth of the business.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Depreciation and amortization: Depreciation and amortization increased by ¥3,065 million, or 21.2%,
from ¥14,486 million for the nine-month period ended December 31, 2024 to ¥17,551 million for the nine-month period ended December 31, 2025. The increase in depreciation and amortization was attributable to the higher depreciable
basis of the PayPay application, which has been capitalized through continuous development. Also, PayPay Bank Corporation recognized a new lease contract, which started in April 2025, that resulted in an increase in depreciation expense.

Management noted that the fluctuation of other operating expenses included a number of immaterial fluctuations in various categories of expenses and did not reflect factors that could materially affect our financial condition and results of operations.

*Share of profit (loss) of investments accounted for using the equity method*. Share of profit of investments accounted for using the equity method was ¥101 million in the nine-month period ended December 31, 2025, compared to share of loss of investments accounted for using the equity method of ¥383 million recorded in nine-month period ended December 31, 2024.

*Profit before tax*. As a result of the foregoing, profit before tax was ¥61,109 million in the nine-month period ended December 31, 2025, an increase of ¥33,308 million, or 119.8%, from ¥27,801 million in the nine-month period ended December 31, 2024.

*Income tax benefit.* Income tax benefit was ¥42,228 million for the nine-month period ended December 31, 2025, compared to ¥1,156 million for the nine-month period ended December 31, 2024. The increase in income tax benefit primarily reflects the recognition of ¥57,535 million of deferred tax assets related to temporary differences that existed in prior periods but were not previously recognized, as recoverability improved in the current period and triggered the capitalization. See Note 13 in our unaudited condensed consolidated financial statements as of December 31, 2025 and for the nine months ended December 31, 2024 and 2025.

*Profit for the period.* As a result of the foregoing, profit for the period was ¥103,337 million for the nine-month period ended December 31, 2025, compared to a profit for the period of ¥28,957 million for the nine-month period ended December 31, 2024.

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##### [**Table of Contents**](#toc)
**Results by Segment** 

The following tables show revenue and profit and loss information by segment for the years ended March 31, 2023, 2024 and 2025:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | For the year ended March 31, 2023 | For the year ended March 31, 2023 | For the year ended March 31, 2023 | For the year ended March 31, 2023 |
|  | Payment segment | Financial service<br>segment | Inter-segment<br>eliminations | Consolidated |
|  | (in millions of yen) | (in millions of yen) | (in millions of yen) | (in millions of yen) |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 123412 | 23515 |  | 146927 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 469 | 1818 | (2287) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total transaction and service income | 123881 | 25333 | (2287) | 146927 |
|  Interest income | 39711 | 10574 |  | 50285 |
|  Gains on financial instruments | 551 | 1528 |  | 2079 |
|  Other operating income | 1791 | 112 |  | 1903 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenue | 165934 | 37547 | (2287) | 201194 |
|  Operating expenses | (187030) | (36999) | 2287 | (221742) |
|  Segment (loss) profit | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21096) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;548 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20548) |
|  | For the year ended March 31, 2024 | For the year ended March 31, 2024 | For the year ended March 31, 2024 | For the year ended March 31, 2024 |
|  | Payment segment | Financial service<br>segment | Inter-segment<br>eliminations | Consolidated |
|  | (in millions of yen) | (in millions of yen) | (in millions of yen) | (in millions of yen) |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 149310 | 24817 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;174127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 823 | 2081 | (2904) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total transaction and service income | 150133 | 26898 | (2904) | 174127 |
|  Interest income | 59013 | 14871 |  | 73884 |
|  Gains on financial instruments | 405 | 4236 |  | 4641 |
|  Other operating income | 1756 | 203 |  | 1959 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenue | 211307 | 46208 | (2904) | 254611 |
|  Operating expenses | (215084) | (42420) | 2904 | (254600) |
|  Segment (loss) profit | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3777) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3788 |  | 11 |
|  | For the year ended March 31, 2025 | For the year ended March 31, 2025 | For the year ended March 31, 2025 | For the year ended March 31, 2025 |
|  | Payment segment | Financial service<br>segment | Inter-segment<br>eliminations | Consolidated |
|  | (in millions of yen) | (in millions of yen) | (in millions of yen) | (in millions of yen) |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 176597 | 26998 |  | 203595 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 1454 | 1362 | (2816) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total transaction and service income | 178051 | 28360 | (2816) | 203595 |
|  Interest income | 68623 | 19819 |  | 88442 |
|  Gains on financial instruments | 276 | 5253 |  | 5529 |
|  Other operating income | 1304 | 208 |  | 1512 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenue | 248254 | 53640 | (2816) | 299078 |
|  Operating expenses | (217898) | (48486) | 2816 | (263568) |
|  Segment profit | 30356 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5154 |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;35510 |

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***Comparison of the Year Ended March 31, 2025 with the Year Ended March 31, 2024***

*Payment Segment* 

Total revenue for the Payment segment increased by ¥36,947 million, or 17.5%, from ¥211,307 million for the year ended March 31, 2024 to ¥248,254 million for the year ended March 31, 2025. The increase in total

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revenue was primarily driven by transaction and service income from external customers, which increased by ¥27,287 million, or 18.3%, from ¥149,310 million for the year ended March 31, 2024 to ¥176,597 million for the year ended March 31, 2025. This increase was supported by the steady growth of GMV associated with PayPay Balance payments, which in turn reflected both an increase in MTUs and higher GMV per MTU.

Operating expenses for the Payment segment increased by ¥2,813 million, or 1.3%, from ¥215,084 million for the year ended March 31, 2024 to ¥217,898 million for the year ended March 31, 2025. The moderate increase in operating expenses resulted from our continuous efforts on cost control. While point expenses, settlement related cost and employee benefit expenses increased by ¥4,960 million, ¥2,985 million and ¥2,003 million, respectively, in line with business growth, these increases were offset by a decrease of ¥6,569 million in professional and outsourcing services expenses, due primarily to reduced outsourcing of sales and system development service. Instead, we utilized our own resources.

As a result of the foregoing, segment profit for the Payment segment amounted to ¥30,356 million for the year ended March 31, 2025, compared with a segment loss of ¥3,777 million for the year ended March 31, 2024.

*Financial Service Segment* 

Total revenue for the Financial service segment increased by ¥7,432 million, or 16.1%, from ¥46,208 million for the year ended March 31, 2024 to ¥53,640 million for the year ended March 31, 2025. The increase was due mainly to (a) an increase in transaction and service income from external customers of ¥2,181 million, or 8.8%, to ¥26,998 million for the year ended March 31, 2025, from ¥24,817 million for the year ended March 31, 2024, which reflected an increase of ancillary banking and platform usage fees from PayPay Bank Corporation, and (b) an increase in interest income of ¥4,948 million, or 33.3%, to ¥19,819 million for the year ended March 31, 2025, compared to ¥14,871 million for the year ended March 31, 2024, reflecting primarily the expansion of loan balances, as well as the end of the Bank of Japan's negative interest rate policy in early 2024 and the subsequent rise in benchmark rates and bond yields.

Operating expenses for the Financial service segment increased by ¥6,066 million, or 14.3%, from ¥42,420 million for the year ended March 31, 2024 to ¥48,486 million for the year ended March 31, 2025. The increase was due mainly to an increase of ¥1,734 million in interest expenses due to higher interest rate and the increased balance of deposits. Employee benefit expenses also increased by ¥1,716 million due to an increase in headcount.

As a result of the foregoing, segment profit for the Financial service segment amounted to ¥5,154 million for the year ended March 31, 2025, compared with a segment profit of ¥3,788 million for the year ended March 31, 2024.

***Comparison of the Year Ended March 31, 2024 with the Year Ended March 31, 2023***

*Payment Segment* 

Total revenue for the Payment segment increased by ¥45,373 million, or 27.3%, from ¥165,934 million for the year ended March 31, 2023 to ¥211,307 million for the year ended March 31, 2024. The increase in total revenue was primarily driven by transaction and service income from external customers, which increased by ¥25,898 million, or 21.0%, from ¥123,412 million for the year ended March 31, 2023 to ¥149,310 million for the year ended March 31, 2024. This increase was supported by the steady growth of GMV associated with PayPay Balance payments, which in turn reflected both an increase in MTUs and higher GMV per MTU.

Operating expenses for the Payment segment increased by ¥28,054 million, or 15.0%, from ¥187,030 million for the year ended March 31, 2023 to ¥215,084 million for the year ended March 31, 2024. The increase in operating expenses was attributable to increases in the following expenses categories: ¥7,722 million

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of provision for loss allowance, ¥5,821 million of employee benefit expenses, ¥4,766 million of license fees, ¥3,141 million of depreciation and amortization, ¥3,119 million of point expenses, and ¥2,884 million of professional and outsourcing services expenses. Provision for loss allowance increased due to higher bad debts arising from the expansion of credit limits. Employee benefit expenses, license fees and depreciation and amortization increased in line with our business growth. Professional and outsourcing services expenses increased due to professional services related to confidential projects as well as the outsourcing of infrastructure system development.

As a result of the foregoing, segment loss for the Payment segment amounted to ¥3,777 million for the year ended March 31, 2024, compared with a segment loss of ¥21,096 million for the year ended March 31, 2023.

*Financial Service Segment* 

Total revenue for the Financial service segment increased by ¥8,661 million, or 23.1%, from ¥37,547 million for the year ended March 31, 2023 to ¥46,208 million for the year ended March 31, 2024. The increase was due mainly to (a) an increase in transaction and service income from external customers of ¥1,302 million, or 5.5%, from ¥23,515 million for the year ended March 31, 2023 to ¥24,817 million for the year ended March 31, 2024, which reflected an increase of ancillary banking and platform usage fees from PayPay Bank Corporation. The increase was also due to (b) an increase in interest income of ¥4,297 million, or 40.6%, from ¥10,574 million in the year ended March 31, 2023 to ¥14,871 million in the year ended March 31, 2024, reflecting primarily the expansion of card loan balances.

Operating expenses for the Financial service segment increased by ¥5,420 million, or 14.6%, from ¥36,999 million for the year ended March 31, 2023 to ¥42,420 million for the year ended March 31, 2024. The increase in operating expenses was due mainly to increases in professional and outsourcing services expenses and employee benefit expenses. Professional and outsourcing services expenses increased due mainly to the outsourcing of administrative functions. Employee benefit expenses increased in line with our business growth and an increase in headcount.

As a result of the foregoing, segment profit for the Financial service segment amounted to ¥3,788 million for the year ended March 31, 2024, compared with a segment profit of ¥548 million for the year ended March 31, 2023.

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The following tables show revenue and profit and loss information by segment for the nine-month periods ended December 31, 2024 and 2025:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | For the nine-month period ended December 31, 2024 | For the nine-month period ended December 31, 2024 | For the nine-month period ended December 31, 2024 | For the nine-month period ended December 31, 2024 |
|  | Payment segment | Financial service<br>segment | Inter-segment<br>eliminations | Consolidated |
|  | (in millions of yen) | (in millions of yen) | (in millions of yen) | (in millions of yen) |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 130550 | 20195 |  | 150745 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 977 | 1157 | (2134) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total transaction and service income | 131527 | 21352 | (2134) | 150745 |
|  Interest income | 50440 | 13986 |  | 64426 |
|  Gains (losses) on financial instruments | 143 | 3799 |  | 3942 |
|  Other operating income | 1191 | 143 |  | 1334 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenue | 183301 | 39280 | (2134) | 220447 |
|  Operating expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(159148) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(35249) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2134 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(192263) |
|  Segment profit | 24153 | 4031 |  | 28184 |
|  | For the nine-month period ended December 31, 2025 | For the nine-month period ended December 31, 2025 | For the nine-month period ended December 31, 2025 | For the nine-month period ended December 31, 2025 |
|  | Payment segment | Financial service<br>segment | Inter-segment<br>eliminations | Consolidated |
|  | (in millions of yen) | (in millions of yen) | (in millions of yen) | (in millions of yen) |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 163251 | 22074 |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;185325 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 1071 | 658 | (1729) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total transaction and service income | 164322 | 22732 | (1729) | 185325 |
|  Interest income | 61238 | 22313 |  | 83551 |
|  Gains (losses) on financial instruments | 1977 | 5680 |  | 7657 |
|  Other operating income | 1466 | 479 |  | 1945 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenue | 229003 | 51204 | (1729) | 278478 |
|  Operating expenses | (177969) | (41230) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1729 | (217470) |
|  Segment profit | 51034 | 9974 |  | 61008 |

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***Comparison of the Nine-Month Period Ended December 31, 2025 with the Nine-Month Period Ended December 31, 2024***

*Payment Segment* 

Total revenue for the Payment segment increased by ¥45,702 million, or 24.9%, from ¥183,301 million for the nine-month period ended December 31, 2024 to ¥229,003 million for the nine-month period ended December 31, 2025. The increase was due mainly to an increase in transaction and service income from external customers of ¥32,701 million, or 25.0%, from ¥130,550 million for the nine-month period ended December 31, 2024 to ¥163,251 million for the nine-month period ended December 31, 2025, which reflected an increase in GMV associated with PayPay Balance payments.

Operating expenses for the Payment segment increased by ¥18,821 million, or 11.8%, from ¥159,148 million for the nine-month period ended December 31, 2024 to ¥177,969 million for the nine-month period ended December 31, 2025. The increase in operating expenses was mainly attributable to increases in the following expense categories: ¥7,154 million of point expenses and ¥3,188 million of settlement related cost. Point expenses increased since the number of people that met the criteria for a grant of points increased. Settlement related cost increased due primarily to higher GMV, which resulted in incurring higher costs charged by banks when users top up their PayPay Balance.

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As a result of the foregoing, segment profit for the Payment segment amounted to ¥51,034 million for the nine-month period ended December 31, 2025, compared with a segment profit of ¥24,153 million for the nine-month period ended December 31, 2024.

*Financial Service Segment* 

Total revenue for the Financial service segment increased by ¥11,924 million, or 30.4%, from ¥39,280 million for the nine-month period ended December 31, 2024 to ¥51,204 million for the nine-month period ended December 31, 2025. The increase mainly resulted from an increase in interest income of ¥8,327 million, or 59.5%, from ¥13,986 million for the nine-month period ended December 31, 2024 to ¥22,313 million for the nine-month period ended December 31, 2025, reflecting primarily the expansion of loan balances, as well as the end of the Bank of Japan's negative interest rate policy in early 2024 and the subsequent rise in benchmark rates and bond yields.

Operating expenses for the Financial service segment increased by ¥5,981 million, or 17.0%, from ¥35,249 million for the nine-month period ended December 31, 2024 to ¥41,230 million for the nine-month period ended December 31, 2025. The increase in operating expenses was attributable to increases in the following expense categories: ¥3,518 million of interest expenses, ¥1,295 million of employee benefit expenses and ¥1,292 million of depreciation and amortization. Interest expenses increased due to the increased balance of deposits as well as increase in effective interest rate. Employee benefit expenses and depreciation and amortization increased in line with our business growth.

As a result of the foregoing, segment profit for the Financial service segment amounted to ¥9,974 million for the nine-month period ended December 31, 2025, compared with a segment profit of ¥4,031 million for the nine-month period ended December 31, 2024.

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**Quarterly Results of Operations** 

The following table sets forth unaudited selected statement of profit or loss data and Adjusted EBITDA for each of the 11 most recent quarterly periods. Adjusted EBITDA is a non-IFRS financial measure that we use to review and assess our operating performance.

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** |
|  | **June 30,<br>2023** | **September 30,<br>2023** | **December 31,<br>2023** | **March 31,<br>2024** | **June 30,<br>2024** | **September 30,<br>2024** | **December 31,<br>2024** | **March 31,<br>2025** | **June 30,<br>2025** | **September 30,<br>2025** | **December 31,**<br>**2025** |
|  | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | |
|  **Selected statement of profit or loss data:** |  |  |  |  |  |  |  |  |  |  |  |
|  Total revenue | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;58067 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;61817 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;66750 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;67977 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;69135 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70917 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;80395 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;78631 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;86154 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;92478 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;99846 |
|  Transaction and service income | 40592 | 42344 | 46196 | 44995 | 45887 | 48458 | 56400 | 52850 | 56816 | 62091 | 66418 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers in Payment segment | 34553 | 36093 | 39693 | 38896 | 39709 | 41995 | 48846 | 45806 | 49643 | 54858 | 58750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers in Financial service segment | 6039 | 6251 | 6503 | 6099 | 6178 | 6463 | 7554 | 7044 | 7173 | 7233 | 7668 |
|  Interest income | 16238 | 17953 | 19432 | 20261 | 21304 | 21011 | 22111 | 24016 | 25435 | 27878 | 30238 |
|  Gains on financial instruments | 1040 | 749 | 922 | 1930 | 1627 | 826 | 1489 | 1587 | 3561 | 1962 | 2134 |
|  Other operating income | 197 | 771 | 200 | 791 | 317 | 622 | 395 | 178 | 342 | 547 | 1056 |
|  Operating expenses | 58762 | 61363 | 67476 | 66999 | 62289 | 63434 | 66540 | 71305 | 70190 | 71990 | 75290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Transaction Cost | 15595 | 16391 | 18141 | 14802 | 16692 | 17177 | 18564 | 19425 | 19015 | 20769 | 21208 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Settlement related cost | 9798 | 9891 | 10231 | 10072 | 10435 | 10716 | 11318 | 11193 | 11572 | 12329 | 12447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for loss allowance | 5353 | 6059 | 7418 | 4176 | 5491 | 5645 | 6105 | 6701 | 5240 | 6073 | 6083 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expenses | 444 | 441 | 492 | 554 | 766 | 816 | 1141 | 1531 | 2203 | 2367 | 2678 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Point expenses | 8963 | 10915 | 13647 | 11877 | 11423 | 12219 | 13692 | 13028 | 13153 | 15268 | 16067 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employee benefit expenses | 8103 | 8545 | 8813 | 12303 | 9967 | 10708 | 9941 | 10867 | 10783 | 10946 | 11081 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Professional and outsourcing services expenses | 8862 | 8884 | 8543 | 8511 | 6731 | 6983 | 7377 | 7676 | 7737 | 7077 | 6486 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 4180 | 4274 | 4398 | 4697 | 4669 | 4806 | 5011 | 5607 | 5729 | 5755 | 6067 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; License fees | 3579 | 3817 | 4140 | 4363 | 4511 | 4376 | 4472 | 4668 | 4283 | 4503 | 5198 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advertising and promotion expenses | 2276 | 2469 | 3235 | 3478 | 2758 | 1935 | 2307 | 3731 | 2388 | 2447 | 2320 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax and charges | 1678 | 1723 | 1271 | 1846 | 1164 | 1130 | 1136 | 1622 | 1237 | 1034 | 1255 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of contract cost | 244 | 254 | 265 | 280 | 294 | 315 | 339 | 349 | 386 | 411 | 446 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 5282 | 4091 | 5023 | 4842 | 4080 | 3785 | 3701 | 4332 | 5479 | 3780 | 5162 |

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | **For the three-month period ended** | |
|  | **June 30,<br>2023** | **September 30,<br>2023** | **December 31,<br>2023** | **March 31,<br>2024** | **June 30,<br>2024** | **September 30,<br>2024** | **December 31,<br>2024** | **March 31,<br>2025** | **June 30,<br>2025** | **September 30,<br>2025** | <br>**December 31,**<br>**2025** |
|  | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | |
|  Operating profit (loss) | (695) | 454 | (726) | 978 | 6846 | 7483 | 13855 | 7326 | 15964 | 20488 | 24556 |
|  Profit (Loss) for the period | (1265) | (41) | (1278) | 1754 | 5310 | 10044 | 13603 | 10200 | 10809 | 73220 | 19308 |
|  **Non-IFRS financial measure:** |  |  |  |  |  |  |  |  |  |  |  |
|  Adjusted EBITDA<sup>(1)</sup> | 4250 | 5366 | 4796 | 6665 | 12178 | 12908 | 19561 | 14003 | 23506 | 27180 | 31851 |

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Note:

(1) See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS Financial Measures" for a discussion of Adjusted EBITDA and "—Non-IFRS Financial Measures—Adjusted EBITDA" above for a
reconciliation of Adjusted EBITDA from profit (loss) for the period.

**Liquidity and Capital Resources** 

***Cash and Capital Requirements***

As a company with all of its main operations in Japan, our cash and capital requirements are principally denominated in Japanese yen. Our cash and capital requirements are related mainly to our operating cash requirements, including for operating expenses, such as advertising and promotion expenses, debt service and repayments, as well as other investments. We launched our PayPay app in 2018 and incurred operating losses in every fiscal year since our inception through the year ended March 31, 2023, but have recorded operating profit since the year ended March 31, 2024, and we recorded losses for the year in every fiscal year since our inception through the year ended March 31, 2024, but recorded profit for the year for the year ended March 31, 2025. We have primarily funded our operations through the issuance of equity to our shareholders as well as with borrowings from various lenders. ****We expect to increasingly fund our operations from cash flow from operating activities due to the increased scale of our user base and revenue, in particular since we ended our initial waiver of small- and medium-sized merchant payment settlement fees in our Payment segment from October 2021.

*Operating Cash Requirements* 

We require cash on an ongoing basis to finance our regular operations. In our Payment segment, when users of our PayPay app charge their PayPay Balance, we receive cash from the users prior to our paying accounts payable to merchants. Generally, at the end of a given fiscal period, the balance of accounts payable related to code-based payments tends to exceed the balance of accounts receivable, and the difference is linked to an increase in cash and deposits to ensure operating cash.

We are required to comply with the Payment Services Act because we engage in business activities that involve advance payments from users using prepaid payment instruments, namely our offering of PayPay Money and PayPay Money Lite as summarized below.

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| | | |
|:---|:---|:---|
|  | **PayPay Money** | **PayPay Money Lite** |
| &nbsp;&nbsp;&nbsp;**eKYC** | Required | Not required |
| &nbsp;&nbsp;&nbsp;**Governing Law and Relevant Regulations** | Payment Services Act (Funds Transfer) | Payment Services Act (Prepaid Payment Instruments) |
| &nbsp;&nbsp;&nbsp;**Required Guarantee Deposits** | - Must cover 100% of the total unused prepaid balance of PayPay Money.<br>Note: For PayPay Money for digital wages payment, however, we are not required to provide guarantee deposits as we execute Guarantee Contract of Security Deposit of | - Must cover 50% of the total unused prepaid balance of PayPay Money Lite. |

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| | | |
|:---|:---|:---|
|  | **PayPay Money** | **PayPay Money Lite** |
|  | Providing Funds Transfer Service for PayPay Money for digital wages payments. |  |
| &nbsp;&nbsp;&nbsp;**Key Features** | - Can be withdrawn in the form of cash;<br> - Can be charged via bank transfer / ATM, by receiving sales proceeds through Yahoo! JAPAN Auction and Yahoo! JAPAN Flea Market, or by transferring withdrawals from the investment accounts of PayPay Invest, LINE BITMAX and Binance Japan; and<br> - Can be transferred between accounts via P2P money transfer. | - Withdrawal not permitted in principle;<br> - Can be charged by PayPay Card or SoftBank/Y!mobile Carrier Billing; and<br> - Can be transferred between accounts via P2P money transfer.<br>Note: If eKYC verification is not completed, any funds charged through a bank transfer / ATM, receiving sales proceeds through Yahoo! JAPAN Auction and Yahoo! JAPAN Flea Market, or receiving PayPay Money via P2P money transfer, will be classified as PayPay Money Lite. |
| &nbsp;&nbsp;&nbsp;**Typical Use Cases** | PayPay payments, transfers and withdrawals | PayPay payments and transfers |

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Under the Payment Services Act, we are registered as a fund transfer service provider to offer PayPay Money, a refundable type of PayPay Balance deposited by users, and are required to provide guarantee deposits to the Tokyo Legal Affairs Bureau for the full amount of the outstanding balance of PayPay Money, plus the costs associated with the exercise of our users' rights as creditors of our fund transfer service. Also under the Payment Services Act, because we offer PayPay Money Lite, a non-refundable type of PayPay Balance pre-loaded through advance payments by users, we are also required to provide guarantee deposits to the Tokyo Legal Affairs Bureau for an amount that is at least half of the balance of PayPay Money Lite as of March 31 or September 30 every year if the balance of our PayPay Money Lite on such date exceeds ¥10 million.

For details on the calculation of our required guarantee deposits, see Note 10 to our audited consolidated financial statements included elsewhere in this prospectus. We are required to deposit the amount for guarantee deposits in cash or bonds, or enter into a guarantee contract or trust agreement with a financial institution for the amount required. The deposited amounts are recorded as guarantee deposits in our consolidated statements of financial position and are not available for our use in accordance with the Payment Services Act, while amounts of PayPay Balance that do not require a guarantee deposit are included in cash and cash equivalents in our consolidated statements of financial position. See Note 10 to our audited consolidated financial statements included elsewhere in this prospectus*.* As of March 31, 2025, cash and cash equivalents were ¥369,811 million and guarantee deposits were ¥244,229 million. As of March 31, 2024, cash and cash equivalents were ¥744,323 million and guarantee deposits were ¥321,885 million. As of March 31, 2023, cash and cash equivalents were ¥859,313 million and guarantee deposits were ¥282,291 million.

In our Payment segment, when PayPay Card holders use our credit payment services (including PayPay Credit), we extend credit to our cardholders and require cash to settle credit payment with merchants prior to collecting receivables from our cardholders. Through liquidation arrangements of credit card receivables, PayPay Card Corporation securitizes its credit card receivables and finances funds from financial institutions, including PayPay Bank Corporation, in order to expedite the timing of collection of the credit card receivables. Securitized credit card receivables are recorded as accounts receivable under our assets and as loan payables and commercial papers under our liabilities on our consolidated statements of financial position. See Note 37 to our audited consolidated financial statements included elsewhere in this prospectus*.* ****However, in the case of PayPay Credit, we will make the advance payment to the merchant, and PayPay Card Corporation will liquidate the card receivables and collect them from the user. See "Business—Our Products and Services—Payment Services" for a description of the payment flows.

Our cash outlays include principally the costs related to the promotion and marketing of our services to acquire new merchants and registered users, the development of our software and services, as well as selling, general and administrative expenses.

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*Capital Expenditures* 

For the year ended March 31, 2025, we invested ¥22,086 million, in capital expenditures, principally towards in-house and outsourcing software development. Capital expenditures are recorded as purchases of property and equipment and purchases of intangible assets (largely attributable to customer-facing tangible and intangible assets such as capitalized system development costs and physical credit cards) in our consolidated statements of cash flows, which were ¥4,822 million and ¥17,264 million, respectively, in the year ended March 31, 2025, compared to ¥4,584 million and ¥17,911 million, respectively, in the year ended March 31, 2024 and ¥10,284 million and ¥19,097 million, respectively, in the year ended March 31, 2023.

*Debt Service and Contractual Obligations* 

As of December 31, 2025, loan payables and commercial papers on our consolidated statement of financial position was ¥568,309 million. As of March 31, 2025, loan payables and commercial papers on our consolidated statement of financial position was ¥399,578 million. The increase from March 31, 2025 to December 31, 2025 was due mainly to an increase in the balance of securitization of loans and advances to customers by PayPay Card Corporation and an increase in the balance of repurchase agreements by PayPay Bank Corporation. All our loan payables and commercial paper are denominated in Japanese yen. Loan payables and commercial papers on our consolidated statement of financial position is expected to be reduced by ¥15,000 million in February 2026, due to a scheduled repayment of certain intercompany loans. The liquidity previously provided through these intercompany loans is expected to be refinanced by us and such repayment of intercompany loans is not expected to materially change our overall level of borrowing.

As of March 31, 2025, the weighted average interest rates of the outstanding loan payables was 0.55% and the weighted average interest rates of the outstanding commercial paper was 0.59%. Commercial paper, intercompany loans and a portion of our borrowings from financial institutions are in part subject to fixed interest rates, while a portion of our borrowings from financial institutions and the liquidation arrangements for credit card receivables are subject to floating interest rates based on a spread over yen Tokyo Interbank Offered Rate. A portion of the liquidation arrangements for credit card receivables are subject to fixed interest rates based on the Tokyo Overnight Average Rate.

Certain of our loan payables, including from PayPay Card Corporation's liquidation arrangements for credit card receivables, special overdraft facility agreements and a term loan, are subject to certain covenants as described below. As of December 31, 2025, ¥209,200 million of our loan payables were from such borrowings.

*Liquidation Arrangements* 

Under the terms of PayPay Card Corporation's liquidation arrangements for credit card receivables, the following events are specified as triggering cancellation of the relevant agreements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Card Corporation ceases to be a subsidiary of LY Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The amount of total net assets on the non-consolidated balance sheet
of PayPay Card Corporation must be maintained at a level higher than 75% of that for the immediately preceding fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Card Corporation records an operating loss on its non-consolidated profit and loss statements for two consecutive years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Card Corporation records an ordinary loss, which generally corresponds to operating profit/loss and non-operating profit/loss excluding certain extraordinary profit/loss, for two consecutive fiscal years.

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In addition, under the terms of PayPay Card Corporation's liquidation arrangements for credit card receivables, early redemption or pro-rata redemption is triggered if certain indicators, including the indicator calculated based on the amount of securitized receivables collected over a given period, do not meet the requirements specified under the agreements.

In addition, under the terms of the liquidation arrangements, a backup servicer takes over PayPay Card Corporation's role as a servicer of collecting receivables and is required to pay collected money pursuant to the relevant agreements if certain events occur, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Card Corporation has ceased to be a consolidated subsidiary of LY Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Card Corporation's issuer rating falls below BB+ or PayPay Card Corporation is placed on negative
watch by a designated rating agency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• LY Corporation's issuer rating falls below BBB+ or LY Corporation is placed on negative watch by, or the
entrustor has ceased to be a consolidated subsidiary of LY Corporation, in case where PayPay Card Corporation does not have an issuer rating provided by a designated rating agency.

None of the events described above occurred for the years ended March 31, 2023, 2024 and 2025 and the nine-month period ended December 31, 2025.

*Special Overdraft Facility* 

Pursuant to a special overdraft facility agreement with Mizuho Bank, Ltd., mandatory repayment is triggered if PayPay Corporation ceases to be a consolidated subsidiary of LY Corporation. Under a special overdraft facility agreement with PayPay Card Corporation, PayPay Card Corporation is required to maintain its status as a consolidated subsidiary of LY Corporation. PayPay Corporation and PayPay Card Corporation were in compliance with these requirements for the years ended March 31, 2023, 2024 and 2025.

*Term Loan* 

Under the terms of a term loan, PayPay Card Corporation is subject to certain covenants including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Card Corporation and Yahoo Japan Corporation (currently LY Corporation after its merger with Z Holdings
Corporation) must maintain their status as consolidated subsidiaries of Z Holdings Corporation (currently LY Corporation after its merger with Yahoo Japan Corporation).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The total amount of net assets on the non-consolidated balance sheet
as of the last day of each fiscal year must be higher than 75% of that of the immediately preceding fiscal year or (ii) 75% of that of the year ended March 31, 2021, whichever is higher.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Card Corporation must not record operating loss on its non-consolidated statements of profit or loss for two consecutive fiscal years.

PayPay Card Corporation was in compliance with all of the above covenants for the years ended March 31, 2023, 2024 and 2025 and the nine-month period ended December 31, 2025.

For additional information on the borrowing arrangements of PayPay Card Corporation, see Note 23 to our audited consolidated financial statements included elsewhere in this prospectus.

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*Financial Liabilities* 

The following table details the balance of our financial liabilities by repayment date as of March 31, 2025. The contractual cash flow amount below reflects cash flow presented on an undiscounted cash flow basis, including interest expense.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Book value** | **Contractual<br>cash flow** | **Within<br>1 year** | **Within<br>1-2 years** | **Within<br>2-3 years** | **Within<br>3-4 years** | **Within<br>4-5 years** | **More than<br>5 years** |
| **Non-derivative financial<br>liabilities** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** |
|  Deposits | ¥2385939 | ¥2386132 | ¥2371106 | ¥3531 | ¥4065 | ¥695 | ¥1761 | ¥4974 |
|  Accounts payable | 949397 | 949397 | 949396 | 1 |  |  |  |  |
|  Borrowings | 399578 | 401819 | 202992 | 59136 | 37083 | 91446 | 11012 | 150 |
|  Other financial liabilities | 33021 | 33021 | 33017 | 4 |  |  |  |  |
|  Lease liabilities | 12097 | 12661 | 2933 | 2373 | 2288 | 2247 | 1805 | 1015 |
| **Derivative financial liabilities** |  |  |  |  |  |  |  |  |
|  Other financial liabilities | 1186 | 1186 | 1186 |  |  |  |  |  |
|  Total | ¥3781218 | ¥3784216 | ¥3560630 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;65045 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;43436 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;94388 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14578 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6139 |
|  **Off-balance sheet item** |  |  |  |  |  |  |  |  |
|  Undrawn loan commitments | ¥— | ¥9954633 | ¥9954633 | ¥— | ¥— | ¥— | ¥— | ¥— |

---

*Lines of Credit* 

We have lines of credit with financial institutions for borrowing arrangements. As of March 31, 2025, our lines of credit totaled ¥913,873 million, and our remaining lines of credit available as of March 31, 2025 were ¥803,973 million.

***Cash Flows***

We believe that our current available cash and cash equivalents and our credit facilities will be sufficient to meet our working capital requirements and capital expenditures in the ordinary course of business for a period of at least twelve months from the date hereof.

The following tables show our consolidated cash flow data for the nine-month periods ended December 31, 2024 and 2025:

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| | | |
|:---|:---|:---|
|  | **For the nine-month period ended<br>December 31,** | **For the nine-month period ended<br>December 31,** |
|  | **2024** | **2025** |
|  | **(in millions of yen)** | **(in millions of yen)** |
|  Cash and cash equivalents at the beginning of the period | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;744323 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;369811 |
|  Net cash provided by (used in) operating activities | 302004 | 465814 |
|  Net cash provided by (used in) investing activities | (238518) | (483942) |
|  Net cash provided by (used in) financing activities | (116829) | 154500 |
|  Effect of exchange rate changes on cash and cash equivalents | 96 | 47 |
|  Increase (decrease) in cash and cash equivalents | (53247) | 136419 |
|  Cash and cash equivalents at the end of the period | 691076 | 506230 |

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*Operating Activities* 

Net cash provided by operating activities was ¥465,814 million in the nine-month period ended December 31, 2025, primarily attributable to profit before tax of ¥61,109 million, adjusted for positive non-cash items consisting of depreciation and amortization of ¥18,794 million, loss on disposal of property and equipment and intangible assets of ¥527 million, partially offset by negative non-cash items consisting of other income and costs of ¥1,354 million. The amount was further adjusted for changes in itemized balances of assets and

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liabilities that had a negative effect on operating cash flow, which primarily consisted of an increase in loans and advances to customers of ¥397,571 million, an increase in securities of ¥79,354 million and an increase in accounts receivable of ¥69,925 million, as well as certain changes in itemized balances of assets and liabilities that had a positive effect on operating cash flow, including primarily an increase in deposits of ¥595,052 million, an increase in accounts payable of ¥262,435 million and a decrease in guarantee deposits of ¥184,132 million.

Net cash provided by operating activities was ¥302,004 million in the nine-month period ended December 31, 2024, primarily attributable to profit before tax of ¥27,801 million, adjusted for positive non-cash items consisting of depreciation and amortization of ¥15,434 million, loss on disposal of property and equipment and intangible assets of ¥493 million and other income and costs of ¥88 million. The amount was further adjusted for changes in itemized balances of assets and liabilities that had a negative effect on operating cash flow, which primarily consisted of an increase in loans and advances to customers of ¥323,364 million, an increase in accounts receiveable of ¥63,448 million, as well as certain changes in itemized balances of assets and liabilities that had a positive effect on operating cash flow, including primarily an increase in deposits of ¥330,341 million, an increase in accounts payable of ¥247,390 million and and a decrease in guarantee deposits of ¥69,918 million.

*Investing Activities* 

Net cash used in investing activities was ¥483,942 million in the nine-month period ended December 31, 2025, which was primarily attributable to purchase of securities of ¥576,449 million, purchase of intangible assets of ¥13,548 million, purchase of investment accounted for using the equity method of ¥11,655 million, purchase of property and equipment of ¥4,971 million and other of ¥2,132 million, partially offset by proceeds from sale of securities of ¥124,813 million.

Net cash used in investing activities was ¥238,518 million in the nine-month period ended December 31, 2024, which was primarily attributable to purchase of securities of ¥341,649 million, purchase of intangible assets of ¥13,085 million, payment for acquisition of subsidiaries of ¥5,759 million, purchase of property and equipment of ¥3,174 million, purchase of investment accounted for using the equity method of ¥1,360 million and other of ¥2,245 million, partially offset by proceeds from sale of securities of ¥128,754 million.

*Financing Activities* 

Net cash provided by financing activities was ¥154,500 million in the nine-month period ended December 31, 2025, which was primarily attributable to proceeds from long-term borrowings of ¥1,160,190 million, proceeds from issuance of new common shares of ¥121,331 million and net increase in borrowings, current, of ¥31,000 million, partially offset by repayments of long-term borrowings of ¥1,022,459 million and payments for the purchase of the equity interest of subsidiaries, through business combinations of entities under common control of ¥130,185 million.

Net cash used in financing activities was ¥116,829 million in the nine-month period ended December 31, 2024, which was primarily attributable to repayments of long-term borrowings of ¥676,221 million and net decrease in borrowings, current, of ¥63,000 million, partially offset by proceeds from long-term borrowings of ¥627,500 million.

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The following tables show our consolidated cash flow data for the years ended March 31, 2023, 2024 and 2025:

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| | | | |
|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** |
|  | **2023** | **2024** | **2025** |
|  | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** |
|  Cash and cash equivalents at the beginning of the year | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;831596 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;859313 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;744323 |
|  Net cash provided by (used in) operating activities | (194702) | 49975 | 155849 |
|  Net cash provided by (used in) investing activities | 190014 | (273383) | (319977) |
|  Net cash provided by (used in) financing activities | 31986 | 107930 | (210325) |
| Effect of exchange rate changes on cash and cash equivalents | 419 | 488 | (59) |
|  Increase (decrease) in cash and cash equivalents | 27717 | (114990) | (374512) |
|  Cash and cash equivalents at the end of the year | 859313 | 744323 | 369811 |

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*Operating Activities* 

Net cash provided by operating activities was ¥155,849 million in the year ended March 31, 2025, primarily attributable to profit before tax of ¥34,961 million, adjusted for positive non-cash items consisting of depreciation and amortization of ¥21,391 million, loss on disposal of property and equipment and intangible assets of ¥696 million and other income and costs of ¥618 million. The amount was further adjusted for changes in itemized balances of assets and liabilities that had a negative effect on operating cash flow, which primarily consisted of an increase in loans and advances to customers of ¥399,055 million, as well as certain changes in itemized balances of assets and liabilities that had a positive effect on operating cash flow, including primarily an increase in deposits of ¥249,362 million, an increase in accounts payable of ¥145,558 million and a decrease in guarantee deposits of ¥77,656 million.

Net cash provided by operating activities was ¥49,975 million in the year ended March 31, 2024, primarily attributable to profit before tax of ¥11 million, adjusted for positive non-cash items consisting of depreciation and amortization of ¥18,591 million and loss on disposal of property and equipment and intangible assets of ¥1,495 million, partially offset by negative non-cash items consisting of other income and costs of ¥1,552 million. The amount was further adjusted for changes in itemized balances of assets and liabilities that had a negative effect on operating cash flow, which primarily consisted of an increase in loans and advances to customers of ¥311,125 million and an increase in securities of ¥45,476 million, as well as certain changes in itemized balances of assets and liabilities that had a positive effect on operating cash flow, including primarily an increase in deposits of ¥260,400 million and an increase in accounts payable of ¥130,744 million.

Net cash used in operating activities was ¥194,702 million in the year ended March 31, 2023, primarily attributable to loss before tax of ¥20,548 million, adjusted for positive non-cash items consisting of depreciation and amortization of ¥14,655 million and loss on disposal of property and equipment and intangible assets of ¥324 million, partially offset by negative non-cash items consisting of other income and costs of ¥616 million. The amount was further adjusted for changes in itemized balances of assets and liabilities that had a negative effect on operating cash flow, which primarily consisted of an increase in loans and advances to customers of ¥348,301 million, an increase in securities of ¥45,828 million, an increase in account receivable of ¥45,580 million and a decrease in other financial liabilities of ¥44,565 million, as well as certain changes in itemized balances of assets and liabilities that had a positive effect on operating cash flow, including primarily an increase in deposits of ¥302,122 million.

*Investing Activities* 

Net cash used in investing activities was ¥319,977 million in the year ended March 31, 2025, which was primarily attributable to purchase of securities of ¥463,314 million, purchase of intangible assets of ¥17,264 million, payments for acquisition of subsidiaries of ¥5,759 million, other of ¥5,343 million, purchase of

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property and equipment of ¥4,822 million and purchases of investment accounted for using the equity method of ¥1,360 million, partially offset by proceeds from sale of securities of ¥177,885 million.

Net cash used in investing activities was ¥273,383 million in the year ended March 31, 2024, which was primarily attributable to payments of deposits with a related party of ¥600,000 million, purchase of securities of ¥437,408 million, purchase of intangible assets of ¥17,911 million and purchase of property and equipment of ¥4,584 million and other of ¥3,316 million, partially offset by proceeds from withdrawal of deposits with a related party of ¥600,000 million and proceeds from sale of securities of ¥189,836 million.

Net cash provided by investing activities was ¥190,014 million in the year ended March 31, 2023, which was primarily attributable to proceeds from withdrawal of deposits with a related party of ¥562,000 million, proceeds from sale of securities of ¥274,870 million and proceeds from divestiture of business of ¥4,596 million, partially offset by payments of deposits with a related party of ¥393,000 million, purchases of securities of ¥228,227 million, purchased of intangible assets of ¥19,097 million, purchases of property and equipment of ¥10,284 million and other of ¥844 million.

*Financing Activities* 

Net cash used in financing activities was ¥210,325 million in the year ended March 31, 2025, which was primarily attributable to repayment of long-term borrowings of ¥917,898 million, net decrease in short-term borrowings of ¥128,700 million, and partially offset by proceeds from long-term borrowings of ¥842,300 million.

Net cash provided by financing activities was ¥107,930 million in the year ended March 31, 2024, which was primarily attributable to proceeds from long-term borrowings of ¥595,100 million and net increase in short-term borrowings of ¥30,000 million, and partially offset by repayment of long-term borrowings of ¥516,422 million.

Net cash provided by financing activities was ¥31,986 million in the year ended March 31, 2023, which was primarily attributable to proceeds from long-term borrowings of ¥519,000 million, net increase in short-term borrowings of ¥85,000 million and proceeds from stock issuances to non-controlling interests of ¥72,689 million, and partially offset by repayment of long-term borrowings of ¥543,045 million, payment for the purchase of the equity interest of subsidiaries, through transactions under common control of ¥63,000 million and dividends paid to non-controlling interests of ¥33,644.

**Regulatory Capital Requirements** 

The Basel Committee has issued "A global regulatory framework for more resilient banks and banking systems," or Basel III, outlining the global regulations for stronger bank capital adequacy. Under Basel III requirements, the capital adequacy ratio is calculated by dividing adjusted capital by risk-weighted assets.

Core capital is calculated based on the amount of qualifying instruments and reserves, with certain regulatory adjustments. Risk-weighted assets generally include credit risk-weighted assets, the equivalent amount of market risk divided by 8% and the equivalent amount of operational risk divided by 8%. In calculating the capital adequacy ratio of PayPay Bank Corporation, we have adopted the standardized approach to calculate the amount of the credit risk weighted assets of PayPay Bank Corporation, as well as the standardized approach to assess the equivalent amount of operational risk. We have adopted exemptions for market risk amounts because we are not proactively taking market risk and fulfill the requirements for such exemptions.

If the capital adequacy ratio of a financial institution falls below the required level, the FSA may, depending upon the extent of capital deterioration, take certain corrective actions, including requiring the financial institution to submit an improvement plan to strengthen its capital base, reduce its total assets, restrict its business operations or other actions that could have a material effect on its financial statements. The minimum capital adequacy ratio applicable to Japanese banks without certain international operations is 4%.

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The table below presents the capital adequacy ratio, core capital, total capital and risk-weighted assets of PayPay Bank Corporation under Japanese GAAP.

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| | | |
|:---|:---|:---|
|  | **As of the year ended March 31,** | **As of the year ended March 31,** |
|  | **2024** | **2025** |
|  | **(in millions of yen, except ratios)** | **(in millions of yen, except ratios)** |
|  Capital adequacy ratio | 18.19% | 16.76% |
|  Core capital | ¥139551 | ¥145215 |
|  Total capital | 128417 | 132575 |
|  Risk-weighted assets | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;705909 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;790957 |

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We, PayPay Card Corporation and PayPay Securities Corporation are also required to maintain capital-related ratio and equity balance as defined by the capital regulations presented below.

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| | | |
|:---|:---|:---|
| **Company**<br>| **Laws and regulations**<br>| **Requirements**<br>|
| PayPay Corporation | Payment Services Act | Maintenance of minimum required equity amount |
| PayPay Card Corporation | Installment Sales Act | Maintenance of minimum required equity ratio |
| PayPay Securities Corporation | Financial Instruments and Exchange Act | Maintenance of minimum required capital-to-risk ratio |

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We, PayPay Card Corporation and PayPay Securities Corporation adequately meets the capital requirements under the relevant laws and regulations.

**Selected Statistical and Other Information** 

The following tables present selected statistical information as required by subpart 1400 of Regulation S-K.

In this section, averages are based on quarterly averages. Those averages are calculated as the average of the beginning balance and each quarter-end balance for the applicable year unless otherwise indicated. The presentation of historical averages in this section on a daily basis would involve unreasonable effort and expense. We do not believe that quarterly averages present trends materially different from those that would be presented by daily averages. We have not recalculated tax-exempt income on a tax-equivalent basis because the effect of doing so would not be significant.

***I. Distribution of assets, liabilities and stockholders' equity; interest rates and interest differential***

**Distribution of Assets, Liabilities and Stockholders' Equity** 

The return (or yield) was calculated by the amount of interest income or expense in the period divided by the average balance.

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The following tables show average balances, interest amounts and yields for our interest-earning assets and interest-bearing liabilities for the years ended March 31, 2024 and 2025.

**For the year ended March 31, 2024** 

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| | | | |
|:---|:---|:---|:---|
|  | **Average Balances** | **Interest income<br>(expense)** | **Average yield (assets) /**<br>**rate paid (liabilities)** |
| **Assets** | **(in millions of yen)** | **(in millions of yen)** | **%** |
|  **Interest-earning assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents  | 749246 | 225 | 0.03% |
| &nbsp;&nbsp;&nbsp;&nbsp; Call loans | 112838 | 4 | 0.00% |
| &nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 1376117 | 70841 | 5.15% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Payment:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit card receivables | 721912 | 58583 | 8.11% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Financial service:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage loans | 453308 | 1673 | 0.37% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Overdraft | 192799 | 10575 | 5.48% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 8098 | 10 | 0.12% |
| &nbsp;&nbsp;&nbsp;&nbsp; Securities | 541286 | 2330 | 0.43% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Payment:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities<sup>(1)</sup> | 2879 | 3 | 0.10% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Financial service:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities<sup>(2)</sup> | 120632 | 388 | 0.32% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities<sup>(2)</sup> | 213113 | 1301 | 0.61% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities | 196158 | 638 | 0.33% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange traded funds | 8504 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits | 7732 | 428 | 5.54% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 222 | 56 | 25.23% |
|  **Total interest-earning assets** | 2787441 | 73884 | 2.65% |
|  **Total non-interest-earning assets** | 696223 |  |  |
|  **Total assets** | 3483664 |  |  |
| **Liabilities** |  |  |  |
|  **Interest-bearing liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits | 1408251 | 412 | 0.03% |
| &nbsp;&nbsp;&nbsp;&nbsp; Borrowing | 514906 | 1452 | 0.28% |
| &nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 8155 | 65 | 0.80% |
| &nbsp;&nbsp;&nbsp;&nbsp; Other Financial liabilities | 102 | 2 | 1.96% |
|  **Total Interest-bearing liabilities** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1931414 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1931 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.10% |
|  **Total non-interest-bearing liabilities** | 1361154 |  |  |
|  **Equity** | 191096 |  |  |
|  **Equity and non-interest-bearing liabilities** | 1552250 |  |  |
|  **Equity and liabilities** | 3483664 |  |  |

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**For the year ended March 31, 2025** 

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| | | | |
|:---|:---|:---|:---|
|  | **Average Balances** | **Interest income<br>(expense)** | **Average yield (assets) /**<br>**rate paid (liabilities)** |
| **Assets** | **(in millions of yen)** | **(in millions of yen)** | **%** |
|  **Interest-earning assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents  | 568734 | 901 | 0.16% |
| &nbsp;&nbsp;&nbsp;&nbsp; Call loans | 91817 | 196 | 0.21% |
| &nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 1743830 | 83557 | 4.79% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Payment:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit card receivables | 926077 | 68395 | 7.39% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Financial service:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage loans | 580095 | 2201 | 0.38% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Overdraft | 237362 | 12951 | 5.46% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 296 | 10 | 3.38% |
| &nbsp;&nbsp;&nbsp;&nbsp; Securities | 811660 | 3710 | 0.46% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Payment:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities<sup>(1)</sup> | 31641 | 77 | 0.24% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Financial service:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities<sup>(2)</sup> | 271501 | 1153 | 0.42% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt<br> securities<sup>(2)</sup> | 269136 | 1426 | 0.53% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities | 234259 | 1201 | 0.51% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange traded funds | 5123 | (147) | (2.87%) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits | 9292 | 7 | 0.08% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 426 | 71 | 16.67% |
|  **Total interest-earning assets** | 3225759 | 88442 | 2.74% |
|  **Total non-interest-earning assets** | 709203 |  |  |
|  **Total assets** | 3934962 |  |  |
| **Liabilities** |  |  |  |
|  **Interest-bearing liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits | 1559883 | 2013 | 0.13% |
| &nbsp;&nbsp;&nbsp;&nbsp; Borrowing | 511009 | 2147 | 0.42% |
| &nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 8375 | 92 | 1.10% |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 119 | 2 | 1.68% |
|  **Total Interest-bearing liabilities** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2079386 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4254 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.20% |
|  **Total non-interest-bearing liabilities** | 1650379 |  |  |
|  **Equity** | 205197 |  |  |
|  **Equity and non-interest-bearing liabilities** | 1855576 |  |  |
|  **Equity and liabilities** | 3934962 |  |  |

---

Notes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Government securities are purchased for the purpose of deposit under the Payment Services Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) These securities include assets pledged as collateral at the Bank of Japan and Japanese Banks' Payment
Clearing Network.

**Changes in Interest Income and Interest Expenses; Volume and Rate Analysis** 

The following tables present the variations in our financial income and expenses as a result of the variations in the average volume of interest-earning assets and interest-bearing liabilities and changes in average interest rates occurred for the year ended March 31, 2025 compared to the year ended March 31, 2024.

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Changes attributable to the combined impact of changes in rate and volume have been allocated proportionately to the changes due to volume changes and changes due to rate changes.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | | | | **(in millions of yen)** |
|  | **For the year<br>ended**<br>**March 31,<br>2024** | **Fiscal year ended March 31, 2025**<br>**versus**<br>**fiscal year ended March 31, 2024** | **Fiscal year ended March 31, 2025**<br>**versus**<br>**fiscal year ended March 31, 2024** | **Fiscal year ended March 31, 2025**<br>**versus**<br>**fiscal year ended March 31, 2024** | **For the year<br>ended**<br>**March 31,<br>2025** |
| **Assets** | **For the year<br>ended**<br>**March 31,<br>2024** | **Volume**  | **Yield**  | **Net Change**  | **For the year<br>ended**<br>**March 31,<br>2025** |
|  **Interest-earning assets** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 225 | (67) | 743 | 676 | 901 |
| &nbsp;&nbsp;&nbsp;&nbsp; Call loans | 4 | (1) | 193 | 192 | 196 |
| &nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to<br> customers | 70841 | 17889 | (5173) | 12716 | 83557 |
| &nbsp;&nbsp;&nbsp;&nbsp; Securities | 2330 | 1228 | 152 | 1380 | 3710 |
| &nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits | 428 | 72 | (493) | (421) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 56 | 39 | (24) | 15 | 71 |
|  **Total interest-earning assets** | 73884 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19160 | (4602) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14558 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;88442 |
|  **Liabilities** |  |  |  |  |  |
|  **Interest-bearing liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits | 412 | 49 | 1552 | 1601 | 2013 |
| &nbsp;&nbsp;&nbsp;&nbsp; Borrowing | 1452 | (11) | 706 | 695 | 2147 |
| &nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 65 | 2 | 25 | 27 | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 2 | 0 | (0) | 0 | 2 |
|  **Total interest-bearing liabilities** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1931 | 40 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2283 | 2323 | 4254 |

---

**Interest-earning Assets-Margin** 

The following table presents our levels of average interest-earning assets and illustrates the comparative gross and net yields obtained for the indicated periods.

---

| | | |
|:---|:---|:---|
|  | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** |
|  | **For the year ended March 31,** | **For the year ended March 31,** |
|  | **2024** | **2025** |
|  Average total interest-earning assets | 2787441 | 3225759 |
|  Interest income | 73884 | 88442 |
|  Interest expense | 1931 | 4254 |
|  Net interest income <sup>(1)</sup> | 71953 | 84188 |
|  Non-IFRS Financial Measures: |  |  |
|  Net interest margin <sup>(2)</sup> | 2.58% | 2.61% |
|  **Payment:** |  |  |
|  Average total interest-earning assets | 1172964 | 1215717 |
|  Interest income | 59013 | 68623 |
|  Interest expense | 1387 | 1994 |
|  Net interest income <sup>(1)</sup> | 57626 | 66629 |
|  Non-IFRS Financial Measures: |  |  |
|  Net interest margin <sup>(2)</sup> | 4.91% | 5.48% |
|  **Financial service:** |  |  |
|  Average total interest-earning assets | 1614477 | 2010042 |
|  Interest income | 14871 | 19819 |
|  Interest expense | 544 | 2260 |
|  Net interest income <sup>(1)</sup> | 14327 | 17559 |
|  Non-IFRS Financial Measures: |  |  |
|  Net interest margin <sup>(2)</sup> | 0.89% | 0.87% |

---

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---

| | | |
|:---|:---|:---|
|  | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** |
|  | **For the year ended March 31,** | **For the year ended March 31,** |
|  | **2024** | **2025** |
| **(PayPay Bank Corporation of financial service segment)** |  |  |
|  Average total interest-earning assets | 1600103 | 1996699 |
|  Interest income | 14811 | 19759 |
|  Interest expense | 542 | 2248 |
|  Net interest income <sup>(1)</sup> | 14269 | 17511 |
|  Non-IFRS Financial Measures: |  |  |
|  Net interest margin <sup>(2)</sup> | 0.89% | 0.88% |

---

Notes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Net interest income is the difference between interest income and interest expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Net interest margin is net interest income divided by average total interest-earning assets.

***II. Investments in debt securities***

**Maturity Composition of Investment in Securities Not Carried at Fair Value through Earnings** 

The following table presents our weighted average yield of each category of debt securities not carried at fair value through earnings as of March 31, 2025.

The weighted average yield for each range of maturities is calculated by dividing the annualized interest income for the year ended March 31, 2025 by the book amount of debt securities at that date.

**As of March 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Maturing** | **Maturing** | **Maturing** | **Maturing** |
|  | **In 1 year or less**  | **After 1 year<br> through 5 years** | **After 5 years**<br> **through 10 years** | **After 10 years**  |
|  | **%** | **%** | **%** | **%** |
| **Debt securities measured at fair value through other comprehensive income** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities | 0.23% | 0.19% | 0.12% | 0.11% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities | 0.24% | 0.35% | 0.38% | 0.41% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset-backed securities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.46% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.44% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.33% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.22% |

---

**As of March 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Maturing** | **Maturing** | **Maturing** | **Maturing** |
|  | **In 1 year or less**  | **After 1 year<br> through 5 years** | **After 5 years**<br> **through 10 years** | **After 10 years**  |
|  | **%** | **%** | **%** | **%** |
| **Debt securities measured at amortized cost** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities | 0.13% | 0.35% | 0.14% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.41% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.41% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.21% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.41% |

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***III. Loan portfolio***

**Maturity and Composition of Loan Portfolio** 

The following table presents our loans and advances to customers' portfolio by the time remaining to maturity as of March 31, 2025. Loans are stated before deduction of allowance for losses.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** |
|  | **Maturing** | **Maturing** | **Maturing** | **Maturing** |
|  | **In 1 year or less**  | **After 1 year**<br> **through 5 years** | **After 5 years**<br> **through 15 years** | **After 15 years**  |
| Loans and advances to customers | 1217380 | 163976 | 121909 | 469336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fixed interest rate |  | 163813 | 107555 | 6803 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variable interest rate |  | 162 | 14354 | 462533 |
|  **Total Loans** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1217380 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;163976 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;121909 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;469336 |

---

***IV. Allowance for Credit Losses***

**Summary of Loan Loss Experience** 

Allocation of Provision for Impairment Losses

The following table presents impairment losses and sets forth the percentage distribution of the total provisions as of March 31, 2024 and 2025.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** |
|  | **March 31, 2024** | **March 31, 2024** | **March 31, 2025** | **March 31, 2025** |
|  | **Amount**  | **% of total** <br>**loan**<br>**portfolio** | **Amount**  | **% of total** <br>**loan**<br>**portfolio** |
|  Total loan portfolio <sup>(1)</sup> | 1560487 |  | 1972601 |  |
|  Total losses allowance | (31935) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.05% | (44994) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.28% |
| Total loan portfolio, net of loss allowance | 1528552 |  | 1927607 |  |

---

Note:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Total loan portfolio includes our total loans and advances to customers.

The ratio of total losses allowance to total loan portfolio as of March 31, 2025 has been relatively consistent with the ratio as of March 31, 2024.

Allocation of Net Charge-offs

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** |
|  | **March 31, 2024** | **March 31, 2024** | **March 31, 2025** | **March 31, 2025** |
|  | **Amount**  | **% of total**<br>**average**<br>**loans**<br>**outstanding** | **Amount**  | **% of total**<br>**average**<br>**loans**<br>**outstanding** |
|  Loans to customers | 1410585 |  | 1789673 |  |
| **Total average loans outstanding <sup>(1)</sup>** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1410585 |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1789673 |  |
|  **Net charge-offs:** |  |  |  |  |
|  Loans to customers | 12119 | 0.86% | 21420 | 1.20% |
|  **Total net charge-offs** | 12119 | 0.86% | 21420 | 1.20% |

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Note:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Average amounts are based on the average of the quarterly balances within each applicable year, unless
otherwise indicated.

The ratio of net charge-offs to total average loans to customers was 0.86% and 1.20% for the years ended March 31, 2024 and 2025, respectively, and preserved on levels around 1% as a result of high quality of loan origination and continuing improvements in loan collection process.

***V. Deposits***

Composition of Deposits per Type and Yield

The following table presents, with average balances, the breakdown of deposits by category as of March 31, 2024 and 2025.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** | **(in millions of yen, except percentages)** |
|  | **March 31, 2024** | **March 31, 2024** | **March 31, 2025** | **March 31, 2025** |
|  | **Average**<br> **Balance** | **Average rate** <br>**paid** | **Average**<br> **Balance** | **Average rate** <br>**paid** |
|  Demand deposits |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest bearing | 1288422 | 0.00% | 1407522 | 0.09% |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-interest bearing | 197140 |  | 226096 |  |
|  Time deposits | 119829 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.32% | 152361 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.48% |
|  Other | 392147 |  | 503936 |  |
|  Total | 1997538 |  | 2289915 |  |

---

Uninsured deposits refer to the amounts of deposit accounts under certain categories that are not covered by the relevant insurance regimes and the aggregate amounts of the uninsured deposit accounts that exceed the respective limits of the insurance regime.

In Japan, categories such as deposits denominated in foreign currency and certificates of deposits are uninsured, and the insurance limit per client is ¥10 million.

The deposit amounts held by our banking business are presented on an estimated basis using the same methodologies and assumptions inherent in our insurance premium reporting requirements to Deposit Insurance Corporation of Japan, our primary regulator.

The other deposit balances are as of March 31, 2024 and 2025.

Our uninsured deposits were ¥473,233 million and ¥571,969 million as of March 31, 2024 and 2025, respectively.

Uninsured time deposits are uninsured deposits which are subject to contractual maturity requirements prior to withdrawal.

Amounts are presented on a residual contractual maturity basis and exclude overnight deposits where contractual requirements are imminently satisfied.

**As of March 31, 2025** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** | **(in millions of yen)** |
|  | **In 3 months** <br>**or less**  | **After 3 months** <br>**but within 6**<br>**months** | **After 6 months** <br>**but within 12**<br>**months** | **After 12<br>months** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total**  |
|  Uninsured Time Deposits | 10516 | 1342 | 1146 |  | 13004 |

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**Market Risks** 

***Foreign Exchange Risk***

We have exposure to foreign exchange risks on transactions denominated in currencies other than the functional currencies. The main foreign currency we use is the U.S. dollar. We enter into forward exchange contracts, foreign exchange futures and other contracts in response to currency exposures resulting from on-balance sheet assets and liabilities denominated in foreign currencies in order to limit the net foreign exchange position by currency to an appropriate level.

For PayPay Bank Corporation, we identify assets and liabilities subject to foreign exchange risk and set a risk limit for the investment amount and the present value fluctuation amount arising from that portfolio, and we manage its compliance with the limit on a daily basis. In addition, we regularly analyze the changes in present value due to exchange rate fluctuations and monitor the impact on assets and liabilities.

Through the risk management procedures described above, our net foreign exchange risk exposure and the effects on profit or loss before tax and shareholders' equity are not material.

***Interest Rate Risk***

We raise capital through interest-bearing loans, including those with floating interest rates, and therefore we are exposed to the risk of an increase in our interest payments resulting from rising interest rates. On the other hand, PayPay Bank Corporation may see an increase in investment income in the event of a rise in interest rates. In order to prevent or reduce any risk tied to interest rate fluctuations, we maintain an appropriate mix of interest-bearing debt with fixed and floating interest rates to hedge the risk of interest rate fluctuations. For floating interest rate debt, we also continuously monitor interest rate fluctuations.

For PayPay Bank Corporation, we identify assets and liabilities subject to interest rate risk management and set a risk limit for the amount of fluctuation in the present value arising from the portfolio, and we manage compliance with the limit on a daily basis. In addition, we regularly analyze the change in present value in response to changes in the shape of the yield curve (flattening and steepening) and monitor the impact on assets and liabilities.

At PayPay Bank Corporation, financial assets exposed to interest rate risk are mainly debt instruments, including purchased monetary claims, bonds and other marketable securities classified as held-to-maturity and loans, including both general loan assets and interbank short-term loans. Financial liabilities exposed to interest rate risk are mainly deposits from customers. The fluctuation of the fair value of these financial assets and liabilities, given certain fluctuations in interest rates, is used in quantitative analysis as part of the process to manage interest rate risk.

For more information on market risks, see Note 37 to our audited consolidated financial statements included elsewhere in this prospectus.

**Credit Risk** 

We are exposed to the debtors' credit risk arising from our operating activities. Generally, the credit risk is related to accounts receivable from cardholders, payment service providers and PayPay merchants, loan arrangements, such as housing loans and card loans, to banking customers, and loan commitments for cardholders.

For cardholders' credit risk, we conduct a screening in accordance with internal policy upon entering into an agreement with a cardholder. We also monitor mainly the collection status of each cardholder to manage

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potential uncollectible amounts. As for the credit card receivables from cardholders, in the event of delinquency, the terms of the contract may be modified for the purpose of facilitating collections, and the original contractual cash flow would change. While most of the credit card receivables are from cardholders based in Japan, we are working to prevent or reduce credit risk through the risk management procedures described above.

For PayPay Bank Corporation customers' credit risk, we have established a credit risk management system in our internal regulations and strive to control credit risk in accordance with our internal credit policy. In addition, we have established regulations for credit review, concentration risk and write-off of bad debts. In order to avoid excessive concentrations of risk, our banking policies and procedures include specific guidelines to focus on maintaining a diversified portfolio by establishing an adequate credit limit. Also, PayPay Bank Corporation is subject to the regulations relating to single party exposure. We use collateral and guarantees to reduce counterparty credit risk and set limits for both individual subsidiaries and the group as a whole. Our portfolio is built around a core of market securities with high creditworthiness and small loans with low concentration risk. Our audit department, which is independent from any department of ours, regularly audits our credit risk management status, checks our credit operations and reports the results of the audits it conducts to our board of directors.

PayPay Securities Corporation holds certain deposits of its customers in segregated trust accounts deposited with trust banks and other financial institutions. These accounts are exposed to the credit risk of the financial institutions in which they are deposited. PayPay Securities Corporation manages this credit risk by keeping the amount of assets exposed to risk from any particular counterparty within a specified amount.

We derecognized financial assets for which the contractual cash flows have been modified and recognized, purchased or originated credit-impaired financial assets, where the change in the discounted present value of the cash flows under the new terms of these financial assets changed by more than 10% from the discounted present value of the remaining cash flows of the original terms. There were no financial assets with modification of contractual cash flows that did not meet such criteria of derecognition as of March 31, 2024 and 2025.

For general credit risks other than those mentioned above, we conduct credit investigations and establish a credit line in order to manage credit risks. We periodically monitor the status of debtors, past dues and outstanding balances in accordance with our internal credit management regulations.

For more information on credit risk, see Note 37 to our audited consolidated financial statements included elsewhere in this prospectus.

**Liquidity Risk** 

Liquidity risk is the risk that we will encounter difficulty in meeting our obligations associated with our financial liabilities that are settled by delivering cash or another financial asset. We are exposed to liquidity risk in funding and use and repayment of cash in relation to our business operations. In order to prevent and reduce liquidity risk, we invest, in principle, in highly liquid and low-risk financial instruments. We hold a sufficient amount of cash and cash equivalents, and receivables with maturities of mainly two months so that our liquidity and stability can be ensured.

For PayPay Bank Corporation, in order to prevent excessive reliance on short-term funds in financing (i.e., overnight to one month), we set an upper limit on the amount of short-term financing permitted and monitor compliance with this limit on a daily basis. In addition, we monitor the balance of assets that can be converted into cash in order to secure liquidity in case of an emergency, for example, if there are large withdrawals of customers' deposits. We define such an emergency based on the ratio of deposit outflows to our primary reserves (our BOJ current account deposits and call loans).

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PayPay Bank Corporation and PayPay Card Corporation have prepared advance measures to procure liquidity in the event of an emergency. PayPay Bank Corporation finances its funds through deposits from customers and PayPay Card Corporation finances its funds through direct financing such as bank loans, commercial paper and financing through liquidation of receivables.

For more information on liquidity risk, see Note 37 to our audited consolidated financial statements included elsewhere in this prospectus.

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**BUSINESS** 

**Who We Are** 

As Japan's leading financial technology company, we are dedicated to our goal of becoming a digital finance platform for all. We strive to empower the everyday lives of users and businesses by transforming their smartphones into a comprehensive, easy-to-use, and accessible financial platform that centralizes and simplifies numerous daily activities for ultimate convenience. Through a seamless ecosystem of payment, financial and everyday services, we have served as a game-changer in driving the shift to a cashless and digitally empowered economy. Through continued innovation, we aim to redefine how millions of individuals and businesses in Japan engage with finance throughout their daily activities.

![LOGO](g941409g34z77.jpg)

We operate a highly scalable and integrated digital finance platform that serves as an all-in-one solution for users and merchants, built on a robust two-sided network connecting tens of millions of users and millions of merchants. Our platform facilitates a shared ecosystem across payments and financial services. As a clear leader in Japan's cashless payment market, we offer one of the most comprehensive and versatile service suites in the market, spanning daily payments, banking, credit, investments, and beyond.

Our story started with our code-based cashless payments solution. We launched this service in October 2018 and it rapidly expanded to become a nation-wide leading cashless payments ecosystem with approximately 72 million PayPay registered users as of December 31, 2025, or a penetration of 75% among 96 million smartphone users in Japan<sup>9</sup>. With the acquisition of PayPay Card Corporation in October 2022, our platform evolved to a next-generation payments ecosystem, seamlessly integrating our code-based payment and credit card payment services through our PayPay app. We recorded Payment Segment GMV of ¥15.39 trillion based on transactions processed through our products, PayPay Balance, PayPay Credit and PayPay Card, for the year ended March 31, 2025, and we have consistently achieved over 20% annual GMV growth since the fiscal year

<sup>9</sup> As of January 1, 2025. Calculated by using 80.5% from the Ministry of Internal Affairs and Communications' "2024 Survey on Communication Usage Trends (announced May 30, 2025)," Materials 2 "Mobile Device Ownership (Individual)" and "Smartphone Ownership (Individual)," applied to the Japanese population aged five and over as of January 1, 2025, from the Ministry of Internal Affairs and Communications and Statistics Bureau's "Population Estimates (final figures as of January 2025 (Reiwa 6))." 

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ended March 31, 2019. Our payment service is deeply integrated in the daily lives of our users, supporting a broad range of transaction scenarios and thereby driving high user engagement. In addition, we have supported merchants through promotional tools such as PayPay Coupons, PayPay Stamp Cards and PayPay Funding solutions designed to enhance retail productivity.

**Payment Segment GMV**![LOGO](g941409g29z29.jpg)

1. The results of PayPay Card Corporation, which became a subsidiary in October 2022, have been retroactively
consolidated from the beginning of FY2021, in accordance with the "interest pooling method" in business combination accounting.

2. Includes 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<sup>®</sup> via PayPay code-based payment. Excludes PayPay Card top-ups to PayPay Balance, and GMV from canceled transactions.

3. Includes PayPay Credit, top-ups to PayPay Balance with PayPay Card
and GMV made by linking a PayPay Card to the PayPay App without linking a PayPay account, excluding the GMV of any cancelled transactions.

4. Includes PayPay Card (physical card) transactions, but excludes top-ups to PayPay Balance with PayPay Card. Excludes GMV from canceled transactions.

We further expanded our platform to core financial services. We acquired majority voting rights in PayPay Bank Corporation and PayPay Securities Corporation in April 2025, gaining comprehensive capabilities to provide a broad range of financial services offerings, to become a convenient one-stop financial portal destination for all users. Our offerings include internet banking and lending services through PayPay Bank Corporation and smartphone-based securities brokerage and investment services through PayPay Securities Corporation along with additional value-added services for our users.

**Overview** 

We offer a digital finance platform with services that range from easy-to-use payments services to a full-suite of financial services, designed to simplify and enrich the everyday lives of consumers and businesses in Japan. Payments services contribute to broad-based user engagement through transaction frequency, while financial services deepen and accelerate user engagement through cross-selling and long-term product relationships. Together, they function as mutually reinforcing pillars of our ecosystem and form the foundation of our user engagement strategy.

<u>Payment business</u>. Our payment business is anchored by PayPay, Japan's leading code-based mobile payment platform, and PayPay Card, our integrated credit card service. Since its launch in 2018, PayPay has

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become one of the most widely used digital wallets in Japan, with approximately 72 million PayPay registered users as of December 31, 2025, and approximately 40 million MTUs during December 2025. PayPay allows users to make fast, secure payments by simply scanning a code with their smartphone, while offering merchants a low-cost, easy-to-adopt digital payment solution. We believe our rapid growth has been supported by key drivers, including the launch of multiple large-scale promotional campaigns offering an aggregate of ¥10 billion in incentives, government policies designed to actively promote and encourage the use of cashless payments, as well as heightened consumer adoption during the COVID-19 pandemic as a means of avoiding physical cash handling. Our users can charge their PayPay Balance via several methods and make payments from that pre-loaded balance or utilize PayPay Credit to leverage credit extended to them by PayPay, if approved for PayPay Card credit. PayPay Card Corporation, through its more traditional credit card offerings, also offers revolving credit, cash advances, and installment plans for eligible card holders. PayPay Card had 16.0 million active cards issued as of December 31, 2025. Together, we recorded Payment segment GMV of ¥15.39 trillion based on transactions processed through PayPay Balance, PayPay Credit and PayPay Card for the year ended March 31, 2025, reinforcing our dominant position in Japan's code-based payments market. These services support a broad range of daily transactions—both offline and online—and form the foundation of our efforts to further deepen user engagement and expand monetization across our ecosystem.

<u>Financial service business</u>. Our financial service business, anchored by PayPay Bank Corporation and PayPay Securities Corporation, complements our payment platform by offering seamless, app-based banking and investing services. PayPay Bank services are integrated into the PayPay ecosystem and, as of December 31, 2025, had 9.7 million accounts with a total of ¥2,281.9 billion in deposits and ¥1,098.3 billion in loan balances, including card loans, business loans and mortgages. PayPay Securities Corporation, with its standalone app in addition to also being embedded in the PayPay app, reached 1.54 million brokerage accounts as of December 31, 2025, and serves a broad base of primarily first-time investors through user-friendly features, such as micro-investing via "PayPay Invest" (as described in more detail below in this section) which allows users to begin investing with as little as ¥100. The feature is often used as a sub-account for casual securities investment, and has become a gateway for users to experience investing in a more simple and accessible format. Our strategy in financial services is to further deepen integration with PayPay—recently exemplified by PayPay acquiring majority stakes in both PayPay Bank Corporation and PayPay Securities Corporation in April 2025—to create a unified digital finance platform where users can effortlessly manage spending, saving, borrowing and investing all within a single mobile experience.

As we have expanded the use cases and frequency of payment transactions, our payment business has not only scaled with user growth, but also contributed meaningfully to overall profitability. In parallel, we have expanded our revenue mix by deepening financial engagement with existing users, leveraging cross-selling between our payment and financial service businesses to increase average revenue per user and improve platform monetization. This deliberate expansion of revenue streams alongside our product ecosystem has enabled us to simultaneously grow revenue and expand margins, which we believe is unique and differentiating across the broader global fintech landscape.

As we expand our service offerings and grow our business, it is important to continue maintaining constructive and transparent relationships with the regulatory authorities that supervise our business. The scope and pace of our license acquisitions underscore the depth of our regulatory engagement and serve as further validation of our role in advancing national policy objectives, particularly the Japanese government's goal of accelerating adoption of digital and cashless payments across the broader Japanese population. To date, we have expanded our business steadily and strategically through the acquisition of a comprehensive set of regulatory licenses, reflecting both our long-term commitment to compliance and the government's support for Japan's transition to a more digital and fintech-enabled financial ecosystem. We have obtained 13 licenses across payment and financial business domains, including licenses for banking, securities brokerage, credit card operations and funds transfer, enabling us to offer a broad range of regulated financial services directly through our platform.

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**Business Expansion Achieved through the Acquisition of 13 Licenses within 7 years<sup>1</sup>**![LOGO](g941409g25y45.jpg)

As of December 31, 2025

As a result, for the year ended March 31, 2025, we generated total revenue of ¥299.1 billion, representing a two-year CAGR of 22%, and operating profit of ¥35.5 billion (representing a 12% operating profit margin). We transitioned from loss to profitability over the past three fiscal years, achieving profit for the year of ¥39.2 billion (representing a profit for the year margin of 13%) and Adjusted EBITDA of ¥58.7 billion (representing an Adjusted EBITDA Margin of 20%) for the year ended March 31, 2025. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS Financial Measures" for a discussion of Adjusted EBITDA and Adjusted EBITDA Margin, and a reconciliation of these figures from profit (loss) for the year. These results illustrate our strong operating leverage and the scalability of our platform as monetization accelerates. As of December 31, 2025, borrowings on our consolidated statement of financial position were ¥568,309 million (including ¥351,325 million of borrowings in the Payment segment mainly related to PayPay Card Corporation's credit card business operations).

**Our Presence and Track Record** 

Japan has historically been a cash-centric economy, with cash comprising approximately ¥182 trillion of domestic household final consumption payment out of ¥247 trillion (or 70.2%) in 2018 calculated based on statistics released by the METI on March 31, 2025, and METI's revised calculation of Japan's cashless penetration rate as of January 1, 2026 driven in part by structural factors such as high merchant onboarding costs and high transaction fees that limited the adoption of digital payments. Additionally, it reported that the ratio of cashless payments in Japan reached 51.7%<sup>10</sup> in 2024, based on statistics released on December 19, 2025.

To address the abovementioned untapped opportunity, PayPay entered the market by waiving transaction fees for up to three years (and then charging transaction fees in later years) for small and medium-sized merchants, combined with low installation and operational costs. Unlike traditional credit card networks, we operate our own merchant network, enabling us to set fee levels independently and avoid third-party acquirer or network charges. This structural difference underpins our ability to provide services at lower cost. These measures expanded merchant participation and ease-of-use for users, reinforcing the expansion of our two-sided network. As more merchants began to accept PayPay, the overall value proposition for users strengthened, leading to increased user engagement and broader ecosystem participation. As a result, PayPay emerged as a leading force in Japan's cashless transformation, achieving an extraordinary CAGR of 65% in

<sup>10</sup> The METI revised the method it uses to calculate the cashless penetration rate as of January 1, 2026 in its report entitled "Summary of the Cashless Promotion Study Group" issued in December 2025. Specifically, it changed the denominator of the calculation from "private final consumption expenditure" to "household final consumption expenditure excluding imputed rent from home ownership," which raised the cashless penetration rate from previously reported levels. Cashless penetration rates prior to 2019 have been calculated by us using METI's revised calculation method. 

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transaction volume over the period from the year ended March 31, 2020 to the year ended March 31, 2025, reaching a Payment Segment GMV of ¥15.39 trillion based on transactions through PayPay Balance, PayPay Credit and PayPay Card for the year ended March 31, 2025. This rapid trajectory underscores our track record:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As of December 31, 2025, we had approximately 72 million PayPay registered users, representing 75%
of all smartphone users in Japan. Our platform is widely adopted across the 20s to 60s age groups, especially younger generations, reflecting our ability to serve as a universal payment solution in everyday life.

**Reached 75% of Smartphone Users in Japan**![LOGO](g941409g18j37.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. As of 1st January 2025. Ministry of Internal Affairs and Communications, Statistics Bureau. Population
Estimates (Released June 20, 2025).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. As of 1st January 2025. Calculated by using 80.5% from the Ministry of Internal Affairs and
Communications' "2024 Survey on Communication Usage Trends (announced May 30, 2025)" Materials 2 "Mobile Device Ownership (Individual)" and "Smartphone Ownership (Individual)," applied to the Japanese
population aged 5 and over as of January 1, 2025, from the Ministry of Internal Affairs and Communications and Statistics Bureau's "Population Estimates (Final figures as of January 2025 (Reiwa 6))."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Number of PayPay registered users, excluding frozen, suspended, cancelled, or deleted accounts. As of end of
December 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. As of the end of December 2025. The percentage of PayPay users by age group who have completed eKYC. This
calculation excludes some users for whom age could not be determined among those who completed eKYC. eKYC-completed users refer to users who have applied for and successfully completed identity verification through the PayPay app using their My
Number Card, driver's license, or driving history certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. As of the end of December 2025. Percentage of PayPay Card active members by age group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. As of the end of December 2025. Percentage of PayPay Securities accounts by age group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. As of the end of December 2025. Percentage of PayPay Bank individual accounts by age group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• According to a brand awareness survey<sup>11</sup> that we
commissioned from Cross Marketing Inc. in July 2025, PayPay was the top response when respondents were asked to name up to five cashless payment means, with the highest percentage of more than 45% citing PayPay—surpassing even traditional
credit cards—highlighting our brand leadership and dominant share of mind in Japan's cashless economy.

<sup>11</sup> This survey was conducted by PayPay Corporation, with research carried out by Cross Marketing Inc. using an online methodology. The survey targeted males and females aged 15 to 69 across Japan and was conducted nationwide between July 9, 2025 (Wednesday) and July 16, 2025 (Wednesday). A total of 3,150 valid responses were collected. Respondents were asked to list up to five non-cash payment methods that they use in their daily shopping and money transactions, in the order that they came to mind. 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are also one of the top providers of cashless payments in terms of number of cashless payments, with our
code-based payments accounting for approximately 19% of all cashless payment transactions in 2024, or one in every five transactions, up from just 0.03% in 2018. In the growing code-based payment industry, we held approximately 65% market share by
number of transactions in 2024, further underscoring our central role in expanding Japan's digital payment infrastructure.

**Dominant in Cashless Brand Awareness**![LOGO](g941409g35h54.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Conducted by: PayPay Corporation / Research Agency: Cross Marketing Inc. / Methodology: Online Research /
Region: Nationwide Japan / Target Audience: Males and females aged 15-69 / Survey Period: July 9, 2025 (Wednesday)–July 16, 2025 (Wednesday) / Valid Responses: 3,150 samples / Question: Please list up to five (5) non-cash payment methods
that you use in your daily shopping and money transactions, in the order that they come to mind.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. This figure is derived by subtracting the total number of PayPay app payment transactions (excluding
cancelled transactions) from the total number of in-store transactions reported in the "Code Payment Usage Trends Survey" by the Payment Japan Association (published March 14, 2025).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We recorded Payment Segment GMV of ¥15.39 trillion based on transactions processed through PayPay Balance,
PayPay Credit and PayPay Card for the year ended March 31, 2025. In aggregate, we have rapidly achieved a GMV of approximately US$100 billion<sup>12</sup> in just six years, highlighting the
exceptional velocity of our growth. For 2024, we held an estimated 64% share of Japan's code-based payment market by transaction volume. Moreover, although we recorded a modest loss for the year of US$6 million<sup>12</sup> at the time, we also achieved over US$100<sup>12</sup> million of Adjusted EBITDA on an annual basis just five years after our founding, reflecting
strong cost discipline and operating leverage.

<sup>12</sup> The U.S. dollar equivalents in this paragraph were calculated using a flat rate of 150 yen against 1 U.S. dollar for illustrative purposes only.

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**Code-based Payment Market Share In Japan by GMV (CY2024)**![LOGO](g941409g27a10.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Calculated based on the PayPay App GMV divided by the GMV for code payments from the Cashless Promotion
Council's "Code Payment Usage Trends Survey" (Released March 14, 2025). PayPay App GMV is the sum of PayPay Balance GMV and PayPay Credit GMV (including PayPay Credit, top-ups to PayPay Balance with PayPay Card and GMV made by
linking a PayPay Card to the PayPay app without linking a PayPay account). Excludes GMV from canceled transactions

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In P2P money transfers, we are the clear market leader with 382 million transfers, accounting for 96% of
code-based P2P money transfers in 2024. In addition, we achieved a five-year CAGR of 135% in terms of number of transactions over the period from 2019 to 2024, outpacing the 6% CAGR in terms of number of transactions effected through traditional
banks over the same period. We do not charge any fees for P2P money transfers. We view this service as a cost-effective way to acquire new users, reflecting the unparalleled network effect we have achieved. New users are often acquired through
solicitations from family, friends, or acquaintances for activities such as bill splitting, money collection or other money transfer needs that arise from social interactions.

**No.1 Position in P2P Money Transfers Has Enabled Network Effect to Drive Further GMV Growth**![LOGO](g941409g32l76.jpg)

1. The total number of transactions made using PayPay Balance's "Send and Receive" (= P2P
money transfers) feature in CY2024. PayPay Balance includes PayPay Money and PayPay Money Lite.

2. Cited from the "Code Payment Usage Trends Survey (published March 14, 2025)" by the Payment Japan
Association, this represents the total number of P2P money transfer transactions made via smartphone payments in 2024.

3. ACH represents Automated Clearing House.

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4. Cited from "Payment Statistics Annual Report 2024—1. Domestic Exchange Handling Status (1-1
interbank domestic exchange transaction volume)" by the Japanese Bankers Association. This refers to the total number of tele-exchange transactions, including corporate money transfers, but excluding
salary transfer transactions.

We are distinguished by our ability to scale rapidly, serve a demographically broad user base, and sustain strong profitability. Although we had recorded loss for the year every year since our inception through the year ended March 31, 2024 due to our strict focus on the scaling of our business, we transitioned from loss to profitability starting from the year ended March 31, 2025. Our ecosystem now extends beyond payments into banking and investments, which led to a seamless integration of services through the PayPay app. Our regulated financial services reached 9.7 million bank accounts and over 20 million users for PayPay Point investment service as of December 31, 2025. These achievements not only reflect our ability to scale digital finance infrastructure across both user and merchant touchpoints but also underscore our track record of execution and continued leadership in driving Japan's digital financial transformation. By bringing PayPay Bank Corporation and PayPay Securities Corporation into our group, we are now positioned to execute a fully integrated cross-selling strategy from payments to financial services, advancing our broader mission of accelerating digital finance adoption across Japan.

**Market Opportunity** 

Japan represents a vast and rapidly evolving opportunity across our core businesses—payments, banking, and securities brokerage—as consumer behavior shifts toward digital solutions. Despite recent progress, the Japanese economy remains mainly cash-centric. Japan's consumer payments market represents a substantial and under-penetrated opportunity, with continued growth expected as digital adoption accelerates. In 2024, Japan's household final consumption expenditure excluding imputed rent totaled approximately ¥273 trillion (equivalent to US$1.8 trillion) according to the METI as reported in "Summary of the Cashless Promotion Study Group" released on December 26, 2025, forming the total addressable market for consumer expenditure. Of this amount, cashless payment volume reached ¥141 trillion (equivalent to US$0.9 trillion) in the same year, according to the same report, which represented a cashless penetration rate of 51.7%,<sup>13</sup> up from ¥74 trillion (equivalent to US$0.5 trillion) in 2018, or a cashless penetration rate of approximately 29.8%, reflecting a CAGR of 11.5% during the period from 2018 to 2024.<sup>14</sup>

Growth has been particularly strong in mobile-first formats: of the overall cashless payment amount, code-based payments grew at a CAGR of 75% over the period from 2019 to 2024, while debit cards, credit cards and E-money expanded at CAGRs of 21%, 9% and 1%, respectively, over the same period, according to the METI as reported in the "Calculation of Cashless Payment Ratio for 2024" released on March 31, 2025 and the Cashless Promotion Council as reported in the "Survey on Code-Based Payment Usage Trends" released on March 14, 2025 (transactions made using credit cards via code are classified under "code-based payments" and are excluded from the general "credit card" category). Within this growing market, PayPay has emerged as the leading player, with a GMV CAGR of 76% over the period from 2019 to 2024. We captured approximately one-quarter of the overall incremental cashless payment volume in Japan from 2023 to 2024, which was approximately ¥2.7 trillion of approximately ¥14.3 trillion in growth. Based on information reported by industry associations, of the approximately 38.8 billion cashless transactions completed in Japan in 2024, we accounted for 20% of the total. The total transaction figure was calculated based on the following data: (i) credit card transactions reported by 26 credit card companies in a survey by the Japan Credit Association, (ii) debit card and electronic money transactions from 1,069 debit card companies and eight electronic money companies as released by the Bank of Japan and (iii) code-based payment transactions from 13 code-based payment companies, as reported by the Payments Japan Association. In the code-based payment market, we held 64% of GMV as of March 14, 2025, as reported by the Cashless Promotion Council in the Survey on Code-Based Payment Usage Trends.

<sup>13</sup> The METI revised the method it uses to calculate the cashless penetration rate as of January 1, 2026 in its report entitled "Summary of the Cashless Promotion Study Group" issued in December 2025. Specifically, it changed the denominator of the calculation from "private final consumption expenditure" to "household final consumption expenditure excluding imputed rent from home ownership," which raised the cashless penetration rate from previously reported levels. 

<sup>14</sup> The U.S. dollar equivalents in this paragraph were calculated using a flat rate of 150 yen against 1 U.S. dollar for illustrative purposes only.

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**We have been the Growth Driver of the Japanese Cashless Market**![LOGO](g941409g01p41.jpg)

1. Ministry of Economy, Trade and Industry, "Calculated Cashless Payment Ratio for 2024" (Released
March 31, 2025), and Cashless Promotion Council, "Code-based Payment Usage Trends Survey" (Released March 14, 2025). Credit card usage within code-based payments is categorized under code-based payments, not credit cards. Cashless
payment ratio is calculated as GMV of each cashless payment method divided by Private Final Consumption Expenditure.

2. "Summary of the Cashless Promotion Study Group," published by the METI, December 2025. The
definition used to calculate the cashless payment ratio for domestic use was revised from the previous definition. Under the new definition, the denominator was changed from private final consumption expenditure to household final consumption
expenditure excluding imputed rent of owner-occupied housing, while the numerator remains the total value of cashless payments. As a result, the cashless payment ratio for 2024 was revised from 42.8% under the previous definition to 51.7% under the
new definition.

3. PayPay App GMV, including GMV from PayPay Balance and PayPay Credit.

4. Calculated based on the Total GMV.

5. Calculated from CY22 to CY24.

6. Calculated from CY21 to CY24

The Japanese government has introduced multiple policy initiatives to promote digital finance adoption. For example, in January 2026 the Japanese government reiterated its long-term national vision of achieving 80% total cashless penetration, as well as its 65% benchmark goal by the end of 2030, both of which represent considerable increases from Japan's 51.7%<sup>15</sup> cashless penetration as of the end of 2024. We have not only benefited from the cashless transition—we have played a foundational role in creating and expanding Japan's digital payments ecosystem. We have aligned our strategy with public-sector efforts such as merchant subsidy programs and government-led campaigns to expand the use of mobile payments.

Structural inefficiencies persist not only in payments, but also across the banking and securities sectors. Japan's household financial assets amounted to ¥2,239 trillion as of the end of September 2025, according to the Bank of Japan's report entitled "Flow of Funds Accounts," highlighting the significant scale of funds held within the financial system. In the banking sector, the total deposits held by all Japanese banks (including Japan Post Bank) amounted to ¥1,176 trillion as of the end of 2024 according to Japanese Bankers Association and Japan Post Bank's company disclosures, growing 1% year-over-year, of which total deposits held by Japan's nine internet-only banks were approximately ¥38 trillion as of the end of March 2025, growing 8% year-over-year,

<sup>15</sup> The METI revised the method it uses to calculate the cashless penetration rate as of January 1, 2026 in its report entitled "Summary of the Cashless Promotion Study Group" issued in December 2025. Specifically, it changed the denominator of the calculation from "private final consumption expenditure" to "household final consumption expenditure excluding imputed rent from home ownership," which raised the cashless penetration rate from previously reported levels. 

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according to company disclosure, while PayPay Bank Corporation had ¥1.8 trillion in deposits as of the end of March 2025, growing 9% from March 31, 2024. Unsecured consumer loans, including credit card and card loans and personal loans, by all Japanese banks and non-banks, totaled ¥10.2 trillion as of the end of March 2025 according to the Japan Card Business Association and the Bank of Japan, growing 5% year-over-year. Out of the ¥10.2 trillion, unsecured consumer loans by Japan's nine internet-only banks accounted for ¥2.0 trillion and unsecured consumer loans by PayPay Bank Corporation accounted for ¥0.2 trillion. Mortgage loans by all Japanese banks totaled ¥227.2 trillion as of the end of March 2025 according to the Japan Housing Finance Agency, growing 3% year-over-year. Out of the ¥227.2 trillion, mortgage loans by Japan's nine internet-only banks accounted for ¥17.7 trillion and mortgage loans by PayPay Bank Corporation accounted for ¥0.7 trillion. Business loans to SMEs by all Japanese banks totaled ¥314.2 trillion as of the end of March 2025 according to Shinkin Central Bank, growing 3% year-over-year. Out of the ¥314.2 trillion, business loans to SMEs by Japan's regional banks and credit unions accounted for ¥169.4 trillion and business loans to SMEs by PayPay Bank Corporation accounted for ¥0.04 trillion. The securities market is similarly dynamic, with total assets under management across Japanese securities firms reaching ¥461 trillion as of the end of March 2025, growing 31% year-over-year, according to Japan Securities Dealers Association, and internet securities firms managing about ¥101 trillion as of the end of March 2025 (growing 16% year-over-year), according to company disclosures. PayPay Securities Corporation captured ¥0.2 trillion as of the end of March 2025, growing 63% year-over-year, of that growth. These data points highlight the meaningful opportunity for digital platforms to scale within still-offline financial verticals, which reflects a broader macro shift toward digitalization—a trend we have successfully leveraged to capture significant shares in multiple markets and which provides a deep, multi-year runway for continued expansion.

In parallel, Japan is also undergoing a national shift "from savings to investment." This is being reinforced by the government's expansion of the NISA program, a Japanese government tax-free stock investment program for individuals, which has contributed to record growth in individual investment account openings. We believe these developments will continue to support the growth of digital brokerage and asset management services.

Taken together, these macroeconomic, structural and policy trends indicate continued long-term growth potential for Japan's digital financial markets and support our expectations for the future development of our platform.

**Our Competitive Advantages** 

We operate a highly scalable, integrated digital finance platform that acts as an all-in-one solution for users and merchants, utilizing a robust two-sided network connecting tens of millions of users and millions of merchants. Our platform facilitates a unified ecosystem across payments and financial services. As a clear leader in Japan's cashless payment market, we offer one of the most comprehensive and versatile service suites in the market, spanning daily payments, banking, credit, investments, and beyond.

The foundation of our platform is the payment service, which enables deep engagement with users and merchants through network effects. As our user base expands and usage grows, it strengthens the incentive for additional merchants to adopt PayPay, further accelerating merchant acquisition. In turn, as more merchants adopt PayPay, the number of payment-acceptance locations increases, and users benefit from greater convenience, driving increased usage. This mutually reinforcing dynamic between user activity and merchant participation is at the core of our two-sided network model, enabling us to scale rapidly across both sides of the platform and deepen engagement across the ecosystem. In addition, because we operate our own merchant network, we are able to process payments without relying on traditional third-party payment processors, external acquirers or brand / network providers, allowing us to retain a greater share of payment economics and minimize settlement outflows.

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Our strong network effects have also driven the expansion of our financial services offerings. Greater engagement with our payment service creates natural opportunities to promote our internet banking and securities brokerage services, facilitating more efficient user acquisition. The growth of our financial services offerings generates cross-service synergies—users who adopt both payment and financial services exhibit higher average payment volume per user and stronger long-term engagement. This synergy forms a powerful feedback loop: active payment users serve as a springboard for financial product adoption, while financial services users tend to transact more payment volume. Our loyal users who also adopt financial services tend to be more engaged and may enter into transactions more frequently with higher amounts.

As our ecosystem has scaled and diversified to satisfy various financial needs of users and merchants, we can serve as a one-stop digital financial platform and create an integrated system of money circulation. For example, users can receive their salary via PayPay Bank Corporation, make everyday purchases via PayPay code-based payments and invest through PayPay Securities Corporation, while merchants can collect payments with PayPay code-based payments and disburse payroll from their PayPay Bank accounts, with both sides using the same infrastructure. This integrated approach to digital finance along with PayPay's two-sided network is unique even when compared to other cashless payment providers, positioning us as both an enabler and beneficiary of Japan's accelerating shift toward a digital finance economy.

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***Strong Value Propositions to Users and Merchants***

**Two-Sided Network** 

**Simple Transaction Structure which Translates into Strategic Pricing**![LOGO](g941409g02y56.jpg)

1. PayPay registered users as of end of December 2025.

2. Solid arrows represent direct payments (i.e. payments not sent via a PSP), which are limited to PayPay app
payments via MPM (Merchant-Presented Mode) and payments made with PayPay Balance.

3. The standard rate for small and medium-sized PayPay merchants.

4. Excerpt from the model case of "Small and Medium-sized Merchants with Average-priced transactions
(Off-us Transactions)," from the "Study Group on Promoting a Better Environment for the Further Adoption of Cashless Payments by Small and Medium-Sized Businesses," 3rd Meeting Materials, published by the Ministry of Economy, Trade
and Industry (August 27, 2021).

5. An off-us transaction is a transaction where the issuer and acquirer are different entities.

6. When a merchant uses a PSP as a gateway to introduce PayPay payments, the merchant pays the settlement fees
to the PSP.

We offer a comprehensive value proposition that meets the evolving needs of both users and merchants in Japan's rapidly digitizing financial environment. For users, our platform delivers a seamless and intuitive experience built around smartphone-based payments, combining the ease of code-based and credit card transactions with compelling promotional incentives such as PayPay Points. These features not only facilitate everyday payments—from retail to transportation to utility bills—but also drive recurring engagement and higher transaction frequency. All services are accessible through a single mobile application that integrates payments, transfers, credit, and banking, providing users with a unified and convenient financial experience. Since the launch of our service, we have implemented a clearly articulated user centric growth strategy, under which we have continuously expanded the locations, use cases and services that users can access through our platform, including online payments, online billing, P2P money transfers and bill payments, in order to increase the number of touchpoints in users' daily lives. By enabling payments to become naturally embedded across a wide range of everyday situations, and not limited to discretionary spending, we have strategically increased payment frequency. Our user centric model differentiates us from traditional cashless players which we believe may have more limited touchpoints and focus on high-value transactions, which may constrain their ability to gather user data and expand into non-payment services.

For merchants, we provide a compelling value proposition centered on low-friction adoption and high-impact tools for business growth. Onboarding is fast and cost-efficient, with no upfront installation fees and competitively priced payment service charges level. Unlike many companies that rely on third-party networks to operate two-sided models, we maintain a highly self-contained value chain, conducting transactions directly with merchants. This structure minimizes external intermediary fees and enables us to offer lower transaction fee rates than issuer peers. We also support merchants with integrated digital marketing functions—such as in-app coupons, promotions, and loyalty programs—designed to increase visibility and encourage user spending.

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Additional solutions like PayPay for Business (our merchant-facing platform that provides onboarding, sales tracking and marketing campaign tools) streamlined settlement and reporting features, and actionable data analytics further enable merchants to improve operational efficiency and optimize performance.

Our broad merchant coverage, spanning both physical retailers and an expanding network of online businesses, complements our user proposition and reinforces the utility of our platform across daily life. By creating a trusted, feature-rich environment that enhances convenience for users and lowers barriers for merchants, we have established a strong foundation for continued engagement, high transaction throughput, and long-term monetization.

***Significant Penetration of eKYC within our User Base***

Our platform has achieved exceptional penetration of electronic Know-Your-Customer (eKYC) verification among our user base. As of December 31, 2025, 38.9 million users, or approximately 54% of registered users, had completed eKYC registration within our PayPay ecosystem. This level of eKYC adoption is unparalleled in the Japanese market and reflects both the trust users place in our platform and the simplicity of our onboarding experience. This puts us in a unique position to offer a frictionless entry point into our regulated financial services. This seamless flow from payments to financial services is a unique advantage to us, since no other provider offers comparable simplicity or scale. Compared to our three-year CAGR for registered users of 10% as of December 31, 2025, our three-year CAGR for users who had completed eKYC was 38%, showing the significant penetration of eKYC within our user base. In a regulatory environment that is becoming increasingly stringent regarding identity verification, our high eKYC penetration serves as a critical enabler of expansion into licensed financial services.

We have leveraged this eKYC foundation to create a unified eKYC, a feature that allows users who have already completed identity verification in PayPay to bypass part of the identity verification process when accessing services provided by PayPay Bank Corporation and PayPay Securities Corporation. By linking their verified identity information as PayPay users to these other services, users gain seamless access to our regulated financial offerings. We plan to expand this feature to cover credit cards as well. This unified eKYC dramatically streamlines onboarding flows. For example, users can open a PayPay Bank account in just two steps, compared to the standard of seven steps through traditional channels. These frictionless entry points eliminate redundancies such as repetitive document uploads and identity verification processes, making our user journey faster, more intuitive, and more conversion-friendly, providing us with an advantage over our competitors which we believe are not able to onboard users as quickly and efficiently as we can.

Beyond efficiency, our high eKYC coverage is also a foundation for deeper user monetization. eKYC users are more likely to be eligible for and adopt financial products such as credit, loans, and investment accounts, which require users to verify their identity. The ease and simplicity of eKYC across our platform provide a foundation for the expansion of our platform across a wide array of services. With just their smartphone, our users can be onboarded onto other services using the platform they already engage with on a daily basis. Our ability to cross-leverage eKYC data across business lines increases the lifetime value of each user and supports user acquisition for financial services. In turn, this supports stronger margins and scalability as we pursue our broader mission of offering a comprehensive digital finance experience.

***Sophisticated, Modern UI/UX***

Our UI/UX design is a major reason users continue to choose our platform. We have continuously refined our UI/UX to deliver an intuitive, responsive and seamless app experience, utilizing data from our large user base and effectively applying our technology. Improving our UI/UX enables us to deepen user engagement, and the large user base we have cultivated through our PayPay app can be guided to adopt additional services throughout our broader ecosystem. We have made consistent design and functionality enhancements over time.

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These enhancements demonstrate our ongoing focus on user centric design, intuitive navigation, and integrated finance features, reinforcing PayPay's positioning as a modern and sticky super app platform.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Home-screen icon redesign (July 2025): The PayPay app home screen was updated to display "For
You" (recommendation function) and "Favorites" in a refreshed layout for easier access and visibility.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Payment-screen UI update (June 2025): The payment screen was redesigned to streamline switching between
PayPay Balance and PayPay Credit by swiping the payment-screen, while clearly showing balances and usable amounts for each payment method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Instant access to PayPay Card info (October 2024): Users can view their PayPay Card details such as
available credit on the home screen in as little as four seconds, enhancing speed and convenience.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Home-screen revamp with swipe credit toggle (April 2024): A redesigned home UI allows swipe-based
navigation to a blue "credit view," enabling intuitive switching among PayPay Balance and Credit. Additionally, "Wallet" was added to the home-screen, enabling users to check their asset at a glance on the home-screen.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Wallet overhaul with financial-platform expansion (October 2023): PayPay introduced a revamped Wallet tab
linking financial services, making banking, investment, and credit features seamlessly accessible within the app.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Points icon added to home-screen (June 2023): A dedicated "Points" icon was added,
consolidating PayPay Points information directly on the home screen for easier access and improved visibility.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Point balance visibility improved (April 2023): Users gained the ability to view their accrued PayPay
Points and point-use settings from the home screen without navigating to other menus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Balance tab replaced with Wallet (October 2022): The bottom navigation label changed from
"Balance" to "Wallet," reflecting an expanded focus on integrated financial management features within the app.

In addition to functionality, our platform is designed for reliability and ease of use. Users benefit from a highly responsive interface, consistently low error rates, and fast transaction processing. Key utilities such as P2P money transfers, real-time balance tracking, and payment notifications enhance the day-to-day usability of our ecosystem, while our app-based integration of financial products allows users to access deposits, loans, and investment services without leaving the PayPay environment. These features help position our platform not only as a payment tool, but also as a core infrastructure for digital financial life.

Moreover, our app is built as a "super app," with multiple financial and non-financial mini apps accessible within the PayPay environment. By minimizing friction across services and eliminating the need for multiple apps, while still allowing users who wish to use dedicated apps with advanced features for PayPay Bank services and PayPay Securities services, users can access a broad range of services in one place, saving time and enabling a smarter daily life. This design promotes the exploration by our users of new services and boosts user engagement.

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![LOGO](g941409g50a01.jpg)

***Strong Patent Portfolio Provides Differentiation***

We believe our extensive patent portfolio provides a foundational competitive moat in Japan's payment and financial services industry. According to independent patent analytics using the Biz Cruncher tool by Patent Result Co., Ltd., PayPay ranks at the top among Japanese payment and financial services companies in terms of overall patent score,<sup>16</sup> significantly outpacing both traditional financial institutions and fintech peers. Our position reflects not only the quantity but also the technical relevance and market applicability of our patents. The size and score of our patent portfolio suggest meaningful innovation leadership across mobile payments, digital identity, security, and transaction optimization technologies.

This intellectual property leadership is a key enabler of product innovation and operational scalability, particularly as we continue expanding into regulated financial services. Our patents span across both core payment technologies and adjacent areas such as credit infrastructure, fraud mitigation and data analytics.

In addition to strengthening our product capabilities, our strong IP position also creates barriers to entry and facilitates strategic flexibility. With a leading share of valuable patent assets, we are well-positioned to defend our market position, pursue licensing or collaboration opportunities, and ensure sustained differentiation in a rapidly evolving competitive landscape. As we continue to scale our user and merchant base and broaden our payment and financial services offerings, we expect our proprietary technology base to remain a core driver of sustainable growth and long-term value creation.

***Technology Infrastructure Supporting Continuous Innovation and Growth***

Our payment business, with Japan's leading code-based mobile payment platform at its core, is underpinned by a vertically integrated and horizontally scalable technology platform that supports high performance, low-cost operations at scale. Built as a cloud-native, microservice-based architecture, our proprietary infrastructure enables us to handle massive transaction volumes with exceptional speed and reliability, while delivering a flexible foundation for rapid product development, personalization and risk management, and horizontal scalability that enables feature expansion supporting continued business growth.

<sup>16</sup> Patent Score is an indicator that quantifies "patent attention" as a deviation value. It is primarily quantified using examination progress information (history accumulated during the examination process). Patents with higher market attention receive a higher score, indicating greater recognition and influence. 

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Our technology platform is bolstered by our investment in in-house engineering capabilities, with approximately 40% of PayPay Corporation's and PayPay India Private Limited's combined employees dedicated to product and technology development, representing a global workforce spanning 47 countries, as of December 31, 2025. This team of engineers drives continuous innovation across our services, enabling the development of features such as personalized credit assessment, dynamic risk decisioning, and the seamless integration of new financial products into our ecosystem. The combination of deep internal technical expertise and a modern, modular platform architecture ensures that we can rapidly adapt to user needs, regulatory requirements, and evolving market demands—positioning us to scale effectively as our user base and transaction volumes continue to grow.

We are accelerating product development through the adoption of generative AI, particularly in coding workflows. By integrating tools such as GitHub Copilot into our development environment, we have observed an approximately 20% increase in the number of commits (defined as a saved change in Github) by product engineers, compared to teams not using generative AI. This improvement in developer productivity, measured over the period from July 1, 2025 to July 10, 2025, enables faster iteration and scaling across product management, infrastructure, and quality assurance teams. We are actively expanding AI-assisted tooling across additional functions to further enhance speed, efficiency, and innovation in our product development. For example, we are leveraging proprietary AI to accumulate and refine product development data over time, enabling further differentiation in tooling optimization and code quality.

Our ability to maintain high availability, transaction security, and rapid iteration cycles—while managing cost and complexity—differentiates us from many legacy financial institutions and fintech peers. This technical foundation is a key enabler of our business strategy and a core driver of our long-term competitive advantage.

***Effective Security and Fraud Prevention***

We have established a reputation for cybersecurity and fraud prevention, supported by a layered defense architecture, proprietary risk controls, and continuous investment in system integrity. Our platform is designed to meet the highest standards of security while maintaining the seamless user experience expected in modern digital finance. In addition to detecting transaction-level fraud, our system incorporates advanced anti-money laundering protocols and behavioral risk modeling to prevent misuse by bad actors, including impersonation and unauthorized use. As digital transactions scale in volume and value, our ability to offer a secure and trusted environment remains a core differentiator.

Our fraud incidence rates are consistently well below industry averages. In 2024, the fraud incidence rate for transactions on the PayPay app was just 0.0015%, and for PayPay Card, only 0.014%. By contrast, the fraud incidence rate across 40 Japanese credit card companies stood at 0.047% in 2024, more than three times higher than that of PayPay Card, and over 30 times higher than PayPay's fraud incidence rate. Fraud loss amounts show a similarly favorable profile. In 2024, total fraud loss on the PayPay app was ¥0.17 billion for PayPay and ¥0.85 billion for PayPay Card, as compared to the average of ¥1.4 billion in losses for 40 credit card companies in Japan in the same year. As illustrated by the diagram below, our fraud losses have remained broadly stable over the past several years, in contrast to the rising fraud loss amounts reported for the overall market.

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**Fraud Incident Rate Far Below the Credit Card Industry Average**![LOGO](g941409g00s40.jpg)

1. The amount considered as fraudulent usage within PayPay App GMV, encompassing both PayPay Balance and PayPay
Credit.

2. The amount considered as fraudulent usage within PayPay Card GMV, which is the combined total of PayPay Card
and PayPay Credit.

3. Cited from the Japan Credit Association's "Status of Credit Card Fraud Damage" (published
March 2025). This figure represents the total amount of credit card fraud damages divided by the total credit extended by 40 domestic credit companies.

This is achieved through a sophisticated risk management system. Our system employs intricate algorithms that analyze a wide array of data, including user behavior, device characteristics, transaction details, merchant information, and location data. Our proprietary technology enables dynamic detection and prevention of suspicious activities at scale, while our security team continuously evolves our defenses to stay ahead of emerging threats. We believe our exceptional fraud prevention performance enhances both user and merchant trust, further reinforcing engagement and retention across our ecosystem.

***Strategic Advantage From Being Part of the SoftBank Group Companies' Ecosystem***

At PayPay, one of our key management policies is centered on openness and universality. Unlike certain competitors, we do not aim to confine our users and merchants within a closed ecosystem. While upholding this commitment to openness, as a core member of the SoftBank Group companies, we actively work towards mutual benefit by integrating with one of Japan's most extensive and synergistic ecosystems. We achieve this by providing payment features to services offered by our group companies. We are closely aligned with key services offered by SoftBank Group companies, including LINE, Japan's most widely used messaging and social media, which had approximately 100 million monthly active users as of December 31, 2025<sup>17</sup>; Yahoo! JAPAN, the country's leading digital media and e-commerce platform, which had approximately 54 million monthly login user IDs as of March 31, 2025; and SoftBank Corp., Japan's third-largest mobile telecommunications provider, which had approximately 32 million smartphone subscribers as of December 31, 2025. Together, these assets allow us to embed PayPay's services natively into users' daily digital touchpoints. For example, SoftBank Corp. offers PayPay Points as a reward to drive new user acquisition and retention. Through its "PayToku" pricing program, SoftBank awards additional points for PayPay usage, effectively lowering the user's mobile bill. Yahoo! JAPAN promotes the use of PayPay Points through targeted campaigns and incentives. LINE, meanwhile, enables seamless P2P money transfers within its app using PayPay.

Our position within the SoftBank Group companies' ecosystem gives us privileged access to infrastructure, data, user traffic, and capital—offering strategic advantages in scale, brand trust, and distribution

<sup>17</sup> LINE MAU is calculated based on the number of accounts, which does not equal the number of unique users.

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that few standalone fintech companies can replicate. For example, our strategy to expand data-driven lending benefits from user insights gained through the rich touchpoints of SoftBank Group companies. We have also been able to integrate services across the ecosystem, for example, by integrating P2P payments into the LINE app. This ecosystem synergy has been instrumental to our growth and will remain an important factor of our continued leadership in Japan's digital finance sector.

**Group Synergy for Profound User Engagement**![LOGO](g941409g01b01.jpg)

1. As of December 31, 2025. Quoted from LINE Corporation's "FY2025Q3 Financial and Operational Data
Sheets."

2. As of March 31, 2025. The number of unique user IDs logged into "Yahoo! JAPAN" monthly, based on
internal data.

3. As of December 31, 2025. Quoted from SoftBank Corp.'s "FY2025 Q3 Financial Results
Briefing—Data Sheet."

**Our Growth Strategies** 

***Drive User Growth and Engagement through Targeted, Phase-Aligned Marketing***

We intend to further expand our registered and active user base by leveraging our strong market presence and executing targeted marketing strategies tailored to each phase of our business evolution. Since our inception, we have adopted a disciplined, KPI-driven approach to marketing—aligning campaign design with business objectives and product maturity—to accelerate user acquisition, deepen engagement, and promote product adoption across our platform.

In the early phase of our growth, as a late entrant to the code-based payment market, we launched large-scale marketing campaigns to rapidly build a foundational user base and establish PayPay as a top-of-mind brand for mobile payments in Japan. Our most notable initiative was the widely publicized "10 Billion Yen Giveaway" campaign, featuring a famous Japanese comedian, which was conducted in two phases. The first phase, which launched in December 2018, offered users a 20% rebate in PayPay Bonus (currently PayPay Points) on eligible purchases (up to ¥50,000 per month), along with a lottery component in which one in every 40 transactions received a full rebate (capped at ¥100,000 per transaction). Within just 10 days, total rebates reached ¥10 billion and the campaign successfully attracted new PayPay registered users, reaching approximately 4 million at the end of 2018. During this time, we also enabled the iconic "PayPay" sound to play from the app when users completed a payment. The second phase, which launched in February 2019, offered a maximum 20% rebate or a 100% PayPay Bonus (currently PayPay Points) reward via lottery, further accelerating adoption of our app. These bold acquisition initiatives—unprecedented in scale—played a pivotal role in jumpstarting our platform, which experienced rapid user onboarding and became a leader in Japan's emerging digital payments sector. By the end of March 2019, PayPay's registered user base had reached approximately 6 million users.

We have consistently reinforced user engagement through large-scale promotional events, including the "Super PayPay Festival," which we typically conduct three times per year. Each iteration of this campaign is tailored to reflect changes in our product portfolio and user behavior. For example, in October 2020, we ran a

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campaign in which users received a 10% PayPay Bonus (currently PayPay Points) for eligible purchases at designated merchants. These initiatives not only drove increases in registered users, MTUs and total payment volume—key metrics for establishing market leadership—but were also highly capital-efficient, with a majority of point-based marketing costs funded by external sources such as merchants, central government, municipalities, and strategic partners in the year ended March 31, 2025. In particular, we have leveraged funding provided by municipal governments under national initiatives aimed at revitalizing local economies and promoting the adoption of cashless payments. In Tokyo and other regions, our platform has been selected as the code-based payment partner of choice, allowing us to benefit from related transaction fee revenues. Our platform is also used for processing payments on regional tax gift vouchers (known as "*furusato nozei*"), which further supports marketing effectiveness and diversifies our monetization channels.

We began providing code-based credit payment functionality, PayPay Credit, in February 2022. Embedding credit functionality within the PayPay ecosystem enabled us to increase transaction value and expand monetization. Marketing initiatives in this phase included the launch of a seasonal promotional PayPay Point rate for PayPay Credit payments in February 2022, as part of the Super PayPay Festival campaign, aimed at driving user migration to higher-ticket credit transactions. Our regular reward program, PayPay STEP (as described in more detail below in this section), became applicable to PayPay Credit transactions starting in January 2023. Our key performance indicators during this phase included PayPay Credit GMV and overall credit card GMV, which have grown meaningfully as a result of this integrated product and marketing strategy. Since 2024, as we transition toward becoming a comprehensive digital finance platform, our marketing efforts have further evolved to support new financial services. Notably, we launched targeted campaigns designed to promote adoption of PayPay Bank and PayPay Securities services ahead of their group integration in April 2025. We introduced our eKYC user acquisition campaign to facilitate seamless onboarding for regulated services through our eKYC. This initiative simplified account opening and offered incentives to verified users, supporting cross-sell into financial products. To deepen engagement with PayPay Bank deposit users, we started the "Dollar & Yen 2% Deposit" program in December 2024, offering competitive yields to drive account opening and deposit balance growth. In March 2025, we launched a follow-on campaign, "Step-Up Yen Deposit," a tiered interest structure aimed at encouraging progressively higher balances. These campaigns were subsequently unified under the umbrella name "Deposit Revolution," supporting broader adoption of our banking offerings. See "—Sales and Marketing" and "—Loyalty Points" for other initiatives and campaigns.

***Expand Monetization through Cross-Selling of Payment and Financial Services***

With a base of approximately 72 million registered users as of December 31, 2025, we have established a dominant position in mobile payments, securing one of the largest sets of user touchpoints in Japan's digital ecosystem. Our code-based payment service originally grew through high-frequency, small-ticket transactions, generating robust user engagement and paving the way for deeper monetization. As our GMV has continued to expand, we have also introduced larger-ticket payment features such as a physical PayPay card with revolving payment features, as well as value added services such as merchant marketing tools—further deepening user engagement and increasing transaction volume.

Building on this strong foundation, we have expanded into regulated financial services following the acquisition of banking and securities licenses. We offer users a full suite of financial services, including deposit, lending, and investment services. We aim to significantly expand our offerings by leveraging our large payment user base, proprietary technology, and seamless app integration to drive user acquisition and engagement across payment, banking and securities. Further, we may receive additional retail finance licenses to further enhance this growth trajectory.

Our app-based integration strategy is already yielding results. The adoption of eKYC by PayPay Bank Corporation and PayPay Securities Corporation has created a seamless user experience, allowing users to open accounts in just two steps for banking, compared to seven steps through traditional channels. With 38.9 million

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users onboarded via our eKYC as of December 31, 2025, we are uniquely positioned to offer a frictionless entry point into the regulated financial services. This seamless flow from payments to financial services is a unique advantage to us, since no other provider offers comparable simplicity or scale.

The next phase of our strategy is to deepen monetization by leveraging our ecosystem to unlock cross-sell opportunities between payments and financial services. Users who adopt both services exhibit higher average payment volume per user and stronger long-term engagement. We believe the more products our users adopt, the more GMV we generate. For the year ended March 31, 2025, the average Monthly GMV per PayPay App MTU was ¥35,600. Average Monthly GMV per user was higher with each additional product adopted by our users. Users who just used the PayPay payments service had an average Monthly GMV of ¥23,400, users who used both PayPay and PayPay Card had an average Monthly GMV of ¥66,900, users who also used PayPay Bank services had an average Monthly GMV of ¥83,100, while users who used all three of those and PayPay Securities services had an average Monthly GMV of ¥136,000. This synergy creates a powerful feedback loop: active payment users form a natural base for financial product adoption, while financial services users tend to transact more payment volume. Our loyal users who also adopt financial services tend to be more engaged and may exhibit higher transaction values. These dynamics allow us to increase revenue per user and drive lifetime value across our platform.

In recent years, we have achieved significant enhancement in monetization, reflecting both increased user activity and higher monetization per user. Notably, this growth was driven by both payment-related revenues, such as increased GMV, higher usage of revolving credit and value-added merchant services, and by financial services revenues, including interest income from loans and fee income from securities brokerage services.

Looking ahead, we see continued upside in both payments upsell—through growing transaction frequency, increased use of credit products, and broader adoption of coupons and merchant tools—and financial services cross-selling, including deposit and loan expansion, investment scaling, and new product launches. As our digital finance platform matures, we believe our ability to drive revenue through deeper engagement across our payments and financial services businesses will be a key driver of long-term growth.

***Drive Continued Revenue Growth Through Deeper Payment Engagement***

We aim to further expand our GMV by deepening user engagement across our integrated code-based and credit card payment services, while continuing to grow both our user base and merchant network. Our payment business remains the core engine of our growth, and we believe it has significant potential for long-term GMV expansion.

In the year ended March 31, 2025, Payment Segment GMV reached ¥15.39 trillion, representing year-over-year growth of 23%, and sustaining a multi-year trend of 20%+ annual growth. While we have achieved widespread adoption—reaching approximately 72 million registered users as of December 31, 2025 and approximately 40 million MTUs in December 2025—there remains a substantial opportunity to increase both the number of active users and their transaction volume. For example, monthly average transactions per active transacting user (Monthly Transactions per User) has nearly tripled, rising from 7.1 times in the three-month period ended June 30, 2019 to 21.5 times in the three-month period ended December 31, 2025, monthly transaction size per active transacting user (Monthly GMV per User) has increased from approximately ¥10,320 to approximately ¥42,363 over the same period, demonstrating strong and rising user engagement.

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**Users—Highly Scaled User Base, but Significant Growth Upside Remains**![LOGO](g941409g53k53.jpg)

1. The number of PayPay registered users, excluding frozen, suspended, cancelled, or deleted accounts. As of the
end of December 2025.

2. The number of unique users who launched the PayPay app at least once during the month. As of the end of
December 2025.

3. The number of unique users who completed at least one payment transaction using the PayPay App during the
month. This includes 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-based payment. It
excludes P2P money transfers and cancelled transactions. This metric represents the performance for the last month of the quarter. As of the end of December 2025.

4. The number of unique users who completed at least one payment transaction using the PayPay App within a
single day. This includes 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-based
payment. It excludes P2P money transfers and cancelled transactions. This metric represents the daily average performance for the last month of the quarter. As of the end of December 2025.

5. This includes members of PayPay Card and PayPay Credit. It excludes members whose accounts have been
suspended or who have withdrawn. Note that from August 2024, if a single member issues multiple PayPay Cards, each card will be counted separately (i.e., duplicate counting will occur). As of the end of December 2025.

6. The number of unique users who completed at least one payment transaction using either PayPay Card or PayPay
Credit during the month. This excludes cancelled transactions. As of the end of December 2025.

Revenue growth for our payment business is driven by GMV growth, increases in transaction fees and increases in interest income. To support further GMV growth, we are executing targeted initiatives across several fronts. These include expanding code-based payment adoption through offline and online campaigns, with a focus on increasing active transacting users (Monthly Transacting Users) and monthly transaction size per active transacting user (Monthly GMV per User), which are the two essential contributors to GMV growth. We are also deepening the integration of PayPay Card Corporation with code-based payments to promote larger-ticket and credit-based transactions and driving monetization through increased adoption of credit features such as revolving payments, cash advances (short-term borrowing available via PayPay Card) and installment plans (fixed-amount monthly payments for eligible purchases). On the other hand, the path to long-term profitability for the payment business is also underpinned by Take Rate expansion and Cost Rate control. In the year ended March 31, 2025, we recorded a Take Rate of 1.61% (calculated as Payment segment revenue divided by Payment Segment GMV) and a Cost Rate of 1.42% (calculated as total operating cost attributable to the Payment segment divided by GMV for the Payment segment). We intend to drive Take Rate expansion by product mix enrichment, such as increasing the share of online payments, which carried a Take Rate of approximately 0.54% higher than the Take Rate of offline payments in the nine-month period ended December 31, 2025, and expanding interest income from revolving balances and cash advances. This strategy has already begun to bear fruit, as our ratio of Online GMV (excluding GMV from transactions made within e-commerce services operated by LY Corporation), which has a higher Take Rate, to total GMV doubled from 7% in the year ended March 31, 2023 to 14% in the year ended March 31, 2025 and further increased to 16% in the nine-month period ended December 31, 2025. At the same time, Cost Rate control is supported by operational efficiencies and economies of scale, as well as ongoing reductions in fund sourcing costs through direct bank integration and improved deposit structures. Furthermore, we are increasing our merchant base by offering value-added services that

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improve merchant sales, user retention and operation funding. We believe these efforts will continue to strengthen the utility of our ecosystem for both sides of the platform.

We also observe encouraging structural indicators of growth in GMV per User. Across all periods, registered user cohorts from the three months ended December 31, 2018 through the three months ended December 31, 2025, we have seen that the longer a user remains on the platform, the higher their active rate and Monthly GMV per User—evidence of sustained engagement and lifetime value. In particular, users who adopt both code-based and credit-based payments show significantly higher spend per month, and greater adoption of additional services over time.

As we scale, our strategy is to drive payment volume growth not only through user acquisition, but increasingly through higher transaction frequency, greater share of users' total spend, and broader credit utilization. With a proven track record of business execution and a loyal, expanding user base, we believe our payment business will continue to serve as a foundation for sustainable GMV and revenue growth.

**Structural Factors Have Supported GMV growth \| High user engagement**![LOGO](g941409g46t86.jpg)

1. This metric establishes user cohorts based on the month of their PayPay account registration. The Active Rate
is calculated by dividing the number of users within each cohort who completed at least one transaction using the PayPay app during the month by the total number of registered users in that specific cohort. Data is from October 2018 to December
2025. 2. This metric sets user cohorts based on the month of their PayPay account registration. The Monthly GMV Per
Users (for these cohorts) is the average GMV (Gross Merchandise Volume) calculated by dividing the total payment GMV from PayPay app transactions within each cohort since registration by the total number of users in that respective cohort. Data is
from October 2018 to December 2025.

***Accelerate Growth in Financial Services Through Platform Integration***

Our financial services model is underpinned by two key drivers: deposit volume and NIM. In the year ended March 31, 2025, our banking business achieved a NIM of 0.88%, with interest income to average total interest-earning assets at 0.99% and interest expenses to average total interest-earning assets at just 0.11%, demonstrating strong fundamentals. Following the acquisition of PayPay Bank Corporation, we expect to further expand NIM through reducing the guaranteed secured portion and improved loan-to-deposit ratio and efficient capital allocation. On the deposit side, we see substantial room for growth in both the number of bank accounts and average deposit balance per user, supported by initiatives such as our "Deposit Revolution" campaign launched in December 2024, which offers market-leading yields of 2.0% annual interest on both Yen and U.S. Dollar savings accounts to individual users. For merchants, we are driving adoption through features such as payouts as early as the next day, which serve as a gateway to broader banking use cases including salary disbursement.

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Our next frontier is the scaling of credit and lending services. We have developed a proprietary data-driven credit model, built on our extensive transaction and behavioral data from approximately 72 million users as of December 31, 2025 and 7.8 billion transactions via the PayPay app in the year ended March 31, 2025. This rich data set underpins our risk evaluation for revolving credit, cash advances, and merchant financing, all of which are already showing traction. Due to this data-rich model, PayPay Card Corporation's approval rate has improved, which has led to a steady increase in the number of active cards issued by PayPay Card Corporation, contributing to consolidated GMV growth. After fully acquiring PayPay Card Corporation in October 2022, we increased the number of active cards issued by 1.8 times from 9.1 million as of September 30, 2022 to 16.0 million as of December 31, 2025. Alongside our efforts to actively manage credit cost, we have also increased PayPay Card Corporation's total revolving and cash advance balance by 2.2 times from ¥214.5 billion to ¥475.1 billion over the same period. Going forward, we intend to horizontally expand this lending framework into new areas. Our PayPay Card business is continuing to grow quickly. By promoting the combined use of our integrated code-based credit payment solution "PayPay Credit" together with physical credit card payments, we were the single fastest growing card issuer in Japan for the six-month period ended September 30, 2025<sup>18</sup>. From its genesis as Yahoo! JAPAN Card in fiscal year 2015, supported by the rapid adoption of PayPay Credit, PayPay Card has delivered significant revenue growth over the years. Post-consolidation, such revenue growth has continued and operating profit has also improved, translating into improved profitability driven by operating leverage achieved through promotion standardization and cost management. Through the know-how we have accumulated from PayPay Credit and PayPay Card, particularly from revolving payments, we plan to expand our offerings in the consumer loan market. We are able to utilize this data, together with our credit models that are refined on a daily basis, to extend credit to customers with no prior credit history. Likewise, the data and insights we have gained regarding merchants' creditworthiness through our merchant financing business position us to expand into the large commercial lending and business loan market (for more information on PayPay Funding, our merchant financing offering, see "—Our Products and Services—Other Value-Added Services—To Merchants"). For instance, because approximately 75% of merchants who receive funds through PayPay Funding become repeat users, we expect to expand this offering beyond the currently limited merchant base. Our data on merchants positions us uniquely to understand their funding needs and enables us to pre-screen merchants, allowing them to obtain funds immediately when they need them. In the future, we are considering broadening this data-driven financing model into additional merchant loan products and, subject to regulatory requirements, consider pathways for PayPay Bank Corporation to deliver similar online financing offerings. We believe these initiatives will enable us to further monetize our data advantage, while maintaining appropriate risk discipline. Since we acquired a majority stake in PayPay Bank Corporation in April 2025, we have offered additional products, including debit QR code payment, business loans guaranteed by a credit guarantee association as well as digitalized and data-driven personal loans. We are currently in the process of fully integrating and leveraging PayPay Bank products and services with our payment system and plan to focus our immediate efforts on transitioning to an in-house cloud-native next-generation system, and increasing loan products utilizing our proprietary data-driven credit model. As these initiatives have begun to bear fruit, our deposit balance grew 19% year-over-year as of December 31, 2025, and our loan balance increased 28% over the same period, driving a substantial increase in revenue. From its genesis as Japan Net Bank in the fiscal year 2000, revenue has steadily improved with significant increases in the fiscal years following its renaming as PayPay Bank, while profitability generally remained steady. Post-consolidation, revenue has continued to climb and profitability has materially improved, driven by operating leverage and cost-efficiency measures, including reductions in temporary personnel, outsourced operations, and advertising and promotional expenses, which contributed to a significantly lower overhead ratio. Our longer term goal is to switch to a fully in-house next-generation core banking system in

<sup>18</sup> The net increase during the relevant period was calculated by PayPay Corporation based on the number of credit cards issued as of March 31, 2025 and September 30, 2025 as disclosed by PayPay Card, Sumitomo Mitsui Card, Rakuten Card, AEON Card, d CARD, au PAY Card, EPOS Card, and Credit Saison. With respect to AEON Card, as its parent company, AEON Financial Service Co., Ltd., has a fiscal year ending in February, and the net increase was calculated based on the number of credit cards issued as of February 28, 2025 and August 31, 2025. Credit cards affiliated with Mitsubishi UFJ Financial Group, Inc. and Mizuho Financial Group, Inc. were excluded from the aggregation due to the unavailability of disclosed data on the number of credit cards issued. 

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addition to expanding our lending business, which currently consists primarily of mortgages, by increasing our market share of SME loans, through fully effectuating our data-rich model.

Furthermore, in the two years since PayPay Corporation became the largest shareholder of PayPay Securities Corporation with a 35% shareholding and became our equity-method affiliate, the number of brokerage accounts has grown from 0.5 million to 1.54 million. From its genesis as One Tap BUY in the fiscal year 2016, revenue has also grown substantially, particularly following the renaming to PayPay Securities in 2021, supported by increased utilization of the PayPay user base through initiatives such as the PayPay point investment program and the rising number of NISA accounts. Operating losses, which remained relatively large for many years, have steadily declined over the past several years as a result of disciplined cost reduction and business portfolio optimization. Most recently, after we acquired a majority ownership position in April 2025, PayPay Securities Corporation also recorded operating profit for the first time on a non-consolidated basis for the three-month period ended September 30, 2025. Going forward, we aim to increase our PayPay Securities offerings, refine our UI/UX and further develop and integrate PayPay Securities products and offerings with our payment system.

By integrating internet banking and securities directly into our ecosystem and leveraging proprietary data for our credit model, we are building a digital finance platform with diversified revenue streams and attractive cost structure. As our financial services scale, we expect it to be a key contributor to both revenue growth and margin expansion over the medium-to-long term. We are also seeking opportunities for streamlining operations through tighter control of promotion and acquisition costs, bringing key system functions in-house, and improving workforce efficiency, all of which support improved unit economics and long-term scalability.

**Operating Data** 

The following tables present certain operating data for the periods indicated:

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| | | | |
|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** |
|  | **2023** | **2024** | **2025** |
|  | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** |
|  Total GMV<sup>(1)</sup> | ¥10.47 | ¥12.73 | ¥15.68 |
|  ***Payment segment*** |  |  |  |
|  Payment Segment GMV<sup>(2)</sup> | ¥10.20 | ¥12.46 | ¥15.39 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Balance GMV<sup>(3)</sup> | ¥6.57 | ¥7.74 | ¥9.07 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Credit GMV<sup>(4)</sup> | ¥1.36 | ¥2.33 | ¥3.48 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Card GMV<sup>(5)</sup> | ¥2.28 | ¥2.39 | ¥2.84 |
|  PayPay registered users (millions of users)<sup>(6)</sup> | 56.6 | 63.0 | 68.4 |
|  PayPay MTU (millions of users)<sup>(7)</sup> | 30.3 | 33.2 | 37.2 |
|  Monthly Transactions per PayPay User<sup>(8)</sup> | 18.0 | 18.2 | 19.9 |
|  Number of Active PayPay Card Issued (millions of cards)<sup>(9)</sup> | 10.0 | 11.6 | 13.8 |
|  Balance of revolving payment (billions of yen)<sup>(10)</sup> | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;259.9 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;345.9 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;403.2 |
|  Balance of cash advances (billions of yen)<sup>(11)</sup> | ¥12.9 | ¥13.8 | ¥18.2 |
|  ***Financial service segment*** |  |  |  |
|  PayPay Bank Visa Debit Card GMV<sup>(12)</sup> | ¥0.27 | ¥0.27 | ¥0.29 |
|  Number of PayPay Bank deposit accounts (millions of accounts)<sup>(13)</sup> | 7.0 | 7.9 | 8.9 |
|  Number of PayPay Securities accounts (millions of accounts)<sup>(14)</sup> | 0.5 | 1.1 | 1.4 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** |
|  | **June 30,<br>2022** | **September 30,<br>2022** | **December 31,<br>2022** | **March 31,<br>2023** | **June 30,<br>2023** | **September 30,<br>2023** |
|  | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | |
|  Total GMV<sup>(1)</sup> | ¥2.31 | ¥2.45 | ¥2.89 | ¥2.82 | ¥3.02 | ¥3.05 |
|  ***Payment segment*** |  |  |  |  |  |  |
|  Payment Segment GMV<sup>(2)</sup> | ¥2.25 | ¥2.38 | ¥2.81 | ¥2.75 | ¥2.95 | ¥2.98 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Balance GMV<sup>(3)</sup> | ¥1.41 | ¥1.54 | ¥1.84 | ¥1.78 | ¥1.87 | ¥1.87 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Credit GMV<sup>(4)</sup> | ¥0.27 | ¥0.29 | ¥0.39 | ¥0.41 | ¥0.51 | ¥0.54 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Card GMV<sup>(5)</sup> | ¥0.57 | ¥0.56 | ¥0.59 | ¥0.56 | ¥0.57 | ¥0.58 |
|  PayPay registered users (millions of users)<sup>(6)</sup> | 48.7 | 51.2 | 54.0 | 56.6 | 58.4 | 60.0 |
|  PayPay MTU (millions of users)<sup>(7)</sup> | 22.5 | 25.2 | 28.2 | 30.3 | 30.2 | 30.8 |
|  Monthly Transactions per PayPay User<sup>(8)</sup> | 18.2 | 18.7 | 18.1 | 17.1 | 17.8 | 18.6 |
|  Number of Active PayPay Card Issued (millions of cards)<sup>(9)</sup> | 8.7 | 9.1 | 9.6 | 10.0 | 10.4 | 10.7 |
|  Balance of revolving payment (billions of yen)<sup>(10)</sup> | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;192.9 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;202.9 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;230.1 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;259.9 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;294.3 | ¥&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;317.4 |
|  Balance of cash advances (billions of yen)<sup>(11)</sup> | ¥11.6 | ¥11.6 | ¥12.0 | ¥12.9 | ¥13.4 | ¥13.6 |
|  ***Financial service segment*** |  |  |  |  |  |  |
|  PayPay Bank Visa Debit Card GMV<sup>(12)</sup> | ¥0.07 | ¥0.07 | ¥0.07 | ¥0.07 | ¥0.07 | ¥0.07 |
|  Number of PayPay Bank deposit accounts (millions of accounts)<sup>(13)</sup> | 6.2 | 6.4 | 6.7 | 7.0 | 7.2 | 7.4 |
|  Number of PayPay Securities accounts (millions of accounts)<sup>(14)</sup> | 0.35 | 0.41 | 0.47 | 0.52 | 0.58 | 0.71 |

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** |
|  | **December 31,<br>2023** | **March 31,<br>2024** | **June 30,<br>2024** | **September 30,<br>2024** | **December 31,<br>2024** | **March 31,<br>2025** | **June 30,<br>2025** | **September 30,<br>2025** | **December 31,<br>2025** |
|  | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** |
|  Total GMV<sup>(1)</sup> | ¥3.32 | ¥3.35 | ¥3.60 | ¥3.78 | ¥4.19 | ¥4.12 | ¥4.46 | ¥4.73 | ¥5.10 |
|  ***Payment segment*** |  |  |  |  |  |  |  |  |  |
|  Payment Segment GMV<sup>(2)</sup> | ¥3.24 | ¥3.28 | ¥3.53 | ¥3.70 | ¥4.11 | ¥4.05 | ¥4.39 | ¥4.65 | ¥5.02 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Balance GMV<sup>(3)</sup> | ¥1.99 | ¥2.00 | ¥2.12 | ¥2.19 | ¥2.42 | ¥2.34 | ¥2.52 | ¥2.68 | ¥2.85 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Credit GMV<sup>(4)</sup> | ¥0.63 | ¥0.66 | ¥0.77 | ¥0.84 | ¥0.93 | ¥0.94 | ¥1.08 | ¥1.12 | ¥1.22 |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Card GMV<sup>(5)</sup> | ¥0.63 | ¥0.62 | ¥0.64 | ¥0.68 | ¥0.76 | ¥0.76 | ¥0.79 | ¥0.84 | ¥0.94 |
|  PayPay registered users (millions of users)<sup>(6)</sup> | 61.5 | 63.0 | 64.5 | 65.7 | 67.0 | 68.4 | 69.8 | 71.1 | 72.2 |
|  PayPay MTU (millions of users)<sup>(7)</sup> | 31.8 | 33.2 | 33.7 | 34.5 | 36.2 | 37.2 | 37.8 | 38.9 | 40.0 |
|  Monthly Transactions per PayPay User<sup>(8)</sup> | 18.4 | 18.2 | 19.3 | 20.4 | 20.3 | 19.6 | 20.5 | 21.6 | 21.5 |
|  Number of Active PayPay Card Issued (millions of cards)<sup>(9)</sup> | 11.2 | 11.6 | 12.0 | 12.5 | 13.1 | 13.8 | 14.5 | 15.2 | 16.0 |
|  Balance of revolving payment (billions of yen)<sup>(10)</sup> | ¥334.7 | ¥345.9 | ¥357.5 | ¥367.7 | ¥383.0 | ¥403.2 | ¥420.8 | ¥439.8 | ¥451.7 |
|  Balance of cash advances (billions of yen)<sup>(11)</sup> | ¥13.3 | ¥13.8 | ¥14.5 | ¥15.0 | ¥15.8 | ¥18.2 | ¥19.9 | ¥21.6 | ¥23.4 |

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** | **As of or for the three-month period ended** |
|  | **December 31,<br>2023** | **March 31,<br>2024** | **June 30,<br>2024** | **September 30,<br>2024** | **December 31,<br>2024** | **March 31,<br>2025** | **June 30,<br>2025** | **September 30,<br>2025** | **December 31,<br>2025** |
|  | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** | **(in trillions of yen unless otherwise indicated)** |
|  ***Financial service segment*** |  |  |  |  |  |  |  |  |  |
|  PayPay Bank Visa Debit Card GMV<sup>(12)</sup> | ¥0.07 | ¥0.07 | ¥0.07 | ¥0.07 | ¥0.08 | ¥0.07 | ¥0.07 | ¥0.08 | ¥0.08 |
|  Number of PayPay Bank deposit accounts<br>(millions of accounts)<sup>(13)</sup> | 7.6 | 7.9 | 8.2 | 8.4 | 8.6 | 8.9 | 9.2 | 9.5 | 9.7 |
|  Number of PayPay Securities accounts (millions of accounts)<sup>(14)</sup> | 0.85 | 1.08 | 1.18 | 1.24 | 1.30 | 1.37 | 1.42 | 1.47 | 1.54 |

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Notes:

(1) 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. See "—Our Financial Performance, Key Metrics and Financial Highlights" for the definition of each GMV. The same applies hereafter.

(2) 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.

(3) 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<sup>®</sup> via PayPay code payment, excluding top-ups to PayPay Balance with PayPay Card and excluding the GMV of cancelled transactions.

(4) 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.

(5) 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.

(6) PayPay registered users is defined as the number of registered users for PayPay, which is the number of
active users excluding those whose accounts have been frozen, suspended, cancelled or deleted as of the end of the last month of the quarter.

(7) 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.

(8) Monthly Transactions per PayPay User is defined as the number of transactions made using PayPay Balance,
PayPay Credit and PayPay Card divided by PayPay MTU. The number of transactions made using PayPay Balance and PayPay Credit divided by PayPay MTU are as follows: 16.6, 17.2, 16.8, 15.9, 16.7, 17.4, 17.2, 17.1, 18.1, 19.2, 19.0, 18.3, 19.2, 20.2 and
20.0 for the three-month periods ended June 30, 2022, September 30, 2022, December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023, December 31, 2023,
March 31, 2024, June 30, 2024, September 30, 2024, December 31, 2024, March 31, 2025, June 30, 2025, September 30, 2025 and December 31, 2025, respectively.

(9) Number of Active PayPay Card Issued is defined as members of PayPay Card, PayPay Credit, and Yahoo! JAPAN
Card, excluding members whose accounts have been suspended or who have withdrawn from the service. A single member that is issued multiple PayPay Cards since August 2024 is counted multiple times.

(10) Balance of revolving payment is defined as the total outstanding revolving payment balance of PayPay Card at
the end of the month of the applicable period.

(11) Balance of cash advances is defined as the total outstanding cash advance balance of PayPay Card at the end
of the month in the applicable period.

(12) 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

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PayPay Debit and ATM withdrawal amounts when using the cash card function, excluding the GMV of any cancelled transactions. <br>

(13) Number of PayPay Bank deposit accounts is defined as the total number of PayPay Bank regular savings accounts
as of the end of the month, for both individual and corporate accounts, excluding closed accounts and fixed deposit accounts.

(14) Number of PayPay Securities accounts is defined as the cumulative total number of PayPay Securities
comprehensive securities accounts as of the end of the quarter, excluding the number of closed or frozen securities accounts.

**Our Products and Services** 

We have created an ecosystem of payments and financial services, serving users' varying financial needs on an everyday basis. As we have rapidly grown the scale of our platform, we believe it offers compelling value for both our registered users and participating merchants.

Our comprehensive suite of products and services supports users' everyday financial needs, making the PayPay app an easily accessible hub for all things finance. Specifically, our offerings span code, credit and debit payments, services such as revolving credit, installment payment options and cash advances, internet banking, security brokerage, PayPay Point investment-related services and loan management services. In addition, we offer other value-added services for users and enterprises such as insurance services and marketing services that merchants have the option to subscribe to.

***Payment Business***

*PayPay Settlement Services* 

Our payment settlement service offered through our PayPay code-based payment app is core to our financial platform, allowing users to make and merchants to receive cashless payments quickly and conveniently. The app is free to download, and users can access our code-based payment feature with a simple registration process, only requiring their phone number, password, and SMS verification. Users can make payments at participating merchant stores by launching the PayPay app, showing their app-generated code and having the merchant scan it or by scanning the merchant's PayPay code.

The sign-up process for merchants to introduce our payment settlement services is a fast and simple process, with a thorough screening process to ensure compliance with regulatory standards and alignment with our service criteria. After completing an initial application, merchants proceed through a screening process and receive a welcome package tailored to their use-cases after approval. We offer customer service support for our merchants 24 hours a day and 365 days a year. Merchants can adopt PayPay's payment settlement service without incurring any upfront hardware costs by presenting the Merchant-Presented Mode, a payment format where a user uses their smartphone to read a QR-code presented by the merchant. We offer full support in this manner, to ensure a seamless integration of PayPay as a payment option, while maintaining a secure and reliable payment ecosystem for both merchants and users.

*Payments Using PayPay Balance and PayPay Credit* 

Our PayPay app presents users with the optionality of two major payment options—PayPay Balance and PayPay Credit. Our payment options are not limited to in-store payments, as users can use either of the two options with any of our participating e-commerce merchants as an online payment method.

*PayPay Balance* 

Users are able to easily load their balance of funds on the app via several methods and make payments from that pre-loaded balance. Users can fund their account from their smartphone, wherever they are, by linking

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their bank account to transfer funds directly to their PayPay Balance. Given the widespread accessibility of convenience stores in Japan, we also support cash deposits at Seven Bank or Lawson Bank ATMs, allowing for easy top-ups when on the go. Users also have the option to link their PayPay Card account to transfer funds advanced by PayPay. In addition, users that have cellphone service contracts with SoftBank Corp. can charge funds, which can be allocated to their monthly cellphone bill.

Users have a variety of potential sources of funds via services and platforms offered through SoftBank Group companies, which we enable with our close-knit partnerships across group companies. Users can charge their PayPay balance with sales proceeds received through Yahoo! JAPAN Auction and Yahoo! JAPAN Flea Market to their PayPay Balance, offering a seamless handover of funds across platforms. ****Furthermore, users of PayPay Invest, a mini-app within our PayPay app and LINE BITMAX, a cryptocurrency asset trading service operated by LINE Xenesis Corporation, can transfer withdrawals from their investment accounts to their PayPay Balance. In November 2025, we introduced a feature that allows users to transfer Japanese-yen balances between their PayPay Balance and accounts they hold with Binance Japan. This functionality enables deposits to, and withdrawals from, Binance Japan using PayPay Balance, thereby expanding our users' available funding and withdrawal options. We do not handle crypto assets or provide crypto-related services, and our role is limited solely to yen transfer connectivity.

In addition, with PayPay Balance, we offer P2P money transfers where users can transfer funds from their PayPay Balance to others with just their PayPay ID, phone number, personal code or social media. Our P2P money transfer service offers users a convenient way to transfer funds to other PayPay users electronically 24 hours a day and 365 days a year with no transaction fees.

Furthermore, in August 2024, we launched PayPay Payroll, a service which allows employers to transfer an employee's salary directly to the employee's PayPay Balance through a digital wage payment. Wage payments of up to ¥200,000 can be stored in a user's PayPay Balance and any excess funds can be transferred to a bank account of the user's choosing. The wage payments added through PayPay Payroll can be transferred to a bank account of the user's choosing at any time, allowing for free conversion to cash to support our users' timely financial needs.

PayPay Balance is not only useful for commercial transactions, but recently has also been made useful for transactions involving non-profit organizations, such as the World Food Programme. Since August 2024, PayPay has been made available as a payment method for donations to and fundraising by non-profit organizations, and users who have completed eKYC have been able to use their PayPay Balance to make online donations to non-profit organizations. Furthermore, since March 2025, eKYC-verified users have been able to easily make donations, not only online, but also by scanning a printed PayPay code on a donation box and entering the amount they wish to donate.

In September 2025, we launched PayPay's Overseas Payment Mode, which enables our eKYC verified users to use the PayPay app overseas. The service was kicked off in South Korea from late September 2025, enabling PayPay users to pay at stores in South Korea affiliated with Alipay+ and ZeroPay (a payment service introduced by the Seoul Metropolitan Government) and to make P2P payments while in South Korea. We plan to expand our outbound partnership to more countries and regions going forward.

*PayPay Credit* 

PayPay Credit allows users of our PayPay app who have been approved for PayPay Card to make code-based payments on the app, leveraging credit extended by PayPay. All payments using PayPay Credit are accumulated each month, where users' bank accounts registered to their PayPay Card are debited in the following month as a lump sum if the user chooses to do so. Users also have the option to cover the prior month's payments made with revolving credit that we extend to the user.

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*Payments Using Linked Services* 

In addition to the two major payment options we offer—PayPay Balance and PayPay Credit—users can also utilize our PayPay code-based payments with participating merchants by linking their credit cards to the PayPay app. Users can create a credit card-linked payment option by adding credit cards issued by PayPay Card Corporation or other credit card companies to the PayPay app. We limit transactions using linked credit cards issued by other credit card companies to a maximum total of ¥20,000 in a single 24-hour period and ¥50,000 in a single 30-day period. Transactions using linked credit cards issued by other credit card companies do not accrue PayPay Points.

*Payments Using PayPay Bank App (PayPay Debit)* 

Our PayPay Bank accountholders are able to make payments with merchants that accept PayPay code-based payments directly from their PayPay Bank yen-denominated deposit accounts using an app operated by PayPay Bank Corporation.

*Utility Bill and Tax Payments* 

We have partnered with major Japanese public and private electricity, gas and water companies, as well as cellphone carriers and insurance companies, to further expand our reach of companies where users can use PayPay as a payment option. Users can pay for utilities by scanning the payment barcodes or QR codes on bills issued by utility companies we have partnered with and use their PayPay Balance or PayPay Credit to make payments. We have also introduced compatibility with online bills, where users can receive notifications that a bill is due and pay the bill entirely within the app. In addition, we have partnered with government agencies in various prefectures across Japan to enable users to make resident tax, property tax, automobile tax, or national insurance tax payments using PayPay in participating prefectures.

Furthermore, in connection with the tax donation program in Japan called *Furusato Nozei*, where taxpayers have the option to redirect a certain portion of their yearly residence tax to local municipalities and in turn receive rewards from donee municipalities, some municipalities issue rewards in the form of *PayPay Gift Vouchers* when donations are performed through our partner Satofull Co., Ltd., a wholly-owned subsidiary of SoftBank Corp. These vouchers can be used across a variety of local stores designated by the issuing municipalities. See "—Sales and Marketing."

*Payment Credit Services* 

We also issue credit cards as an alternative payment option. Our PayPay Cards blend security and convenience, as our cards are issued without cardholders' credit card numbers imprinted on the physical cards for added security and have contactless payment capabilities and an easy-to-access transaction history via our PayPay app. In addition, through the integration of our code-based payment settlement services and our credit card payment services, our users are able to track and maintain their activity in various PayPay Point programs from one convenient location. Our current main offering consists of the following two types of PayPay Cards:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *PayPay Card*. Our basic-level PayPay Card has no annual fee and is issued under three credit card
brands, JCB, Visa and MasterCard. Cardholders earn PayPay Points equivalent to 1% of total amounts charged on the card, and up to an additional 0.5% of the total amounts charged if users make 30 or more purchases of at least ¥200 each and spend
at least ¥100,000 in total over a particular month. This additional reward is one of the benefits of a customer retention program called PayPay STEP. Additional cards can be issued to family members upon the request of cardholders, and
individual cardholders can request more than one card to be issued for them. SoftBank Points, which are issued by SoftBank Corp. and convertible into PayPay Points, of up to 1.5% of the total amounts charged can also be earned when cardholders use
this card to pay their cellphone bills with SoftBank Corp.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *PayPay Card Gold*. Our PayPay Card Gold has an annual fee of ¥11,000 (including consumption tax) and
is also issued under three credit card brands, JCB, Visa and MasterCard. Cardholders can maximize their point earnings, with PayPay Points from 1.5% of total amounts charged up to 2.0% of total amounts charged on the card if users make 30 or more
than 30 purchases of at least ¥200 each and spend at least ¥100,000 in total over a particular month. This additional 0.5% reward is one of the benefits of PayPay STEP. In addition to overseas and domestic travel insurance benefits and
access to domestic airport lounges, PayPay Card Gold cardholders can earn SoftBank Points of up to 10% of total amounts charged to pay cellphone bills with SoftBank Corp. as well as time-limited PayPay Points (a special type of PayPay Points that
expire after a set period of time) of an additional up to 2% of total amounts charged for purchases made via Yahoo! JAPAN Shopping or at LOHACO. Additional cards can be issued to family members upon the request of cardholders.

*Revolving and Installment Payment Options* 

For users short on funds at the time of payment, we offer revolving payment and installment payment options at participating merchant stores to PayPay Card holders. Under our revolving payment option, we have two options, *Marugoto Flat Revo* and *Koredake Skip Revo*. After a cardholder makes purchases, the cardholder selects to automatically convert all of their credit card purchases (*Marugoto Flat Revo*) or selectively convert specific purchases (*Koredake Skip Revo*) into a revolving payment with a commission rate of 18% per annum. Under our installment payment option, the cardholder agrees to pay for the purchase price plus a commission in installments, with a commission rate of 18% per annum. Our revolving payment option is available for purchases made using PayPay Credit as well. However, our installment payment option is only available for payments made using PayPay Card with merchants that have accepted installment payments as a payment option. In addition, our Pay in Installments Later (*Ato Kara Bunkatsu*) service allows cardholders to convert payments they had elected to pay in full at the time of purchase to an installment payment from the PayPay Card app or the mini-app.

*Cash Advances* 

We also offer cash advances to cardholders, who can apply for cash advances on the PayPay app or via an internet browser, whereby we allow approved cardholders to withdraw cash from ATMs or transfer loaned funds to their bank accounts. The interest rate is currently 18.0% per annum and 15.0% per annum for additional advances when the total outstanding amount of cash advances extended to a cardholder totals ¥1 million or more.

*Acquiring Services* 

On the merchant side, we also operate a credit card merchant acquiring business, through which we offer processing services for merchants to accept credit card payments. The majority of our merchants that utilize this service were grandfathered in through referrals from our payment settlement services, LY Corporation (previously Yahoo Japan Corporation) and SB Payment Service Corporation.

***Financial Service Business***

*Internet Banking Services* 

We offer a wide range of retail internet banking products and services to individual and corporate customers, linked throughout our PayPay platform. Our extensive range of products and services includes retail banking functions such as deposit accounts, mortgage and card loans, as well as securities intermediary services and domestic and foreign exchange transaction services. Customers can open a bank account with us completely digitally using remote identity verification, and can make transfers, deposits, bill payments and balance inquiries entirely online. We provide linkage between bank accountholders and users of the PayPay app, enabling instant

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transfer of funds from a user's PayPay Balance into the user's PayPay Bank account balance and vice versa without any fees. Accountholders receive a PayPay Bank Visa Debit Card, which can be used to make cashless payments at merchants worldwide that accept Visa payment cards. Transactions made by individual accountholders using a PayPay Bank Visa Debit Card are rewarded with PayPay Points equivalent to 0.2% of the value of the transaction. In addition, ATM services are available nationwide through partnerships with major ATM networks, where customers can withdraw funds using their PayPay Bank Visa Debit Card or conduct cardless cash withdrawals using the Smartphone ATM feature, allowing withdrawals to be made from in-network ATMs using an account-linked code. When accountholders are abroad, they can also withdraw cash at Visa or PLUS network ATMs worldwide.

*Deposit Accounts and Remittances* 

We offer a full range of deposit account services spanning yen-denominated products including ordinary deposits and time deposits and foreign currency products including ordinary deposits and time deposits denominated in nine different currencies. As an internet bank, PayPay Bank Corporation does not have the high fixed costs associated with maintaining a network of physical branches, which enables us to offer competitively-priced deposit interest rates. We also refer our accountholders to PayForex, a service offered by Queen Bee Capital Co., Ltd., which offers our accountholders the ability to send and receive remittances to and from over 200 countries with no transaction fees.

*Lending Services* 

PayPay Bank Corporation offers three types of lending products to suit our users' financing goals: card loans, mortgage loans and business loans.

Card loans issued through PayPay Bank Corporation are available to customers that have an ordinary savings account and can be borrowed using our PayPay Bank app or by using the accountholder's ATM card and withdrawing borrowed cash from participating ATMs 24 hours a day, 365 days a year. We offer varying interest rates dependent on the amount borrowed by the customer, ranging from 1.59% to 18.0% per annum.

We also offer mortgage loans of durations from 1 to 50 years and an amount from anywhere between ¥5 million and ¥200 million to home buyers through the PayPay Bank app or our website, enabling borrowers to submit the necessary paperwork from their smartphones. Our rates are competitive, starting from 0.730% yearly for variable rate loans. We also offer an innovative "pair loan" product which enables two borrowers to co-sign for a mortgage, with the loan forgiven in the event that one of the two passes away before the end of the term. We offer SoftBank users a 0.60% loan benefit for loan refinancing.

In addition, we offer business loans for corporations and sole proprietors of up to ¥10 million, with competitive interest rates ranging from 1.8% to 13.8% per annum. We offer competitive rates for businesses that use loans for temporary liquidity. For example, for our loans to corporations, if a business pays back its loan within five days of borrowing, we charge a flat fee of ¥945 regardless of the loan's interest rate.

*Securities Intermediary Services* 

We offer securities intermediary services for accountholders to invest in various investment trusts. Accountholders who invest in investment trusts through PayPay Bank Corporation can take advantage of the tax benefits provided through the NISA scheme, which allows investors in Japan to open investment accounts and invest up to ¥3.6 million per year and ¥18 million in total without paying taxes on capital gains or dividends. Our accountholders who make recurring investments in investment trusts pay no transaction fees for the purchase of their investments and can start investing by signing up for recurring investments from just ¥100 a month.

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*Foreign Exchange Transaction Services* 

We also offer a standalone app for foreign exchange transactions to accountholders, allowing trades for 24 currency pairs. The app also contains features to help our users such as stop loss features and rate alerts. The app offers two types of accounts, the general type and the beginner type. The general type allows accountholders to conduct leveraged trades, while the beginner type does not permit leveraged trading. There are no transaction fees charged for foreign exchange transactions beyond the spread charged.

*Digital Securities Services* 

We offer a wide range of digital securities services through PayPay Securities Corporation, a financial services provider focused on digital securities brokerage services. We provide a platform for users to buy and sell mutual funds, stocks and ETFs where trades can be made using PayPay Invest, a mini app integrated into our main PayPay app, built for first-time investors. We also operate a standalone app that offers additional and more advanced investment options for our more experienced users allowing for larger amounts to be invested. In addition, we also offer a platform for trading contracts for difference, or CFDs.

*App-Based Investment Services* 

*PayPay Invest* 

PayPay Invest is a mini app that offers users of our PayPay app a simplified entry point into financial markets, no matter their level of experience in investing. PayPay users can open an account using PayPay Invest in as little as three minutes. Users can open both regular investment accounts as well as NISAs using the mini app, starting with a minimum of ¥100 using PayPay Money. Users can use PayPay Money to make investments, as well as PayPay Points and available funds in a PayPay Bank account. Users can also charge the invested amount to their PayPay Card or withdraw funds from PayPay Invest as PayPay Money and transfer them into their PayPay Balance without a transaction fee (withdrawals above PayPay Money's ¥1 million daily transaction limit will be deposited in the user's bank account registered in the PayPay app without a transaction fee).

Users can invest in U.S. and Japanese stocks and ETFs, as well as in investment trusts, using PayPay Invest. We allow users to trade U.S. stocks and ETFs on a continuous basis, while Japanese stocks and ETFs can be traded during the Tokyo Stock Exchange's operating hours, with the option for flexible trading by scheduling recurring daily, weekly and monthly investments. Securities purchased using PayPay Invest are purchased at an "offered price" by users, which is calculated by adding a spread of 0.5% to the "unit price" provided to us by our information provider.

*PayPay Securities App* 

The PayPay Securities app is available to any investor, offering a broader set of investment products and trading functionality compared to PayPay Invest. Users of the PayPay Securities app can invest in U.S. stocks and ETFs, Japanese stocks and ETFs as well as mutual funds, just like PayPay Invest, in addition to Japanese REITs with a minimum investment amount of ¥1,000. Accounts can be funded with PayPay Money as well as through bank transfers from designated financial institutions. The app provides enhanced features such as reservation orders for Japanese equities outside of the Tokyo Stock Exchange operating hours, as well as the "*Oitamama Kaitsuke*" feature, which enables users to purchase securities using their deposits with designated financial institutions, including with PayPay Bank Corporation, without having to transfer any funds or pay transfer fees.

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*Automated Investing Services* 

We offer certain automated investing solutions in order to make investment as convenient and easy as possible for new investors. We offer two automated investment services tailored to different needs:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *PayPay Invest Easy*. *PayPay Invest Easy* is a simplified investment service integrated as a mini
app within the PayPay app, which allows investors to invest on a recurring basis in one of two index funds using PayPay Money, PayPay Points or their credit card, starting at ¥500 per day. This service is also compatible with NISA, offering tax
benefits to users.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Robot Accumulation Plan. Robot Accumulation Plan* is a standalone app, which facilitates automatic,
recurring investments in U.S. equities, starting at ¥1,000. This service is not compatible with NISA.

*CFD Trading Services*

Through PayPay Securities Corporation, we offer CFD trading services, a type of financial agreement which enables traders to trade on the direction of securities in the very short term. Our services enable customers to engage in leveraged trading using two different standalone apps, the 10x CFD app and the Japanese Equity CFD app. The 10x CFD app allows trading in stock index futures, such as the Nikkei 225 and the E-mini S&P 500, with leverage up to ten times the deposited margin. The Japanese Equity CFD app allows customers to trade in selected Tokyo Stock Exchange-listed equities during regular exchange hours with leverage up to five times the deposited margin amount. Both of these apps offer real-time pricing, margin monitoring and loss-cut functionality while participation in our CFD trading services requires a deposit margin of over ¥10,000.

*PayPay Point Management* 

Through PPSC Investment Services Co., Ltd., a wholly owned subsidiary of PayPay Securities Corporation, we offer a PayPay Point investment service, PayPay Point Management, through which our users can utilize ten different simulated asset management courses to manage their PayPay Points. Users can utilize this service starting from just one PayPay Point. The courses include options linked to Bitcoin, Ethereum and various U.S. ETFs, and users can manage their investments directly from the PayPay app. PayPay Points from shopping, campaigns, My Number points, PayPay Point Codes and withdrawn PayPay Points are all eligible for this service. However, limited-time PayPay Points, PayPay Money, PayPay Money Lite and credit cards cannot be used. Users can monitor, invest and withdraw their managed PayPay Points through the PayPay Point management screen in the PayPay app.

*Loan Management Services Through Credit Engine* 

In November 2024, we acquired Credit Engine Group, Inc. (currently Credit Engine, Inc.), making it our wholly-owned subsidiary. Credit Engine Group, Inc. provides online loan management systems that aid in the digitalization of lending and debt collection operations as well as SaaS lending products for small and medium-sized businesses and automated calls and messaging for debt collection.

***Other Value-Added Services***

*To Users* 

We refer our users to PayPay Insurance Service Corporation, a PayPay-branded insurance agency. Our PayPay app provides users with access to a mini app operated by PayPay Insurance Service Corporation, through which users can apply for an array of insurance policies offered by PayPay Insurance Service Corporation.

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PayPay Insurance Service Corporation is a wholly-owned subsidiary of LY Corporation. PayPay Insurance Service Corporation was formerly known as Wise Insurance and adopted the "PayPay" brand in February 2021. PayPay Insurance Service Corporation is not a subsidiary or affiliate of ours and we have no profit-sharing arrangement with them.

*To Merchants* 

Our platform for merchants offers a user-friendly dashboard from which merchants can easily manage all of their PayPay transactions.

We offer our *PayPay My Store* service on our platform for merchants without a subscription fee. Through *PayPay My Store*, our merchants are able to create and publish a webpage with their business information within our PayPay app. On their personalized webpage, merchants can add information such as their store address and hours of operation as well as pictures of their shops and the products they sell. Event and promotional campaign information can also be posted, functioning as a marketing tool. Merchant webpages have the ability to be followed by users, who can give ratings and reviews enabling merchants to monitor and analyze users' shopping behavior.

We also offer the *PayPay My Store Lite Plan* to our merchants that wish to expand their marketing to our users and/or wish to enjoy a discount on settlement fees. Merchants can sign-up to this service for a fee of just ¥1,980 and pay a monthly per store subscription fee of the same ¥1,980 for the *PayPay My Store Lite Plan*. Merchants that subscribe to our *PayPay My Store Lite Plan* receive a discounted settlement fee rate of 1.60%, compared to our standard rate of 1.98%. We also offer other sales and promotional services with additional fees to our merchants that enroll in our *PayPay My Store Lite Plan*, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *PayPay Coupon.* Our *PayPay Coupon* is an add-on service we
offer on commission through which merchants can issue and distribute coupons for their stores to our PayPay app users. This is a convenient tool for merchants to conduct targeted marketing to either acquire new customers or increase repeat
customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *PayPay Coupon (Item-Specific). PayPay Coupon (Item-Specific)* is a sales promotion service we offer to
manufacturers to issue coupons within the PayPay app on a per-product basis that can be used with certain PayPay merchants that carry POS terminals. **  This tool assists manufacturers in targeting
promotions and gathering market data across national and local drugstore, convenience store and supermarket chains, among other retailers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *PayPay Stamp Card. PayPay Stamp Card* is another add-on service
we offer on commission through which merchants can issue store loyalty cards as a sales promotion tool to grant rewards to users whose payments satisfy pre-determined criteria.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *PayPay Funding. PayPay Funding* is an invite-only merchant financing service that allows selected PayPay
merchants to receive future sales proceeds in advance when they require operating capital. We utilize machine learning to estimate merchants' future sales and provide advances of up to ¥1 million, which is then deducted from the
merchant's subsequent sales proceeds earned via PayPay transactions over a period determined by us. We charge a usage fee of between 3.0% and 18.0% per annum, averaging 15%, for the use of this service. Using our data-driven credit model, we
can conduct instantaneous, fully-online risk assessments based on merchants' sales history, transaction patterns, and growth trends, without the need for the cumbersome screening and documentation typically required by traditional banks. This
offering enables us to provide new liquidity solutions to previously unreached merchants, namely SMEs.

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*PayCAS (PayPay Multi-Payment Unit)* 

In 2022, we began leasing PayCAS, a unified cashless payment terminal with POS integration functionalities, to select merchants by collaborating with SB C&S Corp., a wholly owned subsidiary of SoftBank Corp. and the supplier of PayCAS, and SB Payment Service Corp, another subsidiary of SoftBank Corp. We made PayCAS available to all merchants starting April 2023.

**PayPay Points** 

We operate a proprietary loyalty and rewards program known as PayPay Points, which can be used not only as a traditional loyalty program but also as a form of cash equivalent across a wide range of services within our ecosystem. Unlike many e-commerce platforms whose points are restricted to specific services, PayPay Points may be redeemed across our entire ecosystem, making them a highly versatile and convenient tool for our users.

The principal uses of PayPay Points include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Payments at merchants and online services: Users may use PayPay Points for payments at hundreds of thousands
of participating merchants nationwide, as well as through online services that support PayPay Points, with one point redeemable for one Japanese yen.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Payment of utilities and taxes: Through our PayPay billing platform, users may apply PayPay Points toward
payments for electricity, gas, water and other public utility charges, as well as certain tax obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Financial services: Users may apply PayPay Points directly when purchasing investment trusts through PayPay
Securities Corporation. In addition, through the "Point Management" service offered by PayPay SC Investment Service Corporation, users may manage and invest their PayPay Points.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Other services: PayPay Points may also be used within our PayPay app for a variety of other services,
including remittances and related offerings.

The breadth of use cases for PayPay Points across multiple services and our extensive merchant network increase their utility for users and drive higher frequency of use. This, in turn, contributes to greater engagement within our ecosystem and supports the overall growth of our platform.

We offer our users two primary ways to earn PayPay Points: our standard rewards and bonus rewards through the PayPay STEP program. Originally instrumental in our rapid market share growth, our PayPay Point feature has evolved into a highly controllable promotional tool; we can modify its structure through mission and campaign design, and a majority of the point-based marketing costs is now funded by external sources such as merchants, the central government, municipalities, and strategic partners. Therefore, we consider these as strategic sales promotion expenses intended to increase user acquisition, retention and average monthly spending.

*Standard Rewards* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Users earn a 0.5% base reward rate on payments made with their PayPay Balance, and a 1.0% base reward rate on
payments made with PayPay Credit or PayPay Card (physical card).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Users earn a 0.2% base reward rate on payments made with their PayPay Debit or PayPay Bank Visa Debit Card.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For all standard rewards, PayPay Points accrue for every ¥200 transacted. No PayPay Points are awarded for
some types of transactions, including when payments are made with credit cards issued by other credit card companies linked to the PayPay app. As regular PayPay Points do not expire, the company does not record any breakage associated with these
points.

*PayPay STEP (Bonus Rewards)* 

The PayPay STEP program allows users to boost their reward rate with two types of bonuses as part of our user retention program:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Achievement Bonus*: Users earn an extra 0.5% to their reward rate by meeting the following two
conditions in the previous month:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;○ Make 30 or more payments of at least ¥200 each.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;○ Spend a total of ¥100,000 or more.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Gold Card Bonus*: Cardholders earn an extra 0.5% on their reward rate when they link and use a PayPay
Card Gold for their credit payments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Debit, PayPay Bank Visa Debit Card and payments made with credit cards issued by other credit card
companies linked to the PayPay app are excluded from the PayPay STEP program.

*Changes to PayPay Points Rewards Program* 

On February 4, 2026, we announced some changes to our PayPay Points rewards program aimed at strengthening our eKYC foundation and increasing user engagement, as well as promoting a smoother referral to our financial services for users of our payments services. The following changes are expected to be effective as of June 2026:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Users who have not completed eKYC registration with us will no longer be eligible to earn PayPay Points under
the PayPay STEP program

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• When payments are made using PayPay Points, only the portion of the payment made without using PayPay Points
will accrue PayPay Points for every ¥200 transacted (but the entire payment amount will continue to count towards the Achievement Bonus criteria of our PayPay STEP program)

*Super PayPay Festival* 

We have periodically reinforced user engagement through large-scale promotional events, including the "Super PayPay Festival." See "—Sales and Marketing."

*PayPay Bank Visa Debit Card* 

In addition, payments made using the PayPay Bank Visa Debit Card reward users with PayPay Points equivalent to the value of 0.2% of all purchases. As regular PayPay Points do not expire, the company does not record any breakage associated with these points.

*Extra PayPay Points Stores* 

PayPay launched the "Extra PayPay Points Stores" program in September 2023, allowing merchants to design the timing and conditions for granting PayPay Points according to their own marketing strategies, thereby enabling consistent points experience to users. A variety of merchants, including supermarkets, electronics

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retailers, drugstores, and online services are already part of this program, by which they reward PayPay Points tailored to their specific needs and promotional strategies. By specifying conditions for the granting of points, such as day of the week, time of day, or customer age, and later analyzing its effectiveness, the program can be utilized to acquire new customers, increase retention of existing customers, and boost sales.

Since June 2025, it has been possible for an Extra PayPay Points Store to offer PayPay Points regardless of the payment method, even in physical stores. If the user chooses to pay with PayPay, they can receive PayPay Points without having to present the barcode again. For other methods, the user can receive the PayPay Points by presenting the barcode on the PayPay app to the merchant. Furthermore, while it is possible to grant PayPay Points for any type of product, merchants also have the flexibility to grant points just for certain products, allowing for a more adaptable strategy to address challenges and promotional requirements.

*PayPay Points (Time Limited)* 

Furthermore, we offer customized PayPay Point services to meet the needs of our merchants. These customized rewards include PayPay Points (Time Limited), which have the following characteristics:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• There is an expiration date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Points (Time Limited) can only be used for payments with certain services provided by LY Corporation
and its subsidiaries; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• They cannot be transferred between PayPay users or withdrawn as cash.

**Alliances with our Partners** 

We have entered into partnerships with third-party companies, including Seven-Eleven Japan Co., Ltd., Monteroza Co., Ltd. and MINISTOP Co., Ltd. to integrate their various services with our PayPay app. For example, our users who download the Seven-Eleven app and complete the registration process are able to link their PayPay accounts to the Seven-Eleven app. When users make payments using PayPay in the Seven-Eleven app, users can earn points for both their PayPay and Seven-Eleven accounts, augmenting the financial benefit from making payments with PayPay. Our users that download the Monte app and make payments using PayPay in the Monte app earn PayPay Points as well.

In addition, when LINE Corporation (currently LY Corporation), the operator of the LINE messaging app, which had approximately 98 million monthly active users in Japan in the month of March 2025, became an indirect subsidiary of SoftBank Group Corp. in March 2021, we implemented interoperability between the code-based on-premise payment systems of LINE Pay and PayPay by enabling the use of LINE Pay at PayPay merchants that use the merchant-generated code-based payment method starting August 17, 2021. In October 2024, we added a shortcut function in the LINE app enabling LINE users that are registered users of ours to easily initiate the sending and receiving of P2P money transfers with other PayPay users without leaving the LINE app. Although LINE Pay ended service on April 30, 2025, PayPay continues to remain embedded in the LINE app providing a convenient function for LINE users.

Furthermore, in order to offer a convenient payment method to foreign visitors from China, we have entered into a partnership with Alipay.com Co., Ltd., a Chinese digital payment platformer. Under the partnership, we have enabled Alipay code-based payments at our merchants' stores that have agreed to accept such method of payment. Alipay users can make payments by scanning pre-printed codes at merchant stores via their Alipay app. Alipay.com Co., Ltd. then transfers funds to us corresponding to the payment amount after deducting service fees. We also charge a settlement fee to our merchants for processing Alipay app payments. Through our partnership with Alipay, we also gain access to Alipay+, which allows users of payment systems operated by Kakao Pay Corp., a Korean digital payment platformer, TRUE MONEY COMPANY LIMITED, a Thai digital payment platformer, G-Xchange, Inc., a Filipino digital payment platformer and BLUE CODE

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INTERNATIONAL AG, a pan-European digital payment platformer currently operating mostly in Austria and Germany, among others, to scan PayPay QR codes or barcodes, offering a convenient payment method to foreign visitors from those countries. We also participate in HIVEX, a payment network through which we have entered into partnerships with Taiwanese payment providers Jkopay Co., Ltd., E.SUN COMMERCIAL BANK, LTD., PXPay Plus Co., Ltd. and iPass Corporation to enable foreign visitors from Taiwan to easily make cashless payments when visiting Japan.

To match this integration with overseas partners to benefit inbound travelers, on September 16, 2025, we launched PayPay's Overseas Payment Mode, which enables our eKYC verified users to use the PayPay app overseas. The service started in South Korea from late September 2025, enabling PayPay users to pay at stores in South Korea affiliated with Alipay+ and ZeroPay (a payment service introduced by the Seoul Metropolitan Government) and to make P2P payments while in South Korea. We plan to expand our outbound partnership to more countries and regions going forward. On May 15, 2025, SoftBank Corp. announced its entry into a comprehensive business alliance with Sumitomo Mitsui Card Co., Ltd., intended to integrate the diverse functionalities of Olive, the SMBC Group's comprehensive personal financial service, with SoftBank's range of digital technology-based services. As part of this alliance, we announced the launch of initiatives in collaboration with Sumitomo Mitsui Card Co., Ltd. Specifically, we announced:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that, regardless of any changes in the PayPay app's approach to payment with credit cards issued by
other companies, credit cards issued by Sumitomo Mitsui Card Co., Ltd. would continue to be available without any usage fees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that the Olive app would be updated to enable PayPay users to check their PayPay Balance and perform top-up and withdrawal transactions between their Sumitomo Mitsui Banking Corporation (SMBC) account and PayPay Balance via the Olive app, and that PayPay Balance would be added as a payment method under
Olive's Flexible Pay mode. Payments using PayPay Balance would be available at Visa-affiliated merchants worldwide through Olive; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that users would be able to mutually exchange points between PayPay Points and V Points, a point service
operated by CCC MK Holdings Co., Ltd., which will enable users to earn and use points with both PayPay and Visa-affiliated merchants.

On September 16, 2025, we acquired a 40.0% stake in Binance Japan, an affiliate of Binance, which operates one of the world's largest cryptocurrency exchanges. As the first phase of our strategic partnership with Binance Japan, we have integrated our platforms, enabling our PayPay users to purchase cryptocurrency using their PayPay Money balance and seamlessly convert crypto assets back into PayPay Money within the app. We aim to create a seamless integration of digital payments and cryptocurrency by connecting a leading global crypto exchange with our extensive user and merchant network.

In order to expand payment options for users and merchants in Japan and overseas, we have agreed upon the basic terms of a business alliance with Visa to explore collaboration in Japan and the United States by leveraging our QR codebased payment platform and Visa's global payment network and digital payment technologies. PayPay intends to establish and control an entity to develop a digital wallet that supports both Near Field Communication ("NFC") and QR code payments in the United States. Both PayPay and Visa will contribute capital in the form of investment, technology, and people to this new partnership, with Visa providing additional support through consulting services and embedded expertise delivered via Visa Managed Services or similar programs.

We also intend to collaborate with Visa to integrate new payment experiences into our existing ecosystem in Japan, including enhancing card services through Visa Flexible Credential, to enable multiple funding sources to be linked to a single card, expanding credit card acceptance at PayPay merchants, and strengthening cross-border payment capabilities for both domestic and international users. Details of the potential collaboration have not yet been decided.

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**Collaborations with SoftBank Group Companies** 

We collaborate with SoftBank Group companies in branding and marketing as well as for a variety of other services and arrangements, including for joint promotional activities, outsourcing of services, financial services, loan agreements with LY Corporation and secondments and directors dispatched from SoftBank Group companies. Descriptions of the primary agreements under each category are below. See "Related Party Transactions" for additional details.

*Joint Promotional Activities*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Basic Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between us and SoftBank
Corp., dated September 16, 2021, stipulates the cooperation and cost-sharing agreement between us and SoftBank Corp., for the purpose of expanding the user base of PayPay payment settlement services as well as the subscriber base for
telecommunication services of SoftBank Corp., through "Y!mobile" telecommunication service campaigns, Yahoo! Premium e-shopping mall, PayPay Point incentives and advertisement for such promotional measures. The term of this agreement was
from the date of execution through March 31, 2022, but has been extended through several amendments, and following the latest of such amendments, the agreement is currently scheduled to expire on March 31, 2026. This agreement may be
terminated by the parties to the agreement for breach of all or part of its respective obligations under the agreement as well as for certain conditions set forth in the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Service Outsourcing Agreement for Issuance of PayPay Bonus (currently PayPay Points) between Yahoo Japan
Corporation (currently LY Corporation) and us, dated August 21, 2019, stipulates the outsourcing of the issuance of PayPay Points based on the settlement amount of goods and services purchased by members on LY Corporation's e-commerce
platform. LY Corporation pays us an amount equal to one Japanese yen multiplied by the number of PayPay Points issued to Yahoo!JAPAN members for the services we provide. The term of this agreement was from the date of the agreement to March 31,
2020, but provides that unless either party gives written notice at least three months prior to the expiration of the agreement of its intention to terminate the agreement, the agreement automatically renews for one year from the expiration date and
the same applies thereafter. This agreement may be terminated by the parties to the agreement for breach of all or part of its respective obligations under the agreement as well as for certain conditions set forth in the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Basic Agreement for Provision of "Pay-Toku" Fee Plan between us and SoftBank Corp., dated
September 5, 2023, stipulates the mutual cooperation pursuant to a specific fee rate plan for mobile communication services offered by SoftBank Corp. utilizing PayPay Points aiming at the expansion of the customer base for PayPay's payment
settlement services. The "Pay-Toku" Fee Plan sets forth the PayPay Point-related benefits SoftBank mobile service users can receive. SoftBank Corp. bears the cost equivalent to the amount obtained by multiplying the PayPay Points granted
to SoftBank mobile service users by one Japanese yen. The term of this agreement is from the date of execution until such time when SoftBank Corp. ceases to provide Pay-Toku. This agreement may be terminated by the parties to the agreement for
breach of all or part of its respective obligations under the agreement as well as for certain conditions set forth in the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Service Outsourcing Agreement for Issuance of PayPay Money Lite and PayPay Points between SoftBank Corp. and
us, dated July 31, 2019, stipulates the outsourcing of the issuance of PayPay Money Lite or PayPay Points to certain current and potential customers of services provided by SoftBank Corp. and certain current and potential customers of services
provided with SoftBank Corp. SoftBank Corp. pays us an amount equal to one Japanese yen multiplied by the number of PayPay Money Lite or PayPay Points units issued to current and potential customers of services provided by or with SoftBank Corp. The
term of this agreement was from August 1, 2019 to July 31, 2020, but

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provides that unless either party gives written notice at least six months prior to the expiration of the agreement of its intention to terminate the agreement, the agreement automatically renews for one year from the expiration date and the same applies thereafter. This agreement may be terminated by the parties to the agreement for breach of all or part of its respective obligations under the agreement as well as for certain conditions set forth in the agreement. <br>

*Outsourcing of Services* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Business Alliance Agreement for PayCAS between us, SB C&S Corp. and SB Payment Service Corporation, dated
August 1, 2024, sets forth the agreement among the parties with respect to the role of each party in connection with the provision of services related to PayCAS. The revenue share among us, SB C&S Corp. and SB Payment Service Corporation is 34%,
33% and 33%, respectively. The term of this agreement was for one year from August 1, 2024, but provides that unless either party gives written notice to the contrary at least six months prior to the expiration of the agreement, the agreement
automatically renews for one year upon expiration and the same applies thereafter. This agreement may be terminated by any of the parties to the agreement for another party's failure to perform under the agreement as well as for certain
conditions set forth in the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Business Outsourcing Agreement between us and PayPay SC Corporation, dated August 1, 2024, for the outsourcing
of the following services: (1) signing up merchants for PayCAS and related merchant support, (2) signing of new PayPay merchants, (3) PayPay merchant support related to PayPay payment settlement services and (4) acquisition through sales promotion
activities. The term of this agreement was from August 1, 2024 to March 31, 2025, but provides that unless either party gives written notice to the contrary at least six months prior to the expiration of the agreement, the agreement automatically
renews for one year upon expiration and the same applies thereafter, except with respect to the service of signing up merchants for PayCAS and related merchant support, which ends upon the expiration of the Business Alliance Agreement for PayCAS
between us, SB C&S Corp. and SB Payment Service Corporation. This agreement provides for early termination and may be terminated by the parties to the agreement for any breach of the agreement or default on all or part of its respective
obligations under the agreement as well as for certain conditions set forth in the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• General Agency Agreement between us and SB Payment Service Corporation, dated December 13, 2019, under which
SB Payment Service Corporation acts as our payment service provider and assists our online merchants using our payment settlement services. We pay SB Payment Service Corp. a fee, which is calculated based on a percentage applied to the value of
transactions made through SB Payment Service Corp.'s systems. The term of this agreement was one year from December 13, 2019, but provides that unless either party gives written notice at least three months prior to the expiration of the
agreement of its intention to terminate the agreement, the agreement automatically renews for one year upon expiration and the same applies thereafter. This agreement may be terminated by the parties to the agreement for breach of all or part of its
respective obligations under the agreement as well as for certain conditions set forth in the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Sales Alliance and Partner Agreement between us and SB Payment Service Corporation, dated December 3, 2018,
under which SB Payment Service Corporation provides us with various services, such as access to a payment gateway which connects merchants to our payment system, and supports our relations with the merchants by checking information provided by the
merchants and by communicating with the merchants on our behalf. The term of this agreement was one year from December 3, 2018, but provides that if neither party notifies the other party in writing that it intends to terminate the agreement upon
expiration at least three months prior to the expiration date, the agreement automatically renews for one year and the same applies thereafter. This agreement may be terminated by the parties to the agreement for breach of all or part of its
respective obligations under the agreement as well as for certain conditions set forth in the agreement.

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*Financial Services* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Memorandum on PayPay Merchant Terms for Mini-apps between us and PayPay Insurance Corporation, dated December
1, 2021, provides the terms of the agreement under which PayPay Insurance Corporation operates a mini-app, through which users can apply for an array of insurance policies offered by PayPay Insurance Service Corporation and make purchases using our
PayPay payment settlement services. The mini-app usage fee is calculated as an agreed amount between 2.22% and 5% of the purchases made using the mini-app. The term of this agreement was one year from execution, but provides that if the parties do
not notify the other party of its intention to not renew the agreement at least 30 days prior to expiration, the agreement automatically renews for one year and same applies thereafter. This agreement may be terminated by us without any notice or
other procedures for certain conditions set forth in the agreement.

*Loan Agreements with LY Corporation* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In February 2018, PayPay Card Corporation (then YJ Card Corporation) entered into an agreement with LY
Corporation (then Yahoo Japan Corporation), pursuant to which LY Corporation (then Yahoo Japan Corporation) agreed to provide loans of up to ¥70 billion to PayPay Card Corporation and PayPay Card Corporation agreed to grant a security interest
at the request of LY Corporation (then Yahoo Japan Corporation) with respect to any contractual obligation between PayPay Card Corporation and LY Corporation (then Yahoo Japan Corporation). In April 2019, PayPay Card Corporation entered into a
¥10 billion loan agreement with LY Corporation (then Yahoo Japan Corporation) due in December 2027, with a fixed interest rate of 0.5%, for general business purposes, including working capital. As of December 31, 2025, the amount outstanding
under this loan agreement was ¥10 billion. The term of the master agreement, which applies to all such individual loans, is from the execution date of February 15, 2018 to December 7, 2027. However, there is no remaining committed
availability under this loan agreement. PayPay Card Corporation's obligations to LY Corporation are subject to automatic acceleration for certain conditions set forth in the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In December 2019, PayPay Card Corporation entered into an agreement with LY Corporation (then Z Holdings
Corporation), pursuant to which LY Corporation (then Z Holdings Corporation) agreed to provide loans of up to ¥25 billion to PayPay Card Corporation and PayPay Card Corporation agreed to grant a security interest at the request of LY Corporation
(then Z Holdings Corporation) with respect to any contractual obligation between PayPay Card Corporation and LY Corporation (then Z Holdings Corporation). In December 2019, LY Corporation (then Z Holdings Corporation) provided a ¥10 billion
loan to PayPay Card Corporation due in December 2028, with a fixed interest rate of 0.6%, for general business purposes, including working capital. As of December 31, 2025, the amount outstanding of this loan was ¥10 billion. The term
of the master agreement, which applies to all such individual loans, is from the execution date of December 18, 2019 to December 6, 2028. However, there is no remaining committed availability under this loan agreement. PayPay Card
Corporation's obligations to LY Corporation are subject to automatic acceleration for certain conditions set forth in the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In February 2024, PayPay Card Corporation entered into a ¥15 billion term loan agreement with LY
Corporation due in February 2026, with a fixed interest rate of 0.7%, for general business purposes, including working capital. Under the agreement, PayPay Card Corporation agreed to grant a security interest at the request of LY Corporation with
respect to any contractual obligation between PayPay Card Corporation and LY Corporation. As of December 31, 2025, the amount outstanding under this loan agreement was ¥15 billion. The term of this agreement is from February 29, 2024 until
all obligations owed by PayPay Card Corporation to LY Corporation under the agreement are paid in full. PayPay Card Corporation's obligations to LY Corporation are subject to automatic acceleration for certain conditions set forth in the
agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In December 2024, LY Corporation and PayPay Card Corporation executed a memorandum of understanding pursuant
to which the permitted use of proceeds for the intercompany loans described above was broadened to include business investments (including the provision of working capital and loans to PayPay Corporation for its business investments). The other
principal terms of the loan agreements remain the same. The memorandum of understanding provides that the parties may agree from time to time to renew or extend the maturity of the loans described above. In the event of such renewal, the date of
maturity is extendable unless LY Corporation provides one month of notice that the repayment date will not be extended, with the final maturity being no later than March 29, 2030. Any such renewal bears interest at a rate equal to LY
Corporation's average funding cost as of the day after the repayment date prior to the extension plus a spread of 0.1.

*Secondments and Directors Dispatched from SoftBank Group Companies* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Basic Contract of Secondment between SoftBank Group Corp. and us, dated March 23, 2022, under which employees
of SoftBank Group Corp. are seconded to us. The term of this agreement was until March 31, 2023, but provides that it will be renewed for another year if neither party requests termination of the agreement no later than one month prior to expiration
and the same applies thereafter. This agreement may be terminated by the parties for certain conditions related to anti-social forces (a reference to organized crime in Japan) as set forth in the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Basic Contract of Secondment between Z Holdings Corporation (currently LY Corporation) and us, dated May 1,
2022, under which employees of Z Holdings Corporation (currently LY Corporation) are seconded to us. The term of this agreement was from May 1, 2022 through September 30, 2022, but provides that if neither party requests to terminate the agreement
or amend the terms of the agreement one month prior to expiration, the term is extended for a further six-month period and the same applies thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Basic Contract of Secondment between SoftBank Corp. and us, dated July 1, 2018, under which employees of
SoftBank Corp. are seconded to us. The term of this agreement was until June 14, 2019, but provides that it will renew for another year if neither party requests to terminate the agreement no later than one month prior to expiration. This agreement
may be terminated by the parties for certain conditions related to anti-social forces as set forth in the agreement.

**Sales and Marketing** 

During the initial phase of our operations we focused on the rapid acquisition of users and merchants. Our sales and marketing efforts to acquire users included a series of promotional activities with SoftBank Group companies. To rapidly expand our user base during initial promotional periods, we conducted limited-time, ¥10 billion-scale rebate programs in 2018 and 2019, collaborating with Yahoo Japan Corporation (currently LY Corporation) and SoftBank Corp., where we distributed a total of 20 billion PayPay Points to users as rebates for their payments using the PayPay app. Users were able to earn PayPay Points equivalent to the value of up to 20% of all purchases for these rebate programs, which instantly gained widespread popularity across Japan. Where we had initially anticipated the campaign to last roughly two months, rapid user registrations and usage resulted in the initial ¥10 billion to be given away in just ten days.

Building on the success of these initial campaigns, we have continued to launch a series of large-scale promotional campaigns, known as the "Super PayPay Festival." A key feature of these campaigns is the strategic integration of gamification elements to transform the payment process from a purely transactional interaction into an engaging and enjoyable experience. For example, we have introduced an instant-win scratch-off lottery, which replaced a prior virtual darts game. This gamification is designed with two primary objectives: first, to randomly award additional benefits to users, and, second, to create opportunities for social interaction among family and friends, making the act of payment a shareable and enjoyable moment. We believe this enhanced user engagement, fosters a deeper connection to our platform and generates organic, word-of-mouth interest that helps motivate new user acquisition.

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In addition, some SoftBank Group companies, including SoftBank Corp. and LY Corporation, utilize PayPay Points for certain rewards programs, such as by granting PayPay Points as rebates for payments via PayPay or issuing PayPay Points Code and PayPay Coupons. For example, SoftBank Corp. grants PayPay Points to its long-term smartphone users and LY Corporation has offered both limited-time and regular promotional campaigns in which customers earn PayPay Points equivalent to a certain percentage of purchases made via PayPay on its e-commerce platforms. Typically, these companies pay us a cash amount, which we record under our assets, corresponding to the PayPay Points they grant to their customers, which are recorded as PayPay Users' deposits under our liabilities, increasing such customers' PayPay Balance amounts without us having to incur additional expenses. We also benefit from the use of PayPay Points by merchants, the Japanese government, Japanese local governments and affiliated companies for their own promotions. We estimate that in the year ended March 31, 2025, a majority of PayPay Points granted were attributable to the promotions of such partners.

Our sales and marketing efforts to acquire merchants were focused on reducing or eliminating fees during initial promotional periods. We allowed small- and medium-sized merchants to utilize our PayPay payments system without any settlement fees until September 2021. While we have started to collect settlement fees from all participating merchants, we continue to offer incentives to newly joining merchants. Our success in the rapid acquisition of participating merchants thus far is also a result of our outsourcing of merchant recruitment to SoftBank Corp. and utilizing their resources to achieve nationwide coverage. Using the knowhow of SoftBank Corp., we dispatched a sales team that was comprised of several thousand members to make in-person visits to merchants across Japan to educate them on and to offer our services. As of December 31, 2025, PayPay maintained offices in 21 of Japan's 47 prefectures.

Moreover, the METI launched a cashless payment rebate program, which ran from October 1, 2019 to June 30, 2020, whereby payment service companies including us that could collect participating merchant applications were offered a subsidy to cover costs of granting rebates to users making cashless payments at those merchants' stores as well as for costs for introducing cashless payment systems to those merchants' stores. Following the METI, many municipalities have run similar rebate programs to encourage the adoption of cashless payment systems by local merchant stores as well as to promote consumer spending in their communities. In addition, the Japanese Government provided those who applied for the issuance of their MyNumber social security card by February 28, 2023 with rewards of up to ¥20,000 each in the form of cashless payment funds of the applicant's choice, which included our PayPay Points. We have expended sales and marketing efforts so that merchants applying for subsidized government programs select us as a payment service company among other service providers, enabling us to leverage these government policies to further encourage use of our payment settlement services. These programs have contributed to our expansion of our user base, merchant acquisition and increase in users' balance of PayPay Points to be used for future payments.

On June 5, 2024, we launched our Friend Referral campaign. This campaign provides a bonus of 300 PayPay Points for both the referring and referred user when a referral is completed and a payment of above ¥1,000 is completed within 60 days. Referring users can earn up to 3,000 PayPay Points per month if they refer ten users. On December 19, 2024 we launched our "*Okozukai*" campaign, which rewards parents or guardians who set up periodic allowance payments to registered users between the ages of 12 and 18 with an additional 10% bonus in PayPay Points paid into the child's account, up to a maximum of ¥250 per month for one year. If both users are SoftBank or Y!mobile users, the same amount of PayPay Points will be paid into the parent or guardian's account. This percentage increases to 20% if the parent or guardian subscribes to a particular SoftBank plan.

We have strategically executed several key marketing campaigns to drive user acquisition, engagement, and transaction volume. Our campaigns are designed not only to provide monetary incentives but also to make the payment experience itself more engaging and interactive.

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**Competition** 

The cashless payment industry in Japan remains fragmented, continuously changing, while consistently receiving government support to promote cashless payment and the digitalization of financial services. Many of the areas in which we compete evolve rapidly with innovative and disruptive technologies, shifting user preferences and needs, price sensitivity of merchants and consumers, and frequent introductions of new products and services. Competition may also intensify as new competitors emerge, businesses enter into business combination and partnerships, and established companies in other segments expand to become competitive with various aspects of our business.

*Payment Service* 

The main competitors for our code-based payment services include providers of traditional credit and debit cards, e-money services such as East Japan Railway Company's Suica and other smartphone-based payment apps such as Rakuten Payment, Inc.'s Rakuten Pay and d Payment offered by NTT DOCOMO, INC. We also compete with contactless NFC credit card payment offered by credit card companies as well as smartphone contactless payments such as Apple Pay, Google Pay, QUICPay and iD. In light of the relatively high ratio of cash payments in Japan, the market for cashless settlement is still expected to expand significantly and competition in the industry is expected to remain intense.

Our competitors for PayPay Card Corporation's services consist primarily of large Japanese consumer finance companies, a number of major Japanese banks, Japanese subsidiaries of foreign financial institutions, Japanese internet companies that have entered into the consumer finance industry by acquiring existing consumer finance companies, bank-affiliated credit card companies, retailer-affiliated credit card companies, cellphone carriers and shopping credit companies that issue credit cards, such as Rakuten Card Co., Ltd., Sumitomo Mitsui Card Company, Limited, JCB Co., Ltd., Mitsubishi UFJ NICOS Co., Ltd., Credit Saison Co., Ltd., AEON Financial Service Co., Ltd. and NTT DOCOMO, INC.

*Financial Services Service* 

PayPay Bank Corporation faces competition in Japan's banking market. We compete with various types of financial services companies, including Japan's major banking groups, government-controlled and government-affiliated entities, regional banking institutions, non-bank financial institutions and other firms that are engaged in providing similar products and services. In particular, we compete with other internet banks, including Rakuten Bank, Ltd., SBI Sumishin Net Bank, Ltd., Sony Bank, Inc. and au Jibun Bank Corporation, as well as traditional banking institutions which have expanded their internet banking services. In addition, the development of new technologies in the "Fintech" and other sectors, along with the corresponding rise of new entrants from these sectors into the financial services industry may lead to the development of other competing business models and further intensify competition.

Our main competitors for PayPay Securities Corporation are other online securities firms, such as Rakuten Securities, Inc., SBI Securities Co., Ltd., Matsui Securities Co., Ltd., Monex, Inc. and Mitsubishi UFJ eSmart Securities Co., Ltd. We also face competition from full-services securities firms in Japan, such as Nomura Securities Co., Ltd., Daiwa Securities Co. Ltd. and SMBC Nikko Securities Inc. Since the NISA program was updated in January 2024 to increase the tax benefits available to Japanese taxpayers investing in both long-term investment trusts and stocks, consumer investment has expanded significantly and is expected to continue to expand, resulting in an expected increase in both the size of the market for online securities firms as well as competition.

**Information Technology** 

With our smartphone-based payment service at our core, we rely heavily on information technology and communication systems to operate our business. We utilize a proprietary technology platform on the back end

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within our company that enables us to operate our business effectively. Our app is backed up by a microservices architecture that makes our platform more reliable, scalable and flexible. We also utilize a data platform to make our back-end better able to handle large transaction volumes and scale to meet future growth. Our infrastructure is cloud native.

It is also critical that we create a secure environment to attract and retain users and merchants. We have robust systems in place to process the identity verification of our users, merchants and cardholders through eKYC procedures. We conduct identity verification through smartphones by either certifying a MyNumber social security card and scanning the IC chip on it, scanning the IC chip on a driver license and taking a face photo or taking a photo of an identity verification document in addition to taking a face photo. ****Thanks to our "eKYC Passport," users who are verified through our PayPay app are able to open accounts with other services and apps in our ecosystem through a streamlined process, which allows them to skip verification of name, date of birth, address, telephone number, e-mail address, identity verification documents and facial photos by using the information already processed.

We maintain information security measures as part of our operations. We have established our own security system which we continually work to strengthen. We maintain a dedicated Security Operation Center, or SOC, in charge of monitoring and analyzing threats to information systems, with a focus on incident detection. We also maintain a Computer Security Incident Response Team, or CSIRT, that focuses on responding when an incident occurs. We conduct red teaming on a regular basis to test our security and employ white hat hackers to conduct red teaming, penetration testing and vulnerability diagnosis so we can quickly evaluate information security amidst our frequent release cycle of new features. This helps protect our systems from breach and protect our users' privacy.

In addition, Paytm Labs Inc. has granted us licenses to their software used for our PayPay My Store Service and fraud prevention and marketing solutions.

LY Corporation has granted PayPay Card Corporation a license to use the software necessary to operate our credit card merchant acquiring business.

**Intellectual Property** 

Our success depends in part on our ability to protect our intellectual property and proprietary technologies. To protect our proprietary rights, we rely on a combination of intellectual property rights in Japan and other jurisdictions, including patents, trademarks, copyrights, trade secret laws, license agreements, internal procedure, and contractual provisions. We also enter into confidentiality and invention assignment agreements with our employees and contractors, and sign confidentiality agreements with third parties. Our internal controls restrict access to proprietary technology.

We have patents that span across both core payment technologies and adjacent areas such as credit infrastructure, fraud mitigation and data analytics. We believe our extensive patent portfolio gives us a competitive advantage within Japan's payment and financial services industry. According to independent patent analytics using the Biz Cruncher tool by Patent Result Co., Ltd., as of January 15, 2026, PayPay ranks at the top among Japanese payment and financial services companies in terms of overall patent score.

***PayPay Brand***

LY Corporation has transferred to us trademarks, design rights, domain names and copyrights of logos, which contain or relate to the name "PayPay" such as, but not limited to, the trademarks and logos of PayPay, PayPay Card, PayPay Bank, PayPay Insurance Service and PayPay Securities, as well as various domain names including paypay.ne.jp and paypay-card.co.jp. We have granted to LY Corporation a perpetual, non-exclusive, non-transferable license to use those transferred intellectual property rights as well as the right to sublicense them to certain of its subsidiaries, including PayPay Insurance Service Corporation.

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**Facilities** 

Our corporate headquarters is located in Tokyo, Japan, where we currently lease 17,234 square meters under a lease agreement that expires in January 2030. We do not own any real property. We believe that these facilities are suitable to meet our needs.

**Employees** 

The following table shows our employees of different categories as of December 31, 2025.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | PayPay<br>Corporation<br>(non-<br>consolidated) | PayPay Card<br>Corporation | PayPay Bank<br>Corporation | PayPay Securities<br>Corporation<br>(non-<br>consolidated) |
|  Total employees<sup>(1)</sup> | 2183 | 1584 | 1117 | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp; Full-time, regular employees | 2012 | 1287 | 732 | 128 |
| &nbsp;&nbsp;&nbsp;&nbsp; Fixed-term contract employees | 56 | 73 | 36 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp; Temporary agency employees | 115 | 224 | 349 | 11 |
| Total employees seconded from SoftBank Group companies <sup>(1)</sup> | 57 | 66 | 211 | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp; Seconded from SoftBank Corp. | 9 | 2 | 1 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp; Seconded from LY Corporation | 26 | 13 | 45 | 0 |

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Note:

(1) The number of total employees seconded from SoftBank Group companies is included in the number of total
employees.

**Legal Proceedings** 

We are involved in litigation and other legal proceedings from time to time in connection with the ordinary course of our business. We are not currently involved in any litigation or other legal proceedings that, if determined adversely to us, could potentially, individually or in the aggregate, have a material adverse impact on our business, financial condition or results of operations.

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**MANAGEMENT** 

**Corporate Governance** 

After the consummation of this offering, we will be a "foreign private issuer" under the federal securities laws of the United States and the Nasdaq listing standards. Under the federal securities laws of the United States, foreign private issuers are subject to different disclosure requirements than U.S. registrants. We intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the applicable corporate governance requirements of the Sarbanes-Oxley Act, the rules adopted by the SEC and the Nasdaq listing standards. Under the SEC rules and the Nasdaq listing standards, a foreign private issuer is subject to less stringent corporate governance requirements. Subject to certain exceptions, the SEC and Nasdaq permit a foreign private issuer to follow its home country practice in lieu of their respective rules and listing standards.

In particular, as a foreign private issuer, we will follow Japanese law and corporate practice in lieu of the corporate governance provisions set out under Nasdaq Rule 5600, the requirement in Nasdaq Rule 5250(b)(3) to disclose third party director and nominee compensation, and the requirement in Nasdaq Rule 5250(d) to distribute annual and interim reports. Of particular note, the following rules under Nasdaq Rule 5600 differ from Japanese law requirements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Nasdaq Rule 5605(b)(1) requires that at least a majority of a listed company's board of directors be
independent directors, and Nasdaq Rule 5605(b)(2) requires that independent directors regularly meet in executive session, where only independent directors are present. Under our current corporate structure, the Companies Act does not require
independent directors. However, our board of directors is currently comprised of nine directors, four of whom are considered "independent," as determined in accordance with the applicable Nasdaq rules. We expect our independent directors
to regularly meet in executive sessions, where only the independent directors are present.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Nasdaq Rule 5605(c)(2)(A) requires a listed company to have an audit committee composed entirely of not less
than three directors, each of whom must be independent. Under Japanese law, companies may adopt a corporate governance structure comprised of a board of directors and an audit and supervisory committee, commonly referred to as the audit and
supervisory committee system, in lieu of the traditional structure comprised of a board of directors and a board of corporate auditors or the alternative structure comprised of a board of directors and three statutory committees. We are a
"company with audit and supervisory committee" and the majority of the members of the audit and supervisory committee must be outside directors as defined under the Companies Act. We currently have a four-member Audit and Supervisory
Committee and all of the committee members meet the requirements of Rule 10A-3 under the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Nasdaq Rule 5605(d)(2) requires that a listed company's compensation committee be comprised of at least
two members, each of whom is an independent director as defined under such rule. Although not required under the Companies Act, our board of directors has established a remuneration committee composed of a majority of outside directors. In
accordance with the Companies Act and our Articles of Incorporation, the maximum aggregate annual amount of compensation for our directors who are not Audit and Supervisory Committee members and our directors who are Audit and Supervisory Committee
members is determined by our shareholders through a shareholder resolution, respectively. Once the maximum aggregate annual amount of compensation is approved at a general meeting of shareholders, no further approval is required unless a proposal is
approved by the board of directors to adjust the maximum aggregate annual amount of compensation. Subject to such shareholder resolution, our representative director, in consultation with the remuneration committee, will then determine the specific
amount of compensation for each director who is not Audit and Supervisory Committee members, and the Audit and Supervisory Committee will then determine the specific amount of compensation for each director who is Audit and Supervisory Committee
members. We will not adopt a formal written compensation committee charter as required under Nasdaq Rule 5605(d)(1).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Nasdaq Rule 5605(e) requires that a listed company's nomination and corporate governance committee be
comprised solely of independent directors. Although not required under the Companies Act, our board of directors has voluntarily established a standalone nominating committee. However, our board of directors will not have a corporate governance
committee. Our board of directors will participate in the nomination process of potential directors in consultation with the nominating committee and oversee our corporate governance practices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Nasdaq Rule 5620(c) sets out a quorum requirement of 33 1/3 percent applicable to meetings of shareholders. In
accordance with Japanese law and generally accepted business practices, our articles of incorporation provide that there is no quorum requirement for an ordinary resolution of a general meeting of shareholders. Under the Companies Act and our
articles of incorporation, however, a quorum of not less than one-third of the total number of voting rights is required in connection with the election of directors and certain other matters.

By the resolutions of the general meeting of shareholders on June 23, 2023, we have converted from a company with auditors to a company with an Audit and Supervisory Committee. Pursuant to the Audit and Supervisory Committee system, our board of directors is comprised of directors who are Audit and Supervisory Committee members and directors who are not. Our articles of incorporation provide for a board of directors consisting of at most ten non-members of an Audit and Supervisory Committee and at most five members of an Audit and Supervisory Committee. All directors are elected by our shareholders at a general meeting of shareholders. The term of office for directors who are not Audit and Supervisory Committee members expires at the close of the ordinary general meeting of shareholders held relating to the last fiscal period to end within one year after such director's election, and the term of office for directors who are also members of the Audit and Supervisory Committee expires at the close of the ordinary general meeting of shareholders held relating to the last fiscal period to end within two years after such director's election, but directors and Audit and Supervisory Committee members may serve any number of consecutive terms.

Our board of directors has a statutory duty to administer the business with the due care of a prudent manager and the ultimate responsibility for the administration of our affairs. Our board of directors, however, may delegate by resolution some or all of its decision-making authority in respect of the execution of operational matters (excluding certain matters specified in the Companies Act) to individual directors. Our board of directors must also elect one representative director from among its members who are not Audit and Supervisory Committee members. The representative director has the authority to represent us in conducting our affairs.

Regarding our directors who are Audit and Supervisory Committee members, all must be financially literate and at least one of the directors who is an Audit and Supervisory Committee member shall be a person who is financially sophisticated as required by Nasdaq rules with sufficient knowledge of finance and accounting to qualify as an "audit committee financial expert" under the Sarbanes-Oxley Act. The board of directors shall determine annually whether any member qualifies as an "audit committee financial expert" under the Sarbanes-Oxley Act. They may not serve concurrently as executive directors, managers or any other type of employee for us or any of our subsidiaries, or as accounting advisors or corporate officers for any of our subsidiaries. In addition, more than half of our directors who are Audit and Supervisory Committee members at any one time must be outside directors as defined under the Companies Act, who have not served as executive directors, corporate officers, managers or any other type of employee for us or any of our subsidiaries for ten years prior to their assumption of office and fulfill certain other requirements specified in the Companies Act.

Under the Companies Act and our articles of incorporation, we may exempt, by resolution of the board of directors, our directors (including former directors) from liabilities to the company arising in connection with their failure to execute their duties in good faith and without gross negligence, within the limits stipulated by applicable laws and regulations. In addition, we have entered into liability limitation agreements with each of our non-executive directors, which limits the maximum amount of their liability to the company arising in connection with a failure to execute their duties in good faith and without gross negligence to the minimum amount stipulated by applicable laws and regulations.

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The Audit and Supervisory Committee has a statutory duty to audit the performance of duties by directors and prepare an audit report each fiscal year. We are required to provide them appropriate funding for the payment of ordinary expenses in carrying out their duties and for the remuneration of such independent attorneys and other advisors deemed necessary in the performance of those duties. In addition, the Audit and Supervisory Committee has a statutory duty or is required by its charter to (i) decide on the content of proposals to be submitted to the general meeting of the shareholders regarding the appointment, dismissal or non-reappointment of the independent registered public accounting firm, assume direct responsibility for the appointment, retention, oversight of the work and termination of any independent registered public accounting firm (including resolution of any disagreements between management and the independent registered public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the company and pre-approve such independent registered public accounting firm's services, including non-audit services, (ii) consent to the remuneration of the independent registered public accounting firm, (iii) decide the opinion of the Audit and Supervisory Committee regarding the appointment, dismissal or resignation of directors (excluding Audit and Supervisory Committee members), (iv) decide the opinion of the Audit and Supervisory Committee regarding the remuneration, etc. (meaning remuneration, bonuses, and other economic benefits received as compensation for the performance of duties) of directors, (v) consent to the submission of proposals to the general meeting of shareholders by directors for the appointment of Audit and Supervisory Committee members (including substitute Audit and Supervisory Committee members), (vi) establish, maintain and operate a whistleblower office for suspected misconduct by senior management and the company's accounting, accounting internal controls and auditing, (vii) appoint independent attorneys and other advisors as necessary in the performance of their duties, (viii) receive appropriate funding from the company for payment of remunerations to attorneys and other advisors as necessary in the performance of their duties and other expenses normally required for the performance of their duties (including funding for the payment of ordinary administrative expenses of the Audit and Supervisory Committee that are necessary or appropriate in carrying out its duties). An Audit and Supervisory Committee member may note his/her opinion in the audit report if the opinion expressed in his/her audit report is different from the opinion expressed in the audit report issued by our Audit and Supervisory Committee.

Also, we voluntarily established a nominating committee and a remuneration committee in July 2023 to enhance the independence, objectivity and accountability of our board of directors regarding its consideration of the skill map and diversity of directors and the verification and review of the president's succession plan and the policy for determining the details of remuneration and remuneration of each director (excluding members of the Audit and Supervisory Committee). Our nominating committee and remuneration committee are each comprised of at least three directors, at least two of whom are Audit and Supervisory Committee members that meet the definition of outside director as defined under the Companies Act. According to the committee regulations, the nominating committee must convene at least once a year to assess and provide advice on the competencies of and diversity considerations regarding directors, consider and review the President's succession plan, as well as provide advice on other related matters. Likewise, the remuneration committee is required to meet at least once a year to assess and provide advice on the policy for determining the individual compensation of directors (excluding those who are members of the Audit and Supervisory Committee) and the content of that compensation, as well as provide advice on other related matters.

We are required to appoint and have appointed an independent registered public accounting firm, who has the statutory duties of examining the financial statements to be submitted to the shareholders by a representative director and preparing its audit report thereon. Deloitte Touche Tohmatsu LLC currently acts as our independent registered public accounting firm. Our corporate officers are appointed by our board of directors and have the primary executive responsibility within their appointed business areas and a duty under our internal regulations to report to the board of directors. We currently have fourteen corporate officers.

We have two types of executive officers: those who serve under a mandate agreement (Entrusted) and those who serve under an employment agreement (Employed) as full-time employees. The executive officers under a mandate agreement assume greater responsibility than those under an employment agreement.

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We annually enter into a one-year mandate agreement with each executive officer (Entrusted) serving under this type of contract. In addition to these agreements, the rights and obligations of each executive officer (Entrusted) are governed by applicable laws, our Articles of Incorporation and various internal regulations.

We have liability insurance coverage under a policy, of which SoftBank Group Corp. is the policyholder, that covers our directors, executive officers and senior employees, as well as our directors, executive officers and employees dispatched to other companies (excluding subsidiaries) to serve as directors or officers. This policy is intended to indemnify these individuals against certain liabilities they may incur in the performance of their duties.

**Code of Ethics & Business Conduct** 

Upon listing, we will adopt a Code of Ethics & Business Conduct (the "Code") applicable to all directors, employees and officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar function). The Code will be available on our website at *https://about.paypay.ne.jp/en/* upon listing. We expect that any amendments to the Code, or any waivers of its requirements, will be disclosed on our website to the extent required by applicable SEC and Nasdaq rules. The Code is designed to deter wrongdoing and to promote, among other things, honest and ethical conduct, full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with or submit to the SEC, compliance with applicable laws, internal reporting of violations of the Code and accountability to the Code. The information contained on, or that can be accessed through, our website is not a part of, or incorporated by reference into, this prospectus.

**Directors and Executive Officers (Entrusted)** 

The following table sets forth certain information relating to our directors and executive officers as of the date of this prospectus.

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|:---|:---|:---|:---|:---|
| **Name** | **Position** | **Date of Birth** | **Date of<br>appointment as<br>director or<br>executive officer** | **Date of joining<br>our Company** |
| Ichiro Nakayama | President, Representative Director, CEO and Corporate Officer | September 21, 1969 | June 2018 | June 2018 |
| Jun Shimba | Director (Part-time) | November 15, 1962 | June 2018 | June 2018 |
| Takeshi Idezawa | Director (Part-time) | June 9, 1973 | June 2023 | June 2023 |
| Yoshimitsu Goto | Director (Part-time) | February 15, 1963 | June 2019 | June 2019 |
| Junichi Miyakawa | Director (Part-time) | December 1, 1965 | June 2025 | June 2025 |
| Yasuyoshi<br>Karasawa | Independent Outside Director (Part-time), Audit and Supervisory Committee Member | October 27, 1950 | June 2023 | June 2023 |
| Paul Yonamine | Independent Outside Director (Part-time), Audit and Supervisory Committee Member | August 20, 1957 | June 2023 | June 2023 |
| Hiroko Kono | Independent Outside Director (Part-time), Audit and Supervisory Committee Member | May 8, 1965 | June 2023 | June 2023 |
| Hiroto Kaneko | Independent Outside Director (Part-time), Audit and Supervisory Committee Member | February 26, 1957 | June 2023 | June 2023 |
| Hajime Baba | Executive Vice President, Co-COO and Corporate Officer | September 7, 1965 | June 2023 | June 2018 |
| Masamichi Yasuda | Executive Vice President, Co-COO and Corporate Officer | August 22, 1960 | June 2023 | October 2021 |
| Masanori Sode | Managing Corporate Officer, CAO and CHRO | August 27, 1963 | June 2023 | June 2018 |
| Wataru Kagechika | Managing Corporate Officer and CFO | June 4, 1974 | July 2023 | January 2022 |

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Note:

(1) Yasuyoshi Karasawa, Paul Yonamine, Hiroko Kono, and Hiroto Kaneko satisfy the requirements for outside
directors under the Companies Act.

**Biographical Information** 

The following is a summary of certain biographical information concerning our executive officers and directors.

*Ichiro Nakayama* joined our predecessor, Pay Corporation, in June 2018, and has since served as our President, Representative Director, Corporate Officer and Chief Executive Officer. He received his bachelor's degree in economics from Meiji Gakuin University in 1994, and started his career at International Digital Communication Inc. (currently IDC Frontier Inc.) in April 1994. Mr. Nakayama served in various key positions, including Representative Director and President of IDC Frontier Inc. and Representative Director and Executive Vice President of Ikyu Corporation prior to joining us. He also served as Director of Z Financial Corporation (currently LY Corporation). He concurrently serves as Director of Fukuoka SoftBank HAWKS Corp., Director of PayPay Bank Corporation, and Representative Director of PayPay SC Corporation.

*Jun Shimba* joined us as our Director in June 2018. He received his bachelor's degree in business administration from Tokyo Keizai University in 1985, and started his career at SoftBank Corp. (currently SoftBank Group Corp.) in April 1985. Mr. Shimba served in various key positions, including Senior Director and Managing Executive Officer of SoftBank BB Corp. and Director and Senior Managing Executive Officer of SoftBank Mobile Corporation (both currently SoftBank Corp.) prior to joining us. He concurrently serves as President, Representative Director and Chief Executive Officer of SB Payment Service Corp., Representative Director, Executive Vice President & COO of SoftBank Corp., and Director of B Holdings Corporation.

*Takeshi Idezawa* joined us as our Director in June 2023. He received his bachelor's degree in political science and economics from Waseda University in 1996 and started his career at Asahi Mutual Life Insurance Company in April 1996. He served various key positions, including President and Representative Director of livedoor Co., Ltd. (currently NHN Techorus Corp.), President, Representative Director and CEO of LINE Corporation (currently A Holdings Corporation), Representative Director of LINE Book Distribution Corporation, Representative Director of LINE Digital Frontier Corporation and Representative Director and Co-CEO of Z Holdings Corporation (currently LY Corporation). He concurrently serves as President and Representative Director and CEO of LY Corporation and President and Representative Director of B Holdings Corporation.

*Yoshimitsu Goto* joined us as our Director in June 2019. He received his bachelor's degree in social sciences from Hitotsubashi University in 1987, and he started his career at The Yasuda Trust and Banking Co., Ltd. (currently Mizuho Trust & Banking Co., Ltd.) in April 1987, and joined SoftBank Corp. (currently SoftBank Group Corp.) in June 2000. Mr. Goto served in various key positions, including Director of Vodafone K.K. (currently SoftBank Corp.) and Director of SoftBank Payment Service Corp. (currently SB Payment Service Corp.). He concurrently serves as Representative Director, President, CEO & Acting Owner of Fukuoka SoftBank HAWKS Corp. and Board Director, Corporate Officer, Senior Vice President, CFO, CISO & GCO of SoftBank Group Corp., in addition to serving as an officer or director at several other SoftBank Group companies.

*Junichi Miyakawa* joined us as our Director in June 2025. He received his bachelor's degree in Buddhist studies from Hanazono University in 1988, and started his career as the Representative Director and President of KK Momotaro Internet and has served in various key positions with our parent company, including Representative Director & President of DTH Marketing Corp. (currently SoftBank Corp.), and Representative Director & CTO, Technology Unit Head and Technology Strategy Unit Head of SoftBank Corp. prior to joining us. Mr. Miyakawa concurrently serves as the President, Managing Executive Officer and CEO of SoftBank Corp. and Representative Director & Chairman of B Holdings Corporation.

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*Yasuyoshi Karasawa* joined us as our Independent Outside Director and Audit and Supervisory Committee Member in June 2023. He received his bachelor's degree in economics from Kyoto University in 1975, and he started his career at Sumitomo Marine and Fire Insurance Co., Ltd. (currently Mitsui Sumitomo Insurance Co., Ltd.) in April 1975. He served in various key positions in the company, eventually becoming their Representative Director, President & CEO in April 2010, and also served as the Representative Director and Executive Officer of MS&AD Insurance Group Holdings prior to joining us. Mr. Karasawa concurrently serves as Senior Advisor of Mitsui Sumitomo Insurance Co., Ltd.

*Paul Yonamine* joined us as our Independent Outside Director and Audit and Supervisory Committee Member in June 2023. He received his bachelor's degree in science in business administration from the University of San Francisco in 1979, and started his career at Peat, Marwick, Mitchell & Co. (currently KPMG LLP) in June 1979. He served in various key positions, including Managing Partner of KPMG LLP Hawaii, Chairman and CEO of KPMG Global Solutions LLC (currently PwC Advisory LLC), Representative Director, President & CEO of Hitachi Consulting Co., Ltd., Representative Director, President and CEO of IBM Japan, Ltd., Director and Chairman of GCA Corporation, Chairman and CEO of Central Pacific Bank, and Representative Director & Chairman of Central Pacific Financial Corp. Mr. Yonamine concurrently serves as Outside Director of Sumitomo Mitsui Banking Corporation, Outside Director of Seven & i Holdings Co., Ltd. and Chairman Emeritus of Central Pacific Bank.

*Hiroko Kono* joined us as our Independent Outside Director and Audit and Supervisory Committee Member in June 2023. She received her bachelor's degree in philosophy from Waseda University in 1989, started her career at Mitsubishi Corporation in April 1989 and joined Capital International Research, Inc. in July 1992 where she worked in its Tokyo Office, Los Angeles Headquarters and Washington, D.C. Office. Ms. Kono also served as Executive Director and Head of Operations of International School of Asia, Karuizawa and Head of Operations of UWC ISAK Japan. She concurrently serves as Senior Executive Coach of COACH A Co., Ltd., Outside Director of Life Corporation, and Outside Director and Audit and Supervisory Committee Member of Satudora Holdings Co., Ltd.

*Hiroto Kaneko* joined us as our Independent Outside Director and Audit and Supervisory Committee Member in June 2023. He received his bachelor's degree in economics from Waseda University in 1980, and started his career at Arthur Andersen & Co in Japan (currently KPMG AZSA LLC) in April 1980 as Japanese Certified Public Accountant. Mr. Kaneko served as audit partner of many Japanese global public companies and played various key roles, including the Board Member of KPMG AZSA LLC. He is now running his own CPA office and concurrently serves as Independent non-executive Director as well as Audit and Supervisory Committee Member of Nisshin Seifun Group Inc. and H.I.S. Co., Ltd., respectively.

*Hajime Baba* joined our predecessor, Pay Corporation, in June 2018 and currently serves as our Vice President, Corporate Officer and Co-Chief Operating Officer. Mr. Baba started his career at Nihon SoftBank (currently SoftBank Group Corp.) in April 1988, and has since served various key positions within the organization, including President and Representative Director of SB Power Corp. and Corporate Officer and Advisor of SoftBank Corp.

*Masamichi Yasuda* joined us in October 2021 and currently serves as our Vice President, Corporate Officer and Co-Chief Operating Officer. He started his career at The Bank of Tokyo, Ltd. (currently MUFG Bank, Ltd.) in April 1983, and has served various key positions, including US Treasurer and Deputy CFO at Union Bank, Director, CRO and Chief Executive of Global Markets at Mitsubishi UFJ Financial Group, and Deputy President of Mitsubishi UFJ Morgan Stanley Securities., prior to joining us. Mr. Yasuda concurrently serves as Director of PayPay Securities Corporation, Director of Credit Engine, Inc. and Director of PayPay Bank Corporation.

*Masanori Sode* joined our predecessor, Pay Corporation in June 2018 and currently serves as our Managing Corporate Officer, Chief Administrative Officer and Chief Human Resource Officer. He started his

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career at The Nippon Credit Bank, Ltd. (currently Aozora Bank, Ltd.) in April 1986, and served in various key positions, including Representative Director of Netrust, Ltd. (currently LY Corporation) and Executive Vice President and Representative Director of The Japan Net Bank, Limited (currently PayPay Bank Corporation). Mr. Sode concurrently serves as Director of PayPay Card Corporation and PayPay India Private Limited, as well as Person Responsible for Execution of Duties for Kioicho First LLC, Kioicho Second LLC and Kioicho Third LLC.

*Wataru Kagechika* joined us in January 2022 and currently serves as our Managing Corporate Officer and Chief Financial Officer. He started his career at Industrial Bank of Japan (currently Mizuho Bank, Ltd.) in April 1998. Before joining PayPay, he served as Deputy General Manager of the Financial Planning Dept. and Strategic Planning Dept. of Mizuho Financial Group, Inc. He was seconded as a General Manager of Corporate Planning Dept. and IR Office at SoftBank Corp., after Director at Americas Department of Mizuho Bank, Ltd. and Senior IR officer at Mizuho Financial Group, Inc. Mr. Kagechika concurrently serves as Director of PayPay India Private Limited.

**Compensation of Directors and Executive Officers** 

The aggregate compensation, including bonuses, paid to our directors, members of the Audit and Supervisory Committee and executive officers as a group for the year ended March 31, 2025 was ¥637.8 million.

In accordance with the Companies Act and our articles of incorporation, the amount of compensation for our directors is decided by first setting the maximum amount of total compensation for all of our directors who are not members of the Audit and Supervisory Committee and for directors who are members of the Audit and Supervisory Committee in resolutions adopted by our shareholders at a shareholders meeting, respectively. Our representative director authorized by our board of directors then decide on the amount of compensation for each director other than members of the Audit and Supervisory Committee based on our policy regarding the determination of individual compensation established by us with the advice of the remuneration committee, which policy ensures executive compensation is set to be competitive for executives, utilizing external research institution databases for analysis and considering our company's management status. Compensation consists of fixed remuneration and performance-linked remuneration, with a 50% fixed and 50% performance-linked ratio at target achievement. Individual fixed remuneration amounts are determined considering position and duties. Performance-linked remuneration is calculated with a payout rate ranging from 0% to 150%, depending on our company's performance and individual results. The amount of compensation for each member of the Audit and Supervisory Committee is decided through discussions among the Audit and Supervisory Committee. We did not pay any other cash compensation or benefits in kind to our directors and executive officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and corporate officers.

On November 30, 2022, we granted certain of our directors and corporate officers stock options under a trust-type stock option plan. On May 31, 2025, we granted certain of our directors and corporate officers stock options under a tax qualified-type stock option plan and a one-yen-exercisable at retirement-type stock option plan. The purpose of these stock option grants is to increase the value of the Company, ensure the successful activity of our current team members, enable us to obtain talented human resources, and finally grow our business by enabling our directors, officers and employees to share in our success and aligning their interests with those of our shareholders. The details of the granted stock options are described in "Stock Options—2nd Series Stock Option—46th Series Stock Option (Trust-type Stock Options)," "Stock Options—47th Series Stock Option (Tax qualified-type Stock Options)," "Stock Options—48th Series Stock Option (Tax qualified-type Stock Options)" and "Stock Options—49th Series Stock Option (One-yen-exercisable at retirement-type Stock Options)" below.

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**Stock Options** 

On November 15, 2025, we effected a stock split of one share into 200 shares. Unless otherwise indicated, all numbers of shares underlying stock options and the corresponding exercise prices presented below in this subsection have been retroactively adjusted to reflect the Stock Split.

***1st Series Stock Option***

On September 30, 2020, we granted One97 Communications Singapore Private Limited, a subsidiary of One97 Communications Limited, stock options to purchase 31,802,400 common shares. The exercise price is ¥500 per share and the expiration date of the options is September 29, 2030. The purchase price of the options was ¥159,012 in total. Subsequently, in December 2024, One97 Communications Singapore Private Limited sold its stock options to purchase 31,802,400 of our common shares to SVF II Piranha (DE) LLC, an investment fund ultimately controlled by SoftBank Group Corp. and a shareholder of ours. On April 4, 2025, SVF II Piranha (DE) LLC exercised the stock options it purchased from One97 Communications Singapore Private Limited and received 31,802,400 common shares.

***2nd Series Stock Option–46th Series Stock Option (Trust-type Stock Options)***

In August 2022, our shareholders approved a plan to grant stock options to our directors, corporate officers and employees through trust-type stock options. Under this plan, we issued stock options to purchase 11,636,000 common shares on August 29, 2022, which were initially held by a trustee. On December 5, 2022, we granted a portion of those stock options to certain of our directors, corporate officers and employees, whereby the trustee transferred stock options to purchase 4,589,200 common shares to our directors, corporate officers and employees pursuant to a resolution of our board of directors. As of April 30, 2025, the remaining trust-type stock options to purchase 7,046,800 common shares were forfeited and extinguished, and by May 30, 2025, the trust-type stock options to purchase 580,000 common shares that were registered were forfeited and extinguished due to retirement.

For the issuance of the stock options under this plan, funds were entrusted to the trustee by Z Holdings Corporation (currently LY Corporation) and SoftBank Corp., each in equal amounts, based on which the trustee paid the purchase price of the stock options to us. See Notes 29 and 37 to our audited consolidated financial statements included elsewhere in this prospectus.

Transfer of the stock options requires an approval by our board of directors. A stock option holder generally cannot exercise stock options if they are no longer a director, corporate officer or employee of us, except under limited circumstances or as otherwise determined by our board of directors. In addition, a stock option holder generally cannot exercise stock options unless our common shares or depository receipts or other securities representing our common shares are listed on any financial instrument exchanges. Moreover, certain of our stock options cannot be exercised unless the amount of our market capitalization exceeds a certain threshold. The amount of our market capitalization is the product of (a) the number of our outstanding common shares excluding treasury shares we may hold and (b) a price per share that is calculated based on a market price of our common shares or depository receipts or other securities representing our common shares listed on a financial instrument exchange.

***Restricted Stock Units***

Our Board of Directors approved in October 2025 and an extraordinary general meeting of shareholders approved in November 2025 resolutions to introduce a framework for stock-based compensation in the form of restricted stock units ("RSUs") for our directors, including separate frameworks for (i) director(s) other than members of the Audit and Supervisory Committee and (ii) members of the Audit and Supervisory Committee.

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For director(s) other than members of the Audit and Supervisory Committee, the resolutions approved an annual maximum remuneration limit for RSU-based compensation of up to ¥1.0 billion in value and up to 500,000 shares per fiscal year in the aggregate. For members of the Audit and Supervisory Committee, the resolutions approved an annual maximum remuneration limit for RSU-based compensation of up to ¥500 million in value and up to 250,000 shares per fiscal year in the aggregate.

These resolutions were adopted solely to establish the upper limits and general framework for RSU-based compensation as required under the Companies Act of Japan. At this time, the substantive design and operational details of any RSU program, including grant timing, vesting conditions, performance criteria (if any), individual allocation amounts and other terms, have not been determined. Any such details will be resolved separately by our Board of Directors or through discussions among the Audit and Supervisory Committee members, as applicable. There can be no assurance that RSUs will be granted up to the approved limits, or at all.

The following table summarizes the stock options we have issued under the trust-type stock option plan.

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|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Number of<br>common shares**<br>**underlying<br>stock options** | **Exercise<br>price**<br>**(per share)** | **Beginning of<br>exercise period** | **End of exercise<br>period** | **Minimum of market<br>capitalization to<br>exercise stock<br>options** | **Purchase price** |
|  2nd series | 843000 | ¥ 1,300 | April 1, 2024 | March 31, 2033 |  | ¥106,133,700 |
|  3rd series | 843000 | ¥ 1,300 | April 1, 2025 | March 31, 2033 |  | ¥ 95,638,350 |
|  4th series | 843000 | ¥ 1,300 | April 1, 2026 | March 31, 2033 |  | ¥ 91,044,000 |
|  5th series | 843000 | ¥ 1,300 | April 1, 2027 | March 31, 2033 |  | ¥ 88,009,200 |
|  6th series | 837200 | ¥ 1,300 | April 1, 2028 | March 31, 2033 |  | ¥ 84,892,080 |
|  7th series | 416000 | ¥ 1,300 | April 1, 2024 | March 31, 2033 | ¥ 3 trillion | ¥ 50,211,200 |
|  8th series | 385800 | ¥ 1,300 | April 1, 2025 | March 31, 2033 | ¥ 3 trillion | ¥ 43,537,530 |
|  9th series | 385800 | ¥ 1,300 | April 1, 2026 | March 31, 2033 | ¥ 3 trillion | ¥ 41,647,110 |
|  10th series | 385800 | ¥ 1,300 | April 1, 2027 | March 31, 2033 | ¥ 3 trillion | ¥ 40,277,520 |
|  11th series | 385800 | ¥ 1,300 | April 1, 2028 | March 31, 2033 | ¥ 3 trillion | ¥ 39,120,120 |
|  12th series | 359000 | ¥ 1,300 | April 1, 2024 | March 31, 2033 | ¥ 4 trillion | ¥ 39,633,600 |
|  13th series | 328400 | ¥ 1,300 | April 1, 2025 | March 31, 2033 | ¥ 4 trillion | ¥ 35,598,560 |
|  14th series | 324400 | ¥ 1,300 | April 1, 2026 | March 31, 2033 | ¥ 4 trillion | ¥ 34,499,940 |
|  15th series | 308400 | ¥ 1,300 | April 1, 2027 | March 31, 2033 | ¥ 4 trillion | ¥ 32,027,340 |
|  16th series | 308400 | ¥ 1,300 | April 1, 2028 | March 31, 2033 | ¥ 4 trillion | ¥ 31,179,240 |
|  17th series | 248400 | ¥ 1,300 | April 1, 2024 | March 31, 2033 | ¥ 5 trillion | ¥ 25,746,660 |
|  18th series | 248400 | ¥ 1,300 | April 1, 2025 | March 31, 2033 | ¥ 5 trillion | ¥ 25,634,880 |
|  19th series | 192400 | ¥ 1,300 | April 1, 2026 | March 31, 2033 | ¥ 5 trillion | ¥ 19,778,720 |
|  20th series | 108400 | ¥ 1,300 | April 1, 2027 | March 31, 2033 | ¥ 5 trillion | ¥ 10,997,180 |
|  21st series | 108400 | ¥ 1,300 | April 1, 2028 | March 31, 2033 | ¥ 5 trillion | ¥ 10,812,900 |
|  22nd series | 174200 | ¥ 1,300 | April 1, 2024 | March 31, 2033 | ¥ 6 trillion | ¥ 17,106,440 |
|  23rd series | 174200 | ¥ 1,300 | April 1, 2025 | March 31, 2033 | ¥ 6 trillion | ¥ 17,054,180 |
|  24th series | 161200 | ¥ 1,300 | April 1, 2026 | March 31, 2033 | ¥ 6 trillion | ¥ 15,781,480 |
|  25th series | 161200 | ¥ 1,300 | April 1, 2027 | March 31, 2033 | ¥ 6 trillion | ¥ 15,717,000 |
|  26th series | 125200 | ¥ 1,300 | April 1, 2028 | March 31, 2033 | ¥ 6 trillion | ¥ 12,094,320 |
|  27th series | 73000 | ¥ 1,300 | April 1, 2024 | March 31, 2033 | ¥ 7 trillion | ¥ 6,759,800 |
|  28th series | 73000 | ¥ 1,300 | April 1, 2025 | March 31, 2033 | ¥ 7 trillion | ¥ 6,745,200 |
|  29th series | 73000 | ¥ 1,300 | April 1, 2026 | March 31, 2033 | ¥ 7 trillion | ¥ 6,748,850 |
|  30th series | 73000 | ¥ 1,300 | April 1, 2027 | March 31, 2033 | ¥ 7 trillion | ¥ 6,737,900 |
|  31st series | 73000 | ¥ 1,300 | April 1, 2028 | March 31, 2033 | ¥ 7 trillion | ¥ 6,719,650 |
|  32nd series | 84000 | ¥ 1,300 | April 1, 2024 | March 31, 2033 | ¥ 8 trillion | ¥ 7,362,600 |
|  33rd series | 84000 | ¥ 1,300 | April 1, 2025 | March 31, 2033 | ¥ 8 trillion | ¥ 7,337,400 |
|  34th series | 84000 | ¥ 1,300 | April 1, 2026 | March 31, 2033 | ¥ 8 trillion | ¥ 7,358,400 |
|  35th series | 80000 | ¥ 1,300 | April 1, 2027 | March 31, 2033 | ¥ 8 trillion | ¥ 7,008,000 |
|  36th series | 80000 | ¥ 1,300 | April 1, 2028 | March 31, 2033 | ¥ 8 trillion | ¥ 7,016,000 |
|  37th series | 106600 | ¥ 1,300 | April 1, 2024 | March 31, 2033 | ¥ 9 trillion | ¥ 8,693,230 |
|  38th series | 106600 | ¥ 1,300 | April 1, 2025 | March 31, 2033 | ¥ 9 trillion | ¥ 8,655,920 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Number of<br>common shares**<br>**underlying<br>stock options** | **Exercise<br>price**<br>**(per share)** | **Beginning of<br>exercise period** | **End of exercise<br>period** | **Minimum of market<br>capitalization to<br>exercise stock<br>options** | **Purchase price** |
|  39th series | 103600 | ¥ 1,300 | April 1, 2026 | March 31, 2033 | ¥ 9 trillion | ¥ 8,438,220 |
|  40th series | 103600 | ¥ 1,300 | April 1, 2027 | March 31, 2033 | ¥ 9 trillion | ¥ 8,474,480 |
|  41st series | 103600 | ¥ 1,300 | April 1, 2028 | March 31, 2033 | ¥ 9 trillion | ¥ 8,484,840 |
|  42nd series | 167200 | ¥ 1,300 | April 1, 2024 | March 31, 2033 | ¥ 10 trillion | ¥ 12,774,080 |
|  43rd series | 167200 | ¥ 1,300 | April 1, 2025 | March 31, 2033 | ¥ 10 trillion | ¥ 12,749,000 |
|  44th series | 167200 | ¥ 1,300 | April 1, 2026 | March 31, 2033 | ¥ 10 trillion | ¥ 12,782,440 |
|  45th series | 167200 | ¥ 1,300 | April 1, 2027 | March 31, 2033 | ¥ 10 trillion | ¥ 12,916,200 |
|  46th series | 167200 | ¥ 1,300 | April 1, 2028 | March 31, 2033 | ¥ 10 trillion | ¥ 12,916,200 |

---

The table below summarizes the stock options (consisting of 2nd series stock options–46th series stock options) we have granted to our directors and corporate officers under the trust-type stock option plan, as of the date of this prospectus.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name** | **Title** | **Number of Common<br>Shares Underlying<br>Stock Options Granted** | **Exercise<br>Price**<br>**(per share)** | **Grant Date** | **End of<br>Exercise<br>Period** |
| Ichiro<br>Nakayama | President, Representative Director, CEO and Corporate Officer | \* | ¥1300 | November 30,<br>2022 | March 31,<br>2033 |
| Hajime<br>Baba | Executive Vice President, Co-COO and Corporate Officer | \* | ¥1300 | November 30,<br>2022 | March 31,<br>2033 |
| Masamichi<br>Yasuda | Executive Vice President, Co-COO and Corporate Officer | \* | ¥1300 | November 30,<br>2022 | March 31,<br>2033 |
| Masanori<br>Sode | Managing Corporate Officer, CAO and CHRO | \* | ¥1300 | November 30,<br>2022 | March 31,<br>2033 |
| Wataru<br>Kagechika | Managing Corporate Officer and CFO | \* | ¥1300 | November 30,<br>2022 | March 31,<br>2033 |

---

\*We have not disclosed the number of common shares underlying the stock options granted because the common shares beneficially owned by this officer is less than one percent of all common shares.

***47th Series Stock Option (Tax qualified-type Stock Options)***

In April 2025, our shareholders approved a plan to grant stock options to our directors, corporate officers and employees through tax qualified-type stock options. Under this plan, on May 31, 2025 we granted stock options to purchase 7,625,400 common shares.

***48th Series Stock Option (Tax qualified-type Stock Options)***

In April 2025, our shareholders approved a plan to grant stock options to our directors, corporate officers through tax qualified-type stock options. Under this plan, on May 31, 2025 we granted stock options to purchase 535,000 common shares.

***49th Series Stock Option (One-yen-exercisable at retirement-type Stock Options)***

In April 2025, our shareholders approved a plan to grant stock options to our directors, corporate officers through one-yen-exercisable at retirement-type stock options. Under this plan, on May 31, 2025 we granted stock options to purchase 569,000 common shares.

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**JAPANESE FOREIGN EXCHANGE REGULATIONS** 

**Japanese Foreign Exchange Controls** 

***General***

The Foreign Exchange Regulations govern certain aspects, in particular, relating to the acquisition and holding of shares of our common stock by "exchange non-residents" and by "foreign investors" (each as defined below).

"Exchange residents" are defined in the Foreign Exchange Regulations as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) individuals having domicile or residence within Japan; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) corporations whose principal offices are located within Japan.

"Exchange non-residents" are defined in the Foreign Exchange Regulations as any individuals or corporations other than exchange residents.

Generally, branches and other offices of non-resident corporations that are located within Japan are regarded as exchange residents. Conversely, branches and other offices of Japanese corporations located outside Japan are regarded as exchange non-residents.

"Foreign investors" are defined in the Foreign Exchange Regulations as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) individuals who are exchange non-residents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) corporations or other entities that are organized under the laws of foreign countries or whose principal
offices are located outside Japan (excluding partnerships falling within the definition (iv) below);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) corporations of which 50% or more of the total voting rights are held, directly or indirectly, by
individuals and/or corporations falling within the definition(s) (i) and/or (ii);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) general partnerships under the Civil Code of Japan (Act No. 89 of 1896, as amended) established to
invest in corporations, limited partnerships for investment under the Limited Partnership Act for Investment of Japan (Act No. 90 of 1998, as amended), or any other similar partnerships under the laws of foreign countries, where either (a) 50%
or more of the total contributions are made by exchange non-residents or certain other foreign investors prescribed by the Foreign Exchange Regulations or (b) a majority of the general partners who are
delegated to execute the business of such general partnerships, general partners of such limited partnerships or other similar partners of the other similar partnerships are exchange non-residents or certain
other foreign investors prescribed by the Foreign Exchange Regulations; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) corporations or other entities where a majority of either (a) directors or other officers (including
those who have the same degree or more control over such corporations or such other entities as directors or other officers) or (b) directors or other officers (including those who have the same degree or more control over such corporations or
such other entities as directors or other officers) having the power of representation are individuals who are exchange non-residents.

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***Acquisition of Shares***

In general, the acquisition by an exchange non-resident of shares of a Japanese corporation, such as the shares of our common stock, is not subject to any prior filing requirements. However, in the case where such acquisition constitutes an IDI the exchange non-resident may be required to file a prior notification (see "Prior Notification Requirements on Inward Direct Investment in Shares of Non-Listed Corporations" below). Also, in the case where an exchange resident transfers shares of a Japanese corporation, such as the shares of our common stock, for consideration exceeding ¥100 million, to an exchange non-resident, the exchange resident who transfers the shares is required to report the transfer to the Minister of Finance within 20 days after the later of (a) the date of the transfer or (b) the date of payment for the transfer, unless (i) the transfer was made through a bank or financial instruments business operator registered under the FIEA acting as an agent or intermediary or (ii) the transfer constitutes an IDI.

***Prior Notification Requirements on Inward Direct Investment in Shares of Non-Listed Corporations***

If a foreign investor acquires shares of a Japanese corporation that is not listed on any Japanese stock exchange, such as the shares of our common stock, such acquisition constitutes an IDI. In general, any foreign investor intending to make an IDI in a Japanese corporation that is (whether itself or by any of its subsidiaries or certain related corporations in Japan) engaged in certain business sectors designated under the Foreign Exchange Regulations and the relevant public notice (*Shitei-Gyoshu*) (in which our business sectors are currently included), or the Designated Business Sectors, must, except where any of certain exemptions apply, file a prior notification of the acquisition with the Ministers.

If such prior notification is filed, the proposed acquisition may not be consummated until 30 days have passed from the date of the filing, although this period may be shortened if the proposed acquisition is determined not to raise concerns from a perspective of national security or certain other factors. On the other hand, if any concerns are recognized in the proposed acquisition from a perspective of national security or certain other factors, the Ministers may extend such period up to five months to ensure there is time for examination. The Ministers may recommend any modification or abandonment of the proposed acquisition and, if such recommendation is not accepted by the acquiring foreign investor, they may order the modification or abandonment of such acquisition.

Acquisition of one or more shares of our common stock by a foreign investor from other foreign investor is also subject to similar prior notification requirements. Acquisitions of shares by foreign investors by way of stock split are not subject to the prior notification requirements.

***Exemption for Prior Notification Requirements***

Under the Foreign Exchange Regulations, any foreign investors, excluding disqualified investors such as those with a record of sanctions for violation of the Foreign Exchange and Foreign Trade Act, state-owned enterprises (except those who are accredited by the authorities), and "Type-A investors," (as defined below) (except those who are accredited by the authorities) or Eligible Foreign Investors, will be exempted from the prior notification requirements without any upper limit on the number of shares to be acquired or held, on the condition that they comply with the following exemption conditions, or the Common Exemption Conditions, unless the investment intended to be conducted by them constitutes an IDI in a Japanese corporation engaging, or its subsidiaries or certain related corporations in Japan are engaging, in certain types of the Designated Business Sectors designated under the Foreign Exchange Regulations and the relevant public notice as being a substantial threat to national security (*Core-Gyoshu*) (in which our business sectors are currently included), or the Core Sectors.

Foreign investors falling within either of the following categories are regarded as "Type-A investors":

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) organizations or individuals who have obligations to cooperate with foreign governments, foreign government
agencies, foreign local public entities, foreign central banks, or foreign

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political parties or other political organizations, or collectively, Foreign Governments, in collecting information related to Japan's national security based on agreements with such Foreign Governments or foreign laws and regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) organizations controlled by foreign investors falling within the category (i) or by Foreign Governments
imposing those obligations on these investors. This control is established through (a) holding 50% or more of the total issued shares or the total voting rights of such organizations, (b) holding class shares that grant the right to veto
matters to be resolved at general meetings of shareholders or by the board of directors of such organizations, (c) the appointment of one-third or more of (x) such organizations' directors or
other officers or (y) those having the power of representation, or (d) holding the right to direct such organizations regarding their IDIs or their exercise of voting rights in connection with IDIs; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) directors or other officers of organizations falling within the category (i) or (ii).

In general, the "Common Exemption Conditions" are set out in the relevant public notice as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) foreign investors or their related persons are not to become directors of the investee corporation or its
certain related corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) foreign investors will not propose by themselves or through other shareholders to the general meeting of
shareholders certain matters such as the transfer or disposition of the investee corporation's business activities in the Designated Business Sectors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) foreign investors will not access non-public information about the
investee corporation's or its certain related corporation's technology in relation to business activities in the Designated Business Sectors.

However, Eligible Foreign Investors who intend to invest in a Japanese corporation engaging, or a Japanese corporation which subsidiary or certain related corporation is engaging, in the Core Sectors, which is not listed in Japan, such as us, would not be exempted from the prior notification requirements.

***Consent at General Meeting of Shareholders***

In addition to the acquisition of shares mentioned above, if a foreign investor who holds one or more voting rights of a Japanese corporation that engages in the Designated Business Sectors intends to consent, at the general meeting of shareholders, to certain proposals having material influence on the management of such corporation, such as (i) election of such foreign investor or its related persons as directors or audit and supervisory board members of the investee corporation or (ii) transfer or discontinuation of its business activities in the Designated Business Sectors, such consent also constitutes an IDI that generally requires the filing of a prior notification with the Ministers; provided, however, that in the case of proposal (ii), the prior notification is required only where such proposal is made by such foreign investor by itself or through other shareholders. In such cases, the exemptions from the prior notification requirements described in "Exemption for Prior Notification Requirements" above are not available.

***Post-Investment Reports***

Further to the prior notifications, under the Foreign Exchange Regulations, foreign investors conducting IDIs may be required to submit post-investment reports to the Ministers within 45 days after the transaction settlement date, once the IDIs for which prior notifications have been filed are actually made, or even if such IDIs are not subject to the prior notification requirements or are exempted from such requirements.

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Acquisitions of shares by foreign investors by way of stock split are not subject to the post-investment report requirements.

***Dividends and Proceeds from Sales of Shares***

Under the Foreign Exchange Regulations, dividends paid on and the proceeds from sales in Japan of shares of our common stock held by exchange non-residents may generally be converted into any foreign currency and repatriated abroad. However, under the Foreign Exchange Regulations, certain procedures may be required for the transfer of funds out of Japan or such transfer of funds may be prohibited, depending on the location of the recipient, the purpose of such fund transfer and other factors.

***Acquisition of ADSs, Surrender of ADSs***

Regarding the acquisition of ADSs, the Minister of Finance has expressed its view that, provided that it should be judged in accordance with the actual situation on a case-by-case basis, in general, in the case where a Japanese corporation that is not listed on any Japanese stock exchange, such as us, lists depositary receipts issued by a foreign depository bank backed by the shares of such Japanese corporation on any foreign stock exchange, it is considered that, while such a foreign depositary bank needs to submit a prior notification of IDI upon acquiring the shares, non-residents or foreign corporations that acquire such depositary receipts do not need to submit any prior notification of IDI because the foreign depositary bank that will acquire the shares of such Japanese corporation is required to submit a prior notification. However, there is no guarantee that the Minister of Finance will maintain this view in the future. See "Risk Factors—Prior notification under the Foreign Exchange and Foreign Trade Act of Japan may be required in the case of acquisition by foreign investors of our shares."

Foreign investors that intend to surrender the ADSs and thereby acquire the underlying shares of our common stock will be required to submit a prior notification to the Ministers.

The discussion above is not exhaustive of all possible foreign exchange controls considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange controls consequences of the acquisition, ownership and disposition of the ADSs, shares of our common stock or voting rights by consulting their own advisors.

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**REGULATIONS** 

We are subject to various laws and regulations in Japan, where we primarily conduct our business. These include requirements to obtain governmental approvals for conducting business, as well as laws and regulations such as the Payment Services Act, the Banking Act, the FIEA, the Labor Standards Act (Act No. 49 of 1947, as amended), or the Labor Standards Act, the Ordinance for Enforcement of the Labor Standards Act (Act No. 23 of 1947, as amended), or the Ordinance for Enforcement of the Labor Standards Act, the Money Lending Business Act, the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates, the Interest Rate Restriction Act, the Installment Sales Act, the Deposit Insurance Act (Act No. 34 of 1971, as amended), or the Deposit Insurance Act, the Act on Special Measures for Strengthening Financial Functions of Japan (Act No. 128 of 2004, as amended), or the Act on Special Measures for Strengthening Financial Functions of Japan, the Act on Emergency Measures for the Revitalization of the Financial Functions (Act No. 132 of 1998, as amended), or the Act on Emergency Measures for the Revitalization of the Financial Functions, the Act on Limitation on Shareholding by Banks and Other Financial Institutions of Japan (Act No. 131 of 2001, as amended), or the Act on Limitation on Shareholding by Banks and Other Financial Institutions of Japan, the Act on the Provision and the Improvement of the Environment of Financial Services (Act No. 101 of 2000, as amended), or the Act on the Provision and the Improvement of the Environment of Financial Services, the Act on the Promotion of Ensuring National Security Through Integrated Implementation of Economic Measures (Act No. 43 of 2022, as amended), or the Act on the Promotion of Ensuring National Security Through Integrated Implementation of Economic Measures, the Foreign Exchange and Foreign Trade Act, the Act on Prevention of Transfer of Criminal Proceeds, the Act on the Protection of Personal Information and the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade. Below are summaries of key Japanese regulations applicable to our business.

**PayPay Corporation** 

***Payment Services Act***

*Regulations on Prepaid Payment Instruments* 

In Japan, the Payment Services Act regulates issuers of prepaid payment instruments, such as prepaid cards and e-money. Issuers of prepaid payment instruments must register with the Director of the relevant Local Finance Bureau if the prepaid payment instruments can be used to purchase goods or services that are offered not only by the issuer or its closely related parties, including its subsidiaries, but also by third parties. Since PayPay Corporation offers PayPay Money Lite, a non-refundable type of PayPay Balance, which qualifies as a prepaid payment instrument and can be used to purchase goods and services offered by third parties, PayPay Corporation has registered with the Director of the Kanto Local Finance Bureau and must comply with certain regulations under the Payment Services Act. Such regulations include: (i) an obligation to deposit an amount not less than 50% of the total unused balance arising from all issued prepaid payment instruments, which corresponds to the balance of PayPay Money Lite, as of the relevant reference date (March 31 and September 30 every year) (the "Unused Balance as of the Reference Date"); if the Unused Balance as of the Reference Date is more than JPY 10 million, then the deposit must be made within two months after the date immediately following the reference date, or issuers of prepaid payment instruments must enter into certain guarantee or trust agreements with a financial institution or a trust company to provide the security deposits when required under the Payment Services Act and such agreements must be notified to the Director of the relevant Local Finance Bureau; (ii) an obligation to refund the outstanding balance of prepaid payment instruments if certain events specified under the Payment Services Act, including discontinuation of all or part of the business of issuing prepaid payment instruments, occur; (iii) general restrictions on refunds except for the mandatory refund described in the foregoing item (ii); and (iv) an obligation to secure any private information obtained in connection with prepaid payment instruments. The Director of the Kanto Local Finance Bureau is authorized to issue a business improvement or suspension order, or cancel PayPay Corporation's registration, if PayPay Corporation fails to comply with these regulations. PayPay Corporation may also be subject to criminal sanctions if it fails to fulfill certain obligations under the Payment Services Act.

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In addition, the Payment Services Act regulates issuers of high-value, electronically transferable prepaid payment instrument. These instruments are designed to be transferred by electronic means, exceeding a certain amount either at one time or over the course of a month. Since PayPay Money Lite (High Amount) falls within the definition of a high-value, electronically transferable prepaid payment instrument, PayPay Corporation is required to (i) submit a business implementation plan that states certain matters, such as measures to protect users of PayPay Money Lite (High Amount), and ensure the sound and appropriate management of the business of issuing PayPay Money Lite (High Amount) to the Director of the Kanto Local Finance Bureau, and (ii) conduct the necessary identification procedures for users of PayPay Money Lite (High Amount) as required under the Act on Prevention of Transfer of Criminal Proceeds as described below.

*Regulations on Funds Transfer Services* 

The Payment Services Act also regulates funds transfer service providers. A "funds transfer service" is the business of transferring funds carried out by persons other than banks and other deposit-taking institutions. Under the Payment Services Act, funds transfer services are, in general, classified into three types, one of which is a type II funds transfer service, which permits the transfer of JPY 1 million or less and requires registration with the Director of the relevant Local Finance Bureau. Since PayPay Corporation offers PayPay Money, a refundable type of PayPay Balance deposited by users, which falls within the definition of a type II funds transfer service, PayPay Corporation has registered with the Director of the Kanto Local Finance Bureau as a type II funds transfer service provider and must comply with certain regulations under the Payment Services Act. Under these regulations, type II funds transfer service providers are obligated to deposit a specific amount (the "Deposit") (the calculation of which is described below), and the Deposit must be made within three business days after the end of a period designated as a week or shorter by the funds transfer service provider, or type II funds transfer service providers must enter into certain guarantee or trust agreements with a financial institution or a trust company to provide the Deposits when required under the Payment Services Act and such agreements must be notified to the Director of the relevant Local Finance Bureau. The amount of Deposit is the higher of (i) JPY 5 million and (ii) the amount calculated based on the sum of (a) the amount of outstanding obligations pertaining to funds transfer transactions borne by the funds transfer service provider and (b) the expenses associated with the exercise of rights as creditors of fund transfer service.

In addition, type II funds transfer service providers are obligated to take necessary measures for the safe management of information related to funds transfer services, or provide explanations to prevent users from mistaking these services for exchange transactions conducted by banks.

The Director of the Kanto Local Finance Bureau is authorized to issue a business improvement or suspension order, or cancel PayPay Corporation's registration, if PayPay Corporation fails to comply with these regulations. PayPay Corporation may be also subject to criminal sanctions if it fails to comply with certain obligations as a funds transfer service provider.

***Banking Act***

*Regulations on Electronic Payment Services* 

The Banking Act regulates electronic payment services. "Electronic payment services" is the business of performing any of the following activities using an electronic data processing system as entrusted by a depositor that has opened an account for deposits with a bank: (i) receiving instructions to execute funds transfer transactions for transferring funds in the depositor's account and providing such instructions to the bank; or (ii) acquiring information on the depositor's account from the bank and providing it to the depositor. Electronic payment service providers must: (a) register with the Director of the relevant Local Finance Bureau; (b) enter into a contract with the bank for electronic payment services, stipulating, among other things, the allocation of liability with the bank for any losses or damages incurred by users arising from electronic payment services; (c) conduct electronic payment services pertaining to that bank in accordance with the contract; and (d) disclose

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certain information contained in the above contract from among the conditions of that contract using the internet or by any other means. PayPay Corporation, which acquires information on user accounts from PayPay Bank Corporation and provides it to those users, has registered with the Director of the Kanto Local Finance Bureau as an electronic payment service provider.

The Director of the Kanto Local Finance Bureau is authorized to issue a business improvement or suspension order, or cancel PayPay Corporation's registration, if PayPay Corporation fails to comply with these regulations.

*Regulations on Bank Agency Services* 

The Banking Act regulates bank agency services. "Bank agency services" is the business of acting as an agent or intermediary for a bank to enter into a contract for: (i) the acceptance of deposits, installment savings, etc.; (ii) the lending of funds or the discounting of bills and notes; or (iii) funds transfer transactions. The bank agent must obtain a license from the Director of the relevant Local Finance Bureau. PayPay Corporation, which acts as an intermediary to enter into contracts for the acceptance of yen ordinary deposits, foreign currency ordinary deposits, the lending of yen funds, and funds transfer transactions with PayPay Bank Corporation as its principal bank, has obtained a license from the Director of the Kanto Local Finance Bureau. The Director is authorized to issue a business improvement or suspension order, or cancel PayPay Corporation's license, if PayPay Corporation fails to comply with the regulations applicable to bank agents under the Banking Act.

***The FIEA***

*Regulations on Financial Instruments Intermediary Services* 

The FIEA regulates financial instruments intermediary services. "Financial instruments intermediary services" are services that fall under any of the following acts, which are provided for and under entrustment from financial instruments business operators or registered financial institutions: (i) intermediation for the purchase or sale of securities; (ii) intermediation for the purchase or sale of securities or market derivatives transactions on domestic or foreign financial instruments exchange markets; (iii) the handling of public offerings or secondary distributions of securities, or the handling of a private placement of securities or solicitation for selling, etc. only for professional investors; or (iv) intermediation for the conclusion of investment advisory or discretionary investment contracts. Financial instruments intermediary service providers must register with the Director of the relevant Local Finance Bureau. PayPay Corporation provides various intermediary services, including the opening of PayPay Securities accounts, through its PayPay mini-app. Therefore, PayPay Corporation has registered with the Director of the Kanto Local Finance Bureau as an intermediary with PayPay Securities Corporation as its entrusting financial instruments business operator.

The Director of the Kanto Local Finance Bureau is authorized to issue a business suspension order, or cancel PayPay Corporation's registration, if PayPay Corporation fails to comply with the regulations applicable to financial instruments intermediary services under the FIEA.

***Ordinance for Enforcement of the Labor Standards Act***

*Regulations on Payroll Services* 

Under the Labor Standards Act, wages must, in principle, be paid in cash. However, with the consent of the employee, an employer may pay wages by transferring funds to the employee's account with a funds transfer service provider designated by the Minister of Health, Labour and Welfare (the "Designated Funds Transfer Service Provider"). PayPay Corporation has been designated by the Minister of Health, Labour and Welfare and provides PayPay Payroll service.

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To be designated by the Minister of Health, Labour and Welfare, a funds transfer service provider must, among other things, meet the following requirements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Setting the maximum wages that can be received in an employee-designated account at JPY 1 million or
less. If the balance exceeds JPY 1 million, the excess must be transferred to another account designated by the employee within the same day, taking measures to ensure that the balance in the employee-designated account remains at or below JPY
1 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Establishing a system to reimburse employees for the full amount of any debt (including amounts other than
wages) related to the balance of the employee-designated account in a timely manner (within six business days of the employee filing a claim with the Designated Funds Transfer Service Provider or guarantee institution following the bankruptcy
filing) if a filing is made for commencement of bankruptcy proceedings for the Designated Funds Transfer Service Provider or if the Designated Funds Transfer Service Provider becomes unable to fulfill its obligations related to funds transfer
transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Implementing a mechanism to compensate employees for any losses resulting from unauthorized use of the
balance in the employee-designated account contrary to the employees' intent or from other causes not attributable to the employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Taking measures to ensure that the debt related to the employee-designated account can be fulfilled for at
least 10 years from the date of the last funds transfer related to the account, unless there are exceptional circumstances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Taking measures to enable funds transfers to the employee-designated account, including wage payments, to be
made in increments of one yen.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Establishing a system to enable employees to withdraw the balance of their employee-designated accounts in
increments of one yen through ATMs or other means and to enable employees to make such withdrawal by such method without bearing any fees or other charges at least once a month.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Establishing a system to report to the Minister of Health, Labour and Welfare on the status of operations
related to wage payments and the financial condition, including businesses other than funds transfer services, regularly or upon request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Possessing the technical capability to properly and reliably perform operations related to wage payments and
having sufficient social credibility.

The Minister of Health, Labour and Welfare is authorized to cancel PayPay Corporation's designation if PayPay Corporation fails to meet these requirements.

**PayPay Card Corporation** 

***The Money Lending Business Act***

In Japan, the Money Lending Business Act regulates the business of lending money or acting as an intermediary for the lending or borrowing of money on a regular basis (the "money lending business"). A money lending business provider must register with the Director of the relevant Local Finance Bureau or the relevant prefectural governor. Because PayPay Card Corporation extends cash advances to cardholders, PayPay Card Corporation has registered with the Director of the Kanto Local Finance Bureau. Under the Money Lending Business Act, PayPay Card Corporation is supervised by the FSA, which has the authority to review the

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operation of PayPay Card Corporation and inspect its records to monitor compliance. The Director of the Kanto Local Finance Bureau has the authority under the Money Lending Business Act to issue a business improvement order when it deems it necessary to do so, and, upon PayPay Card Corporation's substantial non-compliance with the Money Lending Business Act or a failure to comply with certain administrative orders, to suspend its money lending business and cancel its registration as a money lending business provider.

In respect of the money lending business of PayPay Card Corporation, the Money Lending Business Act requires it to provide borrowers (and any guarantor) with a written or electronic notice of: (a) the terms and conditions of the loan at the time of, or promptly after, execution of the loan agreement or any guarantee agreement; and (b) the amounts received from a borrower for repayment and the respective amounts of the principal and the interest which were repaid by the amounts received as well as the borrower's remaining balance at the time of, or immediately after each repayment.

Prior to extending a loan, a money lending business provider is required to investigate the ability of borrowers to repay the loan. In granting a loan to an individual borrower, a money lending business provider is required to use credit information (*shinyou jouhou*) available from a designated credit bureau (*shitei shinyou jouhou kikan*) in conducting the above-mentioned investigation. A money lending business provider is generally not permitted to extend a loan to an individual borrower if the aggregate outstanding amount of the borrower's loans from all money lending business providers, after the extension of the loan, will exceed one-third of the borrower's annual income.

***Regulation on Interest Rate***

In Japan, the Interest Rate Restriction Act and the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates regulate the imposition of interest on a loan. Thus, the interest charged for cash advances extended by PayPay Card Corporation is regulated under these acts. Both acts set limits on the maximum interest rates permissible on loans. Any loan agreement with an interest rate exceeding the statutory limits under the Interest Rate Restriction Act is void with respect to the portion of any interest in excess of such limits, without any exemption. In addition, a money lending business provider, who has concluded a loan agreement at more than 20% interest rate, may be subject to criminal penalty under the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates.

***The Installment Sales Act***

In Japan, the Installment Sales Act regulates the intermediation of comprehensive credit purchases, such as a credit card business. A comprehensive credit purchase intermediary must register with the Director of the relevant Bureau of Economy, Trade and Industry. Because PayPay Card Corporation offers credit payment services, PayPay Card Corporation has registered with the Director of the Kyushu Bureau of Economic, Trade and Industry as a comprehensive credit purchase intermediary. To maintain its registration, PayPay Card Corporation must continue to meet certain requirements, including a capital requirement of having a capital amount of ¥20 million or more. Under the Installment Sales Act, there are no regulations on the amount of fees for the intermediation of credit purchases, including any maximum limit, but the METI requires credit purchases intermediaries to set a fee rate within the maximum interest rates specified under the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates. Under the Installment Sales Act, PayPay Card Corporation is supervised by the METI and the Director of the Kyushu Bureau of Economy, Trade and Industry, which have the authority to issue a business improvement order if it deems that PayPay Card Corporation has violated the Installment Sales Act and to suspend its credit payment services and cancel the registration of PayPay Card Corporation as a comprehensive credit purchase intermediary under certain circumstances set forth in the Installment Sales Act.

*Regulations on Intermediation of Comprehensive Credit Purchases* 

Under the Installment Sales Act, before delivering a credit card to an individual customer or increasing the credit limit of a credit card of an individual customer in respect of the intermediation of comprehensive credit

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purchases, a registered comprehensive credit purchase intermediary must investigate the individual customer's payment capacity by reviewing certain matters as specified under the Ordinance for Enforcement of the Installment Sales Act (the "Enforcement Ordinance"). These include the individual customer's annual income, bank deposits, payment status of debts involving the intermediation of credit purchases, etc. (the "Customer Information"), using specified credit information (*tokutei shinyou jouhou*) available from a designated credit bureau (*shitei shinyou jouhou kikan*). A registered comprehensive credit purchase intermediary is generally prohibited from delivering a credit card or increasing a credit limit if the credit limit of the credit card to be delivered or the credit limit after the increase exceeds a certain amount calculated based on the Customer Information.

*Regulations on Credit Card Number, etc. Handling Contractors* 

In addition, the Installment Sales Act regulates persons who enter into contracts with merchants involving the handling of credit card number, etc. Because PayPay Corporation and PayPay Card Corporation have entered into such contracts with merchants, PayPay Corporation has registered with and is supervised by the Director of the Kanto Bureau of Economy, Trade and Industry and PayPay Card Corporation has registered with and is supervised by the Director of the Kyushu Bureau of Economy, Trade and Industry as a credit card number, etc. handling contractor. A credit card number, etc. handling contractor is required to investigate merchants on certain matters specified in the Enforcement Ordinance as necessary to prevent the unauthorized use of credit card numbers, etc. by the merchants prior to entering into the contracts involving the handling of credit card number, etc. with them, and is prohibited from entering into any such contract if it is found that the merchant's management of credit card numbers, etc. may be inappropriate. A credit card number, etc. handling contractor is also required to investigate merchants periodically and as necessary, and to take necessary measures to prevent the unauthorized use of credit card numbers, etc. by merchants, including the cancellation of contracts with the merchants involving the handling of credit card number, etc.

**PayPay Bank Corporation** 

***Supervision of Banks in Japan***

*Financial Services Agency* 

Although the Prime Minister has supervisory authority over banks and bank's major shareholders in Japan, except for matters prescribed by cabinet order, this authority is generally entrusted to the Commissioner of the FSA.

Under the Banking Act, the Prime Minister's authority over banks and bank's major shareholders in Japan extends to various areas, including granting and cancellation of licenses, ordering banks to suspend business in whole or in part, requiring submission of business reports or materials regarding banks and approval and cancellation of approval, ordering bank's major shareholders to ensure compliance with certain criteria and requiring submission of business reports or materials regarding bank's major shareholders.

Under the prompt corrective action system, the Commissioner of the FSA may take corrective actions in the case of deterioration of the capital adequacy ratios of banks and their subsidiaries and affiliates. These actions include requiring a bank to formulate and implement reform measures, requiring a bank to reduce assets or take other specific actions and ordering a bank to suspend all or part of its business operations.

Under the prompt warning system, the FSA may take precautionary measures to maintain and promote the sound operations of banks, even before those banks become subject to the prompt corrective action. These measures include requiring a bank to improve its sustainable profitability, credit risk management, stability and cash flow.

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*The Bank of Japan* 

The BOJ is Japan's central bank and serves as the main instrument for the execution of Japan's monetary policy. The principal measures by which the BOJ implements monetary policy include adjustment of the basic discount rate and basic loan rate, open market operations and imposition of deposit reserve requirements. Banks in Japan are allowed to obtain borrowings from the BOJ. Moreover, most banks in Japan maintain current accounts under agreements with the BOJ pursuant to which the BOJ is entitled to carry out examinations of the banks. The functions of examinations by the BOJ are intended to enable settlement of funds to be smooth among banks and other financial institutions, thereby contributing to the maintenance of an orderly financial system, whereas the supervisory authority of the Prime Minister or the Commissioner of the FSA is intended to maintain the sound operations of banks and promote the security of depositors.

*Licensing and Authorization* 

Under the Banking Act, obtaining a license from the Prime Minister is required in order to engage in banking activities such as (i) acceptance of deposits or installment savings, as well as the lending of funds or the discounting of bills and notes and (ii) dealing in funds transfer transactions. Since PayPay Bank Corporation engages in activities such as accepting deposits or time deposits, lending funds or discounting bills, conducting foreign exchange transactions, and offering online betting services for public competitions, it obtained a banking license from the Financial Reconstruction Commission before its merger with the FSA on September 26, 2000.

Under the FIEA, a financial institution must be registered with the Director of the relevant Local Finance Bureau to engage in any of the (i) brokerage with written orders, (ii) securities business related to government bonds, etc., (iii) mutual fund business, (iv) a business related to foreign securities that have the characteristics of government bonds, (v) Business related to other securities on a regular basis, or if it seeks to provide investment advisory and agency business or engage in securities, etc. management. Since PayPay Bank Corporation conducts over-the-counter derivative transactions, it is registered as a financial institution.

***Certain Restrictions and Regulations under the Banking Act***

As a Japanese banking institution, PayPay Bank Corporation is subject to restrictions and regulations under the Banking Act on various aspects of our banking business, including restrictions on the scope of PayPay Bank Corporation's business, PayPay Bank Corporation's shareholdings of other companies, corporate restructuring and credit limits, and capital adequacy ratio requirements. Certain of the provisions of and regulations under the Banking Act are briefly described below.

*Restrictions on Scope of Business* 

Under the Banking Act, banks in Japan are permitted to engage only in the business of acceptance of deposits or installment savings, loans of funds or discounting of bills, and exchange transactions (such businesses are referred to as the "Primary Business"), certain businesses incidental to the Primary Business (such businesses other than the Primary Business are referred to as the "Incidental Business"), and certain other businesses permitted under the Banking Act and other acts.

*Restrictions on Scope of Business of Subsidiaries* 

The Banking Act restricts the types of businesses in which Japanese banks may engage through their subsidiaries to, among other things, banking businesses, certain securities businesses and certain financial-related and other Incidental Businesses, with the prior authorization of, or prior notice to, the Commissioner of the FSA. The FSA requires the similar restrictions for (i) a company in which another company holds the majority of voting rights, in addition to a domestic company in which a bank or its subsidiary holds more than 5% of the voting rights in aggregate, (ii) a substance standard subsidiaries and (iii) a related company under the Companies Act and accounting through non-legally binding guidelines.

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*Restrictions on Shareholdings of Other Companies* 

With the exception of certain companies that banks are permitted to hold as subsidiaries as described under "—Restrictions on Scope of Business of Subsidiaries" above, the Banking Act generally prohibits a bank and/or its subsidiaries from acquiring or holding in the aggregate more than 5% of the total voting rights of all shareholders of another domestic company. Similarly, the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade generally prohibits a bank from acquiring or holding more than 5% of the total voting rights of all shareholders of another domestic company without obtaining prior authorization of the Fair Trade Commission, pursuant to standards established by the Fair Trade Commission.

*Corporate Restructuring* 

Under the Banking Act, if PayPay Bank Corporation engage in the following acts without obtaining prior authorization from the Commissioner of the FSA, with certain exceptions, such acts will not be effective:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any merger involving a bank as a party where the surviving company or the company established by the merger is
a bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any corporate split to which a bank is a party; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a transfer or acquisition of all or part of a business to which a bank is a party.

*Credit Limits* 

The Banking Act restricts the aggregate amount of loans to any single customer or customer group for the purposes of avoiding excessive concentration of credit risks and promoting the fair and extensive utilization of bank credit. The current limits are 25% of the total qualifying capital of the bank and its subsidiaries, including subsidiaries whose decision making organization, organization which determines policies of finance and operation or business, is controlled by the bank and/or its subsidiaries, with respect to a single customer or customer group.

*Matters Required to be Reported* 

The Banking Act provides for matters required to be reported to the Commissioner of the FSA, which include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• planned issuance of stock acquisition rights or bonds with stock acquisition rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• planned early redemption of bonds with stock acquisition rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• planned repurchase of shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• planned increase of the amount of stated capital; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• implementation of the matters for which a bank had obtained authorization pursuant to the Banking Act.

*Restrictions Applicable to Shareholders of Banks* 

Under the Banking Act, a holding company which intends to hold a bank as its subsidiary is required to obtain prior approval of the Commissioner of the FSA. Such a holding company which has obtained such approval is, as a bank holding company under the Banking Act, subject to restrictions and regulations on various aspects of its banking business, including restrictions on the scope of businesses of the bank holding company

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and its subsidiaries, the shareholdings of other companies by the bank holding company's group, corporate restructuring activities, credit limits on the bank holding company's group, and consolidated capital adequacy ratio requirements, as well as the supervisory authority of the Prime Minister (which is generally entrusted to the Commissioner of the FSA, similar to its supervisory authority over banks).

Under the Banking Act, a person who intends to hold 20% (in certain cases, 15%) or more of the voting rights of a bank is required to obtain prior approval of the Commissioner of the FSA. In addition, the Commissioner of the FSA may request reports or submission of materials from, or inspect, any principal shareholder who holds 20% (in certain cases, 15%) or more of the voting rights of a bank, if necessary in order to secure the sound and appropriate operation of the business of such bank. The Commissioner of the FSA may order such principal shareholder to take such measures as it deems necessary. Also, the Commissioner of the FSA may request any principal shareholder who holds 50% or more of the voting rights of a bank to submit an improvement plan if necessary in order to ensure the sound and appropriate management of a bank and order such principal shareholder to take the measures necessary to ensure such sound and appropriate management of a bank as it deems necessary.

Furthermore, under the Banking Act, any person who becomes a holder of more than 5% of the voting rights of a bank must report its ownership of voting rights to the Commissioner of the FSA or the Director of the relevant Local Finance Bureau, as the case may be, within five business days. In addition, a similar report must be made in respect of any subsequent change of 1% or more in any previously reported holding or any change in material matters set forth in reports previously filed, with some exceptions.

*Capital Adequacy Ratios* 

*Overview* 

The FSA has taken actions to implement new capital adequacy ratio requirements in accordance with the approach adopted in Basel III. Following the amendments to the capital adequacy ratio requirements applicable only to international standard banks (i.e., banks with international operations) (which came into effect in March 2013 with certain transitional measures), the FSA further enacted certain amendments to the capital adequacy ratio requirements applicable to domestic standard banks (i.e., banks with no international operations), including us, with the aim of improving quality of their capital. As a result of these amendments, regulatory capital used in calculating the capital adequacy ratio of domestic standard banks under Basel III is basically limited to common stock and preferred stock that is mandatorily convertible into common stock, while other preferred securities and subordinated debt are excluded. In addition, the amendments in order to implement the finalized capital adequacy ratio requirements under Basel III including with respect to credit risks, credit valuation adjustment (CVA) risks, market risks and operational risks have been applied from March 31, 2024 in respect of international standard banks and domestic standard banks which use internal models to calculate the amount of risk, and have been applied from March 31, 2025 in respect of other domestic standard banks including PayPay Bank Corporation (in both cases, banks that have notified the FSA that they wish to apply finalized Basel III standards earlier have applied the amendments from March 31, 2023 at the earliest).

*Capital Adequacy Ratio Requirements for Domestic Standard Banks* 

Under the current capital adequacy ratio requirements for domestic standard banks, including PayPay Bank Corporation, the FSA requires a minimum capital adequacy ratio of 4.0% on both a consolidated and a non-consolidated basis for banks, which is calculated by dividing the amount of Core Capital (as defined below) by the amount of risk-weighted assets.

Core Capital is generally defined as the sum of the amount of common stock and retained earnings, which have high loss-absorbing capacity, and preferred stock that is mandatorily convertible into common stock, general reserve for possible loan losses (up to an amount not more than 1.25% of credit risk-weighted assets) and certain other items, less the amount of adjustment items including certain deferred tax assets.

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The amount of risk-weighted assets is calculated as the sum of credit risk-weighted assets (the amounts of the relevant assets multiplied by risk weights applicable thereto), an amount calculated by dividing the market risk (the amount of risk of loss due to market fluctuations, such as fluctuations in interest rates, stock prices and currency rates) by 8% and an amount calculated by dividing the operational risk (the amount of risk of loss due to various accidents, such as operational accidents, internal operating system troubles, fraudulent activities and troubles arising from external factors) by 8%. We have, however, adopted special exemptions for market risk amount under which we have not included the amount calculated by dividing the market risk by 8% in our risk-weighted assets.

The amended capital adequacy ratio requirements for domestic standard banks are being phased-in over a transitional period, which began on March 31, 2014, or the Applicable Date. Depending on the matters subject to the transitional arrangements, transitional periods were established. The first period ended in 2019, and other periods ended in 2024 and will end in 2029, respectively.

*Leverage Ratio* 

To prevent the occurrence of deleveraging and of resulting damage to the broader financial system and economy and to reinforce the risk based capital adequacy ratio requirements, the Basel Committee introduced the non-risk based leverage ratio requirements in the Basel III framework in December 2010. The text of the leverage ratio has been revised several times, including in June 2013, January 2014 and December 2017.

Under the revised text of the leverage ratio, leverage ratio is defined as the ratio of the capital measure to the exposure measure. In Japan, the relevant FSA regulations have been promulgated to require international standard banks to publicly disclose their consolidated and non-consolidated leverage ratios from March 31, 2015. Furthermore, international standard banks have been required to maintain a leverage ratio of at least 3% on both a consolidated basis and a non-consolidated basis from March 31, 2019. The FSA implemented G-SIB surcharge from March 31, 2023 in respect of international standard banks and amended the leverage ratio requirements under the Basel III finalization framework, which have been applied to international standard banks from March 31, 2024 (banks that have notified the FSA that they wish to apply finalized Basel III standards earlier have applied the amendments from March 31, 2023 at the earliest). The FSA raised the minimum leverage ratio to 3.15% from April 1, 2024.

Although, as of the date of this prospectus, specific regulations in respect of the leverage ratio applicable to Japanese domestic standard banks, including PayPay Bank Corporation, have yet to be issued in Japan, the FSA may introduce such regulations in the future.

*Liquidity* 

The Basel III framework is aimed at strengthening global liquidity regulations. In December 2010, the Basel Committee announced the liquidity portion of the Basel III framework. This framework is intended to set out requirements for holding more qualified capital and better risk coverage, and it introduced two global liquidity standards.

The first of the two new global liquidity standards is the Liquidity Coverage Ratio, or the LCR, intended to promote short-term resilience in the liquidity risk profile of banks by ensuring that they have sufficient high-quality liquid assets to survive a significant stress scenario lasting 30 calendar days. The second is the Net Stable Funding Ratio, or the NSFR, which has been developed to ensure a sustainable structure of assets and liabilities, taking into account their maturities, with the goal of promoting resilience over longer time horizon by creating additional incentives for banks to secure funds from more stable sources of funding on an ongoing basis.

The Basel Committee revised the text of the LCR and NSFR in January 2013 and October 2014, respectively, which provide the framework to require banks to maintain minimum LCR and NSFR of 100%, which is the minimum requirement in normal conditions.

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In Japan, the LCR requirements applicable to international standard banks were introduced on March 31, 2015 and was fully implemented on January 1, 2019. The NSFR requirements applicable to international standard banks were also introduced on September 30, 2021. With respect to sound management of liquidity, international standard banks are required to (i) disclose quantitative information regarding the LCR and NSFR on a quarterly basis, (ii) disclose qualitative information regarding the NCR and NSFR on a semi-annual basis and (iii) disclose matters relating to management of liquidity risk annually, as well as maintain minimum LCR and NSFR of 100%.

Although, as of the date of this prospectus, specific regulations in respect of the LCR or the NSFR applicable to Japanese domestic standard banks, including PayPay Bank Corporation, have yet to be issued in Japan, the FSA may introduce such regulations in the future.

*Duty to provide information* 

In relation to acceptance of deposits or installment savings, a bank is required to provide depositors with the information by clearly indicating interest rates for principal deposits, fees pertaining to handling the deposits and deposits which are subject to receive payment of insurance as prescribed in Article 53 of the Deposit Insurance Act, explaining corresponding to a request of depositor by using a document stating, among others, name of financial instruments, scope of persons subject to acceptance, period of deposit, minimum amount of deposit, unit of deposit method of payment, matters concerning interest and fees. In addition, if a bank concludes an agreement regarding deposits or installments savings that may incur losses on their principal due to fluctuations related to the indicators, such a bank must comply with the regulation under the Financial Instruments and Exchange Act such as (i) advertising restrictions, (ii) obligations to provide written documents prior to contract conclusion, (iii) obligations to provide written documents at the time of contract conclusion, (iv) prohibitions on compensation for losses, and (v) the principle of suitability.

As part of its information management system for customer-related data, banks are required to implement necessary and appropriate measures to secure information pertaining to individual customers. This includes supervising employees and third parties to whom the handling of such information is outsourced, in order to prevent any leakage, loss, or damage. In the event of any leakage, loss, or damage, or if there is a risk of such an event, a bank must promptly report the incident to the Commissioner of the FSA etc. and take other appropriate actions.

*Inspection and Examination of Banks* 

The Banking Act authorizes the Commissioner of the Director of the relevant Local Finance Bureau (the Commissioner of the FSA shall not be prevented from conducting inspections) to inspect banks in Japan at any time. The FSA inspects the soundness and appropriateness of banks' operations, including the status and performance of their control systems for business activities, by inspecting evaluations performed by banks' self-assessment systems, and reviewing their compliance with laws and regulations. The inspections of banks are performed pursuant to "the approach and procedures for the inspection and supervision of loans after the abolition of the Manual" published on December 18, 2019.

Currently, the FSA takes the "better regulation" approach in its financial regulation and supervision in pursuit of improvement of the quality of financial regulation and supervision. This consists of four pillars: optimal combination of rules-based and principles-based supervisory approaches; timely recognition of priority issues and effective response; encouraging voluntary efforts by financial institutions and placing greater emphasis on providing them with incentives; and improving the transparency and predictability of regulatory actions.

The BOJ also conducts examinations of banks separated from the inspection of banks undertaken by the FSA. The examinations involve reviewing actual conditions of operation and risk management systems. Through these examinations, the BOJ seeks to identify problems at an early stage and give corrective guidance where necessary.

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In addition, the Securities and Exchange Surveillance Commission examines banks in connection with their financial instruments business activities in accordance with the FIEA.

***Deposit Insurance Act***

Under the Deposit Insurance Act of Japan, or the Deposit Insurance Act, depositors are protected through the Deposit Insurance Corporation of Japan, or the DIC, in cases where financial institutions fail to fulfill their obligations. The DIC is supervised by the Commissioner of the FSA and the Minister of Finance.

The DIC receives annual insurance premiums from insured financial institutions. For the year ending March 31, 2026, a premium rate of 0.022% for the deposits that bear no interest and are used primarily for payment which were raised from the rates applicable for the year ended March 31, 2025 of 0.021% and settlement purposes and a premium rate of 0.014% for other ordinary deposits will be applied.

The insurance money may be paid out to depositors in the case of a suspension of deposit repayments, license revocation, dissolution or bankruptcy of a financial institution. For each depositor, pay-outs are generally limited to a maximum of ¥10 million of principal amount covered by the deposit insurance with any interest accrued thereon. Only non-interest bearing deposits, redeemable on demand and used by depositors primarily for payment and settlement functions are protected in full.

Participation in the deposit insurance system is compulsory for city banks, regional banks, trust banks, shinkin banks and credit co-operatives, labor banks and other financial institutions.

***Governmental Measures to Treat Troubled Institutions***

*General Framework of Resolution Procedure* 

The basic method of resolution for a failed financial institution under the Deposit Insurance Act is cessation of the business by paying insurance money to the depositors up to the principal amount of ¥10 million plus accrued interest per depositor, the so-called "pay-off," or transfer of the business to another financial institution with financial "aid provided within the cost of pay-off." Generally, transfer of the business is regarded as the primary method. In order to enable a prompt transfer of the business, the following framework has been established.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A Financial Reorganization Administrator will be appointed by the Commissioner of the FSA and will take
control of the management and assets of the failed financial institution. Such Financial Reorganization Administrator is expected to efficiently search for a financial institution that will succeed to the business of such failed institution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In the case where no successor financial institution can be immediately found, a "bridge bank"
will be established by the DIC for the purpose of the temporary maintenance and continuation of the failed financial institution's operations, and the bridge bank will seek to transfer the failed financial institution's assets to another
financial institution or dissolve the failed financial institution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In order to facilitate or encourage a financial institution to succeed a failed business, the DIC may provide
financial aid such as (i) donation of money, (ii) loans or depositing of funds, (iii) purchase of assets, (iv) guarantees of obligations, (v) assumption of obligations, (vi) subscription for preferred shares, etc., and
(vii) collateralization of damage or indemnify any loss incurred as a result of such succession. In addition, the DIC may provide loans in order to protect depositors and promote equity among creditors of failed financial institutions.

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*Addressing Potential Financial Crises* 

If the Commissioner of the FSA recognizes that the failure of a bank falling within any of the circumstances described in (i) through (iii) below has the potential to cause significant problems in maintaining the financial order in Japan or the region where such bank is operating ("systemic risk"), unless the measures described in (i) through (iii) below are taken, the Commissioner of the FSA may confirm the taking of any of such measures, following deliberations by the Financial Crisis Management Meeting: (i) if the bank is not a bank described in (ii) or (iii), the DIC may subscribe for shares or subordinated bonds of or extend subordinated loans to the bank, or subscribe for shares of the holding company of the bank, in order to enhance the bank's capital adequacy; (ii) if the bank is at risk of suspending or has suspended repayment of deposits or its liabilities exceed its assets, financial aid necessary to meet obligations to depositors in excess of deposit insurance may be made available to such bank; and (iii) if the bank is at risk of suspending or has suspended repayment of deposits and its liabilities exceed its assets, and systemic risk cannot be avoided through measures described in (ii) above, the DIC may acquire all of the bank's shares. Expenses for the implementation of the above measures will be borne by the banking industry, with an exception under which the government may provide partial subsidies for such expenses.

Pursuant to certain amendments to the Deposit Insurance Act that were promulgated in June 2013 and became effective on March 6, 2014, a resolution regime for financial institutions was introduced in Japan. Under these amendments and related implementing ordinances, this regime is applicable to financial institutions including banks, insurance companies and securities firms and their holding companies.

The resolution regime provides, among other things, that if the Commissioner of the FSA recognizes that failure of a financial institution falling within either (a) or (b) below may cause significant disruption in financial markets or other financial systems in Japan, unless measures described in (a) or measures described in (b) are taken, the Commissioner of the FSA may confirm the taking of any of such measures, following deliberations by the Financial Crisis Management Meeting: (a) if the financial institution's liabilities do not exceed its assets, the DIC shall supervise the operations of, and the management and disposal of assets of, such financial institution, and may provide it with loans or guarantees necessary to avoid the risk of significant disruption in financial systems in Japan, or subscribe for shares or subordinated bonds of or extend subordinated loans to such financial institution, in each case as necessary taking into consideration the financial condition of the financial institution; and (b) if the financial institution's liabilities exceed or are likely to exceed its assets, or the financial institution has suspended or is likely to suspend repayment of its obligations, the DIC shall supervise such financial institution, and may provide financial aid necessary to assist a merger, business transfer, corporate split or other reorganization in respect of such financial institution. The expenses for the implementation of the measures under this regime will be borne by the financial industry, with an exception under which the government may provide partial subsidies for such expenses.

If the taking of measures described in (b) above is determined with respect to a financial institution, the Commissioner of the FSA may order that such financial institution's operations and assets be placed under the control of the DIC. The business or liabilities of a financial institution subject to supervision of the DIC as set forth in (b) above may also be transferred to a "bridge bank" established by the DIC for the purpose of the temporary maintenance and continuation of operations of, or repayment of the liabilities of, such financial institution; and the bridge bank will seek to transfer the financial institution's business or liabilities to another financial institution or dissolve the financial institution. Financial aid provided by the DIC to assist a merger, business transfer, corporate split or other reorganization in respect of a financial institution, as described in (b) above, may take the form of purchase of assets, subscription of preferred stock or subordinated bonds, extension of subordinated loan, or loss sharing.

***Act on Special Measures for Strengthening Financial Functions***

The Act on Special Measures for Strengthening Financial Functions of Japan, or the Strengthening Financial Functions Act, was enacted in 2004 in order to establish a scheme of public money injection into

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financial institutions and thereby enhance the soundness of such financial institutions on or prior to March 31, 2008 and revitalize economic activities in the regions where they do business. In 2008, certain amendments to the Strengthening Financial Functions Act took effect. These amendments relaxed certain requirements for public money injection into Japanese banks and other financial institutions under the prior scheme and extended the period of application therefor, which had expired on March 31, 2008, to March 31, 2012. These amendments aimed to promote not only the soundness of such financial institutions but also loans or other forms of credit extended to SMEs in order to revitalize local economies. In 2011, in response to the March 2011 Great East Japan Earthquake, an amendment to the Strengthening Financial Functions Act was enacted to further extend the expiration date described above to March 31, 2017. This amendment was also intended to facilitate capital injections into financial institutions affected by the March 2011 Great East Japan Earthquake that required capital enhancement in order to smoothly extend loans in their principal business regions. In 2016, an amendment to the Strengthening Financial Functions Act was enacted that further extended the expiration date to March 31, 2022. In 2020, in the wake of the COVID-19 pandemic, the expiration date was further extended to March 31, 2026, after relaxing the requirements for applications and removing the deadline for repayment of the injected public money. In 2021, an amendment to the Strengthening Financial Functions Act was enacted to maintain financial functions that support the post COVID-19 recovery and revitalization of the regional economy in areas with declining populations.

***Act on Emergency Measures for the Revitalization of the Financial Functions***

The prompt corrective action system requires financial institutions to establish a self-assessment program that complies with related acts such as the Financial Revitalization Act. Under "the approach and procedures for the inspection and supervision of loans after the abolition of the Manual," financial institutions are required to establish a self-assessment program reflecting their own policies based on their business strategy and business environment. The results of self-assessment should be reflected in the amount of write-offs and reserves according to the standard established by financial institutions pursuant to the guidelines issued by the Japanese Institute of Certified Public Accountants. Based on the results of the self-assessment, financial institutions may establish reserve amounts for their loan portfolio at the relevant balance sheet reference date, even if all or part of such reserves may not be immediately tax deductible under Japanese tax law.

***Act on Limitation on Shareholding by Banks and Other Financial Institutions***

The Act on Limitation on Shareholding by Banks and Other Financial Institutions of Japan requires Japanese banks and their subsidiaries to limit the aggregate market value (excluding unrealized gains, if any) of their holdings in equity securities (excluding certain equity securities prescribed by the related cabinet order) to an amount equal to 100% of their consolidated capital (calculated according to the formula provided for calculating the numerator of the capital adequacy ratio stated in "—Certain Restrictions and Regulations under the Banking Act—Capital Adequacy Ratios" above) in order to reduce exposure to stock price fluctuations.

***Other Regulations***

PayPay Bank Corporation is also subject to certain regulations concerning registered financial institutions under the FIFA (see "—PayPay Corporation—The FIEA"), the Interest Rate Restriction Act (see "—PayPay Card Corporation—Regulation on Interest Rate") and the Act on the Provision and the Improvement of the Environment of Financial Services (see "—PayPay Securities Corporation—The Act on the Provision and the Improvement of the Environment of Financial Services").

**PayPay Securities Corporation** 

***The FIEA***

The FIEA regulates most aspects of transactions and businesses that relate to financial instruments in Japan, including public offerings, private placements, and the secondary trading of securities; ongoing disclosure

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by securities issuers; tender offers for securities; the organization and operation of securities exchanges and self-regulatory associations; and the registration of financial instruments business operators (the "FIBOs"), such as PayPay Securities Corporation. The Commissioner of the FSA has the authority to regulate financial instruments businesses. The Securities and Exchange Surveillance Commission is vested with the authority to conduct day-to-day monitoring of the securities markets, and to investigate irregular activities that hinder the fair trading of securities, including the authority to inspect FIBOs. Furthermore, the Commissioner of the FSA delegates certain authority to the Director of the relevant Local Finance Bureau, to inspect local FIBOs and branches. A violation of the applicable laws and regulations may result in various administrative sanctions, including the revocation of a registration or authorization, a suspension of business operations, or an order to discharge any director or audit and supervisory board member who has failed to comply with applicable laws and regulations. In addition, PayPay Securities Corporation is subject to the rules and regulations of the Japanese stock exchanges and the rules and regulations of self-regulatory associations, including the Japan Securities Dealers Association.

Any person seeking to engage in any of the following businesses must obtain registration as a Type I FIBO: (i) businesses related to highly liquid securities; (ii) businesses related to commodity-related market derivatives transactions; (iii) businesses related to over-the-counter derivative transactions; (iv) businesses related to the underwriting of securities; (v) businesses related to private trading systems (PTS); or (vi) businesses related to the receipt of deposits of securities or money, the opening of accounts, and the transfer of bonds or other securities. PayPay Securities Corporation handles Japanese stocks, U.S. stocks, and investment trusts, supports users' transactions, and conducts business related to highly liquid securities, over-the-counter derivative transactions, and securities management. As such, PayPay Securities Corporation is registered with the Kanto Local Finance Bureau as a Type I FIBO.

A Type I FIBO, such as PayPay Securities Corporation, is required to maintain adjusted capital at specified levels, as compared with the quantified total of its business risks, on a non-consolidated basis. PayPay Securities Corporation as a Type I FIBO is required to calculate its capital adequacy ratio and notify the Director of the Kanto Local Finance Bureau of the capital adequacy ratio at the end of each month. In addition, PayPay Securities Corporation as a Type I FIBO is required to calculate its capital adequacy ratio and immediately notify the Commissioner of the FSA of the capital adequacy ratio whenever the ratio falls below 140%, and to prepare a notification of its capital adequacy ratio for each business day and submit it to the Director of the Kanto Local Finance Bureau without delay. If a Type I FIBO's capital adequacy ratio falls below 120%, the Commissioner of the FSA may order it to take certain measures to rectify the situation. A Type I FIBO whose capital adequacy ratio falls below 100% may be subject to additional proceedings, including, in certain circumstances, the temporary suspension of its business, or the revocation of its registration as a Type I FIBO.

In addition, each of the minimum amount of stated capital and the minimum net assets of a Type I FIBO is 50 million yen.

A Type I FIBO may not conduct any business other than the financial instruments business and other businesses stipulated by the FIEA.

In addition, Mizuho Securities Co., Ltd. holds 24.8% of the shares of PayPay Securities Corporation, and since Mizuho Financial Group, Inc. (a bank holding company under the Banking Act) is the parent company of Mizuho Securities Co., Ltd., PayPay Securities Corporation falls under the category of "affiliated corporation, etc." of a bank holding company under the Banking Act. Under the Banking Act, PayPay Securities Corporation is required to be classified as a company specialized in securities, and the scope of PayPay Securities Corporation' business is limited to the scope of business permitted for a company specialized in securities under the Banking Act.

Prior to entering into a financial instruments transaction contract, FIBOs are generally required to provide customers with information such as their trade name, registration number, an outline of the relevant contract to be entered into, the fees to be paid by the customer, matters related to market risks, and other material

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matters of the relevant financial instruments business that may have an impact on customers' judgment. In addition, FIBOs are generally obligated to provide explanations in a manner and to the extent necessary for the customer to understand the information provided. FIBOs are also generally obligated to provide customers with information regarding matters related to financial instruments transaction contracts at the time of contract conclusion.

As a Type I FIBO, PayPay Securities Corporation is subject to firewall regulations. Specifically, PayPay Securities Corporation is generally prohibited from conducting a purchase and sale or other transaction of securities or an over-the-counter derivative transaction under terms and conditions which differ from ordinary ones and are likely to be detrimental to the fairness of transactions with its parent corporation, etc., including PayPay Corporation, or subsidiary corporation, etc., including PPSC Investment Service Corporation (Arm's Length Rule). In addition, receiving or providing non-public information about customers from parent corporation, etc. or subsidiary corporation, etc., or soliciting the conclusion of financial instruments transaction contracts by using non-public information about customers obtained from parent corporation, etc. or subsidiary corporation, etc. is generally prohibited, except in cases where there are statutory exceptions.

Moreover, PayPay Securities Corporation, as a Type I FIBO, is required to establish an appropriate conflict of interest management system within the company.

A shareholder who has acquired 20% (or 15%, if there are certain facts indicative of material influence over the decisions of the company in relation to its financial and operational policies) or more of the voting rights of a Type I FIBO, or a Type I FIBO Principal Shareholder, such as PayPay Corporation, is required to submit a notification describing, among other things, the ownership of the shares and the purpose of the acquisition, to the Director of the relevant Local Finance Bureau. In limited circumstances, the Commissioner of the FSA may order a Type I FIBO Principal Shareholder to take actions to resign from the position as a Type I FIBO Principal Shareholder, including requiring the disposition of such shares as are held by the Type I FIBO Principal Shareholder. A prompt filing with the Director of the relevant Local Finance Bureau is also required when a person or entity ceases to be a Type I FIBO Principal Shareholder. In addition, the Commissioner of the FSA may request the submission of reports or materials from, or may conduct inspections of, any Type I FIBO Principal Shareholder as well as Type I FIBOs.

***The Act on the Provision and the Improvement of the Environment of Financial Services***

The Act on the Provision of Financial Services imposes a duty of good faith on financial service providers (including PayPay Securities Corporation) to conduct their business fairly and in good faith toward their customers, taking into consideration the best interests of their customers. The Act on the Provision of Financial Services also provides for measures to protect customers by (i) requiring financial instruments providers to explain adequately to customers certain material matters such as risks of losses incurred by customers, and the mechanisms of financial products causing losses and (ii) requiring financial instruments providers to ensure that their solicitation of customers to purchase financial products are made in a fair manner, taking into account the customer's knowledge, experience, financial condition, and purpose; and prohibiting financial instruments providers from providing deceptive or misleading information in respect of uncertain matters in connection with the sale of financial products. Further, this Act holds financial instruments providers liable for damages caused by a failure to follow these requirements. The amount of damages is refutably presumed by this Act to be the loss of principal.

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**Other Regulations** 

***Act on the Promotion of Ensuring National Security Through Integrated Implementation of Economic Measures***

*Regulations on Specified essential infrastructure business* 

Under the Act on the Promotion of Ensuring National Security Through Integrated Implementation of Economic Measures, the competent minister may designate those who engage in specified essential infrastructure businesses as specified essential infrastructure service providers. This designation applies when the suspension or degradation of the function of the specified critical facilities in use is highly likely to cause a situation that undermines the security of Japan. "Specified essential infrastructure business" is the provision of certain specified services forming the basis of the lives of the Japanese citizenry or economic activity, and the hindrance of stable provision of such services is likely to cause a situation that undermines the security of Japan. "Specified critical facilities" are facilities, devices, equipment or programs that are critical for the stable provision of specified essential infrastructure services and are likely to be used as a means for interference, originating outside Japan, with the stable provision of these services.

PayPay Corporation is designated in connection with its funds transfer business and third-party prepaid payment instruments issuing business under the Payment Services Act, and PayPay Card Corporation is designated in connection with its intermediation business of comprehensive credit purchases under the Installment Sales Act as specified essential infrastructure service providers, respectively. In principle, when a specified essential infrastructure service provider introduces specified critical facilities from third parties or outsources material maintenance, management or operation of specified critical facilities to third parties, the specified essential infrastructure service provider must, in advance, notify the competent minister of a plan regarding such planned introduction or outsourcing. Specified essential infrastructure service providers that have made such notification may not carry out such plan until 30 days have passed since the day on which the competent minister receives the relevant notification; provided, however, that this period may be shortened when the competent minister finds that a screening is not necessary or, as a result of a screening, that the relevant specified critical facilities are not highly likely to be used as a means for interference actions. During the screening process, the competent minister may recommend the specified essential infrastructure service provider to take measures necessary to prevent interference actions or to suspend the notified activities. In addition, even after a screening has been completed and a specified essential infrastructure service provider is authorized to proceed with the relevant plan, the competent minister retains the authority to recommend that the specified essential infrastructure service provider implement inspections or maintenance checks, change the outsource, or take other necessary measures to prevent interference actions.

In connection with funds transfer business and third-party prepaid payment instruments issuing business, information processing systems designed to perform all or part of the data processing related to funds transfer services and the issuance of third-party prepaid payment instruments under the Payment Services Act (limited to cases where the suspension of such processing would likely cause significant disruption to the relevant business) and the information processing systems that operate such information processing systems are designated as specified critical facilities. In connection with intermediation business of comprehensive credit purchases, information processing systems that (i) handle matters related to credit card, etc. membership agreements, or centrally manage information related to credit card, etc. membership agreements, (ii) confirm the identity of persons who have received cards or other items prior to concluding comprehensive credit purchase brokerage agreements, (iii) send and receive information related to applications for comprehensive credit purchase brokerage agreements, (iv) detect unauthorized use of credit card numbers, etc., or the possibility thereof based on the information referred to in (iii), (v) confirm whether to accept applications for comprehensive credit purchase brokerage agreements based on information referred to in (i) and (iii), or (vi) replace the system referred to in (v) in the event of temporary suspension of the system or in other cases are designated as specified critical facilities. Therefore, if PayPay Corporation or PayPay Card Corporation intend to introduce or entrust the

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critical maintenance and management of such systems, PayPay Corporation or PayPay Card Corporation must comply with the above regulations.

***Regulations under the Foreign Exchange and Foreign Trade Act***

We comply with the following regulations under the Foreign Exchange and Foreign Trade Act for the purpose of preventing money laundering and terrorist financing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Corporation, a funds transfer service provider, and PayPay Bank Corporation, as a bank, are classified
as foreign exchange transaction operators. Therefore, they are required to set certain standards and comply with the standards when making a payment or receiving payment (collectively, "payments" in this paragraph), conducting foreign
exchange transactions related to such payments of customers, or conducting capital transactions or specific capital transactions (collectively, "foreign exchange transactions" in this paragraph). The content of these standards includes,
for example: (i) identifying various risks, including the risk such as the possibility of conducting transactions that may fall under regulated transactions as defined in the Foreign Exchange and Foreign Trade Act, analyzing and evaluating the
degree of such risks, and preparing a document containing the results of the analysis and evaluation; (ii) preparing a procedure manual that specifies policies and measures to sufficiently reduce the risks described in a document created in
(i) and conducting foreign exchange transactions in accordance with such manual.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Corporation, a funds transfer service provider, and PayPay Bank Corporation, as a bank, are required to
confirm in advance, prior to conducting foreign exchange transactions, that either (i) the payments made by customers do not fall under (a) the payments requiring the approval of the Minister of Finance or (b) the payments related to
capital transactions requiring the approval of the Minister of Finance, or (ii) they have obtained such approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Corporation, a funds transfer service provider, and PayPay Bank Corporation, as a bank, are required to
verify the identity of customers (excluding Exchange non-residents) when conducting foreign exchange transactions related to payments from Japan to foreign countries or the payments with Exchange non-residents (limited to amounts exceeding JPY 100,000).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Bank Corporation, as a bank, and PayPay Securities Corporation, as a financial instruments business
operator, are required to verify the identity of customers when conducting capital transactions with customers.

***The Act on Prevention of Transfer of Criminal Proceeds***

Under the Act on Prevention of Transfer of Criminal Proceeds, fund transfer service providers, issuers of high-value, electronically transferable prepaid payment instruments, credit card providers, money lending business providers, banks, financial instruments business operators and other entities, including PayPay Corporation, PayPay Card Corporation, PayPay Bank Corporation and PayPay Securities Corporation, are required to perform verification procedures of customer identifications and keep records of customer identifications and transactions with customers as prescribed by a ministerial ordinance. The Act on Prevention of Transfer of Criminal Proceeds also requires fund transfer service providers, issuers of high-value, electronically transferable prepaid payment instruments, credit card providers, money lending business providers, banks, financial instruments business operators and other entities, including PayPay Corporation, PayPay Card Corporation, PayPay Bank Corporation and PayPay Securities Corporation, to report to a competent authority if they determine that there is suspicion that any property received from a customer has been obtained illegally or the customer conducts certain criminal acts.

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***The Act on the Protection of Personal Information***

The Act on the Protection of Personal Information and related guidelines cover all business operators that utilize or maintain databases containing personal information, and thus apply to PayPay Corporation, PayPay Card Corporation, PayPay Bank Corporation and PayPay Securities Corporation. Pursuant to this Act, business operators are required to (i) specify the purpose for which personal information will be used prior to handling the information, (ii) save for cases expressly permitted under the Act, refrain from using such personal information beyond the purpose specified without obtaining the prior consent of the person to whom such information relates, (iii) save for cases expressly permitted under the Act, refrain from disclosing such personal information to a third party without obtaining the prior consent of the person to whom such information relates, and (iv) take necessary and appropriate measures to securely manage and prevent leakage, damage and loss of the personal information.

***The Act on Prohibition of Private Monopolization and Maintenance of Fair Trade***

Since PayPay Corporation has a large market share in the code-based payment service, changes to our operations and offerings of new services may be limited in order to comply with the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade.

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**PRINCIPAL AND SELLING SHAREHOLDERS** 

On November 15, 2025, we effected a stock split of one share into 200 shares. Unless otherwise indicated, all numbers of shares and other share-related information presented in this section have been retroactively adjusted to reflect the Stock Split.

The following table sets forth the number of shares of our common stock held of record by the selling shareholder in the offering and other holders of our common stock appearing on our register of shareholders prior to the completion of this offering. Percentage ownership calculations prior to the completion of this offering are based on the number of the then issued and outstanding shares (637,571,200 shares) and shares issuable upon exercise of outstanding stock options (650,007,800 shares).

The percentage of shares beneficially owned after the completion of this offering is based on the shares issued and outstanding after this offering (676,873,535 shares), which includes the common shares represented by ADSs to be issued in connection with this offering, assuming the over-allotment option in the offering is exercised in full and shares issuable upon exercise of outstanding stock options (12,436,600 shares).

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Prior to this offering** | **Prior to this offering** | | **After this offering** | **After this offering** |
| **Name and address of shareholder of<br>our common stock** | **Number of<br>shares<br>beneficially<br>owned before<br>the offering** | **Percentage of<br>issued and<br>outstanding shares<br>beneficially owned<br>before the offering** |<br>**Number of<br>shares offered<br>pursuant to<br>the offering** | **Number of<br>shares<br>beneficially<br>owned** | **Percentage of<br>issued and<br>outstanding shares<br>beneficially owned** |
|  **Directors and Executive Officers<sup>(1)</sup>** |  |  |  |  |  |
|  Ichiro Nakayama |  |  |  |  |  |
|  Jun Shimba |  |  |  |  |  |
|  Takeshi Idezawa |  |  |  |  |  |
|  Yoshimitsu Goto |  |  |  |  |  |
|  Junichi Miyakawa |  |  |  |  |  |
|  Yasuyoshi Karasawa |  |  |  |  |  |
|  Paul Yonamine |  |  |  |  |  |
|  Hiroko Kono |  |  |  |  |  |
|  Hiroto Kaneko |  |  |  |  |  |
|  Hajime Baba |  |  |  |  |  |
|  Masamichi Yasuda |  |  |  |  |  |
|  Masanori Sode |  |  |  |  |  |
|  Wataru Kagechika |  |  |  |  |  |
|  All Directors and Executive Officers as a Group |  |  |  |  |  |
|  B Holdings Corporation<sup>(2)</sup> | 318721600 | 49.03% |  | 318721600 | 46.24% |
|  SVF II Piranha (DE) LLC<sup>(3)</sup> | 216762800 | 33.35% | 23932960 | 192829840 | 27.97% |
|  SoftBank Corp.<sup>(4)</sup> | 51043400 | 7.85% |  | 51043400 | 7.40% |
|  LY Corporation<sup>(5)</sup> | 51043400 | 7.85% |  | 51043400 | 7.40% |
|  Total | 637571200 | 98.09% | 23932960 | 676873535 | 98.20% |

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Notes:

\* Represents beneficial ownership of less than one percent of all common shares. 

(1) The business address for our directors and executive officers is Yotsuya Tower, 1-6-1 Yotsuya, Shinjuku-ku, Tokyo 160-0004, Japan.

(2) SoftBank Corp. holds 50% of the shares in B Holdings Corporation and LY Corporation holds indirectly the
other 50% of the shares. Both SoftBank Corp. and LY Corporation are incorporated in Japan. Pursuant to an agreement between the two companies, LY Corporation is entitled to nominate a majority of the directors of B Holdings Corporation. Pursuant to
an agreement between B Holdings Corporation and us, as long as we are a consolidated subsidiary of LY Corporation, the prior written approval of B Holdings Corporation is required for us to (a) take any action to issue or grant our shares,
stock options, convertible bonds or any other rights to acquire our shares (including disposal of treasury shares or treasury stock acquisition rights) if as a result of such action the percentage of voting rights held by B Holdings Corporation
would be 50% or less (on a fully diluted basis assuming the exercise of all outstanding stock options, convertible bonds and rights to acquire our shares) and (b) sell, transfer, assign, grant a security interest in or dispose of

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assets, including shares, and businesses owned by us or our consolidated subsidiaries, which account for 20% or more of the book value of our total assets on a consolidated basis as of the latest fiscal year-end, to a third party. The address of B Holdings Corporation is 1-3 Kioicho, Chiyoda-ku, Tokyo 102-8282, Japan. <br>

(3) SVF II Piranha (DE) LLC is the record holder of the securities reported herein. SoftBank Group Corp.,
which is a publicly traded company listed on the Tokyo Stock Exchange, is the sole shareholder of SB Global Advisers Limited, which has been appointed as manager and is responsible for making final decisions related to the acquisition, structuring,
financing and disposal of SoftBank Vision Fund II-2 L.P.'s investments, including as held by SVF II Piranha (DE) LLC. SoftBank Vision Fund II-2 L.P. is the sole limited partner of SVF II Aggregator (Jersey) L.P., which is
the sole member of SVF II Holdings (DE) LLC, which is the sole member of SVF II Investment Holdings (Jersey) L.P., which is the majority member of SVF II Investment Holdings LLC, which is the sole member of SVF II Investment Holdings
(Subco) LLC, which is the sole member of SVF II Piranha (DE) LLC. The business address of SoftBank Group Corp. is 1-7-1 Kaigan, Minato-ku, Tokyo 105-7537 Japan. The business address of SB Global Advisers Limited is 69 Grosvenor Street, Mayfair,
London W1K 3JP, England, United Kingdom. The business address of each of SoftBank Vision Fund II-2 L.P., SVF II Aggregator (Jersey) L.P. and SVF II Investment Holdings (Jersey) L.P. is c/o Gen II (Jersey) Limited, 47 Esplanade, St.
Helier, Jersey, JE1 0BD. The business address of each of SVF II Holdings (DE) LLC, SVF II Investment Holdings LLC, SVF II Investment Holdings (Subco) LLC and SVF II Piranha (DE) LLC is 1521 Concord Pike, Wilmington, DE 19803.

(4) SoftBank Corp. is listed on the Tokyo Stock Exchange and is a consolidated subsidiary of SoftBank Group
Corp., which is also listed on the Tokyo Stock Exchange, with an address at 1-7-1 Kaigan, Minato-ku, Tokyo 105-7529, Japan.

(5) LY Corporation is listed on the Tokyo Stock Exchange and is a consolidated subsidiary of SoftBank Group Corp.
as well as a consolidated subsidiary of SoftBank Corp. The address of LY Corporation is 1-3 Kioicho, Chiyoda-ku, Tokyo 102-8282, Japan.

As described in the notes above, our four current shareholders are consolidated subsidiaries of SoftBank Group Corp. and beneficial ownership of the shares held by them may be attributable to SoftBank Group Corp., which is listed on the Tokyo Stock Exchange. SoftBank Group Corp. is a strategic investment holding company with a focus on artificial intelligence, aiming to maximize its enterprise value by building a global investment portfolio of companies leading the Information Revolution and providing essential technologies and services to people around the world.

As of January 31, 2026, there are also 3,910,400 common shares issuable upon the exercise of outstanding stock options under our trust-type stock option plan, 7,957,200 common shares issuable upon the exercise of outstanding stock options under our tax qualified-type stock option plan and 569,000 common shares issuable upon the exercise of outstanding stock options under our one-yen-exercisable at retirement-type stock option plan.

**Historical Changes in Our Shareholding** 

See "Description of Share Capital—History of Securities Issuances" for historical changes in our shareholding.

**Shareholders Agreement** 

On September 15, 2022, B Holdings Corporation, SVF II Piranha (DE) LLC, SoftBank Corp. and LY Corporation, our shareholders, entered into a shareholders agreement. This shareholders agreement, which we are not a party to, will terminate upon the completion of this offering. However, the terms described below will survive the termination of the shareholders agreement.

If we are a consolidated subsidiary of LY Corporation upon the completion of our initial public offering, each of B Holdings Corporation, SVF II Piranha (DE) LLC, SoftBank Corp. and LY Corporation must ensure that B Holdings Corporation and LY Corporation together hold the necessary percentage of our voting rights such that we remain a consolidated subsidiary of LY Corporation after the completion of our initial public offering. SVF II Piranha (DE) LLC, in particular, will be required to cooperate with B Holdings Corporation and LY Corporation, including, but not limited to, by making any necessary adjustments to the number of shares it sells in connection with our initial public offering and consenting to B Holdings Corporation and LY Corporation's subscription to new shares, if any, that we issue in connection with our initial public offering, such

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that we remain a consolidated subsidiary of LY Corporation after the completion of our initial public offering. In addition, the sale of shares owned by SVF II Piranha (DE) LLC is to be prioritized over the sale of shares owned by other shareholders in connection with our initial public offering. In addition, for a period of one year from the completion of our initial public offering, B Holdings Corporation, SoftBank Corp. and LY Corporation will not transfer or otherwise dispose of the shares of our common stock that they own to any third party.

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**RELATED PARTY TRANSACTIONS** 

Our material related party transactions since April 1, 2022 are summarized below.

**Our Related Party Transaction Policy** 

Under our current policies, transactions that fall within the scope of Article 356, paragraph (1), item (ii) and (iii) of the Companies Act, which may include transactions between PayPay and SoftBank Corp., LY Corporation, SB Payment Service Corporation, Fukuoka SoftBank HAWKS Corp., PayPay SC Corporation or B Holdings Corporation, for which any of our directors serve as a representative director, are subject to approval by both our Audit and Supervisory Committee and our board of directors regardless of the expected transaction amount. In addition, related party transactions with our controlling shareholders, such as SoftBank Group Corp., that are expected to exceed ¥1 billion are subject to approval by our Audit and Supervisory Committee and by our board of directors. All other transactions that are expected to exceed ¥1 billion are subject to approval by our Audit and Supervisory Committee.

**Relationship with SoftBank Group companies** 

Our current shareholders are B Holdings Corporation (49.99%), SVF II Piranha (DE) LLC (34.00%), SoftBank Corp. (8.01%) and LY Corporation (8.01%).

SoftBank Group Corp. is the parent company of SoftBank Corp. and LY Corporation. With respect to B Holdings Corporation, SoftBank Corp. holds 50% of its shares and LY Corporation indirectly holds the other 50% of its shares. SoftBank Group Corp. is also a beneficial owner of a majority of shares in SVF II Piranha (DE) LLC. SoftBank Group Corp., SoftBank Corp. and LY Corporation are listed on the Tokyo Stock Exchange.

Since the launch of our PayPay app in 2018, we have had extensive business dealings with affiliated companies ultimately controlled by SoftBank Group Corp., including with respect to promoting and marketing our services, the secondment of employees and outsourcing of services as well as joint branding.

**Management Agreement with B Holdings Corporation** 

On June 16, 2023, we entered into a management agreement with B Holdings Corporation, pursuant to which, as long as we are a consolidated subsidiary of LY Corporation, the prior written approval of B Holdings Corporation is required for us to (a) take any action to issue or grant our shares, stock options, convertible bonds or any other rights to acquire our shares (including disposal of treasury shares and treasury stock acquisition rights) if as a result of such action the percentage of voting rights held by B Holdings Corporation would be 50% or less (on a fully diluted basis assuming the exercise of all outstanding stock options, convertible bonds and rights to acquire our shares) and (b) sell, transfer, assign, grant a security interest in or dispose of assets, including shares, and business owned by us or our consolidated subsidiaries, which account for 20% or more of the book value of our total assets on a consolidated basis as of the latest fiscal year-end, to a third party other than our subsidiaries.

**Registration Rights Agreement** 

In connection with this offering, we expect to enter into a registration rights agreement (the "Registration Rights Agreement") with certain of our principal shareholders identified on the signature pages thereto. The Registration Rights Agreement will grant certain demand registration rights, short-form registration rights and piggyback registration rights in respect of our common shares and related indemnification rights from us, subject to customary restrictions and exceptions. All fees, costs and expenses of registrations, other than underwriting discounts and commissions, are expected to be borne by us. The form of the Registration Rights Agreement will be filed as an exhibit to the registration statement of which this prospectus forms a part.

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**Private Placement** 

We have historically funded our operations through the issuance of shares to entities affiliated with SoftBank Group Corp. For details of such share placements, see "Description of Share Capital—History of Securities Issuances."

**Transactions in connection with reorganization of PayPay Card Corporation** 

*Company Split* 

Yahoo Japan Corporation was a wholly-owned subsidiary of Z Holdings Corporation before they merged to form LY Corporation. On October 1, 2022, PayPay Card Corporation took over LY Corporation's (then Yahoo Japan Corporation) credit card merchant acquiring business for PayPay Card by means of a company split and PayPay Card Corporation issued 5,426 of its shares to LY Corporation (then Yahoo Japan Corporation) as consideration.

*Share Purchase* 

On October 1, 2022, upon completion of the company split, we purchased all shares in PayPay Card Corporation from LY Corporation (then Yahoo Japan Corporation) for ¥63 billion pursuant to a share purchase agreement, whereby PayPay Card Corporation became our wholly-owned subsidiary.

*Distribution of Dividend* 

On September 30, 2022, prior to the above acquisition, PayPay Card Corporation, which was LY Corporation's (then Yahoo Japan Corporation) wholly-owned subsidiary at the time, distributed dividends of ¥37 billion to LY Corporation (then Yahoo Japan Corporation) pursuant to the share purchase agreement between LY Corporation (then Yahoo Japan Corporation) and us. ****

*Issuance of Shares* 

On October 7, 2022, PayPay Card Corporation issued 5,018 of its shares to us and we paid ¥37 billion to PayPay Card Corporation as consideration.

**Transactions in connection with acquisition of shares in PayPay Securities Corporation** 

*Purchase of Newly Issued Shares* 

On April 10, 2023, we purchased 65,560 newly issued shares of PayPay Securities Corporation at a price of ¥100,000 per share while SoftBank Corp. and Mizuho Securities Co., Ltd. purchased 13,536 and 20,904 such shares, respectively. Upon the completion of this transaction, we held 35.0% shares in PayPay Securities Corporation while SoftBank Corp., Mizuho Securities Co., Ltd. and Z Holdings Corporation held 30.6%, 34.0% and 0.4%, respectively, whereby PayPay Securities Corporation remained a subsidiary of SoftBank Corp.

*Share Purchase and Third-Party Allotment of New Shares* 

On April 1, 2025, we purchased 57,265 shares of PayPay Securities Corporation at a price of ¥100,000 per share from SoftBank Corp. and 800 shares of PayPay Securities Corporation at a price of ¥100,000 per share from LY Corporation, as well as underwrote a third-party allotment of 70,000 new shares of PayPay Securities Corporation at a price of ¥100,000 per share. Upon completion of this transaction, we held 75.2% of PayPay Securities Corporation while Mizuho Securities Co., Ltd. held 24.8%, making PayPay Securities Corporation our consolidated subsidiary.

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**Transactions in connection with acquisition of shares in PayPay Bank Corporation** 

On December 13, 2022, PayPay Bank Corporation conducted a third-party allotment of 883,000 new shares of non-voting Class A preferred shares at a price of ¥79,200 per share, which were purchased by Z Financial Corporation (currently LY Corporation).

In April 2025, we completed the acquisition of 47.1% of the common shares and 100% of the non-voting Class A preferred shares of PayPay Bank Corporation from Z Financial Corporation (currently LY Corporation) and Mitsui Sumitomo Insurance Co., Ltd. Upon completion of this transaction, Sumitomo Mitsui Banking Corporation, Fujitsu Ltd., Taiju Life Insurance Company Limited and Sumitomo Life Insurance Company held 46.6%, 5.3%, 0.5% and 0.5% of the common shares, respectively. Upon the conversion of the non-voting Class A preferred shares of PayPay Bank Corporation into common shares, effective April 28, 2025, we held 75.5% of the common shares, making PayPay Bank Corporation our consolidated subsidiary. Sumitomo Mitsui Banking Corporation, Fujitsu Ltd., Taiju Life Insurance Company Limited and Sumitomo Life Insurance Company held 21.5%, 2.4%, 0.2% and 0.2%, respectively, of the common shares upon the conversion of the non-voting Class A preferred shares of PayPay Bank Corporation into common shares.

**Loans to PayPay Card Corporation from LY Corporation** 

In February 2018, PayPay Card Corporation (then YJ Card Corporation) entered into an agreement with LY Corporation (then Yahoo Japan Corporation), pursuant to which LY Corporation (then Yahoo Japan Corporation) agreed to provide loans of up to ¥70 billion to PayPay Card Corporation and PayPay Card Corporation agreed to grant a security interest at the request of LY Corporation (then Yahoo Japan Corporation) with respect to any contractual obligation between PayPay Card Corporation and LY Corporation (then Yahoo Japan Corporation). In April 2019, PayPay Card Corporation entered into a ¥10 billion loan agreement with LY Corporation (then Yahoo Japan Corporation) due in December 2027, with a fixed interest rate of 0.5%, for general business purposes, including working capital. As of December 31, 2025, the amount outstanding under this loan agreement was ¥10 billion. There is no remaining committed availability under this loan agreement.

In December 2019, PayPay Card Corporation entered into an agreement with LY Corporation (then Z Holdings Corporation), pursuant to which LY Corporation (then Z Holdings Corporation) agreed to provide loans of up to ¥25 billion to PayPay Card Corporation and PayPay Card Corporation agreed to grant a security interest at the request of LY Corporation (then Z Holdings Corporation) with respect to any contractual obligation between PayPay Card Corporation and LY Corporation (then Z Holdings Corporation). In December 2019, LY Corporation (then Z Holdings Corporation) provided a ¥10 billion loan to PayPay Card Corporation due in December 2028, with a fixed interest rate of 0.6%, for general business purposes, including working capital. As of December 31, 2025, the amount outstanding under this loan agreement was ¥10 billion. There is no remaining committed availability under this loan agreement.

In February 2024, PayPay Card Corporation entered into a ¥15 billion term loan agreement with LY Corporation due in February 2026, with a fixed interest rate of 0.7%, for general business purposes, including working capital. Under the agreement, PayPay Card Corporation agreed to grant a security interest at the request of LY Corporation with respect to any contractual obligation between PayPay Card Corporation and LY Corporation. As of December 31, 2025, the amount outstanding under this loan agreement was ¥15 billion.

In December 2024, LY Corporation and PayPay Card Corporation executed a memorandum of understanding pursuant to which the permitted use of proceeds for the intercompany loans described above was broadened to include business investments (including the provision of working capital and loans to PayPay Corporation for its business investments). The other principal terms of the loan agreements remain the same. The memorandum of understanding provides that the parties may agree from time to time to renew or extend the maturity of the loans described above. In the event of such renewal, the date of maturity is extendable unless LY Corporation provides one month of notice that the repayment date will not be extended, with the final maturity

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being no later than March 29, 2030. Any such renewal bears interest at a rate equal to LY Corporation's average funding cost as of the day after the repayment date prior to the extension plus a spread of 0.1.

**Cash Deposits by PayPay Card Corporation with LY Corporation** 

In October 2021, PayPay Card Corporation entered into a cash deposit agreement with LY Corporation (then Z Holdings Corporation) with a floating interest rate to be monthly agreed at no more than 2% per annum in order to improve funding efficiency through group financing, pursuant to which PayPay Card Corporation has deposited cash to LY Corporation (previously Z Holdings Corporation). Under the agreement, the deposits can be withdrawn by PayPay Card Corporation based on its financial and business needs, after discussing with LY Corporation. In addition, the agreement may be terminated based on PayPay Card Corporation's financial and business needs only upon discussion with LY Corporation.

**Transactions with LY Corporation** 

Yahoo Japan Corporation was a wholly-owned subsidiary of Z Holdings Corporation before they merged to form LY Corporation.

*Settlement Fee for e-commerce* 

On January 9, 2019, we entered into an agency agreement with LY Corporation (then Yahoo Japan Corporation), pursuant to which LY Corporation acts as an agent for its merchants using our payment settlement services on e-commerce platforms operated by LY Corporation, whereby LY Corporation pays settlement fees to us on behalf of the merchants.

*Collaborative Promotion* 

LY Corporation (previously Yahoo Japan Corporation) has utilized PayPay Points as its loyalty points offered to its customers. For instance, LY Corporation (previously Yahoo Japan Corporation) has offered promotional campaigns from time to time to customers of its e-commerce platforms such as Yahoo! JAPAN Shopping. LY Corporation pays to us cash amounts, which we record under our assets, corresponding to PayPay Points granted to its customers which are recorded as PayPay Users' deposits under our liabilities, helping us to add LY Corporation's customers to our user base.

In October 2022, we entered into an agreement with LY Corporation (then Yahoo Japan Corporation) on promotion, advertising, user acquisition and user incentives, pursuant to which LY Corporation (then Yahoo Japan Corporation) produced and placed advertisements for promotional campaigns to grant PayPay Points to customers using our payment settlement services on its e-commerce platform by allocating expenses between LY Corporation (then Yahoo Japan Corporation) and us.

*Agency Agreement for PayPay Card's Merchant Acquisition* 

On July 30, 2018, we entered into an agency agreement with LY Corporation (then Yahoo Japan Corporation) for the PayPay Card (then YJ Card) credit card merchant acquiring business operated by LY Corporation (then Yahoo Japan Corporation) as the acquirer at that time. Under the agreement, we have been acting as an agent for PayPay merchants who applied for PayPay Card membership, whereby we receive merchants' receivables generated from payments using PayPay Cards at their shops from the acquirer and pay settlement fees to the acquirer on behalf of the merchants. On October 1, 2022, PayPay Card Corporation succeeded the status as a party to this agreement, or the status as the acquirer, from LY Corporation (then Yahoo Japan Corporation).

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*Settlement Fee for e-commerce (PayPay Card Corporation)* 

Since October 2022, LY Corporation (previously Yahoo Japan Corporation) has been acting as an agent for merchants using its e-commerce platforms, where PayPay Card (previously YJ Card) can be used as a payment method, whereby LY Corporation pays settlement fees on behalf of the merchants to PayPay Card Corporation (previously YJ Card Corporation).

For the transactions described above, we recorded revenue for the years ended March 31, 2023, 2024 and 2025 of ¥13,768 million, ¥15,701 million and ¥18,253 million, respectively. In addition, the volume of rendering settlement service for the years ended March 31, 2023, 2024 and 2025 were ¥1,858,411 million, ¥1,768,955 million and ¥1,825,130 million, respectively.

*PayPay Points Arrangements Paid to LY Corporation (previously Yahoo Japan Corporation) (PayPay Card Corporation)* 

PayPay Card holders who use PayPay Card to make purchases on LY Corporation's (previously Yahoo Japan Corporation) e-commerce platforms are granted PayPay Points equivalent to a percentage of the value of such purchases. PayPay Card Corporation pays to LY Corporation cash amounts corresponding to the PayPay Points granted through the purchases described above.

We award PayPay Points to new PayPay Card holders in exchange for the issuance of PayPay Card and additional PayPay Points when a certain number of purchases are made with PayPay Card following such issuance as an incentive to increase our PayPay Card holder base and the use of PayPay Card. When new cardholders apply for PayPay Card through LY Corporation's e-commerce platforms, PayPay Card Corporation pays to LY Corporation cash amounts, corresponding to the PayPay Points awarded as a result of the application and subsequent purchases described above. ****

For the transactions described above, we recorded PayPay Points for user incentives as transaction and service deductions for the years ended March 31, 2023, 2024 and 2025 of ¥16,397 million, ¥6,573 million and ¥2,814 million, respectively.

**Transactions with SoftBank Corp.** 

*Collaborative Promotion* 

SoftBank Corp. has utilized PayPay Points, PayPay Point Code with which users can pre-load their PayPay Balance and PayPay Coupons with which users can earn additional PayPay Points for payments using our payment settlement services as part of its loyalty programs offered to its customers. SoftBank Corp. pays to us cash amounts, which we record under our assets, corresponding to PayPay Points, PayPay Point Code and PayPay Coupons granted to its customers, which we record as PayPay User's deposits under our liabilities, helping us to add SoftBank Corp.'s customers to our user base.

For the transactions described above, the volume of settlement amounts for Granting PayPay points to users on behalf of SoftBank Corp. for the year ended March 31, 2023, 2024 and 2025 were ¥17,745 million, ¥19,888 million and ¥36,385 million, respectively.

*Securitization of SoftBank Corp.'s Receivables* 

SoftBank Corp. has securitized its receivables from installment sales of mobile devices for funding and PayPay Bank Corporation has purchased certain beneficiary interest in those securitized installment receivables from SoftBank Corp. Securitized installment receivables are recorded as securities under our assets on our consolidated statements of financial position.

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For the transactions described above, we recorded on securities for the years ended March 31, 2023, 2024 and 2025 of ¥47,779 million, ¥80,278 million and ¥123,050 million, respectively.

**Transactions with SB Payment Service Corp.** 

SB Payment Service Corp. is a wholly-owned subsidiary of SoftBank Corp.

*Settlement Fee* 

SB Payment Service Corp. acts as our payment service provider, among others, and assists our merchants using our payment settlement services. Under a general agency agreement with SB Payment Service Corp., we transfer funds to SB Payment Service Corp. corresponding to the amount of purchases our users make with our PayPay app at merchants' stores less settlement fees we charge the merchants. SB Payment Service Corp. is then responsible for paying merchants from the transferred funds. SB Payment Service Corp. also provides us with various services, such as access to a payment gateway which connects the merchants to our payment system, and supports our relations with the merchants by checking information provided by the merchants and by communicating with the merchants on our behalf. We pay SB Payment Service Corp. a fee for merchants that connect to our payment system using the payment gateway, which is calculated based on a percentage applied to the value of transactions made through SB Payment Service Corp.'s systems.

For the transactions described above, we recorded expenses for utilizing the settlement system for merchants for the years ended March 31, 2023, 2024 and 2025 of ¥10,695 million, ¥10,245 million and ¥8,806 million, respectively. In addition, the volume of settlement amounts for the years ended March 31, 2024 and 2025 were ¥419,058 million and ¥721,382 million, respectively.

*Fund Source Cost* 

When users increase their PayPay Balance by carrier billing or SoftBank Card, a prepaid payment instrument, SB Payment Service Corp. transfers funds to the users' PayPay Balance as a payment agent and we pay SB Payment Service Corp. a Fund Source Cost and expenses relating to uncollectible receivables. In addition, when SB Payment Service Corp. transfers funds to the users' PayPay Balance, we record accounts receivables for SB Payment Service Corp. of an equal amount to the amount of funds transferred.

For the transactions described above, the volume of settlement amounts for the years ended March 31, 2023, 2024 and 2025 were ¥853,120 million, ¥912,322 million and ¥615,825 million, respectively.

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**DESCRIPTION OF SHARE CAPITAL** 

Set forth below is information concerning the shares of our common stock, including brief summaries of the relevant provisions of our articles of incorporation, our share handling regulations and the Companies Act relating to joint stock corporations (*kabushiki kaisha*) and certain related law and legislation, each as currently in effect unless otherwise indicated.

**General** 

The table below shows our share capital as of the date of this prospectus:

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| | | |
|:---|:---|:---|
| **<u>Type of share capital</u>** | **<u>Authorized shares</u>** | **<u>Issued shares</u>** |
|  Common stock | 1600000000 | 637571200 |

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All issued shares of our common stock are fully-paid and non-assessable and generally transferable. We are not listed on any stock exchange in Japan. Any transfer of shares of Japanese companies which are not listed in any stock exchange in Japan is subject to the requirements and procedures described in the Companies Act and its subordinate regulations. Under the Companies Act, a transfer of any share of a company which does not issue any share certificates will take effect if and when the transferor and the transferee agree to the transfer in any manner. However, the transferee of the shares may not assert its shareholders' rights against the company and, in general, any third party until and unless such transfer is duly recorded in the register of shareholders of such company. We are not a company which issues share certificates, and therefore, the transfer of the shares of our common stock shall take effect between the transferor and the transferee when the agreement of such transfer takes effect as agreed by them. Currently, under the Companies Act and our articles of incorporation, transfer of shares shall be subject to approval by the board of directors. However, upon amendment of our articles of incorporation, which will take effect on the date the ADS is listed on Nasdaq, transfer of shares shall no longer be subject to our approval.

The transfer agent for the shares of our common stock is Mizuho Trust & Banking Co., Ltd., located at 3-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo, 100-8241, Japan. Our transfer agent maintains our register of shareholders.

Under the Companies Act, in order to assert against us shareholders' rights to which shareholders as of a given record date are entitled (such as the rights to vote at a general meeting of shareholders or receive dividends), a shareholder must have its name and address registered in our register of shareholders, except in limited circumstances. See "—Record Date" below. Under the Companies Act and our regulations for handling shares, such registration on the register of shareholders is made only in certain cases including: (1) when there is a joint request by the nominee (or general successor) of the shares and the acquirer, and (2) cases specified in laws and regulations where there is no risk of harm to the interests of interested parties even if the transfer is conducted at the sole request of the acquirer.

**Distribution of Surplus** 

***General***

Under the Companies Act, distribution of cash or other assets by a joint stock corporation to its shareholders, including dividends, takes the form of distribution of Surplus (as defined in "—Restriction on Distribution of Surplus"). We are permitted to make distributions of Surplus to our shareholders any number of times per fiscal year, subject to certain limitations described in "—Restriction on Distribution of Surplus." Under the Companies Act, distributions of Surplus are, in principle, required to be authorized by a resolution of a general meeting of shareholders. However, we will consolidate the decision-making process for distribution of Surplus in our board of directors following the listing of the ADS on Nasdaq. Distributions of Surplus are permitted under the Companies Act to be made pursuant to a resolution of the board of directors if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) our articles of incorporation provide that the board of directors has the authority to decide to make
distributions of Surplus;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) we select an independent registered public accounting firm and form an audit and supervisory board, an audit
and supervisory committee or nominating committee etc. under the Companies Act, as the case may be;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the normal term of office of each director who is not an audit and supervisory committee member terminates
on or prior to the date of conclusion of the ordinary general meeting of shareholders relating to the last fiscal year ending within the period of one year from the election of such director; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) our non-consolidated annual financial statements and certain
documents for the latest fiscal year fairly present our non-consolidated assets and profit or loss, as required by ordinances of the Ministry of Justice of Japan, or the Ministry of Justice.

As of the date of this prospectus, we satisfy the requirements described in (a) through (d) above. Distributions of Surplus may be made in cash or in kind in proportion to the number of shares of our common stock held by each shareholder. A resolution of the board of directors authorizing a distribution of Surplus must specify the kind and aggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders, and the effective date of the distribution. If a distribution of Surplus is to be made in kind, we may, pursuant to a resolution of the board of directors, grant to our shareholders a right to require us to make such distribution in cash instead of in kind. If no such right is granted to shareholders, the relevant distribution of Surplus must be approved by a special resolution of a general meeting of shareholders (see "—Voting Rights" with respect to a "special resolution").

Under our articles of incorporation, the record dates for year-end and interim dividends are March 31 and September 30, respectively, in each year. In Japan, the record date for dividends precedes the date of determination of the amount of the dividend to be paid. Under our articles of incorporation, we are not obligated to pay any year-end dividend nor interim dividend that is paid in cash that has not been received by a shareholder after the lapse of three years from the commencement date of such distribution.

***Restriction on Distribution of Surplus***

In making a distribution of Surplus, we must set aside in our additional paid-in capital and/or legal reserve a total amount equal to one-tenth of the amount of Surplus so distributed until the sum of such additional paid-in capital and legal reserve reaches one-quarter of our stated capital.

The amount of Surplus, or Surplus, at any given time must be calculated in accordance with the following formula:

A+B+C+D-(E+F+G)

In the above formula:

"A" = the total amount of other capital surplus and other retained earnings, each such amount being that appearing on our non-consolidated balance sheet as of the end of the last fiscal year

"B" = (if we have disposed of our treasury stock after the end of the last fiscal year) the amount of the consideration for such treasury stock received by us less the book value thereof

"C" = (if we have reduced our stated capital after the end of the last fiscal year) the amount of such reduction less the portion thereof that has been transferred to additional paid-in capital or legal reserve (if any)

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"D" = (if we have reduced our additional paid-in capital or legal reserve after the end of the last fiscal year) the amount of such reduction less the portion thereof that has been transferred to stated capital (if any)

"E" = (if we have cancelled our treasury stock after the end of the last fiscal year) the book value of such treasury stock

"F" = (if we have distributed Surplus to our shareholders after the end of the last fiscal year) the total book value of the Surplus so distributed

"G" = certain other amounts set forth in ordinances of the Ministry of Justice, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if we have reduced Surplus and increased our stated capital, additional paid-in capital or legal reserve after the end of the last fiscal year, the amount of such reduction; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if we have distributed Surplus to shareholders after the end of the last fiscal year, the amount set aside in
our additional paid-in capital or legal reserve, if any, as required by ordinances of the Ministry of Justice.

The aggregate book value of Surplus distributed by us may not exceed a prescribed distributable amount, or the Distributable Amount, as calculated on the effective date of such distribution. The Distributable Amount at any given time shall be the amount of Surplus less the aggregate of (a) the book value of our treasury stock, (b) the amount of consideration for any of our treasury stock disposed of by us after the end of the last fiscal year and (c) certain other amounts set forth in ordinances of the Ministry of Justice, including all or a certain part of the amount by which deferred assets and one-half of our goodwill exceeds, if at all, the total of the stated capital, additional paid-in capital and legal reserve, each such amount being the amount in our non-consolidated balance sheet as of the end of the last fiscal year, as calculated in accordance with ordinances of the Ministry of Justice.

If we have become, at our option, a company with respect to which its consolidated balance sheet should also be considered in the calculation of the Distributable Amount (*renketsu haito kisei tekiyo kaisha*), we shall further deduct from the amount of Surplus the excess amount, if any, of (x) the total amount of the shareholders' equity appearing on our non-consolidated balance sheet as of the end of the last fiscal year and certain other amounts set forth in ordinances of the Ministry of Justice over (y) the total amount of the shareholders' equity and certain other amounts set forth in ordinances of the Ministry of Justice appearing on our consolidated balance sheet as of the end of the last fiscal year.

If we have prepared interim financial statements as described below, and if such interim financial statements have been approved by the board of directors or (if so required by the Companies Act) by a general meeting of shareholders, then the Distributable Amount must be adjusted to take into account the amount of profit or loss, and the amount of consideration for any of our treasury stock disposed of by us, during the period in respect of which such interim financial statements have been prepared. We may prepare non-consolidated interim financial statements consisting of a balance sheet as of any date subsequent to the end of the last fiscal year and a statement of income for the period from the first day of the subject fiscal year to the date of such balance sheet. Interim financial statements so prepared by us must be audited by the audit and supervisory committee and the independent registered public accounting firm and approved by the board of directors and at a general meeting of shareholders, as required by the Companies Act and ordinances of the Ministry of Justice.

**Capital and Reserves** 

We may generally reduce our additional paid-in capital or legal reserve by a resolution of a general meeting of shareholders and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as stated capital. On the other hand, we may generally reduce our stated capital by a

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special resolution of a general meeting of shareholders and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as additional paid-in capital. In addition, we may reduce our Surplus and increase either (i) stated capital or (ii) additional paid-in capital and/or legal reserve by the same amount, in either case by a resolution of a general meeting of shareholders.

**Stock Splits** 

We may at any time split shares of our common stock into a greater number of shares of our common stock by a resolution of the board of directors. When a stock split is to be made, so long as our only class of outstanding stock is our common stock, we may increase the number of authorized shares to the extent that the ratio of such increase in authorized shares does not exceed the ratio of such stock split by amending our articles of incorporation, which amendment may be effected by a resolution of the board of directors without the approval of shareholders. Before a stock split, we must give public notice of the stock split, specifying the record date therefor, not less than two weeks prior to such record date.

**Unit Share System** 

Upon the amendment of our articles of incorporation, which will take effect on the date the ADS is listed on Nasdaq, our articles of incorporation will provide that 100 shares each constitute one unit of shares. Under the unit share system, shareholders have, at general meetings of shareholders, one voting right for each unit of shares held by them, and shares constituting less than a full unit carry no voting rights. Our articles of incorporation will provide that the holders of shares constituting less than a full unit do not have shareholder rights, except for (a) those specified in the Companies Act or ordinances of the Ministry of Justice, which include rights (i) to receive dividends, (ii) to receive cash or other assets in the case of a consolidation of shares or stock split, share exchange (*kabushiki-kokan*) or share transfer (*kabushiki-iten*), or merger, or (iii) to be allotted shares and stock acquisition rights (*shinkabu yoyakuken*) for free when such rights are granted to shareholders, or (b) those to be allotted rights to subscribe for shares or stock acquisition rights in accordance with the number of shares held by such shareholder when such rights are granted to shareholders. Holders of shares constituting less than a full unit may at any time request that we purchase such shares constituting less than a full unit at their market price in accordance with our share handling regulations. The board of directors may reduce the number of shares constituting one unit or cease to use the unit share system by amendments to the articles of incorporation without shareholders' approval, even though amendments to the articles of incorporation generally require a special resolution of a general meeting of shareholders.

**General Meetings of Shareholders** 

Under our articles of incorporation, the ordinary general meeting of shareholders is held in June of each year. In addition, we may hold an extraordinary general meeting of shareholders whenever necessary. Notice of a general meeting of shareholders stating the place, the time and the purpose thereof must be given to each shareholder having voting rights (or, in the case of a non-resident shareholder, to its standing proxy or mailing address in Japan) at least two weeks prior to the date set for the meeting, provided, however, that we may give certain items to shareholders by means of posting such items on a website instead. ****The record date for an ordinary general meeting of shareholders is March 31 of each year.

Any shareholder holding at least 300 voting rights or 1% of the total number of voting rights for six months or longer may propose a matter to be considered at a general meeting of shareholders, and may request to include a summary of proposals which such shareholder intends to submit with respect to the matters that are purpose of such meeting in a convocation notice to our shareholders, by submitting a request to a representative director at least eight weeks prior to the date of such meeting (provided that we may limit the number of such proposals submitted by each shareholder to 10 when including the summary in such a convocation notice). Any of the minimum percentages, time periods and number of voting rights necessary for exercising the minority shareholder rights described above may be decreased or shortened if our articles of incorporation so provide. Our articles of incorporation currently do not include any such provisions.

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**Voting Rights** 

Upon the amendment of our articles of incorporation, which will take effect on the date the ADS is listed on Nasdaq, shareholders of our common stock will have one voting right for each unit of 100 shares held by them.

Except as otherwise provided by law or in our articles of incorporation, a majority of the voting rights held by the shareholders present at a general meeting of shareholders is necessary to adopt a resolution at the meeting. Our articles of incorporation provide that the quorum for election of directors is one-third of the total number of voting rights. Our shareholders are not entitled to cumulative voting in the election of directors. A shareholder may exercise its voting rights in writing or through a proxy, provided that the proxy is also a holder of our shares having voting rights at such meeting.

The Companies Act provides that certain important matters shall be approved by a "special resolution" of a general meeting of shareholders. Under our articles of incorporation, the quorum for a special resolution is one-third of the total number of voting rights, and the approval of not less than two-thirds of the voting rights held by the shareholders present at the meeting is required for adopting a special resolution. Such important matters include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any amendment to our articles of incorporation (except for such amendments that may be made without the
approval of shareholders under the Companies Act, such as (i) an increase of the number of authorized shares to the extent that the ratio of such increase in authorized shares does not exceed the ratio of such stock split, (ii) a reduction
of the number of shares per unit of shares and (iii) termination of the unit share system; our articles of incorporation do not adopt the unit share system described in (ii) and (iii) above as of the date of this prospectus, although we
plan to adopt this system upon listing);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• dismissal of a director who is an audit and supervisory committee member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our dissolution, merger or consolidation requiring shareholders' approval;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• establishment of a parent and wholly-owned subsidiary relationship by way of a share transfer
(*kabushiki-iten*) or share exchange (*kabushiki-kokan)* requiring shareholders' approval;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• making another corporation a subsidiary by way of a share delivery (*kabushiki-kofu*) requiring
shareholders' approval;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• transfer of the whole or a substantial part of our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• transfer of the whole or a part of the shares or equity interests in our subsidiary which meets certain
requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• taking over of the whole of the business of another company requiring shareholders' approval;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our corporate split requiring shareholders' approval;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• consolidation of shares of our common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acquisition of shares of our common stock from a specific shareholder other than our subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• distribution of Surplus in kind (except when shareholders are granted the right to require that such
distribution be made in cash instead of in kind);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issuance of new shares or sale of existing shares held by us as treasury stock at a "specially
favorable" price except in the case of the allotment of shares to shareholders; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issuance of stock acquisition rights (including those incorporated in bonds with stock acquisition rights)
under "specially favorable" conditions except in the case of the allotment of stock acquisition rights to shareholders.

**Liquidation Rights** 

In the event of our liquidation, the assets remaining after payment of all debts, liquidation expenses, and taxes will be distributed among holders of shares of our common stock in proportion to the respective numbers of shares held by them.

**Issue of Additional Shares and Pre-emptive Rights** 

Holders of our common stock have no pre-emptive rights. Authorized but unissued shares of our common stock may be issued, or existing shares held by us as treasury stock may be sold, at such times and upon such terms as the board of directors determines subject to the limitations as to the issuance of new shares of our common stock or sale of existing shares held by us as treasury stock at a "specially favorable" price mentioned in "—Voting Rights." The board of directors may, however, determine that shareholders shall be given subscription rights regarding a particular issue of new shares of our common stock or sale of existing shares held by us as treasury stock, in which case such rights must be given on uniform terms to all shareholders as of a record date not less than two weeks' prior to which public notice must be given. Each of the shareholders to whom such rights are given must also be given at least two weeks' prior notice of the date on which such rights expire.

In the case of an issuance of shares (including a sale of existing shares held by us as treasury stock) or stock acquisition rights whereby any subscriber (including its subsidiaries and other companies set forth in ordinances of the Ministry of Justice) will hold more than 50% of the voting rights of all shareholders, and if shareholders who hold one-tenth or more of the voting rights of all shareholders dissent from the issuance of shares or stock acquisition rights, the approval by a resolution of a general meeting of shareholders is generally required before the payment date (or the allotment date in the case of an issuance of stock acquisition rights) pursuant to the Companies Act.

**Stock Acquisition Rights** 

We have issued stock acquisition rights, and may issue additional stock acquisition rights in the future. Holders of stock acquisition rights are entitled to acquire shares from us upon payment of the applicable exercise price and subject to other terms and conditions. We may also issue bonds with stock acquisition rights (*shinkabu yoyakuken-tsuki shasai*). The issuance of stock acquisition rights and bonds with stock acquisition rights may be authorized by the board of directors unless it is made under "specially favorable" conditions, as described in "—Voting Rights."

**Record Date** 

As mentioned above, March 31 is the record date for the payment of year-end dividends and the determination of shareholders entitled to vote at the ordinary general meeting of shareholders. September 30 is the record date for the payment of interim dividends. In addition, by a resolution of the board of directors and after giving at least two weeks' prior public notice, we may at any time set a record date in order to determine the shareholders who are entitled to certain rights pertaining to our stock.

**Acquisition of Our Common Stock** 

We may acquire shares of our common stock (i) from all shareholders, on a *pro-rata* basis, who make an offer to transfer in response to our notification to all shareholders of our intention to acquire shares of our

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common stock (currently, under our articles of incorporation, pursuant to a resolution of the board of directors if we satisfy the requirements described in (a) through (d) in "Distribution of Surplus—General" above or, regardless of whether we satisfy such requirements, a resolution of a general meeting of shareholders, however, upon amendment of our articles of incorporation, which will take effect on the date the ADS is listed on Nasdaq, pursuant to a resolution of the board of directors if we satisfy such requirements or a resolution of a general meeting of shareholders if we do not satisfy such requirements), (ii) from a specific shareholder other than any of our subsidiaries (pursuant to a special resolution of a general meeting of shareholders) or (iii) from any of our subsidiaries (pursuant to a resolution of the board of directors). In the case of (ii) above, any other shareholder may make a request to us that such shareholder be included as a seller in the proposed purchase.

The total amount of the purchase price of shares of our common stock may not exceed the Distributable Amount as described in "—Distribution of Surplus—Restriction on Distribution of Surplus."

We may hold the shares of our common stock acquired and may generally dispose of or cancel such shares by a resolution of the board of directors.

**Request by a Controlling Shareholder to Sell All Shares** 

A shareholder holding, directly or indirectly, 90% (or such other percentage above 90% as may be provided in our articles of incorporation) or more of voting rights has the right to request, subject to approval by the board of directors, that the other shareholders and (if the controlling shareholder so determines) all holders of stock acquisition rights (in each case other than us and, if the controlling shareholder so determines, the controlling shareholder's wholly-owned subsidiaries) sell to the controlling shareholder all shares (and all stock acquisition rights, as the case may be) held by them (*kabushikitou uriwatashi seikyu*). If the approval is granted by a resolution of the board of directors, we will be required to give public notice thereof to all holders and registered pledgees of shares (and stock acquisition rights, as the case may be) not later than 20 days prior to the effective date of such sales, as proposed by the controlling shareholder.

**Disposal of Shares of Our Common Stock Held by Shareholders Whose Location is Unknown** 

We are not required to continue to send notices to a shareholder if notices sent by us to such shareholder fail to arrive for five consecutive years or more at such shareholder's address registered in our register of shareholders or otherwise notified to us.

In the above case, if the relevant shareholder also fails to receive dividends on the shares continuously for five years or more at such shareholder's address registered in our register of shareholders or otherwise notified to us, then we may in general dispose of such shares by auction or by a method other than auction with the permission of the court and hold or deposit the proceeds of such disposition on behalf of the relevant shareholder.

**History of Securities Issuances** 

The following is a history of our securities issuances. On November 15, 2025, we effected a stock split of one share into 200 shares. The historical issuances of preferred shares and common shares described in this subsection have not been retroactively adjusted to reflect the Stock Split. The numbers of shares underlying stock options and the corresponding exercise prices presented in this subsection have been retroactively adjusted to reflect the Stock Split.

***Class A Preferred Shares***

On January 21, 2021, we issued a total of 250,000 Class A preferred shares to SoftBank Group Corp., SoftBank Corp. and Yahoo Japan Corporation (currently LY Corporation) for an aggregate consideration of JPY 50,000,000,000.

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On May 21, 2021, we issued a total of 150,000 Class A preferred shares to SoftBank Group Corp., SoftBank Corp. and Yahoo Japan Corporation for an aggregate consideration of JPY 30,000,000,000.

On July 30, 2021, we issued a total of 550,000 Class A preferred shares to SoftBank Group Corp., SoftBank Corp. and Yahoo Japan Corporation for an aggregate consideration of JPY 110,000,000,000.

***Common Shares***

On July 15, 2020, we issued a total of 180,000 common shares to SoftBank Group Corp., SoftBank Corp. and Yahoo Japan Corporation for an aggregate consideration of JPY 18,000,000,000.

On April 1, 2022, we issued 140,000 common shares to SoftBank Corp., 280,000 common shares to SVF II Piranha (DE) LLC and 140,000 common shares to Yahoo Japan Corporation in exchange of the same number of Class A preferred shares held by them, respectively.

On October 1, 2022, we issued 545,000 common shares to SoftBank Corp. and 545,000 common shares to Z Intermediate Holdings Corporation in exchange of the same number of Class A preferred shares held by them, respectively.

On April 4, 2025, SVF II Piranha (DE) LLC exercised the stock options it purchased from One97 Communications Singapore Private Limited in December 2024 and we issued 159,012 common shares.

On April 10, 2025, we issued 94,802 common shares to SVF II Piranha (DE) LLC, 92,021 common shares to SoftBank Corp. and 92,021 common shares to LY Corporation for an aggregate consideration of JPY 105,722,866,068.

***Stock Options***

On September 30, 2020, we issued 42 stock options, upon exercise of which an aggregate of 31,802,400 shares of our common stock will be acquired at an exercise price of JPY 500 per share, and allocated them to One97 Communications Singapore Private Limited. Subsequently, in December 2024, the stock options were sold to SVF II Piranha (DE) LLC, an investment fund ultimately controlled by SoftBank Group Corp. and a shareholder of ours that currently owns 34.0% of our shares.

***Plan-related issuance***

On August 29, 2022, we issued 4,215 2nd series stock options, 4,215 3rd series stock options, 4,215 4th series stock options, 4,215 5th series stock options, 4,186 6th series stock options, 2,080 7th series stock options, 1,929 8th series stock options, 1,929 9th series stock options, 1,929 10th series stock options, 1,929 11th series stock options, 1,795 12th series stock options, 1,642 13th series stock options, 1,622 14th series stock options, 1,542 15th series stock options, 1,542 16th series stock options, 1,242 17th series stock options, 1,242 18th series stock options, 962 19th series stock options, 542 20th series stock options 542 21st series stock options, 871 22nd series stock options, 871 23rd series stock options, 806 24th series stock options, 806 25th series stock options, 626 26th series stock options, 365 27th series stock options, 365 28th series stock options, 365 29th series stock options, 365 30th series stock options, 365 31st series stock options, 420 32nd series stock options, 420 33rd series stock options, 420 34th series stock options, 400 35th series stock options, 400 36th series stock options, 533 37th series stock options, 533 38th series stock options, 518 39th series stock options, 518 40th series stock options, 518 41st series stock options, 836 42nd series stock options, 836 43rd series stock options, 836 44th series stock options, 836 45th series stock options and 836 46th series stock options, upon exercise of which an aggregate of the number of shares of our common stock adjusted for the Stock Split, will be acquired at an exercise price of JPY 1,300 per share respectively, and allocated them to Kotaeru Trust Co., Ltd., which will subsequently deliver such stock options in the future in accordance with the trust agreement between Kotaeru

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Trust Co., Ltd. and SoftBank Corp. and the trust agreement between Kotaeru Trust Co., Ltd. and LY Corporation to directors, corporate officers and employees of us and our subsidiaries designated by us as beneficiaries of the trusts in accordance with the trust management agreement between us, Kotaeru Trust Co., Ltd. and Kotaeru Holdings Co., Inc.

On May 31, 2025, we granted 38,127 47th series stock options and 2,675 48th series stock options through tax qualified-type stock options and 2,845 49th series stock options through one-yen-exercisable at retirement-type stock options. These stock options entitle the holders, upon exercise, to purchase the number of shares of our common stock, adjusted for the Stock Split, at an exercise price of JPY 1,300 per share for the 47th and 48th series stock options and JPY 1 per share for the 49th series stock options, respectively. These stock options were allocated to our directors, corporate officers and other employees.

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**DESCRIPTION OF AMERICAN DEPOSITARY SHARES** 

**American Depositary Shares** 

The Bank of New York Mellon, as depositary, will register and deliver American Depositary Shares, also referred to as ADSs. Each ADS will represent one common share (or a right to receive one common share) deposited with Mizuho Bank, Ltd., as custodian for the depositary in Japan. Each ADS will also represent any other securities, cash or other property that may be held by the depositary. The deposited shares together with any other securities, cash or other property held by the depositary are referred to as the deposited securities. The depositary's office at which the ADSs will be administered and its principal executive office are located at 240 Greenwich Street, New York, New York 10286.

You may hold ADSs either (A) directly (i) by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (ii) by having uncertificated ADSs registered in your name, or (B) indirectly by holding a security entitlement in ADSs through your broker or other financial institution that is a direct or indirect participant in The Depository Trust Company, also called DTC. If you hold ADSs directly, you are a registered ADS holder, also referred to as an ADS holder. This description assumes you are an ADS holder. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

Registered holders of uncertificated ADSs will receive statements from the depositary confirming their holdings.

As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Japanese law governs shareholder rights. The depositary will be the holder of the common shares underlying your ADSs. As a registered holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary, ADS holders and all other persons indirectly or beneficially holding ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs.

The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of ADR. Directions on how to obtain copies of those documents are provided on page 277.

**Dividends and Other Distributions** 

***How will you receive dividends and other distributions on the shares?***

The depositary has agreed to pay or distribute to ADS holders the cash dividends or other distributions it or the custodian receives on common shares or other deposited securities, upon payment or deduction of its fees and expenses. You will receive these distributions in proportion to the number of common shares your ADSs represent.

***Cash***. The depositary will convert any cash dividend or other cash distribution we pay on the common shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If that is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest.

Before making a distribution, any withholding taxes or other governmental charges that must be paid will be deducted. See "Taxation." The depositary will distribute only whole U.S. dollars and cents and will round

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fractional cents to the nearest whole cent. *If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some of the value of the distribution.*

***Shares****.* Unless we agree otherwise with the depositary, the depositary will distribute additional ADSs representing any common shares we distribute as a dividend or free distribution. The depositary will only distribute whole ADSs. It will sell common shares which would require it to deliver a fraction of an ADS (or ADSs representing those common shares) and distribute the net proceeds in the same way as it does with cash. If the depositary does not distribute additional ADSs, the outstanding ADSs will also represent the new common shares. The depositary may sell a portion of the distributed common shares (or ADSs representing those common shares) sufficient to pay its fees and expenses in connection with that distribution.

***Rights to purchase additional shares****.* If we offer holders of our securities any rights to subscribe for additional shares or any other rights, the depositary will, to the extent it deems lawful and practical, (i) exercise those rights on behalf of ADS holders, (ii) distribute those rights to ADS holders or (iii) sell those rights and distribute the net proceeds to ADS holders, in each case after deduction or upon payment of its fees and expenses. To the extent the depositary does not do any of those things, it will allow the rights to lapse. *In that case, you will receive no value for them.* The depositary will exercise or distribute rights only if we ask it to and provide satisfactory assurances to the depositary that it is legal to do so. If the depositary will exercise rights, it will purchase the securities to which the rights relate and distribute those securities or, in the case of shares, new ADSs representing the new shares, to subscribing ADS holders, but only if ADS holders have paid the exercise price to the depositary. U.S. securities laws may restrict the ability of the depositary to distribute rights or ADSs or other securities issued on exercise of rights to all or certain ADS holders, and the securities distributed may be subject to restrictions on transfer.

***Other Distributions****.* The depositary will send to ADS holders anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what we distributed and distribute the net proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs will also represent the newly distributed property. However, the depositary is not required to distribute any securities (other than ADSs) to ADS holders unless it receives satisfactory evidence from us that it is legal to make that distribution. The depositary may sell a portion of the distributed securities or property sufficient to pay its fees and expenses in connection with that distribution. U.S. securities laws may restrict the ability of the depositary to distribute securities to all or certain ADS holders, and the securities distributed may be subject to restrictions on transfer.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. *This means that you may not receive the distributions we make on our shares or any value for them if it is illegal or impractical for us to make them available to you*.

**Deposit, Withdrawal and Cancellation** 

Your ability to deposit shares for delivery of ADSs or to surrender ADSs and receive delivery of the deposited shares may be subject to special pre-notification and preclearance requirements under Japanese law and regulations. See "Japanese Foreign Exchange Regulations" for more information.

***How are ADSs issued?***

The depositary will deliver ADSs if you or your broker deposits common shares or evidence of rights to receive common shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons that made the deposit.

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***How can ADS holders withdraw the deposited securities?***

You may surrender your ADSs to the depositary for the purpose of withdrawal. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the common shares and any other deposited securities underlying the ADSs to the ADS holder or a person the ADS holder designates at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited securities at its office, if feasible. However, the depositary is not required to accept surrender of ADSs to the extent it would require delivery of a fraction of a deposited share or other security. The depositary may charge you a fee and its expenses for instructing the custodian regarding delivery of deposited securities.

However, your ability to deposit common shares for delivery of ADS will be, and your right to receive delivery of common shares upon surrender of ADSs may be, subject to obtaining required pre-clearance under the Japanese Foreign Exchange and Foreign Trade Act. Therefore, if you intend to deposit shares, you should notify the depositary at least 30 days in advance. If you intend to surrender ADSs for delivery of common shares, you should contact Japanese legal counsel to determine if you will need to obtain pre-clearance for that transaction. See "Japanese Foreign Exchange Regulations."

***When can ADSs be cancelled by the depositary?***

The depositary may cancel ADSs if there are no underlying deposited securities, or those deposited securities have become apparently worthless or to the extent there are insufficient underlying deposited securities because of an increase in the number of shares represented by one ADS.

***How do ADS holders interchange between certificated ADSs and uncertificated ADSs?***

You may surrender your ADR to the depositary for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send to the ADS holder a statement confirming that the ADS holder is the registered holder of uncertificated ADSs. Upon receipt by the depositary of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to the ADS holder an ADR evidencing those ADSs.

**Voting Rights** 

***How do you vote?***

ADS holders may instruct the depositary how to vote the number of deposited common shares their ADSs represent. If we request the depositary to solicit your voting instructions (and we are not required to do so), the depositary will notify you of a shareholders' meeting and send or make voting materials available to you. Those materials will describe the matters to be voted on and explain how ADS holders may instruct the depositary how to vote. For instructions to be valid, they must reach the depositary by a date set by the depositary. If we asked the depositary to solicit voting instructions, the depositary will try, as far as practical, subject to the laws of Japan and the provisions of our articles of incorporation or similar documents, to vote or to have its agents vote the deposited shares as instructed by ADS holders. If we do not request the depositary to solicit your voting instructions, you can still send voting instructions, and, in that case, the depositary may try to vote as you instruct, but it is not required to do so.

*Except by instructing the depositary as described above, you will not be able to exercise voting rights unless you surrender your ADSs and withdraw the common shares. However, you may not know about the meeting enough in advance to withdraw the common shares.* In any event, the depositary will not exercise any discretion in voting deposited securities and it will only vote or attempt to vote as instructed or as described in

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the following sentence. If we asked the depositary to solicit your instructions at least 30 days before the meeting date but the depositary does not receive voting instructions from you by the specified date as to a particular question to be voted on and we confirm to the depositary that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we wish to receive a discretionary proxy to vote uninstructed common shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as of the instruction cutoff date we reasonably do not know of any substantial shareholder opposition to that
question; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that question is not materially adverse to the interests of our shareholders,

then the depositary will consider you to have authorized and directed it to give a discretionary proxy to a person designated by us to vote the number of deposited common shares represented by your ADSs as that question.

We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the common shares represented by your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. *This means that you may not be able to exercise voting rights and there may be nothing you can do if the common shares represented by your ADSs are not voted as you requested.*

In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to Deposited Securities, if we request the depositary to act, we agree to give the depositary notice of any such meeting and details concerning the matters to be voted upon at least 30 days in advance of the meeting date.

Under the deposit agreement, we and the depositary may modify the voting procedures described above or adopt additional voting procedures not described above as we determine may be necessary or appropriate to comply with applicable law or regulation.

**Fees and Expenses** 

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; <br> ***Holders or persons depositing or withdrawing shares, surrendering ADSs, or to whom or from whom ADSs are delivered or cancelled, must pay:*** | <br> ***For:*** |
| &nbsp;&nbsp;&nbsp; $10.00 (or less) per 100 ADSs (or portion of 100 ADSs) | Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property or in relation to a change in the number of shares represented by ADSs<br>Surrender of ADSs for the purpose of withdrawal or cancellation of ADSs, including if the deposit agreement terminates or in relation to a change in the number of shares represented by ADSs |
| &nbsp;&nbsp;&nbsp; $.10 (or less) per ADS | Any cash distribution to ADS holders |
| &nbsp;&nbsp;&nbsp; A fee equivalent to the fee that would be payable if securities distributed to you had been common shares and the common shares had been deposited for issuance of ADSs | Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders |
| &nbsp;&nbsp;&nbsp; Fees assessed from time to time, but not exceeding $.10 per ADS during any calendar year<br>| Depositary services |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp; Registration or transfer fees | Transfer and registration of common shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares |
| &nbsp;&nbsp;&nbsp; Expenses of the depositary | Cable (including SWIFT) and facsimile transmissions (when expressly provided in the deposit agreement)<br>Converting foreign currency to U.S. dollars |
| &nbsp;&nbsp;&nbsp; Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or common shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes | As necessary |
| &nbsp;&nbsp;&nbsp; Any charges incurred by the depositary or its agents for servicing the deposited securities<br>| As necessary |

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The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing common shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects its annual fee for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. While aggregate fees for depositary services will not exceed $.10 per ADS in a calendar year, an investor may be charged more than one such fee in a consecutive twelve-month period. The depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

From time to time, the depositary may make payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance of the ADS program, waive fees and expenses for services provided to us by the depositary or share revenue from the fees collected from ADS holders. In performing its duties under the deposit agreement, the depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the depositary and that may earn or share fees, spreads or commissions.

The depositary may convert currency itself or through any of its affiliates, or the custodian or we may convert currency and pay U.S. dollars to the depositary. Where the depositary converts currency itself or through any of its affiliates, the depositary acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the depositary or its affiliate receives when buying or selling foreign currency for its own account. The depositary makes no representation that the exchange rate used or obtained by it or its affiliate in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to ADS holders, subject to the depositary's obligation to act without negligence or bad faith. The methodology used to determine exchange rates used in currency conversions made by the depositary is available upon request. Where the custodian converts currency, the custodian has no obligation to obtain the most favorable rate that could be obtained at the time or to ensure that the method by which that rate will be determined will be the most favorable to ADS holders, and the depositary makes no representation that the rate is the most favorable rate and will not be liable for any direct or indirect losses associated with the rate. In certain instances, the depositary may receive dividends or other distributions from us in U.S. dollars that represent the proceeds of a conversion of foreign currency or translation

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from foreign currency at a rate that was obtained or determined by us and, in such cases, the depositary will not engage in, or be responsible for, any foreign currency transactions and neither it nor we make any representation that the rate obtained or determined by us is the most favorable rate and neither it nor we will be liable for any direct or indirect losses associated with the rate.

**Payment of Taxes** 

You will be responsible for any taxes or other governmental charges payable on your ADSs or on the deposited securities represented by any of your ADSs. The depositary may refuse to register any transfer of your ADSs or allow you to withdraw the deposited securities represented by your ADSs until those taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any proceeds, or send to ADS holders any property, remaining after it has paid the taxes.

**Tender and Exchange Offers; Redemption, Replacement or Cancellation of Deposited Securities** 

The depositary will not tender deposited securities in any voluntary tender or exchange offer unless instructed to do so by an ADS holder surrendering ADSs and subject to any conditions or procedures the depositary may establish.

If deposited securities are redeemed for cash in a transaction that is mandatory for the depositary as a holder of deposited securities, unless we and the depositary agree otherwise, the depositary will call for surrender of a corresponding number of ADSs and distribute the net redemption money to the holders of called ADSs upon surrender of those ADSs.

If there is any change in the deposited securities such as a sub-division, combination or other reclassification, or any merger, consolidation, recapitalization or reorganization affecting the issuer of deposited securities in which the depositary receives new securities in exchange for or in lieu of the old deposited securities, the depositary will hold those replacement securities as deposited securities under the deposit agreement. However, if the depositary decides it would not be lawful and practical to hold the replacement securities because those securities could not be distributed to ADS holders or for any other reason, the depositary may instead sell the replacement securities and distribute the net proceeds upon surrender of the ADSs.

If there is a replacement of the deposited securities and the depositary will continue to hold the replacement securities, the depositary may distribute new ADSs representing the new deposited securities or ask you to surrender your outstanding ADSs in exchange for new ADSs identifying the new deposited securities.

If there are no deposited securities underlying ADSs, including if the deposited securities are cancelled, or if the deposited securities underlying ADSs have become apparently worthless, the depositary may call for surrender of those ADSs or cancel those ADSs upon notice to the ADS holders.

**Amendment and Termination** 

***How may the deposit agreement be amended?***

We may agree with the depositary to amend the deposit agreement and the ADRs without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. *At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended*.

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***How may the deposit agreement be terminated?***

The depositary will initiate termination of the deposit agreement if we instruct it to do so. The depositary may initiate termination of the deposit agreement if

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 60 days have passed since the depositary told us it wants to resign but a successor depositary has not been
appointed and accepted its appointment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we delist the ADSs from an exchange in the United States on which they were listed and do not list the ADSs on
another exchange in the United States or make arrangements for trading of ADSs on the U.S. over-the-counter market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the depositary has reason to believe the ADSs have become, or will become, ineligible for registration on Form
F-6 under the Securities Act of 1933;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we appear to be insolvent or enter insolvency proceedings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all or substantially all the value of the deposited securities has been distributed either in cash or in the
form of securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• there are no deposited securities underlying the ADSs or the underlying deposited securities have become
apparently worthless; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• there has been a replacement of deposited securities.

If the deposit agreement will terminate, the depositary will notify ADS holders at least 90 days before the termination date. At any time after the termination date, the depositary may sell the deposited securities. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement, unsegregated and without liability for interest, for the <u>pro</u> <u>rata</u> benefit of the ADS holders that have not surrendered their ADSs. Normally, the depositary will sell as soon as practicable after the termination date.

After the termination date and before the depositary sells, ADS holders can still surrender their ADSs and receive delivery of deposited securities, except that the depositary may refuse to accept a surrender for the purpose of withdrawing deposited securities or reverse previously accepted surrenders of that kind that have not settled if it would interfere with the selling process. The depositary may refuse to accept a surrender for the purpose of withdrawing sale proceeds until all the deposited securities have been sold. The depositary will continue to collect distributions on deposited securities, but, after the termination date, the depositary is not required to register any transfer of ADSs or distribute any dividends or other distributions on deposited securities to ADS holders (until they surrender their ADSs) or give any notices or perform any other duties under the deposit agreement except as described in this paragraph.

**Limitations on Obligations and Liability** 

***Limits on our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADSs***

The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• are only obligated to take the actions specifically set forth in the deposit agreement without negligence or
bad faith, and the depositary will not be a fiduciary or have any fiduciary duty to holders of ADSs;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• are not liable if we are or it is prevented or delayed by law or by events or circumstances beyond our or its
ability to prevent or counteract with reasonable care or effort from performing our or its obligations under the deposit agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• are not liable if we or it exercises discretion permitted under the deposit agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited
securities that is not made available to holders of ADSs under the terms of the deposit agreement, or for any special, consequential or punitive damages for any breach of the terms of the deposit agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit
agreement on your behalf or on behalf of any other person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or
presented by the proper person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• are not liable for the acts or omissions of any securities depository, clearing agency or settlement system;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the depositary has no duty to make any determination or provide any information as to our tax status. We and
the depositary have no liability for any tax consequences that may be incurred by ADS holders as a result of owning or holding ADSs or be liable for the inability or failure of an ADS holder to obtain the benefit of a foreign tax credit, reduced
rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit.

In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.

**Requirements for Depositary Actions** 

Before the depositary will deliver or register a transfer of ADSs, make a distribution on ADSs, or permit withdrawal of common shares, the depositary may require:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• payment of stock transfer or other taxes or other governmental charges and transfer or registration fees
charged by third parties for the transfer of any common shares or other deposited securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• satisfactory proof of the identity and genuineness of any signature or other information it deems necessary;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compliance with regulations it may establish, from time to time, consistent with the deposit agreement,
including presentation of transfer documents.

The depositary may refuse to deliver ADSs or register transfers of ADSs when the transfer books of the depositary or our transfer books are closed or at any time if the depositary or we think it advisable to do so.

**Your Right to Receive the Shares Underlying your ADSs** 

ADS holders have the right to cancel their ADSs and withdraw the underlying common shares at any time except:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• when temporary delays arise because: (i) the depositary has closed its transfer books or we have closed
our transfer books; (ii) the transfer of common shares is blocked to permit voting at a shareholders' meeting; or (iii) we are paying a dividend on our common shares;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• when you owe money to pay fees, taxes and similar charges; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that
apply to ADSs or to the withdrawal of common shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

**Direct Registration System** 

In the deposit agreement, all parties to the deposit agreement acknowledge that the Direct Registration System, also referred to as DRS, and Profile Modification System, also referred to as Profile, will apply to the ADSs. DRS is a system administered by DTC that facilitates interchange between registered holding of uncertificated ADSs and holding of security entitlements in ADSs through DTC and a DTC participant. Profile is a feature of DRS that allows a DTC participant, claiming to act on behalf of a registered holder of uncertificated ADSs, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register that transfer.

In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an ADS holder in requesting registration of transfer and delivery as described in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the depositary's reliance on and compliance with instructions received by the depositary through the DRS/Profile system and in accordance with the deposit agreement will not constitute negligence or bad faith on the part of the depositary.

**Shareholder Communications; Inspection of Register of Holders of ADSs** 

The depositary will make available for your inspection at its office all communications that it receives from us as a holder of deposited securities that we make generally available to holders of deposited securities. The depositary will send you copies of those communications or otherwise make those communications available to you if we ask it to. You have a right to inspect the register of holders of ADSs, but not for the purpose of contacting those holders about a matter unrelated to our business or the ADSs.

**Jury Trial Waiver**

The deposit agreement provides that, to the extent permitted by law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws. The waiver continues to apply to claims that arise during the period when a holder holds the ADSs, even if the ADS holder subsequently withdraws the underlying common shares. Purchasers of ADSs in secondary transactions will be subject to the jury trial waiver provision to the same extent as purchasers of the ADSs offered in this offering. If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable in the facts and circumstances of that case in accordance with applicable case law. You will not, by agreeing to the terms of the deposit agreement, be deemed to have waived our or the depositary's compliance with U.S. federal securities laws or the rules and regulations promulgated thereunder.

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**SHARES ELIGIBLE FOR FUTURE SALE** 

Upon closing of this offering, we will have ADSs outstanding representing approximately 8.22% of our common shares (or ADS outstanding representing approximately 9.34% of our common shares if the underwriters exercise in full the over-allotment option).

All of the ADSs sold in this offering and the common shares they represent will be freely transferable by persons other than our "affiliates" without restriction or further registration under the Securities Act. Rule 144 of the Securities Act defines an "affiliate" of a company as a person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, our company. All issued common shares prior to this offering are "restricted securities" as that term is defined in Rule 144 because they were issued in a transaction or series of transactions not involving a public offering. Restricted securities, in the form of ADSs or otherwise, may be sold only if they are the subject of an effective registration statement under the Securities Act or if they are sold pursuant to an exemption from the registration requirement of the Securities Act such as those provided for in Rules 144 or 701 promulgated under the Securities Act, which rules are summarized below. Restricted common shares may also be sold outside of the United States to non-U.S. persons in accordance with Rule 904 of Regulation S under the Act. This prospectus may not be used in connection with any resale of the ADSs acquired in this offering by our affiliates.

Pursuant to Rule 144, common shares will be eligible for sale at various times after the date of this prospectus, subject to the lock-up agreements.

Sales of substantial amounts of ADSs in the public market could adversely affect prevailing market prices of the ADSs. Prior to this offering, there has been no public market for our common shares or the ADSs, and while we will make an application to list ADSs on Nasdaq, we cannot assure you that a regular trading market will develop in the ADSs. We do not expect that a trading market will develop for our common shares not represented by ADSs.

**Lock-up Agreements** 

We and holders of substantially all of the shares of our common stock, including the selling shareholder, have agreed, subject to some exceptions, not to sell, transfer or dispose of, directly or indirectly, any of our common shares, or ADSs representing the common shares, or any securities convertible into or exchangeable or exercisable for our common shares, or ADSs representing the common shares, for a period of 180 days after the date this prospectus becomes effective. After the expiration of the 180 day period, the common shares or ADSs held by holders of substantially all of the shares of our common stock, including the selling shareholder, may be sold subject to the restrictions under Rule 144 under the Securities Act or by means of registered public offerings.

**Rule 144** 

In general, under Rule 144 as currently in effect, a person who has beneficially owned our restricted securities for at least six months is entitled to sell the restricted securities without registration under the Securities Act, subject to certain restrictions. Persons who are our affiliates (including persons beneficially owning 10% or more of our issued shares) may sell within any three-month period a number of restricted securities that does not exceed the greater of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 1% of the number of our common shares then outstanding, in the form of ADSs or otherwise, which will equal
approximately 6,686,255 common shares immediately after this offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the average weekly trading volume of the ADSs on Nasdaq during the four calendar weeks preceding the date on
which notice of the sale is filed with the SEC.

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Such sales are also subject to manner-of-sale provisions, notice requirements and the availability of current public information about us. The manner-of-sale provisions require the securities to be sold either in "brokers' transactions" as such term is defined under the Securities Act, through transactions directly with a market maker as such term is defined under the Exchange Act or through a riskless principal transaction as described in Rule 144. In addition, the manner-of-sale provisions require the person selling the securities not to solicit or arrange for the solicitation of orders to buy the securities in anticipation of or in connection with such transaction or make any payment in connection with the offer or sale of the securities to any person other than the broker or dealer who executes the order to sell the securities. If the amount of securities to be sold in reliance upon Rule 144 during any period of three months exceeds 5,000 shares or other units or has an aggregate sale price in excess of US$50,000, three copies of a notice on Form 144 should be filed with the SEC. If such securities are admitted to trading on any national securities exchange, one copy of such notice also must be transmitted to the principal exchange on which such securities are admitted. The Form 144 should be signed by the person for whose account the securities are to be sold and should be transmitted for filing concurrently with either the placing with a broker of an order to execute a sale of securities or the execution directly with a market maker of such a sale.

Persons who are not our affiliates and have beneficially owned our restricted securities for more than six months but not more than one year may sell the restricted securities without registration under the Securities Act subject to the availability of current public information about us. Persons who are not our affiliates and have beneficially owned our restricted securities for more than one year may freely sell the restricted securities without registration under the Securities Act.

**Rule 701** 

Beginning 90 days after the date of this prospectus, persons other than affiliates who purchased common shares under a written compensatory plan or contract may be entitled to sell such shares in the United States in reliance on Rule 701 under the Securities Act, or Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. Rule 701 further provides that non-affiliates may sell these shares in reliance on Rule 144 subject only to its manner-of-sale requirements. However, the Rule 701 shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.

**Registration Rights** 

We intend to enter into the Registration Rights Agreement upon consummation of this offering pursuant to which we will agree under certain circumstances to file a registration statement to register the resale of our common shares held by certain of our existing shareholders, as well as to cooperate in certain public offerings of such common shares. Registration of these common shares under the Securities Act would result in these common shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by our affiliates. See "Related Party Transactions—Registration Rights Agreement."

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**TAXATION** 

The following is a general summary of certain Japan and United States federal income tax consequences relevant to an investment in the ADSs and common shares. The discussion is not intended to be, nor should it be construed as, legal or tax advice to any particular prospective purchaser. The discussion is based on laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change or different interpretations, possibly with retroactive effect. The discussion does not address U.S. state or local tax laws, or tax laws of jurisdictions other than Japan and the United States. You should consult your own tax advisors with respect to the consequences of acquisition, ownership and disposition of the ADSs and common shares.

**Japanese Taxation** 

The following is a general summary of the principal Japanese tax consequences (limited to national tax) to owners of the ADSs and common shares, who are non-resident individuals of Japan or who are non-Japanese corporations without a permanent establishment in Japan (collectively, "non-resident holders"). The statements below regarding Japanese tax laws are based on the laws and treaties in force and as interpreted by the Japanese tax authorities as of the date of this prospectus, and are subject to changes in applicable Japanese laws, tax treaties, conventions or agreements, or in the interpretation of them, occurring after that date. This summary is not exhaustive of all possible tax considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall tax consequences of the acquisition, ownership and disposition of the ADSs and common shares, including, specifically, the tax consequences under Japanese law, under the laws of the jurisdiction of which they are resident and under any tax treaty, convention or agreement between Japan and their country of residence, by consulting their own tax advisors.

Generally, a non-resident holder will be subject to Japanese income tax collected by way of withholding on dividends (meaning in this section distributions made from our retained earnings for the Companies Act purposes) we pay with respect to the ADSs and common shares and such tax will be withheld prior to payment of dividends. Stock splits generally are not subject to Japanese income or corporation tax.

In the absence of any applicable tax treaty, convention or agreement reducing the maximum rate of Japanese withholding tax or allowing exemption from Japanese withholding tax, the rate of the Japanese withholding tax applicable to dividends paid by Japanese corporations on their shares of stock to non-resident holders is generally 20.42% (or 20% for dividends due and payable on or after January 1, 2038) under Japanese tax law. However, with respect to dividends paid by a Japanese corporation on listed shares (the ADSs are treated as listed shares once they are listed on the Nasdaq as planned; and our common shares are treated as listed shares if they are listed on a stock exchange) to non-resident holders, other than any non-resident holder who is an individual shareholder holding 3% or more of the total number of shares issued by the relevant Japanese corporation (to whom the aforementioned withholding tax rate will still apply), the aforementioned withholding tax rate is reduced to (i) 15.315% for dividends due and payable up to and including December 31, 2037 and (ii) 15% for dividends due and payable on or after January 1, 2038. The withholding tax rates described above include the special reconstruction surtax (2.1% multiplied by the original applicable withholding tax rate, i.e., 15% or 20%, as the case may be), which is imposed during the period from and including January 1, 2013 to and including December 31, 2037, to fund the reconstruction from the great earthquake that occurred in Japan in 2011.

If distributions were made from our capital surplus, rather than retained earnings, for the Companies Act purposes, the portion of such distributions in excess of the amount corresponding to a pro rata portion of return of capital as determined under Japanese tax laws would be deemed dividends for Japanese tax purposes, while the rest would be treated as return of capital for Japanese tax purposes. The deemed dividend portion, if any, would generally be subject to the same tax treatment as dividends as described above, and the return of capital portion would generally be treated as proceeds derived from the sale of shares and subject to the same tax treatment as

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sale of ADSs and common shares as described below. Distributions made in consideration of repurchase by us of our own common shares or in connection with certain reorganization transactions will, in general, be treated substantially in the same manner.

As of the date of this prospectus, Japan has income tax treaties whereby the withholding tax rate (including the special reconstruction surtax) may be reduced, generally to 15%, for portfolio investors, with, among others, Canada, Denmark, Finland, Germany, Ireland, Italy, Luxembourg, New Zealand, Norway and Singapore, while the income tax treaties with, among others, Australia, Belgium, France, Hong Kong, the Netherlands, Portugal, Sweden, Switzerland, the United Kingdom and the United States generally reduce the withholding tax rate to 10% for portfolio investors and the income tax treaties with, among others, Spain generally reduce the withholding tax rate to 5% for portfolio investors. In addition, under the income tax treaty between Japan and the United States, dividends paid to pension funds which are qualified United States residents eligible to enjoy treaty benefits are exempt from Japanese income taxation by way of withholding or otherwise unless the dividends are derived from the carrying on of a business, directly or indirectly, by the pension funds. Similar treatment is applicable to dividends paid to pension funds under the income tax treaties between Japan and, among others, Belgium, Denmark, the Netherlands, Spain, Switzerland and the United Kingdom. Under Japanese tax law, any reduced maximum rate applicable under a tax treaty shall be available when such maximum rate is below the rate otherwise applicable under the Japanese tax law referred to in the second preceding paragraph with respect to the dividends to be paid by us on the ADSs and common shares.

Non-resident holders who are entitled under an applicable tax treaty to a reduced rate of, or exemption from, Japanese withholding tax on any dividends on common shares, in general, are required to submit, through the withholding agent to the relevant tax authority prior to the payment of dividends, an Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends together with any required forms and documents. A standing proxy for a non-resident holder may be used in order to submit the application on a non-resident holder's behalf. In this regard, a certain simplified special filing procedure is available for non-resident holders to claim treaty benefits of reduction of or exemption from Japanese withholding tax by submitting a Special Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends of Listed Stocks together with any required forms and documents. With respect to ADSs, where the depositary needs investigation to identify whether any non-resident holders of ADSs are entitled to claim treaty benefits of exemption from or reduction of Japanese withholding tax, the depositary or its agent is required to submit an application form before payment of dividends so that the withholding will be suspended in connection with such holders for eight months after the record date concerning such payment of dividends. If it is proved that such holders are entitled to claim treaty benefits of exemption from or reduction of Japanese withholding tax within the foregoing eight-month period, the depositary or its agent is required to submit another application form together with certain other documents so that such holder can claim exemption from or reduction of Japanese withholding tax. To claim this reduced rate or exemption, such non-resident holder of ADSs will be required to file a proof of taxpayer status, residence, and beneficial ownership, as applicable, and to provide other information or documents as may be required by the depositary. Non-resident holders who are entitled, under any applicable tax treaty, to a reduced rate of Japanese withholding tax below the rate otherwise applicable under Japanese tax law, or exemption therefrom, as the case may be, but fail to submit the required application in advance may nevertheless be entitled to claim a refund from the relevant Japanese tax authority of withholding taxes withheld in excess of the rate under an applicable tax treaty (if such non-resident holders are entitled to a reduced treaty rate under the applicable tax treaty) or the full amount of tax withheld (if such non-resident holders are entitled to an exemption under the applicable tax treaty), as the case may be, by complying with a certain subsequent filing procedure. We do not assume any responsibility to ensure withholding at the reduced treaty rate, or exemption therefrom, for shareholders who would be eligible under an applicable tax treaty but who do not follow the required procedures as stated above.

Gains derived from the sale of the ADSs and common shares outside Japan by a non-resident holder that is a portfolio investor will generally not be subject to Japanese income or corporation tax.

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Japanese inheritance and gift taxes, at progressive rates, may be payable by an individual who has acquired the ADSs and common shares from another individual as a legatee, heir or donee, even if none of the acquiring individual, the decedent or the donor is a Japanese resident.

**Certain United States Federal Income Tax Considerations to United States Holders** 

The following discussion describes certain United States federal income tax consequences of the purchase, ownership and disposition of the ADSs and common shares. This discussion is applicable only to United States Holders (as defined below) (i) who are residents of the United States for purposes of the Convention between the Government of the United States of America and the Government of Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income (the "Treaty"), (ii) whose ADSs or common shares are not, for purposes of the Treaty, effectively connected with a permanent establishment in Japan and (iii) who otherwise qualify for the full benefits of the Treaty. In addition, this discussion deals only with United States Holders that hold the ADSs or common shares as capital assets for United States federal income tax purposes (generally, property held for investment).

As used herein, the term "United States Holder" means a beneficial owner of the ADSs or common shares that is, for United States federal income tax purposes, any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an individual who is a citizen or resident of the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a corporation (or other entity treated as a corporation for United States federal income tax purposes) created
or organized in or under the laws of the United States, any state thereof or the District of Columbia;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an estate the income of which is subject to United States federal income taxation regardless of its
source; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a trust if it (1) is subject to the primary supervision of a court within the United States and one or
more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

This discussion is based upon provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings and judicial decisions thereunder, as well as the Treaty, all as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income tax consequences different from those summarized below. In addition, this discussion assumes that the deposit agreement, and all other related agreements, will be performed in accordance with their terms.

This summary does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws, including if you are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a dealer or broker in securities or currencies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a financial institution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a regulated investment company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a real estate investment trust;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an insurance company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a tax-exempt organization;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a person holding the ADSs or common shares as part of a hedging, integrated or conversion transaction, a
constructive sale or a straddle;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a trader in securities that has elected the mark-to-market method of accounting for your securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a person liable for alternative minimum tax;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a person required to accelerate the recognition of any item of gross income with respect to the ADSs or common
shares as a result of such income being recognized on an applicable financial statement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a person who owns or is deemed to own 10% or more of our stock (by vote or value);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a partnership or other pass-through entity for United States federal income tax purposes; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a person whose "functional currency" is not the U.S. dollar.

If a partnership (or other entity or arrangement treated as a partnership for United States federal income tax purposes) holds the ADSs or common shares, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partnership or a partner of a partnership holding the ADSs or common shares, you should consult your tax advisors.

This discussion does not contain a detailed description of all the United States federal income tax consequences to you in light of your particular circumstances and does not address the Medicare tax on net investment income, United States federal estate and gift taxes or the effects of any state, local or non-United States tax laws.

**If you are considering the purchase of the ADSs or common shares, you should consult your own tax advisors concerning the particular United States federal income tax consequences to you of the purchase, ownership and disposition of the ADSs or common shares, as well as the consequences to you arising under other United States federal tax laws and the laws of any other taxing jurisdiction.** 

***ADSs***

If you hold ADSs, for United States federal income tax purposes, you generally will be treated as the owner of the underlying common shares that are represented by such ADSs. Accordingly, deposits or withdrawals of common shares for ADSs will not be subject to United States federal income tax.

***Taxation of Dividends***

Subject to the discussion under "—Passive Foreign Investment Company" below, the gross amount of distributions on the ADSs or common shares (including any amounts withheld on account of Japanese withholding taxes) will be taxable as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles. To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, the distribution will first be treated as a tax-free return of capital, causing a reduction in your tax basis in the ADSs or common shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain recognized on a sale or exchange (see "—Taxation of a Sale, Exchange or Other Disposition of ADSs or Common Shares" below). We do not, however, expect to determine earnings and profits in accordance with United States federal income tax principles. Therefore, you should expect that a distribution will generally be reported as a dividend.

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Any dividends that you receive (including any withheld taxes) will be includable in your gross income as ordinary income on the day actually or constructively received by you, in the case of common shares, or by the depositary, in the case of ADSs. Such dividends will not be eligible for the dividends received deduction generally allowed to corporations under the Code.

Subject to applicable limitations (including a minimum holding period requirement), dividends received by non-corporate United States Holders from a qualified foreign corporation may be treated as "qualified dividend income" that is subject to reduced rates of taxation. A qualified foreign corporation includes a foreign corporation that is eligible for the benefits of a comprehensive income tax treaty with the United States which the United States Treasury Department determines to be satisfactory for these purposes and which includes an exchange of information provision. The United States Treasury Department has determined that the Treaty meets these requirements, and we believe we will be eligible for the benefits of the Treaty. However, dividends received by non-corporate United States Holders will not be treated as "qualified dividend income" that is subject to reduced rates of taxation if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year. You should consult your own tax advisors regarding the application of these rules to your particular circumstances.

The amount of any dividend paid in yen will equal the U.S. dollar value of the yen received calculated by reference to the exchange rate in effect on the date the dividend is actually or constructively received by you, in the case of common shares, or by the depositary, in the case of ADSs, regardless of whether the yen are converted into U.S. dollars. If the yen received as a dividend are converted into U.S. dollars on the date of receipt, you generally will not be required to recognize foreign currency gain or loss in respect of the dividend income. If the yen received as a dividend are not converted into U.S. dollars on the date of receipt, you will have a tax basis in the yen equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the yen will be treated as United States source ordinary income or loss.

The maximum rate of withholding tax on dividends paid to you pursuant to the Treaty is 10%. You will generally be required to properly demonstrate to the Japanese tax authorities your entitlement to the reduced rate of withholding under the Treaty. See "—Japanese Taxation" above for a discussion of the requirements for obtaining a reduced rate under the Treaty. Subject to certain conditions and limitations (including a minimum holding period requirement) and the Foreign Tax Credit Regulations (as defined below), Japanese withholding taxes on dividends (at a rate not exceeding the applicable Treaty rate) may be treated as foreign taxes eligible for credit against your United States federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid on the ADSs or common shares will be treated as income from sources outside the United States and will generally constitute passive category income. However, Treasury regulations addressing foreign tax credits (the "Foreign Tax Credit Regulations") impose additional requirements for foreign taxes to be eligible for a foreign tax credit if the relevant taxpayer does not elect to apply the benefits of an applicable income tax treaty, and there can be no assurance that those requirements will be satisfied. The Department of the Treasury and the Internal Revenue Service (the "IRS") are considering proposing amendments to the Foreign Tax Credit Regulations. In addition, recent notices from the IRS provide temporary relief by allowing taxpayers that comply with applicable requirements to apply many aspects of the foreign tax credit regulations as they previously existed (before the release of the current Foreign Tax Credit Regulations) for taxable years ending before the date that a notice or other guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or other guidance). Instead of claiming a foreign tax credit, you may be able to deduct Japanese withholding taxes on dividends in computing your taxable income, subject to generally applicable limitations under United States law (including that you will not be eligible for a deduction for otherwise creditable foreign income taxes paid or accrued in a taxable year if you claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year). The rules governing the foreign tax credit and deductions for foreign taxes are complex. You are urged to consult your tax advisors regarding the Foreign Tax Credit Regulations (and the related temporary relief in the IRS notices) and the availability of a foreign tax credit or a deduction under your particular circumstances.

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***Passive Foreign Investment Company***

In general, we will be a PFIC for any taxable year in which:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• at least 75% of our gross income is passive income, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• at least 50% of the value (generally determined based on a quarterly average) of our assets is attributable to
assets that produce or are held for the production of passive income.

For this purpose, passive income generally includes dividends, interest, royalties and rents (other than certain interest derived in the active conduct of a banking business). In addition, cash and other assets readily convertible into cash are generally considered passive assets. If we own at least 25% (by value) of the stock of another corporation, for purposes of determining whether we are a PFIC, we will be treated as owning our proportionate share of the other corporation's assets and receiving our proportionate share of the other corporation's income.

We do not expect to be a PFIC for our current taxable year or in the foreseeable future. However, our PFIC status is a factual determination that is made annually, and thus may be subject to change due to changes in our income or asset composition or in the value of our assets. Because the value of our goodwill may be determined based on the expected market value of the ADSs from time to time, a decrease in the price of the ADSs may also result in our becoming a PFIC for any taxable year. If we are a PFIC for any taxable year during which you hold the ADSs or common shares, you will be subject to special tax rules discussed below.

If we are a PFIC for any taxable year during which you hold the ADSs or common shares and you do not make a timely mark-to-market election, as described below, you will be subject to special tax rules with respect to any "excess distribution" received and any gain realized from a sale or other disposition, including a pledge, of the ADSs or common shares. Distributions received in a taxable year will be treated as excess distributions to the extent that they are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or your holding period for the ADSs or common shares. Under these special tax rules:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the excess distribution or gain will be allocated ratably over your holding period for the ADSs or common
shares,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in
which we were a PFIC, will be treated as ordinary income, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year
for individuals or corporations, as applicable, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

Although the determination of whether we are a PFIC is made annually, if we are a PFIC for any taxable year in which you hold the ADSs or common shares, you will generally be subject to the special tax rules described above for that year and for each subsequent year in which you hold the ADSs or common shares (even if we do not qualify as a PFIC in such subsequent years). However, if we cease to be a PFIC, you can avoid the continuing impact of the PFIC rules by making a special election to recognize gain as if your ADSs or common shares had been sold on the last day of the last taxable year during which we were a PFIC. You are urged to consult your own tax advisor about this election.

In lieu of being subject to the special tax rules discussed above, you may make a mark-to-market election with respect to your ADSs or common shares provided such ADSs or common shares are treated as "marketable stock." The ADSs or common shares generally will be treated as marketable stock if the ADSs or

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common shares are regularly traded on a "qualified exchange or other market" (within the meaning of the applicable Treasury regulations). Under current law, the mark-to-market election may be available to holders of ADSs because the ADSs will be listed on Nasdaq which constitutes a qualified exchange, although there can be no assurance that the ADSs will be "regularly traded" for purposes of the mark-to-market election. It should also be noted that it is intended that only the ADSs and not the common shares will be listed on Nasdaq. Consequently, if you are a holder of common shares that are not represented by ADSs, you generally will not be eligible to make a mark-to-market election.

If you make an effective mark-to-market election, for each taxable year that we are a PFIC you will include as ordinary income the excess of the fair market value of your ADSs or common shares at the end of the year over your adjusted tax basis in the ADSs or common shares. You will be entitled to deduct as an ordinary loss in each such year the excess of your adjusted tax basis in the ADSs or common shares over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. Your adjusted tax basis in the ADSs or common shares will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. In addition, upon the sale or other disposition of your ADSs or common shares in a taxable year that we are a PFIC, (i) any gain will be treated as ordinary income and (ii) any loss will be treated as ordinary loss, but only to the extent of the net amount of previously included income as a result of the mark-to-market election, with any excess treated as a capital loss.

If you make a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the ADSs or common shares are no longer regularly traded on a qualified exchange, or the IRS consents to the revocation of the election. However, because a mark-to-market election cannot be made for any lower-tier PFICs that we may own (as discussed below), you may continue to be subject to the general PFIC rules discussed above with respect to your indirect interest in any such lower-tier PFIC. You are urged to consult your tax advisor about the availability of the mark-to-market election, and whether making the election would be advisable in your particular circumstances.

Alternatively, United States persons can sometimes avoid the special tax rules described above by electing to treat a PFIC as a "qualified electing fund" under Section 1295 of the Code. However, this option is not available to you with respect to the ADSs or common shares because we do not intend to comply with the requirements necessary to permit you to make this election.

If we are a PFIC for any taxable year during which you hold the ADSs or common shares and any of our non-United States subsidiaries is also a PFIC, you will be treated as owning a proportionate amount (by value) of the ADSs or common shares of the lower-tier PFIC for purposes of the application of the PFIC rules. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.

You will generally be required to file IRS Form 8621 if you hold the ADSs or common shares in any year in which we are classified as a PFIC. You are urged to consult your tax advisors concerning the United States federal income tax consequences of holding ADSs or common shares if we are considered a PFIC in any taxable year.

***Taxation of a Sale, Exchange or Other Disposition of ADSs or Common Shares***

For United States federal income tax purposes, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of the ADSs or common shares in an amount equal to the difference between the amount realized for the ADSs or common shares and your adjusted tax basis in the ADSs or common shares, both determined in U.S. dollars. Subject to the discussion under "—Passive Foreign Investment Company" above, such gain or loss will generally be capital gain or loss and will generally be long-term capital gain or loss if you have held the ADSs or common shares for more than one year. Long-term capital gains of non-corporate United States Holders (including individuals) are eligible for reduced rates of taxation. The

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deductibility of capital losses is subject to limitations. Any gain or loss recognized by you will generally be treated as United States source gain or loss for United States foreign tax credit purposes.

***Information Reporting and Backup Withholding***

In general, information reporting will apply to dividends in respect of the ADSs or common shares and the proceeds from the sale, exchange or other disposition of the ADSs or common shares that are paid to you within the United States (and in certain cases, outside the United States), unless you establish that you are an exempt recipient. A backup withholding tax may apply to such payments if you fail to provide a correct taxpayer identification number and a certification that you are not subject to backup withholding or if you fail to report in full dividend and interest income.

Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your United States federal income tax liability, provided that the required information is timely furnished to the IRS.

**The above description is not intended to constitute a complete analysis of all tax consequences relating to the purchase, ownership or disposition of the ADSs or common shares. Each holder should consult such holder's own tax advisors concerning the overall tax consequences to it, including the consequences under laws other than United States federal income tax laws, of an investment in the ADSs or common shares.**

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**UNDERWRITING** 

We, the selling shareholder and the underwriters named below have entered into an underwriting agreement with respect to the ADSs being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of ADSs indicated in the following table. In alphabetical order, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Mizuho Securities USA LLC and Morgan Stanley & Co. LLC are the representatives of the underwriters.

---

| | |
|:---|:---|
| Underwriters | Number of ADSs |
|  Goldman Sachs & Co. LLC |  |
|  J.P. Morgan Securities LLC |  |
|  Mizuho Securities USA LLC |  |
|  Morgan Stanley & Co. LLC |  |
|  Citigroup Global Markets Inc. |  |
|  Jefferies LLC |  |
|  BofA Securities, Inc. |  |
|  SG Americas Securities, LLC |  |
|  Nomura Securities International, Inc. |  |
|  Cantor Fitzgerald & Co. |  |
|  Credit Agricole Securities (USA) Inc. |  |
|  Daiwa Capital Markets America Inc. |  |
|  Deutsche Bank Securities Inc. |  |
|  Natixis Securities Americas LLC |  |
|  SMBC Nikko Securities America, Inc. |  |
|  WR Securities, LLC |  |
|  ING Financial Markets LLC |  |
|  Barclays Capital Inc. |  |
|  Intesa Sanpaolo IMI Securities Corp. |  |
|  Santander US Capital Markets LLC |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 54987214 |

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The underwriters are committed to take and pay for all of the ADSs being offered, if any are taken, other than the ADSs covered by the option described below unless and until this option is exercised. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of the non-defaulting underwriters may be increased or the offering may be terminated.

The underwriters have an option to buy up to an additional 8,248,081 ADSs from us to cover sales by the underwriters of a greater number of ADSs than the total number set forth in the table above. They may exercise that option for 30 days. If any ADSs are purchased pursuant to this option, the underwriters will severally purchase ADSs in approximately the same proportion as set forth in the table above. If any additional ADSs are purchased, the underwriters will offer the additional ADSs on the same terms as those on which the ADSs are being offered.

ADSs sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any ADSs sold by the underwriters to securities dealers may be sold at a discount of up to $ per ADS from the initial public offering price. Any such securities dealers may resell ADSs to certain other brokers or dealers at a discount of up to $ per ADS from the initial public offering price. After the initial offering of the ADSs, the representatives may change the offering price and the other selling terms. The offering of the ADSs by the underwriters is subject to receipt and acceptance and subject to the underwriters' right to reject any order in whole or in part. Sales of any ADSs made outside of the United States may be made by affiliates of the underwriters.

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"Wolfe \| Nomura Alliance" is the marketing name used by Wolfe Research Securities and Nomura Securities International, Inc. in connection with certain equity capital markets activities conducted jointly by the firms. Both Nomura Securities International, Inc. and WR Securities, LLC are serving as underwriters in the offering of the ADSs. In addition, WR Securities, LLC and certain of its affiliates may provide sales support services, investor feedback, investor education, and/or other independent equity research services in connection with this offering.

Bernstein Institutional Services LLC is serving as selling agent on behalf of SG Americas Securities, LLC in the offering described herein. Bernstein Institutional Services LLC and certain of its affiliates may provide investor feedback, research, market sounding, block monitoring, market intelligence, historical market, or trading information and origination and deal execution support to SG Americas Securities, LLC in connection with this offering and may also provide such services in the general course of business.

***Discount, Commissions and Expenses***

The following tables show the per ADS and total underwriting discounts and commissions to be paid to the underwriters by us and the selling shareholder. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase 8,248,081 additional ADSs with respect to the per ADS and total underwriting discounts and commissions to be paid by us.

Paid by Us

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| | | |
|:---|:---|:---|
|  | $No Exercise | $Full Exercise |
|  Per ADS | $| $|
|  Total | $| $|

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Paid by the Selling Shareholder

---

| | |
|:---|:---|
|  | $|
|  Per ADS | $— |
|  Total | $— |

---

We and the selling shareholder estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $74,209,012. We have agreed to reimburse the underwriters for expenses relating to clearance of this offering with the Financial Industry Regulatory Authority, or FINRA, up to $75,000. The underwriters have agreed to reimburse us for $1,147,558 of expenses in connection with the offering.

***Listing***

An application has been made to quote the ADSs on Nasdaq under the symbol "PAYP."

We expect that delivery of the ADSs will be made to investors against payment therefor on or about , 2026, which will be the th business day following the date of pricing of the offering (such settlement being referred to as "T+ "). Under Rule 15c6-1 under the Exchange Act, trades in the secondary market are required to settle in one business day, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade ADSs prior to delivery hereunder will be required, by virtue of the fact that our shares and ADSs initially settle in T+ , to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement. Purchasers of the ADSs who wish to trade the ADSs prior to their date of delivery hereunder should consult their advisors.

***Lock-up Agreements***

We have agreed, during the period beginning from the date of this prospectus and continuing to and including the date 180 days after the date of this prospectus (the "Lock-Up Period"), not to, and not to publicly disclose an intention to, and not to cause any direct or indirect affiliate to, (i) offer, sell, contract to sell, pledge,

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grant any option or contract to purchase, purchase any option or contract to sell, make any short sale, loan, hedge or otherwise transfer or dispose of, directly or indirectly, or file with or confidentially submit with the SEC a registration statement relating to, any ADSs or shares of common stock or any securities of ours that are substantially similar to the ADSs or shares of common stock, or any options or warrants to purchase any ADSs or shares of common stock or any securities of ours that are substantially similar to the ADSs or shares of common stock, or any securities convertible into, exchangeable for or that represent the right to receive ADSs or shares of common stock or any securities of ours that are substantially similar to the ADSs or shares of common stock (collectively, the "Lock-Up Securities"), or (ii) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether any such transaction or arrangement described in (i) or (ii) above is to be settled by delivery of the ADSs or shares of common stock or such other securities, in cash or otherwise, whether now owned or hereinafter acquired, owned directly by such person (including holding as a custodian) or with respect to which such person has beneficial ownership within the rules and regulations of the SEC, without the prior consent of the representatives.

The restrictions described in the paragraph above relating to us do not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the ADSs and shares of common stock to be sold hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the issuance of up to 10% ****of the shares of common stock, or securities convertible into, exercisable for, or which are otherwise exchangeable for, shares of common stock, outstanding immediately following the completion of this offering, in acquisitions or other similar strategic transactions, provided that such recipients enter into an agreement with the underwriters covering the remainder of the Lock-Up Period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the issuance by us of Lock-up Securities upon exercise of outstanding employee stock options existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of the underwriting agreement and as described herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the approval and/or establishment of share incentive plans or any grant of awards under any such plan, provided that any such awards will not vest during the Lock-Up Period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the filing of any registration statement on Form S-8 relating to Lock-up Securities granted or to be granted pursuant to any plan described herein or any assumed benefit plan pursuant to an acquisition or similar strategic transaction; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of Lock-up Securities, provided that (A) such plan does not provide for the transfer of Lock-up Securities, or securities convertible into, exercisable for or which are otherwise exchangeable for, Lock-up Securities, during the Lock-up Period and (B) to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by us regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of Lock-up Securities may be made under such plan during the Lock-up Period.

Holders of substantially all of the shares of our common stock, including the selling shareholder, have agreed, for the duration of the Lock-Up Period, not to, and not to publicly disclose an intention to, and will not cause any direct or indirect affiliate to, (i) offer, sell, contract to sell, pledge, grant any option or contract to purchase, purchase any option or contract to sell, make any short sale, loan, hedge or otherwise transfer or dispose of, directly or indirectly, any Lock-Up Securities, or (ii) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether any such transaction or arrangement described in (i) or (ii) above is to be settled by delivery of the ADSs or shares of common stock or such other securities, in cash or otherwise, whether now owned or hereinafter acquired, owned directly by such person (including holding as a custodian) or with respect to which such person has beneficial ownership within the rules and regulations of the SEC, without the prior consent of the representatives.

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The restrictions described in the paragraph above relating to the selling shareholder do not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the ADSs and shares of common stock to be sold hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any disposition or transfer with respect to the Lock-up Securities as one or more *bona fide* gifts or charitable contributions, provided that (i) such transfer shall not involve a disposition for value, (ii) the donee or donees thereof agree to be bound in writing by the restrictions described herein for the remainder of the Lock-Up Period and (iii) no filing by any party (donor, donee, devisee, transferor, transferee, distributer or distributee) under the Exchange Act, or other public announcement shall be required or shall be made voluntarily in connection with such distribution (other than a filing on Form 5 made after the expiration of the Lock-Up Period and other than any required filing under Section 16(a) of the Exchange Act, or other required public filing, report or announcement reporting a reduction in beneficial ownership of Lock-Up Securities, which filing, report or announcement shall indicate in the footnotes thereto the nature and conditions of such transfer);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any disposition or transfer with respect to the Lock-up Securities to any trust for the direct or indirect benefit of the selling shareholder or the immediate family of the selling shareholder (for purposes of this paragraph, "immediate family" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin); provided that (i) such transfer shall not involve a disposition for value, (ii) the trustee and, if applicable, the trust beneficiaries agree in writing to be bound by the restrictions described herein for the remainder of the Lock-Up Period and (iii) no filing by any party (including transferor, transferee, trustee or beneficiary) under the Exchange Act, or other public announcement shall be required or shall be made voluntarily in connection with such transfer (other than a filing on Form 5 made after the expiration of the Lock-Up Period and other than any required filing under Section 16(a) of the Exchange Act, or other required public filing, report or announcement reporting a reduction in beneficial ownership of Lock-Up Securities, which filing, report or announcement shall indicate in the footnotes thereto the nature and conditions of such transfer);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any deposit of shares of common stock with the depositary in exchange for the issuance of ADSs representing such deposited shares of common stock; provided that any such ADSs shall remain subject to the restrictions described herein for the remainder of the Lock-Up Period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any disposition or transfer with respect to the Lock-up Securities pursuant to a *bona fide* third-party tender offer, merger, consolidation or other similar transaction that is approved by our board of directors and made to all holders of the ADSs or shares of common stock involving a prospective change of control of us (for purposes of this paragraph, "change of control" shall mean the transfer (whether by tender offer, merger, consolidation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons, of the ADSs or shares of common stock if, after such transfer, such person or group of affiliated persons would hold at least a majority of our outstanding voting securities (or the surviving entity)); provided, however, that in the event that such tender offer, merger, consolidation or other such transaction is not completed, such Lock-up Securities held by the selling shareholder shall remain subject to the restrictions on transfer described herein for the remainder of the Lock-Up Period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) any disposition or transfer to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (b) through (e) above; provided that such nominee or custodian agrees in writing to be bound by the restrictions described herein for the remainder of the Lock-Up Period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) any disposition or transfer as part of or in connection with any open market transactions relating to the Lock-Up Securities acquired by the selling shareholder from time to time after completion of this offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) any pledge, charge, lien, mortgage, hypothecation or other granting of a security interest in respect of the Lock-up Securities (including any sale, transfer, appropriation or other disposition with respect to the Lock-up Securities in connection with any such pledge, charge, lien, mortgage, hypothecation or other granting of a security interest) to or for the benefit of one or more banks, financial or other lending institutions or other finance counterparties (as well as any security agent, securities intermediary and/or custodian) (collectively, the

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"Pledgees") as collateral or security for or in connection with any margin loan or other loans, advances or extensions of credit or other financing transaction entered into by the selling shareholder or any of its direct or indirect subsidiaries, and any sales, transfers, appropriations or other dispositions of such Lock-up Securities to the applicable Pledgee(s) or other third parties upon or following foreclosure upon or enforcement of such Lock-up Securities in accordance with the terms of the documentation governing any margin loan or other loan, advance, or extension of credit or other financing transaction (including, without limitation, pursuant to any agreement or arrangement existing as of the date hereof); provided that, with respect to any pledge, charge, lien, mortgage, hypothecation or other granting of a security interest set forth above after the execution of the underwriting agreement, the applicable Pledgee(s) shall be informed of the existence and contents of the restrictions described herein before entering into any margin loan or other loans, advances or extensions of credit or other financing transaction or other financing transaction and further, provided that any purchaser or transferee of such Lock-up Securities shall, upon foreclosure on the pledged Lock-up Securities, execute an agreement stating that the transferee is receiving and holding such share capital subject to the restrictions described herein and there shall be no further transfer of such share capital except in accordance with the restrictions described herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of the Lock-up Securities; provided that (i) such plan does not provide for the transfer of the Lock-up Securities during the Lock-Up Period and (ii) to the extent a public announcement, report or filing under the Exchange Act, if any, is required by or on behalf of the selling shareholder or us regarding the establishment of such plan, such announcement, report or filing shall include a statement to the effect that no transfer, sale or other disposition of Lock-Up Securities may be made under such plan during the Lock-Up Period; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) the transfer by the selling shareholder of any of the Lock-up Securities (i) to another corporation, partnership, limited liability company or other business entity that is an affiliate (as defined in Rule 405 under the Securities Act) of the selling shareholder, or to any investment fund or other entity which fund or entity is controlled or managed by the selling shareholder or affiliates of the selling shareholder, or (ii) as part of a distribution by the selling shareholder to its stockholders, partners, members or other equityholders or to the estate of any such stockholders, partners, members or other equityholders; provided, however, that in any such case, it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding such share capital subject to the restrictions described herein during the Lock-Up Period and there shall be no further transfer of such share capital during the Lock-Up Period except in accordance with the restrictions described herein; provided, further, that it shall be a condition to such transfer that no public filing, report or announcement not otherwise required under applicable law shall be voluntarily made and if any filing under the equivalent of Section 16(a) of the Exchange Act in non-U.S. jurisdictions, or other public filing, report or announcement reporting a reduction in beneficial ownership of the Lock-up Securities in connection with such transfer or distribution shall be legally required during the Lock-Up Period, such filing, report or announcement shall clearly indicate in the footnotes thereto or otherwise the nature and conditions of such transfer.

The restrictions described in the paragraph above relating to holders of substantially all of the shares of our common stock, excluding the selling shareholder, do not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any transfer as one or more *bona fide* gifts or charitable contributions, provided that the donee or donees thereof agree to be bound in writing by the restrictions described herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any transfer to any trust for the direct or indirect benefit of such holder or the immediate family of such holder (for purposes of this paragraph, "immediate family" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any transfer pursuant to a *bona fide* third-party tender offer, merger, consolidation or other similar transaction made to all holders of the ADSs or shares of common stock involving a prospective change of control

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of us (for purposes of this paragraph, "change of control" shall mean the transfer (whether by tender offer, merger, consolidation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons, of the ADSs or shares of common stock if, after such transfer, such person or group of affiliated persons would hold at least a majority of our outstanding voting securities (or those of the surviving entity)); provided, however, that in the event that such tender offer, merger, consolidation or other such transaction is not completed, such securities held by such holder shall remain subject to the restrictions on transfer described herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any transfer as part of or in connection with any open market transactions relating to the ADSs or shares of common stock acquired by such holder from time to time after the completion of this offering;

provided that (i) in the case of any transfer or distribution pursuant to clause (a) and (b) above, such transfer shall not involve a disposition for value and each donee, devisee, transferee or distributee shall execute and deliver to the representatives a lock-up letter consistent with the restrictions described herein; and (ii) in the case of any transfer or distribution pursuant to clause (a), (b) and (d) above, no filing by any party (donor, donee, devisee, transferor, transferee, distributer or distributee) under the Exchange Act, or other public announcement shall be required or shall be made voluntarily in connection with such transfer or distribution (other than a filing on a Form 5 made after the expiration of the Lock-Up Period);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any transfer in connection with any deposit of shares of common stock with the depositary in exchange for the issuance of the ADSs representing shares of common stock so deposited, provided that the ADSs shall remain subject to the restrictions described herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) any transfer to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (a) through (c) and (e) above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) any transfer with the prior written consent of the representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of such holder's Lock-Up Securities, provided that (A) such plan does not provide for the transfer of such holder's Lock-Up Securities during the Lock-Up Period and (B) to the extent a public filing or announcement is required of or voluntarily made by or on behalf of such holder or by us regarding the establishment of such plan, such filing or announcement shall include a statement to the effect that no transfer of such holder's Lock-Up Securities may be made under such plan during the Lock-up Period; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if such holder is a corporation, partnership, limited liability company or other business entity, the transfer by such holder of any of the Lock-Up Securities (A) to another corporation, partnership, limited liability company or other business entity that is an affiliate (as defined in Rule 405 under the Securities Act) of such holder, or to any investment fund or other entity which fund or entity is controlled or managed by such holder or affiliates of such holder, or (B) as part of a distribution by such holder to its stockholders, partners, members or other equityholders or to the estate of any such stockholders, partners, members or other equityholders; provided, however, that in any such case, it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding such share capital subject to the restrictions described herein and there shall be no further transfer of such share capital except in accordance with those restrictions, and provided further that (1) any such transfer shall not involve a disposition for value and (2) it shall be a condition to such transfer that no public filing, report or announcement not otherwise required under applicable law shall be voluntarily made and if any filing under the equivalent of Section 16(a) of the Exchange Act in non-U.S. jurisdictions, or other public filing, report or announcement reporting a change in beneficial ownership of the shares of common stock in connection with such transfer ****or distribution shall be legally required during the Lock-Up Period, such filing, report or announcement shall clearly indicate in the footnotes thereto or otherwise the nature and conditions of such transfer;

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The representatives, in their sole discretion, may release the Lock-up Securities subject to any of the lock-up agreements with the underwriters described above, in whole or in part at any time.

Solely with respect to holders of substantially all of the shares of our common stock, including the selling shareholder, if the representatives release any person who has entered into, and is similarly restricted pursuant to, lock-up agreements imposing restrictions substantially similar to those restrictions described herein (each such person, a "Holder," and each such lock-up agreement, an "Additional Lock-Up Agreement") from the restrictions contained in an Additional Lock-Up Agreement (each such Holder, a "Released Holder"), the same percentage of the ADSs or shares of common stock held by such person (calculated as the number of ADSs or shares of common stock benefitting from such release divided by the total number of ADSs or shares of common stock held by the Released Holder) shall be immediately and fully released on the same terms from any remaining lockup restrictions described herein. Notwithstanding the foregoing, the provisions of this paragraph will not apply (1) if the release or waiver is effected solely to permit a transfer not involving a disposition for value, (2) if the transferee agrees in writing to be bound by the same terms described in such Additional Lock-Up Agreement to the extent and for the duration that such terms remain in effect at the time of transfer, (3) if the total amount that is released or waived with respect to all Additional Lock-Up Agreements is in the aggregate less than or equal to 1% of the total number of outstanding ADSs or shares of common stock or (4) if the release or waiver is granted due to circumstances of an emergency or hardship as determined by the representatives in their sole judgment.

***Price Stabilization, Short Positions and Penalty Bids***

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased ADSs sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the ADSs, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the ADSs. As a result, the price of the ADSs may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on Nasdaq, in the over-the-counter market or otherwise.

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***Indemnification***

We and the selling shareholder have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.

***Electronic Distribution***

A prospectus in electronic format may be made available on websites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of ADSs to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make internet distributions on the same basis as other allocations.

***Pricing of the Offering***

Prior to the offering, there has been no public market for our common stock or the ADSs. The initial public offering price has been negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the ADSs, in addition to prevailing market conditions, will be the information set forth in this prospectus and otherwise available to the representatives, our historical performance, estimates of our business potential and earnings prospects, the history and prospects for the industries in which we compete, the recent market prices of, and demand for, publicly traded common stock of generally comparable companies, an assessment of our management, the consideration of the above factors in relation to market valuation of companies in related businesses and other factors deemed relevant by the underwriters and us. Neither we nor the underwriters can assure investors that an active trading market will develop for the ADSs, or that the ADSs will trade in the public market at or above the initial public offering price.

***Other Relationships***

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to us and to persons and entities with relationships with us, for which they received or will receive customary fees and expenses. In particular, certain of the underwriters and/or their respective affiliates act as agents and/or lenders under credit facilities of the selling shareholder, for which they have received customary fees.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to our assets, securities and/or instruments (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with us. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

***Public Offering Without Listing in Japan***

This offering includes a public offering without listing in Japan of the ADSs (the "POWL"). Approximately 8,653,079 ADSs have been allocated to the POWL. The completion of this offering is not

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conditioned upon completion of the POWL. All of the ADSs offered in the POWL will be offered by Mizuho Securities Co., Ltd. and PayPay Securities Corporation, acting as agent and sub-agent, respectively, of Mizuho Securities USA LLC, and certain of their selling members (if any).

It is intended that the POWL be made by way of a public offering in Japan in accordance with the FIEA and the regulations thereunder. This document is not intended to constitute an offer of, or the solicitation of an offer to buy, ADSs to any resident of Japan. The POWL, if made, will be made pursuant to a securities registration statement filed and its amendments to be filed by us (as amended, collectively, the "SRS") with the relevant authority in Japan in accordance with the FIEA. The offering price will be identical for both the POWL and this offering. The ADSs will not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan or to others for reoffering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident in Japan, except in accordance with the terms and conditions of the POWL under the SRS. As used in this paragraph, resident in Japan means any person residing in Japan, including any corporations or other entities organized under the laws of Japan.

***Indications of Interest***

The Cornerstone Investors have, severally and not jointly, indicated an interest in purchasing up to an aggregate of $220 million of the ADSs offered in this offering at the initial public offering price and on the same terms and conditions as the other purchasers in this offering. Because these indications of interest are not binding agreements or commitments to purchase, the Cornerstone Investors may determine to purchase more, fewer, or no ADSs in this offering, or the underwriters may determine to sell more, less or no ADSs to the Cornerstone Investors. The underwriters will receive the same underwriting discount on any ADSs purchased by the Cornerstone Investors as they will from the other ADSs sold to the public in this offering.

***Selling Restrictions***

Other than in the United States and Japan, no action has been taken by us, the selling shareholder or the underwriters that would permit a public offering of the ADSs offered by this prospectus in any jurisdiction where action for that purpose is required. The ADSs offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such ADSs be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any ADSs offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful. Certain of the underwriters may resell ADSs to or through one or more of their affiliates as selling agent. Any offers and sales in the United States will be conducted by broker-dealers registered with the SEC.

*European Economic Area* 

In relation to each Member State of the European Economic Area (each a "Relevant State"), no ADSs have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to the ADSs which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that the ADSs may be offered to the public in that Relevant State at any time:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to any legal entity which is a qualified investor as defined under Article 2 of the Prospectus Regulation;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the
Prospectus Regulation) subject to obtaining the prior consent of the representatives for any such offer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of the ADSs shall require us and/or the selling shareholder or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an "offer to the public" in relation to the ADSs in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any ADSs to be offered so as to enable an investor to decide to purchase any ADSs, and the expression "Prospectus Regulation" means Regulation (EU) 2017/1129.

Each person in a Relevant State who receives any communication in respect of, or who acquires any ADSs under, the offering contemplated hereby will be deemed to have represented, warranted and agreed to and with each of the underwriters and their affiliates and us that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) it is a qualified investor within the meaning of the Prospectus Regulation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) in the case of any ADSs acquired by it as a financial intermediary, as that term is used in Article 5 of the
Prospectus Regulation, (i) the ADSs acquired by it in the offering have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to,
persons in any Relevant State other than qualified investors, as that term is defined in the Prospectus Regulation, or have been acquired in other circumstances falling within the points (a) to (d) of Article 1(4) of the Prospectus Regulation
and the prior consent of the representatives has been given to the offer or resale; or (ii) where the ADSs have been acquired by it on behalf of persons in any Relevant State other than qualified investors, the offer of those ADSs to it is not
treated under the Prospectus Regulation as having been made to such persons.

We, the selling shareholder, the underwriters and their affiliates, and others will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement. Notwithstanding the above, a person who is not a qualified investor and who has notified the representatives of such fact in writing may, with the prior consent of the representatives, be permitted to acquire ADSs in the offering.

This European Economic Area selling restriction is in addition to any other selling restrictions set out below.

*United Kingdom* 

This prospectus has been prepared on the basis that the offering of the ADSs falls within one of the exceptions specified in Part 1 of Schedule 1 of the Public Offers and Admissions to Trading Regulations 2024 (the "POATRs") and accordingly there will not be a prospectus prepared or published for the purposes of the POATRs. This prospectus does not constitute a prospectus for the purposes of the POATRs.

No ADSs which are the subject of this prospectus have been offered or will be offered to the public in the United Kingdom except:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) at any time to any legal entity which is a qualified investor as defined in paragraph 15 of Schedule 1 to
the POATRs;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) at any time to fewer than 150 persons (other than qualified investors as defined in paragraph 15 of Schedule
1 to the POATRs) in the United Kingdom subject to obtaining the prior consent of the relevant underwriter or underwriters nominated by us for any such offer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) at any time in any other circumstances falling within Part 1 of Schedule 1 to the POATRs.

For the purposes of this provision, the expression an "offer of securities to the public" in relation to any ADSs means the communication in any form and by any means of sufficient information on the terms of the offer and the ADSs to be offered so as to enable an investor to decide to buy or subscribe for the ADSs.

*Canada* 

The ADSs may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations. Any resale of the ADSs must be made in accordance with an exemption form, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

*Hong Kong* 

The ADSs have not been offered or sold and will not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) ("Companies (Winding Up and Miscellaneous Provisions) Ordinance") or which do not constitute an invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) ("Securities and Futures Ordinance"), or (ii) to "professional investors" as defined in the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance. No advertisement, invitation or document relating to the ADSs has been or may be issued or has been or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to ADSs which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the Securities and Futures Ordinance and any rules made thereunder.

*Singapore* 

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the ADSs may not be circulated or distributed, nor may the ADSs be

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offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined under Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA")) under Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to conditions set forth in the SFA.

Where the ADSs are subscribed or purchased under Section 275 of the SFA by a relevant person which is a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor, the securities (as defined in Section 239(1) of the SFA) of that corporation shall not be transferable for 6 months after that corporation has acquired the ADSs under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer in that corporation's securities pursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore ("Regulation 32")

Where the ADSs are subscribed or purchased under Section 275 of the SFA by a relevant person which is a trust (where the trustee is not an accredited investor (as defined in Section 4A of the SFA)) whose sole purpose is to hold investments and each beneficiary of the trust is an accredited investor, the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferable for 6 months after that trust has acquired the ADSs under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer that is made on terms that such rights or interest are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction (whether such amount is to be paid for in cash or by exchange of securities or other assets), (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32.

*Japan* 

It is expected that the POWL will be made in Japan without listing on any stock exchange in Japan in accordance with the terms and conditions stated in the SRS filed with the relevant authority in Japan. The ADSs may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan, except in accordance with the terms and conditions of the POWL under the SRS.

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**EXPENSES RELATED TO THIS OFFERING** 

Set forth below is an itemization of the total expenses, excluding underwriting discounts and commissions, which are expected to be incurred in connection with the offer and sale of the ADSs by us. With the exception of the SEC registration fee, the Nasdaq listing fee and the Financial Industry Regulatory Authority filing fee, all amounts are estimates.

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| | | |
|:---|:---|:---|
|  SEC registration fee | US$ | 174656 |
|  Nasdaq listing fee |  | 325000 |
|  Financial Industry Regulatory Authority filing fee |  | 190206 |
|  Printing and engraving expenses |  | 229750 |
|  Legal fees and expenses |  | 9766403 |
|  Accounting fees and expenses |  | 58556936 |
|  Miscellaneous |  | 4966061 |
|  Total | US$ | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;74209012 |

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**LEGAL MATTERS** 

We are being represented by Simpson Thacher & Bartlett LLP with respect to certain legal matters of United States federal securities and New York state law. The underwriters are being represented by Davis Polk & Wardwell LLP with respect to certain legal matters as to United States federal securities and New York state law. The validity of the common shares represented by the ADSs offered in this offering and legal matters as to Japanese law will be passed upon for us by Mori Hamada & Matsumoto. Certain legal matters as to Japanese law will be passed upon for the underwriters by Nagashima Ohno & Tsunematsu. Certain legal matters in connection with this offering will be passed upon for the selling shareholder by Latham & Watkins LLP.

**EXPERTS** 

The financial statements of PayPay Corporation as of March 31, 2024 and 2025 and for each of the three years in the period ended March 31, 2025 included in this prospectus, have been audited by Deloitte Touche Tohmatsu LLC, an independent registered public accounting firm, as stated in their report. Such financial statements are included in reliance upon the report of such firm given their authority as experts in accounting and auditing.

The offices of Deloitte Touche Tohmatsu LLC are located at Marunouchi Nijubashi Building, 3-2-3 Marunouchi, Chiyoda-ku, Tokyo, 100-8360, Japan.

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**WHERE YOU CAN FIND MORE INFORMATION** 

We have filed with the SEC a registration statement on Form F-1, including relevant exhibits and schedules under the Securities Act with respect to underlying common shares represented by the ADSs, to be sold in this offering. A related registration statement on F-6 will be filed with the SEC to register the ADSs. This prospectus, which constitutes a part of the registration statement, does not contain all of the information contained in the registration statement. You should read the registration statement and its exhibits and schedules for further information with respect to us and the ADSs.

Immediately upon closing of this offering, we will become subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. All information filed with the SEC may be obtained over the internet at the SEC's web site at *www.sec.gov*.

As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we intend to furnish the depositary with our annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with IFRS, and all notices of shareholders' meeting and other reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, if we so request, will mail to all record holders of ADSs the information contained in any notice of a shareholders' meeting received by the depositary from us.

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**PAYPAY CORPORATION** 

**INDEX TO CONSOLIDATED STATEMENTS** 

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| | |
|:---|:---|
| **Audited Consolidated Financial Statements**  | **Page** |
|  [Report of Independent Registered Public Accounting Firm](#fin941409_a1) | F-2 |
|  [Consolidated Statements of Financial Position as of March 31, 2024 and 2025](#fin941409_1) | F-5 |
|  [Consolidated Statements of Profit or Loss for the years ended March 31, 2023, 2024 and 2025](#fin941409_2) | F-7 |
|  [Consolidated Statements of Comprehensive Income for the years ended March 31, 2023, 2024 and 2025](#fin941409_3) | F-8 |
|  [Consolidated Statements of Changes in Equity for the years ended March 31, 2023, 2024 and 2025](#fin941409_4) | F-9 |
|  [Consolidated Statements of Cash Flows for the years ended March 31, 2023, 2024 and 2025](#fin941409_5) | F-12 |
|  [Notes to Consolidated Financial Statements](#fin941409_6) | F-14 |
| **Unaudited Condensed Consolidated Financial Statements** |  |
|  [Condensed Consolidated Statements of Financial Position as of December 31, 2025](#fin941409_7) | F-114 |
|  [Condensed Consolidated Statements of Profit or Loss for the nine months ended December 31, 2025](#fin941409_8) | F-116 |
|  [Condensed Consolidated Statements of Comprehensive Income for the nine months ended December 31, 2025](#fin941409_9) | F-118 |
|  [Condensed Consolidated Statements of Changes in Equity for the nine months ended December 31, 2025](#fin941409_10) | F-119 |
|  [Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2025](#fin941409_11) | F-121 |
|  [Notes to Condensed Consolidated Financial Statements](#fin941409_12) | F-123 |

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![LOGO](g941409g25b09.jpg)

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** 

To the shareholders and management of PayPay Corporation

**Opinion on the Financial Statements** 

We have audited the accompanying consolidated statements of financial position of PayPay Corporation and subsidiaries (the "Group") as of March 31, 2025 and 2024, the related consolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended March 31, 2025, the related notes and the Schedule I (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as of March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2025, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB).

**Basis for Opinion** 

These financial statements are the responsibility of the Group's management. Our responsibility is to express an opinion on the Group's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters** 

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the Audit and Supervisory Committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

***Revenue – Transaction and service income – PayPay Settlement Services and Payment settlement service deduction — Refer to Notes 4 and 31 to the financial statements***

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*Critical Audit Matter Description* 

The Group's revenue from the PayPay Settlement Services is based on the settlement amount and the predetermined rates. The processing of transactions and recording of revenue is based on contractual terms in multiple agreements with PayPay Merchants and PayPay Users, and are highly automated and sourced from multiple systems and databases utilizing various tools to convert and transfer data between systems, databases and spreadsheets. Revenue from PayPay Settlement Services also involves manual entries to record PayPay Points, which is accounted for as consideration payable to customers and, therefore, as a deduction from revenue.

We identified revenue from the PayPay Settlement Services, together with the Payment settlement service deduction, as a critical audit matter given the Group's processes to record revenue are highly automated, involves multiple systems, databases, and tools, and the underlying data used to manually record consideration payable to customers are also highly dependent on Group's technology infrastructure. This required an increased extent of effort, including the need for us to involve professionals with expertise in information technology ("IT"), to understand the process flow and data flow; to identify, test, and evaluate the relevant systems (including software applications) and automated controls; as well as to test and evaluate the underlying data used in the manual entries recorded as a deduction from revenue. Significant auditor judgment was required to design and execute the audit procedures and to assess the sufficiency of the procedures performed and evidence obtained due to the complexity of the Group's technology infrastructure to recognize revenue.

*How the Critical Audit Matter Was Addressed in the Audit* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• With the assistance of our IT specialists, we:

– identified the relevant systems and database used to process revenue transactions and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and system operation controls.

– tested the design, implementation, and operating effectiveness of system interface controls and automated controls within the PayPay Settlement Services revenue stream, as well as the controls designed to ensure the accuracy and completeness of revenue.

– evaluated the integrity of underlying data used for the deduction from revenue in terms of access logs in these systems.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We tested internal controls within the relevant revenue business processes, including those in place to
reconcile the various reports extracted from various systems and database to the Group's general ledger.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For a sample of revenue transactions, we performed detail transaction testing by agreeing the amounts of
revenue recognized to supporting documents and testing the mathematical accuracy of the recorded revenues.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We tested the underlying data used for the deduction from revenue by agreeing the incentives granted with the
respective contracts and tested the mathematical accuracy.

***Acquisitions – PayPay Bank – Accounting policy determination for business combination of entities under common control— Refer to Notes 4 and 8 to the financial statements***

*Critical Audit Matter Description* 

As described in Note 8 to the consolidated financial statements, in April 2025, PayPay Corporation acquired 75.5% voting shares of PayPay Bank Corporation. The transaction was accounted for as a business combination

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##### [**Table of Contents**](#toc)
of entities under common control as PayPay Corporation and PayPay Bank Corporation were both controlled by SoftBank Group Corp. before and after the acquisition. The Group applied the pooling of interest method and retrospectively consolidates the financial statements of PayPay Bank Corporation as if it had always been combined to the earliest comparative period.

The principal considerations for our determination that the acquisition is a critical audit matter include the fact that significant audit effort was necessary to evaluate management's application of the appropriate accounting treatment for the acquisition in the absence of explicit standards for business combination of entities under common control under IFRS Accounting Standards.

*How the Critical Audit Matter Was Addressed in the Audit* 

In order to address this matter, we performed procedures and evaluated audit evidence in connection with forming our opinion on the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We tested the design and operating effectiveness of control over management's review of the
determination of appropriate accounting treatment for the acquisition of PayPay Bank Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We audited the financial information related to PayPay Bank Corporation incorporated in the Group's
consolidated financial statements in accordance with the pooling of interest method for each of the years presented.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We involved our business combination subject matter specialists to assist us in evaluating the appropriateness
of the Group's accounting treatment and policy applied to account for the acquisition of PayPay Bank Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We evaluated the sufficiency, accuracy and completeness of the disclosures in the consolidated financial
statements related to the acquisition of PayPay Bank Corporation.

*/s/ DELOITTE TOUCHE TOHMATSU LLC* 

Marunouchi, Chiyoda-ku, Tokyo, JAPAN

December 17, 2025

We have served as the Group's auditor since 2019.

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##### [**Table of Contents**](#toc)
***PayPay Corporation***

**Consolidated Statements of Financial Position** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Notes**  | **April 1,**<br>**2023**<br>**Restated** | **March 31,<br>2024**<br>**Restated** | **March 31,<br>2025**  |
|  **Assets** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 937 | 859313 | 744323 | 369811 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits | 1037 | 282291 | 321885 | 244229 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Call loans | 37 | 98000 | 116083 | 63000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 1137 | 188111 | 137760 | 141054 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 1237 | 1217427 | 1528552 | 1927607 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 1337 | 468837 | 769157 | 1075748 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 1437 | 17021 | 20761 | 23130 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment | 15 | 14300 | 14535 | 14493 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use assets | 16 | 9728 | 8852 | 14799 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | 17 | 56545 | 61690 | 65672 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 1718 | 9919 | 9919 | 15157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment accounted for using the equity method |  |  |  | 1012 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets | 19 | 29198 | 34261 | 49392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | 20 | 37578 | 38604 | 37001 |
|  **Total assets** |  | &nbsp;&nbsp;&nbsp;&nbsp;3288268 | &nbsp;&nbsp;&nbsp;&nbsp;3806382 | &nbsp;&nbsp;&nbsp;&nbsp;4042105 |

---

*See Notes to Consolidated Financial Statements* 

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---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Notes**  | **April 1,**<br>**2023**<br>**Restated** | **March 31,<br>2024**<br>**Restated** | **March 31,<br>2025**  |
|  **Liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 2137 | 1876176 | 2136577 | 2385939 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 2237 | 673063 | 808449 | 949397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payables |  | 2739 | 4109 | 6477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 2337 | 494540 | 603218 | 399578 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 2437 | 20961 | 31361 | 34207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions | 25 | 2603 | 7295 | 7041 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 162337 | 8698 | 7734 | 12097 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax liabilities | 19 |  | 98 | 377 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | 26 | 17948 | 16290 | 23261 |
|  **Total liabilities** |  | 3096728 | 3615131 | 3818374 |
|  **Shareholders' equity** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issued capital | 29 | 116452 | 94180 | 91434 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share premium | 29 | 17972 | 14617 | 13727 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit | 329 | (62259) | (43516) | (4887) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive loss | 29 | (108) | (119) | (379) |
|  **Equity attributable to owners of the parent company** |  | 72057 | 65162 | 99895 |
|  Non-controlling interests | 38 | 119483 | 126089 | 123836 |
|  **Total shareholders' equity** |  | 191540 | 191251 | 223731 |
|  **Total liabilities and shareholders' equity** |  | &nbsp;&nbsp;&nbsp;&nbsp;3288268 | &nbsp;&nbsp;&nbsp;&nbsp;3806382 | &nbsp;&nbsp;&nbsp;&nbsp;4042105 |

---

*See Notes to Consolidated Financial Statements* 

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**Consolidated Statements of Profit or Loss** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **Notes**  | **March 31,<br>2023<br>Restated** | **March 31,<br>2024<br>Restated** | **March 31,<br>2025**  |
|  Transaction and service income |  | 146927 | 174127 | 203595 |
|  Interest income |  | 50285 | 73884 | 88442 |
|  Gains (losses) on financial instruments |  | 2079 | 4641 | 5529 |
|  Other operating income |  | 1903 | 1959 | 1512 |
|  **Total revenue** | 7313233 | 201194 | 254611 | 299078 |
|  Point expenses |  | (42283) | (45402) | (50362) |
|  Settlement related cost |  | (38482) | (39992) | (43662) |
|  Employee benefit expenses |  | (30476) | (37764) | (41483) |
|  Professional and outsourcing services expenses |  | (30547) | (34800) | (28767) |
|  Provision for loss allowance |  | (15187) | (23006) | (23942) |
|  Other operating expenses |  | (64767) | (73636) | (75352) |
|  **Total operating expenses** | 72734 | &nbsp;&nbsp;&nbsp;&nbsp;(221742) | &nbsp;&nbsp;&nbsp;&nbsp;(254600) | &nbsp;&nbsp;&nbsp;&nbsp;(263568) |
|  **Operating profit (loss)** | 7 | (20548) | 11 | 35510 |
| Share of loss of a joint venture accounted for using the equity method |  |  |  | (549) |
|  **Profit (loss) before tax** |  | (20548) | 11 | 34961 |
|  Income tax (expense) benefit | 19 | (4398) | (841) | 4196 |
|  **Profit (loss) for the year** |  | (24946) | (830) | 39157 |
| &nbsp;&nbsp;&nbsp;&nbsp; Attributable to |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Owners of the parent company |  | (25856) | (3350) | 36170 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-controlling interests | 38 | 910 | 2520 | 2987 |
|  |  |  |  | *(In yen)* |
|  **Earnings (loss) per share** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings (loss) per share attributable to owners of the parent company <sup>[1]</sup> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic earnings (loss) per share | 35 | (58.7) | (6.1) | 65.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Diluted earnings (loss) per share | 35 | (58.7) | (6.1) | 65.8 |

---

[1] The share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 42, *Subsequent Events* for details of share split*.*

*See Notes to Consolidated Financial Statements* 

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**Consolidated Statements of Comprehensive Income** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **Notes**  | **March 31,<br>2023<br>Restated** | **March 31,<br>2024<br>Restated** | **March 31,<br>2025**  |
|  **Profit (loss) for the year** |  | (24946) | (830) | 39157 |
|  Other comprehensive income (loss) for the year, net of tax |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Items that may be reclassified subsequently to profit or loss |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in the fair value of debt instruments at FVTOCI |  | (1147) | (1110) | (3525) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassification to profit or loss of debt instruments at FVTOCI on derecognition |  | 420 | (21) | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange differences on translation of foreign operations | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;29 | (7) | 11 | (10) |
| **Total comprehensive income (loss) for the year, net of tax** |  | &nbsp;&nbsp;&nbsp;&nbsp;(25680) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1950) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;35693 |
| **Total comprehensive income (loss) for the year, net of tax attributable to** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Owners of the parent company |  | (25907) | (3361) | 35910 |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-controlling interests |  | 227 | 1411 | (217) |

---

*See Notes to Consolidated Financial Statements* 

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**Consolidated Statements of Changes in Equity** 

**For the year ended March 31, 2023 (Restated)** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** |  |  |
|  | **Notes** | **Issued**<br>**capital** | **Share<br>premium** | **Accumulated<br>deficit** | **Accumulated<br>other<br>comprehensive<br>loss** | **Total** | **Non-**<br>**controlling<br>interests** | **Total<br>shareholders'<br>equity** |
| **Balance as of April 1, 2022** |  | 121800 | 56230 | (55056) |  | 122974 | 45749 | 168723 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retrospective adjustments from transactions under common control <sup>[1]</sup> |  |  | 6545 | (1209) | (57) | 5279 | 58784 | 64063 |
| **Balance as of April 1, 2022** |  | 121800 | 62775 | (56265) | (57) | 128253 | 104533 | 232786 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss for the year |  |  |  | (25856) |  | (25856) | 910 | (24946) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss | 29 |  |  |  | (51) | (51) | (683) | (734) |
| **Total comprehensive income (loss) for the year** |  |  |  | (25856) | (51) | (25907) | 227 | (25680) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to non-controlling interests <sup>[2].</sup> | 30 |  |  |  |  |  | (33644) | (33644) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to the ultimate parent company <sup>[2]</sup> | 30 |  | (862) | (4067) |  | (4929) |  | (4929) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from issued capital to share premium <sup>[3]</sup> |  | (5348) | 5348 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from share premium to accumulated deficit <sup>[3]</sup> |  |  | (60348) | 60348 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes due to business combinations of entities under common control - PayPay Card Corporation | 8 |  | (1317) | (36419) |  | (37736) | (14853) | (52589) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capital contributions from shareholders in relation to stock option plans | 2936 |  | 1945 |  |  | 1945 |  | 1945 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in interests in subsidiaries <sup>[2]</sup> |  |  | 9718 |  |  | 9718 | 62971 | 72689 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  |  | 713 |  |  | 713 | 249 | 962 |
| **Total transactions with owners and other transactions** |  | (5348) | (44803) | 19862 |  | (30289) | 14723 | (15566) |
| **Balance as of March 31, 2023** |  | &nbsp;&nbsp;&nbsp;&nbsp;116452 | &nbsp;&nbsp;&nbsp;&nbsp;17972 | &nbsp;&nbsp;&nbsp;&nbsp;(62259) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(108) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;72057 | &nbsp;&nbsp;&nbsp;&nbsp;119483 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;191540 |

---

---

| | |
|:---|:---|
| [1] | The acquisition of PayPay Bank Corporation and PayPay Securities Corporation, which were accounted for as a business combination of entities under common control, have been reflected retrospectively in preparing the consolidated financial statements. These entities are deemed to have been acquired by PayPay Corporation as of April 1, 2022. Refer to Note 3, *Restatements and Changes in Presentation* for details.  |

---

---

| | |
|:---|:---|
| [2] | In relation to business combination of entities under common control, any equity transactions undertaken by subsidiaries under common control with entities outside of the Company and its subsidiaries before the date of the actual transaction by the Company are included within "Dividends paid to the ultimate parent company", "Dividends paid to non-controlling interests" and "Changes in interests in subsidiaries".  |

---

[3] These transfers were carried out to offset the accumulated deficit of the Company. Refer to Note 29, *Issued Capital and Reserves* for details.

*See Notes to Consolidated Financial Statements* 

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##### [**Table of Contents**](#toc)
**For the year ended March 31, 2024 (Restated)** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** |  |  |
|  | **Notes** | **Issued**<br>**capital** | **Share<br>premium** | **Accumulated<br>deficit** | **Accumulated<br>other<br>comprehensive<br>loss** | **Total** | **Non-**<br>**controlling<br>interests** | **Total<br>shareholders'<br>equity** |
| **Balance as of April 1, 2023** |  | &nbsp;&nbsp;&nbsp;&nbsp;116452 | &nbsp;&nbsp;&nbsp;&nbsp;17972 | &nbsp;&nbsp;&nbsp;&nbsp;(62259) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(108) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;72057 | &nbsp;&nbsp;&nbsp;&nbsp;119483 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;191540 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss for the year |  |  |  | (3350) |  | (3350) | 2520 | (830) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss | 29 |  |  |  | (11) | (11) | (1109) | (1120) |
| **Total Comprehensive income (loss) for the year** |  |  |  | (3350) | (11) | (3361) | 1411 | (1950) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to non-controlling interests <sup>[1]</sup> | 30 |  |  |  |  |  | (1604) | (1604) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to the ultimate parent company <sup>[1]</sup> | 30 |  |  | (179) |  | (179) |  | (179) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from issued capital to share premium <sup>[2]</sup> |  | (22272) | 22272 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from share premium to accumulated deficit <sup>[2]</sup> |  |  | (22272) | 22272 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in interests in subsidiaries <sup>[1]</sup> |  |  | (3355) |  |  | (3355) | 6799 | 3444 |
| **Total transactions with owners and other transactions** |  | (22272) | (3355) | 22093 |  | (3534) | 5195 | 1661 |
| **Balance as of March 31, 2024** |  | &nbsp;&nbsp;&nbsp;&nbsp;94180 | &nbsp;&nbsp;&nbsp;&nbsp;14617 | &nbsp;&nbsp;&nbsp;&nbsp;(43516) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(119) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;65162 | &nbsp;&nbsp;&nbsp;&nbsp;126089 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;191251 |

---

---

| | |
|:---|:---|
| [1] | In relation to business combination of entities under common control, any equity transactions undertaken by subsidiaries under common control with entities outside of the Company and its subsidiaries before the date of the actual transaction by the Company are included within "Dividends paid to the ultimate parent company" , "Dividends paid to non-controlling interests" and "Changes in interests in subsidiaries".  |

---

[2] These transfers were carried out to offset the accumulated deficit of the Company. Refer to Note 29, *Issued Capital and Reserves* for details.

*See Notes to Consolidated Financial Statements* 

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##### [**Table of Contents**](#toc)
**For the year ended March 31, 2025** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** |  |  |
|  | **Notes** | **Issued**<br>**capital** | **Share<br>premium** | **Accumulated<br>deficit** | **Accumulated<br>other<br>comprehensive<br>loss** | **Total** | **Non-**<br>**controlling<br>interests** | **Total<br>shareholders'<br>equity** |
| **Balance as of April 1, 2024 (Restated)** |  | 94180 | 14617 | (43516) | (119) | 65162 | 126089 | 191251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit for the year |  |  |  | 36170 |  | 36170 | 2987 | 39157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss | 29 |  |  |  | (260) | (260) | (3204) | (3464) |
| **Total Comprehensive income (loss) for the year** |  |  |  | 36170 | (260) | 35910 | (217) | 35693 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to non-controlling interests <sup>[1]</sup> | 30 |  |  |  |  |  | (2519) | (2519) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to the ultimate parent company <sup>[1]</sup> | 30 |  |  | (283) |  | (283) |  | (283) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from issued capital to share premium <sup>[2]</sup> |  | (2746) | 2746 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from share premium to accumulated deficit <sup>[2]</sup> |  |  | (2746) | 2746 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in interests in subsidiaries <sup>[1]</sup> |  |  | (485) |  |  | (485) | 485 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  |  | (405) | (4) |  | (409) | (2) | (411) |
| **Total transactions with owners and other transactions** |  | (2746) | (890) | 2459 |  | (1177) | (2036) | (3213) |
| **Balance as of March 31, 2025** |  | &nbsp;&nbsp;&nbsp;&nbsp;91434 | &nbsp;&nbsp;&nbsp;&nbsp;13727 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4887) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(379) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;99895 | &nbsp;&nbsp;&nbsp;&nbsp;123836 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;223731 |

---

---

| | |
|:---|:---|
| [1] | In relation to business combination of entities under common control, any equity transactions undertaken by subsidiaries under common control with entities outside of the Company and its subsidiaries before the date of the actual transaction by the Company are included within "Dividends paid to the ultimate parent company", "Dividends paid to non-controlling interests" and "Changes in interests in subsidiaries".  |

---

[2] These transfers were carried out to offset the accumulated deficit of the Company. Refer to Note 29, *Issued Capital and Reserves* for details.

*See Notes to Consolidated Financial Statements* 

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**Consolidated Statements of Cash Flows** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **Notes**  | **March 31,<br>2023**<br>**Restated** | **March 31,<br>2024**<br>**Restated** | **March 31,<br>2025**  |
|  **Cash flows from (used in) operating activities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit (loss) before tax |  | (20548) | 11 | 34961 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments for: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 151617 | 14655 | 18591 | 21391 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal of property and equipment and intangible assets | 1517 | 324 | 1495 | 696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other income and costs |  | (616) | (1552) | 618 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in assets and liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits | 10 | (17545) | (39594) | 77656 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Call loans |  | (18000) | (18083) | 53083 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 11 | (45580) | 50350 | (3266) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 12 | (348301) | (311125) | (399055) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 13 | (45828) | (45476) | (31256) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 21 | 302122 | 260400 | 249362 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 22 | 19800 | 130744 | 145558 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 24 | (44565) | 9759 | 2327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions | 25 | 509 | 4438 | (1864) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | 12445 | (6117) | 11920 |
| &nbsp;&nbsp;&nbsp;&nbsp; **Cash provided by (used in) operations** |  | &nbsp;&nbsp;&nbsp;&nbsp;(191128) | &nbsp;&nbsp;&nbsp;&nbsp;53841 | &nbsp;&nbsp;&nbsp;&nbsp;162131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax paid |  | (3721) | (4472) | (6870) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax refunded |  | 147 | 606 | 588 |
|  **Net cash provided by (used in) operating activities** |  | (194702) | 49975 | 155849 |
|  **Cash flows from (used in) investing activities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of securities | 13 | (228227) | (437408) | (463314) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of securities | 13 | 274870 | 189836 | 177885 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of property and equipment | 15 | (10284) | (4584) | (4822) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of intangible assets | 17 | (19097) | (17911) | (17264) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from divestiture of business | 41 | 4596 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from withdrawal of deposits with a related party | 39 | 562000 | 600000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments of deposits with a related party | 39 | (393000) | (600000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment for acquisition of subsidiaries | 8 |  |  | (5759) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of investment accounted for using the equity method |  |  |  | (1360) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | (844) | (3316) | (5343) |
|  **Net cash provided by (used in) investing activities** |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;190014 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(273383) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(319977) |

---

*See Notes to Consolidated Financial Statements* 

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| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **Notes**  | **March 31,<br>2023**<br>**Restated** | **March 31,<br>2024**<br>**Restated** | **March 31,<br>2025**  |
|  **Cash flows from (used in) financing activities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net increase (decrease) in short-term borrowings | 23 | 85000 | 30000 | (128700) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from long-term borrowings | 23 | 519000 | 595100 | 842300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments of long-term borrowings | 23 | &nbsp;&nbsp;&nbsp;&nbsp;(543045) | (516422) | (917898) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments of lease liabilities | 23 | (2742) | (2409) | (2820) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from stock issuances to non-controlling interests |  | 72689 | 3444 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment for the purchase of the equity interest of a subsidiary, through business combinations of entities under common control | 8 | (63000) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to non-controlling interests | 30 | (33644) | (1604) | (2519) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to the ultimate parent company | 30 | (4929) | (179) | (283) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | 2657 |  | (405) |
| **Net cash provided by (used in) financing activities** |  | 31986 | 107930 | (210325) |
| **Effect of exchange rate changes on cash and cash equivalents** |  | 419 | 488 | (59) |
|  **Increase (decrease) in cash and cash equivalents** |  | 27717 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(114990) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(374512) |
| **Cash and cash equivalents at the beginning of the year** | 9 | 831596 | 859313 | 744323 |
|  **Cash and cash equivalents at the end of the year** | 9 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;859313 | 744323 | 369811 |

---

*See Notes to Consolidated Financial Statements* 

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##### [**Table of Contents**](#toc)
**Notes to Consolidated Financial Statements** 

**1. 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 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 payment credit 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.

On October 1, 2023, Z Holdings Corporation, a shareholder of the Company, carried out intra-group reorganizations with its wholly owned subsidiaries mainly including LINE Corporation and Yahoo Japan Corporation, and changed its name to LY Corporation. All the transactions and events pertaining to LY Corporation including those which occurred prior to the name change are referred to as those of LY Corporation in the following notes.

The Company is 57.9% owned directly by B Holdings Corporation, 30.2% by SVF II Piranha (DE) LLC, 5.9% by LY Corporation and 5.9% 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. On October 1, 2022, we acquired all of the shares of PayPay Card Corporation from Yahoo Japan Corporation (currently LY Corporation), a subsidiary of SBG.

In April 2025, the Company acquired shares of PayPay Securities Corporation and PayPay Bank Corporation, which had been under common control of SBG and made both subsidiaries of the Company. The acquisitions of PayPay Securities Corporation and PayPay Bank Corporation were accounted for by the pooling of interests method as business combinations under common control. The Group's consolidated financial statements are retrospectively adjusted to reflect the consolidation of PayPay Bank Corporation and PayPay Securities Corporation from April 1, 2022. Refer to Note 3, *Restatements and Changes in Presentation* and Note 8, *Business Combinations* for further details.

The following diagram illustrates our corporate structure as of March 31, 2025. Certain entities that are immaterial to our results of operations, business and financial condition are omitted.

![LOGO](g941409g24a01.jpg)

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##### [**Table of Contents**](#toc)
**2.** **Basis of Preparation** 

(1) Compliance with IFRS<sup>®</sup> Accounting Standards

The Group's consolidated financial statements have been prepared on a going concern basis in accordance with IFRS Accounting Standards issued by the International Accounting Standards Board ("IASB"). The term "IFRS Accounting Standards" also includes International Accounting Standards ("IASs") and the related interpretations of the interpretations committees (Standard Interpretations Committee ("SIC") and International Financial Reporting Interpretations Committee ("IFRIC")).

(2) Basis of Measurement

The Group's consolidated financial statements have been prepared on a historical cost basis except for items such as financial instruments measured at fair value as described in Note 4, *Material Accounting Policies,* 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 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.

**3.** **Restatements and Changes in Presentation** 

**Retrospective Adjustments Resulting from Business Combinations of Entities under Common Control ("BCUCC")** 

The acquisitions of PayPay Securities Corporation and PayPay Bank Corporation were accounted for by the pooling of interests method as business combinations of entities under common control. Refer to Note 8, *Business Combinations* for further details.

The Group's consolidated statements of financial position as of April 1, 2023 and March 31, 2024, consolidated statements of profit or loss, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years ended March 31, 2023 and 2024 are retrospectively adjusted for the consolidation of the financial statements of PayPay Securities Corporation, PayPay Bank Corporation and their subsidiaries from April 1, 2022.

**Changes in Presentation** 

Moreover, changes in presentation of the Group's consolidated financial statements have been made to the previously issued consolidated financial statements, mainly because the retrospective inclusion of the financial statements of PayPay Bank Corporation has resulted in certain retrospective adjustments given the different nature of its banking business compared to our historical operations. This also resulted in the removal of a separation of our assets and liabilities into current and non-current on the consolidated balance sheet and these disclosures are included in Note 28, *Classification of Current and Non-current* to these consolidated financial statements.

**Retrospective Adjustments Resulting from the Share Split** 

On October 29, 2025, the Company's Board of Directors approved a share split of the Company's common shares, which is effective as of November 15, 2025. The share split does not affect total equity or shareholders' proportionate interests. However, the number of shares or stock options, the exercise price and the fair value of the shares or stock options, and per share calculations are retrospectively adjusted and disclosed based on the new number of shares. Refer to Note 29, *Issued Capital and Reserves*, Note 35, *Earnings Per Share*, Note 36, *Share-based Payments*, and Note 42, *Subsequent Events*, for further details.

The consolidated statements of changes in equity and the consolidated statements of cash flows and the related footnote disclosures were restated accordingly to reflect such restatements.

In addition, the previously reported consolidated financial statements disclosed below were only issued to the shareholders of the Company.

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##### [**Table of Contents**](#toc)
**Consolidated Statement of Financial Position as of April 1, 2023** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br>Reported** | **Reclassification** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| **Assets** |  |  |  |  | **Assets** |
|  **Current assets** |  |  |  |  |  |
|  Cash and cash equivalents | 641228 |  | 218085 | 859313 | Cash and cash equivalents |
|  |  |  | 98000 | 98000 | Call loans |
|  Accounts receivable, current | 614552 | (426777) | 336 | 188111 | Accounts receivable |
|  Guarantee deposits | 135118 |  | 147173 | 282291 | Guarantee deposits |
|  |  | 596917 | 620510 | 1217427 | Loans and advances to customers |
|  |  |  | 468837 | 468837 | Securities |
|  Other financial assets, current | 238 | 914 | 15869 | 17021 | Other financial assets |
|  Other current assets | 5633 | (5633) |  |  |  |
|  **Total current assets** | 1396769 |  |  |  |  |
|  **Non-current assets** |  |  |  |  |  |
|  Accounts receivable, non-current | 170140 | (170140) |  |  |  |
|  Property and equipment | 12313 |  | 1987 | 14300 | Property and equipment |
|  Right-of-use assets | 8631 |  | 1097 | 9728 | Right-of-use assets |
|  Goodwill | 9176 |  | 743 | 9919 | Goodwill |
|  Intangible assets | 45102 |  | 11443 | 56545 | Intangible assets |
|  Deferred tax assets | 26869 |  | 2329 | 29198 | Deferred tax assets |
|  Other financial assets, non-current | 914 | (914) |  |  |  |
|  Other non-current assets | 31854 | 5633 | 91 | 37578 | Other assets |
|  **Total non-current assets** | 304999 |  |  |  |  |
|  **Total assets** | &nbsp;&nbsp;&nbsp;&nbsp;1701768 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;&nbsp;1586500 | &nbsp;&nbsp;&nbsp;&nbsp;3288268 | **Total assets** |

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**Consolidated Statement of Financial Position as of April 1, 2023 (Continued)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br>Reported** | **Reclassification** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| **Liabilities** |  |  |  |  | **Liabilities** |
| **Current liabilities** |  |  |  |  |  |
| Accounts payable | 671341 | 1504 | 218 | 673063 | Accounts payable |
| PayPay Users' deposits | 292362 |  | 1583814 | 1876176 | Deposits |
| Contract liabilities, current | 1651 | (1651) |  |  |  |
| Loan payables and commercial papers, current | 357972 | (357972) |  |  |  |
|  |  | 640740 | (146200) | 494540 | Borrowings |
| Lease liabilities, current | 1715 | 5969 | 1014 | 8698 | Lease liabilities |
| Income tax payables | 1382 |  | 1357 | 2739 | Income tax payables |
| Provisions, current | 546 | 1638 | 419 | 2603 | Provisions |
| Other financial liabilities, current | 12522 | (1496) | 9935 | 20961 | Other financial liabilities |
| Other current liabilities | 12829 | 2936 | 2183 | 17948 | Other liabilities |
| **Total current liabilities** | 1352320 |  |  |  |  |
| **Non-current liabilities** |  |  |  |  |  |
| Contract liabilities, non-current | 1247 | (1247) |  |  |  |
| Loan payables, non-current | 282768 | (282768) |  |  |  |
| Lease liabilities, non-current | 5969 | (5969) |  |  |  |
| Provisions, non-current | 1638 | (1638) |  |  |  |
| Other financial liabilities,<br>non-current | 8 | (8) |  |  |  |
| Other non-current liabilities | 38 | (38) |  |  |  |
| **Total non-current liabilities** | 291668 |  |  |  |  |
| **Total liabilities** | 1643988 |  | 1452740 | 3096728 | **Total liabilities** |
| **Shareholders' equity** |  |  |  |  | **Shareholders' equity** |
| Issued capital | 116452 |  |  | 116452 | Issued capital |
| Share premium | 1645 |  | 16327 | 17972 | Share premium |
| Accumulated deficit | (60310) |  | (1949) | (62259) | Accumulated deficit |
| Accumulated other comprehensive loss | (7) |  | (101) | (108) | Accumulated other comprehensive loss |
| **Equity attributable to shareholders of the Company** | 57780 |  | 14277 | 72057 | **Equity attributable to owners of the parent company** |
|  |  |  | 119483 | 119483 | Non-controlling interests |
| **Total shareholders' equity** | 57780 |  | 133760 | 191540 | **Total shareholders' equity** |
| **Total liabilities and shareholders' equity** | &nbsp;&nbsp;&nbsp;&nbsp;1701768 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;&nbsp;1586500 | &nbsp;&nbsp;&nbsp;&nbsp;3288268 | **Total liabilities and shareholders' equity** |

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**Consolidated Statement of Financial Position as of March 31, 2024** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br>Reported** | **Reclassification** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| **Assets** |  |  |  |  | **Assets** |
|  **Current assets** |  |  |  |  |  |
| Cash and cash equivalents | 580751 |  | 163572 | 744323 | Cash and cash equivalents |
|  |  |  | 116083 | 116083 | Call loans |
| Accounts receivable, current | 694548 | (556614) | (174) | 137760 | Accounts receivable |
| Guarantee deposits | 206614 |  | 115271 | 321885 | Guarantee deposits |
|  |  | 805550 | 723002 | 1528552 | Loans and advances to customers |
|  |  | 14395 | 754762 | 769157 | Securities |
| Other financial assets, current | 2470 | 1031 | 17260 | 20761 | Other financial assets |
| Other current assets | 6731 | (6731) |  |  |  |
| **Total current assets** | 1491114 |  |  |  |  |
| **Non-current assets** |  |  |  |  |  |
| Accounts receivable, non-current | 248936 | (248936) |  |  |  |
| Property and equipment | 11717 |  | 2818 | 14535 | Property and equipment |
| Right-of-use assets | 7683 |  | 1169 | 8852 | Right-of-use assets |
| Goodwill | 9176 |  | 743 | 9919 | Goodwill |
| Intangible assets | 49392 |  | 12298 | 61690 | Intangible assets |
| Investments accounted for using the equity method | 5244 |  | (5244) |  |  |
| Deferred tax assets | 30586 |  | 3675 | 34261 | Deferred tax assets |
| Other financial assets, non-current | 15426 | (15426) |  |  |  |
| Other non-current assets | 31434 | 6731 | 439 | 38604 | Other assets |
|  **Total non-current assets** | 409594 |  |  |  |  |
|  **Total assets** | &nbsp;&nbsp;&nbsp;&nbsp;1900708 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;&nbsp;1905674 | &nbsp;&nbsp;&nbsp;&nbsp;3806382 | **Total assets** |

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##### [**Table of Contents**](#toc)
**Consolidated Statement of Financial Position as of March 31, 2024 (Continued)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br>Reported** | **Reclassification** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| **Liabilities** |  |  |  |  | **Liabilities** |
|  **Current liabilities** |  |  |  |  |  |
| Accounts payable | 802162 | 1046 | 5241 | 808449 | Accounts payable |
| PayPay Users' deposits | 329694 |  | 1806883 | 2136577 | Deposits |
| Contract liabilities, current | 2557 | (2557) |  |  |  |
| Loan payables and commercial papers, current | 543268 | (543268) |  |  |  |
|  |  | 669318 | (66100) | 603218 | Borrowings |
| Lease liabilities, current | 1683 | 5161 | 890 | 7734 | Lease liabilities |
| Income tax payables | 2131 |  | 1978 | 4109 | Income tax payables |
| Provisions, current | 5272 | 1593 | 430 | 7295 | Provisions |
|  |  |  | 98 | 98 | Deferred tax liabilities |
| Other financial liabilities, current | 15724 | (998) | 16635 | 31361 | Other financial liabilities |
| Other current liabilities | 10716 | 3394 | 2180 | 16290 | Other liabilities |
| **Total current liabilities** | 1713207 |  |  |  |  |
| **Non-current liabilities** |  |  |  |  |  |
| Contract liabilities, non-current | 807 | (807) |  |  |  |
| Loan payables, non-current | 126050 | (126050) |  |  |  |
| Lease liabilities, non-current | 5161 | (5161) |  |  |  |
| Provisions, non-current | 1593 | (1593) |  |  |  |
| Other financial liabilities, non-current | 48 | (48) |  |  |  |
| Other non-current liabilities | 30 | (30) |  |  |  |
| **Total non-current liabilities** | 133689 |  |  |  |  |
| **Total liabilities** | &nbsp;&nbsp;&nbsp;&nbsp;1846896 |  | &nbsp;&nbsp;&nbsp;&nbsp;1768235 | &nbsp;&nbsp;&nbsp;&nbsp;3615131 | **Total liabilities** |
| **Shareholders' equity** |  |  |  |  | **Shareholders' equity** |
| Issued capital | 94180 |  |  | 94180 | Issued capital |
| Share premium | 1645 |  | 12972 | 14617 | Share premium |
| Accumulated deficit | (42017) |  | (1499) | (43516) | Accumulated deficit |
| Accumulated other comprehensive income | 4 |  | (123) | (119) | Accumulated other comprehensive loss |
| **Equity attributable to shareholders of the Company** | 53812 |  | 11350 | 65162 | **Equity attributable to owners of the parent company** |
|  |  |  | 126089 | 126089 | Non-controlling interests |
| **Total shareholders' equity** | 53812 |  | 137439 | 191251 | **Total shareholders' equity** |
| **Total liabilities and shareholders' equity** | 1900708 |  | 1905674 | 3806382 | **Total liabilities and shareholders' equity** |

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**Consolidated Statement of Profit or Loss for the year ended March 31, 2023** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br>Reported** | **Reclassification** | **BCUCC** | **Restated** | **Presentation**<br> **Restated** |
| Revenue | 123371 |  | 23556 | 146927 | Transaction and service income |
| Interest income | 40139 | (429) | 10575 | 50285 | Interest income |
|  |  | 91 | 1988 | 2079 | Gains on financial instruments |
| Other operating income | 1872 | 430 | (399) | 1903 | Other operating income |
| **Total revenue and other income** | 165382 | 92 | 35720 | 201194 | **Total revenue** |
|  |  | (42283) |  | (42283) | Point expenses |
|  |  | (29362) | (9120) | (38482) | Settlement related cost |
|  |  | (25160) | (5316) | (30476) | Employee benefit expenses |
|  |  | (23572) | (6975) | (30547) | Professional and outsourcing services expenses |
|  |  | (14928) | (259) | (15187) | Provision for loss allowance |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(51700) | (13067) | (64767) | Other operating expenses |
| Operating expenses | &nbsp;&nbsp;&nbsp;&nbsp;(187231) | &nbsp;&nbsp;&nbsp;&nbsp;226 | &nbsp;&nbsp;&nbsp;&nbsp;(34737) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(221742) | Total operating expenses |
| **Operating loss** | (21849) | 318 | 983 | (20548) | **Operating loss** |
| Finance income | 524 | (524) |  |  |  |
| Finance costs | (206) | 206 |  |  |  |
| **Loss before tax** | (21531) |  | 983 | (20548) | **Loss before tax** |
| Income tax expense | (2725) |  | (1673) | (4398) | Income tax expense |
| **Loss for the year** | (24256) |  | (690) | (24946) | **Loss for the year** |
| Attributable to |  |  |  |  | Attributable to |
| Shareholders of the Company | (25213) |  | (643) | (25856) | Owners of the parent company |
| Non-controlling interests | 957 |  | (47) | 910 | Non-controlling interests |
| **Earnings (loss) per share** |  |  |  |  | **Earnings (loss) per share** |
| **Earnings (loss) per share<br>attributable to shareholders of<br>the Company <sup>[1]</sup>** |  |  |  |  | **Earnings (loss) per share<br>attributable to owners of the<br>parent company <sup>[1]</sup>** |
| Basic loss per share | (57.2) |  | (1.5) | (58.7) | Basic loss per share |
| Diluted loss per share | (57.2) |  | (1.5) | (58.7) | Diluted loss per share |

---

[1] The share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 42, *Subsequent Events* for details of share split.

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##### [**Table of Contents**](#toc)
**Consolidated Statement of Profit or Loss for the year ended March 31, 2024** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br>Reported** | **Reclassification** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| Revenue | 150147 | (13) | 23993 | 174127 | Transaction and service income |
| Interest income | 59619 | (606) | 14871 | 73884 | Interest income |
|  |  | 13 | 4628 | 4641 | Gains on financial instruments |
| Other operating income | 1742 | 13 | 204 | 1959 | Other operating income |
| **Total revenue and other income** | 211508 | (593) | 43696 | 254611 | **Total revenue** |
|  |  | (45402) |  | (45402) | Point expenses |
|  |  | (30161) | (9831) | (39992) | Settlement related cost |
|  |  | (30981) | (6783) | (37764) | Employee benefit expenses |
|  |  | (26456) | (8344) | (34800) | Professional and outsourcing services expenses |
|  |  | (22650) | (356) | (23006) | Provision for loss allowance |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(59393) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14243) | (73636) | Other operating expenses |
| Operating expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(216011) | 968 | (39557) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(254600) | Total operating expenses |
| **Operating loss** | (4503) | 375 | 4139 | 11 | **Operating profit** |
| Finance income | 447 | (447) |  |  |  |
| Finance costs | (72) | 72 |  |  |  |
| Share of loss of associates accounted for using the equity method | (1352) |  | 1352 |  |  |
| **Loss before tax** | (5480) |  | 5491 | 11 | **Profit before tax** |
| Income tax benefit | 1501 |  | (2342) | (841) | Income tax expense |
| **Loss for the year** | (3979) |  | 3149 | (830) | **Loss for the year** |
| **Attributable to** |  |  |  |  | **Attributable to** |
| Shareholders of the Company | (3979) |  | 629 | (3350) | Owners of the parent company |
| Non-controlling interests |  |  | 2520 | 2520 | Non-controlling interests |
| **Earnings (loss) per share** |  |  |  |  | **Earnings (loss) per share** |
| **Earnings (loss) per share<br>attributable to shareholders of<br>the Company <sup>[1]</sup>** |  |  |  |  | **Earnings (loss) per share<br>attributable to owners of the<br>parent company <sup>[1]</sup>** |
| Basic loss per share | (7.2) |  | 1.1 | (6.1) | Basic loss per share |
| Diluted loss per share | (7.2) |  | 1.1 | (6.1) | Diluted loss per share |

---

[1] The share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 42, *Subsequent Events* for details of share split.

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##### [**Table of Contents**](#toc)
**Consolidated Statement of Comprehensive Income for the year ended March 31, 2023** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br>Reported** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| **Loss for the year** | (24256) | (690) | (24946) | **Loss for the year** |
| Other comprehensive income (loss) for the year, net of tax |  |  |  | Other comprehensive income (loss) for the year, net of tax |
| Items that may be reclassified subsequently to profit or loss |  |  |  | Items that may be reclassified subsequently to profit or loss |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1147) | (1147) | Changes in the fair value of debt instruments at FVTOCI |
|  |  | 420 | 420 | Reclassification to profit or loss of debt instruments at FVTOCI on derecognition |
| Exchange differences on translation of foreign operations | (7) |  | (7) | Exchange differences on translation of foreign operations |
| **Total comprehensive loss for the year, net of tax** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(24263) | (1417) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(25680) | **Total comprehensive loss for the year, net of tax** |
| **Total comprehensive loss for the<br>year, net of tax attributable to** |  |  |  | **Total comprehensive loss for<br>the year, net of tax<br>attributable to** |
| Shareholders of the Company | (25220) | (687) | (25907) | Owners of the parent company |
| Non-controlling interests | 957 | (730) | 227 | Non-controlling interests |

---

**Consolidated Statement of Comprehensive Income for the year ended March 31, 2024** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br>Reported** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| **Loss for the year** | (3979) | 3149 | (830) | **Loss for the year** |
| Other comprehensive income (loss) for the year, net of tax |  |  |  | Other comprehensive income (loss) for the year, net of tax |
| Items that may be reclassified subsequently to profit or loss |  |  |  | Items that may be reclassified subsequently to profit or loss |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1110) | (1110) | Changes in the fair value of debt instruments at FVTOCI |
|  |  | (21) | (21) | Reclassification to profit or loss of debt instruments at FVTOCI on derecognition |
| Exchange differences on translation of foreign operations | 11 |  | 11 | Exchange differences on translation of foreign operations |
| **Total comprehensive loss for the year, net of tax** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3968) | 2018 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1950) | **Total comprehensive loss for the year, net of tax** |
| **Total comprehensive loss for the<br>year, net of tax attributable to** |  |  |  | **Total comprehensive loss for<br>the year, net of tax<br>attributable to** |
| Shareholders of the Company | (3968) | 607 | (3361) | Owners of the parent company |
| Non-controlling interests |  | 1411 | 1411 | Non-controlling interests |

---

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##### [**Table of Contents**](#toc)
**Consolidated Statement of Cash Flows for the year ended March 31, 2023** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation**<br> **Previously Reported** | **Previously<br> Reported** | **Reclassification** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| **Cash flows from (used in) operating activities** |  |  |  |  | **Cash flows from (used in) operating activities** |
| Loss before tax | (21531) |  | 983 | (20548) | Loss before tax |
| Adjustments for: |  |  |  |  | Adjustments for: |
| Depreciation and amortization | 10511 |  | 4144 | 14655 | Depreciation and amortization |
| Loss on disposal of property and equipment and intangible assets | 292 |  | 32 | 324 | Loss on disposal of property and equipment and intangible assets |
| Other income and costs | 2052 | (2017) | (651) | (616) | Other income and costs |
| Changes in assets and liabilities: |  |  |  |  | Changes in assets and liabilities: |
|  |  |  | (18000) | (18000) | Call loans |
| Accounts receivable | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(187657) | 144688 | (2611) | (45580) | Accounts receivable |
| Guarantee deposits | (33623) |  | 16078 | (17545) | Guarantee deposits |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(144688) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(203613) | (348301) | Loans and advances to customers |
|  |  |  | (45828) | (45828) | Securities |
| Accounts payable | 19807 |  | (7) | 19800 | Accounts payable |
| PayPay Users' deposits | 111159 | (111159) |  |  |  |
|  |  | 111159 | 190963 | 302122 | Deposits |
| Contract liabilities | 637 | (637) |  |  |  |
| Provisions | 180 |  | 329 | 509 | Provisions |
| Other financial liabilities | (3771) |  | (40794) | (44565) | Other financial liabilities |
| Consumption tax payable | 10835 | (10835) |  |  |  |
| Other | (3805) | 11445 | 4805 | 12445 | Other |
| **Cash used in operations** | (94914) | (2044) | (94170) | (191128) | **Cash provided by (used in) operations** |
| Interest and dividend received | 523 | (523) |  |  |  |
| Interest paid | (2567) | 2567 |  |  |  |
| Income tax paid | (1679) |  | (2042) | (3721) | Income tax paid |
| Income tax refunded | 126 |  | 21 | 147 | Income tax refunded |
| **Net cash used in operating activities** | (98511) |  | (96191) | (194702) | **Net cash used in operating activities** |
| **Cash flows from (used in) investing activities** |  |  |  |  | **Cash flows from (used in) investing activities** |
|  |  | (4) | (228223) | (228227) | Purchases of securities |
|  |  |  | 274870 | 274870 | Proceeds from sale of securities |
| Purchases of property and equipment | (9553) |  | (731) | (10284) | Purchases of property and equipment |
| Purchases of intangible assets | (14254) |  | (4843) | (19097) | Purchases of intangible assets |
| Proceeds from divestiture of business | 4596 |  |  | 4596 | Proceeds from divestiture of business |
| Proceeds from withdrawal of cash deposits for group financing | 562000 |  |  | 562000 | Proceeds from withdrawal of deposits with a related party |
| Payments of cash deposits for group financing | (393000) |  |  | (393000) | Payments of deposits with a related party |
| Other | (850) | 4 | 2 | (844) | Other |
| **Net cash provided by investing activities** | 148939 |  | 41075 | 190014 | **Net cash provided by investing activities** |

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##### [**Table of Contents**](#toc)
**Consolidated Statement of Cash Flows for the year ended March 31, 2023 (Continued)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br> Reported** | **Reclassification** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| **Cash flows from (used in) financing activities** |  |  |  |  | **Cash flows from (used in) financing activities** |
| Repayment of lease liabilities | (2184) |  | (558) | (2742) | Repayments of lease liabilities |
| Net increase in loan payables, current | 38851 | (38851) |  |  |  |
|  |  | 85000 |  | 85000 | Net increase in short-term borrowings |
| Proceeds from loan payables, non-current | 78200 | (78200) |  |  |  |
| Repayment of loan payables, non-current | (22896) | 22896 |  |  |  |
| Proceeds from commercial papers | 463000 | (463000) |  |  |  |
| Repayment of commercial papers | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(433000) | 433000 |  |  |  |
|  |  | 541200 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22200) | 519000 | Proceeds from long-term borrowings |
|  |  | (502045) | (41000) | (543045) | Repayments of long-term borrowings |
|  |  |  | 72689 | 72689 | Proceeds from stock issuances to non-controlling interests |
| Payment for the purchase of the equity interest of subsidiaries, through transactions under common control | (63000) |  |  | (63000) | Payment for the purchase of the equity interest of a subsidiary, through business combinations of entities under common control |
| Dividends paid to non-controlling interests | (32168) |  | (1476) | (33644) | Dividends paid to non-controlling interests |
| Dividends paid to the ultimate parent company | (4832) |  | (97) | (4929) | Dividends paid to the ultimate parent company |
| Proceeds from capital contributions from shareholders in relation to stock option plans | 1945 | (1945) |  |  |  |
| Other | 957 | 1945 | (245) | 2657 | Other |
| **Net cash provided by financing activities** | 24873 |  | 7113 | 31986 | **Net cash provided by financing activities** |
| **Effect of exchange rate changes on cash and cash equivalents** | (41) |  | 460 | 419 | **Effect of exchange rate changes on cash and cash equivalents** |
| **Increase in cash and cash equivalents** | 75260 |  | (47543) | 27717 | **Increase in cash and cash equivalents** |
| **Cash and cash equivalents at the beginning of the year** | 565968 |  | 265628 | 831596 | **Cash and cash equivalents at the beginning of the year** |
| **Cash and cash equivalents at the end of the year** | 641228 |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;218085 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;859313 | **Cash and cash equivalents at the end of the year** |

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##### [**Table of Contents**](#toc)
**Consolidated Statement of Cash Flows for the year ended March 31, 2024** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br> Reported** | **Reclassification** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| **Cash flows from (used in)<br>operating activities** |  |  |  |  | **Cash flows from (used in)<br>operating activities** |
| Loss before tax | (5480) |  | 5491 | 11 | Profit before tax |
| Adjustments for: |  |  |  |  | Adjustments for: |
| Depreciation and amortization | 13891 |  | 4700 | 18591 | Depreciation and amortization |
| Loss on disposal of property and equipment and intangible assets | 1203 |  | 292 | 1495 | Loss on disposal of property and equipment and intangible assets |
| Share of loss of associates accounted for using the equity method | 1352 |  | (1352) |  |  |
| Other income and costs | 2290 | (2380) | (1462) | (1552) | Other income and costs |
| Changes in assets and liabilities: |  |  |  |  | Changes in assets and liabilities: |
|  | – | – | (18083) | (18083) | Call loans |
| Accounts receivable | (158792) | 199534 | 9608 | 50350 | Accounts receivable |
| Guarantee deposits | (71496) |  | 31902 | (39594) | Guarantee deposits |
|  | – | (199534) | (111591) | (311125) | Loans and advances to<br>customers |
|  | – | – | (45476) | (45476) | Securities |
| Accounts payable | 130819 |  | (75) | 130744 | Accounts payable |
| PayPay Users' deposits | 37333 | (37333) |  |  |  |
|  | – | 37333 | 223067 | 260400 | Deposits |
| Contract liabilities | 466 | (466) |  |  |  |
| Provisions | 4740 |  | (302) | 4438 | Provisions |
| Other financial liabilities | 3686 |  | 6073 | 9759 | Other financial liabilities |
| Consumption tax payable | (3623) | 3623 |  |  |  |
| Other | 1277 | (3163) | (4231) | (6117) | Other |
| **Cash used in operations** | &nbsp;&nbsp;&nbsp;&nbsp;(42334) | &nbsp;&nbsp;&nbsp;&nbsp;(2386) | 98561 | 53841 | **Cash provided by (used in) operations** |
| Interest and dividend received | 432 | (432) |  |  |  |
| Interest paid | (2818) | 2818 |  |  |  |
| Income tax paid | (1961) |  | (2511) | (4472) | Income tax paid |
| Income tax refunded | 606 |  |  | 606 | Income tax refunded |
| **Net cash used in operating activities** | (46075) |  | 96050 | 49975 | **Net cash provided by operating activities** |
| **Cash flows from (used in)<br>investing activities** |  |  |  |  | **Cash flows from (used in)<br>investing activities** |
|  | – | (14394) | (423014) | (437408) | Purchases of securities |
|  | – | – | 189836 | 189836 | Proceeds from sale of securities |
| Purchases of property and equipment | (3190) |  | (1394) | (4584) | Purchases of property and equipment |
| Purchases of intangible assets | (13940) |  | (3971) | (17911) | Purchases of intangible assets |
| Proceeds from withdrawal of cash deposits for group financing | 600000 |  |  | 600000 | Proceeds from withdrawal of deposits with a related party |
| Payments of cash deposits for group financing | (600000) |  |  | (600000) | Payments of deposits with a related party |
| Purchases of investments accounted for using the equity method | (6597) |  | 6597 |  |  |
| Payments into term deposits | (1740) | 1740 |  |  |  |
| Purchases of debt instruments | (14394) | 14394 |  |  |  |
| Other | (1438) | (1740) | (138) | (3316) | Other |
| **Net cash used in investing activities** | &nbsp;&nbsp;&nbsp;&nbsp;(41299) |  | &nbsp;&nbsp;&nbsp;&nbsp;(232084) | &nbsp;&nbsp;&nbsp;&nbsp;(273383) | **Net cash used in investing activities** |

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##### [**Table of Contents**](#toc)
**Consolidated Statement of Cash Flows for the year ended March 31, 2024 (Continued)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
| **Presentation<br>Previously Reported** | **Previously<br> Reported** | **Reclassification** | **BCUCC** | **Restated** | **Presentation<br>Restated** |
| **Cash flows from (used in)<br>financing activities** |  |  |  |  | **Cash flows from (used in)<br>financing activities** |
| Repayment of lease liabilities | (1778) |  | (631) | (2409) | Repayments of lease liabilities |
| Net increase in loan payables, current | 30000 |  |  | 30000 | Net increase in short-term borrowings |
| Proceeds from loan payables, current | 3000 | (3000) |  |  |  |
| Repayment of loan payable, current | (3000) | 3000 |  |  |  |
| Proceeds from loan payables, non-current | 52000 | (52000) |  |  |  |
| Repayment of loan payables, non-current | (32422) | 32422 |  |  |  |
| Proceeds from commercial papers | 460000 | (460000) |  |  |  |
| Repayment of commercial papers | (481000) | 481000 |  |  |  |
|  | **–** | 515000 | 80100 | 595100 | Proceeds from long-term<br>borrowings |
|  | **–** | (516422) | – | (516422) | Repayments of long-term<br>borrowings |
|  | **–** | – | 3444 | 3444 | Proceeds from stock issuances<br>to non-controlling interests |
|  | **–** | – | (1604) | (1604) | Dividends paid to<br>non-controlling interests |
|  | **–** | – | (179) | (179) | Dividends paid to the ultimate<br>parent company |
| **Net cash provided by financing activities** | 26800 |  | 81130 | 107930 | **Net cash provided by financing activities** |
| **Effect of exchange rate changes on cash and cash equivalents** | 97 |  | 391 | 488 | **Effect of exchange rate changes on cash and cash equivalents** |
| **Decrease in cash and cash equivalents** | (60477) |  | (54513) | (114990) | **Decrease in cash and cash equivalents** |
| **Cash and cash equivalents at the beginning of the year** | 641228 |  | 218085 | 859313 | **Cash and cash equivalents at the beginning of the year** |
| **Cash and cash equivalents at the end of the year** | &nbsp;&nbsp;&nbsp;&nbsp;580751 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;&nbsp;163572 | &nbsp;&nbsp;&nbsp;&nbsp;744323 | **Cash and cash equivalents at the end of the year** |

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##### [**Table of Contents**](#toc)
**4.** **Material Accounting Policies** 

(1) Basis of Consolidation

Subsidiaries

Subsidiaries are entities controlled by the Company. The consolidated financial statements include the accounts of the Group, which are directly or indirectly controlled by the Company (or the Group). Control is generally conveyed by ownership of the majority of voting rights. The Group controls an entity when the Group has power over the entity, is exposed, or has rights, to variable returns from the involvement with the entity and has the ability to affect those returns through its power over the entity. The Group reassesses whether it controls an entity if facts and circumstances indicate that there are changes to one or more of the elements of control.

The subsidiaries' financial statements are consolidated from the date when control is acquired (the "acquisition date") until the date when the control is lost. For the accounting policies for business combinations of entities under common control, refer to the section below (2) *Business Combinations*.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies. Non-controlling interests in a subsidiary are accounted for separately from the parent's ownership interests in a subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent company and non-controlling interests, even if this results in the non-controlling interests having a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. Any difference between the adjustment to the non-controlling interests and the fair value of the consideration paid or received is recognized directly in shareholders' equity as equity attributable to the owners of the parent company.

Intercompany balances and transactions have been eliminated upon consolidation.

(2) Business Combinations

Business combinations are accounted for using the acquisition method at the acquisition date, except acquisitions under common control which are outside the scope of IFRS 3 "Business Combinations" ("IFRS 3").

The consideration transferred in business combinations is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree, and the equity interest issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except for the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• deferred tax assets or liabilities and assets or liabilities related to employee benefits are recognized and
measured in accordance with IAS 12 "Income Taxes" and IAS 19 "Employee Benefits," respectively;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based
payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 "Share-based Payment," at the acquisition date; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• assets or disposal groups that are classified as held for sale are measured in accordance with IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations."

The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree over the fair value of the identifiable net assets acquired at the acquisition date is recorded as goodwill. If the consideration transferred and the amount of any non-controlling interest in the acquiree is less than the fair value of the identifiable net assets of the acquired subsidiary, the difference is immediately recognized in profit or loss.

On an acquisition-by-acquisition basis, the Group chooses a measurement basis of non-controlling interests at either fair value or the proportionate share of the recognized amount of the acquiree's identifiable net assets. When a business combination is achieved in stages, the Group's previously held interest in the acquiree is remeasured at fair value at the acquisition date and is accounted for in the same way that the Group has disposed of the interest in the acquiree. The amounts arising from changes in the value of interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are accounted for in the same way that the Group has disposed of the interest in the acquiree.

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If the initial accounting for a business combination is incomplete by the end of the fiscal year, the Group reports in its consolidated financial statements provisional amounts for the items for which the accounting is incomplete. The Group retrospectively adjusts the provisional amounts recognized at the acquisition date as an adjustment during the measurement period when it acquires new information about facts and circumstances that existed as of the acquisition date that, if known, would have affected the recognized amounts for the business combination. The measurement period shall not exceed one year from the acquisition date.

Business combinations under common control are not under the scope of IFRS 3. In accordance with IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors", management is required to develop an accounting policy in the absence of an IFRS that specifically applies to such transactions. The Group opted to apply the pooling of interests method, recognizing the effects of the business combination under common control. For business combinations between entities under common control (all of the combining companies or businesses are ultimately controlled by the same party or parties both before and after the business combination, and the control is not transitory), the Group accounts for those transactions based on the book value of the ultimate parent company, and regardless of the actual date of the transaction under common control, retrospectively consolidates the financial statements of the acquired companies as if they had always been combined to the earliest comparative period or from the date in which the ultimate parent company acquired those businesses, if later than the beginning of the earliest comparative period. Non-controlling interest is calculated for all periods presented using the same percentage of ownership calculated by our ultimate parent. Payment for the purchase of the equity interest of subsidiary, through business combinations under common control, is presented in cash flows from financing activities in the Consolidated Statement of Cash Flows.

(3) Foreign Currency Translation

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Transactions denominated in foreign currencies

Transactions in currencies other than the functional currency (foreign currencies) are recognized at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognized in profit or loss in the period in which they arise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Foreign operations

For the purposes of presenting these consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated into Japanese yen using exchange rates prevailing at the end of the consolidated financial position presented. Income and expense items are translated into Japanese yen using the rates at the dates of the transaction or the average exchange rates for the period. Exchange differences arising from translating the financial statements of foreign operations are recognized in other comprehensive income and cumulative differences are included in accumulated other comprehensive income.

(4) Financial Instruments

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Recognition

Financial assets and financial liabilities are recognized in the Group's Consolidated Statements of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value, except for account receivables that do not have a significant financing component which are measured at transaction price. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities measured at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities measured at fair value through profit or loss are recognized immediately in profit or loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Non-derivative Financial Assets

Non-derivative financial assets are classified as either financial assets measured at amortized cost, debt instruments measured at fair value through other comprehensive income ("FVTOCI") or financial assets measured at fair value

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through profit or loss ("FVTPL"). The classification of financial assets is determined at the date of initial recognition, depending on the nature and characteristics as well as the purpose of obtaining those financial assets.

All regular way purchases or sales of financial assets are recognized and derecognized using trade date accounting. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Financial assets measured at amortized cost

Financial assets that meet the following conditions are measured subsequently at amortized cost:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The financial asset is held within a business model whose objective is to hold financial assets in order to
collect contractual cash flows; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.

The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount.

The effective interest method is a method of calculating the amortized cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or (where appropriate) a shorter period, to the amortized cost of a financial instrument.

The gross carrying amount of a financial asset is the amortized cost of a financial asset before adjusting for any loss allowance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Debt instruments measured at FVTOCI

Debt instruments that meet the following conditions are measured subsequently at FVTOCI:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The financial asset is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling the financial assets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.

After initial recognition, debt instruments measured at FVTOCI are measured at fair value and the valuation gains and losses resulting from changes in fair value are recognized in other comprehensive income. Subsequently, changes in the carrying amount because of foreign exchange gains and losses, impairment gains or losses are recognized in profit or loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Financial assets measured at FVTPL

Financial assets that are not classified as financial assets measured at amortized cost or debt instruments measured at FVTOCI are measured at FVTPL. Financial assets measured at FVTPL are measured at fair value at the end of each reporting period, with gains or losses from change in fair value recognized in profit or loss.

Dividend from equity instruments is recognized in Gains (losses) on financial instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) Impairment of financial assets

The Group recognizes a loss allowance for financial assets measured at amortized cost, debt instruments measured at FVTOCI and undrawn loan commitments. At each reporting date, the Group assesses whether credit risk associated with financial assets has increased significantly since the initial recognition. If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses ("ECL") (Stage 1). Whether the credit risk associated with a financial asset has increased significantly since initial recognition is determined by reviewing the risk of default each reporting date and comparing it with the risk of

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default at the time of initial recognition. In addition, the Group recognizes lifetime ECL, when there has been a significant increase in credit risk since initial recognition (Stage 2 and Stage 3). For accounts receivables result from transactions that are within the scope of IFRS 15 "Revenue from Contracts with Customers" ("IFRS 15"), and that do not contain significant financing components, the Group applies the simplified approach under IFRS 9 "Financial Instruments" ("IFRS 9"), which requires expected lifetime losses to be measured from the initial recognition.

The Group considers that default has occurred mainly when a financial asset is more than 90 days past due, the contractual conditions have been modified or the obligor is experiencing significant financial difficulty unless the Group has reasonable and supportable information to demonstrate that a more significant default criterion is more appropriate.

ECLs are estimated in a way that reflects the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• An unbiased, probability-weighted amount calculated by evaluating a range of possible outcomes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The time value of money; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Reasonable and supportable information that is available without undue cost or effort at the reporting date
about past events, current conditions, and forecasts of future economic conditions.

The Group takes into account not only historical information but also reasonably expected future events and other factors. Specifically, the Group calculates the ECLs by using the average probability of default ("PD") and loss given default ("LGD") based on the historical data of PD and LGD during the certain past periods, where PD and LGD are expected to be at the approximate level during the past periods. In addition, when various macroeconomic indicators are expected to deteriorate in the future and the PD and LGD are expected to increase, the Group adjusts PD and LGD by using macroeconomic indicators, such as GDP and unemployment rate, which are correlated with expected credit loss.

The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Group recognizes an impairment gain or loss in profit or loss for financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account. The amount of reversal with respect to previously recorded impairment loss is also recognized in profit or loss.

The Group writes-off the carrying amount of a financial asset when management concludes it is unlikely it will recover the face value in its entirety or a portion thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred financial asset, the Group recognizes its retained interest in the financial asset and its associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and recognizes a collateralized borrowing for the proceeds received.

When derecognizing a financial asset measured at amortized cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. In addition, when derecognizing an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously recorded in the investment's revaluation reserve in accumulated other comprehensive income is reclassified to profit or loss. In contrast, when derecognizing an investment in an equity instrument which the Group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investment revaluation reserve in accumulated other comprehensive income is not reclassified to profit or loss but is transferred to retained earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Non-derivative Financial Liabilities

Non-derivative financial liabilities are classified as either financial liabilities measured at FVTPL or financial liabilities measured at amortized cost. Classification of non-derivative financial liabilities is determined at the date of initial recognition. When the transaction price of the non-derivative financial liabilities differs from the fair value at

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initial recognition and the fair value is based on a valuation technique that uses only data from observable markets, the Group recognizes the difference between the fair value at initial recognition and the transaction price as a gain or loss.

After initial recognition, the Group measures financial liabilities measured at FVTPL at fair value. Any gains and losses resulting from changes in fair value as well as interest expenses are recognized in profit or loss.

Financial liabilities measured at amortized cost are subsequently measured at amortized cost using the effective interest rate method after initial recognition.

The Group derecognizes financial liabilities when, and only when, the obligations are discharged, cancelled, or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

*PayPay Balance and Other Items*

PayPay Balance and Other Items refers to deposits by users of PayPay Settlement Services ("PayPay Users") and points accrued by PayPay Users in our PayPay Points program.

The Group records financial liabilities related to PayPay Balance and Other Items as Deposits on the Group's Consolidated Statements of Financial Position because they represent a current obligation to return the cash deposited or to pay for purchases carried out by our customers.

There are four types of transactions included as part of PayPay Balance and Other Items: PayPay Money, PayPay Money Lite, PayPay Points, and PayPay Gift Voucher.

PayPay Money and PayPay Money Lite are topped up with cash by PayPay Users whereas PayPay Points are awarded through promotions and campaigns rather than topped up by PayPay Users. PayPay Gift Voucher are granted to PayPay Users in accordance with the contracts made between the Group and certain merchants.

PayPay Users can withdraw the balance in PayPay Money, but not balances in PayPay Money Lite, PayPay Points and PayPay Gift Voucher. PayPay Money and PayPay Money Lite are deemed deposits in accordance with the Act on Settlement of Funds (Act No. 59 of June 24, 2009, hereinafter referred to as the "Payment Services Act") of Japan.

When an entity becomes subject to the Payment Services Act, it is legally required to make a deposit, and as a result, guarantee deposits are recorded on the Group's Consolidated Statements of Financial Position. Refer to Note 10, *Guarantee Deposits* for details.

In the event that the Group discontinues its operations, it is required to refund the balance of PayPay Money, PayPay Money Lite and PayPay Gift Voucher in cash.

When PayPay Points are granted to PayPay Users, the Group accounts for those either as point expenses or as a deduction of revenue, based on the judgment on whether those are consideration payable to a customer. Refer to revenue recognition policy section below at (15) *Revenue* for further details.

*PayPay Point Investment Service*

PayPay Users can choose to convert their PayPay Points to "PayPay Investment Points". PayPay Investment Points are financial obligations indexed to the performance of certain exchange traded funds ("ETFs"). Whenever a PayPay User sells a part or the whole of their PayPay Investment Points, the consideration is immediately converted back to PayPay Points.

PayPay Investment Points are accounted for as hybrid financial liabilities and the embedded derivatives related to the indexation to ETFs are bifurcated from the host contracts. The host deposit contracts are measured at amortized cost while the embedded derivatives are measured at FVTPL.

PayPay Investment Points are included in Deposits in the Group's Consolidated Statements of Financial Position and changes in the value of PayPay Investment Points based on the chosen index are recognized in Gains (losses) on financial instruments in the Group's Consolidated Statements of Profit or Loss.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Derivative instruments

Derivative instruments are financial instruments that derive their value from the price of underlying items such as equities, interest rates or other indices. The Group utilizes derivatives including foreign exchange margin trading, forward contracts and futures and bond futures primarily to manage interest rates risks and foreign exchange risks.

Derivatives are recognized initially and are subsequently measured at FVTPL. Derivatives are classified as assets when their fair value is positive or as liabilities when their fair value is negative. This includes embedded derivatives in financial liabilities, which are bifurcated from the host contract when they meet the definition of a derivative on a stand-alone basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Offsetting Financial Assets and Financial Liabilities

Financial assets and financial liabilities are offset, and the net amount presented in the Group's Consolidated Statements of Financial Position when, and only when, the Group has a legally enforceable right to offset the recognized amounts, and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Call loans

Call loans represent inter-bank loans, measured at amortized cost. The fair values of call loans are considered to approximate the carrying amount. Impairment is assessed at each reporting date, with any losses recognized in profit or loss.

(5) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, demand deposits, and short-term investments with an original maturity of three months or less that are readily convertible to a known amount of cash, and which are subject to an insignificant risk of changes in value. Cash deposits for group financing are not classified as cash equivalents because they can be withdrawn only upon the consent of LY Corporation.

(6) Property and Equipment (Excluding Right-of-use Assets)

Property and equipment are recorded and measured at cost and carried at its cost less accumulated depreciation and accumulated impairment losses, if any. The cost of an item of property and equipment includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost includes borrowing costs directly attributed to the acquisition, construction, or production of a qualifying asset, if any. Refer to the section below (8) *Borrowing Costs* for details of borrowing cost capitalization policy.

The depreciable amount of property and equipment is determined after deducting its estimated residual value from the historical cost, and it is depreciated using the straight-line method over the useful life. The estimated useful lives of major assets owned by the Group are as follows:

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| | |
|:---|:---|
|  | Estimated useful lives (years) |
|  Leasehold improvements | 1-18 |
|  Furniture and fixtures | 1-20 |

---

The residual values and estimated useful lives are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

(7) Intangible Assets

Intangible assets with finite useful lives that are acquired separately and internally generated intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets also includes the asset that are related to customer relationships which is acquired in a business combination, and such asset is recognized only when it is probable that the future economic benefits that are attributed to the asset will flow to the Group and the cost of

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the asset can be reliably measured. The amount of initial recognition for internally generated intangible assets is the sum of the expenditures incurred during the development period, where the development period starts from the date when technical and commercial feasibility of the asset have been established, and ends when the development is completed. The costs include borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset, if any. Refer to the section below (8) *Borrowing Costs* for details of borrowing cost capitalization policy. Amortization is recognized on a straight-line basis over their estimated useful lives.

The estimated useful lives of the major intangible assets owned by the Group are as follows:

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| | |
|:---|:---|
|  | Estimated useful lives (years) |
|  Internally generated software | 1-15 |
|  Externally acquired software | 1-5 |
|  Customer relationship intangible assets | 10-15 |

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The estimated useful lives are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses, if any. There are no intangible assets with indefinite useful lives.

*Research and development* 

Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred.

(8) Borrowing Costs

The Group capitalizes borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are expensed as incurred. A qualifying asset is an asset that requires a substantial period of time to get ready for its intended use or sale.

When the Group borrows funds specifically for the purpose of acquiring a qualifying asset, the Group determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.

When the Group borrows funds generally and uses them for the purpose of acquiring a qualifying asset, the Group determines the amount of borrowing costs eligible for capitalization by applying a capitalization rate to the expenditures on that asset, which is the effective interest rate of the general borrowing. The capitalization rate is the weighted average of the borrowing costs applicable to all the borrowings of the Group that are outstanding during the period, other than borrowings made specifically for the purpose of acquiring other qualifying assets until substantially all the activities necessary to prepare that asset for its intended use are complete. The amount of borrowing costs that the Group capitalizes during a period does not exceed the amount of borrowing costs incurred during that period.

(9) Leases

The Group assesses whether a contract is, or contains, a lease, at inception. If the contract transfers the right to control the use of the identified assets in exchange for consideration for a period of time, the contract is, or contains, a lease.

*Group as lessee* 

The Group recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for those with a term of one year or less (the "short-term leases"), and leases of low-value assets.

For leases or contracts that include leases, the Group accounts for the lease components separately from the non-lease components by allocating the consideration in the contract based on the ratio of the independent price of the lease component and the total amount of the independent price of the non-lease component.

The right-of-use assets comprise the initial measurement of the corresponding lease liabilities, lease payments made at or before the commencement days, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any.

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Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognized and measured in accordance with IAS 37 "Provisions, Contingent Liabilities and Contingent Assets". To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset.

The Group does not recognize right-of-use assets for intangible asset leases.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the right-of-use asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

The lease liability is presented as a separate line in the Group's Consolidated Statements of Financial Position.

The total amount of lease payments included in the measurement of lease liabilities consists of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fixed payments (including in-substance fixed payments), less any lease
incentives receivable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amounts expected to be payable by the lessee under residual value guarantees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The exercise price of a purchase option if the lessee is reasonably certain to exercise that option;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The lease payment for the option term if it is reasonably certain that the extension option will be exercised;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to
terminate the lease.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The lease term has changed or there is a significant event or change in circumstances resulting in a change in
the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised
discount rate is used), or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A lease contract is modified, and the lease modification is not accounted for as a separate lease, in which
case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

The Group did not make any such adjustments during the periods presented. For short-term leases and leases of low value assets, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

(10) Impairment of Non-financial Assets

*Non-financial assets other than goodwill* 

At the end of each reporting period, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss if any.

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Recoverable amount is the higher of fair value less costs of disposal and value in use. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit ("CGU") to which the asset belongs. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or a CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or a CGU) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease and to the extent that the impairment loss is greater than the related revaluation surplus, the excess impairment loss is recognized in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or a CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or a CGU) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss to the extent that it eliminates the impairment loss which has been recognized for the asset in prior years. Any increase in excess of original carrying amount is treated as a revaluation increase.

*Goodwill* 

Goodwill acquired in a business combination is, from the acquisition date, allocated to each CGU or CGU group that is expected to benefit from the synergies arising from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. A CGU or CGU group to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU or CGU group is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Impairment losses are recognized in profit or loss, and impairment losses recognized for goodwill are not reversed in subsequent periods. On disposal of the relevant CGU or CGU group, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

(11) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, considering the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows when the effect of the time value of money is material. The discount amount over time is recognized as a finance cost.

The Group's provisions include loss allowance for undrawn loan commitments. Refer to the section above (4) *Financial Instruments* for further details of loss allowance for undrawn loan commitments.

(12) Employee Benefits

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Short-term Employee Benefits

Short-term employee benefits are benefits that are expected to be settled wholly before twelve months after the end of the reporting period in which the employee provided services. A liability is recognized for short-term employee benefits on an accrual basis in the reporting period in which the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Other Long-term Employee Benefits

Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows in respect of services provided by employees up to the reporting date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Post-employment Benefits

For defined contribution plans, when the employees render services, the contribution payables are recognized in profit or loss.

(13) Issued Capital and Share Premium

Common shares and Class A preferred shares issued by the Company are recognized at the issue price in equity. In addition, transaction costs directly attributable to the issuance of such equity instruments are deducted from equity.

(14) Share-Based Payments

The Group has stock option plans as share-based payment awards. The stock options are conditional upon the achievement of business performance and service period of the employees until the performance condition is satisfied. The expenses for share-based payments are charged to operating expenses in the Group's Consolidated Statements of Profit or Loss based on most likely outcome of the performance condition, net of estimated forfeitures, over the vesting period for the services received as consideration for the stock option.

The expenses for share-based payments are recorded in the Consolidated Statements of Profit or Loss and as an increase in share premium in the Consolidated Statements of Changes in Equity.

At each reporting date, the Group revises its estimate of the number of stock options expected to vest because of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to share premium. There were no operating expenses recognized in the Group's Consolidated Statements of Profit or Loss in connection with share-based payments, as it was not deemed probable that the IPO condition would be achieved.

(15) Revenue

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Major Revenue Streams

The Group's major revenue streams are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Transaction and service income

Transaction and service income represents Revenue from contracts with customers. This revenue mainly consists of a. Payment Settlement Services and b. Financial Services. The Group applies the five-step process in accordance with IFRS 15 to determine the appropriate manner and timing of revenue recognition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Identify the contract with a customer (step 1)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Identify the performance obligations in the contract (step 2)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Determine the transaction price (step 3)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Allocate the transaction price to the performance obligations in the contract (step 4)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Recognize revenue when the Group satisfies a performance obligation (step 5)

The Group recognizes revenue for the transfer of services that reflects the consideration to which the Group expects to be entitled to receive in exchange for the promised services. Revenue is measured based on the consideration promised for services provided in the ordinary course of business, less applicable sales and other taxes, as well as consideration payable to a customer. Revenue of the Group does not include estimates of significant variable considerations or significant financing components. For most of the Group's principal revenue streams described below, revenue is recognized at a point in time and no material advance consideration is received from customers. Accordingly, transactions that give rise to contract liabilities are limited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Payment Settlement Services

Payment Settlement Services are composed of PayPay Settlement Services, Credit Payment Settlement Services and Acquiring Services, and Debit Payment Settlement Services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PayPay Settlement Services

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The Group enters into Payment and Settlement Service Agreements with PayPay Merchants<sup>[1]</sup> who are determined to be our customer under IFRS 15 (step 1). PayPay Settlement Services generally include the following transactions and procedures within the Group, PayPay Merchant and PayPay User:

- PayPay User funds their PayPay Balance and Other Items by various methods including ATM, bank transfer, and credit card issued by the Group.

- PayPay User makes a purchase transaction and makes a payment to a PayPay Merchant by utilizing their PayPay Balance and Other Items or PayPay Credit <sup>[2]</sup> through our PayPay app.

- PayPay Merchant provides the record of the purchase transaction between PayPay Merchant and PayPay User to the Group and the Group approves of the purchase transaction.

The Group is entitled to the settlement fee upon approval of each purchase transaction. The Group retains the fee and remits the net purchase transaction amount to the PayPay Merchant. <br>

The Group's performance obligation is to provide payment settlement platform for transactions and support settlements of purchase transactions between the PayPay Merchant and the PayPay User in which the Group acts as the principal providing the payment settlement service (step 2). The Group charges settlement fee for a purchase transaction settled through our PayPay app based on the transaction amount and predetermined rate in accordance with the Payment and Settlement Services Agreement (step 3), which is applied to the single performance obligation noted above (step 4). The performance obligation is fulfilled upon approval of the purchase transaction and settlement of purchase transaction amount to the PayPay Merchant, in which the Group determines whether the settlement should be completed on our platform. The revenue is then recognized at a point in time when the performance obligation is fulfilled (step 5).

PayPay Settlement Services are included in the Payment segment.

[1] PayPay Merchants are companies that the Group provides the PayPay Settlement Services platform to as a method of payment in their stores based on Payment and Settlement Service Agreements between the Group and the PayPay Merchants.

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| | |
|:---|:---|
| [2] | Under PayPay Credit, PayPay Users link and register their PayPay Card in our PayPay app. PayPay Users make payment by PayPay Credit to the PayPay Merchants, and PayPay Users will pay the transaction amount to PayPay Card due to the credit card closing date.  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Credit Payment Settlement Services and Acquiring Services

A credit card transaction generally includes the following procedures between credit card issuers, cardholders, credit card merchants, acquirers and payment processing networks such as VISA, Mastercard and JCB:

- A cardholder uses their credit card at a credit card merchant with the credit card issuer's authorization in a purchase transaction.

- The credit card merchant presents the purchase transaction data to an acquirer.

- The acquirer presents the purchase transaction data to the credit card issuer via the payment processing networks.

The credit card issuer authorizes the purchase transaction and delivers funds for the settlement of the transaction amount to the acquirer, minus the interchange fee, via the payment processing networks. <br>

The acquirer delivers funds received from the credit card issuer to settle the transaction amount to the credit card merchant, minus the merchant fee. <br>

- The credit card issuer collects funds from the cardholder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a) Credit Payment Settlement Services* 

The Group, as the credit card issuer, enters into PayPay Card Comprehensive Merchant Agreements with credit card merchants, Credit Merchants Terms and Conditions with cardholders, and various credit card license agreements with payment processing networks (step 1). In accordance with these agreements, the Group agrees to provide credit card payment settlement services to credit card merchants, payment processing network, and cardholders so that cardholders can make purchases at the credit card merchants by using their credit card.

The Group issues a credit card, known as PayPay Card, in accordance with the license agreements with payment processing networks. When PayPay Card is used in a purchase transaction at a credit card merchant, the Group is involved in a purchase transaction as the credit card issuer and the Group provides Credit Payment Settlement Services.

For Credit Payment Settlement Services, the Group's performance obligation is to provide credit card payment settlement services, including transfer of purchase transaction data and authorization for a purchase transaction (step 2), to the credit card merchants, payment processing networks, and cardholders who are determined to be our customer under IFRS 15.

The Group charges settlement fee to credit card merchants and payment processing networks based on the transaction amount and the predetermined rate (step 3), which is applied to the single performance obligation above (step 4).

The performance obligation is fulfilled when the credit card settlement service is completed, specifically upon receipt of purchase transaction data from an acquirer and the purchase transaction is authorized (step 5). The settlement fee recognized by the Group as revenue pursuant to IFRS 15 under contracts related to Credit Payment Settlement Services is paid to the Group approximately within two months from the satisfaction of the performance obligation.

Credit Payment Settlement Services are included in the Payment segment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b) Acquiring Services* 

The Group enters into an Acquiring Services Agreement with credit card merchants who are determined to be our customer under IFRS 15 (step 1).

When a credit card issued by another credit card issuer is used to purchase goods or services at a credit card merchant, the Group is involved in such a purchase transaction as the acquirer and the Group provides Acquiring Services to the credit card merchant. The Group assists the credit card merchant to obtain the credit card issuer's authorization through the payment processing networks to process the purchase transaction by transferring purchase transaction data. The credit card merchant who receives a benefit from the service pays consideration to the Group in exchange.

The Group has a performance obligation to provide Acquiring Services by obtaining credit card issuer's authorization, transferring purchase transaction data, and processing the purchase transaction (step 2). The amount of revenue recognized by the Group is calculated based on the settlement amount of the purchase transaction and the predetermined rate, less interchange fees charged by the credit card issuer (step 3), which is applied to the single performance obligation above (step 4).

This performance obligation is fulfilled when the credit card issuer's authorization is obtained by the Group, after the receipt of the purchase transaction data from the credit card merchant (step 5).

The fee recognized by the Group as revenue pursuant to IFRS 15 under contracts related to Acquiring Services is paid approximately two business days after the time of satisfying the performance obligation. The cost of Acquiring Services, such as brand fee, charged by the payment processing networks is recorded as commission fees within operating expenses.

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Acquiring Services are included in the Payment segment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Debit Payment Settlement Services

Debit card payment is a payment method where the amount is immediately deducted from the bank account at the time the payment is confirmed with the card.

Unlike credit card payments, there is no deferred payment element, and the amount used can only be paid within the balance available in the account.

A debit card transaction generally includes the following procedures between debit card issuers, cardholders, debit card merchants, acquirers and payment processing networks such as VISA.

- A cardholder uses their debit card at a debit card merchant with the debit card issuer's authorization in a purchase transaction.

- The debit card merchant presents the purchase transaction data to an acquirer.

- The acquirer presents the purchase transaction data to the debit card issuer via the payment processing networks.

The debit card issuer authorizes the purchase transaction and delivers funds for the settlement of the transaction amount to the acquirer, minus the interchange fee, via the payment processing networks. <br>

The acquirer delivers funds received from the debit card issuer to settle the transaction amount to the debit card merchant, minus the merchant fee. <br>

- The debit card issuer collects funds from the cardholder at the same time as the withdrawal from the bank account immediately.

The Group, as the debit card issuer, enters into License Agreements with payment processing networks (step 1).

In accordance with the agreements, the Group agrees to provide debit card payment settlement services, which enable the debit card user to make a purchase transaction and payment by the debit card at merchant.

For Debit Payment Settlement Services, the Group's performance obligation is to provide debit card payment settlement services to payment processing networks who are determined to be customer under IFRS 15, including authorization for a purchase transaction and transfer of purchase transaction data (step 2).

The Group charges fee as a transaction price for debit card payment settlement services arising from a purchase transaction settled by debit card, is calculated by multiplying the transaction amount by the predetermined rate (step 3), which is applied to the single performance obligation above (step 4).

The performance obligation is fulfilled when the service is completed, specifically upon receipt of transaction data from an acquirer (step 5). The fee recognized by the Group as revenue pursuant to IFRS 15 under contracts related to Debit Payment Settlement Services is paid to the Group approximately within two months from the satisfaction of the performance obligation.

Debit Payment Settlement Services are included in the Financial service segment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Financial Services

Financial Services mainly consists of remittances and bank transfer transactions. Users, companies, and other institutions request various remittances and bank transfer transactions based on the terms and conditions (step

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1). The Group has a performance obligation to provide the service of depositing the money into the specified bank account as requested by the customer (step 2). Remittance and bank transfer fees are calculated at a prescribed rate or unit price according to the transaction amount and number of transactions (step 3) related to the single performance obligation (step 4). The Group recognizes revenue associated with these transactions at the point in time the service is provided (step 5).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Interest Income

The Group earns interest income from revolving, installment, cash advance services rendered to cardholders, loan arrangements entered with customers and treasury investments made for the provision of securities services and investment trust-related services.

In recognition of interest income, the Group uses the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset (before adjusting for expected credit losses).

Interest income from non-credit impaired financial assets is recognized by applying the effective interest rate to the gross carrying amount of the asset; for credit impaired financial assets, the effective interest rate is applied to the net carrying amount after deducting the allowance for expected credit losses. The interest rate is set as a fixed rate or is determined based on the length of repayment period.

Interest income is recognized under the effective interest rate method in accordance with IFRS 9.

Interest income is included both in the Payment segment and the Financial service segment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Gains (losses) on financial instruments

Financial income mainly comprises, such as dividend income and changes in fair value of financial instruments measured at FVTPL. For further details, refer to the section above (4) *Financial Instruments*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) Other operating income

Other operating income consists primarily of expired income associated with PayPay Points Code, and also includes other incidental fees. The Group issues PayPay Points Code to PayPay Merchants and other institutions for PayPay Users. By using PayPay Points Code granted by these PayPay Merchants and other institutions, PayPay Users can fund their PayPay Balance and Other Items on our PayPay app. As PayPay Points Code expires over periods of inactivity, the Group recognizes income when it expires.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Consideration Payable to a Customer

The Group has consideration payable to a customer which includes PayPay Points to cardholders through which the Group intends to increase the number of customers and payment transactions. Refer to the section above (4) *Financial Instruments* for further details of non-derivative financial liabilities.

The Group concluded that PayPay Points do not represent a material right under IFRS 15 because these do not include an option to the cardholders to acquire any distinct services or goods from the Group in the future. The accumulated PayPay Points can be used to acquire additional goods or services from third parties or to convert in PayPay Investment Points which represent investments in third parties. Therefore, consideration payable to a customer is accounted for as a reduction of revenue unless the payment to the customer is in exchange for a distinct good or service, which could result in the consideration payable to a customer exceeding the corresponding revenue, and is recognized on the later of when revenue for the transfer of the service is recognized or the consideration is paid or promised to pay.

If a consideration payable to a customer is an upfront payment, the Group recognizes it as an asset to the extent that the Group reasonably expects to generate future revenue associated with the payment, and, in such case, subsequently reduces revenue when or as the related services are rendered to the customer. Refer to Note 20, *Other Assets* for further details of an asset with respect to the consideration payable to a customer.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Incremental Costs of Obtaining a Contract

Incremental costs of obtaining a contract are recognized as assets when the Group expects to recover such costs by generating future revenue associated with the payment. The incremental costs of obtaining a contract are those costs that would not have been incurred if the contract had not been obtained. The portion of incremental costs that is not recoverable is expensed when it is incurred. The Group recognizes an asset for the incremental costs of obtaining a contract with a customer for the amount that the Group expects to recover, which is recorded in other assets on the Group's Consolidated Statements of Financial Position. The asset is amortized over the estimated period that services to which the asset relates are transferred to the customer on a straight-line basis. If the amortization period that the Group otherwise would have recognized is one year or less, the Group applies practical expedient recognizing incremental costs of obtaining a contract as an expense. Refer to Note 20, *Other Assets* and Note 31, *Revenue*.

(16) Income Tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss, except to the extent that they relate to business combinations and items recognized directly in equity or in other comprehensive income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Current Tax

Current tax is measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Deferred Tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized, except for the following temporary differences:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Taxable temporary differences arising from initial recognition of goodwill.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Taxable temporary differences arising from the initial recognition of assets or liabilities in a transaction
which is not a business combination, affects neither accounting profit or loss nor taxable profit or tax loss and does not give rise to equal taxable and deductible temporary differences.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Deductible temporary differences associated with investments in subsidiaries and a joint venture, where it is
not probable that the temporary difference will reverse in the foreseeable future or there will be taxable profit against which the temporary differences can be utilized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Taxable temporary differences associated with investments in subsidiaries and a joint venture, where the Group
is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The Group recognizes deferred tax assets to the extent that it is probable that future taxable profit will be available.

Deferred tax assets are recognized by considering whether it is probable that part or all of deductible temporary differences and tax loss carry forwards can be deducted against future taxable profit and income taxes based on projected future taxable profit and tax planning. The estimation of future taxable profit is calculated based on financial budgets approved by management of the Group, and it is based on management's judgments and assumptions. Deferred tax assets related to operating loss carry forwards and in excess of deferred tax liabilities have been recognized as it is estimated that future taxable profits will be available to realize such assets.

Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting date.

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Deferred tax assets and liabilities are offset, only when the Group has a legally enforceable right to set off current tax assets against current tax liabilities, and the same taxation authority levies income taxes either on the same taxable entity or on different taxable entities which intend either to settle current tax liabilities and assets on a net basis or to realize the assets and settle the liabilities simultaneously.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Uncertainty over Income Tax Treatments

Uncertain tax positions as of each reporting date have been analyzed by the Group in accordance with IFRIC 23 "Uncertainty over Income Tax Treatments". The Company recognizes the effect of uncertain income tax positions only if those positions are more likely than not of being sustained.

The Group records a provision for uncertain tax positions if it is probable that the Group will have to make a payment to tax authorities upon their examination of a tax position. This provision is measured at the Group's best estimate of the amount expected to be paid. Provisions are reversed to income in provision for (recovery of) income taxes in the period in which management determines they are no longer required or as determined by statute.

(17) Earnings Per Share

Basic earnings per share ("EPS") is calculated by dividing profit or loss attributable to the holders of common shares of the Company by the weighted average number of common shares outstanding for each reporting period. Profit or loss attributable to the holders of common shares of the Company is the same as the profit or loss for the year attributable to owners of the parent company.

Diluted EPS is calculated by dividing profit or loss attributable to the holders of common shares of the Company by the weighted average number of common shares outstanding for each reporting period plus the weighted average number of common shares assuming the conversion of all dilutive potential common shares into common shares. Profit or loss attributable to holders of common shares increased by the after-tax amount of dividends recognized in the period in respect of the dilutive potential common shares and is adjusted for any other changes in income or expense that would result from the conversion of the dilutive potential common shares. Potential common shares are antidilutive when their conversion to common shares would increase earnings per share or decrease loss per share. The calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential common shares that would have an antidilutive effect on earnings per share.

**5.** **Critical Accounting Judgments and Key Sources of Estimation Uncertainty** 

The preparation of the Group's 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 effected.

The Group has following areas of critical accounting judgments made and accounting estimates and assumptions made that have significant effects on the reported amount in the consolidated financial statements:

(1) Business combinations under common control

As disclosed in Note 4, *Material Accounting Policies*, for business combinations between entities under common control, the Group accounts for such transactions based on the book values of the ultimate parent company, SBG, and regardless of the actual date of the transactions under common control, retrospectively consolidates the financial statements of the acquired companies as if they had always been combined to the earliest comparative period or from the date in which the ultimate parent company acquired those businesses, if later than the beginning of the earliest comparative period.

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(2) Impairment

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Assets

*Non-financial assets other than goodwill* 

Assets, such as property and equipment, right-of-use assets, intangible assets with definite useful lives disclosed in Note 15, *Property and Equipment*, Note 16, *Leases*, Note 17, *Goodwill and Intangible Assets*, are assessed for indications of impairment at the end of the reporting period. The Group evaluates both internal and external sources of information to assess whether impairment indicators exist. Some of the impairment indicators are evidence of obsolescence or significant adverse changes in the technological, market, economic or legal environment in which the Group (or an associate) operates, or in the market to which the asset is dedicated. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. The recoverable amount is the greater of its value in use and its fair value less cost to sell. An impairment loss is recognized and the carrying amount is adjusted to be equal to its recoverable amount, if the carrying amount of an asset or a CGU exceeds its recoverable amount. The Group identified no impairment indicators for property and equipment, right-of-use assets, and intangible assets as of March 31, 2024 and 2025, except for the assets held by PayPay Securities Corporation.

*Goodwill* 

A goodwill impairment test requires the Group to exercise judgment and assess whether the carrying value of the CGU or CGU group to which goodwill has been allocated can be supported by the recoverable amount of such CGU or CGU group to which goodwill has been allocated.

The recoverable amount of a CGU or CGU group has been determined based on a value in use calculation which involves the use of estimates. The main assumptions used in the value in use calculation include the discount rate, terminal growth rate and expected future cash flow projections for a period of up to five years from financial budgets approved by the management. Cash flow projections beyond the planning period are extrapolated using terminal growth rates. Cash flow projections take into account past experience and represent management's best estimates. These assumptions can be subject to significant adjustments from such factors as user trend, spending on marketing, IT spending of corporations, and market conditions, such as competitors. The key assumptions used to determine the recoverable amounts of the different CGU or CGU group to which goodwill has been allocated are disclosed and further explained in Note 18, *Impairment of Goodwill*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Financial assets measured at amortized cost, debt instruments measured at FVTOCI, and undrawn loan
commitments

The Group assesses the ECL associated with financial assets measured at amortized cost, debt instruments measured at FVTOCI, and undrawn loan commitments. The impairment methodology depends on whether there has been a significant increase in credit risk of the individual financial asset or the asset group including the financial asset. A significant increase in credit risk of the respective financial asset is assessed by considering default risk at the reporting date and comparing it to that at the date of initial recognition. Especially, the financial asset is deemed to be in default when the contractual payment is 90 days or more past due, the contractual conditions have been modified, or the obligor is experiencing significant financial difficulty. The ECL estimation is performed based on unbiased, probability-weighted cash flows calculated by evaluating a range of possible outcomes and the time value of money. The estimation also considers the forecasts of future economic conditions and reasonably expected future events, further expected increase in default probability and deterioration in macro-economic indices, such as GDP or unemployment rate. Refer to Note 4, *Material Accounting Policies* and Note 37, *Financial Instruments* for further details.

(3) Recoverability of Deferred Tax Assets

Regarding temporary differences, which are differences between carrying value of an asset or liability in the Group's Consolidated Statements of Financial Position and its tax base, the Group recognizes deferred tax assets and deferred tax liabilities. In considering their recoverability, the Group assesses the likelihood of their deferred tax assets being recovered within a reasonably foreseeable timeframe. Refer to Note 4, *Material Accounting Policies* and Note 19, *Income Tax* for further details.

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(4) Share-based Payments

Share-based payment expenses related to stock options granted to directors, corporate officers and employees are estimated based on the options' fair value. In the absence of a public trading market, the Group exercised significant judgment in determining fair value of common shares at the grant date and these options have not been recognized as they depend on the Company's completing an initial public offering ("IPO"). Valuation is based on all relevant facts and circumstances known at the time of valuation, including but not limited to factors such as historical financial results and projections of the Group's future operating and financial performance; market performance of comparable publicly traded companies; overall economic and industry outlook; and third-party valuations of the Group's common shares at the grant date. There were no share-based payment expenses recognized in the Group's Consolidated Statements of Profit or Loss for the years ended March 31, 2023, 2024 and 2025, as it was not deemed probable that the IPO condition would be achieved. Once achievement of the IPO condition is deemed probable, the Group will recognize share-based payment expenses based on the estimated fair value of stock options determined at the grant date. Refer to Note 36, *Share-based Payments for* further details.

**6.** **Standards Issued but Not Yet Effective** 

On April 9, 2024, the IASB published IFRS 18 "Presentation and Disclosure in Financial Statements" ("IFRS 18"). IFRS 18, which replaces IAS 1, "Presentation of Financial Statements", introduces new disclosure requirements regarding the required presentation of operating, investing, financing, income taxes, and discontinued operations categories, management performance measures and improvement on grouping information within the financial statements. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, with early adoption permitted.

The Group is currently assessing the impact of adopting the new standard.

Other than noted above, the Group reviewed the following standards and concluded that the standards do not materially affect its financial reporting.

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| | | |
|:---|:---|:---|
| **Standards and amendments** | **Effective date** | **Date of adoption**<br>**by the Group** |
|  Lack of Exchangeability<br> (Amendments to IAS 21 "The Effects of Changes in Foreign Exchange Rates") | January 1, 2025 | April 1, 2025 |
|  The Classification and Measurement of Financial Instruments<br> (Amendments to IFRS 9 and IFRS 7 "Financial Instruments: Disclosures" ("IFRS 7")) | January 1, 2026 | April 1, 2026 |
|  Annual Improvements to IFRS Accounting Standards - Volume 11 | January 1, 2026 | April 1, 2026 |
|  Contracts Referencing Nature-dependent Electricity<br> (Amendments to IFRS 9 and IFRS 7) | January 1, 2026 | April 1, 2026 |
|  IFRS 19 "Subsidiaries without Public Accountability: Disclosures" | January 1, 2027 | April 1, 2027 |

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**7.** **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 nature of services as described below. The reportable segments were revised from PayPay segment and PayPay Card segment to Payment segment and Financial service segment due to the change of segment management classifications triggered by the business combinations of PayPay Securities Corporation and PayPay Bank Corporation, which are described in Note 8, *Business Combinations*. Furthermore, the

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Group's consolidated statements of profit or loss for the years ended March 31, 2023 and 2024 are retrospectively adjusted for the consolidation of the financial statements of PayPay Securities Corporation, PayPay Bank Corporation and their subsidiaries. Refer to Note 3, *Restatements and Changes in Presentation* for further details. As a result, the figures for the fiscal years ended March 31, 2023 and 2024 have been restated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 payment credit services such as revolving and installment payment options and cash advances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Financial service segment

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

(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 or loss for each reportable segment is prepared in the same basis as the Group's consolidated financial statements. The total of individual segment profit or loss is equivalent to operating profit or loss presented on the Group's 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 year ended March 31, 2023** 

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| | | | | |
|:---|:---|:---|:---|:---|
| *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial<br>service** | **Inter-segment**<br>**eliminations** | **Consolidated**  |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 123412 | 23515 |  | 146927 |
| &nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 469 | 1818 | (2287) |  |
|  Total transaction and service income | 123881 | 25333 | (2287) | 146927 |
|  Interest income | 39711 | 10574 |  | 50285 |
|  Gains (losses) on financial instruments | 551 | 1528 |  | 2079 |
|  Other operating income | 1791 | 112 |  | 1903 |
|  Total revenue | 165934 | 37547 | (2287) | 201194 |
|  Operating expenses | (187030) | (36999) | 2287 | (221742) |
|  Segment (loss) profit <sup>[1]</sup> | (21096) | 548 |  | (20548) |

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[1] The consolidated amount of segment loss is equivalent to loss before tax in the consolidated statement of profit or loss for the year ended March 31, 2023.

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**For the year ended March 31, 2024** 

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| | | | | |
|:---|:---|:---|:---|:---|
| *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial<br>service** | **Inter-segment**<br>**eliminations** | **Consolidated**  |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 149310 | 24817 |  | 174127 |
| &nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 823 | 2081 | (2904) |  |
|  Total transaction and service income | 150133 | 26898 | (2904) | 174127 |
|  Interest income | 59013 | 14871 |  | 73884 |
|  Gains (losses) on financial instruments | 405 | 4236 |  | 4641 |
|  Other operating income | 1756 | 203 |  | 1959 |
|  Total revenue | 211307 | 46208 | (2904) | 254611 |
|  Operating expenses | (215084) | (42420) | 2904 | (254600) |
|  Segment profit (loss) <sup>[1]</sup> | (3777) | 3788 |  | 11 |

---

[1] The consolidated amount of segment profit is equivalent to profit before tax in the consolidated statements of profit or loss for the year ended March 31, 2024.

**For the year ended March 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial<br>service** | **Inter-segment**<br>**eliminations** | **Consolidated**  |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 176597 | 26998 |  | 203595 |
| &nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 1454 | 1362 | (2816) |  |
|  Total transaction and service income | 178051 | 28360 | (2816) | 203595 |
|  Interest income | 68623 | 19819 |  | 88442 |
|  Gains (losses) on financial instruments | 276 | 5253 |  | 5529 |
|  Other operating income | 1304 | 208 |  | 1512 |
|  Total revenue | 248254 | 53640 | (2816) | 299078 |
|  Operating expenses | (217898) | (48486) | 2816 | (263568) |
|  Segment profit | 30.356 | 5154 |  | 35510 |
|  (Reconciliation to profit before tax) |  |  |  |  |
| Share of loss of a joint venture accounted for using the equity method |  |  |  | (549) |
|  Profit before tax |  |  |  | 34961 |

---

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##### [**Table of Contents**](#toc)
(3) Geographical Information

Almost all revenues from external customers of the Group were generated in Japan, which is the Company's country of domicile, for the years ended March 31, 2023, 2024 and 2025. In addition, the assets of the Group were primarily located in Japan, as of March 31, 2024 and 2025.

(4) Service Information

The services provided and the amount of revenue are described in revenue section within Note 4, *Material Accounting Policies* and Note 31, *Revenue*.

(5) Information about Major Customers

Revenue from transactions with a single external customer amounting to 10% or more of the revenue on the Group's Consolidated Statements of Profit or Loss is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | | | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **Related segment** | **March 31, 2023** | **March 31, 2023** | **March 31, 2024** | **March 31, 2025** |
|  LY Corporation | Payment segment and Financial service segment |  | 22031 |  |  |

---

The intra-group reorganizations of LY Corporation, the Group's parent company, were carried out on October 1, 2023. Refer to Note 1, *Reporting Entity* and Note 39, *Related Party Transactions* for further details of the transactions with LY Corporation. For the years ended March 31, 2023, the amount of revenue represent transactions with Yahoo Japan Corporation (currently LY Corporation). For the years ended March 31, 2024 and 2025, the amount of revenue are not presented because they are less than 10% of the revenue in the Group's Consolidated Statements of Profit or Loss.

**8.** **Business Combinations** 

**For the year ended March 31, 2023** 

**Acquisition of PayPay Card Corporation and the PayPay Trademark** 

During the year ended March 31, 2023, the Company entered into a series of transactions which resulted in the acquisition of PayPay Card Corporation and the credit card merchant acquiring business from SBG.

On October 1, 2022, the Company acquired all of the shares of PayPay Card Corporation from Yahoo Japan Corporation (currently LY Corporation), a subsidiary of SBG, making PayPay Card Corporation a wholly owned subsidiary of the Company and therefore consolidated in our financial statements. Immediately prior to the acquisition, Yahoo Japan Corporation transferred its credit card merchant acquiring business to PayPay Card Corporation.

PayPay Card Corporation is engaged in the Credit Payment Settlement Services under the PayPay Trademark. With the acquisition of PayPay Card Corporation, the Group aimed to enhance collaboration with the Payment Settlement Services and plans to further expand its market share in the cashless services market by providing PayPay Settlement Services and Credit Payment Settlement Services. Prior to the acquisition, PayPay Card Corporation paid 37,000 million yen of dividends, and upon acquisition, 63,000 million yen of cash was paid to Yahoo Japan Corporation. Refer to Note 30, *Dividends* for further details.

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##### [**Table of Contents**](#toc)
The transaction was accounted for as a business combination of entities under common control as the Company and PayPay Card Corporation were controlled by SBG before and after the acquisition. As a business combination of entities under common control, the Group applied the pooling of interests method recognizing the effects of the business combination from April 1, 2021. In all periods presented in these consolidated financial statements, the Group recognized the assets, liabilities, and results of operations of PayPay Card Corporation at the historical book values recorded by SBG in its consolidated financial statements. The Group had held a non-controlling interest up until it acquired all the PayPay Card Corporation shares. On October 1, 2022, the actual transaction date, the Group recognized a decrease in non-controlling interests, a decrease in share premium, and an increase in accumulated deficit at amounts of 14,853 million yen, 1,317 million yen and 36,419 million yen, respectively, as all of the non-controlling interests were derecognized and the differences between the consideration paid and the non-controlling interests derecognized were recorded as equity as share premium in the Consolidated Statements of Financial Position. Also, the Group recognized 63,000 million yen cash used in Payments for the purchase of the equity interest of subsidiaries, through business combinations of entities under common control in the Consolidated Statements of Cash Flows.

As a result of the application of the pooling of interests method, the Group recognized goodwill arising from this acquisition. This goodwill has been allocated to the Group's cash generating unit in which the PayPay Card Corporation operations are included. Refer to Note 18, *Impairment of Goodwill* for further details.

In addition to the acquisition of PayPay Card Corporation, Z Holdings Corporation (currently LY Corporation), a subsidiary of SBG, transferred to the Company "PayPay" trademark and related rights including design rights, domain names and copyrights (collectively, "the PayPay Trademark"). At the same time, the Company and Z Holdings Corporation concluded a contract for the Company to license the PayPay Trademark to Z Holdings Corporation for an indefinite period. The Company did not pay or receive any cash or other consideration for the two contracts.

The Group did not recognize an intangible asset for the PayPay Trademark as it was an internally generated intangible asset and had no carrying value in SBG's financial statements.

**For the year ended March 31, 2024** 

There were no significant business combinations.

**For the year ended March 31, 2025** 

There were no significant business combinations.

**Acquisition of PayPay Securities Corporation and PayPay Bank Corporation in April 2025** 

The Company entered a series of transactions and acquired PayPay Securities Corporation and PayPay Bank Corporation from SBG in April 2025.

On April 1, 2025, the Company acquired additional 31.0% common shares of PayPay Securities Corporation, in which the Company had held 35.0% of the common shares prior to the transactions. The common shares were acquired from SoftBank Corp. and LY Corporation, subsidiaries of SBG. PayPay Securities Corporation also issued to the Company additional common shares on April 1, 2025 for total consideration of 12,807 million yen. As a result of the transactions, the Company held 75.2% of the common shares of PayPay Securities Corporation as of April 1, 2025.

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##### [**Table of Contents**](#toc)
Also, on April 11, 2025, the Company acquired 47.1% of the common shares and all the non-voting Class A preferred shares of PayPay Bank Corporation from Z Financial Corporation (currently LY Corporation after a merger on August 1, 2025), a subsidiary of SBG, and Mitsui Sumitomo Insurance Co., Ltd. for consideration of 117,378 million yen. After the conversion of the non-voting Class A preferred shares of PayPay Bank Corporation into common shares, effective April 28, 2025, the Company held 75.5% of the common shares of PayPay Bank Corporation.

PayPay Securities Corporation is engaged in the securities intermediary business and PayPay Point investment service related business, and PayPay Bank Corporation is engaged in the internet banking business. Through the transactions, the Group aims to create synergies in the Payment Settlement Services and plans to further expand its market share in the cashless services market by providing PayPay Settlement Services and internet banking and securities intermediary services.

Those transactions were accounted for as business combinations of entities under common control as the Company and PayPay Securities Corporation as well as PayPay Bank Corporation were controlled by SBG before and after the transactions. As business combinations of entities under common control, the Group applied the pooling of interests method recognizing the effects of the business combination from April 1, 2022. In all periods presented in these consolidated financial statements, the Group recognized the assets, liabilities, and results of operations of PayPay Securities Corporation and PayPay Bank Corporation at the historical book values recorded by SBG in its consolidated financial statements. The resulting effects of the transactions were presented as retrospective adjustments in the consolidated financial statements as of and for the year ended March 31, 2023 and 2024.

As a result of the application of the pooling of interests method, the Group recognized its share of the corresponding goodwill previously recognized by SBG based on historical cost. This goodwill has been allocated to the Group's cash generating unit in which PayPay Securities Corporation's operations are included. There is no goodwill recognized arising from the acquisition of PayPay Bank Corporation.

The Group's consolidated statements of financial position as of April 1, 2023 and March 31, 2024, and consolidated statements of profit or loss, consolidated statements of comprehensive income, consolidated statements of changes in equity, and consolidated statements of cash flows for the years ended March 31, 2023 and 2024 are retrospectively adjusted for the consolidation of the financial statements of PayPay Securities Corporation and PayPay Bank Corporation from April 1, 2022. Refer to Note 3, *Restatements and Changes in Presentation* for further details.

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**9.** **Cash and Cash Equivalents** 

Cash and cash equivalents are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024**  | **March 31, 2025**  |
|  **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and demand deposits | 489955 | 141289 |
| &nbsp;&nbsp;&nbsp;&nbsp; Restricted cash related to transfers of credit card receivables | 1630 | 734 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 491585 | 142023 |
|  **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and demand deposits | 20931 | 15530 |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits with the Bank of Japan <sup>[1]</sup> | 231807 | 212258 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 252738 | 227788 |
|  Total | 744323 | 369811 |

---

---

| | |
|:---|:---|
| [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.  |

---

**10.** **Guarantee Deposits** 

Guarantee deposits are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)*  | *(In millions of yen)*  |
|  | **March 31, 2024**  | **March 31, 2025**  |
|  **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits under Payment Services Act <sup>[1][3]</sup> | 206614 | 219466 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 206614 | 219466 |
|  **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits to central counterparty <sup>[2][3]</sup> | 90200 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other <sup>[3]</sup> | 25071 | 24763 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 115271 | 24763 |
|  Total | 321885 | 244229 |

---

---

| | |
|:---|:---|
| [1] | In accordance with the Payment Services Act, the Group is required to deposit certain amounts with Legal Affairs Bureau (the "guarantee deposit") for the unused prepaid balance deposited by users. The guarantee deposit amount must cover 100% of the total unused prepaid balance of PayPay Money. The Group also has PayPay Money Lite for which the Group is required to deposit the amount equal to 50% of the total unused prepaid balance.  |

---

---

| | |
|:---|:---|
| [2] | Cash pledged by a subsidiary engaged in the banking business to Japanese Banks' Payment Clearing Network as collateral for exchange settlements. During the year ended March 31, 2025, cash deposits were replaced with government bond deposits. Refer to Note 13, *Securities* and Note 37, *Financial Instruments* for further details.  |

---

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

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**11.** **Accounts Receivable** 

Accounts receivable are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024**  | **March 31, 2025**  |
|  Settlement receivables <sup>[1][4]</sup> | 92140 | 94087 |
|  Other receivables <sup>[2][4]</sup> | 46594 | 47819 |
|  Loss allowance <sup>[3]</sup> | (974) | (852) |
|  Total | 137760 | 141054 |

---

---

| | |
|:---|:---|
| [1] | Receivables 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.  |

---

[2] Other receivables include mainly cash deposits collected by financial institutions from users, but not yet paid out to the Group. The balance of such items were 22,544 million yen and 28,054 million yen as of March 31, 2024 and 2025, respectively.

[3] The changes in loss allowance for accounts receivable are shown in Note 37, *Financial Instruments*.

[4] These assets are classified as financial assets measured at amortized cost.

**12.** **Loans and Advances to Customers** 

Loans and advances to customers are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024**  | **March 31, 2025**  |
|  **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Credit card receivables | 836712 | 1045681 |
| &nbsp;&nbsp;&nbsp;&nbsp; Loss allowance <sup>[1]</sup>  | (31161) | (43739) |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 805551 | 1001942 |
|  **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortgage loans <sup>[2]</sup> | 508404 | 664594 |
| &nbsp;&nbsp;&nbsp;&nbsp; Overdraft | 215178 | 261943 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 193 | 383 |
| &nbsp;&nbsp;&nbsp;&nbsp; Loss allowance <sup>[1]</sup>  | (774) | (1255) |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 723001 | 925665 |
|  Total | 1528552 | 1927607 |

---

[1] For further details of loss allowance, refer to credit risk management section within Note 37, *Financial Instruments*.

---

| | |
|:---|:---|
| [2] | Mortgage loans include the loans acquired from a financial institution with a guarantee up to 1% provided by the seller, which amounts to 199,005 million yen and 187,471 million yen as of March 31, 2024 and 2025 respectively.  |

---

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**13.** **Securities** 

Securities are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024**  | **March 31, 2025**  |
|  **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Government securities <sup>[1]</sup> | 14395 | 35953 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 14395 | 35953 |
|  **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Government securities <sup>[2]</sup> | 185339 | 329062 |
| &nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities <sup>[2]</sup> | 246736 | 295707 |
| &nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities | 207531 | 282333 |
| &nbsp;&nbsp;&nbsp;&nbsp; Exchange traded funds <sup>[3]</sup> | 114711 | 132509 |
| &nbsp;&nbsp;&nbsp;&nbsp; Equity securities | 445 | 184 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 754762 | 1039795 |
|  Total | 769157 | 1075748 |

---

[1] Government securities within Payment segment are purchased for the purpose of meeting the deposit requirement under the Payment Services Act. Refer to Note 10, *Guarantee Deposits* for details.

[2] These securities include assets pledged as collateral at the Bank of Japan and Japanese Banks' Payment Clearing Network. Refer to Note 37, *Financial Instruments* for further details.

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

**14.** **Other Financial Assets** 

Other financial assets are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024**  | **March 31, 2025**  |
|  Receivables from third party operators of deposit machines <sup>[1][2]</sup> | 8289 | 5747 |
|  Office security deposits <sup>[1]</sup> | 1832 | 3725 |
|  Time deposits <sup>[1][3]</sup> | 1816 | 3677 |
|  Derivative assets <sup>[4]</sup>  | 2591 | 2234 |
|  Accrued interest <sup>[1]</sup> | 1707 | 2177 |
|  Trade date accrual<sup>[1]</sup> | 1249 | 1903 |
|  Accrued income <sup>[1]</sup> | 1819 | 1741 |
|  Other <sup>[5]</sup> | 1458 | 1926 |
|  Total | 20761 | 23130 |

---

[1] These assets are classified as financial assets measured at amortized cost.

[2] The balance mainly consists of the deposits made by customers of PayPay Bank Corporation which is retained at third party operators of deposit machines.

[3] Refer to Note 37, *Financial Instruments* for further details.

[4] These assets are classified as financial assets measured at FVTPL.

[5] These assets primarily consist of financial assets measured at amortized cost.

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**15.** **Property and Equipment** 

Changes in property and equipment are as follows:

(1) Acquisition Cost

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Leasehold<br>improvements**  | **Furniture and<br>fixtures**  | **Construction in<br>progress**  | **Total**  |
|  Balance as of April 1, 2023 | 2514 | 17862 | 967 | 21343 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions | 504 | 3028 | 1596 | 5128 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from construction in progress | 8 | 1257 | (1265) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposals | (280) | (2707) | (1) | (2988) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | 1 | (491) | (490) |
|  Balance as of March 31, 2024 | 2746 | 19441 | 806 | 22993 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions | 432 | 3222 | 1676 | 5330 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from construction in progress | 6 | 1264 | (1270) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposals | (35) | (1592) | (9) | (1636) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (112) | (86) | (647) | (845) |
|  Balance as of March 31, 2025 | 3037 | 22249 | 556 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25842 |

---

(2) Accumulated Depreciation and Impairment Losses

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Leasehold<br>improvements** | **Furniture and<br>fixtures** | **Construction in<br>progress** | **Total**  |
|  Balance as of April 1, 2023 | 687 | 6356 |  | 7043 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | 469 | 3261 |  | 3730 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposals | (279) | (2119) |  | (2398) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment Losses |  | 83 |  | 83 |
|  Balance as of March 31, 2024 | 877 | 7581 |  | 8458 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | 455 | 3658 |  | 4113 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposals | (24) | (1018) |  | (1042) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (100) | (80) |  | (180) |
|  Balance as of March 31, 2025 | 1208 | 10141 |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11349 |

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(3) Book Value

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Leasehold<br>improvements** | **Furniture and<br>fixtures** | **Construction in<br>progress** | **Total**  |
|  Balance as of March 31, 2024 | 1869 | 11860 | 806 | 14535 |
|  Balance as of March 31, 2025 | 1829 | 12108 | 556 | 14493 |

---

Amounts related to property and equipment under construction are shown as construction in progress. There were no property and equipment with restrictions on ownership or pledged as a collateral. Depreciation is included in operating expenses in the Group's Consolidated Statements of Profit or Loss. There was no borrowing cost capitalized on property and equipment. For commitments regarding the acquisition of property and equipment, refer to Note 40, *Commitments*.

**16.** **Leases** 

The Group has no significant sublease arrangements. For cash flows related to leases, refer to Note 23, *Borrowings and Lease Liabilities*.

*Group as a lessee* 

(1) Nature of the Leases

The Group enters into lease contracts primarily for the use of rental offices as well as company housing for employees. Some of the lease agreements include extension and termination options, but there are no purchase options, escalation clauses, or significant restrictions on additional borrowings or additional leases imposed by the lease agreement.

The majority of the extension options are for the same period as the original lease contract, and termination options are for early termination with advance notification of three or six months. These options are exercised as necessary to enable the Group to utilize the underlying asset in its business. In determining the lease term, all relevant facts and circumstances that create an economic incentive for the lessee to exercise the option to extend the lease, or not to exercise the option to terminate the lease are considered. Right-of-use assets and lease liabilities are measured reflecting the lease term based on the management's best estimate about whether an extension or termination option will be exercised at the lease commencement date or when the management reassess the lease terms.

(2) Lease-related Expenses

Lease-related expenses are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31,<br>2023** | **March 31,<br>2024** | **March 31,<br>2025** |
|  Depreciation expenses on right-of-use assets –Buildings | 2909 | 2541 | 2732 |
|  Depreciation expenses on right-of-use assets – Other | 56 | 64 | 90 |
|  Interest expenses on lease liabilities | 69 | 72 | 92 |
|  Expenses relating to short-term leases | 250 | 208 | 167 |
| Expenses relating to leases of low-value assets excluding short-term lease expenses | 113 | 186 | 176 |
|  Total lease-related expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3397 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3071 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3257 |
|  Total cashout flow | 3127 | 2832 | 3038 |

---

Refer to Note 37, *Financial Instruments* for the maturity analysis of the financial liabilities including lease liabilities.

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(3) Book Value of Right-of-use Assets

The movements of the book value of right-of-use assets are as follows:

---

| | | | |
|:---|:---|:---|:---|
| *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Buildings**  | **Other**  | **Total**  |
|  Balance as of April 1, 2023 | 9626 | 102 | 9728 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase due to new lease agreements and remeasurement of lease liabilities | 1842 | 402 | 2244 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease due to termination of lease agreements and remeasurement of lease liabilities | (383) | (9) | (392) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | (2541) | (64) | (2605) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (104) | (19) | (123) |
|  Balance as of March 31, 2024 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8440 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;412 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8852 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase due to new lease agreements and remeasurement of lease liabilities | 9026 | 43 | 9069 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease due to termination of lease agreements and remeasurement of lease liabilities | (207) | 0 | (207) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | (2732) | (90) | (2822) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (61) | (32) | (93) |
|  Balance as of March 31, 2025 | 14466 | 333 | 14799 |

---

**17.** **Goodwill and Intangible Assets** 

Changes in goodwill and intangible assets are as follows:

(1) Acquisition Cost

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **Intangible Assets** | **Intangible Assets** | **Intangible Assets** | **Intangible Assets** |
|  | **Goodwill**  | **Software**  | **Software in<br>progress** | **Customer<br>relationship** | **Total**  |
|  Balance as of April 1, 2023 | 9919 | 65020 | 33332 | 4527 | 102879 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisitions |  | 4546 | 6783 |  | 11329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Internal development |  | 244 | 6860 |  | 7104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from software in progress |  | 42884 | (42884) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposals |  | (1731) | (59) |  | (1790) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | (765) | (450) |  | (1215) |
|  Balance as of March 31, 2024 | 9919 | 110198 | 3582 | 4527 | 118307 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisitions | 5238 | 4794 | 4082 | 1097 | 9973 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Internal development |  | 193 | 7373 |  | 7566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from software in progress |  | 11767 | (11767) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposals |  | (3047) | (79) |  | (3126) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | (83) | (187) |  | (270) |
|  Balance as of March 31, 2025 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15157 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;123822 | 3004 | 5624 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;132450 |

---

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##### [**Table of Contents**](#toc)
(2) Accumulated Amortization and Impairment Losses

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **Intangible Assets** | **Intangible Assets** | **Intangible Assets** | **Intangible Assets** |
|  | **Goodwill**  | **Software**  | **Software in<br>progress** | **Customer<br>relationship** | **Total**  |
|  Balance as of April 1, 2023 |  | 43758 | 224 | 2352 | 46334 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization |  | 10810 |  | 408 | 11218 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment loss |  | 95 |  |  | 95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposals |  | (883) |  |  | (883) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | (147) |  |  | (147) |
|  Balance as of March 31, 2024 |  | 53633 | 224 | 2760 | 56617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization |  | 12733 |  | 438 | 13171 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment loss |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposals |  | (3024) |  |  | (3024) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | 14 |  |  | 14 |
|  Balance as of March 31, 2025 |  | 63356 | 224 | 3198 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;66778 |

---

(3) Book Value

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **Intangible Assets** | **Intangible Assets** | **Intangible Assets** | **Intangible Assets** |
|  | **Goodwill**  | **Software**  | **Software in <br>progress** | **Customer**<br> **relationship** | **Total**  |
|  Balance as of March 31, 2024 | 9919 | 56565 | 3358 | 1767 | 61690 |
|  Balance as of March 31, 2025 | 15157 | 60466 | 2780 | 2426 | 65672 |

---

There were no intangible assets with restrictions on ownership or pledged as a collateral. Amortization of intangible assets is included in operating expenses in the Group's Consolidated Statements of Profit or Loss. For commitments regarding the acquisition of intangible assets, refer to Note 40, *Commitments*.

**18.** **Impairment of Goodwill** 

(1) Goodwill Allocated to CGU or CGU group

Annual impairment testing for goodwill was performed as of January 1, 2024 and 2025 for the years ended March 31, 2024 and 2025, respectively.

Goodwill resulting from the acquisition of PayPay Card Corporation was allocated to one CGU, PayPay Card CGU, which is included in the Payment segment, for impairment testing purposes. PayPay Card CGU includes PayPay Card Corporation acquired on October 1, 2022, which is retrospectively consolidated as if such transaction was executed by the Group prior to the transfer or April 1, 2021. On October 1, 2022, we acquired all of the shares of PayPay Card Corporation from Yahoo Japan Corporation (currently LY Corporation). Immediately prior to the acquisition, Yahoo Japan Corporation transferred its credit card merchant acquiring business to PayPay Card Corporation. The acquisition of PayPay Card Corporation was accounted for as a transaction under common control since we, Yahoo Japan Corporation and PayPay Card Corporation are all controlled by SBG. Refer to Note 8, *Business Combinations* for more details.

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##### [**Table of Contents**](#toc)
The carrying amount of goodwill allocated to the CGU or CGU group for impairment testing is as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2025** |
|  PayPay Card CGU | 9176 | 9176 |
|  Other CGUs or CGU groups | 743 | 5981 |
|  Total | 9919 | 15157 |

---

(2) Measurement Method for Recoverable Amounts of Goodwill

PayPay Card CGU

The recoverable amount of the CGU was determined based on a value in use calculation using cash flow projections and dividend projections for a period of up to five years from financial budgets approved by the Group's management.

Cash flow projections and dividend projections take into account past experience and represent management's best estimates.

The main assumptions used in the value in use calculation include the pre-tax discount rate, terminal growth rate and expected future dividends. These assumptions can be subject to significant adjustments due to factors such as marketing budgets and market conditions, such as competitors. Dividends beyond the planning periods were extrapolated using terminal growth rates. To estimate the pre-tax discount rate that reflects the time value of money and the risks specific to the CGU, the Group has assumed a risk-free rate equal to one-month average market yield on 10-year Japanese government bonds at the date of performing the annual impairment test. The Group also incorporates risk premiums, such as company specific premium including size risk premium and equity premium, in the pre-tax discount rate. The terminal growth rates are based on the long-term average inflation rates of Japan, which take into consideration external macroeconomic sources of data.

The significant assumptions used in the value in use calculations are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br>March 31, 2024** | **For the year ended<br>March 31, 2024** |
|  | **Pre-tax discount<br>rate** | **Terminal growth<br>rate** |
|  PayPay Card CGU | 10.3% | 1.5% |

---

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br>March 31, 2025** | **For the year ended<br>March 31, 2025** |
|  | **Pre-tax discount<br>rate** | **Terminal growth<br>rate** |
|  PayPay Card CGU | 10.2% | 1.5% |

---

No impairment losses were recognized for goodwill for the years ended March 31, 2024 and 2025, as a result of the annual impairment testing.

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##### [**Table of Contents**](#toc)
(3) Sensitivity to Changes in Assumptions

The Group conducted an analysis of the sensitivity of the impairment test to changes in the significant assumptions used to determine the recoverable amount for the CGU or CGU group.

For all the CGUs or CGU groups, in the opinion of the Group's management, the recoverable amount has considerably exceeded the carrying amount of the CGU or CGU group, and the outcomes of the impairment tests are not sensitive to cause material changes in any of the assumptions underlying the cash flow projections, including discount rates, for the periods presented for the CGU or CGU group.

**19.** **Income Tax** 

(1) Deferred Tax

The major movements of deferred tax assets and liabilities are as follows:

**For the year ended March 31, 2024** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Balance as of<br>April 1,<br>2023** | **Amounts<br>recorded under<br>profit or loss** | **Amounts**<br>**recognized**<br>**under other**<br>**comprehensive**<br>**loss** | **Other** | **Balance as of<br>March 31, 2024** |
|  Deferred tax assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating loss carryforwards | 6597 | (1751) |  |  | 4846 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss allowance | 7103 | 8275 |  |  | 15378 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment | 2519 | (335) |  |  | 2184 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Assets revaluation of acquired business | 12383 | (3125) |  |  | 9258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 2877 | (421) |  |  | 2456 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued liabilities | 377 | 623 |  |  | 1000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 51 | 14 |  |  | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 749 | (172) | 521 |  | 1098 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset retirement obligation | 553 | 11 |  |  | 564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 1236 | 636 |  |  | 1872 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1607 | (91) |  | (21) | 1495 |
|  Subtotal | 36052 | 3664 | 521 | (21) | 40216 |
|  Deferred tax liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capitalized card acquisition cost | 1903 | (544) |  |  | 1359 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use assets | 3228 | (387) |  |  | 2841 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 483 | 57 |  |  | 540 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1240 | 73 |  |  | 1313 |
|  Subtotal | 6854 | (801) |  |  | 6053 |
|  Deferred tax, net | 29198 | 4465 | 521 | (21) | 34163 |

---

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##### [**Table of Contents**](#toc)
The amounts of deferred tax assets and deferred tax liabilities on the Consolidated Statements of Financial Position are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2024** |
|  Deferred tax assets |  | 34261 |
|  Deferred tax liabilities |  | 98 |
|  Deferred tax, net |  | 34163 |

---

**For the year ended March 31, 2025** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Balance as of<br>April 1,<br>2024** | **Amounts<br>recorded under<br>profit or loss** | **Amounts**<br>**recognized**<br>**under other**<br>**comprehensive**<br>**loss** | **Other** | **Balance as of<br>March 31, 2025** |
|  Deferred tax assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating loss carryforwards | 4846 | (2052) |  |  | 2794 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss allowance | 15378 | 6191 |  |  | 21569 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment | 2184 | (819) |  |  | 1365 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Assets revaluation of acquired business | 9258 | (2647) |  |  | 6611 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 2456 | 2789 |  |  | 5245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued liabilities | 1000 | (567) |  |  | 433 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 65 | 12668 |  |  | 12733 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 1098 | 184 | 1501 |  | 2783 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset retirement obligation | 564 | 494 |  |  | 1058 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 1872 | 1004 |  |  | 2876 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1495 | 822 |  | 10 | 2327 |
|  Subtotal | 40216 | 18067 | 1501 | 10 | 59794 |
|  Deferred tax liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capitalized card acquisition cost | 1359 | (492) |  |  | 867 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use assets | 2841 | 1961 |  |  | 4802 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease receivables | － | 1422 |  |  | 1422 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 540 | 1472 |  |  | 2012 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1313 | (570) |  | 933 | 1676 |
|  Subtotal | 6053 | 3793 |  | 933 | 10779 |
|  Deferred tax, net | 34163 | 14274 | 1501 | (923) | 49015 |

---

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##### [**Table of Contents**](#toc)
The amounts of deferred tax assets and deferred tax liabilities on the Consolidated Statements of Financial Position are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025** | **March 31, 2025** |
|  Deferred tax assets |  | 49392 |
|  Deferred tax liabilities |  | 377 |
|  Deferred tax, net |  | 49015 |

---

Deferred tax assets which belong to each company in the Group that recorded losses as of March 31, 2024 and 2025 are 30,471 million yen and 12,772 million yen, respectively.

(2) Deductible Temporary Differences and Carryforward of Unused Tax Losses for Which No Deferred Tax Asset is
Recognized in the Group's Consolidated Statements of Financial Position

Deductible temporary differences and carryforward of unused tax losses for which deferred tax assets are not recognized are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2025** |
|  Deductible temporary differences | 181562 | 135389 |
|  Carryforward of unused tax losses | 151051 | 141868 |
|  Total | 332613 | 277257 |

---

Breakdown of carryforward of unused tax losses by expiry date for which deferred tax assets are not recognized are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2025** |
|  Within 1 year | 197 | 315 |
|  Between 1 year and 2 years | 315 | 887 |
|  Between 2 years and 3 years | 887 | 1529 |
|  Between 3 years and 4 years | 1529 |  |
|  5 years and after | 148123 | 139137 |
|  Total | 151051 | 141868 |

---

The Company and certain of its domestic subsidiaries apply the Japanese Group Relief System effective from the year ended March 31, 2024. However, the deductible temporary differences and carryforward of unused tax losses for which deferred tax assets are not recognized that are presented in the above table do not include the amounts related to local taxes (inhabitant tax and enterprise tax), which are not subject to the Japanese Group Relief System.

As of March 31, 2024 and 2025, the amounts of deductible temporary differences related to local taxes (inhabitant tax and enterprise tax) were 144,356 million yen and 103,230 million yen, and the amounts of carryforward of unused tax losses were 161,620 million yen and 142,730 million yen, respectively,

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##### [**Table of Contents**](#toc)
(3) Taxable Temporary Differences Relating to Investments in Subsidiaries for which Deferred Tax Liabilities have
not been Recognized

There were no material taxable temporary differences relating to investments in subsidiaries for which deferred tax liabilities have not been recognized as of March 31, 2024 and 2025.

(4) Income Tax Expense (Benefit)

The components of income tax expense (benefit) are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023** | **March 31, 2024** | **March 31, 2025** |
|  Current tax expense | 4418 | 5306 | 10078 |
|  Deferred tax expense (benefit) | (20) | (4465) | (14274) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes related to origination and reversal of temporary differences <sup>[1]</sup><sup>[2]</sup> | (20) | (4628) | (13095) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in the tax rate <sup>[3]</sup> |  | 163 | (1179) |
|  Total | 4398 | 841 | (4196) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)*  | *(In millions of yen)*  |
|  | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023**  | **March 31, 2024**  | **March 31, 2024**  | **March 31, 2025**  |
|  Income tax recognized directly in equity | (13795) |  |  |  |
| Income tax recognized in other comprehensive income | (321) |  | (521) | (1501) |

---

[1] The results for the year ended March 31, 2025 include deferred tax benefits of 12,736 million yen arising from the recognition of deferred tax assets on deductible temporary differences following the reassessment of their recoverability.

[2] For details, refer to the changes in deferred tax assets and liabilities at the section (1) above.

---

| | |
|:---|:---|
| [3] | Amendments to the Japanese tax regulations were enacted into law on March 31, 2025. As a result of these amendments, the Japanese statutory effective tax rate is scheduled to be increased from 31.46% to approximately 32.34% effective from the year ending March 31, 2027. The Group measured deferred tax assets and deferred tax liabilities at the tax rates that are expected to apply to the period when the assets are realized or the liabilities are settled.  |

---

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##### [**Table of Contents**](#toc)
(5) Reconciliation of the Statutory Effective Tax Rate and the Actual Effective Tax Rate

The reconciliation of the statutory effective tax rate and the actual effective tax rate are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023**  | **March 31, 2024**  | **March 31, 2025**  |
|  Japanese statutory effective tax rate <sup>[1]</sup> | 31.46% | 31.46% | 31.46% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permanent non-deductible items | (3.69) | 877.15 | (0.46) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Assessment of the recoverability of deferred tax assets | (40.96) | 10522.38 | (41.39) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional taxable profit <sup>[2]</sup> | (5.71) | 341.31 | 1.23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax imposed at the trust in relation to stock option plans | (3.60) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in tax rate <sup>[3]</sup> |  | 1441.10 | (3.37) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax credits |  | (2773.17) | (0.92) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of loss of a joint venture accounted for using the equity method |  |  | 0.49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax rate difference between subsidiaries |  | (989.88) | 0.58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1.10 | (2004.09) | 0.38 |
|  Actual effective tax rate | (21.40)% | 7,446.26% | (12.00)% |

---

[1] Japanese statutory effective tax rate is calculated based on corporate tax, inhabitant tax and enterprise tax applicable to the Group.

[2] For added value component of the enterprise tax, there are certain additional taxable items such as employee benefit expenses that are included in taxable profit and loss carryforward cannot be utilized.

---

| | |
|:---|:---|
| [3] | Due to tax reform enacted during the year ended March 31, 2024, a certain subsidiary will apply the size-based enterprise tax from the year ending March 31, 2027. Amendments to the Japanese tax regulations were enacted into law on March 31, 2025. As a result of these amendments, the Japanese statutory effective tax rate is scheduled to be increased from 31.46% to approximately 32.34% effective from the year ending March 31, 2027. The Group measured deferred tax assets and deferred tax liabilities at the tax rates that are expected to apply to the period when the assets are realized or the liabilities are settled.  |

---

**20.** **Other Assets** 

Other assets are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024**  | **March 31, 2025**  |
|  Customer incentives <sup>[1]</sup> | 23514 | 20504 |
|  Incremental costs of obtaining a contract <sup>[2]</sup> | 7317 | 8882 |
|  Prepaid expenses | 6543 | 6497 |
|  Income tax receivables | 699 | 328 |
|  Other | 531 | 790 |
|  Total | 38604 | 37001 |

---

---

| | |
|:---|:---|
| [1] | The Group has consideration payable to a customer for PayPay Points for cardholders. PayPay Points for cardholders are capitalized based on recoverability and those that are not recoverable are expensed as incurred. Capitalized points are amortized on a straight-line basis over the period of ten years from which the related revenue is expected to be recognized when cardholders use their credit cards.  |

---

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The amortization expenses recorded as a reduction of revenue for the years ended March 31, 2023, 2024 and 2025 were 3,817 million yen, 4,230 million yen, and 4,464 million yen, respectively.

[2] Refer to Note 31, *Revenue* for further details of incremental costs of obtaining a contract.

**21.** **Deposits** 

Deposits are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024**  | **March 31, 2025**  |
|  **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Users' deposits <sup>[1][2]</sup> | 329694 | 391595 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 329694 | 391595 |
|  **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Demand deposits | 1570373 | 1688643 |
| &nbsp;&nbsp;&nbsp;&nbsp; Time deposits | 114861 | 152393 |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits from customers in the securities business | 109765 | 142236 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 11884 | 11072 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 1806883 | 1994344 |
|  Total | 2136577 | 2385939 |

---

[1] PayPay Users' deposits are PayPay Balance and Other Items held by PayPay Users in PayPay Settlement Services. For further details of PayPay Balance and Other Items, refer to financial instruments section within Note 4, *Material Accounting Policies*.

---

| | |
|:---|:---|
| [2] | PayPay Users' deposits include PayPay Money which PayPay Users can withdraw at user's discretion. The balance of PayPay Money amounts to 131,878 million yen and 170,030 million yen as of March 31, 2024 and 2025 respectively.  |

---

**22.** **Accounts Payable** 

Accounts payable are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024**  | **March 31, 2025**  |
|  Settlement payable <sup>[1]</sup> | 760150 | 902682 |
|  Credit card payable <sup>[1]</sup> | 27121 | 27913 |
|  Other payables <sup>[1]</sup> | 21178 | 18802 |
|  Total | 808449 | 949397 |

---

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

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##### [**Table of Contents**](#toc)
**23.** **Borrowings and Lease Liabilities** 

(1) Components of Borrowings and Lease Liabilities

Components of borrowings and lease liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024**  | **March 31, 2025**  |
|  **Borrowings** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan payables <sup>[1]</sup> | 389318 | 213050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial papers <sup>[2]</sup> | 112000 | 84000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 501318 | 297050 |
| &nbsp;&nbsp;&nbsp;&nbsp; **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan payables <sup>[1]</sup> | 101900 | 102528 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 101900 | 102528 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | 603218 | 399578 |
|  **Lease liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Payment | 6844 | 11121 |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial service | 890 | 976 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | 7734 | 12097 |

---

---

| | |
|:---|:---|
| [1] | The weighted average interest rates of the outstanding loan payables as of March 31, 2024 and 2025 were 0.36% and 0.55%, respectively.  |

---

---

| | |
|:---|:---|
| [2] | The weighted average interest rates of the outstanding commercial papers as of March 31, 2024 and 2025 were 0.08% and 0.59%, respectively.  |

---

*Significant financial covenants on the loan payables of PayPay Card Corporation* 

PayPay Card Corporation is subject to the following financial covenants with respect to a portion of its loan payables from financial institutions and was in compliance with such covenants for the years ended March 31, 2024 and 2025. All financial covenants are determined based on PayPay Card Corporation stand-alone financial information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Net assets on a stand-alone basis must not be negative for each fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Net assets as of each fiscal year-end should be equal to or greater than
75% of the net assets as of the end of the previous fiscal year or March 31, 2021, whichever is higher.<sup>[1]</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Should not incur operating losses or ordinary losses for two consecutive fiscal years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Required to remain a subsidiary of LY Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Must maintain a minimum issuer rating of BBB- by a rating agency, and in
absence of such rating, LY Corporation must maintain a minimum issuer rating of BBB+.

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##### [**Table of Contents**](#toc)

---

| | |
|:---|:---|
| [1] | Management performs financial covenants review and concluded that PayPay Card Corporation's restricted net assets amounts to 616,011 million yen as of March 31, 2025.  |

---

In accordance with Rule 5-04 of Regulation S-X, management concluded that the Group is required to report Condensed Financial Information as of and for the year ended March 31, 2025. Refer to Schedule I for Condensed Financial Information.

(2) Changes in Liabilities Arising from Financing Activities

The table below details changes in the Group's liabilities arising from financing activities, including both cash flows and non-cash transactions. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified as cash flows from financing activities in the Group's Consolidated Statements of Cash Flows.

**For the year ended March 31, 2023** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  |  |  | **Non-cash transactions**  | **Non-cash transactions**  |  |
|  | **Carrying amount**<br>**as of April 1,**<br>**2022** | **Cash flows** | **Addition <sup>[1]</sup>** | **Decrease <sup>[2]</sup>** | **Carrying amount**<br>**as of March 31,**<br>**2023** |
|  Lease liabilities | 9533 | (2742) | 2306 | (399) | 8698 |
|  Loan payables | 451301 | 30955 |  | (120716) | 361540 |
|  Commercial papers | 103000 | 30000 |  |  | 133000 |
|  Total | 563834 | 58213 | 2306 | (121115) | 503238 |

---

**For the year ended March 31, 2024** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  |  |  | **Non-cash transactions**  | **Non-cash transactions**  |  |
|  | **Carrying amount**<br>**as of April 1,**<br>**2023** | **Cash flows** | **Addition <sup>[1]</sup>** | **Decrease <sup>[2]</sup>** | **Carrying amount**<br>**as of March 31,**<br>**2024** |
|  Lease liabilities | 8698 | (2409) | 1837 | (392) | 7734 |
|  Loan payables | 361540 | 129678 |  |  | 491218 |
|  Commercial papers | 133000 | (21000) |  |  | 112000 |
|  Total | 503238 | 106269 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1837 | (392) | 610952 |

---

**For the year ended March 31, 2025** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  |  |  | **Non-cash transactions**  | **Non-cash transactions**  |  |
|  | **Carrying amount**<br>**as of April 1,**<br>**2024** | **Cash flows** | **Addition <sup>[1]</sup>** | **Decrease <sup>[2]</sup>** | **Carrying amount**<br>**as of March 31,**<br>**2025** |
|  Lease liabilities | 7734 | (2820) | 7204 | (21) | 12097 |
|  Loan payables | 491218 | (176298) | 658 |  | 315578 |
|  Commercial papers | 112000 | (28000) |  |  | 84000 |
|  Total | 610952 | (207118) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7862 | (21) | 411675 |

---

[1] Addition of lease liabilities and loan payables mainly resulted from new contracts.

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##### [**Table of Contents**](#toc)

---

| | |
|:---|:---|
| [2] | Decrease in loan payables resulted from a derecognition of loan payables that had been accounted for by the pooling of interests method under a business combination of entities under common control. The loan payables derecognized were a part of the credit card merchant acquiring business, but those were not transferred to PayPay Card Corporation on October 1, 2022. Refer to Note 8, *Business Combinations* for further details.  |

---

Decrease in lease liabilities resulted from payment of lease liabilities during the period.

**24.** **Other Financial Liabilities** 

Other financial liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2025** |
|  Suspense receipt <sup>[1][2]</sup> | 15772 | 12826 |
|  Advances received <sup>[1]</sup> | 7249 | 12016 |
|  Accrued expenses | 5799 | 6840 |
|  Trade date accrual <sup>[1]</sup> | 1267 | 1336 |
|  Derivative liabilities <sup>[3]</sup> | 1226 | 1186 |
|  Other | 48 | 3 |
|  Total | 31361 | 34207 |

---

[1] These liabilities are classified as financial liabilities measured at amortized cost.

[2] Suspense receipts are mainly temporary accounts related to transfer of funds to other banks that are in progress.

[3] These liabilities are classified as financial liabilities measured at FVTPL.

**25.** **Provisions** 

Changes in provisions are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Loss allowance for<br>undrawn loan<br>commitments** | **Asset retirement<br>obligations** | **Other** | **Total** |
|  **Balance as of April 1, 2023** | 426 | 1848 | 329 | 2603 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in ECL | 4740 |  |  | 4740 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions |  | 103 |  | 103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unwinding of discount |  | 2 |  | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Utilized |  | (143) |  | (143) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reversal |  | － | (302) | (302) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | 292 |  | 292 |
|  **Balance as of March 31, 2024** | 5166 | 2102 | 27 | 7295 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in ECL | (1836) |  |  | (1836) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions |  | 1841 |  | 1841 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unwinding of discount |  | 3 |  | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Utilized |  | (83) | (27) | (110) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reversal |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | (152) |  | (152) |
|  **Balance as of March 31, 2025** | 3330 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3711 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7041 |

---

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##### [**Table of Contents**](#toc)
*Loss allowance for undrawn loan commitments* 

Refer to Note 37, *Financial Instruments* for details of the Group's credit risk management.

*Asset retirement obligations* 

The Group recognizes asset retirement obligations for restoring leased properties to their original conditions upon termination of the lease contract based on contracts and agreements. The asset retirement obligations are measured using a discounted cash flow model at a pre-tax discount rate which can be reasonably estimated. The estimated future cash flow represents the management's best estimates of the expenses expected to be incurred for restoring an asset to its original condition specified in the lease contracts. These expenses are expected to be paid after the estimated period of use. However, the amounts will be affected by future business plans including extension or termination of lease contracts.

**26.** **Other Liabilities** 

Other liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2025** |
|  Consumption tax payables | 2732 | 9118 |
|  Accrued bonuses | 4211 | 4647 |
|  Accrued paid leave | 3872 | 4105 |
|  Contract liabilities | 3364 | 2900 |
|  Other tax payables | 804 | 819 |
|  Other | 1307 | 1672 |
|  Total | 16290 | 23261 |

---

**27.** **Employee Benefits** 

(1) Defined Contribution Plan

The amounts recognized as operating expenses in the Group's Consolidated Statements of Profit or Loss in respect of the defined contribution plans, including publicly provided plans, are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | | | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023** | **March 31, 2023** | **March 31, 2024** | **March 31, 2024** | **March 31, 2025** | **March 31, 2025** |
|  Contribution |  | 2500 |  | 3459 |  | 3910 |

---

(2) Employee Benefit Expenses

Employee benefit expenses included in operating expenses in the Group's Consolidated Statements of Profit or Loss are 30,476 million yen, 37,764 million yen and 41,483 million yen for the years ended March 31, 2023, 2024 and 2025, respectively. For further details, refer to Note 34, *Operating Expenses*.

Employee benefit expenses include salaries, bonuses, statutory welfare expenses. Refer to Note 39, *Related Party Transactions* for details of compensation of key management personnel.

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##### [**Table of Contents**](#toc)
**28.** **Classification of Current and Non-current** 

**As of March 31, 2024** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Collection or settlement period** | **Collection or settlement period** |  |
|  | **12 months or less** | **Over 12 months** | **Total** |
|  **Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 744323 |  | 744323 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits | 321885 |  | 321885 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Call loans | 116083 |  | 116083 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 137760 |  | 137760 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 617349 | 911203 | 1528552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 181055 | 588102 | 769157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 18909 | 1852 | 20761 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment |  | 14535 | 14535 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use assets |  | 8852 | 8852 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets |  | 61690 | 61690 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill |  | 9919 | 9919 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets |  | 34261 | 34261 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | 6950 | 31654 | 38604 |
|  **Total assets** | 2144314 | 1662068 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3806382 |
|  **Liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 2122209 | 14368 | 2136577 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 808449 |  | 808449 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payables | 4109 |  | 4109 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 375268 | 227950 | 603218 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 31313 | 48 | 31361 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions | 5300 | 1995 | 7295 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 2179 | 5555 | 7734 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax liabilities |  | 98 | 98 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | 14942 | 1348 | 16290 |
|  **Total liabilities** | 3363769 | 251362 | 3615131 |

---

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##### [**Table of Contents**](#toc)
**As of March 31, 2025** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Collection or settlement period** | **Collection or settlement period** |  |
|  | **12 months or less** | **Over 12 months** | **Total** |
|  **Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 369811 |  | 369811 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits | 244229 |  | 244229 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Call loans | 63000 |  | 63000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 141054 |  | 141054 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 794538 | 1133069 | 1927607 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 225867 | 849881 | 1075748 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 19372 | 3758 | 23130 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment |  | 14493 | 14493 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use assets |  | 14799 | 14799 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets |  | 65672 | 65672 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill |  | 15157 | 15157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments accounted for using the equity method |  | 1012 | 1012 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets |  | 49392 | 49392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | 5742 | 31259 | 37001 |
|  **Total assets** | 1863613 | 2178492 | 4042105 |
|  **Liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 2371052 | 14887 | 2385939 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 949396 | 1 | 949397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payables | 6477 |  | 6477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 201978 | 197600 | 399578 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 34203 | 4 | 34207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions | 3662 | 3379 | 7041 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 2739 | 9358 | 12097 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax liabilities |  | 377 | 377 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | 22610 | 651 | 23261 |
|  **Total liabilities** | 3592117 | 226257 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3818374 |

---

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##### [**Table of Contents**](#toc)
**29.** **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)* | *(In thousands of shares)* | *(In thousands of shares)* |
|  | **Number of<br>authorized shares** | **Number of**<br>**shares issued <sup>[2][3][4]</sup>** |
|  Common shares <sup>[1]</sup> |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; April 1, 2022 | 500000 | 220000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase during the year <sup>[2]</sup> | 1100000 | 330000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease during the year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; March 31, 2023 | 1600000 | 550000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase during the year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease during the year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; March 31, 2024 | 1600000 | 550000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase during the year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease during the year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; March 31, 2025 <sup>[3]</sup> | 1600000 | 550000 |
|  | <br> **Number of<br>authorized shares** | **Number of**<br>**shares issued <sup>[2][3][4]</sup>** |
|  Class A preferred shares <sup>[4]</sup> |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; April 1, 2022 | 400000 | 330000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase during the year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease during the year <sup>[2]</sup> |  | (330000) |
| &nbsp;&nbsp;&nbsp;&nbsp; March 31, 2023 | 400000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase during the year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease during the year <sup>[5]</sup> | (400000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; March 31, 2024 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase during the year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease during the year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; March 31, 2025 |  |  |

---

---

| | |
|:---|:---|
| [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. Refer to Note 36, *Share-based Payments* for details of the number of common shares and the relevant terms. The number of shares presented above are retrospectively adjusted in respect of the share split that occurred on November 15, 2025. Refer to Note 42, *Subsequent Events,* for further details.  |

---

[2] Increase/decrease due to the exercise of conversion right by Class A preferred shareholder to common shares.

[3] All common shares are fully paid.

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##### [**Table of Contents**](#toc)

---

| | |
|:---|:---|
| [4] | Class A preferred shares have no voting rights, and have preference in dividend payments, while both of Class A preferred shares and common shares have the same rights to residual assets of the Group. The holders of Class A preferred shares have right of conversion of one Class A preferred share to one common share on and after April 1, 2022.  |

---

[5] Decrease due to the abolishment of the provision in the articles of incorporation related to Class A preferred shares.

(2) Share Premium and Retained Earnings

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Share Premium

<u>Legal capital reserve</u>

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.

<u>Transaction costs of equity transaction</u>

Transaction costs of an equity transaction are directly deducted from share premium.

<u>Capital contributions from shareholders in relation to stock option plans</u>

The Group has a trust-type stock option plan for directors, corporate officers and employees. Under the stock option plan, SoftBank Corp. and Z Holdings Corporation (currently LY Corporation), which are the shareholders of the Company, contributed their funds to the Trust. Refer to Note 36, *Share-Based Payments* for further details.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Retained Earnings

<u>Legal earnings reserve</u>

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)* | *(In millions of yen)* |
|  | **Changes in debt<br>instruments measured<br>at FVTOCI** | **Exchange differences on<br>translation of foreign<br>operations** |
|  Balance as of April 1, 2023 | (101) | (7) |
| &nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive income (loss) <br>(attributable to owners of the parent company) | (22) | 11 |
|  Balance as of March 31, 2024 | (123) | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive income (loss) (attributable to owners of the parent company) | (250) | (10) |
|  Balance as of March 31, 2025 | (373) | (6) |

---

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**30.** **Dividends** 

The following dividends paid by the Group were included in the Group's Consolidated Statements of Changes in Equity for the years ended March 31, 2023, 2024 and 2025.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Class of shares** | **Amount of dividends**<br>**(In millions of yen)** | **Dividends per share**<br>**(Yen)** | **Effective date** |
|  **For the year ended March 31, 2023** | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** |
| PayPay Card Corporation<br> September 6, 2022, extraordinary general meeting of shareholders | Common shares | 37000 | 11858974 | September 30, 2022 |
| PayPay Bank Corporation<br> June 23, 2022, general meeting of shareholders | Common shares | 1573 | 2070 | June 24, 2022 |
|  **For the year ended March 31, 2024** | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** |
| PayPay Bank Corporation<br> June 22, 2023, general meeting of shareholders | Common shares | 783 | 1030 | June 23, 2023 |
| PayPay Bank Corporation<br> June 22, 2023, general meeting of shareholders | Class A preferred<br>stock | 1000 | 1133 | June 23, 2023 |
|  **For the year ended March 31, 2025** | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** |
| PayPay Bank Corporation<br> June 21, 2024, general meeting of shareholders | Common shares | 1228 | 1616 | June 24, 2024 |
| PayPay Bank Corporation<br> June 21, 2024, general meeting of shareholders | Class A preferred<br>stock | 1574 | 1782 | June 24, 2024 |

---

Dividends applicable to the owners of the parent company included in the total cash dividends for the years ended March 31, 2023, 2024 and 2025 were 4,929 million yen, 179 million yen and 283 million yen, respectively.

**31.** **Revenue** 

(1) Disaggregation of Revenue

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

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023**  | **March 31, 2024**  | **March 31, 2025**  |
|  Revenue from contracts with customers |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Transaction and service income | 146927 | 174127 | 203595 |
|  Revenue from other sources |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest income <sup>[1]</sup> | 50285 | 73884 | 88442 |
| &nbsp;&nbsp;&nbsp;&nbsp; Gains (losses) on financial instruments | 2079 | 4641 | 5529 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other operating income | 1903 | 1959 | 1512 |
|  Total | 201194 | 254611 | 299078 |

---

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| | |
|:---|:---|
| [1] | The Group pays guarantee fees to third-party financial institutions to mitigate the credit risk of loans and advances to customers. In accordance with IFRS 9, these guarantee fees, which represent amounts paid by the  |

---

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##### [**Table of Contents**](#toc)
Group, are included in the calculation under the effective interest method and therefore reduce interest income. The guarantee fees were 10,659 million yen, 14,707 million yen and 18,163 million yen for the years ended March 31, 2023, 2024 and 2025, respectively.

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

**For the year ended March 31, 2023** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial<br>service** | **Total**  |
|  Payment Settlement Services |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Settlement Services | 115935 |  | 115935 |
| &nbsp;&nbsp;&nbsp;&nbsp; Credit Payment Settlement Services and Acquiring Services <sup>[1]</sup> | 34662 |  | 34662 |
| &nbsp;&nbsp;&nbsp;&nbsp; Debit Payment Settlement Services |  | 4805 | 4805 |
| &nbsp;&nbsp;&nbsp;&nbsp; Payment settlement services deduction <sup>[2]</sup> | (41654) | (1019) | (42673) |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 108943 | 3786 | 112729 |
|  Financial Services |  | 19301 | 19301 |
|  Other <sup>[3][4]</sup>  | 14469 | 428 | 14897 |
|  Total <sup>[5]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;123412 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23515 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;146927 |

---

**For the year ended March 31, 2024** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial<br>service** | **Total**  |
|  Payment Settlement Services |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Settlement Services | 151673 |  | 151673 |
| &nbsp;&nbsp;&nbsp;&nbsp; Credit Payment Settlement Services and Acquiring Services <sup>[1]</sup> | 31917 |  | 31917 |
| &nbsp;&nbsp;&nbsp;&nbsp; Debit Payment Settlement Services |  | 4731 | 4731 |
| &nbsp;&nbsp;&nbsp;&nbsp; Payment settlement services deduction <sup>[2]</sup> | (52669) | (1171) | (53840) |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 130921 | 3560 | 134481 |
|  Financial Services |  | 20867 | 20867 |
|  Other <sup>[3][4]</sup> | 18389 | 390 | 18779 |
|  Total <sup>[5]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;149310 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24817 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;174127 |

---

**For the year ended March 31, 2025** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial<br>service** | **Total**  |
|  Payment Settlement Services |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; PayPay Settlement Services | 193237 |  | 193237 |
| &nbsp;&nbsp;&nbsp;&nbsp; Credit Payment Settlement Services and Acquiring Services <sup>[1]</sup> | 37192 |  | 37192 |
| &nbsp;&nbsp;&nbsp;&nbsp; Debit Payment Settlement Services |  | 5077 | 5077 |
| &nbsp;&nbsp;&nbsp;&nbsp; Payment settlement services deduction <sup>[2]</sup> | (77161) | (1309) | (78470) |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 153268 | 3768 | 157036 |
|  Financial Services |  | 22269 | 22269 |
|  Other <sup>[3][4]</sup> | 23329 | 961 | 24290 |
|  Total <sup>[5]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;176597 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26998 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;203595 |

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| | |
|:---|:---|
| [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 12,620 million yen, 12,427 million yen and 10,819 million yen for the years ended March 31, 2023, 2024 and 2025, respectively. Refer to the major revenue streams section within Note 4, *Material Accounting Policies* for more details.  |

---

[2] Payment settlement services deduction mainly consists of rewards given to customers, all the deduction is related to the 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 188 million yen, 1,870 million yen and 3,408 million yen for the fiscal years ended March 31, 2023, 2024 and 2025, respectively. These deductions mainly relate to consideration payable to customers in connection with annual membership fees for PayPay Card Gold.  |

---

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

[5] Almost all revenues from external customers of the Group were generated in Japan, which is the Company's country of domicile, for the years ended March 31, 2023, 2024 and 2025.

[6] For further details of each service category, refer to major revenue streams section within Note 4, *Material Accounting Policies*.

(2) Assets Recognized from the Incremental Costs of Obtaining a Contract

Contract costs are incurred mainly in the PayPay Card's business.

The Group outsources marketing activities to third-party companies to promote card membership and pays commissions to the third-party companies based on the number of new cardholders acquired by the Group through the third-party companies' promotions. The commission payment represents an incremental cost of obtaining a contract, because it is a cost that would not have been incurred if the contract for the Credit Payment Settlement Services had not been obtained.

Since August 2024, the Group also outsources marketing activities to a joint venture, PayPay SC Corporation to promote PayPay Settlement Services and pays commissions to the joint venture based on the number of new merchants acquired by the Group through the joint venture's promotions. The commission payment represents an incremental cost of obtaining a contract, because it is a cost that would not have been incurred if the contract for the PayPay Settlement Services had not been obtained.

Refer to Note 20, *Other Assets* for details.

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **April 1, 2023** | **March 31, 2024** | **March 31, 2025** |
| Assets recognized from the costs to obtain contracts with customers | 6316 | 7317 | 8882 |
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023** | **March 31, 2024** | **March 31, 2025** |
| Amortization expenses of assets recognized from the costs to obtain contracts with customers | 803 | 1043 | 1297 |

---

(3) Consideration Payable to a Customer

For consideration payable to a customer accounted for as an asset, refer to customer incentives in Note 20, *Other Assets*.

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##### [**Table of Contents**](#toc)
**32.** **Income and Expenses on Financial Instruments** 

Income and Expenses on Financial Instruments are as follows:

**For the year ended March 31, 2023** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* |
|  | **Financial<br>assets<br>measured at<br>FVTPL** | **Debt<br>instruments<br>measured at<br>FVTOCI** | **Equity<br>instruments<br>measured at<br>FVTOCI** | **Financial<br>assets<br>measured at<br>amortized<br>cost** | **Financial<br>liabilities<br>measured at<br>amortized<br>cost** | **Derivative<br>instruments** | **Total** |
|  **Income** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Gains (losses) on financial instruments |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gains (losses) recognized in profit or loss | 62 | (591) |  | (18) | 459 | 1757 | 1669 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend income | 410 |  | 0 |  |  |  | 410 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 472 | (591) | 0 | (18) | 459 | 1757 | 2079 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest income | (103) | 1572 |  | 48782 |  | 34 | 50285 |
|  **Expenses** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expenses <sup>[1]</sup> |  |  |  |  | 1513 | 2 | 1515 |
| &nbsp;&nbsp;&nbsp;&nbsp; Impairment losses (gains) on financial assets <sup>[2]</sup><sup>[3]</sup> |  |  |  | 15665 |  |  | 15665 |

---

**For the year ended March 31, 2024** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  |
|  | **Financial<br>assets<br>measured at<br>FVTPL** | **Debt<br>instruments<br>measured at<br>FVTOCI** | **Equity<br>instruments<br>measured at<br>FVTOCI** | **Financial<br>assets<br>measured at<br>amortized<br>cost** | **Financial<br>liabilities<br>measured at<br>amortized<br>cost** | **Derivative<br>instruments** | **Total** |
|  **Income** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Gains (losses) on financial instruments |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gains (losses) recognized in profit or loss | 42073 | 43 |  | 33 | 412 | (38612) | 3949 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend income | 692 |  | 0 |  |  |  | 692 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 42765 | 43 | 0 | 33 | 412 | (38612) | 4641 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest income |  | 1577 |  | 72247 |  | 60 | 73884 |
|  **Expenses** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expenses<sup>[1]</sup> |  |  |  |  | 1930 | 1 | 1931 |
| &nbsp;&nbsp;&nbsp;&nbsp; Impairment losses (gains) on financial assets<sup>[2]</sup><sup>[3]</sup> |  |  |  | 18881 |  |  | 18881 |

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##### [**Table of Contents**](#toc)
**For the year ended March 31, 2025** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  |
|  | **Financial<br>assets<br>measured at<br>FVTPL** | **Debt<br>instruments<br>measured at<br>FVTOCI** | **Equity<br>instruments<br>measured at<br>FVTOCI** | **Financial<br>assets<br>measured at<br>amortized<br>cost** | **Financial<br>liabilities<br>measured at<br>amortized<br>cost** | **Derivative<br>instruments** | **Total** |
|  **Income** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Gains (losses) on financial instruments |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gains (losses) recognized in profit or loss | 7401 | (90) |  | 667 | (3) | (3680) | 4295 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend income | 1234 |  | 0 |  |  |  | 1234 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 8635 | (90) | 0 | 667 | (3) | (3680) | 5529 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest income | (147) | 1850 |  | 86689 |  | 50 | 88442 |
|  **Expenses** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expenses<sup>[1]</sup> |  |  |  |  | 4253 | 1 | 4254 |
| &nbsp;&nbsp;&nbsp;&nbsp; Impairment losses (gains) on financial assets <sup>[2]</sup><sup>[3]</sup> |  |  |  | 26468 |  |  | 26468 |

---

[1] Interest expenses are included in other operating expenses presented in the Consolidated Statements of Profit or Loss.

[2] Impairment losses (gains) on financial assets are included in provision for loss allowance presented in the Consolidated Statements of Profit or Loss.

[3] The following adjustments would reconcile impairment losses (gains) on financial assets with provision for loss allowance presented in the Consolidated Statements of Profit or Loss:

---

| | | | |
|:---|:---|:---|:---|
| *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  | *(in millions of yen)*  |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023**  | **March 31, 2024**  | **March 31, 2025**  |
| Impairment losses (gains) on financial assets | 15665 | 18881 | 26468 |
| &nbsp;&nbsp;&nbsp;&nbsp; Provisions for credit losses on loan commitments | 39 | 4740 | (1836) |
| &nbsp;&nbsp;&nbsp;&nbsp; Write-offs | (517) | (615) | (690) |
| Provision for loss allowance | 15187 | 23006 | 23942 |

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##### [**Table of Contents**](#toc)
**33.** **Other Operating Income** 

Other operating income is as follows:

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| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023**  | **March 31, 2024**  | **March 31, 2025**  |
| Gain on expiration of contractual obligation<sup>[1]</sup> | 604 | 1258 | 1216 |
| Received secondment and expense contributions | 78 |  | 276 |
|  Government grants | 86 | 574 |  |
|  Subcontracting fees | 1084 |  | 35 |
|  Recoveries of written off receivables | 17 | 13 | 15 |
|  Other | 34 | 113 | (30) |
|  Total | 1903 | 1959 | 1512 |

---

[1] The gain on expiration of contractual obligation mainly consists of gains from expiration of PayPay Points Code. For further details, refer to other operating income section within Note 4, *Material Accounting Policies*.

**34.** **Operating Expenses** 

Operating expenses by nature are as follows:

**For the year ended March 31, 2023** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial**<br>**service** | **Inter-segment**<br>**eliminations** | **Consolidated**  |
|  Point expenses <sup>[1]</sup> | 42283 |  |  | 42283 |
|  Settlement related cost <sup>[2]</sup> | 29802 | 9120 | (440) | 38482 |
|  Employee benefit expenses <sup>[3]</sup> | 25160 | 5316 |  | 30476 |
| Professional and outsourcing services expenses <sup>[4]</sup> | 23572 | 7025 | (50) | 30547 |
|  Provision for loss allowance | 14928 | 259 |  | 15187 |
|  Other operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 9708 | 4144 |  | 13852 |
| &nbsp;&nbsp;&nbsp;&nbsp; License fees | 11133 |  |  | 11133 |
| &nbsp;&nbsp;&nbsp;&nbsp; Advertising and promotion expenses | 11160 | 3649 | (499) | 14310 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax and charges | 5162 | 1942 |  | 7104 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expenses | 2541 | 208 | (1234) | 1515 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of contract cost | 803 |  |  | 803 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 10778 | 5336 | (64) | 16050 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 51285 | 15279 | (1797) | 64767 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;187030 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;36999 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2287) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;221742 |

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**For the year ended March 31, 2024** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial**<br>**service** | **Inter-segment**<br>**eliminations** | **Consolidated**  |
|  Point expenses <sup>[1]</sup> | 45402 |  |  | 45402 |
|  Settlement related cost <sup>[2]</sup> | 30660 | 9832 | (500) | 39992 |
|  Employee benefit expenses <sup>[3]</sup> | 30981 | 6783 |  | 37764 |
|  Professional and outsourcing services expenses <sup>[4]</sup> | 26456 | 8516 | (172) | 34800 |
|  Provision for loss allowance | 22650 | 356 |  | 23006 |
|  Other operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 12849 | 4700 |  | 17549 |
| &nbsp;&nbsp;&nbsp;&nbsp; License fees | 15899 |  |  | 15899 |
| &nbsp;&nbsp;&nbsp;&nbsp; Advertising and promotion expenses | 7955 | 4050 | (547) | 11458 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax and charges | 4270 | 2248 |  | 6518 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expenses | 2814 | 544 | (1427) | 1931 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of contract cost | 1043 |  |  | 1043 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 14105 | 5391 | (258) | 19238 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 58935 | 16933 | (2232) | 73636 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;215084 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;42420 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2904) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;254600 |

---

**For the year ended March 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial**<br>**service** | **Inter-segment**<br>**eliminations** | **Consolidated**  |
|  Point expenses <sup>[1]</sup> | 50362 |  |  | 50362 |
|  Settlement related cost <sup>[2]</sup> | 33645 | 10592 | (575) | 43662 |
|  Employee benefit expenses <sup>[3]</sup> | 32984 | 8499 |  | 41483 |
|  Professional and outsourcing services expenses <sup>[4]</sup> | 19887 | 8997 | (117) | 28767 |
|  Provision for loss allowance | 23368 | 574 |  | 23942 |
|  Other operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 14705 | 5388 |  | 20093 |
| &nbsp;&nbsp;&nbsp;&nbsp; License fees | 18027 |  |  | 18027 |
| &nbsp;&nbsp;&nbsp;&nbsp; Advertising and promotion expenses | 6896 | 4528 | (693) | 10731 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax and charges | 3038 | 2014 |  | 5052 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expenses | 2628 | 2278 | (652) | 4254 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of contract cost | 1297 |  |  | 1297 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 11061 | 5616 | (779) | 15898 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 57652 | 19824 | (2124) | 75352 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;217898 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;48486 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2816) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;263568 |

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##### [**Table of Contents**](#toc)
[1] Point expenses are incurred primarily when the Group grants reward points to PayPay User through various reward programs, which PayPay User 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] Refer to Note 27, *Employee Benefits* for details.

[4] Professional and outsourcing services expenses include customer service related costs, system development labor, and other professional services.

**35.** **Earnings Per Share** 

(1) Basis for Calculation of Basic Earnings Per Share

The profit (loss) for the year and the weighted average number of shares used in the calculation of basic earnings per share ("EPS") are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023**  | **March 31, 2024**  | **March 31, 2025**  |
| Profit (loss) for the year attributable to owners of the parent company (Million yen) | (25856) | (3350) | 36170 |
| Weighted average number of issued common shares for the year (Thousand shares) <sup>[1]</sup> | 440701 | 550000 | 550000 |
| Basic earnings (loss) per share (Yen) <sup>[1]</sup> | (58.7) | (6.1) | 65.8 |

---

[1] The share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 42, Subsequent Events for details of share split.

(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 year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023**  | **March 31, 2024**  | **March 31, 2025**  |
| Profit (loss) for the year attributable to owners of the parent company (Million yen) | (25856) | (3350) | 36170 |
| Weighted average number of issued common shares for the year (Thousand shares) <sup>[1]</sup> | 440701 | 550000 | 550000 |
| Effects of dilutive potential common shares <sup>[2]</sup> |  |  |  |
| Weighted average number of common shares adjusted for the effect of dilution (Thousand shares) <sup>[1]</sup> | 440701 | 550000 | 550000 |
| Diluted earnings (loss) per share (Yen) <sup>[1]</sup> | (58.7) | (6.1) | 65.8 |

---

[1] The share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 42, Subsequent Events for details of share split.

[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. In addition, the Class A

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preferred shares were anti-dilutive, and the 2nd to 46th series of Stock Options had an IPO condition as their condition of vesting, and therefore were not included in the computation of diluted earnings per share. Refer to Note 36, *Share-based Payments*.

**36.** **Share-based Payments** 

Note that the number of the shares or stock options, the exercise price, and the fair value of shares on the grant date presented below have been retrospectively adjusted in respect of the share split that occurred on November 15, 2025. Refer to Note 42, *Subsequent Events,* for further details.

(1) Overview of the Stock Option

**<u>The 1st Stock Options</u>**

The Group has granted stock options as share-based payment awards to non-employees for the software development service provided to the Group. The option holder has the right to acquire the Company's common shares upon exercise. The option holder may exercise the options at any time subsequent to vesting and no later than the expiration date.

**<u>The 2nd to 46th series of Stock Options</u>**

The Group has a trust-type stock option plan for directors, corporate officers and employees ("the Trust-type Plan") to attract and retain exceptionally qualified and talented human resources to achieve the Group's business goals. Under the Trust-type Plan, SoftBank Corp. and Z Holdings Corporation (currently LY Corporation), which are the owners of the parent company, contributed their funds to the Trust and the Trust acquired a total of 11,636 thousand shares of the 2nd to 46th series of the stock options ("the Trust-type Stock Options") from the Company on August 29, 2022. In addition, on a predetermined date, according to the instructions of the Company, the Trust-type Stock Options will be granted to the directors, corporate officers and other employees of the Company or its subsidiaries.

The number of Trust-type Stock Options issued to the Trust is shown in the table below.

**Number of Trust-type Stock Options issued to the Trust** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | *(In thousands shares)* |
|  | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** |
| **Market condition**<br> **(Nine conditions)**<br>| From April 1, 2024<br> to March 31, 2033  | From April 1, 2025<br> to March 31, 2033  | From April 1, 2026<br> to March 31, 2033  | From April 1, 2027<br> to March 31, 2033  | From April 1, 2028<br> to March 31, 2033  |
|  | 843 | 843 | 843 | 843 | 838 |
| &nbsp;&nbsp;&nbsp;&nbsp; 3 trillion yen | 416 | 387 | 387 | 386 | 386 |
| &nbsp;&nbsp;&nbsp;&nbsp; 4 trillion yen | 359 | 328 | 324 | 308 | 308 |
| &nbsp;&nbsp;&nbsp;&nbsp; 5 trillion yen | 248 | 248 | 192 | 108 | 108 |
| &nbsp;&nbsp;&nbsp;&nbsp; 6 trillion yen | 174 | 174 | 161 | 161 | 125 |
| &nbsp;&nbsp;&nbsp;&nbsp; 7 trillion yen | 73 | 73 | 73 | 73 | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp; 8 trillion yen | 84 | 84 | 84 | 80 | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp; 9 trillion yen | 107 | 107 | 104 | 104 | 104 |
| &nbsp;&nbsp;&nbsp;&nbsp; 10 trillion yen | 167 | 167 | 167 | 167 | 167 |
|  Total | 2471 | 2411 | 2335 | 2230 | 2189 |

---

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##### [**Table of Contents**](#toc)
For the year ended March 31, 2023, a total of 4,589 thousand shares of Trust-type Stock Options were granted to directors, corporate officers and other employees. There was no stock option issued in 2024. As of March 31, 2025, the Trust holds a total of 7,047 thousand shares of Trust-type Stock Options.

In addition, the Trust are consolidated to the Group's Consolidated Statements of Financial Position and Consolidated Statements of Profit or Loss.

(2) Stock Options Outstanding

The Group's stock options outstanding as of March 31, 2025 are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Year of grant and name** | **2020 1st Stock Options <sup>[5]</sup>** | **2022 2nd to 6th Stock Options** | **2022 7th to 46th Stock Options** |
| Grant date | September 30, 2020 | December 5, 2022 | December 5, 2022 |
| Grantee | SVF II Piranha (DE) LLC | Directors, corporate officers and other employees | Directors, corporate officers and other employees |
| Number of options granted. | 31,802 thousand shares | See the table below <sup>[4]</sup> | See the table below <sup>[4]</sup> |
| Settlement method | Equity settlement | Equity settlement | Equity settlement |
| Exercisable period | From September 30, 2020<br> to September 29, 2030 | See the table below <sup>[4]</sup> | See the table below <sup>[4]</sup> |
| Conditions of vesting | Vested upon grant | Service condition <sup>[1]</sup><br> IPO condition <sup>[2]</sup> | Service condition <sup>[1]</sup><br> IPO condition <sup>[2]</sup><br> Market condition <sup>[3]</sup> |

---

[1] Service condition

Holders of stock options must be directors, corporate officers, or other permanent employees of the Company or its subsidiaries at the time of exercising the rights. The stock options are forfeited upon resignation from the Group. However, this shall not apply in cases where the Board of Directors approves the condition such as retirement due to expiration of term of office or mandatory retirement age.

[2] IPO condition

Holders of stock options may exercise their stock options only when the Company's shares are listed on a financial instruments exchange market.

[3] Market condition

Holders of stock options may not exercise their stock options unless the market capitalization exceeds a certain threshold <sup>[4]</sup> on a specific date at least once during the period from the listing of the Company's shares on a financial instruments exchange market to the last day of the exercisable period.

[4] Number of stock options granted, exercisable period and market condition

There are five exercisable periods and nine market capitalization conditions, therefore, the Group has a total of 45 types of Stock Options. The number of Trust-type Stock Options granted during the year ended March 31, 2023 is as follows.

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##### [**Table of Contents**](#toc)
**Number of Trust-type Stock Options granted** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | *(In thousands shares)* | *(In thousands shares)* |
|  | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Market condition**<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Nine conditions)**<br>| From April 1, 2024<br> to March 31, 2033  | From April 1, 2025<br> to March 31, 2033  | From April 1, 2026<br> to March 31, 2033  | From April 1, 2027<br> to March 31, 2033  | From April 1, 2028<br> to March 31, 2033  |
|  | 444 | 444 | 442 | 376 | 342 |
| &nbsp;&nbsp;&nbsp;&nbsp; 3 trillion yen | 187 | 165 | 152 | 144 | 136 |
| &nbsp;&nbsp;&nbsp;&nbsp; 4 trillion yen | 123 | 115 | 107 | 98 | 89 |
| &nbsp;&nbsp;&nbsp;&nbsp; 5 trillion yen | 82 | 74 | 63 | 51 | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp; 6 trillion yen | 52 | 50 | 47 | 44 | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp; 7 trillion yen | 28 | 28 | 27 | 26 | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp; 8 trillion yen | 27 | 27 | 26 | 25 | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp; 9 trillion yen | 36 | 35 | 35 | 35 | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp; 10 trillion yen | 52 | 52 | 51 | 50 | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | 1031 | 990 | 950 | 849 | 769 |

---

[5] Exercise of 2020 1st Stock Options

2020 1st Stock Options are exercised on April 4, 2025, all of which held by SVF II Piranha (DE) LLC. The weighted average share price at the date of exercise was 1,300 yen.

(3) Expenses Arising from Share-based Payments

There were no operating expenses recognized in the Group's Consolidated Statements of Profit or Loss in connection with share-based payments for the years ended March 31, 2023, 2024 and 2025, as it was not deemed probable that the IPO condition would be achieved.

(4) Details of the Stock Options

Details of the stock options are as follows:

**<u>The 1st Stock Options</u>**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023** | **March 31, 2023** | **March 31, 2024** | **March 31, 2024** | **March 31, 2025** | **March 31, 2025** |
|  | **Number of<br>stock<br>options<br>(Thousand<br>shares)**  | **Weighted<br>average<br>exercise<br>price (Yen)**  | **Number of<br>stock<br>options<br>(Thousand<br>shares)**  | **Weighted<br>average<br>exercise<br>price (Yen)**  | **Number of<br>stock<br>options<br>(Thousand<br>shares)**  | **Weighted<br>average<br>exercise<br>price (Yen)**  |
| Outstanding at the beginning of the year | 31802 | 500 | 31802 | 500 | 31802 | 500 |
| Granted |  |  |  |  |  |  |
| Exercised |  |  |  |  |  |  |
| Forfeited |  |  |  |  |  |  |
| Expired |  |  |  |  |  |  |
|  Outstanding at the end of the year <sup>[1]</sup> | 31802 | 500 | 31802 | 500 | 31802 | 500 |
|  Exercisable at the end of the year | 31802 | 500 | 31802 | 500 | 31802 | 500 |

---

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##### [**Table of Contents**](#toc)
[1] The weighted average remaining contractual lives in relation to the stock options outstanding as of March 31, 2023, 2024 and 2025 were 7.5 years, 6.5 years and 5.5 years, respectively.

**<u>The 2nd to 46th Stock Options</u>**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023** | **March 31, 2023** | **March 31, 2024** | **March 31, 2024** | **March 31, 2025** | **March 31, 2025** |
|  | **Number of<br>stock<br>options<br>(Thousand<br>shares)**  | **Weighted<br>average<br>exercise<br>price (Yen)**  | **Number<br>of stock<br>options<br>(Thousand<br>share)**  | **Weighted<br>average<br>exercise<br>price<br>(Yen)<sup>[1]</sup>**  | **Number of<br>stock<br>options<br>(Thousand<br>shares)**  | **Weighted<br>average<br>exercise<br>price<br>(Yen)<sup>[1]</sup>**  |
| Outstanding at the beginning of the year |  |  | 4516 | 1300 | 4299 | 1300 |
| Granted | 4589 | 1300 |  |  |  |  |
| Exercised |  |  |  |  |  |  |
| Forfeited | (73) | 1300 | (217) | 1300 | (288) | 1300 |
| Expired |  |  |  |  |  |  |
|  Outstanding at the end of the year <sup>[2]</sup> | 4516 | 1300 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4299 | 1300 | 4011 | 1300 |
|  Exercisable at the end of the year |  |  |  |  |  |  |

---

[1] All stock options are exercisable at 1,300 yen.

[2] The weighted average remaining contractual lives in relation to the stock options outstanding as of March 31, 2023, 2024 and 2025 were 10 years, 9 years and 8 years, respectively.

(5) Fair Value Measurement

Fair value of stock options were measured as follows:

---

| | |
|:---|:---|
| **Year of grant and name** | **2022 2nd to 46th Stock Options** |
|  Weighted average fair value | 285 yen |
|  Valuation method used | Monte-Carlo simulation <sup>[1]</sup> |
|  Key inputs and assumptions |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exercise price | 1,300 yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value of common share on grant date | 1,750 yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exercise period | 10.32 years |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expected dividend yield | 1.4% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expected volatility <sup>[2]</sup> | 36.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Risk-free interest rate | 0.30% |

---

[1] Monte-Carlo simulation requires various highly subjective assumptions, including expected volatility, expected life of stock options, expected dividend yield, and fair value of common share at the time of option grants.

[2] The expected volatility was derived from the historical volatility over a period similar to the expected life of the stock options for publicly listed companies that are comparable to the Group.

There were no stock options granted during the years ended March 31, 2024, and 2025, respectively.

**37.** **Financial Instruments** 

(1) Capital Management

The Group's capital management policy is to realize and maintain the capital composition at optimized levels in order to sustain mid-term and long-term growth and maximize the corporate value.

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##### [**Table of Contents**](#toc)
The main indicators used by the Group in capital management are as follows:

---

| | | |
|:---|:---|:---|
|  | **March 31, 2024**  | **March 31, 2025**  |
| Total shareholders' equity | 191251 | 223731 |
|  Equity capital ratio <sup>[1]</sup> (%) | 5.02% | 5.54% |

---

---

| | |
|:---|:---|
| [1] | Equity capital ratio is calculated as total shareholders' equity divided by total liabilities and equity.  |

---

PayPay Bank Corporation, the Company's banking subsidiary in Japan, is subject to the capital adequacy guidelines set by the Financial Services Agency of Japan, which are based on the Basel Capital Accord. Under the guidelines, PayPay Bank Corporation is classified as a Domestically Active Bank and required to maintain a minimum capital adequacy ratio, namely no less than 4.0%, of capital against the amount of risk weighted assets.

The table below presents PayPay Bank Corporation's capital adequacy ratio, core capital, total capital and risk-weighted assets under Japanese GAAP.

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** |
|  | **March 31, 2024** | **March 31, 2025** |
|  Capital adequacy ratio | 18.19% | 16.76% |
|  Core Capital | 139551 | 145215 |
|  Total Capital | 128417 | 132575 |
|  Risk-weighted assets | 705909 | 790957 |

---

Other companies below in the Group are also required to maintain their own capital-related ratio and equity balance defined by the capital regulations as follows:

---

| | | |
|:---|:---|:---|
| **Company**<br>| **Laws and regulations**<br>| **Requirements**<br>|
|  PayPay Corporation | Payment Services Act | &nbsp;&nbsp; Maintenance of minimum required equity amount |
|  PayPay Card Corporation | Installment Sales Act | &nbsp;&nbsp; Maintenance of minimum required equity ratio |
|  PayPay Securities Corporation | Financial Instruments and Exchange Act | &nbsp;&nbsp; Maintenance of minimum required capital-to-risk ratio |

---

Each company in the Group adequately meets the capital requirements under the laws and regulations.

(2) Financial Risk Management

The Group is exposed to financial risks, including credit risk, liquidity risk, and market risk, relating to its operations. Therefore, we regularly monitor such financial risks and follow policies implemented to mitigate risk exposures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Credit Risk

The Group is exposed to the debtors' credit risk arising from its operating activities. Generally, the credit risk is related to accounts receivable from cardholders, payment service providers and PayPay Merchants, loan arrangements to banking customers, and loan commitments for cardholders.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Credit risk management

The Group assesses credit cardholders' credit risk in accordance with internal policy upon entering into an agreement with cardholders. The Group also monitors mainly collection status of each cardholder to manage potential uncollectible amounts.

As for the credit card receivables from cardholders, in the event of delinquency, the terms of the contracts may be modified for the purpose of facilitating collections, and the original contractual cash flows would change.

While most of the credit card receivables are from cardholders based in Japan, the Group is working to prevent or reduce credit risk through the risk management procedures described above.

For banking customers' credit risk, the Group has established a credit risk management system in its internal regulations and strives to control credit risk in accordance with the internal "Credit Policy". In addition, the Group has established regulations for credit review, concentration risk and write off. In order to avoid excessive concentrations of risk, the Group's policies and procedures include specific guidelines to focus on maintaining a diversified portfolio by establishing an adequate credit limit. The Audit Department, which is independent from each division, regularly audits the credit risk management status, checks credit operations, and reports the results of the audit to the Board of Directors.

The Group derecognized these financial assets for which the contractual cash flows have been modified and recognized purchased or originated credit-impaired financial assets, where the change in the discounted present value of the cash flows under the new terms of these financial assets changed by more than 10% from the discounted present value of the remaining cash flows of the original terms.

As of March 31, 2024 and 2025, there were no modifications of the contractual cash flows of financial assets where the modification did not result in derecognition.

For general credit risks other than the credit risk above, the Group conducts credit investigations and establishes a credit line in order to manage credit risks. The Group periodically monitors the status of debtors, past dues and outstanding balances in accordance with the internal Credit Management Regulations.

The maximum credit risk exposure as of March 31, 2024 and 2025 is the carrying amount after impairment of the respective financial assets that is recognized in the Group's Consolidated Statements of Financial Position, except for loan commitments.

The maximum credit risk exposure to loan commitments is as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2025** |
|  Loan commitments <sup>[1]</sup> | 13335627 | 11140640 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Undrawn loan commitments | 12381436 | 9954633 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss allowance | (5166) | (3330) |

---

[1] Loan commitments are mainly related to shopping under credit and cash limits provided to the credit card holders, which are classified as Stage 1.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Analysis by credit risk rating grades

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Businesses other than banking business

The following table details the gross carrying amounts of financial assets for the businesses other than banking business subsequently measured at amortized cost <sup>[1]</sup> by due date:

**As of March 31, 2024** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **Financial assets with loss allowance measured at<br>lifetime ECL** | **Financial assets with loss allowance measured at<br>lifetime ECL** | **Financial assets with loss allowance measured at<br>lifetime ECL** |  |  |
|  | **Financial<br>assets with loss<br>allowance<br>measured at<br>12-month ECL** | **Accounts<br>receivables for<br>which<br>simplified<br>approach is<br>applied** | **Financial**<br>**assets with**<br>**significant**<br>**increase in**<br>**credit risk**<br>**since initial**<br> **recognition** | **Credit-**<br>**impaired**<br>**financial assets** | **Financial**<br>**assets that are**<br>**purchased or**<br>**originated**<br>**credit-**<br>**impaired** | **Total** |
|  Not past due | 1593048 | 2062 |  |  |  | 1595110 |
|  Within 30 days | 66319 | 54 | 2552 | 1148 | 103 | 70176 |
|  Within 31 to 90 days |  | 97 | 3627 | 3770 | 1300 | 8794 |
|  Over 90 days |  | 393 |  | 25869 | 7191 | 33453 |
|  Total | 1659367 | 2606 | 6179 | 30787 | 8594 | 1707533 |

---

**As of March 31, 2025** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **Financial assets with loss allowance measured at<br>lifetime ECL** | **Financial assets with loss allowance measured at<br>lifetime ECL** | **Financial assets with loss allowance measured at<br>lifetime ECL** |  |  |
|  | **Financial<br>assets with loss<br>allowance<br>measured at<br>12-month ECL** | **Accounts<br>receivables for<br>which<br>simplified<br>approach is<br>applied** | **Financial**<br>**assets with**<br>**significant**<br>**increase in**<br>**credit risk**<br>**since initial**<br> **recognition** | **Credit-**<br>**impaired**<br>**financial assets** | **Financial**<br>**assets that are**<br>**purchased or**<br>**originated**<br>**credit-**<br>**impaired** | **Total** |
|  Not past due | 1479394 | 1914 |  |  |  | 1481308 |
|  Within 30 days | 66830 | 28 | 2781 | 948 | 95 | 70682 |
|  Within 31 to 90 days |  | 3 | 4486 | 3250 | 1383 | 9122 |
|  Over 90 days |  | 494 |  | 36389 | 10103 | 46986 |
|  Total | 1546224 | 2439 | 7267 | 40587 | 11581 | 1608098 |

---

---

| | |
|:---|:---|
| [1] | These assets include cash and cash equivalents, guarantee deposits, accounts receivable, loans and advances to customers, securities and other financial assets on the Group's Consolidated Statements of Financial Position. All of the loss allowance for the financial assets other than credit card receivables and settlement receivables in the tables are measured at 12-month ECL as of March 31, 2024 and 2025. In addition, all of those financial assets except for credit card receivables and settlement receivables were not past due as of March 31, 2024 and 2025.  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Banking business

For the banking business, financial assets are segregated into following credit qualities based on internal risk assessments by debtors.

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Classification of debtors** <br>| **Basis of classification**<br>|
|  Performing | Account not classified as either |
|  Credit Watch | Account designated for elevated attention |
|  At Risk or Default | Account where there is an increased likelihood that default may exist based on qualitative and quantitative factors |

---

**As of March 31, 2024** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  |  | *(In millions of yen)* |
|  |  | **Financial assets with loss allowance<br>measured at lifetime ECL** | **Financial assets with loss allowance<br>measured at lifetime ECL** |  |
|  | **Financial assets with<br>loss allowance<br>measured at<br>12-month ECL** | **Financial**<br>**assets with**<br>**significant**<br>**increase in**<br>**credit risk**<br>**since initial**<br>**recognition** | **Credit-**<br>**impaired**<br>**financial assets** | **Total** |
|  Performing | 1843753 |  |  | 1843753 |
|  Credit Watch |  | 1024 |  | 1024 |
|  At Risk or Default |  |  | 1351 | 1351 |
|  Total | 1843753 | 1024 | 1351 | 1846128 |

---

**As of March 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  |  | *(In millions of yen)* |
|  |  | **Financial assets with loss allowance<br>measured at lifetime ECL** | **Financial assets with loss allowance<br>measured at lifetime ECL** |  |
|  | **Financial assets with<br>loss allowance<br>measured at<br>12-month ECL** | **Financial**<br>**assets with**<br>**significant**<br>**increase in**<br>**credit risk**<br>**since initial**<br>**recognition** | **Credit-**<br>**impaired**<br>**financial assets** | **Total** |
|  Performing | 2143066 |  |  | 2143066 |
|  Credit Watch |  | 1849 |  | 1849 |
|  At Risk or Default |  |  | 1680 | 1680 |
|  Total | 2143066 | 1849 | 1680 | 2146595 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Measurement in loss allowances

The amount of loss allowances is calculated based on PD, LGD and the exposure at default ("EAD") as well as other reasonably available forward-looking information, and measured on a collective basis after grouping the accounts receivables, debt instruments measured at FVTOCI, loans and loan commitments by product and duration of past due.

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The Group considers that there has been a significant increase in credit risk mainly when payments are more than 30 days past due. For loans in the banking business, there has been a significant increase in credit risk when payments are more than 10 days past due or in case of multiple late payments occurred. In assessing whether the credit risk has increased significantly, the Group considers reasonably available and supportable information in addition to past due information.

The Group defines a receivable to be in default mainly when the contractual payment is 90 days or more past due, the contractual conditions have been modified, or the obligor is experiencing significant financial difficulty. Credit impairment is considered to have occurred for receivables that are judged to be in default.

The Group measures the loss allowances of the financial assets at an amount equal to the amount of expected credit losses from possible defaults in the next 12 months after the end of the reporting period if the credit risk has not increased significantly since the initial recognition (12-month expected credit losses). If credit risk on the financial assets at the end of the reporting period have increased significantly since the initial recognition, the loss allowances are measured at an amount equal to the expected credit losses that result from all possible default events over the expected life (lifetime expected credit losses).

However, for accounts receivables result from transactions that are within the scope of IFRS 15, and that do not contain significant financing components, the amount of loss allowances is measured at an amount equal to lifetime expected credit losses, regardless of whether or not there is a significant increase in credit risk from the time of initial recognition.

There was collateral for mortgage loans and guarantee contracts for some loans.

The movements in loss allowances for the financial assets are as follows:

**For the year ended March 31, 2024** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | *(In millions of yen)* |
|  |  | **Financial assets with loss allowance measured at lifetime<br>ECL** | **Financial assets with loss allowance measured at lifetime<br>ECL** | **Financial assets with loss allowance measured at lifetime<br>ECL** |  |
|  | **Financial assets<br>with loss<br>allowance<br>measured at**<br>**12-month ECL** | **Accounts receivables**<br>**for which simplified<br>approach is applied** | **Financial assets<br>with significant<br>increase in<br>credit risk since<br>initial<br>recognition** | **Credit-impaired**<br>**financial assets** | **Total** |
| Balance as of April 1, 2023 | 5881 | 99 | 1687 | 13587 | 21254 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for credit loss, net of reversal | 7029 | 490 | 11 |  | 7530 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Write-offs | (1623) | (0) | (522) | (6077) | (8222) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer between stages | (245) |  | (821) | 1066 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in risk variables | (2220) |  | 953 | 13614 | 12347 |
| Balance as of March 31, 2024 | 8822 | 589 | 1308 | 22190 | 32909 |

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##### [**Table of Contents**](#toc)
**For the year ended March 31, 2025** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | *(In millions of yen)* |
|  |  | **Financial assets with loss allowance measured at lifetime<br>ECL** | **Financial assets with loss allowance measured at lifetime<br>ECL** | **Financial assets with loss allowance measured at lifetime<br>ECL** |  |
|  | **Financial assets<br>with loss<br>allowance<br>measured at**<br>**12-month ECL** | **Accounts<br>receivables for<br>which simplified<br>approach is<br>applied** | **Financial assets<br>with significant<br>increase in credit<br>risk since initial<br>recognition** | **Credit-impaired**<br>**financial assets** | **Total** |
| Balance as of April 1, 2024 | 8822 | 589 | 1308 | 22190 | 32909 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for credit loss, net of reversal | 3851 | (84) | 81 |  | 3848 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Write-offs | (1621) | (1) | (709) | (13622) | (15953) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer between stages | (205) |  | (647) | 852 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in risk variables | (142) |  | 1539 | 23661 | 25058 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (45) |  |  | 29 | (16) |
| Balance as of March 31, 2025 | 10660 | 504 | 1572 | 33110 | 45846 |

---

Loss allowances mainly relate to credit card receivables and loans.

The total amount of undiscounted expected credit losses at initial recognition on financial assets that were purchased or originated credit-impaired as of March 31, 2024 and 2025 were 7,755 million yen and 14,881 million yen, respectively.

There was no significant increase or decrease in the loss allowance relating to financial assets that are purchased or originated credit-impaired.

There was no financial asset that the credit risk that has been modified while the loss allowance was measured at an amount equal to lifetime expected credit losses, has improved to the extent that the loss allowance reverted to being measured at an amount equal to 12-month expected credit losses for the years ended March 31, 2024 and 2025.

There were no significant changes in the gross carrying amount that affected changes in the allowance for the years ended March 31, 2024 and 2025.

The amount of financial assets which has been written off but subject to ongoing collection activity was not significant for the years ended March 31, 2024 and 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Liquidity Risk

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Management of liquidity risk related to financing

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities including derivative instruments that are settled by delivering cash or another financial asset. The Group is exposed to liquidity risk in funding, use and repayment of cash in relation to its business operation. In order to prevent and reduce the liquidity risk, the Group invests, in principle, in highly liquid and low-risk financial instruments. The Group holds a sufficient amount of cash and cash equivalents and

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receivables with maturities of mainly two months so that the Group's liquidity and stability can be ensured. And for the banking business, in order to prevent excessive reliance on short-term funds (overnight to one month) in financing, the Group sets an upper limit on the amount of short-term financing required and monitors compliance with this limit on a daily basis. In addition, the Group monitors the balance of assets that can be converted into cash in order to secure the liquidity in emergencies such as large withdrawals of customers' deposits in the financial businesses.

The Group finances its funds through deposits from customers in the financial businesses, loan payables, commercial papers and financing through liquidation of receivables.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) The balance of financial liabilities by repayment date

The following table details the balance of financial liabilities by repayment date. The contractual cash flow amount below reflects cash flow presented on an undiscounted cash flow basis, including interest expense.

**As of March 31, 2024** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Book value** | **Contractual** <br>**cash flow** | **Within** <br>**1 year** | **Within**<br> **1-2 years** | **Within**<br> **2-3 years** | **Within**<br> **3-4 years** | **Within**<br> **4-5 years** | **More than** <br>**5 years** |
| **Non-derivative financial liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits | 2136577 | 2136634 | 2122237 | 4655 | 3060 | 1293 | 1054 | 4335 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 808449 | 808449 | 808449 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 603218 | 606274 | 376402 | 63739 | 28692 | 35483 | 91446 | 10512 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 30135 | 30135 | 30087 | 48 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 7734 | 7969 | 2243 | 1178 | 986 | 899 | 857 | 1806 |
| **Derivative financial liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 1226 | 1226 | 1226 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 3587339 | 3590687 | 3340644 | 69620 | 32738 | 37675 | 93357 | 16653 |
| **Off-balance sheet item** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Undrawn loan commitments |  | 12381436 | 12381436 |  |  |  |  |  |

---

**As of March 31, 2025** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Book value** | **Contractual <br>cash flow** | **Within** <br>**1 year** | **Within**<br> **1-2 years** | **Within**<br> **2-3 years** | **Within**<br> **3-4 years** | **Within**<br> **4-5 years** | **More than** <br>**5 years** |
| **Non-derivative financial liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits | 2385939 | 2386132 | 2371106 | 3531 | 4065 | 695 | 1761 | 4974 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 949397 | 949397 | 949396 | 1 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 399578 | 401819 | 202992 | 59136 | 37083 | 91446 | 11012 | 150 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 33021 | 33021 | 33017 | 4 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 12097 | 12661 | 2933 | 2373 | 2288 | 2247 | 1805 | 1015 |
| **Derivative financial liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 1186 | 1186 | 1186 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 3781218 | 3784216 | 3560630 | 65045 | 43436 | 94388 | 14578 | 6139 |
| **Off-balance sheet item** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Undrawn loan commitments |  | 9954633 | 9954633 |  |  |  |  |  |

---

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Lines of credit

The Group has lines of credit with financial institutions for borrowing arrangements and liquidation arrangements of credit card receivables. The remaining lines of credit available are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2025** |
|  Committed lines of credit |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | 1812 | 3673 |
| &nbsp;&nbsp;&nbsp;&nbsp; Used |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Remaining | 1812 | 3673 |
|  Uncommitted lines of credit |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | 908400 | 910200 |
| &nbsp;&nbsp;&nbsp;&nbsp; Used | (237600) | (109900) |
| &nbsp;&nbsp;&nbsp;&nbsp; Remaining | 670800 | 800300 |
|  Total remaining lines of credit available | 672612 | 803973 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Market Risk

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Foreign exchange risk management

The Group has exposure to foreign exchange risks on transactions denominated in currencies other than the functional currencies. The main foreign currency used for transactions of the Group is the U.S. dollar ("USD").

The group enters into forward exchange contracts, foreign exchange futures and other contracts in response to currency exposures resulting from on-balance sheet assets and liabilities denominated in foreign currencies in order to limit the net foreign exchange position by currency to an appropriate level.

For the banking business, identifying assets and liabilities subject to foreign exchange risk, the Group sets a risk limit for the investment amount and the present value fluctuation amount arising from that portfolio, and manages its compliance with the limit on a daily basis. In addition, the Group regularly analyzes the changes in present value due to exchange rate fluctuations and monitors the impact on assets and liabilities.

Through the risk management procedures described above, the Group's net foreign exchange risk exposure and the effects on profit or loss before tax and shareholders' equity are not material.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Interest rate risk management

The Group raises capital through interest-bearing borrowings and deposits, including those with floating interest rates, and hence is exposed to the risk of an increase in the interest payments resulting from rising interest rates. In order to prevent or reduce the risk of interest rate fluctuations, the Group maintains an appropriate mix of interest-bearing debt with fixed and floating interest rates to hedge the risk of interest rate fluctuations. For floating interest rate debt, the Group also continuously monitors interest rate fluctuations.

The sensitivity analysis was performed by using balances of the outstanding financial liabilities (including deposits and borrowings bearing floating interest rates) as of March 31, 2024 and 2025, assuming such liabilities were outstanding for the full fiscal year immediately before the respective dates, while holding all other variables constant.

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The effects on profit or loss before tax and shareholders' equity as a result of interest rate fluctuations are as follows:

**As of March 31, 2024** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Profit before tax**  | **Profit before tax**  | **Shareholders' equity**  | **Shareholders' equity**  |
|  | **Increase in interest<br>rate by 1%**  | **Decrease in interest<br>rate by 1%**  | **Increase in interest<br>rate by 1%**  | **Decrease in interest<br>rate by 1%**  |
|  Interest expense | (18165) | 18165 | (12505) | 12505 |

---

**As of March 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Profit before tax**  | **Profit before tax**  | **Shareholders' equity**  | **Shareholders' equity**  |
|  | **Increase in interest<br>rate by 1%**  | **Decrease in interest<br>rate by 1%**  | **Increase in interest<br>rate by 1%**  | **Decrease in interest<br>rate by 1%**  |
|  Interest expense | (18085) | 18085 | (12500) | 12500 |

---

For the banking business, identifying assets and liabilities subject to interest rate risk management, the Group sets a risk limit for the amount of fluctuation in the present value arising from the portfolio and manages compliance with the limit on a daily basis. In addition, the Group regularly analyzes the change in present value in response to changes in the shape of the yield curve (flattening and steepening) and monitors the impact on assets and liabilities. Risk monitoring is carried out by the Risk Management Department, which is independent from the business division, after organizationally separating the front, middle and back offices. Monitoring results are reported internally on a daily basis and regularly to the ALM Committee and the Board of Directors.

At PayPay Bank Corporation, financial assets exposed to interest rate risk are mainly debt instruments. The fluctuation of the fair value of these financial assets, given certain fluctuations in interest rates, is used in quantitative analysis as part of the process to manage interest rate risk. As the debt instruments are measured at FVTOCI, the change in interest rate only affects the shareholders' equity but not profits before tax.

PayPay Bank Corporation calculates the "BPV" (Basis Point Value: the change in market value when interest rates change by 0.01%) for these financial instruments as the change in the present value of the portfolio due to interest rate fluctuations, and uses this for quantitative analysis in interest rate risk management. When calculating BPV, PayPay Bank Corporation breaks down the target financial instruments into appropriate cash flows for each product classification by characteristics of the financial instruments, and applies the change rates derived from interest rate fluctuations for each period determined by the PayPay Bank Corporation.

The fluctuation is based on the assumption that risk variables other than interest rates are held constant, and does not take into account the correlation between interest rates and other risk variables.

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**As of March 31, 2024** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Profit before tax**  | **Profit before tax**  | **Shareholders' equity**  | **Shareholders' equity**  |
|  | **Increase in interest<br>rate by 1%**  | **Decrease in interest<br>rate by 1%**  | **Increase in interest<br>rate by 1%**  | **Decrease in interest<br>rate by 1%**  |
|  Fair value gains (losses) |  |  | 10141 | (10141) |

---

**As of March 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Profit before tax**  | **Profit before tax**  | **Shareholders' equity**  | **Shareholders' equity**  |
|  | **Increase in interest<br>rate by 1%**  | **Decrease in interest<br>rate by 1%**  | **Increase in interest<br>rate by 1%**  | **Decrease in interest<br>rate by 1%**  |
|  Fair value gains (losses) |  |  | 9225 | (9225) |

---

In the calculation of the above table, debt securities held to maturity are excluded as they are not affected by changes in market interest rates.

(3) Fair Value of Financial Instruments

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Group referred to the levels of the fair value hierarchy for financial instruments measured at fair value
in the consolidated financial statements based on the following inputs:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 inputs are quoted prices in active markets for identical assets or liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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 for the years ended March 31, 2024 and 2025.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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, 2024** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Fair value** | **Fair value** | **Fair value** | **Fair value** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  Securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange traded funds | 104473 | 10238 |  | 114711 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity securities | 445 |  |  | 445 |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTOCI |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities | 4323 | 9531 |  | 13854 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities |  | 112792 | 9663 | 122455 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities |  |  | 204271 | 204271 |
|  Other financial assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivative assets | 269 | 2322 |  | 2591 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;109510 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;134883 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;213934 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;458327 |
|  Other financial liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivative liabilities | 250 | 976 |  | 1226 |
|  Total | 250 | 976 |  | 1226 |

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**As of March 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Fair value** | **Fair value** | **Fair value** | **Fair value** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  Securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange traded funds | 132509 |  |  | 132509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity securities | 184 |  |  | 184 |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTOCI |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities | 4639 | 6786 |  | 11425 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities |  | 87492 | 8200 | 95692 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities |  |  | 279442 | 279442 |
|  Other financial assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivative assets | 228 | 2006 |  | 2234 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;137560 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;96284 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;287642 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;521486 |
|  Other financial liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivative liabilities | 102 | 1084 |  | 1186 |
|  Total | 102 | 1084 |  | 1186 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 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, 2024** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Book**<br>**value** | **Fair value**  | **Fair value**  | **Fair value**  | **Fair value**  |
|  | **Book**<br>**value** | <br> **Level 1** | <br> **Level 2** | <br> **Level 3** | <br> **Total** |
|  Financial assets measured at amortized cost |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan and advances |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage loans | 508404 |  |  | 514038 | 514038 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Overdraft | 215178 |  |  | 251109 | 251109 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 193 |  |  | 193 | 193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities | 185880 | 29612 | 139713 |  | 169325 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities | 124281 |  | 115580 |  | 115580 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities | 3260 |  |  | 3267 | 3267 |
|  Total | 1037196 | 29612 | 255293 | 768607 | 1053512 |
|  Financial liabilities measured at amortized cost |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand deposits | 1570373 |  | 1570373 |  | 1570373 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time deposits | 114861 |  | 114775 |  | 114775 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan payables | 491218 |  | 101370 | 387928 | 489298 |
|  Total | 2176452 |  | 1786518 | 387928 | 2174446 |

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**As of March 31, 2025** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Book**<br>**value** | **Fair value**  | **Fair value**  | **Fair value**  | **Fair value**  |
|  | **Book**<br>**value** | <br> **Level 1** | <br> **Level 2** | <br> **Level 3** | <br> **Total** |
|  Financial assets measured at amortized cost |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan and advances |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage loans | 664594 |  |  | 673236 | 673236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Overdraft | 261943 |  |  | 327971 | 327971 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 383 |  |  | 383 | 383 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities | 353590 | 126188 | 220256 |  | 346444 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities | 200015 |  | 195886 |  | 195886 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities | 2891 |  |  | 2866 | 2866 |
|  Total | 1483416 | 126188 | 416142 | 1004456 | 1546786 |
|  Financial liabilities measured at amortized cost |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand deposits | 1688643 |  | 1688643 |  | 1688643 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time deposits | 152393 |  | 152222 |  | 152222 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan payables | 315578 |  | 99354 | 210907 | 310261 |
|  Total | 2156614 |  | 1940219 | 210907 | 2151126 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Fair value of financial instruments is measured as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Debt instruments

Fair values of the debt instruments that consist of Japanese government bonds and municipal bonds 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 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 of corporate bonds are calculated by each contract using discounted future cash flows according to the contract period using an interest rate that reflects the credit risk. Those that are measured using market-observable inputs such as interest rates reflecting external credit ratings are classified as Level 2, and those that use unobservable inputs such as unobservable credit spread of the issuers of the debt instruments are classified as Level 3.

The Risk Management Department quarterly evaluates whether the quoted price meets the eligibility of fair value under IFRS 13 by determining whether there is a certain discrepancy between the quoted price and the price calculated by the Financial Planning Department on a sample basis by type of debt instruments.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Equity instruments

Fair values of the equity instruments that consist of listed shares are evaluated at quoted prices for the identical assets in active markets and those are classified as Level 1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Asset backed securities

These securities include residential mortgage backed, credit card asset backed, installment receivables backed, and other asset backed securities. The markets for these securities are not active, and fair values of the asset backed securities are evaluated using broker or dealer quotations of identical or similar securities where the significant inputs are yields, prepayment rates, default probabilities and loss severities. Because such significant inputs are unobservable, these are classified as Level 3.

The Group monitors whether there is a continuing discrepancy between the quotations from brokers or dealers and the value calculated by the Risk Management Department on a daily basis using discounted future cash flows. In addition, the Risk Management Department quarterly evaluates whether the quoted price meets the eligibility of fair value under IFRS 13 by determining whether there is a certain discrepancy between the quoted price and the price calculated by the Financial Planning Department on a sample basis by type of asset backed securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F) 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.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(G) 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 consists 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The changes in financial instruments categorized as Level 3

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

**For the year ended March 31, 2024** 

---

| | | | |
|:---|:---|:---|:---|
|  | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* |
|  | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** |
|  | **Asset backed<br>securities** | **Debt instruments** | **Total** |
|  Fair value as of April 1, 2023 | 171182 | 11063 | 182245 |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase | 90500 |  | 90500 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total gain or loss for the year: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Included in other comprehensive income or loss | (540) | (0) | (540) |
| &nbsp;&nbsp;&nbsp;&nbsp; Sales and settlement | (56871) | (1400) | (58271) |
| &nbsp;&nbsp;&nbsp;&nbsp; Other |  |  |  |
|  Fair value as of March 31, 2024 | 204271 | 9663 | 213934 |

---

**For the year ended March 31, 2025** 

---

| | | | |
|:---|:---|:---|:---|
|  | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* |
|  | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** |
|  | **Asset backed<br>securities** | **Debt instruments** | **Total** |
|  Fair value as of April 1, 2024 | 204271 | 9663 | 213934 |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase | 138261 |  | 138261 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total gain or loss for the year: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Included in other comprehensive income or loss | (1964) | (63) | (2027) |
| &nbsp;&nbsp;&nbsp;&nbsp; Sales and settlement | (61126) | (1400) | (62526) |
| &nbsp;&nbsp;&nbsp;&nbsp; Other |  |  |  |
|  Fair value as of March 31, 2025 | 279442 | 8200 | 287642 |

---

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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** |
| **Financial assets** | **Valuation technique** | **Significant unobservable inputs** |
|  Asset backed securities | Discounted cash flows | Discount margin/spreads<br> Constant prepayment rate<br> Constant default rate |
|  Loan and advances  | <br> Discounted cash flows  | <br> Credit spread  |
|  Debt instruments | <br> Discounted cash flows  | <br> Credit spread  |

---

The fair values of the asset backed securities 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 and, as such, is unable to provide quantitative information regarding the significant unobservable inputs.

The Group believes that the use of broker or dealer quotes represents the best estimate of fair value, given the lack of active markets and observable inputs for these instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Discount margin/spreads

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, these spreads reduce the net present value of an asset. 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Constant prepayment rate

The constant prepayment rates represent the expected future speed at which a loan portfolio will be repaid ahead of the contractual terms of the underlying loans. Hence, this rate reduces the net present value of the asset backed securities when it is high.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Constant default rate

The constant default rate reflects the percentage of loans within a pool of loans on which the borrowers have fallen behind in making payments to their lender by more than 90 days. Hence, this rate reduces the net present value of the asset backed securities when it is high.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) Credit spread

The credit spread represents the discount rate used when calculating the present value of future cash flows. In discounted cash flow models, such a spread is added to the benchmark rate when discounting the future expected cash flows. Hence, this spread reduces the net present value of debt instruments. The credit spread reflects the additional net yield an investor can earn from a security with more credit risk relative to one with less credit risk.

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(4) Transfers of financial assets that do not meet the requirements for derecognition

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Transfer of financial assets pertaining to Code-based Payment Business

The Group transfers certain settlement receivables included in accounts receivable to an external payment service provider. These transferred receivables subject to recourse obligation that makes the Group obligated to pay in the case of the debtor's default and other specific conditions. As the Group bears credit risks arising from such transactions until collection of receivables, the Group has not substantially transferred all risks and rewards and therefore, such receivables are not derecognized.

The balances of transferred receivables that did not meet the requirement for derecognition of financial assets were 22,390 million yen and 21,615 million yen, which were included in accounts receivable in the Group's Consolidated Statements of Financial Position, as of March 31, 2024 and 2025, respectively. The amounts received due to the transfer were 4,209 million yen and 3,269 million yen, which were included in other financial liabilities in the Group's Consolidated Statements of Financial Position, as of March 31, 2024 and 2025, respectively. As these financial instruments are settled in a short period of time, the carrying amounts are equal to or reasonably approximate to their fair values, and consequently net positions are equal to or reasonably approximate to the difference between the fair value of the transferred assets and the associated liabilities.

This liability will be settled when the payment for the transferred assets by the original debtors is made and the Group is unable to utilize the transferred assets until the settlement is made. The difference between the amount of transferred assets and related liabilities as of March 31, 2024 and 2025 are because of timing difference between the transfer and the collection.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Transfers of receivables arising from the credit card business

The Group transfers certain credit card receivables included in loans and advances to customers to financial institutions. Certain transferred receivables are subject to recourse obligation that makes the Group obligated to pay the transferee in the case of the debtor's default and other conditions. As the Group bears credit risks arising from such transfers until the collection of such receivables, the Group has not substantially transferred all risks and rewards and therefore, such receivables are not derecognized.

The balances of receivables transferred that did not meet the requirement for derecognition of financial assets were 8,271 million yen and 1,144 million yen which were included in loans and advances to customers in the Group's Consolidated Statements of Financial Position, as of March 31, 2024 and 2025, respectively. The amounts received from the transferee were 200,000 million yen and 70,000 million yen, which were included in borrowings in the Consolidated Statements of Financial Position, as of March 31, 2024 and 2025, respectively.

This borrowing will be derecognized when the payment for the transferred receivables by the original debtors received is executed and until such payment is received the Group is unable to utilize the transferred receivables. The difference between the amount of transferred receivables and related borrowing for the years ended March 31, 2024 and 2025 are due to collection of credit card receivables.

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(5) Assets Pledged as Collateral

The carrying amounts of assets pledged as collateral are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2025** |
|  Guarantee deposits <sup>[1][3]</sup> | 92758 | 2133 |
|  Loans and advances to customers <sup>[2]</sup> | 31054 | 30982 |
|  Securities <sup>[1][3]</sup> | 188301 | 249056 |
|  Other <sup>[3]</sup> | 1852 | 3713 |
|  Total | 313965 | 285884 |

---

[1] Securities and Cash are pledged at the Bank of Japan and Japanese Banks' Payment Clearing Network for financing and exchange settlement by PayPay Bank Corporation.

---

| | |
|:---|:---|
| [2] | The Group does not derecognize credit card receivables that are transferred to securitization trusts. The amounts of borrowings from securitization backed by pledged loans and advances to customers was 55,000 million yen as of March 31, 2024 and 2025. The transfers of receivables that do not meet the requirements for derecognition are shown in (ii) Transfers of receivables arising from the credit card business above.  |

---

---

| | |
|:---|:---|
| [3] | Financial institutions have the right to dispose of the assets pledged as collateral and appropriate the amount or offset the amount due in case of a default.  |

---

(6) Offsetting of Financial Assets and Financial Liabilities

The offsetting information regarding financial assets and financial liabilities is as follows:

**As of March 31, 2024** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Gross amounts of<br>recognized financial assets<br>and financial liabilities** | **Amounts offset in<br>Consolidated Statements of<br>Financial Position** | **Net amounts presented in<br>Consolidated Statements of<br>Financial Position** | **Net amounts** |
|  **Financial assets** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Settlement receivables | 59816 | (23685) | 36131 | 36131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other receivables | 12630 | (12630) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit card receivables | 8 | (8) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Receivables from third party operators of deposit machines | 36682 | (29124) | 7558 | 7558 |
|  **Financial liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Settlement payables | 791447 | (35498) | 755949 | 755949 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit card payables | 24082 | (316) | 23766 | 23766 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other payables | 3355 | (8) | 3347 | 3347 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses | 502 | (502) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Suspense receipts | 36942 | (29123) | 7819 | 7819 |

---

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**As of March 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Gross amounts of<br>recognized financial assets<br>and financial liabilities** | **Amounts offset in<br>Consolidated Statements of<br>Financial Position** | **Net amounts presented in<br>Consolidated Statements of<br>Financial Position** | **Net amounts** |
|  **Financial assets** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Settlement receivables | 54611 | (21904) | 32707 | 32707 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other receivables | 15396 | (15396) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit card receivables | 1 | (1) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Receivables from third party operators of deposit machines | 21418 | (16075) | 5343 | 5343 |
|  **Financial liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Settlement payables | 934212 | (36473) | 897739 | 897739 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit card payables | 27742 | (373) | 27369 | 27369 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other payables | 545 | (1) | 544 | 544 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses | 454 | (454) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Suspense receipts | 19496 | (16075) | 3421 | 3421 |

---

The Group has no enforceable master netting arrangement or similar agreement.

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**38.** **Subsidiaries** 

(1) Information on Subsidiaries

The Group's consolidated financial statements include the following subsidiaries.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | | **Percentage of ownership** | **Percentage of ownership** | **Percentage of ownership** |
| <br>**Name**<br>| <br>**Primary business<br>activities** | <br>**Country of<br>incorporation** | **March 31,<br>2023** | **March 31,<br>2024** | **March 31,<br>2025** |
|  PayPay Card Corporation <sup>[1]</sup> | Credit card business | Japan | 100 | 100 | 100 |
|  PayPay India Private Limited | Software development | India | 100 | 100 | 100 |
|  PayPay Bank Corporation <sup>[2]</sup> | Banking business | Japan | 6 | 6 | 6 |
|  PayPay Securities Corporation <sup>[3]</sup> | Security intermediary<br>business | Japan | 20 | 30 | 29 |
|  PPSC Investment Service Corporation <sup>[4]</sup> | PayPay Point<br>investment related<br>business | Japan | 20 | 30 | 29 |
|  Credit Engine Group, Inc. <sup>[5]</sup> | Holding company<br>operation of Credit<br>Engine Group | Japan |  |  | 100 |
|  Credit Engine, Inc. <sup>[5][6]</sup> | Software development | Japan |  |  | 100 |
|  LENDY Servicing, Inc. <sup>[6]</sup> | Servicer | Japan |  |  | 100 |
|  CE Asset, Inc. <sup>[6]</sup> | Servicer | Japan |  |  | 100 |
|  Credit Engine Asia Pte. Ltd. <sup>[6]</sup> | Servicer | Singapore |  |  | 100 |

---

---

| | |
|:---|:---|
| [1] | As stated in Note 4, *Material Accounting Policies*, the Group consolidated the financial statements of PayPay Card Corporation retrospectively from April 1, 2021 as PayPay Card Corporation was acquired through a business combination of entities under common control with Yahoo Japan Corporation (currently LY Corporation).  |

---

---

| | |
|:---|:---|
| [2] | As stated in Note 3, *Restatements and Changes in Presentation*, the Group consolidated the financial statements of PayPay Bank Corporation retrospectively from April 1, 2022 as PayPay Bank Corporation was acquired through a business combination of entities under common control with Z Financial Corporation (currently LY Corporation), a subsidiary of SBG. Refer to Note 8, *Business Combinations* for details.  |

---

---

| | |
|:---|:---|
| [3] | As stated in Note 3, *Restatements and Changes in Presentation*, the Group consolidated the financial statements of PayPay Securities Corporation retrospectively from April 1, 2022 as PayPay Securities Corporation was acquired through a business combination of entities under common control with SoftBank Corp. and LY Corporation, subsidiaries of SBG. Refer to Note 8, *Business Combinations* for details.  |

---

[4] This is the subsidiary of PayPay Securities Corporation as a result of business combinations of entities under common control with SoftBank Corp. and LY Corporation, subsidiaries of SBG.

[5] Effective April 1, 2025, Credit Engine Group, Inc. absorbed its wholly owned subsidiary, Credit Engine, Inc., with the former as the surviving company and the latter as the disappearing company. On the same date, the surviving company changed its corporate name to Credit Engine, Inc.

[6] These are subsidiaries of Credit Engine Group, Inc. as a result of a business combination.

The Group sponsors a number of trusts created with the objective of facilitating securitization transactions for our receivables.

The Group consolidates the trusts and continues to recognize the receivables transferred to the trusts. Other than the investment in the subordinated beneficial interests, the Group does not have any other contractual arrangements that could require the Group to provide financial support to any of the trusts.

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(2) Summarized Financial Information and Other Information on Subsidiaries with Significant Non-controlling Interests

The summarized financial information and other information on subsidiaries with significant non-controlling interests for the years ended March 31, 2023, 2024 and 2025 are as follows:

<u>PayPay Bank Corporation</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) General Information

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31, 2023** | **March 31, 2024** | **March 31, 2025** |
|  Ownership of the non-controlling interests (%) <sup>[1]</sup> | 94 | 94 | 94 |

---

---

| | |
|:---|:---|
| [1] | Non-controlling interests of PayPay Bank Corporation represent the share of PayPay Bank Corporation not owned by the Company's ultimate parent company, SBG, prior to the actual date of the business combination of entities under common control on April 11, 2025. Such non-controlling interests arise as the Company applied the pooling of interests method of accounting for the acquisition of PayPay Bank Corporation retrospectively.  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2024** | **March 31, 2025** | **March 31, 2025** |
| Accumulated amount attributable to non-controlling interests in PayPay Bank Corporation |  | 119562 |  | 119427 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023** | **March 31, 2023** | **March 31, 2024** | **March 31, 2024** | **March 31, 2025** | **March 31, 2025** |
| Profit for the year attributable to non-controlling interests in PayPay Bank Corporation |  | 3562 |  | 5037 |  | 5052 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Summarized financial information

---

| | | | |
|:---|:---|:---|:---|
|  *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |  |
|  | **March 31, 2024** | **March 31, 2025** |  |
|  Total assets | 2051330 | 2179939 |  |
|  Total liabilities | 1918631 | 2048079 |  |
|  Total shareholders' equity | 132699 | 131860 |  |

---

---

| | | | |
|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023** | **March 31, 2024** | **March 31, 2025** |
|  Total revenue | 38187 | 43322 | 49658 |
|  Profit for the year | 3868 | 5483 | 5368 |
| Total comprehensive income for the year, net of tax | 3141 | 4351 | 1915 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023** | **March 31, 2024** | **March 31, 2025** |
| Net cash provided by (used in) operating activities | (10534) | 38709 | 82238 |
|  Net cash used in investing activities | (2858) | (238302) | (102940) |
| Net cash provided by (used in) financing activities | 48358 | 77686 | (3645) |
| Effect of exchange rate changes on cash and cash equivalents | 460 | 392 | (11) |
|  Increase (decrease) in cash and cash equivalents | 35426 | (121515) | (24358) |

---

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**39.** **Related Party Transactions** 

The following tables provide significant balances and related party transactions for the years ended March 31, 2023, 2024 and 2025. For information about the Group's structure, including the parent companies, refer to Note 1, *Reporting Entity*.

(1) Transactions with Related Parties

**For the year ended March 31, 2023** 

Significant balances and transactions between the Group and related parties are as follows:

**<u>Settlement and Other Operating Transactions</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | *(In millions of yen)* |
| **Relationship** | **Name** | **Transactions** | **Profit or<br>loss <sup>[1]</sup>** | **Settlement<br>amounts <sup>[2]</sup>** | **Outstanding receivable<br>(payable) balances <sup>[3]</sup>** |
| <br> Parent company <sup>[4]</sup> | <br> SoftBank Corp. | Granting PayPay Points to users on<br>behalf of SoftBank Corp. <sup>[5]</sup> |  | 17745 | 1509 |
|  |  |  |  |  | (341) |
|  |  | Securitization transaction involving<br> receivables |  | 20513 | 47779 |
| <br> Subsidiary of parent company | SB Payment Service<br>Corporation | Utilizing settlement system for<br> merchants <sup>[6]</sup> | 10695 | 853120 | 94319 |
|  |  |  |  |  | (700) |
| <br> Subsidiary of parent company | Yahoo Japan Corporation<br>(currently LY Corporation) | <br> Rendering settlement service <sup>[7]</sup> | 13768 | 1858411 | (136014) |
|  |  | Bearing PayPay Points for user incentives <sup>[8]</sup> | 16397 |  | (2631) |

---

---

| | |
|:---|:---|
| [1] | Profit or loss shows the amount that is recorded in the Group's Consolidated Statements of Profit or Loss.  |

---

---

| | |
|:---|:---|
| [2] | Settlement amounts show the volume of settlements in millions of yen for settlement related services that are recorded as a balance sheet item and not recorded as profit or loss.  |

---

---

| | |
|:---|:---|
| [3] | The receivable and payable amounts outstanding are unsecured and will be settled in cash.  |

---

[4] SoftBank Corp. was a subsidiary of parent company until September 30, 2022 and became a parent company on October 1, 2022.

---

| | |
|:---|:---|
| [5] | The Group grants PayPay Points to users on behalf of SoftBank Corp. and claims those amounts to SoftBank Corp.  |

---

[6] The Group utilizes SB Payment Service Corporation's settlement system for merchants, which enables users to collectively pay for charging PayPay Balance and Other Items and billings of telecommunication services of SoftBank Corp.

[7] The Group renders settlement services such as for Yahoo Japan Corporation's EC businesses.

[8] The Group pays PayPay Points for user incentives awarded mainly by making purchases on Yahoo Japan Corporation's EC business.

**<u>Financial Transactions</u>**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  |  | *(In millions of yen)* |
| **Relationship** | **Name** | **Transactions** | **Interest**<br> **amounts** | **Outstanding receivable<br>(payable) balances** |
|  <br> Parent company <sup>[1]</sup> | Z Holdings Corporation<br> (currently LY Corporation) | <br> Loan payables and interest expenses | 423 | (95102) |
|  |  | Deposits and interest received | 493 |  |

---

[1] Z Holdings Corporation was a subsidiary of parent company until September 30, 2022 and became a parent company on October 1, 2022.

------

##### [**Table of Contents**](#toc)
**<u>Equity Transactions</u>**

There are no significant impacts either on assets or liabilities as of March 31, 2023 or profit or loss for the year ended March 31, 2023 arising from the transactions listed in the table below.

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* |
| **Relationship** | **Name** | **Transactions** | **Amount** |
|  <br> Subsidiary of parent company | Yahoo Japan Corporation<br> (currently LY Corporation) | <br> Acquisition of shares<sup>[1]</sup> | 63000 |
|  Subsidiary of parent company | Z Financial Corporation<br> (currently LY Corporation) | Issuance of new shares <sup>[2]</sup> | 69933 |

---

[1] On October 1, 2022, the Company acquired all of the shares of PayPay Card Corporation from Yahoo Japan Corporation, a subsidiary of SBG. Refer to Note 8, *Business Combinations* for details.

[2] PayPay Bank Corporation issued Class A preferred shares at 79,200 yen per share.

**For the year ended March 31, 2024** 

Significant balances and transactions between the Group and related parties are as follows:

**<u>Settlement and Other Operating Transactions</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | *(In millions of yen)* |
| **Relationship** | **Name** | **Transactions** | **Profit or<br>loss <sup>[1]</sup>** | **Settlement<br>amounts <sup>[2]</sup>** | **Outstanding receivable<br>(payable) balances <sup>[3]</sup>** |
| Parent company | SoftBank Corp. | Granting PayPay Points to users on behalf of SoftBank Corp. <sup>[4]</sup> |  | 19888 | 3350 |
|  |  |  |  |  | (184) |
|  |  | Securitization transaction involving receivables |  | 51543 | 80278 |
| Parent company | LY Corporation | Rendering settlement service <sup>[5]</sup> | 15701 | 1768955 | (138749) |
|  |  | Bearing PayPay Points for user incentives <sup>[6]</sup> | 6573 |  | (844) |
| Subsidiary of parent company | SB Payment Service<br>Corporation | Utilizing settlement system for merchants <sup>[7]</sup> | 10245 | 912322 | 36144 |
|  |  |  |  |  | (4471) |
|  |  | Rendering settlement service <sup>[7]</sup> |  | 419058 | (22240) |

---

---

| | |
|:---|:---|
| [1] | Profit or loss shows the amount that is recorded in the Group's Consolidated Statements of Profit or Loss.  |

---

---

| | |
|:---|:---|
| [2] | Settlement amounts show the volume of settlements in millions of yen for settlement related services that are recorded as a balance sheet item and not recorded as profit or loss.  |

---

---

| | |
|:---|:---|
| [3] | The receivable and payable amounts outstanding are unsecured and will be settled in cash.  |

---

---

| | |
|:---|:---|
| [4] | The Group grants PayPay Points to users on behalf of SoftBank Corp. and claims those amounts to SoftBank Corp.  |

---

---

| | |
|:---|:---|
| [5] | The Group renders settlement services such as for LY Corporation's EC businesses. The amounts of profit or loss and settlement amount are total of those with Yahoo Japan Corporation on and before September 30, 2023 and those with LY Corporation after September 30, 2023, due to the intra-group reorganizations of LY Corporation on October 1, 2023. Refer to Note 1, *Reporting Entity* for further details of the intra-group reorganizations of LY Corporation.  |

---

[6] The Group pays PayPay Points for expenses of user incentives awarded mainly by making purchases on LY Corporation's EC business.

[7] The Group utilizes SB Payment Service Corporation's settlement system for merchants, which enables users to collectively pay for charging PayPay Balance and Other Items and billings of telecommunication services of SoftBank Corp.

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##### [**Table of Contents**](#toc)
**<u>Financial Transaction</u>**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  |  | *(In millions of yen)* |
| **Relationship** | **Name** | **Transactions** | **Interest**<br> **amounts** | **Outstanding receivable<br>(payable) balances** |
|  Parent company | LY Corporation | Loan payables and interest expenses <sup>[1]</sup> | 502 | (95100) |
|  |  | <br> Deposits and interest received <sup>[1]</sup> | 428 |  |

---

---

| | |
|:---|:---|
| [1] | Interest amount is total of those with Z Holdings Corporation on and before September 30, 2023 and those with LY Corporation after September 30, 2023, due to the intra-group reorganizations of LY Corporation on October 1, 2023. Refer to Note 1, *Reporting Entity* for further details of the intra-group reorganizations of LY Corporation.  |

---

**For the year ended March 31, 2025** 

Significant balances and transactions between the Group and related parties are as follows:

**<u>Settlement and Other Operating Transactions</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | *(In millions of yen)* |
| **Relationship** | **Name** | **Transactions** | **Profit or<br>loss <sup>[1]</sup>** | **Settlement<br>amounts <sup>[2]</sup>** | **Outstanding receivable<br>(payable) balances <sup>[3]</sup>** |
| Parent company | SoftBank Corp. | Granting PayPay Points to users on behalf of SoftBank Corp. <sup>[4]</sup> |  | 36385 | 4546 |
|  |  |  |  |  | (259) |
|  |  | Securitization transaction involving receivables |  | 72914 | 123050 |
| Parent company | LY Corporation | Rendering settlement service <sup>[5]</sup> | 18253 | 1825130 | (148646) |
|  |  | Bearing PayPay Points for user incentives <sup>[6]</sup> | 2814 |  | (474) |
| Subsidiary of parent company | SB Payment Service<br>Corporation | Utilizing settlement system for merchants <sup>[7]</sup> | 8806 | 615825 | 32275 |
|  |  |  |  |  | (3531) |
|  |  | Rendering settlement service <sup>[7]</sup> |  | 721382 | (39036) |

---

---

| | |
|:---|:---|
| [1] | Profit or loss shows the amount that is recorded in the Group's Consolidated Statements of Profit or Loss.  |

---

---

| | |
|:---|:---|
| [2] | Settlement amounts show the volume of settlements in millions of yen for settlement related services that are recorded as a balance sheet item and not recorded as profit or loss.  |

---

---

| | |
|:---|:---|
| [3] | The receivable and payable amounts outstanding are unsecured and will be settled in cash.  |

---

---

| | |
|:---|:---|
| [4] | The Group grants PayPay Points to users on behalf of SoftBank Corp. and claims those amounts to SoftBank Corp.  |

---

[5] The Group renders settlement services such as for LY Corporation's EC businesses.

[6] The Group pays PayPay Points for user incentives awarded mainly by making purchases on LY Corporation's EC business.

[7] The Group utilizes SB Payment Service Corporation's settlement system for merchants, which enables users to collectively pay for charging PayPay Balance and Other Items and billings of telecommunication services of SoftBank Corp.

**<u>Financial Transactions</u>**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  |  | *(In millions of yen)* |
| **Relationship** | **Name** | **Transactions** | **Interest**<br> **amounts** | **Outstanding receivable<br>(payable) balances** |
|  Parent company | LY Corporation | Loan payables and interest expenses | 493 | (50052) |

---

(2) Compensation for Key Executives

The compensation for our key executives (directors) is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
| Types of compensation | **March 31, 2023**  | **March 31, 2024**  | **March 31, 2025**  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remuneration and bonuses | 280 | 231 | 262 |
|  Total | 280 | 231 | 262 |

---

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##### [**Table of Contents**](#toc)
**40.** **Commitments** 

Significant commitments for the purchase of goods and services are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2024** | **March 31, 2025** |
|  Purchase contracts for services | 8460 | 3738 |
|  Intangible assets | 1183 | 1138 |
|  Other | 243 | 192 |
|  Total | 9886 | 5068 |

---

**41.** **Supplemental Cash Flow Information** 

(1) Classification of cash flows in Financial Services segment

The Group classifies the cash flows from changes in assets and liabilities associated with its banking business, such as loans and advances and deposits from customers, as cash flows from operating activities in the Consolidated Statements of Cash Flows because the changes are derived from the principal revenue-producing activities.

(2) Significant Non-cash Transactions

Significant non-cash transactions are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | | | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31, 2023** | **March 31, 2023** | **March 31, 2024** | **March 31, 2024** | **March 31, 2025** | **March 31, 2025** |
| Increase in right-of-use assets |  | 2112 |  | 1852 |  | 8862 |

---

**42.** **Subsequent Events** 

**Acquisitions of PayPay Securities Corporation and PayPay Bank Corporation in April 2025** 

The Company entered into a series of transactions which resulted in the acquisitions of PayPay Securities Corporation and PayPay Bank Corporation carved out from SBG in April 2025. These transactions were completed on April 1, 2025, and April 11, 2025, respectively. Refer to Note 8, *Business Combinations* for further details.

**The Third-party Allotment and the Exercise of the 1st Stock Options in April 2025** 

For the acquisition of PayPay Bank Corporation, the board of directors of the Company authorized the issuance of new shares to SoftBank Corp., LY Corporation, and SVF II Piranha (DE) LLC on December 13, 2024. Based on such authorization, the proceeds from the issuance of new shares in the amount of 105,722 million yen was received on April 10, 2025.

In addition, on April 4, 2025, all of the 1st Stock Options issued by the Company and held by SVF II Piranha (DE) LLC were exercised. Refer to Note 36, *Share-based Payments* for further details of the 1st Stock Options.

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##### [**Table of Contents**](#toc)
The details of the newly issued shares through a third-party allotment and the exercise of the 1st stock options are as follows:

---

| | | |
|:---|:---|:---|
|  | **Third-party allotment**<br>| **Exercise of the 1st Stock Options**<br>|
| Type of issued shares | Common shares | Common shares |
| Number of issued shares | 55,769 thousand shares | 31,802 thousand shares |
| Issue price | 1,896 yen per share | 500 yen per share |
| Total issuance amount | 105,722 million yen | 15,901 million yen |
| Number of shares issued to each underwriter (the stock option holder) | SoftBank Corp. (18,404 thousand shares)<br> LY Corporation (18,404 thousand shares)<br> SVF II Piranha (DE) LLC (18,961 thousand shares) | SVF II Piranha (DE) LLC<br>(31,802 thousand shares) |
| Increase in issued capital | 52,861 million yen | 8,110 million yen |
| Increase in capital reserve | 52,608 million yen | 7,752 million yen |
| Payment period | From March 1, 2025 to August 29, 2025 |  |
| Payment completion date | April 10, 2025 | April 4, 2025 |

---

Note that the number of issued shares and the issue price presented above are retrospectively adjusted in respect of the share split that occurred on November 15, 2025. Refer to the section below *Share Split in November 2025*, for further details.

**Share Split in November 2025** 

(1) Resolution to Approve the Share Split

On October 29, 2025, the Company's Board of Directors approved a share split of the Company's common shares, which is effective as of November 15, 2025.

(2) Purpose of the Share Split

The purpose of the share split is to enhance the liquidity of the Company's shares and to expand the investor base by lowering the investment unit per share.

(3) Overview of the Share Split

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Method of the Share Split

As of November 14, 2025, each share of common stock held by shareholders recorded or registered in the final register of shareholders as on that date was split at a ratio of 200 shares for one share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Number of Shares to Be Increased as a Result of the Share Split

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of shares<br>authorized<br>(thousand shares)** | **Number of shares<br>authorized<br>(thousand shares)** | **Number of shares<br>issued<br>(thousand shares)** | **Number of shares<br>issued<br>(thousand shares)** |
|  Before the share split |  | 8000 |  | 3188 |
|  Increase in shares resulting from the share split |  | 1592000 |  | 634383 |
|  After the share split |  | 1600000 |  | 637571 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Effective Date of the Share Split

November 15, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Accounting Treatment and Impact on Per Share Information

The share split does not affect total equity or shareholders' proportionate interests. However, the number of shares or stock options, the exercise price and the fair value of the shares or stock options, and per share calculations are retrospectively adjusted and disclosed based on the new number of shares. Refer to Note 3, *Restatement and Changes in Presentation* for a detailed description of the manner in which the event affected the presentation of the consolidated financial statements.

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##### [**Table of Contents**](#toc)
**Investment of Binance Japan Inc. in September 2025** 

On September 16, 2025, the Company acquired 40% of the shares of Binance Japan Inc., a cryptocurrency exchange in Japan. The Company will classify the entity as an associate accounted for using the equity method. The financial impact of this acquisition on the consolidated financial statements for the fiscal year ending March 31, 2026, is considered immaterial.

**43.** **Approval of Consolidated Financial Statements** 

The consolidated financial statements have been approved by Wataru Kagechika, Managing Corporate Officer and Chief Financial Officer, on December 17, 2025.

**Schedule I Condensed Financial Information** 

**PayPay Corporation** 

**Condensed Statements of Financial Position** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **April 1, 2023**  | **March 31,<br>2024** | **March 31,<br>2025** |
|  **Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 599959 | 312072 | 133350 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits | 135029 | 297025 | 590878 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 353094 | 382107 | 472813 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 48 | 53 | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities |  | 14395 | 35953 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 326 | 2166 | 11264 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment | 1102 | 1256 | 1666 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use assets | 1218 | 1607 | 2959 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | 11144 | 16407 | 18958 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments in subsidiaries and associates | 100066 | 106622 | 115165 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets |  |  | 12737 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | 4469 | 5095 | 5126 |
|  **Total assets** | 1206455 | 1138805 | 1400920 |
|  **Liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 292362 | 329694 | 391595 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 552720 | 695583 | 842956 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payables | 1174 |  | 2995 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 254767 | 14305 | 21099 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions | 237 | 302 | 745 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 1114 | 1490 | 6744 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | 11776 | 8267 | 14523 |
|  **Total liabilities** | 1114150 | 1049641 | 1280657 |
|  **Shareholders' equity** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issued capital | 116452 | 94180 | 91434 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share premium | 968 | 968 | 968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings (Accumulated deficit) | (25115) | (5984) | 27861 |
|  **Total shareholders' equity** | 92305 | 89164 | 120263 |
|  **Total liabilities and shareholders' equity** | 1206455 | 1138805 | 1400920 |

---

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##### [**Table of Contents**](#toc)
**Condensed Statements of Profit or Loss** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31,<br>2023** | **March 31,<br>2024** | **March 31,<br>2025** |
|  Transaction and service income | 124980 | 167871 | 217432 |
|  Interest income | 30 | 36 | 325 |
|  Gains (losses) on financial instruments | (81) | (59) | 105 |
|  Other operating income | 690 | 1740 | 1439 |
|  **Total revenue** | 125619 | 169588 | 219301 |
|  Point expenses | (52319) | (65078) | (86424) |
|  Settlement related cost | (31937) | (41872) | (46894)  |
|  Employee benefit expenses | (19354) | (21853) | (20972) |
|  Professional and outsourcing services expenses | (14849) | (15480) | (12757) |
|  Provision for loss allowance | 63 | (536) | 93 |
|  Other operating expenses | (31002) | (30416) | (30899) |
|  **Total operating expenses** | (149398) | (175235) | (197853) |
|  **Operating profit (loss)** | (23779) | (5647) | 21448 |
|  **Profit (loss) before tax** | (23779) | (5647) | 21448 |
|  Income tax (expense) benefit | (1914) | 2506 | 9651 |
|  **Profit (loss) for the year** | (25693) | (3141) | 31099 |

---

[1] The above balances included intergroup revenue or expenses, which will be eliminated in the Group's Consolidated Statements of Profit or Loss.

**Condensed Statements of Cash Flows** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the year ended** | **For the year ended** | **For the year ended** |
|  | **March 31,<br>2023** | **March 31,<br>2024** | **March 31,<br>2025** |
|  **Net cash provided by (used in) operating activities** | 206106 | (254620) | (133687) |
|  **Cash flows from (used in) investing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of intangible assets | (7265) | (9235) | (8360) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of investment securities |  | (14394) | (21555) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of shares of subsidiaries and associates | (100070) | (6596) | (8543) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments into term deposits |  | (1740) | (1861) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others | (1595) | (588) | (3641) |
|  **Net cash used in investing activities** | (108930) | (32553) | (43960) |
|  **Cash flows from (used in) financing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments of lease liabilities | (1079) | (714) | (1075) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from capital contributions from shareholders in relation to stock option plans | 1945 |  |  |
|  **Net cash provided by (used in) financing activities** | 866 | (714) | (1075) |
|  **Increase (decrease) in cash and cash equivalents** | 98042 | (287887) | (178722) |
|  **Cash and cash equivalents at the beginning of the year** | 501917 | 599959 | 312072 |
|  **Cash and cash equivalents at the end of the year** | 599959 | 312072 | 133350 |

---

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##### [**Table of Contents**](#toc)
**Note to Condensed Financial Statements - Basis of presentation** 

In accordance with Rule 5-04 of Regulation S-X, stand-alone condensed financial statements of the Company are required to accompany the consolidated financial statements. These condensed financial statements do not include the investment in PayPay Securities Corporation and PayPay Bank Corporation as these were acquired on April 1st and 11th, 2025, respectively. As permitted in IAS 27 "Separate Financial Statements", the investments in subsidiaries are stated at cost as of the respective dates of acquisition and any impairment loss would be recognized in profit or loss.

Using the equity method of accounting for the investments, the Group records total undistributed earnings of subsidiaries other than PayPay Bank Corporation were 30,946 million yen, 25,107 million yen, and 23,582 million yen of decrease in equity as of April 1, 2023, March 31, 2024 and 2025, respectively. Under IAS 28 "Investments in Associates and Joint Ventures", the Group records the share of loss from the earnings of subsidiaries other than PayPay Bank Corporation for 3,121 million yen and 3,172 million yen for the year ended March 31, 2023 and 2024 respectively, and the Group also records the share of income from the earnings of subsidiaries other than PayPay Bank Corporation for 2,690 million yen for the year ended March 31, 2025. The increase in equity and share of income from PayPay Bank Corporation are separately disclosed in Note 38, *Subsidiaries*.

The Company's condensed financial information should be read in conjunction with the Company's consolidated financial statements.

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##### [**Table of Contents**](#toc)
***PayPay Corporation***

**Condensed Consolidated Statements of Financial Position (Unaudited)** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Notes**  | **March 31, <br>2025**  | **December 31,<br>2025**  |
|  **Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 7 | 369811 | 506230 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits | 8 | 244229 | 60097 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Call loans |  | 63000 | 106000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 9 | 141054 | 210970 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 10 | 1927607 | 2325178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 11 | 1075748 | 1606245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  | 23130 | 89261 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment |  | 14493 | 14767 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use assets |  | 14799 | 12865 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | 12 | 65672 | 66928 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill |  | 15157 | 15157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments accounted for using the equity method |  | 1012 | 12955 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets | 13 | 49392 | 105226 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets |  | 37001 | 40284 |
|  Total assets |  | &nbsp;&nbsp;&nbsp;&nbsp;4042105 | &nbsp;&nbsp;&nbsp;&nbsp;5172163 |

---

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##### [**Table of Contents**](#toc)

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Notes**  | **March 31, <br>2025**  | **December 31,<br>2025**  |
|  **Liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 14 | 2385939 | 2980991 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 15 | 949397 | 1210825 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payables |  | 6477 | 7988 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 16 | 399578 | 568309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  | 34207 | 45811 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions |  | 7041 | 7252 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities | 16 | 12097 | 10115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax liabilities |  | 377 | 108 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities |  | 23261 | 20535 |
|  **Total liabilities** |  | 3818374 | 4851934 |
|  **Shareholders' equity** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issued capital | 17 | 91434 | 152405 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share premium | 17 | 13727 | 37260 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings (Accumulated deficit) | 17 | (4887) | 96357 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive loss | 17 | (379) | (1852) |
|  **Equity attributable to owners of the parent company** |  | 99895 | 284170 |
|  Non-controlling interests |  | 123836 | 36059 |
|  **Total shareholders' equity** |  | 223731 | 320229 |
|  **Total liabilities and shareholders' equity** |  | &nbsp;&nbsp;&nbsp;&nbsp;4042105 | &nbsp;&nbsp;&nbsp;&nbsp;5172163 |

---

*See Notes to Condensed Consolidated Financial Statements* 

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##### [**Table of Contents**](#toc)
**Condensed Consolidated Statements of Profit or Loss (Unaudited)** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the nine months ended** | **For the nine months ended** |
|  | **Notes**  | **December 31,<br>2024**  | **December 31,<br>2025**  |
|  Transaction and service income | 18 | 150745 | 185325 |
|  Interest income | 18 | 64426 | 83551 |
|  Gains (losses) on financial instruments | 18 | 3942 | 7657 |
|  Other operating income | 18 | 1334 | 1945 |
|  **Total revenue** |  | 220447 | 278478 |
|  Point expenses |  | (37334) | (44488) |
|  Settlement related cost |  | (32469) | (36348) |
|  Employee benefit expenses |  | (30616) | (32810) |
|  Professional and outsourcing services expenses |  | (21091) | (21300) |
|  Provision for loss allowance |  | (17241) | (17396) |
|  Other operating expenses |  | (53512) | (65128) |
|  **Total operating expenses** | 19 | &nbsp;&nbsp;&nbsp;&nbsp;(192263) | &nbsp;&nbsp;&nbsp;&nbsp;(217470) |
|  **Operating profit** |  | 28184 | 61008 |
|  Share of profit (loss) of investments accounted for using the equity method |  | (383) | 101 |
|  **Profit before tax** |  | 27801 | 61109 |
|  Income tax benefit | 13 | 1156 | 42228 |
|  **Profit for the period** |  | 28957 | 103337 |
| &nbsp;&nbsp;&nbsp;&nbsp; Attributable to |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Owners of the parent company |  | 26483 | 101521 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-controlling interests |  | 2474 | 1816 |
|  |  |  | *(In yen)* |
|  **Earnings per share** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings per share attributable to owners of the parent company <sup>[1]</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic earnings per share | 20 | 48.2 | 159.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Diluted earnings per share | 20 | 48.2 | 159.8 |

---

[1] The share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 17, *Issued Capital and Reserves* for details of share split.

*See Notes to Condensed Consolidated Financial Statements* 

------

##### [**Table of Contents**](#toc)
**Condensed Consolidated Statements of Profit or Loss (Unaudited)** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the three months ended** | **For the three months ended** |
|  | **Notes**  | **December 31,<br>2024**  | **December 31,<br>2025**  |
|  Transaction and service income | 18 | 56400 | 66418 |
|  Interest income | 18 | 22111 | 30238 |
|  Gains (losses) on financial instruments | 18 | 1489 | 2134 |
|  Other operating income | 18 | 395 | 1056 |
|  **Total revenue** |  | 80395 | 99846 |
|  Point expenses |  | (13692) | (16067) |
|  Settlement related cost |  | (11318) | (12447) |
|  Employee benefit expenses |  | (9941) | (11081) |
|  Professional and outsourcing services expenses |  | (7377) | (6486) |
|  Provision for loss allowance |  | (6105) | (6083) |
|  Other operating expenses |  | (18107) | (23126) |
|  **Total operating expenses** | 19 | &nbsp;&nbsp;&nbsp;&nbsp;(66540) | &nbsp;&nbsp;&nbsp;&nbsp;(75290) |
|  **Operating profit** |  | 13855 | 24556 |
|  Share of profit (loss) of investments accounted for using the equity method |  | (131) | 264 |
|  **Profit before tax** |  | 13724 | 24820 |
|  Income tax expenses | 13 | (121) | (5512) |
|  **Profit for the period** |  | 13603 | 19308 |
| &nbsp;&nbsp;&nbsp;&nbsp; Attributable to |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Owners of the parent company |  | 12497 | 18424 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-controlling interests |  | 1106 | 884 |
|  |  |  | *(In yen)* |
|  **Earnings per share** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings per share attributable to owners of the parent company <sup>[1]</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic earnings per share | 20 | 22.7 | 28.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Diluted earnings per share | 20 | 22.7 | 28.9 |

---

[1] The share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 17, *Issued Capital and Reserves* for details of share split.

*See Notes to Condensed Consolidated Financial Statements* 

------

##### [**Table of Contents**](#toc)
**Condensed Consolidated Statements of Comprehensive Income (Unaudited)** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the nine months ended** | **For the nine months ended** |
|  | **Notes**  | **December 31,<br>2024**  | **December 31,<br>2025**  |
|  **Profit for the period** |  | 28957 | 103337 |
|  Other comprehensive income (loss) for the period, net of tax |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Items that may be reclassified subsequently to profit or loss |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in the fair value of debt instruments at FVTOCI |  | (1741) | (1774) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange differences on translation of foreign operations |  | 2 | 4 |
|  **Total comprehensive income for the period, net of tax** |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27218 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;101567 |
| **Total comprehensive income for the period, net of tax attributable to** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Owners of the parent company |  | 26338 | 100079 |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-controlling interests |  | 880 | 1488 |

---

**Condensed Consolidated Statements of Comprehensive Income (Unaudited)** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the three months ended**  | **For the three months ended**  |
|  | **Notes**  | **December 31,<br>2024**  | **December 31,<br>2025**  |
|  **Profit for the period** |  | 13603 | 19308 |
|  Other comprehensive income (loss) for the period, net of tax |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Items that may be reclassified subsequently to profit or loss |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in the fair value of debt instruments at FVTOCI |  | (1248) | (1721) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange differences on translation of foreign operations |  | 14 | 17 |
|  **Total comprehensive income for the period, net of tax** |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12369 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17604 |
| **Total comprehensive income for the period, net of tax attributable to** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Owners of the parent company |  | 12426 | 17146 |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-controlling interests |  | (57) | 458 |

---

*See Notes to Condensed Consolidated Financial Statements* 

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##### [**Table of Contents**](#toc)
**Condensed Consolidated Statements of Changes in Equity (Unaudited)** 

**For the nine months ended December 31, 2024** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** |  |  |
|  | **Notes** | **Issued**<br>**capital** | **Share<br>premium** | **Accumulated<br>deficit** | **Accumulated<br>other<br>comprehensive<br>loss** | **Total** | **Non-**<br>**controlling<br>interests** | **Total<br>shareholders'<br>equity** |
|  **Balance as of April 1, 2024 (Restated)** |  | 94180 | 14617 | (43516) | (119) | 65162 | 126089 | 191251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit for the period |  |  |  | 26483 |  | 26483 | 2474 | 28957 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss |  |  |  |  | (145) | (145) | (1594) | (1739) |
|  **Total Comprehensive income (loss) for the period** |  |  |  | 26483 | (145) | 26338 | 880 | 27218 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to non-controlling interests <sup>[1]</sup> |  |  |  |  |  |  | (2519) | (2519) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to the ultimate parent company <sup>[1]</sup> |  |  |  | (283) |  | (283) |  | (283) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from issued capital to share premium <sup>[2]</sup> |  | (2746) | 2746 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer from share premium to accumulated deficit <sup>[2]</sup> |  |  | (2746) | 2746 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in interests in subsidiaries <sup>[1]</sup> |  |  | 41 |  |  | 41 | (41) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  |  | (406) | 2 |  | (404) | (2) | (406) |
|  **Total transactions with owners and other transactions** |  | (2746) | (365) | 2465 |  | (646) | (2562) | (3208) |
|  **Balance as of December 31, 2024** |  | &nbsp;&nbsp;&nbsp;&nbsp;91434 | &nbsp;&nbsp;&nbsp;&nbsp;14252 | &nbsp;&nbsp;&nbsp;&nbsp;(14568) | &nbsp;&nbsp;&nbsp;&nbsp;(264) | &nbsp;&nbsp;&nbsp;&nbsp;90854 | &nbsp;&nbsp;&nbsp;&nbsp;124407 | &nbsp;&nbsp;&nbsp;&nbsp;215261 |

---

---

| | |
|:---|:---|
| [1] | In relation to business combination of entities under common control, any equity transactions undertaken by subsidiaries under common control with entities outside of the Company and its subsidiaries before the date of the actual transaction by the Company are included within "Dividends paid to the ultimate parent company", "Dividends paid to non-controlling interests", and "Changes in interests in subsidiaries".  |

---

[2] These transfers were carried out to offset the accumulated deficit of the Company. Refer to Note 17, *Issued Capital and Reserves* for details.

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##### [**Table of Contents**](#toc)
**For the nine months ended December 31, 2025** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** | **Equity attributable to owners of the parent company** |  |  |
|  | **Notes** | **Issued**<br>**capital** | **Share<br>premium** | **Retained<br>earnings**<br>**(Accumulated<br>deficit)** | **Accumulated<br>other<br>comprehensive<br>loss** | **Total** | **Non-**<br>**controlling<br>interests** | **Total<br>shareholders'<br>equity** |
|  **Balance as of April 1, 2025** |  | 91434 | 13727 | (4887) | (379) | 99895 | 123836 | 223731 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit for the period |  |  |  | 101521 |  | 101521 | 1816 | 103337 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss |  |  |  |  | (1442) | (1442) | (328) | (1770) |
|  **Total Comprehensive income (loss) for the period** |  |  |  | 101521 | (1442) | 100079 | 1488 | 101567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to non-controlling interests |  |  |  |  |  |  | (2909) | (2909) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to the ultimate parent company |  |  |  | (311) |  | (311) |  | (311) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of new shares | 17 | 60971 | 60360 |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | 121331 |  | 121331 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes due to business combinations of entities under common control - PayPay Securities Corporation and PayPay Bank Corporation | 6 |  | (36827) |  |  | (36827) | (86358) | (123185) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  |  |  | 34 | (31) | 3 | 2 | 5 |
|  **Total transactions with owners and other transactions** |  | 60971 | 23533 | (277) | (31) | 84196 | (89265) | (5069) |
|  **Balance as of December 31, 2025** |  | &nbsp;&nbsp;&nbsp;&nbsp;152405 | &nbsp;&nbsp;&nbsp;&nbsp;37260 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;96357 | (1852) | &nbsp;&nbsp;&nbsp;&nbsp;284170 | &nbsp;&nbsp;&nbsp;&nbsp;36059 | &nbsp;&nbsp;&nbsp;&nbsp;320229 |

---

*See Notes to Condensed Consolidated Financial Statements* 

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##### [**Table of Contents**](#toc)
**Condensed Consolidated Statements of Cash Flows (Unaudited)** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the nine months ended** | **For the nine months ended** |
|  | **Notes**  | **December 31,<br>2024**  | **December 31,<br>2025**  |
|  **Cash flows from (used in) operating activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit before tax |  | 27801 | 61109 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments for: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization |  | 15434 | 18794 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal of property and equipment and intangible assets |  | 493 | 527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other income and costs |  | 88 | (1354) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits | 8 | 69918 | 184132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Call loans |  | 38083 | (43000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 9 | (63448) | (69925) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans and advances to customers | 10 | (323364) | (397571) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities |  | (42908) | (79354) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 14 | 330341 | 595052 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 15 | 247390 | 262435 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  | 42 | (64060) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  | 6831 | 11470 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions |  | (1915) | (73) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | 2361 | (994) |
| &nbsp;&nbsp;&nbsp;&nbsp; **Cash provided by operations** |  | 307147 | 477188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax paid |  | (5730) | (12250) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax refunded |  | 587 | 876 |
|  **Net cash provided by operating activities** |  | 302004 | 465814 |
|  **Cash flows from (used in) investing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of securities | 11 | (341649) | (576449) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of securities | 11 | 128754 | 124813 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of property and equipment |  | (3174) | (4971) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of intangible assets | 12 | (13085) | (13548) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment for acquisition of subsidiaries |  | (5759) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of investment accounted for using the equity method |  | (1360) | (11655) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | (2245) | (2132) |
|  **Net cash used in investing activities** |  | &nbsp;&nbsp;&nbsp;&nbsp;(238518) | &nbsp;&nbsp;&nbsp;&nbsp;(483942) |

---

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##### [**Table of Contents**](#toc)

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  |  | **For the nine months ended** | **For the nine months ended** |
|  | **Notes**  | **December 31,<br>2024**  | **December 31,<br>2025**  |
|  **Cash flows from (used in) financing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net increase (decrease) in borrowings, current | 16 | (63000) | 31000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from long-term borrowings | 16 | 627500 | 1160190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments of long-term borrowings | 16 | (676221) | (1022459) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments of lease liabilities | 16 | (1901) | (2157) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from issuance of new common shares |  |  | 121331 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments for the purchase of the equity interest of subsidiaries, through business combinations of entities under common control | 6 |  | (130185) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to non-controlling interests |  | (2519) | (2909) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to the ultimate parent company |  | (283) | (311) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | (405) |  |
|  **Net cash provided by (used in) financing activities** |  | (116829) | 154500 |
|  **Effect of exchange rate changes on cash and cash equivalents** |  | 96 | 47 |
|  **Increase (decrease) in cash and cash equivalents** |  | (53247) | 136419 |
|  **Cash and cash equivalents at the beginning of the period** | 7 | 744323 | 369811 |
|  **Cash and cash equivalents at the end of the period** | 7 | &nbsp;&nbsp;&nbsp;&nbsp;691076 | &nbsp;&nbsp;&nbsp;&nbsp;506230 |

---

*See Notes to Condensed Consolidated Financial Statements* 

------

##### [**Table of Contents**](#toc)
**Notes to Condensed Consolidated Financial Statements (Unaudited)** 

**1. 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 payment credit 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 49.99% owned directly by B Holdings Corporation, 34.0% by SVF II Piranha (DE) LLC, 8.01% by LY Corporation, and 8.01% 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: Intermediary Holding Company; LY Corporation, A Holdings Corporation, and SoftBank Corp.

On September 16, 2025, the Company acquired 40% of the shares of Binance Japan Inc., an operator of a cryptocurrency exchange in Japan. The Company has classified the entity as an associate accounted for using the equity method.

In addition, the Group has established certain trusts for the purpose of safeguarding deposits for the nine months ended December 31, 2025. These trusts are controlled by the Group in accordance with IFRS 10, "Consolidated Financial Statements" ("IFRS 10"), and are therefore included in the condensed consolidated financial statements. Refer to Note 8, *Guarantee Deposits* for details.

**2. 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, 2024 and 2025, which have been prepared in accordance with IFRS Accounting Standards as issued by 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 values 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.

**3. 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 fiscal years ended March 31, 2024 and 2025, except for the following.

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##### [**Table of Contents**](#toc)
Income taxes

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 Interim Financial Reporting. 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.

**4. Use of Estimates and Judgments** 

The preparation of the Group's condensed consolidated financial statements requires the management to make 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 the 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.

Except for the reassessment of deferred tax assets, the condensed consolidated financial statements are prepared based on the same judgments, estimates, and assumptions as those applied and described in the consolidated financial statements as of and for the years ended March 31, 2024 and 2025. For further details, refer to Note 13, *Income Tax.*

**5.** **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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 payment credit services such as revolving and installment payment options and cash advances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 or loss for each reportable segment is prepared on the same basis as the Group's condensed consolidated financial statements. The total of individual segment profit or loss is equivalent to operating profit or loss presented on the Group's Condensed Consolidated Statements of Profit or Loss.

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##### [**Table of Contents**](#toc)
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 nine months ended December 31, 2024** 

*(In millions of yen)* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Payment**  | **Financial<br> service**  | **Inter-segment**<br> **eliminations**  | **Consolidated**  |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 130550 | 20195 |  | 150745 |
| &nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 977 | 1157 | (2134) |  |
|  Total transaction and service income | 131527 | 21352 | (2134) | 150745 |
|  Interest income | 50440 | 13986 |  | 64426 |
|  Gains (losses) on financial instruments | 143 | 3799 |  | 3942 |
|  Other operating income | 1191 | 143 |  | 1334 |
|  Total revenue | 183301 | 39280 | (2134) | 220447 |
|  Operating expenses | (159148) | (35249) | 2134 | (192263) |
|  Segment profit | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24153 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4031 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28184 |
|  (Reconciliation to profit before tax) |  |  |  |  |
| Share of loss of investments accounted for using the equity method |  |  |  | (383) |
|  Profit before tax |  |  |  | 27801 |

---

**For the nine months ended December 31, 2025** 

*(In millions of yen)* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Payment**  | **Financial<br> service**  | **Inter-segment**<br> **eliminations**  | **Consolidated**  |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 163251 | 22074 |  | 185325 |
| &nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 1071 | 658 | (1729) |  |
|  Total transaction and service income | 164322 | 22732 | (1729) | 185325 |
|  Interest income | 61238 | 22313 |  | 83551 |
|  Gains (losses) on financial instruments | 1977 | 5680 |  | 7657 |
|  Other operating income | 1466 | 479 |  | 1945 |
|  Total revenue | 229003 | 51204 | (1729) | 278478 |
|  Operating expenses | (177969) | (41230) | 1729 | (217470) |
|  Segment profit | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;51034 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9974 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;61008 |
|  (Reconciliation to profit before tax) |  |  |  |  |
| Share of profit of investments accounted for using the equity method |  |  |  | 101 |
|  Profit before tax |  |  |  | 61109 |

---

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**For the three months ended December 31, 2024** 

*(In millions of yen)* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Payment**  | **Financial<br> service**  | **Inter-segment**<br> **eliminations**  | **Consolidated**  |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 48846 | 7554 |  | 56400 |
| &nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 307 | 287 | (594) |  |
|  Total transaction and service income | 49153 | 7841 | (594) | 56400 |
|  Interest income | 17187 | 4924 |  | 22111 |
|  Gains (losses) on financial instruments | 361 | 1128 |  | 1489 |
|  Other operating income | 338 | 57 |  | 395 |
|  Total revenue | 67039 | 13950 | (594) | 80395 |
|  Operating expenses | (54916) | (12218) | 594 | (66540) |
|  Segment profit | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12123 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1732 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13855 |
|  (Reconciliation to profit before tax) |  |  |  |  |
| Share of loss of investments accounted for using the equity method |  |  |  | (131) |
|  Profit before tax |  |  |  | 13724 |

---

**For the three months ended December 31, 2025** 

*(In millions of yen)* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Payment**  | **Financial<br> service**  | **Inter-segment**<br> **eliminations**  | **Consolidated**  |
|  Transaction and service income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue from external customers | 58750 | 7668 |  | 66418 |
| &nbsp;&nbsp;&nbsp;&nbsp; Inter-segment revenue | 587 | 268 | (855) |  |
|  Total transaction and service income | 59337 | 7936 | (855) | 66418 |
|  Interest income | 21518 | 8720 |  | 30238 |
|  Gains (losses) on financial instruments | 175 | 1959 |  | 2134 |
|  Other operating income | 667 | 389 |  | 1056 |
|  Total revenue | 81697 | 19004 | (855) | 99846 |
|  Operating expenses | (62187) | (13958) | 855 | (75290) |
|  Segment profit | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19510 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5046 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24556 |
|  (Reconciliation to profit before tax) |  |  |  |  |
| Share of profit of investments accounted for using the equity method |  |  |  | 264 |
|  Profit before tax |  |  |  | 24820 |

---

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##### [**Table of Contents**](#toc)
**6.** **Business Combinations** 

**For the nine months ended December 31, 2024** 

There were no significant business combinations.

**For the nine months ended December 31, 2025** 

**Acquisition of PayPay Securities Corporation and PayPay Bank Corporation** 

The Company entered a series of transactions and acquired PayPay Securities Corporation and PayPay Bank Corporation from SBG in April 2025.

On April 1, 2025, the Company acquired additional 31.0% common shares of PayPay Securities Corporation, in which the Company had held 35.0% of the common shares prior to the transactions. The common shares were acquired from SoftBank Corp. and LY Corporation, subsidiaries of SBG. PayPay Securities Corporation also issued to the Company additional common shares on April 1, 2025 for total consideration of 12,807 million yen. As a result of the transactions, the Company held 75.2% of the common shares of PayPay Securities Corporation as of April 1, 2025. Also, on April 11, 2025, the Company acquired 47.1% of the common shares and all the non-voting Class A preferred shares of PayPay Bank Corporation from Z Financial Corporation (currently LY Corporation after a merger on August 1, 2025), a subsidiary of SBG, and Mitsui Sumitomo Insurance Co., Ltd. for consideration of 117,378 million yen. After the conversion of the non-voting Class A preferred shares of PayPay Bank Corporation into common shares, effective April 28, 2025, the Company held 75.5% of the common shares of PayPay Bank Corporation.

PayPay Securities Corporation is engaged in the securities intermediary business and PayPay Point investment service related business, and PayPay Bank Corporation is engaged in the internet banking business. Through the transactions, the Group aims to create synergies in the Payment Settlement Services and plans to further expand its market share in the cashless services market by providing PayPay Settlement Services and internet banking and securities intermediary services.

Those transactions were accounted for as business combinations of entities under common control as the Company and PayPay Securities Corporation as well as PayPay Bank Corporation were controlled by SBG before and after the transactions. As business combinations of entities under common control, the Group applied the pooling of interests method, recognizing the effects of the business combination from April 1, 2022. In all periods presented in these condensed consolidated financial statements, the Group recognized the assets, liabilities, and results of operations of PayPay Securities Corporation and PayPay Bank Corporation at the historical book values recorded by SBG in its consolidated financial statements. On April 1 and 11, 2025, the Company acquired common shares of PayPay Securities Corporation and common shares and Class A preferred shares of PayPay Bank Corporation, respectively, increasing the Company's ownership interests. As a result, the Group derecognized non-controlling interest of those entities in total shareholder's equity, which resulted in 86,358 million yen decrease in non-controlling interest and 36,827 million yen decrease in share premium in the Condensed Consolidated Statements of Financial Position as of December 31, 2025. Also, the Group recognized 130,185 million yen cash used in Payments for the purchase of the equity interest of subsidiaries, through business combinations of entities under common control in the Condensed Consolidated Statements of Cash Flows.

As a result of the application of the pooling of interests method, the Group recognized its share of the corresponding goodwill previously recognized by SBG based on historical cost. This goodwill has been allocated to the Group's cash generating unit in which PayPay Securities Corporation's operations are included. There is no goodwill recognized arising from the acquisition of PayPay Bank Corporation.

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**7. Cash and Cash Equivalents** 

Cash and cash equivalents are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025** | **December 31, 2025** |
|  **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and demand deposits | 141289 | 123641 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted cash related to transfers of credit card receivables | 734 | 697 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 142023 | 124338 |
|  **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and demand deposits | 15530 | 17087 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits with the Bank of Japan <sup>[1]</sup> | 212258 | 364805 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 227788 | 381892 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;369811 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;506230 |

---

---

| | |
|:---|:---|
| [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.  |

---

**8. Guarantee Deposits** 

Guarantee deposits are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025**  | **December 31, 2025**  |
|  **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee deposits under Payment Services Act <sup>[1][2][3]</sup> | 219466 | 40013 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 219466 | 40013 |
|  **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other <sup>[3][4]</sup> | 24763 | 20084 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 24763 | 20084 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;244229 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;60097 |

---

---

| | |
|:---|:---|
| [1] | In accordance with the Payment Services Act, the Group is required to safeguard unused prepaid balances held by users of PayPay settlement services through prescribed measures, including making a security deposit (the "guarantee deposit") or investing in government securities with the Legal Affairs Bureau. 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.  |

---

---

| | |
|:---|:---|
| [2] | The Company has held the guarantee deposits and government securities with Legal Affairs Bureau. During the three months ended December 31, 2025, the Group adopted an additional method for safeguarding the unused prepaid balances through the establishment of a consolidated trust. The Group reports the trust arrangement to the Kanto Local Finance Bureau. Through this trust arrangement, the trust made security deposit at PayPay Bank Corporation instead of making a deposit with the Legal Affairs Bureau. However, the funds from the trust held by PayPay Bank Corporation are managed in normal course of the banking business.  |

---

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

[4] These are mainly cash segregated as deposits for customers.

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**9. Accounts Receivable** 

Accounts receivable are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025** | **December 31, 2025** |
|  Settlement receivables <sup>[1][3]</sup> | 94087 | 114307 |
|  Other receivables <sup>[2][3]</sup> | 47819 | 97484 |
|  Loss allowance | (852) | (821) |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;141054 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;210970 |

---

---

| | |
|:---|:---|
| [1] | Receivables 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.  |

---

[2] Other receivables include mainly cash deposits collected by financial institutions from users, but not yet paid out to the Group. The balances were 28,054 million yen and 72,098 million yen as of March 31, 2025 and December 31, 2025, respectively.

[3] These assets are classified as financial assets measured at amortized cost.

**10. Loans and advances to customers** 

Loans and advances to customers are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025** | **December 31, 2025** |
|  **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Credit card receivables | 1045681 | 1269694 |
| &nbsp;&nbsp;&nbsp;&nbsp; Loss allowance  | (43739) | (40905) |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 1001942 | 1228789 |
|  **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortgage loans <sup>[1]</sup> | 664594 | 790760 |
| &nbsp;&nbsp;&nbsp;&nbsp; Overdraft | 261943 | 297855 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 383 | 9662 |
| &nbsp;&nbsp;&nbsp;&nbsp; Loss allowance  | (1255) | (1888) |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 925665 | 1096389 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1927607 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2325178 |

---

---

| | |
|:---|:---|
| [1] | Mortgage loans include the loans acquired from a financial institution with a guarantee up to 1% provided by the seller, which amounts to 187,471 million yen and 179,229 million yen as of March 31, 2025 and December 31, 2025, respectively.  |

---

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**11. Securities** 

Securities are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025** | **December 31, 2025** |
|  **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Government securities <sup>[1]</sup> | 35953 | 72777 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 35953 | 72777 |
|  **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Government securities <sup>[2]</sup> | 329062 | 609448 |
| &nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities <sup>[2]</sup> | 295707 | 405402 |
| &nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities | 282333 | 300602 |
| &nbsp;&nbsp;&nbsp;&nbsp; Exchange traded funds <sup>[3]</sup> | 132509 | 217678 |
| &nbsp;&nbsp;&nbsp;&nbsp; Equity securities | 184 | 338 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 1039795 | 1533468 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1075748 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1606245 |

---

[1] Government securities within Payment segment are purchased for the purpose of meeting the deposit requirement under the Payment Services Act. Refer to Note 8, *Guarantee Deposits* for details.

[2] These securities include assets pledged as collateral at the Bank of Japan and Japanese Banks' Payment Clearing Network.

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

**12. Intangible Assets** 

Changes of intangible assets are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **2024** | **2025** |
|  Balance as of April 1 | 61690 | 65672 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions | 13681 | 13308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization | (10182) | (11614) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (261) | (438) |
|  Balance as of December 31 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;64928 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;66928 |

---

**13. Income Tax** 

The Group regularly assesses the recoverability of deferred tax assets in accordance with IAS 12 "Income Taxes", considering whether it is probable that sufficient taxable profit will be available to utilize deductible temporary differences and carryforward of unused tax losses.

As of December 31, 2025, the Company reassessed the recoverability of its deferred tax assets in light of projections of future taxable profit. As a result, the Company recognized additional deferred tax assets relating to deductible temporary differences and carryforward of unused tax losses that had not been previously recognized. The basis for this conclusion is as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• It has become probable that taxable profit will be generated for two consecutive fiscal years at the end of the
current fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The unused tax losses resulted from identifiable causes that are unlikely to recur in the future.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Based on a critical assessment of historical performance and approved business plans for the next four years,
the Company concluded that sufficient taxable profit is expected to be generated during the periods in which the carryforward of unused tax losses can be utilized.

The Company's deferred tax assets increased by 57,535 million yen for nine months ended December 31, 2025, and such increase was mainly attributable to the recognition of deferred tax assets of 18,795 million yen arising from temporary differences related to deposits and 31,938 million yen arising from the carryforward of unused tax losses.

As a result, deductible temporary differences and carryforward of unused tax losses for which deferred tax assets are not recognized are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025** | **December 31, 2025** |
|  Deductible temporary differences | 135389 | 68876 |
|  Carryforward of unused tax losses | 141868 | 33264 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;277257 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;102140 |

---

Breakdown of carryforward of unused tax losses by expiry date for which deferred tax assets are not recognized are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025** | **December 31, 2025** |
|  Within 1 year | 315 | 887 |
|  Between 1 year and 2 years | 887 | 1529 |
|  Between 2 years and 3 years | 1529 |  |
|  Between 3 years and 4 years |  | 1559 |
|  5 years and after | 139137 | 29289 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;141868 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;33264 |

---

**14. Deposits** 

Deposits are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025** | **December 31, 2025** |
|  **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PayPay Users' deposits <sup>[1][2]</sup> | 391595 | 466734 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 391595 | 466734 |
|  **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand deposits | 1688643 | 2061525 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time deposits | 152393 | 220417 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits from customers in the securities business | 142236 | 221523 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 11072 | 10792 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 1994344 | 2514257 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2385939 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2980991 |

---

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

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---

| | |
|:---|:---|
| [2] | PayPay Users' deposits include PayPay Money which PayPay Users can withdraw at user's discretion. The balance of PayPay Money amounts to 170,030 million yen and 213,604 million yen as of March 31, 2025 and December 31, 2025 respectively.  |

---

**15. Accounts Payable** 

Accounts payable are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025** | **December 31, 2025** |
|  Settlement payable <sup>[1]</sup> | 902682 | 1159957 |
|  Credit card payable <sup>[1]</sup> | 27913 | 29940 |
|  Other payables <sup>[1]</sup> | 18802 | 20928 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;949397 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1210825 |

---

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

**16. Borrowings and Lease Liabilities** 

Components of Borrowings and lease liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **March 31, 2025** | **December 31, 2025** |
|  **Borrowings** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; **Payment:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan payables <sup>[1]</sup> | 213050 | 236325 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial papers | 84000 | 115000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 297050 | 351325 |
| &nbsp;&nbsp;&nbsp;&nbsp; **Financial service:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan payables <sup>[1]</sup> | 102528 | 216984 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 102528 | 216984 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | 399578 | 568309 |
|  **Lease liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Payment | 11121 | 9547 |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial service | 976 | 568 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12097 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10115 |

---

[1] In the Payment segment, the increase mainly arises from a higher balance of securitization of loans and advances to customers. In the Financial service segment, the increase is mainly attributable to a higher balance of repurchase agreements.

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##### [**Table of Contents**](#toc)
**17. Issued Capital and Reserves** 

(1) Authorized Shares and Issued Capital

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The movement of authorized shares and shares issued is as follows:

---

| | | |
|:---|:---|:---|
|  | *(In thousands of shares)* | *(In thousands of shares)* |
|  | **Number of<br>authorized shares** | **Number of**<br> **shares issued <sup>[3][4]</sup>** |
|  Common shares <sup>[1]</sup><sup>[2]</sup> |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; April 1, 2025 | 1600000 | 550000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase during the year <sup>[3]</sup> |  | 87571 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease during the year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; December 31, 2025 <sup>[4]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1600000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;637571 |

---

---

| | |
|:---|:---|
| [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. Refer to Note 21, *Share-based Payments* for details of the number of common shares and the relevant terms.  |

---

[2] The Company conducted a share split, which became effective on November 15, 2025. Under the share split, the Company's common shares were split at a ratio of 200 shares for one share. The number of shares presented above are retrospectively adjusted in respect of the share split.

---

| | |
|:---|:---|
| [3] | During the nine months ended December 31, 2025, the Company implemented a third-party allotment of new shares to SoftBank Corp., LY Corporation, and SVF II Piranha (DE) LLC. Also, all of the 1st Stock Options issued by the Company and held by SVF II Piranha (DE) LLC were exercised. Refer to Note 23, *Related Party Transactions*.  |

---

[4] All common shares are fully paid.

(2) Share Premium and Retained Earnings

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Share Premium

<u>Legal capital reserve</u>

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.

<u>Transaction costs of equity transaction</u>

Transaction costs of an equity transaction were directly deducted from share premium. The amount deducted for the nine months ended December 31, 2025 was 293 million yen.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Retained Earnings

<u>Legal earnings reserve</u>

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.

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##### [**Table of Contents**](#toc)
(3) Accumulated other comprehensive income (loss)

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

---

| | | |
|:---|:---|:---|
|  |  | *(In millions of yen)* |
|  | **Changes in debt<br>instruments measured<br>at FVTOCI** | **Exchange differences on<br>translation of foreign<br>operations** |
|  Balance as of April 1, 2025 | (373) | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive income (loss) (attributable to owners of the parent company) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1476) | 3 |
|  Balance as of December 31, 2025 | (1849) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) |

---

**18. Revenue** 

(1) Disaggregation of Revenue

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

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the nine months ended** | **For the nine months ended** |
|  | **December 31,<br>2024** | **December 31,<br>2025** |
|  Revenue from contracts with customers |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Transaction and service income | 150745 | 185325 |
|  Revenue from other sources |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest income <sup>[1]</sup> | 64426 | 83551 |
| &nbsp;&nbsp;&nbsp;&nbsp; Gains (losses) on financial instruments | 3942 | 7657 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other operating income | 1334 | 1945 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;220447 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;278478 |

---

---

| | | |
|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the three months ended** | **For the three months ended** |
|  | **December 31,<br>2024** | **December 31,<br>2025** |
|  Revenue from contracts with customers |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transaction and service income | 56400 | 66418 |
|  Revenue from other sources |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income <sup>[1]</sup> | 22111 | 30238 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gains (losses) on financial instruments | 1489 | 2134 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other operating income | 395 | 1056 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;80395 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;99846 |

---

---

| | |
|:---|:---|
| [1] | The Group pays guarantee fees to third-party financial institutions to mitigate the credit risk of loans and advances to customers. In accordance with IFRS 9, these guarantee fees, which represent amounts paid by the Group, are included in the calculation under the effective interest method and therefore reduce interest income. The guarantee fees were 13,438 million yen and 15,884 million yen for the nine months ended December 31, 2024 and 2025, respectively, and 4,767 million yen and 5,300 million yen for the three months ended December 31, 2024 and 2025, respectively.  |

---

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##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Disaggregation of revenue from contracts with customers by type of service

**For the nine months ended December 31, 2024** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial<br>service** | **Total**  |
|  Payment Settlement Services |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PayPay Settlement Services | 141058 |  | 141058 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit Payment Settlement Services and Acquiring Services <sup>[1]</sup> | 27271 |  | 27271 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debit Payment Settlement Services |  | 3840 | 3840 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment settlement services deduction <sup>[2]</sup> | (55176) | (974) | (56150) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 113153 | 2866 | 116019 |
|  Financial services |  | 16584 | 16584 |
|  Other <sup>[3][4]</sup> | 17638 | 504 | 18142 |
|  Total <sup>[5]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;130791 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19954 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;150745 |

---

**For the nine months ended December 31, 2025** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial<br>service** | **Total**  |
|  Payment Settlement Services |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PayPay Settlement Services | 181032 |  | 181032 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit Payment Settlement Services and Acquiring Services <sup>[1]</sup> | 33323 |  | 33323 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debit Payment Settlement Services |  | 4056 | 4056 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment settlement services deduction <sup>[2]</sup> | (72801) | (1046) | (73847) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 141554 | 3010 | 144564 |
|  Financial services |  | 17939 | 17939 |
|  Other <sup>[3][4]</sup> | 21697 | 1125 | 22822 |
|  Total <sup>[5]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;163251 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22074 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;185325 |

---

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##### [**Table of Contents**](#toc)
**For the three months ended December 31, 2024** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial<br>service** | **Total**  |
|  Payment Settlement Services |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PayPay Settlement Services | 52047 |  | 52047 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit Payment Settlement Services and Acquiring Services <sup>[1]</sup> | 10211 |  | 10211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debit Payment Settlement Services |  | 1374 | 1374 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment settlement services deduction <sup>[2]</sup> | (19999) | (329) | (20328) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 42259 | 1045 | 43304 |
|  Financial services |  | 5889 | 5889 |
|  Other <sup>[3][4]</sup> | 6828 | 379 | 7207 |
|  Total <sup>[5]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;49087 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7313 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;56400 |

---

**For the three months ended December 31, 2025** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial<br>service** | **Total**  |
|  Payment Settlement Services |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PayPay Settlement Services | 64919 |  | 64919 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit Payment Settlement Services and Acquiring Services <sup>[1]</sup> | 12457 |  | 12457 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debit Payment Settlement Services |  | 1442 | 1442 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment settlement services deduction <sup>[2]</sup> | (26520) | (362) | (26882) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 50856 | 1080 | 51936 |
|  Financial services |  | 6167 | 6167 |
|  Other <sup>[3][4]</sup> | 7894 | 421 | 8315 |
|  Total <sup>[5]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;58750 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7668 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;66418 |

---

---

| | |
|:---|:---|
| [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 8,212 million yen and 8,065 million yen for the nine months ended December 31, 2024 and 2025, respectively, and 2,876 million yen and 2,772 million yen for the three months ended December 31, 2024 and 2025, respectively.  |

---

[2] Payment settlement services deduction mainly consists of rewards given to customers. All the deduction is related to the 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 2,315 million yen and 3,382 million yen for the nine months ended December 31, 2024 and 2025, respectively, and 997 million yen and 1,789 million yen for the three months ended December 31, 2024 and 2025, respectively. These deductions mainly relate to consideration payable to customers in connection with annual membership fees for PayPay Card Gold.  |

---

[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.

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##### [**Table of Contents**](#toc)
**19. Operating Expenses** 

Operating expenses by nature are as follows:

**For the nine months ended December 31, 2024** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial** <br>**service** | **Inter-segment**<br> **eliminations** | **Consolidated**  |
| Point expenses <sup>[1]</sup> | 37334 |  |  | 37334 |
| Settlement related cost <sup>[2]</sup> | 24978 | 7918 | (427) | 32469 |
| Employee benefit expenses | 24574 | 6042 |  | 30616 |
| Professional and outsourcing services expenses <sup>[3]</sup> | 14391 | 6782 | (82) | 21091 |
| Provision for loss allowance | 16841 | 400 |  | 17241 |
| Other operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 10673 | 3813 |  | 14486 |
| &nbsp;&nbsp;&nbsp;&nbsp; License fees | 13359 |  |  | 13359 |
| &nbsp;&nbsp;&nbsp;&nbsp; Advertising and promotion expenses | 4470 | 3035 | (505) | 7000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax and charges | 1754 | 1676 |  | 3430 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expenses | 2003 | 1341 | (621) | 2723 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of contract cost | 948 |  |  | 948 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 7823 | 4242 | (499) | 11566 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 41030 | 14107 | (1625) | 53512 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;159148 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;35249 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2134) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;192263 |

---

**For the nine months ended December 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial** <br>**service** | **Inter-segment**<br> **eliminations** | **Consolidated**  |
| Point expenses <sup>[1]</sup> | 44488 |  |  | 44488 |
| Settlement related cost <sup>[2]</sup> | 28166 | 8773 | (591) | 36348 |
| Employee benefit expenses | 25483 | 7337 | (10) | 32810 |
| Professional and outsourcing services expenses <sup>[3]</sup> | 15228 | 6317 | (245) | 21300 |
| Provision for loss allowance | 16734 | 662 |  | 17396 |
| Other operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 12446 | 5105 |  | 17551 |
| &nbsp;&nbsp;&nbsp;&nbsp; License fees | 13415 | 569 |  | 13984 |
| &nbsp;&nbsp;&nbsp;&nbsp; Advertising and promotion expenses | 5030 | 2362 | (236) | 7156 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax and charges | 1914 | 1612 |  | 3526 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expenses | 2479 | 4859 | (90) | 7248 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of contract cost | 1243 |  |  | 1243 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 11343 | 3634 | (557) | 14420 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 47870 | 18141 | (883) | 65128 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;177969 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;41230 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1729) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;217470 |

---

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##### [**Table of Contents**](#toc)
**For the three months ended December 31, 2024** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial** <br>**service** | **Inter-segment**<br> **eliminations** | **Consolidated**  |
| Point expenses <sup>[1]</sup> | 13692 |  |  | 13692 |
| Settlement related cost <sup>[2]</sup> | 8719 | 2748 | (149) | 11318 |
| Employee benefit expenses | 7760 | 2181 |  | 9941 |
| Professional and outsourcing services expenses <sup>[3]</sup> | 5204 | 2199 | (26) | 7377 |
| Provision for loss allowance | 5953 | 152 |  | 6105 |
| Other operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 3721 | 1290 |  | 5011 |
| &nbsp;&nbsp;&nbsp;&nbsp; License fees | 4472 |  |  | 4472 |
| &nbsp;&nbsp;&nbsp;&nbsp; Advertising and promotion expenses | 1516 | 995 | (204) | 2307 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax and charges | 593 | 543 |  | 1136 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expenses | 604 | 635 | (98) | 1141 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of contract cost | 339 |  |  | 339 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 2343 | 1475 | (117) | 3701 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 13588 | 4938 | (419) | 18107 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;54916 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12218 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(594) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;66540 |

---

**For the three months ended December 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Payment**  | **Financial** <br>**service** | **Inter-segment**<br> **eliminations** | **Consolidated**  |
| Point expenses <sup>[1]</sup> | 16067 |  |  | 16067 |
| Settlement related cost <sup>[2]</sup> | 9640 | 3016 | (209) | 12447 |
| Employee benefit expenses | 8547 | 2543 | (9) | 11081 |
| Professional and outsourcing services expenses <sup>[3]</sup> | 4900 | 1693 | (107) | 6486 |
| Provision for loss allowance | 5706 | 377 |  | 6083 |
| Other operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 4345 | 1722 |  | 6067 |
| &nbsp;&nbsp;&nbsp;&nbsp; License fees | 4631 | 567 |  | 5198 |
| &nbsp;&nbsp;&nbsp;&nbsp; Advertising and promotion expenses | 1898 | 502 | (80) | 2320 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax and charges | 684 | 571 |  | 1255 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expenses | 929 | 1784 | (35) | 2678 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of contract cost | 446 |  |  | 446 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 4394 | 1183 | (415) | 5162 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 17327 | 6329 | (530) | 23126 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;62187 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13958 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(855) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;75290 |

---

[1] Point expenses are incurred primarily when the Group grants reward points to PayPay User through various reward programs, which PayPay User 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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##### [**Table of Contents**](#toc)
**20. 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 nine months ended** | **For the nine months ended** |
|  | **December 31,<br>2024**  | **December 31,<br>2025**  |
| Profit for the period attributable to owners of the parent company (Million yen) | 26483 | 101521 |
| Weighted average number of issued common shares during the period (Thousand shares) <sup>[1]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;550000 | &nbsp;&nbsp;&nbsp;&nbsp;635399 |
|  Basic earnings per share (Yen) <sup>[1]</sup> | 48.2 | 159.8 |

---

---

| | | |
|:---|:---|:---|
|  | **For the three months ended** | **For the three months ended** |
|  | **December 31,<br>2024**  | **December 31,<br>2025**  |
| Profit for the period attributable to owners of the parent company (Million yen) | 12497 | 18424 |
| Weighted average number of issued common shares during the period (Thousand shares) <sup>[1]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;550000 | &nbsp;&nbsp;&nbsp;&nbsp;637571 |
|  Basic earnings per share (Yen) <sup>[1]</sup> | 22.7 | 28.9 |

---

[1] The share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 17, *Issued Capital and Reserves* for details of share split.

(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 nine months ended** | **For the nine months ended** |
|  | **December 31,<br>2024**  | **December 31,<br>2025**  |
| Profit for the period attributable to owners of the parent company (Million yen) | 26483 | 101521 |
| Weighted average number of issued common shares during the period (Thousand shares) <sup>[1]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;550000 | &nbsp;&nbsp;&nbsp;&nbsp;635399 |
|  Effects of dilutive potential common shares <sup>[2]</sup> |  |  |
| Weighted average number of common shares adjusted for the effect of dilution (Thousand shares) <sup>[1]</sup> | 550000 | 635399 |
|  Diluted earnings per share (Yen) <sup>[1]</sup> | 48.2 | 159.8 |

---

------

##### [**Table of Contents**](#toc)

---

| | | |
|:---|:---|:---|
|  | **For the three months ended** | **For the three months ended** |
|  | **December 31,<br>2024**  | **December 31,<br>2025**  |
| Profit for the period attributable to owners of the parent company (Million yen) | 12497 | 18424 |
| Weighted average number of issued common shares during the period (Thousand shares) <sup>[1]</sup> | 550000 | 637571 |
|  Effects of dilutive potential common shares <sup>[2]</sup> |  |  |
| Weighted average number of common shares adjusted for the effect of dilution (Thousand shares) <sup>[1]</sup> | 550000 | 637571 |
|  Diluted earnings per share (Yen) <sup>[1]</sup> | 22.7 | 28.9 |

---

[1] The share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 17, *Issued Capital and Reserves* for details of share split.

---

| | |
|:---|:---|
| [2] | The potential dilutive effect of the 1st series of Stock Options for the nine months and three months ended December 31, 2024 is not disclosed, as the estimated difference between basic and diluted earnings per share was determined not to be material. In addition, the 2nd to 49th series of Stock Options had an IPO condition as their vesting condition and therefore those stock options were not included in the computation of diluted earnings per share for nine months and three months ended December 31, 2024 and for nine months and three months ended December 31, 2025.  |

---

**21. Share-Based Payments** 

Note that the number of the shares or stock options, the exercise price, and the fair value of the shares on the grant date presented below have been retrospectively adjusted in respect of the share split that occurred on November 15, 2025. Refer to Note 17, *Issued Capital and Reserves* for details of share split.

**Expenses Arising from Share-based Payments** 

There were no liabilities and operating expenses recognized in the Group's Condensed Consolidated Statements of Financial Position as of March 31, 2025 and December 31, 2025, and Condensed Consolidated Statements of Profit or Loss for the nine months and three months ended December 31, 2024 and December 31, 2025 in connection with share-based payments, as it was not deemed probable that the IPO condition would be achieved.

**Exercise of 1st Stock Options** 

On April 4, 2025, all of the 1st Stock Options held by SVF II Piranha (DE) LLC were exercised and the weighted average share price at the date of exercise was 1,300 yen. Refer to Note 17, *Issued Capital and Reserves* and Note 23, *Related Party Transactions.*

**Grant of 47th to 49th series of Stock Options** 

(1) Overview of the Stock Option

The Group has stock option plans for directors, corporate officers, and other employees for the purpose of attracting and retaining exceptionally qualified and talented human resources to achieve the Group's business goals.

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##### [**Table of Contents**](#toc)
(2) Stock Options Outstanding

The Group's stock options issued during the nine months ended December 31, 2025 are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Year of grant and name** | **2025 47th Stock Option** | **2025 48th Stock Options** | **2025 49th Stock Options** |
| Grant date | April 28, 2025 | April 28, 2025 | April 28, 2025 |
| Grantee | Employees | Directors and corporate officers | Directors and corporate<br>officers |
| Number of options granted | See the table below <sup>[3]</sup> | See the table below <sup>[3]</sup> | 569 thousand shares |
| Settlement method | Equity settlement | Equity settlement | Equity settlement |
| Exercisable period | See the table below <sup>[3]</sup> | See the table below <sup>[3]</sup> | From June 1, 2025<br> to May 31, 2045 |
| Conditions of vesting | Service condition <sup>[1]</sup><br> IPO condition <sup>[2]</sup> | Service condition <sup>[1]</sup><br> IPO condition <sup>[2]</sup> | IPO condition <sup>[2]</sup> |

---

[1] Service condition

Holders of stock options must be directors, corporate officers, or other permanent employees of the Company or its subsidiaries at the time of exercising the rights. The stock options are forfeited upon resignation from the Group. However, this shall not apply in cases where the Board of Directors approves the condition such as retirement due to expiration of term of office or mandatory retirement age.

[2] IPO condition

Holders of stock options may exercise their stock options only when the Company's shares are listed on a financial instruments exchange market.

[3] Number of stock options granted, exercisable period

The number of 2025 47th and 48th Stock Options by exercisable period is as follows.

**Number of Stock Options granted** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  | *(In thousands of shares)* |
|  | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** | **Exercisable period**<br>**(Five periods)** |
|  | From April 25,<br>2027 to<br>April 23, 2035 | From April 29,<br>2028 to<br>April 23, 2035 | From April 29,<br>2029 to<br>April 23, 2035 | From April 29,<br>2030 to<br>April 23, 2035 | From April 29,<br>2031 to<br>April 23, 2035 | Total |
|  2025 47th Stock Options | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1625 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1582 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1529 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1472 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1417 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7625 |
|  2025 48th Stock Options | 107 | 107 | 107 | 107 | 107 | 535 |

---

(3) Details of the Stock Options

Details of the stock options are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the nine months ended December 31, 2025** | **For the nine months ended December 31, 2025** | **For the nine months ended December 31, 2025** | **For the nine months ended December 31, 2025** | **For the nine months ended December 31, 2025** | **For the nine months ended December 31, 2025** |
|  | **2025 47th Stock Options** | **2025 47th Stock Options** | **2025 48th Stock Options** | **2025 48th Stock Options** | **2025 49th Stock Options** | **2025 49th Stock Options** |
|  | Number of<br>stock<br>options<br>(Thousand<br>shares) | Weighted<br>average<br>exercise<br>price (Yen) | Number of<br>stock<br>options<br>(Thousand<br>shares) | Weighted<br>average<br>exercise<br>price (Yen) | Number of<br>stock<br>options<br>(Thousand<br>shares) | Weighted<br>average<br>exercise<br>price (Yen) |
| Outstanding at the beginning of the period |  |  |  |  |  |  |
|  Granted | 7625 | 1300 | 535 | 1300 | 569 | 1 |

---

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##### [**Table of Contents**](#toc)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the nine months ended December 31, 2025** | **For the nine months ended December 31, 2025** | **For the nine months ended December 31, 2025** | **For the nine months ended December 31, 2025** | **For the nine months ended December 31, 2025** | **For the nine months ended December 31, 2025** |
|  | **2025 47th Stock Options** | **2025 47th Stock Options** | **2025 48th Stock Options** | **2025 48th Stock Options** | **2025 49th Stock Options** | **2025 49th Stock Options** |
|  | Number of<br>stock<br>options<br>(Thousand<br>shares) | Weighted<br>average<br>exercise<br>price (Yen) | Number of<br>stock<br>options<br>(Thousand<br>shares) | Weighted<br>average<br>exercise<br>price (Yen) | Number of<br>stock<br>options<br>(Thousand<br>shares) | Weighted<br>average<br>exercise<br>price (Yen) |
|  Exercised |  |  |  |  |  |  |
|  Forfeited | (194) | 1300 |  |  |  |  |
|  Expired |  |  |  |  |  |  |
| Outstanding at the end of the period <sup>[1]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;7431 | &nbsp;&nbsp;&nbsp;&nbsp;1300 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;535 | &nbsp;&nbsp;&nbsp;&nbsp;1300 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;569 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1 |
| Exercisable at the end of the period |  |  |  |  |  |  |

---

[1] The weighted average remaining contractual lives in relation to the stock options outstanding as of December 31, 2025 were 9.3 years, 9.3 years, and 19.4 years, respectively.

(4) Fair Value Measurement

Fair value of stock options were measured as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Year of grant and name** | **2025 47th Stock Options**  | **2025 48th Stock Options**  | **2025 49th Stock Options**  |
| Weighted average fair value | 488 yen | 409 yen | 472 yen |
| Valuation method used | Monte-Carlo simulation <sup>[1]</sup> | Monte-Carlo simulation <sup>[1]</sup> | Monte-Carlo simulation <sup>[1]</sup> |
| Key inputs and assumptions |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Exercise price | &nbsp;&nbsp;&nbsp;&nbsp; 1,300 yen | &nbsp;&nbsp;&nbsp;&nbsp; 1,300 yen | &nbsp;&nbsp;&nbsp;&nbsp; 1 yen |
| &nbsp;&nbsp;&nbsp;&nbsp; Fair value of share on grant date | &nbsp;&nbsp;&nbsp;&nbsp; 1,300 yen | &nbsp;&nbsp;&nbsp;&nbsp; 1,300 yen | &nbsp;&nbsp;&nbsp;&nbsp; 1,300 yen |
| &nbsp;&nbsp;&nbsp;&nbsp; Exercise period | &nbsp;&nbsp;&nbsp;&nbsp; 10 years | &nbsp;&nbsp;&nbsp;&nbsp; 10 years | &nbsp;&nbsp;&nbsp;&nbsp; 20 years |
| &nbsp;&nbsp;&nbsp;&nbsp; Expected dividend yield | &nbsp;&nbsp;&nbsp;&nbsp; 3.4% | &nbsp;&nbsp;&nbsp;&nbsp; 3.4% | &nbsp;&nbsp;&nbsp;&nbsp; 3.4% |
| &nbsp;&nbsp;&nbsp;&nbsp; Expected volatility <sup>[2]</sup> | &nbsp;&nbsp;&nbsp;&nbsp; 38.6% | &nbsp;&nbsp;&nbsp;&nbsp; 38.6% | &nbsp;&nbsp;&nbsp;&nbsp; 37.6% |
| &nbsp;&nbsp;&nbsp;&nbsp; Risk-free interest rate | &nbsp;&nbsp;&nbsp;&nbsp; 1.3% | &nbsp;&nbsp;&nbsp;&nbsp; 1.3% | &nbsp;&nbsp;&nbsp;&nbsp; 2.1% |

---

[1] Monte-Carlo simulation requires various highly subjective assumptions, including expected volatility, expected life of stock options, expected dividend yield, and fair value of common share at the time of option grants.

[2] The expected volatility was derived from the historical volatility over a period similar to the expected life of the stock options for publicly listed companies that are comparable to the Group.

**Grant of Phantom Stock Awards** 

(1) Overview of Phantom Stock Awards

The Group grants phantom stock awards to certain employees, which are accounted for as cash-settled share-based payment arrangements. The awards become exercisable upon satisfaction of all conditions, including service conditions, an IPO condition, and market conditions. Upon exercise, the Group settles the awards in cash based on the difference between the exercise price and the share price at the exercise date.

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##### [**Table of Contents**](#toc)
(2) Details of Phantom Stock Awards

Details of the awards are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the nine months ended**<br>**December 31, 2025** | **For the nine months ended**<br>**December 31, 2025** |
|  | Number of awards<br>(Thousand) | Weighted average<br>exercise price (Yen) |
|  Outstanding at the beginning of the period | 79 | 1300 |
|  Granted | 155 | 1327 |
|  Exercised |  |  |
|  Forfeited |  |  |
|  Expired |  |  |
|  Outstanding at the end of the period <sup>[1]</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;234 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1318 |
|  Exercisable at the end of the period |  |  |

---

[1] The weighted average remaining contractual lives in relation to the awards outstanding as of December 31, 2025 was 8.6 years.

(3) Fair Value Measurement

Fair value of the awards at the end of the period was measured as follows:

---

| | |
|:---|:---|
|  | **December 31, 2025** |
|  Weighted average fair value | 896 yen |
|  Valuation method used | Monte-Carlo simulation <sup>[1]</sup> |
| Key inputs and assumptions |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Exercise price | 1,300 yen or 1,750 yen |
| &nbsp;&nbsp;&nbsp;&nbsp; Fair value of share at the end of the period | 2,165 yen |
| &nbsp;&nbsp;&nbsp;&nbsp; Exercise period | 10 years |
| &nbsp;&nbsp;&nbsp;&nbsp; Expected dividend yield | See below <sup>[2]</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp; Expected volatility <sup>[3]</sup> | 39.3% - 41.3% |
| &nbsp;&nbsp;&nbsp;&nbsp; Risk-free interest rate | 1.8% - 2.0% |

---

[1] Monte-Carlo simulation requires various highly subjective assumptions, including expected volatility, expected life of the awards, expected dividend yield, and fair value of common share at the end of the period.

---

| | |
|:---|:---|
| [2] | The expected dividend yield was estimated to be zero for the first five years following the IPO and 2.2% from the sixth year onward.  |

---

[3] The expected volatility was derived from the historical volatility over a period similar to the expected life of the awards for publicly listed companies that are comparable to the Group.

**22. Financial Instruments** 

Fair Value of Financial Instruments

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 inputs are quoted prices in active markets for identical assets or liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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, 2025 and December 31, 2025.

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##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Fair value** | **Fair value** | **Fair value** | **Fair value** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  Securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange traded funds | 132509 |  |  | 132509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity securities | 184 |  |  | 184 |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTOCI |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities | 4639 | 6786 |  | 11425 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities |  | 87492 | 8200 | 95692 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities |  |  | 279442 | 279442 |
|  Other financial assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivative assets | 228 | 2006 |  | 2234 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;137560 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;96284 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;287642 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;521486 |
|  Other financial liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivative liabilities | 102 | 1084 |  | 1186 |
|  Total | 102 | 1084 |  | 1186 |

---

**As of December 31, 2025** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* | *(In millions of yen)* |
|  | **Fair value** | **Fair value** | **Fair value** | **Fair value** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  Securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange traded funds | 217678 |  |  | 217678 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity securities | 338 |  |  | 338 |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTOCI |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities | 54341 | 4894 |  | 59235 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities | 4714 | 84865 | 7454 | 97033 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities |  |  | 297995 | 297995 |
|  Other financial assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivative assets | 190 | 2280 |  | 2470 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;277261 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;92039 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;305449 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;674749 |
|  Other financial liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities measured at FVTPL |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivative liabilities | 110 | 1055 |  | 1165 |
|  Total | 110 | 1055 |  | 1165 |

---

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##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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, 2025** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Book<br>value** | **Fair value** | **Fair value** | **Fair value** | **Fair value** |
|  | **Book<br>value** | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  Financial assets measured at amortized cost |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Loan and advances |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage loans | 664594 |  |  | 673236 | 673236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Overdraft | 261943 |  |  | 327971 | 327971 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 383 |  |  | 383 | 383 |
| &nbsp;&nbsp;&nbsp;&nbsp; Securities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities | 353590 | 126188 | 220256 |  | 346444 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities | 200015 |  | 195886 |  | 195886 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities | 2891 |  |  | 2866 | 2866 |
|  Total | 1483416 | 126188 | 416142 | 1004456 | 1546786 |
|  Financial liabilities measured at amortized cost |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand deposits | 1688643 |  | 1688643 |  | 1688643 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time deposits | 152393 |  | 152222 |  | 152222 |
| &nbsp;&nbsp;&nbsp;&nbsp; Borrowings |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan payables | 315578 |  | 99354 | 210907 | 310261 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;2156614 |  | &nbsp;&nbsp;&nbsp;&nbsp;1940219 | &nbsp;&nbsp;&nbsp;&nbsp;210907 | &nbsp;&nbsp;&nbsp;&nbsp;2151126 |

---

**As of December 31, 2025** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **Book<br>value** | **Fair value** | **Fair value** | **Fair value** | **Fair value** |
|  | **Book<br>value** | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  Financial assets measured at amortized cost |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Loan and advances |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage loans | 790760 |  |  | 790091 | 790091 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Overdraft | 297855 |  |  | 325457 | 325457 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 9662 |  |  | 9662 | 9662 |
| &nbsp;&nbsp;&nbsp;&nbsp; Securities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt instruments |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government securities | 622990 | 223395 | 387073 |  | 610468 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and other debt securities | 308369 |  | 301126 |  | 301126 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities | 2607 |  |  | 2607 | 2607 |
|  Total | &nbsp;&nbsp;&nbsp;&nbsp;2032243 | &nbsp;&nbsp;&nbsp;&nbsp;223395 | &nbsp;&nbsp;&nbsp;&nbsp;688199 | &nbsp;&nbsp;&nbsp;&nbsp;1127817 | &nbsp;&nbsp;&nbsp;&nbsp;2039411 |
|  Financial liabilities measured at amortized cost |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand deposits | 2061525 |  | 2061525 |  | 2061525 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time deposits | 220417 |  | 220335 |  | 220335 |
| &nbsp;&nbsp;&nbsp;&nbsp; Borrowings |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan payables <sup>[1]</sup> | 453309 |  | 214220 | 233211 | 447431 |
|  Total | 2735251 |  | 2496080 | 233211 | 2729291 |

---

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| | |
|:---|:---|
| [1] | The Company identified an error in relation to inaccurate aggregation of the amount of the fair value for Loan payables categorized as level 3. The Company has corrected the error to present the correct amount of the fair value. This correction does not have any significant impact on the condensed consolidated financial statements as of and for nine months ended December 31, 2025. The date of approval of the condensed consolidated financial statements has not been revised.  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Fair value of financial instruments is measured as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Debt instruments

Fair values of the debt instruments that consist of Japanese government bonds and municipal bonds 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 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 of corporate bonds are calculated by each contract using discounted future cash flows according to the contract period using an interest rate that reflects the credit risk. Those that are measured using market-observable inputs such as interest rates reflecting external credit ratings are classified as Level 2, and those that use unobservable inputs such as unobservable credit spread of the issuers of the debt instruments are classified as Level 3.

The Risk Management Department quarterly evaluates whether the quoted price meets the eligibility of fair value under IFRS 13 by determining whether there is a certain discrepancy between the quoted price and the price calculated by the Financial Planning Department on a sample basis by type of debt instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Equity instruments

Fair values of the equity instruments that consist of listed shares are evaluated at quoted prices for the identical assets in active markets and those are classified as Level 1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Asset backed securities

These securities include residential mortgage backed, credit card asset backed, installment receivables backed, and other asset backed securities. The markets for these securities are not active, and fair values of the asset backed securities are evaluated using broker or dealer quotations of identical or similar securities where the significant inputs are yields, prepayment rates, default probabilities, and loss severities. Because such significant inputs are unobservable, these are classified as Level 3.

The Group monitors whether there is a continuing discrepancy between the quotations from brokers or dealers and the value calculated by the Risk Management Department on a daily basis using discounted future cash flows. In addition, the Risk Management Department quarterly evaluates whether the quoted price meets the eligibility of fair value under IFRS 13 by determining whether there is a certain discrepancy between the quoted price and the price calculated by the Financial Planning Department on a sample basis by type of asset backed securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) 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.

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##### [**Table of Contents**](#toc)
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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) 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 significant unobservable input, these are classified as Level 3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F) 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(G) 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 consists 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The changes in financial instruments categorized as Level 3

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

**For the nine months ended December 31, 2024** 

---

| | | | |
|:---|:---|:---|:---|
|  | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* |
|  | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** |
|  | **Asset backed<br>securities** | **Debt instruments** | **Total** |
|  Fair value as of April 1, 2024 | 204271 | 9663 | 213934 |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase | 76700 |  | 76700 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total gain or loss for the period: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Included in other comprehensive income or loss | (981) | (27) | (1008) |
| &nbsp;&nbsp;&nbsp;&nbsp; Sales and settlement | (45039) | (700) | (45739) |
|  Fair value as of December 31, 2024 | 234951 | 8936 | 243887 |

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##### [**Table of Contents**](#toc)
**For the nine months ended December 31, 2025** 

---

| | | | |
|:---|:---|:---|:---|
|  | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* |
|  | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** |
|  | **Asset backed<br>securities** | **Debt instruments** | **Total** |
|  Fair value as of April 1, 2025 | 279442 | 8200 | 287642 |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase | 76200 |  | 76700 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total gain or loss for the period: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Included in other comprehensive income or loss | 420 | (46) | 374 |
| &nbsp;&nbsp;&nbsp;&nbsp; Sales and settlement | (58067) | (700) | (58767) |
|  Fair value as of December 31, 2025 | 297995 | 7454 | 305449 |

---

**For the three months ended December 31, 2024** 

---

| | | | |
|:---|:---|:---|:---|
|  | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* |
|  | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** |
|  | **Asset backed<br>securities** | **Debt instruments** | **Total** |
|  Fair value as of October 1, 2024 | 228264 | 8976 | 237240 |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase | 23500 |  | 23500 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total gain or loss for the period: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Included in other comprehensive income or loss | (725) | (40) | (765) |
| &nbsp;&nbsp;&nbsp;&nbsp; Sales and settlement | (16088) |  | (16088) |
|  Fair value as of December 31, 2024 | 234951 | 8936 | 243887 |

---

**For the three months ended December 31, 2025** 

---

| | | | |
|:---|:---|:---|:---|
|  | *(in millions of yen)* | *(in millions of yen)* | *(in millions of yen)* |
|  | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** | **Financial assets measured at FVTOCI** |
|  | **Asset backed<br>securities** | **Debt instruments** | **Total** |
|  Fair value as of October 1, 2025 | 289644 | 7508 | 297152 |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase | 29200 |  | 29200 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total gain or loss for the period: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Included in other comprehensive income or loss | (211) | (53) | (264) |
| &nbsp;&nbsp;&nbsp;&nbsp; Sales and settlement | (20638) | (1) | (20639) |
|  Fair value as of December 31, 2025 | 297995 | 7454 | 305449 |

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##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Financial assets** | **Valuation technique** | **Significant unobservable inputs** |  |  |  |
| **Financial assets** | **Valuation technique** | **Significant unobservable inputs** | Asset backed securities | Discounted cash flows | Discount margin/spreads<br> Constant prepayment rate<br> Constant default rate |
|  Loan and advances | Discounted cash flows | Credit spread |  |  |  |
|  Debt instruments | Discounted cash flows | Credit spread |  |  |  |

---

The fair values of the asset backed securities 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 and, as such, is unable to provide quantitative information regarding the significant unobservable inputs.

The Group believes that the use of broker or dealer quotes represents the best estimate of fair value, given the lack of active markets and observable inputs for these instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Discount margin/spreads

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, these spreads reduce the net present value of an asset. 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Constant prepayment rate

The constant prepayment rates represent the expected future speed at which a loan portfolio will be repaid ahead of the contractual terms of the underlying loans. Hence, this rate reduces the net present value of the asset backed securities when it is high.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Constant default rate

The constant default rate reflects the percentage of loans within a pool of loans on which the borrowers have fallen behind in making payments to their lender by more than 90 days. Hence, this rate reduces the net present value of the asset backed securities when it is high.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) Credit spread

The credit spread represents the discount rate used when calculating the present value of future cash flows. In discounted cash flow models, such a spread is added to the benchmark rate when discounting the future expected cash flows. Hence, this spread reduces the net present value of debt instruments. The credit spread reflects the additional net yield an investor can earn from a security with more credit risk relative to one with less credit risk.

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##### [**Table of Contents**](#toc)
**23.** **Related Party Transactions** 

The following tables provide significant changes for the nine months ended December 31, 2025 in related party transactions from those disclosed in the Group's consolidated financial statements for the year ended March 31, 2025.

**<u>Equity Transactions</u>**

There are no significant impacts either on assets or liabilities as of December 31, 2025 or profit or loss for the nine months ended December 31, 2025 arising from the transactions listed in the table below.

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | *(In millions of yen)* |
| **Relationship** | **Name** | **Transactions** | **Amount** |
|  Parent company | SoftBank Corp. | Acquisition of shares <sup>[1]</sup> | 5727 |
|  |  | Issuance of new shares <sup>[3]</sup> | 34889 |
|  Other affiliated company | SVF II Piranha (DE) LLC | Exercise of stock options <sup>[2]</sup> | 15901 |
|  |  | Issuance of new shares <sup>[3]</sup> | 35944 |
|  Parent company | LY Corporation | Acquisition of shares <sup>[1]</sup> | 80 |
|  |  | Issuance of new shares <sup>[3]</sup> | 34889 |
|  Subsidiary of parent company | Z Financial Corporation<br>(currently LY Corporation <sup>[5]</sup>) | Acquisition of shares <sup>[4]</sup> | 117000 |

---

[1] On April 1, 2025, the Company acquired Common shares of PayPay Securities Corporation at 100,000 yen per share.

[2] On April 4, 2025, all of the 1st Stock Options issued by the Company and held by SVF II Piranha (DE) LLC were exercised.

[3] On April 10, 2025, the Company issued Common shares through a third-party allotment.

[4] On April 11, 2025, the Company acquired Common and Class A preferred shares of PayPay Bank Corporation at 94,584 yen per share.

[5] Z Financial Corporation was merged into LY Corporation on August 1, 2025.

**24.** **Commitments** 

The Group entered into significant commitments for the purchase of goods and services for the nine months ended December 31, 2024, amounting to 14,297 million yen, which primarily included commitments related to leasing and the purchase of fixed assets for an office and related to marketing expense, and as of December 31, 2025, amounting to 28,193 million yen, which primarily included commitments for the purchase of licenses for cloud computing platforms.

**25.** **Supplemental Cash Flow Information** 

(1) Classification of cash flows in Financial services segment

The Group classifies the cash flows from changes in assets and liabilities associated with its banking business, such as loans and advances and deposits from customers, as cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2024 and 2025, because the changes are derived from the principal revenue-producing activities.

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##### [**Table of Contents**](#toc)
(2) Significant Non-cash Transactions

Significant non-cash transactions are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* | *(In millions of yen)* |
|  | **For the nine months ended** | **For the nine months ended** | **For the nine months ended** | **For the nine months ended** |
|  | **December 31,<br>2024** | **December 31,<br>2024** | **December 31,<br>2025** | **December 31,<br>2025** |
|  Increase in right-of-use assets |  | 1075 |  | 677 |

---

**26.** **Subsequent Events** 

There are no significant subsequent events to be disclosed.

**27.** **Approval of Condensed Consolidated Financial Statements** 

The condensed consolidated financial statements have been approved by Wataru Kagechika, Managing Corporate Officer and Chief Financial Officer on February 12, 2026.

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##### [**Table of Contents**](#toc)
**54,987,214 American Depositary Shares**![LOGO](g941409g51q72.jpg)

**Representing 54,987,214 Shares of Common Stock** 

**PROSPECTUS** 

***(in alphabetical order)***

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| | | | |
|:---|:---|:---|:---|
| **Goldman Sachs & Co. LLC** | **J.P. Morgan** | **Mizuho** | **Morgan Stanley** |

---

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| | | | | |
|:---|:---|:---|:---|:---|
| **Citigroup** | **Jefferies** | **BofA Securities** | **Societe Generale** | **Wolfe \| Nomura Alliance** |

---

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Cantor** | **Credit Agricole**<br> **CIB** | **Daiwa Capital**<br> **Markets** | **Deutsche Bank**<br> **Securities** | **Natixis** | **SMBC Nikko** |

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| | | | |
|:---|:---|:---|:---|
|  **ING** | **Barclays** | **IMI – Intesa Sanpaolo** | **Santander** |

---

Through and including , 2026 (the 25th day after the date of this prospectus), all dealers effecting transactions in these ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

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##### [**Table of Contents**](#toc)
**PART II** 

**INFORMATION NOT REQUIRED IN PROSPECTUS** 

**Item 6.** **Indemnification of Directors and Officers** <br>

Article 330 of the Companies Act makes the provisions of Part III, Chapter 2, Section 10 of the Civil Code of Japan (Act No. 89 of 1896, as amended) applicable to the relationship between us and our directors. Section 10 of the Civil Code, among other things, provides in effect that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Any director of a company may demand advance payment of expenses which are considered necessary for the
management of the affairs of such company entrusted to such director;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) If a director of a company has defrayed any expenses which are considered necessary for the management of
the affairs of such company entrusted to such director, such director may demand reimbursement therefor and interest thereon after the date of payment from such company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) If a director has assumed an obligation necessary for the management of the affairs of a company entrusted
to such director, such director may require such company to perform it in place of such director or, if it is not due, to furnish adequate security; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) If a director, without any fault on such director part, sustains damage through the management of the
affairs of a company entrusted to such director, such director may demand compensation therefor from such company.

Pursuant to Article 427, paragraph 1 of the Companies Act and our articles of incorporation, we have entered into an agreement with each of our non-executive directors providing that such director's liability for damages to us shall be limited to the amount prescribed by applicable laws and regulations, provided that such director has acted in good faith and without gross negligence.

Further, pursuant to Article 426, paragraph 1 of the Companies Act and our articles of incorporation, we may, by resolution of the board of directors, release any of our directors from liability for damages to us, provided that such director has acted in good faith and without gross negligence to the extent permitted by applicable laws and regulations.

We maintain a liability insurance policy for each of our directors, corporate officers and senior employees, as well as our directors, corporate officers and employees who are dispatched by us to other companies (excluding our subsidiaries) to take office as a director or officer of such companies. The policy insures each of those persons against certain liabilities that they may incur in their capacity. ****

The form of underwriting agreement to be filed as Exhibit 1.1 to this registration statement will also provide for indemnification of us and our directors and corporate officers.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

**Item 7.** **Recent Sales of Unregistered Securities** <br>

The following sets forth information regarding all unregistered securities sold since April 1, 2022. None of these transactions involved any underwriters' underwriting discounts or commissions, or any public offering.

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##### [**Table of Contents**](#toc)
We believe that each of the following transactions was exempt from registration under the Securities Act in reliance on Regulation S or Rule 701 under the Securities Act or pursuant to Section 4(2) of the Securities Act regarding transactions not involving a public offering.

***Common Shares***

On April 1, 2022, we issued 140,000 common shares to SoftBank Corp., 280,000 common shares to SVF II Piranha (DE) LLC and 140,000 common shares to Yahoo Japan Corporation in exchange of the same number of Class A preferred shares held by them, respectively.

On October 1, 2022, we issued 545,000 common shares to SoftBank Corp. and 545,000 common shares to Z Intermediate Holdings Corporation in exchange of the same number of Class A preferred shares held by them, respectively.

On April 10, 2025, we conducted a third-party allotment of new shares in which we issued 94,802 shares of common stock to SVF II Piranha (DE) LLC, 92,021 shares of common stock to SoftBank Corp. and 92,021 shares of common stock to LY Corporation.

***Stock Options***

On August 29, 2022, we issued 4,215 2nd series stock options, 4,215 3rd series stock options, 4,215 4th series stock options, 4,215 5th series stock options, 4,186 6th series stock options, 2,080 7th series stock options, 1,929 8th series stock options, 1,929 9th series stock options, 1,929 10th series stock options, 1,929 11th series stock options, 1,795 12th series stock options, 1,642 13th series stock options, 1,622 14th series stock options, 1,542 15th series stock options, 1,542 16th series stock options, 1,242 17th series stock options, 1,242 18th series stock options, 962 19th series stock options, 542 20th series stock options 542 21st series stock options, 871 22nd series stock options, 871 23rd series stock options, 806 24th series stock options, 806 25th series stock options, 626 26th series stock options, 365 27th series stock options, 365 28th series stock options, 365 29th series stock options, 365 30th series stock options, 365 31st series stock options, 420 32nd series stock options, 420 33rd series stock options, 420 34th series stock options, 400 35th series stock options, 400 36th series stock options, 533 37th series stock options, 533 38th series stock options, 518 39th series stock options, 518 40th series stock options, 518 41st series stock options, 836 42nd series stock options, 836 43rd series stock options, 836 44th series stock options, 836 45th series stock options and 836 46th series stock options, upon exercise of which each stock option will entitle the holder to purchase 200 shares of our common stock (adjusted for the Stock Split) at an exercise price of JPY 260,000 per option, and allocated them to Kotaeru Trust Co., Ltd., which will subsequently deliver such stock options in the future in accordance with the trust agreement between Kotaeru Trust Co., Ltd. and SoftBank Corp. and the trust agreement between Kotaeru Trust Co., Ltd. and LY Corporation to directors, corporate officers and employees of us and our subsidiaries designated by us as beneficiaries of the trusts in accordance with the trust management agreement between us, Kotaeru Trust Co., Ltd. and Kotaeru Holdings Co., Inc.

On May 31, 2025, we granted 38,127 47th series stock options and 2,675 48th series stock options, upon exercise of which each option will entitle the holder to purchase 200 shares of our common stock (adjusted for the Stock Split) at an exercise price of JPY 260,000 per option, and 2,845 49th series stock options, upon exercise of which each stock option will entitle the holder to purchase 200 shares of our common stock (adjusted for the Stock Split) at an exercise price of JPY 1 per share.

**Item 8.** **Exhibits and Financial Statement Schedules** <br>

**(a)**  ***Exhibits*** 

See Exhibit Index beginning on page II-4 of this Registration Statement.

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##### [**Table of Contents**](#toc)
**(b)**  ***Financial Statement Schedules.*** 

All supplement schedules are omitted because of the absence of conditions under which they are required or because the information is shown in the financial statements or notes thereto.

**(c)**  ***Calculation of Registration Fee.*** 

See Exhibit 107 to this Registration Statement.

**Item 9.** **Undertakings** <br>

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant under the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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##### [**Table of Contents**](#toc)
**EXHIBIT INDEX** 

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| | |
|:---|:---|
| **Exhibit<br>No.** | **Description of Exhibit** |
| 1.1\* | [Form of Underwriting Agreement](d941409dex11.htm) |
| 3.1\*\* | [Articles of Incorporation of the Registrant, as currently in effect (English translation)](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex31.htm) |
| 3.2\*\* | [Form of Articles of Incorporation of the Registrant, to be in effect upon completion of this offering (English translation)](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex32.htm) |
| 3.3\*\* | [Share Handling Regulations of the Registrant as currently in effect (English translation)](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex33.htm) |
| 3.4\*\* | [Form of Share Handling Regulations of the Registrant, to be in effect upon completion of this offering (English translation)](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex34.htm) |
| 3.5\*\* | [Regulations of Board of Directors of the Registrant, as currently in effect (English translation)](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex35.htm) |
| 3.6\*\* | [Form of Regulations of Board of Directors of the Registrant, to be in effect upon completion of this offering (English translation)](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex36.htm) |
| 4.1\* | [Form of Deposit Agreement among the Registrant, The Bank of New York Mellon, as depositary, and the holders and beneficial owners of ADSs issued thereunder](d941409dex41.htm) |
| 4.2\* | [Form of American Depositary Receipt evidencing American Depositary Shares (included in Exhibit 4.1)](d941409dex41.htm) |
| 5.1\* | [Opinion of Mori Hamada & Matsumoto](d941409dex51.htm) |
| 10.1\*\* | [Novation Agreement among PayPay Card Corporation, Yahoo Japan Corporation and Visa Worldwide Pte Limited, dated September 30, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex101.htm) |
| 10.2†\*\* | [English translation of Share Purchase Agreement between PayPay Corporation and Z Financial Corporation, dated December 17, 2024](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex102.htm) |
| 10.3†\*\* | [English translation of Share Purchase Agreement between PayPay Corporation and SoftBank Corp., dated February 10, 2025](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex103.htm) |
| 10.4+\*\* | [English translation of Management Agreement between PayPay Corporation and B Holdings Corporation, dated June 16, 2023](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex104.htm) |
| 10.5\*\* | [English translation of Basic Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated September 16, 2021](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex105.htm) |
| 10.6\*\* | [English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated May 9, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex106.htm) |
| 10.7\*\* | [English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated September 15, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex107.htm) |
| 10.8\*\* | [English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated May 23, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex108.htm) |

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##### [**Table of Contents**](#toc)

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| | |
|:---|:---|
| **Exhibit<br>No.** | **Description of Exhibit** |
| 10.9\*\* | [English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated September 22, 2023](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex109.htm) |
| 10.10\*\* | [English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated March 5, 2024](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1010.htm) |
| 10.11\*\* | [English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated March 11, 2025](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1011.htm) |
| 10.12\*\* | [English translation of Service Outsourcing Agreement for Issuance of PayPay Bonus (currently PayPay Points) between Yahoo Japan Corporation (currently LY Corporation) and PayPay Corporation, dated August 21, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1012.htm) |
| 10.13\*\* | [English translation of Basic Agreement for Provision of "Pay-Toku" Fee Plan between PayPay Corporation and SoftBank Corp., dated September 5, 2023](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1013.htm) |
| 10.14\*\* | [English translation of Service Outsourcing Agreement for Issuance of PayPay Money Lite and PayPay Points between SoftBank Corp. and PayPay Corporation, dated July 31, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1014.htm) |
| 10.15\*\* | [English translation of Business Alliance Agreement for PayCAS between PayPay Corporation, SB C&S Corp. and SB Payment Service Corporation, dated August 1, 2024](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1015.htm) |
| 10.16\*\* | [English translation of Business Outsourcing Agreement between PayPay Corporation and PayPay SC Corporation, dated August 1, 2024](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1016.htm) |
| 10.17†\*\* | [English translation of General Agency Agreement between PayPay Corporation and SB Payment Service Corporation, dated December 13, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1017.htm) |
| 10.18†\*\* | [English translation of Sales Alliance and Partner Agreement between PayPay Corporation and SB Payment Service Corporation, dated December 3, 2018](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1018.htm) |
| 10.19\*\* | [English translation of Memorandum on PayPay Merchant Terms for Mini-apps between PayPay Corporation and PayPay Insurance Corporation, dated December 1, 2021](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1019.htm) |
| 10.20†\*\* | [English translation of Basic Loan Agreement between PayPay Card Corporation (then YJ Card Corporation) and Z Holdings Corporation (then Yahoo Japan Corporation), dated February 15, 2018](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1020.htm) |
| 10.21\*\* | [English translation of Loan Drawdown Application between and Yahoo Japan Corporation (currently LY Corporation) and YJ Card Corporation (currently PayPay Card Corporation), dated April 8, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1021.htm) |
| 10.22†\*\* | [English translation of Basic Loan Agreement between PayPay Card Corporation (then YJ Card Corporation) to Z Holdings Corporation, dated December 18, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1022.htm) |
| 10.23\*\* | [English translation of Loan Drawdown Application between Z Holdings Corporation (currently LY Corporation) and YJ Card Corporation (currently PayPay Card Corporation)](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1023.htm) |
| 10.24\*\* | [English translation of Basic Loan Agreement between LY Corporation and PayPay Card Corporation, dated December 6, 2023](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1024.htm) |

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##### [**Table of Contents**](#toc)

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| | |
|:---|:---|
| **Exhibit<br>No.** | **Description of Exhibit** |
| 10.25\*\* | [English translation of Basic Loan Agreement between LY Corporation and PayPay Card Corporation, dated February 29, 2024](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1025.htm) |
| 10.26\*\* | [English translation of Memorandum of Understanding between LY Corporation and PayPay Card Corporation, dated December 24, 2024](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1026.htm) |
| 10.27\*\* | [English translation of Basic Contract of Secondment between SoftBank Group Corp. and PayPay Corporation, dated March 23, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1027.htm) |
| 10.28†\*\* | [English translation of Basic Contract of Secondment between Z Holdings Corporation (currently LY Corporation) and PayPay Corporation, dated May 1, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1028.htm) |
| 10.29\*\* | [English translation of Basic Contract of Secondment between SoftBank Corp. and PayPay Corporation, dated July 1, 2018](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1029.htm) |
| 10.30†\*\* | [English translation of Monetary Deposit for Consumption Agreement between Z Holdings Corporation (currently LY Corporation) and PayPay Card Corporation, dated October 2021](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1030.htm) |
| 10.31\*\* | [English translation of Trademark Transfer Agreement between Z Holdings Corporation (currently LY Corporation) and PayPay Corporation, dated August 31, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1031.htm) |
| 10.32\*\* | [English translation of Trademark License Agreement between PayPay Corporation and Z Holdings Corporation (currently LY Corporation), dated August 31, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1032.htm) |
| 10.33†\*\* | [English translation of Basic Loan Agreement between Yahoo Japan Corporation and YJ Card Corporation (currently PayPay Card Corporation), dated April 1, 2015](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1033.htm) |
| 10.34†\*\* | [English translation of Memorandum on Contract Amendment between Z Holdings Corporation (then Yahoo Japan Corporation and currently LY Corporation) and YJ Card Corporation (currently PayPay Card Corporation), dated December 22, 2020](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1034.htm) |
| 10.35\*\* | [English translation of Memorandum between Z Holdings Corporation (currently LY Corporation) and PayPay Card Corporation, dated October 31, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1035.htm) |
| 10.36\*\* | [English translation of PayPay Money General Agency Agreement between PayPay Corporation and Yahoo Japan Corporation (currently LY Corporation), dated January 9, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1036.htm) |
| 10.37\*\* | [English translation of Services Agreement on Acquiring Business and Payment Processing Business between Yahoo Japan Corporation (currently LY Corporation) and PayPay Card Corporation, dated September 29, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1037.htm) |
| 10.38\*\* | [English translation of Memorandum on Contract Amendment between Yahoo Japan Corporation (currently LY Corporation) and PayPay Card Corporation, dated April 1, 2023](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1038.htm) |
| 10.39\*\* | [English translation of PayPay Card General Payment Agency Agreement between PayPay Card Corporation and Yahoo Japan Corporation (currently LY Corporation), dated October 1, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1039.htm) |
| 10.40\*\* | [English translation of Memorandum on PayPay Card Payment Agency Agreement between PayPay Card Corporation and Yahoo Japan Corporation (currently LY Corporation), dated October 1, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1040.htm) |
| 10.41\*\* | [English translation of Memorandum on PayPay Card Merchant Agreement among PayPay Card Corporation, Yahoo Japan Corporation (currently LY Corporation) and SB Payment Service Corporation, dated September 30, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1041.htm) |

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##### [**Table of Contents**](#toc)

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| | |
|:---|:---|
| **Exhibit<br>No.** | **Description of Exhibit** |
| 10.42\*\* | [English translation of Memorandum on PayPay Card Merchant Agreement among PayPay Card Corporation, Yahoo Japan Corporation (currently LY Corporation) and SB Payment Service Corporation, dated September 30, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1042.htm) |
| 10.43\*\* | [English translation of Agreement on Card Merchant between SoftBank Payment Service Corporation and YJ Card Corporation (currently PayPay Card Corporation), dated March 20, 2015](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1043.htm) |
| 10.44†\*\* | [English translation of Memorandum on Merchant Fees between SB Payment Service Corporation and PayPay Card Corporation, dated August 25, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1044.htm) |
| 10.45\*\* | [English translation of Gift Cards Master Agreement between Yahoo Japan Corporation (currently LY Corporation) and PayPay Corporation, dated February 1, 2020](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1045.htm) |
| 10.46\*\* | [English translation of Gift Card Projects Master Agreement between SoftBank Corp. and PayPay Corporation, dated August 28, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1046.htm) |
| 10.47\*\* | [English translation of SB Crew Projects Master Agreement between SoftBank Corp. and PayPay Corporation, dated January 11, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1047.htm) |
| 10.48\*\* | [English translation of Agreement on Issuance of PayPay Coupons between PayPay Corporation and SoftBank Corp., dated October 15, 2021](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1048.htm) |
| 10.49\*\* | [English translation of Service Outsourcing Agreement on Issuance of PayPay Lite between SoftBank Corp. and PayPay Corporation, dated July 31, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1049.htm) |
| 10.50\*\* | [English translation of Memorandum on Terms of Service of Carrier Billing among SoftBank Corp., SB Payment Service Corporation and PayPay Corporation, dated July 29, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1050.htm) |
| 10.51\*\* | [English translation of SoftBank Pay In A Lump Sum (B) Merchant Terms between SoftBank Corp. and SB Payment Service Corporation, as of March 1, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1051.htm) |
| 10.52\*\* | [English translation of SoftBank Card Agency Agreement between SB Payment Service Corporation and the Company, dated October 1, 2020](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1052.htm) |
| 10.53†\*\* | [License and Services Agreement between Paytm Labs Inc. and PayPay Corporation, dated July 1, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1053.htm) |
| 10.54†\*\* | [English translation of Software License Agreement relating to credit card merchant acquiring business between Yahoo Japan Corporation (currently LY Corporation) and PayPay Card Corporation, dated September 28, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1054.htm) |
| 10.55\*\* | [English translation of Memorandum on Addition of Payment Method (PayPay Atobarai) to PayPay Money General Agent Agreement between PayPay Corporation and Yahoo Japan Corporation (currently LY Corporation), dated January 28, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1055.htm) |
| 10.56\*\* | [English translation of Memorandum on Mini App Merchant Terms (PayPay Mall and PayPay Flea Market) between Yahoo Japan Corporation (currently LY Corporation) and PayPay Corporation, dated March 31, 2020](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1056.htm) |
| 10.57\*\* | [English translation of Memorandum on Amendment of Merchant Fee Rate, Etc. of PayPay Money General Agency Agreement between PayPay Corporation and Yahoo Japan Corporation (currently LY Corporation), dated March 31, 2020](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1057.htm) |

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##### [**Table of Contents**](#toc)

---

| | |
|:---|:---|
| **Exhibit<br>No.** | **Description of Exhibit** |
| 10.58\*\* | [English translation of Memorandum on PayPay General Agency Agreement between PayPay Corporation and SB Payment Service Corporation, dated February 25, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1058.htm) |
| 10.59†\*\* | [PAI SHIELD License and Implementation Statement of Work between Paytm Labs Inc. and PayPay Corporation, dated April 1, 2022](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1059.htm) |
| 10.60\*\* | [Master Service Agreement between PayPay Corporation and Paytm Labs Inc., dated October 1, 2018](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1060.htm) |
| 10.61\*\* | [English translation of PayPay Card General Agency Agreement between PayPay Card Corporation and Yahoo Japan Corporation (currently LY Corporation), dated April 1, 2023](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1061.htm) |
| 10.62\*\* | [English translation of Memorandum on PayPay Card General Agency Agreement between PayPay Card Corporation and Yahoo Japan Corporation (currently LY Corporation), dated April 1, 2023](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1062.htm) |
| 10.63\*\* | [English translation of Agreement on Loyalty Program (PayPay Step) between PayPay Corporation and Yahoo Japan Corporation (currently LY Corporation), dated June 30, 2021](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1063.htm) |
| 10.64\*\* | [English translation of Fixed-Term Building Leaase Agreement among MITSUBISHI ESTATE CO., LTD, MITSUBISHI JISHO PROPERTY MANAGEMENT Co., Ltd., and PayPay Corporation, dated April 30, 2024](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1064.htm) |
| 10.65\*\* | [English translation of Basic Loan Agreement between LY Corporation and PayPay Card Corporation, dated December 24, 2024](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1065.htm) |
| 10.66\*\* | [English translation of Agreement regarding PayPay Step between PayPay Corporation and PayPay Card Corporation, dated April 29, 2023](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1066.htm) |
| 10.67†\*\* | [English translation of Guarantee Business Alliance Agreement between PayPay Bank Corporation and SMBC Consumer Finance Co., Ltd., dated October 1, 2025](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1067.htm) |
| 10.68\*\* | [English translation of Memorandum on PayPay Card Merchant Agreement between PayPay Card Corporation and Yahoo Japan Corporation, dated April 1, 2013](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1068.htm) |
| 10.69\*\* | [English translation of PayPay Card Payment Facilitator Agreement between PayPay Card Corporation and Yahoo Japan Corporation, dated April 1, 2013](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1069.htm) |
| 10.70\*\* | [English translation of Memorandum on PayPay Card Merchant Agreement between PayPay Card Corporation and LY Corporation, dated October 1, 2024](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1070.htm) |
| 10.71\*\* | [English translation of Amendments to Memorandum among SoftBank Corp., SB Payment Service Corporation and PayPay Corporation, dated August 31, 2023](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1071.htm) |
| 10.72\*\* | [English translation of Memorandum on Amendment to PayPay Money Payment Facilitator Agreement between PayPay Corporation and Yahoo Japan Corporation, dated May 31, 2019](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1072.htm) |
| 10.73\*\* | [English translation of Memorandum on Amendment to PayPay Money Payment Facilitator Agreement between PayPay Corporation and Yahoo Japan Corporation, dated April 5, 2021](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1073.htm) |
| 10.74†\*\* | [English translation of Share Purchase Agreement between Mitsui Sumitomo Insurance Company, Limited and PayPay Corporation, dated March 25, 2025](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1074.htm) |
| 10.75†\*\* | [English translation of Service Agreement between PayPay Card Corporation and Yahoo Japan Corporation, dated June 30, 2023](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1075.htm) |
| 10.76\* | [Form of Registration Rights Agreement](d941409dex1076.htm) |

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##### [**Table of Contents**](#toc)

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| | |
|:---|:---|
| **Exhibit<br>No.** | **Description of Exhibit** |
| 10.77+\* | [Form of Terms and Conditions of Issuance of Stock Acquisition Rights (Trust-type Stock Options) (English translation)](d941409dex1077.htm) |
| 10.78+\* | [Form of Terms and Conditions of Issuance of Stock Acquisition Rights (Tax qualified-type Stock Options) (English translation)](d941409dex1078.htm) |
| 10.79+\* | [Form of Terms and Conditions of Issuance of Stock Acquisition Rights (One-yen-exercisable at retirement-type Stock Options) (English translation)](d941409dex1079.htm) |
| 21.1\*\* | [List of Subsidiaries of Registrant](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex211.htm) |
| 23.1\* | [Consent of Deloitte Touche Tohmatsu LLC](d941409dex231.htm) |
| 23.2\* | [Consent of Mori Hamada & Matsumoto (included in Exhibit 5.1)](d941409dex51.htm) |
| 24.1\*\* | [Powers of Attorney (included on the signature page to the initial registration statement)](http://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409df1.htm#ii941409_sig) |
| 107\* | [Filing fee table](d941409dexfilingfees.htm) |

---

\* Filed herewith.

\*\* Filed previously.

+ Indicates management contract or compensatory plan or arrangement.

† Portions of this exhibit (indicated by asterisks) have been omitted as the registrant has determined that
(i) the omitted information is not material and (ii) the omitted information is the type that the registrant treats as private or confidential.

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##### [**Table of Contents**](#toc)
**SIGNATURES** 

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Tokyo, Japan on March 2, 2026.

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| | | |
|:---|:---|:---|
| PAYPAY CORPORATION | PAYPAY CORPORATION | PAYPAY CORPORATION |
| By: | /s/ Ichiro Nakayama | /s/ Ichiro Nakayama |
|  | Name: | Ichiro Nakayama |
|  | Title: | President, Representative Director, CEO and Corporate Officer |

---

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Capacity** | **Date** |
| /s/ Ichiro Nakayama<br> Ichiro Nakayama | President, Representative Director, CEO and Corporate Officer (principal executive officer) | March 2, 2026 |
| /s/ Wataru Kagechika<br> Wataru Kagechika | Managing Corporate Officer and CFO (principal financial and accounting officer) | March 2, 2026 |
| \*<br> Takeshi Idezawa | Director | March 2, 2026 |
| \*<br> Yasuyoshi Karasawa | Director | March 2, 2026 |
| \*<br> Hiroko Kono | Director | March 2, 2026 |
| \*<br> Hiroto Kaneko | Director | March 2, 2026 |

---

---

| | |
|:---|:---|
| \* /s/ Ichiro Nakayama | \* /s/ Ichiro Nakayama |
| Name: | Ichiro Nakayama |
| Title: | Attorney-in-fact |

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##### [**Table of Contents**](#toc)
**SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES** 

Pursuant to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of PayPay Corporation has signed this registration statement or amendment thereto in the United States on March 2, 2026.

---

| | |
|:---|:---|
| COGENCY GLOBAL INC. | COGENCY GLOBAL INC. |
| By: | /s/ Colleen A. De Vries |
|  | Name: Colleen A. De Vries |
|  | Title: Senior Vice President |

---

## Exhibit 1.1

**Exhibit 1.1** 

**PayPay Corporation** 

**[ ] American Depositary Shares** 

**Representing** 

**[ ] Common Shares** 

***<u>Underwriting Agreement</u>***

[ ], 2026

Goldman Sachs & Co. LLC

J.P. Morgan Securities LLC

Mizuho Securities USA LLC

Morgan Stanley & Co. LLC

As representatives (the "**Representatives**") of the several Underwriters named in Schedule I hereto

c/o Goldman Sachs & Co. LLC

200 West Street

New York, New York 10282

c/o J.P. Morgan Securities LLC

270 Park Avenue

New York, New York 10017

c/o Mizuho Securities USA LLC

1271 Avenue of the Americas

New York, New York 10020

c/o Morgan Stanley & Co. LLC

1585 Broadway

New York, New York 10036

Ladies and Gentlemen:

PayPay Corporation, a joint stock corporation incorporated under the laws of Japan (the "**Company**"), proposes, subject to the terms and conditions stated in this agreement (this "**Agreement**") and a deposit agreement (the "**Deposit Agreement**"), dated as of [ ], 2026, among the Company, The Bank of New York Mellon as the depositary (the "**Depositary**") and owners and holders from time to time of the ADSs (as defined below), to issue and deposit with the Depositary (i) [ ] shares of common stock of the Company (the "**Common Shares**"), upon which the Depositary will issue an aggregate of [ ] American Depositary Shares, representing such Common Shares, and deliver such American Depositary Shares to the underwriters named in Schedule I hereto (the "**Underwriters**"), and (ii) at the option of the Underwriters, up to an additional [ ] Common Shares, upon which the Depositary will issue up to [ ] additional American Depositary Shares representing such Common Shares and deliver such American Depositary Shares to the Underwriters. SVF II Piranha (DE) LLC, a Delaware limited liability company (the "**Selling Shareholder**"), also proposes, subject to the terms and conditions stated in this Agreement and the Deposit Agreement, to deposit with the Depositary an aggregate of [ ] Common Shares, upon which the Depositary will issue [ ] American Depositary Shares representing such Common Shares and deliver such American Depositary Shares to the Underwriters. The aggregate of [ ] American Depositary Shares representing [ ] Common Shares to be issued by the Depositary in respect of the Common Shares deposited by the Company and the Selling Shareholder as described above is herein called the "**Firm ADSs**", the Common Shares deposited in respect of the Firm ADSs are hereinafter called the "**Firm Shares**", the additional [ ] American Depositary Shares to be issued by the Depositary at the Underwriters' option are herein called the "**Optional ADSs**" and the Common Shares deposited in respect of the Optional ADSs are herein called the "**Optional Shares**". The Firm ADSs and the Optional ADSs are herein together called the "**ADSs**" and the Firm Shares and the Optional Shares are herein together called the "**Shares**".

------

The offering of ADSs contemplated by this Agreement includes a public offering without listing by the Company of ADSs in Japan (the "**Japanese POWL**"). The Japanese POWL will be made pursuant to the Japanese Registration Statement and the Japanese Prospectus (as defined below). The Company has prepared and filed with the Director General of the Kanto Local Finance Bureau of the Ministry of Finance of Japan (the "**KLFB**") a securities registration statement dated February 13, 2026 with respect to the Japanese POWL and amendments to such securities registration statement pursuant to the Financial Instruments and Exchange Act of Japan (as amended, the "**FIEA**"), and a further amendment to such securities registration statement dated [ ], 2026 in the form heretofore delivered to you is proposed to be filed by the Company with the KLFB promptly after the execution of this Agreement (such securities registration statement, including exhibits thereto and all such amendments are collectively referred to as the "**Japanese Registration Statement**"); the Company has prepared a Japanese statutory prospectus, including its amendments, with respect to the Japanese POWL and intends to publish supplemental pricing information promptly after the execution of this Agreement (as amended, the "**Japanese Prospectus**"); both of the Japanese Registration Statement and the Japanese Prospectus have been or will be prepared in the Japanese language in accordance with the FIEA based on the information included in the Pricing Prospectus and the U.S. Prospectus (as defined below), with such omissions and additions as appropriate for the purpose of the Japanese POWL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. (a) The Company represents and warrants to, and agrees with, each of the Underwriters that:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) A registration statement on Form F-1 (File No. 333-293410) (the "**Initial Registration Statement**"), including a prospectus relating to the ADSs, has been filed with the U.S. Securities and Exchange Commission (the "**Commission**"); the Initial Registration Statement and any post-effective amendment thereto, each in the form heretofore delivered to the Representatives, have been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a "**Rule 462(b) Registration Statement**"), filed pursuant to Rule 462(b) under the U.S. Securities Act of 1933, as amended (the "**Act**"), which became effective upon filing, no other document with respect to the Initial Registration Statement has heretofore been filed with the Commission; and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose or pursuant to Section 8A of the Act has been initiated or, to the Company's knowledge, threatened by the Commission (any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) under the Act is hereinafter called a "**Preliminary Prospectus**"; the various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and including the information contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the Initial Registration Statement at the time it was declared effective, each as amended at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the "**Registration Statement**"; the Preliminary Prospectus relating to the Shares and ADSs that was included in the Registration Statement immediately prior to the Applicable Time (as defined in Section 1(a)(iii) hereof) is hereinafter called the "**Pricing Prospectus**"; such final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is hereinafter called the "**U.S. Prospectus**" and, together with the Pricing Prospectus and Japanese Prospectus, the "**Prospectuses**" and each individually, a "**Prospectus**"; any oral or written communication with potential investors undertaken in reliance on Rule 163B under the Act is hereinafter called a "**Testing-the-Waters Communication**"; and any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Act is hereinafter called a "**Written Testing-the-Waters Communication**"; any "issuer free writing prospectus" as defined in Rule 433(h)(1) under the Act relating to the Shares and ADSs is hereinafter called an "**Issuer Free Writing Prospectus**"); and any "road show" as defined in Rule 433(h)(4) under the Act, together with any communication that is provided or transmitted simultaneously with such road show in a manner designed to make such communication available as part of such road show, is hereinafter called a "**Road Show**");

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, no proceeding for that purpose or pursuant to Section 8A of the Act has been initiated or, to the Company's knowledge, threatened by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in any Preliminary Prospectus in reliance upon and in conformity with (A) information with respect to the Selling Shareholder furnished to the Company by the Selling Shareholder expressly for use therein, it being understood that the only such information furnished by the Selling Shareholder consists of the Selling Shareholder Information (defined below), or (B) information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the Underwriter Information (defined below);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) For the purposes of this Agreement, the "**Applicable Time**" is [ ]:[ ] [a.m./p.m.] (Eastern time) on the date of this Agreement. The Pricing Prospectus, as supplemented by those Issuer Free Writing Prospectuses and other documents listed in <u>Schedule III(b)</u> hereto, taken together (collectively, the "**Pricing Disclosure Package**") as of the Applicable Time, did not and as of each Time of Delivery (as defined in Section 4 hereof) will not, include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus listed on <u>Schedule</u> <u>III(a)</u> hereto, each Written Testing-the-Waters Communication and each Road Show does not conflict with the information contained in the Registration Statement or the Prospectuses and each Issuer Free Writing Prospectus, each Written Testing-the-Waters Communication and each Road Show, as supplemented by and taken together with the Pricing Disclosure Package as of the Applicable Time, did not, and as of each Time of Delivery, will not, include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in an Issuer Free Writing Prospectus or Written Testing-the-Waters Communication in reliance upon and in conformity with (A) information with respect to the Selling Shareholder furnished to the Company by the Selling Shareholder expressly for use therein, it being understood that the only such information furnished by the Selling Shareholder consists of the Selling Shareholder Information, or (B) information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the Underwriter Information;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Except as set forth on <u>Schedule III(b)</u> hereto, (A) The Company has not prepared or used any free writing prospectus, and (B) no documents were filed with the Commission since the Commission's close of business on the business day immediately prior to the date of this Agreement and prior to the execution of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The Registration Statement conforms, and the U.S. Prospectus and any further amendments or supplements to the Registration Statement and the U.S. Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to each part of the Registration Statement, as of the applicable filing date as to the U.S. Prospectus and any amendment or supplement thereto, and as of each Time of Delivery, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in the Registration Statement in reliance upon and in conformity with (A) information with respect to the Selling Shareholder furnished to the Company by the Selling Shareholder expressly for use therein, it being understood that the only such information furnished by the Selling Shareholder consists of the Selling Shareholder Information, or (B) information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the Underwriter Information; and the Japanese Registration Statement and the Japanese Prospectus conform and will conform, in all material respects, to the requirements of the FIEA and the rules and regulations thereunder and do not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) A registration statement on Form F-6 (File No. [ ]) in respect of the ADSs has been filed with the Commission; such registration statement in the form heretofore delivered to the Representatives has been declared effective by the Commission in such form; no other document with respect to such registration statement has heretofore been filed with the Commission; no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose or pursuant to Section 8A has been initiated or, to the Company's knowledge, threatened by the Commission (the various parts of such registration statement, including all exhibits thereto, each as amended at the time such part of the registration statement became effective, being hereinafter called the "**ADS Registration Statement**"); and the ADS Registration Statement when it became effective conformed, and any further amendments thereto will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not, as of the applicable effective date, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) A registration statement on Form 8-A (File No. [ ]) in respect of the registration of the Shares and ADSs under the U.S. Securities Exchange Act of 1934, as amended (the "**Exchange Act**"), has been filed with the Commission; such registration statement in the form heretofore delivered to the Representatives has been declared effective by the Commission in such form; no other document with respect to such registration statement has heretofore been filed with the Commission; no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose or pursuant to Section 8A has been initiated or, to the Company's knowledge, threatened by the Commission (the various parts of such registration statement, including all exhibits thereto, each as amended at the time such part of the registration statement became effective, being hereinafter called the "**Form 8-A Registration Statement**"); and the Form 8-A Registration Statement when it became effective conformed, and any further amendments thereto will conform, in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission thereunder, and did not and will not, as of the applicable effective date, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) The registration made under the Japanese Registration Statement will become effective no later than [ ], 2026; and no order preventing or suspending the effectiveness of, or, requiring an amendment to, the Japanese Registration Statement, nor notice of a hearing from which such order may result, has been issued by the KLFB (or other Japanese securities authority);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Neither the Company nor any of its subsidiaries has, since the date of the latest audited financial statements included in the Pricing Prospectus, (A) sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court, governmental or regulatory action, order or decree, or (B) entered into any transaction or agreement (whether or not in the ordinary course of business) that is material to the Company and its subsidiaries, taken as a whole, or incurred any liability or obligation, direct or contingent, that is material to the Company and its subsidiaries, taken as a whole, in each case, otherwise than as set forth or contemplated in the Pricing Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, there has not been (x) any change in the share capital or long-term debt or any material change in the short-term debt of the Company or any of its subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock, or (y) any material adverse change or effect, or any development involving a prospective material adverse change or effect, in or affecting the business, properties, general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries taken as a whole, or in the ability of the Company to perform its obligations under this Agreement, including the issuance and sale of the ADSs, or to consummate the transactions contemplated in the Prospectuses (a "**Material Adverse Effect**"), in each case, otherwise than as set forth or contemplated in the Pricing Prospectus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Each of the Company and its principal subsidiaries as disclosed on Exhibit 21.1 to the Registration Statement, which are the only significant subsidiaries of the Company, as that term is defined in Rule 1-02 of Regulation S-X under the Exchange Act (the "**Principal Subsidiaries**"), has good and valid title to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Pricing Prospectus or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its Principal Subsidiaries; and any real property and buildings held under lease by each of the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Principal Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) Except as disclosed in the Pricing Prospectus, the Company and its Principal Subsidiaries maintain insurance covering their respective properties, operations, personnel and businesses as the Company reasonably deems adequate; such insurance insures against such losses and risks to an extent that is available in Japan and which the Company reasonably believes is adequate in accordance with customary industry practice in Japan to protect the Company and its Principal Subsidiaries and their respective businesses; all such insurance is fully in force on the date hereof and will be fully in force at the time of purchase and each additional time of purchase, if any; neither the Company nor any of its Principal Subsidiaries has reason to believe that it will not be able to renew any such insurance as and when such insurance expires; and there is no material insurance claim made by or against the Company or any of its subsidiaries, pending, outstanding, or to the Company's knowledge, threatened, and no facts or circumstances exist which would reasonably be expected to give rise to any such claim and all due premiums in respect thereof have been paid;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) The Company has been duly incorporated and is validly existing as a corporation under the laws of Japan, with power and authority (corporate and other) to own, lease and operate its properties and conduct its business as described in the Pricing Prospectus or the Japanese Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing (where such concept is relevant) under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; and each Principal Subsidiary of the Company has been duly incorporated or organized and is validly existing and in good standing (where such concept is relevant) under the laws of its jurisdiction of incorporation or organization, with power and authority (corporate and other) to own, lease and operate its properties and conduct its business as described in the Pricing Prospectus or the Japanese Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing (where such concept is relevant) under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the lack of such power and authority to conduct or transact any business would not, individually or in the aggregate, have a Material Adverse Effect, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) Neither the Company nor any of its Principal Subsidiaries has sent or received any written communication regarding termination of, or intent not to renew, any of the contracts or agreements specifically referred to or described in the Pricing Prospectus or the Japanese Prospectus, or specifically referred to or described in, or filed as an exhibit to, the Registration Statement, and no such termination or non-renewal has been threatened by the Company, any of its Principal Subsidiaries or, to the Company's knowledge, any other party to any such contract or agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) Each of the Company and its Principal Subsidiaries has all necessary licenses, franchises, concessions, consents, authorizations, approvals, orders, certificates and permits of and from, and has made all declarations and filings with, governmental and regulatory agencies to own, lease, license and use its properties, assets and conduct its business in the manner described in the Pricing Prospectus or the Japanese Prospectus, except where the failure to obtain such licenses, franchises, concessions, consents, authorizations, approvals, orders, certificates or permits would not, individually or in the aggregate, have a Material Adverse Effect, and such licenses, franchises, concessions, consents, authorizations, approvals, orders, certificates or permits contain no material restrictions or conditions not described in the Pricing Prospectus; neither the Company nor any of its Principal Subsidiaries is aware that any regulatory body is considering modifying, suspending or revoking any such licenses, consents, authorizations, approvals, orders, certificates or permits, and the Company and its Principal Subsidiaries are in compliance with the provisions of all such licenses, consents, authorizations, approvals, orders, certificates or permits in all material respects;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) Neither the Company nor any of its Principal Subsidiaries is (A) in breach of or in default under any laws, regulations, rules, orders, decrees, guidelines or notices of Japan, and any other jurisdiction where it was incorporated or operates, (B) in breach of or in default under any approval, consent, waiver, authorization, exemption, permission, endorsement or license granted by any court, governmental or regulatory agency or body or any stock exchange authorities ("**Governmental Agency**") in Japan or any other jurisdiction where it was incorporated or operates, (C) in violation of its constitutive or organizational documents or (D) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except, in the case of clauses (A), (B) and (D), where such breach or default would not, individually or in the aggregate, have a Material Adverse Effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) The Company has an authorized capitalization as set forth in the Pricing Prospectus and the Japanese Prospectus and all of the issued share capital of the Company (including the shares to be sold by the Selling Shareholder) have been duly and validly authorized and issued and are fully paid and non-assessable and conform to the description thereof contained in the Pricing Disclosure Package and the Prospectuses; and all of the issued share capital of each Principal Subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims; there are no outstanding securities convertible into or exchangeable for, or warrants, rights or options to purchase from the Company, or obligations of the Company to issue, Shares, ADSs or any other class of share capital of the Company except as described in the Pricing Prospectus; the Shares, when issued and delivered against payment therefor, may be freely deposited by the Company and the Selling Shareholder with the Depositary against issuance of ADRs evidencing ADSs; the ADSs, when issued and delivered against payment therefor, will be freely transferable by the Company and the Selling Shareholder to or for the account of the several Underwriters and the initial purchasers thereof; and there are no restrictions on subsequent transfers of the Shares or the ADSs under the laws of Japan or the United States except as described in the Pricing Prospectus;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) (A) No person has any preemptive rights, resale rights, rights of first refusal or other rights to purchase any Shares, ADSs or any other share capital of or other equity interests in the Company or any of its Principal Subsidiaries and (B) no person has the right to act as an underwriter or as a financial advisor to the Company in connection with the offer and sale of the Shares and the ADSs other than pursuant to this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xviii) The Shares to be issued underlying the ADSs to be sold by the Company and the Selling Shareholder to the Underwriters hereunder have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued and fully paid and non-assessable and will conform to the description of the Shares contained in the Prospectuses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xix) Except as set forth or contemplated in the Registration Statement, the Pricing Prospectus or the U.S. Prospectus, there are no contracts, agreements or understandings between the Company or any of its subsidiaries and any person granting such person the right to require the Company to file a registration statement under the Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement, the ADS Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) The Company has full right, power and authority to execute and deliver this Agreement and to perform its obligations hereunder and thereunder; and all action required to be taken for the due and proper authorization, execution and delivery by it of this Agreement and the consummation by it of the transactions contemplated hereby and thereby has been duly and validly taken;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxi) This Agreement has been duly executed and delivered by the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxii) The Deposit Agreement has been duly authorized and, when executed and delivered by the Company and, assuming due authorization, execution and delivery by the Depositary, will constitute a valid and legally binding agreement of the Company, enforceable in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency, reorganization and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles, and upon issuance by the Depositary of ADRs evidencing ADSs and the deposit of Shares in respect thereof in accordance with the provisions of the Deposit Agreement, such ADRs will be duly and validly issued and the persons in whose names the ADRs are registered will be entitled to the rights specified therein and in the Deposit Agreement; and the Deposit Agreement and the ADRs conform in all material respects to the descriptions thereof contained in the Prospectuses;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxiii) Except as described in the Pricing Prospectus, all dividends and other distributions declared and payable on the Shares may under the current laws and regulations of Japan be paid to the Depositary, and all dividends and other distributions payable on the ADSs will not be subject to withholding or other taxes under the laws and regulations of Japan and are otherwise free and clear of any other tax, withholding or deduction in Japan and without the necessity of obtaining any consents, approvals, authorizations, orders, registrations, clearances or qualifications of or with any court or Governmental Agency having jurisdiction over the Company or any of its Principal Subsidiaries or any of their respective properties (hereinafter referred to as "**Governmental Authorizations**") in Japan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxiv) The issue and sale of the Shares or the ADSs, the deposit of the Shares with the Depositary against issuance of the ADRs evidencing the ADSs and the execution and delivery of this Agreement and the compliance by the Company with this Agreement and the Deposit Agreement and the consummation of the transactions herein and therein contemplated will not (A) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company and any of its Principal Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Principal Subsidiaries is a party or by which the Company or any of its Principal Subsidiaries is bound or to which any of the property or assets of the Company or any of its Principal Subsidiaries is subject, (B) result in any violation of the provisions of the constitutive or organizational documents of the Company or any Principal Subsidiary or (C) result in any violation of any statute or any order, rule or regulation of any court or Governmental Agency having jurisdiction over the Company or any of its Principal Subsidiaries or any of their properties or assets, except, in the case of clauses (A) and (C) above, as would not have a Material Adverse Effect;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxv) No consent, approval, authorization, order, registration or qualification of or with any court or Governmental Agency is required for the issue and sale of the Shares or the ADSs, for the deposit of the Shares with the Depositary against issuance of ADRs evidencing the ADSs to be delivered or the consummation by the Company of the transactions contemplated by this Agreement and the Deposit Agreement, except (A) the registration under the Act of the Shares and ADSs and listing of the ADSs on the Nasdaq Global Select Market, (B) the filing of the Japanese Registration Statement and the extraordinary report, amendments and supplements thereto with the KLFB pursuant to the FIEA, (C) such Governmental Authorizations as may be required under state securities or Blue Sky laws or any laws of jurisdictions outside Japan and United States in connection with the purchase and distribution of the Shares and ADSs by or for the respective accounts of the several the Underwriters, (D) the filing of a prior notification by a foreign investor with the relevant governmental authorities for the acquisition of Common Shares (including through delivery of underlying shares upon surrender of the ADSs representing the same) and a clearance thereon pursuant to the Foreign Exchange and Foreign Trade Act of Japan (the **"FEFTA**"), which filing and clearance has been made or obtained with respect to the acquisition of the Firm Shares and the Optional Shares by the depositary, (E) the submission by the Company to the Ministry of Finance of Japan through the Bank of Japan of reports pursuant to the Foreign Exchange and Foreign Trade Act of Japan, and (F) the filing by the Company with the relevant registration offices of the Ministry of Justice of Japan of an application for commercial registration of the Shares and the Optional Shares (but, in the case of the Optional Shares, only to the extent that the relevant option is exercised) pursuant to the Companies Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxvi) The ADSs have been approved for listing on the Nasdaq Global Select Market, subject to notice of issuance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxvii) No stamp, documentary, registration, value added or other issuance or transfer taxes or duties and no capital gains, income, withholding or other taxes are payable by or on behalf of the Underwriters in Japan or the United States or to any political subdivision or taxing authority thereof or therein in connection with: (A) assuming that the ADRs evidencing the ADSs will be delivered outside Japan, the deposit with the Depositary of the Shares by the Company against the issuance of such ADRs evidencing the ADSs to be sold by the Company, (B) the sale and delivery by the Company or the Selling Shareholder of the ADSs to or for the respective accounts of the several Underwriters, (C) assuming that each of the Underwriters is a non-Japanese corporation having no permanent establishment in Japan for Japanese tax purposes, and further that Article 178, Paragraph (6) of the Order for Enforcement of the Corporation Tax Act of Japan, as amended, does not apply to the sale and delivery by the Underwriters of the ADSs to the initial purchasers thereof, the sale and delivery by the Underwriters of the ADSs to the initial purchasers thereof in the manner contemplated by this Agreement or (D) the execution and delivery outside of Japan of this Agreement or the consummation of any other transaction contemplated under this Agreement;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxviii) Neither the Company nor any of its subsidiaries has taken, directly or indirectly, any action which was designed to or which has constituted or which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares and ADSs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxix) The statements set forth in the Pricing Prospectus and the U.S. Prospectus under the captions "Description of Share Capital" and "Description of American Depositary Shares", insofar as they purport to constitute a summary of the terms of the Shares and ADSs, respectively, and under the captions "Taxation" and "Underwriting", insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair summaries in all material respects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxx) Other than as set forth in the Pricing Prospectus, there are no legal, governmental or regulatory investigations, actions, demands, claims, suits, arbitrations, inquiries or proceedings ("**Actions**") (A) pending to which the Company or any of its subsidiaries or the Company's officers and directors is a party or of which any property or assets of the Company or any of its subsidiaries or any officer or director of the Company is the subject which, if determined adversely to the Company or any of its subsidiaries (or such officer or director), would have a Material Adverse Effect; or (B) that are required to be described in the Registration Statement, Pricing Prospectus and U.S. Prospectus and are not so described; and, to the Company's knowledge, no such Actions are threatened or contemplated by governmental or regulatory authorities or threatened by others;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxxi) The Company is not and, after giving effect to the offering and sale of the ADSs (including the Japanese POWL) and the application of the proceeds thereof, will not be, an "investment company", as such term is defined in the U.S. Investment Company Act of 1940, as amended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxxii) At the time of filing the Initial Registration Statement the Company was not and, as of the date of this Agreement, is not an "ineligible issuer", as defined under Rule 405 under the Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxxiii) Each of this Agreement and the Deposit Agreement is in proper form to be enforceable against the Company in Japan in accordance with its terms; to ensure the legality, validity, enforceability or admissibility into evidence in Japan of this Agreement or the Deposit Agreement, it is not necessary that this Agreement or the Deposit Agreement be filed or recorded with any court or other authority in Japan or that any stamp or similar tax in Japan be paid on or in respect of this Agreement, the Deposit Agreement or any other documents to be furnished hereunder;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxxiv) The Registration Statement, the Prospectuses, any Issuer Free Writing Prospectus, Form 8-A Registration Statement and ADS Registration Statement and the filing of the Registration Statement, Pricing Prospectus, U.S. Prospectus, any Issuer Free Writing Prospectus, Form 8-A Registration Statement and ADS Registration Statement with the Commission have been duly authorized by and on behalf of the Company, and the Registration Statement, Form 8-A Registration Statement and ADS Registration Statement have been duly executed pursuant to such authorization by and on behalf of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxxv) There are no contracts or documents which are required to be described in the Registration Statement and the Pricing Prospectus or the Japanese Prospectus or to be filed as exhibits to the Registration Statement which have not been so described and filed as required;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxxvi) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect and/or as otherwise disclosed in the Pricing Prospectus: (A) the Company and each of its Principal Subsidiaries own or otherwise possess adequate rights to use or can acquire on reasonable terms all patents, trademarks, service marks, trade names, domain names, copyrights, know-how, software, systems and technology (including trade secrets and other proprietary or confidential information, systems or procedures) and other intellectual property and similar proprietary rights (collectively, "**Intellectual Property Rights**") used in or otherwise necessary for the conduct of their respective businesses as currently conducted, (B) the Company and each of its Principal Subsidiaries do not, through the conduct of their respective businesses, infringe, misappropriate, or otherwise violate or conflict with any Intellectual Property Rights of others, (C) in the past three years, the Company and each of its Principal Subsidiaries have not received any written notice of any claim of infringement, misappropriation, or other violation or conflict with, any Intellectual Property Rights of others, and no action, suit or proceeding related to the same is pending or, to the Company's knowledge, threatened in writing, and (D) to the knowledge of the Company, no third party is infringing, misappropriating, or otherwise violating any Intellectual Property Rights of the Company or any of its Principal Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxxvii) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect and/or as otherwise disclosed in the Pricing Prospectus: (A) the Company and its Principal Subsidiaries own or have a valid right to access and use all information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases used in connection with their business as currently conducted (collectively, "**IT Systems**"), (B) all IT Systems are adequate for, and operate and perform as required in connection with the operation of the business of the Company and its Principal Subsidiaries as currently conducted, to the Company's knowledge, free and clear of all corruptants, (C) the Company and its Principal Subsidiaries use commercially reasonable controls, policies, procedures, and safeguards designed to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data (including all personal, personally identifiable, sensitive, confidential or regulated data ("**Personal Data**")) used, gathered, accessed, stored, maintained or otherwise processed in connection with their businesses, (D) to the Company's knowledge, in the past three years, there have been (x) no breaches, violations, outages, unauthorized uses of or accesses to, or similar incidents involving the Company's and its Principal Subsidiaries' IT Systems or the Personal Data in their possession and control, except for those that have been remedied without cost or liability or the duty to notify any other person, nor (y) any incidents under internal review or investigations relating to the same, (E) the Company and its Principal Subsidiaries are presently in compliance with all applicable laws and statutes, judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, binding industry standards, internal and external policies and contractual obligations, in each case, relating to the privacy and/or security of their IT Systems and/or Personal Data and/or to the protection of their IT Systems and/or Personal Data from unauthorized use, access, misappropriation or modification or other similar incident (collectively, "**Data Security Obligations**") and (F) in the past three years, neither the Company nor any of its Principal Subsidiaries has received any written notification of or written complaint regarding, and there is no action, suit or proceeding by or before any court or governmental agency, authority or body pending or, to the Company's knowledge, threatened in writing alleging non-compliance with any Data Security Obligation by the Company or any of its Principal Subsidiaries;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxxviii) The Company was not a Passive Foreign Investment Company ("**PFIC**") for U.S. federal income tax purposes for its previous taxable years and for the fiscal year ended March 31, 2025 and, based on the Company's current projected income, assets and activities and after giving effect to the offering and sale of the ADSs (including the Japanese POWL) and the application of the proceeds thereof as described in the Pricing Prospectus, the Company does not expect to be a PFIC in the current taxable year or for the foreseeable future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxxix) The Company has not sold, issued or distributed any Shares during the six-month period preceding the date hereof, including any sales pursuant to Rule 144A, Regulation D or Regulation S promulgated under the Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xl) The Company is a "foreign private issuer" within the meaning of Rule 405 under the Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xli) There are (and prior to the closing date of the offering of the Shares and ADSs hereunder will be) no debt securities, convertible securities or preferred stock issued or guaranteed by the Company or any of its Principal Subsidiaries that are rated by a "nationally recognized statistical rating organization", as such term is defined in Section 3(a)(62) under the Exchange Act;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xlii) No material indebtedness (actual or contingent) and no material contract or arrangement is outstanding between the Company or any of its subsidiaries and any director or executive officer of the Company or any of its subsidiaries or any person connected with such director or executive officer (including his/her spouse, infant children, any company or undertaking in which he/she holds a controlling interest); and there are no material relationships or transactions between the Company or any of its subsidiaries on the one hand and its affiliates, officers and directors or their shareholders, customers or suppliers on the other hand except as disclosed in the Pricing Prospectus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xliii) Deloitte Touche Tohmatsu LLC, who have certified certain financial statements of the Company and its subsidiaries, are independent registered public accountants as required by the Act and the rules and regulations of the Commission thereunder and by the requirements of FIEA and the cabinet orders and ministerial ordinances and other rules and regulations thereunder (including the FIEA, the "**Japanese Rules and Regulations**"), are independent in accordance with the requirements of the U.S. Public Company Accounting Oversight Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xliv) Except as described in the Pricing Prospectus, the Company maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that (i) complies with the requirements of the Exchange Act, (ii) has been designed by the Company's principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and (iii) is sufficient to provide reasonable assurance that: (A) transactions are executed in accordance with management's general or specific authorizations; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS; (C) access to assets is permitted only in accordance with management's general or specific authorization; and (D) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate actions are taken with respect to any differences. The Company's auditors and the audit and supervisory committee of the Company have been advised of: (x) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which have adversely affected or are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls over financial reporting. Since the date of the latest audited financial statements included in the Pricing Prospectus there has been no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. The Company has taken all necessary actions to ensure that, upon and at all times after the filing of the Registration Statement, the Company and its officers and directors, in their capacities as such, are in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and the rules and regulations promulgated thereunder (it being understood that nothing in this Agreement shall require the Company to comply with any provision of the Sarbanes-Oxley Act as of an earlier date than it would otherwise be required to so comply under applicable law). The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) of the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed by, or are under the supervision of, the Company's principal executive officer and principal financial officer to ensure that material information relating to the Company and its subsidiaries is made known to such officers by others within those entities; and such disclosure controls and procedures are effective;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xlv) Except as described in the Pricing Prospectus, neither the Company nor any of its Principal Subsidiaries has any material obligation to provide retirement, healthcare, death or disability benefits to any of the present or past employees of the Company or any of its Principal Subsidiaries, or to any other person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xlvi) No labor disturbance, dispute, work stoppage, slow down or other conflict with the employees of the Company or any of its Principal Subsidiaries exists or, to the Company's knowledge, is imminent or threatened, and the Company is not aware of any existing or imminent labor disturbance by, or dispute with, the employees of any of its subsidiaries' principal suppliers, contractors or customers, except in each case for such dispute, stoppage, slow down or other conflicts as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Neither the Company nor any of its Principal Subsidiaries has received any notice of cancellation or termination with respect to any collective bargaining agreement to which it is a party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xlvii) Since the date of the latest audited financial statements included in the Pricing Prospectus, neither the Company nor any of its Principal Subsidiaries has: (A) entered into or assumed any contract, (B) incurred or agreed to incur any liability (including any contingent liability) or other obligation, (C) acquired or disposed of or agreed to acquire or dispose of any business or any other asset or (D) assumed or acquired or agreed to assume or acquire any liabilities (including contingent liabilities), that would, in any of clauses (A) through (D) above, be material to the Company and its Principal Subsidiaries and that are not otherwise described in the Pricing Prospectus;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xlviii) No holder of any of the Shares or the ADSs after the consummation of the transactions contemplated by this Agreement or the Deposit Agreement is or will be subject to any personal liability in respect of any liability of the Company by virtue only of its holding of any such Shares or ADSs; and except as set forth in the Pricing Prospectus, there are no limitations on the rights of holders of the Shares or the ADSs to hold, vote or transfer their securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xlix) The financial statements included in the Registration Statement and the Prospectuses, together with the related schedules and notes, present fairly in all material respects the financial position of the Company and its consolidated subsidiaries at the dates indicated and the profit or loss, comprehensive income, changes in equity and cash flows of the Company and its consolidated subsidiaries for the periods specified; said financial statements have been prepared in conformity with IFRS applied on a consistent basis throughout the periods involved. The supporting schedules, if any, present fairly in all material respects in accordance with IFRS the information required to be stated therein. The selected financial data and the summary financial information included in the Registration Statement and the Prospectuses present fairly in all material respects the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included therein. Except as included therein, no historical or pro forma financial statements or supporting schedules are required to be included in the Registration Statement or the Prospectuses under the Act or the rules and regulations promulgated thereunder and the applicable requirements, if any, of the Japanese Rules and Regulations. All disclosures contained in the Registration Statement and the Prospectuses regarding "non-GAAP financial measures" (as such term is defined by the rules and regulations of the Commission) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Act, to the extent applicable, and the applicable requirements, if any, of the Japanese Rules and Regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Under the laws of Japan, each holder of ADRs evidencing ADSs issued pursuant to the Deposit Agreement shall be entitled, subject to the Deposit Agreement, to seek enforcement of its rights through the Depositary or its nominee registered as representative of the holders of the ADRs in a direct suit, action or proceeding against the Company. Any holder of the Shares and each Underwriter are each entitled to sue as plaintiff in the court of the jurisdiction of formation and domicile of the Company for the enforcement of their respective rights under this Agreement and the Shares and such access to such courts will not be subject to any conditions which are not applicable to residents of such jurisdiction or a company incorporated in such jurisdiction except that plaintiffs not residing in Japan may be required to guarantee payment of a possible order for payment of costs or damages at the request of the defendant;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(li) All amounts payable by the Company to Underwriters in respect of the ADRs evidencing the ADSs or the underlying Shares may ****be made free and clear of and without deduction for or on account of any taxes imposed, assessed or levied by Japan or any authority thereof or therein (except such income taxes as may otherwise be imposed by Japan on payments hereunder to an Underwriter whose net income is subject to tax by Japan or withholding, if any, with respect to any such net-based income tax) nor are any taxes imposed in Japan on, or by virtue of the execution or delivery of, such documents assuming that such documents are executed and delivered outside Japan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lii) All returns, reports or filings which ought to have been made by or in respect of the Company and its subsidiaries for taxation purposes as required by the law of the jurisdictions in which the Company and its subsidiaries are incorporated, managed or engage in business have been made and all such returns are correct and on a proper basis in all material respects and are not the subject of any dispute with the relevant revenue or other appropriate authorities except as may be being contested in good faith and by appropriate proceedings and as to which adequate reserves have been established by the Company in accordance with IFRS; the provisions included in the audited consolidated financial statements as set out in the Pricing Prospectus and the Japanese Prospectus include appropriate provisions required under IFRS for all taxation in respect of accounting periods ended on or before the accounting reference date to which such audited accounts relate for which the Company was then or might reasonably be expected thereafter to become or have become liable; and neither the Company nor any of its subsidiaries has received notice of any tax deficiency with respect to the Company or any of its subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(liii) No forward-looking statement (within the meaning of Section 27A of the Act and Section 21E of the Exchange Act) included in any of the Registration Statement or the Prospectuses has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(liv) Nothing has to come to the attention of the Company that has caused the Company to believe that any statistical and market-related data included in the Registration Statement or the Prospectuses is not based on or derived from sources that are reliable and accurate in all material respects;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lv) The application of the net proceeds from the offering of ADSs (including the Japanese POWL), as described in the Pricing Prospectus, will not (A) contravene any provision of any current and applicable laws or the current constituent documents of the Company or any of its Principal Subsidiaries, (B) contravene the terms or provisions of, or constitute a default under, any material indenture, mortgage, deed of trust, loan agreement, note, lease or other agreement or instrument currently binding upon the Company or any of its Principal Subsidiaries or (C) contravene or violate the terms or provisions of any Governmental Authorization applicable to any of the Company or any of its Principal Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lvi) No subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such subsidiary's capital stock or similar ownership interest, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary's properties or assets to the Company or any other subsidiary of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lvii) There are no contracts, agreements or understandings between the Company or any of its subsidiaries and any person that would give rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a brokerage commission, finder's fee or other like payment in connection with the issuance and sale of the Shares and ADSs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lviii) The choice of laws of the State of New York as the governing law of this Agreement and the Deposit Agreement is a valid choice of law under the laws of Japan and will be honored by the courts of Japan, subject to the restrictions described under the caption "Enforcement of Civil Liabilities" in the Registration Statement, the Pricing Disclosure Package and the U.S. Prospectus. The Company has the power to submit, and pursuant to Section 15 of this Agreement, has legally, validly, effectively and irrevocably submitted, to the personal jurisdiction of each New York state and United States federal court sitting in the City of New York and has validly and irrevocably waived any objection to the laying of venue of any suit, action or proceeding brought in such court.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lix) The indemnification and contribution provisions set forth in Section 9 hereof do not contravene Japanese law or public policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lx) Neither the Company nor any of its subsidiaries or their properties or assets has immunity under Japanese, U.S. federal or New York state law from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any Japanese, U.S. federal or New York state court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court with respect to their respective obligations, liabilities or any other matter under or arising out of or in connection herewith; and, to the extent that the Company or any of its subsidiaries or any of its properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings arising out of, or relating to the transactions contemplated by the Transaction Documents, may at any time be commenced, the Company has, pursuant to Section 22 of this Agreement, waived, and it will waive, or will cause its subsidiaries to waive, such right to the extent permitted by law;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lxi) Neither the Company nor any of its subsidiaries, nor any director, officer or employee of the Company or any of its subsidiaries nor, to the Company's knowledge, any agent, affiliate or other person acting on behalf of the Company or any of its subsidiaries has directly or indirectly (A) made, offered, promised or authorized any unlawful contribution, gift, entertainment or other unlawful benefit or expense to any government official, including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office (or taken any act in furtherance thereof); (B) made, offered, promised or authorized any direct or indirect unlawful payment; or (C) violated or is in violation of any applicable provision of the Foreign Corrupt Practices Act of 1977, as amended, or the rules and regulations thereunder, the Bribery Act 2010 of the United Kingdom, Article 18 of the Unfair Competition Prevention Act (Act No. 47 of 1993, as amended) of Japan, and the rules and regulations promulgated thereunder, or any other applicable anti-corruption, anti-bribery or related law, statute or regulation (collectively, "**Anti-Corruption Laws**"); the Company, its subsidiaries and affiliates have conducted their businesses in compliance with Anti-Corruption Laws and have instituted and maintained and enforced and will continue to maintain and enforce policies and procedures designed to promote and ensure compliance with such laws and with the representations and warranties contained herein; neither the Company nor any of its subsidiaries or affiliates will use, directly or indirectly, the proceeds of the offering of the Shares and ADSs hereunder in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of Anti-Corruption Laws and no investigation, inquiry, action, suit, or proceeding by or before any court or governmental or regulatory agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Anti-Corruption Laws is pending or, to the Company's knowledge, threatened;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lxii) The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with the requirements of applicable anti-money laundering laws, including, but not limited to, the Bank Secrecy Act of 1970, as amended by the USA PATRIOT ACT of 2001, and the rules and regulations promulgated thereunder, the Act on Prevention of Transfer of Criminal Proceeds of Japan (Act No. 22 of 2007, as amended) and any other anti-money laundering laws of the various jurisdictions in which the Company and its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulation or guidelines issued, administered or enforced by any governmental or regulatory agency, including the Money Laundering Control Act of 1986, and the Anti-Money Laundering Act of 2020 (collectively, the "**Anti-Money Laundering Laws**") and no investigation, inquiry, action, suit, or proceeding by or before any court or governmental or regulatory agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the Company's knowledge, threatened, and neither the Company nor any of its subsidiaries or affiliates will use, directly or indirectly, the proceeds of the offering of the Shares and ADSs hereunder in any manner that would violate the Anti-Money Laundering Laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lxiii) Neither the Company nor any of its subsidiaries, nor any director, officer or employee of the Company or any of its subsidiaries nor, to the Company's knowledge, any agent, affiliate or other person acting on behalf of the Company or any of its subsidiaries is, or is owned or controlled by one or more persons or entities that are (A) currently the subject or the target of any sanctions administered or enforced by the U.S. Government, including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury ("**OFAC**"), or the U.S. Department of State and including, without limitation, the designation as a "specially designated national" or "blocked person", the European Union, His Majesty's Treasury, the United Nations Security Council, or other relevant sanctions authority (collectively, "**Sanctions**"), (B) located, organized, or resident in a country, region, or territory that is the subject or target of Sanctions, including, without limitation, the so-called Donetsk People's Republic, the so-called Luhansk People's Republic, or any other Covered Region of Ukraine identified pursuant to Executive Order 14065, Crimea, Cuba, Iran, and North Korea (a "**Sanctioned Jurisdiction**"), and the Company will not directly or indirectly use the proceeds of the offering of the Shares and ADSs hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (x) to fund or facilitate any activities of or business with any person, or in any country, region or territory, that, at the time of such funding or facilitation, is the subject or the target of Sanctions or (y) in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions; since April 24, 2019, the Company and its subsidiaries have not engaged in, are not now engaged in, and will not engage in, any dealings or transactions with or involving any individual or entity that was or is, as applicable, at the time of such dealing or transaction, the subject or target of Sanctions or with any Sanctioned Jurisdiction; the Company and its subsidiaries have instituted, and maintain, policies and procedures designed to promote and achieve continued compliance with Sanctions; and no investigation, inquiry, action, suit or proceeding by or before any court or governmental or regulatory agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to Sanctions is pending or, to the Company's knowledge, threatened;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lxiv) None of the Company or any of its subsidiaries is or intends to be involved in supporting or operating any "anti-social forces," as defined under the regulations of the Japan Securities Dealers Association ("**Anti-social Forces**"), such as, but not limited to, organized crime groups (*bouryokudan*), through financing or otherwise; none of the Company or any of its subsidiaries provides or intends to provide any form of funds to Anti-social Forces; none of the Company or any of its subsidiaries has appointed or intends to appoint a person belonging to the Anti-social Forces as an officer, or has employed or intends to employ such person as an employee; further, the Company is not aware of any facts or circumstances by which the management of the Company or any of its subsidiaries has been materially influenced by Anti-social Forces, either directly or indirectly;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lxv) The Company and its Principal Subsidiaries and their respective properties, assets and operations are, to the Company's knowledge, in compliance with, and the Company and each of its Principal Subsidiaries hold, to the Company's knowledge, all permits, authorizations and approvals required under Environmental Laws (as defined below); there are no past, present or, to the Company's knowledge, reasonably anticipated future events, conditions, circumstances, activities, practices, actions, omissions or plans that could reasonably be expected to give rise to any material costs or liabilities to the Company or any Principal Subsidiary under, or to interfere with or prevent compliance by the Company or any Principal Subsidiary with, Environmental Laws; neither the Company nor any of its Principal Subsidiaries (A) is the subject of any investigation, (B) has received any notice or claim, (C) is a party to or affected by any pending or, to the Company's knowledge, threatened action, suit or proceeding, (D) is bound by any judgment, decree or order or (E) has entered into any agreement, in each case relating to any alleged violation of any Environmental Law or any actual or alleged release or threatened release or cleanup at any location of any Hazardous Materials (as defined below) (as used herein, "**Environmental Law**" means any national, provincial, municipal or other local or foreign law, statute, ordinance, rule, regulation, order, notice, directive, decree, judgment, injunction, permit, license, authorization or other binding requirement, or common law, relating to health, safety or the protection, cleanup or restoration of the environment or natural resources, including those relating to the distribution, processing, generation, treatment, storage, disposal, transportation, other handling or release or threatened release of Hazardous Materials, and "**Hazardous Materials**" means any material (including, without limitation, pollutants, contaminants, hazardous or toxic substances or wastes) that is regulated by or may give rise to liability under any Environmental Law);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lxvi) There are no affiliations or associations between any member of the Financial Industry Regulatory Authority ("**FINRA**") and the Company; there are no affiliations or associations between (A) any member of the FINRA and (B) any of the Company's officers, directors or 5% or greater security holders or any beneficial owner of the Company's unregistered equity securities that were acquired at any time on or after the 180th day immediately preceding the date the Registration Statement was initially filed with the Commission; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lxvii) There are no business relationships or related-party transactions involving the Company or any of its subsidiaries or any other person required to be described in the Registration Statement or the Prospectuses which have not been described as required.

In addition, any certificate signed by any officer of the Company or any of its Principal Subsidiaries and delivered to the Underwriters or counsel for the Underwriters in connection with the offering of the Shares and ADSs shall be deemed to be a representation and warranty by the Company, as to matters covered thereby, to each of the Underwriters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Selling Shareholder represents and warrants to, and agrees with, each of the Underwriters and the Company that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Selling Shareholder has been duly organized and is validly existing as a limited liability company, in good standing in its jurisdiction of formation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Selling Shareholder has full right, power and authority to enter into this Agreement and to sell, assign, transfer and deliver the Shares and ADSs to be sold by the Selling Shareholder hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) No consent, approval, authorization, order, registration or qualification of or with any court or Governmental Agency is required for the sale of the Shares or the ADSs by the Selling Shareholder, for the deposit of the Shares with the Depositary against issuance of ADRs evidencing the ADSs to be delivered by the Selling Shareholder or the consummation by the Selling Shareholder of the transactions contemplated by this Agreement and the Deposit Agreement, except (A) the registration under the Act of the Shares and ADSs and listing of the ADSs on the Nasdaq Global Select Market, (B) the filing of the Japanese Registration Statement and the extraordinary report, amendments and supplements thereto with the KLFB pursuant to the FIEA, (C) such Governmental Authorizations as have been duly obtained and are in full force and effect and copies of which have been furnished to the Representatives, (D) such Governmental Authorizations as may be required under state securities or Blue Sky laws or any laws of jurisdictions outside Japan and the United States in connection with the purchase and distribution of the Shares and ADSs by or for the respective accounts of the several the Underwriters, and (E) the filing of a prior notification by a foreign investor with the relevant governmental authorities for the acquisition of Common Shares (including through delivery of underlying Common Shares upon surrender of the ADSs representing the same) and a clearance thereon pursuant to the FEFTA, which filing and clearance has been made or obtained with respect to the acquisition of the Firm Shares and the Optional Shares by the Depositary;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The sale of the Shares and ADSs to be sold by the Selling Shareholder hereunder, the deposit of the Shares by the Selling Shareholder with the Depositary against issuance of the ADRs evidencing the ADSs to be delivered by the Selling Shareholder at the First Time of Delivery and the compliance by the Selling Shareholder with all of the provisions of this Agreement, the Deposit Agreement and the consummation of the transactions herein and therein contemplated will not (A) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Selling Shareholder is a party or by which the Selling Shareholder is bound, or to which any of the property or assets of the Selling Shareholder is subject, (B) result in any violation of the provisions of the constituent or organizational documents of the Selling Shareholder or (C) result in any violation of any statute or any order, rule or regulation of any court or Governmental Agency having jurisdiction over the Selling Shareholder or the property of the Selling Shareholder, except, in the case of clauses (A) and (C) above, as would not reasonably be expected to have a material adverse effect on the ability of the Selling Shareholder to consummate the transactions contemplated by this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The Selling Shareholder has, and immediately prior to the First Time of Delivery the Selling Shareholder will have, good and valid title to the Shares to be represented by the ADSs to be sold by the Selling Shareholder hereunder at the First Time of Delivery, free and clear of all liens, encumbrances, equities or claims; and, upon delivery of the ADSs representing such Shares and payment therefor pursuant hereto, good and valid title to such ADSs, free and clear of all liens, encumbrances, equities or claims, will pass to the several Underwriters;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Neither the Selling Shareholder nor any of its affiliates, nor any person acting on its or their behalf has taken, directly or indirectly, any action which is designed to or which has constituted or which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares or the ADSs, it being understood that the Selling Shareholder makes no representation with respect to actions taken by the Company, the Depositary or the Underwriters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) The Selling Shareholder is not prompted by any material information concerning the Company or any of its subsidiaries that is not disclosed in the Pricing Prospectus to sell its Shares pursuant to this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) The Registration Statement did not, as of its effective time, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Pricing Disclosure Package as of the Applicable Time ****did not, and as of the First Time of Delivery will not, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; the U.S. Prospectus, as of the applicable filing date as to the U.S. Prospectus and any amendment or supplement thereto and as of the First Time of Delivery, will not, as then amended or supplemented, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus, as supplemented by and taken together with the Pricing Disclosure Package as of the Applicable Time, did not, and as of the First Time of Delivery will not, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty with respect to the Selling Shareholder shall only apply to any untrue statement of a material fact or omission to state a material fact made in reliance upon and in conformity with any information relating to the Selling Shareholder furnished to the Company in writing by the Selling Shareholder expressly for use in the Registration Statement, the Pricing Disclosure Package, the U.S. Prospectus or any Issuer Free Writing Prospectus, as applicable, it being understood and agreed that the only such information furnished by the Selling Shareholder consists of (A) the legal name and address of the Selling Shareholder and the other information about the Selling Shareholder set forth in the footnote relating to the Selling Shareholder under the caption "Principal and Selling Shareholders" and (B) the number of Common Shares and ADSs beneficially owned by the Selling Shareholder before and after the offering (excluding percentages) that appears in the table (and corresponding footnotes) under the caption "Principal and Selling Shareholders" (collectively, the "**Selling Shareholder Information**");

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) No stamp, documentary, registration, value added or other issuance or transfer taxes or duties and no capital gains, income, withholding or other taxes are payable by or on behalf of the Underwriters in Japan or to any political subdivision or taxing authority thereof or therein in connection with (A) assuming that the ADRs evidencing the ADSs will be delivered outside Japan, the deposit with the Depositary of the Shares by the Selling Shareholder against the issuance of such ADRs evidencing the ADSs to be sold by the Selling Shareholder, (B) the sale and delivery by the Selling Shareholder of the ADSs to be sold by the Selling Shareholder to or for the respective accounts of the Underwriters, (C) assuming that the Underwriters are not residents of and do not have any permanent establishment in Japan for Japanese tax purposes, and further that Article 178, Paragraph (6) of the Order for Enforcement of the Corporation Tax Act of Japan, as amended, is not applied to the sale and delivery by the Underwriters of the ADSs to the initial purchasers thereof, the sale and delivery by the Underwriters of the ADSs to the initial purchasers thereof in the manner contemplated by this Agreement or (D) assuming that the Underwriters are not residents of and do not have any permanent establishment in Japan for Japanese tax purposes, the execution and delivery of this Agreement or the consummation of any other transaction contemplated under this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) All amounts payable to the Underwriters by the Selling Shareholder under this Agreement shall be made free and clear of and without deduction for or on account of any taxes imposed, assessed or levied by Japan or any authority thereof or therein, nor are any taxes imposed in Japan on, or by virtue of the execution of this Agreement or the sale and delivery of the ADSs assuming that such documents are executed and delivered outside Japan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) This Agreement has been duly authorized, executed and delivered by or on behalf of the Selling Shareholder; and to ensure the legality, validity, enforceability or admissibility into evidence in Japan of this Agreement, it is not necessary that this Agreement be filed or recorded with any court or other authority in Japan or that any stamp or similar tax in Japan be paid on or in respect of this Agreement or any other documents to be furnished hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) The obligations of the Selling Shareholder hereunder shall not be terminated by operation of law, whether by dissolution or by the occurrence of any other event; if the Selling Shareholder should be dissolved, or if any other such event should occur, before the delivery of the Shares and ADSs hereunder, certificates representing the Shares and ADSs shall be delivered by or on behalf of the Selling Shareholder in accordance with the terms and conditions of this Agreement; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) None of the Selling Shareholder or any of its subsidiaries is or intends to be involved in supporting or operating any Anti-social forces, such as, but not limited to, organized crime groups (*bouryokudan*), through financing or otherwise; none of the Selling Shareholder or any of its subsidiaries provides or intends to provide any form of funds to Anti-social Forces; none of the Selling Shareholder or any of its subsidiaries has appointed or intends to appoint a person belonging or related to the Anti-social Forces as an officer, or has employed or intends to employ such person as an employee; further, the Selling Shareholder is not aware of any facts or circumstances by which the management of the Selling Shareholder or any of its subsidiaries has been materially influenced by Anti-social Forces, either directly or indirectly;

In addition, any certificate signed by the Selling Shareholder (or, with respect to the Selling Shareholder that is not an individual, any officer of the Selling Shareholder or of any of the Selling Shareholder's subsidiaries) or by any representative of the Selling Shareholder and delivered to the Underwriters or counsel for the Underwriters in connection with the offering of the Shares and ADSs shall be deemed to be a representation and warranty by the Selling Shareholder, as to matters covered thereby, to each of the Underwriters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Subject to the terms and conditions herein set forth, (a) each of the Company and the Selling Shareholder agrees, severally and not jointly, and, with respect to the Selling Shareholder only, subject to the issuance of the Common Shares to be deposited prior to the First Time of Delivery by the Company with the Depositary, to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company and the Selling Shareholder, at a purchase price per ADS of US$[ ], the number of Firm ADSs (to be adjusted by the Underwriters so as to eliminate fractional shares) determined by multiplying the aggregate number of Firm ADSs to be sold by the Company and the Selling Shareholder as set forth opposite their respective names in <u>Schedule II</u> attached hereto by a fraction, the numerator of which is the aggregate number of Firm ADSs to be purchased by such Underwriter as set forth opposite the name of such Underwriter in <u>Schedule I</u> attached hereto and the denominator of which is the aggregate number of Firm ADSs to be purchased by all of the Underwriters from the Company and the Selling Shareholder hereunder and (b) in the event and to the extent that the Underwriters shall exercise the election to purchase Optional ADSs as provided below, the Company agrees to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at the purchase price per ADS set forth in clause (a) of this Section 2 (provided that the purchase price per Optional ADS shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm ADSs but not payable on the Optional ADSs), that portion of the number of Optional ADSs as to which such election shall have been exercised (to be adjusted by the Representatives so as to eliminate fractional shares) determined by multiplying such number of Optional ADSs by a fraction the numerator of which is the maximum number of Optional ADSs which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in <u>Schedule I</u> attached hereto and the denominator of which is the maximum number of Optional ADSs that all of the Underwriters are entitled to purchase hereunder.

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The Company, as and to the extent indicated in <u>Schedule II</u> attached hereto, hereby grants to the Underwriters the right to purchase at their election up to [ ] Optional ADSs, at the purchase price per share set forth in the paragraph above, provided that the purchase price per Optional ADS shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm ADSs but not payable on the Optional ADSs, for the sole purpose of covering sales of shares in excess of the number of Firm ADSs. Any such election to purchase Optional ADSs shall be made in proportion to the maximum number of Optional ADSs to be sold by the Company as set forth in <u>Schedule II</u> attached hereto initially with respect to the Optional ADSs to be sold by the Company. Any such election to purchase Optional ADSs may be exercised only by written notice from the Representatives to the Company, given within a period of 30 calendar days after the date of this Agreement, setting forth the aggregate number of Optional ADSs to be purchased and the date on which such Optional ADSs are to be delivered, as determined by the Representatives but in no event earlier than the First Time of Delivery (as defined in Section 4 hereof) or, unless the Representatives, the Company otherwise agree in writing, earlier than two or later than ten business days after the date of such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Upon the authorization by the Representatives of the release of the Firm ADSs, the several Underwriters propose to offer the Firm ADSs for sale upon the terms and conditions set forth in the Prospectuses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. (a) The ADSs to be purchased by each Underwriter hereunder, in definitive or book-entry form, and in such authorized denominations and registered in such names as the Representatives may request upon at least forty-eight hours' prior notice to the Company and the Selling Shareholder, shall be delivered by or on behalf of the Company and the Selling Shareholder to the Representatives, through the facilities of The Depository Trust Company ("**DTC**"), for the account of such Underwriter, against payment (with respect to payment to the Company, as payment for the issue price of new Common Shares issued by the Company represented by the ADSs in the context of the Company Act of Japan) by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by the Company and the Selling Shareholder to the Representatives at least forty-eight hours in advance. The Company and, if applicable, the Selling Shareholder will cause the certificates, if any, representing the Shares and ADSs to be made available for checking and packaging at least twenty-four hours prior to the applicable Time of Delivery (as defined below) with respect thereto at the office of DTC or its designated custodian (the "**Designated Office**"). The time and date of such delivery shall be, with respect to the Firm ADSs, [ ]:[ ] [a.m./p.m.], New York City time, on [ ], 2026 (with payment with respect to the Firm ADSs to sold by the Company to be made on or around [ ]:[ ] [a.m./p.m.], New York City time, on [ ], 2026 and, with respect to the Firm ADSs to be sold by the Selling Shareholder, [ ]:[ ] [a.m./p.m.], New York City time, on [ ], 2026) or such other time and date as the Representatives, the Company and the Selling Shareholder may agree upon in writing as to the respective Firm ADSs to be sold by them, and, with respect to the Optional ADSs, [ ]:[ ] [a.m./p.m.], New York City time, on the date specified by the Representatives in the written notice given by the Representatives of the Underwriters' election to purchase such Optional ADSs (with payment with respect to the Optional ADSs to be made on or around [ ]:[ ] [a.m./p.m.], New York City time, on the date specified by the Representatives in the written notice given by the Representatives of the Underwriters' election to purchase such Optional ADSs, or such other time and date as the Representatives and the Company may agree upon in writing. Such time and date for delivery of the Firm ADSs is herein called the "**First Time of Delivery**", such time and date for delivery of the Optional ADSs, if not the First Time of Delivery, is herein called the "**Second Time of Delivery**", and each such time and date for delivery is herein called a "**Time of Delivery**".

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The documents to be delivered at the applicable Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross-receipt for the ADSs and any additional documents requested by the Underwriters pursuant to Section 8 hereof, will be delivered at the offices of Davis Polk & Wardwell LLP, Izumi Garden Tower, 33F, 6-1 Roppongi 1-chome, Minato-ku, Tokyo, 106-6033, Japan (the "**Closing Location**"), and the ADSs will be delivered at the Designated Office, all at the applicable Time of Delivery. A meeting will be held at the Closing Location at 3:00 p.m., Japan time, on the New York Business Day next preceding the applicable Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, "**New York Business Day**" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. (a) The Company agrees with each of the Underwriters:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) To prepare the U.S. Prospectus in a form approved by the Representatives and to file such U.S. Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; to file the Japanese Registration Statement with the KLFB in accordance with the Japanese Rules and Regulations; to make no further amendment or any supplement to the Registration Statement, the U.S. Prospectus, the Japanese Registration Statement or the Japanese Prospectus prior to the last Time of Delivery which shall be disapproved by the Representatives promptly after reasonable notice thereof; to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the U.S. Prospectus, the Japanese Registration Statement or the Japanese Prospectus has been filed and to furnish the Representatives with copies thereof; to file promptly all material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; to advise the Representatives, promptly after it receives notice thereof, of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any part thereof or of any order preventing or suspending the use of any Issuer Free Writing Prospectus, Preliminary Prospectus or other prospectus in respect of the Shares and ADSs, of the suspension of the qualification of the Shares and ADSs for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose or pursuant to Section 8A of the Act, or of any request by the Commission for the amending or supplementing of the Registration Statement or the U.S. Prospectus or for additional information; to advise the Representatives, promptly after it receives notice thereof, of the issuance by the KLFB of any order suspending the effectiveness of the Japanese Registration Statement or any part thereof or of any order preventing or suspending the use of the Japanese Prospectus, of the initiation or threatening of any proceeding for any such purpose, or of any request by the KLFB for the amending or supplementing of the Japanese Registration Statement or the Japanese Prospectus or for additional information; and, in the event of the issuance of any stop order suspending the effectiveness of the Registration Statement, the Japanese Registration Statement or any part thereof or of any order preventing or suspending the use of any Issuer Free Writing Prospectus, Preliminary Prospectus, Japanese Prospectus or other prospectus or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Shares and ADSs for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Shares and ADSs, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation (where not otherwise required) or to file a general consent to service of process in any jurisdiction (where not otherwise required);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Prior to 10:00 a.m., New York City time, on the New York Business Day next succeeding the date of this Agreement (or such other time as may be agreed to by the Company and the Representatives) and from time to time, to furnish the Underwriters with written and electronic copies of the U.S. Prospectus and Japanese Prospectus in such quantities as the Representatives may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issue of the U.S. Prospectus in connection with the offering or sale of the Shares and ADSs and if at such time any event shall have occurred as a result of which the U.S. Prospectus or Japanese Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such U.S. Prospectus or Japanese Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the U.S. Prospectus in order to comply with the Act or the Japanese Prospectus in order to comply with the Japanese Rules and Regulations, to notify the Representatives and, before amending or supplementing the Registration Statement, the Pricing Disclosure Package, the U.S. Prospectus or the Japanese Prospectus, to furnish to the Representatives a copy of each such proposed amendment or supplement and not file any such proposed amendment or supplement to which the Representatives reasonably object, and upon the Representatives' request, to prepare and furnish without charge to each Underwriter and to any dealer in securities as many written and electronic copies as the Representatives may from time to time reasonably request of an amended U.S. Prospectus or Japanese Prospectus or a supplement thereto which will correct such statement or omission or effect such compliance; and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Shares and ADSs at any time nine months or more after the time of issue of the U.S. Prospectus, upon the Representatives' request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as the Representatives may request of an amended or supplemented U.S. Prospectus complying with Section 10(a)(3) of the Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) To make generally available to its securityholders as soon as practicable, but in any event not later than sixteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158); provided, however, that the Company may satisfy the requirements of this Section 5(a)(iv) by filing such information through the Commission's Electronic Data Gathering Analysis and Retrieval System ("**EDGAR**");

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) During the period beginning from the date hereof and continuing to and including the date 180 days after the date of the U.S. Prospectus (the "**Lock-Up Period**"), not to, and not publicly disclose an intention to, and not to cause any direct or indirect affiliate to, (1) offer, sell, contract to sell, pledge, grant any option or contract to purchase, purchase any option or contract to sell, make any short sale, loan, hedge or otherwise transfer or dispose of, directly or indirectly, or file with or confidentially submit to the Commission a registration statement under the Act relating to any ADSs or Common Shares or any securities of the Company that are substantially similar to the ADSs or Common Shares, or any options or warrants to purchase any ADSs or Common Shares or any securities of the Company that are substantially similar to the ADSs or Common Shares, or any securities convertible into, exchangeable for or that represent the right to receive ADSs or Common Shares or any securities of the Company that are substantially similar to the ADSs or Common Shares (collectively, "**Lock-up Securities**"), or (2) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Lock-up Securities, whether any such transaction or arrangement mentioned in clause (1) or (2) above is to be settled by delivery of the ADSs or Common Shares or such other securities, in cash or otherwise, whether now owned or hereinafter acquired, owned directly by such person (including holding as a custodian) or with respect to which such person has beneficial ownership within the rules and regulations of the Commission, without the prior written consent of all of the Representatives. The restrictions contained in the preceding sentence shall not apply to (i) the ADSs and Shares to be sold hereunder, (ii) the issuance of up to 10% ****of the Common Shares, or securities convertible into, exercisable for, or which are otherwise exchangeable for, Common Shares, outstanding immediately following the Time of Delivery, in acquisition or other similar strategic transactions, provided that such recipients enter into an agreement (each, a "**Lock-Up Agreement**"), in the form attached as <u>Annex</u> <u>I</u> hereto, with the Underwriters covering the remainder of the Lock-Up Period, (iii) the issuance by the Company of Lock-up Securities upon exercise of outstanding employee stock options existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement and as described in the Pricing Prospectus, (iv) the approval and/or establishment of share incentive plans or any grant of awards under any such plan, provided that any such awards will not vest during the Lock-Up Period, (v) the filing of any registration statement on Form S-8 relating to Lock-up Securities granted or to be granted pursuant to any plan described in the Prospectuses or any assumed benefit plan pursuant to an acquisition or similar strategic transaction, or (vi) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of Lock-up Securities, provided that (A) such plan does not provide for the transfer of Lock-up Securities, or securities convertible into, exercisable for or which are otherwise exchangeable for, Lock-up Securities, during the Lock-up Period and (B) to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by the Company regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of Lock-up Securities may be made under such plan during the Lock-up Period;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) To furnish to its shareholders within such period required by the Exchange Act after the end of each fiscal year an annual report (including a balance sheet and statements of income, shareholders' equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to its shareholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail; provided, however, that the Company may satisfy the requirements of this Section 5(a)(vi) by filing such information through the Commission's EDGAR;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) During a period of two years from the effective date of the Registration Statement, so long as the Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act, to furnish to the Representatives copies of all reports or other communications (financial or other) furnished to shareholders, and to deliver to the Representatives (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any securities exchange on which any class of securities of the Company is listed; and (ii) such additional information concerning the business and financial condition of the Company as the Representatives may from time to time reasonably request (such, financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its shareholders generally or to the Commission); provided, however, that the Company may satisfy the requirements of this Section 5(a)(vii) by filing such information through the Commission's EDGAR;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) To use the net proceeds received by it from the sale of the Shares and ADSs pursuant to this Agreement in the manner specified in the Pricing Prospectus under the caption "Use of Proceeds";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Prior to each Time of Delivery to deposit Shares with the Depositary in accordance with the provisions of the Deposit Agreement and otherwise to comply with the Deposit Agreement so that ADRs evidencing ADSs will be executed (and, if applicable, countersigned) and issued by the Depositary against receipt of such Shares and delivered to the Underwriters at such Time of Delivery;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Not to (and to cause its affiliates not to) take, directly or indirectly, any action which is designed to or which constitutes or which would reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company or facilitate the sale or resale of the Shares and ADSs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) To use its best efforts to include the ADSs for listing on the Nasdaq Global Select Market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) To file with the Commission such information on Form 20-F as may be required by Rule 463 under the Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 3a(c) of the Commission's Informal and Other Procedures (16 CFR 202.3a);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) Upon reasonable request of any Underwriter in writing, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Company's trademarks, servicemarks and corporate logo for use on the website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Shares and ADSs (the "**License**"); provided, however, that the License shall be used solely for the purpose described above, is granted without any fee and may not be assigned or transferred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) To indemnify and hold each of the Underwriters harmless against any issuance, documentary, registration, stamp, value added, transfer or similar taxes, duties or fees and any transaction levies, commissions or brokerage charges, including any interest and penalties, which are or may be required to be paid in connection with the creation, allotment, issuance, offer and distribution of the Shares and ADSs to be sold by the Company (including, for the avoidance of doubt, the Japanese POWL) and the execution and delivery of this Agreement and the Deposit Agreement. All indemnity payments to be made by the Company hereunder in respect of this Section 5(a)(xv) shall be made without withholding or deduction for or on account of any present or future Japanese taxes, duties or governmental shares whatsoever unless the Company is compelled by law to deduct or withhold such taxes, duties or charges. In that event, except for any net income, capital gains or franchise taxes imposed on the Underwriters by Japan or the United States or any political subdivision of taxing authority thereof or therein as a result of any present or former connection (other than any connection resulting from the transactions contemplated by this Agreement) between the Underwriters and the jurisdiction imposing such withholding or deductions, the Company shall pay such additional amounts as may be necessary in order to ensure that the net amounts received after such withholding or deductions shall equal the amounts that would have been received if no withholding or deduction has been made. If applicable, and upon reasonable request, the Company shall provide to the Representatives evidence of such payment of taxes, duties or charges made to the relevant governmental authority within thirty (30) days thereof and shall also provide to the Representatives the original or a certified copy of any official tax receipt or other documentation issued by the appropriate governmental authorities with respect to such payment;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) To comply with Rule 433(d) under the Act (without reliance on Rule 164(b) under the Act) and with Rule 433(g) under the Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) Not, at any time at or after the execution of this Agreement, to, directly or indirectly, offer or sell any Shares or ADSs by means of any "prospectus" (within the meaning of the Act), or use any "prospectus" (within the meaning of the Act) in connection with the offer or sale of the Shares or the ADSs, in each case other than the Prospectuses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xviii) To promptly notify the Representatives if the Company ceases to be a Foreign Private Issuer at any time prior to the later of (A) completion of the distribution of the Shares within the meaning of the Act and (B) the completion of the Lock-Up Period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xix) If at any time prior to the completion of the sale of the ADSs by the Underwriters, the Company becomes aware of a relationship between (i) the Company or any of its subsidiaries and (ii) any Anti-social Forces, to immediately inform the Underwriters of such fact and any details thereof, and if the Company becomes aware of any fact that would render the representations and warranties made in Section 1(a)(lxiii) hereof untrue or incorrect, to also immediately notify the Underwriters.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Selling Shareholder agrees with each of the Underwriters:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) During the Lock-Up Period, the Selling Shareholder will not, and will not publicly disclose an intention to, and will not cause any direct or indirect affiliate to, (1) offer, sell, contract to sell, pledge, grant any option or contract to purchase, purchase any option or contract to sell, make any short sale, loan, hedge or otherwise transfer or dispose of, directly or indirectly, any Lock-up Securities, or (2) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Lock-up Securities, whether any such transaction or arrangement mentioned in clause (1) or (2) above is to be settled by delivery of the ADSs or Common Shares or such other securities, in cash or otherwise, whether now owned or hereinafter acquired, owned directly by such person (including holding as a custodian) or with respect to which such person has beneficial ownership within the rules and regulations of the Commission, or make any demand for, or exercise any right with respect to, the registration of any such securities, without the prior written consent of all of the Representatives. The restrictions contained in the preceding sentence shall not apply to: (A) the Shares and ADSs to be sold hereunder; (B) any disposition or transfer with respect to the Lock-up Securities as one or more *bona fide* gifts or charitable contributions, provided that (i) such transfer shall not involve a disposition for value, (ii) the donee or donees thereof agree to be bound in writing by the restrictions set forth in this Section 5(b)(i) for the remainder of the Lock-Up Period and (iii) no filing by any party (donor, donee, devisee, transferor, transferee, distributer or distributee) under the Exchange Act, or other public announcement shall be required or shall be made voluntarily in connection with such distribution (other than a filing on Form 5 made after the expiration of the Lock-Up Period and and other than any required filing under Section 16(a) of the Exchange Act, or other required public filing, report or announcement reporting a reduction in beneficial ownership of Lock-Up Securities, which filing, report or announcement shall indicate in the footnotes thereto the nature and conditions of such transfer); (C) any disposition or transfer with respect to the Lock-up Securities to any trust for the direct or indirect benefit of such Selling Shareholder or the immediate family of such Selling Shareholder (for purposes of this Section 5(b)(i), "**immediate family**" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin); provided that (i) such transfer shall not involve a disposition for value, (ii) the trustee and, if applicable, the trust beneficiaries agree in writing to be bound by the restrictions set forth in this Section 5(b)(i) for the remainder of the Lock-Up Period and (iii) no filing by any party (including transferor, transferee, trustee or beneficiary) under the Exchange Act, or other public announcement shall be required or shall be made voluntarily in connection with such transfer (other than a filing on Form 5 made after the expiration of the Lock-Up Period and other than any required filing under Section 16(a) of the Exchange Act, or other required public filing, report or announcement reporting a reduction in beneficial ownership of Lock-Up Securities, which filing, report or announcement shall indicate in the footnotes thereto the nature and conditions of such transfer); (D) any deposit of Shares with the Depositary in exchange for the issuance of ADSs representing such deposited Shares; provided that any such ADSs shall remain subject to the restrictions set forth in this Section 5(b)(i) for the remainder of the Lock-Up Period; (E) any disposition or transfer with respect to the Lock-up Securities pursuant to a *bona fide* third-party tender offer, merger, consolidation or other similar transaction that is approved by the Board of Directors of the Company and made to all holders of the ADSs or Shares involving a prospective change of control of the Company (for purposes of this Section 5(b)(i), "**change of control**" shall mean the transfer (whether by tender offer, merger, consolidation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons, of the ADSs or Shares if, after such transfer, such person or group of affiliated persons would hold at least a majority of the outstanding voting securities of the Company (or the surviving entity)); provided, however, that in the event that such tender offer, merger, consolidation or other such transaction is not completed, such Lock-up Securities held by the Selling Shareholder shall remain subject to the restrictions on transfer set forth in this Section 5(b)(i) for the remainder of the Lock-Up Period; (F) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (B) through (E) above; provided that such nominee or custodian agrees in writing to be bound by the restrictions set forth in this Section 5(b)(i) for the remainder of the Lock-Up Period; (G) as part of or in connection with any open market transactions relating to the Lock-up Securities acquired by the Selling Shareholder from time to time after completion of the Offering; and (H) any pledge, charge, lien, mortgage, hypothecation or other granting of a security interest in respect of the Lock-up Securities (including any sale, transfer, appropriation or other disposition with respect to the Lock-up Securities in connection with any such pledge, charge, lien, mortgage, hypothecation or other granting of a security interest) to or for the benefit of one or more banks, financial or other lending institutions or other finance counterparties (as well as any security agent, securities intermediary and/or custodian) (collectively, the "**Pledgees**") as collateral or security for or in connection with any margin loan or other loans, advances or extensions of credit or other financing transaction entered into by the Selling Shareholder or any of its direct or indirect affiliates, and any sales, transfers, appropriations or other dispositions of such Lock-up Securities to the applicable Pledgee(s) or other third parties upon or following foreclosure upon or enforcement of such Lock-up Securities in accordance with the terms of the documentation governing any margin loan or other loan, advance, or extension of credit or other financing transaction (including, without limitation, pursuant to any agreement or arrangement existing as of the date hereof); provided that, with respect to any pledge, charge, lien, mortgage, hypothecation or other granting of a security interest set forth above after the execution of this Agreement, the applicable Pledgee(s) shall be informed of the existence and contents of this Section 5(b)(i) before entering into any margin loan or other loans, advances or extensions of credit or other financing transaction. Notwithstanding the foregoing, this Section 5(b)(i) shall not restrict the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of the Lock-up Securities; provided that (i) such plan does not provide for the transfer of the Lock-up Securities during the Lock-Up Period and (ii) to the extent a public announcement, report or filing under the Exchange Act, if any, is required by or on behalf of such Selling Shareholder or the Company regarding the establishment of such plan, such announcement, report or filing shall include a statement to the effect that no transfer, sale or other disposition of Lock-Up Securities may be made under such plan during the Lock-Up Period. In addition, notwithstanding the foregoing, the Selling Shareholder may transfer any of the Lock-up Securities (x) to another corporation, partnership, limited liability company or other business entity that is an affiliate (as defined in Rule 405 under the Act) of the Selling Shareholder, or to any investment fund or other entity which fund or entity is controlled or managed by the Selling Shareholder or affiliates of the Selling Shareholder, or (y) as part of a distribution by the Selling Shareholder to its stockholders, partners, members or other equityholders or to the estate of any such stockholders, partners, members or other equityholders; provided, however, that in any such case, it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding such share capital subject to the provisions of this Section 5(b)(i) during the Lock-Up Period and there shall be no further transfer of such share capital during the Lock-Up Period except in accordance with this Section 5(b)(i); provided further that it shall be a condition to such transfer that no public filing, report or announcement not otherwise required under applicable law shall be voluntarily made and if any filing under the equivalent of Section 16(a) of the Exchange Act in non-U.S. jurisdictions, or other public filing, report or announcement reporting a reduction in beneficial ownership of the Lock-up Securities in connection with such transfer or distribution shall be legally required during the Lock-Up Period, such filing, report or announcement shall clearly indicate in the footnotes thereto or otherwise the nature and conditions of such transfer. If the Representatives release any person who has entered into and is similarly restricted pursuant to, lock-up agreements imposing restrictions substantially similar to those restrictions contained herein (each such person, a "**Holder**," and each such lock-up agreement, an "**Additional Lock-Up Agreement**") from the restrictions contained in an Additional Lock-Up Agreement (each such Holder, a "**Released Holder**," and each such release, a "**Lock-Up Release**"), the same percentage of the Shares or ADSs held by the Selling Shareholder (calculated as the number of Shares or ADSs benefitting from such release divided by the total number of Shares or ADSs held by the Released Holder) shall be immediately and fully released on the same terms from any remaining lockup restrictions set forth herein. Notwithstanding the foregoing, the provisions of this paragraph will not apply (1) if the release or waiver is effected solely to permit a transfer not involving a disposition for value, (2) if the transferee agrees in writing to be bound by the same terms described in such Additional Lock-Up Agreement to the extent and for the duration that such terms remain in effect at the time of transfer, (3) if the total amount that is released or waived with respect to all Additional Lock-Up Agreements is in the aggregate less than or equal to 1% of the total number of outstanding ADSs or Shares or (4) if the release or waiver is granted due to circumstances of an emergency or hardship as determined by the Representatives in their sole judgment. The Representatives shall use commercially reasonable efforts to promptly notify the Selling Shareholder of each such release (provided that the failure to provide such notice shall not give rise to any claim or liability against the Representatives or the Underwriters). The Selling Shareholder also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar and the Depositary against the transfer of the Lock-up Securities except in compliance with the foregoing restrictions.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Prior to the First Time of Delivery, to deposit, or cause to be deposited on their behalf, Shares with the Depositary in accordance with the provisions of the Deposit Agreement and otherwise to comply with the Deposit Agreement so that ADRs evidencing ADSs will be executed (and, if applicable, countersigned) and issued by the Depositary against receipt of such Shares and delivered to the Underwriters at the First Time of Delivery;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Not to (and to cause its affiliates not to) take, directly or indirectly, any action which is designed to or which constitutes or which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company or facilitate the sale or resale of the Shares and ADSs, it being understood that such Selling Shareholder makes no representation with respect to actions taken by the Company, the Depositary or the Underwriters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) To indemnify and hold each of the Underwriters harmless against any issuance, documentary, registration, stamp, value added, transfer or similar taxes, duties or fees and any transaction levies, commissions or brokerage charges, including any interest and penalties imposed with respect to such taxes, duties, fees, levies or charges, which are or may be required to be paid in connection with the creation, allotment, issuance, offer and distribution of the Shares and ADSs to be sold by the Selling Shareholder and the execution and delivery of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) To pay or cause to be paid all taxes, if any, on the transfer and sale of the Shares and ADSs being sold by the Selling Shareholder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The Selling Shareholder will deliver to the Representatives prior to or at the First Time of Delivery a properly completed and executed United States Internal Revenue Service Form W-9 or W-8, as appropriate, together with all required attachments to such form; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Not to use, directly or knowingly indirectly, the proceeds of the offering of the Shares and ADSs hereunder by the Selling Shareholder (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of Anti-Corruption Laws, (ii) in any manner in violation of the Anti-Money Laundering Laws or (iii) as to any subsidiary, joint venture partner or other person or entity (x) to fund or facilitate any activities of or business with any person, or in any country, region or territory, that, at the time of such funding or facilitation, is the subject or the target of Sanctions or (y) in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as an underwriter, advisor, investor or otherwise) of Sanctions; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) If at any time prior to the completion of the sale of the ADSs by the Underwriters, the Selling Shareholder becomes aware of a relationship between (i) the Selling Shareholder or any of its subsidiaries and (ii) any Anti-social Forces, to immediately inform the Underwriters of such fact and any details thereof, and if the Selling Shareholder becomes aware of any fact that would render the representations and warranties made in Section 1(b)(xiii) hereof untrue or incorrect, to also immediately notify the Underwriters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. (a) The Company represents and agrees that, without the prior consent of the Representatives, it has not made and will not make any offer relating to the Shares and ADSs that would constitute a "free writing prospectus" as defined in Rule 405 under the Act; the Selling Shareholder represents and agrees that, without the prior consent of the Representatives, it has not made and will not make any offer relating to the Shares and ADSs that would constitute a "free writing prospectus" as defined in Rule 405 under the Act; each Underwriter represents and agrees that, without the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Shares and ADSs that would constitute a "free writing prospectus" as defined in Rule 405 under the Act; any such free writing prospectus the use of which has been consented to by the Company and the Representatives is listed on <u>Schedule III</u> hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company has complied and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending; and the Company represents that it has satisfied and agrees that it will satisfy the conditions under Rule 433 under the Act to avoid a requirement to file with the Commission any electronic Road Show;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company agrees that if at any time following the issuance or other distribution of an Issuer Free Writing Prospectus, Written Testing-the-Waters Communication or Road Show any event occurred or occurs as a result of which such Issuer Free Writing Prospectus, Written Testing-the-Waters Communication or Road Show would conflict with the information in the Registration Statement or the Prospectuses or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus, Written Testing-the-Waters Communication or other appropriate document which will correct such conflict, statement or omission; provided, however, that this paragraph shall not apply to any statements or omissions in an Issuer Free Writing Prospectus or Written Testing-the-Waters Communication made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the Underwriter Information;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company represents and agrees that it (i) has not engaged in any Testing-the-Waters Communications, other than Testing-the-Waters Communications with the prior consent of the Representatives with entities that are, or that the Company reasonably believes are, qualified institutional buyers ("**QIBs**") as defined in Rule 144A under the Act or institutions that are accredited investors as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), (a)(8), (a)(9), (a)(12) or (a)(13) under the Act and otherwise in compliance with the requirements of Rule 163B under the Act; (ii) has not authorized anyone other than the Representatives to engage in Testing-the-Waters Communications; and (iii) has not distributed, or authorized or approved any other person to distribute, any Written Testing-the- Waters Communication, other than those distributed with the prior consent of the Representatives that are listed on <u>Schedule III(d)</u> hereto; and the Company reconfirms that the Underwriters have been authorized to act on its behalf in engaging in Testing-the-Waters Communications by virtue of a writing substantially in the form agreed between the Company and the Representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Each Underwriter represents and agrees that any Testing-the-Waters Communications undertaken by it were with entities that such Underwriter reasonably believes are qualified institutional buyers as defined in Rule 144A under the Act or institutions that are accredited investors as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), (a)(8), (a)(9), (a)(12) or (a)(13) under the Act.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company and the Selling Shareholder covenant and agree with one another and with the several Underwriters that (a) the Company will pay or cause to be paid ****the following expenses incident to the performance of their obligations under this agreement: (i) the fees, disbursements and expenses of the Company's counsel and accountants in connection with the registration of the Shares under the Act and all other expenses in connection with the preparation, printing, reproduction and filing of the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication, any Road Show and the Prospectuses and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Shares and ADSs; (iii) all expenses in connection with the qualification of the Shares and ADSs for offering and sale under the laws of the jurisdictions as provided in Section 5(a)(ii)) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky survey; (iv) all fees and expenses in connection with the preparation and filing of the registration statement on Form 8-A relating to the ADSs and all fees and expenses incident to listing the ADSs on Nasdaq Global Select Market; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by the FINRA of the terms of the sale of the Shares and ADSs, provided that the aggregate amount payable by the Company pursuant to clause (v) shall not exceed $75,000; (vi) the cost of preparing stock certificates; (vii) the cost and charges of any transfer agent or registrar; (viii) the fees and expenses (including fees and disbursements of counsel), if any, of the Depositary and any custodian appointed under the Deposit Agreement, other than the fees and expenses to be paid by holders of ADRs; (ix) all expenses of the Company incurred in connection with any Road Show, including, without limitation, expenses associated with the preparation or dissemination of any electronic Road Show, expenses associated with the production of Road Show slides and graphics, fees and expenses of any consultants engaged in connection with the Road Show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants; provided, however, that subject to and following the completion of the offering of the Shares and ADSs as contemplated hereunder, Morgan Stanley & Co. LLC, on behalf of the Underwriters, shall reimburse the Company in an amount up to $1,500,000 to cover expenses incurred by the Company in connection with the production of any videos related to IPO marketing activities, including Road Show and product demo videos (the "**IPO Video Expenses**"); provided further that each of Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Mizuho Securities USA LLC shall, severally and not jointly, reimburse Morgan Stanley & Co. LLC for the IPO Video Expenses in the manner as may be agreed among the Representatives; and (x) all other costs and expenses incident to the performance of their obligations hereunder which are not otherwise specifically provided for in this Section; and (b) the Selling Shareholder will pay or cause to be paid (i) the fees, disbursements and expenses of the Selling Shareholder's counsel, and (ii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this section. It is understood, however, that, except as provided in this Section, and Sections 9 and 12 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, stock transfer taxes on resale of any of the Shares by them (other than resales to the initial purchasers thereof pursuant to the Offering, if applicable, or as otherwise covered under Section 5(a)(xv) hereof), and any advertising expenses in connection with any offers they may make.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. The obligations of the Underwriters hereunder, as to the Shares and ADSs to be delivered at each Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company and of the Selling Shareholder herein are, at and as of the applicable Time of Delivery, true and correct, the condition that the Company and the Selling Shareholder shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions (for purposes hereof, the applicable Time of Delivery with respect to any deliverable by the Selling Shareholder shall be the First Time of Delivery):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The U.S. Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a)(i) hereof; all material required to be filed by the Company pursuant to Rule 433(d) under the Act shall have been filed with the Commission within the applicable time period prescribed for such filing by Rule 433; if the Company has elected to rely upon Rule 462(b) under the Act, the Rule 462(b) Registration Statement shall have become effective by 10:00 P.M., Washington, D.C. time, on the date of this Agreement; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose or pursuant to Section 8A of the Act shall have been initiated or threatened by the Commission; no stop order suspending or preventing the use of the Pricing Prospectus, the U.S. Prospectus or any Issuer Free Writing Prospectus shall have been initiated or threatened by the Commission; the Japanese Registration Statement shall have been filed with the KLFB in accordance with the Japanese Rules and Regulations; and all requests for additional information on the part of the Commission or KLFB, as the case may be, shall have been complied with to the Representatives' reasonable satisfaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Davis Polk & Wardwell LLP, U.S. counsel for the Underwriters, shall have furnished to the Representatives such written opinion and letter delivered on and dated such Time of Delivery, in form and substance satisfactory to the Representatives, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Nagashima Ohno & Tsunematsu, Japanese counsel to the Underwriters, shall have furnished to the Representatives such written opinion and letter, delivered on and dated such Time of Delivery, in form and substance satisfactory to the Representatives, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Simpson Thacher & Bartlett LLP, U.S. counsel for the Company, shall have furnished to the Representatives such written opinion and letter, delivered on and dated such Time of Delivery, in form and substance satisfactory to the Representatives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Mori Hamada & Matsumoto, Japanese counsel to the Company and the Selling Shareholder, shall have furnished to the Representatives such written opinion and letter, delivered on and dated such Time of Delivery, in form and substance satisfactory to the Representatives;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Latham & Watkins LLP, U.S. counsel for the Selling Shareholder, shall have furnished to the Representatives their written opinion, delivered on and dated the First Time of Delivery, in form and substance satisfactory to the Representatives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Emmet, Marvin & Martin, LLP, counsel for the Depositary, shall have furnished to the Representatives their written opinion, delivered on and dated such Time of Delivery, in form and substance satisfactory to the Representatives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) On the date of the U.S. Prospectus concurrently with the execution of this Agreement, at 9:30 a.m., New York City time, or on the date on which the first sale of ADSs is confirmed if such date is not the same as the date of this Agreement, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each Time of Delivery, Deloitte Touche Tohmatsu LLC shall have furnished to the Representatives a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to the Representatives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) No Preliminary Prospectus, Issuer Free Writing Prospectus or any Prospectus or amendment or supplement to the Registration Statement, the Japanese Registration Statement, the Preliminary Prospectus or any Prospectus shall have been filed to which the Representatives shall have objected in writing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) (i) Neither the Company nor any of its Principal Subsidiaries shall have sustained since the date of the latest audited financial statements included in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court, governmental or regulatory action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus, and (ii) since the respective dates as of which information is given in the Pricing Prospectus there shall not have been any change in the share capital, short or long-term debt of the Company or any of its subsidiaries, or any change or effect, or any development involving a prospective change or effect, in or affecting (x) the business, properties, general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries taken as a whole or (y) in the ability of the Company to perform its obligations under this Agreement, otherwise than as set forth or contemplated in the Pricing Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in the Representatives' judgment so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery at such Time of Delivery of the ADSs representing the Shares on the terms and in the manner contemplated in the Prospectuses;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) On or after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the Nasdaq Stock Market, the New York Stock Exchange or the Tokyo Stock Exchange; (ii) a suspension or material limitation in trading in the Company's securities on the Nasdaq Global Select Market; (iii) a general moratorium on commercial banking activities in New York or Japan declared by the relevant authorities, or a material disruption in commercial banking or securities settlement or clearance services in the United States or Japan; (iv) the outbreak or escalation of hostilities or act of terrorism involving the United States or Japan or the declaration by the United States or Japan of a national emergency or war; or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions or currency exchange rates or controls in the United States or Japan or elsewhere, if the effect of any such event specified in clauses (i), (iv) ****or (v), in the Representatives' sole judgment, makes it impracticable or inadvisable to proceed with the public offering or the delivery at such Time of Delivery of the ADSs representing the Shares on the terms and in the manner contemplated in the Prospectuses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The FINRA shall have confirmed in writing that it has not raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) The ADSs to be sold by the Company and the Selling Shareholder at the applicable Time of Delivery shall have been duly listed on the Nasdaq Global Select Market, subject to official notice of issuance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) The Depositary shall have furnished or caused to be furnished to the Representatives at such Time of Delivery certificates satisfactory to the Representatives evidencing the deposit with it of the Shares being so deposited against issuance of ADRs evidencing the ADSs to be delivered by the Company and the Selling Shareholder at the applicable Time of Delivery, and the execution, countersignature (if applicable), issuance and delivery of ADRs evidencing such ADSs pursuant to the Deposit Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Each party set forth in <u>Annex II</u> attached hereto shall have entered into a Lock-up Agreement in the form attached as <u>Annex</u> <u>I</u><u> </u>hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) The Company shall have complied with the provisions of Section 5(a)(iii) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) On the date hereof concurrently with the execution of this Agreement and also at the applicable Time of Delivery, as the case may be, the Chief Financial Officer of the Company shall have furnished to the Representatives an officer's certificate, dated the date of delivery thereof, in form and substance satisfactory to the Representatives, to the effect set forth in <u>Annex III</u> attached hereto;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) The Company and the Selling Shareholder shall have furnished or caused to be furnished to the Representatives at the applicable Time of Delivery certificates of an officer of the Company and a director of the Selling Shareholder satisfactory to the Representatives as to the accuracy of the representations and warranties of the Company and the Selling Shareholder, respectively, herein at and as of the applicable Time of Delivery, as to the performance by the Company and the Selling Shareholder of all of their respective obligations hereunder to be performed at or prior to the applicable Time of Delivery, and as to such other matters as the Representatives may reasonably request, and the Company shall have furnished or caused to be furnished certificates as to the matters set forth in subsections (a), (j) and (q) of this Section 8 and as such other matters as the Representatives may reasonably request;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) There shall not be any litigation, proceedings, investigations, processes for administrative sanctions or other actions initiated or threatened by any Governmental Agency before any Governmental Agency, in each case with due authority, against or involving any party hereto, in Japan or elsewhere, that seeks to declare non-compliance, unlawful or illegal, under Japanese laws, rules and regulations, the issuance and sales of the Shares and ADSs, the listing and trading of the ADSs on the Nasdaq Global Select Market or the transactions contemplated by this Agreement and the Deposit Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. (a) The Company will indemnify and hold harmless each Underwriter, from and against any and all losses, claims, damages or liabilities, joint or several, or actions in respect thereof, that arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the ADS Registration Statement, any Preliminary Prospectus, the Japanese Registration Statement, the Pricing Disclosure Package or the Prospectuses, or any amendment or supplement thereto, any Issuer Free Writing Prospectus, any "issuer information" filed or required to be filed pursuant to Rule 433(d) under the Act, any Testing-the-Waters Communication or any Road Show, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the U.S. Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus or any Testing-the-Waters Communication, in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in paragraph (c) below.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Selling Shareholder will indemnify and hold harmless each Underwriter, from and against any and all losses, claims, damages or liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the ADS Registration Statement, any Preliminary Prospectus, the Japanese Registration Statement, the Pricing Disclosure Package or the Prospectuses, or any amendment or supplement thereto, any Issuer Free Writing Prospectus, any "issuer information" filed or required to be filed pursuant to Rule 433(d) under the Act, any Testing-the-Waters Communication or any Road Show, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred, in each case, only to the extent such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with the Selling Shareholder Information; provided that the aggregate liability under this paragraph and in Section 9(e) of the Selling Shareholder shall not exceed an amount equal to the net proceeds (after deducting underwriting commissions and discounts but before deducting expenses) received by the Selling Shareholder from the sale of ADSs sold by it under this Agreement (with respect to the Selling Shareholder, the "**Selling Shareholder Proceeds**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Each Underwriter severally and not jointly will indemnify and hold harmless the Company and the Selling Shareholder, from and against any and all losses, claims, damages or liabilities to which the Company or the Selling Shareholder may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) that arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the U.S. Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any Testing-the-Waters Communication, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the U.S. Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any Testing-the-Waters Communication, in reliance upon and in conformity with the Underwriter Information (as defined below); and will reimburse the Company and the Selling Shareholder for any legal or other expenses reasonably incurred by the Company or the Selling Shareholder in connection with investigating or defending any such action or claim as such expenses are incurred. As used in this Agreement with respect to an Underwriter, "Underwriter Information" shall mean the written information furnished to the Company by such Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the following information in the U.S. Prospectus furnished on behalf of each Underwriter: (i) the names of the Underwriters appearing on the front and back cover pages of the U.S. Prospectus, (ii) the names of the Underwriters set forth in the table of Underwriters in the first paragraph of text under the caption "Underwriting" (the "**Underwriter Information**"); and will reimburse the Company and the Selling Shareholder for any legal or other expenses reasonably incurred by the Company and the Selling Shareholder in connection with investigating or defending any such action or claim as such expenses are incurred.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Promptly after receipt by an indemnified party under subsection (a), (b) or (c) of this Section 9 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability that it may have under the preceding paragraphs of this Section 9 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the contrary; (ii) the indemnifying party has failed within a reasonable time to retain counsel reasonably satisfactory to the indemnified party; (iii) the indemnified party shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the indemnifying party; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a), (b) or (c) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company or the Selling Shareholder, as applicable, on the one hand and the Underwriters on the other from the offering of the Shares and ADSs. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Shareholder, on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company or the Selling Shareholder, as applicable, on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering of ADSs contemplated hereby, including, for the avoidance of doubt, the Japanese POWL (after deducting underwriting discounts and commissions but before deducting expenses) received by the Company or the Selling Shareholder, as applicable, bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the U.S. Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Shareholder, as applicable, on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Selling Shareholder and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (e) were determined by *pro rata* allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the ADSs underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the foregoing provisions, the liability of the Selling Shareholder under the contribution agreement contained in this paragraph and the indemnity agreement contained in Section 9(e) shall be limited in the aggregate to an amount equal to the Selling Shareholder Proceeds of the Selling Shareholder. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (e) to contribute are several in proportion to their respective underwriting obligations and not joint.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The obligations of the Company and the Selling Shareholder under this Section 9 shall be in addition to any liability which the Company and the Selling Shareholder may otherwise have and shall extend, upon the same terms and conditions, to each employee, officer and director of each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act and each affiliate and selling agent (including Mizuho Securities Co., Ltd. and PayPay Securities Corporation in their capacities as selling agents in the Japanese POWL) of any Underwriter; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company (including any person who, with his or her consent, is named in the Registration Statement as about to become a director of the Company) and the Selling Shareholder and to each person, if any, who controls the Company or the Selling Shareholder within the meaning of the Act. The Company and Selling Shareholder agree and confirm that references to "each affiliate" of Morgan Stanley & Co. LLC that appear in this Agreement shall be understood to include Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Morgan Stanley MUFG Securities Co., Ltd. and their respective affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. (a) If any Underwriter shall default in its obligation to purchase the ADSs which it has agreed to purchase hereunder at a Time of Delivery, the Representatives may in their discretion arrange for the Representatives or another party or other parties to purchase such ADSs on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representatives do not arrange for the purchase of such ADSs, then the Company and the Selling Shareholder shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such ADSs on such terms. In the event that, within the respective prescribed periods, the Representatives notify the Company and the Selling Shareholder that the Representatives have so arranged for the purchase of such ADSs, or the Company or the Selling Shareholder notifies the Representatives that it has so arranged for the purchase of such ADSs, the Representatives or the Company or the Selling Shareholder shall have the right to postpone such Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the U.S. Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the U.S. Prospectus which in the Representatives' opinion may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such ADSs.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If, after giving effect to any arrangements for the purchase of the ADSs of a defaulting Underwriter or Underwriters by the Representatives and the Company and the Selling Shareholder as provided in subsection (a) above, the aggregate number of such ADSs which remains unpurchased does not exceed one-eleventh of the aggregate number of all the ADSs to be purchased at such Time of Delivery, then the Company and the Selling Shareholder shall have the right to require each non-defaulting Underwriter to purchase the number of ADSs which such Underwriter agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of ADSs which such Underwriter agreed to purchase hereunder) of the ADSs of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If, after giving effect to any arrangements for the purchase of the ADSs of a defaulting Underwriter or Underwriters by the Representatives and the Company and the Selling Shareholder as provided in subsection (a) above, the aggregate number of such ADSs which remains unpurchased exceeds one-eleventh of the aggregate number of all ADSs to be purchased at such Time of Delivery, or if the Company and the Selling Shareholder shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase ADSs of a defaulting Underwriter or Underwriters, then this Agreement (or, with respect to the Second Time of Delivery, the obligations of the Underwriters to purchase and of the Company to sell the Optional ADSs shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company or the Selling Shareholder, except for the expenses to be borne by the Company, the Selling Shareholder and the Underwriters as provided in Section 7 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. The respective indemnities, rights of contribution, agreements, representations, warranties and other statements of the Company, the Selling Shareholder and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any director, officer, employee, affiliate or controlling person of any Underwriter, or the Company, or the Selling Shareholder or any officer or director or controlling person of the Company, or any controlling person of the Selling Shareholder, and shall survive delivery of and payment for the ADSs.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. If this Agreement shall be terminated pursuant to Section 10 hereof, neither the Company nor the Selling Shareholder shall then be under any liability to any Underwriter except as provided in Sections 7 and 9 hereof; but, if for any other reason, any ADSs are not delivered by or on behalf of the Company and the Selling Shareholder as provided herein, or the Underwriters decline to purchase the Shares for any reason permitted under this Agreement, the Company will, promptly (and, in any event, not later than 30 days), reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Shares or the ADSs not so delivered, but the Company and the Selling Shareholder shall then be under no further liability to any Underwriter in respect of the Shares or the ADSs not so delivered except as provided in Sections 7 and 9 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. In all dealings hereunder, the Representatives shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by the Representatives; and in all dealings with the Selling Shareholder hereunder, the Representatives and the Company shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of the Selling Shareholder made or given by any or all of the Attorneys-in-Fact for the Selling Shareholder.

In accordance with the requirements of the USA PATRIOT ACT (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Company and the Selling Shareholder, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.

All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the Representatives c/o Goldman Sachs & Co. LLC, 200 West Street, New York, New York 10282, Attention: Registration Department; J.P. Morgan Securities LLC, 270 Park Avenue, New York, New York 10017, Attention: Equity Syndicate Desk, Fax No.: (212) 622-8358; Mizuho Securities USA LLC, 1271 Avenue of the Americas, New York, New York 10020, Attention: Equity Capital Markets, Email: legalnotices@mizuhogroup.com; and Morgan Stanley & Co. LLC, 1585 Broadway, 29th Floor, New York, New York 10036, Attention: Investment Banking Division, Fax No.: (212) 507-8999; and if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement, Attention: Chief Financial Officer; provided, however, that any notice to an Underwriter pursuant to Section 9(d) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters' Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company or the Selling Shareholder by the Representatives upon request; provided, however, that notices under Section 5(a)(v) hereof shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the Representatives c/o Goldman Sachs & Co. LLC, 200 West Street, New York, New York 10282, Attention: Registration Department; J.P. Morgan Securities LLC, 270 Park Avenue, New York, New York 10017, Attention: Equity Syndicate Desk, Fax No.: (212) 622-8358; Mizuho Securities USA LLC, 1271 Avenue of the Americas, New York, New York 10020, Attention: Equity Capital Markets, Email: legalnotices@mizuhogroup.com; and Morgan Stanley & Co. LLC, 1585 Broadway, 29th Floor, New York, New York 10036, Attention: Investment Banking Division, Fax No.: (212) 507-8999. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and the Selling Shareholder and, to the extent provided in Sections 9 and 11 hereof, the officers and directors of the Company and each person who controls the Company, the Selling Shareholder or any Underwriter, or any director, officer, employee, or affiliate of any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the ADSs from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. Each of the parties hereto irrevocably (i) agrees that any legal suit, action or proceeding against the Company or the Selling Shareholder brought by any Underwriter or by any person who controls any Underwriter arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any state or federal court located in the Borough of Manhattan, The City of New York, New York (each, a "**New York Court**"), (ii) waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such proceeding and (iii) submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company has appointed Cogency Global Inc. as its authorized agent (the "**Authorized Agent**") upon whom process may be served in any such action arising out of or based on this Agreement or the transactions contemplated hereby which may be instituted in any New York Court by any Underwriter or by any person who controls any Underwriter, expressly consents to the jurisdiction of any such court in respect of any such action, and waives any other requirements of or objections to personal jurisdiction with respect thereto. Such appointment shall be irrevocable. The Company represents and warrants that the Authorized Agent has agreed to act as such agent for service of process and agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent of the Company and written notice of such service to the Company shall be deemed, in every respect, effective service of process upon the Company.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. All payments to be made by the Company and the Selling Shareholder to the Underwriters under this Agreement shall be made without set-off or counterclaim, and free and clear of, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature and all interest, penalties or similar liabilities with respect thereto, imposed by Japan or any jurisdiction in which the Company or the Selling Shareholder is tax-resident or by any department, agency or other political subdivision or taxing authority thereof or therein ("**Taxes**"), unless such Taxes are required by law. If any Taxes are required by law to be deducted or withheld in connection with any such payment, the Company or the Selling Shareholder, as applicable, shall pay such additional amounts as may be necessary such that the net amounts received by the Underwriters after such withholding or deduction shall equal the amounts that would have been received if no withholding or deduction had been made, except that no additional amounts shall be payable in respect of (a) any income, capital gains, franchise or similar taxes that would not have been imposed but for a present or former connection between the recipient of such payment and the applicable taxing jurisdiction other than a connection arising solely from such recipient having executed, delivered or performed its obligations, or received a payment, under this Agreement or (b) any Taxes that would not have been imposed but for the failure of such recipient to comply, upon request by the Company or the Selling Shareholder, as applicable, with any certification, identification or other reporting requirements concerning the nationality, residence, identity or connection with the applicable taxing jurisdiction of such recipient if such compliance is required or imposed by law as a precondition to an exemption from, or reduction in, such Taxes. If applicable, and upon reasonable request, the Company or the Selling Shareholder, as applicable, shall provide to the Representatives evidence of such payment of Taxes made to the relevant governmental authority within thirty (30) days thereof and shall also provide to the Representatives the original or certified copy of any official tax receipt or other similar documentation issued by the appropriate governmental authorities with respect to such payment; provided that no such additional amounts shall be payable by the Selling Shareholder with respect to any Taxes imposed by the United States (or any jurisdiction thereof or therein) if the Selling Shareholder has provided the Representatives with a United States Internal Revenue Service Form W-9 certifying that the Selling Shareholder is a "U.S. person" for U.S. federal tax purposes.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. In respect of any judgment or order given or made for any amount due hereunder that is expressed and paid in a currency (the "**judgment currency**") other than United States dollars, the Company or the Selling Shareholder, as the case may be, will indemnify each Underwriter against any loss incurred by such Underwriter as a result of any variation as between (i) the rate of exchange at which the United States dollar amount is converted into the judgment currency for the purpose of such judgment or order and (ii) the rate of exchange at which an Underwriter is able to purchase United States dollars with the amount of the judgment currency actually received by such Underwriter. The foregoing indemnity shall constitute a separate and independent obligation of the Company and the Selling Shareholder and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term "rate of exchange" shall include any premiums and costs of exchange payable in connection with the purchase of or conversion into United States dollars.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. Time shall be of the essence of this Agreement. As used herein, the term "**business day**" shall mean any day when the Commission's office in Washington, D.C. is open for business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. (a) Each of the Company and the Selling Shareholder acknowledges and agrees that (i) the purchase and sale of the Shares and ADSs pursuant to this Agreement is an arm's-length commercial transaction between the Company and the Selling Shareholder, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the Company or the Selling Shareholder, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company or the Selling Shareholder with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company or the Selling Shareholder on other matters) or any other obligation to the Company or the Selling Shareholder except the obligations expressly set forth in this Agreement, (iv) each of the Company and the Selling Shareholder has consulted its own legal and financial advisors to the extent it deemed appropriate and (v) none of the activities of the Underwriters in connection with the transactions contemplated herein constitutes a recommendation, investment advice, or solicitation of any action by the Underwriters with respect to any entity or natural person. Each of the Company and the Selling Shareholder agrees that it will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company or the Selling Shareholder, in connection with such transaction or the process leading thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company and the Selling Shareholder waive to the full extent permitted by applicable law any claims it may have against the Underwriters arising from an alleged breach of fiduciary duty in connection with the offering of the Shares and ADSs.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Selling Shareholder further acknowledges and agrees that, although the Underwriters may provide the Selling Shareholder with certain Regulation Best Interest and Form CRS disclosures or other related documentation in connection with the offering, the Underwriters are not making a recommendation to the Selling Shareholder to participate in the offering or sell any Shares or ADSs at the purchase price set forth in Section 2 herein, and nothing set forth in such disclosures or documentation is intended to suggest that any Underwriter is making such a recommendation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. This Agreement constitutes the entire agreement among the parties and supersedes all prior agreements and understandings (whether written or oral) among the Company, the Selling Shareholder and the Underwriters, or any of them, with respect to the subject matter hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21. This Agreement and any transaction contemplated by this Agreement and any claim, controversy or dispute arising under or related thereto shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflict of laws that would result in the application of any other law than the laws of the State of New York.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22. To the extent that the Company or the Selling Shareholder has or hereafter may acquire any immunity (sovereign or otherwise) from jurisdiction of any court of (i) Japan, or any political subdivision thereof, (ii) the United States or the State of New York, (iii) any jurisdiction in which it owns or leases property or assets or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution, set-off or otherwise) with respect to themselves or their respective property and assets or this Agreement, each of the Company and the Selling Shareholder hereby irrevocably waives such immunity in respect of its obligations under this Agreement to the fullest extent permitted by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23. Each of the Company, the Selling Shareholder and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25. Notwithstanding anything herein to the contrary, the Company and the Selling Shareholder are authorized to disclose to any persons the U.S. federal and state income tax treatment and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided to the Company and the Selling Shareholder relating to that treatment and structure, without the Underwriters imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, "tax structure" is limited to any facts that may be relevant to that treatment.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26. (a) In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.

For purposes of this Section 26, the terms which follow shall have the meanings indicated:

"**BHC Act Affiliate**" has the meaning assigned to the term "affiliate" in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).

"**Covered Entity**" means any of the following: (i) a "covered entity" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a "covered bank" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a "covered FSI" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

"**Default Right**" has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

"**U.S. Special Resolution Regime**" means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.

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If the foregoing is in accordance with the Representatives' understanding, please sign and return to us a counterpart hereof, and upon the acceptance hereof by the Representatives, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement among each of the Underwriters, the Company and the Selling Shareholder. It is understood that the Representatives' acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters.

---

| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| **PayPay Corporation** | **PayPay Corporation** |
| By: |  |
|  | Name: |
|  | Title: |
|  **SVF II Piranha (DE) LLC** | **SVF II Piranha (DE) LLC** |
| By: |  |
|  | Name: |
|  | Title: |

---

------

Accepted as of the date hereof:

---

| | |
|:---|:---|
| **Goldman Sachs & Co. LLC** | **Goldman Sachs & Co. LLC** |
| By: |  |
|  | Name: |
|  | Title: |
| **J.P. Morgan Securities LLC** | **J.P. Morgan Securities LLC** |
| By: |  |
|  | Name: |
|  | Title: |
| **Mizuho Securities USA LLC** | **Mizuho Securities USA LLC** |
| By: |  |
|  | Name: |
|  | Title: |
| **Morgan Stanley & Co. LLC** | **Morgan Stanley & Co. LLC** |
| By: |  |
|  | Name: |
|  | Title: |

---

On behalf of themselves and each the other Underwriters

------

**SCHEDULE I** 

---

| | | |
|:---|:---|:---|
| **Underwriter** | **Total Number of**<br>**Firm ADSs**<br>**to be**<br>**Purchased** | **Number of**<br>**Optional**<br>**ADSs to be**<br>**Purchased if**<br>**Maximum**<br>**Option**<br>**Exercised** |
|  Goldman Sachs & Co. LLC |  |  |
|  J.P. Morgan Securities LLC |  |  |
|  Mizuho Securities USA LLC |  |  |
|  Morgan Stanley & Co. LLC |  |  |
|  Citigroup Global Markets Inc. |  |  |
|  Jefferies LLC |  |  |
|  BofA Securities, Inc. |  |  |
|  SG Americas Securities, LLC |  |  |
|  Nomura Securities International, Inc. |  |  |
|  Cantor Fitzgerald & Co. |  |  |
|  Credit Agricole Securities (USA) Inc. |  |  |
|  Daiwa Capital Markets America Inc. |  |  |
|  Deutsche Bank Securities Inc. |  |  |
|  Natixis Securities Americas LLC |  |  |
|  SMBC Nikko Securities America, Inc. |  |  |
|  WR Securities, LLC |  |  |
|  ING Financial Markets LLC |  |  |
|  Barclays Capital Inc. |  |  |
|  Intesa Sanpaolo IMI Securities Corp. |  |  |
|  Santander US Capital Markets LLC |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  |  |

---

------

**SCHEDULE II** 

---

| | | |
|:---|:---|:---|
|  | **Total Number of**<br>**Firm ADSs**<br>**to be Sold** | **Number of<br>Optional**<br>**ADSs to be Sold<br>if Maximum<br>Option**<br>**Exercised** |
|  The Company |  |  |
|  SVF II Piranha (DE) LLC |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  |  |

---

------

**SCHEDULE III** 

(a). Issuer Free Writing Prospectuses not included in the Pricing Disclosure Package:

Electronic Roadshow dated [ ], 2026

(b). Materials and information other than the Pricing Prospectus that comprise the Pricing Disclosure Package:

The initial public offering price per ADS is US$ per ADS

The number of ADSs purchased by the Underwriters is [ ]

Issuer Free Writing Prospectus: The Free Writing Prospectus filed by the Company with the Commission on [ ], 2026

(c). Written Testing-the-Waters Communications:

Investors Presentation dated [ ], 202[ ]

------

**ANNEX I** 

**Form of Lock-up Agreement** 

[ ]**, 2026**

Goldman Sachs & Co. LLC

J.P. Morgan Securities LLC

Mizuho Securities USA LLC

Morgan Stanley & Co. LLC

As representatives of the several Underwriters

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;named in Schedule I to the Underwriting Agreement

c/o Goldman Sachs & Co. LLC

200 West Street

New York, New York 10282

c/o J.P. Morgan Securities LLC

270 Park Avenue

New York, New York 10017

c/o Mizuho Securities USA LLC

1271 Avenue of the Americas

New York, New York 10020

c/o Morgan Stanley & Co. LLC

1585 Broadway

New York, New York 10036

Re: <u>PayPay Corporation - Lock-Up Agreement</u>

Ladies and Gentlemen:

The undersigned understands that you, as representatives (the "**Representatives**"), propose to enter into an underwriting agreement (the "**Underwriting Agreement**") on behalf of the several underwriters named in <u>Schedule I</u> to such agreement (collectively, the "**Underwriters**"), with PayPay Corporation, a joint stock corporation incorporated under the laws of Japan (the "**Company**"), and the selling stockholders named in <u>Schedule II</u> to the Underwriting Agreement, providing for the initial public offering (the "**Offering**") of American Depositary Shares (the "**ADSs**") representing shares of common stock of the Company (the "**Shares**"), pursuant to a Registration Statement on Form F-1 filed with the U.S. Securities and Exchange Commission (the "**SEC**").

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In consideration of the agreement by the Underwriters to offer and sell the ADSs, and of other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees that, during the period beginning from the date of this agreement (the "**Lock-Up Agreement**") and continuing to and including the date 180 days after the date set forth on the final prospectus used to sell the ADSs (the "**Lock-Up Period**"), the undersigned will not, and will not publicly disclose an intention to, and will not cause any direct or indirect affiliate to, offer, sell, contract to sell, pledge, grant any option or contract to purchase, purchase any option or contract to sell, make any short sale, loan, hedge or otherwise transfer or dispose of, directly or indirectly, any ADSs or Shares or any securities of the Company that are substantially similar to the ADSs or Shares, or any options or warrants to purchase any ADSs or Shares, or any securities convertible into, exchangeable for or that represent the right to receive ADSs or Shares or any securities of the Company that are substantially similar to the ADSs or Shares, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the ADSs or Shares or any securities of the Company that are substantially similar to the ADSs or Shares, whether any such aforementioned transaction or arrangement is to be settled by delivery of the ADSs or Shares or such other securities, in cash or otherwise, whether now owned or hereinafter acquired, owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership (as used in this Lock-Up Agreement, the term "beneficial ownership" and similar terms shall have the meaning given to them within the rules and regulations of the SEC) (collectively the "**Undersigned's Shares**"). The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigned's Shares even if such ADSs or Shares would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the Undersigned's Shares or with respect to any security that includes, relates to, or derives any significant part of its value from such ADSs or Shares. For the avoidance of doubt, to the extent that the undersigned has demand, piggyback and/or other registration rights in respect of any of the Undersigned's Shares, nothing in this Lock-Up Agreement will prohibit the undersigned from exercising such demand, piggyback and/or other registration rights and/or undertaking (or obtaining that any other party undertake) preparations related thereto, including any confidential submission of a registration statement with the SEC during the Lock-Up Period). For the avoidance of doubt, nothing contained herein will be construed to prohibit the undersigned from causing any of its direct or indirect affiliates to take any action permitted under (including by way of waiver) any lock-up letter such affiliate has delivered to the Representatives with sole regard to ADSs or Shares beneficially owned by such affiliate.

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[If the undersigned is not a natural person, the undersigned represents and warrants that no single natural person, entity or "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) beneficially owns, directly or indirectly, 50% or more of the common equity interests, or 50% or more of the voting power, in the undersigned.]<sup>1</sup>[The undersigned represents and warrants that a single natural person, entity or "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) beneficially owns, directly or indirectly, 50% or more of the common equity interests, or 50% or more of the voting power, in the undersigned.]<sup>2</sup> ****The undersigned further confirms that it has furnished the Representatives with the details of any transaction the undersigned, or any of its affiliates, is a party to as of the date hereof, which transaction would have been restricted by this Lock-Up Agreement if it had been entered into by the undersigned during the Lock-Up Period.

Notwithstanding the foregoing, the undersigned may transfer the Undersigned's Shares:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) as one or more *bona fide* gifts or charitable contributions, provided that the donee or donees thereof
agree to be bound in writing by the restrictions set forth herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the
undersigned (for purposes of this Lock-Up Agreement, "**immediate family**" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) pursuant to a *bona fide* third-party tender offer, merger, consolidation or other similar transaction
made to all holders of the ADSs or Shares involving a prospective change of control of the Company (for purposes of this Lock-up Agreement, "**change of control**" shall mean the transfer
(whether by tender offer, merger, consolidation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons, of the ADSs or Shares if, after such transfer, such person or group of
affiliated persons would hold at least a majority of the outstanding voting securities of the Company (or the surviving entity)); <u>provided</u>, <u>however</u>, that in the event that such tender offer, merger, consolidation or other such
transaction is not completed, such securities held by the undersigned shall remain subject to the restrictions on transfer set forth in this Lock-Up Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) if the undersigned is not an officer or director of the Company, as part of or in connection with any open
market transactions relating to the ADSs or Shares acquired by the undersigned from time to time after completion of the Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) as any deposit of Shares with the Depositary (as defined in the Underwriting Agreement), in exchange for the
issuance of the ADSs representing Shares so deposited, provided that the ADSs shall remain subject to the restrictions contained in this Lock-up Agreement;

<sup>1</sup> To be included only in SoftBank Corp. lock-up

<sup>2</sup> To be included only in B Holdings Corporation and LY Corporation lock-up.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under
clauses (i) through (iii) and (v) above; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) with the prior written consent of the Representatives on behalf of the Underwriters;

provided that (A) in the case of any transfer or distribution pursuant to clause (i) and (ii) above, such transfer shall not involve a disposition for value and each donee, devisee, transferee or distributee shall execute and deliver to the Representatives a lock-up letter in the form of this Lock-Up Agreement, and (B) in the case of any transfer or distribution pursuant to clause (i), (ii) and (iv) above, no filing by any party (donor, donee, devisee, transferor, transferee, distributer or distributee) under the Exchange Act, or other public announcement shall be required or shall be made voluntarily in connection with such transfer or distribution (other than a filing on a Form 5 made after the expiration of the Lock-Up Period referred to above).

Notwithstanding the foregoing, this Lock-Up Agreement shall not restrict the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of Undersigned's Shares, provided that (A) such plan does not provide for the transfer of Undersigned's Shares during the Lock-Up Period and (B) to the extent a public filing or announcement is required of or voluntarily made by or on behalf of the undersigned or by the Company regarding the establishment of such plan, such filing or announcement shall include a statement to the effect that no transfer of the Undersigned's Shares may be made under such plan during the Lock-up Period.

In addition, notwithstanding the foregoing, if the undersigned is a corporation, partnership, limited liability company or other business entity, the undersigned may transfer any of the Undersigned's Shares (A) to another corporation, partnership, limited liability company or other business entity that is an affiliate (as defined in Rule 405 under the Securities Act of 1933, as amended) of the undersigned, or to any investment fund or other entity which fund or entity is controlled or managed by the undersigned or affiliates of the undersigned, or (B) as part of a distribution by the undersigned to its stockholders, partners, members or other equityholders or to the estate of any such stockholders, partners, members or other equityholders; <u>provided</u>, <u>however</u>, that in any such case, it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding such share capital subject to the provisions of this Lock-Up Agreement and there shall be no further transfer of such share capital except in accordance with this Lock-Up Agreement, and provided further that (1) any such transfer shall not involve a disposition for value and (2) it shall be a condition to such transfer that no public filing, report or announcement not otherwise required under applicable law shall be voluntarily made and if any filing under the equivalent of Section 16(a) of the Exchange Act in non-U.S. jurisdictions, or other public filing, report or announcement reporting a change in beneficial ownership of the Company's Shares in connection with such transfer or distribution shall be legally required during the Lock-Up Period, such filing, report or announcement shall clearly indicate in the footnotes thereto or otherwise the nature and conditions of such transfer. The undersigned now has, and, except in the case of permitted transfers as contemplated above, for the duration of this Lock-Up Agreement will have, good and marketable title to the Undersigned's Shares, free and clear of all liens, encumbrances, and claims whatsoever. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar and the depositary for the ADSs against the transfer of the Undersigned's Shares except in compliance with the foregoing restrictions.

------

In furtherance of the foregoing, the Company, and any duly appointed transfer agent for the registration or transfer of the securities described herein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Lock-Up Agreement.

The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Agreement. All authority herein conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, assigns, heirs or personal representatives of the undersigned.

If the Representatives release any person who has entered into and is similarly restricted pursuant to, lock-up agreements imposing restrictions substantially similar to those restrictions contained herein (each such person, a "**Holder**," and each such lock-up agreement, an "**Additional Lock-Up Agreement**") from the restrictions contained in an Additional Lock-Up Agreement (each such Holder, a "**Released Holder**," and each such release, a "**Lock-Up Release**"), the same percentage of the Shares or ADSs held by the undersigned (calculated as the number of Shares or ADSs benefitting from such release divided by the total number of Shares or ADSs held by the Released Holder) shall be immediately and fully released on the same terms from any remaining lockup restrictions set forth herein. Notwithstanding the foregoing, the provisions of this paragraph will not apply (1) if the release or waiver is effected solely to permit a transfer not involving a disposition for value, (2) if the transferee agrees in writing to be bound by the same terms described in such Additional Lock-Up Agreement to the extent and for the duration that such terms remain in effect at the time of transfer, (3) if the total amount that is released or waived with respect to all Additional Lock-Up Agreements is in the aggregate less than or equal to 1% of the total number of outstanding ADSs or Shares or (4) if the release or waiver is granted due to circumstances of an emergency or hardship as determined by the Representatives in their sole judgment. The Representatives shall use commercially reasonable efforts to promptly notify the undersigned of each such release (provided that the failure to provide such notice shall not give rise to any claim or liability against the Representatives or the Underwriters).

The undersigned acknowledges and agrees that the Underwriters have not provided any recommendation or investment advice nor have the Underwriters solicited any action from the undersigned with respect to the Offering of the ADSs or Shares and the undersigned has consulted their own legal, accounting, financial, regulatory and tax advisors to the extent deemed appropriate. The undersigned further acknowledges and agrees that, although the Representatives may be required or choose to provide certain Regulation Best Interest and Form CRS disclosures to you in connection with the Offering, the Representatives and the other Underwriters are not making a recommendation to you to participate in the Offering, enter into this Lock-Up Agreement, or sell any ADSs or Shares at the price determined in the Offering, and nothing set forth in such disclosures is intended to suggest that the Representatives or any Underwriter is making such a recommendation.

------

This Lock-Up Agreement shall automatically terminate, and the undersigned will be released from all obligations hereunder, upon the earliest to occur, if any, of (a) the date on which the Company, or the Representatives on behalf of the Underwriters, advises the other party in writing, prior to the execution of the Underwriting Agreement, that it has determined not to proceed with the Offering, (b) termination of the Underwriting Agreement before the closing of the Offering, (c) the date of the withdrawal of the registration statement filed with the SEC relating to the Offering or (d) [ ], 2026, in the event that the Underwriting Agreement has not been executed by such date.

The undersigned understands that the Company and the Underwriters are relying upon this Lock-Up Agreement in proceeding toward consummation of the Offering. The undersigned further understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned's heirs, legal representatives, successors, and assigns. This Lock-up Agreement may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com or www.echosign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

This Lock-Up Agreement and any transaction contemplated by this Lock-Up Agreement and any claim, controversy or dispute arising under or related thereto shall be governed by, and construed in accordance with, the laws of the State of New York.

[*Remainder of page intentionally left blank.*]

------

---

| |
|:---|
| Very truly yours, |
| Exact Name of Shareholder |
| Authorized Signature |
| Title |

---

Annex-I

------

**ANNEX II** 

**Parties to Execute Lock-Up Agreement** 

SoftBank Corp.

B Holdings Corporation

LY Corporation

Annex-II

------

**ANNEX III** 

**CFO Certificate and Bring-Down CFO Certificate** 

*[Intentionally omitted]* 

Annex-III

## Exhibit 4.1

**Exhibit 4.1** 

PAYPAY CORPORATION

AND

THE BANK OF NEW YORK MELLON

As Depositary

AND

OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES

Deposit Agreement

[ ], 2026

------

**TABLE OF CONTENTS**

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| | | |
|:---|:---|:---|
| ARTICLE 1. DEFINITIONS | ARTICLE 1. DEFINITIONS | 1 |
| SECTION 1.1. | American Depositary Shares | 1 |
| SECTION 1.2. | Commission | 2 |
| SECTION 1.3. | Company | 2 |
| SECTION 1.4. | Custodian | 2 |
| SECTION 1.5. | Deliver; Surrender | 2 |
| SECTION 1.6. | Deposit Agreement | 3 |
| SECTION 1.7. | Depositary; Depositary's Office | 3 |
| SECTION 1.8. | Deposited Securities | 3 |
| SECTION 1.9. | Disseminate | 3 |
| SECTION 1.10. | Dollars | 3 |
| SECTION 1.11. | DTC | 4 |
| SECTION 1.12. | FEFTA | 4 |
| SECTION 1.13. | FEFTA Sensitive Entity; FEFTA Pre-Notification; FEFTA Pre-Clearance | 4 |
| SECTION 1.14. | Foreign Registrar | 4 |
| SECTION 1.15. | Holder | 4 |
| SECTION 1.16. | Owner | 5 |
| SECTION 1.17. | Receipts | 5 |
| SECTION 1.18. | Registrar | 5 |
| SECTION 1.19. | Replacement | 5 |
| SECTION 1.20. | Restricted Securities | 5 |
| SECTION 1.21. | Securities Act of 1933 | 5 |
| SECTION 1.22. | Shares | 5 |
| SECTION 1.23. | SWIFT | 6 |
| SECTION 1.24. | Termination Option Event | 6 |
| ARTICLE 2. FORM OF RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN DEPOSITARY SHARES | ARTICLE 2. FORM OF RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN DEPOSITARY SHARES | 7 |
| SECTION 2.1. | Form of Receipts; Registration and Transferability of American Depositary Shares | 7 |
| SECTION 2.2. | Deposit of Shares | 8 |
| SECTION 2.3. | Delivery of American Depositary Shares | 9 |
| SECTION 2.4. | Registration of Transfer of American Depositary Shares; Combination and Split-up of Receipts; Interchange of Certificated and Uncertificated American Depositary Shares | 10 |
| SECTION 2.5. | Surrender of American Depositary Shares and Withdrawal of Deposited Securities | 11 |

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| | | |
|:---|:---|:---|
| SECTION 2.6. | Limitations on Delivery, Registration of Transfer and Surrender of American Depositary Shares | 12 |
| SECTION 2.7. | Lost Receipts, etc. | 13 |
| SECTION 2.8. | Cancellation and Destruction of Surrendered Receipts; Cancellation of American Depositary Shares | 13 |
| SECTION 2.9. | DTC Direct Registration System and Profile Modification System | 14 |
| ARTICLE 3. CERTAIN OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES | ARTICLE 3. CERTAIN OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES | 14 |
| SECTION 3.1. | Filing Proofs, Certificates and Other Information | 14 |
| SECTION 3.2. | Liability of Owner for Taxes | 15 |
| SECTION 3.3. | Warranties on Deposit of Shares | 15 |
| SECTION 3.4. | Disclosure of Interests | 16 |
| ARTICLE 4. THE DEPOSITED SECURITIES | ARTICLE 4. THE DEPOSITED SECURITIES | 16 |
| SECTION 4.1. | Cash Distributions | 16 |
| SECTION 4.2. | Distributions Other Than Cash, Shares or Rights | 17 |
| SECTION 4.3. | Distributions in Shares | 18 |
| SECTION 4.4. | Rights | 19 |
| SECTION 4.5. | Conversion of Foreign Currency | 20 |
| SECTION 4.6. | Fixing of Record Date | 22 |
| SECTION 4.7. | Voting of Deposited Shares | 22 |
| SECTION 4.8. | Tender and Exchange Offers; Redemption, Replacement or Cancellation of Deposited Securities | 23 |
| SECTION 4.9. | Reports | 25 |
| SECTION 4.10. | Lists of Owners | 25 |
| SECTION 4.11. | Withholding | 25 |
| ARTICLE 5. THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY | ARTICLE 5. THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY | 26 |
| SECTION 5.1. | Maintenance of Office and Register by the Depositary | 26 |
| SECTION 5.2. | Prevention or Delay of Performance by the Company or the Depositary | 27 |
| SECTION 5.3. | Obligations of the Depositary and the Company | 27 |
| SECTION 5.4. | Resignation and Removal of the Depositary | 28 |
| SECTION 5.5. | The Custodians | 29 |
| SECTION 5.6. | Notices and Reports | 30 |
| SECTION 5.7. | Distribution of Additional Shares, Rights, etc. | 31 |
| SECTION 5.8. | Indemnification | 31 |
| SECTION 5.9. | Charges of Depositary | 32 |

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| | | |
|:---|:---|:---|
| SECTION 5.10. | Retention of Depositary Documents | 33 |
| SECTION 5.11. | Exclusivity | 33 |
| SECTION 5.12. | Information for Regulatory Compliance | 33 |
| ARTICLE 6. AMENDMENT AND TERMINATION | ARTICLE 6. AMENDMENT AND TERMINATION | 34 |
| SECTION 6.1. | Amendment | 34 |
| SECTION 6.2. | Termination | 34 |
| ARTICLE 7. MISCELLANEOUS | ARTICLE 7. MISCELLANEOUS | 35 |
| SECTION 7.1. | Counterparts; Signatures; Delivery; Electronic Records | 35 |
| SECTION 7.2. | No Third Party Beneficiaries | 35 |
| SECTION 7.3. | Severability | 36 |
| SECTION 7.4. | Owners and Holders as Parties; Binding Effect | 36 |
| SECTION 7.5. | Notices | 36 |
| SECTION 7.6. | Appointment of Agent for Service of Process; Submission to Jurisdiction; Jury Trial Waiver | 37 |
| SECTION 7.7. | Waiver of Immunities | 38 |
| SECTION 7.8. | Governing Law | 38 |

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DEPOSIT AGREEMENT

DEPOSIT AGREEMENT dated as of [ ], 2026 among PAYPAY CORPORATION, a company incorporated under the laws of Japan (herein called the Company), THE BANK OF NEW YORK MELLON, a New York banking corporation (herein called the Depositary), and all Owners and Holders (each as hereinafter defined) from time to time of American Depositary Shares issued hereunder.

W I T N E S S E T H:

WHEREAS, the Company desires to provide, as set forth in this Deposit Agreement, for the deposit of Shares (as hereinafter defined) of the Company from time to time with the Depositary or with the Custodian (as hereinafter defined) under this Deposit Agreement, for the creation of American Depositary Shares representing the Shares so deposited and for the execution and delivery of American Depositary Receipts evidencing the American Depositary Shares; and

WHEREAS, the American Depositary Receipts are to be substantially in the form of Exhibit A annexed to this Deposit Agreement, with appropriate insertions, modifications and omissions, as set forth in this Deposit Agreement;

NOW, THEREFORE, in consideration of the premises, it is agreed by and between the parties hereto as follows:

ARTICLE 1. DEFINITIONS

The following definitions shall for all purposes, unless otherwise clearly indicated, apply to the respective terms used in this Deposit Agreement:

SECTION 1.1. <u>American</u><u> </u><u>Depositary</u><u> </u><u>Shares.</u>

The term "<u>American Depositary Shares</u>" shall mean the securities created under this Deposit Agreement representing rights with respect to the Deposited Securities. American Depositary Shares may be certificated securities evidenced by Receipts or uncertificated securities. The form of Receipt annexed as Exhibit A to this Deposit Agreement shall be the prospectus required under the Securities Act of 1933 for sales of both certificated and uncertificated American Depositary Shares. Except for those provisions of this Deposit Agreement that refer specifically to Receipts, all the provisions of this Deposit Agreement shall apply to both certificated and uncertificated American Depositary Shares.

Each American Depositary Share shall represent the number of Shares specified in Exhibit A to this Deposit Agreement, <u>except that</u>, if there is a distribution upon Deposited Securities covered by Section 4.3, a change in Deposited Securities covered by Section 4.8 with respect to which additional American Depositary Shares are not delivered or a sale of Deposited Securities under Section 3.2 or 4.8, each American Depositary Share shall thereafter represent the amount of Shares or other Deposited Securities that are then on deposit per American Depositary Share after giving effect to that distribution, change or sale.

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SECTION 1.2. <u>Commission.</u>

The term "<u>Commission</u>" shall mean the Securities and Exchange Commission of the United States or any successor governmental agency in the United States.

SECTION 1.3. <u>Company.</u>

The term "<u>Company</u>" shall mean PayPay Corporation, a company incorporated under the laws of Japan, and its successors.

SECTION 1.4. <u>Custodian.</u>

The term "<u>Custodian</u>" shall mean Mizuho Bank, Ltd., as custodian for the Depositary in Japan for the purposes of this Deposit Agreement, and any other firm or corporation the Depositary appoints under Section 5.5 as a substitute or additional custodian under this Deposit Agreement, and shall also mean all of them collectively.

SECTION 1.5. <u>Deliver;</u><u> </u><u>Surrender.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The term "<u>deliver</u>", or its noun form, when used with respect to Shares or other Deposited Securities, shall mean (i) book-entry transfer of those Shares or other Deposited Securities to an account maintained by an institution authorized under applicable law to effect transfers of such securities designated by the person entitled to that delivery or (ii) physical transfer of certificates evidencing those Shares or other Deposited Securities registered in the name of, or duly endorsed or accompanied by proper instruments of transfer to, the person entitled to that delivery.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The term "<u>deliver</u>", or its noun form, when used with respect to American Depositary Shares, shall mean (i) registration of those American Depositary Shares in the name of DTC or its nominee and book-entry transfer of those American Depositary Shares to an account at DTC designated by the person entitled to that delivery, (ii) registration of those American Depositary Shares not evidenced by a Receipt on the books of the Depositary in the name requested by the person entitled to that delivery and mailing to that person of a statement confirming that registration or (iii) if requested by the person entitled to that delivery, execution and delivery at the Depositary's Office to the person entitled to that delivery of one or more Receipts evidencing those American Depositary Shares registered in the name requested by that person.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The term "<u>surrender</u>", when used with respect to American Depositary Shares, shall mean (i) one or more book-entry transfers of American Depositary Shares to the DTC account of the Depositary, (ii) delivery to the Depositary at its Office of an instruction to surrender American Depositary Shares not evidenced by a Receipt or (iii) surrender to the Depositary at its Office of one or more Receipts evidencing American Depositary Shares.

SECTION 1.6. <u>Deposit</u> <u>Agreement.</u>

The term "<u>Deposit Agreement</u>" shall mean this Deposit Agreement, as it may be amended from time to time in accordance with the provisions of this Deposit Agreement.

SECTION 1.7. <u>Depositary;</u> <u>Depositary</u><u>'</u><u>s</u> <u>Office.</u>

The term "<u>Depositary</u>" shall mean The Bank of New York Mellon, a New York banking corporation, and any successor as depositary under this Deposit Agreement. The term "<u>Office</u>", when used with respect to the Depositary, shall mean the office at which its depositary receipts business is administered, which, at the date of this Deposit Agreement, is located at 240 Greenwich Street, New York, New York 10286.

SECTION 1.8. <u>Deposited</u> <u>Securities.</u>

The term "<u>Deposited Securities</u>" as of any time shall mean Shares at such time deposited or deemed to be deposited under this Deposit Agreement, including without limitation, Shares that have not been successfully delivered upon surrender of American Depositary Shares, and any and all other securities, property and cash received by the Depositary or the Custodian in respect of Deposited Securities and at that time held under this Deposit Agreement.

SECTION 1.9. <u>Disseminate.</u>

The term "<u>Disseminate</u>," when referring to a notice or other information to be sent by the Depositary to Owners, shall mean (i) sending that information to Owners in paper form by mail or another means or (ii) with the consent of Owners, another procedure that has the effect of making the information available to Owners, which may include (A) sending the information by electronic mail or electronic messaging or (B) sending in paper form or by electronic mail or messaging a statement that the information is available and may be accessed by the Owner on an Internet website and that it will be sent in paper form upon request by the Owner, when that information is so available and is sent in paper form as promptly as practicable upon request.

SECTION 1.10. <u>Dollars.</u>

The term "<u>Dollars</u>" shall mean United States dollars.

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SECTION 1.11. <u>DTC.</u>

The term "<u>DTC</u>" shall mean The Depository Trust Company or its successor.

SECTION 1.12. <u>FEFTA.</u>

The term "<u>FEFTA</u>" shall mean the Japanese Foreign Exchange and Foreign Trade Act and related regulations.

SECTION 1.13. <u>FEFTA</u><u> </u><u>Sensitive</u><u> </u><u>Entity;</u><u> </u><u>FEFTA</u><u> </u><u>Pre-Notification;</u><u> </u><u>FEFTA</u><u> </u><u>Pre-Clearance; FEFTA Implementation Report.</u>

The term "<u>FEFTA Sensitive Entity</u>" shall mean a business entity that, because of the nature of its business, under FEFTA, is subject to restrictions on transfer of its shares to a "foreign investor" (*gaikoku toshika*), as defined in the FEFTA. The Company has notified the Depositary that a foreign investor is required to obtain FEFTA Pre-Clearance prior to acquiring shares of a FEFTA Sensitive Entity. The Company has notified the Depositary that "<u>FEFTA Pre-Clearance</u>" means that the foreign investor has submitted a pre-notification of the proposed share acquisition (a "<u>FEFTA Pre-Notification</u>") to the Minister of Finance of Japan and any other minister having jurisdiction over any business of that entity and the applicable waiting period (normally 30 days) has run without any recommendation or order relating to that notification having been issued by any of those ministers. The term "<u>FEFTA Implementation Report</u>" shall mean a report required to be made by a foreign investor after it acquires or disposes of Shares that are subject to a FEFTA Pre-Notification requirement.

SECTION 1.14. <u>Foreign</u><u> </u><u>Registrar.</u>

The term "<u>Foreign Registrar</u>" shall mean the entity that carries out the duties of registrar for the Shares and any other agent of the Company for the transfer and registration of Shares, including, without limitation, any securities depository for the Shares.

SECTION 1.15. <u>Holder.</u>

The term "<u>Holder</u>" shall mean any person holding a Receipt or a security entitlement or other interest in American Depositary Shares, whether for its own account or for the account of another person, but that is not the Owner of that Receipt or those American Depositary Shares.

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SECTION 1.16. <u>Owner.</u>

The term "<u>Owner</u>" shall mean the person in whose name American Depositary Shares are registered on the books of the Depositary maintained for that purpose.

SECTION 1.17. <u>Receipts.</u>

The term "<u>Receipts</u>" shall mean the American Depositary Receipts issued under this Deposit Agreement evidencing certificated American Depositary Shares, as the same may be amended from time to time in accordance with the provisions of this Deposit Agreement.

SECTION 1.18. <u>Registrar.</u>

The term "<u>Registrar</u>" shall mean any corporation or other entity that is appointed by the Depositary to register American Depositary Shares and transfers of American Depositary Shares as provided in this Deposit Agreement.

SECTION 1.19. <u>Replacement.</u>

The term "<u>Replacement</u>" shall have the meaning assigned to it in Section 4.8.

SECTION 1.20. <u>Restricted</u> <u>Securities.</u>

The term "<u>Restricted Securities</u>" shall mean Shares that (i) are "restricted securities," as defined in Rule 144 under the Securities Act of 1933, except for Shares that could be resold in reliance on Rule 144 without any conditions, (ii) are beneficially owned by an officer, director (or person performing similar functions) or other affiliate of the Company, (iii) otherwise would require registration under the Securities Act of 1933 in connection with the public offer and sale thereof in the United States or (iv) are subject to other restrictions on sale or deposit under the laws of Japan, a shareholder agreement or the articles of incorporation or similar document of the Company.

SECTION 1.21. <u>Securities</u><u> </u><u>Act</u><u> </u><u>of</u><u> </u><u>1933.</u>

The term "<u>Securities Act of 1933</u>" shall mean the United States Securities Act of 1933, as from time to time amended.

SECTION 1.22. <u>Shares.</u>

The term "<u>Shares</u>" shall mean ordinary shares of the Company that are validly issued and outstanding, fully paid and nonassessable and that were not issued in violation of any pre-emptive or similar rights of the holders of outstanding securities of the Company; <u>provided</u>, <u>however</u>, that, if there shall occur any change in nominal or par value, a split-up or consolidation or any other reclassification or, upon the occurrence of an event described in Section 4.8, an exchange or conversion in respect of the Shares of the Company, the term "Shares" shall thereafter also mean the successor securities resulting from such change in nominal value, split-up or consolidation or such other reclassification or such exchange or conversion.

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SECTION 1.23. <u>SWIFT.</u>

The term "<u>SWIFT</u>" shall mean the financial messaging network operated by the Society for Worldwide Interbank Financial Telecommunication, or its successor.

SECTION 1.24. <u>Termination</u><u> </u><u>Option</u><u> </u><u>Event.</u>

The term "<u>Termination Option Event</u>" shall mean any of the following events or conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Company institutes proceedings to be adjudicated as bankrupt or insolvent, consents to the institution of bankruptcy or insolvency proceedings against it, files a petition or answer or consent seeking reorganization or relief under any applicable law in respect of bankruptcy or insolvency, consents to the filing of any petition of that kind or to the appointment of a receiver, liquidator, assignee, trustee, custodian or sequestrator (or other similar official) of it or any substantial part of its property or makes an assignment for the benefit of creditors, or if information becomes publicly available indicating that unsecured claims against the Company are not expected to be paid;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) *[Intentionally Omitted]*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the American Depositary Shares are delisted from a stock exchange in the United States on which the American Depositary Shares were listed and, 30 days after that delisting, the American Depositary Shares have not been listed on another stock exchange in the United States, nor is there a symbol available for over-the-counter trading of the American Depositary Shares in the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the Depositary has received notice of facts that indicate, or otherwise has reason to believe, that the American Depositary Shares have become, or with the passage of time will become, ineligible for registration on Form F-6 under the Securities Act of 1933; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) an event or condition that is defined as a <u>Termination Option Event</u> in Section 4.1, 4.2 or 4.8.

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ARTICLE 2. FORM OF RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN DEPOSITARY SHARES

SECTION 2.1. <u>Form</u><u> </u><u>of</u><u> </u><u>Receipts;</u><u> </u><u>Registration</u> <u>and</u><u> </u><u>Transferability</u><u> </u><u>of</u> <u>American Depositary Shares.</u>

Definitive Receipts shall be substantially in the form set forth in Exhibit A to this Deposit Agreement, with appropriate insertions, modifications and omissions, as permitted under this Deposit Agreement. No Receipt shall be entitled to any benefits under this Deposit Agreement or be valid or obligatory for any purpose, unless that Receipt has been (i) executed by the Depositary by the manual signature of a duly authorized officer of the Depositary or (ii) executed by the facsimile signature of a duly authorized officer of the Depositary and countersigned by the manual signature of a duly authorized signatory of the Depositary or the Registrar or a co-registrar. The Depositary shall maintain books on which (x) each Receipt so executed and delivered as provided in this Deposit Agreement and each transfer of that Receipt and (y) all American Depositary Shares delivered as provided in this Deposit Agreement and all registrations of transfer of American Depositary Shares, shall be registered. A Receipt bearing the facsimile signature of a person that was at any time a proper officer of the Depositary shall, subject to the other provisions of this paragraph, bind the Depositary, even if that person was not a proper officer of the Depositary on the date of issuance of that Receipt.

The Receipts and statements confirming registration of American Depositary Shares may have incorporated in or attached to them such legends or recitals or modifications not inconsistent with the provisions of this Deposit Agreement as may be required by the Depositary or required to comply with any applicable law or regulations thereunder or with the rules and regulations of any securities exchange upon which American Depositary Shares may be listed or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Receipts and American Depositary Shares are subject by reason of the date of issuance of the underlying Deposited Securities or otherwise.

American Depositary Shares evidenced by a Receipt, when the Receipt is properly endorsed or accompanied by proper instruments of transfer, shall be transferable as certificated registered securities under the laws of the State of New York. American Depositary Shares not evidenced by Receipts shall be transferable as uncertificated registered securities under the laws of the State of New York. The Depositary, notwithstanding any notice to the contrary, may treat the Owner of American Depositary Shares as the absolute owner thereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in this Deposit Agreement and for all other purposes, and neither the Depositary nor the Company shall have any obligation or be subject to any liability under this Deposit Agreement to any Holder of American Depositary Shares (but only to the Owner of those American Depositary Shares).

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SECTION 2.2. <u>Deposit</u><u> </u><u>of</u><u> </u><u>Shares.</u>

Subject to the terms and conditions of this Deposit Agreement, Shares or evidence of rights to receive Shares may be deposited under this Deposit Agreement by delivery thereof to any Custodian, accompanied by any appropriate instruments or instructions for transfer, or endorsement, in form satisfactory to the Custodian.

As conditions of accepting Shares for deposit, the Depositary may require (i) any certification required by the Depositary or the Custodian in accordance with the provisions of this Deposit Agreement, (ii) a written order directing the Depositary to deliver to, or upon the written order of, the person or persons stated in that order American Depositary Shares representing those deposited Shares, (iii) evidence satisfactory to the Depositary that those Shares have been re-registered in the books of the Company or the Foreign Registrar in the name of the Depositary, a Custodian or a nominee of the Depositary or a Custodian, (iv) evidence satisfactory to the Depositary that any necessary approval for the transfer or deposit has been granted by any governmental body in each applicable jurisdiction and (v) an agreement or assignment, or other instrument satisfactory to the Depositary, that provides for the prompt transfer to the Custodian of any dividend, or right to subscribe for additional Shares or to receive other property, that any person in whose name those Shares are or have been recorded may thereafter receive upon or in respect of those Shares, or, in lieu thereof, such agreement of indemnity or other agreement as shall be satisfactory to the Depositary.

The Company has notified the Depositary that, as of the date of this Deposit Agreement, it is a FEFTA Sensitive Entity. The Company shall notify the Depositary promptly of any change in its status as a FEFTA Sensitive Entity. The Depositary shall notify the Owners if it receives notice from the Company of a change in the Company's status as a FEFTA Sensitive Entity. During any period in which the Depositary has been notified the Company is a FEFTA Sensitive Entity, the Depositary shall submit a FEFTA Pre-Notification with respect to any request of any person to deposit Shares, and the Depositary shall not accept that deposit until FEFTA Pre-Clearance has been obtained.

The Depositary has been advised that, as of the date of this Deposit Agreement, FEFTA requires the Depositary, within 45 days after it acquires Shares subject to a FEFTA Pre-Notification or disposes of all or part of such Shares after such acquisition, to submit a FEFTA Implementation Report with respect to that transaction, to the applicable Japanese governmental authority

The Company agrees to reimburse the Depositary for its expenses, including fees and expenses of counsel, for submitting FEFTA Pre-Notifications and FEFTA Implementation Reports in connection with deposits of Shares.

At the request and risk and expense of a person proposing to deposit Shares, and for the account of that person, the Depositary may receive certificates for Shares to be deposited, together with the other instruments specified in this Section, for the purpose of forwarding those Share certificates to the Custodian for deposit under this Deposit Agreement.

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The Depositary shall instruct each Custodian that, upon each delivery to a Custodian of a certificate or certificates for Shares to be deposited under this Deposit Agreement, together with the other documents specified in this Section, that Custodian shall, as soon as transfer and recordation can be accomplished, present that certificate or those certificates to the Company or the Foreign Registrar, if applicable, for transfer and recordation of the Shares being deposited in the name of the Depositary or its nominee or that Custodian or its nominee.

Deposited Securities shall be held by the Depositary or by a Custodian for the account and to the order of the Depositary or at such other place or places as the Depositary shall determine.

The Depositary will use reasonable efforts to comply with written instructions of the Company to not accept for deposit under this Deposit Agreement any Shares identified in such instructions at such time and under such circumstances as may reasonably be specified in such instructions in order to facilitate the Company's compliance with the securities laws in the United States or other applicable jurisdiction.

SECTION 2.3. <u>Delivery</u><u> </u><u>of</u><u> </u><u>American Depositary</u><u> </u><u>Shares.</u>

The Depositary shall instruct each Custodian that, upon receipt by that Custodian of any deposit pursuant to Section 2.2, together with the other documents or evidence required under that Section, that Custodian shall notify the Depositary of that deposit and the person or persons to whom or upon whose written order American Depositary Shares are deliverable in respect thereof. Upon receiving a notice of a deposit from a Custodian, or upon the receipt of Shares or evidence of the right to receive Shares by the Depositary, or, to the extent there are insufficient outstanding American Depositary Shares in respect of the amount of Shares on deposit with the Custodian as a result of a decrease in the number of Shares represented by one American Depositary Share, the Depositary, subject to the terms and conditions of this Deposit Agreement, shall deliver, to or upon the order of the person or persons entitled thereto, the number of American Depositary Shares issuable in respect of that deposit or change in the ratio of Shares per American Depositary Share, but only upon payment to the Depositary of the fees and expenses of the Depositary for the delivery of those American Depositary Shares as provided in Section 5.9, and of all taxes and governmental charges and fees payable in connection with that deposit and the transfer of the deposited Shares. <u>However</u>, the Depositary shall deliver only whole numbers of American Depositary Shares.

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SECTION 2.4. <u>Registration of Transfer of American Depositary Shares;</u> <u>Combination and Split-up of Receipts; Interchange of Certificated and Uncertificated</u> <u>American Depositary Shares.</u>

The Depositary, subject to the terms and conditions of this Deposit Agreement, shall register a transfer of American Depositary Shares on its transfer books upon (i) in the case of certificated American Depositary Shares, surrender of the Receipt evidencing those American Depositary Shares, by the Owner or by a duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer or (ii) in the case of uncertificated American Depositary Shares, receipt from the Owner of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9), and, in either case, duly stamped as may be required by the laws of the State of New York and of the United States of America. Upon registration of a transfer, the Depositary shall deliver the transferred American Depositary Shares to or upon the order of the person entitled thereto.

The Depositary, subject to the terms and conditions of this Deposit Agreement, shall upon surrender of a Receipt or Receipts for the purpose of effecting a split-up or combination of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for any authorized number of American Depositary Shares requested, evidencing the same aggregate number of American Depositary Shares as the Receipt or Receipts surrendered.

The Depositary, upon surrender of certificated American Depositary Shares for the purpose of exchanging for uncertificated American Depositary Shares, shall cancel the Receipt evidencing those certificated American Depositary Shares and send the Owner a statement confirming that the Owner is the owner of the same number of uncertificated American Depositary Shares. The Depositary, upon receipt of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9) from the Owner of uncertificated American Depositary Shares for the purpose of exchanging for certificated American Depositary Shares, shall cancel those uncertificated American Depositary Shares and register and deliver to the Owner a Receipt evidencing the same number of certificated American Depositary Shares.

The Depositary may appoint one or more co-transfer agents for the purpose of effecting registration of transfers of American Depositary Shares and combinations and split-ups of Receipts at designated transfer offices on behalf of the Depositary, and the Depositary shall notify the Company as promptly as practicable if it makes an appointment of that kind. In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by Owners or persons entitled to American Depositary Shares and will be entitled to protection and indemnity to the same extent as the Depositary.

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SECTION 2.5. <u>Surrender of American</u><u> </u><u>Depositary</u> <u>Shares</u><u> </u><u>and</u><u> </u><u>Withdrawal</u><u> </u><u>of</u> <u>Deposited Securities.</u>

Upon surrender of American Depositary Shares for the purpose of withdrawal of the Deposited Securities represented thereby and payment of the fee of the Depositary for the surrender of American Depositary Shares as provided in Section 5.9 and payment of all taxes and governmental charges payable in connection with that surrender and withdrawal of the Deposited Securities, and subject to the terms and conditions of this Deposit Agreement, the Owner of those American Depositary Shares shall be entitled to delivery (to the extent delivery can then be lawfully and practicably made), to or as instructed by that Owner, of the amount of Deposited Securities at the time represented by those American Depositary Shares, <u>but not</u> any money or other property as to which a record date for distribution to Owners has passed (since money or other property of that kind will be delivered or paid on the scheduled payment date to the Owner as of that record date), <u>and except that</u> the Depositary shall not be required to accept surrender of American Depositary Shares for the purpose of withdrawal to the extent it would require delivery of a fraction of a Deposited Security. That delivery shall be made, as provided in this Section, without unreasonable delay.

As a condition of accepting a surrender of American Depositary Shares for the purpose of withdrawal of Deposited Securities, the Depositary may require (i) that each surrendered Receipt be properly endorsed in blank or accompanied by proper instruments of transfer in blank and (ii) that the surrendering Owner execute and deliver to the Depositary a written order directing the Depositary to cause the Deposited Securities being withdrawn to be delivered to or upon the written order of a person or persons designated in that order.

Thereupon, the Depositary shall direct the Custodian to deliver, subject to Sections 2.6, 3.1 and 3.2, the other terms and conditions of this Deposit Agreement and local market rules and practices, to the surrendering Owner or to or upon the written order of the person or persons designated in the order delivered to the Depositary as above provided, the amount of Deposited Securities represented by the surrendered American Depositary Shares, and the Depositary may charge the surrendering Owner a fee and its expenses for giving that direction by cable (including SWIFT) or facsimile transmission. The Company agrees not to prevent, hinder or unreasonably delay any lawful delivery or registration of transfer of Deposited Securities upon surrender of American Depositary Shares for the purpose of withdrawal.

As of the date of this Deposit Agreement, and at any time that the Company is a FEFTA Sensitive Entity, any "foreign investor", as defined under FEFTA, that expects to receive delivery of Shares upon surrender of American Depositary Shares must submit a FEFTA Pre-Notification, and the Depositary shall not accept surrender of American Depositary Shares for the purpose of withdrawal of Shares until it receives evidence that any required FEFTA Pre-Clearance has been obtained. Accordingly, Owners wishing to surrender American Depositary Shares for the purpose of withdrawal of deposited Shares that are foreign investors or intend to direct delivery of Shares to foreign investors should apply, or advise the persons to whom they intend to direct delivery of Shares to apply, for FEFTA Pre-Clearance at least 30 days in advance.

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The Depositary has been further advised that, as of the date of this Deposit Agreement, under FEFTA, it must make a FEFTA Implementation Report to the applicable Japanese governmental authority within 45 days whenever it delivers deposited Shares upon a surrender of American Depositary Shares. The Company agrees to reimburse the Depositary for its expenses, including fees and expenses of counsel, for making required FEFTA Implementation Reports in connection with surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Shares.

If Deposited Securities are delivered physically upon surrender of American Depositary Shares for the purpose of withdrawal, that delivery will be made at the Custodian's office, <u>except that</u>, at the request, risk and expense of an Owner surrendering American Depositary Shares for withdrawal of Deposited Securities, and for the account of that Owner, the Depositary shall direct the Custodian to forward any cash or other property comprising, and forward a certificate or certificates, if applicable, and other proper documents of title, if any, for, the Deposited Securities represented by the surrendered American Depositary Shares to the Depositary for delivery at the Depositary's Office or to another address specified in the order received from the surrendering Owner.

SECTION 2.6. <u>Limitations</u><u> </u><u>on</u><u> </u><u>Delivery,</u><u> </u><u>Registration</u><u> </u><u>of</u> <u>Transfer</u><u> </u><u>and</u><u> </u><u>Surrender</u> <u>of American Depositary Shares.</u>

As a condition precedent to the delivery, registration of transfer or surrender of any American Depositary Shares or split-up or combination of any Receipt or withdrawal of any Deposited Securities, the Depositary, Custodian or Registrar may require payment from the depositor of Shares or the presenter of the Receipt or instruction for registration of transfer or surrender of American Depositary Shares not evidenced by a Receipt of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees as provided in this Deposit Agreement, may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with any regulations the Depositary may establish consistent with the provisions of this Deposit Agreement, including, without limitation, this Section 2.6.

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The Depositary may refuse to accept deposits of Shares for delivery of American Depositary Shares or to register transfers of American Depositary Shares in particular instances, or may suspend deposits of Shares or registration of transfer generally, whenever it or the Company considers it necessary or advisable to do so. The Depositary may refuse surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities in particular instances, or may suspend surrenders for the purpose of withdrawal generally, <u>but, notwithstanding anything to the contrary in this Deposit</u> <u>Agreement, only for</u> (i) temporary delays caused by closing of the Depositary's register or the register of holders of Shares maintained by the Company or the Foreign Registrar, or the deposit of Shares, in connection with voting at a shareholders' meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the American Depositary Shares or to the withdrawal of the Deposited Securities or (iv) any other reason that, at the time, is permitted under paragraph I(A)(1) of the General Instructions to Form F-6 under the Securities Act of 1933 or any successor to that provision.

The Depositary shall not knowingly accept for deposit under this Deposit Agreement any Shares that, at the time of deposit, are Restricted Securities.

The Depositary shall notify the Company, as promptly as practicable, of any suspension or refusal under this Section that is outside the ordinary course of business.

SECTION 2.7. <u>Lost</u><u> </u><u>Receipts,</u><u> </u><u>etc.</u>

If a Receipt is mutilated, destroyed, lost or stolen, the Depositary shall deliver to the Owner the American Depositary Shares evidenced by that Receipt in uncertificated form or, if requested by the Owner, execute and deliver a new Receipt of like tenor in exchange and substitution for such mutilated Receipt, upon surrender and cancellation of that mutilated Receipt, or in lieu of and in substitution for that destroyed, lost or stolen Receipt. <u>However</u>, before the Depositary will deliver American Depositary Shares in uncertificated form or execute and deliver a new Receipt, in substitution for a destroyed, lost or stolen Receipt, the Owner must (a) file with the Depositary (i) a request for that replacement before the Depositary has notice that the Receipt has been acquired by a bona fide purchaser and (ii) a sufficient indemnity bond and (b) satisfy any other reasonable requirements imposed by the Depositary.

SECTION 2.8. <u>Cancellation</u> <u>and</u><u> </u><u>Destruction</u><u> </u><u>of</u><u> </u><u>Surrendered</u><u> </u><u>Receipts;</u> <u>Cancellation of American Depositary Shares.</u>

The Depositary shall cancel all Receipts surrendered to it. The Depositary may destroy cancelled Receipts. The Depositary agrees to maintain records of all Receipts surrendered and Deposited Securities withdrawn under Section 2.5, of substitute Receipts delivered under Section 2.7 and of cancelled or destroyed Receipts under this Section, in keeping with procedures ordinarily followed by stock transfer agents located in the United States. The Depositary may cancel American Depositary Shares, upon notice to the Owners, in accordance with Section 4.8 or to the extent there are insufficient deposited Shares in respect of the outstanding American Depositary Shares as a result of an increase in the number of Shares each American Depositary Share represents. If the Depositary cancels American Depositary Shares under the preceding sentence, it shall also call for surrender of the outstanding Receipts to be replaced with new Receipts evidencing the number of American Depositary Shares held by the Owners after that cancellation. Surrenders and cancellations of American Depositary Shares shall incur fees of the Depositary as provided in Section 5.9, and the Depositary may also require Owners or former Owners to pay taxes and governmental charges payable in connection therewith.

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SECTION 2.9. <u>DTC</u><u> </u><u>Direct</u><u> </u><u>Registration</u> <u>System</u><u> </u><u>and</u><u> </u><u>Profile</u><u> </u><u>Modification</u> <u>System.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding the provisions of Section 2.4, the parties acknowledge that DTC's Direct Registration System ("<u>DRS</u>") and Profile Modification System ("<u>Profile</u>") apply to the American Depositary Shares upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC that facilitates interchange between registered holding of uncertificated securities and holding of security entitlements in those securities through DTC and a DTC participant. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of an Owner of American Depositary Shares, to direct the Depositary to register a transfer of those American Depositary Shares to DTC or its nominee and to deliver those American Depositary Shares to the DTC account of that DTC participant without receipt by the Depositary of prior authorization from the Owner to register that transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In connection with DRS/Profile, the parties acknowledge that the Depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an Owner in requesting a registration of transfer and delivery as described in paragraph (a) above has the actual authority to act on behalf of that Owner (notwithstanding any requirements under the Uniform Commercial Code). For the avoidance of doubt, the provisions of Sections 5.3 and 5.8 apply to the matters arising from the use of the DRS/Profile. The parties agree that the Depositary's reliance on and compliance with instructions received by the Depositary through the DRS/Profile system and otherwise in accordance with this Deposit Agreement shall not constitute negligence or bad faith on the part of the Depositary.

ARTICLE 3. CERTAIN OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES

SECTION 3.1. <u>Filing Proofs, Certificates and Other Information.</u>

Any person presenting Shares for deposit or any Owner or Holder may be required from time to time to file with the Depositary or the Custodian such proof of citizenship or residence, exchange control approval, or such information relating to the registration on the books of the Company or the Foreign Registrar, if applicable, and to execute such certificates and to make such representations and warranties, as the Depositary may deem necessary or proper, or as the Company may reasonably require by written request to the Depositary. The Depositary may withhold the delivery or registration of transfer of American Depositary Shares, the distribution of any dividend or other distribution or of the proceeds thereof or the delivery of any Deposited Securities until that proof or other information is filed or those certificates are executed or those representations and warranties are made.

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SECTION 3.2. <u>Liability</u><u> </u><u>of</u><u> </u><u>Owner</u> <u>for</u> <u>Taxes.</u>

If any tax or other governmental charge shall become payable by the Custodian or the Depositary with respect to or in connection with any American Depositary Shares or any Deposited Securities represented by any American Depositary Shares or in connection with a transaction to which Section 4.8 applies, that tax or other governmental charge shall be payable by the Owner of those American Depositary Shares to the Depositary. The Depositary may refuse to register any transfer of those American Depositary Shares or any withdrawal of Deposited Securities represented by those American Depositary Shares until that payment is made, and may withhold any dividends or other distributions or the proceeds thereof, or may sell for the account of the Owner any part or all of the Deposited Securities represented by those American Depositary Shares and apply those dividends or other distributions or the net proceeds of any sale of that kind in payment of that tax or other governmental charge <u>but</u>, even after a sale of that kind, the Owner of those American Depositary Shares shall remain liable for any deficiency. The Depositary shall distribute any net proceeds of a sale made under this Section that are not used to pay taxes or governmental charges to the Owners entitled to them in accordance with Section 4.1. If the number of Shares represented by each American Depositary Share decreases as a result of a sale of Deposited Securities under this Section, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.

SECTION 3.3. <u>Warranties</u><u> </u><u>on</u> <u>Deposit</u><u> </u><u>of</u> <u>Shares.</u>

Every person depositing Shares under this Deposit Agreement shall be deemed thereby to represent and warrant that those Shares and each certificate therefor, if applicable, are validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or similar rights of the holders of outstanding securities of the Company and that the person making that deposit is duly authorized so to do. Every depositing person shall also be deemed to represent that the Shares, at the time of deposit, are not Restricted Securities. All representations and warranties deemed made under this Section shall survive the deposit of Shares and delivery of American Depositary Shares.

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SECTION 3.4. <u>Disclosure</u><u> </u><u>of</u><u> </u><u>Interests.</u>

When required in order to comply with applicable laws and regulations or the articles of incorporation or similar document of the Company, the Company may from time to time request each Owner and Holder to provide to the Depositary information relating to: (a) the capacity in which it holds American Depositary Shares, (b) the identity of any Holders or other persons or entities then or previously interested in those American Depositary Shares and the nature of those interests and (c) any other matter where disclosure of such matter is required for that compliance. Each Owner and Holder agrees to provide all information known to it in response to a request made pursuant to this Section. Each Holder consents to the disclosure by the Depositary and the Owner or any other Holder through which it holds American Depositary Shares, directly or indirectly, of all information responsive to a request made pursuant to this Section relating to that Holder that is known to that Owner or other Holder. The Depositary agrees to use reasonable efforts to comply with written instructions received from the Company requesting that the Depositary forward any request authorized under this Section to the Owners and to forward to the Company any responses it receives in response to that request. If the Company notifies the Depositary that it restricts rights to vote or transfer Deposited Securities in accordance with applicable law because a disclosure request of the kind referred to in this Section has not been complied with, the Depositary shall use reasonable efforts to follow instructions it receives from the Company to give effect to those restrictions to the extent practicable. The Depositary may charge the Company a fee and its expenses for complying with requests under this Section 3.4.

ARTICLE 4. THE DEPOSITED SECURITIES

SECTION 4.1. <u>Cash Distributions.</u>

Whenever the Depositary receives any cash dividend or other cash distribution on Deposited Securities, the Depositary shall, subject to the provisions of Section 4.5, convert that dividend or other distribution into Dollars and distribute the amount thus received (net of the fees and expenses of the Depositary as provided in Section 5.9) to the Owners entitled thereto, in proportion to the number of American Depositary Shares representing those Deposited Securities held by them respectively; <u>provided</u>, <u>however</u>, that if the Custodian or the Depositary shall be required to withhold and does withhold from that cash dividend or other cash distribution an amount on account of taxes or other governmental charges, the amount distributed to the Owners of the American Depositary Shares representing those Deposited Securities shall be reduced accordingly. <u>However</u>, the Depositary will not pay any Owner a fraction of one cent, but will round each Owner's entitlement to the nearest whole cent.

The Company or its agent will remit to the appropriate governmental agency in each applicable jurisdiction all amounts withheld and owing to such agency

If a cash distribution would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that cash distribution; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) sell all Deposited Securities other than the subject cash distribution and add any net cash proceeds of that sale to the cash distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that cash distribution.

If the Depositary acts under this paragraph, that action shall also be a <u>Termination Option</u> <u>Event</u>.

SECTION 4.2. <u>Distributions</u><u> </u><u>Other</u><u> </u><u>Than</u><u> </u><u>Cash,</u><u> </u><u>Shares</u> <u>or</u><u> </u><u>Rights.</u>

Subject to the provisions of Sections 4.11 and 5.9, whenever the Depositary receives any distribution other than a distribution described in Section 4.1, 4.3 or 4.4 on Deposited Securities (but not in exchange for or in conversion or in lieu of Deposited Securities), the Depositary shall cause the securities or property received by it to be distributed to the Owners entitled thereto, after deduction or upon payment of any fees and expenses of the Depositary and any taxes or other governmental charges, in proportion to the number of American Depositary Shares representing such Deposited Securities held by them respectively, in any manner that the Depositary may reasonably deem equitable and practicable for accomplishing that distribution (which may be a distribution of depositary shares representing the securities received); <u>provided</u>, <u>however</u>, that if in the reasonable opinion of the Depositary, after consultation with the Company to the extent practicable, such distribution cannot be made proportionately among the Owners entitled thereto, or if for any other reason (including, but not limited to, any requirement that the Company or the Depositary withhold an amount on account of taxes or other governmental charges or that securities received must be registered under the Securities Act of 1933 in order to be distributed to Owners or Holders) the Depositary deems such distribution not to be lawful and feasible, the Depositary, after consultation with the Company to the extent practicable, may adopt such other method as it may reasonably deem equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and distribution of the net proceeds of any such sale (net of the fees and expenses of the Depositary as provided in Section 5.9) to the Owners entitled thereto, all in the manner and subject to the conditions set forth in Section 4.1. The Depositary may withhold any distribution of securities under this Section 4.2 if it has not received reasonably satisfactory assurances from the Company that the distribution does not require registration under the Securities Act of 1933. The Depositary may sell, by public or private sale, an amount of securities or other property it would otherwise distribute under this Section 4.2 that is sufficient to pay its fees and expenses in respect of that distribution.

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If a distribution to be made under this Section 4.2 would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may, after consultation with the Company to the extent practicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that distribution; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) sell all Deposited Securities other than the subject distribution and add any net cash proceeds of that sale to the distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that distribution.

If the Depositary acts under this paragraph, that action shall also be a <u>Termination Option</u> <u>Event</u>.

SECTION 4.3. <u>Distributions</u><u> </u><u>in</u><u> </u><u>Shares.</u>

Whenever the Depositary receives any distribution on Deposited Securities consisting of a dividend in, or free distribution of, Shares, the Depositary shall, unless the Company and the Depositary agree otherwise, deliver to the Owners entitled thereto, in proportion to the number of American Depositary Shares representing those Deposited Securities held by them respectively, an aggregate number of American Depositary Shares representing the amount of Shares received as that dividend or free distribution, subject to the terms and conditions of this Deposit Agreement with respect to the deposit of Shares and issuance of American Depositary Shares, including withholding of any tax or governmental charge as provided in Section 4.11 and payment of the fees and expenses of the Depositary as provided in Section 5.9 (and the Depositary may sell, by public or private sale, an amount of the Shares received (or American Depositary Shares representing those Shares) sufficient to pay its fees and expenses in respect of that distribution). In lieu of delivering fractional American Depositary Shares, the Depositary may sell the amount of Shares represented by the aggregate of those fractions (or American Depositary Shares representing those Shares) and distribute the net proceeds, all in the manner and subject to the conditions described in Section 4.1. If and to the extent that additional American Depositary Shares are not delivered and Shares or American Depositary Shares are not sold, each American Depositary Share shall thenceforth also represent the additional Shares distributed on the Deposited Securities represented thereby.

If the Company declares a distribution in which holders of Deposited Securities have a right to elect whether to receive cash, Shares or other securities or a combination of those things, or a right to elect to have a distribution sold on their behalf, the Depositary may, after consultation with the Company, make that right of election available for exercise by Owners in any manner the Depositary considers to be lawful and practical. As a condition of making a distribution election right available to Owners, the Depositary may require reasonably satisfactory assurances from the Company that doing so does not require registration of any securities under the Securities Act of 1933 that has not been effected.

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SECTION 4.4. <u>Rights.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If rights are granted to the Depositary in respect of deposited Shares to purchase additional Shares or other securities, the Company and the Depositary shall endeavor to consult as to the actions, if any, the Depositary should take in connection with that grant of rights. The Depositary shall, to the extent deemed by it to be lawful and practical (i) if requested in writing by the Company, grant to all or certain Owners rights to instruct the Depositary to purchase the securities to which the rights relate and deliver those securities or American Depositary Shares representing those securities to Owners, (ii) if requested in writing by the Company, deliver the rights to or to the order of certain Owners, or (iii) sell the rights to the extent practicable and distribute the net proceeds of that sale to Owners entitled to those proceeds. To the extent rights are not exercised, delivered or disposed of under (i), (ii) or (iii) above, the Depositary shall permit the rights to lapse unexercised.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Depositary will act under (a)(i) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon instruction from an applicable Owner in the form the Depositary specified and upon payment by that Owner to the Depositary of an amount equal to the purchase price of the securities to be received upon the exercise of the rights, the Depositary shall, on behalf of that Owner, exercise the rights and purchase the securities. The purchased securities shall be delivered to, or as instructed by, the Depositary. The Depositary shall (i) deposit the purchased Shares under this Deposit Agreement and deliver American Depositary Shares representing those Shares to that Owner or (ii) deliver or cause the purchased Shares or other securities to be delivered to or to the order of that Owner. The Depositary will not act under (a)(i) above unless the offer and sale of the securities to which the rights relate are registered under the Securities Act of 1933 or the Depositary has received an opinion of United States counsel that is reasonably satisfactory to it to the effect that those securities may be sold and delivered to the applicable Owners without registration under the Securities Act of 1933. For the avoidance of doubt, nothing in the Deposit Agreement shall create any obligation on the part of the Company to file a registration statement with respect to rights or the underlying securities or to endeavor to have such a registration statement declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Depositary will act under (a)(ii) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon (i) the request of an applicable Owner to deliver the rights allocable to the American Depositary Shares of that Owner to an account specified by that Owner to which the rights can be delivered and (ii) receipt of such documents as the Company and the Depositary agreed to require to comply with applicable law, the Depositary will deliver those rights as requested by that Owner.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the Depositary will act under (a)(iii) above, the Depositary will use reasonable efforts to sell the rights in proportion to the number of American Depositary Shares held by the applicable Owners and pay the net proceeds to the Owners otherwise entitled to the rights that were sold, upon an averaged or other practical basis without regard to any distinctions among such Owners because of exchange restrictions or the date of delivery of any American Depositary Shares or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Payment or deduction of the fees of the Depositary as provided in Section 5.9 and payment or deduction of the expenses of the Depositary and any applicable taxes or other governmental charges shall be conditions of any delivery of securities or payment of cash proceeds under this Section 4.4.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Depositary shall not be responsible for any failure to determine that it may be lawful or feasible to make rights available to or exercise rights on behalf of Owners in general or any Owner in particular, or to sell rights.

SECTION 4.5. <u>Conversion</u><u> </u><u>of</u><u> </u><u>Foreign</u><u> </u><u>Currency.</u>

Whenever the Depositary or the Custodian receives foreign currency, by way of dividends or other distributions or the net proceeds from the sale of securities, property or rights, and if at the time of the receipt thereof the foreign currency so received can in the judgment of the Depositary be converted on a reasonable basis into Dollars and the resulting Dollars transferred to the United States, the Depositary or one of its agents or affiliates or the Custodian shall convert or cause to be converted by sale or in any other manner that it may determine that foreign currency into Dollars, and those Dollars shall be distributed as promptly as reasonably practicable to the Owners entitled thereto. A cash distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Owners based on exchange restrictions, the date of delivery of any American Depositary Shares or otherwise and shall be net of any expenses of conversion into Dollars incurred by the Depositary as provided in Section 5.9.

If a conversion of foreign currency or the repatriation or distribution of Dollars can be effected only with the approval or license of any government or agency thereof, the Depositary may, but will not be required to, file an application for that approval or license.

If the Depositary determines that in its judgment any foreign currency received by the Depositary or the Custodian is not convertible on a reasonable basis into Dollars transferable to the United States, or if any approval or license of any government or agency thereof that is required for such conversion is not filed or sought by the Depositary or is not obtained within a reasonable period as determined by the Depositary, the Depositary may distribute the foreign currency received by the Depositary to, or in its discretion may hold such foreign currency uninvested and without liability for interest thereon for the respective accounts of, the Owners entitled to receive the same.

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If any conversion of foreign currency, in whole or in part, cannot be effected for distribution to some of the Owners entitled thereto, the Depositary may in its discretion make that conversion and distribution in Dollars to the extent practicable and permissible to the Owners entitled thereto and may distribute the balance of the foreign currency received by the Depositary to, or hold that balance uninvested and without liability for interest thereon for the account of, the Owners entitled thereto.

The Depositary may convert currency itself or through any of its affiliates, or the Custodian or the Company may convert currency and pay Dollars to the Depositary. Where the Depositary converts currency itself or through any of its affiliates, the Depositary acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under this Deposit Agreement and the rate that the Depositary or its affiliate receives when buying or selling foreign currency for its own account. The Depositary makes no representation that the exchange rate used or obtained by it or its affiliate in any currency conversion under this Deposit Agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to Owners, subject to the Depositary's obligations under Section 5.3. The methodology used to determine exchange rates used in currency conversions made by the Depositary is available upon request. Where the Custodian converts currency, the Custodian has no obligation to obtain the most favorable rate that could be obtained at the time or to ensure that the method by which that rate will be determined will be the most favorable to Owners, and the Depositary makes no representation that the rate is the most favorable rate and will not be liable for any direct or indirect losses associated with the rate. In certain instances, the Depositary may receive dividends or other distributions from the Company in Dollars that represent the proceeds of a conversion of foreign currency or translation from foreign currency at a rate that was obtained or determined by or on behalf of the Company and, in such cases, the Depositary will not engage in, or be responsible for, any foreign currency transactions and neither it nor the Company makes any representation that the rate obtained or determined by the Company is the most favorable rate and neither it nor the Company will be liable for any direct or indirect losses associated with the rate.

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SECTION 4.6. <u>Fixing</u><u> </u><u>of</u><u> </u><u>Record</u> <u>Date.</u>

Whenever a cash dividend, cash distribution or any other distribution is made on Deposited Securities or rights to purchase Shares or other securities are issued with respect to Deposited Securities (which rights will be delivered to or exercised or sold on behalf of Owners in accordance with Section 4.4) or the Depositary receives notice that a distribution or issuance of that kind will be made, or whenever the Depositary receives notice that a meeting of holders of Shares will be held in respect of which the Company has requested the Depositary to send a notice under Section 4.7, or whenever the Depositary will assess a fee or charge against the Owners, or whenever the Depositary causes a change in the number of Shares that are represented by each American Depositary Share, or whenever the Depositary otherwise finds it necessary or convenient, the Depositary shall fix a record date, which shall be the same as, or as near as practicable to, any corresponding record date set by the Company with respect to Shares, (a) for the determination of the Owners (i) who shall be entitled to receive the benefit of that dividend or other distribution or those rights, (ii) who shall be entitled to give instructions for the exercise of voting rights at that meeting, (iii) who shall be responsible for that fee or charge or (iv) for any other purpose for which the record date was set, or (b) on or after which each American Depositary Share will represent the changed number of Shares. Subject to the provisions of Sections 4.1 through 4.5 and to the other terms and conditions of this Deposit Agreement, the Owners on a record date fixed by the Depositary shall be entitled to receive the amount distributable by the Depositary with respect to that dividend or other distribution or those rights or the net proceeds of sale thereof in proportion to the number of American Depositary Shares held by them respectively, to give voting instructions or to act in respect of the other matter for which that record date was fixed, or be responsible for that fee or charge, as the case may be.

SECTION 4.7. <u>Voting of Deposited Shares.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Upon receipt of notice of any meeting of holders of Shares at which holders of Shares will be entitled to vote, if requested in writing by the Company, the Depositary shall, as soon as practicable thereafter, Disseminate to the Owners a notice, the form of which shall be in the sole discretion of the Depositary, that shall contain (i) the information contained in the notice of meeting received by the Depositary, (ii) a statement that the Owners as of the close of business on a specified record date will be entitled, subject to any applicable provision of Japanese law and of the articles of incorporation or similar documents of the Company, to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Shares represented by their respective American Depositary Shares, (iii) a statement as to the manner in which those instructions may be given, including an express indication that instructions may be deemed given in accordance with the last sentence of paragraph (b) below, if no instruction is received, to the Depositary to give a discretionary proxy to a person designated by the Company and (iv) the last date on which the Depositary will accept instructions (the "<u>Instruction Cutoff Date</u>").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon the written request of an Owner of American Depositary Shares, as of the date of the request or, if a record date was specified by the Depositary, as of that record date, received on or before any Instruction Cutoff Date established by the Depositary, the Depositary may, and if the Depositary sent a notice under the preceding paragraph shall, endeavor, in so far as practicable, to vote or cause to be voted the amount of deposited Shares represented by those American Depositary Shares in accordance with the instructions set forth in that request. The Depositary shall not vote or attempt to exercise the right to vote that attaches to the deposited Shares other than in accordance with instructions given by Owners and received by the Depositary or as provided in the following sentence. If (i) the Company instructed the Depositary to Disseminate a notice under paragraph (a) above and complied with paragraph (d) below, (ii) no instructions are received by the Depositary from an Owner with respect to a matter and an amount of American Depositary Shares of that Owner on or before the Instruction Cutoff Date and (iii) the Depositary has received from the Company, by the business day following the Instruction Cutoff Date, a written confirmation that, as of the Instruction Cutoff Date, (x) the Company wishes a proxy to be given under this sentence, (y) the Company reasonably does not know of any substantial opposition to the matter and (z) the matter is not materially adverse to the interests of shareholders, then, the Depositary shall deem that Owner to have instructed the Depositary to give a discretionary proxy to a person designated by the Company with respect to that matter and the amount of deposited Shares represented by that amount of American Depositary Shares and the Depositary shall give a discretionary proxy to a person designated by the Company to vote that amount of deposited Shares as to that matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) There can be no assurance that Owners generally or any Owner in particular will receive the notice described in paragraph (a) above in time to enable Owners to give instructions to the Depositary prior to the Instruction Cutoff Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In order to give Owners a reasonable opportunity to instruct the Depositary as to the exercise of voting rights relating to Shares, if the Company will request the Depositary to Disseminate a notice under paragraph (a) above, the Company shall give the Depositary notice of the meeting, details concerning the matters to be voted upon and copies of materials to be made available to holders of Shares in connection with the meeting not less than 30 days prior to the meeting date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything in this Section 4.7 to the contrary, the Depositary and the Company may modify, amend or adopt additional procedures relating to voting of Deposited Securities from time to time as they determine may be necessary or appropriate to comply with applicable law or regulation.

SECTION 4.8. <u>Tender</u><u> </u><u>and</u><u> </u><u>Exchange</u><u> </u><u>Offers;</u><u> </u><u>Redemption,</u> <u>Replacement</u><u> </u><u>or</u> <u>Cancellation of Deposited Securities.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Depositary shall not tender any Deposited Securities in response to any voluntary cash tender offer, exchange offer or similar offer made to holders of Deposited Securities, except when instructed in writing to do so by an Owner surrendering American Depositary Shares and subject to any conditions or procedures the Depositary may require.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Depositary receives a written notice that Deposited Securities have been redeemed for cash or otherwise purchased for cash in a transaction that is mandatory and binding on the Depositary as a holder of those Deposited Securities (a "<u>Redemption</u>"), the Depositary, at the expense of the Company (unless otherwise agreed in writing between the Company and the Depositary), shall (i) if required, surrender Deposited Securities that have been redeemed to the issuer of those securities or its agent on the redemption date, (ii) Disseminate a notice to Owners (A) notifying them of that Redemption, (B) calling for surrender of a corresponding number of American Depositary Shares and (C) notifying them that the called American Depositary Shares have been converted into a right only to receive the money received by the Depositary upon that Redemption and those net proceeds shall be the Deposited Securities to which Owners of those converted American Depositary Shares shall be entitled upon surrenders of those American Depositary Shares in accordance with Section 2.5 or 6.2 and (iii) distribute the money received upon that Redemption to the Owners entitled to it upon surrender by them of called American Depositary Shares in accordance with Section 2.5 (and, for the avoidance of doubt, Owners shall not be entitled to receive that money under Section 4.1). If the Redemption affects less than all the Deposited Securities, the Depositary shall call for surrender a corresponding portion of the outstanding American Depositary Shares and only those American Depositary Shares will automatically be converted into a right to receive the net proceeds of the Redemption. The Depositary shall allocate the American Depositary Shares converted under the preceding sentence among the Owners pro-rata to their respective holdings of American Depositary Shares immediately prior to the Redemption, <u>except that</u> the allocations may be adjusted so that no fraction of a converted American Depositary Share is allocated to any Owner. A Redemption of all or substantially all of the Deposited Securities shall be a <u>Termination Option Event</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Depositary is notified of or there occurs any change in nominal value or any subdivision, consolidation, conversion, combination or any other reclassification of the Deposited Securities or any recapitalization, reorganization, sale of assets substantially as an entirety, merger or consolidation affecting the issuer of the Deposited Securities or to which it is a party that is mandatory and binding on the Depositary as a holder of Deposited Securities and, as a result, securities or other property have been or will be delivered in exchange, conversion, replacement or in lieu of, Deposited Securities (a "<u>Replacement</u>"), the Depositary shall, if required, surrender the old Deposited Securities affected by that Replacement of Shares and hold, as new Deposited Securities under this Deposit Agreement, the new securities or other property delivered to it in that Replacement. <u>However</u>, the Depositary may elect to sell those new Deposited Securities if in the opinion of the Depositary, after consultation with the Company to the extent practicable, it is not lawful or not practical for it to hold those new Deposited Securities under this Deposit Agreement because those new Deposited Securities may not be distributed to Owners without registration under the Securities Act of 1933 or for any other reason, at public or private sale, at such places and on such terms as it deems proper and proceed as if those new Deposited Securities had been Redeemed under paragraph (b) above. A Replacement shall be a <u>Termination Option Event</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the case of a Replacement where the new Deposited Securities will continue to be held under this Deposit Agreement, the Depositary, after consultation with the Company to the extent practicable, may call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing the new Deposited Securities and the number of those new Deposited Securities represented by each American Depositary Share. If the number of Shares represented by each American Depositary Share decreases as a result of a Replacement, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If there are no Deposited Securities with respect to American Depositary Shares, including if the Deposited Securities are cancelled, or the Deposited Securities with respect to American Depositary Shares have become apparently worthless, the Depositary may call for surrender of those American Depositary Shares or may cancel those American Depositary Shares, upon notice to Owners, and that condition shall be a <u>Termination Option Event</u>.

SECTION 4.9. <u>Reports</u>.

The Depositary shall make available for inspection by Owners at its Office any reports and communications, including any proxy solicitation material, received from the Company which are both (a) received by the Depositary as the holder of the Deposited Securities and (b) made generally available to the holders of those Deposited Securities by the Company. The Company shall furnish reports and communications, including any proxy soliciting material to which this Section applies, to the Depositary in English, to the extent those materials are required to be translated into English pursuant to any regulations of the Commission.

SECTION 4.10. <u>Lists</u><u> </u><u>of</u> <u>Owners.</u>

Upon written request by the Company, the Depositary shall, at the expense of the Company, furnish to it a list, as of a recent date, of the names, addresses and American Depositary Share holdings of all Owners.

SECTION 4.11. <u>Withholding.</u>

If the Depositary determines that any distribution received or to be made by the Depositary (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charge that the Depositary is obligated to withhold, the Depositary may sell, by public or private sale, all or a portion of the distributed property (including Shares and rights to subscribe therefor) in the amounts and manner the Depositary deems necessary and practicable to pay those taxes or charges, and the Depositary shall distribute the net proceeds of that sale, after deduction of those taxes or charges, to the Owners entitled thereto in proportion to the number of American Depositary Shares held by them respectively.

Services for Owners and Holders that may permit them to obtain reduced rates of tax withholding at source or reclaim excess tax withheld, and the fees and costs associated with using services of that kind, are not provided under, and are outside the scope of, this Deposit Agreement.

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Each Owner and Holder agrees to indemnify the Company, the Depositary, the Custodian and their respective directors, employees, agents and affiliates for, and hold each of them harmless against, any claim by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced withholding at source or other tax benefit received by it. The obligations of Owners and Holders under the preceding sentence shall survive any transfer of American Depositary Shares or surrender of American Depositary Shares and withdrawal of Deposited Securities and the termination of this Deposit Agreement.

ARTICLE 5. THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY

SECTION 5.1. <u>Maintenance of Office and Register by the Depositary.</u>

Until termination of this Deposit Agreement in accordance with its terms, the Depositary shall maintain facilities for the delivery, registration of transfers and surrender of American Depositary Shares in accordance with the provisions of this Deposit Agreement.

The Depositary shall keep a register of all Owners and all outstanding American Depositary Shares, which shall be open for inspection by the Owners at the Depositary's Office during regular business hours, but only for the purpose of communicating with Owners regarding the business of the Company or a matter related to this Deposit Agreement or the American Depositary Shares.

The Depositary may close the register for delivery, registration of transfer or surrender for the purpose of withdrawal from time to time as provided in Section 2.6.

If any American Depositary Shares are listed on one or more stock exchanges, the Depositary shall act as Registrar or appoint a Registrar or one or more co-registrars for registration of those American Depositary Shares in accordance with any requirements of that exchange or those exchanges.

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SECTION 5.2. <u>Prevention</u><u> </u><u>or</u><u> </u><u>Delay</u> <u>of</u><u> </u><u>Performance</u><u> </u><u>by</u><u> </u><u>the</u><u> </u><u>Company</u><u> </u><u>or</u><u> </u><u>the</u> <u>Depositary.</u>

Neither the Depositary nor the Company nor any of their respective directors, employees, agents or affiliates shall incur any liability to any Owner or Holder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if by reason of (A) any provision of any present or future law or regulation or other act or action of the government of the United States, any State of the United States or any other state or jurisdiction, or of any governmental or regulatory authority or stock exchange; (B) (in the case of the Depositary only) any provision, present or future, of the articles of incorporation or similar document of the Company, or any provision of any securities issued or distributed by the Company, or any offering or distribution thereof; or (C) any event or circumstance, whether natural or caused by a person or persons, that is beyond the ability of the Depositary or the Company, as the case may be, to prevent or counteract by reasonable care or effort (including, but not limited to, earthquakes, floods, severe storms, fires, explosions, war, terrorism, civil unrest, labor disputes, criminal acts or outbreaks of infectious disease; interruptions or malfunctions of utility services, Internet or other communications lines or systems; unauthorized access to or attacks on computer systems or websites; or other failures or malfunctions of computer hardware or software or other systems or equipment), the Depositary or the Company is, directly or indirectly, prevented from, forbidden to or delayed in, or could be subject to any civil or criminal penalty on account of doing or performing and therefore does not do or perform, any act or thing that, by the terms of this Deposit Agreement or the Deposited Securities, it is provided shall be done or performed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) for any exercise of, or failure to exercise, any discretion provided for in this Deposit Agreement (including any determination by the Depositary to take, or not take, any action that this Deposit Agreement provides the Depositary may take);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) for the inability of any Owner or Holder to benefit from any distribution, offering, right or other benefit that is made available to holders of Deposited Securities but is not, under the terms of this Deposit Agreement, made available to Owners or Holders; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) for any special, consequential, indirect or punitive damages for any breach of the terms of this Deposit Agreement.

Where, by the terms of a distribution to which Section 4.1, 4.2 or 4.3 applies, or an offering to which Section 4.4 applies, or for any other reason, that distribution or offering may not be made available to Owners, and the Depositary may not dispose of that distribution or offering on behalf of Owners and make the net proceeds available to Owners, then the Depositary shall not make that distribution or offering available to Owners, and shall allow any rights, if applicable, to lapse.

SECTION 5.3. <u>Obligations</u><u> </u><u>of</u><u> </u><u>the</u><u> </u><u>Depositary</u><u> </u><u>and</u> <u>the</u> <u>Company.</u>

The Company assumes no obligation nor shall it be subject to any liability under this Deposit Agreement to any Owner or Holder, except that the Company agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith.

The Depositary assumes no obligation nor shall it be subject to any liability under this Deposit Agreement to any Owner or Holder (including, without limitation, liability with respect to the validity or worth of the Deposited Securities), except that the Depositary agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith, and the Depositary shall not be a fiduciary or have any fiduciary duty to Owners or Holders.

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Neither the Depositary nor the Company shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or in respect of the American Depositary Shares on behalf of any Owner or Holder or any other person.

Each of the Depositary and the Company may rely, and shall be protected in relying upon, any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties.

Neither the Depositary nor the Company shall be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Owner or Holder, or any other person believed by it in good faith to be competent to give such advice or information.

Neither the Depositary nor the Company shall be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary.

The Depositary shall not be liable for the acts or omissions of any securities depository, clearing agency or settlement system in connection with or arising out of book-entry settlement of American Depositary Shares or Deposited Securities or otherwise.

In the absence of bad faith on its part, the Depositary shall not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any such vote is cast or the effect of any such vote.

The Depositary shall have no duty to make any determination or provide any information as to the tax status of the Company. Neither the Depositary nor the Company shall have any liability for any tax consequences that may be incurred by Owners or Holders as a result of owning or holding American Depositary Shares. Neither the Depositary nor the Company shall be liable for the inability or failure of an Owner or Holder to obtain the benefit of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit.

SECTION 5.4. <u>Resignation</u><u> </u><u>and</u><u> </u><u>Removal of</u><u> </u><u>the</u> <u>Depositary.</u>

The Depositary may at any time resign as Depositary hereunder by written notice of its election so to do delivered to the Company, to become effective upon the appointment of a successor depositary and its acceptance of that appointment as provided in this Section. The effect of resignation if a successor depositary is not appointed is provided for in Section 6.2.

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The Depositary may at any time be removed by the Company by 90 days' prior written notice of that removal, to become effective upon the later of (i) the 90th day after delivery of the notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of its appointment as provided in this Section.

If the Depositary resigns or is removed, the Company shall use its commercially reasonable efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York. Every successor depositary shall execute and deliver to the Company an instrument in writing accepting its appointment under this Deposit Agreement. If the Depositary receives notice from the Company that a successor depositary has been appointed following its resignation or removal, the Depositary, upon payment of all sums due it from the Company, shall deliver to its successor a register listing all the Owners and their respective holdings of outstanding American Depositary Shares and shall deliver the Deposited Securities to or to the order of its successor. When the Depositary has taken the actions specified in the preceding sentence (i) the successor shall become the Depositary and shall have all the rights and shall assume all the duties of the Depositary under this Deposit Agreement and (ii) the predecessor depositary shall cease to be the Depositary and shall be discharged and released from all obligations under this Deposit Agreement, except for its duties under Section 5.8 with respect to the time before that discharge. A successor Depositary shall notify the Owners of its appointment as soon as practical after assuming the duties of Depositary.

Any corporation or other entity into or with which the Depositary may be merged or consolidated shall be the successor of the Depositary without the execution or filing of any document or any further act.

SECTION 5.5. <u>The</u> <u>Custodians.</u>

The Custodian shall be subject at all times and in all respects to the directions of the Depositary and shall be responsible solely to it. The Depositary in its discretion may at any time appoint a substitute or additional custodian or custodians, each of which shall thereafter be one of the Custodians under this Deposit Agreement. If the Depositary receives notice that a Custodian is resigning and, upon the effectiveness of that resignation there would be no Custodian acting under this Deposit Agreement, the Depositary shall, as promptly as practicable after receiving that notice, appoint a substitute custodian or custodians, each of which shall thereafter be a Custodian under this Deposit Agreement. The Depositary shall notify the Company of any change in the Custodian as promptly as practicable. The Depositary shall require any Custodian that resigns or is removed to deliver all Deposited Securities held by it to another Custodian.

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SECTION 5.6. <u>Notices</u><u> </u><u>and</u><u> </u><u>Reports.</u>

If the Company takes or decides to take any corporate action of a kind that is addressed in Sections 4.1 to 4.4, or 4.6 to 4.8, or that effects or will effect a change of the name or legal structure of the Company, or that effects or will effect a change to the Shares, the Company shall notify the Depositary and the Custodian of that action or decision as soon as it is lawful and practical to give that notice. The notice shall be in English and shall include all details that the Company is required to include in any notice to any governmental or regulatory authority or securities exchange or is required to make available generally to holders of Shares by publication or otherwise.

The Company will arrange for the translation into English, if not already in English, to the extent required pursuant to any regulations of the Commission, and the prompt transmittal by the Company to the Depositary and the Custodian of all notices and any other reports and communications which are made generally available by the Company to holders of its Shares. If requested in writing by the Company, the Depositary will Disseminate, as promptly as practicable, at the Company's expense, those notices, reports and communications to all Owners or otherwise make them available to Owners in a manner that the Company specifies as substantially equivalent to the manner in which those communications are made available to holders of Shares and compliant with the requirements of any securities exchange on which the American Depositary Shares are listed. The Company will timely provide the Depositary with the quantity of such notices, reports, and communications, as requested by the Depositary from time to time, in order for the Depositary to effect that Dissemination.

The Company represents, as of the date of this Deposit Agreement and continuously thereafter until its termination, that the statements in the first paragraph of Article 11 of the form of Receipt appearing as Exhibit A to this Deposit Agreement or, if applicable, most recently filed with the Commission pursuant to Rule 424(b) under the Securities Act of 1933 (in each case to the extent not superseded by a notice given to the Depositary under this Section 5.6 and Section 7.5 of this Deposit Agreement) with respect to the Company's obligation to file periodic reports under the United States Securities Exchange Act of 1934, as amended, or its qualification for exemption from registration under that Act pursuant to Rule 12g3-2(b) under that Act, as the case may be, are true and correct. The Company agrees to promptly notify the Depositary upon becoming aware of any change in the truth of any of those statements or if there is any change in the Company's status regarding those reporting obligations or that qualification.

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SECTION 5.7. <u>Distribution</u><u> </u><u>of</u><u> </u><u>Additional Shares,</u><u> </u><u>Rights,</u> <u>etc.</u>

If the Company or any affiliate of the Company determines to make any issuance or distribution of (1) additional Shares, (2) rights to subscribe for Shares, (3) securities convertible into Shares, or (4) rights to subscribe for such securities (each a "<u>Distribution</u>"), the Company shall notify the Depositary in writing in English as promptly as practicable and in any event before the Distribution starts and, if requested in writing by the Depositary, the Company shall promptly furnish to the Depositary either (i) evidence reasonably satisfactory to the Depositary that the Distribution is registered under the Securities Act of 1933 or (ii) a written opinion from United States counsel that is reasonably satisfactory to the Depositary, stating that the Distribution does not require, or, if made in the United States, would not require, registration under the Securities Act of 1933. <u>However</u>, the Company shall not be required to notify the Depositary when the Company makes a Distribution if the Distribution is part of a standing compensation plan of the Company and the Company has previously notified the Depositary of the existence and terms of that plan.

Nothing in this Section 5.7 or elsewhere in this Deposit Agreement shall create any obligation on the part of the Company to file a registration statement with respect to a Distribution or to endeavor to have such a registration statement declared effective.

The Company agrees with the Depositary that neither the Company nor any company controlled by, controlling or under common control with the Company will at any time deposit any Shares that, at the time of deposit, are Restricted Securities.

SECTION 5.8. <u>Indemnification.</u>

The Company agrees to indemnify the Depositary, its directors, officers, employees, agents and affiliates and each Custodian against, and hold each of them harmless from, any liability or documented expense (including, but not limited to any documented fees and expenses incurred in seeking, enforcing or collecting such indemnity, including the reasonable and documented fees and expenses of counsel) that may arise out of or in connection with (a) any registration with the Commission of American Depositary Shares or Deposited Securities or the offer or sale thereof or (b) acts performed or omitted, pursuant to the provisions of or in connection with this Deposit Agreement and the American Depositary Shares, as the same may be amended, modified or supplemented from time to time, (i) by either the Depositary or a Custodian or their respective directors, employees, agents and affiliates, except for any liability or expense arising out of the negligence or bad faith of either of them, or (ii) by the Company or any of its directors, employees, agents and affiliates.

The Depositary agrees to indemnify the Company, its directors, officers, employees, agents and affiliates and hold them harmless from any liability or documented expense (including, but not limited to any documented fees and expenses incurred in seeking, enforcing or collecting such indemnity, including the reasonable and documented fees and expenses of counsel) that may arise out of acts performed or omitted by the Depositary or any Custodian or their respective directors, employees, agents and affiliates due to their negligence or bad faith.

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SECTION 5.9. <u>Charges</u><u> </u><u>of</u><u> </u><u>Depositary.</u>

The following charges shall be incurred by any party depositing or withdrawing Shares or by any party surrendering American Depositary Shares or to whom or from whom American Depositary Shares are delivered or cancelled (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the American Depositary Shares or Deposited Securities or a delivery of American Depositary Shares pursuant to Section 4.3), or by Owners, as applicable: (1) taxes and other governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of Shares generally on the Share register of the Company or Foreign Registrar and applicable to transfers of Shares to or from the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals hereunder, (3) such cable (including SWIFT) and facsimile transmission fees and expenses as are expressly provided in this Deposit Agreement, (4) such expenses as are incurred by the Depositary in the conversion of foreign currency pursuant to Section 4.5, (5) a fee of $10.00 or less per 100 American Depositary Shares (or portion thereof) for the delivery of American Depositary Shares pursuant to Section 2.3, 4.3 or 4.4 or the cancellation or surrender of American Depositary Shares pursuant to Section 2.5, 2.8, 4.8 or 6.2, (6) a fee of $.10 or less per American Depositary Share for any cash distribution made pursuant to this Deposit Agreement, including, but not limited to Sections 4.1 through 4.4 and Section 4.8, (7) a fee for the distribution of securities pursuant to Section 4.2 or of rights pursuant to Section 4.4 (where the Depositary will not exercise or sell those rights on behalf of Owners), such fee being in an amount equal to the fee for the execution and delivery of American Depositary Shares referred to above which would have been charged as a result of the deposit of such securities under this Deposit Agreement (for purposes of this item 7 treating all such securities as if they were Shares) but which securities are instead distributed by the Depositary to Owners, (8) in addition to any fee charged under item 6 above, fees for depositary services, which (i) may be assessed against Owners from time to time, (ii) in the aggregate shall not exceed $.10 per American Depositary Share during any calendar year and (iii) shall be payable as provided in item 9 below, and (9) any other charges payable by the Depositary or the Custodian, any of the Depositary's or Custodian's agents or the agents of the Depositary's or Custodian's agents, in connection with the servicing of Shares or other Deposited Securities (which charges shall be assessed against Owners as of the date or dates set by the Depositary in accordance with Section 4.6 and shall be payable at the sole discretion of the Depositary by billing those Owners for those charges or by deducting those charges from one or more cash dividends or other cash distributions).

The Depositary may collect any of its fees by deduction from any cash distribution payable, or by selling a portion of any securities to be distributed, to Owners that are obligated to pay those fees.

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In performing its duties under this Deposit Agreement, the Depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the Depositary and that may earn or share fees, spreads or commissions.

The Depositary may own and deal in any class of securities of the Company and its affiliates and in American Depositary Shares.

SECTION 5.10. <u>Retention</u><u> </u><u>of</u><u> </u><u>Depositary</u><u> </u><u>Documents.</u>

The Depositary is authorized to destroy those documents, records, bills and other data compiled during the term of this Deposit Agreement at the times permitted by the laws or regulations governing the Depositary, unless the Company requests in writing, sufficiently prior to any such destruction, that such papers be retained for a longer period or turned over to the Company.

SECTION 5.11. <u>Exclusivity.</u>

Without prejudice to the Company's rights under Section 5.4, the Company agrees not to appoint any other depositary for issuance of depositary shares, depositary receipts or any similar securities or instruments so long as The Bank of New York Mellon is acting as Depositary under this Deposit Agreement.

SECTION 5.12. <u>Information</u><u> </u><u>for</u><u> </u><u>Regulatory</u><u> </u><u>Compliance.</u>

Each of the Company and the Depositary shall provide to the other, as promptly as practicable, information from its records or otherwise available to it that is reasonably requested by the other to permit the other to comply with applicable law or requirements of governmental or regulatory authorities.

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ARTICLE 6. AMENDMENT AND TERMINATION

SECTION 6.1. <u>Amendment.</u>

The form of the Receipts and any provisions of this Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary without the consent of Owners or Holders in any respect that they may deem necessary or desirable. Any amendment that would impose or increase any fees or charges (other than taxes and other governmental charges, registration fees, cable (including SWIFT) or facsimile transmission costs, delivery costs or other such expenses), or that would otherwise prejudice any substantial existing right of Owners, shall, however, not become effective as to outstanding American Depositary Shares until the expiration of 30 days after notice of that amendment has been Disseminated to the Owners of outstanding American Depositary Shares. Every Owner and Holder, at the time any amendment so becomes effective, shall be deemed, by continuing to hold American Depositary Shares or any interest therein, to consent and agree to that amendment and to be bound by this Deposit Agreement as amended thereby. Upon the effectiveness of an amendment to the form of Receipt, including a change in the number of Shares represented by each American Depositary Share, the Depositary may call for surrender of Receipts to be replaced with new Receipts in the amended form or call for surrender of American Depositary Shares to effect that change of ratio. In no event shall any amendment impair the right of the Owner to surrender American Depositary Shares and receive delivery of the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.

SECTION 6.2. <u>Termination.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company may initiate termination of this Deposit Agreement by notice to the Depositary. The Depositary may initiate termination of this Deposit Agreement if (i) at any time 60 days shall have expired after the Depositary delivered to the Company a written resignation notice and a successor depositary has not been appointed and accepted its appointment as provided in Section 5.4 or (ii) a Termination Option Event has occurred. If termination of this Deposit Agreement is initiated, the Depositary shall Disseminate a notice of termination to the Owners of all American Depositary Shares then outstanding setting a date for termination (the "<u>Termination Date</u>"), which shall be at least 90 days after the date of that notice, and this Deposit Agreement shall terminate on that Termination Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) After the Termination Date, the Company shall be discharged from all obligations under this Deposit Agreement except for its obligations to the Depositary under Sections 5.8 and 5.9.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) At any time after the Termination Date, the Depositary may sell the Deposited Securities then held under this Deposit Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it hereunder, unsegregated and without liability for interest, for the pro rata benefit of the Owners of American Depositary Shares that remain outstanding, and those Owners will be general creditors of the Depositary with respect to those net proceeds and that other cash. After making that sale, the Depositary shall be discharged from all obligations under this Deposit Agreement, <u>except</u> (i) to account for the net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of such American Depositary Shares in accordance with the terms and conditions of this Deposit Agreement and any applicable taxes or governmental charges), (ii) for its obligations under Section 5.8 and (iii) to act as provided in paragraph (d) below.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) After the Termination Date, if any American Depositary Shares remain outstanding, the Depositary shall continue to receive dividends and other distributions pertaining to Deposited Securities (that have not been sold), may sell rights and other property as provided in this Deposit Agreement and shall deliver Deposited Securities (or sale proceeds) upon surrender of American Depositary Shares (after payment or upon deduction, in each case, of the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of those American Depositary Shares in accordance with the terms and conditions of this Deposit Agreement and any applicable taxes or governmental charges). After the Termination Date, the Depositary shall not accept deposits of Shares or deliver American Depositary Shares. After the Termination Date, (i) the Depositary may refuse to accept surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities (that have not been sold) or reverse previously accepted surrenders of that kind that have not settled if in its judgment the requested withdrawal would interfere with its efforts to sell the Deposited Securities, (ii) the Depositary will not be required to deliver cash proceeds of the sale of Deposited Securities until all Deposited Securities have been sold and (iii) the Depositary may discontinue the registration of transfers of American Depositary Shares and suspend the distribution of dividends and other distributions on Deposited Securities to the Owners and need not give any further notices or perform any further acts under this Deposit Agreement except as provided in this Section.

ARTICLE 7. MISCELLANEOUS

SECTION 7.1. <u>Counterparts; Signatures; Delivery; Electronic Records.</u>

This Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of those counterparts shall constitute one and the same instrument. Copies of this Deposit Agreement shall be filed with the Depositary and shall be open to inspection by any Owner or Holder during regular business hours.

This Deposit Agreement may be executed by manual or electronic signatures, including images of manually executed signatures, DocuSign, AdobeSign or a similar agreed-upon electronic signature system, and may be delivered by exchange of copies of this Deposit Agreement by email including a pdf or similar bit-mapped image of the signature pages. The parties to this Deposit Agreement represent and agree that if it has been executed or delivered electronically as provided in the preceding sentence or subsequently stored in and retrieved from an electronic record-keeping system, it shall have the same legal effect, validity and enforceability as a manually executed agreement maintained in a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, and that they shall not argue to the contrary.

SECTION 7.2. <u>No</u><u> </u><u>Third</u><u> </u><u>Party</u> <u>Beneficiaries.</u>

This Deposit Agreement is for the exclusive benefit of the Company, the Depositary, the Owners and the Holders and their respective successors and shall not be deemed to give any legal or equitable right, remedy or claim whatsoever to any other person.

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SECTION 7.3. <u>Severability.</u>

In case any one or more of the provisions contained in this Deposit Agreement or in a Receipt should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Deposit Agreement or that Receipt shall in no way be affected, prejudiced or disturbed thereby.

SECTION 7.4. <u>Owners</u><u> </u><u>and</u><u> </u><u>Holders</u><u> </u><u>as</u><u> </u><u>Parties;</u> <u>Binding</u><u> </u><u>Effect.</u>

The Owners and Holders from time to time shall be parties to this Deposit Agreement and shall be bound by all of the terms and conditions of this Deposit Agreement and of the Receipts by acceptance of American Depositary Shares or any interest therein.

SECTION 7.5. <u>Notices.</u>

Any and all notices to be given to the Company shall be in writing and shall be deemed to have been duly given if personally delivered or sent by domestic first class or international air mail or air courier or sent by facsimile transmission or email attaching a pdf or similar bit-mapped image of a signed writing, addressed to PayPay Corporation, 1-3 Kioicho, Chiyoda-ku, Tokyo, Japan, Attention: LEGAL DEPARTMENT, email: legal@paypay-corp.co.jp or any other place to which the Company may have transferred its principal office or other email address with notice to the Depositary.

Any and all notices to be given to the Depositary shall be in writing and shall be deemed to have been duly given if in English and personally delivered or sent by first class domestic or international air mail or air courier or sent by facsimile transmission or email attaching a pdf or similar bit-mapped image of a signed writing, addressed to The Bank of New York Mellon, 240 Greenwich Street, New York, New York 10286, Attention: Depositary Receipt Administration, email: bnymdepositarynotices@bnymellon.com or any other place to which the Depositary may have transferred its Office with notice to the Company.

Delivery of a notice to the Company or Depositary by mail or air courier shall be deemed effected when deposited, postage prepaid, in a post-office letter box or received by an air courier service. Delivery of a notice to the Company or Depositary sent by facsimile transmission or email shall be deemed effected when the recipient acknowledges receipt of that notice.

A notice to be given to an Owner shall be deemed to have been duly given when Disseminated to that Owner. Dissemination in paper form will be effective when personally delivered or sent by first class domestic or international air mail or air courier, addressed to that Owner at the address of that Owner as it appears on the transfer books for American Depositary Shares of the Depositary, or, if that Owner has filed with the Depositary a written request that notices intended for that Owner be mailed to some other address, at the address designated in that request. Dissemination in electronic form will be effective when sent in the manner consented to by the Owner to the electronic address most recently provided by the Owner for that purpose.

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SECTION 7.6. <u>Appointment</u><u> </u><u>of</u><u> </u><u>Agent</u> <u>for</u><u> </u><u>Service</u><u> </u><u>of</u><u> </u><u>Process;</u><u> </u><u>Submission</u><u> </u><u>to</u> <u>Jurisdiction; Jury Trial Waiver.</u>

The Company hereby (i) designates and appoints the person named in Exhibit A to this Deposit Agreement as the Company's authorized agent in the United States upon which process may be served in any suit or proceeding arising out of or relating to the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Deposit Agreement (a "Proceeding"), (ii) consents and submits to the jurisdiction of any state or federal court in the State of New York in which any Proceeding may be instituted and (iii) agrees that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Company in any Proceeding. The Company agrees to deliver to the Depositary, upon the execution and delivery of this Deposit Agreement, a written acceptance by the agent named in Exhibit A to this Deposit Agreement of its appointment as process agent. The Company further agrees to take any and all action, including the filing of any and all such documents and instruments, as may be necessary to continue that designation and appointment in full force and effect, or to appoint and maintain the appointment of another process agent located in the United States as required above, and to deliver to the Depositary a written acceptance by that agent of that appointment, for so long as any American Depositary Shares or Receipts remain outstanding or this Deposit Agreement remains in force. In the event the Company fails to maintain the designation and appointment of a process agent in the United States in full force and effect, the Company hereby waives personal service of process upon it and consents that a service of process in connection with a Proceeding may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified for notices under this Deposit Agreement, and service so made shall be deemed completed five (5) days after the same shall have been so mailed.

EACH PARTY TO THIS DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH OWNER AND HOLDER) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE COMPANY AND/OR THE DEPOSITARY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE AMERICAN DEPOSITARY SHARES OR THE RECEIPTS, THIS DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF, INCLUDING, WITHOUT LIMITATION, ANY QUESTION REGARDING EXISTENCE, VALIDITY OR TERMINATION (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) AND ANY CLAIM BASED ON U.S. FEDERAL SECURITIES LAWS.

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No disclaimer of liability under the United States federal securities laws or the rules and regulations thereunder is intended by any provision of this Deposit Agreement, inasmuch as no person is able to effectively waive the duty of any other person to comply with its obligations under those laws, rules and regulations.

SECTION 7.7. <u>Waiver</u><u> </u><u>of</u><u> </u><u>Immunities.</u>

To the extent that the Company or any of its properties, assets or revenues may have or may hereafter become entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any duty of performance under this Deposit Agreement, claim, legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any immunity of that kind and consents to relief and enforcement as provided above.

SECTION 7.8. <u>Governing</u> <u>Law.</u>

This Deposit Agreement and the Receipts shall be interpreted in accordance with and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by the laws of the State of New York.

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IN WITNESS WHEREOF, PAYPAY CORPORATION and THE BANK OF NEW YORK MELLON have duly executed this Deposit Agreement as of the day and year first set forth above and all Owners and Holders shall become parties hereto upon acceptance by them of American Depositary Shares or any interest therein.

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| | |
|:---|:---|
| PAYPAY CORPORATION | PAYPAY CORPORATION |
| By: |  |
|  | Name: Ichiro Nakayama |
|  | Title: President, Representative Director, CEO and<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate Officer |

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| | |
|:---|:---|
| THE BANK OF NEW YORK MELLON,<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;as Depositary | THE BANK OF NEW YORK MELLON,<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;as Depositary |
| By: |  |
|  | Name: |
|  | Title: |

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EXHIBIT A

AMERICAN DEPOSITARY SHARES (Each American Depositary Share represents one deposited Share)

THE BANK OF NEW YORK MELLON

AMERICAN DEPOSITARY RECEIPT

FOR ORDINARY SHARES OF

PAYPAY CORPORATION

(INCORPORATED UNDER THE LAWS OF JAPAN)

The Bank of New York Mellon, as depositary (hereinafter called the "Depositary"), hereby certifies that <u> </u>, or registered assigns IS THE OWNER OF<u> </u> 

AMERICAN DEPOSITARY SHARES

representing deposited ordinary shares (herein called "<u>Shares</u>") of PayPay Corporation, incorporated under the laws of Japan (herein called the "<u>Company</u>"). At the date hereof, each American Depositary Share represents one Share deposited or subject to deposit under the Deposit Agreement (as such term is hereinafter defined) with a custodian for the Depositary (herein called the "<u>Custodian</u>") that, as of the date of the Deposit Agreement, was Mizuho Bank, Ltd. located in Japan. The Depositary's Office and its principal executive office are located at 240 Greenwich Street, New York, N.Y. 10286.

THE DEPOSITARY'S OFFICE ADDRESS IS

240 GREENWICH STREET, NEW YORK, N.Y. 10286

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1. THE DEPOSIT AGREEMENT.

This American Depositary Receipt is one of an issue (herein called "<u>Receipts</u>"), all issued and to be issued upon the terms and conditions set forth in the Deposit Agreement dated as of [ ], 2026 (herein called the "<u>Deposit Agreement</u>") among the Company, the Depositary, and all Owners and Holders from time to time of American Depositary Shares issued thereunder, each of whom by accepting American Depositary Shares agrees to become a party thereto and become bound by all the terms and conditions thereof. The Deposit Agreement sets forth the rights of Owners and Holders and the rights and duties of the Depositary in respect of the Shares deposited thereunder and any and all other securities, property and cash from time to time received in respect of those Shares and held thereunder (those Shares, securities, property, and cash are herein called "<u>Deposited</u> <u>Securities</u>"). Copies of the Deposit Agreement are on file at the Depositary's Office in New York City and at the office of the Custodian.

The statements made on the face and reverse of this Receipt are summaries of certain provisions of the Deposit Agreement and are qualified by and subject to the detailed provisions of the Deposit Agreement, to which reference is hereby made. Capitalized terms defined in the Deposit Agreement and not defined herein shall have the meanings set forth in the Deposit Agreement.

2. SURRENDER OF AMERICAN DEPOSITARY SHARES AND WITHDRAWAL OF SHARES; CANCELLATION OF AMERICAN DEPOSITARY SHARES.

Upon surrender of American Depositary Shares for the purpose of withdrawal of the Deposited Securities represented thereby and payment of the fee of the Depositary for the surrender of American Depositary Shares as provided in Section 5.9 of the Deposit Agreement and payment of all taxes and governmental charges payable in connection with that surrender and withdrawal of the Deposited Securities, and subject to the terms and conditions of the Deposit Agreement, the Owner of those American Depositary Shares shall be entitled to delivery (to the extent delivery can then be lawfully and practicably made), to or as instructed by that Owner, of the amount of Deposited Securities at the time represented by those American Depositary Shares, <u>but not</u> any money or other property as to which a record date for distribution to Owners has passed (since money or other property of that kind will be delivered or paid on the scheduled payment date to the Owner as of that record date), <u>and except that</u> the Depositary shall not be required to accept surrender of American Depositary Shares for the purpose of withdrawal to the extent it would require delivery of a fraction of a Deposited Security. The Depositary shall direct the Custodian with respect to delivery of Deposited Securities and may charge the surrendering Owner a fee and its expenses for giving that direction by cable (including SWIFT) or facsimile transmission. The Depositary may cancel American Depositary Shares, upon notice to the Owners, in accordance with Section 4.8 of the Deposit Agreement or to the extent there are insufficient deposited Shares in respect of the outstanding American Depositary Shares as a result of an increase in the number of Shares each American Depositary Share represents. Surrenders and cancellations of American Depositary Shares shall incur fees of the Depositary as provided in Section 5.9 of the Deposit Agreement, and the Depositary may also require Owners or former Owners to pay taxes and governmental charges payable in connection therewith. The Company agrees not to prevent, hinder or unreasonably delay any lawful delivery or registration of transfer of Deposited Securities upon surrender of American Depositary Shares for the purpose of withdrawal. If Deposited Securities are delivered physically upon surrender of American Depositary Shares for the purpose of withdrawal, that delivery will be made at the Custodian's office, <u>except that</u>, at the request, risk and expense of the surrendering Owner, and for the account of that Owner, the Depositary shall direct the Custodian to forward any cash or other property comprising, and forward a certificate or certificates, if applicable, and other proper documents of title, if any, for, the Deposited Securities represented by the surrendered American Depositary Shares to the Depositary for delivery at the Depositary's Office or to another address specified in the order received from the surrendering Owner.

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As of the date of this Deposit Agreement, and at any time that the Company is a FEFTA Sensitive Entity, any "foreign investor", as defined under FEFTA, that expects to receive delivery of Shares upon surrender of American Depositary Shares must submit a FEFTA Pre-Notification, and the Depositary shall not accept surrender of American Depositary Shares for the purpose of withdrawal of Shares until it receives evidence that any required FEFTA Pre-Clearance has been obtained. Accordingly, Owners wishing to surrender American Depositary Shares for the purpose of withdrawal of deposited Shares that are foreign investors or intend to direct delivery of Shares to foreign investors should apply, or advise the persons to whom they intend to direct delivery of Shares to apply, for FEFTA Pre-Clearance at least 30 days in advance.

3. REGISTRATION OF TRANSFER OF AMERICAN DEPOSITARY SHARES; COMBINATION AND SPLIT-UP OF RECEIPTS; INTERCHANGE OF CERTIFICATED AND UNCERTIFICATED AMERICAN DEPOSITARY SHARES.

The Depositary, subject to the terms and conditions of the Deposit Agreement, shall register a transfer of American Depositary Shares on its transfer books upon (i) in the case of certificated American Depositary Shares, surrender of the Receipt evidencing those American Depositary Shares, by the Owner or by a duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer or (ii) in the case of uncertificated American Depositary Shares, receipt from the Owner of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9 of that Agreement), and, in either case, duly stamped as may be required by the laws of the State of New York and of the United States of America. Upon registration of a transfer, the Depositary shall deliver the transferred American Depositary Shares to or upon the order of the person entitled thereto.

The Depositary, subject to the terms and conditions of the Deposit Agreement, shall upon surrender of a Receipt or Receipts for the purpose of effecting a split-up or combination of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for any authorized number of American Depositary Shares requested, evidencing the same aggregate number of American Depositary Shares as the Receipt or Receipts surrendered.

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The Depositary, upon surrender of certificated American Depositary Shares for the purpose of exchanging for uncertificated American Depositary Shares, shall cancel the Receipt evidencing those certificated American Depositary Shares and send the Owner a statement confirming that the Owner is the owner of the same number of uncertificated American Depositary Shares. The Depositary, upon receipt of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9 of the Deposit Agreement) from the Owner of uncertificated American Depositary Shares for the purpose of exchanging for certificated American Depositary Shares, shall cancel those uncertificated American Depositary Shares and register and deliver to the Owner a Receipt evidencing the same number of certificated American Depositary Shares.

As a condition precedent to the delivery, registration of transfer, or surrender of any American Depositary Shares or split-up or combination of any Receipt or withdrawal of any Deposited Securities, the Depositary, the Custodian, or Registrar may require payment from the depositor of the Shares or the presenter of the Receipt or instruction for registration of transfer or surrender of American Depositary Shares not evidenced by a Receipt of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees as provided in the Deposit Agreement, may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with any regulations the Depositary may establish consistent with the provisions of the Deposit Agreement.

The Depositary may refuse to accept deposits of Shares for delivery of American Depositary Shares or to register transfers of American Depositary Shares in particular instances, or may suspend deposits of Shares or registration of transfer generally, whenever it or the Company considers it necessary or advisable to do so. The Depositary may refuse surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities in particular instances, or may suspend surrenders for the purpose of withdrawal generally, <u>but, notwithstanding anything to the contrary in the Deposit Agreement, only</u> <u>for</u> (i) temporary delays caused by closing of the Depositary's register or the register of holders of Shares maintained by the Company or the Foreign Registrar, or the deposit of Shares, in connection with voting at a shareholders' meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the American Depositary Shares or to the withdrawal of the Deposited Securities or (iv) any other reason that, at the time, is permitted under paragraph I(A)(1) of the General Instructions to Form F-6 under the Securities Act of 1933 or any successor to that provision.

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The Depositary shall not knowingly accept for deposit under the Deposit Agreement any Shares that, at the time of deposit, are Restricted Securities.

The Company has notified the Depositary that, as of the date of the Deposit Agreement, it is a FEFTA Sensitive Entity. The Company shall notify the Depositary promptly of any change in its status as a FEFTA Sensitive Entity. The Depositary shall notify the Owners if it receives notice from the Company of a change in the Company's status as a FEFTA Sensitive Entity. During any period in which the Depositary has been notified the Company is a FEFTA Sensitive Entity, the Depositary shall submit a FEFTA Pre-Notification with respect to any request of any person to deposit Shares, and the Depositary shall not accept that deposit until FEFTA Pre-Clearance has been obtained. The Company has advised the Depositary that obtaining FEFTA Pre-Clearance normally takes at least 30 days.

4. LIABILITY OF OWNER FOR TAXES.

If any tax or other governmental charge shall become payable by the Custodian or the Depositary with respect to or in connection with any American Depositary Shares or any Deposited Securities represented by any American Depositary Shares or in connection with a transaction to which Section 4.8 of the Deposit Agreement applies, that tax or other governmental charge shall be payable by the Owner of those American Depositary Shares to the Depositary. The Depositary may refuse to register any transfer of those American Depositary Shares or any withdrawal of Deposited Securities represented by those American Depositary Shares until that payment is made, and may withhold any dividends or other distributions or the proceeds thereof, or may sell for the account of the Owner any part or all of the Deposited Securities represented by those American Depositary Shares, and may apply those dividends or other distributions or the net proceeds of any sale of that kind in payment of that tax or other governmental charge but, even after a sale of that kind, the Owner shall remain liable for any deficiency. The Depositary shall distribute any net proceeds of a sale made under Section 3.2 of the Deposit Agreement that are not used to pay taxes or governmental charges to the Owners entitled to them in accordance with Section 4.1 of the Deposit Agreement. If the number of Shares represented by each American Depositary Share decreases as a result of a sale of Deposited Securities under Section 3.2 of the Deposit Agreement, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.

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5. WARRANTIES ON DEPOSIT OF SHARES.

Every person depositing Shares under the Deposit Agreement shall be deemed thereby to represent and warrant that those Shares and each certificate therefor, if applicable, are validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or similar rights of the holders of outstanding securities of the Company and that the person making that deposit is duly authorized so to do. Every depositing person shall also be deemed to represent that the Shares, at the time of deposit, are not Restricted Securities. All representations and warranties deemed made under Section 3.3 of the Deposit Agreement shall survive the deposit of Shares and delivery of American Depositary Shares.

6. FILING PROOFS, CERTIFICATES, AND OTHER INFORMATION.

Any person presenting Shares for deposit or any Owner or Holder may be required from time to time to file with the Depositary or the Custodian such proof of citizenship or residence, exchange control approval, or such information relating to the registration on the books of the Company or the Foreign Registrar, if applicable, and to execute such certificates and to make such representations and warranties, as the Depositary may deem necessary or proper or as the Company may reasonably require by written notice to the Depositary. The Depositary may withhold the delivery or registration of transfer of any American Depositary Shares, the distribution of any dividend or other distribution or of the proceeds thereof or the delivery of any Deposited Securities until that proof or other information is filed or those certificates are executed or those representations and warranties are made. As conditions of accepting Shares for deposit, the Depositary may require (i) any certification required by the Depositary or the Custodian in accordance with the provisions of the Deposit Agreement, (ii) a written order directing the Depositary to deliver to, or upon the written order of, the person or persons stated in that order, the number of American Depositary Shares representing those deposited Shares, (iii) evidence satisfactory to the Depositary that those Shares have been re-registered in the books of the Company or the Foreign Registrar in the name of the Depositary, a Custodian or a nominee of the Depositary or a Custodian, (iv) evidence satisfactory to the Depositary that any necessary approval for the transfer or deposit has been granted by any governmental body in each applicable jurisdiction and (v) an agreement or assignment, or other instrument satisfactory to the Depositary, that provides for the prompt transfer to the Custodian of any dividend, or right to subscribe for additional Shares or to receive other property, that any person in whose name those Shares are or have been recorded may thereafter receive upon or in respect of those Shares, or, in lieu thereof, such agreement of indemnity or other agreement as shall be satisfactory to the Depositary.

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7. CHARGES OF DEPOSITARY.

The following charges shall be incurred by any party depositing or withdrawing Shares or by any party surrendering American Depositary Shares or to whom or from whom American Depositary Shares are delivered or cancelled (including, without limitation, delivery pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the American Depositary Shares or Deposited Securities or a delivery of American Depositary Shares pursuant to Section 4.3 of the Deposit Agreement), or by Owners, as applicable: (1) taxes and other governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of Shares generally on the Share register of the Company or Foreign Registrar and applicable to transfers of Shares to or from the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals hereunder, (3) such cable (including SWIFT) and facsimile transmission fees and expenses as are expressly provided in the Deposit Agreement, (4) such expenses as are incurred by the Depositary in the conversion of foreign currency pursuant to Section 4.5 of the Deposit Agreement, (5) a fee of $10.00 or less per 100 American Depositary Shares (or portion thereof) for the delivery of American Depositary Shares pursuant to Section 2.3, 4.3 or 4.4 of the Deposit Agreement or the cancellation or surrender of American Depositary Shares pursuant to Section 2.5, 2.8, 4.8 or 6.2 of the Deposit Agreement, (6) a fee of $.10 or less per American Depositary Share for any cash distribution made pursuant to the Deposit Agreement, including, but not limited to Sections 4.1 through 4.4 and 4.8 of the Deposit Agreement, (7) a fee for the distribution of securities pursuant to Section 4.2 of the Deposit Agreement or of rights pursuant to Section 4.4 of that Agreement (where the Depositary will not exercise or sell those rights on behalf of Owners), such fee being in an amount equal to the fee for the execution and delivery of American Depositary Shares referred to above which would have been charged as a result of the deposit of such securities under the Deposit Agreement (for purposes of this item 7 treating all such securities as if they were Shares) but which securities are instead distributed by the Depositary to Owners, (8) in addition to any fee charged under item 6, fees for depositary services, which (i) may be assessed against Owners from time to time, (ii) in the aggregate shall not exceed $.10 per American Depositary Share during any calendar year and (iii) shall be payable as provided in item 9 below, and (9) any other charges payable by the Depositary or the Custodian, any of the Depositary's or Custodian's agents or the agents of the Depositary's or Custodian's agents, in connection with the servicing of Shares or other Deposited Securities (which charges shall be assessed against Owners as of the date or dates set by the Depositary in accordance with Section 4.6 of the Deposit Agreement and shall be payable at the sole discretion of the Depositary by billing those Owners for those charges or by deducting those charges from one or more cash dividends or other cash distributions).

The Depositary may collect any of its fees by deduction from any cash distribution payable, or by selling a portion of any securities to be distributed, to Owners that are obligated to pay those fees.

The Depositary may own and deal in any class of securities of the Company and its affiliates and in American Depositary Shares and may use brokers, dealers, foreign currency dealers or other service peroviders that are owned by or affiliated with the Depositary and that may earn or share fees, spreads or commissions.

From time to time, the Depositary may make payments to the Company to reimburse the Company for costs and expenses generally arising out of establishment and maintenance of the American Depositary Shares program, waive fees and expenses for services provided by the Depositary or share revenue from the fees collected from Owners or Holders. In performing its duties under the Deposit Agreement, the Depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the Depositary and that may earn or share fees, spreads or commissions.

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8. DISCLOSURE OF INTERESTS.

When required in order to comply with applicable laws and regulations or the articles of incorporation or similar document of the Company, the Company may from time to time request each Owner and Holder to provide to the Depositary information relating to: (a) the capacity in which it holds American Depositary Shares, (b) the identity of any Holders or other persons or entities then or previously interested in those American Depositary Shares and the nature of those interests and (c) any other matter where disclosure of such matter is required for that compliance. Each Owner and Holder agrees to provide all information known to it in response to a request made pursuant to Section 3.4 of the Deposit Agreement. Each Holder consents to the disclosure by the Depositary and the Owner or other Holder through which it holds American Depositary Shares, directly or indirectly, of all information responsive to a request made pursuant to that Section relating to that Holder that is known to that Owner or other Holder.

9. TITLE TO AMERICAN DEPOSITARY SHARES.

It is a condition of the American Depositary Shares, and every successive Owner and Holder of American Depositary Shares, by accepting or holding the same, consents and agrees that American Depositary Shares evidenced by a Receipt, when the Receipt is properly endorsed or accompanied by proper instruments of transfer, shall be transferable as certificated registered securities under the laws of the State of New York, and that American Depositary Shares not evidenced by Receipts shall be transferable as uncertificated registered securities under the laws of the State of New York. The Depositary, notwithstanding any notice to the contrary, may treat the Owner of American Depositary Shares as the absolute owner thereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in the Deposit Agreement and for all other purposes, and neither the Depositary nor the Company shall have any obligation or be subject to any liability under the Deposit Agreement to any Holder of American Depositary Shares, but only to the Owner.

10. VALIDITY OF RECEIPT.

This Receipt shall not be entitled to any benefits under the Deposit Agreement or be valid or obligatory for any purpose, unless this Receipt shall have been (i) executed by the Depositary by the manual signature of a duly authorized officer of the Depositary or (ii) executed by the facsimile signature of a duly authorized officer of the Depositary and countersigned by the manual signature of a duly authorized signatory of the Depositary or the Registrar or a co-registrar.

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11. REPORTS; INSPECTION OF TRANSFER BOOKS.

The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and, accordingly, files certain reports with the Securities and Exchange Commission. Those reports will be available for inspection and copying through the Commission's EDGAR system or at public reference facilities maintained by the Commission in Washington, D.C.

The Depositary will make available for inspection by Owners at its Office any reports, notices and other communications, including any proxy soliciting material, received from the Company which are both (a) received by the Depositary as the holder of the Deposited Securities and (b) made generally available to the holders of those Deposited Securities by the Company. The Company shall furnish reports and communications, including any proxy soliciting material to which Section 4.9 of the Deposit Agreement applies, to the Depositary in English, to the extent such materials are required to be translated into English pursuant to any regulations of the Commission.

The Depositary will maintain a register of American Depositary Shares and transfers of American Depositary Shares, which shall be open for inspection by the Owners at the Depositary's Office during regular business hours, but only for the purpose of communicating with Owners regarding the business of the Company or a matter related to the Deposit Agreement or the American Depositary Shares.

12. DIVIDENDS AND DISTRIBUTIONS.

Whenever the Depositary receives any cash dividend or other cash distribution on Deposited Securities, the Depositary will, if at the time of receipt thereof any amounts received in a foreign currency can in the judgment of the Depositary be converted on a reasonable basis into Dollars transferable to the United States, and subject to the Deposit Agreement, convert that dividend or other cash distribution into Dollars and distribute the amount thus received (net of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.9 of the Deposit Agreement) to the Owners entitled thereto; <u>provided</u>, <u>however</u>, that if the Custodian or the Depositary is required to withhold and does withhold from that cash dividend or other cash distribution an amount on account of taxes or other governmental charges, the amount distributed to the Owners of the American Depositary Shares representing those Deposited Securities shall be reduced accordingly.

If a cash distribution would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that cash distribution; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) sell all Deposited Securities other than the subject cash distribution and add any net cash proceeds of that sale to the cash distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that cash distribution.

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If the Depositary acts under this paragraph, that action shall also be a <u>Termination Option</u> <u>Event</u>.

Subject to the provisions of Section 4.11 and 5.9 of the Deposit Agreement, whenever the Depositary receives any distribution other than a distribution described in Section 4.1, 4.3 or 4.4 of the Deposit Agreement on Deposited Securities (but not in exchange for or in conversion or in lieu of Deposited Securities), the Depositary will cause the securities or property received by it to be distributed to the Owners entitled thereto, after deduction or upon payment of any fees and expenses of the Depositary and any taxes or other governmental charges, in any manner that the Depositary may reasonably deem equitable and practicable for accomplishing that distribution (which may be a distribution of depositary shares representing the securities received); <u>provided</u>, <u>however</u>, that if in the opinion of the Depositary, after consultation with the Company to the extent practicable, such distribution cannot be made proportionately among the Owners entitled thereto, or if for any other reason the Depositary deems such distribution not to be lawful and feasible, the Depositary, after consultation with the Company to the extent practicable, may adopt such other method as it may reasonably deem equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and distribution of the net proceeds of any such sale (net of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.9 of the Deposit Agreement) to the Owners entitled thereto all in the manner and subject to the conditions set forth in Section 4.1 of the Deposit Agreement. The Depositary may withhold any distribution of securities under Section 4.2 of the Deposit Agreement if it has not received reasonably satisfactory assurances from the Company that the distribution does not require registration under the Securities Act of 1933. The Depositary may sell, by public or private sale, an amount of securities or other property it would otherwise distribute under this Article that is sufficient to pay its fees and expenses in respect of that distribution.

If a distribution to be made under Section 4.2 of the Deposit Agreement would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may, after consultation with the Company to the extent practicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that distribution; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) sell all Deposited Securities other than the subject distribution and add any net cash proceeds of that sale to the distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that distribution.

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If the Depositary acts under this paragraph, that action shall also be a <u>Termination Option</u> <u>Event</u>.

Whenever the Depositary receives any distribution consisting of a dividend in, or free distribution of, Shares, the Depositary shall, unless otherwise agreed between the Company and the Depositary, deliver to the Owners entitled thereto, an aggregate number of American Depositary Shares representing the amount of Shares received as that dividend or free distribution, subject to the terms and conditions of the Deposit Agreement with respect to the deposit of Shares and issuance of American Depositary Shares, including the withholding of any tax or other governmental charge as provided in Section 4.11 of the Deposit Agreement and the payment of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.9 of the Deposit Agreement (and the Depositary may sell, by public or private sale, an amount of Shares received (or American Depositary Shares representing those Shares) sufficient to pay its fees and expenses in respect of that distribution). In lieu of delivering fractional American Depositary Shares, the Depositary may sell the amount of Shares represented by the aggregate of those fractions (or American Depositary Shares representing those Shares) and distribute the net proceeds, all in the manner and subject to the conditions described in Section 4.1 of the Deposit Agreement. If and to the extent that additional American Depositary Shares are not delivered and Shares or American Depositary Shares are not sold, each American Depositary Share shall thenceforth also represent the additional Shares distributed on the Deposited Securities represented thereby.

If the Company declares a distribution in which holders of Deposited Securities have a right to elect whether to receive cash, Shares or other securities or a combination of those things, or a right to elect to have a distribution sold on their behalf, the Depositary may, after consultation with the Company, make that right of election available for exercise by Owners in any manner the Depositary considers to be lawful and practical. As a condition of making a distribution election right available to Owners, the Depositary may require reasonably satisfactory assurances from the Company that doing so does not require registration of any securities under the Securities Act of 1933 that has not been effected.

If the Depositary determines that any distribution received or to be made by the Depositary (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charge that the Depositary is obligated to withhold, the Depositary may sell, by public or private sale, all or a portion of the distributed property (including Shares and rights to subscribe therefor) in the amounts and manner the Depositary deems necessary and practicable to pay those taxes or charges, and the Depositary shall distribute the net proceeds of that sale, after deduction of those taxes or charges, to the Owners entitled thereto in proportion to the number of American Depositary Shares held by them respectively.

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Each Owner and Holder agrees to indemnify the Company, the Depositary, the Custodian and their respective directors, employees, agents and affiliates for, and hold each of them harmless against, any claim by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced withholding at source or other tax benefit received by it. The obligations of Owners and Holders under the preceding sentence shall survive any transfer of American Depositary Shares or surrender of American Depositary Shares and withdrawal of Deposited Securities and the termination of the Deposit Agreement. Services for Owners and Holders that may permit them to obtain reduced rates of tax withholding at source or reclaim excess tax withheld, and the fees and costs associated with using services of that kind, are not provided under, and are outside the scope of, the Deposit Agreement.

13. RIGHTS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If rights are granted to the Depositary in respect of deposited Shares to purchase additional Shares or other securities, the Company and the Depositary shall endeavor to consult as to the actions, if any, the Depositary should take in connection with that grant of rights. The Depositary shall, to the extent deemed by it to be lawful and practical (i) if requested in writing by the Company, grant to all or certain Owners rights to instruct the Depositary to purchase the securities to which the rights relate and deliver those securities or American Depositary Shares representing those securities to Owners, (ii) if requested in writing by the Company, deliver the rights to or to the order of certain Owners, or (iii) sell the rights to the extent practicable and distribute the net proceeds of that sale to Owners entitled to those proceeds. To the extent rights are not exercised, delivered or disposed of under (i), (ii) or (iii) above, the Depositary shall permit the rights to lapse unexercised.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Depositary will act under (a)(i) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon instruction from an applicable Owner in the form the Depositary specified and upon payment by that Owner to the Depositary of an amount equal to the purchase price of the securities to be received upon the exercise of the rights, the Depositary shall, on behalf of that Owner, exercise the rights and purchase the securities. The purchased securities shall be delivered to, or as instructed by, the Depositary. The Depositary shall (i) deposit the purchased Shares under the Deposit Agreement and deliver American Depositary Shares representing those Shares to that Owner or (ii) deliver or cause the purchased Shares or other securities to be delivered to or to the order of that Owner. The Depositary will not act under (a)(i) above unless the offer and sale of the securities to which the rights relate are registered under the Securities Act of 1933 or the Depositary has received an opinion of United States counsel that is reasonably satisfactory to it to the effect that those securities may be sold and delivered to the applicable Owners without registration under the Securities Act of 1933. For the avoidance of doubt, nothing in the Deposit Agreement shall create any obligation on the part of the Company to file a registration statement with respect to rights or the underlying securities or to endeavor to have such a registration statement declared effective.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Depositary will act under (a)(ii) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon (i) the request of an applicable Owner to deliver the rights allocable to the American Depositary Shares of that Owner to an account specified by that Owner to which the rights can be delivered and (ii) receipt of such documents as the Company and the Depositary agreed to require to comply with applicable law, the Depositary will deliver those rights as requested by that Owner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the Depositary will act under (a)(iii) above, the Depositary will use reasonable efforts to sell the rights in proportion to the number of American Depositary Shares held by the applicable Owners and pay the net proceeds to the Owners otherwise entitled to the rights that were sold, upon an averaged or other practical basis without regard to any distinctions among such Owners because of exchange restrictions or the date of delivery of any American Depositary Shares or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Payment or deduction of the fees of the Depositary as provided in Section

5.9 of the Deposit Agreement and payment or deduction of the expenses of the Depositary and any applicable taxes or other governmental charges shall be conditions of any delivery of securities or payment of cash proceeds under Section 4.4 of the Deposit Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Depositary shall not be responsible for any failure to determine that it may be lawful or feasible to make rights available to or exercise rights on behalf of Owners in general or any Owner in particular, or to sell rights.

14. CONVERSION OF FOREIGN CURRENCY.

Whenever the Depositary or the Custodian receives foreign currency, by way of dividends or other distributions or the net proceeds from the sale of securities, property or rights, and if at the time of the receipt thereof the foreign currency so received can in the judgment of the Depositary be converted on a reasonable basis into Dollars and the resulting Dollars transferred to the United States, the Depositary or one of its agents or affiliates or the Custodian shall convert or cause to be converted by sale or in any other manner that it may determine that foreign currency into Dollars, and those Dollars shall be distributed as promptly as reasonably practicable to the Owners entitled thereto. A cash distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Owners based on exchange restrictions, the date of delivery of any American Depositary Shares or otherwise and shall be net of any expenses of conversion into Dollars incurred by the Depositary as provided in Section 5.9 of the Deposit Agreement.

If a conversion of foreign currency or the repatriation or distribution of Dollars can be effected only with the approval or license of any government or agency thereof, the Depositary may, but will not be required to, file an application for that approval or license.

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If the Depositary determines that in its judgment any foreign currency received by the Depositary or the Custodian is not convertible on a reasonable basis into Dollars transferable to the United States, or if any approval or license of any government or agency thereof that is required for such conversion is not filed or sought by the Depositary or is not obtained within a reasonable period as determined by the Depositary, the Depositary may distribute the foreign currency received by the Depositary to, or in its discretion may hold such foreign currency uninvested and without liability for interest thereon for the respective accounts of, the Owners entitled to receive the same.

If any conversion of foreign currency, in whole or in part, cannot be effected for distribution to some of the Owners entitled thereto, the Depositary may in its discretion make that conversion and distribution in Dollars to the extent practicable and permissible to the Owners entitled thereto and may distribute the balance of the foreign currency received by the Depositary to, or hold that balance uninvested and without liability for interest thereon for the account of, the Owners entitled thereto.

The Depositary may convert currency itself or through any of its affiliates, or the Custodian or the Company may convert currency and pay Dollars to the Depositary. Where the Depositary converts currency itself or through any of its affiliates, the Depositary acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the Deposit Agreement and the rate that the Depositary or its affiliate receives when buying or selling foreign currency for its own account. The Depositary makes no representation that the exchange rate used or obtained by it or its affiliate in any currency conversion under the Deposit Agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to Owners, subject to the Depositary's obligations under Section 5.3 of that Agreement. The methodology used to determine exchange rates used in currency conversions made by the Depositary is available upon request. Where the Custodian converts currency, the Custodian has no obligation to obtain the most favorable rate that could be obtained at the time or to ensure that the method by which that rate will be determined will be the most favorable to Owners, and the Depositary makes no representation that the rate is the most favorable rate and will not be liable for any direct or indirect losses associated with the rate. In certain instances, the Depositary may receive dividends or other distributions from the Company in Dollars that represent the proceeds of a conversion of foreign currency or translation from foreign currency at a rate that was obtained or determined by or on behalf of the Company and, in such cases, the Depositary will not engage in, or be responsible for, any foreign currency transactions and neither it nor the Company makes any representation that the rate obtained or determined by the Company is the most favorable rate and neither it nor the Company will be liable for any direct or indirect losses associated with the rate.

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15. RECORD DATES.

Whenever a cash dividend, cash distribution or any other distribution is made on Deposited Securities or rights to purchase Shares or other securities are issued with respect to Deposited Securities (which rights will be delivered to or exercised or sold on behalf of Owners in accordance with Section 4.4 of the Deposit Agreement) or the Depositary receives notice that a distribution or issuance of that kind will be made, or whenever the Depositary receives notice that a meeting of holders of Shares will be held in respect of which the Company has requested the Depositary to send a notice under Section 4.7 of the Deposit Agreement, or whenever the Depositary will assess a fee or charge against the Owners, or whenever the Depositary causes a change in the number of Shares that are represented by each American Depositary Share, or whenever the Depositary otherwise finds it necessary or convenient, the Depositary shall fix a record date, which shall be the same as, or as near as practicable to, any corresponding record date set by the Company with respect to Shares, (a) for the determination of the Owners (i) who shall be entitled to receive the benefit of that dividend or other distribution or those rights, (ii) who shall be entitled to give instructions for the exercise of voting rights at that meeting, (iii) who shall be responsible for that fee or charge or (iv) for any other purpose for which the record date was set, or (b) on or after which each American Depositary Share will represent the changed number of Shares. Subject to the provisions of Sections 4.1 through 4.5 of the Deposit Agreement and to the other terms and conditions of the Deposit Agreement, the Owners on a record date fixed by the Depositary shall be entitled to receive the amount distributable by the Depositary with respect to that dividend or other distribution or those rights or the net proceeds of sale thereof in proportion to the number of American Depositary Shares held by them respectively, to give voting instructions or to act in respect of the other matter for which that record date was fixed, or be responsible for that fee or charge, as the case may be.

16. VOTING OF DEPOSITED SHARES.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Upon receipt of notice of any meeting of holders of Shares at which holders of Shares will be entitled to vote, if requested in writing by the Company, the Depositary shall, as soon as practicable thereafter, Disseminate to the Owners a notice, the form of which shall be in the sole discretion of the Depositary, that shall contain (i) the information contained in the notice of meeting received by the Depositary, (ii) a statement that the Owners as of the close of business on a specified record date will be entitled, subject to any applicable provision of Japanese law and of the articles of incorporation or similar documents of the Company, to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Shares represented by their respective American Depositary Shares, (iii) a statement as to the manner in which those instructions may be given, including an express indication that instructions may be deemed given in accordance with the last sentence of paragraph (b) below, if no instruction is received, to the Depositary to give a discretionary proxy to a person designated by the Company and (iv) the last date on which the Depositary will accept instructions (the "<u>Instruction Cutoff Date</u>").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon the written request of an Owner of American Depositary Shares, as of the date of the request or, if a record date was specified by the Depositary, as of that record date, received on or before any Instruction Cutoff Date established by the Depositary, the Depositary may, and if the Depositary sent a notice under the preceding paragraph shall, endeavor, in so far as practicable, to vote or cause to be voted the amount of deposited Shares represented by those American Depositary Shares in accordance with the instructions set forth in that request. The Depositary shall not vote or attempt to exercise the right to vote that attaches to the deposited Shares other than in accordance with instructions given by Owners and received by the Depositary or as provided in the following sentence. If (i) the Company instructed the Depositary to Disseminate a notice under paragraph (a) above and complied with paragraph (d) below, (ii) no instructions are received by the Depositary from an Owner with respect to a matter and an amount of American Depositary Shares of that Owner on or before the Instruction Cutoff Date and (iii) the Depositary has received from the Company, by the business day following the Instruction Cutoff Date, a written confirmation that, as of the Instruction Cutoff Date, (x) the Company wishes a proxy to be given under this sentence, (y) the Company reasonably does not know of any substantial opposition to the matter and (z) the matter is not materially adverse to the interests of shareholders, then, the Depositary shall deem that Owner to have instructed the Depositary to give a discretionary proxy to a person designated by the Company with respect to that matter and the amount of deposited Shares represented by that amount of American Depositary Shares and the Depositary shall give a discretionary proxy to a person designated by the Company to vote that amount of deposited Shares as to that matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) There can be no assurance that Owners generally or any Owner in particular will receive the notice described in paragraph (a) above in time to enable Owners to give instructions to the Depositary prior to the Instruction Cutoff Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In order to give Owners a reasonable opportunity to instruct the Depositary as to the exercise of voting rights relating to Shares, if the Company will request the Depositary to Disseminate a notice under paragraph (a) above, the Company shall give the Depositary notice of the meeting, details concerning the matters to be voted upon and copies of materials to be made available to holders of Shares in connection with the meeting not less than 30 days prior to the meeting date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything in Section 4.7 of the Deposit Agreement to the contrary, the Depositary and the Company may modify, amend or adopt additional procedures relating to voting of Deposited Securities from time to time as they determine may be necessary or appropriate to comply with applicable law or regulation.

17. TENDER AND EXCHANGE OFFERS; REDEMPTION, REPLACEMENT OR CANCELLATION OF DEPOSITED SECURITIES.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Depositary shall not tender any Deposited Securities in response to any voluntary cash tender offer, exchange offer or similar offer made to holders of Deposited Securities, except when instructed in writing to do so by an Owner surrendering American Depositary Shares and subject to any conditions or procedures the Depositary may require.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Depositary receives a written notice that Deposited Securities have been redeemed for cash or otherwise purchased for cash in a transaction that is mandatory and binding on the Depositary as a holder of those Deposited Securities (a "<u>Redemption</u>"), the Depositary, at the expense of the Company (unless otherwise agreed in writing between the Company and the Depositary), shall (i) if required, surrender Deposited Securities that have been redeemed to the issuer of those securities or its agent on the redemption date, (ii) Disseminate a notice to Owners (A) notifying them of that Redemption, (B) calling for surrender of a corresponding number of American Depositary Shares and (C) notifying them that the called American Depositary Shares have been converted into a right only to receive the money received by the Depositary upon that Redemption and those net proceeds shall be the Deposited Securities to which Owners of those converted American Depositary Shares shall be entitled upon surrenders of those American Depositary Shares in accordance with Section 2.5 or 6.2 of the Deposit Agreement and (iii) distribute the money received upon that Redemption to the Owners entitled to it upon surrender by them of called American Depositary Shares in accordance with Section 2.5 of that Agreement (and, for the avoidance of doubt, Owners shall not be entitled to receive that money under Section 4.1 of that Agreement). If the Redemption affects less than all the Deposited Securities, the Depositary shall call for surrender a corresponding portion of the outstanding American Depositary Shares and only those American Depositary Shares will automatically be converted into a right to receive the net proceeds of the Redemption. The Depositary shall allocate the American Depositary Shares converted under the preceding sentence among the Owners pro-rata to their respective holdings of American Depositary Shares immediately prior to the Redemption, <u>except that</u> the allocations may be adjusted so that no fraction of a converted American Depositary Share is allocated to any Owner. A Redemption of all or substantially all of the Deposited Securities shall be a <u>Termination</u> <u>Option Event</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Depositary is notified of or there occurs any change in nominal value or any subdivision, consolidation, conversion, combination or any other reclassification of the Deposited Securities or any recapitalization, reorganization, sale of assets substantially as an entirety, merger or consolidation affecting the issuer of the Deposited Securities or to which it is a party that is mandatory and binding on the Depositary as a holder of Deposited Securities and, as a result, securities or other property have been or will be delivered in exchange, conversion, replacement or in lieu of, Deposited Securities (a "<u>Replacement</u>"), the Depositary shall, if required, surrender the old Deposited Securities affected by that Replacement of Shares and hold, as new Deposited Securities under the Deposit Agreement, the new securities or other property delivered to it in that Replacement. <u>However</u>, the Depositary may elect to sell those new Deposited Securities if in the opinion of the Depositary, after consultation with the Company to the extent practicable, it is not lawful or not practical for it to hold those new Deposited Securities under the Deposit Agreement because those new Deposited Securities may not be distributed to Owners without registration under the Securities Act of 1933 or for any other reason, at public or private sale, at such places and on such terms as it deems proper and proceed as if those new Deposited Securities had been Redeemed under paragraph (b) above. A Replacement shall be a <u>Termination Option Event</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the case of a Replacement where the new Deposited Securities will continue to be held under the Deposit Agreement, the Depositary, after consultation with the Company to the extent practicable, may call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing the new Deposited Securities and the number of those new Deposited Securities represented by each American Depositary Share. If the number of Shares represented by each American Depositary Share decreases as a result of a Replacement, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If there are no Deposited Securities with respect to American Depositary Shares, including if the Deposited Securities are cancelled, or the Deposited Securities with respect to American Depositary Shares have become apparently worthless, the Depositary may call for surrender of those American Depositary Shares or may cancel those American Depositary Shares, upon notice to Owners, and that condition shall be a <u>Termination</u> <u>Option Event</u>.

18. LIABILITY OF THE COMPANY AND DEPOSITARY.

Neither the Depositary nor the Company nor any of their respective directors, employees, agents or affiliates shall incur any liability to any Owner or Holder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if by reason of (A) any provision of any present or future law or regulation or other act or action of the government of the United States, any State of the United States or any other state or jurisdiction, or of any governmental or regulatory authority or stock exchange; (B) (in the case of the Depositary only) any provision, present or future, of the articles of incorporation or similar document of the Company, or by reason of any provision of any securities issued or distributed by the Company, or any offering or distribution thereof; or (C) any event or circumstance, whether natural or caused by a person or persons, that is beyond the ability of the Depositary or the Company, as the case may be, to prevent or counteract by reasonable care or effort (including, but not limited to earthquakes, floods, severe storms, fires, explosions, war, terrorism, civil unrest, labor disputes, criminal acts or outbreaks of infectious disease; interruptions or malfunctions of utility services, Internet or other communications lines or systems; unauthorized access to or attacks on computer systems or websites; or other failures or malfunctions of computer hardware or software or other systems or equipment), the Depositary or the Company is, directly or indirectly, prevented from, forbidden to or delayed in, or could be subject to any civil or criminal penalty on account of doing or performing and therefore does not do or perform, any act or thing that, by the terms of the Deposit Agreement or the Deposited Securities, it is provided shall be done or performed;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) for any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement (including any determination by the Depositary to take, or not take, any action that the Deposit Agreement provides the Depositary may take);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) for the inability of any Owner or Holder to benefit from any distribution, offering, right or other benefit that is made available to holders of Deposited Securities but is not, under the terms of the Deposit Agreement, made available to Owners or Holders; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) for any special, consequential, indirect or punitive damages for any breach of the terms of the Deposit Agreement.

Where, by the terms of a distribution to which Section 4.1, 4.2 or 4.3 of the Deposit Agreement applies, or an offering to which Section 4.4 of that Agreement applies, or for any other reason, that distribution or offering may not be made available to Owners, and the Depositary may not dispose of that distribution or offering on behalf of Owners and make the net proceeds available to Owners, then the Depositary shall not make that distribution or offering available to Owners, and shall allow any rights, if applicable, to lapse.

Neither the Company nor the Depositary assumes any obligation or shall be subject to any liability under the Deposit Agreement to Owners or Holders, except that they agree to perform their obligations specifically set forth in the Deposit Agreement without negligence or bad faith. The Depositary shall not be a fiduciary or have any fiduciary duty to Owners or Holders. The Depositary shall not be subject to any liability with respect to the validity or worth of the Deposited Securities. Neither the Depositary nor the Company shall be under any obligation to appear in, prosecute or defend any action, suit, or other proceeding in respect of any Deposited Securities or in respect of the American Depositary Shares, on behalf of any Owner or Holder or other person. Neither the Depositary nor the Company shall be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Owner or Holder, or any other person believed by it in good faith to be competent to give such advice or information. Each of the Depositary and the Company may rely, and shall be protected in relying upon, any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with a matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises, the Depositary performed its obligations without negligence or bad faith while it acted as Depositary. Neither the Depositary nor the Company shall be liable for the acts or omissions of any securities depository, clearing agency or settlement system in connection with or arising out of book-entry settlement of American Depositary Shares or Deposited Securities or otherwise. In the absence of bad faith on its part, the Depositary shall not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities or for the manner in which any such vote is cast or the effect of any such vote. The Depositary shall have no duty to make any determination or provide any information as to the tax status of the Company. Neither the Depositary nor the Company shall have any liability for any tax consequences that may be incurred by Owners or Holders as a result of owning or holding American Depositary Shares. Neither the Depositary nor the Company shall be liable for the inability or failure of an Owner or Holder to obtain the benefit of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit.

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19. RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT OF SUCCESSOR CUSTODIAN.

The Depositary may at any time resign as Depositary under the Deposit Agreement by written notice of its election so to do delivered to the Company, to become effective upon the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement. The Depositary may at any time be removed by the Company by 90 days' prior written notice of that removal, to become effective upon the later of (i) the 90th day after delivery of the notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of its appointment as provided in the Deposit Agreement. The Depositary in its discretion may at any time appoint a substitute or additional custodian or custodians.

20. AMENDMENT.

The form of the Receipts and any provisions of the Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary without the consent of Owners or Holders in any respect which they may deem necessary or desirable. Any amendment that would impose or increase any fees or charges (other than taxes and other governmental charges, registration fees, cable (including SWIFT) or facsimile transmission costs, delivery costs or other such expenses), or that would otherwise prejudice any substantial existing right of Owners, shall, however, not become effective as to outstanding American Depositary Shares until the expiration of 30 days after notice of that amendment has been Disseminated to the Owners of outstanding American Depositary Shares. Every Owner and Holder, at the time any amendment so becomes effective, shall be deemed, by continuing to hold American Depositary Shares or any interest therein, to consent and agree to that amendment and to be bound by the Deposit Agreement as amended thereby. Upon the effectiveness of an amendment to the form of Receipt, including a change in the number of Shares represented by each American Depositary Share, the Depositary may call for surrender of Receipts to be replaced with new Receipts in the amended form or call for surrender of American Depositary Shares to effect that change of ratio. In no event shall any amendment impair the right of the Owner to surrender American Depositary Shares and receive delivery of the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.

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21. TERMINATION OF DEPOSIT AGREEMENT.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company may initiate termination of the Deposit Agreement by notice to the Depositary. The Depositary may initiate termination of the Deposit Agreement if (i) at any time 60 days shall have expired after the Depositary delivered to the Company a written resignation notice and a successor depositary has not been appointed and accepted its appointment as provided in Section 5.4 of that Agreement or (ii) a Termination Option Event has occurred. If termination of the Deposit Agreement is initiated, the Depositary shall Disseminate a notice of termination to the Owners of all American Depositary Shares then outstanding setting a date for termination (the "<u>Termination Date</u>"), which shall be at least 90 days after the date of that notice, and the Deposit Agreement shall terminate on that Termination Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) After the Termination Date, the Company shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary under Sections 5.8 and 5.9 of that Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) At any time after the Termination Date, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it hereunder, unsegregated and without liability for interest, for the pro rata benefit of the Owners of American Depositary Shares that remain outstanding, and those Owners will be general creditors of the Depositary with respect to those net proceeds and that other cash. After making that sale, the Depositary shall be discharged from all obligations under the Deposit Agreement, except (i) to account for the net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of such American Depositary Shares in accordance with the terms and conditions of the Deposit Agreement and any applicable taxes or governmental charges), (ii) for its obligations under Section 5.8 of that Agreement and (iii) to act as provided in paragraph (d) below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) After the Termination Date, if any American Depositary Shares remain outstanding, the Depositary shall continue to receive dividends and other distributions pertaining to Deposited Securities (that have not been sold), may sell rights and other property as provided in the Deposit Agreement and shall deliver Deposited Securities (or sale proceeds) upon surrender of American Depositary Shares (after payment or upon deduction, in each case, of the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of those American Depositary Shares in accordance with the terms and conditions of the Deposit Agreement and any applicable taxes or governmental charges). After the Termination Date, the Depositary shall not accept deposits of Shares or deliver American Depositary Shares. After the Termination Date, (i) the Depositary may refuse to accept surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities (that have not been sold) or reverse previously accepted surrenders of that kind that have not settled if in its judgment the requested withdrawal would interfere with its efforts to sell the Deposited Securities, (ii) the Depositary will not be required to deliver cash proceeds of the sale of Deposited Securities until all Deposited Securities have been sold and (iii) the Depositary may discontinue the registration of transfers of American Depositary Shares and suspend the distribution of dividends and other distributions on Deposited Securities to the Owners and need not give any further notices or perform any further acts under the Deposit Agreement except as provided in Section 6.2 of that Agreement.

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22. DTC DIRECT REGISTRATION SYSTEM AND PROFILE MODIFICATION SYSTEM.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding the provisions of Section 2.4 of the Deposit Agreement, the parties acknowledge that DTC's Direct Registration System ("<u>DRS</u>") and Profile Modification System ("<u>Profile</u>") apply to the American Depositary Shares upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC that facilitates interchange between registered holding of uncertificated securities and holding of security entitlements in those securities through DTC and a DTC participant. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of an Owner of American Depositary Shares, to direct the Depositary to register a transfer of those American Depositary Shares to DTC or its nominee and to deliver those American Depositary Shares to the DTC account of that DTC participant without receipt by the Depositary of prior authorization from the Owner to register that transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In connection with DRS/Profile, the parties acknowledge that the Depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an Owner in requesting registration of transfer and delivery as described in paragraph (a) above has the actual authority to act on behalf of that Owner (notwithstanding any requirements under the Uniform Commercial Code). For the avoidance of doubt, the provisions of Sections 5.3 and 5.8 of the Deposit Agreement apply to the matters arising from the use of the DRS/Profile. The parties agree that the Depositary's reliance on and compliance with instructions received by the Depositary through the DRS/Profile system and otherwise in accordance with the Deposit Agreement, shall not constitute negligence or bad faith on the part of the Depositary.

23. APPOINTMENT OF AGENT FOR SERVICE OF PROCESS; SUBMISSION TO JURISDICTION; JURY TRIAL WAIVER; WAIVER OF IMMUNITIES.

The Company has (i) appointed Cogency Global Inc., with an address as of the date of the Deposit Agreement at 122 East 42nd Street, 18th Floor, New York, NY 10168, as the Company's authorized agent in the United States upon which process may be served in any suit or proceeding arising out of or relating to the Shares or Deposited Securities, the American Depositary Shares, the Receipts or the Deposit Agreement, (ii) consented and submitted to the jurisdiction of any state or federal court in the State of New York in which any such suit or proceeding may be instituted, and (iii) agreed that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding.

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EACH PARTY TO THE DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH OWNER AND HOLDER) THEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE COMPANY AND/OR THE DEPOSITARY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE AMERICAN DEPOSITARY SHARES OR THE RECEIPTS, THE DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF, INCLUDING, WITHOUT LIMITATION, ANY QUESTION REGARDING EXISTENCE, VALIDITY OR TERMINATION (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) AND ANY CLAIM BASED ON U.S. FEDERAL SECURITIES LAWS.

No disclaimer of liability under the United States federal securities laws or the rules and regulations thereunder is intended by any provision of the Deposit Agreement, inasmuch as no person is able to effectively waive the duty of any other person to comply with its obligations under those laws, rules and regulations.

To the extent that the Company or any of its properties, assets or revenues may have or hereafter become entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any duty of performance under the Deposit Agreement, claim, legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with the Shares or Deposited Securities, the American Depositary Shares, the Receipts or the Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any such immunity and consents to such relief and enforcement.

## Exhibit 5.1

**Exhibit 5.1** 

March 2, 2026

PayPay Corporation

Yotsuya Tower, 1-6-1 Yotsuya

Shinjuku-ku, Tokyo 160-0004

Japan

Dear Sirs and Mesdames:

We have acted as legal counsel to PayPay Corporation (the "Company"), a joint-stock corporation with limited liability organized under Japanese law (*kabushiki kaisha*), with respect to the laws of Japan in connection with the preparation and filing by the Company with the United States Securities and Exchange Commission (the "SEC"), under the United States Securities Act of 1933, as amended (the "Securities Act"), of a Registration Statement on Form F-1 (File No. 333-293410) (including all exhibits thereto and as amended from time to time, the "Registration Statement"), relating to the offering and sale in the United States of America (the "Offering") of certain American Depositary Shares (the "ADSs"), representing common stock of the Company (the "Common Shares") newly issued by the Company (including Common Shares issuable upon exercise by the underwriters of their over-allotment option) (together, the "Primary Shares") and certain Common Shares held by SVF II Piranha (DE) LLC (the "Selling Shareholder") (the "Secondary Shares").

For the purposes of rendering this opinion, we have examined the following documents:

(a) an official certificate of all matters recorded in the commercial register of the Company dated February
February 24, 2026;

(b) a copy of the Articles of Incorporation of the Company effective as of February 13, 2026;

(c) a copy of the Regulations of the Board of Directors of the Company effective as of February 13, 2026;

(d) a copy of the Share Handling Regulations of the Company effective as of February 13, 2026;

(e) copies of the minutes of the meetings of the Board of Directors of the Company dated February 13, 2026
and March 2, 2026 respectively;

(f) a copy of the minutes of the extraordinary general meeting of shareholders held on March 2, 2026;

(g) a copy of the Shareholder Register (the "Shareholder Register") of the Company effective as of
March 2, 2026;

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(h) a form of the Deposit Agreement (the "Deposit Agreement") to be executed between the Company,
the Bank of New York Mellon, as depositary, and holders from time to time of the ADSs;

(i) a form of the Underwriting Agreement (the "Underwriting Agreement") to be executed between the
Company, the Selling Shareholder and the underwriters named therein (the "Underwriters"); and

(j) a copy of the Registration Statement and all exhibits thereto.

We have also examined such certificates and other records and documents of the Company and such other matters, documents and records, and considered such questions of the laws of Japan, as we have deemed necessary or appropriate for the purpose of furnishing this opinion.

Based upon the above examination and subject to the further assumptions and qualifications set forth below, we are of the opinion that insofar as the laws of Japan, in effect as of the date hereof, are concerned, (i) the Primary Shares to be newly issued and delivered by the Company as contemplated in the Underwriting Agreement have been duly and validly authorized, and when the Primary Shares are issued and delivered by the Company in exchange for payment in full to the Company of all considerations required therefor, in the manner and on the terms and conditions described in the Underwriting Agreement and the relevant resolutions of the meeting of the Board of Directors of the Company dated March 2, 2026 and in accordance with the proceedings described therein, all the Primary Shares will be duly and validly issued, fully paid, and non-assessable and (ii) according to the Shareholder Register, the Secondary Shares registered in the Shareholder Register in the name of the Selling Shareholder are duly and validly issued and non-assessable.

The foregoing opinion is subject to the assumptions and qualifications set forth below:

(a) In conducting our examination, we have assumed, without independent verification, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) all signatures or seal impressions on any documents we reviewed are true and genuine;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) all documents submitted to us as originals are authentic and complete;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) all documents submitted to us as copies are accurate and complete and conform to the originals thereof that
are authentic and complete;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) all documents submitted to us as forms will be duly and validly executed by relevant parties in such forms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the factual matters stated in the documents we reviewed are true and correct;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) the parties, other than the Company, executing or delivering such documents were entities validly existing
under the laws of the relevant jurisdictions and had the power, corporate or other, to execute or deliver such documents and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other,
and execution and delivery by such parties (other than the Company) of such documents and the validity and binding effect of the due authorizations of such parties (other than the Company);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) all relevant matters would be found to be legal, valid, and binding under the applicable laws of, or not
otherwise contrary to public policy or any mandatory provisions of applicable laws of, any jurisdiction other than Japan, as presently or hereafter in force or given effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) no agreements, contracts, instruments, or documents which may contradict or be inconsistent with, or affect
the characterization or the nature of, all the documents so examined or the transactions contemplated thereunder have existed or been made between any parties to such documents so examined;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) the ADSs will be offered in the manner and on the terms and conditions described or referred to in the
Registration Statement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) the Company and the Underwriters will have taken all necessary steps to be required after the date hereof
under the applicable laws and regulations.

(b) The above opinion is subject to the qualifications and limitations set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) this opinion is strictly limited to the matters expressly stated herein and may not be read as extending by
implication to any matters or documents not specifically referred to herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) our opinion expressed herein is limited solely to the laws of Japan effective as of the date hereof and is
given on the basis that it will be governed and construed in accordance with the laws of Japan, and we do not purport to express or imply any opinion with respect to the applicability or effect of the laws of any other jurisdiction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) we have made no investigation on any laws of any jurisdiction other than Japan and neither express nor imply
any opinion as to the applicability or effect of any law of any jurisdiction other than Japan. We express no opinion concerning, and assume no responsibility as to, laws or judicial decisions related to any U.S. federal laws, rules or regulations,
including but not limited to any U.S. federal securities laws, rules or regulations, or any U.S. state securities or "blue sky" laws, rules or regulations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) in this opinion and the Registration Statement, Japanese legal terms and concepts that are expressed in the
English language must be construed in accordance with Japanese law. The terms and concepts concerned may not be identical to the terms or concepts described by the equivalent English language as they exist under the laws of other jurisdictions. We
do not render any opinion as to how judges qualified in a jurisdiction other than Japan would interpret Japanese legal concepts or expressions.

We hereby consent to the reference to our firm's name under the caption "LEGAL MATTERS" in the prospectus included in the Registration Statement and the filing of this opinion as Exhibit 5.1 to the Registration Statement. In giving this consent, we do not hereby admit that we are in the category of persons where consent is required under Section 7 of the Securities Act or the rules and regulations of the SEC.

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Yours sincerely,

/s/ Katsumasa Suzuki

Katsumasa Suzuki

Attorney-at-law in Japan,

Partner, Mori Hamada & Matsumoto

## Exhibit 10.76

**Exhibit 10.76** 

**REGISTRATION RIGHTS AGREEMENT** 

by and among

PAYPAY CORPORATION

and

THE STOCKHOLDERS

(as defined herein)

Dated as of [●], 2026

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**CONTENTS** 

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| | |
|:---|:---|
| **Clause** | **Page** |
| Section 1 Definitions and Interpretation | 1 |
| Section 2 Demand Registration | 4 |
| Section 3 Piggyback Registrations | 7 |
| Section 4 Shelf Registration | 8 |
| Section 5 Registration Procedures | 9 |
| Section 6 Expenses | 12 |
| Section 7 Indemnification | 13 |
| Section 8 Assignment of Registration Rights | 16 |
| Section 9 Changes in Common Stock | 16 |
| Section 10 Rule 144 Reporting | 17 |
| Section 11 Miscellaneous | 19 |
| Schedule A Schedule of Stockholders | 23 |

---

i

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**REGISTRATION RIGHTS AGREEMENT** 

**This REGISTRATION RIGHTS AGREEMENT** (this "**Agreement**"), dated as of [•], 2026, is made and entered into by and among:

(1) PayPay Corporation, a joint stock corporation incorporated under the laws of Japan (the
" **Company**") and

(2) each of the holders of shares of Common Stock (as defined below) listed on <u>Schedule A</u> attached hereto
(herein referred to individually as a "  **<u>Stockholder</u>**" and collectively as the "  **<u>Stockholders</u>** ").

Each of the Company and the Stockholders shall be referred to individually as a "**Party**" and collectively as the "**Parties**".

**WHEREAS,** the Company is currently contemplating an initial public offering ("**IPO**") of its common stock or American Depositary Shares representing its common stock; and

**WHEREAS**, the Company desires to grant registration rights to the Stockholders on the terms and conditions set out in this Agreement;

**NOW, THEREFORE**, in consideration of the foregoing premises and of the mutual covenants and obligations hereinafter set forth, the Company hereby covenants and agrees with the other Parties hereto as follows:

**SECTION 1** 

**DEFINITIONS AND INTERPRETATION** 

1.1. As used in this Agreement, and unless the context requires a different meaning, the following terms shall
have the following respective meanings:

"**Affiliate**" means, with respect to any specified Person, any other Person who directly or indirectly Controls, is Controlled by, or is under common Control with such specified Person; *provided* that the Company shall not be deemed an Affiliate of any Holder and no Holder shall be deemed an Affiliate of the Company.

"**Applicable Securities Law**" means (a) with respect to any offering of securities in the United States of America, or any related act or omission within that jurisdiction, the securities laws of the United States, including the Exchange Act and the Securities Act, and any applicable law of any state of the United States of America, and (b) with respect to any offering of securities in any jurisdiction other than the United States of America, or any related act or omission in that jurisdiction, the applicable laws of that jurisdiction.

"**Board**" means the board of directors of the Company.

"**Commission**" means the United States Securities and Exchange Commission or any successor agency.

"**Common Stock**" means any common stock the Company may issue from time to time, as well as American Depositary Shares representing its Common Stock.

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"**Common Stock Equivalents**" means warrants, options and rights exercisable for shares of Common Stock or securities convertible into or exchangeable for Common Stock.

"**Company Notice**" has the meaning ascribed to in <u>Section</u> <u>2.2</u> hereof.

"**Control**" means, as used with respect to any Person, the possession, directly or indirectly, of the power or authority, whether exercised or not, to direct or cause the direction of the business, management and policies of such Person, whether through the ownership of voting securities, as trustee, personal representative, executor, or by contract, credit arrangement or otherwise; *provided* that such power shall conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled to be cast at a meeting of the members or stockholders of such Person, or power to control the composition of a majority of the board of directors of such Person. The terms "**Controlled by**" and "**under common Control with**" shall have correlative meanings.

"**Demand Registration**" has the meaning ascribed to in <u>Section</u> <u>2.1</u> hereof.

"**Derivative Counterparty**" means any broker-dealer, other financial institution or unaffiliated Person that enters into a Derivative Transaction with a Holder.

"**Derivative Transaction**" means any transaction which transfers some or all of the economic risk of ownership of Common Stock, including any forward contract, equity swap, put or call, put or call equivalent position, collar, sale of exchangeable security or any similar transaction.

"**DTC**" means The Depository Trust Company.

"**Eligible Holders**" has the meaning ascribed to in <u>Section</u> <u>2.2</u> hereof.

"**Equity Securities**" means any share of Common Stock in the capital of the Company (including American Depositary Shares representing Common Stock) and any Common Stock Equivalent.

"**Exchange Act**" means the United States Securities Exchange Act of 1934, as amended, and any successor to such statute, and the rules and regulations promulgated thereunder.

"**Family Member**" means, with respect to any Person, any child, grandchild, parent, grandparent, spouse, sibling, mother-in-law, father-in-law, brother-in-law, sister-in-law, daughter-in-law or son-in-law of such Person, and shall include adoptive relationships of the same type.

"**Governmental Authority**" means any nation or government, any state, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, government and any executive official thereof.

"**Holders**" means the Stockholders and their permitted transferees or assignees under Section 8 hereof from time to time.

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"**Person**" means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

"**Registration**" means a registration effected by preparing and filing a Registration Statement and the declaration or ordering of the effectiveness of that Registration Statement, and the terms "Register" and "Registered" have meanings correlative with the foregoing.

"**Requesting Holders**" has the meaning ascribed to in <u>Section</u> <u>2.2</u> hereof.

"**Registration Equivalent**" has the meaning ascribed to in <u>Section</u> <u>6</u> hereof.

"**Registration Expenses**" means expenses so described in <u>Section</u> <u>6</u> hereof.

"**Registrable Securities**" means any shares of Common Stock beneficially owned (including, for the avoidance of doubt, in the form of American Depositary Shares representing such shares and such shares issuable or issued upon the exercise or conversion of Common Stock Equivalents held by such Holders) by the Holders or any of their Affiliates or any permitted assignee of rights under <u>Section</u> <u>8</u> hereof from time to time, whether or not held immediately following the IPO and any securities issued or issuable directly or indirectly with respect to, in exchange for, upon the conversion of or in replacement of such Common Stock, whether by way of a dividend or distribution or stock split or in connection with a combination of stock, recapitalization, merger, consolidation, exchange or other reorganization; *provided* that any such Common Stock shall cease to be Registrable Securities if (i) they have been registered and sold pursuant to an effective Registration Statement, (ii) they have been transferred by a Holder in a transaction in which the Holder's rights under this Agreement are not, or cannot be, assigned, (iii) (A) the Holder may sell all of its Common Stock pursuant to Rule 144 under the Securities Act without limitation thereunder with respect to holding period requirements, volume or manner of sale, during a three-month period without registration and (B) the Holder of such securities does not beneficially own more than 1% of outstanding Common Stock, or (iv) they have ceased to be outstanding.

"**Registration Statement**" means a registration statement prepared on Form F-1, F-3, S-1 or S-3 under the Securities Act (including, without limitation, Rule 415 under the Securities Act), or on any comparable form in connection with registration in a jurisdiction other than the United States.

"**Securities Act**" means the United States Securities Act of 1933, as amended, and any successor to such statute, and the rules and regulations promulgated thereunder.

"**Selling Expenses**" means the underwriting discounts and commissions and stock transfer taxes applicable to the sale of Registrable Securities.

"**Underwritten Public Offering**" means a firm underwritten public offering of the Common Stock (including American Depositary Shares representing Common Stock) in the United States that has been registered under the Securities Act, or a similar public offering of the Common Stock in another jurisdiction, which results in the Common Stock (including American Depositary Shares or similar instrument representing Common Stock) trading publicly on a recognized regional or national securities exchange.

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1.2. All references herein to "Forms" or "Rules" refer to the relevant Form or Rule, as
the case may be, promulgated by the Commission.

1.3. **Jurisdiction**.

The terms of this Agreement are drafted primarily in contemplation of offerings of securities in the United States of America. The parties hereto recognize the possibility that the Company might effect an offering in the United States of America in the form of American Depositary Shares. The parties hereto further recognize, however, that securities may be qualified or registered in a jurisdiction other than the United States of America for offering to the public. Accordingly, it is their intention that, whenever this Agreement refers to a law, form, process or institution of the United States of America but the parties hereto wish to effectuate qualification or registration in a different jurisdiction, reference in this Agreement to the laws or institutions of the United States shall be read as referring, *mutatis mutandis*, to the comparable laws or institutions of the jurisdiction in question.

**SECTION 2** 

**DEMAND REGISTRATION** 

2.1. At any time beginning after the expiration of the lock-up period
applicable to such Holder under any lock-up agreement in connection with the IPO of the Common Stock (including American Depositary Shares representing Common Stock), any shareholders' agreement to which
such Holder is a party or any other contractual lock-up arrangement to which such Holder is subject (or at such earlier time allowable under the terms of or pursuant to a full or partial waiver of any such
applicable contractual arrangement or arrangements as would permit the Company to cause any filings hereunder to be filed promptly after such expiration), any Holder (each an "**Initial Requesting Holder**") may, from time to time, by
written notice specifying (1) the number of Registrable Securities proposed to be included in such Registration, (2) the intended method or methods of disposition (including whether an Underwritten Public Offering is requested), and
(3) any proposed managing underwriter or underwriters, if known, request that the Company register under the Securities Act all or any portion of the Registrable Securities held by such Initial Requesting Holder(s) for sale in the manner
specified in such notice (a "**Demand Registration** "); *provided*, *however*, that the Company shall not be obligated to register Registrable Securities pursuant to such request if: (i) the Company then meets the
eligibility requirements applicable to use the Form F-3 or Form S-3 in connection with such Registration and is able to and does effect such requested Registration from
Initial Requesting Holder(s) pursuant to <u>Section</u> <u>4</u> hereof; (ii) external U.S. counsel to the Company of reputable standing provides a written opinion to the Initial Requesting Holder(s) within twenty (20) days of
the relevant Demand Registration that (A) the filing of such a Registration Statement would require the disclosure of material non-public information about the Company that the Company is not otherwise
required to disclose and (B) the Company has a bona fide business purpose for preserving such information as confidential and the disclosure of which would likely have a material adverse effect on the business or financial condition of the
Company, in which event no such Registration Statement need be filed until the earlier of (y) the lapse of fifty (50) days from the issuance of the opinion of counsel or (z) such time as the information is no longer required to be
disclosed, is not material or non-public, or its disclosure would not have a material adverse effect on the business or financial condition of the Company, *provided* that the Company shall promptly
inform the applicable Initial Requesting Holders of the occurrence of any of the foregoing conditions under clause (z); or (iii) the Board, in its good faith judgment, determines, after consultation with its independent auditors and U.S.
counsel of reputable standing, that the Company is unable to prepare and file a Registration Statement responsive to such Demand Registration because the financial statements or other financial information required to be included therein under the
Securities Act (including, without limitation, any audited financial statements, pro forma financial information or financial statements of an acquired or to-be-acquired business) are not then available or cannot be prepared in time using reasonable best efforts, in which event the Company may defer the filing of such Registration Statement until such required financial information becomes available or, if earlier,
ceases to be required, which deferment shall not exceed sixty (60) days, *provided*, (a) that such deferment period, if necessary, may be extended as agreed upon in good faith between the Company and the Initial Requesting Holder(s),
and (b) with respect to this clause (iii), that the Company shall notify the Initial Requesting Holder(s) of such determination and the anticipated timing for availability of such information (or, if earlier, when such information will cease to
be required), and shall use its reasonable best efforts to make such information available as promptly as practicable; *provided*, *however*, that the Company may not exercise its rights under clauses (ii) and (iii) to delay or defer
either a Registration pursuant to this Section 2 or a shelf registration pursuant to Section 4 more than a total of twice in any twelve-month-period; and *provided* further that the Company shall not register any Equity
Securities for the account of itself or any other stockholder during the period of any delay or deferment pursuant to such clauses.

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2.2. Following receipt of any notice under <u>Section</u> <u>2.1</u> hereof, the Company shall within
10 business days of the receipt of such request, give written notice of such Demand Registration (the "**Company Notice**") to all other Holders other than the relevant Initial Requesting Holder(s) (the "**Eligible Holders** "), and such other Eligible Holders may, upon written request given no later than 10 business days following their receipt of the Company Notice, request that the Company also effect the Registration of all or part of each Eligible
Holder's Registrable Securities. Thereafter, the Company shall (i) use its reasonable best efforts to file a Registration Statement in respect of such Demand Registration for all Registrable Securities that the Initial Requesting
Holder(s) and participating Eligible Holders (together, the "**Requesting Holders**") have requested to be included within 45 days of receipt of the Initial Requesting Holder's (or Holders') request, and (ii) use its
reasonable best efforts to cause such Registration Statement to become effective as soon as reasonably practicable thereafter for public sale, in accordance with the method of disposition specified in such notice. If such method of disposition shall
be an Underwritten Public Offering, the Requesting Holder(s) representing a majority in number of the Registrable Securities to be registered may designate the managing underwriter of such Underwritten Public Offering, subject to the approval of the
Company, which approval shall not be unreasonably withheld or delayed. The number of Registrable Securities to be included in such an underwriting may be reduced (pro rata among all Requesting Holders, under this <u>Section</u> <u>2</u>,
to participate in such Registration) if and to the extent that the managing underwriter shall be of the opinion that such inclusion would adversely affect the marketing of the securities to be sold therein; *provided*, *however*, that the
Company shall include in such underwriting, prior to the inclusion of any securities held by the management or by employees or directors of the Company (or any other securities that are not Registrable Securities), the number of Registrable
Securities requested to be included which in the opinion of such managing underwriter will not adversely affect the marketing of the securities to be sold therein, pro rata among the Requesting Holders on the basis of the respective number of
Registrable Securities owned by each such Requesting Holder; *provided*, *further*, that the number of Registrable Securities held by the Requesting Holders to be included in such underwriting shall not be reduced unless all other
securities (including Registration by the Company pursuant to <u>Section</u> <u>2.3</u> below) are first entirely excluded from the underwriting. With respect to the preceding sentence, if the Company elects to reduce pro rata the amount
of Registrable Securities proposed to be offered in the underwriting, for purposes of making any such reduction, each Holder which is a partnership, together with the Affiliates, partners, employees, retired partners and retired employees of such
holder, the estates and Family Members of any such partners, employees, retired partners and retired employees and of their spouses, and any trusts for the benefit of any of the foregoing Persons shall be deemed to be a single "Person",
and any pro rata reduction with respect to such "Person" shall be based upon the aggregate number of Registrable Securities owned by all entities and individuals included as such "Person," as defined in this sentence (and the
aggregate number so allocated to such "Person" shall be allocated among the entities and individuals included in such "Person" in such manner as such Holder may reasonably determine). The Company shall be obligated to
register Registrable Securities pursuant to requests made under this <u>Section</u> <u>2</u> no more than three (3) times in any twelve (12) month period for each Holder; *provided*, *however*, that as to each such
occasion such obligation shall be deemed satisfied only when a Registration Statement covering all of the Registrable Securities specified in notices received as aforesaid, for sale in accordance with the method of disposition specified by the
Initial Requesting Holder(s), shall have become effective and, if such method of disposition is an Underwritten Public Offering, all such Registrable Securities shall have been sold pursuant thereto.

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2.3. The Company shall be entitled to include in any Registration Statement referred to in this <u>Section</u> <u>2</u> for which the method of distribution is an Underwritten Public Offering, for sale in accordance with the method of disposition specified by the Initial Requesting Holder(s), Common Stock to be sold by the Company
for its own account, except as and to the extent that, in the opinion of the managing underwriter, such inclusion would adversely affect the marketing of the Registrable Securities to be sold. Except as set forth in this <u>Section</u> <u>2.3</u>, no securities shall be included in any Registration Statement referred to in this <u>Section</u> <u>2</u> without the prior written consent of the Requesting Holders. Except with respect to
registration statements on Form S-8, the Company will not file with the Commission any other registration statement with respect to its Common Stock, whether for its own account or that of other stockholders,
from the date of receipt of a notice from Initial Requesting Holder(s) pursuant to this <u>Section</u> <u>2</u> until the completion of the period of distribution of the Registration contemplated thereby.

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**SECTION 3** 

**PIGGYBACK REGISTRATIONS** 

3.1. **Registration of the Company's Securities** 

Subject to the terms of this Agreement, if the Company proposes to register for its own account any of its Equity Securities, or for the account of any holder (other than a Holder) of Equity Securities any of such holder's Equity Securities, in connection with the public offering of such securities (except as set forth in <u>Section</u> <u>3.4</u>), the Company shall promptly give each Holder written notice of such Registration, which notice shall specify (1) the number of Equity Securities proposed to be registered, (2) the proposed method of disposition, (3) the proposed managing underwriter and underwriters (if any and if known), and (4) a good faith estimate by the Company of the proposed minimum offering price of such Equity Securities, and, upon the written request of any Holder, which request shall specify (1) the number of Registrable Securities such Holder desires to include in such Registration and (2) the intended method or methods of disposition (if different from that contemplated by the Company), given within fifteen (15) days after receipt of such notice from the Company, the Company shall use its reasonable best efforts to include in such Registration any Registrable Securities thereby requested to be registered by such Holder. If a Holder decides not to include all or any of its Registrable Securities in such Registration by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent Registration Statement as may be filed by the Company, all upon the terms and conditions set forth herein.

3.2. **Right to Terminate Registration** 

The Company shall have the right to terminate or withdraw any Registration initiated by it under <u>Section</u> <u>3.1</u> hereof prior to the effectiveness of such Registration, whether or not any Holder has elected to participate therein. The expenses of such withdrawn Registration shall be borne by the Company in accordance with <u>Section</u> <u>6</u> hereof.

3.3. **Underwriting Requirements** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In connection with any Underwritten Public Offering involving the Company's Equity Securities solely
for cash, the Company shall not be required to Register the Registrable Securities of a Holder under this <u>Section</u> <u>3</u> unless such Holder's Registrable Securities are included in the underwriting and such Holder enters
into an underwriting agreement in customary form with the underwriter or underwriters of internationally recognized standing selected by the Company. In the event the underwriters advise Holders seeking Registration of Registrable Securities
pursuant to this <u>Section</u> <u>3</u> in writing that the inclusion of all such Registrable Securities would adversely affect the marketing of such Equity Securities to be underwritten, such number of Registrable Securities as may be
included in such Registration without adversely affecting the marketing of such Equity Securities shall be included in such Registration; *provided, however*, any reduction (which such reduction will be pro rata among all requesting Holders) of
a requesting Holder's Registrable Securities in such offering shall occur only after all securities which are not Registrable Securities other than Equity Securities to be sold by the Company are excluded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If any Holder disapproves the terms of any underwriting, the Holder may elect to withdraw therefrom by
written notice to the Company and the underwriters delivered at least ten (10) days prior to such Holder's good faith estimate of the effective date of the Registration Statement. Any Registrable Securities excluded or withdrawn from the
underwriting shall be withdrawn from the Registration.

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3.4. **Exempt Transactions** 

The Company shall have no obligation to Register any Registrable Securities under this <u>Section</u> <u>3</u> in connection with a Registration by the Company (i) relating solely to the sale of securities to participants in a Company employees stock incentive plan, (ii) relating to a corporate reorganization or other transaction under Rule 145 under the Securities Act (or comparable provision under the laws of another jurisdiction, as applicable); (iii) on any form that does not include substantially the same information as would be required to be included in a Registration Statement covering the sale of the Registrable Securities; or (iv) relating to a Registration in which the only Common Stock being registered are Common Stock issuable upon conversion of debt securities that are also being registered.

**SECTION 4** 

**SHELF REGISTRATION** 

If, at a time when Form S-3 or Form F-3 (or any successor form thereto) is available for Registration (or will be available within thirty (30) days), the Company shall receive from any Holder of Registrable Securities a written request that the Company effect a Registration on Form S-3 or Form F-3 of any of such Holder's Registrable Securities, the Company shall use its reasonable best efforts to file a Registration Statement in respect of such shelf registration within thirty (30) days of receipt of the request, and use its reasonable best efforts to cause such Registration Statement to become effective as soon as reasonably practicable thereafter. The Company shall use its reasonable best efforts to cause such Registration Statement to remain effective under the Securities Act until the earlier of the date (i) all Registrable Securities covered by such Registration Statement have been sold or (ii) all Registrable Securities covered by such shelf registration otherwise cease to be Registrable Securities. The Company shall not be required to file a Registration Statement under Form S-3 or Form F-3 if it would not be required to file a Registration Statement under <u>Section</u> <u>2</u> hereof pursuant to clause (ii) or (iii) of the first sentence of <u>Section</u> <u>2.1</u> hereof (but only to the extent of such clauses, and subject to the provisos therein, *mutatis mutandis*). The Company shall prepare and file with the Commission, and use its reasonable best efforts to cause to become and remain effective, any post-effective amendments, prospectus supplements, and, if required by applicable Commission rules, any replacement Registration Statement(s), in each case as necessary to maintain the continuous effectiveness and usability of the shelf registration for the disposition of all Registrable Securities until the earlier of clauses (i) and (ii) above. Any Registration under this <u>Section</u> <u>4</u> will not be counted as a Registration under <u>Section</u> <u>2</u> above. At any time, and from time to time, a Registration Statement remains effective pursuant to this <u>Section</u> <u>4</u>, a Holder may notify the Company of its intent to sell (in whole or in part) Registrable Securities covered by such Registration Statement in an underwritten takedown. Such notice shall specify the aggregate number of Registrable Securities requested to be registered in such underwritten takedown. Upon receipt by the Company of such notice, the Company shall promptly comply with the applicable provisions of this Agreement (including without limitation <u>Section</u> <u>5</u> hereof), assist in the preparation and filing with the Commission of prospectus supplements and amendments to the relevant Registration Statement, and take such other actions as necessary or appropriate to permit the consummation of such underwritten takedown as promptly as practicable. In connection with any underwritten takedown under a shelf registration pursuant to this <u>Section</u> <u>4</u>, the requesting Holder may designate the managing underwriter of such underwritten takedown, subject to the approval of the Company, which approval shall not be unreasonably withheld or delayed. Any reduction of securities in connection with an underwritten takedown pursuant to this Section 4 shall be made in accordance with the cutback mechanics set forth in <u>Section</u> <u>2.2</u> (*mutatis mutandis*), including pro rata allocation among selling Holders and the exclusion of all other securities before reducing Registrable Securities. Promptly after receipt of any request under this Section 4 (and in advance of any takedown off any Registration Statement filed pursuant to this Section 4), the Company shall give written notice of such request (or takedown, as applicable) to all other Holders and shall include in such Registration Statement and/or such takedown such Registrable Securities of such other Holders as have made written requests to participate within 3 business days after receipt of such notice, in each case subject to the applicable pro rata limitations and "cut-back" provisions of this Agreement.

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**SECTION 5** 

**REGISTRATION PROCEDURES** 

5.1. If and whenever the Company is required by the provisions of <u>Section</u> <u>2</u>, <u>Section</u> <u>3</u> or <u>Section</u> <u>4</u> hereof to effect the Registration of any Registrable Securities under the Securities Act, the Company will, as expeditiously as possible:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) prepare and file with the Commission a Registration Statement with respect to such securities and use its
reasonable best efforts to cause such Registration Statement to become and remain effective (*provided* that before filing a Registration Statement or any amendments or supplements thereto, the Company will furnish to the counsel selected by
the holders of a majority of the Registrable Securities covered by such Registration Statement copies of all such documents and include any reasonable comments of such counsel in such document) for the period of the distribution contemplated thereby
(determined as provided in <u>Section</u> <u>5.2</u> hereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) prepare and file with the Commission such amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the period specified in <u>Section</u> <u>5.1(a)</u> hereof and as to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such Registration Statement in accordance with the selling Holders' intended method of disposition set forth in such Registration Statement for such period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) furnish to each selling Holder and to each underwriter such number of copies of the Registration Statement
and the prospectus included therein (including each preliminary prospectus and any amendment or supplement thereto) and such other documents as such Persons may reasonably request in order to facilitate the public sale or other disposition of the
Registrable Securities covered by such Registration Statement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) use its reasonable best efforts to register or qualify the Registrable Securities covered by such
Registration Statement under the securities or blue sky laws of such jurisdictions as the selling Holders of Registrable Securities or, in the case of an Underwritten Public Offering, the managing underwriter shall reasonably request and do any and
all other acts and things which are reasonably necessary or advisable to enable such selling Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such selling Holder (*provided* that the Company will
not be required to (<u>i</u>) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection or (<u>ii</u>) consent to general service of process (i.e., service of process
which is not limited solely to securities law violations) in any such jurisdiction);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) immediately notify each selling Holder under such Registration Statement and each underwriter, at any time
when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and the Company will promptly prepare a supplement or
amendment to such Registration Statement so that, as thereafter delivered to the purchasers of such Registrable Securities, such Registration Statement will not contain an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) use its reasonable best efforts to cause all such Registrable Securities to be listed on a recognized U.S.
share exchange or traded on a U.S. inter-dealer quotation system and, if similar securities issued by the Company are already so listed, on each securities exchange or inter-dealer quotation system on which similar securities issued by the
Company are then listed or traded;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) provide a transfer agent and registrar for all such Registrable Securities and provide a CUSIP number (to
the extent applicable) for all such Registrable Securities not later than the printing of any preliminary prospectus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) assist any underwriter or selling Holder participating in such Registration and public offering in its
marketing efforts with prospective investors by causing the Company's officers, directors and employees to participate in marketing efforts, including "roadshow" presentations in various major national and international centers, in
connection with any public offering; *provided* that the Company's obligations under this clause (h) shall apply only to the extent that the applicable underwritten offering or takedown involves marketing efforts, and shall not
require the Company to conduct or participate in roadshows or other marketing activities in connection with transactions that customarily do not involve such activities, such as accelerated book buildings or block trades;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the
Commission or any other applicable Governmental Authority, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the
Company's first full calendar quarter after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of <u>Section</u> <u>11(a)</u> of the Securities Act and Rule 158 promulgated
thereunder;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) in the event of the issuance of any stop order suspending the effectiveness of a Registration Statement, or
of any order suspending or preventing the use of any related public offering document or suspending the qualification of any Registrable Securities included in such Registration Statement or public offering document for sale in any jurisdiction, the
Company will use its reasonable best efforts promptly to obtain the withdrawal of such order and the Company shall notify holders of the Registrable Securities promptly and without any delay;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) notify each selling Holder, promptly after the Company receives notice thereof, of the time when such
Registration Statement has been declared effective or a supplement to any prospectus forming a part of such Registration Statement has been filed; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) use its reasonable best efforts to cause such Registrable Securities covered by such Registration Statement
to be registered with or approved by such other Governmental Authority as would ordinarily be necessary to enable the selling Holders thereof to consummate the disposition of such Registrable Securities.

5.2. For purposes of <u>Sections 5.1(a)</u> and <u>(b)</u> hereof and of <u>Section</u> <u>2.3</u> hereof, the period of distribution of Registrable Securities in an Underwritten Public Offering shall be deemed to extend until each underwriter has completed the distribution of all securities purchased by it,
and the period of distribution of Registrable Securities in any other Registration shall be deemed to extend until the earlier of the sale of all Registrable Securities covered thereby or six months after the effective date thereof.

5.3. In connection with each Registration hereunder, the selling Holders of Registrable Securities will only be
required to furnish to the Company such information with respect to themselves and the proposed distribution by them as shall be necessary in order to assure compliance with United States and applicable state securities laws.

5.4. In connection with each Registration pursuant to <u>Section</u> <u>2</u> and <u>Section</u> <u>3</u> hereof covering an Underwritten Public Offering, the Company agrees to enter into such customary agreements (including underwriting agreements) as the managing underwriter selected in the manner herein provided may
request in such form and containing such provisions as are customary in the securities business for such an arrangement between major underwriters and companies of the Company's size and investment stature, *provided* that such agreement
shall not contain any such provision applicable to the Company which is inconsistent with the provisions hereof.

5.5. Any Holder and their permitted assignees receiving any written notice from the Company regarding the
Company's plans to file a Registration Statement shall treat such notice confidentially and shall not disclose such information to any Person other than as necessary to exercise its rights under this Agreement; *provided, however*, that
such Holder may disclose such notice in its reasonable discretion for the purpose of seeking additional insurance coverage for such Holder's directors and officers and for purposes of fund reporting or inter-fund reporting or to its fund
manager, other funds managed by its fund manager or their respective Affiliates, advisers, consultants, auditors, directors, officers, employees, stockholders, investors or insurers.

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5.6. Each Holder agrees that any written notice delivered by such Holder to the Company requesting or initiating
a Registration shall be delivered only after such Holder has obtained all internal authorizations and approvals required under its internal governance procedures to make such request (but which need not extend to the ultimate sale of any Common
Stock subject to the Registration), and shall be executed by a duly authorized representative of such Holder. The Company may conclusively rely on any such notice that appears on its face to have been duly executed and delivered, and any purported
notice delivered without such authorization and approvals shall be null and void and of no force or effect.

**SECTION 6** 

**EXPENSES** 

All expenses incurred in complying with <u>Section</u> <u>2</u>, <u>Section</u> <u>3</u>, <u>Section</u> <u>4</u> and <u>Section</u> <u>5</u> hereof, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities and blue sky laws, fees and expenses in connection with any listing of the Common Stock (including American Depositary Shares representing Common Stock) on a securities exchange or inter-dealer quotation system, printing expenses, fees and disbursements of counsel and independent public accountants for the Company and the fees and disbursements of the underwriters (including counsel thereto) (which, to the extent agreed in writing with the underwriters in connection with any particular offering of Registrable Securities, maybe borne by the underwriters), fees of the United States Financial Industry Regulatory Authority (FINRA), fees of transfer agents and registrars and costs of insurance, but excluding any Selling Expenses attributable to the sellers of Registrable Securities (the "**Registration Expenses**"), shall be borne by the Company, except that any Holder's internal administrative and similar costs, the fees and disbursements of its counsel and any Selling Expenses attributable to the sale of Registrable Securities will be paid by such Holder.

Notwithstanding the immediately preceding sentence, if any Registration proceeding begun pursuant to Section 2 is subsequently withdrawn because all Requesting Holders have withdrawn their Registration requests and the Company has not proposed to include any Equity Securities in such Registration for sale for its own account, the Company shall bear only the Registration Expenses (in the manner set forth in the immediately preceding sentence) attributable to the Requesting Holders who have elected to treat such withdrawn Registration as one of the three Registrations such Requesting Holder is entitled to request in any twelve (12) month period pursuant to the final sentence of <u>Section</u> <u>2.2</u> (a "**Registration Equivalent**"). These Requesting Holders who decline to treat the withdrawn Registration as a Registration Equivalent shall bear the remaining Registration Expenses, in the proportion attributable to them. Registration Expenses attributable to any Requesting Holder pursuant to this paragraph shall be determined on the basis of the proportion of the number of Registrable Securities proposed to be included by such Requesting Holder in the Registration to the total number of Registrable Securities proposed to be included by all Requesting Holders and any other Equity Securities proposed to be included by any other Person. For the avoidance of doubt, where the Company proposed to include any Equity Securities to be sold by it for its own account in a Registration pursuant to <u>Section</u> <u>2.3</u>, the preceding paragraph shall apply. The foregoing notwithstanding, if, at the time of such withdrawal, (1) a Holder has learned of a material adverse change in the condition, business, or prospects of the Company from that known to such Holder at the time of their request and have withdrawn the request with reasonable promptness after learning of such information or (2) the Company has requested a deferment of such Registration (including pursuant to the first proviso under Section 2.1), then such Holder shall not be required to pay any of such Registration Expenses and the Company shall bear and pay such Registration Expenses instead.

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**SECTION 7** 

**INDEMNIFICATION** 

7.1. In the event of a Registration of any of the Registrable Securities under the Securities Act pursuant to <u>Section</u> <u>2</u>, <u>Section</u> <u>3</u> or <u>Section</u> <u>4</u> hereof, the Company will indemnify and hold harmless, to the fullest extent permitted by law, each Holder and such Holder's
officers, directors, stockholders, employees, advisors, Affiliates and agents; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person who controls (within the
meaning of the Securities Act or the Exchange Act) such Holder or underwriter from and against any and all losses, claims, damages, expenses or liabilities, joint or several, to which such Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under
which such Registrable Securities were registered under the Securities Act pursuant to <u>Section</u> <u>2</u>, <u>Section</u> <u>3</u> or <u>Section</u> <u>4</u> hereof, any preliminary prospectus or final
prospectus contained therein, any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each such Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, expense or action; *provided, however*, that the
Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with
information furnished by such Person in writing specifically for use in such Registration Statement or prospectus, except to the extent such information has been corrected in a subsequent writing at least one business day prior to the sale of
Registrable Securities to the Person asserting the claim, nor for amounts paid in settlement of any claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld.

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7.2. In the event of a Registration of any of the Registrable Securities under the Securities Act pursuant to <u>Section</u> <u>2</u>, <u>Section</u> <u>3</u> or <u>Section</u> <u>4</u> hereof, each selling Holder of such Registrable Securities thereunder, severally and not jointly, will indemnify and hold harmless, to
the full extent permitted by law, the Company and the Company's directors, officers, employees, advisors, Affiliates and agents and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) from and
against any and all losses, claims, damages, expenses or liabilities, to which the Company or such Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, expenses or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant
to <u>Section</u> <u>2</u>, <u>Section</u> <u>3</u> or <u>Section</u> <u>4</u> hereof, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading and will reimburse the Company and each such Person for any legal or other
expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; *provided*, *however*, that such selling Holder will be liable hereunder in any such case if and only to
the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission (i) made in reliance upon and in conformity with information pertaining to
such selling Holder, as such, furnished in writing to the Company by such Holder specifically for use in such Registration Statement or prospectus and (ii), in each case, that has not been corrected in a subsequent writing delivered to the Company
at least one business day prior to the sale of Registrable Securities to the Person asserting the claim; *provided*, *further*, *however*, that the liability of each selling Holder hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the proportion that the public offering price of the stock sold by such selling Holder under such Registration Statement bears to the total public offering price of all securities sold
thereunder, but not to exceed the proceeds received by such selling Holder from the sale of Registrable Securities covered by such Registration Statement. Notwithstanding anything to the contrary, in no event shall the aggregate amounts payable by
any Holder by way of indemnity or contribution under this Section 7 exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder).

7.3. Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof. In case any such action shall be brought against any indemnified party, the indemnified
party shall notify the indemnifying party of the commencement thereof and the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory
to such indemnified party. After notice from the indemnifying party to such indemnified party of its election to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this <u>Section</u> <u>7</u> for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; *provided*, *however*, that, if the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the other party or parties thereto or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests of the other party or parties thereto, the indemnified party shall have the right to select a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party, to the extent so prejudiced, of any liability to the indemnified party
under this <u>Section</u> <u>7</u>, but the omission to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party other than under this <u>Section</u> <u>7</u>.

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7.4. It is understood that the indemnifying party shall not, in connection with any action or related actions in
the same jurisdiction, be liable for the fees and disbursements of more than one separate firm qualified in such jurisdiction to act as counsel for the indemnified party. The indemnifying party shall not (i) without the prior written consent of
the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from
all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld), but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. If the indemnification provided for in <u>Section</u> <u>7.1</u> and <u>Section</u> <u>7.2</u> is unavailable to or insufficient to hold harmless an indemnified party under such paragraphs in respect of any losses, claims, damages or liabilities or actions
referred to therein, then each indemnifying party shall in lieu of indemnifying such indemnified party contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or actions in such
proportion as appropriate to reflect the relative fault of the Company, on the one hand, and the selling Holders of such Registrable Securities, on the other, in connection with the statement or omissions which resulted in such losses, claims,
damages, liabilities or actions, as well as any other relevant equitable considerations including, without limitation, the failure to give any notice under <u>Section</u> <u>7.3</u>. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or by the selling Holders of such
Registrable Securities, on the other hand, and to the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

7.5. The Company and the selling Holders of Registrable Securities agree that it would not be just and equitable
if contribution pursuant to the final two sentences of <u>Section</u> <u>7.4</u> were determined by pro rata allocation (even if all of the selling Holders of Registrable Securities were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or
action referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this and the immediately preceding paragraph, the selling Holders of such Registrable Securities shall not be required to contribute any amount in excess of the amount, if any, by which the
net proceeds received by such selling Holders exceeds the amount of any damages which they would have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

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7.6. The indemnification provided for under this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities.

7.7. To the extent that the provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the Underwritten Public Offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

**SECTION 8** 

**ASSIGNMENT OF REGISTRATION RIGHTS** 

Except as set forth herein, the rights under this Agreement, including the rights to cause the Company to register Registrable Securities pursuant to <u>Section</u> <u>2</u>, <u>Section</u> <u>3</u> and <u>Section</u> <u>4</u> hereof, may be assigned (but only with all related obligations) by a Holder to an Affiliate or partner of the Holder (without restrictions as to minimum shareholdings); *provided* the Company is, within a reasonable time after such assignment, furnished with written notice of the name and address of such assignee and the securities with respect to which such registration rights are being assigned; and *provided, further*, that any such assignee shall first be required to execute a document in a form reasonably acceptable to the Company pursuant to which it agrees and undertakes to be bound by the provisions of this Agreement as though named herein as a Holder.

For the purposes of determining the number of shares of Registrable Securities held by an assignee, the holdings of assignees of a partnership who are partners or retired partners of such partnership (including spouses and ancestors, lineal descendants and siblings of such partners or spouses who acquire Registrable Securities by gift, will or intestate succession) shall be aggregated together and with the partnership; *provided* that all assignees who would not qualify individually for assignment of registration rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action hereunder.

**SECTION 9** 

**CHANGES IN COMMON STOCK** 

If, and as often as, there are any changes in the Common Stock by way of stock split, stock dividend, combination or reclassification, or through merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof, as may be required, so that the rights and privileges granted by this Agreement shall continue with respect to the Common Stock as so changed.

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**SECTION 10** 

**RULE 144 REPORTING; IN-KIND DISTRIBUTIONS AND DERIVATIVE TRANSACTIONS** 

10.1. With a view to making available to the Holders the benefits of Rule 144 under the Securities Act and any
comparable provision of any Applicable Securities Laws that may at any time permit a Holder to sell securities of the Company to the public without Registration or pursuant to a Registration Statement on Form F-3 or Form S-3 (or any comparable form in a jurisdiction other than the United States), the Company agrees to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) make and keep current public information available, as those terms are understood and defined in Rule 144
(or comparable provision, if any, under Applicable Securities Laws in any jurisdiction where the Company's securities are listed), at all times following the effective date of the first Registration under the Securities Act filed by the
Company for an offering of its securities to the general public;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) file with the Commission in a timely manner all reports and other documents required of the Company under
all Applicable Securities Laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) at any time following ninety (90) days after the effective date of the first Registration under the
Securities Act filed by the Company for an offering of its securities to the general public by the Company, promptly furnish to any Holder holding Registrable Securities, upon request (i) a written statement by the Company that it has complied
with the reporting requirements of all Applicable Securities Laws at any time after it has become subject to such reporting requirements or, at any time after so qualified, that it qualifies as a registrant whose securities may be resold pursuant to
Form F-3 or Form S-3 (or any form comparable thereto under Applicable Securities Laws of any jurisdiction where the Company's securities are listed), (ii) a copy
of the most recent annual report of the Company and such other reports and documents as may be filed by the Company with the Commission, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or
regulation of the Commission, that permits the selling of any such securities without Registration or pursuant to Registration Statement on Form F-3 or Form S-3 (or any
form comparable thereto under Applicable Securities Laws of any jurisdiction where the Company's securities are listed); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) coordinate with its legal counsel in respect of the rendering by such counsel of any legal opinion which may
be required in connection with a sale under Rule 144 and otherwise reasonably cooperate (subject to applicable law and the Company's transfer agent's customary procedures) with the Company's transfer agent to facilitate such sale.

10.2. In-Kind Distributions. If any Holder seeks to effectuate an in-kind distribution of all or part of its Registrable Securities, the Company shall, subject to applicable "lock-up" arrangements and applicable law, cooperate
with such Holder and the Company's transfer agent and/or the depositary for the American Depositary Shares, as applicable, to facilitate such in-kind distribution in the manner reasonably requested by
such Holder, as well as any resales by such transferees under a Registration Statement covering such distributed shares (subject to the customary procedures of the Company's transfer agent and/or the depositary, including the receipt of any
documentation reasonably requested by the Company or the transfer agent and/or the depositary).

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10.3. Financing Cooperation. Upon the request of any Holder that wishes to pledge, hypothecate or grant security
interests in any or all of the Registrable Securities beneficially owned by it, including to banks or financial institutions as collateral or security for loans, advances or extensions of credit, the Company agrees to cooperate with each such Holder
in taking any action reasonably necessary to consummate any such pledge, hypothecation or grant, including without limitation, delivery of letter agreements to lenders in form and substance reasonably satisfactory to such lenders and the Company
(which may include customary agreements by the Company in respect of the exercise of remedies by such lenders) and instructing the transfer agent to transfer any such Shares subject to the pledge, hypothecation or grant into the facilities of DTC
without restricted legends, to the extent permitted under applicable law.

10.4. Derivative Transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company agrees that the provisions of this Agreement relating to the registration, offer and sale of
Registrable Securities on a registered basis, including any applicable pro rata limitation or "cut-back," apply also to Derivative Transactions entered into by a Holder. Any such prospectus in
connection with a Derivative Transaction shall permit a Derivative Counterparty to sell shares of the Registrable Securities covered by such prospectus and the applicable prospectus supplement, including in short sale transactions in compliance with
applicable law (whether Common Stock is borrowed from such Holder or otherwise). If in connection with a Derivative Transaction, a Derivative Counterparty or any affiliate thereof is (or may reasonably be considered) an underwriter or selling
stockholder, then such Derivative Counterparty shall be required to furnish to the Company such information as the Company may reasonably request for inclusion in the Registration Statement/prospectus and provide customary indemnities to the Company
regarding the plan of distribution and related matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Without limiting the foregoing, the Company agrees to cooperate with each Holder in taking any action
reasonably necessary to consummate a Derivative Transaction entered into by such Holder (whether executed on a registered basis, under Rule 144 or otherwise) and any pledge, hypothecation or grant of security over Common Stock related thereto,
including without limitation, (x) delivery of letter agreements to lenders in form and substance reasonably satisfactory to such lenders and the Company (which may include customary agreements by the Company in respect of the exercise of
remedies by such lenders) and instructing the transfer agent to transfer any such Shares subject to the pledge, hypothecation or grant into the facilities of DTC without restricted legends, to the extent permitted under applicable law and
(y) such action as such Holder may reasonably request from time to time to enable such Holder to sell or hedge Common Stock pursuant to an effective Registration Statement or an available exemption from registration under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) For avoidance of doubt, the clarifications provided in this Section 10 to the effect that Derivative
Transactions are among the types of transactions covered by the provisions of this Agreement relating to the registration, offer, and sale of Registrable Securities shall not be read to imply that any other particular types of transactions, by
virtue of not having a similar clarifying provision in this Agreement, are not among the types of transactions covered by the provisions of this Agreement relating to the registration, offer, and sale of Registrable Securities. Nothing in this
Section 10 shall be deemed to constitute an admission by the Company that any person is an "underwriter" as defined in the Securities Act.

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**SECTION 11** 

**MISCELLANEOUS** 

11.1. The rights of any Holder under <u>Section</u> <u>2</u>, <u>Section</u> <u>3, Section</u> <u>4</u>, <u>Section</u> <u>8</u> and <u>Section</u> <u>9</u> hereof shall terminate and cease to apply to such Holder at such time as such Holder ceases to hold any Registrable Securities.

11.2. All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not.

11.3. All notices, demands, requests and other communications provided for or permitted hereunder shall be made in
writing and shall be sent by electronic mail (including attachments) or delivered by commercial express courier service or personal delivery:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) if to the Company:

Address: YOTSUYA TOWER 1-6-1, Yotsuya, Shinjuku-ku, Tokyo, Japan

Email address: paypay_contract@paypay-corp.co.jp

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) if to Stockholders, at the Stockholders' respective addresses set forth on Schedule A hereto

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) if to any permitted assignee under Section 8 hereof, at the e-mail or physical address of such permitted assignee specified thereby.

or to such other address or addresses as shall have been furnished in writing to the other Parties hereto. All notices and other communications hereunder shall be deemed to have been duly given: (i) when delivered by hand or by internationally recognized overnight courier service; or (ii) when sent by electronic mail (including attachments) to the email address specified by the recipient from time to time in accordance with this Section. Each party shall provide the other parties with a physical address and an email address for notices and shall update such information as necessary by written notice.

11.4. <u>GOVERNING LAW</u>. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE WITH, AND ENFORCED UNDER,
THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS OR INSTRUMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN SUCH STATE.

11.5. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and
shall supersede the prior agreements and all other prior agreements and understandings between the parties with respect to such subject matter. This Agreement may not be amended or modified and waivers and consents to departures from the provisions
hereof may not be given, except by an instrument or instruments in writing making specific reference to this Agreement and signed by the Company and Holders of a majority of the Registrable Securities as of such time.

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11.6. If any one or more of the provisions contained in this Agreement, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions of this Agreement. The parties hereto further agree to replace such invalid, illegal or unenforceable provision of this
Agreement with a valid, legal and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, illegal or unenforceable provision.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date first above written.

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| |
|:---|
|  PAYPAY CORPORATION |
|  By: |
|  Name: |
|  Title: |

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[Signature page to Registration Rights Agreement]

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IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date first above written.

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| |
|:---|
|  [STOCKHOLDER] |
|  By: |
|  Name: |
|  Title: |

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[Signature page to Registration Rights Agreement]

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**SCHEDULE A** 

**SCHEDULE OF STOCKHOLDERS** 

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|:---|:---|
| **Stockholder** | **Address for Notice** |

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## Exhibit 10.77

**Exhibit 10.77** 

**TERMS AND CONDITIONS OF** 

**THE [X] ISSUANCE OF STOCK ACQUISITION RIGHTS** 

1. Number of Stock Acquisition Rights

[X]

The total number of shares that may be delivered upon exercise of Stock Acquisition Rights shall be [X] ordinary shares of PayPay Corporation (the "Company"), and if the number of shares allotted per Stock Acquisition Right is adjusted in accordance with 3-(1) below, the adjusted number of allotted shares shall be multiplied by the number of Stock Acquisition Rights.

2. Payment of cash in exchange for Stock Acquisition Rights

The issue price per Stock Acquisition Rights shall be [X] yen. This amount was determined based on the results of a calculation by a third-party rating agency using the Monte Carlo Simulation, a common option price calculation model, taking into consideration the Company's share price information and other factors.

3. Details of Stock Acquisition Rights

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Class and number of shares to be issued or transferred upon exercise of Stock Acquisition Rights

The class of shares to be issued or transferred upon exercise of Stock Acquisition Rights shall be ordinary shares of the Company. The number of shares to be issued or transferred upon exercise of each Stock Acquisition Right (the "Number of Shares to be Allotted") shall be one share.

However, in the event the Company conducts a stock split or a consolidation of shares with respect to its ordinary shares after the allotment date of Stock Acquisition Rights, the Number of Shares to be Allotted shall be adjusted using the following formula, and the total number of shares to be issued or transferred upon exercise of all Stock Acquisition Rights shall be adjusted accordingly. Such adjustment shall be made only to the Number of Shares to be Allotted for Stock Acquisition Rights that have not yet been exercised at the time of the adjustment. Any amount less than one share arising from the adjustment shall be rounded down.

Number of Shares to be Alloted after adjustment = Number of Shares<br> to be Alloted before <br>adjustment x Ratio of stock split or stock<br>consolidation

Other than the above, in the event the Company conducts a merger, company split, share exchange, or share delivery after the allotment date of the Stock Acquisition Rights, or in the event the Number of Shares to be Allotted needs to be adjusted pursuant to such events, the Company may adjust the Number of Shares to be Allotted in a suitable manner within reasonable scope.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Amount or calculation method of assets to be contributed upon exercise of Stock Acquisition Rights

The amount of the assets to be contributed upon exercise of each Stock Acquisition Right shall be obtained by multiplying the price per share to be delivered upon exercise of each Stock Acquisition Right (the "Exercise Price") by the Number of Shares to be Allotted. The Exercise Price shall be [X] yen.

If the Company conducts a stock split or a reverse stock split after the allotment date of Stock Acquisition Rights, the Exercise Price shall be adjusted in accordance with the following formula, and any fraction less than one (1) yen resulting from the adjustment shall be rounded up to the nearest one (1) yen.

Exercise Price after adjustment = Exercise Price before adjustment x 1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratio of split or consolidation

In addition, if, after the allotment date of Stock Acquisition Rights, the Company issues new shares or disposes of treasury stock at a price lower than The Exercise Price before adjustment with respect to the ordinary share of the Company (excluding cases where new shares are issued or treasury stock is disposed of upon the exercise of Stock Acquisition Rights, the exercise of acquisition rights for shares of a class other than ordinary shares or the triggering of acquisition provisions for such shares, or where new shares are issued or treasury stock is delivered due to a merger, company split, share exchange, or share delivery), The Exercise Price shall be adjusted in accordance with the following formula, and any fraction less than one yen resulting from the adjustment shall be rounded up to the nearest one (1) yen.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Number of shares<br>already issued | <br> +  | Number of shares<br>newly issued | x | Paid-in amount <br> per share |
| Exercise Price<br>after adjustment | =  | Exercise Price<br>before adjustment | x  | Number of shares<br>already issued | <br> +  | Exercise Price<br> before adjustment | Exercise Price<br> before adjustment | Exercise Price<br> before adjustment |
|  | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued |

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In the above formula, the "number of shares already issued" shall be the number obtained by deducting the number of shares of treasury stock of the Company's ordinary shares from the total number of shares issued of the Company's ordinary shares, and in the case of the disposal of treasury stock of the Company's ordinary shares, the "number of shares newly issued" shall be read as "number of treasury stock to be disposed of."

Furthermore, other than the above, after the allotment date of Stock Acquisition Rights, in the event that the Company conducts a merger, company split, share exchange, or share delivery, or if Stock Acquisition Rights or shares of a class other than ordinary shares are issued that result in the issuance of ordinary shares of the Company at a price lower than the Exercise Price before adjustment, or if it is necessary to adjust the Exercise Price in accordance with other such cases, the Company may appropriately adjust the Exercise Price to a reasonable extent.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Period during which Stock Acquisition Rights are exercisable

The period during which Stock Acquisition Rights are exercisable (the "Exercise Period") is from [DATE] to [DATE] (or the preceding bank business day if the last day is not a bank business day).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Matters concerning the share capital and legal capital surplus to be increased

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) The amount of share capital to be increased due to the issuance of shares upon exercise of Stock Acquisition
Rights shall be one half (1/2) of the maximum amount of increase in the share capital, etc. to be calculated according to Article 17, Paragraph 1 of the Corporate Accounting Regulations, with any amount less than one (1) yen arising from such
calculation to be rounded up.

ii) The amount of legal capital surplus to be increased due to the issuance of shares upon exercise of Stock Acquisition Rights shall be the amount obtained by deducting the amount of share capital to be increased set forth in (i) above, from the maximum possible amount of increase in the share capital, etc. set forth in (i) above. 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Restriction on the acquisition of Stock Acquisition Rights through transfer

Any acquisition of Stock Acquisition Rights through transfer shall require the approval by resolution of the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Conditions for the exercise of Stock Acquisition Rights

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) Holders of Stock Acquisition Rights may exercise their Stock Acquisition Rights only when the
Company's shares or beneficial interests in trusts of the Company's shares, depositary receipts for the Company's shares, or other securities having the characteristics of the Company's shares (the "Company's
shares, etc.") are listed on a financial instruments exchange market, such as a stock exchange, or a foreign financial instruments market only after the date of such listing.

ii) [Notwithstanding i) above, the holders of Stock Acquisition Rights may not exercise their Stock Acquisition Rights unless the market capitalization (to be calculated by the following formula; the same shall apply hereinafter) exceeds 10 trillion yen on a specific date at least once during the period from the listing of the Company's shares, etc. on a financial instruments exchange market or foreign financial instruments market to the last day of the Exercise Period. If the aggregate market value on such specific date exceeds 10 trillion yen, the holders of Stock Acquisition Rights may exercise their Stock Acquisition Rights on the day following the said date and thereafter. 

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Market<br> capitalization | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;= | [ | Total number of issued<br> shares of common stock<br> of the Company | Number of treasury shares<br>of common stock of the<br>Company held by the<br>Company | ] | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;x  | \*The closing price of an ordinary transaction per share<br> or a price equivalent to such closing price<br> of the Company's common stock<br> on the exchange financial instruments market<br> or foreign financial instruments market<br> where the Company's shares, etc. are listed |

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\*In the event that the Company's shares, etc. are listed on a foreign financial instruments market, the closing price shall be converted into Japanese yen (with any amount less than one (1) yen arising from such calculation to be rounded down) using the middle rate of the telegraphic transfer market for customers published by Mizuho Bank, Ltd. at the end of business hours on the bank business day preceding such specific day (if such exchange rate is not published for some reason, the Company shall use the exchange rate reasonably determined by the Company on such preceding bank business day).]

iii) Holders of Stock Acquisition Rights must be directors, corporate officers, or permanent employees of the Company or its subsidiaries at the time of exercising the rights. However, this shall not apply in cases where the Board of Directors recognizes that there is a justifiable reason for such retirement, such as retirement due to expiration of term of office or mandatory retirement age. 

iv) Notwithstanding the items above, the holders of Stock Acquisition Rights may not exercise all of their remaining Stock Acquisition Rights if any of the following events occurs between the listing of the Company's shares, etc. on a financial instruments exchange market or foreign financial instruments market and the expiration date of the Exercise Period of Stock Acquisition Rights. 

In the event that the prices set forth in the following items are determined in a currency other than Japanese yen, they shall be converted into Japanese yen (with any amount less than one (1) yen arising from such calculation to be rounded down) using the middle rate of the telegraphic transfer market for customers published by Mizuho Bank, Ltd. at the end of business hours on the bank business day preceding such specific day (if such exchange rate is not published for some reason, the Company shall use the exchange rate reasonably determined by the Company on such preceding bank business day).

If the Company conducts a stock split or a reverse stock split after the allotment date of Stock Acquisition Rights, the Assumed Value shall be adjusted in accordance with the following formula, and any fraction less than one (1) yen resulting from the adjustment shall be rounded up to the nearest one (1) yen.

Assumed Value after adjustment = Assumed Value before adjustment x 1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratio of split or consolidation

In addition, if, after the allotment date of the Stock Acquisition Rights, the Company issues new shares or disposes of treasury stock at a price lower than the Assumed Value before adjustment with respect to the ordinary shares of the Company (excluding cases where new shares are issued or treasury stock is disposed of upon the exercise of Stock Acquisition Rights, the exercise of acquisition rights for shares of a class other than ordinary shares or the triggering of acquisition provisions for such shares, or where new shares are issued or treasury stock is delivered due to a merger, company split, share exchange, or share delivery), the Assumed Value shall be adjusted in accordance with the following formula, and any fraction less than one (1) yen resulting from the adjustment shall be rounded up to the nearest one (1) yen.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Number of shares<br>already issued | <br> +  | Number of shares<br>newly issued | x | Paid-in amount <br> per share |
| Assumed Value<br>after adjustment | =  | Assumed Value<br>before adjustment | x  | Number of shares<br>already issued | <br> +  | Assumed Value<br> before adjustment | Assumed Value<br> before adjustment | Assumed Value<br> before adjustment |
|  | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued |

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In the above formula, the "number of shares already issued" shall mean the number obtained by deducting the number of treasury shares of the Company's ordinary shares from the total number of issued ordinary shares of the Company, and in the case of the disposal of treasury shares of the Company's ordinary shares, the "number of newly issued shares" shall be read as "number of treasury shares to be disposed of."

Furthermore, other than the above, after the allotment date of the Stock Acquisition Rights, in the event that the Company conducts a merger, company split, share exchange, or share delivery, or if Stock Acquisition Rights or shares of a class other than ordinary shares are issued that result in the issuance of ordinary shares of the Company at a price lower than the Assumed Value before adjustment, or if it is necessary to adjust the Assumed Value in accordance with other such cases, the Company may appropriately adjust the Assumed Value to a reasonable extent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event of the issuance or disposal of shares of ordinary shares of the Company at a price that is
lower than the Assumed Value (which shall be [X] yen; the same shall apply hereinafter).

However, the following cases are excluded.

- In the event of the amount to be paid for such shares is made at a price that is deemed to be different from the value of the shares of our ordinary shares at the time of such issuance or disposal (including cases where such shares are issued at a "Particularly favorable amount" as defined in Article 199, Paragraph 3 and Article 200, Paragraph 2 of the Companies Act and cases due to a shareholder allotment).

- The issuance or disposal of shares of ordinary shares of the Company upon the exercise of Stock Acquisition Rights, the exercise of acquisition rights for shares of a class other than ordinary shares or the triggering of acquisition provisions for such shares, or the issuance or delivery of shares of ordinary shares of the Company upon merger, company split, share exchange, or share delivery

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that new stock acquisition rights are issued with an exercise price that is lower than the
assumed price (excluding in the case where such stock acquisition rights are issued with the exercise price set at a price different from the share value of the Company's ordinary shares at the time of issuance of such stock acquisition
rights)

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event that the closing price of our ordinary shares in ordinary transactionson financial instruments
exchange market or foreign financial instruments market, or a price equivalent to such closing price, falls below the Assumed Value during the period when Company shares, etc. are listed on any financial instruments exchange market or foreign
financial instruments market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v) The exercise of these Stock Acquisition Rights by the heirs of the holders of these Stock Acquisition Rights
shall not be permitted.

vi) A Stock Acquisition Rights holder shall immediately forfeit the exercise of Stock Acquisition Rights specified below from any of the remaining rights, even during the Exercise Period, if any of the following events occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event that the holder of Stock Acquisition Rights is sentenced to imprisonment or a severer penalty
(all remaining Stock Acquisition Rights).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that the holder of Stock Acquisition Rights violates the employment regulations, etc. of the
Company or its affiliates and is subject to "Disciplinary dismissal" or "Termination at request of the Company" (all remaining Stock Acquisition Rights).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event that the holder of Stock Acquisition Rights commits a serious violation of laws and regulations
or the internal rules of the Company or its affiliates (all remaining Stock Acquisition Rights).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the event that the holder of Stock Acquisition Rights requests in writing as prescribed by the Company
that all or part of the stock acquisition rights be waived (the number of remaining Stock Acquisition Rights that are the subject of such request).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Otherwise, in the event that the Board of Directors deems it inappropriate to permit the exercise of Stock
Acquisition Rights in light of the purpose for which Stock Acquisition Rights were granted (of the remaining number of Stock Acquisition Rights, the number determined by the Board of Directors).

4. Allotment date of Stock Acquisition Rights

[DATE]

5. Matters concerning the acquisition of Stock Acquisition Rights

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company may acquire Stock Acquisition Rights without compensation at the arrival ofthe day separately
prescribed by the Board of Directors of the Company, in the event that an agenda for approval of one of the following is approved at the General Meeting of Shareholders of the Company (or, if approval of the General Meeting of Shareholders is not
required, is resolved at the Board of Directors Meeting of the Company):

- a merger agreement, under which the Company shall become an absorbed company

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- a company split agreement or plan, under which the Company shall be split

- a share exchange agreement, or share delivery or share transfer plan, under which the Company shall become a wholly owned subsidiary

However, this shall not apply if the Trust Company, which has a contractual relationship with the Company, is the holder of the Stock Acquisition Rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) In the following cases, the Company may acquire Stock Acquisition Rights without compensation at the arrival
of the day specified by the Board of Directors of the Company:

- a resolution is passed at a General Meeting of Shareholders of the Company to acquire all of the ordinary shares of the Company after amending the Articles of Incorporation of the Company to make the ordinary shares of the Company classified stocks subject to whole acquisition clause

- a resolution is passed at a Company's Board of Directors Meeting to approve a request by special controlling shareholders of the Company to sell Company shares, etc. to another shareholder of the Company

- a resolution is passed at a General Meeting of Shareholders of the Company to approve the consolidation of ordinary shares due to the delisting of the Company

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) If the holder of Stock Acquisition Rights becomes unable to exercise the Stock Acquisition Rights pursuant
to the provisions set forth in 3. (6). iii) through vi) above before exercising the rights, the Company may acquire the Stock Acquisition Rights without compensation on a date determined by the Board of Directors of the Company. However, this shall
not apply if the Trust Company, which has a contractual relationship with the Company, is the holder of the Stock Acquisition Rights.

6. Treatment of Stock Acquisition Rights upon restructuring

In the event that the Company conducts a merger (limited to where the Company is absorbed as a result of the consolidation), an absorption-type company split, an incorporation-type company split, a share exchange, or a share delivery (collectively "Restructuring"), the stock acquisition rights of the companies listed in (a) to (e) of Article 236, Paragraph 1, Item 8, of the Companies Act (the "Restructured Company") shall be delivered, in each of the above cases, to the holders of remaining Stock Acquisition Rights at the effective time of Restructuring according to the conditions (1) – (10) described below. However, the foregoing shall be on the condition that delivery of stock acquisition rights of the Restructured Company in accordance with the following conditions is stipulated in an absorption-type merger agreement, a consolidation-type merger agreement, an absorption-type company split agreement, an incorporation-type company split plan, a share exchange agreement, or a share delivery plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Number of stock acquisition rights of the Restructured Company to be delivered

The same number of stock acquisition rights as the number of the remaining Stock Acquisition Rights held by a right holder shall be delivered to that right holder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Class of shares of the Restructured Company to be issued or transferred upon exercise of stock
acquisition rights

Ordinary shares of the Restructured Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Number of shares of the Restructured Company to be issued or transferred upon exercise of stock acquisition
rights

Shall be determined in accordance with 3. (1) above, based on the consideration of conditions for Restructuring and other factors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Amount of assets to be contributed upon exercise of Stock Acquisition Rights

The value of assets to be contributed upon the exercise of each Stock Acquisition Right to be issued shall be the post-restructuring exercise price obtained by adjusting the exercise price determined in 3. (2) above, multiplied by the number of shares of the Restructured Company to be issued upon exercise of such Stock Acquisition Rights as determined in accordance with 6. (3) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Period during which Stock Acquisition Rights are exercisable

Shall be from the commencement date of the Exercise Period stipulated in 3. (3) above, or the effective date of Restructuring, whichever is later, to the expiry date of the Exercise Period stipulated in 3. (3) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Matters concerning the share capital and legal capital surplus to be increased when shares are issued upon
exercise of Stock Acquisition Rights

Shall be determined in accordance with 3. (4) above

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Restriction on acquisition of Stock Acquisition Rights through transfer

Concerning restrictions on acquisition by transfer, approval by a resolution of the Board of Directors of the Restructured Company (or the General Meeting of Shareholders in the case of a company without a Board of Directors) shall be required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Other conditions for the exercise of Stock Acquisition Rights

Shall be determined in accordance with 3. (6) above

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Terms and conditions for acquisition of Stock Acquisition Rights

Shall be determined in accordance with 5 above

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.

7. Matters concerning certificates for Stock Acquisition Rights

The Company shall not issue certificates for stock acquisition rights.

8. Others

In the event that revisions to the Companies Act or other laws necessitate the replacement of terms and conditions in these Terms and Conditions or other actions, the Company will take the necessary measures.

9. Date of payment of cash in exchange for Stock Acquisition Rights

[DATE]

## Exhibit 10.78

**Exhibit 10.78** 

**TERMS AND CONDITIONS OF** 

**THE [X] ISSUANCE OF STOCK ACQUISITION RIGHTS** 

1. Number of Stock Acquisition Rights

[X]

The total number of shares that may be delivered upon exercise of Stock Acquisition Rights shall be [X] ordinary shares of PayPay Corporation (the "Company"), and if the number of shares allotted per Stock Acquisition Right is adjusted in accordance with 3-(1) below, the adjusted number of allotted shares shall be multiplied by the number of Stock Acquisition Rights.

2. Payment of cash in exchange for Stock Acquisition Rights

No payment of consideration shall be required upon the issuance of these stock acquisition rights.

3. Details of Stock Acquisition Rights

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Class and number of shares to be issued or transferred upon exercise of Stock Acquisition Rights

The class of shares to be issued or transferred upon exercise of Stock Acquisition Rights shall be ordinary shares of the Company. The number of shares to be issued or transferred upon exercise of each Stock Acquisition Right (the "Number of Shares to be Allotted") shall be one share.

However, in the event the Company conducts a stock split or a consolidation of shares with respect to its ordinary shares after the allotment date of Stock Acquisition Rights, the Number of Shares to be Allotted shall be adjusted using the following formula, and the total number of shares to be issued or transferred upon exercise of all Stock Acquisition Rights shall be adjusted accordingly. Such adjustment shall be made only to the Number of Shares to be Allotted for Stock Acquisition Rights that have not yet been exercised at the time of the adjustment. Any amount less than one share arising from the adjustment shall be rounded down.

Number of Shares to be Alloted after adjustment = Number of Shares to be Alloted before adjustment x Ratio of stock split or stock consolidation

Other than the above, in the event the Company conducts a merger, company split, share exchange, or share delivery after the allotment date of the Stock Acquisition Rights, or in the event the Number of Shares to be Allotted needs to be adjusted pursuant to such events, the Company may adjust the Number of Shares to be Allotted in a suitable manner within reasonable scope.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Amount or calculation method of assets to be contributed upon exercise of Stock Acquisition Rights

The amount of the assets to be contributed upon exercise of each Stock Acquisition Right shall be obtained by multiplying the price per share to be delivered upon exercise of each Stock Acquisition Right (the "Exercise Price") by the Number of Shares to be Allotted.

The Exercise Price shall be [X] yen.

If the Company conducts a stock split or a reverse stock split after the allotment date of Stock Acquisition Rights, the Exercise Price shall be adjusted in accordance with the following formula, and any fraction less than one (1) yen resulting from the adjustment shall be rounded up to the nearest one (1) yen.

Exercise Price after adjustment = Exercise Price before adjustment x 1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratio of split or consolidation

In addition, if, after the allotment date of Stock Acquisition Rights, the Company issues new shares or disposes of treasury stock at a price lower than The Exercise Price before adjustment with respect to the ordinary share of the Company (excluding cases where new shares are issued or treasury stock is disposed of upon the exercise of Stock Acquisition Rights, the exercise of acquisition rights for shares of a class other than ordinary shares or the triggering of acquisition provisions for such shares, or where new shares are issued or treasury stock is delivered due to a merger, company split, share exchange, share transfer, or share delivery), The Exercise Price shall be adjusted in accordance with the following formula, and any fraction less than one yen resulting from the adjustment shall be rounded up to the nearest one (1) yen.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Number of shares<br>newly issued | <br> +  | Number of shares<br>already issued | x | Paid-in amount <br> per share |
| Exercise Price<br>after adjustment | =  | Exercise Price<br>before adjustment | x  | Number of shares<br>newly issued | <br> +  | Exercise Price<br> before adjustment | Exercise Price<br> before adjustment | Exercise Price<br> before adjustment |
|  | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued |

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In the above formula, the "number of shares already issued" shall be the number obtained by deducting the number of shares of treasury stock of the Company's ordinary shares from the total number of shares issued of the Company's ordinary shares, and in the case of the disposal of treasury stock of the Company's ordinary shares, the "number of shares already issued" shall be read as "number of treasury stock to be disposed of."

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Furthermore, other than the above, after the allotment date of Stock Acquisition Rights, in the event that the Company conducts a merger, company split, share exchange, share transfer or share delivery, or if Stock Acquisition Rights or shares of a class other than ordinary shares are issued that result in the issuance of ordinary shares of the Company at a price lower than the Exercise Price before adjustment, or if it is necessary to adjust the Exercise Price in accordance with other such cases, the Company may appropriately adjust the Exercise Price to a reasonable extent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Period during which Stock Acquisition Rights are exercisable

The period during which Stock Acquisition Rights are exercisable (the "Exercise Period") is from the date that is two years after the date of the grant resolution to [DATE] (or the preceding bank business day if the last day is not a bank business day).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Matters concerning the share capital and legal capital surplus to be increased

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) The amount of share capital to be increased due to the issuance of shares upon exercise of Stock Acquisition
Rights shall be one half (1/2) of the maximum amount of increase in the share capital, etc. to be calculated according to Article 17, Paragraph 1 of the Corporate Accounting Regulations, with any amount less than one (1) yen arising from such
calculation to be rounded up.

ii) The amount of legal capital surplus to be increased due to the issuance of shares upon exercise of Stock Acquisition Rights shall be the amount obtained by deducting the amount of share capital to be increased set forth in (i) above, from the maximum possible amount of increase in the share capital, etc. set forth in (i) above. 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Restriction on the acquisition of Stock Acquisition Rights through transfer

Any acquisition of Stock Acquisition Rights through transfer shall require the approval by resolution of the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Conditions for the exercise of Stock Acquisition Rights

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) The stock acquisition rights may be exercised by the holders thereof only in the event that the shares of
the Company are listed on a financial instruments exchange market in Japan or on a foreign securities exchange market.

However, during each of the periods set forth in items (a) through (e) below, the number of stock acquisition rights that may be exercised by a holder shall be limited to the number specified in each respective item. In cases where 20% of the number of stock acquisition rights allotted to the holder is not an integer, for the periods specified in items (a) through (d), the number of stock acquisition rights exercisable by the holder shall be limited to the sum of (i) the product of (x) the number obtained by truncating the decimal portion of 20% of the allotted stock acquisition rights and (y) the coefficient assigned to each period ((a) = 1, (b) = 2, (c) = 3, (d) = 4), and (ii) the lesser of (x) the remainder obtained by dividing the number of allotted stock acquisition rights by 5 and (y) the coefficient mentioned above.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) From the commencement date of the exercise period until April 28, 2028: up to 20% of the total number
of stock acquisition rights allotted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For the one-year period commencing on the day following the end of
the period set forth in (a): up to 40% of the total number of stock acquisition rights allotted, including those exercised during the period set forth in (a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) For the one-year period commencing on the day following the end of
the period set forth in (b): up to 60% of the total number of stock acquisition rights allotted, including those exercised during the periods set forth in (a) and (b).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) For the one-year period commencing on the day following the end of
the period set forth in (c): up to 80% of the total number of stock acquisition rights allotted, including those exercised during the periods set forth in (a), (b), and (c).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) From the day following the end of the period set forth in (d) until the end of the exercise period: up
to 100% of the total number of stock acquisition rights allotted, including those exercised during the periods set forth in (a), (b), (c), and (d).

ii) Holders of Stock Acquisition Rights must be directors, corporate officers, or employees of the Company or its subsidiaries at the time of exercising the rights. However, this shall not apply in cases where the Board of Directors recognizes that there is a justifiable reason for such retirement, such as retirement due to expiration of term of office or mandatory retirement age. 

iii) [Notwithstanding the provisions of the above items, the holder of Stock Acquisition Rights shall not be able to exercise any remaining Stock Acquisition Rights if any of the following events occur during the period from the allotment date of the Stock Acquisition Rights to the expiration date of the exercise period. In the case where the price specified in any of the following items is set in a currency other than Japanese yen, the amount will be converted to Japanese yen using the exchange rate published by Mizuho Bank at the close of business on the last banking business day preceding the occurrence of the event in question, as indicated by the Mizuho Bank's customer telegraphic transfer buying rate (if the exchange rate is not published for any reason, the exchange rate reasonably determined by the Company on that day shall be used) (the amount shall be rounded down to the nearest yen). 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If the issuance or disposal of common stock of the Company for consideration at a price lower than the
exercise price of the Stock Acquisition Rights occurs (excluding cases where the payment amount for such stock is recognized as being different from the market value of the Company's common stock at the time of such issuance or disposal
(including cases where the stock is issued at a "particularly advantageous price" as defined in Article 199, Paragraph 3 and Article 200, Paragraph 2 of the Companies Act, and cases where the stock is issued by a shareholder allotment),
and cases where common stock of the Company is issued or disposed of through the exercise of the Stock Acquisition Rights).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If new Stock Acquisition Rights are issued with an exercise price lower than the exercise price of the
original Stock Acquisition Rights (excluding cases where the exercise price is set at a price different from the market value of the Company's common stock at the time of issuance of such new Stock Acquisition Rights).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If, during a period when the common stock of the Company, which is the subject of the Stock Acquisition
Rights, is listed on any exchange financial product market or foreign financial product market, the closing price of the Company's common stock or a price similar to such closing price on that market falls below the exercise price of the Stock
Acquisition Rights.]

iv) Notwithstanding the provisions of item (ii) above, in the event that the holder of the stock acquisition rights fails to meet the exercise conditions set forth in item (ii) due to death, the heir(s) of such holder may exercise the stock acquisition rights that the holder would have been entitled to exercise had they remained alive, only until the earlier of the date falling one year from the date of the holder's death or the expiration date of the exercise period. 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v) Notwithstanding the provisions of items (ii) and (iv) above, in the event that the holder of the stock
acquisition rights fails to satisfy the exercise conditions set forth in item (ii) due to death, and if the Company, after considering various circumstances, grants written approval for the exercise of the stock acquisition rights by the
heir(s) of such holder, the heir(s) may, even after the deadline specified in item (iv), exercise the stock acquisition rights that the holder would have been entitled to exercise had they remained alive.

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vi) Except as otherwise provided in items (iv) and (v) above, succession of the stock acquisition rights by inheritance shall not be permitted. Furthermore, re-succession of the stock acquisition rights upon the death of the heir of the original holder shall also not be permitted.

vii) A Stock Acquisition Rights holder shall immediately forfeit the exercise of Stock Acquisition Rights specified below from any of the remaining rights, even during the Exercise Period, if any of the following events occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event that the holder of Stock Acquisition Rights is sentenced to imprisonment or a severer penalty
(all remaining Stock Acquisition Rights).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that the holder of the Stock Acquisition Rights violates the employment regulations or other
internal rules of the Company or its affiliates and is subject to disciplinary dismissal or termination at the initiative of the Company (all of the remaining Stock Acquisition Rights), or is otherwise subject to disciplinary action (the number of
the remaining Stock Acquisition Rights as determined by the Board of Directors).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event that the Board of Directors deems it inappropriate to permit the exercise of the Stock
Acquisition Rights in light of the purpose for which the Stock Acquisition Rights were granted (all of the remaining Stock Acquisition Rights).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the event that the holder of the Stock Acquisition Rights submits a request, in the form prescribed by
the Company, to waive all or part of the Stock Acquisition Rights (the number of the remaining Stock Acquisition Rights subject to such request).

viii) The exercise of the Stock Acquisition Rights shall not be permitted if, as a result of such exercise, the total number of issued shares of the Company exceeds the total number of shares that can be issued at that time. 

ix) The exercise of less than one Stock Acquisition Right shall not be permitted.

4. Allotment date of Stock Acquisition Rights

[DATE]

5. Matters concerning the acquisition of Stock Acquisition Rights

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company may acquire Stock Acquisition Rights without compensation at the arrival of the day separately
prescribed by the Board of Directors of the Company, in the event that an agenda for approval of one of the following is approved at the General Meeting of Shareholders of the Company (or, if approval of the General Meeting of Shareholders is not
required, is resolved at the Board of Directors Meeting of the Company):

- a merger agreement, under which the Company shall become an absorbed company

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- a company split agreement or plan, under which the Company shall be split

- a share exchange agreement, or share delivery or share transfer plan, under which the Company shall become a wholly owned subsidiary

However, this shall not apply if the Trust Company, which has a contractual relationship with the Company, is the holder of the Stock Acquisition Rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) In the following cases, the Company may acquire Stock Acquisition Rights without compensation at the arrival
of the day specified by the Board of Directors of the Company:

- a resolution is passed at a General Meeting of Shareholders of the Company to acquire all of the ordinary shares of the Company after amending the Articles of Incorporation of the Company to make the ordinary shares of the Company classified stocks subject to whole acquisition clause

- a resolution is passed at a Company's Board of Directors Meeting to approve a request by special controlling shareholders of the Company to sell Company shares, etc. to another shareholder of the Company

- a resolution is passed at a General Meeting of Shareholders of the Company to approve the consolidation of ordinary shares due to the delisting of the Company

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) If the holder of Stock Acquisition Rights becomes unable to exercise the Stock Acquisition Rights pursuant
to the provisions set forth in 3. (6). ii) through vii) above before exercising the rights, the Company may acquire the Stock Acquisition Rights without compensation on a date determined by the Board of Directors of the Company. However, this shall
not apply if the Trust Company, which has a contractual relationship with the Company, is the holder of the Stock Acquisition Rights.

6. Treatment of Stock Acquisition Rights upon restructuring

In the event that the Company conducts a merger (limited to where the Company is absorbed as a result of the consolidation), an absorption-type company split, an incorporation-type company split, a share exchange, or a share transfer (collectively "Restructuring"), the stock acquisition rights of the companies or its parent company listed in (a) to (e) of Article 236, Paragraph 1, Item 8, of the Companies Act (the "Restructured Company") shall be delivered, in each of the above cases, to the holders of remaining Stock Acquisition Rights at the effective time of Restructuring according to the conditions (1) – (10) described below. However, the foregoing shall be on the condition that delivery of stock acquisition rights of the Restructured Company in accordance with the following conditions is stipulated in an absorption-type merger agreement, a consolidation-type merger agreement, an absorption-type company split agreement, an incorporation-type company split plan, a share exchange agreement, or a share delivery plan.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Number of stock acquisition rights of the Restructured Company to be delivered

The same number of stock acquisition rights as the number of the remaining Stock Acquisition Rights held by a right holder shall be delivered to that right holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Class of shares of the Restructured Company to be issued or transferred upon exercise of stock acquisition
rights

Ordinary shares of the Restructured Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Number of shares of the Restructured Company to be issued or transferred upon exercise of stock acquisition
rights

Shall be determined in accordance with 3. (1) above, based on the consideration of conditions for Restructuring and other factors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Amount of assets to be contributed upon exercise of Stock Acquisition Rights

The value of assets to be contributed upon the exercise of each Stock Acquisition Right to be issued shall be the post-restructuring exercise price obtained by adjusting the exercise price determined in 3. (2) above, multiplied by the number of shares of the Restructured Company to be issued upon exercise of such Stock Acquisition Rights as determined in accordance with 6. (3) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Period during which Stock Acquisition Rights are exercisable

Shall be from the commencement date of the Exercise Period stipulated in 3. (3) above, or the effective date of Restructuring, whichever is later, to the expiry date of the Exercise Period stipulated in 3. (3) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Matters concerning the share capital and legal capital surplus to be increased when shares are issued upon
exercise of Stock Acquisition Rights

Shall be determined in accordance with 3. (4) above

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Restriction on acquisition of Stock Acquisition Rights through transfer

Concerning restrictions on acquisition by transfer, approval by a resolution of the Board of Directors of the Restructured Company (or the General Meeting of Shareholders in the case of a company without a Board of Directors) shall be required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Other conditions for the exercise of Stock Acquisition Rights

Shall be determined in accordance with 3. (6) above

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Terms and conditions for acquisition of Stock Acquisition Rights

Shall be determined in accordance with 5 above

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.

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7. Matters concerning certificates for Stock Acquisition Rights

The Company shall not issue certificates for stock acquisition rights.

8. Others

In the event that revisions to the Companies Act or other laws necessitate the replacement of terms and conditions in these Terms and Conditions or other actions, the Company will take the necessary measures.

## Exhibit 10.79

**Exhibit 10.79** 

**TERMS AND CONDITIONS OF** 

**THE [X] ISSUANCE OF STOCK ACQUISITION RIGHTS** 

1. Number of Stock Acquisition Rights

[X]

The total number of shares that may be delivered upon exercise of Stock Acquisition Rights shall be [X] ordinary shares of PayPay Corporation (the "Company"), and if the number of shares allotted per Stock Acquisition Right is adjusted in accordance with 3-(1) below, the adjusted number of allotted shares shall be multiplied by the number of Stock Acquisition Rights.

2. Payment of cash in exchange for Stock Acquisition Rights

No payment of consideration shall be required upon the issuance of these stock acquisition rights.

3. Details of Stock Acquisition Rights

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Class and number of shares to be issued or transferred upon exercise of Stock Acquisition Rights

The class of shares to be issued or transferred upon exercise of Stock Acquisition Rights shall be ordinary shares of the Company. The number of shares to be issued or transferred upon exercise of each Stock Acquisition Right (the "Number of Shares to be Allotted") shall be one share.

However, in the event the Company conducts a stock split or a consolidation of shares with respect to its ordinary shares after the allotment date of Stock Acquisition Rights, the Number of Shares to be Allotted shall be adjusted using the following formula, and the total number of shares to be issued or transferred upon exercise of all Stock Acquisition Rights shall be adjusted accordingly. Such adjustment shall be made only to the Number of Shares to be Allotted for Stock Acquisition Rights that have not yet been exercised at the time of the adjustment. Any amount less than one share arising from the adjustment shall be rounded down.

Number of Shares to be Alloted after adjustment = Number of Shares to be Alloted before adjustment x Ratio of stock split or stock consolidation

Other than the above, in the event the Company conducts a merger, company split, share exchange, or share delivery after the allotment date of the Stock Acquisition Rights, or in the event the Number of Shares to be Allotted needs to be adjusted pursuant to such events, the Company may adjust the Number of Shares to be Allotted in a suitable manner within reasonable scope.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Amount or calculation method of assets to be contributed upon exercise of Stock Acquisition Rights

The amount of the assets to be contributed upon exercise of each Stock Acquisition Right shall be obtained by multiplying the price per share to be delivered upon exercise of each Stock Acquisition Right (the "Exercise Price") by the Number of Shares to be Allotted.

The Exercise Price shall be 1 yen.

If the Company conducts a stock split or a reverse stock split after the allotment date of Stock Acquisition Rights, the Exercise Price shall be adjusted in accordance with the following formula, and any fraction less than one (1) yen resulting from the adjustment shall be rounded up to the nearest one (1) yen.

Exercise Price after adjustment = Exercise Price before adjustment x 1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratio of split or consolidation

In addition, if, after the allotment date of Stock Acquisition Rights, the Company issues new shares or disposes of treasury stock at a price lower than The Exercise Price before adjustment with respect to the ordinary share of the Company (excluding cases where new shares are issued or treasury stock is disposed of upon the exercise of Stock Acquisition Rights, the exercise of acquisition rights for shares of a class other than ordinary shares or the triggering of acquisition provisions for such shares, or where new shares are issued or treasury stock is delivered due to a merger, company split, share exchange, share transfer, or share delivery), The Exercise Price shall be adjusted in accordance with the following formula, and any fraction less than one yen resulting from the adjustment shall be rounded up to the nearest one (1) yen.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Number of shares<br>newly issued | <br> +  | Number of shares<br>already issued | x | Paid-in amount <br> per share |
| Exercise Price<br>after adjustment | =  | Exercise Price<br>before adjustment | <br> x<br>| Number of shares<br>newly issued | <br> +  | Exercise Price<br> before adjustment | Exercise Price<br> before adjustment | Exercise Price<br> before adjustment |
|  | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued | Number of shares already issued + Number of shares newly issued |

---

In the above formula, the "number of shares already issued" shall be the number obtained by deducting the number of shares of treasury stock of the Company's ordinary shares from the total number of shares issued of the Company's ordinary shares, and in the case of the disposal of treasury stock of the Company's ordinary shares, the "number of shares already issued" shall be read as "number of treasury stock to be disposed of."

------

Furthermore, other than the above, after the allotment date of Stock Acquisition Rights, in the event that the Company conducts a merger, company split, share exchange, share transfer or share delivery, or if Stock Acquisition Rights or shares of a class other than ordinary shares are issued that result in the issuance of ordinary shares of the Company at a price lower than the Exercise Price before adjustment, or if it is necessary to adjust the Exercise Price in accordance with other such cases, the Company may appropriately adjust the Exercise Price to a reasonable extent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Period during which Stock Acquisition Rights are exercisable

The period during which Stock Acquisition Rights are exercisable (the "Exercise Period") is from [DATE], until [DATE] (or the preceding bank business day if the last day is not a bank business day).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Matters concerning the share capital and legal capital surplus to be increased

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) The amount of share capital to be increased due to the issuance of shares upon exercise of Stock Acquisition
Rights shall be one half (1/2) of the maximum amount of increase in the share capital, etc. to be calculated according to Article 17, Paragraph 1 of the Corporate Accounting Regulations, with any amount less than one (1) yen arising from such
calculation to be rounded up.

ii) The amount of legal capital surplus to be increased due to the issuance of shares upon exercise of Stock Acquisition Rights shall be the amount obtained by deducting the amount of share capital to be increased set forth in (i) above, from the maximum possible amount of increase in the share capital, etc. set forth in (i) above. 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Restriction on the acquisition of Stock Acquisition Rights through transfer

Any acquisition of Stock Acquisition Rights through transfer shall require the approval by resolution of the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Conditions for the exercise of Stock Acquisition Rights

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) The holder of these Stock Acquisition Rights may exercise the rights only if the Company's shares are
listed on a financial product market of a stock exchange or a foreign financial product market.

ii) If the holder of these Stock Acquisition Rights resigns or retires from their position as a director of a subsidiary of the Company or as an executive officer under a business execution delegation agreement before exercising the rights, the holder will not be able to exercise the Stock Acquisition Rights, unless the resignation or retirement is due to the expiration of the term, mandatory retirement, death, retirement due to company reasons, voluntary retirement (excluding cases of changing jobs to a competing company, except when such transfer is recognized by the Company or occurs at the request of the Company), or other justifiable reasons. If there are justifiable reasons, the holder may exercise the Stock Acquisition Rights within 10 days from the day following the date the position as a director or executive officer of the Company or its subsidiary ends, and after this period, the rights cannot be exercised. 

------

iii) Notwithstanding the provisions of item (ii) above, in the event that the holder of the stock acquisition rights fails to meet the exercise conditions set forth in item (ii) due to death, the heir(s) of such holder may exercise the stock acquisition rights that the holder would have been entitled to exercise had they remained alive, only until the earlier of the date falling one year from the date of the holder's death or the expiration date of the exercise period. 

iv) Notwithstanding the provisions of items (iii) above, in the event that the holder of the stock acquisition rights fails to satisfy the exercise conditions set forth in item (iii) due to death, and if the Company, after considering various circumstances, grants written approval for the exercise of the stock acquisition rights by the heir(s) of such holder, the heir(s) may, even after the deadline specified in item (iii), exercise the stock acquisition rights that the holder would have been entitled to exercise had they remained alive. 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v) Except as otherwise provided in items (iii) and (iv) above, succession of the stock acquisition rights
by inheritance shall not be permitted. Furthermore, re-succession of the stock acquisition rights upon the death of the heir of the original holder shall also not be permitted.

vi) Notwithstanding the items above, the holders of Stock Acquisition Rights may not exercise all of their remaining Stock Acquisition Rights if any of the following events occurs between the listing of the Company's shares, etc. on a financial instruments exchange market or foreign financial instruments market and the expiration date of the Exercise Period of Stock Acquisition Rights. 

In the event that the prices set forth in the following items are determined in a currency other than Japanese yen, they shall be converted into Japanese yen (with any amount less than one (1) yen arising from such calculation to be rounded down) using the middle rate of the telegraphic transfer market for customers published by Mizuho Bank, Ltd. at the end of business hours on the bank business day preceding such specific day (if such exchange rate is not published for some reason, the Company shall use the exchange rate reasonably determined by the Company on such preceding bank business day).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event of the issuance or disposal of shares of ordinary shares of the Company at a price that is
lower than the Assumed Value (which shall be [X] yen; the same shall apply hereinafter).

However, the following cases are excluded.

- In the event of the amount to be paid for such shares is made at a price that is deemed to be different from the value of the shares of our ordinary shares at the time of such issuance or disposal (including cases where such shares are issued at a "Particularly favorable amount" as defined in Article 199, Paragraph 3 and Article 200, Paragraph 2 of the Companies Act and cases due to a shareholder allotment).

- The issuance or disposal of shares of ordinary shares of the Company upon the exercise of Stock Acquisition Rights, the exercise of acquisition rights for shares of a class other than ordinary shares or the triggering of acquisition provisions for such shares, or the issuance or delivery of shares of ordinary shares of the Company upon merger, company split, share exchange, or share delivery

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that new stock acquisition rights are issued with an exercise price that is lower than the
assumed price (excluding in the case where such stock acquisition rights are issued with the exercise price set at a price different from the share value of the Company's ordinary shares at the time of issuance of such stock acquisition
rights)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event that the closing price of our ordinary shares in ordinary transactions on financial instruments
exchange market or foreign financial instruments market, or a price equivalent to such closing price, falls below the Assumed Value during the period when Company shares, etc. are listed on any financial instruments exchange market or foreign
financial instruments market.

vi) The holder of these Stock Acquisition Rights shall immediately lose the right to exercise such rights in the event that any of the following conditions apply during their tenure as a director or executive officer of the Company or its subsidiaries:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If the holder becomes subject to the disqualification grounds specified in Article 331, Paragraph 1, Items 3
and 4 of the Companies Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the holder engages in competitive transactions in violation of Article 356, Paragraph 1, Item 1 of the
Companies Act without following the necessary procedures under the Companies Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the holder engages in conflict-of-interest transactions in violation of Article 356, Paragraph 1, Items 2 or 3 of the Companies Act without following the necessary procedures under the
Companies Act.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the holder is sentenced to imprisonment or a more severe penalty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If the holder engages in acts that damage the social trust of the Company, its subsidiaries, or affiliates,
or any other acts recognized as disloyal towards the Company, its subsidiaries, or affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) If the Board of Directors determines that, based on the purpose of granting the Stock Acquisition Rights, it
is inappropriate to allow the exercise of such rights.

vii) The exercise of the Stock Acquisition Rights shall not be permitted if, as a result of such exercise, the total number of issued shares of the Company exceeds the total number of shares that can be issued at that time. 

viii) The exercise of less than one Stock Acquisition Right shall not be permitted.

4. Allotment date of Stock Acquisition Rights

[DATE]

5. Matters concerning the acquisition of Stock Acquisition Rights

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company may acquire Stock Acquisition Rights without compensation at the arrival of the day separately
prescribed by the Board of Directors of the Company, in the event that an agenda for approval of one of the following is approved at the General Meeting of Shareholders of the Company (or, if approval of the General Meeting of Shareholders is not
required, is resolved at the Board of Directors Meeting of the Company):

- a merger agreement, under which the Company shall become an absorbed company

- a company split agreement or plan, under which the Company shall be split

- a share exchange agreement, or share delivery or share transfer plan, under which the Company shall become a wholly owned subsidiary

However, this shall not apply if the Trust Company, which has a contractual relationship with the Company, is the holder of the Stock Acquisition Rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) In the following cases, the Company may acquire Stock Acquisition Rights without compensation at the arrival
of the day specified by the Board of Directors of the Company:

- a resolution is passed at a General Meeting of Shareholders of the Company to acquire all of the ordinary shares of the Company after amending the Articles of Incorporation of the Company to make the ordinary shares of the Company classified stocks subject to whole acquisition clause

- a resolution is passed at a Company's Board of Directors Meeting to approve a request by special controlling shareholders of the Company to sell Company shares, etc. to another shareholder of the Company

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- a resolution is passed at a General Meeting of Shareholders of the Company to approve the consolidation of ordinary shares due to the delisting of the Company

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) If the holder of Stock Acquisition Rights becomes unable to exercise the Stock Acquisition Rights pursuant
to the provisions set forth in 3. (6). i) through vii) above before exercising the rights, the Company may acquire the Stock Acquisition Rights without compensation on a date determined by the Board of Directors of the Company. However, this shall
not apply if the Trust Company, which has a contractual relationship with the Company, is the holder of the Stock Acquisition Rights.

6. Treatment of Stock Acquisition Rights upon restructuring

In the event that the Company conducts a merger (limited to where the Company is absorbed as a result of the consolidation), an absorption-type company split, an incorporation-type company split, a share exchange, or a share transfer (collectively "Restructuring"), the stock acquisition rights of the companies or its parent company listed in (a) to (e) of Article 236, Paragraph 1, Item 8, of the Companies Act (the "Restructured Company") shall be delivered, in each of the above cases, to the holders of remaining Stock Acquisition Rights at the effective time of Restructuring according to the conditions (1) – (10) described below. However, the foregoing shall be on the condition that delivery of stock acquisition rights of the Restructured Company in accordance with the following conditions is stipulated in an absorption-type merger agreement, a consolidation-type merger agreement, an absorption-type company split agreement, an incorporation-type company split plan, a share exchange agreement, or a share delivery plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Number of stock acquisition rights of the Restructured Company to be delivered

The same number of stock acquisition rights as the number of the remaining Stock Acquisition Rights held by a right holder shall be delivered to that right holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Class of shares of the Restructured Company to be issued or transferred upon exercise of stock acquisition
rights

Ordinary shares of the Restructured Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Number of shares of the Restructured Company to be issued or transferred upon exercise of stock acquisition
rights

Shall be determined in accordance with 3. (1) above, based on the consideration of conditions for Restructuring and other factors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Amount of assets to be contributed upon exercise of Stock Acquisition Rights

The value of assets to be contributed upon the exercise of each Stock Acquisition Right to be issued shall be the post-restructuring exercise price obtained by adjusting the exercise price determined in 3. (2) above, multiplied by the number of shares of the Restructured Company to be issued upon exercise of such Stock Acquisition Rights as determined in accordance with 6. (3) above.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Period during which Stock Acquisition Rights are exercisable

Shall be from the commencement date of the Exercise Period stipulated in 3. (3) above, or the effective date of Restructuring, whichever is later, to the expiry date of the Exercise Period stipulated in 3. (3) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Matters concerning the share capital and legal capital surplus to be increased when shares are issued upon
exercise of Stock Acquisition Rights

Shall be determined in accordance with 3. (4) above

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Restriction on acquisition of Stock Acquisition Rights through transfer

Concerning restrictions on acquisition by transfer, approval by a resolution of the Board of Directors of the Restructured Company (or the General Meeting of Shareholders in the case of a company without a Board of Directors) shall be required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Other conditions for the exercise of Stock Acquisition Rights

Shall be determined in accordance with 3. (6) above

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Terms and conditions for acquisition of Stock Acquisition Rights

Shall be determined in accordance with 5 above

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.

7. Matters concerning certificates for Stock Acquisition Rights

The Company shall not issue certificates for stock acquisition rights.

8. Others

In the event that revisions to the Companies Act or other laws necessitate the replacement of terms and conditions in these Terms and Conditions or other actions, the Company will take the necessary measures.

## Exhibit 23.1

**Exhibit 23.1** 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form F-1 of our report dated December 17, 2025, relating to the financial statements of PayPay Corporation. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ Deloitte Touche Tohmatsu LLC

Tokyo, Japan

March 2, 2026

## Ex-Filing

?xml version='1.0' encoding='ASCII'? EX-FILING FEES

---

| |
|:---|
| **Calculation of Filing Fee Tables**  |
| &nbsp;&nbsp;&nbsp;&nbsp;**F-1**  |
| &nbsp;&nbsp;&nbsp;&nbsp;**PayPay Corp**  |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | **Security Type**  | **Security Class Title**  | **Fee Calculation or Carry Forward Rule**  | **Amount Registered**  | **Proposed Maximum Offering Price Per Unit**  | **Maximum Aggregate Offering Price**  | **Fee Rate**  | **Amount of Registration Fee**  |
| **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** |
| Fees to be Paid | 1 | Equity | Common Shares, no par value, as represented by American Depositary Shares | 457(a) | 58235295 | $20.00 | $1164705900.00 | 0.0001381 | $160845.88 |
| Fees Previously Paid | 2 | Equity | Common shares, no par value, as represented by American Depositary Shares | 457(a) | 5000000 | $20.00 | $100000000.00 |  | $13810.00 |
| **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** |
| Carry Forward Securities |  |  |  |  |  |  |  |  |  |
|  |  |  | Total Offering Amounts: | Total Offering Amounts: | Total Offering Amounts: |  | $1264705900.00  |  | $174655.88  |
|  |  |  | Total Fees Previously Paid:  | Total Fees Previously Paid:  | Total Fees Previously Paid:  |  |  |  | $13810.00  |
|  |  |  | Total Fee Offsets:  | Total Fee Offsets:  | Total Fee Offsets:  |  |  |  | $0.00  |
|  |  |  | Net Fee Due:  | Net Fee Due:  | Net Fee Due:  |  |  |  | $160845.88  |

---

 **Offering Note** <br>

<sup>1</sup> (a) The common shares will be represented by American Depositary Shares, or ADS, which will be registered under a separate registration statement on Form F-6 and are issuable upon deposit of the common shares registered hereby. Each ADS will represent one common share. (b) Includes the aggregate offering price of additional shares represented by ADSs that the underwriters have the option to purchase. (c) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.

<sup>2</sup> (a) See note 1(a) above. (b) See note 1(b) above. (c) The Registrant previously paid a registration fee of $13,810.00 in connection with initial filing of the Registration Statement on Form F-1 on February 12, 2026. The fee was estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. This Maximum Aggregate Offering Price was originally registered under 457(o) and is now converted to 457(a).

---

| | |
|:---|:---|
| | |
| **Rules 457(b) and 0-11(a)(2)** | **Rules 457(b) and 0-11(a)(2)** |
| Fee Offset Claims | N/A |
| Fee Offset Sources | N/A |
| **Rule 457(p)** | **Rule 457(p)** |
| Fee Offset Claims | N/A |
| Fee Offset Sources | N/A |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Security Type**  | **Security Class Title**  | **Amount of Securities Previously Registered**  | **Maximum Aggregate Offering Price of Securities Previously Registered**  | **Form Type**  | **File Number**  | **Initial Effective Date**  |
| N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |

---