PayPay Corporation (PAYP.O): Flywheel Continues to Spin

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PayPay Corporation (PAYP.O): Flywheel Continues to Spin

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31 Jul 2026 16:53:25 ET │ 14 pages

PayPay Corporation (PAYP.O)

Flywheel Continues to Spin

CITI'S TAKE

PAYP reported a strong F1Q26 with KPIs such as GMV growth, MTUs, and

Adj. EBITDA margins all coming in nicely ahead, leading to an annual

guidance raise. Management leaned into expanding eKYC users this Neutral / High Risk

quarter, strategically reducing the cross-sell friction traditionally seen when Price (31 Jul 26 16:00) US$15.13

going from digital wallet only to bank/brokerage accounts. Transaction

costs and fraud should fall while user account protections and transaction Target price US$18.00↓

limits increase, which we view as supportive of GMV longer term. We believe from US$23.00

that the company’s move to acquire a majority stake of T&D Life extends the Expected share price return 19.0%growing financial services footprint that the digital app seeks to have,

though there is the risk of multiple dilution. We remain Neutral/HR but lower Expected dividend yield 0.0%

our TP to $18 due to peer group multiple compression. Expected total return 19.0%

Market Cap US$10,242M

Strengths

n Annual Guidance Raise. PAYP raised its annual financial guidance by more than

the size of the beat (F1Q revenues outperformed the midpoint of the guide by 5 Price Performance

bln JPY vs the raise of 11 bln JPY at midpoint), suggesting that management

(RIC: PAYP.O, BB: PAYP US) believes the strong momentum in F1Q can continue in the following quarters.

– Total Revenue: anticipates 465-473 bln JPY (growth of 22-24% Y/Y) vs 454-

462 bln JPY (growth of 19-21%) prior.

– Adj. EBITDA: anticipates 149-155 bln JPY (margins of 32.4%) vs 134.5-140.5

bln JPY (margins of 30% at midpoint) prior.

n Strong Adj.