It is time. We would like to begin Mercari, Inc.'s FY 2026 full- year earnings briefing. I will be the emcee today. My name is Takasu. Thank you. Today we have with us Representative Executive Officer and CEO Shintaro Yamada, as well as Executive Officer, SVP of Corporate and CFO Sayaka Eda here with us today. They will take us through the full year briefing for FY 2026. After the presentation, we will have a Q&A session for the media, and this session is estimated to finish at 4:45 P.M. Please refrain from recording and streaming the entire session. Mr. Yamada, please go ahead.
Thank you for joining Mercari's FY 2026 full- year earnings briefing. I am Shintaro Yamada, Representative Executive Officer and CEO of Mercari. This is the agenda we will follow today. SVP of Corporate and CFO Eda will take you through the recent earnings.
As for my part, I would like to start with a summary of FY 2026 and the progress with respect to our midterm plan. This is our achievement in FY 2026 of our consolidated business forecast. This fiscal year, mainly our marketplace business witnessed earlier than expected positive impact from improvements in our product's core experience, which led to two upward revisions in our forecast during the fiscal year. Ultimately, we booked JPY 229.2 billion in revenue and JPY 44.1 billion in core operating profit, exceeding our revised targets on both fronts, achieving record high results. Revenue grew 19% year-on-year, recovering to double-digit growth for the first time in three years. Next, moving on to the summary. We positioned this fiscal year as the year of preparation for FY 2027, the final year of our midterm plan.
We have endeavored to achieve top line growth that leads to increased profits and to expand business centered around group synergy. We have focused in these areas. While focusing on making enhancements to our product's core experience, we have seen faster than expected results this fiscal year. The results can be summarized into two categories. One is return to double-digit revenue growth. We announced at our FY 2024 full year earnings briefing that we will achieve double-digit CAGR growth over the midterm by FY 2027. Having said that, we were unable to realize the desired top line growth in the first year in FY 2025 of our midterm plan. Thus, we refocused our efforts to further accelerate our top line growth in FY 2026.
As a result, as you see here, we were able to achieve high growth in each segment and recover to double-digit consolidated revenue growth. Second is establishing the revenue base of the group. During the midterm plan period, we aspire to create a strong revenue foundation so that the marketplace, FinTech and U.S. businesses can each contribute to profits. We invested and sowed the seeds for our future growth and reexamined our portfolio, including prioritization and divestment. Company-wide usage of AI has improved productivity, contributing to strengthening of group's revenue base. The revenue and profitability of all of our three business segments improved and marked record high results. We saw solid results this fiscal year. However, we know that there are still some challenges, namely creation and expansion of group synergy, growth of the marketplace MAU, and U.S. GMV growth rate.
We will overcome these challenges to realize even faster results. We also scaled up our AI initiatives over the past fiscal year. We declared at the full year announcement last fiscal year that we will evolve into an AI-native company and adopt an AI-driven approach in everything that we do to fundamentally transform our organization and our product. We have now completed a foundation for our AI native transformation. First, 100% of our employees now use AI tools, and collaborating with AI daily has become commonplace. The next stage involves engineers and non-engineers, not only using AI agents, but creating AI agents to solve issues faced during daily work. To further improve our AI maturity, we will continue to run this AI Agent Day initiative regularly so that we can become even more AI native.
During the first half of the fiscal year, through the AI task force, we conducted a comprehensive review of all business processes and identified approximately one million hours worth of productivity improvement. Then we transformed our business process using AI and managed to realize nearly half, or 495,000 hours of improvement. Moreover, we have identified 770,000 more hours of potential improvement. Compared to two years ago, output per engineer has increased 7.6 x, thereby dramatically improving the speed at which we enhance our CX and add or improve new functionalities. We are also seeing concrete results in AI implementation into our products and development process. For example, we have significantly improved the accuracy of our recommendations in our search and home screens and improved the listing completion rate through AI listing support feature, which uses AI to make suggestions, thereby increasing transaction activity.
Furthermore, we enhanced fraud monitoring utilizing AI to establish a safer and more secure transaction environment. We believe these core product improvements are contributing to GMV growth. In addition, with AI-driven development, we are increasingly able to develop new services and features with fewer engineers and shorter lead times. To support the speed of this AI native transformation, we established a dedicated AI governance organization and formulated the Mercari Group AI Usage Policy to balance both speed and security. We will continue to strengthen our organization by establishing a permanent AI task force and continue our journey to become an AI native company. Next, I would like to share our future direction with respect to our AI native transformation. First, with adoption of AI, our business and development are dramatically accelerating.
To maximize the speed, we will update the way we work, organizational structure, and HR framework with AI in mind. Kimura, our former CTO, will now serve as both CHRO and Chief AI Officer, enabling us to promote both AI and HR. We will redesign our workflows and organizational structure based on AI agents. We will also continue with our AI native transformation in both product innovation and organizational reform. With respect to product innovation, we will fully adopt AI to radically change our service. More specifically, to enhance our CX, we will accelerate the development of a proprietary AI model based on Mercari's data and use cases. This will be implemented to our search and recommendation features. Moreover, we will use AI to enhance CS capabilities to improve response speed and enable multilingual support.
We will also create a safer and more secure environment by strengthening fraud detection and improving authenticity appraisal speed. To provide our customers value unique to AI, we will also develop shopping agents, among others. With respect to organizational reform, we will promote the development of AI agents by engineers and non-engineers alike. We hope to completely establish an environment where AI agents collaborate across all business domains. We will standardize AI pods with small group of engineers who will be involved in development from end to end, from requirement definition, quality assurance, to release. By doing so, we want our teams to transcend organizational roles, enable more products, and accelerate new business creation and new AI-based user experiences. In addition, we want to strengthen AI-based decision support, delegate authority to frontline teams, and renew approval processes.
By redesigning AI implementation and evaluation system as a single integrated effort, we will accelerate our business execution speed. Furthermore, we will utilize AI for business reviews conducted by the risk management division, thereby building AI-driven capabilities to support both offensive and defensive initiatives. Here is our midterm plan progress to date. We are making steady progress to achieve both double-digit CAGR revenue growth and core operating profit CAGR of more than 25%. We have achieved our core OP target one year ahead of schedule. We also plan to achieve our revenue CAGR target, and we will endeavor to continue to grow both revenue and core OP. We have also shared our 2B vision over the midterm for each of our core businesses. We updated a few things, but no major changes have been made. We will continue to do our best to achieve these goals.
We are undertaking these initiatives to deliver on our group mission. Currently, we are working on our next midterm plan, which will start in FY 2028, to be announced next fiscal year. We will continue to do our best to achieve our mission, circulate all forms of value to unleash the potential in all people. This concludes my presentation. Eda will now introduce the FY 2026 financial results. Thank you very much.
Thank you very much, Mr. Yamada. Ms. Eda, please go ahead.
Good afternoon. I'm Eda, the CFO. From here, I will take you through the financial results for FY 2026. Here is the consolidated result forecast and guidance achievement for each business. Yamada talked about the consolidated results, but we have made upward revisions twice this fiscal year to both revenue and core OP. We landed at JPY 229.2 billion, growing by 19% year-on-year.
Core operating profit was JPY 44.1 billion, growing 60% year-on-year. We have grown significantly over the past fiscal year. This is by business. Per business, marketplace, we did update the guidance as well in the middle of the fiscal year. Year-on-year, we grew at 15%, so we have achieved double-digit growth for the first time in a while. Core operating profit was JPY 42.9 billion, significantly overachieving the guidance. In FinTech in U.S., we did not make upward revisions to these businesses, but we have dramatically overachieved the guidance that we announced at the beginning of the fiscal year. FinTech, the range was JPY 5 billion-JPY 7.5 billion, but core operating profit landed at JPY 9.1 billion. With respect to U.S., we wanted to grow positively year-on-year while maintaining break even.
GMV growth rate was 11% year-on-year, and core operating profit was JPY 2 billion. All of the core businesses, we saw excellent performance. This is the consolidated results for the full year, and this is quarterly results. With respect to the quarterly results, as I explained during the earnings briefing for Q3, we have invested our core OP towards our future growth. First half, we saw great traction, so we started to additionally invest towards FY 2027 and beyond. We executed on those plans as initially planned. Moving on to performance by business. First, starting with the marketplace. As we mentioned at the beginning of the year, these are the business objectives, and we are going to focus on enhancing the product's core experience and strengthen cross-border transactions. We wanted to lay the foundations for accelerating GMV growth in FY 2026, 2027, and beyond.
MAU went beyond 24 million. As I mentioned before, the full year GMV growth rate was +15% year-on-year, recovering to double-digit growth for the first time in three years. We created a safer and more secure transaction environment and improved usability. We improved our core experience. We saw an improvement in the number of users, ARPU, and frequency. These grew in a well-balanced way. Using this as a platform, we have conducted large-scale marketing initiatives such as Super Mercari Market Days to maintain GMV growth momentum. For the focus area of cross-border transactions, we saw strong demand in entertainment and hobby category, with GMV growing steadily to JPY 112.2 billion, approximately 9% of total GMV. This grew quite steadily. We also expanded our inventory through our partnership with Surugaya.
We also released in the fall a global app and direct cross-border transactions. We started with Hong Kong and Taiwan, and in June, we started in U.S. as well. We have been implementing and have made progress with our initiatives for future growth. These are the results for the marketplace GMV and core operating profit. As I mentioned before, we grew double digits. As such, core OP has significantly increased as well. This is by quarter. The fourth quarter GMV was JPY 346.2 billion, growing 26% year-over-year. This grew significantly. FY 2025, it was a very hard quarter for us, the fourth quarter in FY 2025, so the hurdle was low. Due to the Super Mercari Market Days, it usually tends to be in March and December, and we actually have these large-scale marketing initiatives at high seasons.
For various reasons, we conducted this in June. We saw great results from Super Mercari Market Days, and solid performance of the entertainment and hobby tech category resulted in high growth this quarter. Moving on to the core operating profit and cost composition. As I mentioned when I introduced the consolidated results, and as I explained during our third quarter earnings brief, we made proactive investment in marketing initiatives this quarter, including Super Mercari Market Days and in growth for FY 2027. Thus our core OPM, operating profit margin, decreased quarter-on-quarter. However, we have been investing for the next fiscal year onwards, and despite that, we were able to achieve high core operating profit. In the marketplace, we have implemented many initiatives to make sure that we provide a safe and secure environment for a transaction. As a result, GMVs grew quite rapidly.
Here are some key topics. For example, we implemented a full cover support program and anonymous return service. Customer support, we also provided more guarantees. Compared to two years ago, the rate of inquiries related to transactions dropped from 0.49% to 0.35%, and the percentage of transaction in which users are compensated within 48 hours improved from last year's figure of 40.9% to a dramatic 92.6%. We have been able to improve the customer experience. We are also utilizing AI to create fraud detection scores and tighten account restriction. We also established the Mercari Appraisal Center and waived appraisal costs for items over a certain price. By offering authentication services and defining rules, the number of items Safe Appraisal was used on nearly tripled year-over-year, demonstrating its contribution to anti-counterfeiting measures.
Our measures to provide a safe and secure environment for transaction has borne fruit. Moving on to the FinTech business summary. This is the business objective that we announced at the beginning of the fiscal year. We wanted to establish a foundation to become a product that is chosen by users for all payment and credit use cases. Aim for core operating profit of JPY 5 billion- JPY 7.5 billion. With FinTech, we managed to grow both the top line and profits rapidly. Thus the core operating profit, as I mentioned before, was JPY 9.1 billion. We greatly surpassed the initial guidance. We have issued 6.32 million MerCards and number of crypto asset trading accounts have grown steadily to 4 million. We have been able to expand the user base quite steadily. In particular, MerCard acquisition and usage.
We have been working on many campaigns together with merchants, and these figures have grown rapidly. Thus our external transaction value has grown. We saw great results in terms of our external transaction value. We have added new features. Leveraging partnerships, not only ourselves, but leveraging partnerships. We have made progress in building a foundation to become a product that is chosen by users. For example, we provided BaaS functions and crypto assets. We have added a variety of crypto assets through this partnership. By adding new features by leveraging partnerships, we have built a foundation to become a product that is chosen by users for a wide range of payment and credit use cases. These are the business trends. We achieved both high revenue and profit growth for FinTech. This is for the quarter.
We started with the payment business, but over the midterm, we believe the credit business is going to be the midterm growth driver. We have built a foundation based on credit. Therefore, by leveraging the unique characteristics as a stock business, we have been able to realize steady revenue growth. As I mentioned before, this is the quarterly core operating profit and advertising cost. In the fourth quarter, as I mentioned before with marketplace, we have been strengthening our investment for FY 2027 and beyond. As planned, we have amplified our investment in MerCard and Merpay acquisitions. The advertising spend increased significantly to JPY 5.9 billion as a result of our efforts. This is the fintech expansion of credit balance has been growing stably.
We have been able to gradually expand credit limits due to our unique AI credit model, which has resulted in high credit balance growth and high collection rate. Moving on to the U.S. business summary. The business objective for the U.S. business that we announced at the beginning of fiscal year is as follows: Continue to break even while aiming for positive full year GMV growth year-on-year, by enhancing the product's core experience and distinguishing ourselves from our competitors by using category-specific strategies. It is quite close to the marketplace business in Japan, but we wanted to focus on improving core product experience. We have implemented category-specific CRM measures as well and shipping discount promotions. Therefore, we successfully captured strong demand in entertainment and hobby categories. These efforts enable us to achieve double-digit GMV growth for the full year.
By maintaining disciplined investment, we have been able to achieve core operating profit of JPY 2 billion. Basically, our grassroots efforts to improve our core product has produced early results. Next fiscal year onwards, we have a great foundation in place for growth. We have achieved the midterm target ahead of plans. This is the full year results for the U.S. business. GMV has grown positively this fiscal year, and GMV and core OP reached the bottom in FY 2025. It has recovered, and core OP has improved every year. These are the quarterly results. Moving on to the financial forecast for FY 2027 and business objectives. This is the consolidated financial forecast for FY 2027. We aim to achieve a revenue of JPY 260 billion -JPY 290 billion. Core operating profit will be JPY 45 billion or more. These are our forecasts from JPY 260 billion- JPY 290 billion.
This is the final year of our midterm plan. We have announced that we want to achieve more than 10% CAGR growth over the three years, and this will enable us to achieve 12%-16% CAGR growth over the three years. Core operating profit, Yamada mentioned that we have already achieved this target ahead of schedule, and three-year CAGR will come out to be about 34% or more. We want to continue to balance high growth with investments for mid to long term growth while maintaining top-line growth that drives profit growth. The core operating profit is going to be more than JPY 45 billion. However, taking into consideration the uncertainty of one-year investment plans, we have decided to disclose a lower range of the core OP. We may revise our forecast as necessary depending on the progress we make in the first semester.
Moving on to the business objectives for the next fiscal year. I already talked about the guidance, but we want to become an AI native company utilizing AI agents. We are making company-wide efforts. The guidance and the objectives for each business, I will talk about these more in detail from the next page onwards. First, starting with the marketplace business. These are our business objectives. We aim to maintain a high GMV growth rate by focusing on strengthening cross-border transactions while continuing to enhance the product's core experience. We aim for GMV growth rate of 10%-15% year-on-year, and core operating profit of JPY 45 billion or more. This is our guidance. There are three key important objectives: enhancing the product's core experience, enhancing entertainment value, and cross-border transactions.
With respect to improving the product's core experience, we want to improve the core experience by leveraging AI. We now have the foundations in place that will enable us to develop more and more features with a smaller engineering team. We want to continue to improve the core experience, especially customer support structure, as well as the authentication feature. These are very important, and we will continue to invest in these areas to build a stronger product foundation. With respect to enhancing entertainment value, I would like to talk about that more in detail on the next page. In addition to enhancing the product's core experience, we want to improve the entertainment value of the core experience to grow both MAU and the time spent on our app. With respect to MAU is more than 24 million now, as I mentioned earlier.
The cumulative number of Mercari users has exceeded 60 million. They're not coming every month, but they're coming once in a while. O f course, there are dormant users as well. We want to reactivate existing infrequent users, which will help us improve MAU. There's great potential here. We want to focus on new acquisitions and acquisitions in the global market through cross-border transactions as well. We want to improve our entertainment value, and we want many customers to come back or welcome new users as well, so that we can continue to improve our MAU. In terms of time spent, we have seen noteworthy growth in time spent, but there is room to improve. Our current app is more purpose-specific. People come because they want to buy something specific or sell something.
We want to transform from a purpose-specific service to a place people visit for fun, just browse, and we want people to discover and search for things that they would like. We want to become a service that people just use day-to-day and visit for fun. We will add the auction feature and enhance the discovery search experience to further increase the entertainment value of our service. Expanding cross-border transactions, if I may touch upon this as well. FY 2026, we have aimed to grow direct cross-border transactions in Taiwan, Hong Kong, and U.S., and we believe there's still room for growth. We'll focus on growing the business and also expand the service to other countries and regions. We will accelerate our global expansion efforts.
We will also strengthen partnerships with B2C companies such as Surugaya to increase inventory in the entertainment and hobby category, which are in high demand. Despite changes in the business environment, including higher tariffs. There was a lot of headwind for the cross-border business, even though we grew quite rapidly. But we were able to expand the GMV, grow the GMV to JPY 112.2 billion. Our direct cross-border transactions in Taiwan surpassed transactions through the partner site. We would like to further accelerate our efforts in this area in FY 2027 and beyond. These are the major investment areas for Marketplace going forward. We talked about improving the core product experience, the CS structure, as well as authentication. We also can develop with smaller pods. But we want to make sure that we will hire AI-native talent that will enable us to deliver on our objectives.
Moving on to the FinTech business objectives. We will leverage partnerships and enhance the user experience to seamlessly connect payment, credit, and other features to achieve sustainable transaction value and credit growth, promote daily use, and create opportunities for credit. We will aim to achieve core OP of more than JPY 10 billion in FY 2027. There are two key focal areas: increasing total transaction value and build further trust. First, starting with increasing transaction value. It's been more than three years since we started issuing MerCards, but the credit business or transactions have grown 2.2 fold over the last three years. We will aspire to achieve further transaction growth. It's only been three years since we began, so we don't have all the features yet.
We want to add more basic features, promote daily use, and we want to improve user experience of receiving points so that our customers will utilize this service day to day. We also want to build further trust. We will also issue a card for payments using the balance and points, thereby expanding the range of eligible users to create opportunities to build trust using MerCard. We want to expand our user base. We want to create opportunities for people to become eligible for credit using MerCard. We know that this is going to take time, but over the mid to long term, Mercari and Merpay customers, we want to focus on expanding our user base for Mercari and Merpay. Now moving on to the U.S. business objectives.
We want to continue to break even while aiming for a full year GMV growth rate of 10% or higher year-over-year by enhancing the product's core experience. We also want to find a winning strategy to achieve strong growth in the mid to long term. There are three key areas that we will focus on enhancing the product's core experience. This is common to the marketplace here in Japan, but we want to utilize AI to develop new features with smaller teams, and we want to update the UI/UX and continue to enhance CS and strengthen fraud prevention measures to activate transactions among mainly existing users. Also, we want to drive bigger baskets. In the U.S., shipping fees per transaction is quite high in comparison to Japan.
AOV tends to be low for our service at the moment, but we want to strengthen bundle purchases so that we can increase the average versus amount per transaction and lower the shipping fee composition of each transaction. Entertainment and hobby and fashion are two key categories, but we want to drive the activation of transactions across categories and not just in fashion and entertainment and hobby. Until the end of June 2026, Yamada was the CEO of the U.S. Business, but as of July 1, 2026, former Mercari, Inc. Vice President of Growth, Jeff LeBeau, was appointed as the new CEO of Mercari, Inc. The new CEO will take charge of everyday business management and decision-making, while Yamada will focus on the mid to long-term strategy that will realize U.S. business step change growth.
We have changed the structure so that we can drive further growth in the U.S. market. As I mentioned before, we will continue to enhance the UI/UX and our core experience, and Jeff LeBeau will take the lead in this area. Yamada will continue to focus on strategies for high growth. That concludes our explanation of the business objectives for FY 2027. Now I would like to talk about the capital policy. We have just announced at the same time as our earnings briefing, but we will be conducting our first share buyback. At last year's full year earnings briefing, we announced for the first time our philosophy behind capital allocation and our retained earnings for FY 2026 will become positive. As I mentioned before, both our consolidated and Mercari standalone retained earnings are positive for this fiscal year.
Based on the capital allocation philosophy, we have decided to conduct our first share buyback. With respect to our capital allocation, this is a review of what we announced last year, that we have the credit business, Merpay, and of course we want to prioritize loss cost debt financing and maintain stable access to capital. Cash, excluding internal reserves, will be used to invest in long-term growth because we are still a growth company. These investments include new businesses, M&A. We will also use the funds to buy back shares if the investment in our own business offer attractive returns. We want to think about share buyback as part of our capital allocation philosophy. Based on this thinking, we have decided to conduct a share buyback.
Next fiscal year onwards as well, we want to make decisions flexibly, based on our capital allocation policy. First and foremost, investment in our business will be key. Total number of shares to be purchased will be up to 4 million shares, and this will begin tomorrow. One more announcement. We disclosed this on July 29th, but to realize step change growth, we revised our executive compensation policy. We have upheld an ambitious goal of achieving a market cap of JPY 2 trillion within five years to encourage bold challenges and risk-taking by executive officers to achieve step change growth. The compensation committee has introduced this new compensation policy. Especially the group CEO, Yamada. Until now, restricted stock units and phantom stocks were granted. However, he will only be granted PSUs going forward so that he can firmly commit to the group's growth.
Other executive officers will be granted PSUs as mid to long-term incentives so that the representative director, CEO, and the executive leadership can work in concert to achieve bold results. This shows our commitment as well as expectations. This concludes my explanation. Apologies for the lengthy presentation, but we would like to conclude this fiscal year's earnings briefing for Mercari, Inc. Thank you very much.
Ms. Eda, thank you very much. This concludes Mercari, Inc.'s FY 2026 full year earnings briefing. Thank you very much for joining us today.