Slide 1: IR Introduction - Business Overview & Business Model
IR Introduction - Business Overview & Business Model - Q3 FY2023 August 10, 2023 74th Investor Meeting Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.
Slide 2: 0. At a Glance
0. At a Glance Key features of GMO-PG group’s business model and the mechanism of sustainable growth ・Broad-based & high growth payment market ・Leading player ✓ Repeating and indispensable part of any ✓ GMV ¥11.3 trn (FY2022) commercial transaction ✓ Revenue ¥50.2 bn（FY2022) Market ✓ EC penetration
Slide 3: Agenda and Abbreviations
1 Business p.4 Overview 2 Focus Areas p.18 3 Reference p.36 Materials Abbreviations used in the materials are as follows: GMO-PG : GMO Payment Gateway GMO-EP : GMO Epsilon GMO-MR : GMO Medical Reservations Technology GMO-PS : GMO Payment Service GMO-FG : GMO Financial Gate GMO-CAS : GMO Card System
Slide 4: 1.1 Our Track Record of Growth
1.1 Our Track Record of Growth The results of management policy focused on sustainable growth （Mil Yen） （Mil Yen） （Mil Yen） 59,100 25,000 60,000 20,311 22,901 Revenue*1 +17.5％ Operating Profit*1 EBITDA*1.2 20,000 50,298 +25.0% +24.4% 50,000 20,000 16,249 18,403 15,000 40,000 15,000 30,000 10,000 10,
Slide 5: 1.2 Consolidated management
1.2 Consolidated management Realize Group-wide stable growth through sound business operation that agilely responds to the business environment of each of the major Group companies Omni-channel Strategy Expand payment Diverse customer method offerings coverage Share customer base Sharing of manageme
Slide 6: 1.3 Three Business Segments
1.3 Three Business Segments Sustain an over 25% OP growth from the expansion of mainstay payment processing business and its peripheral businesses Payment Processing Business （Actual data for Q3 FY2023） ・Online Payment* 2% ・Offline Payment Online payment ￥ ・Ginko Pay/Processing 22％ GMO Payment After
Slide 7: 1.4 Our Business Eco-system
1.4 Our Business Eco-system An expanding eco-system where the value-added services complements the main business to achieve mutual growth Increase in payment processing Payment processing （Gross margin 85％） Money Service Payment Business Processing Payment Business Enhancement Business Customer grow
Slide 8: 1.5 Revenue Trend by Segment
1.5 Revenue Trend by Segment 3 segments of Payment Processing Business, Money Service Business and, Payment Enhancement Business （Mil Yen） J-GAAP IFRS Payment 60,000 Enhancement Business 55,000 Money 50,000 Service Business 45,000 40,000 35,000 30,000 25,000 Payment 20,000 Processing Business 15,000
Slide 9: 1.6 Our Value Proposition
1.6 Our Value Proposition Businesses and services to comprehensively cater to customer’s needs Issues & Needs Value Proposition ・Cumbersome implementation work ・Package of diverse payment methods with ・Time consuming payment admin work, Processing centralized management Business Payment Merchant les
Slide 10: 1.7 Positioning of GMO-PG group
1.7 Positioning of GMO-PG group Connecting merchants and payment companies through ‘contracts,’ ‘payment information,’ and ‘money flow’. Consumer Merchant GMO-PG consolidated Payment subsidiaries Companies 155,598 stores*1 40+ Credit card (As of end-Jun 2023) companies EC Convenience store B2B・B2C・C
Slide 11: 1.8 Revenue Model of Credit Card Payment Processing
1.8 Payment Processing Business: Revenue Model of Credit Card Payment Processing Revenue model determined by merchant size and type ■Four revenue types (i.e., business models) ■Revenue type determined by merchant type/size ① Initial (Initial revenue) Municipalities Payment Terminal Sales Coefficient
Slide 12: 1.9 Payment Processing: Two types of merchant contracts
1.9 Payment Processing: Two types of merchant contracts Direct Contract Payment Payment Revenue type Processing Processing No. of contracts ② Stock Several contracts with multiple payment ③ Fee companies 2.8% Merchant Discount Rate (MDR) MDR （Large GMV = Lower） Direct negotiations with payment compa
Slide 13: 1.10 Revenue Breakdown by Business Model
1.10 Revenue Breakdown by Business Model Aiming for a balanced revenue growth by pursuing various initiatives （Mil Yen） 60,000 J-GAAP IFRS 55,000 50,000 Spread 45,000 40,000 35,000 30,000 25,000 Fee 20,000 15,000 Stock 10,000 5,000 Initial 0 04/9 05/9 06/9 07/9 08/9 09/9 10/9 11/9 12/9 13/9 14/9 15/
Slide 14: 1.11 Summary Table of Segments, Business Model and Services
1.11 Summary Table of Segments, Business Model and Services Reporting in 3 Segments and 4 business models Business Model Segment Online Payment* Initial Online Payment* / fincode byGMO Offline Payment （Initial revenue) SSL Service Offline Payment Payment Processing Online Payment Business Ginko Pay
Slide 15: 1.12 Competitive Advantage and Achievements
1.12 Competitive Advantage and Achievements Expand value provided to clients to contribute to client’s growth Past Present （As of end-Sep 2011） （As pf end-Sep 2022） １ Over 30 Product Nos. of payment Credit card pure-play（payment) Multi-payment methods （*Before 2005） Implemented Open API type from Ma
Slide 16: 1.13 Continuous Achievement of OP Target
1.13 Continuous Achievement of OP Target Earnings targets achieved through a highly visible earnings structure and a disciplined business operation Operation Profit* （Mil Yen） Initial Forecast 20,000 Actual 18,000 16,000 Continuing stable growth while overcoming external volatilities 14,000 2020 COV
Slide 17: Business Overview
1 Business p.4 Overview 2 Focus Areas p.18 3 Reference p.36 Materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 17
Slide 18: 2.0 Focus Markets
2.0 Focus Markets Sustain high growth from expanding revenues in existing services and entering new domains Revenue trend by consolidated subsidiary and/or service (¥ bn） 50 Global Loan balance 2017 Launched BaaS Approx. ¥13.0 bn 40 Support service (GMO-PG) 2016 BaaS 3-yr CAGR 35% Consolidated subsi
Slide 19: 2.1.1 Narrowly-defined EC: B2C EC Market
2.1.1 Narrowly-defined EC: B2C EC Market Low cashless and EC penetration compared to US/European countries EC Penetration Rates in Developed Markets*1 Cashless Penetration (ratio of private final consumption)*2 *3 （¥trn） (%) UK Gov’t Future: 80% (%) 31.0 140 Cashless Penetration USA Credit Card targ
Slide 20: 2.1.2 Characteristic of Payment Business: Cross-Industry
2.1.2 Characteristic of Payment Business: Cross-Industry Payment is a required action for any purchase and is a highly repetitive application Manufacturing Digital Content Water Supply Publishing Education Utility Bill Logistics Finance Apparel Medical Energy Taxes Provide payment infrastructure – a
Slide 21: 2.2.1 Broader EC: Expanding Scope of Cashless Business
2.2.1 Broader EC: Expanding Scope of Cashless Business Japan’s migration towards cashless payment contributes to accelerating the growth of GMO-PG group B2B B2C C2C Narrowly-defined B2C EC market*1 ¥20.7 trillion EC ratio: 8.8% Flea Market App 2021 (Act.) 2025 (Est.) EC ratio (%) 8.8 12 Enormous mar
Slide 22: 2.2.2 Broader EC: Public Dues and Utility Bills
2.2.2 Broader EC: Public Dues and Utility Bills Entered into the public dues/taxes sector in 2006 when Local Autonomy Law was amendment; pioneered credit card payments in this sector Tax National tax credit card payment website National tax smartphone app payment service Local Taxes, hometown tax Wa
Slide 23: 2.2.3 Broader EC: Transaction Volume
2.2.3 Broader EC: Transaction Volume* Stable growth by capturing pay-as-you-go and recurring payment （100 million transactions） 45 40 35 30 Digital content Pay-as-you-go subscription payment 25 Payment occurs at each purchase 20 15 Electricity bill 10 Water utility bill Recurring payment 5 NHK Recep
Slide 24: 2.2.4 Broader EC: Transaction Value
2.2.4 Broader EC: Transaction Value TRX Value = Sustainably grow revenues at client/merchants that we support/service （¥ trillion） 8 7 6 Direct Contract 56% 5 4 3 2 Representative Contract 1 44% 0 03/9 04/9 05/9 06/9 07/9 08/9 09/9 10/9 11/9 12/9 13/9 14/9 15/9 16/9 17/9 18/9 19/9 20/9 21/9 22/9 Cop
Slide 25: 2.3.1 FinTech: Money Service Business
2.3.1 FinTech: Money Service Business Financial services that only a payment processing company can offer Service Related assets Business Model GMO Payment After Pay the sales proceed ahead of ③ Fee Delivery Accrued revenues the deposit from the consumer GMO B2B Pay On Credit ④ Spread Improves cash
Slide 26: 2.3.2 FinTech: Japan's BNPL market
2.3.2 FinTech: Japan’s BNPL market Expand business by capturing the Japan’s unique BNPL needs BNPL needs in Japan Outlook of Japan’s BNPL market ・Receiving goods before payment A growing payment method driven by the (Unit：¥ bn） ・Cash payment expansion of EC, used in conjunction with Consumer 1,993 ・
Slide 27: 2.3.3 FinTech: Instant Salary byGMO
2.3.3 FinTech: Instant Salary byGMO To be the de facto digital and seamless service provider in the ¥225 trillion salary market Collaboration with SMFG Growth Trend (image) 2015 2016 2017 2018 2019 2020 2021 2022 An established salary Expertise in Prepayment payment and Positive Business profit Reor
Slide 28: 2.4.1 BaaS (Embedded Finance)
2.4.1 BaaS（Embedded Finance） One-stop payment solution by leveraging our payment know-how and track record GMO-PG Processing Platform Revolutionary credit card issuing system “H-ALIS”* クレジット Issuing FEP ハウス Network カード Gateway ソリューション イシュイング House サポート サービス Acquiring デビット Solution カード プリペイド Prepaid
Slide 29: 2.4.2 BaaS/IoT
2.4.2 BaaS/IoT Increase Ginko Pay adopters, interlink each service to create an infrastructure-like service Ginko Pay GMO Cashless Platform Smartphone-based payment app that allows Cashless solution for offline stores that offers a package for immediate debit from user’s bank account, of payments me
Slide 30: 2.5 IoT: Offline Payment Market
2.5 IoT: Offline Payment Market Scale-up business through cashless migration and alliance strategy Offline payment：GMO Financial Gate, one of our Group companies, offers payment terminals for payments made at offline stores. 【Growth factors of the offline market】 Cashless demand from changing extern
Slide 31: 2.6.1 Global: Overseas Strategy
2.6.1 Global: Overseas Strategy Leverage overseas expertise to focus on growth markets of SE Asia and India Business Area グロース センター Payment Processing Business India & SE Asia Money Service Japan Business North America Profit Center Innovation Innovation Growth Center Center Center Strategy Investme
Slide 32: 2.6.2 Global: 20-year track record of overseas investment
2.6.2 Global: The 20-year track record of overseas investment strategy Major functions shifted to India/Pacific region: Evolving into a credit provider from a payment service provider Major overseas investment and loan portfolio Market expansion of SE Asia & India 8% Penetration TAM*2 BtoC EC ¥40 tr
Slide 33: 2.7.1 Sustainability
2.7.1 Sustainability Integrated Report outlines the various initiatives to realize sustainability 29th Integrated Report URL：URL: https://www.gmo-pg.com/en/corp/newsroom/pdf/20221219_gmo_pg_ir_integrated_report_en.pdf Specific initiatives (excerpt) Realize convenient and comfortable society by promo
Slide 34: 2.7.2 Strengthening Governance Structure
2.7.2 Strengthening Governance Structure Realize medium- to long-term improvement in enterprise value through strengthening of supervisory function of the Board Corporate Governance Organizational Structure ➀ Transition to company with Audit and Supervisory Committee ①② ➁ Proportion of External Dire
Slide 35: Reference Materials
1 Business p.4 Overview 2 Focus Areas p.18 3 Reference p.36 Materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 35
Slide 36: 3.1 Company Outline (as of June 30, 2023)
3.1 Company Outline (as of June 30, 2023) ■Name ■Management team GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange Prime) Chairman & Director Masatoshi Kumagai President & Chief Executive Officer Issei Ainoura ■ Date of establishment March 1995 Director, Executive Vice President Ryu Muramatsu ■
Slide 37: 3.2 Organizational Chart
3.2 Organizational Chart GMO Payment Gateway, Inc. GMO-PG internal organizations Annual General Shareholder’s Representative Internal Audit Meeting (AGM) Director Office Management Board of Directors Committee Audit & Supervisory Director Committee Corporate Value Creation Strategy Division Nominati
Slide 38: 3.3 Major Subsidiaries and Equity-method Affiliates
3.3 Major Subsidiaries and Equity-method Affiliates（IFRS Standards） GMO Payment Gateway, Inc. Consolidated subsidiary Equity method affiliate Multi payment service（targets small-sized merchants） GMO Epsilon, Inc. FY2022 Revenue ¥4,933 mil, Ordinary income ¥3,058 mil. (J-GAAP) GMO Medical Reservation
Slide 39: 3.4 GMO Medical Reservations Technology
3.4 GMO Medical Reservations Technology Provides reservation management system to improve operations at hospitals and clinics Medical Kakumei byGMO Corporate Overview Seamless services that not only includes online Corporate reservation function, but also reception, e-medical name GMO Medical Reserv
Slide 40: 3.5 Key Characteristics of Payment Business
3.5 Key Characteristics of Payment Business Stable industry with high entry barriers and low churn rates High entry barriers Regulation ・Responding to tightening regulation through repeated amendments (Amended ISA* etc.） ・Merchant management, security enforcement Payment company ・Unique payment prac
Slide 41: 3.6 Product map
3.6 Product map GMO-PG’s definition of payment: that which enables the digitalization of money flow No Credit Risk Cashless Payment Service DX support Ginko Pay PG Multi-Payment Service platform Processing platform EP payment service GMO Dokodemo SMS Choice Cashpoint of Payment Services that complem
Slide 42: 3.7 DX Support Services to Improve Clients PL/BS
3.7 DX Support Services to Improve Clients PL/BS Service line-up that can respond to the diverse clients’ needs Customer needs & PL/BS changes Use cases Our DX support services EC shop, Utility bills PL Revenue Multiple payment methods PG Multi-Payment service Cost of Sales Paperless (lower postal c
Slide 43: 3.8 Revenue structure in the credit card foodchain by player
3.8 Revenue structure in the credit card foodchain by player ■ Image of revenue structure by player Payment International Merchant processing Acquirer Issuer brand company Sale Merchant proceeds discount rate Spread revenue 100% Around 3.0% 0.3~0.5% 0.5 ~0.7% 1.5 ~1.8% 0.1% *Compiled by GMO-PG by re
Slide 44: 3.9.1 Business outline of payment processing company (1)
3.9.1 Business outline of payment processing company (1) Problems with online credit card payment in the early days of E-Commerce Consumer Merchant Authorization Payment ①Order taking （approval number Company assigned） ク レ Credit Card Company Large volume of sales slips Network ジ ッ ト カ ②Enter each ③
Slide 45: 3.9.2 Business outline of payment processing company (2)
3.9.2 Business outline of payment processing company (2) Payment processing service realizes operational efficiency in credit card payment operations Consumer Merchants Payment Payment Processing company ①Order taking Company Credit・sales Update Credit Card Company card data Network Real-time credit