Slide 1: IR Introduction - Business Overview & Business Model - Q3 FY2022
IR Introduction - Business Overview & Business Model - Q3 FY2022 August 10, 2022 Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.
Slide 2: Business Overview, Focus Areas, Reference Materials
1 Business p.3 Overview 2 Focus Areas p.17 3 Reference p.35 Materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 2
Slide 3: 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） ※1 ※1,2 ※1 50,000 Revenue 50,000 18,000 Operating Profit 16,234 20,000 EBITDA 18,399 +20.0％ 18,000 16,000 +25.0% +23.6% 41,667 16,000 40,000 14,000 12,987 14,889 14,000 12,000
Slide 4: Consolidated management
4 1.2 Consolidated management Realize Group-wide stable growth through sound business operation that agilely responds to the business environments at the major Group companies. Omni-channel Strategy Expand payment Diverse customer method offerings coverage Share customer base Sharing of management p
Slide 5: Three Business Segments
5 1.3 Three Business Segments Sustain an over 25% OP growth from the expansion of mainstay payment processing business and its peripheral businesses Revenue Operating Profit （Actual data for Q3 FY2022) Payment Enhancement Breakdown Breakdown Business 2% 1% Online Advertising Service SSL Service Deli
Slide 6: Our Business Eco-system
6 1.4 Our Business Eco-system An expanding eco-system of our value-added services complementing our 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 gro
Slide 7: 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 50,000 Enhancement 45,000 Business Money Service 40,000 Business 35,000 30,000 25,000 Payment 20,000 Processing Business 15,000 10,000 5,000
Slide 8: 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 ・Time consuming payment admin work, with centralized management Processing Merchant Payment Business les
Slide 9: Positioning of GMO-PG group
9 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 138,119 stores ※１ 40+ Credit card (As of end-Jun 2022) companies EC Convenience store B2B・B2
Slide 10: 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 Sales of Initial (Initial revenue) Payment ① Payment Terminal Sales Municipa
Slide 11: Payment Processing: Two types of merchant contracts
1.9 Payment Processing: Two types of merchant contracts Direct contract Payment Payment Flow of Revenue and charges Processing Processing Revenue type GMO-PG consolidated No. of contracts subsidiaries ② Stock Several contracts with A Credit multiple payment 2.8% Merchant Discount Rate (MDR) Card com
Slide 12: Revenue Breakdown by Business Model
1.10 Revenue Breakdown by Business Model Aiming for a balanced revenue growth by pursuing various initiatives （Mil Yen） J-GAAP IFRS 50,000 45,000 40,000 Spread 35,000 30,000 25,000 20,000 Fee 15,000 10,000 Stock 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 15/9 16/9 17/9 18
Slide 13: 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
Slide 14: Product map
1.12 Product map GMO-PG’s definition of payment: what enables the digitalization of money flow No Credit Risk Payment Cashless Ginko Pay PG Multi-Payment Service Service DX support EP payment service platform Processing platform GMO Dokodemo Cashpoint SMS Choice of Payment Services that complements
Slide 15: Competitive Advantage and Achievement
1.13 Competitive Advantage and Achievement Expand the value provided to clients, contribute to client’s growth Past Present （As of FY2011） （As pf end-Jun 2022） Product Nos. of payment １ Over 30 methods Credit card only （※Before 2005） Multi-payment Competitive Advantage Sales Capability Sales Personn
Slide 16: Business Overview, Focus Areas, Reference Materials
1 Business p.3 Overview 2 Focus Areas p.17 3 Reference p.35 Materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 16
Slide 17: Expansion of TAM and Profit Targets
2.1 Expansion of TAM and Profit Targets Expand scope of business in the enormous market to achieve 2025 OP target of ¥25 bn ■ TAM by market segment, GMV, OP target and Priority Initiatives Broader EC BaaS ※2 P.27 Offline・ Market FinTech P.23-26 -28 P.29-30 Global P.31 P.18-22 IoT Segment 2020 2025 2
Slide 18: Narrowly-defined EC: B2C EC Market
2.2.1 Narrowly-defined EC: B2C EC Market Low cashless and EC penetration compared to US/European countries ■ Cashless penetration in Japan ■ EC Penetration Rates in Developed Markets (ratio to private final consumption) （％） （¥ trillion） （％） Cashless penetration 32.5 UK 30.9 100 29.7 Credit card Debi
Slide 19: Key Characteristics of Payment Business
2.2.2 Key Characteristics of Payment Business Stable industry with high entry barriers and low churn rates High entry barriers Regulation • Responding to tightening regulations through (Amended ISA etc.） repeated amendments • Merchant management, security enforcement Payment company • Unique payment
Slide 20: Characteristic of Payment Business: Cross-Industry
2.2.3 Characteristic of Payment Business: Cross-Industry Payment is a required action for any purchase and is a highly sticky application Manufacturing Water Supply Publishing Education Utility Bill Logistics Content Apparel Finance Medical Energy Digital Taxes Payment is a requisite action Effectiv
Slide 21: Broader EC: Expanding Scope of Cashless Business
2.2.4 Broader EC: Expanding Scope of Cashless Business Japan’s migration towards cashless payment is contributing to GMO-PG group’s growth acceleration B2B B2C C2C Narrowly-defined B2C EC market ¥19.3 trillion Online EC ratio: 8.1% Flea Market Payment App 2020 2025 CAGR: 6.2% EC ratio (%) 8.1 14 Eno
Slide 22: Broader EC: Public Dues and Utility Bills
2.2.5 Broader EC: Public Dues and Utility Bills Introducing card payments for public dues and taxes since the amendment of the Local Autonomy Law in 2006 Local Local Taxes (automobile tax, light vehicle tax, governments fixed assets tax, etc.) Water bill, gas bill, hometown tax National tax credit c
Slide 23: FinTech: Money Service Business (MSB)
2.3.1 FinTech: Money Service Business (MSB) Financial services that only a payment processing company can offer Services Related assets Business Model GMO Payment After Pay the sales proceed ahead of ③ Fee Accrued revenues Delivery the deposit from the consumer GMO B2B Pay On Credit ④ Spread Remitta
Slide 24: 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 ・Cash payment expansion of EC, use in conjunction with Consumer ・Manage and control
Slide 25: FinTech: BNPL business of GMO-PS
2.3.3 FinTech: BNPL business of GMO-PS Established top-tier market share and earnings base as a comprehensive payment provider J-GAAP Key features of our BNPL business （Mil Yen） 8,000 Revenue • Apply machine learning that utilizes the large amount of credit data 7,000 Net Profit • Lower default rate
Slide 26: FinTech: Instant Salary byGMO
2.3.4 FinTech: Instant Salary byGMO To be the de facto digital and seamless service provider in the ¥220 trillion salary market Collaboration with SMFG Growth Trend (image) 2015 2016 2017 2018 2019 2020 2021 An established salary Expertise in prepayment payment and Positive Business (“sokkyu”) remit
Slide 27: BaaS (Embedded Finance)
2.4.1 BaaS （Embedded Finance） One-stop payment solution by leveraging payment know-how and our track record 【Background】 【End-user】 Enterprise・Individual • Expansion of cashless/DX needs • Financial services provided by business operators 【GMO-PG Processing Platform】 Payment Payment & Cashless Solut
Slide 28: BaaS & Cashless
2.4.2 BaaS & Cashless （Embedded Finance ） Increase Ginko Pay adopters, interlink each service to create an infrastructure-like service ■Ginko Pay ■ GMO Cashless Platform Smartphone-based payment app marketed to financial institutions Cashless solution for offline stores which offers a package that a
Slide 29: IoT: Offline Payment Market
2.5.1 IoT: Offline Payment Market Expand business scale through cashless migration and alliance strategy ■Offline payment GMO Financial Gate offers payment terminals for payments made at offline stores. ■Growth factors of the offline market • Cashless demand from changing externalities such as Targe
Slide 30: GMO Financial Gate, Inc.: Overview
2.5.2 GMO Financial Gate, Inc.: Overview ■Name GMO Financial Gate, Inc. (TSE Growth, security code 4051) ■Date of Establishment September 1999 ■Location Humax Shibuya Building 7F, 1-14-6 Dogenzaka, Shibuya-ku, Tokyo ■Capital Stock ¥1,618 million yen (As of June 30, 2022) ■Major Shareholders GMO Paym
Slide 31: Global: Overseas Strategy
2.6 Global: Overseas Strategy Leverage synergy of N. American investments and focus on the growing SE Asian and Indian Markets Payment Processing ■Business Area Business North America Money Service Japan Innovation Business Profit Center Center SE Asian & India Growth Center ■Strategy ■Investments※1
Slide 32: Sustainability
・「働きがい認定企業」更新 2.7.1 Sustainability ・グラフ追加 Integrated Report outlines the various initiatives to realize sustainability 28 th Integrated Report URL：https://www.gmo-pg.com/en/corp/newsroom/pdf/211220_gmo_pg_ir_integrated_report_en.pdf Specific initiatives (excerpt) Realize convenient and comfortable s
Slide 33: 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 ① Transition to company with Audit and Supervisory Committee ② Proportion of External Directo
Slide 34: Business Overview, Focus Areas, Reference Materials
1 Business p.3 Overview 2 Focus Areas p.17 3 Reference p.35 Materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 34
Slide 35: Company Outline (as of July 1, 2022)
3.1 Company Outline (as of July 1, 2022) ■ 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 36: Major subsidiaries and equity-method affiliates
3.2 Major subsidiaries and equity-method affiliates (IFRS standards) Consolidated subsidiary GMO Payment Gateway, Inc. Equity method affiliate Multi payment service（targets small-sized merchants） GMO Epsilon, Inc. FY2021 Revenue ¥4,824 mil, Ordinary income ¥3,050 mil. (J-GAAP) GMO Medical Reservatio
Slide 37: GMO Medical Reservations Technology
3.3 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 GMO Medical Reservati
Slide 38: Continuous achievement of OP target
3.4 Continuous achievement of OP target Earnings targets achieved through the earnings structure with high visibility and a disciplined business operation Operation Profit ※ （Mil Yen） 16,000 Initial Forecast Actual 14,000 Continuing stable growth and overcoming external volatilities 2020 COVID-19 12
Slide 39: Expand line-up and expand revenue per customer
3.5 Expand line-up and expand revenue per customer Diverse value proposition to existing customers Promote up-sell through resolving customers’ issues Our Strengths/Value Proposition Highly scalable payment platform Expand Product Early Payment • GMO-PG Remittance • Incorporates various payment meth
Slide 40: DX Support Services to Improve Clients PL/BS
3.6 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 PL Revenue EC shop, Utility bills PG Multi-Payment service Multiple payment methods Cost of Sales TEPCO EP’s Paperless (lo
Slide 41: Business outline of payment processing company (1)
3.7.1 Business outline of payment processing company (1) Problems with online credit card payment in the early days of E-Commerce Payment Consumer Merchant company Authorization ①order taking （approval number assigned） Credit card company Large volume of sales slips network ②Enter each ③Make sales r
Slide 42: Business outline of payment processing company (2)
3.7.2 Business outline of payment processing company (2) Payment processing service realizes operational efficiency in credit card payment operations Payment Consumer Merchants Payment company Processing ①Order taking Company Credit card company Credit・sales Update card data Network Real-time credit