Gmo Payment Gateway, Inc. · TSE:3769

Gmo Payment Gateway — Q2 FY2020 Earnings Presentation

37 slides from Gmo Payment Gateway's earnings presentation, May 14, 2020

  1. Slide 1: Financial Results Briefing for Q2 FY2020

    Financial Results Briefing for Q2 FY2020 Initiatives Underway for the New Business Landscape During COVID-19 May 14, 2020 The 61st IR Meeting GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange First Section) https://www.gmo-pg.com/en/corp/ Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights R

  2. Slide 2: Safe Harbor Statement

    Safe Harbor Statement The contents of this document are based on generally recognized economic and social conditions, as well as assumptions judged to be reasonable by GMO Payment Gateway as of May 14, 2020. Please note that the contents are subject to change without prior notice in the event of cha

  3. Slide 3: Agenda

    Agenda 1. Summary of Financial Results for Q2 FY2020 2. Business Landscape during the COVID-19 Pandemic 3. Future Initiatives and Growth Strategy 4. Financial Highlights Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 3

  4. Slide 4: Summary of Financial Results for Q2 FY2020

    1. Summary of Financial Results for Q2 FY2020 Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 4

  5. Slide 5: Financial Results Summary (IFRS)

    1.1 Financial Results Summary （IFRS） Q2 standalone growth rates improved; Exceeded 1H guidance % achievement FY2020 Q2 FY2019 1H FY2020 1H (Mil. Yen) % YoY vs. 1H guidance standalone Actual Actual (vs. Full Year guidance) (% YoY) Revenue 16,015 18,386 ＋14.8％ 107.4% 9,356 （50.2％） （＋20.4％） Operating 4

  6. Slide 6: KPI Analysis (Q2 standalone/YoY)

    1.2 KPI Analysis（Q2 standalone/YoY) Revenue driven by strong trend of operating stores and GMV volume even during COVID-19 Operating stores ＋20.2％ GMV volume ＋37.2％ GMV value ＋19.8％ vs prev. Q2 ＋15.7% vs prev. Q2 ＋29.6％ vs prev. Q2 ＋24.9％ (Stores) (Mil. transactions) GMV Volume (¥bn.) 決済処理金額 GMV Val

  7. Slide 7: Factors affecting OP & Pretax Profit (Cumulative Q2 basis)

    1.3 Factors affecting OP & Pretax Profit (Cumulative Q2 basis) SG&A increase due to higher provisions; Pre-tax profit uplifted from increase in equity method income ■OP waterfall chart (+10.5% YoY) ■Pre-tax profit waterfall chart (Mil. Yen) (Mil. Yen) (+26.9% YoY) GP SGA Equity increase increase inc

  8. Slide 8: Segment revenue and OP YoY (cumulative Q2)

    1.4.1 Segment revenue and OP YoY (cumulative Q2) All segments outperformed company plans ■ Segment revenue ■ Segment operating profit (Mil. Yen) (Mil. Yen) 7,000 (%): % YoY 20,000 Consol. Revenue: +14.8％ Consol. OP:＋10.5％ 3,169 （+8.9％） 18,000 54 (turns a profit) ＋ MACROKIOSK in line 6,000 ＋ Decline

  9. Slide 9: Segment revenue and OP YoY (Q2 standalone)

    1.4.2 Segment revenue and OP YoY (Q2 standalone) All segments outperformed company plans ■ Segment Revenue ■ Segment Operating Profit (%): % YoY (Mil. Yen) (Mil. Yen) 10,000 Consol. Revenue: +20.4％ 4,000 Consol. OP: +20.3％ 9,000 1,602 （+13.3％） 3,500 ＋ MACROKIOSK in line with 81 （＋74.6％） 8,000 intern

  10. Slide 10: MACROKIOSK: Transfer of Shares and Waiver of Claims

    1.5 MACROKIOSK: Transfer of Shares and Waiver of Claims 3 reasons behind decision to divest: management, profitability and, area coverage ■Reasons for divestiture and waiver of claims ① Management challenges Cashflow improvement Difficulty to exercise management control over drastic changes in busin

  11. Slide 11: FY2020 Guidance

    1.6 FY2020 Guidance Impact to consolidated earnings unconfirmed due to undetermined closure date of share transfer and deconsolidation ※ ■ Impact of share transfer of MACROKIOSK (estimates as of April 30 th) OP: Approx. ¥300 mil. reduction Loss on sales of subsidiary shares Profit: Approx. ¥600 mil.

  12. Slide 12: Subsidiary earnings: proportion, actual and forecast

    1.7 Subsidiary earnings: proportion, actual and forecast Reviewing Q3 and Q4 guidance due to current lack of clarity on COVID-19 impact % of consol. % of 1Q 2Q 3Q 4Q revenue consol. OP Reviewing impact of MK Consol. 100% 100% + and COVID-19 PG parent 60% 73% EP 12% 20% － + PS 18% 4% + FG 10% 3% + +

  13. Slide 13: Business Landscape during the COVID-19

    2. Business Landscape during the COVID-19 Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 13

  14. Slide 14: Our response to the COVID-19 pandemic

    2.1 Our response to the COVID-19 pandemic Reinforce systems on the presumption of prolonged COVID-19 impact, switched to remote work from end of January. ■ Response to COVID-19 Date Ratio of Response remote work Jan. 27th 70％ Switched to remote-working Early March 80％ Start of operation according to

  15. Slide 15: March revenues and GMV: performance by sector and revenue exposure

    2.2 March revenues and GMV: performance by sector and revenue exposure Sectors with high revenue exposure are growing; high growth is achievable even during COVID-19 ■ Scatter diagram of revenue and GMV by merchant’s sector ※1 High High revenue exposure Digital Content ＜Legend＞ ＋200％ Proportion of r

  16. Slide 16: Sectors transformed by COVID-19 and our response

    2.3 Sectors transformed by COVID-19 and our response Development of Digital Transformation (DX) platforms that adapt to the industry changes caused by COVID-19 ■ Impact of COVID-19 by sector and our response Sector Changes caused by COVID-19 Our response Positive Surge from nesting demand, increase

  17. Slide 17: Future initiatives and growth strategy

    3. Future initiatives and growth strategy Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 17

  18. Slide 18: Progress of Priority Initiatives

    3.1 Progress of Priority Initiatives Vector of initiatives remains unchanged; acknowledged delays of few week to few months in certain projects Update/Progress Already commenced 2020 2021 (not limited to impact of COVID-19) Current To be commenced Delays in development of expanded Financial Ginko Pa

  19. Slide 19: DX Platform: The Broader EC

    3.2.1 DX Platform: The Broader EC Revamp sales structure; capture new demand through industry- specific DX platform ① Growth strategy so far ■ Quarterly trend of merchandise and non- merchandise GMV value ※1 Acquiring large and high-growth merchants Expanding non-merchandise EC Structuring industry-

  20. Slide 20: DX Platform: Financial Institutions

    3.2.2 DX Platform: Financial Institutions Promoting strategy to capture rising cashless demand during COVID-19 ■Quarterly trend of stock revenue for ① Growth strategy so far financial institution businesses Expand the financial institution platform Ginko Pay, Issuing/Acquiring, stera Total: ＋46.1％ Y

  21. Slide 21: Progress of Initiatives at GMO Epsilon

    3.2.3 Progress of Initiatives at GMO Epsilon Focus on new merchant acquisitions to return to 25% growth track; GMV recovering from nesting demand ■GMO-EP: Quarterly trend of GMV value and ① Growth strategy so far new merchant acquisitions Acceleration of new merchant acquisitions (Mil. Yen) 40,000 a

  22. Slide 22: Offline Payment (IoT)

    3.3 Offline Payment (IoT) Rebuild society with unmanned payment technology during the COVID-19 phase ■Quarterly trend of initial revenues in offline ① Growth strategy so far market ※ Strengthen marketing to Unattended Expansion of Unattended Market; Market (UM) Forecast stable growth from (Mil. Yen)

  23. Slide 23: FinTech

    3.4 FinTech Improve capital efficiency and expand earnings through high-margin services and Payment After Delivery ① Growth strategy so far ■ Segment revenues (Q2 standalone) ※ Shift asset to high-margin services Payment After Delivery (PaD), overseas Lending Finance Lease B2B Factoring (Invoice Ear

  24. Slide 24: Global: Business portfolio after MK divestiture

    3.5.1 Global: Business portfolio after MK divestiture Business promotion with a healthy asset base; prudently expand high-margin business ■ Global business footprint ※ Company names and logos shown are Payment Processing for major investees and borrowers. Business India Taiwan Money Service Hong Kon

  25. Slide 25: Global: MSB for Fintech Support (Lending)

    3.5.2 Global: MSB for Fintech Support (Lending) Credit crunch in US and Asia; Fintech Companies growing on back of working capital squeeze ※ ■ Growth strategy ■ GDP forecast for US & Asia and Initiatives Strengthen FinTech supporting MSBs Downturn Recovery Phase Support leading Fintech companies in

  26. Slide 26: Financial Highlights

    4. Financial Highlights Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 26

  27. Slide 27: Balance Sheet Changes

    4.1 Balance Sheet Changes Increase in deposits received and MSB-related assets (Mil. Yen) Assets (Mil. Yen) Liabilities and Equity 160,000 159,194 160,000 159,194 140,000 139,990 140,000 139,990 56,724 62,306 120,000 116,858 120,000 116,858 46,752 52,013 100,000 100,000 42,033 38,800 24,037 16,630 8

  28. Slide 28: FinTech: Assets & profit growth (cumulative basis)

    4.2.1 FinTech: Assets & profit growth (cumulative basis) Steady growth of high-margin services; YoY decline from reversals of provisions booked in the previous year ■ MSB related assets ■ Segment revenue (1H） ■ Segment profit (end-March) －40.9％ (%: % YoY) +13.8％ ＋501.3％ －51.9％ －16.0％ +16.3％ ＋253.9％

  29. Slide 29: FinTech: Assets & profit growth (Q2 standalone)

    4.2.2 FinTech: Assets & profit growth (Q2 standalone) Steady growth of high-margin services; YoY decline from reversals of provisions booked in the previous year (%: YoY change) ■ MSB related assets ■ Segment revenue ■ Segment profit (end-March) (Q2 standalone） －44.3％ ＋393.3％ Impact from －51.9％ +24.

  30. Slide 30: Revenue by business model (cumulative and Q2 standalone basis)

    4.3.1 Revenue by business model (cumulative and Q2 standalone basis) (Mil. Yen) ＜1H＞ ＜Q2 standalone＞ 20,000 Spread ＋10.3％ YoY ＋16.2％ YoY （+）Strong online payment excl. one-offs 18,000 （+）Growth of GMO Payment After Delivery (2 wk term) 16,000 （－）Impact of cashless initiatives (Point rebate) 7,548 14

  31. Slide 31: Quarterly trend of revenue by business model

    4.3.2 Quarterly trend of revenue by business model ※ J-GAAP IFRS 3,770 3,778 (Mil. Yen) 3,595 3,468 3,500 3,379 3,435 3,250 3,230 3,072 2,997 3,059 2,971 3,000 2,773 2,946 2,801 2,705 2,861 2,691 2,653 2,666 2,471 2,436 2,500 2,360 2,101 2,004 2,000 1,895 1,809 1,527 1,500 1,441 1,383 1,362 1,414 1,

  32. Slide 32: Revenue trend by business model (annual)

    4.3.3 Revenue trend by business model (annual) (Mil. Yen) 40,000 J-GAAP IFRS 38,000 36,000 34,000 32,000 30,000 28,000 Spread 26,000 24,000 22,000 20,000 18,000 16,000 14,000 Fee 12,000 10,000 8,000 6,000 4,000 Stock 2,000 Inital 0 2004/9 2005/9 2006/9 2007/9 2008/9 2009/9 2010/9 2011/9 2012/9 2013/

  33. Slide 33: Quarterly trend of CoS and SGA ratio

    4.4.1 Quarterly trend of CoS and SGA ratio CoS ratio fluctuates with changes in revenue mix *Figures with asterisk exclude outsourcing expense related to MSB. These outsourcing expenses are not booked in SG&A from December 2017 (Q1) due to IFRS adoption. J-GAAP IFRS 9,356 (Mil. Yen) 9,030 ※44.5％ ※47

  34. Slide 34: Quarterly trend of PG and EP's CoS and SGA ratio

    4.4.2 Quarterly trend of PG and EP’s CoS and SGA ratio CoS ratio fluctuates with changes in revenue mix (Mil. Yen) 6,000 50.9% 48.8% 50.0% 47.4% 5,271 5,032 5,142 5,126 44.9% 45.3% 4,840 5,000 4,816 4,663 41.3% 44.8% 45.2% 4,384 4,297 40.0% 36.8% 3,937 4,000 33.5% 34.0% 3,712 33.1% 34.2% 3,653 36.7%

  35. Slide 35: Consolidated Cashflow Statement

    4.5 Consolidated Cashflow Statement (Mil. Yen) ■ FY2020 Q2 changes 20,000 J-GAAP IFRS Operating CF: ＋16,379 18,000 Pretax profit +5,247 16,000 Chgs in rcvbls ＋305 14,000 Advances paid －1,033 12,000 Accrued income －2,943 Chgs in payables ＋682 10,000 Accrued expenses ＋2,175 8,000 Deposits received ＋13

  36. Slide 36: Major Quarterly KPIs

    4.6 Major Quarterly KPIs Group-wide annual GMV value reaches ¥5.1 trillion ※1 ※2 Operating stores: 122,328 stores, GMV volume 580 mil., GMV value approx. ¥1.2 trillion. (Stores) (Bil. Yen) (10K cases) 140,000 1,400 60,000 （Reference）Consolidated GMV value: Approx. ¥5.1 trillion 1,200 1,100 GMV value

  37. Slide 37: Thank You Very Much

    Thank You Very Much GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange, Section 1) URL： https://www.gmo-pg.com/en/corp/ For inquiries please contact our IR team at the telephone number below: Corporate Value Creation Strategy Division (IR Department) TEL: +81-3-3464-0182 E-mail：ir-contact@gmo-pg.

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