Gmo Payment Gateway, Inc. · TSE:3769
Gmo Payment Gateway — Q3 FY2020 Earnings Presentation
40 slides from Gmo Payment Gateway's earnings presentation, Aug 13, 2020
Slide 1: Financial Results Briefing for Q3 FY2020
Financial Results Briefing for Q3 FY2020 Business attributes to assist in sustaining high growth even in times of crises August 13, 2020 The 62nd 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, In
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 August 13, 2020. Please note that the contents are subject to change without prior notice in the event of
Slide 3: Agenda
Agenda 1. Summary of Financial Results for Q3 FY2020 2. Key Attributes of Our Business and Growth Strategy 3. Financial Highlights Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 3
Slide 4: Summary of Financial Results for Q3 FY2020
1. Summary of Financial Results for Q3 FY2020 Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 4
Slide 5: Financial Results Summary (IFRS)
1.1 Financial Results Summary （IFRS） Results outperforming company plans; MK reclassified as discontinued operation from Q3 % achievement FY2020 Q3 Q3 FY2019 Q3 FY2020 （Million yen） % YoY vs. Full year standalone Actual Actual guidance （% YoY) Revenue 20,108 24,118 ＋19.9％ 76.7% 8,623 （＋29.5％） Operat
Slide 6: Main points on earnings ①
1.2.1 Main points on earnings ① Initial plan was to return to revenue growth of 25%, and maintain OP growth 25% ■Return to revenue growth of 25% Focusing on multiple large development projects to recoup the impact that large merchants had from Q2 of the previous term. Revenues from these projects li
Slide 7: Main points on earnings ②
1.2.2 Main points on earnings ② ※ Underlying growth excluding MK’s reclassification to discontinued operation and PS’ allowance for doubtful accounts 【Consol. 3Q】 Adjusting for previous term’s OP uplift from PS’ allowance for doubtful accounts Revenue +19.9％ OP +12.2％ Excl. above factors: ＋20.4％ 【Co
Slide 8: Drilldown of recent revenue growth rates
1.3 Drilldown of recent revenue growth rates Progress on track; business attributes worked to offset the negatives with the positives ■ Image of near-term growth Sectors/services showing accelerating growth Digital content, apparel, home delivery etc. Sectors/services Trajectory for showing accelera
Slide 9: Analysis of major KPIs (Q3 standalone)
1.4 Analysis of major KPIs (Q3 standalone) DX acceleration at customers and services: resulting in surging TRX volume and increasing TRX value ※1 Operating stores＋22.2％ TRX Volume ＋53.1％ ※1 TRX Value ＋24.9％ ※2 Prev. Q3 ＋16.0% Prev. Q3 ＋26.1％※2 Prev. Q3 ＋24.0％ ※2 （stores） （Mil. trx.) 140,000 （Bil Yen
Slide 10: Revenue by business model (Q3 standalone, continuing operations)
1.5 Revenue by business model (Q3 standalone, continuing operations) Q3 standalone (Apr. to Jun.) fee and spread grew over 30% (Mil. Yen) (See page 3.5.1 for 9,000 8,623 Spread Up 30.4％ YoY Cumulative Q3) Prev. Q3 up 29.9% 8,000 （+）Strong online payment （+）Growth of GMO Payment After Delivery （+）Gro
Slide 11: Segment revenue and OP YoY (Q3 standalone)
1.6 Segment revenue and OP YoY (Q3 standalone, continuing operations) All segments outperformed company plans Cumulative comparison on page 3.6 ■ Segment revenue ■ Segment operating profit (Unit: Mil. Yen) (Mil. Yen) (Mil. Yen) Consol. OP: Up 20.3% YoY - 9,000 Consol. Revenue: Up 29.5％ YoY 4,000 (Ex
Slide 12: Group earnings: Actual, Forecast and Mix
1.7 Group earnings: Actual, Forecast and Mix Strong Q3 earnings at each company; progressing towards achieving full-year guidance (revised) % of 1Q 2Q 3Q 3Q % of OP Forecast Actual Revenue （As of Q2） Consolidated 100% 100% ー PG parent 60% 73% ー EP 12% 20% PS 18% 4% FG 10% 3% ※2 Increase of up to Rev
Slide 13: Future initiatives and growth strategy
2. Future initiatives and growth strategy Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 13
Slide 14: Business Attributes: Resilient business and revenue structure in times of crisis
2.1 Business Attributes: Resilient business and revenue structure in times of crisis Achieved OP growth of over 20% even during past crises (Great Financial Crisis) ※2 ■ Business characteristics Past crises and OP trend (prev. standard) 2020 COVID-19 Market Factors Growth markets: EC, DX, Cashless,
Slide 15: Cross-industry ①
2.2.1 Cross-industry ① Sustain a high and stable growth by acquiring growth companies across diverse sectors and within sectors ■Services provided to (including to-be provided) representative merchants in the Nikkei industry classification and growth expectation trend Nikkei Pharma- Electric Real El
Slide 16: Cross-industry ②
2.2.2 Cross-industry ② Sustain a high and stable growth by acquiring growth companies across diverse sectors and within sectors ■Services provided to (including to-be provided) representative merchant in the Nikkei industry classification and growth expectation trend Nikkei Retail Services industry
Slide 17: 2025 Management Target
2.3 2025 Management Target Promote commercialization of large projects to achieve OP of ¥25.0bn by 2025 （）OP potential amount（Unit: ¥ billion) ■ OP target by focus areas FY2015 FY2020 FY2025 ¥2.9bn ¥10.3bn ¥25.0bn Global business （¥5bn～） 2.8 Broader EC ＋20％ ¥20.0bn FinTech CAGR ～ （¥3bn～） 2.7 ¥16.0bn
Slide 18: Progress of Priority Initiatives
2.4 Progress of Priority Initiatives Delays occurred in certain projects; impact to earnings estimated to be minimal 2020 2021 Update/Progress Already commenced 2H 1H 2H (not limited to COVID-19 impact) To be commenced Ginko Pay・Issuing/Acquiring Slowdown of next project Financial discussions Instit
Slide 19: DX Platform: The Broader EC
2.5.1 DX Platform: The Broader EC Growth acceleration of merchandise EC from progress in DX; also aiming at new business opportunities ■ OP Potential of broader EC 2025 ■ Quarterly trend of merchandise ※ and non- merchandise GMV value 2020 （Est.） ¥16.0bn ～ Non-merchandise EC (TRX value) 非物販EC（決済処理金額
Slide 20: DX Platform: Financial Institution
2.5.2 DX Platform: Financial Institution Expand stock revenue by expanding the number of services provided per financial institution ■ OP potential from financial ■Quarterly trend of stock revenue for institution platform 2025 financial institution businesses The Hokuriku Bank The Hokkaido Bank Tota
Slide 21: Initiative in the SME domain and progress
2.5.3 Initiative in the SME domain and progress TRX value surging, focusing on new merchant acquisitions to return to 25% growth trajectory ■GMO-EP: TRX value and new merchant ■Growth strategy and progress acquisitions Acceleration of new merchant acquisition measures and creation of new businesses
Slide 22: Offline payment and IoT
2.6 Offline payment and IoT Accelerate cashless by promoting omni-channel adoption and unmanned payment technology ■Offline Payment/IoT OP potential ■IPO of GMO-FG to TSE Mothers market; 2025 ～2035 core company in the IoT domain ¥10.0bn OP growth of 25%; Procured necessary funds of ¥732 mil. to prom
Slide 23: FinTech
2.7 FinTech Improve capital efficiency and expand earnings through high-margin services and Payment After Delivery ■OP potential of FinTech ■Segment revenues and OP (Q3 standalone) 2025 New service ※2 Up 31.0％ YoY －52.7％ 2020 ¥3.0bn～ ＋158.7％ Finance Lease 507 ＋52.3％ B2B Factoring ■Growth strategy an
Slide 24: Global: The payment domains
2.8.1 Global: The 5 payment domains Create Payment FinTech feedback loop in the mid/long term ■Q3 FY2020 progress ■Growth potential of Global Payment processing revenue Equity-method affiliate (Twn only) Inv. income from 2C2P 2025 ＜Reference＞ Positive Profit ¥5.0bn～ Up 35.0％ Full Yr Revenue ※1 YoY u
Slide 25: Global: Fintech supporting MSB services (Lending)
2.8.2 Global: Fintech supporting MSB services (Lending) Strategy unchanged; Seeking new potential investee/borrower while monitoring overall conditions ※ ■Growth strategy ■ Phases and US/Asia GDP growth Strengthening Fintech support Down Recovery trend Phase 1: Prudently ① monitor existing borrowers
Slide 26: Financial Highlights
3. Financial Highlights Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 26
Slide 27: Balance Sheet Changes
3.1 Balance Sheet Changes Increase in deposits received and MSB-related assets (Mil. Yen) (Mil. Yen) Asset Liability/Equity 200,000 192,661 200,000 192,661 180,000 180,000 160,000 160,000 77,485 139,990 139,990 140,000 92,039 140,000 120,000 116,858 120,000 116,858 52,013 46,752 100,000 100,000 38,8
Slide 28: Revision to Full Year Guidance
3.2 Revision to Full Year Guidance Reclassified MS as discontinued operations as per IFRS standards; OP guidance unchanged ■FY2020 Full Year Guidance Revision (Mil. Yen) （％: % YoY） Revenue OP +25.0% ＋16.7％ ＋8.5％ 32,121 31,418 10,376 MK Impact 9,562 MK Impact －5,199 26,922 8,301 +1,261 Pre-revision 2
Slide 29: Factors affecting OP & Pretax Profit (Cumulative Q3 basis)
3.3 Factors affecting OP & Pretax Profit (Cumulative Q3 basis) SG&A increase due to higher provisions; Pre-tax profit uplifted from increase in equity method income ■OP waterfall chart (+12.2% YoY) ■Pre-tax profit waterfall chart GP SGA (Mil. Yen) (+24.7% YoY) Equity (Mil. Yen) increase increase inc
Slide 30: Quarterly trend of CoS and SGA ratio
3.4.1 Quarterly trend of CoS and SGA ratio CoS ratio fluctuates with changes in revenue mix ※ J-GAAP IFRS (Mil. Yen) IFRS 9,356 ※44.5％ ※47.2％ 9,030 9,000 50.3% 50.4% 8,623 ※41.7％ 8,246 50.0% 46.8% 8,160 ※39.9％ 7,945 ※40.3％ 7,769 8,000 44.2% 43.6% 40.9% 7,295 41.2% 40.2% 7,000 6,563 40.0% 6,459 41.1%
Slide 31: Quarterly trend of PG and EP's CoS and SGA ratio
3.4.2 Quarterly trend of PG and EP’s CoS and SGA ratio CoS ratio fluctuates with changes in revenue mix (Mil. Yen) 50.9% 6,110 6,000 48.8% 47.4% 50.0% 44.9% 45.3% 44.8% 45.2% 5,142 5,271 5,032 5,126 5,000 4,840 4,816 4,663 40.0% 4,384 4,297 34.0% 33.5% 3,937 33.1% 36.7% 36.7% 36.8% 36.5% 4,000 32.5%
Slide 32: Revenue by business model (cumulative Q3, continuing operations)
3.5.1 Revenue by business model (cumulative Q3, continuing operations) (Mil. Yen) Spread Up 17.6% YOY 25,000 24,118 Prev. Q3 up 27.2% （+） Strong online payment excl. one-off impact from certain customers 20,108 （+） Growth of GMO Payment After Delivery 20,000 （+） Growth of overseas lending 11,609 Fee
Slide 33: Quarterly trend of revenue by business model
3.5.2 Quarterly trend of revenue by business model J-GAAP IFRS 4,290 (Mil. Yen) 4,000 3,647 3,672 3,500 3,450 3,289 3,365 3,136 3,000 2,816 2,558 2,671 2,532 2,500 2,433 2,383 2,291 2,057 2,083 1,938 2,000 1,876 1,907 1,825 1,847 1,813 1,662 1,767 1,527 1,520 1,500 1,441 1,359 1,411 1,461 1,383 1,40
Slide 34: Revenue trend by business model (annual)
3.5.3 Revenue trend by business model (annual) (Mil. Yen) 34,000 J-GAAP IFRS 32,000 30,000 28,000 26,000 24,000 Spread 22,000 20,000 18,000 16,000 14,000 12,000 Fee 10,000 8,000 6,000 4,000 Stock 2,000 0 Initial 2004/9 2005/9 2006/9 2007/9 2008/9 2009/9 2010/9 2011/9 2012/9 2013/9 2014/9 2015/9 2016
Slide 35: Segment revenue and OP YoY (cumulative Q3)
3.6 Segment revenue and OP YoY (cumulative Q3, continuing operations) （Unit: Mil. Yen) ■ Segment revenue ■ Segment operating profit (Mil. Yen) Up 19.9％ YoY 25,000 Up 12.2% YoY 448 Down 9.8% YOY 10,000 79 Down 33.4% YOY Prev. Q3 ー Prev. Q3 ー 120 20,000 497 Down 9.5% YOY 6,868 Up 19.6% YOY 7,778 1,337
Slide 36: FinTech: Assets & profit growth (cumulative basis)
3.7.1 FinTech: Assets & profit growth (cumulative basis) Expansion of high-margin services; YoY decline from reversals of provisions booked in the previous year ■ MSB related assets ■ Segment revenue (Q3） ■ Segment profit (end-June) －44.9％ Down 9.5％ (%: % YoY) Up 15.9％ －58.9％ Up 19.6％ ＋306.7％ ＋82.4％
Slide 37: FinTech: Assets & profit growth (Q3 standalone)
3.7.2 FinTech: Assets & profit growth (Q3 standalone) Steady growth of high-margin services leading to higher revenues and profits ■ Segment revenue (Q3 ■ MSB related assets standalone） ■ Segment profit (end-June) (%: % YoY) －52.7％ +15.9％ －58.9％ +31.0％ ＋158.7％ ＋82.4％ ＋3.6％ ＋52.3％ +19.4％ +68.0％ Impac
Slide 38: Consolidated Cashflow Statement
3.8 Consolidated Cashflow Statement (Mil. Yen) ■ FY2020 Q3 changes (Mil. Yen) 50,000 J-GAAP IFRS Operating CF: ＋43,889 45,000 Pretax profit +8,413 40,000 Depr. & Amort. ＋1,117 35,000 Advances paid －3,121 Accrued income －3,619 30,000 Chgs in payables ＋1,463 25,000 Accrued expenses ＋5,789 20,000 Depos
Slide 39: Major Quarterly KPIs
3.9 Major Quarterly KPIs Group-wide annual GMV value reaches ¥5.5 trillion ※1 ※2 Operating stores: 129,404 stores, GMV volume 670 mil., GMV value approx. ¥1.3 trillion. (Stores) (¥100 Mil.) (10K cases) 140,000 14,000 70,000 13,000 （Reference）Consolidated GMV value: Approx. ¥5.5 trillion 12,000 GMV v
Slide 40: 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.
GMO Payment Gateway — Q3 FY2020 Earnings Presentation on 6ix