Gmo Payment Gateway, Inc. · TSE:3769

Gmo Payment Gateway — Q3 FY2021 Earnings Presentation

40 slides from Gmo Payment Gateway's earnings presentation, Aug 11, 2021

  1. Slide 1: Financial Results Briefing for Q3 FY2021

    Financial Results Briefing for Q3 FY2021 Strategy and current business environment faced with growing uncertainty due to COVID-19 resurgence August 11, 2021 66 th Investor Meeting Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

  2. Slide 2: Agenda

    Agenda 1. Summary of Financial Results for Q3 FY2021 2. Growth Strategies and Initiatives 3. Financial Highlights Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 2

  3. Slide 3: 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 11, 2021. Please note that the contents are subject to change without prior notice in the event of

  4. Slide 4: 1. Summary of Financial Results for Q3 FY2021

    1. Summary of Financial Results for Q3 FY2021 Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 4

  5. Slide 5: Conversion of Euro-yen CB and new issue

    1.1 Conversion of Euro-yen CB and new issue Previous bond fully converted to common stock 2 years earlier than planned; new bond issue to secure growth funds Changes in BS Early redemption of previous Euro Euro-yen CB due 2026 (¥ Mil.) yen CB issued 2 years earlier (5-yr zero-coupon bond) 200,000 Pa

  6. Slide 6: Earnings Summary

    1.2 Earnings Summary OP grew 31.4% YoY and ahead of plans, despite the hard comps from nesting demand last FY FY2020 Q3 FY2021 Q3 FY2021 Q3 IFRS Progress ratio Cumulative Cumulative % YoY standalone （¥ Mil.） (vs. Full Year) Actual Actual （% YoY） Revenue 24,118 30,535 +26.6% 76.7% 10,646 （＋23.5％） ✓@

  7. Slide 7: Current status as seen from revenues by business model

    1.3 Current status as seen from revenues by business model Q3 standalone saw lower growth rates of around 10% for fee and spread due to COVID-19 hard comps （¥ Mil.) 10,646 10,000 Spread ＋9.7% YoY 8,623 ＋ Online payment in line with plans 4,707 ＋ Growth of overseas lending － Conservative operation of

  8. Slide 8: Growth trend of revenue

    1.4 Growth trend of revenue Recovery continues in Q3 despite low growth rates due to hard comps with previous Q3 that saw a surge from nesting demand (％: % YoY) Revenue growth image Recovery trend towards a 20～25％ revenue growth trend 3Q ＋23.5% ✓ @ 1Q ＋28.5% FY2019 FY2020 FY2021 FY2022 Copyright (C)

  9. Slide 9: Business environment

    1.5 Business environment Business environment for online payment show signs to returning to the pre-COVID-19 trendline Q3 standalone revenue reaches pre-COVID levels, online payment TRX volume & value both exceed pre-COVID-19 growth rate at 30% Before With Now ※1 （Q3 FY18 → Q3 FY19） （Q3 FY19 → Q3 FY

  10. Slide 10: Change in GMV by sector

    1.6 Change in GMV by sector Nesting demand (≒ online consumption) is becoming a normalized part of many sectors (%: % YoY) Nesting demand situation ※ in Q3: TRX value (indexed) Before Before With Now Q3 FY2018 Q3 FY2019 Q3 FY2020 Q3 FY2021 Daily Necessity standalone standalone standalone standalone

  11. Slide 11: What the Q3 numbers say…

    1.7 What the Q3 numbers say… Sustaining a mid-to-long term growth is feasible … about business environment ・EC usage related to daily consumption of new normal lifestyle that was affected by COVID is here to stay ①～④：EC migration to increase and here to stay ⑤～⑥：Significantly expanded due to changed

  12. Slide 12: Growth trend of revenue

    1.8 Growth trend of revenue Return to 20~25% revenue growth trend as COVID impact recedes before COVID-19 with COVID-19 after COVID-19 (¥ Mil.) 2-year CAGR 11,000 3Q ＋26.4％ 2Q ＋24.6％ 10,000 1Q ＋18.8％ 9,000 Significant COVID-19 impact 8,000 7,000 FY2021 Plan Actual FY2020 +20.4 → + ? ％ Plan Actual 6,

  13. Slide 13: Segment results (Q3 standalone)

    1.9 Segment results (Q3 standalone) Payment Processing segment revenue grew 34.4% thanks to solid online payment and strong payment terminal sales Segment revenue Segment operating profit (Unit: ¥ Mil.) ＋23.5％ YoY (consol. ) After consol. eliminations ＋17.4％ YoY （¥ Mil.） （¥ Mil.） 4,500 28 －30.7% YoY

  14. Slide 14: GMO-PG non-consolidated performance (quarterly trend)

    1.10.1 GMO-PG non-consolidated performance (quarterly trend) GMO-PG non-consolidated returns to normalized growth pattern driven by non-merchandize EC GMO-PG non-consolidated: merchandize and non- merchandize EC revenue and OP Revenue ＋13.6％ YoY (¥ Mil.) Revenue from certain merchant (LHS) 4,000 OP

  15. Slide 15: Performance of GMO-EP, GMO-PS and GMO-FG (quarterly trend)

    1.10.2 Performance of GMO-EP, GMO-PS and GMO-FG (quarterly trend) COVID impact both positive and negative at subsidiaries Revenue and major KPI’s by company Revenue (LHS) KPI (RHS) （％: % YoY) GMO-EP Consol. GMOｰPS GMO-FG Consol. Revenue ＋9.6％ Revenue －2.7％ Revenue ＋157.9％ New merchant acquisitions N

  16. Slide 16: Growth Strategies and Initiatives

    2. Growth Strategies and Initiatives Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 16

  17. Slide 17: Our value proposition

    2.1 Our value proposition Driving social advancement and progress through DX adoption and decarbonization efforts Value contribution to society and our role Access to financial services for all men and women Investment and loans to microfinance and new technology firms Plan to begin EC payment proce

  18. Slide 18: Our value proposition: product map

    2.2 Our value proposition: product map How we define “payment”: digitalizing the flow of money Cashless DX No credit risk Ginko Pay Payment services Support PF PG Multi-payment service Processing platform EP Payment service SMS Choice GMO Dokodemo of Payment cashpoint Feedback to payment services GM

  19. Slide 19: Vector of business expansion

    2.3 Vector of business expansion Business expansion by aligning services to the industry’s characteristics Financial Electroni Medical/ Telecom cs/Auto Pharma Electric Service Digital Estate Power Retail Food Real Gas （¥ tr.） Mrkt size 146 32 45 14 60 45 15 9 125 25 EC mrkt size 12 7 2 0.8 － － － － 0

  20. Slide 20: Broader EC

    2.4 Broader EC Targeting large merchandize/non-merchandize EC operators, focus on SME sector Quarterly trend of GMO-PG non- consolidated TRX value for B2C EC sector 2020 2025 （¥ bn） (incl. merchandize and non-merchandize) （Act.） （Plan as of 2021） 1,600 7.5 18～22 十億 OP (¥ bn.) 1,400 物販EC Merchandize

  21. Slide 21: BaaS/Cashless

    2.5 BaaS/Cashless ※ Target OP ¥1.0 bn in 2025 by service diversification and lateral expansion within the sector Stock revenue from services to financial institutions 2020 2025 (Q3 standalone) （Act.） （Plan as of 2021） ■ Ginko Pay OP (¥ Bn.) 0.5 1.0～ ■ Issuing/Acquiring ■ Other Growth scenario ＋16.7％

  22. Slide 22: Offline/IoT

    2.6 Offline/IoT Capture the gigantic offline market by leveraging the synergy between IoT+EC business and stera Quarterly trend GMO-FG & GCS’s revenue by business model (¥ mil.) 2020 2025 700 1,800 （Act.） （Plan as of 2021） % YoY 0.5 2.0～ ※1 OP（¥ bn.） ■Initial (RHS) ＋238.3％ 1,600 600 ■Stock (LHS) ＋25

  23. Slide 23: FinTech

    2.7.1 FinTech Aim to return to 25% growth through new merchant acquisitions for Payment After Delivery and new services 2020 2025 Q3 cumulative revenue for FinTech services （Act.） （Plan as of 2021） Sokkyu byGMO OP（¥ bn.） 1.8 3～ to start from this Q4 ＋10.1％ Growth scenario Remittance service 1) Asset

  24. Slide 24: FinTech: product additions

    2.7.2 FinTech: product additions Providing financial access broadly by digitalizing the flow of money Salary bank transfer market Final private consumption TAM ¥200 tr. TAM ¥300 tr. Buy Enjoy Instant access Rent payment apparel video to salary for the IN OUT online content amount of work SMS payment

  25. Slide 25: Global

    2.8 Global Ascertain differences in economic recovery of each country, buildout a stable foundation for future expansion 2020 2025 Payment processing MSB revenue （Act.） （Plan as of 2021） TRX value（% YoY） （% YoY） ※2 ① - 3.0～ ※1 ＋40.9% OP（¥ bn.） ＋16.3% ＋26.9% Q3 FY2020 Q3 FY2021 Q3FY2020 Q3 FY2021 Q3…

  26. Slide 26: Financial Highlights

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

  27. Slide 27: Balance Sheet Changes

    3.1 Balance Sheet Changes Financial strength improves as equity reaches ¥55.7bn, an increase of ¥17.0bn from Euro-yen CB conversion Asset Liability/Equity （¥ Mil.) （¥ Mil.) 213,290 213,290 200,000 192,022 200,000 192,022 77,040 105,708 150,000 139,990 150,000 139,990 86,751 95,830 23,096 52,013 46,7

  28. Slide 28: OP and Pre-tax Profit Growth (Q3 Cumulative)

    3.2 OP and Pre-tax Profit Growth (Q3 Cumulative) FG’s revenue growth offset the cost-of-sales increase; continuing to control credit related cost OP YoY: waterfall chart （¥ Mil.） Pre-tax profit YoY: waterfall chart （¥ Mil.） （+25.1% YoY） （+31.4% YoY） SGA increase Equity GP increase －1,251 Financial F

  29. Slide 29: Revenue by Business Model (Q3 Cumulative)

    3.3.1 Revenue by Business Model (Q3 Cumulative) Fee and spread increased despite the hard comps against last year’s nesting demand （¥ Mil.） 30,535 30,000 Spread ＋22.2％ YoY ＋ Strong online payment ＋ Growth of overseas lending 25,000 24,118 14,181 － Conservative operation of domestic MSB 20,000 Fee ＋2

  30. Slide 30: Quarterly Trend of Revenue by Business Model

    3.3.2 Quarterly Trend of Revenue by Business Model （¥ Mil.） J-GAAP IFRS 5,000 4,808 4,665 4,707 4,414 4,500 4,290 4,000 3,672 3,646 3,500 3,450 3,365 3,289 3,136 3,000 2,671 2,816 2,713 2,669 2,558 2,527 2,559 2,532 2,433 2,500 2,383 2,291 2,057 2,083 1,937 1,717 2,000 1,876 1,907 1,847 1,813 1,767

  31. Slide 31: Revenue Trend by Business Model (Annual)

    3.3.3 Revenue Trend by Business Model (Annual) （¥ Mil.） 42,000 J-GAAP IFRS 40,000 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 Fee 14,000 12,000 10,000 8,000 6,000 Stock 4,000 2,000 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

  32. Slide 32: Segment Results (Q3 cumulative)

    3.4 Segment Results (Q3 cumulative) Payment Processing Business and Money Service Business segment OP increased by over 25% （Unit: ¥ Mil.） Segment revenue Segment operating profit Up 26.6％ YoY (consol.) Up 31.4％ YoY (after consol. eliminations) （¥ Mil.） （¥ Mil.） 30,000 531 ＋18.6％ YoY 86 +8.8% YoY 12

  33. Slide 33: FinTech: Assets & Profit Growth (Q3 Cumulative)

    3.5.1 FinTech: Assets & Profit Growth (Q3 Cumulative) Profit increased from expansion of high-margin services and control of credit-related costs （％: % YoY) MSB related assets Segment revenue Segment profit (end-June) +9.2％ +10.1％ ＋16.5％ ＋17.1％ +26.3％ ＋12.7％ －1.4％ ＋7.9% ＋18.0％ ＋67.5％ ＋25.4％ +4.8％ En

  34. Slide 34: FinTech: Assets & Profit Growth (Q3 Standalone)

    3.5.2 FinTech: Assets & Profit Growth (Q3 Standalone) Profit increased from expansion of high-margin services and control of credit-related costs （％: % YoY) MSB related assets Segment revenue Segment profit (end-June) +9.2％ －1.5％ ＋17.1％ +4.2％ －12.0％ －16.1％ －1.4％ －2.7% ＋18.0％ ＋65.6％ ＋25.4％ +31.9％ End

  35. Slide 35: Quarterly Trend of CoS and SGA Ratio

    3.6.1 Quarterly Trend of CoS and SGA Ratio CoS ratio fluctuates with changes in revenue mix; decline from Q3 FY2020 is due to deconsolidation of MK ※ J-GAAP IFRS （¥ Mil.） ※47.2％ 10,646 50.4% 10,121 50.0% 9,767 10,000 8,927 41.1% 9,356 9,030 42.7% 40.9% 40.2% 8,246 41.2% 8,623 36.3% 7,769 39.6% 7,945

  36. Slide 36: Quarterly Trend of PG and EP's CoS and SGA ratio

    3.6.2 Quarterly Trend of PG and EP’s CoS and SGA ratio Cost of sales ratio for online payment business trending stably 6,858 6,878 6,709 50.9% 6,370 (¥ Mil.) 6,110 50.0% 47.4% 6,000 44.8% 45.3% 45.2% 5,142 4,840 5,271 41.6% 5,032 36.8% 36.5% 5,126 39.7% 5,000 36.7% 36.7% 40.0% 4,816 4,663 32.5% 33.1

  37. Slide 37: Quarterly Trend of Operating Stores, TRX Volume and Value

    3.7.1 Quarterly Trend of Operating Stores, TRX Volume and Value Group-wide annual TRX value reaches ¥7.4 trillion ※1 ※2 Operating stores: 119,440 stores, TRX volume approx. 890 mil., TRX value approx. ¥2.0 trillion. （Stores）（¥100 Mil.） （万件） 18,000 （Reference）Online payment: TRX volume approx. 850 mi

  38. Slide 38: Growth trend of KPIs

    3.7.2 Growth trend of KPIs Organic growth rate for TRX volume is +30％, TRX value is +25％ Quarterly Online TRX Volume Trend Quarterly Online TRX Value Trend TRX volume TRX value ③ （Mil. trx） ＋27.4% YoY （¥ bn） ＋25.7% YoY 1,000 1,800 ① 900 ① ③ ③ 1,600 800 ② 1,400 ② 700 1,200 600 1,000 500 800 400 600 3

  39. Slide 39: Consolidated Cashflow Statement

    3.8 Consolidated Cashflow Statement （¥ Mil.） J-GAAP IFRS FY2021 Q3 changes (¥ Mil.) 55,000 Operating CF： －9,050 50,000 Pretax profit +10,526 45,000 Depreciation ＋1,387 40,000 Advances paid －12,261 Accrued revenue －1,292 35,000 Accrued expenses +1,120 30,000 Deposits received －3,750 25,000 Income tax

  40. 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

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