Slide 1: FY2023.6 Q2 Presentation Material
FY2023.6 Q2 Presentation Material mercari
Slide 2: Table of Contents
Table of Contents 1 Summary 2 Financial Highlights 3 ESG 4 Appendix 2
Slide 3: Summary
Summary 3
Slide 4: FY2023.6 Q2—Progress & Highlights
1 FY2023.6 Q2—Progress & Highlights Consolidated ● Despite the start of new investment in the credit card business to maximize the creation of Group synergies, focusing on the profitability of the existing businesses Marketplace, Fintech, and US, we were able to record the Group’s highest-ever sales
Slide 5: FY2023.6 Q2—KPI Summary
1 FY2023.6 Q2—KPI Summary Marketplace Fintech US Merpay Users3 GMV1 GMV1 14.58 million 254.8 billion JPY 270 million USD 4 YoY +10% Credit Balance YoY -12% 92.3 billion JPY Adjusted Operating Margin2 MAU6 Collection Rate5 42% 5.16 million (YoY +16 ppts) 98.0% (YoY +1%) 1. Aggregate transaction value
Slide 6: FY2023.6 Q2—Consolidated Net Sales & Operating Income by Business
1 FY2023.6 Q2—Consolidated Net Sales & Operating Income by Business (Billion JPY) FY2022.6 Q2 FY2023.6 Q2 YoY Operating Income/ Net Sales/ Operating Income/ Net Sales/ Operating Income/ Net Sales/ Adjusted Segment External Net Sales Adjusted External Net Sales Adjusted External Net Sales Operating I
Slide 7: FY2023.6 Q2 Financial Highlights
FY2023.6 Q2 Financial Highlights 7
Slide 8: Financial Highlights—Consolidated Net Sales & Operating Income
2 Financial Highlights—Consolidated Net Sales & Operating Income ● Thanks to steady growth in business focused on Marketplace, quarterly sales increased to a record level ● Continued to achieve operating profit for a third consecutive quarter thanks to prioritized and disciplined investment ● Fraud c
Slide 9: The Talent Supporting Mercari's Growth
2 The Talent Supporting Mercari’s Growth ● Headcount decreased QoQ due to a more selective hiring policy taking into account external conditions ● Select hiring, mainly of engineering talent, will continue going forward Number of Employees 9
Slide 10: Marketplace—FY2023.6 Q2 Progress
2 Marketplace—FY2023.6 Q2 Progress FY2023.6 Aim to achieve full-year GMV YoY growth of +10–15% and adjusted Business operating margin of 30–35% by increasing the number of listings through strengthened collaboration between the C2C and B2C business areas Objectives Focused efforts on acquiring new u
Slide 11: Marketplace—FY2023.6 Q2 GMV/MAU
2 Marketplace—FY2023.6 Q2 GMV/MAU ● Continued to acquire new users through referral campaigns and strengthen listings through offline initiatives such as Mercari Workshops, resulting in a record-high MAU of 21.53 million (an increase of 780 thousand QoQ) YoY ● GMV growth rate progressed roughly as an
Slide 12: Marketplace—FY2023.6 Q2 Progress
2 Marketplace—FY2023.6 Q2 Progress Adjusted Operating Net Sales Income/Margin1 YoY +16 ppts YoY Billion YoY Billion (Billion JPY) JPY +19% (Billion JPY) JPY +92% Adjusted operating income Adjusted operating margin 1. Profit after deduction of internal transactions with Fintech (outsourced payment pro
Slide 13: Marketplace—Cost Structure Against Net Sales
2 Marketplace—Cost Structure Against Net Sales ● Promotion cost ratio decreased YoY as a result of carefully selected investments in areas such as new user acquisition and listing promotion where effects steadily accumulate, which supports sustainable growth ● The percentage of costs taken up by com
Slide 14: Fintech—FY2023.6 Q2 Progress
2 Fintech—FY2023.6 Q2 Progress FY2023.6 Business Promote circular finance by strengthening Group synergy Objectives Entered the credit card business to further grow the credit business and strengthen our profit base. Despite starting investment into acquiring cardholders, etc. for Mercard, we maintain
Slide 15: Fintech—Net Sales and Adjusted/Unadjusted Operating Income
2 Fintech—Net Sales and Adjusted/Unadjusted Operating Income ● Maintained a high growth rate in both total net sales and net sales excluding internal transactions, thanks to the steady growth of the payment and credit businesses ● Despite starting investment in the credit card business in November,
Slide 16: Fintech—Services
2 Fintech—Services Asset Payment Credit Management Services allowing users to Various payment methods available Various services that utilize unique credit based on use their Merpay balance behavior history such as usage history on Mercari for asset management and more iD payment Smart Payments Cred
Slide 17: Fintech—Credit Balance and Collection Rates of Credit Services
2 Fintech—Credit Balance and Collection Rates of Credit Services ● Fixed-amount payments, a focus since FY2021.6, have fueled steady growth of credit balance, establishing a profit base ● Amid the growth of credit balance, we realized a high collection rate thanks to the ongoing enhancement of credit
Slide 18: Fintech—Our Four Aims With Mercard
2 Fintech—Our Four Aims With Mercard ● Started to provide Mercard to users in Q2; the number of cardholders increased at a good pace in response to successful TV commercials and cardholder registration promotions ● Although the response reflects the initial momentum generated during our promotions, a
Slide 19: Fintech—Number of Merpay Users/Verified Users
2 Fintech—Number of Merpay Users/Verified Users ● Merpay users and verified users continue to increase; the identity verification rate has grown steadily to 87.5% ● Becoming verified allows users to start accessing credit services seamlessly and contributes to the growth of the credit business Million u
Slide 20: US—FY2023.6 Q2 Progress
2 US—FY2023.6 Q2 Progress FY2023.6 Focus on product initiatives to promote selling and buying Business Expecting YoY GMV growth of +0–10% Objectives In Q2, while MAU grew, GMV fell short of expectations. Given that projections show the business environment will continue to be challenging, we will re
Slide 21: US—FY2023.6 Q2 GMV/MAU
2 US—FY2023.6 Q2 GMV/MAU ● Having succeeded in achieving a certain level of brand recognition, targeted and effective advertising led to an increase in new users and MAU growth of +1% YoY to 5.16 million ● YoY GMV growth rate landed at -12% due to the continued slowdown in purchasing driven by inflat
Slide 22: US—Progress of Major Initiatives
2 US—Progress of Major Initiatives ● Released initiatives, mainly toward promoting purchases, as anticipated ● In H2, will focus on various product initiatives, centered on updating these initiatives, and service enhancements, etc. to promote repeated purchases Major Initiatives Focus Areas Carried
Slide 23: US—Net Sales/Adjusted Operating Income (US GAAP/Quarterly)
2 US—Net Sales/Adjusted Operating Income (US GAAP/Quarterly) ● Will continue lean business management while consciously balancing continued growth with profit and reduce losses in H2 by further reviewing costs, among other initiatives Net Sales Adjusted Operating Income1 (Million USD) YoY (Million US
Slide 24: ESG
ESG 24
Slide 25: ESG—Mercari's Five Material Topics
3 ESG—Mercariʼs Five Material Topics ● Mercari contributes to resolving environmental issues through our business, aims to help people share the earth’s limited resources across generations, and seeks to create a planet-positive world where people can continue to create new value ● We have defined th
Slide 26: ESG—Efforts Toward Creating a Circular Economy and Local Empowerment
3 ESG—Efforts Toward Creating a Circular Economy and Local Empowerment ● To achieve planet positive, we will strengthen our collaborative efforts with local organizations in regions across the entire country, focusing primarily on the three categories of utilizing EC & promoting reuse, education, an
Slide 27: Appendix
Appendix 27
Slide 28: New Group Mission
4 New Group Mission ● Announced a new Group mission, “Circulate all forms of value to unleash the potential in all people,” to mark our 10th anniversary ● Will continue to take on bold challenges without fear of failure as we aim to unleash the potential in people all over the world 28
Slide 29: New Group Mission
4 New Group Mission ● The new Group mission is an overarching concept that encompasses each company’s mission and defines the role Mercari Group should play in society 1 29 1. Refers to US-based consolidated subsidiary Mercari, Inc. (US)
Slide 30: Updating Policies to Adapt to Changes in the Business Environment
Updating Policies to Adapt to Changes in the Business 4 Environment ● Updated our management policy and investment policy in the second half of FY2022.6 Through FY2022.6 H1 From FY2022.6 H2 ■ Work with external partners to create an ecosystem that leads the move to a circular economy Mid-term object
Slide 31: Investment Policy and Details by Business
4 Investment Policy and Details by Business Through FY2022.6 H1 From FY2022.6 H2 Investment policy and main investments Investment policy and main investments Clarify priorities and make disciplined investments in areas Aim for strong GMV growth and invest aggressively in that will have steadily acc
Slide 32: Board of Directors Structure
4 Board of Directors Structure ● Appointing Outside Directors with a wealth of knowledge and experience in a variety of areas to realize a transparent and highly diverse organization 5 Directors Directors (2) Independent Outside Directors (3) Shintaro Yamada Fumiaki Koizumi Makiko Shinoda Norio Mura
Slide 33: Strong Governance Structure (Independent Outside Directors)
4 Strong Governance Structure (Independent Outside Directors) Makiko Shinoda Norio Masayuki Watanabe Murakami Background • The Long-Term Credit Bank of Japan, Limited • Hitachi Electronics Corporation (now • McKinsey & Company, Inc. (currently SBI Shinsei Bank, Limited) Hitachi Kokusai Electric Inc.
Slide 34: Change in Business Segments
4 Change in Business Segments ● As of this fiscal year, we have changed the reporting segments to Japan Region and US ● Going forward, we will use the Marketplace and Fintech domains to explain and disclose business results for Japan Region Japan Region Marketplace Fintech US Others Adjustments1 Comp
Slide 35: Consolidated BS
4 Consolidated BS 1 1. Includes long-term borrowings planned to be repaid within 1 year 35
Slide 36: Major Itemization of Consolidated BS
4 Major Itemization of Consolidated BS ● We will continue to leverage various methods of financing and appropriately control our balance sheet to support business growth while maintaining a sound financial foundation ● To ensure the stability of long-term financing, in Q2, we received an external ratin
Slide 37: Consolidated P&L
4 Consolidated P&L 1 1. Operating income + Depreciation and Goodwill amortization 37
Slide 38: Marketplace PL
4 Marketplace PL 1 1. After deduction of internal transactions with Fintech (outsourced payment processing fees) 38
Slide 39: Fintech PL
4 Fintech PL 1 1 1. Adjusted: Figures after adjustment exclude internal transactions between Marketplace and Fintech (outsourced payment processing fees) Unadjusted: Figures before adjustment include internal transactions between Marketplace and Fintech (outsourced payment processing fees) 39
Slide 40: US PL
4 US PL1 2 1. Based on US GAAP. Different in booking method from the figures of Mercari US included in Consolidated PL (J GAAP) 2. Adjusted operating profit after non-cash items (i.e., stock-based compensation and depreciation) are deducted 40
Slide 41: Japan Region—Sustainable Growth by Creating Group Synergy
4 Japan Region—Sustainable Growth by Creating Group Synergy ● Bring Marketplace (C2C/B2C) and Fintech together to promote efficient and effective product UI/UX improvements and marketing ● Create an ecosystem that circulates credit, NFTs, cryptoassets, and all forms of value, not just physical things
Slide 42: Marketplace—Q2 Cost Structure
4 Marketplace—Q2 Cost Structure ● Commission fees decreased thanks to prioritized and disciplined investments, as well as a decrease in expenses related to fraudulent use (Billion JPY) 1 1. Outsourcing expenses, rent, taxes & dues, hiring fees 42
Slide 43: Marketplace/US—Q2 (Oct–Dec)—Category Shift
4 Marketplace/US—Q2 (Oct–Dec)—Category Shift ● No major change overall for both Marketplace and US Marketplace US FY2022.6 FY2023.6 FY2022.6 FY2023.6 Q2 Q2 Q2 Q2 43
Slide 44: Marketplace App Market Data
4 Marketplace App Market Data ● Mercari holds an approximate 70% GMV share in the expanding marketplace app market in Japan Estimated value of unneeded items1 7.6 Online C2C market2 Approx. 2.2 trillion JPY Annually Marketplace app market3 Approx. Approx. 1.2 trillion JPY trillion JPY Mercari GMV4 A
Slide 45: Fintech—Credit Volume of Deferred Payment in the EC Market
4 Fintech—Credit Volume of Deferred Payment in the EC Market1 ● ● The amount of deferred payments in the EC market is growing A high rate of market growth is forecast for the future 1,909 billion JPY 1,089 billion JPY 440 billion JPY Outlook Forecast Forecast Forecast Forecast 1. Source: E-commerce
Slide 46: US—US Reuse Market
4 US—US Reuse Market ● The US online reuse market has more than doubled since 2015 and is expected to reach approx. 200 billion USD by 2030 ● Key categories to watch include apparel and electronics, some of our strongest areas, while the data overall supports our strategy of continuing to strengthen
Slide 47: For Investors New to Mercari
4 For Investors New to Mercari ● Materials that cover basic information regarding Mercari Group Fact Book link Overview link https://speakerdeck.com/mercari_inc/mercari-fact-book-en https://speakerdeck.com/mercari_inc/merpay-overview-en 47
Slide 48: Disclaimer
Disclaimer This material has been prepared based on information gathered at the time of its preparation and is not in any way intended as a commitment to future implementation. Also note that information contained herein has not been audited or reviewed by an independent certified public accountant o