Gmo Payment Gateway, Inc. · TSE:3769

Gmo Payment Gateway — Q2 FY2022 Earnings Presentation

48 slides from Gmo Payment Gateway's earnings presentation, May 13, 2022

  1. Slide 1: Financial Results Briefing for Q2 FY2022

    Financial Results Briefing for Q2 FY2022 Solid progress in earnings irrespective of externalities; making progress in growth initiatives for next year and beyond May 13, 2022 69 th Investor Meeting Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

  2. Slide 2: Agenda

    Agenda 1. Summary of Financial Results for Q2 FY2022 2. Growth Strategy and Initiatives in Focus Areas 3. Financial Highlights and Reference Materials 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 May 13, 2022. Please note that the contents are subject to change without prior notice in the event of cha

  4. Slide 4: 1. Summary of Financial Results for Q2 FY2022

    1. Summary of Financial Results for Q2 FY2022 Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 4

  5. Slide 5: Earnings Summary

    1.1 Earnings Summary Q2 was in line with plans, 1H exceeded guidance 1H FY2022 IFRS Q2 FY2022 (¥ Mil) 1H FY2021 1H FY2022 % YoY Guidance （Achievement %) （% YoY） 23,438 12,201 Revenue 19,888 24,059 +21.0% (102.7％) (+20.6％) Operating 8,117 4,159 Profit 6,593 8,276 +25.5% (102.0％) (+19.9％) 7,738 4,392

  6. Slide 6: Waterfall chart for TRX Value

    1.2 Waterfall chart for TRX Value TRX value increased from growth in offline payments and increasing transactions from large-sized merchants TRX Value of offline and by sector: % YoY (unit: % YoY) Offline Payments Online Payments Total （¥ Tri） ＋118.6％ ＋31.8％ ＋44.2％ 3.0 Apparel 十億 Impact from a certa

  7. Slide 7: Revenue by Business Model (Q2 FY2022)

    1.3 Revenue by Business Model (Q2 FY2022) Solid performance by stock revenue from processing platform expansion （Q1 FY2022) （¥ Mil） Spread ＋13.5％ YoY ＋11.7％ YoY 12,201 12,000 ＋ Online payment excl. a certain merchant ＋22.1％ YoY ＋21.5％ YoY 10,121 ＋ Overseas lending 10,000 5,296 － GMO Payment After De

  8. Slide 8: Segment Results (Q2)

    1.4 Segment Results (Q2) Each segment making steady progress towards full year guidance Segment Revenue Consol. ＋20.6％ YoY Segment Profit ＋19.9％ YoY （after consol. adjustments) （¥ Mil） （¥ Mil） 49 ＋28.3％ YoY 12,000 231 ＋28.4％ YoY 5,000 ＋ Strong GMO-MR ＋ Strong GMO-MR ＋ Growth of online advertising ＋

  9. Slide 9: GMO-PG Non-consolidated performance (Quarterly trend)

    1.5.1 GMO-PG Non-consolidated performance: (Quarterly trend) % YoY Non-merchandise continues to grow over 25% Q2 Q1 FY2022 FY2022 GMO-PG Non-consolidated Revenue and OP Revenue ＋17.6％ ＋16.5％ （¥ Mil） 7,000 3,500 Excl. a certain merchant ＋22.6％ ＋23.8％ Revenue from a certain merchant (left axis) 百万 百万

  10. Slide 10: Performance of GMO-EP, GMO-PS and GMO-FG

    1.5.2 Performance of GMO-EP, GMO-PS and GMO-FG (Quarterly Trend) ※1 EP/PS accelerates initiatives to return to the growth trajectory, GMO-FG continues strong performance Revenue (Right axis) KPI (Left axis) GMO-EP Consol. GMO-PS GMO-FG Consol. Revenue +7.7％ YoY Revenue ＋7.9％ YoY Revenue ＋52.0％ YoY （

  11. Slide 11: Transfer of Shares of 2C2P

    1.6.1 Transfer of Shares of 2C2P Gains from investment to strengthen BS, continue to focus on overseas by accelerating growth investments Expand overseas businesses including Payment Processing and Money Service Business in the Asian region 2C2P Operates payment processing business mainly in Thailan

  12. Slide 12: Revision to FY2022 Guidance

    1.6.2 Revision to FY2022 Guidance FY2022 full year guidance is revised to reflect the estimated gains from transfer of shares of 2C2P ・No change to revenue and OP guidance ・Year end dividend forecast also unchanged at ¥66 per share Revision to FY2022 Consolidated Financial Forecast (announced on Apr

  13. Slide 13: 2. Growth Strategy and Initiatives in Focus Areas

    2. Growth Strategy and Initiatives in Focus Areas Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 13

  14. Slide 14: Expanding Scope of Business

    2.1.1 Expanding Scope of Business Promote DX with digital payment as payment shifts from analog to the digital Business scope expands from niche to core Analog payment Digital payment DX Support Paperless/ SMS payment Online EC migration/ Delivery Multi-payment Subscription Card/Contactless Offline

  15. Slide 15: Expanding Scope of Business

    2.1.2 Expanding Scope of Business Sustain high growth from expanding service line-up and entering into new domains 2018 Consolidated subsidiaries revenue by service （¥ Bil） Joined Group Global 2.7 40 BaaS 2.6 M&A Strategy (majority investment) • Expand TAM through M&A in payment and 2017 Offline/ Ba

  16. Slide 16: Progress of Priority Initiatives

    2.2 Progress of Priority Initiatives Further buildup of project pipeline to secure 25% growth next FY and beyond Estimated rollout time OP (¥ bil) 2021 2025 FY2022 FY2023 （Act.） （Target as of 2021） Initiatives and Progress 2H 1H 2H Utility Co. B SMS Choice of Payment Co. C SMS Choice of Payment NEW

  17. Slide 17: Broader EC: Evolving customer base

    2.3.1 Broader EC: Evolving customer base 2025 OP Target ¥18.0～¥22.0bn Pursue diversified and large customers through targeted initiatives by customer segment Top 50 customer companies: Revenue by customer and cumulative proportion: FY2018 vs FY2021 Revenue （¥ Mil） proportion of FY2018 Proportion of

  18. Slide 18: Broader EC: Competitive advantage of core product

    2.3.2 Broader EC: Competitive advantage of core product Contribute to customer’s growth by expanding the value proposition Past Current (End of September 2011） （End of March 2022） GMO-PG Multi-payment Product No. of payment １ Over 30 Multi-payment Service methods Credit card only （※ Prior to 2005） O

  19. Slide 19: Broader EC: SME Sector

    2.3.3 Broader EC: SME Sector Aim for revenue to return to 25% growth trajectory through new initiatives and entering into new domains Revenue from SME sector and growth trajectory (quarterly) （¥ Mil） 25％ Growth trend COVID windfall and ■ GMO Medical Reservations Technology its reversal ■ GMO Epsilon

  20. Slide 20: FinTech

    2.4.1 FinTech 2025 OP Target ¥3.0 bn ～ Expand service to achieve strategic goals while paying attention to financial environment Money Service Business performance (% YoY) Major service % YoY Funding method Strategic purpose/policy Revenue （below 25%） ＋11.0％ （¥ Mil） • Respond to flexible funding Rem

  21. Slide 21: FinTech: Domestic SMB sector's potential

    2.4.2 FinTech: Domestic SMB sector’s potential Preparing multiple medium-term initiatives in the promising BNPL Domestic MSB segment profit and target (image) Domestic MSB BNPL business (GMO-PS) BNPL Strategy ① New initiative (to be launched) OP target of Strategy ② Penetrate into non-merchandise ¥3

  22. Slide 22: Offline and IoT

    2.5.1 Offline and IoT 2025 OP Target ※1 ¥2.0bn ～ Growth of KPI and stock-type revenue by acquiring large ※2 merchants to drive terminal sales GMO-FG & GMO-CAS Revenue by business model ※3 （¥ Mil） (quarterly) 700 1,800 KPI Q2 FY2022 Q2 FY2021 1,600 TRX Volume ＋126.8% ＋85.7% 600 1,400 TRX Value ＋118.6

  23. Slide 23: Offline and IoT

    2.5.2 Offline and IoT Accelerate growth through diverse strategies Growth strategy ① Merchant acquisition leveraging company’s Q2 FY2022 Share of GMV of Top 30 merchants strengths (Total GMV: ¥116.3bn) • Acquire large merchants by leveraging the collaboration with SMCC 29% and the advantage of ownin

  24. Slide 24: BaaS

    2.6.1 BaaS 2025 OP Target ¥1.0bn ～ （Embedded Finance） Expand BaaS/Embedded Finance by further strengthening the product and sales structure Revenue of Ginko Pay & Processing platform (quarterly) ※1 External environment/Needs ■ Issuing (Processing PF) ■ Acquiring (Processing PF) Q2 FY2022 Expand BaaS

  25. Slide 25: BaaS: Acquiring large customers

    2.6.2 BaaS: Acquiring large customers （Embedded Finance） Acquired multiple large customers over the past few years with strategic deployment of BaaS support services FY2021 Revenue of Top 50 customer （¥ Mil） 1,200 FY2021 Revenue by customer 1,000 FY2021 Revenue of BaaS customers (acquired after FY20

  26. Slide 26: Global

    2.7.1 Global 2025 OP Target ¥3.0 bn～ Expand FinTech loans in the rapidly growing credit markets of India and Singapore ■Revenue (% YoY) ■Loan balance (% YoY) ■Growth potential of Indian market Asia ※1 Asia MSB USA MSB Indonesia Singapore payment India USA ・Nominal GDP: Approx. ¥516 trn（2025） ※2 ・Pop

  27. Slide 27: Global: Overseas Investment Strategy

    2.7.2 Global: Overseas Investment Strategy Maximize investment returns by deploying optimal strategies that captures the trends Overseas investment SEE page 46 （¥100 Mil） 200 Completed Expected closure in June divestment in 80 ：Direct Investment April (partial) Pursue investment return from both ：Fu

  28. Slide 28: 3. Financial Highlights and Reference Materials

    3. Financial Highlights and Reference Materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 28

  29. Slide 29: Balance Sheet Changes

    3.1.1 Balance Sheet Changes Financial strength improved from investment returns Asset Liabilities/Equity Major changes （¥ Mil） 252,257 （¥ Mil） 252,257 vs. End Q4 250,000 FY2021 250,000 215,455 215,455 Profit +5,615 192,022 200,000 192,022 99,087 200,000 Dividend 111,206 −4,474 78,251 Valuation gain

  30. Slide 30: Major Financial Indicators

    3.1.2 Major Financial Indicators Strengthened equity base with the expansion of MSB J-GAAP IFRS （¥ Mil） 45% 300,000 Third party allotment Raised ¥8.0bn 40% Euro Yen CB Due2026 Raised ¥21.1 bn 250,000 35% Euro Yen CB Due 2023 Fully converted 30% 200,000 Issued Euro Yen CB Due 2023 25.9% 25% Raised ¥1

  31. Slide 31: OP and Pre-tax Profit Waterfall Chart (Q2 Cumu.)

    3.2 OP and Pre-tax Profit Waterfall Chart (Q2 Cumu.) Pre-tax profit grew 30.9% from profit contribution from forex gains related to overseas investments/loans and gains on investment OP YoY: waterfall chart （¥ Mil） Pre-tax profit YoY: waterfall chart （¥ Mil） （+25.5% YoY） （+30.9% YoY） Equity GP SGA O

  32. Slide 32: Revenue by Business Model (Q2 Cumulative)

    3.3.1 Revenue by Business Model (Q2 Cumulative) Solid stock revenue from expansion of processing platform （¥ Mil） 25,000 24,059 Spread ＋12.6％ YoY ＋ Online payment excl. a certain merchant＋21.8％ 19,888 ＋ Overseas lending 20,000 10,668 ＋ Early Payment service － GMO Payment After Delivery 9,473 Fee ＋21

  33. Slide 33: Quarterly Trend of Revenue by Business Model

    3.3.2 Quarterly Trend of Revenue by Business Model J-GAAP IFRS （¥ Mil） 5,500 5,371 5,296 5,000 4,808 4,707 4,665 4,731 4,500 4,414 4,290 4,000 3,646 3,672 3,450 3,364 3,500 3,289 3,278 3,135 3,149 3,000 2,815 2,922 2,713 2,671 2,557 2,532 2,559 2,669 2,432 2,527 2,500 2,291 2,382 1,947 1,906 1,846 2

  34. Slide 34: Revenue Trend by Business Model (Annual)

    3.3.3 Revenue Trend by Business Model (Annual) （¥ Mil） 55,000 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 18/9 19/9 20/9 21/9 22/9E TSE Listing ※ Online advertising s

  35. Slide 35: Segment Results (Q2 Cumulative)

    3.4 Segment Results (Q2 Cumulative) Steady progress in all segments towards full year guidance Segment Revenue Consol. ＋21.0％ YoY Segment Profit ＋25.5％ YoY （after consol. adjustments) （¥ Mil） （¥ Mil） 11,000 25,000 457 ＋32.9％ YoY 10,000 100 ＋72.2％ YoY ＋ Strong GMO-MR ＋ Strong GMO-MR ＋ Growth of onlin

  36. Slide 36: FinTech: Assets & Profit Growth (Q2 FY2022)

    3.5.1 FinTech: Assets & Profit Growth (Q2 FY2022) Steady profit trend from expansion of high margin services MSB related assets (end-Mar.) Segment revenue Segment profit （% YoY) （¥ Mil) （¥ Mil) （¥ Mil) 80,000 +17.7％ －17.5％ ＋11.0％ －32.9％ 800 +21.9％ +7.9％ 2,500 ＋16.9％ 60,000 600 2,000 1,500 40,000 400

  37. Slide 37: FinTech: Assets & Profit Growth (Q2 Cumulative)

    3.5.2 FinTech: Assets & Profit Growth (Q2 Cumulative) Steady profit trend from expansion of high margin services MSB related assets (end-Mar.) Segment revenue Segment profit （% YoY) （¥ Mil) （¥ Mil) （¥ Mil) 80,000 +17.7％ －17.5％ ＋11.3％ －41.3％ +24.8％ 5,000 +6.7％ 1,200 ＋16.9％ 60,000 4,000 800 3,000 40,0

  38. Slide 38: 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 IFRS (¥ Mil) 12,201 12,000 11,857 11,132 50.0% 42.7% 10,646 41.2% 9,767 10,121 10,000 41.1% 8,927 37.6% 35.5% 9,030 9,356 8,623 39.6% 35.9% 36.6% 40.0%

  39. Slide 39: CoS/SGA ratio of GMO-PG & GMO-EP

    3.6.2 CoS/SGA ratio of GMO-PG & GMO-EP (Quarterly Trend) Cost of sales ratio for online payment business trending stably (¥ Mil) 8,000 7,906 7,682 47.4% 50.0% 45.2% 7,122 7,000 44.8% 6,709 6,858 6,878 6,370 36.5% 41.6% 41.2% 6,110 39.7% 6,000 36.8% 33.1% 40.0% 36.7% 34.2% 5,142 5,271 32.5% 31.6% 4,8

  40. Slide 40: Operating Stores, TRX Volume and Value

    3.7.1 Operating Stores, TRX Volume and Value (Quarterly Trend) Group-wide annual TRX value reaches ¥9.5 trillion ※1 Operating stores 134,096 stores, consol. TRX volume approx. 1.15 bn, consol. TRX value approx. ¥2.7 trillion※2 （¥ Tri） 14 mil （100 （Stores） 2.2 (Reference) online payment TRX volume ap

  41. Slide 41: TRX volume and value (Quarterly Trend)

    3.7.2 TRX volume and value (Quarterly Trend) TRX volume and value continues its robust growth; both offline and online trended strongly Consol. TRX Volume ＋39.7％ YoY Consol. TRX Value ＋44.2％ YoY （¥ Mil) （¥ Bil) 1,200 Online payment A certain merchant 2,500 1,000 Offline payment 2,000 800 1,500 600 1

  42. Slide 42: Scatter chart of major merchant sectors

    3.7.3 Scatter chart of major merchant sectors Sector diversification achieves both stability and growth ■Revenue proportion by sector (vertical axis)/Revenue growth rate (horizontal axis) 20% （Based on Q2 FY2022） Size of circle denotes the size of TRX value 15% Digital content Proportion of revenue

  43. Slide 43: Consolidated Cashflow Statement

    3.8.1 Consolidated Cashflow Statement （¥ Mil） J-GAAP IFRS Q2 FY2022 changes by item (¥ Mil) 55,000 Operating CF： ＋19,682 50,000 Pretax profit ＋8,691 45,000 Depreciation +1,021 40,000 Advances paid －3,953 35,000 Accrued revenue －3,639 Accrued expense ＋2,153 30,000 Deposits received ＋20,430 25,000 Inc

  44. Slide 44: Changes in the Consolidated CF Statement

    3.8.2 Changes in the Consolidated CF Statement Following factors affect operating CF other than the pretax profit Related Liabilities & Assets Impact from business expansion Payment Processing Business Sales proceeds from Deposits received Liability Operating CF merchants under (liability) Yearly fl

  45. Slide 45: Potential Market

    3.9 Potential Market Massive business opportunity in the vast DX domain Proportion of Usage rate of Rent Life fixed Usage rate insurance Electric bills EC food delivery subscription payments premiums charge video of taxi hire paid by Migration to restaurant using credit paid by revenue streaming app

  46. Slide 46: Divestments of overseas investments (after Q2 FY2022)

    3.10 Divestments of overseas investments (after Q2 FY2022) Reap the fruits of growth through investments in leading FinTech start-ups • Payment processing company operating in the main SEAsian markets of Thailand, Singapore, Malaysia • Owns a vast payment network for online/offline, clients include

  47. Slide 47: S (Society): Contributions to talent

    3.11 S（Society): Contributions to talent Build an environment for each person to have high aspirations and ownership to grow ※1 Acquired the “Kurumin Mark” certifying us as a company that supports child- raising under the Act on Advancement of Measures to Support Raising Next Generation Children (ce

  48. Slide 48: Thank You Very Much

    Thank You Very Much GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange Prime) 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.com

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