Gmo Financial Gate, Inc. · TSE:4051
Gmo Financial Gate — Q2 2021 Earnings Presentation
49 slides from Gmo Financial Gate's earnings presentation, May 13, 2021
Slide 1: Financial Results Briefing for Q2 FY2021
Financial Results Briefing for Q2 FY2021 Key Message A strategy for expanding market share as an offline payment platformer May 13, 2021 Fourth IR Presentation GMO Financial Gate, Inc. (Ticker:4051; TSE-M) https://www.gmo-fg.com/ Copyright (C) 1999 GMO Financial Gate, Inc. All Rights Reserved.
Slide 2: Cautionary Note Regarding Presentation Materials
Cautionary Note Regarding Presentation Materials The content of these presentation materials is based on generally recognized economic and social conditions, as well as assumptions judged to reasonable by GMO Financial Gate as of May 13, 2021 Note that presentation material content is subject to cha
Slide 3: Meeting agenda
Meeting agenda 1. Summary of Financial Results for Q2 FY2021 2. Growth Strategy and Progress 3. Financial Highlights 4. Appendix Copyright (C) 1999 GMO Financial Gate, Inc. All Rights Reserved. 3
Slide 4: Summary of Financial Results for Q2 FY2021
1. Summary of Financial Results for Q2 FY2021 Copyright (C) 1999 GMO Financial Gate, Inc. All Rights Reserved. 4
Slide 5: Q2 FY2021 Summary
1.1 Q2 FY2021 Summary Experienced steady business progress under 2nd State of Emergency Declaration. No. of payment terminals grew steadily as well P6 • Progress (toward original FY2021 guidance) : Revenue：58.7% OP：54.2% Financials/KPIs ‐ Revenue：Q2 cumulative YoY＋37.3%（surpassed FY2021 guidance of
Slide 6: Summary of Financial Results
1.2 Summary of Financial Results Sales of terminals grew steadily. Stock-model revenue rose thanks to the activation of installed terminals. OP & KPI are on schedule toward FY2021 guidance FY2020 FY2021 % FY2021 FY2021 Progress toward Q2 cumulative Q2 cumulative Q2 FY2020/ Guidance FY2021 Guidance (
Slide 7: Major Topics Regarding Financial Results
1.3 Major Topics Regarding Financial Results Achieved profit growth as planned, reflecting sales of less-profitable stera terminal and investment in growth for the future ◼ Revenue (＋)Sales of stera terminal rose (Unit: Millions of yen) (＋)Expanded stock-model revenue by acquiring new merchants acro
Slide 8: OP trends (Quarterly)
1.4 OP trends（Quarterly） Anticipating well-balanced quarterly profit this year. Making steady progress toward FY2021 guidance (+30% YoY) even under COVID-19 Anticipating ◼ Operating Profit ＋30% YoY 250 (Unit: Millions of yen) FY2020 FY2021 (Unit: Millions of yen) 600 ＋30％ YoY The rest of FY2021 ¥270
Slide 9: Revenue by Business Model
1.5 Revenue by Business Model Initial sales pushed higher due to sales of stera, which leads to growth in terminal-originated sales. Stock and Fee also grew steadily, even though Spread was affected by COVID-19 FY2020 FY2021 Composition % Q2 Cumulative Q2 Cumulative Q2 FY2020/ (Millions of yen) Rati
Slide 10: Revenue by Business Model (Quarterly)
1.6 Revenue by Business Model (Quarterly) Initial sales grew steadily. Stock also grew, thanks to an increasing number of active terminals. We maintains Spread sales at pre- COVID-19 levels by acquiring participating merchants in clinic and beauty salon industries, even though Spread was impacted sl
Slide 11: Expansion of Stock-Model Revenue
1.7 Expansion of Stock-Model Revenue Stock and Fee sales made steady progress, covering decelerated growth in Spread due to COVID-19. We are implementing action plans for further expansion of Spread under COVID-19 Stock-model revenue (Subtotal of Stock, Fee, and Spread） +15.7％ YoY After considering
Slide 12: Consolidated KPIs (Active Terminals)
1.8 Consolidated KPIs (Active Terminals) No. of total active terminals driven higher up by payment terminals (ex. IoT), especially stera. We also observed well-balanced growth in IoT and Alliance partner sales FY2020 FY2020 FY2020 FY2021 FY2021 QoQ YoY (Unit: Thousand) Q2 Q3 Q4 Q1 Q2 (%) (%) Payment
Slide 13: Consolidated KPIs (TRX Volume, Value/Q)
1.9 Consolidated KPIs (TRX Volume, Value/Q) TRX Volume and TRX Value in stand-alone Q2 surpassed our target (+50% YoY), as we minimized the impact of COVID-19 ◼ TRX Volume State of Emergency Declaration, (SOE) ◼ TRX Value State of Emergency Declaration, (SOE) (Unit: million) +85.7％ YoY +53.9％ YoY 30
Slide 14: Consolidated KPIs (TRX Volume, Value/M)
1.10 Consolidated KPIs (TRX Volume, Value/M) Even though we experienced the impact of seasonality and the state of emergency declaration in January and February, we returned to growth in March ◼ TRX Volume State of Emergency Declaration, (SOE) ◼ TRX Value State of Emergency Declaration, (SOE) (Unit:
Slide 15: Comparison of Growth (Market vs GMO FG)
1.11 Comparison of Growth (Market vs GMO FG) We accomplished significantly higher YoY growth than the market, even during the second state of emergency declaration Left Axis ：TRX Value YoY GMO FG ALL Other retailors Restaurants Hotels/Inn Right Axis：GMO FG TRX value (Monthly) (Unit: 100 million Yen)
Slide 16: Upward Revision to FY2021 Revenue Forecast
1.12 Upward Revision to FY2021 Revenue Forecast （no revision to profit forecasts) We recorded steady terminal sales in the first half FY2021. Accordingly, we upgraded revenue guidance for FY2021, adding overachievement in the first half while leaving our second half estimate unchanged. We did not ch
Slide 17: Breakdown of Guidance
1.13 Breakdown of Guidance Revenue：Added the overachievement (=¥449M) from the first half to the original full-year guidance for FY2021 Profit ：Left the original guidance unchanged, considering the impact of COVID-19 on the rest of FY2021 and investment for future business expansion ◼ Revenue（Revise
Slide 18: Growth Strategy and Progress
2. Growth Strategy and Progress Copyright (C) 1999 GMO Financial Gate, Inc. All Rights Reserved. 18
Slide 19: Assessment of Action Plan for Profit Growth
2.1 Assessment of Action Plan for Profit Growth We are making steady progress toward ¥1 billion in operating profit for FY2024, in line with our action plan *Actual around FY2020 FY2021 FY2024 FY2025 FY2035 *J-GAAP OP ¥0.45 billion ¥0.59 billion more than ¥1.5 billion ¥10 billion Target ¥1 billion G
Slide 20: Strategy to Maximize TRX Value
Action Plan: 1 2 3 4 2.2 Strategy to Maximize TRX Value We created a new payment processing route with alliance partners. This route increases GMV, as the route reduces costs to participating merchants and acquirers Merchants Acquirers Competitor/Peer Terminals Conventional Retail Route Processing P
Slide 21: Global Payment Network Progress
Action Plan: 1 2 3 4 2.3 Global Payment Network Progress Backlog forecast for Q3 and Q4 FY2021 is more than 17,000 units. Making steady progress toward terminal sales projections for FY2021 ◼ No. of active terminals *Payment terminals (excluding IoT) FY2020 FY2020 FY2020 FY2021 FY2020 QoQ YoY （単位：千台
Slide 22: IoT/Unattended Market Growth
Action Plan: 1 2 3 4 2.4 IoT/Unattended Market Growth The number of machines in the unattended market (e.g., vending machines, service machines) exceeds that of the offline market. The unattended market is expanding rapidly due following factors: Steady growth 3.1 +0.2 4.5 million ◼ Factors that acc
Slide 23: Progress of IoT/Unattended
Action Plan: 1 2 3 4 2.5 Progress of IoT/Unattended We have begun to expand business steadily in hotel checkout registers. Accelerating terminal deliveries to both new and current customers. Started delivering a new type of terminal for beverage vending machines and coffee machines 2021 2022 Progres
Slide 24: Accelerating business in mobility
Action Plan: 1 2 3 4 2.6 Accelerating business in mobility We are entering into the mobility domain (smaller payments than other types of consumption), offering Cashless Platform x Touch Payments New April 2021～ ◼ Fukuoka City Transportation Bureau Launched trial of ticket buying service via VISA to
Slide 25: Financial Highlights
3. Financial Highlights Copyright (C) 1999 GMO Financial Gate, Inc. All Rights Reserved. 25
Slide 26: Profit & Loss
3.1 Profit & Loss The sales of stera terminal increased steadily in Q2. Q2 COGS ratio increased due to revenue increase and higher stera terminal sales. SG&A growth was lower in comparison to sales growth due to cost management measures YoY QoQ Q2 FY2021 (Q2 FY2020 accumulated basis) （Ｑ1 FY2021） Acc
Slide 27: Balance Sheet
3.2 Balance Sheet Maintaining steady cash and equity balances through stable cashflows generated by our businesses Q2 FY2021 (Unit: Thousands of yen) ◼ Points Cash & Current liabilities cash equivalents (43%) • Holding adequate stock toward sales forecast 2,850,391 2,393,753 of payment terminals suc
Slide 28: Revenue by Business Model (YoY)
3.3 Revenue by Business Model (YoY) Achieved steady growth, even compared to the pre-COVID-19 period (Jan-Mar 2020) 3,000 (Unit: Millions of yen) +37.3％ 375 13.3% ◼ Points 2,500 201 7.1% • Revenue approximately +30% YoY compared to the pre-COVID-19 period 282 10.0% (Jan-Mar 2020) 2,000 358 17.4% 7.1
Slide 29: Appendix
4. Appendix Copyright (C) 1999 GMO Financial Gate, Inc. All Rights Reserved. 29
Slide 30: GMO-FG Business Domain
GMO-FG Business Domain GMO-FG is focusing on offline payment （リアル店舗決済 ＋ IoT決済） Company name Business GMO Financial Gate GMO Payment Gateway Domain （Payment at Brick & Mortar ＋ IoT） （EC） Payment by passing card/QR code over Payment by entering credit card the reader information in PC/mobile phone Pay
Slide 31: Rev Models: Financial Gate vs. Payment Gateway
Rev Models: Financial Gate vs. Payment Gateway Initial revenue in offline payment is tend to be fluctuate because of its seasonality of terminal delivery FG PG Revenue Revenue Time Time Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Initial Revenue（Terminal Sales・Software Development） Initial Revenue（Initial Set up
Slide 32: Three Biz Models Over a Single, One-Stop Platform
Three Biz Models Over a Single, One-Stop Platform One-stop platform covering all settlement processes between merchants and acquirers Consumer Merchants FG Acquirers Various Payment Terminals 1 Methods Terminal Sales Various Payment Payment Credit Card Business Methods Terminal Issuer Flow Revenue P
Slide 33: Stock Revenue Expansion Originating From Terminal Sales
Stock Revenue Expansion Originating From Terminal Sales Stock revenue grows with flow model revenue which is mainly coming form the sales of payment terminals Model 3 Businesses 4 Types of Revenue ① Terminal Flow Model Rev Sales Initial One-time revenue via Business terminal sales Monthly recurring
Slide 34: Relationship Between Spread Revenue and GMV
Relationship Between Spread Revenue and GMV We do not necessarily generate spread revenue for every transaction. This is due to the fact that credit card companies have historically acquired major participating merchants on their own. Therefore, we calculate spread revenue as GMV × Take Rate × Contr
Slide 35: Leveraged Growth Model
Leveraged Growth Model Fee and spread revenue are expanding with the market /growth in participating merchants Leveraged Growth N＋1 Stock revenue N Stock revenue Expanding stock revenue with the market/growth Spread in participating merchants Fee Stock revenue before N-1 Stock Stock revenue linked w
Slide 36: TAM (Total Addressable Market)
TAM (Total Addressable Market) Value of cashless (face-to-face) payment is expanding rapidly, as the value of IoT/Unattended ◼ Offline TRX value in Japan ◼ Potential market value of IoT/Unattended Private sector final consumption Potential market size for expenditure in IoT/Unattended (our Japan (in
Slide 37: Market Growth of Offline Cashless (face-to-face payments)
Market Growth of Offline Cashless (face-to-face payments) The market for offline cashless payments is currently ¥92 trillion, six times larger than the online market. Cashless penetration is expected to rise to as much as 80%, driven by government-led cashless policies 80％ ¥238 trillion 120 60.0% Lo
Slide 38: Government Promotion of Cashless Payments
Government Promotion of Cashless Payments METI* announced its Cashless Vision policy to encourage cashless payments. We expect the Japanese cashless market to expand rapidly in response Events Our Business 4/2018 Announcement of Cashless Vision（by METI） Demand for cashless terminals increases as bus
Slide 39: Strategy to Maximize TRX Value
Strategy to Maximize TRX Value Maximize GMV through a new processing network and by pursuing B-to-B alliances (*1) Offline Cashless (face-to-face) Market (2025 E) TRX value: ¥118 trillion/year Continuous Growth Offline Cashless (face-to-face) Market (2020 E) TRX value: ¥87 trillion/year Aim to achie
Slide 40: Composition of Cashless Payment Methods
Composition of Cashless Payment Methods While cashless payments have become more diversified, credit card use is still high ◼ TRX value of cashless payment ◼ Credit card brand share in Japan (2020) （Unit：trillion yen） クレジットカード Credit card デビットカード Debt card 電子マネー Eーmoney 100 50.0% QRコード QR code Cashl
Slide 41: Unique Positioning
Unique Positioning End-to-end solutions via one-stop platform allows us to create alliances with many players in the market ◼ Solutions in Offline Payment Market Customization Adaptation of Terminal Payment Clearing/ Maintenance/ (Customize Payment Top-End POS Settlement Processing Adjustment Suppor
Slide 42: Barriers to Entry (Regulations to be Followed)
Barriers to Entry （Regulations to be Followed） Many kinds of regulations exist in the face-to-face payment market depending on the payment method, and the number of regulations are increasing. As payment methods become more diversified, the barriers to entry become more challenging Law E-money Regul
Slide 43: Monetization by Payment Method
Monetization by Payment Method We operate different business models according to payment method as a cashless platformer. Growth in each payment method contributes to our growth as well Flow model revenue Stock model revenue ① Initial ➁ Stock ③ Fee ④ Spread Credit・China Union Pay・J-debit E-money ー Q
Slide 44: Revenue Model by Merchant Size
Revenue Model by Merchant Size We mainly acquire medium- to large-sized merchants through alliances with major financial institutions. We mainly acquire small merchants (=long tail segment) through our subsidiaries ◼ Four types of revenue model ◼ Revenue model related to the size of merchant Termina
Slide 45: Medium-Term Strategy
Medium-Term Strategy Acquiring major participating merchants by focusing on alliances Meeting customer needs through enhanced credit payment functions and alliances with QR/points vendors Credit E-money Point QR J-debit House point/House E-money Duty exemption Terminals we offer Floor-Standing POS M
Slide 46: Alliance Overview
Alliance Overview Working with alliance partners allows us to secure participating merchants consistently and steadily Alliance Partners Payment/ Unattended POS GMO Group Financial Terminal Manufacturers Synergies Institutions Manufacturers Merchants Healthcare/Welfare Vocational Schools Vending Mac
Slide 47: stera Network Real-World Implementations
stera Network Real-World Implementations (July 21, 2020) (November 20, 2020) First adoption of Visa Touch for public First adoption of Visa Touch in railways. Ride transportation in Japan (highway bus operated by with a simple touch! Kyoto Tango Railway is Ibaraki Kotsu) Earliest Adopter ◼ First-eve
Slide 48: Company Profile
Company Profile ■Company GMO Financial Gate, Inc.（TSE Mothers Ticker:4051） ■Foundation September 1999 ■Address Humax Shibuya Building 7F, Shibuya Dogenzaka 1-14-6, Tokyo ■Stock Capital ¥1,594 Million ■Major Shareholder GMO Payment Gateway, Inc. ■Board Member Representative Director, President Kentar
Slide 49: Thank You
T h a n k Y o u GMO Financial Gate, Inc (Tokyo Stock Exchange Mothers 4051) IR website https://www.gmo-fg.com/ir/ Contact: TEL：+81-3-6416-3881 E-mail：irpr@mail.gmo-fg.com Copyright (C) 1999 GMO Financial Gate, Inc. All Rights Reserved.