GMO Financial Gate, Inc. · TSE:4051
GMO Financial Gate — Q1 2023 Earnings Presentation
74 slides from GMO Financial Gate's earnings presentation, Feb 14, 2023
Slide 1: Financial Results Briefing for Q1 FY2023
Financial Results Briefing for Q1 FY2023 Expansion of next-generation payment platform contributes to growth of Stock-Model revenue ～ Progress in acquiring large merchants driven by Vertical Expansion ～ February 14, 2023 11th IR Presentation GMO Financial Gate, Inc. (Ticker:4051, TSE-Growth) https:/
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 February 14, 2023 Note that presentation material content is subject t
Slide 3: Meeting agenda
Meeting 1. Summary of financial Results for Q1 FY2023 agenda 2. Business Highlights 3. Growth Strategy and Progress 4. Financial Information 5. Appendix Copyright 2022 GMO Financial Gate, Inc. 3
Slide 4: Summary of financial Results for Q1 FY2023
Summary of financial Results for Q1 FY2023 1 Copyright 2022 GMO Financial Gate, Inc.
Slide 5: 1.1 Q1 FY2023 Summary
1.1 Q1 FY2023 Summary Both revenue and operating profit are making good progress against the 1H and full-year forecasts. Recovery of economic activity in face to face market also contributed our business. ⚫ Q1 FY2022 - Revenue ¥3.27billion (+52.6% YoY ) Progress towards 1H forecast 53.4%, Progress t
Slide 6: 1.2 Summary of Financial Results
1.2 Summary of Financial Results Both revenue and operating profit are making good progress against the 1H and full-year forecasts. Forecast Progress （Millions of yen） Q1 FY2022 Q1 FY2023 YoY FY2023 1st half towards forecast （Full-year） 6,115 53.4% Revenue 2,141 3,267 ＋52.6% （12,470) （26.2%) 1,492 5
Slide 7: 1.3 Major Topics Regarding Financial Results
1.3 Major Topics Regarding Financial Results Progress in-line with the full-year forecast (profit margin also in line with expectations). Secured high operating profit growth rate (+34.5% YoY) while continuing to make necessary investments. ◼ Revenue （Millions of yen） (＋) Large-lot deal contributed
Slide 8: 1.4 Revenue by Business Model (YoY)
1.4 Revenue by Business Model (YoY) Continued high YoY growth in both Initial and Stock-Model Revenue. Steadily expand Stock-Model Revenue by flexibly designing the contract structure to monetize any of the three items. (Unit：Millions of Yen) Q1 FY2022 Q1 FY2023 YoY (Composition %) (Composition %) 1
Slide 9: 1.5 Initiatives for accelerating Spread Revenue
1.5 Initiatives for accelerating Spread Revenue Strengthen solutions for small and medium-sized merchants by “expanding payment valuations” and “simplifying the implementation process”. Implement various initiatives to achieve continuous revenue growth of 25%. Category Initiative Spread Revenue (Con
Slide 10: 1.6 Revenue by business model (Quarterly)
1.6 Revenue by business model (Quarterly) 【Initial】 Continued to be fluctuate from quarter to quarter, but steadily expanding because now is the time to increase the market share. 【Stock-Model】 Growth driven by fee expansion backed by growth in the number of active terminals. Initial Revenue Stock-M
Slide 11: 1.7 Initial Revenue and No. of Active Terminals (Quarterly)
1.7 Initial Revenue and No. of Active Terminals (Quarterly) Initial revenue grew steadily due to the contribution of large-lot deal. On the other hand, terminals sold as a result of this large-lot deal are scheduled to go into operation in Q3 of current fiscal year or later. *Large-lot deal contribu
Slide 12: 1.8 Consolidated KPIs (Number of active terminals)
1.8 Consolidated KPIs（Number of active terminals） The increase in the number of manned terminals, mainly stera, continues to drive the overall increase. Unattended terminals also continue to expand steadily. Active terminals overall ：+64.5K YoY, YoY+45.1% （Unit：Thousand） YoY 250 Manned terminal Unma
Slide 13: 1.9 Consolidated KPIs (Quarterly Transaction volume/GMV)
1.9 Consolidated KPIs (Quarterly Transaction volume/GMV) Both the number of transaction volume and GMV exceeded our target of +50% YoY. KPIs steadily expanded in line with the increase in the number of active terminals. Number of transaction volume Transaction value (GMV) （Unit：million） （Unit：100 mi
Slide 14: Business Highlights
Business Highlights 2 Copyright 2022 GMO Financial Gate, Inc.
Slide 15: 2.1 Merchant Industry
2.1 Merchant Industry Increased installation of terminals at merchants in industries where COVID used to affect huge impact. Confirming strong cashless demand at many merchants to capture the recovery wave from COVID. New New ※Planned to be booked as active Public service terminal from Q3 FY2023 or
Slide 16: 2.2 Transaction Trends by Industry (Q1)
2.2 Transaction Trends by Industry (Q1) Reopening/recovery of inbound tourism demand has led to a recovery in merchants that were negatively impacted by COVID. Merchant Ａ COVID-19 headwind Jul - Sep：Decreased Merchant C COVID-19 tailwind due to Transaction Volume Transaction Volume Re-expansion of C
Slide 17: 2.3 Top ranked merchants (GMV basis)
2.3 Top 30 ranked merchants (GMV basis) Vertical expansion of our payment platform has been successful, and we are steadily acquiring new merchants. Steady YoY growth of existing merchants has been contributing the expansion of our cashless payment platform. Q1 FY2022 Q1 FY2023 Retailer 小売りAA アパレルC
Slide 18: 2.4 Comparison with Market Growth
2.4 Comparison with Market Growth While the overall market is currently growing +14% YoY, our GMV grew +76% YoY in Q1. Growth of existing merchants and acquisition of new merchants are the two factors driving our growth. Market GMV (Transaction value of credit card payment) GMO-FG GMV All Retailers
Slide 19: 2.5 Payment platform grows together with merchants
2.5 Payment platform grows together with merchants Compared to current market growth of 14%, our Q1 GMV growth rate is 76% overall and 24% for existing merchants. The growth rate of just existing merchants exceeds market growth. with merchants growing together with our payment platform. GMV growth r
Slide 20: Growth Strategy and Progress
Growth Strategy and Progress 3 Copyright 2022 GMO Financial Gate, Inc.
Slide 21: 3.1 Growth strategy on mid-term target
3.1 Growth strategy on mid-term target Successfully delivering software development to large-lot merchants through Vertical expansion. Steadily making track record of symbolic deals. Growth strategy toward 2025 is progressing steadily on schedule. 2022 *actual 2023 *Forecast 2024 2025 Consolidate OP
Slide 22: 3.2 Expansion of GMO-FG cashless platform
3.2 Expansion of GMO-FG cashless platform Building a highly-retentive payment platform through Vertical Expansion. Supporting merchants in resolving issues in preparation for the cashless transition of public service institutions and for the recovery of inbound tourism demand in related industries.
Slide 23: 3.3 Business progress in active manned terminal
3.3 Business progress in active manned terminal Action plans 1 2 3 4 Nicely acquiring large merchants in each industry through promotion of Vertical expansion Historical data of active manned terminal （Unit : FY2020 （単位：千台）FY2021 FY2021 FY2021 FY2021 FY2022 FY2022 FY2022 FY2022 FY2023 QoQ YoY thousa
Slide 24: 3.4 Expansion of Payment Platforms - Mobility
3.4 Expansion of Payment Platforms - Mobility Action plans 1 2 3 4 In anticipation of a recovery in inbound tourism demand, the use of Visa touch payment cards in the mobility field has become widespread also in Tokyo metropolitan area. Penetration of “Card Touch Payment”* contributes to increased a
Slide 25: 3.5 Promote the success experience of cashless payment
3.5 Promote the success experience of cashless payment Action plans 1 2 3 4 Create a cashless environment in previously cash-only event environments to encourage consumers to experience cashless success. GMO SONIC 2023 (Jan 2023) Professional sports stadiums ⚫ Established cashless only environment ⚫
Slide 26: 3.6 Status of ESG Initiatives as a Cashless Platform Company
3.6 Status of ESG Initiatives as a Cashless Platform Company Disclosed "ESG-related Initiatives in our group" on our website last December. Currently conducting third-party data review to obtain external certification for supply chain CO2 emissions, including SCOPE3. ESG-related disclosure schedule
Slide 27: Financial Information
Financial Information 4 Copyright 2022 GMO Financial Gate, Inc.
Slide 28: 4.1 Profit & Loss
4.1 Profit & Loss Slight YoY decline in gross margin mainly due to the change in sales mix within Initial revenue. SG&A ratio is declining due to revenue expansion, and operating profit is on track to meet the annual plan. FY2022 FY2023 (Unit：Thousands) YoY Q1 (actual) Q1 (actual) Revenue 2,141,482
Slide 29: 4.2 Revenue by business model (YoY)
4.2 Revenue by business model（YoY） Composition ratio of Initial and Stock-Model revenue remained unchanged from the same period of the previous year. % of Fee revenue rose among Stock-Model revenue increased. Initial Stock Fee Spread 268 519 259 239 261 185 193 2,220 101 135 1,454 855 FY2021 1Q FY20
Slide 30: 4.3 Revenue by business model (Quarterly)
4.3 Revenue by business model (Quarterly) Initial revenue grew steadily due to the contribution from the development of large-lot merchant. Fee revenue was pushed up by the sales of paper rolls (seasonality). Spread revenue also grew steadily in QoQ due to the seasonality from the year-end sales spi
Slide 31: 4.4 Balance sheet
4.4 Balance sheet Build up inventory based on future sales forecasts. Accumulate assets needed to execute market share expansion strategy. End of Q1 FY2023（Thousands of yen） ◼ Points Cash & Cash equivalents Merchandise： (23.5%) Current liabilities Increased approx. ¥1billion from the end of Q4. Inve
Slide 32: 4.5 Consolidated KPIs (No. of Active Terminals)
4.5 Consolidated KPIs（No. of Active Terminals） The increase in the number of active terminals continued to be driven by manned terminals. Steady accumulation of unattended terminals. （Unit: FY2020 FY2020 FY2021 FY2021 FY2021 FY2021 FY2022 FY2022 FY2022 FY2022 FY2023 QoQ YoY thousand） Q3 Q4 Q1 Q2 Q3
Slide 33: Appendix
Appendix 5 Copyright 2022 GMO Financial Gate, Inc.
Slide 34: GMO-FG Business Domain
GMO-FG Business Domain Business Model 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 Payment by entering credit card over the reader information in PC
Slide 35: Rev Models: Financial Gate vs. Payment Gateway
Rev Models: Financial Gate vs. Payment Gateway Business Model Initial revenue in offline payment is tend to be fluctuate because of its seasonality of terminal delivery. FG PG Revenue Revenue Time Time １Q ２Q ３Q ４Q １Q １Q ２Q ３Q ４Q １Q Initial Revenue（Terminal Sales・Software Development） Initial Revenue
Slide 36: Three Biz Models Over a Single, One-Stop Platform
Three Biz Models Over a Single, One-Stop Platform Business Model One-stop platform covering all settlement processes between merchants and acquirers. Consumer Merchants FG Acquirers Various Payment Terminals 1 Methods Payment Various Payment Terminal Sales Terminal Methods Business Credit Card Issue
Slide 37: Stock Revenue Expansion Originating From Terminal Sales
Stock Revenue Expansion Originating From Terminal Sales Business Model Stock revenue grows with flow model revenue which is mainly coming form the sales of payment terminals. % Revenue Model 3 Business 4 Types of Revenue (FY2023 Q1) ① Terminal Flow Model Rev Sales Initial 67.9％ Business Stock 8.0％ ②
Slide 38: Players in offline cashless payment setting
Players in offline cashless payment setting Business Model Sales activity to merchants/Clearing of merchant transaction offline Payment Processing Payment Financial Merchants Center Network Institutions Offline market Domestic network Acquirer Terminal manufacturer POS vendor Processing center (CCT)
Slide 39: Image of rise in Rev & OP
Image of rise in Rev & OP Business Model Phase1: Focus on sales/activation of payment terminals and revenue will be fluctuated. Phase2: Expansion of Stock-Model revenue. Increase of Market Share (approx. up to 2025) Rise in Profit Margin Revenue: Increase at a CAGR of 25% or more, although the exten
Slide 40: Leveraged Growth Model
Leveraged Growth Model Business Model Fee and spread revenue are expanding with the market /growth in membership merchants. Leveraged Growth N＋1 Stock revenue N Stock revenue Stock-Model Revenue Spread Linking with the growth of TAM / membership merchants Fee Stoc-model revenue before N-1 Stock Link
Slide 41: Details on each revenue ①
Details on each revenue ① Business Model Initial Content Rev Model This is a sales revenue of payment terminals from merchants or credit card companies. Payment terminal All of first, we purchase hardware from manufactures. And confirm certain measures of • Terminal Selling Price × Units Sold paymen
Slide 42: Details on each revenue ②
Details on each revenue ② Business Model Fee Content Rev Model • TRX Volume× Processing Fee Processing It is a fee we charge toward monthly transaction volume based on the rate per transaction ✓ Processing fee is about ¥2 to ¥3 per transaction Sales of • No. of Order × Price of Roll Paper This is a
Slide 43: Fee ARPU (Fee revenue divided by Transaction volume)
Fee ARPU (Fee revenue divided by Transaction volume) Business Model Strengthening electronic slip storage services in anticipation of a paperless society in the future. Although there is a possibility of offsetting paper roll sales in the future, currently it is a factor that increases the unit pric
Slide 44: Software assets and depreciation
Software assets and depreciation Business Model Assets, mainly software assets, increased due to the development investments for large merchants. Depreciation and amortization expenses are also on the rise, but will contribute to the expansion of stock-type revenues in the future. 1800 140 ソフトウェア資産(
Slide 45: Number of Employees (Consolidated basis)
Number of Employees(Consolidated basis) Business Model Plans a net increase of 10 to 15 employees per fiscal year to achieve the management benchmarks. Assumed composition of work force is approximately 40% sales, 40% systems, and 20% administration. Plan to hire 10-15 people (consolidated basis) ea
Slide 46: Concept of Spread revenue ratio to GMV
Concept of Spread revenue ratio to GMV Business Model Our total GMV is the sum of ①and ②below. Spread revenue is generated only in the case of ②Agent contract. Since ① also contributes significantly to GMV, the linkage between total GMV and Spread revenue tends to decline. Enjoyable revenue ①Direct
Slide 47: Relationship between number of active terminals & stock rev
Relationship between number of active terminals & stock rev Business Model In addition to the increase in the number of active terminals, revenue opportunities for Stock revenue will increase, but the status of subscriptions to paid services will differ depending on the needs/demand of merchants. Te
Slide 48: Monetization by Payment Method
Monetization by Payment Method Business Model 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-d
Slide 49: Revenue Model by Merchant Size
Revenue Model by Merchant Size Business Model 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
Slide 50: Medium-Term Strategy Acquiring major merchants by focusing on alliances
Medium-Term Strategy Acquiring major merchants by focusing on alliances Business Model Meeting customer needs through enhanced credit payment functions and alliances with QR / points vendors. Credit E-money QR code J-debit House points Common Points Duty exemption Terminals we offer Floor-Standing M
Slide 51: TRX-increase through cashless penetration
TRX-increase through cashless penetration Business Model TRX volume & value tend to go up in a few months to six months after the merchants introduced cashless payment for the first time. ◼ Merchant A（Tokyo） Monthly TRX trend TRX Volume TRX Value Merchant Cash only ⇒ Introduce cashless payments N月 N
Slide 52: TAM (Total Addressable Market)
TAM(Total Addressable Market) Market Environment Transaction Value of cashless (face-to-face) payment is expanding rapidly, as the value of IoT / Unattended. ◼ Offline Transaction value in Japan ◼ Potential market value of IoT/Unattended Private sector final consumption expenditure in Potential mark
Slide 53: Growth trend of domestic offline cashless market
Growth trend of domestic offline cashless market Market Environment 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. （Unit : trillion ye
Slide 54: Composition Ratio of Domestic Cashless Payment Methods
Composition Ratio of Domestic Cashless Payment Methods Market Environment Even in an environment of significant growth in the proportion of QR codes, transaction value and volume of credit continue to grow. Transaction Value Transaction Volume Composition 2019 2020 2021 Composition 2019 2020 2021 Cr
Slide 55: IoT/Unattended Market Growth
IoT/Unattended Market Growth Market Environment The number of terminals is expected to be equal to or greater than the market for payment terminals in real stores. Unattended market (= general term for vending/service machine market) is expected to expand further due to changes in the external envir
Slide 56: Trends in the number of foreign visitors to Japan
Trends in the number of foreign visitors to Japan Market Environment The number of foreign visitors to Japan decreased sharply due to the COVID, but we are also focusing on preparations for a recovery in demand. Number of visiting foreigners (annually) Our inbound-related industry merchants （Unit :
Slide 57: Strategy to Maximize Transaction Value
Strategy to Maximize Transaction Value Growth Strategy 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 58: Strategy to Maximize Transaction Value
Strategy to Maximize Transaction Value Growth Strategy Maximize GMV through a new processing network and by pursuing B-to-B alliances. (*1) Offline Cashless (face-to-face) Market (2025 E) GMV： ¥128 trillion/year Offline Cashless (face-to-face) Continuous Market (2022 E) GMV： ¥95 trillion/year Growth
Slide 59: Progress in Unmanned Terminal (IoT) Business
Progress in Unmanned Terminal (IoT) Business Growth Strategy Strengthening alliances in the unmanned terminal (IoT) field in response to the trend toward manpower savingPromoting various projects with an eye on future data monetization 2022 2023 Progress Launched To be released Oct Dec Mar Jun Sep H
Slide 60: Growth Strategies for 2025 and Beyond
Growth Strategies for 2025 and Beyond Growth Strategy For 2025 and beyond, we aim to grow stock-model revenue in the payment-related field. Aim at a continuous 25% growth in OP through business diversification. ：High inbound tourism demand Image of service expansion Area of focus OP (100 million yen
Slide 61: Data Services in the IoT Domain
Data Services in the IoT Domain Growth Strategy Started providing payment data service for merchandise vending machines, contributing to stock-model revenue. Supporting merchants' operational efficiency improvement and sophistication (DX) using data. IoT Appropriate stock replenishment and cash Paym
Slide 62: Alliance Overview
Alliance Overview Growth Strategy 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 Sc
Slide 63: Unique Positioning
Unique Positioning Competitive Advantage 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 Methods) Settlem
Slide 64: Barriers to Entry (Regulations to be Followed)
Barriers to Entry （Regulations to be Followed） Competitive Advantage 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 challen
Slide 65: Government Promotion of Cashless Payments
Government Promotion of Cashless Payments Industry Topic METI announced its Cashless Vision policy to encourage cashless payments. We expect the Japanese cashless market to expand rapidly in response. Present Impact on our business Increasing demand for cashless terminals as merchants are obligated
Slide 66: Expansion of credit card payment eligibility
Expansion of credit card payment eligibility Industry Topic The "Cashless Law" will go into effect in November 2022. Expansion of areas where payment can be made by credit card. Feb 2008～ national pension contribution Application of individual law Jan 2017～ national tax provisions Apr 2019～ Patent a
Slide 67: New topic of credit card industry
New topic of credit card industry Industry Topic In response to a request from the Japan Fair Trade Commission, Visa, Mastercard, and UnionPay announced their intention to disclose their interchange fee rates by the end of November. Breakdown of MDR METI requires fee among credit card companies （mod
Slide 68: COVID infections
COVID infections Industry Topic High level of infected cases observed in the 8th Wave, but movement toward normalization of economic activity continues. Number of new cases of COVID-19 infection 300,000 7th wave 8th wave 250,000 to "Category designation from "Category " Government policy to change 2
Slide 69: Initiatives for terminal-less payments
Initiatives for terminal-less payments Industry Topic Implemented various measures to prepare for future handset-less payments. Strengthening Initiatives in the Mobility Domain and Beverage Vending Machines Status of Our Efforts Tap to Phone NFC tagging touch payment Dec 2021～ Launched in FY2022 Sta
Slide 70: Share holder structure
Share holder structure Company Profile GMO-PG Japanese institutional investors Other enterprises Foreign institutional investors Individuals 100% 90% 16.26 13.19 15.11 80% 7.84 21.87 18.48 70% 8.07 8.14 1.54 3.15 60% 6.35 6.21 50% 40% 30% 59.69 57.05 57.05 20% 10% 0% End of September 2020 End of Mar
Slide 71: Promotion of DX introduction to improve business efficiency
Promotion of DX introduction to improve business efficiency Company Profile Department Content in charge Whole VDI (virtual desktop) implementation for enhanced security Integrated operation of scheduling, internal portal, workflow, attendance system, and Whole expense reimbursement Whole Paperless
Slide 72: Affiliated Companies
Affiliated Companies Company Profile GMO-FG serves in offline face to face payment market as a consolidated subsidiary of GMO-PG. GMO INTERNET GROUP （Internet infrastructure business） GMO PAYMENT GATEWAY （Online payment/Payment section of GMO internet group） Consolidated 100% GMO EPSILON （Online pay
Slide 73: Company Profile
Company Profile Company Profile ■Company GMO Financial Gate, Inc.（TSE Growth Ticker:4051） ■Foundation September 1999 ■Address Humax Shibuya Building 7F, Shibuya Dogenzaka 1-14-6, Tokyo ■Stock Capital ¥1,618 Million(end of December 2022) ■Major Shareholder GMO Payment Gateway, Inc. ■Board Member Repr
Slide 74: Thank you
T h a n k y o u GMO Financial Gate, Inc. (TSE Growth 4051) IR Web site URL https://www.gmo-fg.com/ir/ Copyright 2022 GMO Financial Gate, Inc.