Slide 1: Financial Results for 2Q of Fiscal Year Ending March 31, 2019
Oct 29, 2018 (TSE 1st Section: 8698) Financial Results for 2Q of Fiscal Year Ending March 31, 2019 This is an English translation of Japanese presentation materials prepared in connection with the disclosure of the financial results of Monex Group, Inc. It includes information derived from the conso
Slide 2: Our Business Principles
Our Business Principles Always a step ahead of the “Y” in "MONEY," our name MONEX symbolizes our position as a forerunner in finance. In the face of an ever-changing future, the Monex Group utilizes state-of-the-art IT technologies and world-class financial expertise to design innovative ways of man
Slide 3: Table of Contents
Table of Contents Our Business Principles p. 1 Table of Contents p. 2 I. Highlights p.3 - p.11 II. Consolidated Performance p.12 - p.26 III. Business Update p.27 - p.41 Appendix: Group Overview p.42 - p.51 2
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 3
Slide 5: Business Overview 1/3 Global Vision III
Business Overview 1/3 Global Vision III 新しい時代の金融を再定義し、全ての個人の投資・経済活動をサポート Global Vision III AI (artificial intelligence), blockchain and other new technologies are spreading globally at a rapid pace, with the potential to radically transform societies and economies. At the same time, the way individu
Slide 6: Business Overview 2/3 Global Vision III
Business Overview 2/3 Global Vision III Specifically, we will incorporate such new technologies as AI primarily in our U.S. segment, and then use that as a base to expand our efforts to each of our global Group operations. In the crypto asset segment, we will firmly establish our leading position in
Slide 7: Business Overview 3/3 Global Vision III and New Beginning
Business Overview 3/3 Global Vision III and New Beginning Redefine finance and create a new industry that supports individual economic activity Keywords of Forerunner redefining finance Development of in a new era “Global” online brokerage finance “Individual” businesses “New technology” Firmly es
Slide 8: Highlights 2Q of FYE Mar. 2019 (3 months) 1/5
Highlights 2Q of FYE Mar. 2019 (3 months) 1/5 Successful save on expenses in Japan while revenue decreases. Steady growth in net financial income in US helps drive its segment profit* at record high Despite an increase in FX income, a decline in market trading volume drove Japan the brokerage commis
Slide 9: Highlights 2Q of FYE Mar. 2019 (3 months) 2/5
Highlights 2Q of FYE Mar. 2019 (3 months) 2/5 Since the service suspension in January 2018, Coincheck only allowed existing customers to sell their cryptocurrency. This limited revenue stream Crypto Asset resulted in segment loss of ¥ 0.6 B. Coincheck has improved in governance, internal control and
Slide 10: Highlights 2Q of FYE Mar. 2019 (3 months) 3/5
Highlights 2Q of FYE Mar. 2019 (3 months) 3/5 ◆Total operating revenue after deducting financial expenses and quarterly profit attributable to owners of the Company (JPY million) Total operating revenue after deducting financial expenses Quarterly profit before Quarterly profit attributable to owner
Slide 11: Highlights 2Q of FYE Mar. 2019 (3 months) 4/5
Highlights 2Q of FYE Mar. 2019 (3 months) 4/5 ◆Total operating revenue after deducting financial expenses and cost of sales and segment profit (JPY million) Total operating revenue after deducting financial expenses and cost of sales Quarterly profit before income taxes 6,000 US 4,791 4,619 4,619 4,
Slide 12: Highlights 2Q of FYE Mar. 2019 (3 months) 5/5
Highlights 2Q of FYE Mar. 2019 (3 months) 5/5 ◆Total operating revenue after deducting financial expenses and cost of sales and segment profit (JPY million) Total operating revenue after deducting financial expenses and cost of sales Quarterly profit before income taxes Crypto Asset Coincheck, Inc.
Slide 13: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 12
Slide 14: YoY Comparison (6 months) Consolidated Performance
YoY Comparison (6 months) Consolidated Performance (JPY million) 2Q FYE Mar. 2Q FYE Mar. 2018 2019 Rate of Variance Reference (Apr. 2017 – (Apr. 2018– change Sep. 2017) Sep. 2018) Total operating revenue after P15: Analysis of Japan segment deducting financial expenses 22,456 23,845 1,389 6.2% P17:
Slide 15: YoY Comparison (6 months) Segment Performance
YoY Comparison (6 months) Segment Performance (JPY million) Japan US Asia Pacific Crypto Asset Investment 2018/3 2019/3 2018/3 2019/3 2018/3 2019/3 2018/3 2019/3 2018/3 2019/3 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q Total operating revenue after deducting financial expenses 13,443 13,111 8,390 9,238 466 413 -
Slide 16: YoY Comparison (6 months) Analysis: Operating Revenue (Japan)
YoY Comparison (6 months) Analysis: Operating Revenue Japan : A change in the pricing for margin trading led to higher market share of trading volume and trading balance ■Total operating revenue after deducting financial expenses and cost of sales Total operating revenue after deducting financial (c
Slide 17: YoY Comparison (6 months) Analysis: SG&A (Japan)
YoY Comparison (6 months) Analysis: SG&A Japan : Advertising expenses declined by improving marketing efficiency. System related expenses increased primarily to reinforce the cyber security ■SG&A (compared to Apr. 2017 – Sep. 2017) SG&A Total +3.5% (+388) (JPY million) *figures in parenthesis is the
Slide 18: YoY Comparison (6 months) Analysis: Operating Revenue (USD)
YoY Comparison (6 months) Analysis: Operating Revenue (USD) US：Net financial income increased due to rising interest rates. Growth in account openings and higher market volatility drove higher brokerage commissions ■Total operating revenue after deducting financial expenses and cost of sales (compar
Slide 19: YoY Comparison (6 months) Analysis: SG&A (USD)
YoY Comparison (6 months) Analysis: SG&A (USD) US：Compensation and benefits increased due to incentive compensation linked to the Company’s stock price and an increase in human capital to support expanding customer base. An increase in trading volume drove higher commissions paid SG&A Total +6.1% (+
Slide 20: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance （JPY million） 1Q FYE Mar. 2Q FYE Mar. 2019 2019 Rate of Variance change Reference (Apr. 2018- (Jul. 2018- Jun. 2018) Sep. 2018) Total operating revenue after P21: Analysis of Japan segment 12,358 11,487 -871 -7.0% deducting financial expenses P23: A
Slide 21: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance (JPY million) Japan US Asia Pacific Crypto Asset Investment 2019/3 2019/3 2019/3 2019/3 2019/3 2019/3 2019/3 2019/3 2019/3 2019/3 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q Total operating revenue after deducting financial expenses and 6,634 6,477 4,619 4,619 192 221
Slide 22: QoQ Comparison (3 months) Analysis: Operating Revenue (Japan)
QoQ Comparison (3 months) Analysis: Operating Revenue Japan : While FX income increased, brokerage commissions declined due to a decrease in market trading volume ■Quarterly total operating revenue after deducting Quarterly total operating revenue after financial expenses and cost of sales deducting
Slide 23: QoQ Comparison (3 months) Analysis: SG&A (Japan)
QoQ Comparison (3 months) Analysis: SG&A Japan : Advertising expenses declined by improving marketing efficiency. System related expenses increased primarily to reinforce the cyber security ■Quarterly SG&A Quarterly SG&A -2.0％ (-117) (JPY million) *figures in parenthesis is the variance from previou
Slide 24: QoQ Comparison (3 months) Analysis: Operating Revenue (USD)
QoQ Comparison (3 months) Analysis: Operating Revenue (USD) US : An increase in net financial income driven by rising interest rates for the last three consecutive quarters partially offset by lower brokerage commissions due to lower market volatility ■Quarterly total operating revenue after deducti
Slide 25: QoQ Comparison (3 months) Analysis: SG&A (USD)
QoQ Comparison (3 months) Analysis: SG&A (USD) US : Commissions paid decreased due to lower trading volume and a more favorable mix of options trading which generates higher margins ■Quarterly SG&A Quarterly SG&A -6.0% (-2,402) (USD thousand) *figures in parenthesis is the variance from previous qua
Slide 26: Summary of Statement of Financial Position
Summary of Statement of Financial Position The difference between “Net capital” and “Non-current assets” is the source of funds for investments and shareholders distribution ◆ Summary of consolidated statement of financial position as of September 30, 2018 Assets Liabilities JPY 985.1B (*1) Non-curr
Slide 27: Shareholders' Distribution
Shareholders’ Distribution Total return ratio (*1) is 75% on a multi-year basis ◆Total return amount(*2) and total return ratio ◆Return on Equity ratio （million yen） 12,000 Amount of acquisition of own shares(left) 900% 15% Amount of dividends (left) 103% 12.9% Total return ratio(right) 800% 10,000
Slide 28: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 27
Slide 29: Business Update Japan segment
Business Update Japan segment Expanded customer base by using technology, product development and competitive price advantages Active Trading - Over 14,000 account openings. Number of funded accounts and active accounts both increased by +10% (vs 1Q FYE Mar. 2019). The trading volume share of TradeS
Slide 30: Business Update Japan segment: Investment Supporting
Business Update Japan segment Monex for wealth creation services and investment supporting tool with various product lineup - Investment balance is about ¥ 40.8 B (※) including a wrap service (MSV LIFE) for Wealth Creation individuals and investment entrusted by institutional investors - Shizuoka Ba
Slide 31: Launched an investment information media "Money Clip"
Business Update Japan segment Launched an investment information media “Money Clip” URL: https://media.monex.co.jp/ ■Overview • Monex Securities launched a new owned media that is available anytime, anywhere with a mobile-friendly design • Integrate various investment information offered by the comp
Slide 32: Customer base of Monex Securities
Business Update Japan segment: Customer base of Monex Securities Aiming to enlarge equities commissions through acquisition of active traders as well as investors, Monex's main customer base Higher ratio than the average of the main online Larger than the average of the main online securities securi
Slide 33: Business Update US segment
Business Update US segment Account growth continues at record levels driven by our simplified pricing structure and our newly streamlined onboarding and cashiering processes ■ Expanded services and customer base - Record number of active accounts driving increased client assets totaling $ 5.8 B in 2
Slide 34: Strong account growth and favorable interest rates provide a steady profit structure
Business Update US segment ■ Strong account growth and favorable interest rates provide a steady profit structure - Strong growth in active accounts and a hike in interest rate drove higher net financial income - Commission received + net financial income decreased by 3% from previous quarter as mar
Slide 35: Business Update Asia Pacific Segment
Business Update Asia Pacific Segment Explore business opportunities in Asia Pacific area ■ Online securities business in Australia - Monex Securities Australia started the online securities business in Jan. 2018 - The company makes use of the system of the HK-based brokerage subsidiary in order to l
Slide 36: Business Update Crypto Asset Segment
Business Update Crypto Asset Segment Since the service suspension in Jan. 2018, Coincheck basically allowed existing customers only to sell their cryptocurrency. Segment loss was ¥ 0.6 B in 2Q 2Q FYE March 2019（Crypto Asset Segment） 1Q FYE March 2019 2Q FYE March 2019 （Billion yen） （3 months) （3 mon
Slide 37: Crypto Asset Segment: Potential for Growth and Profitability
Business Update Crypto Asset Segment ■Potential for Growth ・ Coincheck has approximately 1.7 million users, a majority in the young generations. Customers’ financial assets and transactions per user are likely to increase over time ・ Due to its different age group of customers compared with Monex Se
Slide 38: Improvements in governance, internal control and internal audit
Business Update Crypto Asset Segment Improvements in governance, internal control and internal audit in response to the business improvement order (Mar 8, 2018) Business Improvement Order Major Improvements Redefined the Board of Directors’ functions to focus Drastically reform management system mai
Slide 39: Monex Cryptocurrency Lab
Business Update Crypto Asset Segment Monex Cryptocurrency Lab offers up-to-date information relating to cryptocurrencies to individual traders • Monex Cryptocurrency Lab offers information of cryptocurrency’s market projection and industry trend studied by Nana Otsuki, known as an analyst of financi
Slide 40: Four potentials: Fusion with traditional finance
Business Update Crypto Asset Segment Four potentials: Fusion with traditional finance. New financial conglomerate in a new age Innovation：New businesses/services utilizing block-chain technology Payment Service：Cryptocurrency as a payment tool to realize real-time and low-cost international transact
Slide 41: Business Update Investment Segment
Business Update Investment Segment Investment Segment was curved out from Japan Segment since April 2018 ■Current scope of investment ・ Monex Ventures, Inc. (a wholly-owned subsidiary of Monex Group, Inc.) - Principle investment with a focus on Fintech companies ・ MONEX EDISON Investment Limited Par
Slide 42: Expanding investments in Fintech companies
Business Update Investment Segment Expanding investments in Fintech companies Online reservation P2P lending EC Payment DLT * Mortgage loan consulting App for upper-end invested in 2014 invested in 2014 invested in 2015 invested in 2015 invested in 2015 invested in 2016 （registered as Type Ⅱ Financi
Slide 43: Appendix. Group Overview
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 42
Slide 44: Group Overview
Group Overview Japan: 1.79M accounts, Crypto Asset: 1.7M users, US: 100K accounts, AP: 13K accounts. Global customer base as a group Aim for continuous growth in the online brokerage business and enhancement of crypto asset business* for retail investors as our core business Crypto Asset Segment
Slide 45: Group Overview－Revenues, Costs, and Employees
Group Overview－Revenues, Costs, and Employees ◆Total operating revenue after deducting financial expenses ◆SG&A by segment and by cost items by region and by business Others 3% Compensation and benefits 4% System related expenses 3% Othres 2% Crypto 2. System 1. Equities Others 3% related expenses C
Slide 46: Corporate value creation process
Group Overview－Corporate value creation process As experts in finance, we strive to expand customer base using IT technology As of October 2018 45
Slide 47: New financial conglomerate in a new age
Group strategy overview combined with crypto-asset business New financial conglomerate in a new age Traditional Financial New Financial Monex Group Conglomerate Conglomerate Bank Crypto Asset Bank Coincheck Monex Securities, TradeStation Securities Broker Global Online Brokerage Securities, Monex Bo
Slide 48: Corporate Governance
Corporate Governance Establish global-standard corporate governance practices and emphasis on dialogue with retail/institutional investors Adoption of “company with three committees” structure - Highly effective executive management monitoring system - Adopted “company with committees” structure in
Slide 49: Monex Group
Monex Group (As of September 30, 2018) Listed Holding Company [Japan] [US/Europe] [Asia Pacific] Cryptocurrency exchange Online Securities Company service provider Monex International Limited Holding Company in Hong Kong TradeStation Group, Inc. Online Securities Company Holding Company in the U.S.
Slide 50: Overview of Monex Group and Main Subsidiary Companies
Overview of Monex Group and Main Subsidiary Companies ■ Monex, Inc. (Tokyo, Japan) ■ TradeStation Group, Inc. (HQ in Florida, U.S.) One of the major online brokerage firms in Japan Online securities group with award-winning trading technology - President : Oki Matsumoto development capabilities - Fo
Slide 51: History of Monex Group
History of Monex Group Japan U.S. Asia Pacific 1982 - TradeStation Technologies, Inc. is formed as Omega Research, Inc. 1997 - TradeStation stock lists on NASDAQ - Boom Securities (H.K.) Limited is founded (now Monex Boom Securities (H.K.) Limited), becoming the first in Asia Pacific to launch Inter
Slide 52: Investors' Guide
Investors’ Guide ■ Shareholders distribution ■ Shareholders & indicators per share ◆ Our basic policy for shareholders distribution ◆ Major shareholders and shareholder breakdown (as of Sep. 30, 2018) Monex Group, Inc. Monex Group aims to provide returns to its shareholders 1.5% based on the busines