Monex Group, Inc. · TSE:8698
Monex — Q3 FY2019 Earnings Presentation
50 slides from Monex's earnings presentation, Jan 31, 2019
Slide 1: Financial Results for 3Q of Fiscal Year Ending March 31, 2019
Jan 31, 2019 TSE 1st Section: 8698 Financial Results for 3Q of Fiscal Year Ending March 31, 2019
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. 9 II. Consolidated Performance p.10 - p.24 III. Business Update p.25 - p.39 Appendix: Group Overview p.40 - p.49 This is an English translation of Japanese presentation materials prepared in connection with
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 3
Slide 5: Business Overview
Business Overview Japan Generate the synergy between Monex Securities and Coincheck Favorable market condition. Net financial income will increase by $ 12 M (annual rate) going forward due to the expiration of US interest rate swap. Progressing to enter cryptoasset business as a stepping stone for f
Slide 6: Highlights 3Q of FYE Mar. 2019 (3 months) 1/5
Highlights 3Q of FYE Mar. 2019 (3 months) 1/5 Revenue and income increased in Japan due to the growth in equities and FX trading. An increase in net financial income in US drove its highest quarterly segment profits* Revenue increased due to higher market trading volume in Japan equities and a rise
Slide 7: Highlights 3Q of FYE Mar. 2019 (3 months) 2/5
Highlights 3Q of FYE Mar. 2019 (3 months) 2/5 Coincheck resumed its service offerings and improved profitability of Crypto Asset segment Coincheck resumed new account openings and depositing and purchasing services for all tradable cryptocurrencies by the end of Crypto Asset Nov 2018, leading to an
Slide 8: Highlights 3Q of FYE Mar. 2019 (3 months) 3/5
Highlights 3Q of FYE Mar. 2019 (3 months) 3/5 ◆Total operating revenue after deducting financial expenses and quarterly profit attributable to owners of the Company Total operating revenue after deducting financial expenses Quarterly profit before Quarterly profit attributable to owners of the Compa
Slide 9: Highlights 3Q of FYE Mar. 2019 (3 months) 4/5
Highlights 3Q 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 4,791 5,115 4,236 4,619
Slide 10: Highlights 3Q of FYE Mar. 2019 (3 months) 5/5
Highlights 3Q of FYE Mar. 2019 (3 months) 5/5 ◆Total operating revenue after deducting financial expenses and cost of sales and segment profit Total operating revenue after deducting financial expenses and cost of sales Quarterly profit before income taxes Crypto Asset (JPY million) Coincheck, Inc.
Slide 11: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 10
Slide 12: YoY Comparison (9 months) Consolidated Performance
YoY Comparison (9 months) Consolidated Performance (JPY million) 3Q FYE Mar. 3Q FYE Mar. 2018 2019 Rate of Variance Reference (Apr. 2017 – (Apr. 2018– change Dec. 2017) Dec. 2018) Total operating revenue after P13: Analysis of Japan segment deducting financial expenses 35,046 36,400 1,354 3.9% P15:
Slide 13: YoY Comparison (9 months) Consolidated Performance by segment
YoY Comparison (9 months) Consolidated 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 3Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q Total operating revenue after deducting financial expenses 21,810 20,092 12,626 14,353 68
Slide 14: YoY Analysis: Operating Revenue (Japan)
YoY Comparison (9 months) Analysis: Operating Revenue Japan : Price change for margin trading led to higher market share and a growth in net financial income. A rise in market share in FX trading drove higher FX & fixed income ■Total operating revenue after deducting financial expenses and cost of s
Slide 15: YoY Analysis: SG&A (Japan)
YoY Comparison (9 months) Analysis: SG&A Japan : Advertising expenses declined by efficient marketing initiative leveraging a large-scale IPO (new account openings: +11% vs 2Q FYE 2019). System related expenses increased primarily to enhance the cyber security ■SG&A (compared to Apr. 2017 – Dec. 201
Slide 16: YoY Analysis: Operating Revenue (USD)
YoY Comparison (9 months) Analysis: Operating Revenue (USD) US：Growth in new accounts and higher market volatility drove higher brokerage commissions. Net financial income increased due to rising interest rates ■Total operating revenue after deducting financial expenses and cost of sales (compared t
Slide 17: YoY Analysis: SG&A (USD)
YoY Comparison (9 months) Analysis: SG&A (USD) US：Variable costs increased due to higher commissions paid, driven by larger trading volume, and an increase in incentive compensation earned from the favorable company performance SG&A Total +5.8% (+6,411) ■SG&A (compared to Apr. 2017 – Dec. 2017) * fi
Slide 18: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance （JPY million） 2Q FYE Mar. 3Q FYE Mar. 2019 2019 Rate of Variance change Reference (Jul. 2018-Sep. (Oct. 2018- 2018) Dec. 2018) Total operating revenue after P19: Analysis of Japan segment 11,487 12,555 1,069 9.3% deducting financial expenses P21: An
Slide 19: 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 2Q 3Q 2Q 3Q 2Q 3Q 2Q 3Q 2Q 3Q Total operating revenue after deducting financial expenses and 6,477 6,981 4,619 5,115 221 186
Slide 20: QoQ Analysis: Operating Revenue (Japan)
QoQ Comparison (3 months) Analysis: Operating Revenue Japan : Higher FX & fixed income driven by an increase in market share. Brokerage commissions increased due to an increase in market trading volume ■Quarterly total operating revenue after deducting financial Quarterly total operating revenue aft
Slide 21: QoQ Analysis: SG&A (Japan)
QoQ Comparison (3 months) Analysis: SG&A Japan : Commissions paid increased due to larger market trading volume. An increase in system developers drove higher compensation and benefits Quarterly SG&A +0.8％ (+45) ■Quarterly SG&A *figures in parenthesis is the variance from previous quarter (JPY milli
Slide 22: QoQ Analysis: Operating Revenue (USD)
QoQ Comparison (3 months) Analysis: Operating Revenue (USD) US : Brokerage commissions increased due to higher market volatility. Net financial income increased, driven by higher rates and the expiration of interest rate swap receiving a fixed interest rate ■Quarterly total operating revenue after d
Slide 23: QoQ Analysis: SG&A (USD)
QoQ Comparison (3 months) Analysis: SG&A (USD) US : Variable costs increased due to higher commissions paid, driven by larger trading volume, and an increase in incentive compensation earned from the favorable company performance ■Quarterly SG&A Quarterly SG&A +3.2% (+1,208) (USD thousand) *figures
Slide 24: 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 December 31, 2018 Assets Liabilities (*1) Non-current assets J
Slide 25: 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 26: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 25
Slide 27: Cross-segment Cooperation
Business Update Cross-segment Cooperation Cryptocurrency trading business will be a key to enhance cross-segment interaction, leading to expand business capability and create new customers Promote customers’ Exchange information around asset diversification global cryptoasset business Monex TradeSta
Slide 28: Japan segment: Customer base of Monex Securities
Business Update Japan segment: Customer base of Monex Securities Aiming to increase revenue from equities commissions through acquisition of active traders as well as retail investors, who are Monex's main customer base Higher ratio than the average of the main online Larger than the average of the
Slide 29: Japan segment: US equities and FX trading
Business Update Japan segment Steady expansion of US equities business. Market share of FX trading and the total FX revenue increased US Equity Trading FX Trading - Number of transactions increased by 45% - The spread of the Monex’s FX service “FX and number of active accounts increased PLUS” was co
Slide 30: Japan segment: Wealth creation services and investment tools
Business Update Japan segment Monex for wealth creation services and investment supporting tool with various product lineup Intermediary Service with Financial Institutes Investment Supporting Tools Trader Score - Investment balance is about ¥ 39.4 B (*) - Analyze user’s trading ability and - Shizuo
Slide 31: Monex Activist Forum
Business Update Japan segment Monex Securities launched a new initiative “Monex Activist Forum” An initiative called “Monex Activist Forum” will begin by Monex Securities to help individual traders execute shareholders’ rights in a well-thought manner - Objective This project aims to facilitate comm
Slide 32: US segment: Account growth and expanded services
Business Update US segment Steady growth in active accounts drove quarterly DARTs at record high ■ Expanded services and customer base - Number of active account continues to grow, while total client assets remains stable, consistent with the overall market decline - Several quarters of strong accou
Slide 33: US segment: Commissions and net financial income
Business Update US segment ■ Commission received and net financial income increased due to a hike in VIX and favorable interest rates - Commission received + net financial income increased by 11% from previous quarter as market volatility hiked in 3Q (21.0* vs 12.9* in 2Q FYE Mar. 2019) * Daily aver
Slide 34: Asia Pacific Segment
Business Update Asia Pacific Segment Monex Boom Securities remains profitable for the last eight consecutive quarters Monex Boom Securities (HK) Cherry Technology Co., Ltd (China) - An increase in net financial income drove - Providing technology and knowledge of online amount equivalent to operatin
Slide 35: Crypto Asset Segment: Coincheck results
Business Update Crypto Asset Segment Coincheck resumed purchasing and depositing services for all tradable cryptocurrencies by the end of Nov 2018 and completed the registration as a cryptocurrency exchange on Jan 11, 2019 3Q FYE March 2019（Crypto Asset Segment） 2Q FYE March 2019 3Q FYE March 2019 （
Slide 36: Crypto Asset Segment: Trading volume and accounts
Business Update Crypto Asset Segment Service resumption contributed to an increase in trading volume. Growth potential in customer base where the millennials are the majority Increasing Trading Volume Number of accounts as of Dec 2018 ◆ Change rate of BTC and Altcoin transaction (both exchange and m
Slide 37: Crypto Asset Segment: Strength of Coincheck
Business Update Crypto Asset Segment Strive for a new business opportunity by taking advantage of the strength of Coincheck with continuous improvement of governance, internal controls and security Strength of Coincheck User First Predominant UI/UX Further Deep knowledge reinforcement 1.7 in cryptoc
Slide 38: Monex Cryptocurrency Lab
Business Update Crypto Asset Segment Monex Cryptocurrency Lab offers up-to-date information related to cryptocurrencies to individual traders • Monex Cryptocurrency Lab offers unique information such as cryptocurrency’s market projection and industry trend studied by Nana Otsuki, known as an analyst
Slide 39: Investment Segment: MV I Investment Limited Partnership
Business Update Investment Segment Established a flagship fund “MV I Investment Limited Partnership”, aiming for a new business opportunity Entity and scope of investment Monex Ventures, Inc. ：Principle investment with a focus on Fintech companies MONEX EDISON Investment ：Leveraging track-record of
Slide 40: Investment Segment: Portfolio of Fintech investments
Business Update Investment Segment Portfolio of Monex Ventures, Inc. and MONEX EDISON Investment Limited Partnership: Expanding investments in Fintech companies P2P lending EC Payment DLT * Mortgage loan consulting AI/Big Data invested in 2014 invested in 2014 invested in 2015 invested in 2015 inves
Slide 41: Appendix. Group Overview
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 40
Slide 42: Group Overview
Group Overview Japan: 1.81M accounts, Crypto Asset: 1.73M 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 43: 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 44: Corporate value creation process
Group Overview－Corporate value creation process As experts in finance, we strive to expand customer base using IT technology 43
Slide 45: 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 46: Corporate Governance
Corporate Governance Established 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 i
Slide 47: Monex Group
Monex Group (As of December 31, 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. M
Slide 48: 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 49: 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 50: 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