Gmo Payment Gateway, Inc. · TSE:3769

Gmo Payment Gateway — Q1 FY2021 Earnings Presentation

35 slides from Gmo Payment Gateway's earnings presentation, Feb 12, 2021

1. Slide 1: Financial Results Briefing for Q1 FY2021

   Financial Results Briefing for Q1 FY2021 Promoting platforms for a New Normal world, topline returns to 25% growth trajectory Februar y 12, 2021 64 th Investors Meeting Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

2. Slide 2: Agenda

   Agenda 1. Summary of Financial Results for Q1 FY2021 2. Key Initiatives and Growth Strategies 3. Financial Highlights 4. Reference Material 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 February 12, 2021. Please note that the contents are subject to change without prior notice in the event o

4. Slide 4: Summary of Financial Results for Q1 FY2021

   1. Summary of Financial Results for Q1 FY2021 Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 4

5. Slide 5: Summary of P/L

   1.1.1 Summary of P/L Strong revenue and OP from online payment growth; Net Profit affected by hard comps from one-off factors in the previous term Progress on 1H IFRS 1H FY2021 Q1 FY2020 Q1 FY2021 % YoY FY2021 （¥ mil.） Guidance Guidance (%) Revenue 7,602 9,767 +28.5% 19,115 51.1% Operating Profit 2,

6. Slide 6: Growth trend of revenue

   1.1.2 Growth trend of revenue Revenue returns to 25% growth trajectory from monetization of key initiatives and adapting to COVID-19 conditions Key points ① Revenue returns to 25% growth trajectory （¥ Mil.） ② COVID-19 uplift is around 2～3% pts of revenue growth rate 10,000 ＋28.5％ FY2019 FY2020 FY202

7. Slide 7: OP and Pre-tax Profit Growth

   1.1.3 OP and Pre-tax Profit Growth OP grew 48.3% from controlling the credit related costs; other profit lines affected by one-off factors in previous term OP YoY: waterfall chart （¥ Mil.） Pre-tax profit YoY: waterfall chart （¥ Mil.） （Up 48.3% YoY） （Up 10.1% YoY） SGA GP increase Financial increase E

8. Slide 8: Operating stores, TRX Volume and Value

   1.2 Operating stores, TRX Volume and Value Strong online payments from COVID-19 windfall and year-end seasonality; significant increase in TRX volume and value Q1 FY2021 % YoY Factors Increase in merchants at a large Operating delivery service operator ＋121.4% stores 160,535 ＋37.0％ Excl. above ＋17.4

9. Slide 9: GMO-PG standalone performance

   1.3.1 GMO-PG standalone performance Online payments expanded from nesting demand and capturing the year-end seasonal consumption GMO-PG standalone: Revenues for merchandise and non-merchandise revenue （¥ Mil.） Up 29.1％ YoY MSB and others MSB and others Increase in remittance demand from 5,000 cancel

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

    1.3.2 Performance of GMO-EP, GMO-PS and GMO-FG All companies on track driven by expanding online payments and cashless penetration GMO-EP GMOｰPS GMO-FG （¥ Mil.） Up 41.0％ YoY （¥ Mil.） Up 18.3％ YoY （¥ Mil.） Up 29.9％ YoY 1,400 2,000 1,400 1,800 1,200 1,200 1,600 1,000 1,400 1,000 1,200 800 800 1,000 60

11. Slide 11: Revenue by business model (consolidated)

    1.4 Revenue by business model (consolidated) Fee and spread revenues grow from strong online payment at PG and EP （Mil. Yen) 10,000 9,767 Spread Up 31.9% YoY 9,000 ＋ Strong online payment ＋ Growth of early payment service 8,000 7,602 － Decline of overseas lending 4,808 7,000 Fee Up 32.1% YoY 6,000 3

12. Slide 12: Conversion status of Euro-yen CB

    1.5 Conversion status of Euro-yen CB Conversions of Euro-yen CB continued following the share price increase from November (increase in equity) Status of conversions (illustrated BS image) Euro-Yen Convertible Bond （Mil. Yen） （5-yr bond, zero coupon) 200,000 Payment Date: June 19, 2018 Total issue a

13. Slide 13: Key Initiatives and Growth Strategies

    2. Key Initiatives and Growth Strategies Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 13

14. Slide 14: Strategy to achieve OP ¥25.0bn

    2.1 Strategy to achieve OP ¥25.0bn Target an OP of ¥25.0bn in 2025 by expanding scope of businesses and services The 5 ① Expand footprint to non-merchandise and merchandise TRX value size Strategies ② Entry into offline payment and FinTech service ③ Acquire customers in proprietary domain and large

15. Slide 15: Broader EC

    2.2 Broader EC Expand merchandise/non-merchandise segments, make inroads to large EC operators, focus on SME segment Broader EC market potential Merchandise and non-merchandise EC 2020 2025 revenues at GMO-PG standalone Merchandise EC TAM 20 45 (B2C EC） Non-merchandise EC Non-merchandise EC （Tril. Y

16. Slide 16: Offline payment/IoT

    2.3 Offline payment/IoT Making headway into the gigantic offline market by expanding stera and IoT, pursuing synergy with EC business Offline payment and IoT potential GMO-FG: Q1 earnings and YOY change 2020 2025 （Mil. Yen） 1,286 Revenue +29.9% ■ Initial TAM 87 118 (Cashless） （Tril. Yen） ■ Stock ＋8.

17. Slide 17: Industry specific platforms

    2.4 Industry specific platforms Rollout platforms to process several billions of transactions to sector leaders addressing large markets Financial Uti l i t i es Institutions Telecom R e t a i l Electric power bills Market Size IT investment ¥2 tr. GMV several tril. yen Retail mrkt ¥145 tr. ¥20 tr.

18. Slide 18: FinTech

    2.5 FinTech Aim for profit increase through high-margin services and controlling credit related costs Segment profit, bad loan provision and ROA FinTech potential (Quarter profit & asset) 2020 2025 (Mil. Yen） （％: % YoY） 2.0% Segment profit ※2 TAM 1 3 (Deferred Payment) 700 Provision for doubtful acc

19. Slide 19: Global

    2.6 Global Executing on strategy to achieve medium term plans while paying close attention to timing of economic recovery in each country Results for Q1 FY2021 Asia payment revenue Asia MSB revenue US MSB revenue （% YoY） （% YoY） （% YoY） -13.2% ＋17.0% ＋121.3% Rebuilding portfolio 19/12 20/12 19/12 20

20. Slide 20: Financial Highlights

    3. Financial Highlights Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 20

21. Slide 21: Balance Sheet Changes

    3.1 Balance Sheet Changes Increase in deposits received and MSB-related assets Asset Liability/Equity （Mil. Yen） （Mil. Yen） 210,476 210,476 200,000 192,022 200,000 192,022 99,430 101,521 150,000 139,990 150,000 139,990 86,751 95,830 52,013 46,752 100,000 31,920 100,000 18,021 17,756 28,822 16,630 16

22. Slide 22: Quarterly trend of revenue by business model

    3.2.1 Quarterly trend of revenue by business model （Mil. Yen） 5,000 J-GAAP IFRS 4,808 4,414 4,500 4,290 4,000 3,646 3,672 3,500 3,450 3,365 3,289 3,136 3,000 2,816 2,671 2,433 2,558 2,532 2,527 2,559 2,500 2,383 2,291 2,083 2,057 1,876 1,907 1,937 2,000 1,767 1,847 1,813 1,825 1,662 1,527 1,520 1,46

23. Slide 23: Revenue trend by business model (annual)

    3.2.2 Revenue trend by business model (annual) （Mil. Yen） 42,000 J-GAAP IFRS 40,000 38,000 36,000 34,000 32,000 30,000 28,000 Spread 26,000 24,000 22,000 20,000 18,000 16,000 Fee 14,000 12,000 10,000 8,000 6,000 Stock 4,000 2,000 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

24. Slide 24: Segment results (consolidated)

    3.3 Segment results (consolidated) Profits at all segments increased from revenue growth and cost management benefits Segment revenue Segment operating profit （Mil. Yen） Up 28.5％ YoY (consol.) Up 48.3％（after consol. eliminations) （Mil. Yen） （Mil. Yen） 10,000 3,900 20 － 163 Up 17.7％ YoY 9,000 3,400 4

25. Slide 25: FinTech: Assets & profit growth

    3.4 FinTech: Assets & profit growth Profit increased from expansion of high-margin services and control of credit-related costs （％: % YoY） MSB related assets Segment revenue Segment profit (end-December) －77.3％ +7.4％ ＋47.6％ －71.2％ +18.1％ ＋89.8％ +45.4％ ＋25.1％ +3.8％ +18.3％ ＋18.6％ ＋32.8％ －14.2％ －18.6％

26. Slide 26: Quarterly trend of CoS and SGA ratio

    3.5.1 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 ※ J-GAAP IFRS （Mil. Yen) 9,767 10,000 ※47.2％ 9,356 50.4% 9,030 8,927 9,000 8,623 50.0% ※40.3％ 8,246 ※39.9％ 8,160 44.2% 43.6% 7,945 41.1% 42.7% 8,000 7,7

27. Slide 27: Quarterly trend of PG and EP's CoS and SGA ratio

    3.5.2 Quarterly trend of PG and EP’s CoS and SGA ratio Cost of sales ratio for online payment business trending stably 6,709 （Mil. Yen） 50.9% 6,370 47.4% 6,110 50.0% 6,000 45.3% 45.2% 44.8% 5,126 5,271 36.8% 5,142 5,032 39.7% 5,000 36.7% 4,816 40.0% 36.7% 4,663 4,840 41.6% 33.5% 34.0% 4,384 34.2% 4,

28. Slide 28: Quarterly trend of operating stores, transaction volume and value

    3.6 Quarterly trend of operating stores, transaction volume and value Group-wide annual GMV value reaches ¥6.4 trillion ※1 ※2 Operating stores: 160,535 stores, GMV volume approx. 840 mil., GMV value approx. ¥2.0 trillion. （Stores） （100 Mil. Yen） （Reference）Online payment: TRX volume approx. 810 mil.

29. Slide 29: Consolidated Cashflow Statement

    3.7 Consolidated Cashflow Statement （Mil. Yen） ■ FY2021 Q1 changes (Mil. Yen) 55,000 J-GAAP IFRS Operating CF： ＋3,026 50,000 Pretax profit +3,038 45,000 Advances paid －13,332 40,000 Accrued income －5,264 35,000 Chgs in payables ＋1,069 Accrued expenses ＋5,009 30,000 Deposits received ＋15,494 25,000 I

30. Slide 30: Reference Material

    4. Reference Material Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 30

31. Slide 31: GMO-PG: Revenue breakdown by size of merchant

    4.1 GMO-PG: Revenue breakdown by size of merchant Growth led by increasing proportion of large merchants （Mil. Yen） 5,000 Corporate size by annual sales Under \1 bn Q1 FY2021 % YoY From \1bn to \100bn 4,000 ＋47.3% \101.0bn and above Proportion 31.9% 3,000 40.6% ＋22.6% 2,000 19.6% 55.5% 1,000 19.4% 5

32. Slide 32: Current status of BaaS

    4.2 Current status of BaaS Aim to achieve ¥1.0bn in 2025 through lateral deployment within the sector and diversification of service BaaS potential Stock revenue from services to financial institutions 2020 2025 Ginko Pay (IT investment Issuing/Acquiring TAM 2 2～ by financial Other （Tril. Yen） insti

33. Slide 33: Digital invoice service

    4.3 Digital invoice service Value proposition of cost reduction, AR reduction and CF improvement by digitalization of payment slips TAM of digital invoice service Value realization Payment slip and postal expenses can be reduced Payment slip Digital invoice and digitalized by implementing our servic

34. Slide 34: Global MSB

    4.4 Global MSB Phased-based strategy to address TAMs in respective countries; current ROIC TAM by market (Tril. Yen) Indonesia India USA 2020 2025 2020 2025 2020 2025 B2B B2B B2B Credit 17.0 17.0x Credit 15.0 49.0 Credit 12.3 12.3x B2C 3.5 10.1 B2C 6.4 18.8 B2C 66.9 66.9x Phase-based strategy (Globa

35. Slide 35: Thank You Very Much

    Thank You Very Much GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange, Section 1) 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

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