Monex Group, Inc. · TSE:8698
Monex — Q2 FY March 2024 Earnings Presentation
68 slides from Monex's earnings presentation, Oct 27, 2023
Slide 1: Financial Results for 2Q of Fiscal Year Ending March 31, 2024
TSE Prime : 8698 Monex Group Financial Results for 2Q of Fiscal Year Ending March 31, 2024 October 27, 2023
Slide 2: Corporate Philosophy
Corporate Philosophy Always a step ahead of the “Y” in “MONEY,” our name MONEX expresses our desire to embrace all people who are engaged at the forefront of our future. With state-of-the-art IT technology, globally universal values and a sense of professionalism, Monex Group designs innovative ways
Slide 3: Table of Contents
Corporate Philosophy p.1 Table of Contents p.2 Ⅰ. Highlights p.3 - p.14 Ⅱ. Consolidated Performance p.15 - p.32 Ⅲ. Business Update p.33 - p.52 Appendix: Group Overview p.53 -p.66 Disclaimer p.67 This is an English translation of Japanese presentation materials prepared in connection with the disclos
Slide 4: I. Highlights
MONEX GROUP I . Highlights
Slide 5: Impact of Capital Business Alliance with NTT DOCOMO
Impact of Capital Business Alliance with NTT DOCOMO With the Capital Business Alliance with NTT DOCOMO, Monex Securities will acquire a mid- to long- term growth opportunity. The Company intends to use a part of the funds obtained from the Sale of Shares for growth investment, with an aim of achievi
Slide 6: Transaction Overview
Transaction Overview Monex Securities, NTT DOCOMO and the Company agreed to establish Capital Business Alliance. Both the Company and NTT DOCOMO will cooperatively endorse the growth strategy of Monex Securities going forward. • Monex Group and NTT DOCOMO jointly operate Docomo Monex Holdings* (inte
Slide 7: Profit contribution to consolidated profit
Transaction Overview Although Monex Securities’ contribution to the consolidated profit* will decrease in the short-term due to the change in equity interest, the alliance will provide an opportunity to expand the profit in the mid- to long-term. Inorganic Growth as Monex Securities Management pol
Slide 8: Transaction Overview
Transaction Overview The Company will use the funds obtained from the Sale of Shares of the intermediate holding company established through the Capital and Business Alliance to NTT DOCOMO, with an aim to increase enterprise value by growth investment and enhance shareholder return. Valuation of int
Slide 9: Use of Capital: Change in Shareholder Distribution Policy
Use of Capital Change in Shareholder Distribution Policy on and after January 4, 2024*1. While continuing to pay stable dividends to shareholders, the Company will accelerate its growth strategy. • Double the minimum amount of annual dividend per share from JPY15 to JPY30. • Launch share buyback pro
Slide 10: Shareholder Distribution
Shareholder Distribution The interim dividend for this fiscal year is 8.0 yen per share. New Shareholder Distribution Policy will be effective on and after Jan 4, 2024*1. ◆ History of dividend per share ◆ Return on equity ratio Given the business environment, the performance of its subsidiaries in t
Slide 11: Consolidated and Segment Profit Attributable to Owners of the Company
Consolidated and Segment Profit Attributable to Owners of the Company Stable business foundation of the Japan Segment, strong performance of the US Segment, and cost reduction in the Crypto Asset Segment generated another solid quarterly profit attributable to owners of the Company. Profit attributa
Slide 12: Business Performance of the Japan Segment
Business Performance of the Japan Segment Steady growth in net financial income and mutual fund related revenues that is linked to client deposits. Diverse product offerings generate complementary revenues and stable profits even in various market environments. Quarterly Revenue and Profit of the Ja
Slide 13: Business Performance of the US Segment
Business Performance of the US Segment Segment profit remained strong due to the steady trading from active traders, who are the main focus of TradeStation, and the favorable gains on management of cash deposits driven by higher rates. Quarterly Revenue and Profit of the US Segment (USD Million) (US
Slide 14: Business Performance of the Crypto Asset Segment
Business Performance of the Crypto Asset Segment Revenue increased QoQ as the crypto asset market recovered, and the management continues to control SG&A appropriately. The management expects improvement of profit going forward. Quarterly Revenue and Profit of the Crypto Asset Segment (JPY Million)
Slide 15: Strategy Overview of Monex Group
Strategy Overview of Monex Group With the Capital and Business Alliance, Monex Securities acquire growth opportunities. Monex Group will expand its areas of growth investment and further enhance its enterprise value. Existing Businesses New Alliance Growth Investments Asset management business Growt
Slide 16: II. Consolidated Performance
Ⅱ. Consolidated Performance 15
Slide 17: Highlights 2Q of FYE Mar. 2024 (3 months)
Highlights 2Q of FYE Mar. 2024 (3 months) The Japan segment generated stable revenue stream due to an increase in net financial income of margin trading and the US segment continues to perform strong. Continuously controlled spending in the Crypto Asset segment, resulting in consolidated pre-tax inc
Slide 18: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance FYE Mar. 2023 FYE Mar. 2024 1Q 2Q Rate of (JPY million) Variance Reference change (Apr. 2023– Jun. 2023) (Jul. 2023– Sep. 2023) Total operating revenue after P19: Analysis of Japan segment deducting financial expenses and 20,203 20,749 +546 +3% P21:
Slide 19: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance Japan US Crypto Asset Asia Pacific Investment (JPY million) 2024/3 2024/3 2024/3 2024/3 2024/3 2024/3 2024/3 2024/3 2024/3 2024/3 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q Total operating revenue after deducting financial expenses and cost of sales 8,976 8,922 9,796
Slide 20: QoQ Analysis: Operating Revenue (Japan)
QoQ Comparison (3 months) Analysis: Operating Revenue Japan: Net financial income increased due to higher margin balances. Total revenue remained high due to a contribution of success fees from Monex Activist Fund fees in two consecutive quarters. ■ Total operating revenue after deducting financial
Slide 21: QoQ Analysis: SG&A (Japan)
QoQ Comparison (3 months) Analysis: SG&A Japan: In addition to an increase in advertising expenses due to larger number of accounts opened, compensation and benefits increased driven by base-pay increases and performance-linked bonuses. ■ Total SG&A Quarterly SG&A Total +3.3％ (+243) * Figures in par
Slide 22: QoQ Analysis: Operating Revenue (USD)
QoQ Comparison (3 months) Analysis: Operating Revenue (USD) US: Total revenue stayed steady. Commissions increased mainly due to higher trading volume. Net financial income increased as US interest rates continued to climb. ■ Total operating revenue after deducting financial expenses Quarterly total
Slide 23: QoQ Analysis: SG&A (USD)
QoQ Comparison (3 months) Analysis: SG&A (USD) US: Total expense increased mainly due to higher cloud costs to accommodate a market data change while advertising expenses decreased due to more efficient marketing. ■ Total SG&A Quarterly SG&A Total +1.8％ (+1,065) *Figures in parenthesis reflect the v
Slide 24: QoQ Analysis: Operating Revenue (Crypto)
QoQ Comparison (3 months) Analysis: Operating Revenue Crypto: Higher crypto asset values driving an increase in net trading income. ■ Total operating revenue after deducting financial expenses Quarterly total operating revenue after deducting financial and cost of sales expenses and cost of sales +2
Slide 25: QoQ Analysis: SG&A (Crypto)
QoQ Comparison (3 months) Analysis: SG&A Crypto: Continued SG&A cost discipline and advertising budget management in response to current market conditions, resulting in efficient account acquisition. ■ Total SG&A Total SG&A -5.5％ (-87) (JPY million) * Figures in parentheses indicate the variance fro
Slide 26: YoY Comparison (6 months) Consolidated Performance
YoY Comparison (6 months) Consolidated Performance 2Q of FYE Mar. 2023 2Q of FYE Mar. 2024 Rate of (JPY million) Variance Reference (Apr. 2022 – Sep. 2022) (Apr. 2023 – Sep. 2023) change Total operating revenue after P27: Analysis of Japan segment deducting financial expenses and cost 36,211 40,952
Slide 27: YoY Comparison (6 months) Segment Performance
YoY Comparison (6 months) Segment Performance Japan US Crypto Asset Asia Pacific Investment (JPY million) 2023/3 2024/3 2023/3 2024/3 2023/3 2024/3 2023/3 2024/3 2023/3 2024/3 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q Total operating revenue after deducting financial expenses and cost of sales 15,089 17,897 15,
Slide 28: YoY Analysis: Operating Revenue (Japan)
YoY Comparison (6 months) Analysis: Operating Revenue Japan: Revenue sources linked to the balance of customer deposits, such as stock lending, mutual fund and others, have grown. Active Japanese equity market drove higher brokerage commissions. Total operating revenue after deducting financial expe
Slide 29: YoY Analysis: SG&A (Japan)
YoY Comparison (6 months) Analysis: SG&A Japan: Personnel expenses increased due to business expansion and base-pay increase. System related expenses increased due to the launch of US equities margin trading service, etc. ■ Total SG&A SG&A Total +13.7％ (+1,801) * Figures in parentheses indicate the
Slide 30: YoY Analysis: Operating Revenue (USD)
YoY Comparison (6 months) Analysis: Operating Revenue (USD) US: Total revenue increased 20.6% YoY due to a significant increase in net financial income as a result of higher interest rates. Trading volume stayed steady despite lower VIX. Total operating revenue after deducting financial expenses and
Slide 31: YoY Analysis: SG&A (USD)
YoY Comparison (6 months) Analysis: SG&A (USD) US: Commissions paid and association dues increased primarily as a result an increase in the third- party pass-through exchange fees for futures customers. Significantly reduced advertising expenses as part of the re-focus strategy on the active traders
Slide 32: YoY Analysis: Operating Revenue (Crypto)
YoY Comparison (6 months) Analysis: Operating Revenue Crypto: Revenue declined due to the sluggish market transactions of both cryptocurrencies and NFTs. ■ Total operating revenue after deducting financial expenses Total operating revenue after deducting financial expenses and and cost of sales cost
Slide 33: YoY Analysis: SG&A (Crypto)
YoY Comparison (6 months) Analysis: SG&A Crypto: Reduction of advertising expenses by 70%, through a dynamic management approach that is responsive to market conditions. ■ Total SG&A Total SG&A -32.3％ (-1,475) * Figures in parentheses indicate the variance from the previous year (JPY million) (JPY m
Slide 34: III. Business Update
MONEX GROUP IT. Business Update 33
Slide 35: Business Update Japan Segment 1/6
Business Update Japan Segment 1/6 The alliance with strong partners and the reinforced asset management business drives rapid growth in the customer assets and steady progress of the asset gathering model. (JPY Trillion) Customer Assets in the Japan Segment 12 Japanese Equities 10 Others Foreign Equ
Slide 36: Business Update Japan Segment 2/6
Business Update Japan Segment 2/6 Toward more customer-centric and tailor-made financial services. Key Activities 1 Market presence in online Provide easy and simple asset building services d POINT membership broker securities industry for investment beginners Offer d POINT as part of royalty Hi
Slide 37: Business Update Japan Segment 3/6
Business Update Japan Segment 3/6 Financial instrument intermediary business partnership between Monex Securities and AEON Bank is in progress toward the transfer of accounts and mutual fund balances in January 2024. Broadening Number of investment activity AEON Bank accounts Client In-house backbon
Slide 38: Business Update Japan Segment 4/6
Business Update Japan Segment 4/6 Asset under management (AUM) of Monex Asset Management exceeded ¥380B. Robo-advisor service series, ON COMPASS, to become available under the new NISA program from 2024 ■ Robo-advisor services Asset Under Management Total AUM ON COMPASS 1 (JPY Billion) 4500 approx.
Slide 39: Business Update Japan Segment 5/6
Business Update Japan Segment 5/6 Expanded the balance of mutual fund using periodic purchasing service. Independent Financial Advisors (IFA) and wealth management (WM) businesses are steadily growing. Mutual Funds IFA / WM Business • The number of accounts holding mutual fund balances • Launched an
Slide 40: Business Update Japan Segment 6/6
Business Update Japan Segment 6/6 Prior to the implementation of the New NISA (Nippon Individual Savings Account), Monex Securities waived trading commissions on eligible products. Doubling Asset-Based Income Plan Initiatives at Monex Securities • NISA, a tax-exempt program for small • No trading co
Slide 41: Business Update US Segment 1/4
Business Update US Segment 1/4 Trading from active customers remained steady despite lower VIX and rising interest rates. Brokerage commissions and other commissions Commissions increased due to an increase in equities, futures and options trading despite lower VIX. Brokerage commission and VIX （DAR
Slide 42: Business Update US Segment 2/4
Business Update US Segment 2/4 Net interest income from customer deposits increased as US interest rates continued to climb. Interest on customer cash Interest income from customer cash deposits($2.5 B as of the end of Sep 2023) belongs to TradeStation and is recorded as net financial income. About
Slide 43: Business Update US Segment 3/4
Business Update US Segment 3/4 The number of target customers* of TradeStation is steadily growing. The number of target customers Continuing to increase the target customers by growing them by 24% from the same quarter previous year. Target customers +24% The number of main target customers 12,000
Slide 44: Business Update US Segment 4/4
Business Update US Segment 4/4 TradeStation captures active traders through organic marketing and third-party referral partners. Customers Revenue* by Funnel Source ・Both organic customers revenue and third-party referral customers revenue are growing. ・Third-party referral customers revenue as a pe
Slide 45: Business Update Crypto Asset Segment 1/5
Business Update Crypto Asset Segment 1/5 Expanding the institutional business through leveraging the strong retail customer base. More users will be connected to Coincheck with a growing institutional business Exchange/Marketplace Possess a solid industry position and a large retail customer base as
Slide 46: Business Update Crypto Asset Segment 2/5
Business Update Crypto Asset Segment 2/5 Coincheck is Japan’s premier and most trusted crypto assets trading platform. Crypto asset exchange / marketplace App Downloads Leading market share with 24%*2 Number of tokens supported No.1 domestic market share for 4 consecutive years1 share of verified ac
Slide 47: Business Update Crypto Asset Segment 3/5
Business Update Crypto Asset Segment 3/5 Diversifying earnings into new products through our strong reputation and large customer base. Coincheck Initial Exchange Offering (IEO) Coincheck is the leading player in the Japanese IEO market, completing the largest number of IEOs Progress has been made i
Slide 48: Business Update Crypto Asset Segment 4/5
Business Update Crypto Asset Segment 4/5 Coincheck has started supporting the blockchain gaming community through the introduction of Coincheck INO. INO (NFT to be sold for the first time) Coincheck started “Coincheck INO” in which NFT collections are to be sold for the first time. Coincheck handled
Slide 49: Business Update Crypto Asset Segment 5/5
Business Update Crypto Asset Segment 5/5 Coincheck Group (CCG)*1 is proceeding with listing procedures. We plan to be listed on Nasdaq to secure global talent and business opportunities. - After the proposed business combination with Nasdaq-listed SPAC, Thunder Bridge Capital Partners IV, Inc. (THCP
Slide 50: Business Update Asia Pacific and Investment Segment
Business Update Asia Pacific and Investment Segment The Social Impact Investment Fund received funding with a total of ¥3.7B under management. The fund is in its investment phase. Asia Pacific Segment Investment Segment Monex Boom Securities (H.K.) Limited Social Impact Investment Fund (2023) • One
Slide 51: Business Update New Businesses (Japan segment)
Business Update New Businesses (Japan segment) Promote new businesses based on a corporate philosophy that aims to optimize an individual's lifetime balance sheet. STEAM / Bilingual Education Business Genome Platform Business Genex, Inc. began whole-genome molecular testing service STEAM Education V
Slide 52: Business Initiatives on AI (Japan segment)
Business Initiatives on AI (Japan segment) Crew, a service for secure business use of ChatGPT, is now available with several new features. Business Related to Generative AI New Features Crafter Co. Ltd. offers a service, Crew, that provides 1. Prompt Features institutional players with a safe access
Slide 53: Business Update ESG and Sustainability
Business Update ESG and Sustainability Integrated Report 2023 discloses its approach to sustainability. Overview Disclose the value creation story led by the new management structure • Introduces group portfolio that realizes the corporate philosophy of “Optimize Lifetime Balance Sheet." • CEO succe
Slide 54: Appendix: Group Overview
MONEX GROUP Appendix: Group Overview 53
Slide 55: Appendix: Highlights 2Q of FYE Mar. 2024 (3 months) 1/3
Appendix: Highlights 2Q of FYE Mar. 2024 (3 months) 1/3 ◆Total operating revenue after deducting financial expenses and cost of sales, and quarterly profit attributable to owners of the Company (JPY Million) Total operating revenue after deducting financial expenses and cost of sales Quarterly profi
Slide 56: Appendix: Highlights 2/3
Appendix: Highlights 1Q of FYE Mar. 2024 (3 months) 2/3 ◆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 Segment profit (Quarterly profit before income taxes) 1
Slide 57: Appendix: Highlights 3/3
Appendix: Highlights 1Q of FYE Mar. 2024 (3 months) 3/3 ◆Total operating revenue after deducting financial expenses, and Segment profit (JPY Million) Total operating revenue after deducting financial expense Segment profit (Quarterly profit before income taxes) 800 Asia 600 Pacific 400 263 255 248 2
Slide 58: Consolidated balance sheet
Consolidated balance sheet Key points of Monex Group’s consolidated balance sheet of Monex 1. Actual net debt is ¥9.2B for the holding company Monex Group, Inc., which does not engage in securities transactions, etc. 2. Trust assets, which are segregated deposits received from customers and guarante
Slide 59: 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
Slide 60: Overview of Monex Group and Main Subsidiaries
Overview of Monex Group and Main Subsidiaries ■ Monex, Inc. (Tokyo, Japan) ■ Coincheck, Inc. (Tokyo, Japan) One of the major online brokerage firms in Japan Crypto asset Exchange/Marketplace agency that is ranked No.1 in crypto asset • President : Yuko Seimei trading app downloads in Japan for 4 con
Slide 61: Overview of the Group
Group Overview of the Group Listed Holding Company [ Japan Segment ] [ US Segment ] [ Crypto Asset Segment ] Online Brokerage Asset Management Crypto Asset Exchange Agency Monex, Inc. Monex Asset Management, Inc. TradeStation Group, Inc. Coincheck, Inc. Comprehensive investment service provider Smal
Slide 62: Group Overview - Revenues, Costs, and Employees
Group Overview - Revenues, Costs, and Employees Five Segments Contribution in FYE Mar. 2023 ■ Japan Segment Total operating revenue Selling, general and ■ US Segment after deducting financial expenses administrative expenses ■ Crypto Asset Segment 1% 0% 2% 0% ■ Asia Pacific Segment 10% 11% ■ Investm
Slide 63: Investment Segment – Portfolio 1/4
Investment Segment – Portfolio 1/4 ◆ Monex Ventures, Inc. ◆ MONEX EDISON Investment Limited Partnership 62
Slide 64: Investment Segment – Portfolio 2/4
Investment Segment – Portfolio 2/4 ◆ MV I Investment Limited Partnership 63
Slide 65: Investment Segment – Portfolio 3/4
Investment Segment – Portfolio 3/4 ◆ MV I Investment Limited Partnership ◆ MV II Investment Limited Partnership 64
Slide 66: Investment Segment – Portfolio 4/4
Investment Segment – Portfolio 4/4 ◆ Social Impact Investment Fund 65
Slide 67: Disclaimer
Disclaimer About Coincheck Important Information About the Business Combination and Where to Find It In connection with the proposed business combination in connection with to the business combination agreement among Coincheck, Inc. (“Coincheck”), Coincheck Group B.V. (“CCG”), Thunder Bridge Capital
Slide 68: © Monex Group, Inc.
© Monex Group, Inc. www.monexgroup.jp/