Monex Group, Inc. · TSE:8698
Monex — Q1 FY2021 Earnings Presentation
57 slides from Monex's earnings presentation, Jul 29, 2020
Slide 1: Financial Results for 1Q of Fiscal Year Ending March 31, 2021
July 29, 2020 TSE 1st Section: 8698 Financial Results for 1Q of Fiscal Year Ending March 31, 2021
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. 12 II. Consolidated Performance p. 13 - p. 31 III. Business Update p. 32 - p. 45 Appendix: Group Overview p. 46 - p. 56 This is an English translation of Japanese presentation materials prepared in connecti
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 3
Slide 5: Business Overview 1/5
Business Overview 1/5 Consolidated pre-tax profit significantly increased fueled by the business transformation of Monex Group, added to active markets and an increase in demand for online services （JPY billion） ¥1.99 Billion 2 1.5 +67% ¥1.2 Billion YoY 1 0.5 0 2020/3 1Q 2021/3 1Q • The financial pe
Slide 6: Business Overview 2/5
Business Overview 2/5 Daily average trading value at Monex, Inc. (Japan) increased by 72% Daily Average Trading Value | Monex, Inc. Daily Average Trading Value | Japan Market +72% YoY +56% YoY 100 2020/3 1Q 2020/3 2Q 2020/3 3Q 2020/3 4Q 2021/3 1Q • Trading volume increased more than market growth be
Slide 7: Business Overview 3/5
Business Overview 3/5 DARTs at TradeStation Group (US) increased by 133% +133% +133% YoY YoY TradeStation All of the US Equities Market +76% YoY 100 2020/3 1Q 2020/3 2Q 2020/3 3Q 2020/3 4Q 2021/3 1Q • DARTs increased more than market growth because more people are now working from home, and commissi
Slide 8: Business Overview 4/5
Business Overview 4/5 Promoting new business-model transformation leveraging our stable core businesses Core Business Business transformation and new businesses Online Broker Business New initiatives for transforming to an asset-management model ・ Launch of Monex Activist Fund ・ Expand other revenue
Slide 9: Business Overview 5/5
Business Overview 5/5 With continued active market throughtout 1Q, promoted business transformation of each business segment Monex Activist Fund, a transformation driver to our new asset- management model, successfully gathered ¥4.2B in managed Japan assets as of June 30. Total assets in custody gra
Slide 10: Highlights 1Q of FYE Mar. 2021 (3 months) 1/4
Highlights 1Q of FYE Mar. 2021 (3 months) 1/4 Achieved quarterly segment profit in all five segments in two consecutive quarters. Consolidated pre-taxe profit was ¥ 2.0 B Segment profit significantly increased to ¥ 1.15B driven by high trading Japan volumes due to continued market activity since 4Q
Slide 11: Highlights 1Q of FYE Mar. 2021 (3 months) 2/4
Highlights 1Q of FYE Mar. 2021 (3 months) 2/4 ◆Total operating revenue after deducting financial expenses and quarterly profit attributable to owners of the Company Quarterly Pre-taxes Profit Total operating revenue after deducting financial expenses 1,991 Quarterly profit attributable to owners of
Slide 12: Highlights 1Q of FYE Mar. 2021 (3 months) 3/4
Highlights 1Q of FYE Mar. 2021 (3 months) 3/4 ◆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 Segment profit (Quarterly profit before income taxes) (JPY million) 6,000 5,451
Slide 13: Highlights 1Q of FYE Mar. 2021 (3 months) 4/4
Highlights 1Q of FYE Mar. 2021 (3 months) 4/4 ◆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 Segment profit (Quarterly profit before income taxes) (JPY million) Crypto Asset
Slide 14: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 13
Slide 15: YoY Comparison (3 months) Consolidated Performance
YoY Comparison (3 months) Consolidated Performance FYE Mar. 2020 FYE Mar. 2021 1Q 1Q Rate of (JPY million) Variance Reference (Apr. 2019– (Apr. 2020– change Jun. 2019) Jun. 2020) P16: Analysis of Japan segment Total operating revenue after deducting financial expenses 11,881 13,208 +1,328 +11% P18:
Slide 16: YoY Comparison (3 months) Segment Performance
YoY Comparison (3 months) Segment Performance Japan US Asia Pacific Crypto Asset Investment (JPY million) 2020/3 2021/3 2020/3 2021/3 2020/3 2021/3 2020/3 2021/3 2020/3 2021/3 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q Total operating revenue after deducting financial expenses 5,598 6,811 4,996 5,326 195 324 1,2
Slide 17: YoY Analysis: Operating Revenue (Japan)
YoY Comparison (3 months) Analysis: Operating Revenue Japan : Monex’s market share of Japan equity has increased. Commissions from US equity also increased, taking 11% of entire brokerage commissions ■ Total operating revenue after deducting Total operating revenue after deducting financial expenses
Slide 18: YoY Analysis: SG&A (Japan)
YoY Comparison (3 months) Analysis: SG&A Japan : Larger trading volume drove higher variable cost. Depreciation expenses increased due to new system investment in margin trading service ■ SG&A SG&A Total +11.2% (+583) (JPY million) 7,000 ■Others (-20) 6,000 5,777 ■Advertising expenses (+33) 5,194 39
Slide 19: YoY Analysis: Operating Revenue (US, USD)
YoY Comparison (3 months) Analysis: Operating Revenue (USD) US : Brokerage commissions and other commissions increased due to increased trading volume from sustained high market volatility and strong account growth from commission-free plans and new marketing website. They offset a decline in net fi
Slide 20: YoY Analysis: SG&A (US, USD)
YoY Comparison (3 months) Analysis: SG&A (USD) US : Advertising expenses increased to support rollout of new marketing website and new businesses such as TradeStation Crypto and YouCanTrade. Commissions paid increased due to higher trading volume. Compensation and benefits increased temporarily beca
Slide 21: YoY Analysis: Operating Revenue (Crypto)
YoY Comparison (3 months) Analysis: Operating Revenue Crypto : Net trading income decreased with lower trading volumes and narrowed bid-ask spread of cryptocurrencies Total operating revenue after deducting ■ Total operating revenue after deducting financial expenses and cost of sales financial expe
Slide 22: YoY Analysis: SG&A (Crypto)
YoY Comparison (3 months) Analysis: SG&A Crypto : Cost restructuring implemented in the first half of last fiscal year contributed to a significant reduction in expenses, mainly fixed costs ■ SG&A SG&A Total -36.4% (-410) ■Others (-36) * (JPY million) 1,200 1,127 ■Advertising expenses (+17) 151 ■Com
Slide 23: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance （JPY million） 4Q FYE Mar. 1Q FYE Mar. 2020 2021 Rate of Variance change Reference (Jan. 2020 (Apr. 2020- -Mar. 2020) Jun. 2020) P24: Analysis of Japan segment Total operating revenue after 13,556 13,208 -348 -3% P26: Analysis of US segment (USD) ded
Slide 24: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance Japan US Asia Pacific Crypto Asset Investment (JPY million) 2020/3 2021/3 2020/3 2021/3 2020/3 2021/3 2020/3 2021/3 2020/3 2021/3 4Q 1Q 4Q 1Q 4Q 1Q 4Q 1Q 4Q 1Q Total operating revenue after deducting financial expenses and 6,821 6,811 5,451 5,326 278 324
Slide 25: QoQ Analysis: Operating Revenue (Japan)
QoQ Comparison (3 months) Analysis: Operating Revenue Japan : Continued active stock markets throughout 1st quarter drove higher brokerage commissions, so did US equities commissions ■Quarterly total operating revenue after deducting financial Quarterly total operating revenue after expenses and cos
Slide 26: QoQ Analysis: SG&A (Japan)
QoQ Comparison (3 months) Analysis: SG&A Japan : Even with an increase in variable cost driven by higher trading volumes, total SG&A remained slightly decreased with an effort of cost control Quarterly SG&A -1.5％ (-86) ■Quarterly SG&A * Figures in parenthesis is the variance from previous (JPY milli
Slide 27: QoQ Analysis: Operating Revenue (US, USD)
QoQ Comparison (3 months) Analysis: Operating Revenue (USD) US : Brokerage commissions remained strong while net financial income decreased due to lower interest rates. In particular, the trading volume of equities and options increased, and so did other commissions ■Quarterly total operating revenu
Slide 28: QoQ Analysis: SG&A (US, USD)
QoQ Comparison (3 months) Analysis: SG&A (USD) US : Commissions paid decreased because of an increase in equity and options trading, generating lower commissions paid, as well as volume discounts on higher trading volumes. Compensation and benefits decreased due to reduction in force and lower incen
Slide 29: QoQ Analysis: Operating Revenue (Crypto)
QoQ Comparison (3 months) Analysis: Operating Revenue Crypto : Net trading income decreased because of lower trading volume at Coincheck under a sluggish cryptocurrency markets ■Quarterly total operating revenue after deducting financial Quarterly total operating revenue after expenses and cost of s
Slide 30: QoQ Analysis: SG&A (Crypto)
QoQ Comparison (3 months) Analysis: SG&A Crypto : Continued expense control after the cost reduction in FY2019 remained effective and provided a normalized level of quarterly SG&A Quarterly SG&A -27.4％ (-270) ■Quarterly SG&A * Figures in parenthesis is the variance from previous (JPY million) quarte
Slide 31: 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 June 30, 2020 Assets Liabilities (*1) Non-current assets JPY 1
Slide 32: Shareholders' Distribution
Shareholders’ Distribution Total return ratio (*1) is aimed at 75% on a multi-year basis ◆ Total return amount (*2) and total return ratio ◆ Return on Equity ratio （million yen） Amount of acquisition of own shares(left) Amount of dividends (left) Total return ratio(right) 15% 12,000 827% 900% 12.9%
Slide 33: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 32
Slide 34: Business Update Japan segment 1/4
Business Update Japan segment 1/4 In addition to favorable Japanese equity commission revenues, our US equity trading service set a record in quarterly revenues and the number of transactions Japanese equity trading US equity trading • Our trading value increased by 72%, while market • Number of tra
Slide 35: Business Update Japan segment 2/4
Business Update Japan segment 2/4 Transform business into asset-management model, and expand new initiatives Monex Activist Fund ferci - Trading community app • A professional investment approach combining • Designed for people who frequently use bottom-up research and market insights smartphones, f
Slide 36: Business Update Japan segment 3/4
Business Update Japan segment 3/4 Monex Activist Fund provides individual investors with a new investment experience. Monex Group’s asset management capability will drive our business transformation to an asset management model Accelerator of asset New investment experience management model for indi
Slide 37: Business Update Japan segment 4/4
Business Update Japan segment 4/4 Monex Activist Fund got off to a great start with AUM of ¥ 4.2 B, aiming for ¥ 60 B AUM in total after a year 15％ Other 40％ Business plans ・Optimize the portfolio ・Business modification & Action Action consolidation ・Intra-industry integration ・Investment plan revie
Slide 38: Business Update US segment 1/2
Business Update US segment 1/2 Revenues related to trading increase significantly even after commission-free plans Brokerage Commissions & Fees Account Transition • Trading volume (DARTs) increased 2.3 times YoY • Number of active accounts exceeded 110K with and 1.3 times QoQ from sustained market v
Slide 39: Business Update US segment 2/2
Business Update US segment 2/2 New business initiatives to diversify revenue sourced for offsetting revenue decline Impact of commission-free plans & lower interest rates TradeStation Crypto • Although Fed interest rates are nearly zero due to • Launch of cypto iOS and Android mobile apps and the Fe
Slide 40: Business Update Crypto Asset segment 1/3
Business Update Crypto Asset segment 1/3 The cost-effective marketing initiatives expand users steadily Core business as No.1 Efforts in 1Q No.1* ・ Coincheck Lending app DLs in the cryptocurrency exchanges Launch of a new plan “180 days (annual rate of 4.0%)” No.1 Lowered the minimum loan amount to
Slide 41: Business Update Crypto Asset segment 2/3
Business Update Crypto Asset segment 2/3 Accelerating growth by strengthening core business earnings and entering new business areas Business development utilizing core business Core Business Cryptocurrency Related Business (Staking services, crypto lending, etc.) Exchange and Marketplace Developm
Slide 42: Business Update Crypto Asset segment 3/3
Business Update Crypto Asset segment 3/3 Virtual shareholder meeting support service, “Sharely” • “Sharely”, comprehensive virtual shareholder meeting service, will be offered in fall 2020 or later • Considering the implementation of a blockchain system that eliminates vote tampering 3 features of S
Slide 43: Business Update Crypto-asset Initiatives
Business Update Crypto-asset Initiatives Gathering examples of blockchain use and aiming for synergistic effects with external and internal businesses LOOKBLOCK Cryptocurrencies and Blockchain • LOOKBLOCK • BLOCK INSIGHT A database service specializing in blockchain and A web-based media delivering
Slide 44: Business Update Asia Pacific segment
Business Update Asia Pacific segment Revenue rose with higher trading volume. Number of active accounts increased significantly Monex Boom Securities (HK) Cherry Technology Co., Ltd (China) ・ Number of transactions +25% QoQ • The number of transactions and account openings were both strong due to ac
Slide 45: Business Update Investment Segment
Business Update Investment Segment Segment profit was ¥150M due to valuation gains on investments. Second flag ship fund, MV2, is under preparation Details of MV1 Fund R&D purpose investment* Features Active support for startups in product IoT Blockchain Cryptocurrency development and growth stages
Slide 46: Business Update ESG Management
Business Update ESG Management Based on our corporate philosophy, we aim to sustainably increase corporate value by addressing ESG topics related to our medium- to long-term business areas within our core business Materiality Matrix ESG Initiatives Disclosing Materiality Matrix Corporate Governance
Slide 47: Appendix. Group Overview
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 46
Slide 48: Group Overview
Group Overview Japan: 1.86M accounts, Crypto Asset: 2.03M users, US: 104K accounts, AP: 14K accounts. Established 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 (JPY 100
Slide 49: 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 2% Crypto Compensation and benefits 3% Asset System related expenses 2% Othres 1% 1. Equities 8% 21% Crypto 2. System Investme
Slide 50: Group Overview－Corporate value creation process
Group Overview－Corporate value creation process Democratization of capital markets is our core value and the key driver for the Company’s sustainable growth 49
Slide 51: 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 52: Monex Group
Monex Group (As of June 30, 2020) Listed Holding Company [Japan] [US/Europe] [Asia Pacific] Cryptocurrency exchange Online Securities Company Monex International Limited service provider Holding Company in Hong Kong TradeStation Group, Inc. Online Securities Company Holding Company in the U.S. Monex
Slide 53: Overview of Monex Group and Main Subsidiary Companies
Overview of Monex Group and Main Subsidiary Companies ■ Monex, Inc. (Tokyo, Japan) ■ TradeStation Group, Inc. (Florida, U.S.) One of the major online brokerage firms in Japan Online securities group with award-winning trading technology - President : Yuko Seimei development capabilities - Founded in
Slide 54: 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 55: Investors' Guide
Investors’ Guide ■ Shareholders distribution ■ Shareholders & indicators per share ◆ Our basic policy for shareholders distribution ◆ Major shareholders and shareholder breakdown Monex Group aims to provide returns to its shareholders (as of March 31, 2020) Monex Group, Inc. based on the business pe
Slide 56: Investment Segment – Portfolio 1/2
Investment Segment – Portfolio 1/2 ◆ Monex Ventures, Inc. P2P lending EC Settlement DLT* Prop Tech Online lending （Registered as Type 2 Financial Instruments Business） AI/Big Data Thematic Investment B2B Robo-advisor AI/Big Data Vacation Rental SNS （Registered as Type 1 Financial Instruments Busines
Slide 57: Investment Segment – Portfolio 2/2
Investment Segment – Portfolio 2/2 ◆ MV I Investment Limited Partnership B2B SaaS E-market place B2B SaaS Logistics B2B Saas EC Asset Management EC E-market place Ad Tech B2B Saas B2B SaaS B2B SaaS IoT/AI B2B SaaS Agri-Tech B2B Saas Insure Tech KYC / Big Data B2B SaaS Robotics Marketplace AI / Sport