Monex Group, Inc. · TSE:8698
Monex — Q3 FY2021 Earnings Presentation
59 slides from Monex's earnings presentation, Jan 29, 2021
Slide 1: Financial Results for 3Q of Fiscal Year Ending March 31, 2021
January 29, 2021 TSE 1st Section: 8698 Financial Results for 3Q 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. 46 Appendix: Group Overview p. 47 - p. 58 This is an English translation of Japanese presentation materials prepared in connectio
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 3
Slide 5: Business Overview 1/5: All segments grew from last fiscal year
Business Overview 1/5 All segments grew from last fiscal year. Crypto Asset Segment boosted revenues and consolidated pre-tax profits increased significantly. （¥ Billion） 10 ¥ 8.94B 9 8 ■Investment Segment 7 ■Crypto Asset Segment 6 YoY 5 x 2.9 ■US Segment 4 ¥ 3.06B ■Japan Segment 3 2 ■Asia Pacific S
Slide 6: Business Overview 2/5: Pre-tax profit mix by segment
Business Overview 2/5 The group's business portfolio has expanded, and the contribution of profits from segments other than Japan has increased. Pre-tax profit from US & Crypto Asset segment in the three main segments 46%→62% 2021/3 1Q-3Q 2020/3 1Q-3Q 62% 46% 1% 45% 54% Pre-tax profit Pre-tax profit
Slide 7: Business Overview 3/5: Crypto Asset segment profit rose sharply
Business Overview 3/5 Segment profit of Crypto Asset rose sharply driven by a highly active crypto asset market. Quarterly pre-tax profit of Crypto Asset Segment (Coincheck) (Billion yen） 3 ¥ 2.42B 2.5 QoQ 2 x 3.3 1.5 1 0.5 0 2020/3 1Q 2020/3 2Q 2020/3 3Q 2020/3 4Q 2021/3 1Q 2021/3 2Q 2021/3 3Q -0.5
Slide 8: Business Overview 4/5: Japan segment profit increased significantly
Business Overview 4/5 Segment profit of Japan increased significantly driven by an active Japanese stock market and strong U.S. equity trading. (Billion yen） Quarterly pre-tax profit of Japan Segment ¥ 1.45B 1.5 QoQ x 2.6 1 0.5 0 2020/3 1Q 2020/3 2Q 2020/3 3Q 2020/3 4Q 2021/3 1Q 2021/3 2Q 2021/3 3Q
Slide 9: Business Overview 5/5: Transforming our business model
Business Overview 5/5 Transforming our business model while leveraging our existing core businesses. Transforming to an Diversifying revenue sources Entering new business areas asset-management model Online Investment Education Virtual Shareholder Meeting Asset Management Business Media Service & Co
Slide 10: Highlights 3Q of FYE Mar. 2021 (3 months) 1/4
Highlights 3Q of FYE Mar. 2021 (3 months) 1/4 Japan and Crypto Asset segments made great progress, with consolidated pre-tax profit of ¥ 4.79B. Consolidated EBITDA* reached ¥ 7.0B, the highest since 2014/3 1Q. The steady growth of our competitive US equity services and the Japanese stock Japan marke
Slide 11: Highlights 3Q 2/4: Consolidated and Japan
Highlights 3Q 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 4,792 (JPY million) Quarterly profit attributable
Slide 12: Highlights 3Q 3/4: US and Asia Pacific
Highlights 3Q of FYE Mar. 2021 (3 months) 3/4 ◆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) 6,000 5,451
Slide 13: Highlights 3Q 4/4: Crypto Asset and Investment
Highlights 3Q of FYE Mar. 2021 (3 months) 4/4 ◆Total operating revenue after deducting financial expenses and Segment profit (JPY million) Crypto Asset Total operating revenue after deducting financial expenses Segment profit (Quarterly profit before income taxes) 3,997 4,000 3,000 2,423 1,773 2,000
Slide 14: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 13
Slide 15: YoY Comparison (9 months) Consolidated Performance
YoY Comparison (9 months) Consolidated Performance FYE Mar. 2020 FYE Mar. 2021 3Q 3Q Rate of (JPY million) Variance Reference (Apr. 2019– (Apr. 2020– change Dec. 2019) Dec. 2020) P16: Analysis of Japan segment Total operating revenue after 34,434 43,932 9,498 28% P18: Analysis of US segment (USD) de
Slide 16: YoY Comparison (9 months) Segment Performance
YoY Comparison (9 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 3Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q Total operating revenue after deducting financial expenses 17,521 20,555 14,435 16,078 357 1,0
Slide 17: YoY Analysis: Operating Revenue (Japan)
YoY Comparison (9 months) Analysis: Operating Revenue Japan : Brokerage commissions increased by 53% YoY due to higher Monex’s market share for Japan equities, the growth of the U.S. equity business and favorable market condition. ■ Total operating revenue after deducting Total operating revenue aft
Slide 18: YoY Analysis: SG&A (Japan)
YoY Comparison (9 months) Analysis: SG&A Japan : Limited overall increase in SG&A to the increase in revenues, even though variable expenses increased due to higher trading volume, and compensation and benefits increased due to launching new businesses. ■ SG&A SG&A Total +11.6% (+1,828) (JPY million
Slide 19: YoY Analysis: Operating Revenue (USD, US)
YoY Comparison (9 months) Analysis: Operating Revenue (USD) US : Commission-free plans, account growth and higher volatility (VIX) generated a significant increase in trading volume resulting in higher brokerage and other commissions. ■ Total operating revenue after deducting financial expenses and
Slide 20: YoY Analysis: SG&A (USD, US)
YoY Comparison (9 months) Analysis: SG&A (USD) US : Advertising expenses increased to support the growth of new business such as TradeStation Crypto and YouCanTrade. Larger trading volume drove higher commissions paid and association dues. ■ SG&A SG&A Total +13.4% (+15,873) (USD thousand) * Figures
Slide 21: YoY Analysis: Operating Revenue (Crypto)
YoY Comparison (9 months) Analysis: Operating Revenue Crypto : Trading volume, especially for Altcoins, at Coincheck increased significantly due to the booming crypto asset market, which led to a 163% increase in net trading income. Total operating revenue after deducting ■ Total operating revenue a
Slide 22: YoY Analysis: SG&A (Crypto)
YoY Comparison (9 months) Analysis: SG&A Crypto : The increase in total expenses associated with the rise in market and revenues is limited due to the low variable cost ratio. ■ SG&A SG&A Total +24.2% (+609) * Figures in parentheses indicate the variance from the previous year (JPY million) (JPY mil
Slide 23: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance （JPY million） 2Q FYE Mar. 3Q FYE Mar. 2021 2021 Rate of Variance change Reference (Jul. 2020- (Oct. 2020- Sep. 2020) Dec. 2020) P24: Analysis of Japan segment Total operating revenue after 13,898 16,826 2,929 21% P26: Analysis of US segment (USD) de
Slide 24: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance Japan US Asia Pacific Crypto Asset Investment (JPY million) 2021/3 2021/3 2021/3 2021/3 2021/3 2021/3 2021/3 2021/3 2021/3 2021/3 2Q 3Q 2Q 3Q 2Q 3Q 2Q 3Q 2Q 3Q Total operating revenue after deducting financial expenses and 6,513 7,231 5,346 5,406 394 359
Slide 25: QoQ Analysis: Operating Revenue (Japan)
QoQ Comparison (3 months) Analysis: Operating Revenue Japan : Commissions from Japanese and U.S. equities grew in line with the buoyant stock markets of each country. U.S. equities accounted for 19% of total brokerage commissions this quarter. ■Quarterly total operating revenue after deducting finan
Slide 26: QoQ Analysis: SG&A (Japan)
QoQ Comparison (3 months) Analysis: SG&A Japan : System related expenses decreased due to the migration of the data center. Variable expenses increased as a result of higher trading volume. Quarterly SG&A +2.1％ (+125) ■Quarterly SG&A * Figures in parentheses indicate the variance from the previous q
Slide 27: QoQ Analysis: Operating Revenue (USD, US)
QoQ Comparison (3 months) Analysis: Operating Revenue (USD) US : Net financial income increased by 17% due to revenue growth from securities lending and crypto lending. Other commissions increased from higher trading volume of equities and options through commission-free plans. ■Quarterly total oper
Slide 28: QoQ Analysis: SG&A (USD, US)
QoQ Comparison (3 months) Analysis: SG&A (USD) US : Total expenses remained flat QoQ, although marketing and personnel costs of new businesses increased slightly to support growth in new business for diversification of revenue sources. ■Quarterly SG&A Quarterly SG&A +1.3% (+561) (USD thousand) * Fig
Slide 29: QoQ Analysis: Operating Revenue (Crypto)
QoQ Comparison (3 months) Analysis: Operating Revenue Crypto : Highest quarterly revenue since joining Monex Group. Trading revenue increased by 2.3 times QoQ due to a significant increase in trading volume at Coincheck marketplaces, accompanied by booming market activity. ■Quarterly total operating
Slide 30: QoQ Analysis: SG&A (Crypto)
QoQ Comparison (3 months) Analysis: SG&A Crypto : Increase in SG&A is less sensitive to the booming market than that of revenues, as the percentage of variable cost is low. Quarterly SG&A +27.3％ (+289) ■Quarterly SG&A * Figures in parentheses indicate the variance from the previous quarter (JPY mill
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 Dec 31, 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 dividends (left) Amount of acquisition of own shares(left) Total return ratio(right) 15% 827% 12,000 900% 12.9% 8
Slide 33: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 32
Slide 34: Business Update Japan segment 1/3
Business Update Japan segment 1/3 Aiming to shift to the asset-management model, expand revenues other than Japanese brokerage commissions, starting with US stocks. Asset-Management Model US equity trading • Develop services that will contribute to an increase in • Cooperating with TradeStation, Mon
Slide 35: Business Update Japan segment 2/3
Business Update Japan segment 2/3 Transforming business into asset management model, and expanding new initiatives. Mutual Fund Securities Lending • Daily installment service became widely spread and • Enabled margin account holders to use their the monthly accumulation amount reached to ¥ 4B, colla
Slide 36: Business Update Japan segment 3/3
Business Update Japan segment 3/3 Total AUM by Monex Asset Management reached ¥ 16.8 B (as of Dec 31, 2020). In addition to its mainstay discretionary investment management, also manages the publicly offered fund, Monex Activist Fund, with an investment advice* from Japan Catalyst. Also expanding as
Slide 37: Business Update US Segment 1/2
Business Update US Segment 1/2 Client assets increased to $9.3B. Customer base expanded steadily. Account Additions & Client Assets Brokerage Commissions & Fees A strong increase in active accounts and total client • TradeStation Securities Rated “#1 Platform assets was driven by commission-free pla
Slide 38: Business Update US Segment 2/2
Business Update US Segment 2/2 Added to the steady growth in the existing brokerage business, TradeStation strives for new business initiatives for revenue diversification. API Partners TradeStation Crypto (TCI) • TradeStation continues to experience demand for • TCI growth was spurred by enthusiasm
Slide 39: Business Update Crypto Asset segment 1/2
Business Update Crypto Asset segment 1/2 Coincheck’s core business, cryptocurrency exchanges, has been ranked as the number one app DL in Japan for two consecutive years. Leading Company among Japanese Cryptocurrency Exchanges No. 1 app DLs*1 among domestic crypto exchanges As the crypto asset marke
Slide 40: Business Update Crypto Asset segment 2/2
Business Update Crypto Asset segment 2/2 Coincheck aims to stabilize earnings by continuing to control fixed costs and develop new businesses. Fixed Cost Containment Virtual Shareholder Meeting Support Service Coincheck has built a revenue structure that allows it to • With marketing support from th
Slide 41: The Earn-out Clause related to the M&A of Coincheck, Inc.
The Earn-out Clause related to the M&A of Coincheck, Inc. Coincheck achieved a cumulative net profit of ¥ 434 M after joining Monex Group. Based on the earn-out clause, recorded a loss of ¥ 217 M on the fair value of contingent consideration in 3Q FYE March 2021. Turned profitable on a cumulative ba
Slide 42: Business Update Asia Pacific segment
Business Update Asia Pacific segment Consistent favorable performance in each Asia Pacific segment company. Monex Boom Securities & Monex Securities Australia Cherry Technology Co., Ltd (China) Economic recovery in the Hong Kong market, an active Providing technology and knowledge of the online IPO
Slide 43: Business Update Investment Segment
Business Update Investment Segment ¥ 0.13B of segment profit in 3Q due to valuation gains on investments and the first EXIT of an invested company in MV1. Details of MV1 Fund First fund investee to achieve EXIT Active support for startups in product MV1, as a largest VC to Tolleta Cats, provided Fea
Slide 44: Business Update ESG Management 1/4
Business Update ESG Management 1/4 Positioned this year to kick off full-scale of ESG initiatives. The executive officers themselves are promoting ESG initiatives as part of business promotion. Launched new initiatives in environmental and social issues. ESG Initiatives The Monex Group’s ESG Approac
Slide 45: Business Update ESG Management 2/4
Business Update ESG Management 2/4 Develop sustainable finance solutions as one of its core businesses. Established a Sustainable Finance Dept. to launch an ESG fund Monex to offer sustainable finance Japanese government stated its determination to achieve carbon neutrality with virtually zero green
Slide 46: Business Update ESG Management 3/4
Business Update ESG Management 3/4 Achieving diversity, equity and inclusion, and promoting the activities of diverse human resources. Equity of Gender Monex signed Disability Inclusion Equal evaluation of gender • Signed a commitment to join “The Valuable 500”, a Relatively high equality of gender
Slide 47: Business Update ESG Management 4/4
Business Update ESG Management 4/4 Monex Group and two listed companies are now shareholders of a healthcare tech company, GENEX. Innovation Support for a Social Impact Overview Genex plans to establish a blockchain-enabled data platform capable of accumulating healthcare-related big data, which can
Slide 48: Appendix: Group Overview
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 47
Slide 49: Group Overview
Group Overview Japan: 1.91M accounts, US: 131K accounts, Crypto Asset: 2.26M users, AP: 18K 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 ◆ Consol
Slide 50: 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 51: 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 50
Slide 52: 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 53: Monex Group
Monex Group (As of December 31, 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. M
Slide 54: Overview of Monex Group and Main Subsidiary Companies
Overview of Monex Group and Main Subsidiary Companies ■ Monex, Inc. (Tokyo, Japan) ■ Coincheck, Inc. (Tokyo, Japan) One of the major online brokerage firms in Japan Cryptocurrency Exchange/Marketplace agency - President : Yuko Seimei - President: Satoshi Hasuo - Founded in 1999 - Founded in 2012, jo
Slide 55: 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 56: 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 September 30, 2020) Monex Group, Inc. based on the busines
Slide 57: 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 58: 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
Slide 59: Investment Segment – Portfolio 2/2
Investment Segment – Portfolio 2/2 ◆ MV I Investment Limited Partnership B2B SaaS EC EC VR Elderly Care B2B SaaS Audio Content Marketing 58