Gmo Payment Gateway, Inc. · TSE:3769

Gmo Payment Gateway — Q3 FY2023 Earnings Presentation

45 slides from Gmo Payment Gateway's earnings presentation, Aug 10, 2023

  1. Slide 1: Financial Results Briefing for Q3 FY2023

    Financial Results Briefing for Q3 FY2023 Progressing Towards Achieving FY2023 Guidance and Addressing Challenges to Ensure Growth Beyond This Year August 10, 2023 74th Investor Meeting

  2. Slide 2: Safe Harbor Statement for Forward Looking Statements

    Safe Harbor Statement for Forward Looking Statements The contents of this document is based on generally recognized economic and social conditions, as well as certain assumptions judged to reasonable by GMO Payment Gateway as of August 10, 2023. Please note that the contents are subject to change wi

  3. Slide 3: Agenda

    Agenda 1. Summary of Financial Results for Q3 FY2023 2. Growth Strategy and Initiatives in Focus Areas 3. Sustainability 4. Financial Highlights and Reference Materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 3

  4. Slide 4: 1. Summary of Financial Results for Q3 FY2023

    1. Summary of Financial Results for Q3 FY2023 Copyright Copyright (C) (C) 1995 1995 GMO GMO Payment Gateway, Inc. Payment Gateway, Inc. All All Rights RightsReserved. Reserved. 4

  5. Slide 5: 1.1 Summary of Consolidated Results

    1.1 Summary of Consolidated Results Earnings outperformed plans with the offline domain driving topline growth FY2023 Q3 FY2023 Q3 FY2022 Q3 FY2023 （¥ mil） % YoY Guidance Standalone Cumulative Cumulative (Achievement %) (% YoY) 59,100 16,546 Revenue 36,956 47,000 +27.2% (79.5%) (+28.3%) 10,171 Gross

  6. Slide 6: 1.2 Waterfall Chart of Consol. TRX Value (Q3 standalone)

    1.2 Waterfall Chart of Consol. TRX Value (Q3 standalone) Online payment grew 17.3% from the impact of electricity rate reductions and local government projects （% YoY） Offline Online payment GMO-PG +17.3% Consol. +28.4% payment Market*1 +8.9% Non-merchandise EC Merchandise EC （¥ trn) GMO-PG +62.9% +

  7. Slide 7: 1.3.1 Waterfall Chart for Consol. Revenue (Q3 standalone)

    1.3.1 Waterfall Chart for Consol. Revenue (Q3 standalone) 28.3% growth driven by offline terminals despite temporary slowdown in non-merchandise EC (% YoY) Consol. GMO-FG*1*2 GMO-PG*3 GMO-PS*3 Consol. GMO-EP*1*3 Consol. （¥ bn） +59.1% +17.2% +30.6% +5.9% +28.3% 17 Other ¥16.5 bn 16 GMO Payment After

  8. Slide 8: 1.3.2 Change in Consolidated Revenue Mix

    1.3.2 Change in Consolidated Revenue Mix Revenue Excluding Initial growth rate increased by 9.4% pts. since Q3 FY2021 Consolidated revenue breakdown and YoY growth (quarterly) (¥ mil) 20,000 Initial revenue (left axis) Initial revenue = Payment processing revenue Revenue excl. initial (left axis) re

  9. Slide 9: 1.3.3 Waterfall Chart for Consol. OP and Pre-tax Profit

    1.3.3 Waterfall Chart for Consol. OP and Pre-tax Profit (Q3 Cumulative) OP grew 25.3% as gross profit increased on the back of revenue growth that offset the increase in SG&A OP Waterfall Chart Pre-tax Profit Waterfall Chart Up 25.3% YoY （¥ mil） Down 49.3% YoY （¥ mil） GP SGA Financial Financial Equi

  10. Slide 10: 1.4.1 GMO-PG Non-consolidated Performance

    1.4.1 GMO-PG Non-consolidated Performance Revenue grew 17.2% from cycling through of major project that accelerated growth over the past year GMO-PG Non-consolidated Revenue & OP （¥ mil） MSB revenue (left axis) Over 25% YoY BaaS Support revenue (left axis) % YoY Non-merchandise EC revenue (left axis

  11. Slide 11: 1.4.2 Performance of GMO-EP, GMO-PS and GMO-FG

    1.4.2 Performance of GMO-EP, GMO-PS and GMO-FG Growth rate improves from April onwards at GMO-EP and GMO-PS; GMO-FG continues is high growth Consol. GMO-EP*1*2 GMO-PS*2 Consol. GMO-FG*1*3 (% YoY) Q2 FY23 Q3 FY23 Q2 FY23 Q3 FY23 Q2 FY23 Q3 FY23 Revenue +0.3% +5.9% Revenue +20.5% +30.6% Revenue +71.8%

  12. Slide 12: 1.5 Revenue by Business Model (Q3 Cumulative)

    1.5 Revenue by Business Model (Q3 Cumulative) Fee revenue grew 32.3% from increased TRX volume for offline payment % YoY Factors* (¥ mil) Q3 Cumu. Q3 Cumu. 47,000 FY22 FY23 45,000 Spread +12.6% +14.3% ＋ Online payment（PG） 40,000 ＋ Overseas lending 36,956 18,254 － Online payment（EP） 35,000 － GMO Paym

  13. Slide 13: 1.6 Segment Results (Q3 Cumulative)

    1.6 Segment Results (Q3 Cumulative) Each segment making solid progress towards achieving full year guidance Segment Revenue Segment Profit % YoY % YoY (¥ mil) (¥ mil) Q3 Cumu. Q3 Cumu. Q3 Cumu. Q3 Cumu. FY22 FY23 FY22 FY23 20,000 50,000 47,000 +21.0% +27.2% 16,022 +25.1% +25.3% 18,000 2,270 10,393 8

  14. Slide 14: 2. Growth Strategy and Initiatives in Focus Areas

    2. Growth Strategy and Initiatives in Focus Areas Copyright Copyright (C) (C) 1995 1995 GMO GMO Payment Gateway, Inc. Payment Gateway, Inc. All All Rights RightsReserved. Reserved. 14

  15. Slide 15: 2.1.1 Snapshot of Major Business Portfolio

    2.1.1 Snapshot of Major Business Portfolio Challenges and responses of consolidated subsidiaries’ revenue growth rates Challenges and responses for each companies’ growth potential Growth % YoY Challenges/Factors Response Initiatives Q3 FY22 Q3 FY23 ・Project delays ・Strengthen PM capability 2.3.1 GM

  16. Slide 16: 2.1.2 Reason for Sluggish Revenue Growth

    2.1.2 Reason for Sluggish Revenue Growth Measures in place to fill the temporary lull before the contribution from new projects Image of revenue and startup of new projects In order to sustain high growth, it is necessary to expand revenue and profit size per contract However, the larger the project

  17. Slide 17: 2.2 Initiatives in Each Focus Areas

    2.2 Initiatives in Each Focus Areas Generating and launching large projects to return to high growth; raising efficiency of new acquisitions Basic strategy 1. Generate large-scale projects with high gross margins and achieve on-schedule launch 2. Improve yield rates by efficiently acquiring new cust

  18. Slide 18: 2.3.1 Broader EC: Large Merchant Strategy

    Broader EC OP target: 2.3.1 Broader EC: Large Merchant Strategy 2025 ¥18.0～¥22.0 bn Accelerate approach to global large customers by improving competitiveness of major products GMO-PG/GMO-EP Revenue trend by merchant size Growth initiatives Annual revenue size of merchant ・Enterprises ・Acquisition o

  19. Slide 19: 2.3.2 Broader EC: Return to Growth in Small Operator Segment

    2.3.2 Broader EC: Return to Growth in Small Operator Segment Expand services and focus on target domains to return to growth Consol. GMO-EP revenue & GMV growth rate Growth initiatives （¥ mil） % YoY ・Drill down into non-merchandise domain Revenue (left axis) Acquire merchants across verticals by pro

  20. Slide 20: 2.4 BaaS/EF

    BaaS2025営業利益目標 BaaS OP target: 2.4 BaaS/EF*1 2025 10 ¥1.0 億円～bn～ Return to growth next fiscal year from contribution of large-scale projects, and expand the revenue model Ginko Pay/Processing PF revenue*2 (Q3 standalone) Growth initiatives ■ Ginko Pay ・Expand issuing PF ■ Issuing（Processing PF) ・Ser

  21. Slide 21: 2.5 Offline Payment

    Offline OP target: 2.5 Offline Payment 2025 ¥2.0bn~*1 Focusing on new domains to secure medium-to-long term high growth GMO-FG/CAS revenue by business model*2 (Quarterly) Growth initiatives Stera terminals rolled out to Japan Post ★ ・Enter into new domains (full year est. 26K units) Public transport

  22. Slide 22: 2.6 FinTech: GMO Payment After Delivery

    FinTech FinTech OP target: 2025営業利益目標 2.6 FinTech: GMO Payment After Delivery 202530 ¥3.0 億円～ bn~ Revenue on expanding trend, as new merchant acquisitions offsets the impact of credit tightening FinTech revenue and profit/loss (Quarterly) Growth initiatives （¥ mil） ・Expanding share by broadening ser

  23. Slide 23: 2.7.1 Global Strategy

    2.7.1 Global Strategy High growth of Asia payment service from acquisition of major Chinese merchant; strengthening lending in priority regions Asia payment business Target markets of global lending business ・Growth driven by remittance operations for major ・Expand mainly in the attractive markets o

  24. Slide 24: 2.7.2 Global: Earnings Summary

    2.7.2 Global: Earnings Summary Made progress in new investments/lending and increased lending to attractive FinTech companies in focus regions Revenue*1・OP*2（Quarterly） Loan balance（end-Jun） New loans executed % YoY % YoY （¥ mil） （¥ mil） +45.0% +43.4% Q3 Loan extended to US Music funding incremental

  25. Slide 25: 2.8 Fund Investment Strategy

    2.8 Fund Investment Strategy Expand the reach to growth companies by reinvesting the returns from equity investments Fund investment and returns 13/9 14/9 15/9 16/9 17/9 18/9 19/9 20/9 21/9 22/9 23/9 24/9 25/9 26/9 Distributions/ ④ Seek strategic returns by expanding ② Secure financial returns as fu

  26. Slide 26: 3. Sustainability

    3. Sustainability Copyright Copyright (C) (C) 1995 1995 GMO GMO Payment Gateway, Inc. Payment Gateway, Inc. All All Rights RightsReserved. Reserved. 26

  27. Slide 27: 3. Sustainability: External Evaluation

    3. Sustainability: External Evaluation Inclusion in ESG Indexes Constituent of ESG indexes External evaluation The FTSE Blossom Japan Index and FTSE Blossom Received “Eruboshi certification (3-star)” for Japan Sector Relative Index are indexes adopted as promoting the empowerment of women from the t

  28. Slide 28: 4. Financial Highlights and Reference Materials

    4. Financial Highlights and Reference Materials Copyright Copyright (C) (C) 1995 1995 GMO GMO Payment Gateway, Inc. Payment Gateway, Inc. All All Rights RightsReserved. Reserved. 28

  29. Slide 29: 4.1.1 Consolidated Balance Sheet Changes

    4.1.1 Consolidated Balance Sheet Changes Increase in deposits received and MSB related assets Assets Liabilities and Equity (¥ mil) (¥ mil) 300,000 294,874 300,000 294,874 273,407 273,407 250,000 250,000 100,144 215,455 134,181 215,455 85,562 113,967 200,000 200,000 78,251 30,148 35,252 104,523 150,

  30. Slide 30: 4.1.2 Major Consolidated Financial Indicators (Annual Trend)

    4.1.2 Major Consolidated Financial Indicators (Annual Trend) Strengthened equity base with the expansion of MSB J-GAAP IFRS Third party allotment Issued Euro Yen Euro Yen CB Due 2026 Raised ¥8.0bn CB Due 2023 Raised ¥21.1 bn （¥ bn） Raised ¥17.5 bn Euro Yen CB Due 2023 45% 300 Fully converted 40% 250

  31. Slide 31: 4.2 Consolidated Revenue and Operating Profit (Quarterly)

    4.2 Consolidated Revenue and Operating Profit (Quarterly) Consol. revenue Consol. operating profit （¥ mil） （¥ mil） 18,000 6,000 +25.7% +28.3% % YoY % YoY +28.2% +26.4% 16,000 +23.7% +24.9% 5,000 14,000 12,000 4,000 10,000 3,000 8,000 6,000 2,000 4,000 1,000 2,000 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY2021 9

  32. Slide 32: 4.3 Consolidated Revenue by Business Model (Quarterly)

    4.3 Consolidated Revenue by Business Model (Quarterly) (¥ mil) 6,171 6,057 6,025 6,000 5,371 5,415 5,296 5,297 5,000 4,808 4,707 4,731 4,665 4,414 4,430 4,290 4,257 4,311 4,000 3,840 3,646 3,672 3,536 2,408 3,364 3,395 3,278 3,015 3,149 2,922 2,288 3,000 2,713 2,669 2,527 2,559 2,237 2,382 2,037 2,0

  33. Slide 33: 4.4 Segment Results (Q3 standalone)

    4.4 Segment Results (Q3 standalone) Both Payment Processing Business and Money Service Business segments’ revenues grew by over 25% Segment Revenue Segment Profit % YoY % YoY (¥ mil) (¥ mil) Q3 FY22 Q3 FY23 Q3 FY22 Q3 FY23 7,000 16,546 5,671 +21.1% +28.3% +24.3% +25.7% 15,000 6,000 790 3,513 317 +38

  34. Slide 34: 4.5.1 FinTech Related Asset

    4.5.1 FinTech Related Asset FinTech related asset (quarterly) （¥ mil） 100,000 % YoY 80,000 +21.3% 60,000 40,000 +24.5% 20,000 +41.7% 0 End Q4 End Q1 End Q2 End Q3 End Q4 End Q1 End Q2 End Q3 End Q4 End Q1 End Q2 End Q3 End Q4 End Q1 End Q2 End Q3 FY2019 FY2020 FY2020 FY2020 FY2020 FY2021 FY2021 FY20

  35. Slide 35: 4.5.2 FinTech Related Asset (Quarterly)

    4.5.2 FinTech Related Asset (Quarterly) FinTech segment revenue and profit （¥ mil） 3,500 % YoY ＋14.5% 3,000 2,500 2,000 ＋30.6% 1,500 1,000 ＋29.1% 500 ＋9.4% ＋39.1% 0 19/4Q 20/1Q 20/2Q 20/3Q 20/4Q 21/1Q 21/2Q 21/3Q 21/4Q 22/1Q 22/2Q 22/3Q 22/4Q 23/1Q 23/2Q 23/3Q Lending (Japan/Overseas) Early Payment

  36. Slide 36: 4.6.1 Consolidated CoS and SG&A Ratio (Quarterly)

    4.6.1 Consolidated CoS and SG&A Ratio (Quarterly) SG&A ratio declined to 27.6% from cost control and scale benefit (¥ mil) * 16,546 16,000 15,641 50.0% 14,813 14,000 42.7% 13,341 41.2% 12,897 37.5% 40.9% 39.6% 12,201 38.5% 40.0% 36.8% 11,857 12,000 36.6% 11,132 37.2% 36.7% 35.2% 34.8% 33.8% 34.7% 10

  37. Slide 37: 4.6.2 CoS/SGA Ratio of GMO-PG & GMO-EP (Quarterly)

    4.6.2 CoS/SGA Ratio of GMO-PG & GMO-EP (Quarterly) CoS ratio trending stably for online payment business (¥ mil) 9,219 9,177 9,083 9,000 8,498 50.0% 7,977 8,000 45.2% 7,906 7,682 41.6% 7,122 6,709 6,858 41.2% 40.7% 7,000 6,878 39.7% 6,370 40.0% 6,110 36.5% 34.2% 6,000 5,271 33.3% 5,126 32.5% 5,142 3

  38. Slide 38: 4.7.1 Operating Stores, TRX Volume and Value

    4.7.1 Operating Stores, TRX Volume and Value Consol. TRX value reaches approx. ¥14.0 trn in the past 12 months Operating TRX volume*2*3 TRX value*2 Stores*1/Terminals*2 End Q3 FY2023 Q3 FY2023 Past 12-month Q3 FY2023 Past 12-month - 1.58 bn 5.86 bn ¥3.7 trn ¥14.0 trn Consol. % YoY - +26.4% +30.1% +2

  39. Slide 39: 4.7.2 Distribution of major sectors (Q3 Standalone)

    4.7.2 Distribution of major sectors (Q3 Standalone) Balance both stability and growth through sector diversification Revenue share by industry (vertical axis)/ Revenue growth rate (horizontal axis) (Q3 FY2023 standalone Actual) Revenue The size of the circle represents the TRX value proportion 30% 2

  40. Slide 40: 4.8.1 Consolidated Cash Flow Statement (Q3 Cumulative)

    4.8.1 Consolidated Cash Flow Statement (Q3 Cumulative) Q3 FY2023 cumu. changes by item (¥ mil) (¥ mil) J-GAAP IFRS Operating CF： +9,797 50,000 Pretax profit +15,954 Trade receivables -4,202 Advances paid -6,058 40,000 Accrued revenues -5,882 Accrued expenses +3,819 Deposits received +14,723 30,000 I

  41. Slide 41: 4.8.2 Changes in consolidated cash flow statement

    4.8.2 Changes in consolidated cash flow statement Related liabilities & assets Impact from business expansion Payment Processing Business Sales proceeds of Deposits received Liability Operating CF merchants under the (liability) Yearly fluctuations can be large as annual TRX value of Representative

  42. Slide 42: 4.9 Broader EC: Rollout of Industry Specific Platforms

    4.9 Broader EC: Rollout of Industry Specific Platforms Progressing with multiple applications being adopted within various verticals Expansion strategy of industry platforms along the triple-axes of applications, customers and sector/industry Expand line-up of applications Electric power/Gas DX Supp

  43. Slide 43: 4.10 Major Update of PG Multi-payment Service

    4.10 Major Update of PG Multi-payment Service Explaining the advantages to EC operators at a press briefing New connectivity method launched by implementing “OpenAPI-type” • Technical specifications adopt global standards, thus improving competitiveness in acquiring large merchants and global mercha

  44. Slide 44: 4.11 Investment Strategy

    4.11 Investment Strategy Secure investment potential (incl. for financial business) by strengthening BS with investment returns Balance sheet trend （¥ mil） Significantly scaled up investment 400,000 Investment related *1 MSB related *2 professionals in the past year 35% Equity Other 31.9% Cash & equ

  45. Slide 45: Thank You Very Much

    Thank You Very Much GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange Prime) For inquiries or requests for 1-on-1 interviews, please contact the IR Department, Corporate Value Creation Strategy Division, at the telephone number below: TEL ： +81-3-3464-0182 E-mail ： ir-contact@gmo-pg.com IR Websi

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