Monex Group, Inc. · TSE:8698
Monex — Q1 FYE March 2018 Earnings Presentation
44 slides from Monex's earnings presentation, Jul 28, 2017
Slide 1: Financial Results for 1Q of Fiscal Year Ending March 31, 2018
July 28, 2017 (TSE 1st Section: 8698) Financial Results for 1Q of Fiscal Year Ending March 31, 2018 This is an English translation of Japanese presentation materials prepared in connection with the disclosure of the financial results of Monex Group, Inc. It includes information derived from the cons
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.8 II. Consolidated Performance p.9 - p.23 III. Business Update p.24 - p.30 IV. Mid- & Long-Term Initiatives p.31 - p.33 Appendix. Group Overview p.34 - p.43 2
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 3
Slide 5: Management's recognition of the current business situation /2 (Japan)
Management’s recognition of the current business situation 1/2 Reinforce revenue base and promote cost reduction Expand profit in Japan and maintain black for 3 consecutive quarters in US ・Fixed-type cost has decreased by JPY 2.4B per year as planned with completion of parallel operation of old and
Slide 6: Management's recognition of the current business situation /2 (US, Asia-Pacific)
Management’s recognition of the current business situation 2/2 ・In 1Q, renewed the previous quarter’s record of the highest number of newly opened funded accounts ・Rapidly expand customer base with a quick succession of new strategies that US appealed to a new customer segment ・A rise in US interest
Slide 7: Highlights 1Q FYE Mar. 2018 (3 months)
Highlights 1Q FYE Mar. 2018 (3 months) Profit increases because fixed-type cost reduction scheme in Japan has worked out as planned Parallel operation of backbone system finished. Segment profit in 1Q (3 months) is JP JPY 1,094M (+839M QoQ), following the reduction of 744M of fixed-type costs (syste
Slide 8: Highlights 1Q FYE Mar. 2018: Consolidated and Japan
Highlights 1Q FYE Mar. 2018 (3 months) ◆Total operating revenue after deducting financial expenses and quarterly profit attributable to owners of the Company (JPY million) Total operating revenue after deducting financial expenses Consolidated Quarterly profit attributable to owners of the Company,
Slide 9: Highlights 1Q FYE Mar. 2018: US and Asia-Pacific
Highlights 1Q FYE Mar. 2018 (3 months) ◆Total operating revenue after deducting financial expenses and cost of sales and segment profit (JPY million) US Total operating revenue after deducting financial expenses and cost of sales Segment profit, Pre-tax profit 6,000 5,071 4,336 4,565 4,569 3,976 4,1
Slide 10: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 9
Slide 11: YoY Comparison (3 months) Consolidated Performance
YoY Comparison (3 months) Consolidated Performance (JPY million) 1Q FYE Mar. 2017 1Q FYE Mar. 2018 Change (Apr. 2016 - (Apr. 2017 - Variance Reference (%) Jun. 2016) Jun. 2017) Total operating revenue after P12: Analysis of Japan segment 10,635 10,836 202 1.9% deducting financial expenses P14: Analy
Slide 12: YoY Comparison (3 months) Segment Performance
YoY Comparison (3 months) Segment Performance (JPY million) Japan US Asia Pacific 2017/3 2018/3 Change 2017/3 2018/3 Change 2017/3 2018/3 Change 1Q 1Q (%) 1Q 1Q (%) 1Q 1Q (%) Total operating revenue after deducting financial expenses 6,790 6,635 -2.3% 3,976 4,223 6.2% 167 240 43.7% and cost of sales
Slide 13: YoY Analysis: Operating Revenue (Japan)
YoY Comparison (3 months) Analysis: Operating Revenue Japan：Increase of net interest income covers cutdown of FX transaction ■ Total operating revenue after deducting financial expenses and cost of sales (compared to Apr. 2016 - Jun. 2016) （JPY million） Total operating revenue after deducting 8,000
Slide 14: YoY Analysis: SG&A (Japan)
YoY Comparison (3 months) Analysis: SG&A Japan : System related costs decreased due to a migration to new backbone system ■ SG&A (compared to Apr. 2016 - Jun. 2016) （JPY million） 7,000 SG&A Total -7.6% ( -459) 6,068 * figures in parenthesis is the variance from 1Q FYE Mar.2017 (JPY million) 6,000 46
Slide 15: YoY Analysis: Operating Revenue (USD)
YoY Comparison (3 months) Analysis : Operating Revenue (USD) US：Increased net financial income due to increase in customers cash balance and hike in interest rates. Revenue other than commissions and options trading volume increased ■ Total operating revenue after deducting financial expenses and co
Slide 16: YoY Analysis: SG&A (USD)
YoY Comparison (3 months) Analysis : SG&A (USD) US：SG&A decreases 10% YoY excluding one-time cost of USD 2.9M ■SG&A (compared to Apr. 2016 - Jun. 2016) （USD thousand） 45,000 38,728 SG&A Total -2.2% (-869) 40,000 37,859 * figures in parenthesis is the variance from 1Q FYE Mar.2017 (USD thousand) 35,0
Slide 17: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance （JPY million） 4Q FYE Mar. 2017 1Q FYE Mar. 2018 Change Variance Reference (Jan.-Mar. 2017) (Apr.-Jun. 2017) (%) Total operating revenue P18: Analysis of Japan segment after deducting financial 11,333 10,836 -497 -4.4% P20: Analysis of US segment (US
Slide 18: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance (JPY million) Japan US Asia Pacific 2017/3 2018/3 Change 2017/3 2018/3 Change 2017/3 2018/3 Change 4Q 1Q (%) 4Q 1Q (%) 4Q 1Q (%) Total operating revenue after deducting financial expenses and 7,292 6,635 -9.0% 4,114 4,223 2.7% 199 240 20.7% cost of sales
Slide 19: QoQ Analysis: Operating Revenue (Japan)
QoQ Comparison (3 months) Analysis: Operating Revenue Japan： Revenue improved, excluding one-time gain on sales of securities in the previous quarter ■Quarterly total operating revenue after deducting financial expenses and cost of sales （JPY million） 8,000 7,292 Quarterly total operating revenue af
Slide 20: QoQ Analysis: SG&A (Japan)
QoQ Comparison (3 months) Analysis: SG&A Japan : Fixed-type cost substantially decreased due to completion of the parallel operation of backbone systems SG&A Total -15.1％ ( -998) * figures in parenthesis is the variance from previous quarter ■Quarterly SG&A (JPY million) of which fixed-type cost con
Slide 21: QoQ Analysis: Operating Revenue (USD)
QoQ Comparison (3 months) Analysis : Operating Revenue (USD) US : Net financial income improved due to increase in customer cash balance and hike in interest rates. Commissions up due to increase in options trading ■Quarterly total operating revenue after deducting financial expenses and cost of sal
Slide 22: QoQ Analysis: SG&A (USD)
QoQ Comparison (3 months) Analysis : SG&A (USD) US : Continuous effort to control fixed-type costs. SG&A same as the previous quarter excluding USD 2.9M of one-time expense ■Quarterly SG&A （USD thousand） SG&A Total +5.3% ( +1,893) 45,000 * figures in parenthesis is the variance from previous quarter
Slide 23: 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’ return ◆ Summary of consolidated statement of financial position as of June 30, 2017 Assets Liabilities (*1) Non-current assets JPY 995.3B
Slide 24: Shareholders' Return
Shareholders’ Return Aim to achieve a total return ratio (*1) of 75% on a multi-year basis by dividend and share buyback ◆Dividend per share and total return ratio ◆Return on Equity ratio Interim dividends per share(left) （yen） Year-end dividends per share(left) Total return ratio(right) 30 71.3% 82
Slide 25: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 24
Slide 26: Business Update Japan Segment (1) Customer base expansion 1/2
Business Update Japan Segment (1) Customer base expansion 1/2 Unique products and services appeal to a broad customer segment For all traders Backbone system, GALAXY - Foundation to expand customer segment - Considering customers’ request, aim to further advance services by improving usability For a
Slide 27: Business Update Japan Segment (2) Customer base expansion 2/2
Business Update Japan Segment (2) Customer base expansion 2/2 For all traders TradeStation mobile application for US Equities - First smartphone app for US equity among major online brokers, equipped with various order functions, and sophisticated charts with about 50 years of historical data tradin
Slide 28: Business Update Japan Segment (3) Monex, Inc.'s customer segment
Business Update Japan Segment (3) Monex, Inc.’s customer segment Try to acquire active traders as well as investors, Monex’s main customer base, aiming to double the equities commissions ◆Active account ratio (as of Mar. 31, 2017) ◆Customer assets per account (as of Mar. 31, 2017) (active account ra
Slide 29: Business Update US segment (1)
Business Update US segment (1) Increases in new account openings and customers’ assets. Expanded profits and established stable profitability ■ Expand customer base - Revision of commissions for equities and options trading in March helped increase new accounts. The number of newly opened funded acc
Slide 30: Business Update US Segment (2)
Business Update US Segment (2) ■ Net financial income improved ◆Customers’ assets in custody ◆Net interest income *2 and US Federal Fund rate (USD million) Increase in customers’ assets in custody (USD million) （％） 5,000 35 *3 5 Customer Assets(Institutional) Net interest income from investment(left
Slide 31: Business Update Asia Pacific Segment
Business Update Asia Pacific Segment Keep seeking for business opportunities in Asia Pacific area ■ Will launch online securities business operation in Australia - Monex Securities Australia Pty Ltd will start online securities business in 2Q, making use of systems of the HK-based brokerage subsidia
Slide 32: IV. Mid- & Long-Term Initiatives
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 31
Slide 33: Medium- to long-term management strategy "Global Vision II-Bloom"
Our medium- to long-term management strategy “Global Vision Ⅱ- Bloom” Aim to improve margin to achieve business growth and a consolidated operating profit margin of 30% Listed Holding Company Monex Group will enhance its ability to oversee each region and segment to ensure the implementation of opti
Slide 34: Corporate Governance
Corporate Governance Establish 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 in
Slide 35: Appendix. Group Overview
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 34
Slide 36: Group Overview – streams for Monex value
Group Overview – 3 streams for Monex value Three retail brands: “Monex”, “TradeStation”, and “BOOM” －Oki Matsumoto, a former partner at Goldman Sachs, established Monex and led the online brokerage industry as a pioneer in Japan Brand － Japan: “Monex” promotes long & diversified investment and is su
Slide 37: Group Overview – Continuous growth over years
Group Overview – Continuous growth over 15 years Japan: 1.70M accounts, US: 80K accounts, HK: 10K accounts. Monex has a global customer base Make efforts to continuously grow, with the online brokerage business for retail investors as our core business ◆Consolidated Operating Revenue (JPY millio
Slide 38: Group Overview – Revenues, Costs and Employees by segment
Group Overview－Revenues,Costs: 60% from Japan, 40% from US; Employees: 40% in Japan, 60% in US or China ◆Total operating revenue after deducting financial expenses ◆SG&A by segment and by cost items by region and by business Others 2% Others 4% Financial income 9% 1. Equities Commissions 1. Options
Slide 39: Group Overview – Corporate value creation cycle
Group Overview－Corporate value creation cycle 38
Slide 40: Investments: Finance × IT × Retail Service
Continuing to create value from the viewpoint of Finance × IT × Retail Service * PFM=Personal Financial Management A pioneer of the FinTech community in Japan since the company’s establishment **DWM=Digital Wealth Management Investment DWM**/Robo-advisor Robo-advisor PFM* DWM**/Robo-advisor Program
Slide 41: Monex Group
Monex Group (As of July 28, 2017) Listed Holding Company [Japan] [US/Europe] [Asia Pacific] Online Securities Company Monex International Limited Holding Company in Hong Kong TradeStation Group, Inc. Holding Company in the U.S. Monex, Inc. Comprehensive investment service provider Online Securities
Slide 42: Overview of Monex Group and Main Subsidiary Companies
Overview of Monex Group and Main Subsidiary Companies ■ Monex Group, Inc. (Tokyo, Japan) TSE 1st Sec. Code: 8698 ■ TradeStation Group (HQ in Florida, U.S.) - Chairman, Representative Executive Officer, CEO: Oki Matsumoto Online securities group with award-winning trading technology development capab
Slide 43: 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 44: Investors' Guide
Investors’ Guide ■Pursue returns to shareholders through ROE improvement ■Shareholders & indicators per share ◆ Our basic policy for shareholders’ return ◆Major shareholders and shareholder breakdown To provide returns to shareholders based on our business (as of March 31, 2017) FMR LLC (Fidelity) S
Monex Group — Q1 FYE March 2018 Earnings Presentation on 6ix