Monex Group, Inc. · TSE:8698
Monex — Q1 FYE Mar. 2020 Earnings Presentation
53 slides from Monex's earnings presentation, Jul 26, 2019
Slide 1: Financial Results for 1Q of Fiscal Year Ending March 31, 2020
July 26, 2019 TSE 1st Section: 8698 Financial Results for 1Q of Fiscal Year Ending March 31, 2020
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.9 II. Consolidated Performance p.10 - p.28 III. Business Update p.29 - p.41 Appendix: Group Overview p.42 - p.52 This is an English translation of Japanese presentation materials prepared in connection with t
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 3
Slide 5: Business Overview 1/2
Business Overview 1/2 Japan, the pillar of earnings long since founding, is struggling to improve its profitability under the current equity market condition. TradeStation which joined the Group under the “Global Vision”, turned into the biggest earner. Coincheck turned black for the first time afte
Slide 6: Business Overview 2/2
Business Overview 2/2 US segment turns into the biggest earner in our group. Revenue base continues to expand with steady growth in customer assets US and account openings. TradeStation Crypto, Inc. is expected to launch a cryptocurrency trading offering this October Promotes cost reduction while st
Slide 7: Highlights 1Q of FYE Mar. 2020 (3 months) 1/4
Highlights 1Q of FYE Mar. 2020 (3 months) 1/4 US became most profitable among the five segments while Crypto Asset significantly increased its revenue. Japan remains profitable despite the low market condition and seeks to improve its profitability Segment profit* remained to be about ¥0.5 billion r
Slide 8: Highlights 1Q of FYE Mar. 2020 (3 months) 2/4
Highlights 1Q of FYE Mar. 2020 (3 months) 2/4 ◆Total operating revenue after deducting financial expenses and profit attributable to owners of the Company (JPY million) Total operating revenue after deducting financial expenses Pre-tax Profit 1,196 Consolidated Quarterly profit attributable to owner
Slide 9: Highlights 1Q of FYE Mar. 2020 (3 months) 3/4
Highlights 1Q of FYE Mar. 2020 (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 Quarterly profit before income taxes 6,000 US 4,619 5,115 4,985 4,
Slide 10: Highlights 1Q of FYE Mar. 2020 (3 months) 4/4
Highlights 1Q of FYE Mar. 2020 (3 months) 4/4 ◆Total operating revenue after deducting financial expenses and cost of sales and segment profit (JPY million) Crypto Asset Total operating revenue after deducting financial expenses and cost of sales Quarterly profit before income taxes 1,500 1,274 942
Slide 11: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 10
Slide 12: YoY Comparison (3 months) Consolidated Performance
YoY Comparison (3 months) Consolidated Performance FYE Mar. 2019 FYE Mar. 2020 １Q １Q Rate of (JPY million) Variance Reference (Apr. 2018– (Apr. 2019– change Jun. 2018) Jun. 2019) P13: Analysis of Japan segment Total operating revenue after 12,358 11,881 -477 -4% P15: Analysis of US segment (USD) ded
Slide 13: YoY Comparison (3 months) Segment Performance
YoY Comparison (3 months) Segment Performance Japan US Asia Pacific Crypto Asset Investment (JPY million) 2019/3 2020/3 2019/3 2020/3 2019/3 2020/3 2019/3 2020/3 2019/3 2020/3 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q Total operating revenue after deducting financial expenses 6,634 5,598 4,619 4,996 192 195 942
Slide 14: YoY Comparison Analysis: Operating Revenue (Japan)
YoY Comparison (3 months) Analysis: Operating Revenue Japan : Lower market trading volume by individual traders led to lower brokerage commissions and net financial income. Tightened spread of FX services drove a rise in market share of trading volume to the highest level ■Total operating revenue af
Slide 15: YoY Comparison Analysis: SG&A (Japan)
YoY Comparison (3 months) Analysis: SG&A Japan : System related expenses largely decreased due to lower depreciation cost caused by the impairment in the previous quarter ■SG&A (compared to Apr. 2018 - Jun. 2018) SG&A Total -11.0% (-641) (JPY million) 5,835 *Figures in parenthesis is the variance fr
Slide 16: YoY Comparison Analysis: Operating Revenue (USD)
YoY Comparison (3 months) Analysis: Operating Revenue (USD) US : Net financial income has increased due to higher interest rates as well as an increase in customer assets ■Total operating revenue after deducting financial expenses and cost of sales Total operating revenue after deducting (compared t
Slide 17: YoY Comparison Analysis: SG&A (USD)
YoY Comparison (3 months) Analysis: SG&A (USD) US : Discretionary spending remains efficiently controlled while variable costs increased in parallel with the increase in revenue SG&A Total -1.4% (-556) ■SG&A (compared to Apr. 2018 - Jun. 2018) * Figures in parenthesis is the variance from 1Q FYE Mar
Slide 18: YoY Comparison Analysis: Operating Revenue (Crypto)
YoY Comparison (3 months) Analysis: Operating Revenue Crypto : Coincheck sequentially resumed its services since October 2018. Favorable market condition of this quarter drove higher trading income ■Total operating revenue after deducting financial Total operating revenue after deducting expenses an
Slide 19: YoY Comparison Analysis: SG&A (Crypto)
YoY Comparison (3 months) Analysis: SG&A Crypto : SG&A declined due to decreased professional fees ■SG&A (compared to Apr. 2018 - Jun. 2018) SG&A Total -6.9% (-84) *Figures in parenthesis is the variance from 1Q FYE Mar. 2019 (JPY million) (JPY million) 1,500 1,211 ■Others (-217) * 1,200 1,127 ■Adve
Slide 20: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance 4Q FYE Mar. 1Q FYE Mar. 2019 2020 Rate of （JPY million） Variance change Reference (Jan. 2019-Mar. (Apr. 2019- 2019) Jun. 2019) P21: Analysis of Japan segment Total operating revenue after 11,017 11,881 864 8% P23: Analysis of US segment (USD) deduct
Slide 21: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance Japan US Asia Pacific Crypto Asset Investment (JPY million) 2019/3 2020/3 2019/3 2020/3 2019/3 2020/3 2019/3 2020/3 2019/3 2020/3 4Q 1Q 4Q 1Q 4Q 1Q 4Q 1Q 4Q 1Q Total operating revenue after deducting financial expenses and 5,647 5,598 4,985 4,996 209 195
Slide 22: QoQ Comparison Analysis: Operating Revenue (Japan)
QoQ Comparison (3 months) Analysis: Operating Revenue Japan : Brokerage commissions decreased due to the lowest trading volume by individual traders in about seven years ■Quarterly total operating revenue after deducting financial Quarterly total operating revenue after expenses and cost of sales de
Slide 23: QoQ Comparison Analysis: SG&A (Japan)
QoQ Comparison (3 months) Analysis: SG&A Japan : System related expenses largely decreased due to lower depreciation cost caused by the impairment in the previous quarter Quarterly SG&A -8.8％ (-504) ■Quarterly SG&A *Figures in parenthesis is the variance from previous quarter (JPY million) (JPY mill
Slide 24: QoQ Comparison Analysis: Operating Revenue (USD)
QoQ Comparison (3 months) Analysis: Operating Revenue (USD) US : Revenue remains solid, keeping the increase in net interest income for 6 quarters in a row. Brokerage commissions increased driven by larger futures trading volume from an increase in intraday volatility ■Quarterly total operating reve
Slide 25: QoQ Comparison Analysis: SG&A (USD)
QoQ Comparison (3 months) Analysis: SG&A (USD) US : Commissions paid increased due to larger futures trading volumes ■Quarterly SG&A Quarterly SG&A +3.8% (+1,462) (USD thousand) *Figures in parenthesis is the variance from previous quarter 45,000 40,345 39,150 39,789 (USD thousand) 38,326 ■ Others (
Slide 26: QoQ Comparison Analysis: Operating Revenue (Crypto)
QoQ Comparison (3 months) Analysis: Operating Revenue Crypto : Revenue increased approximately 4 times while the monthly market transaction(*) in Japan increased 2.4 times from the previous quarter ■Quarterly total operating revenue after deducting financial Quarterly total operating revenue after e
Slide 27: QoQ Comparison Analysis: SG&A (Crypto)
QoQ Comparison (3 months) Analysis: SG&A Crypto : Coincheck saved outsourcing expenses as a part of cost reduction efforts Quarterly SG&A -18.0％ (-247) ■Quarterly SG&A *Figures in parenthesis is the variance from previous quarter (JPY million) (JPY million) 2,000 ■ Others (-42) 1,800 ■ Advertising e
Slide 28: 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, 2019 Assets Liabilities (*1) Non-current assets JPY 1
Slide 29: Shareholders’ Distribution
Shareholders’ Distribution Total return ratio (*1) is 75% on a multi-year basis ◆Total return amount(*2) and total return ratio ◆Return on Equity ratio （million yen） 12,000 Amount of acquisition of own shares(left) 900% 15% Amount of dividends (left) 103% 12.9% Total return ratio(right) 800% 10,000
Slide 30: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 29
Slide 31: Business Update Cross-segment Cooperation
Business Update Cross-segment Cooperation Set multiple customer intersections between Monex Securities and Coincheck Owned media: Money Clip Coincheck Articles Monex Cryptocurrency Lab Monex Securities Users, Coincheck Users Enhance Knowledge on Cryptocurrency Easier to Start Cryptocurrency Trading
Slide 32: Business Update Japan segment
Business Update Japan segment Lowered the pricing table for US equities trading. Market share of FX trading increased to the highest level US Equity Trading FX Trading - The minimum trading fee for US equities trading - The spread of the Monex Securities’ FX service was abolished from July 10 “FX PL
Slide 33: Business Update Japan segment
Business Update Japan segment Strengthened margin trading and TradeStation for Japanese equities trading. A trust company joined our group with an aim of contributing to the super-aged society Active traders / Super-aged society of Japan Intermediary Service with Financial Institutes Monex Stock Sco
Slide 34: Business Update Japan segment: Monex Activist Forum
Business Update Japan segment “Monex Activist Forum” was well-received among retail and institutional investors “Monex Activist Forum” aims to facilitate communication between individual investors and companies, and enhance the value of Japanese equities. Monex Securities will deepen individual inve
Slide 35: Business Update US segment
Business Update US segment Number of active accounts continues to grow and total client assets increased, consistent with overall market rise - Account growth remains steady as new branding and simplified offerings continue to successfully attract casual traders/millennials that expand customer base
Slide 36: Business Update US segment
Business Update US segment Net financial income is forecasted to increase in FYE March 2020, driven by larger net interest income - Commission received plus net financial income increased by 1.5% from previous quarter - Commission received increased by approximately 1% under higher volatility from t
Slide 37: Business Update Asia Pacific Segment
Business Update Asia Pacific Segment Monex Boom Securities remains profitable for the last ten consecutive quarters Monex Boom Securities (HK) Cherry Technology Co., Ltd (China) - Recorded the amount equivalent to operating - Providing technology and knowledge of online income for the last ten conse
Slide 38: Business Update Crypto Asset Segment
Business Update Crypto Asset Segment Assets in custody and the number of users with personnel identity confirmed increased due to favorable market condition Assets in Custody Registered / ID-confirmed users Correlating with cryptocurrency prices, Number of app downloads customers’ assets in custody
Slide 39: Business Update Crypto Asset Segment
Business Update Crypto Asset Segment Cryptocurrency market is in the process of leading to the healthy development, with the introduction of transparent regulations and the entry of a global company, where Coincheck expands its business maintaining a competitive advantage Initiatives - Enhanced the
Slide 40: Business Update Crypto Asset Segment
Business Update Crypto Asset Segment Familiarize individuals with cryptocurrency by utilizing a smart-phone app “Cheeese” and a web-based news media “Monex Cryptocurrency Lab” • A smart-phone application “Cheeese” to give away small amount of Bitcoin by answering simple questionnaires and read the a
Slide 41: Business Update Investment Segment
Business Update Investment Segment The flagship fund “MV I Investment Limited Partnership” has successfully made several investments Entity and scope of investment Monex Ventures, Inc. ：Principle investment with a focus on Fintech companies MONEX EDISON Investment ：Leveraging track-record of investm
Slide 42: Business Update Investment Segment
Business Update Investment Segment (Portfolio of Monex Ventures, Inc., MONEX EDISON Investment Limited Partnership and MV I Investment Limited Partnership) Expanded investments mainly to Fintech companies, to which Monex Securities can propose to be IPO lead arranger Mortgage loan P2P lending EC Pay
Slide 43: Appendix. Group Overview
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 42
Slide 44: Corporate Value
Corporate Value Enhance corporate value driven by the steady growth of online brokerage businesses and the mid-to-long term growth drivers Steady development of online Three mid-to-long term Enhanced brokerage business growth drivers Corporate Value Finance in a New Age 2019/6 EBITDA ¥ 1.6 B Crypto
Slide 45: Group Overview
Group Overview Japan: 1.83M accounts, Crypto Asset: 1.88M users, US: 110K accounts, AP: 13K 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 46: 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 3% Compensation and benefits 4% Crypto System related expenses 3% Othres 2% Asset 2. System 1. Equities Others 2% Crypto Finan
Slide 47: Group Overview－Corporate value creation process
Group Overview－Corporate value creation process Experts in finance aim to expand customer base using IT technology 46
Slide 48: New financial conglomerate in a new age
Group strategy overview combined with crypto-asset business New financial conglomerate in a new age Traditional Financial New Financial Monex Group Conglomerate Conglomerate Bank Crypto Asset Bank Coincheck Monex Securities, TradeStation Securities Broker Global Online Brokerage Securities, Monex Bo
Slide 49: 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 50: Monex Group
Monex Group (As of June 30, 2019) Listed Holding Company [Japan] [US/Europe] [Asia Pacific] Cryptocurrency exchange Online Securities Company service provider Monex International Limited Holding Company in Hong Kong TradeStation Group, Inc. Online Securities Company Holding Company in the U.S. Monex
Slide 51: 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 52: 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 53: Investors’ Guide
Investors’ Guide ■ Shareholders distribution ■ Shareholders & indicators per share ◆ Our basic policy for shareholders distribution ◆ Major shareholders and shareholder breakdown (as of Mar. 31, 2019) Monex Group, Inc. Monex Group aims to provide returns to its shareholders 0.2% MOMO&Co. and Oki Mat