Monex Group, Inc. · TSE:8698
Monex — Q3 FY2020 Earnings Presentation
58 slides from Monex's earnings presentation, Jan 31, 2020
Slide 1: Financial Results for 3Q of Fiscal Year Ending March 31, 2020
January 31, 2020 TSE 1st Section: 8698 Financial Results for 3Q of Fiscal Year Ending March 31, 2020
Slide 2: Table of Contents
Table of Contents Table of Contents p. 1 I. Highlights p.2 - p.9 II. Consolidated Performance p.10 - p.28 III. Business Update p.29 - p.43 Appendix: Group Overview p.44 - p.57 This is an English translation of Japanese presentation materials prepared in connection with the disclosure of the financia
Slide 3: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 2
Slide 4: Business transformation 1/2
Business transformation 1/2 Each segment is striving to create new business models to adapt to the changing business environment Japan Segment plans to transform from a brokerage-model to an asset-management model that aims to increase client assets Japan after deducting commissions and management f
Slide 5: Japan Segment transition to an asset-management model
Business transformation 1/2 Japan Segment will strengthen its customer asset services and promote its transition to an asset-management model • Japan Catalyst will enlighten individual investors and promote an engagement investment with the aim to increase customers’ assets in custody as well as man
Slide 6: US Segment to expand and diversify revenue streams
Business transformation 2/2 US Segment will use its new trading experience as leverage to expand and diversify its revenue streams • “YouCanTrade” will offer educational content and gaming experiences for trading as part of its social networking service. It will not only cultivate new revenue stream
Slide 7: Highlights 3Q of FYE Mar. 2020 (3 months) 1/4
Highlights 3Q of FYE Mar. 2020 (3 months) 1/4 Trading volume in Monex Securities increased more than market growth, Japan and segment profit* increased to ¥0.9B. With lower interest rate environment and offering commission-free US trading, segment profit dropped to ¥0.3B Despite continuously reducin
Slide 8: Highlights 3Q of FYE Mar. 2020 2/4: Consolidated
Highlights 3Q 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 Quarterly profit attributable to owners of the Company Pre-tax Profit 86
Slide 9: Highlights 3Q 3/4: US and Asia Pacific
Highlights 3Q 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 5,115 4,985 4,996 4,925
Slide 10: Highlights 3Q 4/4: Crypto Asset and Investment
Highlights 3Q of FYE Mar. 2020 (3 months) 4/4 ◆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 Crypto Asset 1,500 1,274 801
Slide 11: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 10
Slide 12: YoY Comparison (9 months) Consolidated Performance
YoY Comparison (9 months) Consolidated Performance FYE Mar. 2019 FYE Mar. 2020 3Q 3Q Rate of (JPY million) Variance Reference (Apr. 2018– (Apr. 2019– change Dec. 2018) Dec. 2019) P13: Analysis of Japan segment Total operating revenue after 36,400 34,434 -1,966 -5% P15: Analysis of US segment (USD) d
Slide 13: YoY Comparison (9 months) Segment Performance
YoY Comparison (9 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 3Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q Total operating revenue after deducting financial expenses 20,092 17,521 14,353 14,435 599 357
Slide 14: YoY Analysis: Operating Revenue (Japan)
YoY Comparison (9 months) Analysis: Operating Revenue Japan : Brokerage commissions and net financial income decreased due to lower market volume and margin loan balance ■ Total operating revenue after deducting financial expenses and cost of sales Total operating revenue after deducting (JPY millio
Slide 15: YoY Analysis: SG&A (Japan)
YoY Comparison (9 months) Analysis: SG&A Japan : The impairment in the previous fiscal year contributed to lower depreciation ■ SG&A SG&A Total -8.7% (-1,507) (JPY million) 18,000 17,315 ■Others (-41) 1,124 15,808 15,000 918 1,084 ■Advertising expenses (-161) ■Communication, freight and information
Slide 16: YoY Analysis: Operating Revenue (US, USD)
YoY Comparison (9 months) Analysis: Operating Revenue (USD) US : Net financial income increased due to higher interest rates, growing customers’ assets in custody, and the expiration of the interest rate swap receiving fixed interest in Nov. 2018 ■ Total operating revenue after deducting financial e
Slide 17: YoY Analysis: SG&A (US, USD)
YoY Comparison (9 months) Analysis: SG&A (USD) US : Total expenses have been well controlled while amortization and depreciation cost increased due to new business development such as the launch of cryptocurrency business ■ SG&A SG&A Total +1.2% (+1,354) (USD thousand) 140,000 117,437 118,791 ■Other
Slide 18: YoY Analysis: Operating Revenue (Crypto)
YoY Comparison (9 months) Analysis: Operating Revenue Crypto : Net trading income drastically increased because Coincheck has provided all of services in 9 months during in this fiscal year Total operating revenue after deducting ■ Total operating revenue after deducting financial expenses and cost
Slide 19: YoY Analysis: SG&A (Crypto)
YoY Comparison (9 months) Analysis: SG&A Crypto : Coincheck carried out large cost reduction with a focus on fixed cost, after obtaining a formal cryptocurrency exchange license in January 2019 ■ SG&A SG&A Total -25.9% (-878) (JPY million) 3,500 3,393 ■Others (-624) * 3,000 849 ■Advertising expenses
Slide 20: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance 2Q FYE Mar. 3Q FYE Mar. 2020 2020 Rate of （JPY million） Variance change Reference (Jul. 2019-Sep. (Oct. 2019- 2019) Dec. 2019) P21: Analysis of Japan segment Total operating revenue after 11,397 11,157 -240 -2% P23: Analysis of US segment (USD) dedu
Slide 21: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance Japan US Asia Pacific Crypto Asset Investment (JPY million) 2020/3 2020/3 2020/3 2020/3 2020/3 2020/3 2020/3 2020/3 2020/3 2020/3 2Q 3Q 2Q 3Q 2Q 3Q 2Q 3Q 2Q 3Q Total operating revenue after deducting financial expenses and 5,629 6,293 4,925 4,514 96 65 8
Slide 22: QoQ Analysis: Operating Revenue (Japan)
QoQ Comparison (3 months) Analysis: Operating Revenue Japan : Trading volume increased more than market growth, and so did brokerage commissions ■Quarterly total operating revenue after deducting financial Quarterly total operating revenue after expenses and cost of sales deducting financial expense
Slide 23: QoQ Analysis: SG&A (Japan)
QoQ Comparison (3 months) Analysis: SG&A Japan : Total SG&A is well under control despite an increase in variable expenses due to higher trading volume Quarterly SG&A +2.3％ (+118) ■Quarterly SG&A *Figures in parenthesis is the variance from previous quarter (JPY million) (JPY million) 7,000 ■ Others
Slide 24: QoQ Analysis: Operating Revenue (US, USD)
QoQ Comparison (3 months) Analysis: Operating Revenue (USD) US : Net financial income declined due to lower interest rate. Brokerage commissions decreased due to lower VIX and an introduction of commission- free trading plans, TS Go/Select ■Quarterly total operating revenue after deducting financial
Slide 25: QoQ Analysis: SG&A (US, USD)
QoQ Comparison (3 months) Analysis: SG&A (USD) US : Commissions paid and association dues decreased by lower trading volume, and so did compensation and benefits ■Quarterly SG&A Quarterly SG&A -3.2% (-1,295) (USD thousand) *Figures in parenthesis is the variance from previous quarter 45,000 (USD tho
Slide 26: QoQ Analysis: Operating Revenue (Crypto)
QoQ Comparison (3 months) Analysis: Operating Revenue Crypto : Net trading income significantly decreased against a backdrop of lower market volume since the previous quarter ■Quarterly total operating revenue after deducting financial Quarterly total operating revenue after expenses and cost of sal
Slide 27: QoQ Analysis: SG&A (Crypto)
QoQ Comparison (3 months) Analysis: SG&A Crypto : Under prolonged lower trading volume, Coincheck has drastically reduced expenses by 28% QoQ and 58% compared to 4Q FY2018 Quarterly SG&A -27.6％ (-223) ■Quarterly SG&A *Figures in parenthesis is the variance from previous quarter (JPY million) (JPY mi
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 Dec 31, 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) Total return ratio(right) 103% 12.9% 800% 10,000 7
Slide 30: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 29
Slide 31: Business Update Japan segment 1/4
Business Update Japan segment 1/4 Japan Catalyst, Inc. was established to create an engagement fund for retail investors Engagement Investment Fund for Retail Investors Monex Group is establishing an engagement investment fund for Monex Securities customers. The fund will seek for investment returns
Slide 32: Goals and action plans of the engagement investment fund
Business Update Japan segment 2/4 Goals and action plans of the engagement investment fund The valuation of Japanese equities is significantly lower than global Now equities. There is still room for further innovation in Japanese corporate governance reform to unlock the true value of Japan equities
Slide 33: Asset-management and asset-creation services in Japan
Business Update Japan segment 3/4 Establish asset-management and asset-creation services to solve social issues in Japan Service for asset-management model Asset-creation service for beginner traders Launched a smartphone app “ferci” • As a central part of the asset-management of asset-creation for
Slide 34: Further expand US equity and margin trading services
Business Update Japan segment 4/4 Further expand US equity services and margin trading services for Japan equity US Equity Margin Trading of Japan Equity • Introduced free-commission programs; free • Promote expansion of margin trading services, minimum transaction fee since Jul. 2019 and aiming to
Slide 35: New business initiatives to offset commission decline (US)
Business Update US segment 1/3 New business initiatives to offset commission decline resulting from customers’ shift to TS Go/Select and increase its revenue ・ Commission decline resulting from the new commission-free plans, TS Go/Select, is expected to be $3-4M in FY19 ・ Pricing changes of inactivi
Slide 36: New business initiatives provide access to new customer base
Business Update US segment 2/3 New business initiatives provide an access to new customer base ・ With the API integration to outside trading communities, including “TradingView”, TradeStation will expand its customer base not only to existing advanced traders but also to intermediate and beginner tr
Slide 37: YouCanTrade
Business Update US segment 3/3 "YouCanTrade" will help to vitalize trading in addition to acquiring its new customer base Features of YouCanTrade Advanced ・ Education platform provides various educational contents to all kinds of traders Service Gaming* ・ Build an environment where Intermediate begi
Slide 38: Coincheck lowered break-even point by cost reduction
Business Update Crypto Asset Segment 1/4 Coincheck lowered its break-even point by cost reduction and strives for the initiatives of further revenue increase Initiatives - Started new cryptocurrency offering of Stellar Lumens in Nov. 2019. First in Japan to offer Stellar Lumens - Launched “Coincheck
Slide 39: Coincheck exchange and marketplace services
Business Update Crypto Asset Segment 2/4 Aims to increase revenue with the market place service through easy-to-use smartphone app which usability and profitability are higher Coincheck Services Exchange Market place Available currencies BTC only BTC, 10 Altocoins Customer segment Advanced Beginner
Slide 40: Coincheck smartphone app ranked No.1 in downloads
Business Update Crypto Asset Segment 3/4 Coincheck smartphone app ranked as No.1 downloads* Registered and ID-confirmed Users User Acquisitions Number of app downloads In-house digital marketing system Coincheck keeps track of customer trend as 2.74M Users with a part of its data-driven marketing st
Slide 41: Market insight of crypto-assets and blockchain
Business Update Crypto Asset Segment 4/4 Provide market insight of crypto-assets and blockchain to investors as well as offer related services to society Crypto-assets Crypto-assets and blockchain Offers holistic database services, delivering A web-based media “Block Insight” delivers latest informa
Slide 42: Business Update Asia Pacific Segment
Business Update Asia Pacific Segment The revenue impact on Monex Boom Securities from the prolonged political instability in Hong Kong is limited Monex Boom Securities (HK) Cherry Technology Co., Ltd (China) - Recorded additional provision of ¥0.11B for - Providing technology and knowledge of online
Slide 43: MV1 Investment Segment
Business Update Investment Segment MV1 attracts promising investment opportunities by leveraging its unique network Details of MV1 Fund R&D purpose investment* Features Active support for startups in product IoT Blockchain Cryptocurrency development and growth stages Investment 2.65 billion yen (Fou
Slide 44: ESG Management
Business Update ESG Management Contribute to the sound development of the capital market and promote initiatives that lead to sustainable growth of Monex Group Materiality Matrix ESG Initiatives Disclosing Materiality Matrix Corporate Governance - Prioritized ESG topics based on our group - Establis
Slide 45: Appendix. Group Overview
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 44
Slide 46: 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 47: 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 2019/12 EBITDA* ¥ 5.4 B Crypt
Slide 48: Group Overview: Consolidated Assets in Custody
Group Overview Japan: 1.84M accounts, Crypto Asset: 1.98M users, US: 116K 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 3% Compensation and benefits 4% Crypto System related expenses 3% Othres 2% 2. System Asset 1. Equities Others 2% Crypto Finan
Slide 50: 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: New financial conglomerate in a new age
Group strategy overview 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 Boom Securities, Monex Securities Aust
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 structure
Monex Group (As of Dec. 31, 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 54: 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 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 (as of Sep. 30, 2019) Monex Group, Inc. Monex Group aims to provide returns to its shareholders 3.9% MOMO&Co. and Oki Mat
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 1 Small （Registered as Type 2 Financial Amount Electronic Public Offering Instruments Business） Service Provider） AI/Big Data Thematic Investment B2B Robo-advisor AI/
Slide 58: Investment Segment – Portfolio 2/2
Investment Segment – Portfolio 2/2 ◆ MONEX EDISON Investment Limited Partnership Web media EC AI/Big Data Insure Tech EC Ad Tech ◆ 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 5