Gmo Payment Gateway, Inc. · TSE:3769

Gmo Payment Gateway — Q2 FY2019 Earnings Presentation

33 slides from Gmo Payment Gateway's earnings presentation, May 10, 2019

  1. Slide 1: Financial results briefing for Q2 of FY2019

    Financial results briefing for Q2 of FY2019 Initiatives to Secure Post-2020 Growth and Tackling Near Term Challenges May 10, 2019 The 57 th IR Meeting GMO Payment Gateway, Inc. (Code: 3769; TSE-1st section) https://corp.gmo-pg.com/en/

  2. Slide 2: A cautionary note about the contents of the document

    A cautionary note about the contents of the document The contents of this document are based on generally recognized economic and social conditions, as well as assumptions judged to be reasonable by GMO Payment Gateway as of May 10, 2019. However, please note that they are subject to change without

  3. Slide 3: Agenda

    Agenda 1. Summary of financial results for Q2 FY2019 2. Future initiatives and growth strategy 3. Financial highlights 4. Reference materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 3

  4. Slide 4: 1. Summary of financial results for Q2 of FY2019

    1. Summary of financial results for Q2 of FY2019 Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 4

  5. Slide 5: Industry Topics

    1.0 Industry Topics Our position/stance on recent issues and topics  METI “Point Reward Project for Consumers using Cashless Payment” (METI, March 12 th 2019) ・3 Group companies (i.e. GMO-PG, GMO-EP, SGP) have provisionally registered as cashless supporter (Type B) ・Measures taken to counter advers

  6. Slide 6: Financial Results Summary

    1.1 Financial Results Summary Revenues up 27.5% YoY, OP up 30.2% YoY, beating guidance H1 FY2018 H1 FY2019 FY2019 Full % Progress （mil. JPY） % YoY Actual Actual Yr. guidance vs. guidance （H1 Guidance） （vs H1 Guidance） Revenue 12,558 16,015 ＋27.5％ 31,850 50.3% （15,202） （105.3％） Operating Profit 3,269

  7. Slide 7: Regarding Full year guidance and trend of micropayments

    1.2 Regarding Full year guidance and trend of micropayments On track to achieve Full Year guidance despite various issues 1. On track to achieve full year guidance Even after increasing provisions for bad loans and mainframe upgrade expenses 2. TRX Volume (Q2) ≒ 420 million, up by 29.6％ YoY TRX Valu

  8. Slide 8: Q2-only earnings

    1.3 Q2-only earnings Q2 standalone OP was up 30.2% YoY, while revenue growth was up by 20.3% YoY Mil. JPY +20.3% Revenue by business model 16,000 Spread Up by 16.0% YoY Under 25％ 14,000 Fee Up by 22.0% YoY Stock Up by 47.4% YoY （Adj. 26.5% YoY)* 12,000 Initial Down by 17.8% YoY （Adj. 27.0% YoY)* 10,

  9. Slide 9: Reasons for Q2-only revenue increase of 20.3% YoY

    1.4 Reasons for Q2-only revenue increase of 20.3％ YoY Revenue affected by one-offs and special factors, but topline growth to accelerate from Q3 onwards （Mil. JPY） Revenue 【Factors】 9,000 ・Change in revenues from some merchants in the previous term ・Planned service termination at a merchant ・Revenue

  10. Slide 10: 2. Future Initiatives and Growth Strategy

    2. Future Initiatives and Growth Strategy Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 10

  11. Slide 11: Product portfolio of focus areas and growth strategy

    2.1 Product portfolio of focus areas and growth strategy Concrete measures for the 5 focus areas Secular Broader EC ・New customer wins (Large-scale, growth oriented) Broader-EC market: 20％ above-25％ ・ARPU growth from cross-selling OP growth Other Areas: 5％ ・SMCC ＆ VISA ・Build large scale non-merchan

  12. Slide 12: Broader EC Market

    2.2.1 Broader EC Market Executing the 25% growth plan aimed at realizing a 20% CAGR medium/long term growth 25％ Growth Plan Reinforcing sales to acquire large-scale & high-growth merchants ARPU uplift from cross-selling Making inroads into the B2B market Focus on growth areas (Shared economy, subscr

  13. Slide 13: Broader EC: Strengthening IT system for further business growth

    2.2.2 Broader EC: Strengthening IT system for enable further business growth Preparing for a 30% transaction growth in the next 5 years while maintaining OP over-25％ CAGR growth Upgrade of mainframe system Purpose 1 Improving processing capacity (4.3x) Expanding resource/capacity ・Upgrade/Expansion

  14. Slide 14: FinTech: Assets and profit growth

    2.3.1 FinTech: Assets and profit growth Margin improvement of GMO PaD; * rapid growth of global lending Growth ① Expansion of GMO PaD ② Margin Improvement ③ Expand service line-up - Expand merchant - Accumulate and analyze payment data - B2B-type MSB services, etc strategy footprint and TRX value -

  15. Slide 15: FinTech: BtoB Factoring

    2.3.2 FinTech: BtoB Factoring Launched Upfront Payment of receivables to address funding crunch at SMEs with high cash needs Provide GMO BtoB Early Payment to Addressable Market = Infomart from September 2020 onwards Receivables at SMEs ¥78 trillion ※2 Backdrop Backdrop: Supply gap widening for SMEs

  16. Slide 16: Cashless: Ginko Pay

    2.4.1 Cashless: Ginko Pay Broad coverage of QR-code payment (a.k.a. smartphone payment) including internet companies and financial institutions Internet related 15 out of 26 companies involved ① provision of payment foundation: 6 companies ② provision of charge infrastructure: 4 companies ③ mounted

  17. Slide 17: Cashless: Cash withdrawal service

    2.4.2 Cashless: Cash withdrawal service Strong start of cash withdrawal service: stock revenue momentum robust Started cash withdrawal service at ■Stock revenue trend from services to FIs ticket machines* at all Tokyo Line train stations from May 8 th 2019 Significance Overall YoY ・Acts as a bridge

  18. Slide 18: IoT/Card Present: Next Gen Payment Platform

    2.5 IoT/Card Present: Next Gen Payment Platform Finalize and sign agreement in May, aim for early service rollout Project Overview Addressable market and estimated business size for GMO-PG Roles Assigned 2025 2019 Payment Processing Cashless Market ¥65 trillion ≒¥120 trillion Center GMO-FG TRX ¥0.3

  19. Slide 19: Global: Overseas business and focus areas

    2.6.1 Global: Overseas business and focus areas Steady progress in each region and region-specific strategies U.S.A. Reinforce Global lending China Taiwan India Hong Kong Reinforce Global lending Reinforce Thailand Payment processing Money Service Business Vietnam Sales +60% YoY (Q2 standalone) Phil

  20. Slide 20: Global: Q2 achievements & growth strategy

    2.6.2 Global: Q2 achievements & growth strategy Focus on diversifying portfolio, laying groundwork for payment processing ■Global: Quarterly revenue by business line （mil. JPY） （mil. JPY） 1,200 80 ■SMS service（MK） ＋22.8％ YoY * Left Banks/Large companies (SMS service) 銀行／大企業ビジネス（SMSサービス） axis 決済代行ビジネ

  21. Slide 21: 3. Financial Highlights

    3. Financial Highlights Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 21

  22. Slide 22: Revenue by business model

    3.1 Revenue by business model Quarterly trend of revenue by business model ※ （mil. JPY） J-GAAP IFRS 3,595 3,500 3,250 3,072 2,946 2,971 3,000 2,861 2,773 2,691 2,801 2,705 2,653 2,666 2,471 2,500 2,436 2,360 2,101 2,004 2,000 1,895 1,809 1,527 1,500 1,441 1,383 1,227 1,259 1,184 1,226 959 1,026 1,00

  23. Slide 23: Balance Sheet changes

    3.2 Balance Sheet changes Increase in deposits received and MSB-related assets; capital raised through Euro-Yen CB Issue （unit: mil. JPY) Current assets Fixed assets Liability Net Asset Deposits Received Investments （under Representative Merchant Service) *1 Other MSB-related Other *2 Other MSB-rela

  24. Slide 24: Major Quarterly KPIs

    3.3 Major Quarterly KPIs Group-wide annual TRX value reaches ¥4.1 trillion Operating merchants: 133,199 stores, TRX volume approx. 420 mil., TRX value approx. 1 trillion. （¥100 mil.) （Reference）Cumulative trailing 12-mnth TRX Value approx. ¥3.84 trillion （10,000 TRXs) 11,000 Including GMO FG, the TR

  25. Slide 25: 4. Reference materials

    4. Reference materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 25

  26. Slide 26: Factors affecting earnings for cumulative 2Q period

    4.1 Factors affecting earnings for cumulative 2Q period Revenue grew 27.5% YoY, OP grew by more than 30% Revenue （＋）Continued strong growth of online payment (spread revenue) (mil. JPY) （－）Temporary slowdown in online payments (fee revenue) +27.5％ （＋）Expansion of Ginko Pay and other services to fina

  27. Slide 27: Cumulative Q2 Segment Revenue and OP

    4.2 Cumulative Q2 Segment Revenue and OP Payment Processing & MSB recorded higher revenue and OP, offsetting the strategic losses in Payment Enhancement Business due to upfront investments ■Segment Revenue ■ Segment OP before adjustments & eliminations （mil. JPY） 18,000 （mil. JPY） Consoli. OP +30.2％

  28. Slide 28: Cumulative Q2 Revenue breakdown by business model

    4.3 Cumulative Q2 Revenue breakdown by business model Achieved over-25% YoY growth despite slower-than-1Q growth in Fee and Spread revenues （mil. JPY） 16,000 Spread +24.6％ YoY ・Strong online payment 14,000 ・Decline in Spread revenues from PaD* (2Q-only) ・Carrier billing revenue decline at Macro Kios

  29. Slide 29: Revenue trend by business model (annual)

    4.4 Revenue trend by business model (annual) Pursue balanced growth of each business model （mil. JPY） 32,000 J-GAAP IFRS 30,000 28,000 26,000 SPREAD 24,000 22,000 20,000 18,000 16,000 14,000 12,000 FEE 10,000 8,000 6,000 4,000 STOCK 2,000 INITIAL 0 2004/9 2005/9 2006/9 2007/9 2008/9 2009/9 2010/9 20

  30. Slide 30: Quarterly trend of CoS and SGA ratio

    4.5.1 Quarterly trend of CoS and SGA ratio CoS ratio fluctuates with changes in sales mix *Figures with asterisk exclude outsourcing expense related to MSB. These outsourcing expenses are not booked in SG&A from Q1 FY2018 due to IFRS adoption. （mil. JPY） J-GAAP IFRS ※50.2％ 8,246 52.7% ※44.5％ ※47.2％

  31. Slide 31: Quarterly trend of PG and EP's CoS and SGA ratio

    4.5.2 Quarterly trend of PG and EP’s CoS and SGA ratio CoS ratio fluctuates with changes in sales mix *All figures are based on J-GAAP PG: GMO-PG, EP: GMO Epsilon （mil. JPY） 50.9% 8,000 51.8% 48.8% 50.0% 47.4% 44.8% 7,000 44.9% 45.3% 44.8% 40.4% 42.5% 41.3% 40.0% 6,000 36.8% 36.7% 36.7% 5,032 34.0%

  32. Slide 32: Consolidated CF Statement

    4.6 Consolidated CF Statement Positive FCF thanks to earnings and increase in deposits received (mil. JPY) ■Changes in cumulative Q2 FY19 20,000 J-GAAP IFRS 18,000 Operating CF: ＋¥3,839 16,000 Pretax profit + ¥4,134 Chgs. in receivables + ¥1,447 14,000 Advances paid － ¥4,143 12,000 Accrued Income －

  33. Slide 33: Thank You Very Much

    T h a n k Yo u Ve r y M u c h GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange, Section 1) URL： https://corp.gmo-pg.com /en /ir/ For inquiries please contact our IR team at the telephone number below: Corporate Value Creation Strategy Division (IR Department) TEL: +81-3-3464-0182

GMO Payment Gateway — Q2 FY2019 Earnings Presentation on 6ix