Monex Group, Inc. · TSE:8698
Monex — Q2 FY2018 Earnings Presentation
49 slides from Monex's earnings presentation, Oct 27, 2017
Slide 1: Financial Results for 2Q of Fiscal Year Ending March 31, 2018
October 27, 2017 (TSE 1st Section: 8698) Financial Results for 2Q 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 c
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.12 II. Consolidated Performance p.13 - p.27 III. Business Update p.28 - p.35 IV. Mid- & Long-Term Initiatives p.36 - p.38 Appendix. Group Overview p.39 - p.48 2
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 3
Slide 5: Mission Statement 1/4
Mission Statement 1/4 MONEX’s New Beginning The emergence of new technologies, such as block chain, is radically changing the way people live and how money is handled. Just like the Internet, block chain and other new technologies will revolutionize people’s lives around the world and change how cap
Slide 6: Mission Statement 2/4
Mission Statement 2/4 For investors, we will utilize existing block chain and other new technologies to offer individual investors diverse small-lot investment opportunities that until now were open only to institutional investors. We want to make sure that individual investors can reap the benefits
Slide 7: Mission Statement 3/4
Mission Statement 3/4 Redefine finance for a new era. Support everyone’s investment and economic needs Using block chain technology, execute all the tradings of financial products and every financial transactions in Future of safety and at low cost. Creating our own block chain and finance, staying
Slide 8: Mission Statement 4/4: Strategy Map
Mission Statement 4/4 Strategy Map of "Future of finance, staying one step ahead" Outer environment Business activities New service Future •Lower-yielding conventional •Import and securitize various •Divide diverse global asset products asset classes, and distribute classes into small lots and Inves
Slide 9: Management's recognition of the current business situation /2
Management’s recognition of the current business situation 1/2 Significantly growing profit in Japan segment from 1Q FYE Mar. 2018 US records consecutive profit in the last four quarters ・Japanese stock trading platform, TradeStation, increased its share of the total trading volume in Monex, Inc. ・W
Slide 10: Management's recognition of the current business situation /2
Management’s recognition of the current business situation 2/2 ・Customer base is continuing to expand from accelerated growth in account opening and the lower attrition rate since 1Q FYE Mar. 2018 US ・Growth in stock lending volume and higher interest rates were core drivers of increased net income
Slide 11: Highlights 2Q FYE Mar. 2018 (3 months)
Highlights 2Q FYE Mar. 2018 (3 months) Large increase of profit due to the net return from start-up investment by MONEX Ventures and the lower expenses Our start-up investment destination, Money Forward, Inc. is listed on the Tokyo Stock JP Exchange Mothers, and provides JPY 750M of profit. Due to t
Slide 12: Highlights 2Q FYE Mar. 2018 (3 months)
Highlights 2Q 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 13: Highlights 2Q FYE Mar. 2018 (3 months)
Highlights 2Q 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 4,565 4,569 4,114 4,223 4,1
Slide 14: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 13
Slide 15: YoY Comparison (6 months) Consolidated Performance
YoY Comparison (6 months) Consolidated Performance (JPY million) 2Q FYE Mar. 2017 2Q FYE Mar. 2018 Variance Change (%) Reference (Apr. 2016 - Sep.) (Apr. 2017 - Sep.) Total operating revenue after P16: Analysis of Japan segment deducting financial 20,100 22,456 2,356 11.7% P18: Analysis of US segmen
Slide 16: YoY Comparison (6 months) Segment Performance
YoY Comparison (6 months) Segment Performance (JPY million) Japan US Asia Pacific 2017/3 2018/3 Change 2017/3 2018/3 Change 2017/3 2018/3 Change 2Q 2Q (%) 2Q 2Q (%) 2Q 2Q (%) Total operating revenue after deducting financial expenses 12,743 14,102 10.7% 7,653 8,390 9.6% 338 466 37.7% and cost of sal
Slide 17: YoY Comparison: Analysis Operating Revenue
YoY Comparison (6 months) Analysis: Operating Revenue Japan： Increased due to higher net financial income and brokerage commissions ■ Total operating revenue after deducting financial expenses and cost of sales (compared to Apr. 2016 - Sep. 2016) （JPY million） Total operating revenue after deducting
Slide 18: YoY Comparison: Analysis SG&A
YoY Comparison (6 months) Analysis: SG&A Japan : System related costs decreased due to a migration to new backbone system ■ SG&A (compared to Apr. 2016 - Sep. 2016) （JPY million） SG&A Total -8.2% ( -991) * figures in parenthesis is the variance from 2Q FYE Mar.2017 (JPY million) 14,000 12,159 ■Other
Slide 19: YoY Comparison: Analysis Operating Revenue (USD)
YoY Comparison (6 months) Analysis : Operating Revenue (USD) US：Increased net financial income due to increase in customers cash balance and hike in interest rates. Revenue, except for commissions, and options trading volume increased ■ Total operating revenue after deducting financial expenses and
Slide 20: YoY Comparison: Analysis SG&A (USD)
YoY Comparison (6 months) Analysis : SG&A (USD) US：SG&A decreased by 7% excluding one-time cost of USD 2.9M in 1Q ■SG&A (compared to Apr. 2016 - Sep. 2016) SG&A Total -2.9% ( -2,237) * figures in parenthesis is the variance from 2Q FYE Mar.2017 (USD thousand) （USD thousand） 80,000 76,001 73,765 ■Oth
Slide 21: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance （JPY million） 1Q FYE Mar. 2Q FYE Mar. Change 2017 (Apr.- 2018 (Jul.- Variance Reference Sep. 2017) (%) Jun. 2017) Total operating revenue P22: Analysis of Japan segment after deducting financial 10,836 11,620 784 7.2% P24: Analysis of US segment (US
Slide 22: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance (JPY million) Japan US Asia Pacific 2018/3 2018/3 Change 2018/3 2018/3 Change 2018/3 2018/3 Change 1Q 2Q (%) 1Q 2Q (%) 1Q 2Q (%) Total operating revenue after deducting financial expenses and 6,635 7,467 12.5% 4,223 4,167 -1.3% 240 226 -5.8% cost of sale
Slide 23: QoQ Comparison: Analysis Operating Revenue
QoQ Comparison (3 months) Analysis: Operating Revenue Japan：Revenue increased due to the net return from start-up investment by MONEX Ventures ■Quarterly total operating revenue after deducting financial expenses and cost of sales Quarterly total operating revenue after （JPY million） deducting finan
Slide 24: QoQ Comparison: Analysis SG&A
QoQ Comparison (3 months) Analysis: SG&A Japan : Advertising expenses increased to aim for expanding customer base, SG&A decreased through the control of system related expenses ■Quarterly SG&A （JPY million） SG&A Total -0.9％ ( -49) * figures in parenthesis is the variance from previous quarter 7,000
Slide 25: QoQ Comparison: Analysis Operating Revenue (USD)
QoQ Comparison (3 months) Analysis : Operating Revenue (USD) US : Net financial income improved due to the increase in customer cash balance and hike in interest rates. Commissions down ■Quarterly total operating revenue after deducting financial expenses and cost of sales Total operating revenue af
Slide 26: QoQ Comparison: Analysis SG&A (USD)
QoQ Comparison (3 months) Analysis : SG&A (USD) US : The level of quarterly expenses get back to normal in 2Q after the one-time cost of 2.9M in 1Q ■Quarterly SG&A （USD thousand） SG&A Total -5.2% ( -1,953) 45,000 * figures in parenthesis is the variance from previous quarter 40,000 37,859 (USD thous
Slide 27: 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 September 30, 2017 Assets Liabilities (*1) Non-current assets JPY 9
Slide 28: 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 29: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 28
Slide 30: Business Update Japan Segment (1) Customer base expansion 1/3
Business Update Japan Segment (1) Customer base expansion 1/3 Unique products and services to acquire broader customer base For all traders GALAXY, in-house backbone system - In-house system with high flexibility in development that enables quick response to customer needs. - Reached a license agree
Slide 31: Business Update Japan Segment (2) Customer base expansion 2/3
Business Update Japan Segment (2) Customer base expansion 2/3 Monex for Wealth Creation Services. Fulfilling products for our targets Asset-formation services Launched in September, 2016 - Investment balance is ¥19.6B(*1) including a wrap service (MSV LIFE) for individuals and investment entrusted b
Slide 32: Business Update Japan Segment (3) Customer base expansion 3/3
Business Update Japan Segment (3) Customer base expansion 3/3 Launched in September, 2017 Individual-type Defined Contribution pension plan [iDeCo] - Take advantage of the position as a follower. Taking our pride in the commissions fee, a lineup of products, and a generous support of the industry’s
Slide 33: Japan Segment: 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 Jun. 30, 2017) ◆Customer assets per account (as of Jun. 30, 2017) (active account ra
Slide 34: Business Update US segment (1)
Business Update US segment (1) Increase in new account openings and assets in custody Profits are stabilized ■ Expanded customer base - Increased levels of new account openings are being driven by revised pricing for equities and options trading in March, and futures trading in August. The attrition
Slide 35: 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 Net interest income from investment(left) Customer Assets(Institutional
Slide 36: 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 3Q, enabling an access to 12 countries and regions including
Slide 37: IV. Mid- & Long-Term Initiatives
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 36
Slide 38: 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 39: 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 40: Appendix. Group Overview
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 39
Slide 41: 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 42: Group Overview – Continuous growth over years
Group Overview – Continuous growth over 17 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 43: Group Overview – Revenues, Costs and Employees
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 44: Group Overview – Corporate value creation process
Group Overview－Corporate value creation process As experts in finance, our personnel strive to expand customer base using IT technology 43
Slide 45: Investments
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 46: Monex Group structure
Monex Group (As of October 27, 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 Securiti
Slide 47: 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 48: 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 49: 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 Sep. 30, 2017) Monex Group, Inc. Sec