GMO Financial Gate, Inc. · TSE:4051
GMO Financial Gate — FY2022 Earnings Presentation
76 slides from GMO Financial Gate's earnings presentation, Nov 15, 2022
Slide 1: Financial Results Briefing for FY2022 Full-Year
Financial Results Briefing for FY2022 Full -Year Steady growth in stock-model revenue originating from sales of payment terminals - Building a high-retention payment platform that achieves growth with merchants - November 15, 2022 10th IR Presentation GMO Financial Gate, Inc. (Ticker:4051, TSE-Growt
Slide 2: Cautionary Note Regarding Presentation Materials
Cautionary Note Regarding Presentation Materials The content of these presentation materials is based on generally recognized economic and social conditions, as well as assumptions judged to reasonable by GMO Financial Gate as of November 15, 2022 Note that presentation material content is subject t
Slide 3: Table of Contents
Table 1. Summary of financial Results for FY2022 of Contents 2. FY2023 projection 3. Growth Strategy and Progress 4. Financial Highlights 5. Appendix Copyright 2022 GMO Financial Gate, Inc. 2
Slide 4: Summary of Financial Results for FY2022
Summary of financial Results for FY2022 1 Copyright 2022 GMO Financial Gate, Inc.
Slide 5: 1.1 FY2022 Summary
1.1 FY2022 Summary A virtuous cycle of steady initial revenue and growth in stock-model revenue. Revenue exceeded the revised plan FY2022 Full-Year P5 ‐ Revenue：¥10,295 million (＋45.2% YoY)、Operating profit：¥740 million (＋25.7% YoY) ‐ Transaction Volume：302 million (2.1x YoY)、GMV：¥2.46 trillion(2.1x
Slide 6: 1.2 Summary of Financial Results
1.2 Summary of Financial Results Sales/gross profit exceeded the forecast, and the growth strategy to expand market share is progressing steadily. Due to future investments, operating profit was in line with the forecast FY2022 FY2021 FY2022 Actual/Forecast (%) YoY （Millions of yen） Forecast actual
Slide 7: 1.3 Major Topics Regarding Financial Results
1.3 Major Topics Regarding Financial Results Steady growth in both initial and stock-model revenue Gross profit and operating profit both exceeded the mid-to long-term target of 25% growth ◼ Revenue (+)Steady growth in sales of payment terminals （Unit: Millions of yen） (+) Steady growth in stock-mod
Slide 8: 1.4 Revenue by business model (YoY)
1.4 Revenue by business model (YoY) Steady growth in stock-model revenue backed by steady sales and installation of payment terminals FY2021 FY2022 （Millions of yen） YoY actual actual FY2021 vs FY2022 (Composition %) (Composition %) 5,166 7,162 Initial +38.6% (72.9%) (69.6%) 1,923 3,132 Stock-model
Slide 9: 1.5 Revenue by business model (Quarterly)
1.5 Revenue by business model (Quarterly) 【Initial】 Achieved solid level in Q4 as well. Aiming for continued expansion also in FY2023, although there will be fluctuation from quarter to quarter 【Stock-model】 Spread revenue was affected by COVID in Q4, but Stock-model revenue overall expanded steadil
Slide 10: 1.6 Initial Revenue and No. of Active Terminals (Quarterly)
1.6 Initial Revenue and No. of Active Terminals (Quarterly) Q4 initial revenue remained at a certain level. The number of active terminals increased steadily despite the impact of the infection spread of COVID. Inbound effect is expected from Q1 FY2023 onward +15.3 Initial revenue（Unit: Millions of
Slide 11: 1.7 Merchant Industry
1.7 Merchant Industry Preparing for the recovery of inbound tourism demand toward After COVID by installing new payment terminals at big electronics chain-retailers etc. Expanded the number of merchants in SME as well, centered on stera pack Store scale：Large ： High inbound tourism demand COVID-19 h
Slide 12: 1.8 Transaction Trends by Industry (Q4)
1.8 Transaction Trends by Industry (Q4) In Q4, hotel and travel-related businesses showed signs of recovery. Restaurant business stagnated slightly due to the re-expansion of COVID and bad weather such as typhoons Merchant Ａ COVID-19 headwind Jul - Sep：Decreased Merchant C due to COVID-19 tailwind T
Slide 13: 1.9 Top ranked merchants (GMV basis)
1.9 Top 30 ranked merchants (GMV basis) Hotel/travel and apparel increased as a result of focusing on acquiring new merchants in anticipation of After COVID. Re-opening trend has been confirmed, mainly coming from domestic demand FY2021 Q4 standalone FY2022 Q4 standalone Retailer A Supermarket E Dru
Slide 14: 1.10 Percentage of top merchants out of total GMV
1.10 Percentage of top 30 merchants out of total GMV Dependence on top merchants continues to decline. Industry composition changed due to re-opening effect Dependence on top ranked merchants Q4 FY2021(Jul-Sep) Dependence on top ranked merchants Q4 FY2022(Jul-Sep) GMV Q4 FY2021 :¥381.1 billion GMV Q
Slide 15: 1.11 Expandability of GMO-FG cashless platform
1.11 Expandability of GMO-FG cashless platform Building a highly retentive payment platform by promoting “Vertical Expansion” Support merchants through resolving issues in preparation for future recovery of inbound demand Vertical Expansion 2 3 4 Examples of merchants’ needs which is booked as softw
Slide 16: 1.12 Payment platform achieving growth together with merchants
1.12 Payment platform achieving growth together with merchants Provides merchants with a highly-retentive payment platform. It’s Win-Win model that the more merchant grow in cashless payments, the more we grow ※Existing growth includes "increase in the number of payment terminals" and "new store ope
Slide 17: 1.13 Consolidated KPIs (Number of active terminals)
1.13 Consolidated KPIs（Number of active terminals） The name of the active terminal category has been changed (refer below), and manned terminal, centered on stera, is steadily expanding. Although the time from sales to activation varied by terminal category, the mix contributed to an increase in the
Slide 18: 1.14 Consolidated KPIs (Quarterly Transaction volume/GMV)
1.14 Consolidated KPIs (Quarterly Transaction volume/GMV) Progress in acquiring merchants and accumulating active payment terminals without any bias toward any industry. Overachieving our target of +50% YoY ◼ Number of transaction volume ◼ Transaction value (GMV) （Unit：100 million yen） （Unit：million
Slide 19: 1.15 Comparison with Market Growth
1.15 Comparison with Market Growth All industries are recovering toward pre-COVID level. Restaurant expanded significantly due to the low performance in the previous year. Hotel/Inn expanded during the vacation season. Moderate recovery of inbound demand is expected to contribute in the future （Unit
Slide 20: FY2023 projection
FY2023 projection 2 Copyright 2022 GMO Financial Gate, Inc.
Slide 21: 2.1 FY2023 forecast
2.1 FY2023 forecast Aim to maintain revenue growth rate at 25% CAGR line, even with over ¥10 billion in revenue in the previous year. Gross profit is set based on the stera composition ratio in Initial revenue and increased amortization due to growth investments. OP continues to be above +25% YoY （U
Slide 22: 2.2 Revenue growth rate in 1st Half & 2nd Half
2.2 Revenue growth rate in 1st Half & 2nd Half The divergence in revenue growth rates between 1H and 2H is due to the quarterly revenue plan is assumed to be balanced within a certain level, taking into account the possibility of fluctuating terminal sales. The momentum of terminal sales is expected
Slide 23: Growth Strategy and Progress
Growth Strategy and Progress 3 Copyright 2022 GMO Financial Gate, Inc.
Slide 24: 3.1 Growth strategy on mid-term target
3.1 Growth strategy on mid-term target Strategy to expand market share through sales of payment terminals is making steady progress against targets. Focusing on “Vertical expansion” has created a virtuous cycle of next Horizontal expansion (acquisition of new merchants) 2022 *actual 2023 *Forecast 2
Slide 25: 3.2 Manned terminal-operation progress
3.2 Manned terminal-operation progress Action Plan： 1 2 3 4 Steady progress in developing merchants regardless of industry or size Number of active terminal（Manned terminal） （単位：千台） End of Q4 End of Q1 End of Q2 End of Q3 End of Q4 End of Q1 End of Q2 End of Q3 End of Q4 QoQ YoY （Unit : Thousand） FY
Slide 26: 3.3 Expansion of Payment Platforms - Public Sector
3.3 Expansion of Payment Platforms - Public Sector Action Plan： 1 2 3 4 Although the current volume of cashless payments at public institutions is small compared to private- sector merchants, there are many public institution outlets throughout Japan, contributing to increased awareness of cashless
Slide 27: 3.4 Expansion of Payment Platforms - Mobility
3.4 Expansion of Payment Platforms - Mobility Action Plan： 1 2 3 4 Even before the recovery of inbound demand and various domestic events, VISA touch boarding in the mobility area gradually penetrated the market. Expanded the use scene of credit card payment and contributed to increased user recogni
Slide 28: 3.5 Status of terminal-less payment initiatives
3.5 Status of terminal-less payment initiatives Action Plan： 1 2 3 4 We have been working on terminal-less payment since 2020. We are preparing for the future expansion of terminal-less payment and expanding monetization points related to terminal-less payment History of our approach to terminal-les
Slide 29: 3.6 Status of ESG Initiatives as a Cashless Platform Company
3.6 Status of ESG Initiatives as a Cashless Platform Company As we expand our business, we have an increasing social responsibility to fulfill, and we are stepping up our ESG initiatives. ESG-related data is scheduled to be disclosed in near future. Plans to continue disclosing and monitoring ESG da
Slide 30: Financial Highlight
Financial Highlight 4 Copyright 2022 GMO Financial Gate, Inc.
Slide 31: 4.1 Profit & Loss
4.1 Profit & Loss Gross profit margin is now at cruising level due to growth in stock-model revenue, despite increase in percentage of low gross margin stera terminal. OP was approximately in line with the plan due to additional investment in SG&A expenses that exceeded the plan FY2021 FY2022 (Unit：
Slide 32: 4.2 Revenue by business model (YoY)
4.2 Revenue by business model（YoY） In addition to a steady increase in the number of active terminal, a recovery in face-to-face cashless payment market due to the lift of the quasi of state of emergency has contributed to a steady increase in Stock-model revenue Initial Stock Fee Spread 950 1,317 8
Slide 33: 4.3 Revenue by business model (Quarterly)
4.3 Revenue by business model (Quarterly) Steady growth in Stock and Fees revenue due to an increase in the number of active terminals. Initial revenue slightly declined as we expected because of its fluctuation model. Spread revenue declined QoQ due to the impact of COVID Quasi of 7th spike SOE① ②
Slide 34: 4.4 Balance sheet
4.4 Balance sheet Stable cash position and favorable Merchandise (Payment terminal) at the end of the period remained at about the same level as at the end of Q3. No significant change in terminal procurement status End of Q4 FY2022（Thousands of yen） ◼ Points Current liabilities Merchandise Cash & C
Slide 35: 4.5 Consolidated KPIs (No. of Active Terminals)
4.5 Consolidated KPIs（No. of Active Terminals） Growth driven by manned terminal, centered on stera, and steady expansion of Unmanned(IoT) terminal. Sold by others remained almost flat, but the impact on business performance is small （Unit: FY2020 FY2020 FY2021 FY2021 FY2021 FY2021 FY2022 FY2022 FY20
Slide 36: 4.6 Impact of GMO Data becoming profitable
4.6 Impact of GMO Data (consolidated subsidiary) becoming profitable GMO Data, a consolidated subsidiary of GMO-FG, became profitability in FY2022. YoY growth rate of profit of attributable to owners of parent is temporarily low due to the completion of loss distribution attributable to noncontrolli
Slide 37: Appendix
Appendix 5 Copyright 2022 GMO Financial Gate, Inc.
Slide 38: GMO-FG Business Domain
GMO-FG Business Domain Business Model GMO-FG is focusing on offline payment （リアル店舗決済 ＋ IoT決済） Company name Business GMO Financial Gate GMO Payment Gateway Domain (Payment at Brick & Mortar + IoT) (EC) Payment by passing card/QR code Payment by entering credit card over the reader information in PC /
Slide 39: Rev Models: Financial Gate vs. Payment Gateway
Rev Models: Financial Gate vs. Payment Gateway Business Model Initial revenue in offline payment is tend to be fluctuate because of its seasonality of terminal delivery FG PG Revenue Revenue Time Time １Q ２Q ３Q ４Q １Q １Q ２Q ３Q ４Q １Q Initial Revenue（Terminal Sales・Software Development） Initial Revenue（
Slide 40: Three Biz Models Over a Single, One-Stop Platform
Three Biz Models Over a Single, One-Stop Platform Business Model One-stop platform covering all settlement processes between merchants and acquirers Consumer Merchants FG Acquirers Various Payment Terminals 1 Methods Payment Various Payment Terminal Sales Terminal Methods Business Credit Card Issuer
Slide 41: Stock Revenue Expansion Originating From Terminal Sales
Stock Revenue Expansion Originating From Terminal Sales Business Model Stock revenue grows with flow model revenue which is mainly coming form the sales of payment terminals % Revenue Model 3 Business 4 Types of Revenue (FY2022) ① Terminal Flow Model Rev Sales Initial 69.6％ Business Stock 8.4％ ② Pay
Slide 42: Players in offline cashless payment setting
Players in offline cashless payment setting Business Model Sales activity to merchants/Clearing of merchant transaction offline Payment Processing Payment Financial Merchants Center Network Institutions Offline market Domestic network Acquirer Terminal manufacturer POS vendor Processing center (CCT)
Slide 43: Image of rise in Rev & OP
Image of rise in Rev & OP Business Model Phase1: Focus on sales/activation of payment terminals and revenue will be fluctuated. Phase2: Expansion of Stock-Model revenue Increase of Market Share (approx. up to 2025) Rise in Profit Margin Revenue: Increase at a CAGR of 25% or more, although the extent
Slide 44: Leveraged Growth Model
Leveraged Growth Model Business Model Fee and spread revenue are expanding with the market /growth in membership merchants Leveraged Growth N＋1 Stock revenue N Stock revenue Stock-Model Revenue Spread Linking with the growth of TAM / membership merchants Fee Stoc-model revenue before N-1 Stock Linki
Slide 45: Details on each revenue ①
Details on each revenue ① Business Model Initial Content Rev Model This is a sales revenue of payment terminals from merchants or credit card companies. Payment terminal All of first, we purchase hardware from manufactures. And confirm certain measures of • Terminal Selling Price × Units Sold paymen
Slide 46: Details on each revenue ②
Details on each revenue ② Business Model Fee Content Rev Model • TRX Volume× Processing Fee Processing It is a fee we charge toward monthly transaction volume based on the rate per transaction ✓ Processing fee is about ¥2 to ¥3 per transaction Sales of • No. of Order × Price of Roll Paper This is a
Slide 47: Fee ARPU
Fee ARPU (Fee revenue divided by Transaction volume) Business Model Strengthening electronic slip storage services in anticipation of a paperless society in the futureAlthough there is a possibility of offsetting paper roll sales in the future, currently it is a factor that increases the unit price
Slide 48: Relationship Between Spread Revenue and GMV
Relationship Between Spread Revenue and GMV Business Model We do not necessarily generate spread revenue for every transaction. This is due to the fact that credit card companies have historically acquired major participating merchants on their own. Therefore, we calculate spread revenue as GMV × Ta
Slide 49: Relationship between number of active terminals & stock rev
Relationship between number of active terminals & stock rev Business Model In addition to the increase in the number of active terminals, revenue opportunities for Stock revenue will increase, but the status of subscriptions to paid services will differ depending on the needs/demand of merchants Ter
Slide 50: Monetization by Payment Method
Monetization by Payment Method Business Model We operate different business models according to payment method as a cashless platformer. Growth in each payment method contributes to our growth as well Flow model revenue Stock model revenue ① Initial ➁ Stock ③ Fee ④ Spread Credit・China Union Pay・J- d
Slide 51: Revenue Model by Merchant Size
Revenue Model by Merchant Size Business Model We mainly acquire medium- to large-sized merchants through alliances with major financial institutions. We mainly acquire small merchants (=long tail segment) through our subsidiaries ◼ Four types of revenue model ◼ Revenue model related to the size of m
Slide 52: Medium-Term Strategy Acquiring major merchants by focusing on alliances
Medium-Term Strategy Acquiring major merchants by focusing on alliances Business Model Meeting customer needs through enhanced credit payment functions and alliances with QR / points vendors Credit E-money Common Points QR code J-debit House points Duty exemption Terminals we offer Floor-Standing Mo
Slide 53: TRX-increase through cashless penetration
TRX-increase through cashless penetration Business Model TRX volume & value tend to go up in a few months to six months after the merchants introduced cashless payment for the first time ◼ Merchant A（Tokyo） Monthly TRX trend TRX Volume TRX Value Merchant Cash only ⇒ Introduce cashless payments N月 N
Slide 54: TAM(Total Addressable Market)
TAM(Total Addressable Market) Market Environment Transaction Value of cashless (face-to-face) payment is expanding rapidly, as the value of IoT / Unattended ◼ Offline Transaction value in Japan ◼ Potential market value of IoT/Unattended Private sector final consumption expenditure in Potential marke
Slide 55: Growth trend of domestic offline cashless market
Growth trend of domestic offline cashless market Market Environment The market for offline cashless payments is currently ¥92 trillion, six times larger than the online market. Cashless penetration is expected to rise to as much as 80%, driven by government-led cashless policies （Unit : trillion yen
Slide 56: Composition Ratio of Domestic Cashless Payment Methods
Composition Ratio of Domestic Cashless Payment Methods Market Environment Even in an environment of significant growth in the proportion of QR codes, transaction value and volume of credit continue to grow Transaction Value Transaction Volume Composition 2019 2020 2021 Composition 2019 2020 2021 Cre
Slide 57: IoT/Unattended Market Growth
IoT/Unattended Market Growth Market Environment The number of terminals is expected to be equal to or greater than the market for payment terminals in real stores. Unattended market (= general term for vending/service machine market) is expected to expand further due to changes in the external envir
Slide 58: Trends in the number of foreign visitors to Japan
Trends in the number of foreign visitors to Japan Market Environment The number of foreign visitors to Japan decreased sharply due to the COVID, but we are also focusing on preparations for a recovery in demand Number of visiting foreigners (annually) Our inbound-related industry merchants （Unit : 1
Slide 59: Strategy to Maximize Transaction Value
Strategy to Maximize Transaction Value Growth Strategy We created a new payment processing route with alliance partners. This route increases GMV, as the route reduces costs to participating merchants and acquirers Merchants Acquirers Competitor/Peer Terminals Conventional Retail Route Processing Pa
Slide 60: Strategy to Maximize Transaction Value
Strategy to Maximize Transaction Value Growth Strategy Maximize GMV through a new processing network and by pursuing B-to-B alliances (*1) Offline Cashless (face-to-face) Market (2025 E) GMV： ¥111 trillion/year Offline Cashless (face-to-face) Continuous Market (2021 E) GMV： ¥92 trillion/year Growth
Slide 61: Progress in Unmanned Terminal (IoT) Business
Progress in Unmanned Terminal (IoT) Business Growth Strategy Strengthening alliances in the unmanned terminal (IoT) field in response to the trend toward manpower saving. Promoting various projects with an eye on future data monetization Launched 2021 2022 Progress To be released Oct Dec Mar Jun Sep
Slide 62: Growth Strategies for 2025 and Beyond
Growth Strategies for 2025 and Beyond Growth Strategy For 2025 and beyond, we aim to grow stock-model revenue in the payment-related field. Aim at a continuous 25% growth in OP through business diversification ：High inbound tourism demand Image of service expansion Area of focus OP (100 million yen)
Slide 63: Data Services in the IoT Domain
Data Services in the IoT Domain Growth Strategy Started providing payment data service for merchandise vending machines, contributing to stock-model revenue. Supporting merchants' operational efficiency improvement and sophistication (DX) using data IoT Appropriate stock replenishment and cash Payme
Slide 64: Alliance Overview
Alliance Overview Growth Strategy Working with alliance partners allows us to secure participating merchants consistently and steadily Alliance Partners Payment/ Unattended POS GMO Group Financial Terminal Manufacturers Synergies Institutions Manufacturers Merchants Healthcare/Welfare Vocational Sch
Slide 65: Unique Positioning
Unique Positioning Competitive Advantage End-to-end solutions via one-stop platform allows us to create alliances with many players in the market ◼ Solutions in Offline Payment Market Customization Adaptation of Terminal Payment Clearing/ Maintenance/ (Customize Payment Top-End POS Methods) Settleme
Slide 66: Barriers to Entry (Regulations to be Followed)
Barriers to Entry （Regulations to be Followed） Competitive Advantage Many kinds of regulations exist in the face-to-face payment market depending on the payment method, and the number of regulations are increasing. As payment methods become more diversified, the barriers to entry become more challen
Slide 67: Government Promotion of Cashless Payments
Government Promotion of Cashless Payments Industry Topic METI* announced its Cashless Vision policy to encourage cashless payments. We expect the Japanese cashless market to expand rapidly in response Present Impact on our business Increasing demand for cashless terminals as merchants are obligated
Slide 68: Expansion of credit card payment eligibility
Expansion of credit card payment eligibility NEW Industry Topic The "Cashless Law" will go into effect in November 2022. Expansion of areas where payment can be made by credit card Feb 2008～ national pension contribution Application of individual law Jan 2017～ national tax provisions Apr 2019～ Paten
Slide 69: New topic of credit card industry
New topic of credit card industry Industry Topic In response to a request from the Japan Fair Trade Commission, VISA, Mastercard, and UnionPay announced their intention to disclose their interchange fee rates by the end of November Breakdown of MDR METI requires fee among credit card companies （mode
Slide 70: COVID infections in FY2022
COVID infections in FY2022 Industry Topic In Q3, the economy is on a recovery trend due to the lifting of quasi of SOE issued in Q2 In Q4, some businesses were affected by the 7th wave of infection compared to Q3 Number of new cases of COVID-19 infection 300,000 7th wave 250,000 200,000 150,000 100,
Slide 71: Initiatives for terminal-less payments
Initiatives for terminal-less payments Industry Topic Implemented various measures to prepare for future handset-less payments. Strengthening Initiatives in the Mobility Domain and Beverage Vending Machines Status of Our Efforts Tap to Phone NFC tagging touch payment Dec 2021～ New Planning to launch
Slide 72: Share holder structure
Share holder structure Company Profile GMO-PG Japanese institutional investors Other enterprises Foreign institutional investors Individuals 100% 90% 16.26 13.19 15.11 80% 7.84 21.87 18.48 70% 8.07 8.14 1.54 3.15 60% 6.35 6.21 50% 40% 30% 59.69 57.05 57.05 20% 10% 0% End of September 2020 End of Mar
Slide 73: Promotion of DX introduction to improve business efficiency
Promotion of DX introduction to improve business efficiency Company Profile Department Content in charge Whole VDI (virtual desktop) implementation for enhanced security Integrated operation of scheduling, internal portal, workflow, attendance system, and Whole expense reimbursement Whole Paperless
Slide 74: Affiliated Companies
Affiliated Companies Company Profile GMO-FG serves in offline face to face payment market as a consolidated subsidiary of GMO-PG GMO INTERNET GROUP （Internet infrastructure business） GMO PAYMENT GATEWAY （Online payment/Payment section of GMO internet group） Consolidated 100% GMO EPSILON （Online paym
Slide 75: Company Profile
Company Profile Company Profile ■Company GMO Financial Gate, Inc.（TSE Growth Ticker:4051） ■Foundation September 1999 ■Address Humax Shibuya Building 7F, Shibuya Dogenzaka 1-14-6, Tokyo ■Stock Capital ¥1,618 Million ■Major Shareholder GMO Payment Gateway, Inc. ■Board Member Representative Director, P
Slide 76: Thank you
T h a n k y o u GMO Financial Gate, Inc. (TSE Growth 4051) IRサイトURL https://www.gmo-fg.com/ir/ Copyright 2022 GMO Financial Gate, Inc.