Slide 1: Financial Results for 3Q of Fiscal Year Ending March 31, 2018
January 31, 2018 (TSE 1st Section: 8698) Financial Results for 3Q 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.10 II. Consolidated Performance p.11 - p.25 III. Business Update p.26 - p.33 IV. Mid- & Long-Term Initiatives p.34 - p.37 Appendix: Group Overview p.38 - p.47 2
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 3
Slide 5: Business Overview 1/3
Business Overview 1/3 Accomplishment of the “New Beginning”* in 3Q ・ Monex, Inc. and Monex Crypto Bank, Inc. (Established in Dec, 2017) are preparing to start a cryptocurrency exchange business. Also, Monex Group plans to form a business alliance with a global cryptocurrency exchange. Set up a Monex
Slide 6: Business Overview 2/3
Business Overview 2/3 Large growth in profit of Japan enabled us to apply an aggressive strategy ・ Entered into a license agreement of our in-house backbone system, GALAXY, with a general brokerage firm and recorded an operating income of JPY 600M. Developing new customers for further B2B business ・
Slide 7: Business Overview 3/3
Business Overview 3/3 US records consecutive profit in the last five quarters ・ Customer growth accelerating from record account openings coupled with declining attrition, driven by continued strong uptake of our 1Q new pricing plan for equities and options and a futures rebranding in 3Q that includ
Slide 8: Revision of Shareholder Distribution Policy
Revision of Shareholder Distribution Policy Revised total shareholders distribution ratio (dividend and share buybacks combined) from 75% of the profit on a multi-year basis to 100% on a single-year basis for the periods from FYE March 2018 to FYE March 2021. ■Points of the revision Original（FYF Mar
Slide 9: Highlights 3Q FYE Mar. 2018 (3 months) 1/3
Highlights 3Q FYE Mar. 2018 (3 months) 1/3 Significant increase in profit due to the revenue from licensing our backbone system and increase in brokerage commissions in Japan Segment profit increased from JPY 2B to 2.4B due to the revenue of licensing the securities backbone system and the profit fr
Slide 10: Highlights 3Q FYE Mar. 2018 (3 months) 2/3
Highlights 3Q FYE Mar. 2018 (3 months) 2/3 ◆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 Pre-tax Profit 2,428 Quarterly profit attributable t
Slide 11: Highlights 3Q FYE Mar. 2018 (3 months) 3/3
Highlights 3Q FYE Mar. 2018 (3 months) 3/3 ◆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 US Segment profit, Pre-tax profit 6,000 4,565 4,569 4,114 4,223 4,167
Slide 12: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 11
Slide 13: YoY Comparison (9 months) Consolidated Performance
YoY Comparison (9 months) Consolidated Performance (JPY million) 3Q FYE Mar. 2017 3Q FYE Mar. 2018 Rate of Variance Reference (Apr. 2016 - Dec.) (Apr. 2017 - Dec.) change Total operating revenue after P14: Analysis of Japan segment deducting financial 30,519 35,046 4,527 14.8% P16: Analysis of US se
Slide 14: YoY Comparison (9 months) Segment Performance
YoY Comparison (9 months) Segment Performance (JPY million) Japan US Asia Pacific 2017/3 2018/3 Rate of 2017/3 2018/3 Rate of 2017/3 2018/3 Rate of 3Q 3Q change 3Q 3Q change 3Q 3Q change Total operating revenue after deducting financial expenses 19,401 22,470 15.8% 11,502 12,626 9.8% 509 688 35.2% a
Slide 15: YoY Comparison (9 months) Analysis: Operating Revenue
YoY Comparison (9 months) Analysis: Operating Revenue Japan： Revenue increased due to larger net financial income, increase in brokerage commissions and the license fee of our backbone system ■Total operating revenue after deducting financial expenses and cost of sales (compared to Apr. 2016 - Dec.
Slide 16: YoY Comparison (9 months) Analysis: SG&A
YoY Comparison (9 months) Analysis: SG&A Japan : System related costs decreased due to a migration to new backbone system ■SG&A (compared to Apr. 2016 – Dec. 2016) (JPY million) SG&A Total -7.5% (-1,378) *figures in parenthesis is the variance from 3Q FYE Mar. 2017 (JPY million) 20,000 18,444 1,269
Slide 17: YoY Comparison (9 months) Analysis: Operating Revenue (USD)
YoY Comparison (9 months) Analysis: Operating Revenue (USD) US：Increase in net financial income due to higher yields from rate increases on growing client cash balances. Brokerage revenues overall and options trading volume were higher, while Brokerage Commissions were down slightly ■ Total operatin
Slide 18: YoY Comparison (9 months) Analysis: SG&A (USD)
YoY Comparison (9 months) Analysis: SG&A (USD) US：SG&A decreased by 2% excluding one-time expense of USD 2.9M in 1Q ■SG&A (compared to Apr. 2016 – Dec. 2016) SG&A Total 1.0% (+1,106) (USD thousand) *figures in parenthesis is the variance from 3Q FYE Mar. 2017 120,000 111,026 109,919 (USD thousand) 1
Slide 19: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance （JPY million） 2Q FYE Mar. 3Q FYE Mar. Rate of 2018 (Jul.- 2018 (Oct.- Variance change Reference Sep. 2017) Dec. 2017) Total operating revenue P20: Analysis of Japan segment after deducting financial 11,620 12,590 971 8.4% P22: Analysis of US segment
Slide 20: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance (JPY million) Japan US Asia Pacific 2018/3 2018/3 Rate of 2018/3 2018/3 Rate of 2018/3 2018/3 Rate of 2Q 3Q change 2Q 3Q change 2Q 3Q change Total operating revenue after deducting financial expenses and 7,467 8,368 12.1% 4,167 4,236 1.7% 226 222 -1.7% c
Slide 21: QoQ Comparison (3 months) Analysis: Operating Revenue
QoQ Comparison (3 months) Analysis: Operating Revenue Japan : Revenue increased due to the license fee of our backbone system and increase in brokerage commissions ■Quarterly total operating revenue after deducting financial expenses and cost of sales Quarterly total operating revenue after (JPY mil
Slide 22: QoQ Comparison (3 months) Analysis: SG&A
QoQ Comparison (3 months) Analysis: SG&A Japan : Advertising expenses increased to aim for expanding customer base and SG&A increased by larger equity trading volume ■Quarterly SG&A (JPY million) Quarterly SG&A 6.1％ (+338) *figures in parenthesis is the variance from previous quarter 7,000 6,607 (JP
Slide 23: QoQ Comparison (3 months) Analysis: Operating Revenue (USD)
QoQ Comparison (3 months) Analysis: Operating Revenue (USD) US : Brokerage Commissions remained flat vs previous quarter despite further declining market volatility ■Quarterly total operating revenue after deducting financial expenses and cost of sales (USD thousand) 40,000 37,870 37,547 37,556 Quar
Slide 24: QoQ Comparison (3 months) Analysis: SG&A (USD)
QoQ Comparison (3 months) Analysis: SG&A (USD) US : Compensation and benefits temporarily increased due to the revaluation of allowance of Paid-Time-Off. Increased advertising expenses to broaden the customer base ■Quarterly SG&A (USD thousand) Quarterly SG&A 3.8% (+1,355) *figures in parenthesis is
Slide 25: 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 December 31, 2017 Assets Liabilities (*1) Non-current assets J
Slide 26: Shareholders' Distribution
Shareholders’ Distribution Revised total distribution ratio (*1) from 75% on a multi-year basis to 100 % on a single-year basis ◆Dividend per share(*2) and total distribution ratio ◆Return on Equity ratio （million yen） 12,000 Amount of acquisition of own shares(left) 900% 15% 827% Amount of dividend
Slide 27: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 26
Slide 28: Business Update Japan segment (1) Customer base expansion 1/3
Business Update Japan segment (1) Customer base expansion 1/3 New services utilizing AI and our unique technology AI technology Trade Carte FX（Launched Jan 2018） ・ AI provides a diagnosis and prescription based on the user’s trading activity to support enhance their trading techniques ・ Developed in
Slide 29: Business Update Japan segment (2) Customer base expansion 2/3
Business Update Japan segment (2) Customer base expansion 2/3 Developed customer base with our advanced technology For all traders In-house Backbone System “GALAXY” - In-house system with high flexibility in development that enables quick response to customer needs - Operating income of JPY 610M by
Slide 30: Business Update Japan segment (3) Customer base expansion 3/3
Business Update Japan segment (3) Customer base expansion 3/3 Monex for Wealth Creation Services with various product lineup Wealth Creation Service - Investment balance is about ¥28B(*) including a wrap service (MSV LIFE) for individuals and investment entrusted by institutional investors - Conclud
Slide 31: Business Update Japan segment (4) Customer base of Monex, Inc.
Business Update Japan segment (4) Customer base of Monex, Inc. Aiming to double equities commissions through acquisitions of active traders as well as investors, Monex's main customer base ◆Active account ratio (as of September 30, 2017) ◆Customer assets per account (as of September 30, 2017) Higher
Slide 32: Business Update US segment (1)
Business Update US segment (1) Increase in new account openings and assets in custody. Consistently achieving profitability ■ Expanded customer base - Record number of accounts and client assets at the end of 3Q. Client assets exceeded USD 5 billion dollars - Launched Bitcoin futures. Achieved appro
Slide 33: Business Update US segment (2)
Business Update US segment (2) ◆Increased the percentage of the revenue which does ■ Secured a profitable structure despite not depend on volatility. Revenue structure is changing low volatility, supported by interest income - Higher interest rates along with growth in Commission 37% Commission clie
Slide 34: Business Update Asia Pacific Segment
Business Update Asia Pacific Segment Keep seeking for business opportunities in Asia Pacific area ■ Launched online securities business operation in Australia - Monex Securities Australia Pty Ltd launched online securities business, enabling an access to 12 countries and regions including Shanghai A
Slide 35: IV. Mid- & Long-Term Initiatives
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 34
Slide 36: MONEX's New Beginning
MONEX’s New Beginning 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, its ICO
Slide 37: 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 38: 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 39: Appendix. Group Overview
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Initiatives Appendix. Group Overview 38
Slide 40: 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 41: Group Overview – Continuous growth over years
Group Overview – Continuous growth over 17 years Japan: 1.74M accounts, US: 89K accounts, HK: 10K accounts. Monex has a global customer base Aim for continuous growth in the online brokerage business for retail investors as our core business ◆Consolidated Operating Revenue (JPY million) 60,000 O
Slide 42: Group Overview – Revenues, Costs and Employees by region
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 43: 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 42
Slide 44: 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 45: Monex Group structure
Monex Group (As of January 31, 2018) Listed Holding Company [Japan] [US/Europe] [Asia Pacific] Online Securities Company Monex International Limited Holding Company in Hong Kong TradeStation Group, Inc. Online Securities Company Holding Company in the U.S. Monex, Inc. Comprehensive investment servic
Slide 46: 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 47: 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 48: Investors' Guide
Investors’ Guide ■Pursue returns to shareholders through ROE improvement ■Shareholders & indicators per share ◆ Our basic policy for shareholders distribution ◆Major shareholders and shareholder breakdown To provide returns to shareholders based on our business (as of Sep. 30, 2017) Monex Group, Inc