Monex Group, Inc. · TSE:8698
Monex — Q2 FY2021 Earnings Presentation
53 slides from Monex's earnings presentation, Oct 27, 2020
Slide 1: Financial Results for 2Q of Fiscal Year Ending March 31, 2021
October 27, 2020 TSE 1st Section: 8698 Financial Results for 2Q of Fiscal Year Ending March 31, 2021
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. 29 III. Business Update p. 30 - p. 41 Appendix: Group Overview p. 42 - p. 52 This is an English translation of Japanese presentation materials prepared in connectio
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 3
Slide 5: Business Overview 1/3
Business Overview 1/3 Consolidated pre-tax profit significantly increased YoY in all five segments Japan Segment doubled, US Segment performed solid despite low interest rate, Crypto Asset Segment became a profit pillar （¥Billion） 5 YoY ¥ 4.2B 4 +89% ■Investment Segment ■Crypto Asset Segment 3 ¥ 2.2
Slide 6: Business Overview 2/3: Customer accounts keep growing
Business Overview 2/3 Customer accounts in each segment keep growing （Active Accounts） Monex (Japan) （Active Accounts） TradeStation (US) 2,000,000 140,000 120,000 1,600,000 100,000 1,200,000 80,000 800,000 60,000 40,000 400,000 20,000 0 0 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-16 Sep-17 Sep-18 Sep-1
Slide 7: Business Overview 3/3: Transforming our business model
Business Overview 3/3 Transforming our business model while leveraging our existing core businesses Transforming to an Diversifying revenue sources Entering new business areas asset-management model Online Investment Education Virtual Shareholder Meeting Asset Management Business Media Service & Com
Slide 8: Highlights 2Q of FYE Mar. 2021 (3 months) 1/4
Highlights 2Q of FYE Mar. 2021 (3 months) 1/4 ¥ 2.2B consolidated pre-tax profit with the three major segments reporting almost the same level of profits ¥ 0.6B of segment profit, derived from higher online trading volumes by Japan retail investors and better performance of our competitive US equiti
Slide 9: Highlights 2Q 2/4: Consolidated and Japan
Highlights 2Q of FYE Mar. 2021 (3 months) 2/4 ◆Total operating revenue after deducting financial expenses and quarterly profit attributable to owners of the Company Quarterly Pre-taxes Profit Total operating revenue after deducting financial expenses 2,161 (JPY million) Quarterly profit attributable
Slide 10: Highlights 2Q 3/4: US and Asia Pacific
Highlights 2Q of FYE Mar. 2021 (3 months) 3/4 ◆Total operating revenue after deducting financial expenses and cost of sales and Segment profit Total operating revenue after deducting financial expenses and cost of sales (JPY million) Segment profit (Quarterly profit before income taxes) 6,000 5,451
Slide 11: Highlights 2Q 4/4: Crypto Asset and Investment
Highlights 2Q of FYE Mar. 2021 (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 Crypto Asset Segment profit (Quarterly profit before income taxes)
Slide 12: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 11
Slide 13: YoY Comparison (6 months) Consolidated Performance
YoY Comparison (6 months) Consolidated Performance FYE Mar. 2020 FYE Mar. 2021 2Q 2Q Rate of (JPY million) Variance Reference (Apr. 2019– (Apr. 2020– change Sep. 2019) Sep. 2020) P14: Analysis of Japan segment Total operating revenue after 23,277 27,106 +3,829 +16% P16: Analysis of US segment (USD)
Slide 14: YoY Comparison (6 months) Segment Performance
YoY Comparison (6 months) Segment Performance Japan US Asia Pacific Crypto Asset Investment (JPY million) 2020/3 2021/3 2020/3 2021/3 2020/3 2021/3 2020/3 2021/3 2020/3 2021/3 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q Total operating revenue after deducting financial expenses 11,227 13,324 9,921 10,672 292 718
Slide 15: YoY Analysis: Operating Revenue (Japan)
YoY Comparison (6 months) Analysis: Operating Revenue Japan : Increased market transactions and multiple measurements drove Monex’s market share for Japan equities higher, especially in margin trading, leading to a 65% increase in brokerage commissions YoY ■ Total operating revenue after deducting T
Slide 16: YoY Analysis: SG&A (Japan)
YoY Comparison (6 months) Analysis: SG&A Japan : Larger trading volume drove higher variable costs. Depreciation expenses increased due to a new system investment in margin trading services and in NISA services for better usability ■ SG&A SG&A Total +11.5% (+1,202) (JPY million) * Figures in parenth
Slide 17: YoY Analysis: Operating Revenue (US, USD)
YoY Comparison (6 months) Analysis: Operating Revenue (USD) US : Brokerage commissions and other commissions increased significantly due to larger trading volume driven by growth in commission-free plans and higher volatility (VIX). This drove an increase in total revenue despite a decline in net fi
Slide 18: YoY Analysis: SG&A (US, USD)
YoY Comparison (6 months) Analysis: SG&A (USD) US : Higher advertising expenses for TradeStation Crypto and YouCanTrade. Larger trading volume drove higher commissions paid and association dues ■ SG&A (USD thousand) SG&A Total +11.7% (+9,373) 120,000 * Figures in parentheses indicate the variance fr
Slide 19: YoY Analysis: Operating Revenue (Crypto)
YoY Comparison (6 months) Analysis: Operating Revenue Crypto : Despite lower market trading volume(*) of BTC, customer trading volume at Coincheck remains almost flat YoY. Favorable transaction volume of Altcoins led to a 24% increase in net trading income Total operating revenue after deducting ■ T
Slide 20: YoY Analysis: SG&A (Crypto)
YoY Comparison (6 months) Analysis: SG&A Crypto : Effect of restructuring of fixed costs, such as system related expenses, in the first half of last fiscal year kept contributing to a reduction in expenses ■ SG&A SG&A Total -8.1% (-157) ■Others (+70) * (JPY million) 2,800 ■Advertising expenses (+89)
Slide 21: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance （JPY million） 1Q FYE Mar. 2Q FYE Mar. 2021 2021 Rate of Variance change Reference (Apr. 2020- (Jul. 2020- Jun. 2020) Sep. 2020) P22: Analysis of Japan segment Total operating revenue after 13,208 13,898 +689 +5% P24: Analysis of US segment (USD) ded
Slide 22: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance Japan US Asia Pacific Crypto Asset Investment (JPY million) 2021/3 2021/3 2021/3 2021/3 2021/3 2021/3 2021/3 2021/3 2021/3 2021/3 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q Total operating revenue after deducting financial expenses and 6,811 6,513 5,326 5,346 324 394
Slide 23: QoQ Analysis: Operating Revenue (Japan)
QoQ Comparison (3 months) Analysis: Operating Revenue Japan : Although Japanese equities commissions decreased because of the slow market, total revenue is continuously strong due to an increase in net financial income driven by higher margin balances under higher stock prices and better performance
Slide 24: QoQ Analysis: SG&A (Japan)
QoQ Comparison (3 months) Analysis: SG&A Japan : Advertising expenses increased with an increase in the number of application for brokerage accounts at Monex Quarterly SG&A +1.6％ (+90) ■Quarterly SG&A * Figures in parentheses indicate the variance from the previous quarter (JPY million) (JPY million
Slide 25: QoQ Analysis: Operating Revenue (US, USD)
QoQ Comparison (3 months) Analysis: Operating Revenue (USD) US : Other Commission increased as commission-free plans drove increased trading volumes in equities and options despite lower volatility. Brokerage commissions were lower, though, due to the additional impact of lower futures trading volum
Slide 26: QoQ Analysis: SG&A (US, USD)
QoQ Comparison (3 months) Analysis: SG&A (USD) US : Total expenses remained flat QoQ although marketing of new businesses increased to diversify future earnings ■Quarterly SG&A Quarterly SG&A +0.6% (+275) (USD thousand) * Figures in parentheses indicate the variance from the previous quarter 60,000
Slide 27: QoQ Analysis: Operating Revenue (Crypto)
QoQ Comparison (3 months) Analysis: Operating Revenue Crypto : Highest quarterly revenue since Coincheck joining Monex Group. Net trading income largely increased driven by higher trading volume of altcoins at the marketplace ■Quarterly total operating revenue after deducting financial Quarterly tot
Slide 28: QoQ Analysis: SG&A (Crypto)
QoQ Comparison (3 months) Analysis: SG&A Crypto : Higher advertising expenses for the spike in new account openings and higher compensation and benefits Quarterly SG&A +47.8％ (+342) ■Quarterly SG&A * Figures in parentheses indicate the variance from the previous quarter (JPY million) (JPY million) 1
Slide 29: 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 September 30, 2020 Assets Liabilities (*1) Non-current assets
Slide 30: Shareholders' Distribution
Shareholders’ Distribution Total return ratio (*1) is aimed at 75% on a multi-year basis ◆ Total return amount (*2) and total return ratio ◆ Return on Equity ratio （million yen） Amount of dividends (left) Amount of acquisition of own shares(left) 15% Total return ratio(right) 827% 12.9% 12,000 900%
Slide 31: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 30
Slide 32: Business Update Japan segment 1/3
Business Update Japan segment 1/3 Cooperation with TradeStation leveraged growth in customer base of US equities Japanese equity US equity trading • Lowered commissions on Japanese stock trades; • Cooperating with TradeStation, Monex Securities can one-day flat rate for cash/margin trading and per-
Slide 33: Business Update Japan segment 2/3
Business Update Japan segment 2/3 Transforming business into asset-management model, and expanding new initiatives Mutual Funds ON COMPASS+ • Daily installment service was launched in January, • Shizugin TM Securities, a subsidiary of Shizuoka which drove growth in the number of installment Bank, wi
Slide 34: Business Update Japan segment 3/3: Monex Activist Fund
Business Update Japan segment 3/3 Monex Activist Fund implements holistic engagement to several listed companies and plans to expand its sales marketing region to overseas 120,000,000,000 FY20 2Q After this quarter 100,000,000,000 In addition to the sales at Monex Securities, Marketing in abroad wit
Slide 35: Business Update US Segment 1/2
Business Update US Segment 1/2 Revenue related to trading remains strong even after introducing commission-free plans Account Additions & Client Assets Brokerage Commissions & Fees Commission-free plans, API integrations such as TradingView, Even though VIX peaked in 1Q, trading volume and revenue a
Slide 36: Business Update US Segment 2/2: New business initiatives
Business Update US Segment 2/2 New business initiatives for revenue diversification TradeStation Crypto (TCI) YouCanTrade (YCT) • TCI launched an integrated Crypto experience within Premium subscriptions to YCT have gradually increased, the TradeStation Mobile App, several new crypto with expanding
Slide 37: Business Update Crypto Asset segment 1/2
Business Update Crypto Asset segment 1/2 Coincheck’s core business has been ranked as No.1 for its App DL in Japan. Launched various new businesses for further intermittent growth Core Business New Business No.1* ・ Sharely - virtual shareholder meeting app DLs in the cryptocurrency exchanges In resp
Slide 38: Business Update Crypto Asset segment 2/2
Business Update Crypto Asset segment 2/2 Coincheck will continue to focus on adding new cryptocurrencies to revitalize trading and further expand its revenue base Revenue Structure Adding New Cryptocurrency Net trading income is correlated with the trading Captures revenue opportunities of the marke
Slide 39: Business Update Crypto Asset Initiatives
Business Update Crypto Asset Initiatives Gathering examples of blockchain use and aiming for synergistic effects with external and internal businesses LOOKBLOCK Cryptocurrencies and Blockchain • BLOCK INSIGHT • Cheeese A web-based media delivering the latest trends in the An app that allows users to
Slide 40: Business Update Asia Pacific segment
Business Update Asia Pacific segment Customer base continues to expand in each company in Asia Pacific segment Monex Boom Securities & Monex Securities Australia Cherry Technology Co., Ltd (China) Economic recovery appreciated in the Hong Kong Providing technology and knowledge of the online market,
Slide 41: Business Update Investment Segment
Business Update Investment Segment ¥0.13B of segment profit due to valuation gains on investments. Second flagship fund, MV2, is under preparation Details of MV1 Fund Investment Portfolio Active support for startups in product Growing interest in new consumption styles Features development and growt
Slide 42: Business Update ESG Management
Business Update ESG Management Appoint an executive officer responsible for promoting each of the seven ESG materiality categories to integrate ESG activities into business management Materiality Matrix ESG Initiatives Disclosing Materiality Matrix Appoint officers for each ESG category - Prioritize
Slide 43: Appendix: Group Overview
I. Highlights II. Consolidated Performance III. Business Update Appendix. Group Overview 42
Slide 44: Group Overview: Customer base and assets in custody
Group Overview Japan: 1.89M accounts, US: 125K accounts, Crypto Asset: 2.15M users, AP: 17K 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 45: 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 2% Crypto Compensation and benefits 3% Asset System related expenses 2% Othres 1% 1. Equities 8% 21% Crypto 2. System Investme
Slide 46: 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 45
Slide 47: 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 48: Monex Group structure
Monex Group (As of September 30, 2020) Listed Holding Company [Japan] [US/Europe] [Asia Pacific] Cryptocurrency exchange Online Securities Company Monex International Limited service provider Holding Company in Hong Kong TradeStation Group, Inc. Online Securities Company Holding Company in the U.S.
Slide 49: Overview of Monex Group and Main Subsidiary Companies
Overview of Monex Group and Main Subsidiary Companies ■ Monex, Inc. (Tokyo, Japan) ■ Coincheck, Inc. (Tokyo, Japan) One of the major online brokerage firms in Japan Cryptocurrency Exchange/Marketplace agency - President : Yuko Seimei - President: Satoshi Hasuo - Founded in 1999 - Founded in 2012, jo
Slide 50: 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 51: Investors' Guide
Investors’ Guide ■ Shareholders distribution ■ Shareholders & indicators per share ◆ Our basic policy for shareholders distribution ◆ Major shareholders and shareholder breakdown Monex Group aims to provide returns to its shareholders (as of September 30, 2020) Monex Group, Inc. based on the busines
Slide 52: 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 2 Financial Instruments Business） AI/Big Data Thematic Investment B2B Robo-advisor AI/Big Data Vacation Rental SNS （Registered as Type 1 Financial Instruments Busines
Slide 53: Investment Segment – Portfolio 2/2
Investment Segment – Portfolio 2/2 ◆ 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 B2B SaaS Agri-Tech B2B Saas Insure Tech KYC / Big Data B2B SaaS Robotics Marketplace AI / Sport