Gmo Payment Gateway, Inc. · TSE:3769

Gmo Payment Gateway — Q2 FY2024 Earnings Presentation

46 slides from Gmo Payment Gateway's earnings presentation, May 13, 2024

  1. Slide 1: Financial Results Briefing for Q2 FY2024

    Financial Results Briefing for Q2 FY2024 Tackle urgent issues and strengthen profit generation by building up projects in the new domains May 13, 2024 77th Investor Meeting

  2. Slide 2: Safe Harbor Statement for Forward Looking Statements

    Safe Harbor Statement for Forward Looking Statements The contents of this document is based on generally recognized economic and social conditions, as well as certain assumptions judged to reasonable by GMO Payment Gateway as of May 13, 2024. Please note that the contents are subject to change witho

  3. Slide 3: Agenda

    Agenda 1. Summary of Financial Results for Q2 FY2024 2. Growth Strategy and Initiatives in Focus Areas 3. Sustainability 4. Financial Highlights and Reference Materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 3

  4. Slide 4: 1. Summary of Financial Results for Q2 FY2024

    1. Summary of Financial Results for Q2 FY2024 Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 4

  5. Slide 5: 1.1 Summary of consolidated results

    1.1 Summary of consolidated results Both revenue and OP outperformed 1H plans 1H FY2024 Q2 FY2024 （¥ mil） 1H FY2023 1H FY2024 % YoY Guidance (% YoY) (Progress ratio) 35,341 18,313 Revenue 30,454 36,099 +18.5% (102.1%) (+17.1%) 11,720 Gross Profit 19,609 23,267 +18.7% － (+19.4%) 12,470 6,822 Operatin

  6. Slide 6: 1.2.1 Waterfall chart of consol. revenue (cumulative)

    1.2.1 Waterfall chart of consol. revenue (cumulative) CP Payment continues to be solid, Payment After Delivery and overseas business outperformed plans to contribute to revenue （% YoY） GMO-FG GMO-PG*3 GMO-PS*3 GMO-EP Overseas Consol. （¥ bn） Consol.*1*2 Consol.*1*3 Business*3 Cumu. 2Q Plan +26.7% +14

  7. Slide 7: 1.2.2 Waterfall chart for consol. OP and pre-tax profit (cumulative)

    1.2.2 Waterfall chart for consol. OP and pre-tax profit (cumulative) OP grew 29.7% in 2Q and 22.2% in 1H; decline of one-off expense booked in the previous term and decline in credit costs OP Waterfall Chart Pre-tax Profit Waterfall Chart （¥ mil） （¥ mil） % YoY: 1H +22.2% % YoY: 1H +33.1% 2Q +29.7% 2

  8. Slide 8: 1.3.1 GMO-PG non-consolidated performance

    1.3.1 GMO-PG non-consolidated performance Bottoming out of online payment growth rates; revenue up 15.6% GMO-PG non-consolidated revenue & OP *1 （¥ mil） Merchandise EC revenue % YoY Revenue Non-merchandise EC revenue 10,000 2-yr Q2 FY2023 Q1 FY2024 Q2 FY2024 BaaS Support revenue 百万 MSB revenue CAGR

  9. Slide 9: 1.3.2 Performance of GMO-EP, GMO-PS and GMO-FG

    1.3.2 Performance of GMO-EP, GMO-PS and GMO-FG All 3 companies outperformed plans thanks to revenue- expanding initiatives Consol. GMO-EP*1*2 GMO-PS*2 Consol. GMO-FG*1*3 (% YoY） Q2 FY2023 Q2 FY2024 Q2 FY2023 Q2 FY2024 Q2 FY2023 Q2 FY2024 Revenue +0.3% +9.1% Revenue +20.5% +19.5% Revenue +71.8% +18.8

  10. Slide 10: 1.4 Trend of revenue growth rates and full-year revenue guidance

    1.4 Trend of revenue growth rates and full-year revenue guidance Consol. guidance likely achievable but issue of risks in the SME domain Trend of revenue growth rates and probability of achieving full-year revenue guidance by company 70.0% GMO-PG Changes Consol. GMO-EP over the past 1-yr FY2024 guid

  11. Slide 11: 2. Growth Strategy and Initiatives in Focus Areas

    2. Growth Strategy and Initiatives in Focus Areas Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 11

  12. Slide 12: 2.1 Strategy and assumptions to achieve OP CAGR 25%

    2.1 Strategy and assumptions to achieve OP CAGR 25% Accelerate strategy that was revised ahead of the business environment’s changes since 2020 Trend of revenue by service （¥ mil） 2020 60,000 Payment processing (online) 2018 Domestic MSB Commence 50,000 Payment after Delivery overseas MSB Payment- C

  13. Slide 13: 2.2 Growth drivers of GMO-PG's revenue

    2.2 Growth drivers of GMO-PG’s revenue Pursue 25% revenue growth by stacking up projects in new domains on the foundation of existing business Revenue growth image of GMO-PG non-consol. 25% revenue growth Pursue growth by capturing new large-sized projects that ■ Payment-related respond to complex i

  14. Slide 14: 2.3.1 Strengthen generation of consolidated profits

    2.3.1 Strengthen generation of consolidated profits Strengthen generation of consolidated profit by improving payment-related services OP trend by service in Q2*1 and profitability improving initiatives （¥ mil） 10,000 Payment Processing (online) Domestic MSB OP margin*2 Consol OP 9,000 Payment after

  15. Slide 15: 2.3.2 Profitability improvement of payment processing (online)

    2.3.2 Profitability improvement of payment processing (online) Strengthen profit generation by leveraging scale benefit of revenue growth Trend of Payment processing (online) OP margin (Quarterly) （¥ mil） Revenue 10,000 OP 100.0% OP margin 9,000 OP margin 1-yr trailing average 90.0% Source of fund 8

  16. Slide 16: 2.4.1 GMO-PG non-consol.: Broader EC

    2.4.1 GMO-PG non-consol.: Broader EC Completed building up pipeline to achieve full year guidance GMO-PG non-consol. revenue and targets (1H/2H) Examples of new projects contributing to revenues in 2H （¥ mil） Actual % YoY Utility Local government DX support Target +21.5% Large-scale leisure facility

  17. Slide 17: 2.4.2 RetailTech×FinTech

    2.4.2 RetailTech×FinTech Expanding RetailTech services that resolve issues at stores and service facilities Solutions provided to retail business operators (incl. collaboration with RetailTech merchants) and customer use-case GCP*1 revenue Major issues for store operations Labor shortage Increase of

  18. Slide 18: 2.4.3 Succession of acquiring function

    2.4.3 Succession of acquiring function Expected to take over the acquiring function of GMO Aozora Net Bank Current Post effective date (up to June 30, 2024) (July 1, 2024 onwards) International brand International brand （VISA/Mastercard） （VISA/Mastercard） GMO Aozora Net Bank, Ltd. Acquire license Ac

  19. Slide 19: 2.4.4 GMO-PG non-consol.: BaaS support and EF

    2.4.4 GMO-PG non-consol.: BaaS support and EF*1 Large-size project contributes to high growth; successive launch of projects expected from 2H onwards Revenue of BaaS Support service*2（Q2） Progress of Processing PF projects Start of revenue contribution is brought forward (or ■ Ginko Pay Base system

  20. Slide 20: 2.5 Consol. GMO-EP: Broader EC (SME domain)

    2.5 Consol. GMO-EP: Broader EC (SME domain) Progressing with initiatives to change revenue model and expand into new business domains Consol. GMO-EP revenue (quarterly trend) Progress of initiatives （¥ mil） GMO-EP % YoY ・Change of revenue model Progress on track to convert rate structure of +9.1％ ex

  21. Slide 21: 2.6 GMO-PS: FinTech

    2.6 GMO-PS：FinTech Continued growth from building up new projects while improving profitability GMO-PS: Revenue and OP (Q2) Revenue trend by new and existing merchant （¥ mil） ■ New merchants (start of operation from Q3 FY2023～Q2 FY2024) Other revenue (left axis) 3,000 % YoY 600 ■ Existing merchants

  22. Slide 22: 2.7 GMO-FG: CP payment

    2.7 GMO-FG: CP payment Further expansion of recurring-model revenue and building up pipeline of large customers Consol. GMO-FG revenue by business model*1(quarterly) Expanding pipeline of large customers （¥ mil） % YoY （’000 units） Difficulty Size of circle: size of profit contribution (image) Commer

  23. Slide 23: 2.8.1 Global: earnings summary

    2.8.1 Global: earnings summary Solid progress in new loans provided in Asia, revenue continues to grow 50% primarily from North America Revenue/OP Loan balance (end-Mar) Earnings highlight （¥ mil） （¥ mil） Revenue High growth from building up % YoY % YoY OP new and add-on loans in past +49.9% +25.3%

  24. Slide 24: 2.8.2 Global: investment strategy

    2.8.2 Global: investment strategy Investing in B2B FinTech by leveraging “Loan×Investment” synergy Investments in the past one year Total investment amount Approx. ¥3.5 bn New Jun. 2023 Oct. 2023 Jan. 2024 Apr. 2024 KYC Tech HR Tech Payment FinTech Trade FinTech KYC Tech market HR Tech market Bill P

  25. Slide 25: 3. Sustainability

    3. Sustainability Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 25

  26. Slide 26: 3.1 Sustainability: decarbonization initiatives

    3.1 Sustainability: decarbonization initiatives Achieved carbon neutrality, promoting initiatives to reduce Scope 3 emissions FY2022 FY2023 FY2024 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Done Done Planned Planned Non-fossil certificate Non-fossil certificate Non-fossil certificate Non-fossil certificate (for

  27. Slide 27: 3.2 Sustainability: external accreditation

    3.2 Sustainability: external accreditation Received A- score in CDP Climate Change report CDP Score (released in Feb. 2024) ESG Indices Previous Current （2022） （2023） C A－ One notch below the 109 companies with an A score; of a total of 1,984 companies in Japan Received A- (leadership level) score f

  28. Slide 28: 4. Financial Highlights and Reference Materials

    4. Financial Highlights and Reference Materials Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 28

  29. Slide 29: 4.1.1 Consolidated balance sheet changes

    4.1.1 Consolidated balance sheet changes Increase in merchant deposits and MSB related assets due to scaling up of business Assets Liabilities and Equity Cash (¥ mil) (¥ mil) corresponding to 350,000 350,000 deposits received 334,497 334,497 from merchants 300,000 292,346 300,000 292,346 273,407 273

  30. Slide 30: 4.1.2 Major consolidated financial indicators (annual trend)

    4.1.2 Major consolidated financial indicators (annual trend) Managing business while balancing profitability, capital efficiency and capital base J-GAAP IFRS Third party allotment Issued Euro Yen Euro Yen CB Due 2026 Raised ¥8.0bn CB Due 2023 Raised ¥21.1 bn （¥ bn） 45% Raised ¥17.5 bn 300 Euro Yen C

  31. Slide 31: 4.2 Consolidated revenue and operating profit (quarterly)

    4.2 Consolidated revenue and operating profit (quarterly) Consol. revenue Consol. operating profit （¥ mil） （¥ mil） 20,000 7,000 6,000 15,000 5,000 4,000 10,000 3,000 2,000 5,000 1,000 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY2021 9,767 10,121 10,646 11,132 FY2021 3,122 3,470 3,629 2,764 FY2022 11,857 12,201 12

  32. Slide 32: 4.3 Waterfall chart of consolidated revenue (Q2)

    4.3 Waterfall chart of consolidated revenue (Q2) Consol. Revenue grew 17.1% from continued growth of CP, Payment After Delivery and overseas business （% YoY） Consol. GMO-PG*3 GMO-PS*3 Consol. Overseas Consol. （¥ bn） GMO-FG*1*2 GMO-EP *1*3 companies*3 Q2 Actual +18.8% +15.6% +19.5% +9.1% +90.9% +17.1

  33. Slide 33: 4.4.1 Revenue by business model (cumulative)

    4.4.1 Revenue by business model (cumulative) Initial, stock and fee each grew over 20%, spread on a recovery trend % YoY Factors* (¥ mil) Cumu. Q2 Cumu. Q2 FY2023 FY2024 36,099 Spread +13.3% +14.9% ＋ Overseas lending 30,454 ＋ CP payment 30,000 － Online payment (GMO-PG) 13,878 － Payment after Deliver

  34. Slide 34: 4.4.2 Consolidated revenue by business model (quarterly)

    4.4.2 Consolidated revenue by business model (quarterly) （¥ mil） 6,988 7,000 6,889 6,265 6,057 6,025 6,171 6,000 5,371 5,415 5,296 5,297 5,267 5,093 5,000 4,808 4,707 4,731 4,773 4,665 4,414 4,430 4,290 4,257 4,311 4,000 3,840 3,536 2,764 3,395 2,408 3,015 3,392 3,278 3,149 2,719 2,288 3,000 2,922 2

  35. Slide 35: 4.5.1 Segment results (Q2 cumulative)

    4.5.1 Segment results (Q2 cumulative) Revenues at all segments grew; MSB profit increased 38.1% from controlling credit cost Segment revenue* Segment profit* % YoY % YoY (¥ mil) Cumu. Q2 Cumu. Q2 (¥ mil) Cumu. Q2 Cumu. Q2 FY2023 FY2024 FY2023 FY2024 36,099 15,000 12,652 +26.6% +18.5% +25.1% +22.2% 2

  36. Slide 36: 4.5.2 Segment results (Q2)

    4.5.2 Segment results (Q2) Payment Processing profit increased 29.8% as higher personnel cost was offset by the decline in one-time expense in the previous term Segment revenue* Segment profit* % YoY % YoY (¥ mil) (¥ mil) Q2 FY2023 Q2 FY2024 Q2 FY2023 Q2 FY2024 18,313 8,000 6,822 +28.2% +17.1% +26.4

  37. Slide 37: 4.6.1 FinTech related asset (quarterly trend)

    4.6.1 FinTech related asset (quarterly trend) FinTech related asset （¥ mil） 120,000 100,000 % YoY +9.1% 80,000 60,000 +13.5% 40,000 20,000 +23.2% 0 End-Q3 End-Q4 End-Q1 End-Q2 End-Q3 End-Q4 End-Q1 End-Q2 End-Q3 End-Q4 End-Q1 End-Q2 End-Q3 End-Q4 End-Q1 End-Q2 FY2020 FY2020 FY2021 FY2021 FY2021 FY202

  38. Slide 38: 4.6.2 FinTech revenue and profits (quarterly trend)

    4.6.2 FinTech revenue and profits (quarterly trend) FinTech segment revenue and profit （¥ mil） 4,000 % YoY 3,500 ＋9.8% 3,000 2,500 2,000 ＋18.2% 1,500 ＋43.8% 1,000 500 ＋5.7% ＋46.4% 0 20/3Q 20/4Q 21/1Q 21/2Q 21/3Q 21/4Q 22/1Q 22/2Q 22/3Q 22/4Q 23/1Q 23/2Q 23/3Q 23/4Q 24/1Q 24/2Q *1 *2 Domestic lending

  39. Slide 39: 4.7.1 Consolidated CoS and SG&A ratio (quarterly trend)

    4.7.1 Consolidated CoS and SG&A ratio (quarterly trend) Cost of sales ratio fluctuates depending on revenue mix (¥ mil) 18,313 17,785 18,000 50.0% 16,546 16,118 16,000 15,641 42.7% 40.9% 14,813 39.6% 14,000 38.5% 40.0% 36.8% 37.5% 13,341 37.2% 37.0% 11,857 12,897 36.0% 34.8% 33.4% 35.1% 33.8% 34.6%

  40. Slide 40: 4.7.2 CoS/SGA ratio of GMO-PG & GMO-EP (quarterly trend)

    4.7.2 CoS/SGA ratio of GMO-PG & GMO-EP (quarterly trend) CoS ratio trending stably for online payment business (¥ mil) 10,511 10,158 10,000 50.0% 9,564 9,219 9,177 9,083 41.6% 8,498 41.2% 39.7% 7,977 40.7% 8,000 7,682 7,906 40.0% 7,122 36.6% 32.5% 6,858 6,878 34.1% 6,709 6,370 6,110 33.3% 31.6% 32.5

  41. Slide 41: 4.8.1 Operating stores, TRX volume and value

    4.8.1 Operating stores, TRX volume and value Consol. TRX value reaches approx. ¥16.7 trn in the past 12 months Operating TRX Volume*2*3 TRX Value*2 Stores*1/Terminals*2 End-Q2 FY2024 Q2 FY2024 Past 12-mnth Q2 FY2024 Past 12-mnth - 1.77 bn 6.80 bn ¥4.6 trn ¥16.7 trn Consolidated % YoY - +19.8% +23.1%

  42. Slide 42: 4.8.2 Waterfall chart of consol. TRX value (Q2)

    4.8.2 Waterfall chart of consol. TRX value (Q2) Online payment grew only 13.4% due to impact of electricity rate reductions, etc. CP Online payment GMO-PG +13.4% Consol. +25.8% payment Market*1 +12.0% （% YoY） Non-merchandise EC Merchandise EC （¥ trn） GMO-PG +58.8% +15.5% +9.2% Market*1 +11.1% +18.7%

  43. Slide 43: 4.8.3 Distribution of major sectors (Q2)

    4.8.3 Distribution of major sectors (Q2) Balance both stability and growth through sector diversification Revenue share by industry (vertical axis)/ Revenue growth rate (horizontal axis)* Revenue (Based on actual figures for Q2 FY2024) proportion The size of the circle represents the TRX value 30% 2

  44. Slide 44: 4.9.1 Consolidated cash flow statement (cumulative)

    4.9.1 Consolidated cash flow statement (cumulative) （¥ mil） 50,000 Cumu. Q2 FY2024 (¥ mil) Operating CF ： +33,859 Pretax profit +13,118 40,000 Deprec. & Amort. +1,574 Trade and other receivables -4,235 Advances paid -3,502 Accrued revenues -2,200 30,000 Accrued expenses +3,174 Deposits received +33,

  45. Slide 45: 4.9.2 Changes in consolidated cash flow statement

    4.9.2 Changes in consolidated cash flow statement Related liabilities & assets Impact from business expansion Payment Processing Business Sales proceeds of Deposits received Liability Operating CF merchants under the (liability) Yearly fluctuations can be large as annual TRX value of Representative

  46. Slide 46: Thank You Very Much

    Thank You Very Much GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange Prime) For inquiries or requests for 1-on-1 interviews, please contact the IR Department, Corporate Value Creation Strategy Division, at the telephone number below: TEL ： +81-3-3464-0182 E-mail ： ir-contact@gmo-pg.com IR Websi

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