Financial results briefing for the Q2 of FY2018 · Financial results briefing for the Q2 of FY2018...

Financial results briefing for the Q2 of FY2018

GMO Payment Gateway, Inc.

May 11, 2018

(3769: Tokyo Stock Exchange Section-1) h t t p s : / / c o r p . g m o - p g . c o m / e n /

The 53rd IR Meeting

Laying the groundwork for the next growth stage

https://corp.gmo-pg.com/en/

2Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

The contents of this document are based on generally recognized economic and social conditions, as well as assumptions judged to be reasonable by GMO Payment Gateway as of May 11, 2018. However, please note that they are subject to change without prior notice in the event of changes in the business environment or other unforeseen occurrences.

A cautionary note about the contents of the document


1. Summary of financial results for Q2 of FY2018

2. Full-year target for FY2018

3. Management target and requirements

4. Future actions to implement growth strategies

5. Financial highlights

6. Reference materials

Agenda


1. Summary of financial resultsfor Q2 of FY2018


(million yen)H1 FY17

actual

H1 FY18

actual

YoY

change

H1 FY18 plan

＜full-year plan＞

H1 FY18

actual vs. plan

＜vs. full-year plan＞

Revenue 10,028 12,558 ＋25.2％ 11,967 104.9％

Operating profit 2,153 3,269 ＋51.8％ 3,011 108.6％

Profit attributable to owners of parent 1,357 1,962 ＋44.5％ 1,825 107.5％

EBITDA 2,516 3,727 ＋48.1％ - -

1.1 Business performance

OP +51.8％ (+31.4％ under J-GAAP), TRX value +32.3％

※

(net profit)

Operating stores

(End of Q2)

Transaction value (Q2)

Transaction volume (Q2)

KPI88,673

（＋4.2％）

820 billion yen

（＋32.3％）

327 million

（＋25.0％）

*1

*3

*1 EBITDA＝OP＋depreciation expenses*2 Excludes offline payments. ( ) represents year-on-year changes.*3 Growth rate slowed down after a batch of merchants went idle with a partner’s service termination (+15.4％ without this factor)

*2

（2,536）（3,334）（＋31.4％）＜6,475＞＜50.5％＞

＜3,933＞＜49.9％＞

＜26,107＞＜48.1％＞

(J-GAAP)


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

Revenue Operating profit Profit attributable to

owners of parent

(million yen)

H1 FY2017 H1 FY2018

1.2 Factors that affected the cumulative results

+51.8％

+44.5％

+25.2％

Financial statements disclosed under IFRS from Q1 FY2018

Revenue・Major Ecommerce merchants grew・Expanded business areas besides merchandising Ecommerce

(service, digital goods, business with banks, etc.)・GMO payment after delivery transactions grew・MACRO KIOSK pushed up payment enhancement business

Operating profit・Money Service Business margin improved・Foreign exchange loss (payment enhancement business)・(H1 FY17) Expensed changes of fair value of BIP trust

Profit attributable to owners of parent (net profit)

・Foreign exchange (profit)・Equity method investment loss

dropped

*GMO-PS: GMO Payment Service

(net profit)


5,8866,960

2,070

3,106

2,071

2,491

0

2,000

4,000

6,000

8,000

10,000

12,000

Payment processing MSB Payment enhancement

1.3 Revenue/OP by segment

3,242 3,855

-87

583186

22

(100)

400

900

1,400

1,900

2,400

2,900

3,400

3,900

4,400

Payment processing MSB Payment enhancement

Payment processing profit up 20%+ (net), MSB turned black* ( ): YoY change■ OP by segment (before

consolidation adjustment)■Revenue by segment

（+18.2％）

（+50.0％）

（+20.3％）

（ - ％）

（-88.2％）

（+18.9％）

H1 FY17 H1 FY17H1 FY18 H1 FY18

・Major system development in H1 FY17+22.8% without this factor

・Solid GMO payment afterdelivery

・TRX value of early payment up・Remittance service grew steadily

・MK:Mainstay business grew mainly in emerging countries

・Online ad service:Ad placement down due to external factor ・GMO payment after delivery

margin improved

・MK’s foreign exchange loss・Portfolio of online ad service

under review

Total: +25.2% after adjustment

Total: +33.5% before adjustment(＋51.8％ before adjustment)

・Smaller system dev sales dragged(could have grown by +20%)

(“+20%” is our estimate since wecannot identify the expense for eachsystem development)

*MK: MACROKIOSK


1.4 Segment: Money Service Business (MSB)

Transaction lending Early payment GMO payment after delivery Finance lease Remittance Segment profit

F1 FY17 H1 FY18

■ MSB-related assets ■ MSB-related revenue

2017/3 2018/3

IFRSJ-GAAP

+44.5％Revenue

Segment profit

※

*H1 FY18 finance lease is for YoY comparison purpose only(Revenue recorded in net under IFRS; this bar is gross-based)

*( ): H1 FY18/H1 FY17

+50.0％

Asset +44.5%, MSB returned to profitability with better margin

+15.2％

+115.4％

+35.5％

－25.7％

+43.6％

+72.4％

+27.1％

＋23.0％

－21.0％


1.5 Revenue breakdown by business model

Fee and spread solid with higher transaction value and volume

803639

1,406 1,628

3,5384,797

4,280

5,492

0

2,000

4,000

6,000

8,000

10,000

12,000

H1 FY17 H1 FY18

(million

yen)

Initial Stock Fee Spread

Spread

Fee

Stock

Initial

・Solid payment processing business・GMO payment after delivery TRX value up

・Online ad service portfolio under review・Ginko Pay contribution to stock to kick in from H2

・One-off in H1 FY17 (major system development)

YoY ＋28.3％

YoY ＋35.6％

YoY ＋15.8％

YoY -20.3％

・Solid payment processing business・GMO payment after delivery TRX value up・MK transaction +35%

※MK：MACROKIOSK


2. Earnings target for FY2018


2.1 Full-year forecast

(million yen)FY2017

(actual)

FY2018

(forecast)Change

H1 FY2018

(forecast)

Revenue 21,054 26,107 +24％ 11,967

Operating profit(JGAAP)

3,948（5,015）

6,475（6,269）

+64％（+25％）

3,011

Profit attributable to owners of

parent

2,430 3,933 +62％ 1,825

Full-year dividend 40.0 yen 49.0 yen ＋9.0 yen -

(Unit: million yen; ％ represents change vs. previous year)■ FY2018 ending September 2018

Released IFRS-based forecast; targeting OP growth of 64％

*1 Gap between JGAAP and IFRS: largely due to a fair value change in BIP Trust provision (pushed up SG&A and down profit in FY17)*2 YoY changes are pre-audit figures

YoY changes are omitted on summary of consolidated financial statements, etc. since IFRS adoption started in FY2018.

*2

*1


0

5000

10000

15000

20000

25000

(million yen)

Revenue Operating profit Net profit DPS

2.2 Consolidated earnings transitions

Forecast vs. Prev. year results

Revenue +24％

Operating profit +64％

Profit ＋62％

Expecting a JPY49 DPS for the current periodIFRSJ-GAAP

26,107

6,475

3,933

21,054

3,948

2,430¥4.38 ¥5.25

¥5.88 ¥7.75

¥9.75

¥12.25

¥15.00

¥18.00

¥27.00

¥40.00

¥49.00


3. Management target and

requirements


3.1 Management target and requirements

Guarantee 25%+ growth continuation by covering the 5 areas

EC CashlessFinTech

Management target

Focal areas

・Acquiring partner banks- account transfer

app- new payment

method

・Applying IoT terminals tovending/ticket dispensing machines

・Expanding MACRO KIOSK business areas

・Investing in top companyin each country

Guarantee continuation of 25%+ consolidated OP growth

IoT Global

・Implementing collaborative businesses

・Acquiring major/growthbusinesses

・Growing digital goods

・AI research

・Margin improvement

REV Installment Sales Act

Marketenvironment

Cashless vision Domestic GDP scaling down

Advancement of technologies

Managementrequirements

As Is

To B

e

REV Banking ActTokyo Olympics

・Diversify B2B product・Collaborate with offline

market・Connect merchants and

services

・Accelerate businessexpansion

・Overseas lending(JPN interest rates = low)

・Terminal replacement・Key account acquisition

- Beverage, public transportation, etc.

・Accumulate and use payment data(payment data× biz data)

・Acquire, connect andbe the infrastructure

・Improve MACRO KIOSKmargin

・Overseas lending


4. Future actions to implement

growth strategies


IoT

Global

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

4.1 Operating profit target for 2020

EC

Cashless

Fintech

Expand in 5 areas to deliver JPY 10 billion OP in FY2020

2018

Operating profit target

JPY 6.4 billion(plan)

JPY 10 billion(target)

4.2

4.4

4.5

4.3

4.6

“guaranteeing 25％+ profit growth continuation”


FY2017 FY2018 FY2019 FY2020

4.2 EC: Deliver 20%+ profit growth continuation

Acquire and connect “winners”, and put non-B2C EC payments online

EC market expected to grow by 10％

Target 20%+ growth

Our initiative and strategies

Profit target Market outlook

EC rate

Present 2020

5.8％ 7～8％

¥16.5T ¥22-24T

¥3T

EC market

TRX value

*

*2020 figures are our estimates

●B2B market to expand steadily

Diversify our products

Expand services to clients within same industry

●Services dedicated to pre-EC industries

Healthcare, construction, education, etc.

●New growth markets

O2O, subscription

Services for inbound visitors


FY17 H1 FY18 FY19 FY20

¥583 million(1H actual)

*MSB

MSB margin improvement and acceleration of business expansion while monitoring capital efficiency

4.3 FinTech: MSB profit expansion

●Move on from investment to profit collection stage

Invest in high capital efficiency or margin services

Healthy expansion of relevant assets

●Synergy with payments (ecosystem)

Early payment, transaction lending

●Take in high-growth C2C market

Remittance

●Foreign lending to take off


Creditpaymentmarket

2020

¥400B ¥1-1.2T

*

MSBbalance ¥43.4B

Present


*2020 figure is our estimate


4.4 IoT: Seize chances for growth acceleration

IC terminal replacement on law revision and Tokyo Olympics

FY17 FY18 FY19 FY20


OfflineCashlessmarket

2020

¥58T ¥87T

*2020 figure is our estimate

*

Total of credit, debit and prepaid cards

Present

●Replacement demands of offline terminals

From magnetic tape to IC chip

●IoT terminal resales expansion and more data accumulation/utilization

Target: beverage maker, public transport, etc.

Connect payment and business data for higher business efficiency

●Government target (40% in 2025)

“Cashless vision” by METI



4.5 Cashless: Expanding business with banks

Acquire banks, connect services and be their infrastructure

17/7

17/8

17/9

17/1

0

17/1

1

17/1

2

18/1

18/2

18/3

18/4

18/5

No. of merchants under Ginko Pay

(Registration base)

Merchant/services

July 2017

Hama Pay

starts

March 2018

YOKA!Pay

starts

Processingplatform

Ginko Pay

TAX

Bank

User

Merchant

■Advantages of connecting banks・Accelerates data accumulation・Delivers peripheral services

(Lending, remittance, etc.）

・Optimizes credit card charge・Collects customer data

efficiently

・User incentive(reward redemption, etc.)

・Account consolidation


Country GDP(Trillion yen)

Devstage

ApproachMain

investment/businessPortfolio

Taiwan 60 LatePayment processing (Assist JPN companies with TW

entry)

Malaysia 30 LatePayment enhancement (Acquisition of banks/large companies and R&D base)

Singapore 30 LateControl, research and investment (Invest, R&D into

promising companies)

Thailand 50 MiddlePayment processing (Incorporate results of equity

method affiliate)

India 250 Early Invest in local promising companies as a base

Indonesia 100 EarlyPayment enhancement (transactions at banks and

large companies)

Vietnam 20 Early Invest in local promising companies as a base

Philippines 30 EarlyPayment enhancement (transactions at banks and

large companies)

4.6 Global: Focal businesses in Asia

Optimize approaches by country

■Strategy portfolio by country (Asia)

*Nominal GDPUnderlined are approaches by our consolidated subsidiaries or entities that deliver our products

*

Invested Mar. 2018Detects fraud with AI


5. Financial highlights


MSB-relatedOther

Allowance for doubtful accounts-3,051

Net assets

35,663

63,569

Increase in MSB-related deposits and assets

5.1 Changes in our balance sheet

End ofQ2/18

End of Q4/17

End ofQ4/16

Current assets Noncurrent assets Liabilities Net assets

Investment

Deposits(under representative merchant service)

MSB-related

Interest-bearing debts(short+long)

45,549

71,079

79,593

9,222

13,259

13,732 71,637

19,108

20,769

21,688

*MSB-related assets: lease receivable, short-term loans receivable,advance payments-trade and accounts payable-other

*1 J-GAAP was applied for FY2016*2 MSB-related liabilities: accounts payable-other

Allowance for doubtful accounts-327

Allowance for doubtful accounts-2,393

Other Other

15,461

39,130

43,478

(Unit: million yen)

27,634

37,406

41,418

2,784

12,558

14,074

※1*2


0

50

100

150

200

250

300

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

12/12 13/3 13/6 13/9 13/12 14/3 14/6 14/9 14/12 15/3 15/6 15/9 15/12 16/3 16/6 16/9 16/12 17/3 17/6 17/9 17/12 18/3

Recurring billing Online payment volume Operating stores*Number of operating stores represents end-of-quarter figure, transaction value/volume represents figure during quarter

Operating stores: 88,673; Transaction: ¥820 billion (value), 327 million (volume)

5.2 Major KPIs (Quarterly)

Annual transaction value reaches ¥3.2 trillion

Transaction value

≒50% of trx value is subject to spread charge

*This figure is an annual average

(Updated every５％)

(million TRX)

(stores) (billion yen)

600

500

400

*17/9 operating store number dropped QoQ due to a batch of merchants that went idle after a partner’s service termination

700 (Reference) Transaction value (past 12 months) ¥2.96 trillion

Including GMO Financial Gate ¥3.2 trillion


6. Reference materials


2,204 2,265

2,6032,733

2,9983,090

3,294

4,347

5,6455,716

6,086 6,098

6,459

476 508 554 615 683 700 772

1,109

1,813 1,8231,940

2,0352,143

966 944

1,3721,247 1,307 1,316

1,655

2,036

2,497 2,491

3,067

2,4942,595

21.5%22.4%

21.3%22.5% 22.8% 22.6% 23.4%

25.5%

32.1% 31.9% 31.9% 33.4% 33.2%

43.8%

41.7%

52.7%

45.6%

43.6%42.6%

50.3%

46.8%44.2%

43.6%

50.4%

40.9% 40.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

15/3(2Q) 15/6(3Q) 15/9(4Q) 15/12(1Q) 16/3(2Q) 16/6(3Q) 16/9(4Q) 16/12(1Q) 17/3(2Q) 17/6(3Q) 17/9(4Q) 17/12(1Q) 18/3(2Q)

Revenue Cost of revenue SG&A Cost-revenue ratio SG&A-revenue ratio

6.1 Cost of revenue ratio/SG&A ratio (Quarterly)

Cost of revenue ratio changed due to sales mix change

*Figures with asterisk do not take into account outsourcing expenseNot included in SG&A under IFRS from Q1/18

*50.2％

*42.6％

*41.5％

*39.8％

*37.4％

*44.5％

*41.7％*40.3％

*39.9％

*47.2％

IFRSJ-GAAP


127 182

108 147

105 142 127 150 142 161 151 185

343

457

237

327251

388464

483 501 499 516 528 565

594 663

728 748

786 875 906 929

980

795832

468 496 501

512 532

601 612 630 667

724 749

794 1,026

1,809

1,895

2,004

2,3602,436

584

680 713 733 804

931 959

1,227 1,259

1,383 1,441

1,527

2,101

2,471

2,653

2,7732,691

2,801

0

500

1,000

1,500

2,000

2,500

14/1Q 14/2Q 14/3Q 14/4Q 15/1Q 15/2Q 15/3Q 15/4Q 16/1Q 16/2Q 16/3Q 16/4Q 17/1Q 17/2Q 17/3Q 17/4Q 18/1Q 18/2QInitial Stock Fee Spread

6.2 Revenue breakdown (Quarterly)

Revenue of some services recorded in net figure under IFRS(million yen)

IFRSJ-GAAP

*Revenue of online ad service (stock) and finance lease (spread) are now recorded on a net basis on transition to IFRS

*

*


-6,000

-4,000

-2,000

0

2,000

4,000

6,000

8,000

FY2013 FY2014 FY2015 FY2016 FY2017 Q2/18

OCF ICF FCF Free Cash Flow

Positive OCF with earnings and deposit growth

6.3 Consolidated cash flows

OCF: ＋3,816 million

ICF: －788 million

FCF: 1,228 million

Pre-tax profit +3,180 millionChanges in operating and other receivables -4,204 millionChanges in operating and otherpayables ＋6,073 million

Acquisition of intangible assets-538 million

Net changes in short-term borrowings +3,200 millionPayment of long-term borrowings

-415 millionDividend payout -1,482 million

Free cash flow: ＋3,028 million

IFRSJ-GAAP■Cash flow changes in Q2

Thank you very much!

GMO Payment Gateway Inc.

URL https://corp.gmo-pg.com/en

( T S E : 3 7 6 9 )

For more information, please contact the Corporate Value Creation Strategy Division

Investor relations office TEL:+81-3-3464-0182

Financial results briefing for the Q2 of FY2018 · Financial results briefing for the Q2 of FY2018...

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