Financial Results Briefing for Q2 FY2020
Initiatives Underway for the New Business Landscape During COVID-19

May 14, 2020

The 61st IR Meeting

GMO Payment Gateway, Inc.
(3769; Tokyo Stock Exchange First Section)

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

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

Safe Harbor Statement

The contents of this document are based on generally
recognized economic and social conditions, as well asassumptions judged to be reasonable by GMO Payment
Gateway as of May 14, 2020.
Please note that the contents are subject to change
without prior notice in the event of changes in thebusiness environment or other unforeseen occurrences.

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

2

Agenda1. Summary of Financial Results for Q2 FY2020
2. Business Landscape during the COVID-19 Pandemic
3. Future Initiatives and Growth Strategy
4. Financial Highlights

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

3

1.

Summary of Financial Results for Q2 FY2020

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

4

1.1

Financial Results Summary （IFRS）

Q2 standalone growth rates improved; Exceeded 1H guidance(Mil. Yen)

Revenue

FY2019 1H
ActualFY2020 1H
Actual

16,015

18,386% achievementvs. 1H guidance% YoY(vs. Full Year guidance)＋14.8％

9,356（50.2％）（＋20.4％）

2,623

4,258

4,704

＋10.5％

107.8%

Pre-tax
Profit

4,134

5,247

＋26.9％

127.3％

Profit Attributableto Owners of
Parent

2,578

3,408

＋32.2％

134.5%

4,753

5,414

＋13.9％

-

※1

KPI

※2

(% YoY)107.4%

Operating
ProfitEBITDAFY2020 Q2standalone（45.3％）（53.2％）（55.8％）（＋20.3％）2,518（＋14.5％）

1,679（＋12.0％）2,985（＋22.7％）

Operating Stores ※3(End-Q2)

GMV Volume(Q2 Standalone)

GMV Value(Q2 Standalone)

122,328

Approx. 580 mil.

Approx. ¥1.2 tr.

（＋20.2％）（＋37.2％）（＋19.8％）※1 EBITDA＝Operating Profit + Depreciation.
※2 Figures in parentheses are % YoY changes. Excludes offline transactions; if offline transactions are included the GMV volume is approx.
590 mil. (up 38.1％ YoY) and GMV value is approx. ¥1.3 tr. (up 24.9％ YoY).
※3 Figures exclude the recent increase in operating stores from a specific merchant. If included, the number of operating stores is 281,500
stores (up 111.3% YoY) for the same period.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

5

1.2

KPI Analysis（Q2 standalone/YoY)

Revenue driven by strong trend of operating stores and GMV
volume even during COVID-19
Operating stores ＋20.2％
vs prev. Q2＋15.7%(Stores)
120,000＋20.2％

100,000

GMV volume ＋37.2％
vs prev. Q2 ＋29.6％(Mil. transactions)
600

GMV Volume(¥bn.)

Excl. Digital Content

1,400

500

60,000450

決済処理金額GMV Value
旅行・チケット除く決済処理金額
Excl. travel/ticket＋19.8％

1,300

550

80,000

GMV value ＋19.8％
vs prev. Q2 ＋24.9％＋37.2％

1,200
1,100
1,000

40,000400＋33.7％
20,000

350

0

300

End-March 2019

End-March 2020

800
700
18/6

18/9 18/12 19/3

19/6

19/9 19/12 20/3★
・Surge in small-scale operators ★
・Growth acceleration ofmoving online
Delivery/Take-out
Daily good, sundries etc.

★＝Impact of COVID-19＋22.5％

900

digital contents
Video streaming, e-books
・Strong trends in infrastructure sectors (e.g. local
governments, utilities,
telecom, public dues)

18/6

18/9 18/12 19/3

19/6

19/9 19/12 20/3

・Decline of high-price payments,★
i.e. travel and ticket sales.
GMV value excl. travel/ticket※up 22.55% YoY

・ Increase of micropayments
e.g. digital contents※ Figures exclude a certain sector in the PG Multi-Payment service.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

6

1.3 Factors affecting OP & Pretax Profit (Cumulative Q2 basis)
SG&A increase due to higher provisions; Pre-tax profit upliftedfrom increase in equity method income■OP waterfall chart (+10.5% YoY)
(Mil. Yen)

SGA
GP
increase increase＋1,566 ＋1,121

Other
Other
revenue expenses＋20 4,704
＋21

4,258
・Increase in provision for
doubtful accounts at PS＋525 mil.
・Higher rent and otherexpense from officerelocation＋139 mil.
・Higher provision for oneoff factors
Current term ＋246 mil.
Prev. term
－356 mil.
・Revenue increase＋1,563 mil.

1H FY2019OP

1H FY2020
OP■Pre-tax profit waterfall chart(+26.9% YoY)
Equity(Mil. Yen)

incomeFinancial Financial ＋473 5,247
income expense
OP increase ＋218
＋25
＋446

4,134
・Increase in gains frominv. partnerships (Q1)＋223 mil.
・Decline in interest &dividend received －4 mil.
・Increase in equity method
income (2C2P turns a profit)＋59 mil.
・Gain on change in equity to
2C2P (Q1)＋414

1H FY2019PBT

1H FY2020
PBT

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

7

1.4.1

Segment revenue and OP YoY (cumulative Q2)

All segments outperformed company plans■ Segment revenue■ Segment operating profit(Mil. Yen)

(Mil. Yen)

20,0007,000

Consol. Revenue: +14.8％
3,169

18,0002,909

12,000987

5,000

4,364 （+13.8％）＋ Strong trend of GMO
Payment After Delivery (2wk)＋ Growth of overseas lending 4,000－ Decline in Remittance and
Early Payment services

3,833

10,00010,858 （+17.1％）

9,272

8,000

54 (turns a profit)＋ MACROKIOSK in line
6,000
with internal plans－ Impact of online advertisingand delivery service

16,00014,000（+8.9％）＋ Growth of online payment＋ Strong trend of offline
payment＋ Expansion of Ginko Pay

6,000
4,000

Of which, offline andlike-for-like online
payment: +31.5%

2,000

4,258

3,000

4,724
2,000

FY2019 1H

FY2020 1H＋ Decline of forex losses at
MACROKIOSK－ Impact of online advertisingand delivery service
4,704

829（－16.0％）＋ Strong trend of GMO Payment
After Delivery (2wk)+ Growth of overseas lending－ Decline in Remittance and
Early Payment services－ Impact from change inprovisions
5,380（+13.9％）＋ Growth of online payment＋ Strong trend of offline payment＋ Expansion of Ginko Pay

1,000

0

0

(%): % YoYConsol. OP:＋10.5％

FY2019 1H-31

FY2020 1H

Operating Profit
Payment Processing
Money Service
Payment Enhancement(1,000)(after consol. Eliminations/adjustments)※ Like-for-like online payment excludes: ① Contract expiration of a large merchant in the previous Q2, ② contract termination of a certain merchant in
the previous Q2, ③ change in contract terms to certain merchants in the current term’s Q1.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

8

1.4.2 Segment revenue and OP YoY (Q2 standalone)
All segments outperformed company plans■ Segment Revenue■ Segment Operating Profit(Mil. Yen)

(Mil. Yen)

10,000Consol. Revenue: +20.4％

4,000

1,602 （+13.3％）

9,000＋ MACROKIOSK in line withinternal plans－ Impact of online advertisingand delivery service

8,000

1,415

7,000

2,261 （+24.3％）
6,000

1,819

5,000

4,534

4,000

5,494 （+21.2％）

Consol. OP: +20.3％

3,500

81 （＋74.6％）

3,000

2,500

＋ Strong trend of GMO Payment
After Delivery (2 wk)＋ Growth of overseas lending
2,000－ Decline of Early Payment service

46

Of which, offline andlike-for-like online
payment: +31.7%

1,000＋ Decline in forex loss at
MACROKIOSK－ Impact of online advertisingand delivery service

493 （＋44.1％）＋ Strong trend of GMO Payment
After Delivery (2wk)＋ Growth of overseas lending－ Decline of Early Payment
service

342

1,500

2,296

1,000

2,000

2,623

2,181

＋ Growth of online payment＋ Strong trend of offline payment＋ Expansion of Ginko Pay

3,000(%): % YoY

2,878 （+25.3％）＋ Growth of online payment＋ Strong trend of offline
payment＋ Revenue expansion of
Ginko Pay

500

0

0

FY2019 Q2

FY2020 Q2

Payment Processing

Money Service

FY2019 Q2

Payment Enhancement

FY2020 Q2

Operating Profit (after elimination/adjustments※ Like-for-like online payment excludes: ① Contract expiration of a large merchant in previous Q2, ② contract termination of a particular merchant inprevious Q2, ③ change in contract terms to certain merchants in the current term’s Q1.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

9

1.5

MACROKIOSK: Transfer of Shares and Waiver of Claims

3 reasons behind decision to divest: management, profitability and, area coverage■Reasons for divestiture and waiver of claims① Management challenges
Difficulty to exercise management control
over drastic changes in business environment② Uncertainty over profitability
Negative capital continues; difficulty to achieve
25% growth③ Uncertainty of area coverage
COVID-19 spread across Asia and widespread recession■P/L Impact (estimated)
OP: Approx. ¥300 mil. reduction
Profit: Approx. ¥600 mil. reduction■History
Consolidated Macro Kiosk on August 30, 2016
Voting rights:
70%
Acquisition price: approx. ¥1,121 mil.
FY2018: Recorded impairment loss ¥359 mil.
FY2019: Recorded impairment loss ¥992 mil.
■ Total amount of loans
Approx. ¥10 mil.
Used to support long-dated AR services andexpansion to neighboring countries

Cashflow improvement
Resource focus on high-margin
businesses
Exit from uncontrollable risks■ Financial results(Mil. Yen)100

CY2017
CY2018CY2019

Revenue ※¥3,627 mil. (+28.5％ YoY)
¥4,375 mil. (+20.6％ YoY)
¥5,059 mil. (+15.6% YoY)

0
OP Loss

-100
-200

OP

Net Asset-300
CY2017

CY2018OP Loss
Negative Capital
CY2019※ Converted using 1 Malaysian Ringgit = 25 JPY
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

10

1.6

FY2020 GuidanceImpact to consolidated earnings unconfirmed due toundetermined closure date of share transfer and deconsolidation※■ Impact of share transfer of MACROKIOSK (estimates as of April 30 th)

OP: Approx. ¥300 mil. reduction
Loss on sales of subsidiary shares
Profit: Approx. ¥600 mil. reduction
In addition to this, net profit attributable to owners of parent will be impacted from waiver of claims※ Estimate assumes share transfer to conclude by end of March 2020. Revenue reduction is likely but has not been computed.

Impact to consolidated earnings unconfirmed due to undetermined closure date of share transfer
and deconsolidation at present. Details on the impact to guidance figures are currently being
reviewed and will be promptly disclosed once confirmed.
(Unit: Mil. Yen, % YoY)
■ FY2020 Earnings guidance announced on November 12, 2019
FY2019ActualFY2020
Guidance

Revenue

32,121

36,618＋14.0％

OP

8,301

10,376＋25.0％

Pretax profit

8,039

9,867

＋22.8％

Profit

5,052

6,216

+23.0%

Profit attributableto owners of parent

5,267

6,110

＋16.0％

Earnings per share

¥36

¥42

+¥6

% YoY

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

11

1.7 Subsidiary earnings: proportion, actual and forecast
Reviewing Q3 and Q4 guidance due to current lack of clarity
on COVID-19 impact% of consol. % ofrevenue consol. OP
Consol.

100%

100%

PG parent

60%

73%

EP

12%

20%

PS

18%

4%

FG

10%

3%

MK

ー%

ー%

1Q

+

3Q

4Q

Reviewing impact of MK
and COVID-19

－

+

+
+

+

+
Date of deconsolidation
undetermined※2+ Revenue increase of over 14% YoY※1 Estimate for Q3 and beyond is as of May 14th.

2Q

Up to +14% YoY－% YoY decline※2 ＋14％ is the FY2020 revenue growth rate guidance
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

12

2.

Business Landscape during the COVID-19

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

13

2.1

Our response to the COVID-19 pandemic

Reinforce systems on the presumption of prolonged COVID-19
impact, switched to remote work from end of January.
■ Response to COVID-19
Ratio ofDateremote work
Jan. 27th70％

Response
Switched to remote-working

Early March

80％

Start of operation according to Group Rules

April 7th90％

Stricter implementation of remote workwith the declaration of State of Emergency
Revise operations and organization presuming
a prolonged COVID-19

May～current■ Undertakings that were reinforced assuming remote-working and prolonged COVID-19
・Systems Division: ratio of remote-work reached 98% from the initial 78%
Switch to email/chat-based support operations instead of telephone-based
・Fully online: BoD meetings, periodic meetings and, training for new grad recruits
・Revised operations and organization effective June assuming prolonged COVID-19 impact
OnlineUnchanged stance on strengthening sales to large-sized operators
Increased personnel with expertise in utility sector
Considering revising the office layout

OfflineProposals of take-out/delivery service to adversely affected offline stores
Strengthened proposals on strategy including self-checkout to COVID-19
resilient sectors
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

14

2.2

March revenues and GMV:
performance by sector and revenue exposure

Sectors with high revenue exposure are growing; high growthis achievable even during COVID-19■ Scatter diagram of revenue and GMV by merchant’s sector ※1
High

High revenue exposure

Proportion of revenue＜Legend＞
Sector Growth trajectory
Performance of major merchants

Digital Content＋200％
Major telecom
Major video streaming ＋90%
＋60％
Security tool

UtilityGas utility ＋30％
New EPCO ＋25％

ApparelFood & Beverage

Ticket＋1000％
Beer server
Grocery delivery ＋40％
Alcohol delivery ＋25％

Ticket X－60％－70％
Ticket Y
Entertainment －100％

Hobby/Sport＋0％
Golf shop
Model-kit subscription ＋25％
＋0％Sports goods＋60％
Domestic apparel X＋40％
Domestic apparel Y
Foreign-brand apparel ＋30％

Insurance＋45％
Non-life X＋15％
Non-life Y
Life insurance ＋30％

Low revenue exposure

Travel/Transport
Travel agent
AirlineResort Hotel

N/A ※2
N/A－60％

Proportion of GMV

High※1 This shows the relative position of GMV value and revenue of each sector within the PG Multi Payment Service, which accounts for around 80% of GMV.
The %age figures show the approximate YoY performance of GMV value for the month of March of major merchants.
※2 % YoY changes cannot be computed due to cancellations.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

15

2.3

Sectors transformed by COVID-19 and our response

Development of Digital Transformation (DX) platforms that
adapt to the industry changes caused by COVID-19■ Impact of COVID-19 by sector and our response
Positive

Demand change caused by COVID-19
Negative

SectorChanges caused by COVID-19

Our response

Digital content

Surge from nesting demand, increasein new entrants

Approach to new entrants
Responding to high EC demand

Telecom

Surge in data traffic; consumer content
business expands

Supporting new economies
through payment

ApparelO2O, acceleration of omnichannel
systems

Dining/Food/
Beverage

Massive increase in delivery/take-out
and subscription services

Utility

Online payment expands; rising need forsmart meter

Healthcare/
Pharmaceutical

Stronger momentum toward online
medical service and dispensaries

Lateral deployment of in-development
services
Collaboration to win major projects
Remote consultation, testing services
Making inroads to new entrants

Education

Initiative to build framework for online
schooling

Making inroads to new entrants, e.g.
online educational service providers

Hobby/Sports

Increased demand for VR/AR
technology-based businesses

TicketCancellation of events and live
performances

Travel/Transport

Demand plummeted from movement
restrictions

Strengthen sales collaboration
between online and offline
Promote O2O/omnichannel systems

Promote O2O business thatleverage latest technologies(VR/AR)
Proposals on transition toautonomous/unmanned service

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

16

3.

Future initiatives and growth strategy

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

17

3.1

Progress of Priority Initiatives

Vector of initiatives remains unchanged; acknowledged delaysof few week to few months in certain projects Update/Progress
Already commenced
To be commenced

DX Platform

Offline Payment(IoT)
FinTechGlobal Major
Players

2020

2021

Current

Delays in development of expanded
add-on operation
Financial Ginko Pay・Issuing/Acquiring
Revisions to certain functions cause
stera (online)
Institutions
around a 3-mnth delay
UtilityFirst case to start in Fall New plans delayed by around 1mnth
Telecom

Delay of service launch (Mar→Jun)

Logistics

Temporarily de-prioritized by customer
Demand increase, higher strategic
prioritization

Unattended Market

App development delayed 1.5 months

stera (offline)
B2B Factoring (early invoice andB2B early payment))
Expansion of B2B AR GuaranteeFirst case to start
this FYB2B Payment
Business
Global Business(not limited to impact of COVID-19)

Decline in inflows(shift to govt. loans)
Progressing but contract
confirmations to take time
Demand increase
Faster take—up likely

Strengthen MSB to support
investees (Fintech companies)
through payment and lending

Competition easing
Opportunity to expand lending

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

18

3.2.1DX Platform: The Broader EC

Revamp sales structure; capture new demand through industryspecific DX platform■ Quarterly trend of merchandise and nonmerchandise GMV value ※1① Growth strategy so far

Acquiring large and high-growth merchants
Expanding non-merchandise EC
Structuring industry-specific DX platforms

Non-merchandise GMV
Merchandise GMV② Impact of COVID-19
Surge in digital content demand, online shiftNon-merchandise EC
in healthcare and education
CAGR ≒40％
Increase in merchandise EC store openings
Recognized need for partial revision of※2
stera’s function causing a 3-month delay
Acceleration of
New plans targeting utilities delayed by 1mnth
EC penetration
No change in overall demand③ Growth strategy during COVID-19
Enhance collaboration with local
governments/educational institutions
Merchandise EC
CAGR ≒ 20％※1 GMV value for Multi-Payment Service offered by GMO Payment Gateway

Omnichannel proposal to “offline” sectors
i.e., healthcare/education/retail O2O/B2B etc.

※2 Not due to COVID-19
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

193.2.2DX Platform: Financial Institutions

Promoting strategy to capture rising cashless demand during COVID-19① Growth strategy so far■Quarterly trend of stock revenue forfinancial institution businesses

Expand the financial institution platform
Ginko Pay, Issuing/Acquiring, stera

Total: ＋46.1％ YoY② Impact of COVID-19
Ginko Pay
Up 74.9% YoY

Increase in cashless demand
Decrease in inbound transactions
Increased inquiries for issuing/acquiring

Issuing/Acquiring
Up 36.9% YoY

Requests from existing clients for add-ons
However, delay in developing add-on operations
New merchant acquisitions temporarily slowed③ Growth strategy during COVID-19

Ginko Pay

Issuing/Acquiring
イシュイング／…

Other

20/12

20/9

20/6

20/3

19/12

19/9

19/6

19/3

18/12

18/9

18/6

18/3

17/12

17/9

17/6

17/3

16/12

16/9

16/6

Basic strategy is unchanged
Revise pipeline of issuing/acquiring andformulate alternative plan
Expand merchant base for GCP for
the post-COVID-19 phase※ GCP stands for GMO Cashless Platform
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

20

3.2.3

Progress of Initiatives at GMO Epsilon

Focus on new merchant acquisitions to return to 25% growth
track; GMV recovering from nesting demand■GMO-EP: Quarterly trend of GMV value andnew merchant acquisitions(Mil. Yen)
40,000

GMV Value (LHS)＋26.9％ YoY(Stores)
4,000

New merchant acquisitions (RHS)
35,00030,000Target acquisitions (RHS)

3,000① Growth strategy so far
Acceleration of new merchant acquisitions
and rollout of new businesses
Strengthen MSB through collaboration withpartners② Impact of COVID-19
Increase in new applications and GMV
value due to nesting demand③ Growth strategy during COVID-19
Basic strategy is unchanged
Select targets based on industry’s risk level25,000Measures underway toincrease merchant2,000
acquisitions

20,00015,0001,000

Robust GMV value driven by nesting demand＜Top sectors in GMV value growth for March 2020＞
Alcohol＋70%

Book/Magazine/Comics+50%

Gardening/DIY+35%

Healthcare/Contact lens/Aged care +30%
Kitchen/Daily goods/Stationary+25%※ all approximations

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

21

3.3

Offline Payment (IoT)

Rebuild society with unmanned payment technology during the COVID-19 phase① Growth strategy so far
Strengthen marketing to Unattended
Expansion of Unattended Market;
Market (UM)
Forecast
stablegrowthfrom(Mil. Yen)
stera
accelerationofcashless
700② Impact of COVID-19
Approx. +147％ YoY penetration
Postponement of GMO-FG listing■Quarterly trend of initial revenues in offline
market ※600

Increased demand of UM

500

Increased demand of payment terminals in theoffline market due to rapid cashless penetration

400

300

stera app development delayed by 1.5 months
Risk of supply delays for payment terminals(currently recovering)③ Growth strategy during COVID-19

200

100

Basic strategy unchanged (incl. IPO of GMO-FG)
Promote delivery/take-out (O2O, omnichannel)
Expansion of UM (self-checkout, autopay, etc.)0

Use of existing terminals for stera;
Setup a remote system development structure※ Initial revenues for offline payment include development and payment terminal sales.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

22

3.4

FinTechImprove capital efficiency and expand earnings through high-margin services andPayment After Delivery① Growth strategy so far※
Shift asset to high-margin services■ Segment revenues (Q2 standalone)

Finance Lease
B2B Factoring+24.3％ YoY－44.3％＋393.3％＋6.5％

Remittance Service
GMO Payment After
Delivery

Payment After Delivery (PaD), overseas Lending
B2B Factoring (Invoice Early Payment, B2B Early Payment)
B2B AR Guarantee② Impact of COVID-19
Increased demand for PaD, Lending, C/F
support services
PaD (2wk): Q2 standalone +43.3% YoY

Temporary increase in Remittance demand

Early Payment Service

Higher remittance service use for cancellation refunds
Domestic&Overseas
Lending+25.0％

Increase in credit risk
Decline in inflows for B2B Factoring
Demand shift to govt. loans＋1.9％+74.6％FY2019 Q2

FY2020 Q2③ Growth strategy during COVID-19
Provide credit that incorporates change incredit risk
Diversifying clients in PaD service, marketing to
new sectors※ Defined as services where ROIC > WACC. ROIC = Est NOPAT ÷ Monthly avg. BS balance

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

23

3.5.1

Global: Business portfolio after MK divestiture

Business promotion with a healthy asset base; prudently expand high-margin business■ Global business footprint
Payment Processing
Business
Money Service
Business

2C2P
・ Positive profit
・ Revenue up
57.3% YoY
・ Equity value
and market
value up 2.8x

※ Company names and logos shown are
for major investees and borrowers.

India

Hong Kong
VietnamThailandApprox.
2.8x

TaiwanUS

Equity stake 100%

Philippines

A Make-Any-Day-Pay-Day Fintech
company. Maintaining soundfinance even during COVID-19.

Equity stake 30％

Singapore
Indonesia
InitialInvestment

Deferred Payment Fintech company.
Loan balance increased 3x YoY.

Current Mrkt
Value
(End-March)※ Current term % growth rates are estimates.

Global business: Previous term and outlook; BS exposure (excl. Payment Enhancement Business)
Total
Payment Processing
Money Service Business(Unit: Mil. Yen)

RevenueOP
2C2P equity
method income
Profit adj. for equity
method income

Asset
EquityFY2019 FY2020 Est. % YoY

40

50

－117

FY2019FY2020 Est.

% YoY

FY2019 FY2020 Est. % YoY

＋25％

387

533

＋38％

427

583

＋37％

－111

－

194

304

＋31％

77

143

＋86％

－19

419

－

－136

308

－

＋48％

2,900

4,300

＋48％

2,198

2,198

－

Cumulative equity
investment into 2C2P

2,198

2,198

Avg. loan balance

2,900

2C2P adj. equity
return14％

4,300

MSB adj. asset
return 7％※ Excludes MK and other companies included in Payment Enhancement Business. No occurrence of NPL and delinquencies in interest and repayment since launch of global lending
business. 2C2P adjusted equity return related to 2C2P = OP adj. for equity income ÷ Equity investment.
MSB adjusted asset return = OP of global MSB ÷ Est. avg. loan balance

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

24

3.5.2Global: MSB for Fintech Support (Lending)Credit crunch in US and Asia;
Fintech Companies growing on back of working capital squeeze■ Growth strategy
Strengthen FinTech supporting MSBs
Support leading Fintech companies in the
mid/small-businesses space amidst theshrinking footprint of incumbent players
Expanded addressable market ofFintech companies in the credit score
pyramid

Mid/Small & Nonbanks
Large banksⒷ

FinTechⓎⓍ

Downturn

Recovery Phase

During COVID-19

Shrink from Ⓐ→Ⓑ
Increase in NPLs
Attrition caused bymonetary policy

3Phase2└Proactive
transformations

0

FinTech Companies
Expand from Ⓧ→Ⓨ
Opportunity to fill the“vacuum” created byattrition of large andmid/small-sized banks-3

Phase1└Prudency ① Monitor existing borrowers② Capture new borrowers

-6
2020
2021
Current

Individual

Corporate

Post COVID-19
Phase3└Proactive expansion
High growth from initiatives
undertaken during COVID-19（％）
6

Mid/Small-sizedbanks & nonbanks

Ⓐ

Co. X

※

■ GDP forecast for US & Asia and Initiatives

2022

2023

2024

2025

※ GDP forecast for Asian countries excluding Japan, South Korea,
Taiwan, Hong Kong and Singapore.
Figures for 2022 and beyond are GMO-PG’s forecast by referencing
IMF’s ”World Economic Outlook, April 2020: The Great Lockdown”
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

25

4.

Financial Highlights

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

26

4.1

Balance Sheet Changes

Increase in deposits received and MSB-related assets
Assets(Mil. Yen)

159,194

160,000

139,990140,000

120,000

100,000

42,03360,0000116,858

100,000

38,80060,00059,27540,00053,530 Prov. for

7,965

7,275

8,535

End-Sep 2018

End-Sep 2019

End-Mar 2020

※1

120,000

doubtfulaccounts－
1,968

※2

MSB Related

46,752

16,63014,32743,674 Prov. for
doubtfulaccounts－2,003

Investment Related

139,990

80,00023,18540,00020,00029,07627,171

Other

159,194

56,72452,01380,000Liabilities and Equity

140,000

62,306

116,858(Mil. Yen)
160,000

Prov. fordoubtful
20,000accounts－2,537

Cash & Equivalent

24,037

16,745

16,78017,19915,79814,732

15,12317,36626,02027,53928,486End-Sep 2018

End-Sep 2019※2

End-Mar 2020

16,6766,300

0EquityMSB Related

Borrowings

Bonds

Other

Merchant Deposits※3※1 Securities classified under Investment Securities and Equity-Method Affiliates※2 MSB Related Asset = Lease assets, Short term loans, Advance payment, Accrued revenue (net of provision for doubtful accounts)
MSB Related Liabilities = Accrued expenses※3 Deposits received from merchants under the Representative Contract. ※4 Some figures are shown in net amounts of financial assets and liabilities.

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

27

4.2.1 FinTech: Assets & profit growth (cumulative basis)
Steady growth of high-margin services; YoY decline fromreversals of provisions booked in the previous year
■ MSB related assets(end-March)+16.3％■ Segment revenue (1H）
+13.8％－51.9％＋253.9％－40.9％＋501.3％■ Segment profit(%: % YoY)

－16.0％－3.8％

Impact fromchange inprovision rate
for doubtful
accounts+27.4％+22.2％+15.2％

＋7.0％

－6.6％
+47.4％+93.1％
End-March 2019
End-March 20202019年9月期第2四半期末
2020年9月期第2四半期末
Domestic & Overseas Lending

FY2019 1H

Early Payment Service

FY2020 1H

GMO Payment After Delivery

FY2019 1H
Remittance

FY2020 1H

B2B Factoring

Finance Lease※ Figures are net of GMO Payment After Delivery assets (accrued revenue) and provision for doubtful accounts.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

28

4.2.2 FinTech: Assets & profit growth (Q2 standalone)
Steady growth of high-margin services; YoY decline fromreversals of provisions booked in the previous year(%: YoY change)■ Segment revenue(Q2 standalone）■ MSB related assets(end-March)+16.3％－51.9％＋253.9％+24.3％■ Segment profit－44.3％＋393.3％

Impact fromchange inprovision
rate fordoubtfulaccounts+44.1％＋6.5％+27.4％+72.0％+25.0％＋7.0％+93.1％＋1.9％+74.6％End-September
End-March
FY 2019 Q2
FY2020 Q2
2019
2020
Domestic & Overseas Lending
Early Payment Service
GMO Payment After Delivery

2019年9月期第2四半期末 2020年9月期第2四半期末

FY2019 Q2
Remittance

FY2020 Q2

B2B Factoring

Finance Lease※ Figures are net of GMO Payment After Delivery assets (accrued revenue) and provision of doubtful accounts.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

29

4.3.1 Revenue by business model (cumulative and Q2
standalone basis)＜1H＞(Mil. Yen)

＜Q2 standalone＞＋10.3％ YoY＋16.2％ YoY
Spread（+）Strong online payment excl. one-offs（+）Growth of GMO Payment After Delivery (2 wk term)（－）Impact of cashless initiatives (Point rebate)

20,00018,00016,0007,548

14,000

6,846
12,000

6,666

10,000

6,044
8,000

2,777

6,000

2,000

1,394

713

InitialStock＋15.6％ YoY（＋）Strong online payment excl. one-offs（＋）Strong offline payment（＋）MACROKIOSK trending in line with plans（＋）Increase in remittance service from refunds(Q2 standalone)Stock＋15.2％ YoY＋15.3％ YoY

FY2020 1H

Fee

Initial+ 95.5％ YoY+127.7％ YoY（+）Strong trend in payment terminal sales forthe offline market

0

FY2019 1H＋10.3％ YoY（+）Robust trend in new business for banks

2,411

4,000

Fee

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

30

4.3.2

Quarterly trend of revenue by business modelIFRS

J-GAAP(Mil. Yen)※
3,770 3,778

3,595

3,500

3,379

3,468

3,250
3,072

3,000

2,773
2,691

2,653
2,471

2,500

2,946
2,801
2,861
2,705
2,666

2,971

3,435

3,230

2,997 3,059

2,436
2,360

2,101

2,000
1,809

1,500

1,383

1,441

931

1,184 1,226 1,240

1,026
749

794

748

786

875

906

929

147

105

142

127

150

142

161

980
795

151

237

185

832

893

1,264

1,362 1,414

923
666

728

563

457
343

108

0

724

667
630
733
601
728
612
532
663
512
594
501
565
516 528
501
499
713

500

959

804

2,004

1,527

1,227 1,259

1,000

1,895

327

388
251

393
298

319

328

367

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 18/2Q 18/3Q 18/4Q 19/1Q 19/2Q 19/3Q 19/4Q 20/1Q 20/2Q

IntialStock

Fee

Spread※Online advertising service (stock) and finance lease (spread) revenues are recognized as a net amount with the IFRS adoption rather than the gross method.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

31

4.3.3 Revenue trend by business model (annual)(Mil. Yen)J-GAAP

40,000IFRS

38,00036,00034,00032,00030,00028,000Spread26,00024,00022,00020,00018,00016,00014,000Fee

12,00010,000
8,000
6,000

Stock

4,000
2,000

Inital0

2004/9 2005/9 2006/9 2007/9 2008/9 2009/9 2010/9 2011/9 2012/9 2013/9 2014/9 2015/9 2016/9 2017/9 2018/9 2019/9 2020/9E
TSE
Listing

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

32

4.4.1

Quarterly trend of CoS and SGA ratio

CoS ratio fluctuates with changes in revenue mix*Figures with asterisk exclude outsourcing expense related to MSB.
These outsourcing expenses are not booked in SG&A from December 2017 (Q1) due to IFRS adoption.

J-GAAP

IFRS

9,356

(Mil. Yen)

※44.5％
50.3%

9,000

9,030

※47.2％
50.4%※41.7％
46.8%

8,000

8,246
※40.3％
44.2%

7,769
40.9%

7,000

43.6%
※39.9％

42.6%※37.4％

6,459
6,098
33.4%
31.9%

6,086
5,716

6,000

5,645
32.1%

5,000

4,000

23.4%

22.6%

7,295
41.1%

40.2%

41.2%

6,563
36.3%

37.6%

33.2%
35.3%

35.4%

36.4%

35.9%

35.5%

36.1%

35.2%

32.7%

30.0%

4,347
25.5%

3,294

2,997

3,067

3,000

2,497

2,491

1,813

1,823

2,036
2,000

36.7%
35.2%

33.3%

31.9%

40.0%

36.6%

2,664
3,090

50.0%

8,160

7,945

1,655

2,494
1,940

2,035

2,595

2,382

2,143

2,320

3,098
3,004

2,581

2,646
2,791
2,807

2,818

2,986

3,720
3,433
3,181

20.0%
3,292

10.0%

1,316
1,109
1,000

700

772

0

0.0%
16/6(3Q) 16/9(4Q) 16/12(1Q) 17/3(2Q) 17/6(3Q) 17/9(4Q) 17/12(1Q) 18/3(2Q) 18/6(3Q) 18/9(4Q) 18/12(1Q) 19/3(2Q) 19/6(3Q) 19/9(4Q) 19/12(1Q) 20/3(2Q)

Revenue

Cost of Sales

SG&A

CoS ratio

SG&A ratio

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

33

4.4.2 Quarterly trend of PG and EP’s CoS and SGA ratio
CoS ratio fluctuates with changes in revenue mix(Mil. Yen)
6,000
50.9%
48.8%

47.4%
44.9%

5,000

45.3%

5,142

5,032
4,840

4,663

41.3%
4,297

33.5% 34.0%
3,653
3,397

3,712

50.0%

5,271

4,816
45.2%

44.8%

4,384

40.0%

36.8%

3,937

4,000

5,126

36.7%

33.1%

36.7%

3,469

34.2%

36.5%

30.0%

3,092
3,000 2,899
21.1%

21.9%

23.6%

22.6%

1,509

1,000
611

1,225

677

22.2%

1,890

767

778

1,577

1,611

822

928

1,039

1,067

20.9%

20.7%
2,253

1,785

1,180
770

23.0%
2,212

1,525

1,197

24.3%

22.1%
21.3%

2,000

24.2%

21.0%

20.9%

20.7%

2,319

20.0%

1,874

1,783

21.2%
1,800

1,592

1,071

1,043

1,016

1,005

1,065

1,069

1,117

0

10.0%

0.0%
16/6(3Q) 16/9(4Q) 16/12(1Q) 17/3(2Q) 17/6(3Q) 17/9(4Q) 17/12(1Q) 18/3(2Q) 18/6(3Q) 18/9(4Q) 18/12(1Q) 19/3(2Q) 19/6(3Q) 19/9(4Q) 19/12(1Q) 20/3(2Q)

Revenue

Cost of Sales

SG&A

CoS ratio

SG&A ratio※ Based on J-GAAP

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

34

4.5

Consolidated Cashflow Statement■ FY2020 Q2 changes(Mil. Yen)J-GAAP

20,000IFRS

18,00016,00014,00012,00010,0008,000
6,000

Operating CF:
Pretax profit
Chgs in rcvbls
Advances paid
Accrued income
Chgs in payables
Accrued expenses
Deposits received
Provisions＋16,379+5,247＋305－1,033－2,943＋682＋2,175＋13,101＋132

Investing CF:
Acq. of intangibles
Acq. of securities－1,831－766－909

Financing CF:
ST borrowings
Dividend payout－4,246－1,000－2,647

4,000
2,000
0
-2,000-4,000-6,000-8,000-10,000
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
Q2
Operating CF

Investing CF

Financing CF

FCF

FCF:

＋14,548

Cash &
Equivalent:※

62,306※ FCF is calculated as Operating CF less Investing CF. Only major items of the cash flow statement are shown on this page.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

35

4.6

Major Quarterly KPIs

Group-wide annual GMV value reaches ¥5.1 trillion※2※1

Operating stores: 122,328 stores, GMV volume 580 mil., GMV value approx. ¥1.2 trillion.
(Stores) (Bil. Yen)

(10K cases)

140,000 1,400

60,000（Reference）Consolidated GMV value: Approx. ¥5.1 trillion
GMV value excl. GMO-FG: Approx. ¥4.7 trillion

1,200
1,100
120,000 1,000

50,000900
800
100,000

700
600

40,000500
80,000400
30,000

Proportion of spread revenue≒50%※Annual average basis(revised in 5% increments)

60,00020,00040,00010,00020,000Recurring billing transaction volume

Pay-as-you-go billing transaction volume

Operating stores

20/3

19/12

19/9

19/6

19/3

18/12

18/9

18/6

18/3

17/12

17/9

17/6

17/3

16/12

16/9

16/6

16/3

15/12

15/9

15/6

15/3

14/12

14/9

14/6

14/3

13/12

13/9

13/6

13/3

0

12/12

0

GMV value※1 Figure excludes a significant increase in operating stores from a specific merchant. If included, operating stores would be 281,500 outlets as of end-Mar 2020 (up 111.3% YoY).
※2 Operating stores are measured on an end-of-quarter basis. GMV value and volume are the total for the respective quarter.

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

36

Thank You Very Much
GMO Payment Gateway, Inc.
(3769; Tokyo Stock Exchange, Section 1)
URL： https://www.gmo-pg.com/en/corp/

For inquiries please contact our IR team at the telephone number below:
Corporate Value Creation Strategy Division (IR Department)
TEL: +81-3-3464-0182
E-mail：ir-contact@gmo-pg.com

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