Financial results briefing for the 1Q of FY2015（ O c t o b e r

Themes：1 ,2 0 1 4 - D e c e m b e r

3 1 ,2 0 1 4 ）Ordinary income to grow 26% by recognizing
the EC market’s structural change

February 6, 2015

The 40 th IR Meeting

GMO Payment Gateway, Inc.
(3769: Tokyo Stock Exchange section-1)

h t t p : / / c o r p . g m o - p g . c o m /A Cautionary Note About
the Contents of this Document

The contents of this document are based on generally
recognized economic and social conditions, as well as
premises judged to be reasonable by GMO Payment
Gateway as of February 6th , 2015.
However, please note that they 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
2. Future growth strategy
3. Financial highlights
4. Results forecast for the term ending September 2015

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

3

1. Summary

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

4

1.1

Market changes

2015 is a year of change in the EC market, with the advent ofa “New-fields-EC”⇒Service commerce/ digital EC/ CtoC will be the growth engine in place ofthe sale of Goods-EC

New-fields-EC“New-fields-EC”
E-book（Company A）up 141％
Web content（Company B）up 114％
Car sharing（Company C）up 264％
Prior reservation service (Company D) up 123％
（Growth rate: Change between December 2012 and December 2014)

CtoC average of 5 companies

up 1,968％(Growth rate: Change between December 2012 and December 2014)

Goods-EC

Growth rate of narrow definition EC
10～15％

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

5

1.2

Our business performance

Ordinary income to grow 26%

Payment

Processing Business＋New businessIn good shape

Rapid growth

Goods-EC ：Bullish

GMO Payment Later service
Face-to-face area (smartphone
Payment)
MSB(Money service business)

New-fields-EC：Very strong※※References：METI, [Market report in regard to EC 2013]⇒

Ordinary income
to grow 26%

EC Maeket：17%Growth（2013）※Y-o-y growth
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

6

1.3

Comparison to market and other companies

Growth outperforms EC-related firms and other rivals
Comparison of operating income / operating income growth rateof payment processing firms (FY2014)

Revenue index of EC-related listed firms (quarterly)

25.0%
OP
margin1.4EC-malls・EC Businesses average●Company A●Company B●Company C●GMO-PG

GMO-PG
1.3

20.0%

1.2

15.0%

1.1

10.0%

1.0

5.0%

0.9

0.0%

2013/6

2013/92013/12

2014/3

2014/6

2014/92014/12OP（Million yen）
0

500

1,000

1,500

2,000

2,500

3,000

※Estimated by GMO-PG

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

7

1.4 Source of unrivaled growth that outperforms
the market“System capability, “expansion to New-fields-EC” and“launch of new products” are the key“System capability”
To incorporate new fields (mass processing
and low unit price) into our growth,
1. Capability to process massive volume of
payments and traffic that increases anddecreases drastically (spike),
2. stability, andSatoru Isozaki, Executive Vice President(General Manager of System Division)

3. ability to strengthen the system at low cost, are necessary.

Our dominance lies in our superior team comprising over 70 payment
processing professionals to realize the above-mentioned conditions

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

8

2. Future growth strategy

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

9

2.1

Management direction

Well-balanced growth of the four profit models while launching
new services

Large-sized enterprises

Initial

Stock

Fee

Payment processing

Payment processing

Payment processing

Development
connected tosettlement

GMO Payment
after delivery
Shipping services

Service forlarge
companies
SSL

SpreadInsurance

Payment processing

Online Ad
ServiceMedium-sized companies
MSB
MSB

Small businesses(Long-tale)
MSB: Money service business

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

10

2.2

Broad definition EC market

Initiatives to conquer the EC market in a broad definition is well under way,contributing to accelerated growth
BtoB market
BtoB market¥1,000 Trillion

Non face-to-face
EC

Goods

BtoC market

GMO Payment
after delivery）

Service commerce
Public funds, taxes
BtoB

Face to face

Rental car reservation
Lunch box
reservation, delivery
Beauty salon
reservation

Manufacturer

Dawn of the
CtoC EC
marketNarrow definition
BtoC-EC market（

Other than
goods

CtoC Market

COC

Flea markets app

MSB

Crowd-funding

Flea markets※Reference：METI, [Market report in regard to EC 2013]

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

11

2.3

Growth strategy

Sustaining more than 20% income growth is our mission
Past decade
The largest in Japan
Processing company
OP: 0.2⇒2.5 billion yen

Next decade
The largest in Asia
Invention partner
OP: 2.5⇒25 billion yen

Strategy③Long-Term “Business area”
Asian market
Innovation

Strategy②
Mid-Term ” Product strategy”
TL, GMO Payment Later service, etc.

20％ growth line

Strategy①
Short-Term “Market targeting”
Expansion into “New-fields-EC”
Broad definition EC market

Growth rate of narrow definition EC
10～15％
Now
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

122.3.1Strategy①Expansion into “New-fields-EC”

Service commerce/ digital EC/ CtoC will be the growth engine
Amount of processed online
payments（Index,2008/1=1）

Change in business category of our top 50 customers

Private consumption
integrated estimates（Sales）

2.5
Amount of processed online
payment (Index)
Private consumption integrated

120

CtoC

Consumption tax hike

Service commerce/ digital EC, etc
Goods-EC

115

estimates2

110
Dec 2012

Dec 2014

1.5

105

1
100

Lehman ShockThe Great EasternJapan Earthquake
95

08/1
08/2
08/3
08/4
08/5
08/6
08/7
08/8
08/9
08/10
08/11
08/12
09/1
09/2
09/3
09/4
09/5
09/6
09/7
09/8
09/9
09/10
09/11
09/12
10/1
10/2
10/3
10/4
10/5
10/6
10/7
10/8
10/9
10/10
10/11
10/12
11/1
11/2
11/3
11/4
11/5
11/6
11/7
11/8
11/9
11/10
11/11
11/12
12/1
12/2
12/3
12/4
12/5
12/6
12/7
12/8
12/9
12/10
12/11
12/12
13/1
13/2
13/3
13/4
13/5
13/6
13/7
13/8
13/9
13/10
13/11
13/12
14/1
14/2
14/3
14/4
14/5
14/6
14/7
14/8
14/9
14/10
14/11
14/12

0.5

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

13

2.3.1Strategy①Expansion into “New-fields-EC”
Face-to-face area: COC

Increase in spread revenue and growing smartphone payments in the face-to-facearea have started making contributions to growth
Sales

COC smartphone transaction volume

InitialSpreadFee

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

14/12

14/10

14/8

14/6

14/4

14/2

13/12

13/10

13/8

13/6

13/4

13/2

12/12

12/10

12/8

14/12

14/11

14/10

14/9

14/8

14/7

14/6

14/5

14/4

14/3

14/2

14/1

13/12

13/11

13/10

13/9

13/8

13/7

13/6

13/5

13/4

13/3

13/2

13/1

Stock

14

2.3.1Strategy①Expansion into “New-fields-EC”
BtoB

Results of full-fledged marketing promotion are showing promiseStarted full-fledged promotion of
BtoB payment processing service

320

Y-o-y

+64％

2014/9“EC-CUBE B2B” started

Number of BtoB marchants
280

2014/4“Visa Business Pay” started

240

200

160

120

80

40

0
13/10

13/11

13/12

14/1

14/2

14/3

14/4

14/5

14/6

14/7

14/8

14/9

14/10

14/11

14/12

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

15

2.3.1

Fields in the near future

Regional revitalization
Cabinet Secretariat
Bill to revitalize towns,
people and jobs
(Fiscal years 2015 – 2019)
To solve population issue
and secure growth potential

Expected change

Our stanceIntegration of regional banks
Redevelopment of the areas
surrounding stations
Enhancement of added valueof regional industry

Promote cashless payment
Assist vitalization of local
firms
Expand face-to-face market

New regulations in the electricity field
2016 Liberalization of entry
into electricity retail business
Number of registered firms:
483 (as of January 14)

Free choice of electricity
companies
Diversified needs in payment
methodPromptness of fee settlement
will be important.

Introduce credit card
settlement
Collaborate with systemvendor※参考：新電力PPSポータルサイト

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

16

2.3.2Strategy②” Product strategy”
GMO Payment after delivery

Still at the investment stage, but amount of loss is shrinking
Number of processed payments

QonQ

18.7 times

Sales

QonQ

22.5 times

14/1Q

14/2Q

14/3Q

14/4Q

15/1Q

14/1Q

14/2Q

14/3Q

14/4Q

15/1Q

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

172.3.2Strategy②” Product strategy”
Other than payment processing service

New service other than settlements started to contribute to sales growth
Sales of other than payment processing service

Transaction lending started to
become profitable

Money service businessstarted to become
profitable

Launched web analysis /reporting service
Gross profitability improved
by 4.6 points (year-on-yearcomparison)

MSB
cross-selling

Online advertising service

2014/1Q

2015/1Q
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

18

2.3.3 Strategy③“Business area”
Expand to the world’s growth center（１）Accelerate support to Japanese merchants’ “Cross border EC”
Expand mainly in the travel / female consumer
market where Japan has strengths

GMO-PG Global Payment
GMO Global Payment Fund
GMO-PG×GMO-VP

Full-fledged cross border EC
Track record in the area of cosmetics, fashion, accessories and digital content

Hong Kong
ThailandThailand+Mekong
50⇒75Trillion Yen

Malaysia
Focus on the travel market as number of overseas travelers exceeds 20
millionTaiwanHong Kong+Taiwan
75⇒115Trillion Yen

Vietnam+Philippines
50⇒75Trillion Yen

Singapore＋Malaysia
70⇒110Trillion Yen

Singapore

Large travel agency / inbound and outbound measures by travel business
Inbound and outbound measures by airline companies
Provide full support on settlement and attracting customers

Our oversea entities

Indonesia
90⇒135Trillion Yen※Economic area
GDP⇒GDP of 2022, our forecasts
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

192.3.3 Strategy③“Business area”
Expand to the world’s growth center（２）Reaching local EC market by providing support to local payment

processing firms
Goods
EC

ServiceEC※Number: Increase in the number ofprocessed payments after our investment

4times4timesCredit card payment
services for the big EC
businesses

Cash receiving agent
services

Provide support to cross border EC
Started approaching by forming
business alliances

4times4timesCarrier payment

Digital-EC

DigitalEC

Greater China

Thailand

Malaysia

Singapore

Indonesia

VietnamPhilippines

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

20

3. Financial highlights

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

21

3.1

Summary of the consolidated results

Operating income up 25.7%, achievement ratio of 1H targets is 49% for net
sales and 52% for ordinary income（Million yen）

1Q of FY2015

Compared to the resultsfor previous corresponding period

Compared to the
cumulated forecast for
2Q(1H), FY2015

Results

GrowthGrowth rate

Forecast

Progress

Sales

1,958

1,645

313

19.1％

4,033

48.6%

Cost of sales

382

317

64

20.3%

-

-

Gross income

1,576

1,327

249

18.8％

-

-

SG&A

851

750

100

13.4%

-

-

Operatingincome

725

577

148

25.7％

1,471

49.3％

Ordinary
income

758

601

156

26.0％

1,473

51.5％

Net income

476

355

120

33.9％

887

53.7％

13.78

10.31

-

-

25.68

-

Net income
per share(Yen)※In October 1, 2014, our company executed a 2-1 stock split

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

22

3.2

Summary of the consolidated balance sheets

Change in increasing pace of deposit due to diversificationof closing/payment cycles（Million yen）

Results for
1Q, FY2015

Results for
1Q, FY2014

Change（Million yen）

Results for
1Q, FY2015

Results for
1Q, FY2014

ChangeCurrent assets

27,092

22,422

4,670

Current liabilities

22,775

18,525

4,249

Cash and deposits

23,84920,9482,900

Deposits

20,822

17,575

3,246

Advance payments

969

393

575

1,953

950

1,002

Other current assets

2,302

1,108

1,194

Other current
liabilities

Allowance for
doubtful accounts

△28

△28

0

Fixed assets

2,662

1,851

810

Tangible fixed assets

215

282

△67

Intangible fixed
assets

785

722

63

Software

669

543

125

Valuation andtranslation
adjustments

1,660

846

814

Subscription rights
to shares

11

11

0

29,75424,274

5,480

Investments andother assets
Bonds of affiliates
Total assets

Deposits by merchants through representative merchantservice*Discrepancy occurs with the pace of merchants’ sales growth
due to change in merchants’ cutoff date and payment cycle
Non-current liabilities

167

160

6

Shareholders’ equity

6,684

5,552

1,132

120

27

93

3

7

△4

6,811

5,587

1,224

29,75424,274

5,480

Total net assets
Total of liabilities and net
assetsIncrease in investment securities and investments in other securities of subsidiaries and affiliates
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

23

3.3

Sales/Ordinary income (Quarterly changes)

Ordinary income grew by 26.0%, exceeding sales growth rate
■Sales（1,000yen）
2,000,000

Compared to last 1Q

20.5％ increase except
payment systemdevelopment sales+19.1％
1,958,642
1,842,793

1,825,574

1,892,030■ Ordinary income（1,000yen）
800,000+26.0％
758,080

684,886

700,000

1,645,144

641,092

1,563,063

1,600,000
1,469,820
1,311,166

601,701
540,382

1,307,506
1,162,012

600,113600,000

1,420,034

1,200,000

Compared to last 1Q

500,000

1,176,791

480,414465,565

560,812475,402465,943

433,440

1,061,787

389,917400,000

800,000

300,000

200,000
400,000
100,000

00

1Q
FY 20122Q
FY 2013

3Q

4Q

FY 2014

FY 2015

1Q

2Q

FY 2012FY 2013

3Q

4Q

FY 2014

FY 2015

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

24

3.4

Sales results for each segment（Quarterly changes）

Transaction processing revenue and merchant acquiring
service revenue are in good shape（1,000yen）
800,000

700,000

600,000

y-o-yInitial revenue-17.2％

Monthly revenue+11.1％

Transaction processing revenue+24.2％

473,999

500,000
408,062

300,000

670,573

Merchant acquiring service revenue +29.2％
526,214400,000

752,202350,983
341,807347,313
303,811

291,439568,811357,956
320,293371,745401,280
374,667

390,290363,264584,529505,369
483,241

470,792
464,560
431,131403,729705,327582,291

529,688464,540689,264

526,041
501,688

540,507516,330

499,083

441,038
425,963

396,019

336,130

183,609200,000
102,823
100,000 77,557

125,630
94,811

117,872
93,072112,981

127,249

147,110

127,499

108,580

105,5790
11/12 (1Q)

12/3 (2Q)

Initial revenue

12/6 (3Q)

12/9 (4Q)

12/12 (1Q)

Monthly revenue

13/3 (2Q)

13/6 (3Q)

13/9 (4Q)

Transaction processing revenue

13/12 (1Q)

14/3 (2Q)

14/6 (3Q)

14/9 (4Q)

14/12 (1Q)

Merchant acquiring service revenue

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

25

3.5

Cost of sales ratio/SG&A ratio（Quarterly changes）

Higher cost-to-sales ratio due to sales mix has been absorbed by DC
integration effect, among others（千円）
2,500,000

60.0%

53.2%
2,000,000

47.0%

45.9%

51.6%

45.8%
43.9%

44.4%

1,842,793
45.6%

44.0%

1,825,574

43.2%

1,645,144

50.9%
1,958,642
1,892,030

43.5%

42.9%

40.0%

1,563,063
1,420,034

1,500,000
1,307,506
1,162,012

50.0%

1,469,820

1,311,166

1,176,791

30.0%

1,061,787
1,000,000

500,000

14.3%

13.4%
498,728

533,740

15.3%

696,122600,491

17.8%

179,489

11/12 (1Q) 12/3 (2Q)

12/6 (3Q)

18.2%
17.8% 806,331

750,260

20.9%
796,546

317,675

783,601

19.5%20.0%
851,039

365,973368,339

14/6 (3Q)

14/9 (4Q) 14/12 (1Q)

253,353

261,235

12/9 (4Q) 12/12 (1Q) 13/3 (2Q)

13/6 (3Q)

13/9 (4Q) 13/12 (1Q) 14/3 (2Q)

231,643

962,44319.5%

384,293284,580

220,44220.0%

647,175

630,407517,179

166,050

142,583

16.9%

17.7%

19.3%

382,006

0

10.0%

0.0%

Sales

Sales-cost

SG&A

Sales-cost ratio

Sales-SG&A ratio

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

26

3.6

Transition of the major factors (Quarterly changes)

Number of operating stores rose rapidly thanks to a large project
Settlement volume also grew sharply fuelled by new fields

Number of operating stores 54,469/ Amount of processed payments 380billion yen/ Number of processed payments 192Million
Number ofoperatingstores60,000

Amount ofprocessed payments（100 million yen）

Acquisition of partners
with many merchants

4,000

Number of processed
payments (10,000 trx)

20,00018,0003,000
50,00016,0002,000

40,00030,000Share of themerchant acquiring
service revenue
in the settlement
amount: 20%(Dec. 2011)

1,000

14,000Share of themerchant acquiring
service revenue
in the settlement
amount: 30%

012,00010,0008,000
20,0006,000

4,000
10,000
2,000

0

0
09/3

09/6

09/9 09/12 10/3

Recurring payment

10/6

10/9 10/12 11/3

Online payment

11/6

11/9 11/12 12/3

12/6

12/9 12/12 13/3

Number of operating stores

13/6

13/9 13/12 14/3

14/6

14/9 14/12

Amount of processed payments(The number of operating stores is calculated at the end of the quarter, the amount/number of processed payments are the results for each quarter)

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

27

4. Results forecast for the term ending
September 2015

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

28

4.1

Summary of the consolidated results (Forecast)

Repeat operating income growth rate of 20% as investment phasewill still continue（Million yen）
9,000,000

8,656,000※％ yoy8,000,000

Sales
7,205,542

7,000,000¥18.006,000,000

5,764,085

5,000,000

4,708,097
3,866,316

4,000,000¥15.002007/9Sales

2008/92009/92010/9Operating income

2011/9+18.1％Net income+18.6％

2,974,000¥7.75

2006/9Ordinary income¥9.75

2,476,408
2,985,000

2,546,550¥5.88
2,048,865
2,207,071
2,527,793 1,797,000¥5.25
1,753,759
1,945,011
2,000,000
1,441,214¥4.38
1,629,951
2,047,552
1,515,788
1,305,157
1,169,694¥3.75
926,288
1,764,325¥3.13
1,431,391
776,253
927,535 1,147,552
960,761
1,000,000
763,774
641,925
1,217,025
523,277
323,328524,259 585,206
756,506
535,350
645,909295,828
30,173
304,302 377,212
440,08002005/9listed on
the TSEOperating income +20.1％¥12.25

3,145,901
3,000,000+20.1％

2012/9Ordinary income

2013/92014/92015/9E

Net income※In October 1, 2014, our company
executed a 2-1 stock split.
Dividend information that have been
retroactively revised in light of the
impact of this split to make it easier
to compare between periods.

Dividend

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

29

4.2

Sales for each segment (Forecast)

Action plans to realize the balanced growth in all segments（Million yen）※％y-o-y9,000,000

Cultivating large-scale
merchants

8,000,000

7,000,000+ 26.7％+ 29％

6,000,000+ 27.6％“GMO payment later”
expantion

5,000,000+ 28.4％+ 22.8％ + 22％

4,000,000+ 36.4％Conservative sales
plan of “Online
Advertising Service“+ 17.3％3,000,000+ 40.3％+25.9％

2,000,000+88.4％+155.5％1,000,000

0listed on
the TSE+45.4％+41.4％+95.0％+46.9％+14.2％ +4.1％+44.4％+15.4％ +6.4％+166.1％ -22.2％ +6.6％+9.9％+ 14.8％+ 16.6％+ 24.9％+ 18.1％+1.9％ +15.6％ + 19.4％+ 10％+ 24.6％+ 22.4％+ 21.8％+24.6％ +10.6％ + 11.5％ + 7.1％ + 20.0％ + 12.6％
2011/92012/92013/9+ 25.6％

2014/9+ 7％

2004/92005/92006/92007/92008/92009/92010/9Merchant acquiring service revenue

38,364

98,011

191,126

360,138

529,138

666,209934,441

Transaction processing revenue

327,409

476,041

687,235

784,799

816,868

897,658

1,060,123 1,235,737 1,418,822 1,663,741 2,042,710 2,497,452

Monthly revenue

344,083

486,490561,253

597,193608,236

702,946

839,522

1,022,263 1,251,675 1,559,914 1,948,574 2,148,710

Initial revenue

91,920244,613

190,336

202,880

252,828

279,735

311,813333,895

System development
Services for largesized enterprises

2015/9E

1,274,419 1,636,774 2,089,254 2,647,458 3,405,164

400,823

451,175

566,799

605,195

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

30

Thank you very much!

GMO Payment Gateway Inc.
(TSE:3769)
URL http://corp.gmo-pg.com/

For more information, please contact the Company Value Creation Planning Office
IR/PR Group TEL:03-3464-0182