Financial results briefing for the Q4 of FY2016（ O c t o b e r

1 , 2 0 1 5 - S e p t e m b e r

3 0 , 2 0 1 6 ）A favorable year: we enhanced our foundation for future growththrough well-balanced investment and M&A

November 7, 2016

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

The 47 th IR Meeting
http://corp.gmo-pg.com/en/

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 November 7, 2016.
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. Performance overview of FY2016
2. Issues
3. Performance forecast of FY2017

4. Strategies for future growth
5. Financial highlights

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

3

1.

Performance overview of FY2016

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

4

1.1

Performance overview①

Achieved our commitment of 25% OP growth(Million yen)

FY2016(Forecast)

FY2016(Actual)% Change

FY2015(Actual)% ChangeSales

11,413

12,113

+6.1％

9,030

+34.1％

Operatingincome

3,741

3,819

+2.1％

2,977

+28.3％

Operatingincome ratio

32.8％

31.5％

-1.3%

33.0％

-1.5%

Ordinary
income

3,750

3,780

+0.8％

3,000

+26.0％Net income

2,335

2,910

+24.7％

1,853+57.1％

3,274+28.0％

18.0+9.0

EBITDA

Dividend
(Yen)

KPI

4,191
22.0

27.0

+5.0円

Number of operating
stores (end of period)

Amount of processed
payments (FY2016)

Number of processed payments(FY2016)

77,256

Approx.¥2 trillion

Approx. 900 Million* EBITDA＝Operating income + Depreciation + Amortization of goodwill
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

5

1.2

Performance overview ②

Record highest revenue growth ratio,¥27 dividends per share, up ¥5 per share■ Points of FY2016
Sales：+ 34.1％ / Highest revenue growth ratio since listed in 2005
Good shape in payment processing business（up 20% in real terms）
Money service business is expanding（up 163%）

Operating income：+ 28.3％ / Achieved our commitment of 25% OP growth

The operating margin of payment processing business up from 56.2% to 58.7％
Increased profits in consolidated subsidiaries and online Advertising service
Ordinary income：+ 26.0％Exchange losses due to the strong yen
Net income：+ 57.1％Gain on step acquisitions due to acquisition of GMO Financial Gate (¥ 395 million ）Income from securities sold（¥ 194 million ）Dividend：¥27 per share as per basic dividend policy（consolidated payout ratio of 35％)
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

6

1.3

Activities in FY2016

Action plan for the next decadeHighlights

Lowlights
Segment

・Cultivating major/high-growthmerchants
・Expansion of money service business・Consecutive adoption of our services intaxes sector (zei.tokyo)
・Approaching the growth area of theoffline(card-present) market
・Steady build-up of MSB-related asset
・Rapid expansion of “GMO payment
after delivery” service
・Expansion of online advertising service
and profitability increase・Achieved our commitment of 25% OP
growth・Acquisition of GMO Financial Gate

Payment
processing
business

Money service
business
Other
Management strategy
Growthstrategies,

・Exchange losses due to the strong yen

・Acquisition of MACRO KIOSK, 12 countries
global business,and regions, excellent human resources
totaling about 250 people
investment etc.
・Expansion of collaborative business
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

7

1.4

Sales/Operating Income by Segment (Cumulative)

OP of payment processing business up 26.9％ in real terms■Sales (segment)（1,000 yen）
12,000,000■ Operating income (segment)（12,113,864）*（5,443,036）

1,238,876+46.2％

159,485+89.5％（1,000 yem）
4,900,000

10,000,000

2,242,795（9,030,892）

847,469
8,000,000

Special factors

216,883
Turned into
gains

4,123,998

5,066,667＋22.9％（4,186,311）

84,151+163.5%3,900,000％：YOY()：overall

851,073
Special factors
2,900,000

6,000,000

8,632,192
4,000,000+17.7％ 1,900,000

7,332,349

Excludingspecial factors+20.2％

2,000,000

Excludingspecial factors+26.9％

900,000

0

FY2015
Payment processing business(100,000)

FY2016
Money service business

Other

FY2015 -21,838

Payment processing business

FY2016
Money service business

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

Other

8

2.

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

9

2.1

Our approach to all payment methods

Press release outline
Lending●GMO-PG partners with Money Forward to offer Lending service to SMEs
⇒For companies and individual businesses that use Money Forward’s billing and accounting software

Payment after
delivery●GMO-PS launches “GMO Payment after delivery” service for Japan’slargest fashion shopping website “ZOZOTOWN”

4.4.2

Global Payment●Acquisition of MACRO KIOSK

4.3.1⇒Expansion of business scope in SEA

Offline(card-present)
payment●Acquisition of GMO Financial Gate

4.2

⇒Accelerating the cashless payments in the offline(card-present) market.

New payment
methods●Apple Pay Coming to “PG Multi-Payment Service”

Bank accounttransfer●GMO-PG and the Bank of Yokohama join their efforts to develop
mobile payment solution “Hama Pay”

CVS payment●Direct connection with major convenience stores

Debit card

●GMO-PG to develop a smart phone app for users of the ”Hokkoku Visa Debit Card”

Credit card

2.2

⇒To make payments instantly on the mobile banking app●GMO-PG launches credit card solution for various taxes in Aichi Prefecture⇒To support local governments by providing payment processing of various taxes after adoption inTokyo Prefecture and Fukuoka city
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

10

2.2

Payment solution provided by ”Hama Pay”

Focusing on the area of cash payments, support new payment
solutions provided by Bank of Yokohama■ Area of ”Hama Pay” solution

Recurring
payments

One-off payments

Major payment
methods
Credit/Debit
card■Solutions

Spending
High end
Luxury clothing, home
appliances, furniture etc.

Low end
Daily necessities,
beverages, transport,
digital content

Cash

Credit/
Debit
card
Cash

Solution area

Middle range
Health care, education,
repairs industry,
public facilities etc.

【Contract-based business】
Rent, press, public
utilities fees, subscriptionbased magazines etc.

Current issues
GeneralHospitals• Cash management• Long wait foraccounting• Uneasiness about
customers (junior andCram school/ senior high school
Preparatory
students) who haveschoollarge sums of money
to pay for study

Repairindustry

Publicfacilities

Solutions• Customers’ cash
shortages• Cash management• Time consuming by
cash delivery• Completely cashless• Payments everywhere

Hama
Pay

• Completely cashless• Lecture guide and otherfeatures just by pushbutton notifications etc.

• Completely cashless• Effective fee collection• Completely cashless• Optimizing cash
management

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

11

3.

Performance forecast for FY2017

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

12

3.1

Performance forecast overview

Operating income up 31.2％、planning +10 yen for dividends■ FY2017 forecast
Net sales
Full year 18,767(54.9％)

2Q of FY
2 0 1 6(46.4％)

8,389

Dividends
forecast■ Points
 Net sales

37 yenOperatingincomeOrdinary
incomeNet
income（Million yen, ％ yoy）

5,013 (31.2％) 4,673 (23.6％) 2,762 (-5.1％)
2,499 (33.0％)(+102,351 (22.5％)

EBITDA
5,811 （38.7％）

1,409 (22.3％)

yen)* EBITDA＝Operating income + Depreciation + Amortization of goodwill

・We plan to consolidate the income statement of MACRO KIOSK from the second quarteraccounting period and incorporate their income and losses over nine months from
October 1, 2016 to June 30, 2017.
・The part of ”GMO payment after delivery” offered to ZOZOTOWN（11/1 press release）
is not considered in the forecast
・Goodwill amortization due to the increase from group companies（total of ¥230 million）

 SG&A Non-operation ・Goodwill from equity-method affiliate is expected（About ¥160 million）
expenses Dividends
Forecast

・Based on our successful business plan, we expect dividend payout ratio of 50%
relative to net income in order to further strengthen shareholder returns by
maintaining consecutive increases of dividends from the beginning of our dividend
payments. Thereby we will contribute to increasing our medium-to-long-term
corporate value.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

13

3.2.1

Forecast

Sales up 54.9％, Operating income up 31.2％（1,000 yen）

Sales

YoY +54.9％ （1,000 yen）

20,000,000

15,000,000

Operating income YoY +31.2％
MKFG

5,000,000

MK

4,500,000

FG

4,000,000

Excluding
MK & FG

YoY +26.1％

Excluding
MK & FG

YoY +30.1％

3,500,000

3,000,000

10,000,000

2,500,000

2,000,000

1,500,000
5,000,000
1,000,000

500,000

00※MK：MACRO KIOSK, FG：GMO Financial Gate

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

14

3.2.2

Forecast (Quarterly)

Quarterly forecasts（％:YoY）■ Forecast for the period ending September 30, 2017

Sales

Operating income+64.7％+60.3％+37.8％+53.5％

4,000,000+28.9％（1,000 yen）

（1,000 yen）
5,000,000+30.3％+28.5％+38.6％
1,000,000

3,000,000

2,000,000

500,000

1,000,000

00FY2014FY2015FY2016FY2017E

FY2014FY2015FY2016FY2017E

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

15

3.2.3

Revenue Breakdown by Business Model

Action plans to realize growth in all business models（1,000 yen）

18,000,000
16,000,000＋41％

14,000,000

・Cultivating large-scale
merchants
・”GMO payment later”
expansion・”Remittance service”
expansion
・FG+MK

12,000,000
10,000,000＋41.1％＋94％

8,000,000+ 38.4％＋28.1％+ 27.6％4,000,000

0・Cultivating large-scale
merchants
・ “Online AdvertisingService“ expansion
・FG+ 26.7％6,000,000

2,000,000

・Cultivate growing
merchants
・Service to increase
the merchants’ sales
・Expansion of MSB
such as Transaction
lending, Early
payments
・FG+ 28.4％+46.9％+4.1％+1.9％+24.6％+25.9％+9.9％+15.6％+10.6％+ 36.4％+ 17.3％+ 40.3％+ 18.1％+ 16.6％+ 14.8％+ 19.4％+ 11.5％+ 21.8％+ 7.1％+ 22.4％+ 20.0％+ 22.8％+ 29.0％+ 24.6％+ 24.9％+ 13.2％+ 12.6％+ 25.6％

－7.1％

＋23％

＋32.8％＋21.5％＋107％

2008/92009/92010/92011/92012/92013/92014/92015/92016/92017/9E

Merchant acquiring
加盟店売上
Service revenue

529,138

666,209934,441

1,274,419

1,636,774

2,089,254

2,647,458

3,664,591

5,172,308

7,287,537

Transaction
処理料売上
processing
revenue

816,868

897,658

1,060,123

1,235,737

1,418,822

1,663,741

2,042,710

2,634,854

3,374,645

6,560,666

固定費売上Monthly
revenue

608,236

702,946

839,522

1,022,263

1,251,675

1,559,914

1,948,574

2,204,794

2,926,798

3,593,720

Initialrevenue
ｲﾆｼｬﾙ売上252,828

279,735

311,813333,895

400,823

451,175

566,799

526,652

640,111

1,325,876*MK：MACRO KIOSK, FG：GMO Financial Gate

・System development
and Services for largesized enterprises
・Cultivating large-scale
merchants
・FG*％: YoY

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

16

4.

Strategies for future growth

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

17

4.1

Ecosystem of our business

All our services for increasing our Merchant’s sales, and ourPayment Processing
Transaction
analysis

Offline(cardpresent)/
Onlinepayment
processing

OnlineAdvertising

BtoB
Lending

GMO
payment
after
delivery

Increasing
sales of the merchant
Increasing
sales of the merchant
Cultivating new merchants

Creation of newservices

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

18

4.2

Our approach to offline(card-present) payments

Expanded our business in the offline(card-present) market
by making GMO Financial Gate our subsidiary■Market changes and new areas of growthMarketchanges■Capital structure and business area

• Security strengthening due to growing consumption
from foreign visitors• Expanding cashless payments before upcoming
Tokyo Olympics
65%• IoT devices / Technology adoption
capitalGrowing • Demand for switching to EMV compatible terminals
area ofoffline(card • Expansion of installation of new devices forcashless payments-present)
100%
payments • Payments & IoT Monetization

Online market(e-commerce)Enterprise

Offline(card-present)
marketcapital•Acquisition of GMO-FG and GCS
Ouractions•Establish management systemcovering the growing area ofoffline(card-present) payments

SMEs*GMO-FG：GMO Financial Gate, GCS：Global Card System

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

19

4.3.1

Global business expansion

Mission of
Global Business

To offer a convenient payment method for the ASEAN economic
zone which has more than 600 million people

Current and future potential of ASEAN

Purpose of MacroKiosk(MK) acquisition■Bank account ownership rate in ASEAN countries
・Bank account transfer is not very popular as■Overview of MK’s business spread
100
a payment method except Singapore, Malaysia and ・Building network with ASEAN banks is essential to（％）
realizing our growth mission.
Thailand.
・We acquired MK because MK covers 95% of all Malaysian・Expected to expand its usage in other countries
80

banks and is expanding its business to other ASEAN countries.

Hong Kong
60

40

Up to the levelof developed countries

Thailand Cambodia
Vietnam
Malaysia
Covers 95%
of all banks

20

Singapore

Establishedbanking network
Currently expandingbanking network0

Indonesia※Reference：THE WORLD BANK「World Development Indicators」

Philippine

Forecasted ongoing
expansion*MK：MACRO KIOSK

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

20

4.3.2Global business expansion

MK’s contribution to our growth: their sales ratio of
our global business is up to over 10%.
■Forecast of MK’s performance■Their sales ratio of our global businessOver 10%(Millionyen)

Contribution to our OP growth of 25％

9,000

8,000
7,000

Small %

6,000
5,000
4,000
3,000
+63%

2,000

+12%

+10%

+16%

1,000

0
Incomebefore tax

1035

1202

53

72

1967

2221

2338

93

54

77

ActualForecast2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

FY2016FY2017

Inside Japan

Outside Japan*MK：MACRO KIOSK

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

21

4.4.1

Expansion of Money service business(MSB)

Steady build-up of MSB-related assets¥40 bil(Plan)

Actual¥14.2 bilBusiness Plan

¥5 bil2015/92016/9Transaction lending

2017/9Plan

2018/9Plan
Early payment

2019/9Plan

2020/9Plan

Finance lease

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

22

4.4.2

MSB: GMO Payment after delivery

Adoption by ZOZOTOWN to boost growth
GMO-PG launches “GMO Payment after
delivery” service for Japan’slargest fashion shopping website “ZOZOTOWN”■Amount of “GMO Payment after
delivery” payments processed

Growthacceleration

15/1Q15/2Q15/3Q15/4Q16/1Q16/2Q16/3Q16/4Q

The number/amount of processed payments
increased rapidly
Increase in the number of payment after
delivery users
Increase in the number of stores that adopted
payment after delivery service

Line of the organic growth of market for payment
after delivery service
Processed payments
2010 to 2014: Annual average growth of 40.4% * amountof PS is up
2020: Scale of 550 billion yen (forecast)
70%

Processed payments amount of “GMO Payment after delivery”* Reference: YANO Research ”Online payment service providers 2016”

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

23

4.5

Breakdown of Operating Income Trends

Business expansion strategy: from Payments to Fintech, global
Operating Profit (Bil¥)

Strategy
Expansion of・Payment service
・Banking business・Lending business・Global business
50
37

100
X
(in preparation)

GlobalSolutions

Advertising

・Ads agency
・Ads fee payment provider

Offline(cardpresent)

・BtoB
・BtoC

Finance
Service

E-commerce

2016（actual） 2017（forecast）

・Global payment provider
・Payment in Asia/Banking business・GMO payment after delivery
・Early payment service
・Transaction lending・Remittance service
・Financial leases
・Factoring

・BtoB
・BtoC

around 2020
（forecast） Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

24

5.

Financial highlights

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

25

5.1

Consolidated Balance Sheets

MSB growth reflected in current assets(Million yen)

Results for
Q4, FY2016

Results for
Q4, FY2015

ChangeCurrent assets

45,54938,4697,079

Cash and deposits

25,23130,152(4,921)

Lease receivables

7,291

2,293

4,997

Advance payments

6,388

2,303

4,085

(Million yen)

Results for
Q4, FY2016

Results for
Q4, FY2015

Change35,33025,448

9,882

27,634

21,184

6,449

Current liabilities
Deposits received

Related to Finance Lease
Increase of Early Payment Service

Accounts payable

Deposits by merchants through representative merchantservice*Discrepancy occurs with the pace of merchants’ sales growth
due to changes in merchants’ cutoff dates and payment cycles

2,784

1,911

872

Increase of Payment after delivery

Accounts receivable

1,742

1,156

585

Other current
liabilities

4,912

2,352

2,560

Allowance for
doubtful accounts

(327)

(186)

(141)

Noncurrent liabilities

332

197

135

Other current assets

5,222

2,748

2,473

Shareholders’ equity

18,305

16,0672,238

Noncurrent assets

9,222

3,362

5,860

4,712

4,711

1

Tangible assets

352

215

136

(145)

116

(261)

Intangible assets

3,698

934

2,763

Software

1,079

751

327

19,10816,1862,921

Investments andother assets

5,171

2,211

2,959

54,771

41,831

12,939Total assets

Capital stock
Total cumulative othercomprehensive income

Total net assets

Increase in investment securities and investments in other securities of subsidiaries and affiliates

Total liabilities andnet assets

54,771

41,831

12,939* Borrowed ¥4 billion in October 2016 due to the expansion of MSB business
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

26

5.2

Consolidated statement of cash flows

Cash and cash equivalents decreased temporarily
because of the growth of MSB related assets and MA activities（Unit: Million yen）

FY2015FY2016

Net cash provided by operating activities

3,709

-748

Net cash provided by investing activities－1,374－3,415

Net cash provided by financing activities

7,398

－654

Translation differences of cash and cash equivalents

30

－107

Increase and decrease in cash and cash equivalents

9,764－4,926

Cash and cash equivalents at the end of period

30,11325,187* Borrowed ¥4 billion in October 2016
due to the expansion of MSB business
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

27

5.3

Changes to Major KPI (Quarterly Change)

Amount of processed payments almost ¥2 trillion
Number of operating stores 77,256 / Amount of processed payments ¥500 billion / Number of processed payments 234 million(number ofstores)
70,000(billionamount of
5,000
payment
processed
4,000 amount)(Reference) Amount of processed payments (past 12 months, cumulative)
Including GMO FG’s amount of processed payments(ten thousandsof processed
payments)

1.98 trillion yen
2.16 trillion yen

20,0003,000
60,0002,000

15,00050,000

Ratio of payment
processing amountattributable toaffiliates’ sales:
45%

40,00010,00030,00020,0005,000
10,0000010/12 11/3

11/6

11/9 11/12 12/3

Recurrent payments

12/6

12/9 12/12 13/3

Online payments

13/6

13/9 13/12 14/3

14/6

14/9 14/12 15/3

Number of operating stores

15/6

15/9 15/12 16/3

16/6

16/9

Number 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 from each quarter)

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

28

Thank you very much!

GMO Payment Gateway, Inc.
(TSE 3769)
URL https://corp.gmo-pg.com/en/ir/

For more information, please contact the Corporate Value Creation Strategy Division
Investor Relations Office Phone: +81-3-3464-0182