Financial results briefing for the 3Q of FY2014（ O c t o b e r

1 ,2 0 1 3 - J u n e

3 0 ,

2 0 1 4 ）Themes：Achieving more than 20% profit growth,
expecting to make a new record high profit

August 1, 2014
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 August 1st, 2014.
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. Current status and future growth strategy
2. Financial highlights
3. Results forecast for the term ending September 2014

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

3

1. Current status and future growth strategies

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

41.1

Recent topics
Topic

Expected changes

Japan Post plan to enter into
credit card settlement
services.（June 2014）

Base of the BtoC-EC market will bebroadened

No impact: We have already establishedcompetitive advantage.
But some services may have an impact
and we need to pay attention to them.

Kakaku.com started mobilephone payments service forTabelogʼs merchants.

Competition may intensify due tothe same kind of services“GMO Pallet” allows simple payments
using only a smartphone app.

Impact on our business performance（May 2014）Yahoo Japan Co. purchased
KC Card Co., Ltd.
（June 2014）

LOCKON CO., LTD. launched
the new service package tocreate BtoB-EC site in Sept.

Fierce competition between big
online shopping malls

Expansion of the BtoB-EC markets
will be supported（June 2014）

LINE Co. scheduled forlisting on the Tokyo Stock
Exchange（July 2014）

Hope for further growth throughleverage from raised funds andacceleration of its global expansion

There is only a minor impact on
independent e-commerce site

Strengthening collaboration to maximize
benefit

No impact: strengthened partnerships
with growing companies like LINE Co. andsupport their growth with our service

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

51.2Forecasts and business model

Achieve growth of over 10 billion yen in ordinary incomeby creating new markets and improving Japanʼs EC ratio

EC ratio

BtoC EC
Market scale

2014

Around 2020

3％

10％

¥10 Trillion

3 times30％

Large-sizedenterprises

Around 30 trillion
Expanding market share

Amount ofprocessed
payments(GMO-PG Group)¥1.3 trillion 3+α times

Ordinary incomeof GMO-PG¥2.5 billion 3+α times 7.5 billion +α4 trillion +α

Payment processing
business・Initial・Stock・FeePayment processing+αMedium-sized companies
・Spread（Forecast:2014/9）

BtoB-EC business
Payment-related business+α
10 billion

Small businesses(Long-tail)Payment processing+α・Fee※References：METI, [Market report in regard to EC 2013]

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

6

1.3

Expanding business fields

Provide a payment platform to solve our merchantsʼ problems
Consumer

Merchant（Merchantsupport）④2011, Online
Advertising
serviceNon face-to face（EC）

Domestic

Face to faceOverseas⑩2014,
Lending service

ConsumerBusinesses

BtoC

Businesses

BtoB

Businesses

Gateway①1995, Started Payment
processing business②2005, Listed andpurchased GMO EpsilonNetworkBusiness related⑥2013, launched
Payment afterdelivery（GMO-PS）⑤2013, Partnered withWebPay⑧2014, launched BtoB-EC
Payment service③2010, joined COC as an
Equity method application

Credit card companies
Convenience storesElectronic money
Transportation companies
Financial institutions
Mobile phone companies
etc⑨2014, launched simple payments
service using only a smartphone app（GMO Pallet）⑦2013, launchedglobal payment services
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

7

1.4

Global trends

Looking at business trends,
strengthening our business foundations
ConsumerMerchant（Merchantsupport）

Gateway
GMO-PG

GMO-PG
Amazonlending

Non face-to face（EC）

ConsumerBusinesses

Face to face

BtoC

Businesses

BtoB

Businesses

Network

Major companyʼs business

KlarnaWirecard expansion in overseas（Payment after delivery）

markets
New players rise steadily
WebPayBusiness related

GMO-PS

StripeBrandʼs credit cards company purchased payment
processing company

Cybersource

VISA

DataCashMasterCard

Globalcorrect

COCingenico(POS)

Credit card companies
Convenience storesElectronic money
Transportation companies
Financial institutions
Mobile phone companies
etcMajor face-to face payment processing
company purchased non-face-to-face nonface-to-face company

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

8

1.5

Expansion of our business market

Challenging large market, not limited to narrow sense BtoC-EC
BtoB market

Goods

Non face-to-face（EC）

Other thangoods

Face to face

・1,000 trillion yen market
・Credit card payments are notwidely available between
businesses (BtoB)
wholesale site
Office supplies EC mall

BtoC market
・Narrow sense BtoC-ECmarket ¥9.5 trillion
・EC ratio: 3.1％
・Both EC mall andindependent e-commerce site
are growing

CtoC Market
・Dawn of the CtoC EC market
・Fast-growing market

Flea markets app

・Service commerce
・Public funds, taxes
Applications forprinting ofbusiness cards

Wholesalemerchants

Credit card
payments
Electronictransactions

Wifi cost
Donation
O2O
Rental car reservation
Lunch box reservation,delivery（GMO Pallet）
Beauty salon
reservation
Restaurant
Department store

Crowd-funding・Credit card payment is not yet
available
Flea markets※Reference：METI, [Market report in regard to EC 2013]

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

9

1.6

BtoB market：Credit card payment

Support credit card payment processing of untappedmega market
BtoB market

Strategy 1：Visa Business Pay¥1,000 trillion（from large-sized enterprises to smallbusinesses）

Large-sizedenterprises

Medium-sized companies

VISA plan to hold Visa Business
Pay Seminar of from August

Strategy 2：Direct sales of PG MultiPayment Service
Example: Terminals manufacturing company・Customer：Domestic and foreign, small and midsize
manufacturing companies
・Reasons for using：①Simplifies credit management②Cash flow improvement③Expand sales in overseas markets

Storategy3：Cooperation with “EC-CUBE”
and “MakeShop”
Small businesses(Long-tail)“EC-CUBE B2B” release is scheduled for
September 1※EC-CUBE ：Open source e-commerce suite that makes it possible to build a low cost shopping sitewith ease and is now Number 1 in Japan.
MakeShop ：Simple ecommerce site building tools (ASP)

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

10

1.7

Lending service by using transaction analysis

New service to support growth of our merchants
Lending money to support growth

ConsumerMerchants

GMO-PG

Business related
Credit card companyetc

Payment transaction analysis

Pre-launch trial is being conducted this Fiscal Year,full-scale business will be started from next Fiscal Year
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

11

2. Financial highlights

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

12

2.1

Summary of Consolidated Results

More than 75% of forecast annual sales and income
FY2014 (ending September 2014)（Million yen）

3Q

Compared to the accumulated
results for 3Q FY2013

Compared to the accumulated
forecast for FY2014

Results% Change

2Q
Forecast

Progress

1Q

2Q

3Q

Sales

1,645

1,842

1,825

5,313

4,201

26.5％

6,934

+76.6%

Cost ofsales

317

384

365

1,067

746

43.1%

--Gross
income

1,327

1,458

1,459

4,245

3,454

22.9％

SG&A

750

796

783

2,330

1,878

24.1%

Continuing
strategic
investments -Operating
income

577

661

675

1,915

1,576

21.5％

2,475

+77.4％Ordinary
income

601

641

684

1,927

1,581

21.9％

2,460+78.4％

Net income

355

363

407

1,126

946

19.0％

1,421

+79.3％Net income
per share(Yen)

---

65.31

55.08

-

82.34

-

accumulated
results

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

13

2.2

Summary of Consolidated Balance Sheets

No major changes
Results for
3Q, FY2013

Change（Million yen）

Results for
3Q, FY2014

22,967

16,636

6,330

Current liabilities

Cash and deposits

21,02915,215

5,814

Advance payments

619

294325

Other current assets

1,3521,155

197

Allowance for
doubtful accounts△34△28△5Fixed assets

1,932

1,527

404

Tangible fixed assets

249

238

10Intangible fixedassets

761

615

146

Software616

405

Investments andother assets

921

Bonds of affiliates（Million yen）

Results for
3Q, FY2014

Current assets

Total assets

Results for
3Q, FY2013

Change18,346

12,701

5,644

Deposits

16,982

11,942

5,040

Other current
liabilities

1,363

759

604

Deposits from merchants under the“Merchant acquiring service agreement”

Non-current liabilities

174

115

58

Shareholdersʼ equity6,338

5,330

1,007

210

Valuation andtranslation
adjustments

33528673

247

Subscription rights
to shares

311△711110

6,378

5,347

1,031

24,89918,164

6,735

24,89918,164

6,735

Total net assets
Total of liabilities and netassets

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

14

2.3

Sales/Ordinary income (Quarterly changes)

Impact of the consumption tax hike was small – Sales up +24.2％ YOY
Compared to last 3Q■Sales1,800,000

systemdevelopment
40 million yen

1,469,820

952,847

895,971465,565

560,812475,402433,440
396,884

400,000

1,047,704

969,793

480,414500,000

1,176,791

1,162,012

601,701

600,000

540,382
1,307,506

1,061,787
1,000,000

1,563,063

1,311,166

1,200,000

684,886

700,000
641,092

1,420,034
1,400,000+22.1％（1,000 yen）

1,825,574

1,842,793

1,645,144

1,600,000■ Ordinary income+24.2％（1,000 yen） Sales of special

Compared to last 3Q

400,593465,943
389,917333,673
300,240

300,000

800,000

600,000

200,000

400,000
100,000

200,00000

1Q
FY 20112Q
FY 2012

3Q4Q

FY 2013

FY 2014

1Q

2Q

FY 2011

FY 2012

3Q

4Q

FY 2013

FY 2014

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

15

2.4

Impact of the consumption tax hikeNo major impact on the EC market
Private consumption
integrated estimates

Number of processed payments(online)（2008/1=1;Index）
6120

Number of processed payment (online)
5Consumption tax hikeprivate consumption integrated estimates

115

4110

3105

2100

The Great EasternJapan Earthquake

195

Lehman Shock900

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

162.5

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

Cost of sales ratio deteriorated due to increase in sales ofvalue-added services that exceeded initial plan
Sales of special
system development
40 million yen（1,000 yen）

2,000,000

1,800,000

1,200,000
1,047,704
1,000,000

1,307,506 1,311,166
45.9%
45.8%
43.9%
1,162,012
1,176,791

1,061,787

44.4%

51.6%

50.0%
45.6%

44.0%

43.2%

42.9%
40.0%

806,331
696,122600,491

613,394

600,000

498,728

441,423

200,000

1,469,820

969,793

800,000

400,000

1,420,034

47.0%

45.5%

60.0%

1,563,063
53.2%

1,400,000

1,842,793 1,825,574
1,645,144

58.5%

1,600,000

70.0%

13.4%
130,075

13.0%
135,92213.4%
142,583

533,740

14.3%
166,05016.9%
220,442

179,48917.7%
231,643796,546

783,601 30.0%

647,175

630,40720.9%

517,17915.3%

750,260

17.8%
253,353

18.2%

17.8%
261,235

284,58019.3%
317,675

20.0%
384,29320.0%

365,973
10.0%

Cost of sales of special
system development

00.0%
11/6 (3Q)

11/9 (4Q) 11/12 (1Q) 12/3 (2Q)

Sales

Sales-cost

12/6 (3Q)

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

SG&A

Sales-cost ratio

13/6 (3Q)

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

14/6 (3Q)

Sales-SG&A ratio

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

17

2.6

Sales results for each segment（Quarterly changes）

Good results for Merchant acquiring service revenue
Initial revenue fluctuated according to system sales（1,000 yen）
700,000

600,000

YOY（1Q）
Initial revenue+37.0％
Monthly revenue+27.9％
Transaction processing revenue+20.6％
Merchant acquiring service revenue +25.3％（2Q）+55.8％+29.0％+25.9％+27.4％

500,000(3Q)-3.9％+26.7％+22.0％+30.1％

473,999

356,129

313,562 326,267
309,391
300,000
278,531
264,470

350,983
347,313341,807
303,811

291,439

357,956
320,293568,811526,214371,745
336,130

401,280
374,667

363,264

505,369
470,792

464,540

390,290582,291

529,688431,131403,729

408,062400,000

441,038

86,77677,557

102,823

125,630
94,811

93,072

117,872

526,041
501,688483,241

464,560425,963

396,019

Sales of special system development
40 million yen

200,000

100,000 82,368

689,264

670,573

112,981

127,249

183,609

127,499

108,580011/6 (3Q)

11/9 (4Q)

Initial revenue

11/12 (1Q)

12/3 (2Q)

12/6 (3Q)

Monthly revenue

12/9 (4Q)

12/12 (1Q)

13/3 (2Q)

Transaction processing revenue

13/6 (3Q)

13/9 (4Q)

13/12 (1Q)

14/3 (2Q)

14/6 (3Q)

Merchant acquiring service revenue

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

182.7

Sales results for each segment

Balanced growth in all segments-3.9％（％:YOY）+26.7％New service

New service
Payment systemdevelopment &SSL

Onlineadvertising
service

62％

Initial（Initial revenue）

New service
Delivery service,etc
8％+30.1％New service
Lending service
Others
2％

24％

38％

Payment
processing
service+22.0％

Payment
processing
service

76％

Stock

（Monthly revenue）

Payment
processing
service

Payment
processing
service

92％

98％

Fee

（Transaction processing revenue）

Spread（Merchant acquiring service revenue）※Image of the revenue structure（％: Sales composition of 3Q, FY2014）
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

192.8Transition of major factors (Quarterly changes)

Number of operating stores, number and amount ofprocessed payments grew immensely

Number of operating stores 48,532/Amount of processed payments ¥370 billion/ Number of processed payments 166million
Number ofoperating
storesAmount ofprocessed payments
4,000 （100 million yen）

50,00040,000

Number of processed
payments (10,000 trx)

Payments occurring only once a year like
automobile tax and other Public moneys tend
to concentrate in April/May

18,0003,000

16,0002,000

14,000Share of merchant acquiring
service revenue
in settlement amount: 20%(June 2011)

1,000
30,00012,000Share of the merchantacquiring service revenue
in the settlement amount:30%

0

10,0008,000

20,000
6,000

4,000

10,000

2,000

00.

09/3

09/6

09/9

Recurring payment

09/12

10/3

10/6

10/9

10/12

Online payment

11/3

11/6

11/9

11/12

12/3

12/6

12/9

Number of operating stores

12/12(Number of operating stores is calculated at end of quarter; amount/number of processed payments is result for each quarter)

13/3

13/6

13/9

13/12

14/3

14/6

Amount of processed paymentsCopyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

20

2.9

New businessNew business and major factors■Online advertising service
Sales（GMO-PG）■SAPS

Ordinary income

13/3

13/6

13/9

13/12

14/3

14/6

12/12

13/3

13/6

13/9

13/12

14/3

14/6

12/6
12/6

12/9

12/3
12/3

12/12

11/12
11/12

12/9

11/9
11/9

11/6

11/3

10/12

10/9

10/6

10/3
10/6
10/93
10/12
11/3
11/6
11/9
11/12
12/3
12/6
12/9
12/12
13/3
13/6
13/9
13/12
14/3
14/6

10/3

Established in March 2010

■COC
11/6

11/3

10/9

10/12

Joined as an
Equity method
application
concerned
company inJanuary 2010

10/6

Ordinary income
10/3

Amount of processed payments

10/3
10/6
10/93
10/12
11/3
11/6
11/9
11/12
12/3
12/6
12/9
12/12
13/3
13/6
13/9
13/12
14/3
14/6

■GMO-PS

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

21

3. Results forecast for the term ending
September 2014

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

22

3.1

Summary of Consolidated Results (Forecast)Investment continues though ordinary profit
growth rate returns to 20%（1,000 yen）

6,934,000

7,000,000

6,000,000

34.3%

33.2%

32.8%

36.4%

35.5%

37.5%

37.0%

36.5%

35.5%

5,764,085¥28.505,000,000¥24.504,000,000

3,866,316

22.7%¥19.503,145,901
3,000,000¥15.502,207,071
1,945,011

2,000,000

1,629,951

2,460,000¥6.25

2004/9295,828

645,909304,302756,506

377,212 440,080

927,535
524,259

1,147,552
585,206

960,761

1,217,025

10%
1,421,000

2005/92006/9

Sales+20.3％

763,7740%
2007/9Ordinary income

2008/92009/9Net income

2010/92011/92012/9Ordinary income ratio※％ yoyOrdinary income+20.1％

30,173listed on the TSE

Sales1,764,325
1,431,391¥7.50

535,350

192,400
150,092

2,047,552¥11.75¥8.75

1,305,157
801,778¥10.50

By continuing priorinvestment andsales mix(Sale of valueadded services withhigh cost price rate), sales amount forthe ordinary profit
rate is expected tomove sideways.

20%

2,546,550

030%

4,708,097
24.0%

1,000,00040%

2013/9Net income+16.8％

2014/9E

Dividend

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

233.2

Sales for Each Segment (Forecast)

Planning for merchant acquiring service revenue to be +25%
and transaction processing revenue to be +23％
（1,000yen）

7,000,000※％ yoy6,000,000

listed on
the TSE+ 25％

Because of expansion of
the ECmarket, we forecast
that merchant acquiring
service revenue is goingstay in good shape.

5,000,000+ 27.6％4,000,000+ 28.4％+ 36.4％+ 23％

3,000,000+ 17.3％+ 40.3％+ 14.8％+25.9％
2,000,000+88.4％+95.0％+155.5％1,000,000+45.4％+41.4％+44.4％+15.4％+14.2％+6.4％+ 16.6％+46.9％

+4.1％

+1.9％

+9.9％

+15.6％+ 18.1％+ 24.6％+ 19.4％+ 21.8％+ 13％+ 22.4％

2004/9Merchant acquiring service revenue

38,364

98,011

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

Monthly revenue

344,083

486,490561,253

597,193608,236

702,946

839,522 1,022,263 1,251,675 1,559,914

Initial revenue

91,920244,613

190,336

202,880

252,828

279,735

311,813

191,126

360,138

529,138

666,209

The Online AdvertisingServiceʼs sales estimatedconservatively. Focusing
on expanding steadyrevenues.

+ 15％+ 20.0％ + 12.6％+24.6％ +10.6％ + 11.5％ + 7.1％
+166.1％ -22.2％+6.6％
2005/92006/92007/92008/92009/92010/92011/92012/92013/92014/9E

0In accordance with theeconomic recovery, we
forecast an increase in thetransactions of large-scale
merchants and anenlargement sale for
GMO-PS.

934,441 1,274,419 1,636,774 2,089,254

333,895

400,823

451,175

Devote to acquiring thelarge and medium-scale
merchants, cross sell andorder of largescale development items.

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

24

3.3

Cost of sales ratio and SG&A ratio (Forecast)

Find balance between cost of sales ratio and SG&A ratio(1,000yen）
6,934,000

7,000,000

6,000,000

52.0%

50.8%

50.6%

49.0%

47.7%
44.7%

5,000,000

46.6%
4,708,097

4,000,000
3,145,901

24.0%
17.1%

1,945,011

1,629,951
1,305,157
801,778
416,8740

192,223

2,684,406

2,546,550

2,000,000

1,000,000

40%

SG&A
• Employment of highly
talented personnel• Establishing newcompany (GMO-PS)• Rent expenses increase
associated withexpansion of
headquarters.

3,866,316
30.5%

3,000,000

5,764,085
47.7%

49.0%

48.1%

60%

584,130
397,698

2004/92005/9listed on
the TSE827,385
279,287

2,207,071
17.1%

2,245,771

16.4%
984,589
318,497

1,053,821

376,997

1,247,407

372,853

1,894,257

14.7%

14.6%

1,513,031

463,175

17.9%

20%

15.0%

13.7%

1,030,813
708,566

530,843

Cost of sales• Continuation of priorinvestment• Strong sales of Online
Advertising Service• Increase agency fees
• Cost of data center
parallel operation willremain the same.

0%
2006/9Sales

2007/92008/9

Sales-cost

2009/9SG&A

2010/92011/92012/9

Sales-cost ratio

2013/92014/9E

Sales-SG&A ratio

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

25

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 GroupTEL:03-3464-0182