Financial results briefing for the 1Q of FY2017(October 1, 2016-December 31, 2016)
Growth acceleration toward 2020 target

February 6, 2017

The 48 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 Note About
the Contents of this Document

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 February 6, 2017.
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 of Financial Results for 1Q FY2017

2. Performance Forecast of FY2017
3. Strategies for Future Growth

4. Financial Highlights
5. Reference Materials

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

3

1.

Summary of Financial Results for 1Q FY2017

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

4

1.1

Summary①

Strong start: OP up 38%, EBITDA up 42%（Million yen）

Consolidated
results of 1Q,
FY2017(cumulative)

Consolidated results of 1Q, FY2016(cumulative)

Progress rate against plan

ActualChangeChange%1H

Actual
23.2%

Sales

4,346

2,732

1,614

59.1％

51.8%

Gross income

3,237

2,117

1,119

52.9％

-

Operatingincome

1,201

870

330

37.9％

48.1％

24.0％

Ordinary
income

1,109

924

184

20.0％

47.2％

23.7％

Net income

597

596

0

0.1％

42.4％

21.6％

EBITDA

1,356

952

404

42.4％

KPI

-

Number of operating stores（end of period）

Amount of processed
payments (1Q estimate)

Number of processed
payments (1Q estimate)

81,990Approx.570 Billion Yen

Approx. 249 Million* EBITDA＝Operating income + Depreciation + Amortization of goodwill
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

5

1.2

Summary②

OP and ordinary income growth as planned, net income
affected by income tax accounting
5,000
4,500

(+)Payment processing business in good shape(+)Consolidated results include GMO-FG and GCS(+)GMO payment after delivery creates extra sales for MSB

Million yen+59.1％

4,000(－)The ratio of COGS increased due to GMO-FG and GCS consolidation.
(－)Increases of some MSB services with high COGS ratio

3,500
3,000

(－)Decrease of equity method investment profit
following GMO-FG acquisition(－)Loss on equity method investments

2,500(Incorporation of equity loss + amortization of goodwill)

2,000+37.9％

1,500(－)Increase of corporate taxes+20.0％

1,000(affected by income tax accounting)

+0.1％

500
0
Sales

Operating income
FY2016/1Q

Ordinary income

FY2017/1Q Plan

Net income

FY2017/1QActual

GMO-FG: GMO Financial Gate, Inc.; GCS: Global Card System, Inc.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.
6

1.3

Quarterly change and forecast％: YoY( ): forecast

Sales growth over forecast, OP as planned■ FY2017 Forecast（Consolidated）（1,000 yen）

+37.9％(+60.3％)5,000,000+59.1％
4,000,000

Operating Income(+64.7％)

Sales（1,000 yen）(+30.3％)(+28.9％)(+37.8％)(+53.5％)(+28.5％)(+38.6％)1,000,000

3,000,000

2,000,000

500,000

1,000,000

001Ｑ
FY20142Ｑ
FY20153Ｑ
FY20164Ｑ
FY20171Ｑ
FY20142Ｑ
FY20153Ｑ
FY20164Ｑ
FY2017

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

7

1.4

Sales/Operating income by Segment (Cumulative)

OP up more than 25% in all segments■Sales by segment*％: YoY■ OP by segment（prior to intercompany eliminations）
42,715+54.8％（1,000 yen）

（1,000 yen）

345,089 1,600,000+21.9％

4,000,000

178,150+323.9％1,400,000

3,500,000

1,189,294+177.5％ 1,200,000

27,5891,000,000

42,0243,000,000

283,189
2,500,000

428,588

800,000

2,000,000

2,812,430

1,500,000

1,000,000

1,465,987+25.6％

1,167,028

600,000+39.1％
2,021,235

400,000

500,000

200,000

00

FY2016/1Q
Payment processing business

FY2016/1Q

FY2017/1Q
Money service business

Other

Payment processing business

FY2017/1Q
Money service business

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

Other

8

1.5

Revenue Breakdown by Business Model(Cumulative)

Spread revenue up 46.5％、Fee revenue up 86.0％ due to
GMO payment after delivery growth
Spread YoY+46.5％
・MSB has continued to steadily grow
(Early payment・FL)
・Amount of processed payments has
increased (up to 2 trillion yen in FY2017)(1,000 yen)

4,000,000
1,692,544

3,500,000
3,000,000

Fee YoY+86.0％
・Strong expansion of MSB (GMO payment
after delivery, Remittance Service)2,500,000
1,155,545

2,000,000

1,434,642

Stock YoY+31.7％
・Expansion of business with large-scale
merchants (banks, etc.)
・Expansion of “Online Advertising Service”

1,500,000
771,471

1,000,000

874,081500,000

663,5810142,188
FY2016/1Q

InitialStock

Initial YoY+143.0％
・System development and services forlarge-sized enterprises
・Cultivating major/high-growth merchants
・Sales of payment terminals (GMO-FG)

345,545
FY2017/1Q

Fee

SpreadGMO-FG: GMO Financial Gate, Inc.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

9

2.

Performance Forecast for FY2017

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

10

2.1

Forecast (Summary)

OP forecast remains unchanged, up 31.2％ excluding
GMO payment after delivery growth■ FY2017 forecast

OperatingincomeSales
Full year 18,767(54.9％)

2Q of FY
2 0 1 7(46.4％)

Dividends
forecast■ Points

8,389

37 yenOrdinary
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

 Sales・We plan to consolidate the income statement of MACROKIOSK from the second quarteraccounting period and incorporate their income and losses over the 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 SG&A

・Goodwill amortization due to the increase from group companies (total of ¥230 million)

 Non-operation ・Goodwill amortization from equity-method affiliate is expected (About ¥160 million)
expenses
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

11

2.2 Changes in Consolidated Performance(FY2017 Forecast)¥37.00* YoY change of（1,000 yen）

¥27.0018,767,000 performance forecast

18,000,000

Sales¥18.0016,000,000

Operating income +31.2％¥15.0014,000,000

¥4.38

¥7.75

¥5.88

¥5.25

¥9.75

+54.9％¥12.25

Ordinary income +23.9％
Net income

12,113,864－5.1％

12,000,000

10,000,000

9,030,892

8,000,000

7,205,542
3,866,316

6,000,000

4,708,097

3,145,901
4,000,000 2,207,071

2,546,550
926,2882,000,000

1,441,214756,506
440,080

524,259

1,753,759

1,147,552
585,206

5,013,000

2,977,270
2,048,865

2,476,408

1,169,694

3,819,506

3,000,455
3,780,880

776,253

927,535

5,764,085

1,431,391
763,774

1,764,325

2,047,552

960,761

1,853,449

2,527,793

1,855,037

2,910,926

4,673,000

2,762,000

1,515,7880
2008/92009/9Sales

2010/92011/9Operating income

2012/92013/9Ordinary income

2014/9Net income

2015/92016/92017/9E

Dividend per share

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

12

3.

Strategies for Future Growth

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

13

3.1

Industry topics

Our position regarding recent issues■Development of FinTech environment: to revise Law of Financial Services Agency,
plan to introduce a registration system for “online payment processing service
providers” (Nikkei, Jan 27 th, 2017）
・Positive law revision for major companies with strong financial structure and security infrastructure
・Expansion of business opportunities through collaboration with financial institutions■Establishment of revised Installment Sales Act: to be enforced in 2018
・It is necessary to strengthen security to prevent data leakage incidents and adopt more effective fraud
prevention systems
・Major E-commerce enterprises need to consider the usage of payment processing service from the principleof self-sufficiency■Expansion of payment methods by smartphone: ”Apple Pay”, etc.
・Full scale expansion of market for card-present cashless payments
・Started approach to growth areas of card-present market by acquiring GMO-FG and GCS.
GMO-FG: GMO Financial Gate, Inc.; GCS: Global Card System, Inc.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

14

3.2

Mid-term goals

Measures to achieve OP of 10 billion yen by 2020
OP goals

Environment・Measures

Payment processing business

Card-present area

MSB

Global business10 billion
yen

④
③

5 billion
yen

②

③MSB
Environment: Expansion of FinTech services.
Measures:
Strengthening of Early payment service, TL
Expansion of GMO payment after delivery(supporting sales increase for merchants)

7.5 billion
yen②Card present area
Environment: Moving toward cashless payments by Tokyo
2020 Olympics.
Measures:
Acquired GMO-FG and GCS;
Approach to growth area
(Smartphone/IoT/Inbound)①
1.7 Times
4.5 billionyen
EC ratio
4.8％
2017（Forecast）④Global business
Environment: Competition for leadership with global major
players
Measures:
Acquired MK(strategic moves toward Asian E-commercemarket at the time of its expansion)

EC ratio
8％①Payment processing business
Environment: Steady expansion of E-commerce market
Measures:Adding various payment solutions
Expanding businesses for financial
institutions
Expanding the area of public funds (taxes,etc)
B2B(creating & strengthening of ecosystem)

2020
GMO-FG: GMO Financial Gate, GCS: Global Card System, MK: MACROKIOSK

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

15

3.3

Ecosystem model

All services involve in increasing our merchants’ sales andour payment processing
More payment processing

Payment
processing
Payment
processing

Analysis / Conclusion
Ad service
Finance service

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

16

3.4

Payment processing business: Methods expansion

Expanding services other than online credit card payments(Scale factor: comparison to2010)

Changes in amount of non-credit card
payments processed (Online)

Amount of major types of non-credit
card payments processed (Online) andof card-present payments

24.6 times

4.5 times

15.2 times

non-credit card payments（Online）

CVC（prepaid）

CVC（deferred payment）

account transfer

FG

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

17

3.5

Payment processing business:
Services for financial institutions

Delivering value as a “Rebundling player” of FinTech
Complementation and coexistence ofexisting financial services

Replacement of existing financial services

Payment processing service
Remittance service (money transfer business)

P2P remittance
Cash
out

Direct payment accountBanking app

TL, Lease, Factoring

Rationalization/labor saving

Real time communication

Fraud prevention

Analysis of big data

Credit decision

Service AI（machine learning/deep learning）

Key
component

Authentication technology

Expansion of FinTech services focusing on ”Banking app“
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

18

3.6

Payment processing business: B2B

New measures to accelerate B2B market cultivation
B2B EC market：288 tr. yen*･Added “Paid” in ”Payment package for B2B E-commerce”(service launch is April 2017)･Collaboration with external partners and expansion ofpartnership-Partnership with cloud billing business-Collaboration with Zuora (supporting subscription-based business)
EDI

Order receiving
Shipment / inspection
Large scale

Invoice issuing

Cloudbilling

Buyer

Medium scale(wholesale, etc.)

Supplier（manufacturingindustry・construction, etc.）

Partner

Payment
Payment package for B2B E-commerce

Small scale（retailing, etc.）
Credit card
payment

Accounttransfer

Virtual AccountBank Transfer

Paid*Reference: METI “Results of the E-Commerce Market Survey
Complied (2015)

We will establish a firm position as an industry standard B2B payment platform
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

19

3.7

Payment processing business: Taxes

Started operation of “National tax payment website”(URL： https://kokuzei.noufu.jp/ )+Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

20

3.8

Payment processing business: Card-present market

Focus on a new growth area of card-present market: Payments + IoT
Embedded EMV terminals

Growing area

Target

EMV・cashless

Existing area

Available devices■GMO-FG Group, OP (Actual & Forecast)with PIN

without PIN

2,500K units

960K units
Railway
company

Number of mobile TRX

157K units

Gas station

Parkingcompany

Amount of mobile TRX

Mobile payment

Forecast

200K units

These pictures are merely illustrations, and do not intend to suggest implementation.

Beverage
maker

Actualwith PIN

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

21

3.9

MSB (Money Service Business: MSB)

Growth in sales, OP, and assets related to MSB(1,000 yen)

30,000,000

Assets related to MSB: 3.7 times

Sales: 2.8 times

Sales related
to MSB assets
3.1 times

25,000,000

20,000,000

15,000,000

10,000,000OP
4.2 times

5,000,000

0Transaction lending

Early payment

GMO Payment after delivery

Finance lease

Transaction lending
GMO Payment after delivery
Remittance service

Early payment
Finance leaseOP

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

22

3.10

Business expansion: MACROKIOSK

Increased number of mobile transactions as the usage of online accounts grows.
Acquired orders from finance and transport related businesses in Indonesia andthe Philippines.
■MK 2016: Changes in SMS traffic160■MK October-December 2016: major orders(January-March period is set as 100)

Joined GMO-PG
in August 2016

140

125

120
100

Acquired orders from financial institutions in each county.
In Indonesia the service is available for transport-related
businesses
132

108

100

Orders from major
financial institution in
the Philippines

Philippines

80
60
40

Indonesia

20

Orders from transportrelated businesses
deploying in SEA

0
Jan-MarApr-Jun

Jul-Sep

Oct-Dec

Orders fromforeign financial
institutions

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

23

4. Financial Highlights

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

24

4.1

Consolidated Balance Sheet

Short-term debt of 4 billion yen due to MSB expansion
Results for 1Q,
FY2016

Change(Million yen)

68,06744,80723,260Current liabilities

Cash and deposits

34,256

33,772483

Lease receivable

7,696

3,440

4,256

Advance payments

8,795

2,373

6,422

Accounts receivable

11,527

1,590

9,936

(Million yen)
Current assets

Results for 1Q,
FY2017

Results for
1Q, FY2017

Results for 1Q,
FY2016

Change58,67733,76424,913

Short-term debt

4,050

0

4,000

Deposits received

36,82729,278

7,549

Related to Finance Lease
Increase in Early Payment
Service
Increase in payment after delivery

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

Allowance for
doubtful accounts

(605)

(223)

(381)

Accounts payable

13,204

2,671

10,533

Other current assets

6,396

3,853

2,543

Other current
liabilities

4,596

1,815

2,781

Noncurrent assets

9,815

5,306

4,509

Noncurrent liabilities

308

211

97

Tangible assets

335

214

120

Intangible assets

3,855

1,009

2,845

Goodwill

2,238

24

2,214

Software

1,245

737

508

5,624

4,082

1,542

Investment securities

2,442

2,837

(394)

Shares of subsidiaries
and affiliates

2,418

279

2,139

77,88350,113

27,769Investments andother assets

Total assets

Short-term loan receivables (=TL-related assets) is included in “Other current assets”

Shareholders’ equity
Capital stock

Total cumulative othercomprehensive income

17,891

15,995

1,895

4,712

4,712

0

43

140

(97)

Increase in investment securities of subsidiaries and affiliates

Total net assets

18,897

16,1372,759

Total liabilities andnet assets

77,88350,113

27,769Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

25

4.2

Cash flow chart

Borrowed approx. 4 billion yen at the end of Octoberdue to MSB expansion(Million yen）

FY2016

FY 2017
１Q

Operating activities CF

-748

6,685

Investing activities CF－3,415－656

Financing activities CF

－654

2,983

Effect of exchange rate changes on cash

－107

4

Cash increase/decrease－4,926

9,016

Cash at the end of the period

25,187

34,203Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

26

4.3

Changes to major KPI (Quarterly change)

Annual amount of processed payments exceeded 2 trillion yen
Number of operating stores 81,990/ Amount of processed payments approx. ¥570 billion/ Number of processed payments approx.249 million(Number ofstores)80,000(Amount ofprocessed payments
in yen x 100 million)

5,000(10 thousandsof processed
payments)
25,000(Reference) Amount of processed payments (past 12 months, cumulative) approx. ¥2.1 trillion
Including GMO-FG’s amount of processed payments
approx.¥2.29 trillion

4,000
70,0003,000
20,00060,0002,000

Ratio of amount of
payments
processed
attributable tomerchant acquiring
service revenue: approx.45%

50,00040,00030,00015,00010,00020,0005,000
10,000

0

0
11/3

11/6

11/9 11/12 12/3

Recurring payments

12/6

12/9 12/12 13/3
Online payments

13/6

13/9 13/12 14/3

Number of operating stores

14/6

14/9 14/12 15/3

15/6

15/9 15/12 16/3

16/6

16/9 16/12

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

5. Reference Materials

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

28

5.1

Summary of Consolidated Results

OP up 38％, EBITDA up 42％
1Q of FY2017（Million yen）

YoY

1Q of FY2016

ChangeYoYchange(%)

ActualProportion ofsales (%)

100%

1,614

+59.1%

2,732

100%

1,109

25.5%

494

+80.4%

615

22.5%

Gross income

3,237

74.5%

1,119

+52.9%

2,117

77.5%

SG&A

2,036

46.8%

789

+63.3%

1,246

45.6%

Operating income

1,201

27.6%

330

+37.9%

870

31.9%

Ordinary income

1,109

25.5%

184

+20.0%

924

33.8%

Net income

597

13.7%

0

+0.1%

596

21.8%

Net income
per share (yen)

16.08

-

-

-

16.07

-

EBITDA

1,356

404

42.4%

952

-

ActualProportion ofsales (%)

Sales

4,346

COGS

-

* EBITDA＝Operating income + Depreciation + Amortization of goodwill

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

29

5.2 Revenue Breakdown by Business Model(Quarterly Change)
Substantial increases in all categories(1,000 yen)

YoY

1,600,000

Initial+143.0％Stock＋31.7％

Fee＋86.0％

Spread＋46.5%

1,400,000
1,200,000

1,692,544

1,409,342
1,280,987
1,148,987

1,000,000
873,483

800,000
670,573

600,000

505,369
483,241

689,264

526,041
501,688705,327

771,471

659,842
540,507
499,083

826,928
708,637

584,529
516,330

681,844565,664

528,120

1,326,433

1,155,545

889,917752,202663,581

728,714864,012912,232

874,081786,472
748,031594,679

400,000
200,000

1,434,642

345,545
183,609108,580

147,110

105,579

142,887

127,279

150,905

142,188

161,170

151,134

185,6170Initial

Stock

Fee

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

30

5.3 COGS Ratio/SG&A Ratio (Quarterly Change)
The COGS ratio fluctuates according to proportion of sales(1000 yen)

4,346,814* Excluding MSB-related outsourcing expenses* 50.2％52.7%* 44.5％50.9%

4,000,000

50.3%* 42.6％3,500,000

43.2%* 41.5％

43.8%

43.5%

42.9%

45.6%

* 39.8％50.0%* 37.4％46.8%* 41.9％3,293,665
42.6%
3,089,611

43.6%

41.7%
2,997,800

3,000,000

40.0%

2,732,786
2,603,210

2,500,000
2,204,334
2,000,000 1,842,793

1,825,574

20.9%
1,500,000

1,892,030

20.0%

2,264,704••

1,958,642
22.4%

21.5%
19.5%

21.3%

22.8%

22.5%

1,246,788

1,306,759

1,315,732

1,000,000

500,000

384,293783,601

365,973

962,443
368,339

851,039

966,013476,005

382,006

944,400
508,027

615,078

553,79720.0%

1,655,497

19.5%
1,372,331

796,546

23.4%

22.6%

30.0%
Excluding GMO-FG:
22.9％
25.5%
2,036,145

682,804

699,684

1,109,296
772,009* FG part
10.0%

0

0.0%
14/3 (2Q)

14/6 (3Q)

14/9 (4Q)Sales

14/12 (1Q)

15/3(2Q)

COGS

15/6(3Q)

SG&A

15/9(4Q)

15/12(1Q)

COGS ratio

16/3(2Q)

16/6(3Q)

16/9(4Q)

16/12(1Q)

SG&A ratio

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

31

5.4

Segment/ Revenue model/ Service

３ Segments, 4 Revenue models
３Segments
Payment processing
business

４Revenue models

Payment processing(including FG)

InitialSystem development
GMO Financial Gate

（Initial revenue）

etc

Stock
（Monthly revenue）

Remittance service

Payment processing(including FG)

Online Ad Service

etc

Payment processing

MSB

Transaction lending

SSL
System developmentetc

GMO payment after delivery

Money service
business

Payment processing(including FG・MK)

Early payment service

Fee

Financial lease（Transaction
processing revenue）

GMO payment
after delivery
Remittance service

Delivery service

etc

Online Ad Service

etc

Payment processing(including MK)

OthersSSL
Delivery service
MACROKIOSK

etc

SpreadTransaction lending（Merchant acquiring
service revenue）

Early payment service* MK: MACROKIOSK, FG: GMO Financial Gate

Finance lease

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

etc

32

Thank you very much!

ＧＭＯ Payment Gateway, Inc.
(TSE

3769)

IR website http://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