Supplementary Information Financial results briefing for the Q2 of FY2019 May 10, 2019 GMO Payment Gateway, Inc. st (Code: 3769, TSE-1 Section) h t t p s : //c o r p . g m o - pg. c o m / The Growth track record: KPIs & Business results FY2018 revenue reached ¥26.4bn and OP ¥6.5bn （unit: mil. JPY） （unit: mil. JPY） （unit: mil. JPY） *1 9,000 8,000 *2 30,000 Revenues Operating Profit EBITDA 26,417 8,000 7,516 7,000 6,550 25,000 7,000 +25.5％ 6,000 +65.9％ 6,000 +58.9％ 20,000 5,000 5,000 15,000 4,000 4,000 3,000 3,000 10,000 2,000 2,000 5,000 1,000 1,000 0 0 0 2008/9 2009/9 2010/9 2011/9 2012/9 2013/9 2014/9 2015/9 2016/9 2017/9 2018/9 2008/9 2009/9 2010/9 2011/9 2012/9 2013/9 2014/9 2015/9 2016/9 2017/9 2018/9 2008/9 2009/9 2010/9 2011/9 2012/9 2013/9 2014/9 2015/9 2016/9 2017/9 2018/9 2019/9E 2019/9E 2019/9E J-GAAP IFRS J-GAAP IFRS J-GAAP IFRS Operating Stores*3 TRX Volume TRX Value 133,199 1.57 billion ¥4.1 trillion （*1）The group commenced voluntary adoption of IFRS in FY2018. The figures for the FY2017 have been re-calculated on the same basis. （*2）EBITDA under J-GAAP is calculated as the sum total of operating profit, depreciation and amortization; and under IFRST is calculated as sum total of operating profit and depreciation. （*3）The number of operating stores is at the end of March 2019. Transaction Volume and transaction value are the figures of April 2018 to March 2019; transaction volume and transaction value include the figures of GMO Financial Gate Group. Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 2 Three business segments Continuing above-25% OP growth from expansion of mainstay payment processing and its peripheral businesses Payment enhancement Sales Operating Profit （Actual data as of cumulative Q2 FY2019） 決済活性化business事業 Breakdown breakdown Online advertising service 12% Asia payment enhancement business (MK)* and others 18％ 17% 58％ 83% 24％ Payment processing business Money金融関連 Service事業 Business （マネーサービスビジネス）(MSB) Online payment GMO Payment after delivery Recurring payment Remittance service Card-present payment Transaction lending (GMO-FG)* Early payment service System development Finance lease and others Ginko Pay/Processing and others ※MK: MACROKIOSK, GMO-FG：GMO Financial Gate Group We have renamed the “customer support service” to “online advertising services” effective from October 1st 2018. Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 3 Mutually Enhancing business model An ecosystem of the main business and the value-added services that leads to a symbiotic growth Payment processing demand increase Payment processing （GP margin 85％） Money Service Payment Business Processing Payment Business Enhancement Business Merchant growth Main Business Value-added services that contribute to expanding the main business Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 4 Payment Processing Business: Our Role Connecting merchants and payment companies along the keywords “contract”, “payment data,” and “money flow” Merchant Our Company & Service Payment company Consumer Merchants=Our Customers 133,199 stores 40+ Credit card (end of March 2019) company EC Convenience store BtoB・BtoC・CtoC E-money Public money/Taxes Online NHK, NTA, Automobile Cash on delivery tax, Municipalities Carrier Billing (e.g. Tokyo Met. Gov.) PC Online banking Subscription Video streaming Wallet payment Software, Apparel Account transfer Service commerce Smartphone Digital goods, Donation, Travel, Insurance GMO Payment After Delivery Global payment Card 35,628 terminals Present (end of March 2019) BitCoin payment Apple Pay Physical Store etc. Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 5 Revenue structure of credit card payment Revenues determined by merchant type/size ■The four revenue types ■Revenues by merchant type/size Initial (Initial revenue) Initial introduction fees Municipalities ① Coefficient: Number of new merchants acquired Large Enterprise Revenue: Number of new merchants acquired × _Yen (at the time of introduction) ① ② ③ Stock (fixed monthly revenue) ② Customer support and maintenance fee Coefficient: Number of merchants Mid to Large Revenue：Operating merchants × _Yen Enterprises Fee (Transaction processing revenue) ① ② ③ ④ ③ Fee based on transaction volume Coefficient: Number of payments processed Revenue：Number of payments processed × _Yen Startups Spread (Merchant acquiring service revenue) ④ Fee based on transaction value ④ Coefficient: Amount of payments processed Revenue：Amount of payments processed × _% Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 6 Two types of contracts We introduced a new contract system and changed the flow of sales proceeds Payment Payment Direct contract processing processing mainly for large companies and municipalities Our group Credit card 2.8％ charge company Sales proceed Merchant Payment company 0.5% Spread (Merchant acquiring revenue) Representative 3.0％ charge 2.5％ charge contract mainly for SME’s but covers some large companies Sales proceed Our group Sales proceed Credit card company 3.2％ charge (Charge that is applied under direct Merchant contracts with payment company) Payment company *Numbers are provided for illustration purposes only. Flow of sales proceed/charge Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 7 Revenue breakdown by business model Aim for a balanced revenue growth （Mil. yen） J-GAAP IFRS 32,000 30,000 28,000 26,000 Spread 24,000 22,000 20,000 18,000 16,000 14,000 12,000 Fee 10,000 8,000 6,000 4,000 Stock 2,000 Initial 0 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 2019/9E TSE 2008 2011 2013 2014 2015 2016 Listing Launched Launched Launched Launched Revamped Launched Early Online Payment Transaction Early services Payment Advertising After Lending Payment targeting banks Service Service Delivery Service GMO-FG and MK* ※ MK：MACROKIOSK GMO-FG：GMO Financial Gate Group We have renamed the “customer support service” to “online advertising services” effective from October 1st 2018. Became subsidiaries Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 8 Summary of Segments and Business models We disclose in 3 reporting segments and disclose 4 business models ■Segments ■Business model Payment processing Payment processing（MK） Initial SSL Payment processing Services for banks/Processing （Initial revenue） System development business System development Payment processing (MK) GMO-FG Stock Services for banks/Processing (Monthly revenue) GMO payment after delivery Online advertising service Remittance service Payment processing (MK) Money service Transaction lending Fee GMO payment after delivery（Fee） business (Transaction Early payment service processing revenue) Remittance service Shipping service Finance lease Payment processing (MK) Online advertising service GMO payment after delivery (Spread) Spread Payment SSL enhancement (Merchant acquiring Transaction lending service revenue ) business Shipping service Early payment service MACRO KIOSK Finance lease ※MK：MACROKIOSK GMO-FG：GMO Financial Gate Group Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 9 Growth potential of Ecommerce market in Japan Low Ecommerce ratio and higher cash payment ratio than other advanced countries ■Ecommerce ratio ■Card usage to private final consumption expenditure （％） 17.9 Credit+Debit * UK 16.2 Credit Card usage to private （2017) Debit card usage rate final consumption US 14.5 15.0 expenditure rate Japan 12.5 South Korea 76 ％ 19 ％ 95 ％ 11.3 10.4 9.7 10.0 9.2 UK 12 ％ 55 ％ 67 ％ 8.8 8.2 8.2 7.6 7.3 7.0 6.4 Australia 30 ％ 25 ％ 55 ％ 6.0 5.8 5.8 5.4 5.4 5.0 4.8 4.6 4.4 5.0 4.1 US 3.6 3.7 26 ％ 20 ％ 46 ％ 3.1 （2016） 2.8 2.5 2.1 1.8 Japan 18％ - 18 ％ （2016年） 0.0 *Rate = (Amount handled by CC or DC) / Private final 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 consumption expenditure References：METI. “FY2017 Building infrastructure for information- and service- oriented Japanese economy and society (Ecommerce market survey)” * GMO-PG Estimates by referencing CPSS Red Book “Statistics on payment, clearing U.S. Bureau of the Census. “The 4th Quarter 2018 Retail E-Commerce Sales Report”; and settlement systems in the CPMI countries - Figures for 2017” Office for National Statistics ”Retail Sales Index internet sales, March 2019” THE WORLD BANK ”Household final consumption expenditure (current USD)” Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 10 Expanding Scope of Cashless Payment Cashless payment trends in Japan is our growth accelerator B2B B2C C2C Enormous market Narrowly-defined Developing market potential B2C EC market ¥1 trillion ¥1,000 trillion ¥16.5 trillion EC ratio: 5.8% （10% CAGR） Online Merchandising Flea market Payment via app internet, etc. 2017 2020E 2025E EC rate 5.8% 7-8% 15-20% Market size ¥16.5T ¥22-24T ¥45-50T Service commerce Public fund・utility fee B2B Digital content ・Local tax ¥40 trillion Credit card ・National tax ¥66 trillion Offline payment (card-present) Flea market Payment via a Consumer spending terminal in a physical store ¥300 trillion *References：METI. “FY2017 Building infrastructure for information- and service-oriented Japanese economy and society (Ecommerce market survey)”. Figures 2020 and after are our estimates. *MIC “Breakdown of national tax and local tax revenue (FY2018 Budget and Local Government Finance Plan)” *THE WORLD BANK ”Household final consumption expenditure (current USD)” Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved. 11 Payment processing: Public due & utility payments We have been cultivating card payments in this field since the revision of the Local Autonomy Law in 2006 Sapporo city Local ：Local Taxes (Automobile tax, light vehicle tax, governments fixed assets tax, etc.) etc.