Results Presentation2016/02/08 · Results Presentation February 8, 2016 2 1. Overview 2. Guidance 3. Financial Results 4. Segment Report i) Group Overview ii) Internet Infrastructure

STOCK CODE : 9449

Fiscal Year 2015

Results Presentation

February 8, 2016

2 2

1. Overview

2. Guidance

3. Financial Results

4. Segment Report

i) Group Overview

ii) Internet Infrastructure

iii) Internet Securities

iv) Online Advertising & Media

v) Mobile Entertainment

5. Group Strategy

3 3

Overview

Executive Summary: FY2015

・Internet Infrastructure Revenue up 20.0％ profit down 19.9％

Aggressive investment in minne (JPY 1.5B)

・Internet Securities Profit up 61.0%

Global No. 1 in FX trading volume for fourth

consecutive year

・Online Ad & Media Revenue up 14.9% profit down 38.9%

Accelerated investment in technology shift

・Mobile Entertainment Release of titles developed completely in-house,

building expertise, aiming for hit title.

Segment Report

• Forecasts achieved for 6 consecutive years

• Operating profit JPY14.8B Up 14.5% after accelerated strategic investment

• 2.24B allocated to share buyback as 50% shareholder returns policy comes into effect

Earnings

4 4

Strengthening strengths and Enhancing Weakness with

No.1 Products

Current Themes Overview

Internet Infrastructure Strengthening Strengths In Japan: Brand Reinforcement

Globally: Expansion into global markets

Internet Securities Strengthening Strengths Expanding market share with technology-edge

and cost leadership strategy

Online Ad & Media Introducing No. 1 Products

Focus on technology, proprietary product

development

Mobile Entertainment Introducing No. 1 Products Leveraging expertise with aim to produce hit title.

5 5

(JPY billions)

Net Sales

Operating

Profit

Ordinary

Profit

Net Profit

YoY Growth

Overview

Financial Results

Forecasts achieved for 6 consecutive years. Net profit doubles on sale of shares

in GMO CLICK HD.

2014 (Actual)

109.3

12.93

12.73

5.84

126.3

14.80

13.41

＋15.5%

＋16.7％

＋14.5%

2015

＋129.7％

14.85

Forecast Actual

121.0

14.3

13.0

14.3

6 6

1. Overview

2. Guidance


4. Segment Report

i) Group Overview





5. Group Strategy

7 7

(JPY billions)

Net Sales

Operating

Profit

Ordinary

Profit

Net Profit

2015

(Actual)

126.3

14.80

14.85

13.41

YoY Growth

135.0

16.50

16.50

7.0

＋6.9%

+11.1%

+11.5%

2016

(Forecast)

-47.8%

Infrastructure and media to drive double digit profit growth

Net profit to decrease after one-time profit (on sale of share in GMO CLICK

HD) this year

Guidance

FY2016 Earnings

8 8

JPY Q1 Q2 Q3 Q4 Total

2014

Upward

Revision - - - １ 1 17

Initial

Forecast ４４４４ 16

2015

Upward

Revision ２ - ２ 14+１ 19

38 Initial

Forecast ４５５５ 19

2016 Dividend 5 ５５５ 20

Guidance

FY2016 Dividends

Dividend payout ratio 33.4% in 2015

Total dividend per share to reach JPY20 in 2016

UP

UP special UP

9 9

Guidance

FY2016 Dividends

Dividend Payout

Ratio

Share Buyback

33%

17%

Total Shareholder

Returns Ratio

50%

Quarterly dividend

Net profit at end of fiscal

year to form basis of

buyback in following year

Over

10 10

1. Overview

2. Guidance


4. Segment Report

i) Group Overview





5. Group Strategy

11 11

Generating

High Profits

even after

Strategic

Investment in

2016

Quarterly Earnings

Overview

(JPY billions)

Net

Sales

OP

minne promotion -JPY580M

Game promotion -JPY300M

Technology shift -JPY140M

4.36

3.74

4.00

31.5 31.2

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

29.4

12 12

Revenue up

6.9%

4th consecutive

quarter over

JPY30B

Incubation

Mobile Entertainment

Internet Securities

Online Ads/Media

Internet Infrastructure

Overview

Net Sales by Segment

(JPY billions)

6.9

1.4

9.4

11.9

9.5

7.6

14.1

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

31.5

29.4 31.2

10.3

6.7

0.7

14.8

0.9

13 13

Strong Securities

Accelerated

Strategic Investment

Profit by Segment

Overview

(JPY billions)

Incubation

Mobile Entertainment

Internet Securities

Online Ads/Media

Internet Infrastructure

2.72

0.82

2.28

4.36

-0.10

1.28

2.46

-0.45

0.35

0.12

3.58

0.88

2.55

-0.13

0.21 Technology shift

minne promotion

0.28

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

Game promotion

-JPY140M

-JPY580M

-JPY300M

14 14

Financial Results

Consolidated Profit and Loss

(JPY 100 millions) 2014 2015YoY

Change

Net Sales 1,093.6 1,263.3 15.5%

Cost of Sales 508.3 600.6 18.2%

Gross Profit on Sales 585.3 662.6 13.2%

SGA 456.0 514.6 12.8%

Operating Profit 129.3 148.0 14.5%

(OP Margin) 11.8% 11.7% -0.1pt

Ordinary Profit 127.3 148.5 16.7%

Extraordinary Profit 19.0 136.1 615.4%

Extraordinary Loss 20.6 33.2 61.3%

Profit before Tax 125.7 251.4 100.0%

Corporate Tax 46.6 103.1 121.2%

(Corporate Tax Rate) 37.1% 41.0% +3.9pt

Minority Interests 20.6 14.1 -31.8%

Net Profit 58.4 134.1 129.7%

15 15

Consolidated Balance Sheet

Financial Results

(JPY 100 millions) 12/2014 12/2015 ChangeGMO CLICK HD

(12/2015)Change

Current Assets 4,612 5,313 15.2% 4,473 11.9%

Cash & deposits 695 759 9.2% 203 -23.1%

Fixed assets 221 232 5.3% 35 -6.0%

Goodwill 39 22 -43.6% - -100.0%

Software 42 46 9.3% 14 15.6%

Investment securities 23 43 83.0% 2 237.8%

Total Assets 4,833 5,546 14.7% 4,509 11.8%

Liabilities 4,394 4,924 12.1% 4,271 11.4%

Interest-bearing debt 300 398 32.8% 375 86.2%

Net Assets 438 621 41.7% 237 20.0%

Minority equity 146 224 53.6% - -100.0%

Shareholders' Equity 292 396 35.6% 237 25.8%

Earned Surplus 194 301 55.2% 205 26.7%

(Shareholders' Equity Ratio) 6.1% 7.1% +1.0pt 5.3% +0.6pt

Liabilities/Net Assets Total 4,833 5,546 14.7% 4,509 11.8%

16 16

Market Cap / Equity Share in

Listed Group Companies

Financial Results

17 17

Stock Code Stock Name Exchange Market Cap (JPY 100millions)

% Ownership Equity Share (JPY 100millions)

Market Cap/Equity Share Ratio

9449 GMO Internet TSE 1 1,670

3769 GMO Payment Gateway TSE1 2,128 51.6％ 1,098

7177 GMO CLICK Holdings TSE JQS 918 82.8％ 760

3633 GMO Pepabo TSE JQS 110 65.1% 71

3788 GMO CLOUD TSE1 79 51.3% 40

4784 GMO AD Partners TSE JQS 68 54.8% 37

6180 GMO Media TSE MOTHERS 51 65.5% 33

6026 GMO TECH TSE MOTHERS 24 52.2% 12

3695 GMO Research TSE MOTHERS 17 53.9% 9

Group Total 5,065 2,060

*1 *2

Group Listed Companies – Equity Share

Group News

*1 Market value as of 5/2/2016

*2 Includes indirect holdings

*3 Calculated as the sum of the listed market cap values

*3

18 18

145.0

-55.1

27.5

120.9

-126.2

58.8

286.6

4.9

650.3 658.4

-204.0

26.0

151.8

-26.5

194.7

Financial Results

Consolidated Cash Flow

(JPY 100 millions) FY2014 FY2015 GMO CLICK HD

Operating Cash Flow

Investing Cash Flow

Financing Cash Flow

Change in Cash and

Equivalents

Balance of Cash and

Equivalents

19 19

1. Overview

2. Guidance


4. Segment Report

i) Group Overview





5. Group Strategy

20 20

Business Segments (Composition)

Market share growth accelerating across all segments

Group Overview

*1 Customer contracts in Internet Infrastructure (excluding Provider)

*2 Customer contracts in Provider sub-segment

21 21

全商材フルスクラッチで内製販売・サポートまで全て自社提供

顧客満足度ナンバーワン

GMOアプリクラウド最優秀賞4年連続1位

GMOクラウド 2014年ビジネスクラウド

総合評価AAA受賞

GMOグローバルサインUS

情報セキュリティ

グローバルエクセレントアワード2013

金賞受賞

GMOクリック証券 2015年度顧客満足度

ランキングネット証券総合1位

GMOグローバルサイン

4年連続Online Trust Alliance「オンライントラスト栄誉賞」受賞

0

1,000

2,000

3,000

4,000

5,000 その他職種

エンジニア

クリエイター

All products

developed, sold

and supported

in-house

グループスタッフ数：4,415人インターネットの基盤を支える高度な技術者集団

No.1 in Customer

Satisfaction

Staff

% Engineers

Goal: Workforce of over 50% engineers

Strengths - Technology

Group Overview

4,600

42.5% 42.5%

4,198

3,800

40% 37%

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

22 22

1. Overview

2. Guidance


4. Segment Report

i) Group Overview





5. Group Strategy

23 23

Domestic market share at 55.7% *3

Segment Report: Internet Infrastructure

Segment Composition

Number one across all infrastructure products

Domain Registrar

Hosting & Cloud

Ecommerce

Security

Payment

Domestic gTLD market share at 90.3%*2

74,000 paid stores

55.3% YoY increase in certificate issues

65,000 merchants *1 Based on our own data

*2 Based on ICANN data

*3 Based on Webhosting.info data

No. 1

No.1

No. 1

Strong

No. 1

Domain Registry Brand TLDs / Geo TLDs

81.7% of gTLD market in Japan *1

Strong

No. 1

Strong

No. 1

24 24

Historical Performance by Quarter

0.82 0.88

1.28

14.8 14.1

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

11.9

-JPY580M

Net

Sales

OP

(JPY billions)

minne promotion


Revenue up 24.3%

Profit down 35.8% YoY

25 25

Record High

JPY14.8B

Net Sales by Sub Segment


2.9

2.6

1.1

1.8

3.5

1.7 1.3

3.4

1.1

1.0

1.8

2.0

1.4

3.4

1.6

1.0

2.5

2.7

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

11.9

14.1 14.8

Other

Provider

Payment

Security

Ecommerce Solutions

Cloud & Hosting

Domain

(JPY billions)

26 26

6.41M contracts

10.6%

YoY growth

5.79

Internet Infrastructure Contracts

*Excludes Provider contracts (approx. 350,000 contracts)

6.41 6.28

（millions）

*

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4


27 27


Internet Infrastructure Contracts

New contracts

Stable

Earnings

Base

Yearly 600,000

Monthly 50,000

Daily 1,500

28 28


Strategic Investment: C2C Handmade Market (minne)

Rapid growth in KPI

Sellers: 174,000

Products: 2.09M

App downloads: 4.41M

Transactions: JPY1.68B/Q

Japan

No1

Japan

No1

Q/Q

+36%

Q/Q

+38%

29 29

0

2

4

6

8

10

12

14

16

0

20

40

60

80

100

120

140

160

180

Sellers Products

Sellers: 174K

Products: 2.09M

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q1

2012

Q3 Q4


Q2 Q3 Q4

Toward a

strong

No. 1

Sellers

(10,000s) Growth in number of sellers and products Products

(10,000s)


30 30



1.68

0.92

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

1.23.

Transaction Volume

(JPY billions)

Annual

Transaction

volume

4.4B

31 31

1. Overview

2. Guidance


4. Segment Report

i) Group Overview





5. Group Strategy

32 32

(JPY billions)

OP

Net

Sales

Segment Report: Internet Securities


Profit down

7.4% YoY

7.68 6.98

2.55 2.46

2.28

6.76

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

Goodwill amortization completed in Q3 +JPY170M

High profit

levels

maintained

33 33

Global No.1 in

FX Trading

Volume for

4 Consecutive

Years

Global


Global Global Global

GMO CLICK Securities – FX Trading Volume

316tr 921tr 919tr 1,321tr

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4 Q2 Q1 Q3 Q4

2013

34 34


New FX System

New FX System

Execution Speed

6x faster

4 New Currency

Pairs NZD/USD EUR/GBP

EUR/AUD GBP/AUD

Place Large Orders Trade up to

5M currency units

2/8/2016

Official release

* Execution speed measured by GMO CLICK Securities in the company’s development environment

* Availability of large orders varies according to currency pair

World’s

Fastest!

35 35

1. Overview

2. Guidance


4. Segment Report

i) Group Overview





5. Group Strategy

36 36

(JPY billions)

Segment Report: Online Advertising & Media


OP

Net

Sales

Revenue up 8.8%

Profit down 63.8%

0.21 0.12

0.35

-JPY140M

9.5 9.4

10.3

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

Recruiting investment in

technology shift

YoY

37 37

Strong Ad

Network

Performance

Net Sales by Sub-Segment


(JPY billions)

Internet Media

Online Advertising

Internet Research/Other 3.4

6.2 5.7

3.1

0.6

0.6

5.5

3.2

0.7

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

9.5

10.3

9.4

38 38

FY2015 revenue up 18.4%, profit down 54.6% YoY

Technology shift continues

FY2015 revenue up 13.5%, profit up 26.5% YoY

Strengthening own smartphone ad products.

FY2015 revenue up 15.2%, profit down 34.1% YoY

Domestic research business flat

FY2015 revenue up 15.9%, profit up 41.0% YoY

Ecommerce media double in 3 years

Online Advertising & Media Segment Companies


39 39

1. Overview

2. Guidance


4. Segment Report

i) Group Overview





5. Group Strategy

40 40

Net Sales

OP


Segment Report: Mobile Entertainment

0.78

Building Expertise

through Internalization,

Releasing New Titles

-0.45

1.48

-0.1

0.98

-0.13

収益性は改善テストマーケティング開始

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3

(JPY billions)

Q4

-JPY300M Chain Heroes promotion

41 41

1. Overview

2. Guidance


4. Segment Report

i) Group Overview





5. Group Strategy

42 42

Strengthening strengths and Enhancing Weakness with

No.1 Products

Current Themes Overview

Internet Infrastructure Strengthening Strengths In Japan: Brand Reinforcement

Globally: Expansion into global markets

Internet Securities Strengthening Strengths Expanding market share with technology-edge

and cost leadership strategy

Online Ad & Media Introducing No. 1 Products

Focus on technology, proprietary product

development

Mobile Entertainment Introducing No. 1 Products Leveraging expertise with aim to produce hit title

43 43

Strengthening Strengths

Developments in Finance and Payment

44 44

Group Strategy

Progressing fintech strategy,

forming alliances with major

financial institutions

Securities/FX

Payment Net Banking

Finance and Payment – Alliance Strategy

45 45

Finance and Payment – Alliance Strategy

Launched on February 2

Group Strategy

46 46


Acquisition of New gTLD .shop

47 47

・Operators of .com .net etc.

・Only one operator per domain ・新gTLD販売世界４位

・新規登録230万件/年

Registrar

Registry

ICANN

※1) 出典 https://ntldstats.com/

※2) 2015年度当社グループ新規ドメイン

登録数合計

・Global domain management

・NPO

370 registries

2,100 registrars

・Domain registration sales

・Many registrar resellers

Group Strategy

Domain Industry Structure

48 48

↓

Crowded namespaces

Few attractive names available

.com

.net

.jp

.org

Group Strategy

Domains Until Now…

49 49

New

Domains

New Applications Opened

↓

Group Strategy

New Domains

50 50

Auction Date 28/1/2016

Auction Price USD41.5M

Contract Date H1 2016

Launch End of 2016

.shop rights acquired in new gTLD auction!

*

*Acquisition cost to be amortized over 20 years

Group Strategy

About .shop

51 51

2010

Q2 FY2010 Earnings Presentation Materials

2016

Application

Announced

Acquired

Group Strategy

New gTLD .shop

52 52

・Global strategy product

・Cannot be copied – the only one

・Long term recurring revenue

・Established sales channels

・Ecommerce gateway

・Highest industry evaluation

Group Strategy

.shop Strengths

53 53

Source: http://webhosting.info/domain-names/registrars (as of 2/8)

Global top 10 registrars

１６ HICHINA ZHICHENG

TECHNOLOGY LTD

２７

３８

４９

５ 10

Group Strategy

New gTLD .shop Sales Channels

http://webhosting.info/domain-names/registrars





54 54

１ SHOP ２ WEB

３ SITE

４ MUSIC

５ HOTEL

６ ONE

７ BLOG

８ ECO

９ SPORT

10 LOVE

Top 10 new gTLDs

Ranking of new gTLDs by value/potential

Source: https://sedo.com/fileadmin/documents/resources/gTLD_Values_Factsheet_US_RGB.pdf

■Evaluation Basis

- Number of applicants for the new gTLD

- Number of Google searches for keywords

- Expected Cost-per-Click from online ads

- Pre-registrations at United Domain

sedo: United Internet Group domain aftermarket brand

90,000 regs (6mths)

Avg: USD37

*Based on retail price at top 5 global registrars according to our own research

（of 1,000 domains）

No.1 *

Group Strategy

.shop Value

50,000 regs (8mths)

Avg: USD13 *

55 55

Pre-registrations ranking

Source: https://www.uniteddomains.com/newgtld-ranking/

United domains: The domain registrar brand of Europe’s largest Internet Group, United Domains

Group Strategy

.shop Value

No.2

56 56

Legacy gTLD, new gTLD average registration volume

.com .net .xyz .top

Rank gTLD

No. 1 gTLD

No. 2 New gTLD

No. 1 New gTLD

No. 2

Cumulative

Registrations 123M 15.6M 1.93M 1.06M

Average Yearly

Registrations

4.1M 0.52M 0.96M 1.06M

Average Price USD17.8 USD18.9 USD14.5 USD16.9

potential 200,000 - 300,000 registrations

*

Group Strategy

.shop Potential

*Based on retail price at top 5 global registrars according to our own research

57 57

Group Strategy

Internet Infrastructure Strengths

World’s Only Internet services group

to aggregate these core Internet resources

Domain name source

Only one registry per domain

SSL Certificate source

Few globally trusted players

Domain

Registry

SSL Certificate

Authority

Overwhelming competitive strength

58 58

レジストリ

SSL認証局

Wholesale Sales

Global Strategy

Products ＝

Group Strategy

Global Strategy

59 59


Bringing our Number 1 Products to

the Global Market

60 60

Global Strategy

Group Strategy

Global

Brand

Direct Sales

＝

(Infrastructure, FX）

61 61

Global Growth - Locations

17 countries, 43 locations, 730 global staff

As of 12/2015

Myanmar

10/13 Launch

Philippines

Pre-launch

Korea

Pre-launch

Singapore

10/6 Launch

Thailand

Pre-launch

NEW

Vietnam

10/20 Launch

Infrastructure

FX UK

11/11 Launch

イギリス

11/11 営業開始

Hong Kong 11/9

Z.com Forex

(Re-branding)

Group Strategy

62 62

Global Growth: Global Net Sales

Global Net Sales

up 52.4％

Global Net Sales

4.0％

Net

Sales

1.26

0.88

3.0%

3.9％

Global

Sales

Ratio

1.21

4.0% (JPY billions)

2013

Q1 Q2 Q3 Q4

2014

Q1 Q2 Q3 Q4

2015

Q2 Q1 Q3 Q4

Group Strategy

63

Internet for Everyone

64

This document includes projections based on expectations, premises and plans as of February 8, 2016. These projections may

differ from actual results due to factors including changes in the global economy, competition, exchange rate fluctuations, natural

disasters and other unforeseeable events. Some of the figures given, such as market share are based on our own calculations.

These figures may differ from research agency figures.

Information contained in this document is provided for information purposes only and does not constitute solicitation of investors.

Further, results forecasts and other forward-looking statements are based on premises that include risks and factors that are

largely indeterminable. Please understand that actual results may differ significantly as a result of forces including economic

conditions and market environment. No responsibility for any reason is accepted for damage sustained as a result of actions taken

based on this information.

Documents

Results Presentation2016/02/08 · Results Presentation February 8, 2016 2 1. Overview 2. Guidance 3. Financial Results 4. Segment Report i) Group Overview ii) Internet Infrastructure