【IR】GMO Internet Group Strategy 2017 Q3 Summary

The following is an overview of the 3rd Quarter (July to September) FY12/2017.
For more details please refer to the following.
Results presentation materials (here)
(IR) Masatoshi Kumagai talks about GMO Internet Group Strategy (IR) GMO Internet Group Strategy 2017 Q1 Summary (here)
(IR) GMO Internet Group Strategy 2017 Q2 Summary (here)=============================================
■Financial Overview

  • Financial summary for Q3 (July-September) of 2017.
  • Net sales reached a record high, but profit lagged slightly behind the forecast as financial services had a late start in Q1. Although net profit saw a slight lag as well, tax effects will be reflected in Q4, having a positive effect.

This is an executive summary of operating profit for January to September. Operating profit has decreased by about 1 billion yen to 11.98 billion yen year-on-year. Looking at each segment, Internet Infrastructure has been growing. Internet Finance’s performance weakened this year, compared to the volatile market last year, and Online Advertising and Media’s revision to the net sales for Q1 led to a decrease in consolidated operating profit.

【The third quarter financial results (January-September) – analysis of operating profit】

■Internet Infrastructure

  •  Next two graphs show net sales, by sub-segment, and operating profit of the third quarter for the past 5 years.
  • Net sales have increased by 27.5% year-on-year, driven by Payment and Provider businesses. For Domain and Security businesses, the absence of the previous year’s one-off factors has led to year-on-year losses, but the overall momentum of business is very good. Profit was up year-on-year despite an additional investment of 15 million yen in minne. For the new business “GMO payment after delivery,” we have been closely watching the default rates and credit costs. It achieved positive figures in Q3, and has now entered a profitable phase.

【Internet Infrastructure – results trends】

■Internet Finance* segment.
*Segment name changed from Internet Securities to Internet Finance in Q1 FY2017.

  • Next two graphs show the transition of Internet Finance’s net sales and operating profit of the third quarter for the past five years.
  • Despite the drop in FX trading volume, net sales increased by 13.4% as we worked on improving profitability. Operating profit has increased by 6.4% as we are still investing in the cryptocurrency related service GMO Coin, which incurred a loss of several hundred million yen.

【Internet Finance – results trends】

■Online Advertising & Media segment.

  • For Online Advertising, ad tech products grew through ad technology shifts, but net sales decreased due to the decline in ad placements by certain customers. There was a drop in the sales of existing products in Online Media due to changes in ad network advertisement distribution regulations, resulting in a reduction in revenue.
  • A drop in net sales of high-margin Media products led to a decrease in profit. Despite continued progress in our ad technology shift over the past few years, seasonal factors are still impacting both new and existing products. We will continue to strengthen our in-house products.

【Online Advertising & Media – results trends】

■Mobile entertainment segment and other businesses.

  •  Group companies at the core of the Mobile Entertainment segment will be merged into GMO Internet through organizational restructuring. The purpose of the merge is further cost optimization and to create a system that focuses more on game development.
  • In our incubation business, we posted a gain via sales of listed shares that went public in 2016.

【Mobile entertainment and other businesses – performance by quarter】

Please refer to “Masatoshi Kumagai talks about the GMO Internet Group strategy” for the 2017 Overview of the group’s current position and an outline of our strategy going forward, particularly for cryptocurrency and Internet banking businesses and other major themes.

We appreciate your ongoing support of the GMO Internet Group.

Internet for Everyone

Results presentation materials (here)
(IR) Masatoshi Kumagai talks about GMO Internet Group Strategy (here