February 14, 2006 (First Section of Tokyo Stock Exchange 9449) GMO Internet, Inc.

Transcription

1 Presentation of FY 25 Results February 14, 26 (First Section of Tokyo Stock Exchange 9449) GMO Internet, Inc. 1

2 Results Presentation Program Introduction: Summary and Report of this Presentation Part 1: Part 2: Overview of the consolidated results for FY 25 and Results Forecasts Conditions by Segment of FY 25 Part 3: FY 26 Strategies *These presentation materials include future forecasts based on assumptions, predictions, and plans, etc. as determined by the Company at the time of writing, and therefore, we provide no guarantee as to the accuracy of the information contained herein. Actual results may differ greatly from those forecast herein due to the risks associated with the global economy, competitive conditions, and exchange rate fluctuations, as well as unknown factors such as natural disasters. 2

3 Summary and Report of this Presentation 1. In full-year results, the Company posted sales of 37,219 million yen (up 58%), an operating profit of 4,352 million yen (up 55.2%), an ordinary profit of 4,13 million yen (up 46.3%), and a net profit of 3,258 million yen (up 27.2%). 2. Results forecasts for FY 26 anticipate sales of 51, million yen (up 37%), an operating profit of 7,5 million yen(72.3%) %), and an ordinary profit of 6,5 million yen (up 58.4%). 3. Decision made on the advance redemption (call) in March of all 31 billion yen worth of MPO (MSCB) issued on August 22. As of February 14, no shares had been converted, and there had been no share dilution. 4. Steady progress made in each of the major projects aimed at improving results. (Projects involving the bolstering of Jword products and tie-ups with ebank are seeing rapid progress.) 3

4 Part 1 Overview of the Consolidated Results for FY 25 and Results Forecasts 4

5 Business Results and Forecasts (1) Sales (Million yen) 6, 5, 4, Results Forecast 3, 2, 1, Sales 9,174 12,313 15,678 23,561 37,219 51, 5

6 Business Results and Forecasts (2) Operating Profit/Ordinary Profit (Million yen) 8, 7, 6, Forecast 5, Results 4, 3, 2, 1, Operating profit 274 1,186 2,122 2,84 4,352 7,5 Ordinary profit 167 1,11 1,946 2,85 4,13 6,5 6

7 Business Results and Forecasts (3) Net Profit (Million yen) 3,5 Extraordinary profit posted because of the gain on the sale of investment securities, etc. Results 3, 2,5 2, Forecast 1,5 1, Net profit ,4 2,563 3,258 2,2 7

8 Summary by Segment (1) Sales & Operating Profit (Million yen) 12, 1, 8, 6, 4, <Changes in sales by business segment> <Changes in operating profit by business segment> (Million yen) 1,9 1,7 1,5 1,3 1, , -1-3 Jword launch costs 3/4Q 4/1Q 4/2Q 4/3Q 4/4Q 5/1Q 5/2Q 5/3Q 5/4Q Total 4,187 4,9 4,927 6,197 7,536 7,657 6,646 11,49 11,56 Internet Finance Business ,759 4,629 Internet Use Support Business 2,765 3,238 3,532 4,13 4,856 4,566 3,851 3,89 3,827 Internet Advertising Support Business 1,449 1,799 1,437 2,31 2,789 3,151 2,861 2,857 3, /4Q 4/1Q 4/2Q 4/3Q 4/4Q 5/1Q 5/2Q 5/3Q 5/4Q Total , ,331 1,898 Internet Finance Business ,288 Internet Use Support Business Internet Advertising Support Business

9 Full-year and Q4 Profit and Loss (Consolidated) in FY 25 (Million yen) FY 25 FY 24 For the previous year FY 25 4Q FY 24 4Q For the previous year Sales 37,219 23, % 11,56 7, % Business expenses 12,814 9, % 3,368 3, % Selling, general and administrative expenses 2,52 11, % 6,239 3, % Operating profit 4,352 2, % 1,898 1, % Ordinary profit 4,13 2, % 1,784 1, % Net profit 3,258 2, % 2, % Please refer to the Results Briefing for more details. 9

10 FY24 Balance Sheet (Consolidated) (Million yen) FY 25 FY 24 For the previous year Current Assets 54,56 16, % Cash and deposits 24,192 11, % Fixed assets 33,551 11, % Total of assets 88,57 27, % Current liabilities 56,435 1, % Fixed liabilities 1, ,484.4% Total of liabilities 67,9 1, % Minority equity 4,684 3, % Net assets 16,282 13, % Please refer to the Results Briefing for more details. 1

11 FY25 Cash Flow Statement (Consolidated) Cash flow from operating activities Cash flow from investing activities Cash flow from financial activities Total of cash flow Change in cash and cash equivalents Balance of cash and cash equivalents at the end of the term FY ,711 34,748 11,816 11,883 23,22 (Million yen) FY 24 2,436-1,112 1,439 2,758 2,794 11,319 Please refer to the Results Briefing for more details. 11

12 Part 2 Conditions by Segment of FY 25 12

13 Inter-relationships Between Business Segments (Product Cycle) Internet Use Support (Internet Infrastructure) Business Internet Advertising Support (Media) Business Share No.2 Website construction Security Credit card Share No.1 Settlement 2 million users (Net Ratings No. 3) 46, enterprise customers Advertising Share No.1 Web Hosting Media Construction Advertising Sales Share No.1 Domain Access 3 rd Business Area Internet Finance Business Personal Finance Venture Capital 13

14 Internet Use Support Business (Internet Infrastructure Business) Summary of Q4 Results (Million yen) < 5 45 This key business domain is gaining a firmer and firmer foothold. The key infrastructure businesses of domain acquisition, web hosting, security, and payment processing are continuing to see strong growth. Change in Internet Infrastructure Business total sales > (Million yen) 5 < Sales in key Internet Infrastructure Business areas > (Excluding the Website construction and support business And Enterprise communications business) Key business areas showing steady growth Access Domain acquisition Web hosting 1,59 1,649 1,763 1, Website construction and support Security Credit card payment processing Enterprise communications 4/4Q 5/1Q 5/2Q 5/3Q 5/4Q , Other Access Domain acquisition Web hosting 1,59 1,649 1,763 1, Security Credit card pay ment processing 4/4Q 5/1Q 5/2Q 5/3Q 5/4Q Other

15 Internet Use Support Business (Internet Infrastructure Business) Underlying Conditions in Q4 - (1) Domain Acquisition and Web Hosting Show Strong Performance (Thousand cases) <Change in domain registrations> 5 45 (Thousand cases) 3 <Change in web hosting contracts> /4Q 5/1Q 5/2Q 5/3Q 5/4Q Total no. of managed domains (*) Total registrations * Source: JPRS. As of February 1, 26 4/4Q 5/1Q 5/2Q 5/3Q 5/4Q Hosting contracts

16 Internet Use Support Business (Internet Infrastructure Business) Underlying Conditions in Q4 - (2) Security Operations Growth and Market Share (Million yen) <Security business sales & No. of contracts> 2,5 2, <Share of the electronic authentication market in Japan and market share changes>* (Cases) Entrust.net 7% Comodo 8% Other 6% 5 1,5 Geo Trust 21% Verisign 58% 4 3 1, 1% VeriSign GeoTrust 2 5 5% Comodo Entrustnet Others 1 % Bt J Co., Ltd 4/4Q 5/1Q 5/2Q 5/3Q 5/4Q Sales Registration 1,135 1,719 2,159 2,239 2,2 Dec. 24 Dec. 25 Verisign accounts for 58% of the electronic authentication market in Japan,while Geo Trust has a 21% share. 16 * Source: Netcraft. As of December 1, 25

17 Internet Use Support Business (Internet Infrastructure Business) Underlying Conditions in Q4 -(3) Card Business Growth <No. of orders received, funds in circulation & No. of server contracts> (Cases) 348 No. of server contracts (Thousand cases) No. of orders received Funds in circulation 286 (Yen) 1,4,, 1,2,, 1,,, 8,, Paperboy & Co. An inexpensive on-line shop construction service that can be used by a broad spectrum of users, ranging from people with HTML knowledge to absolute beginners. (As of December) No. of orders received:19,632 Funds in circulation:232 million yen 6 6,, MAKESHOP Co., Ltd ,, 2,, An Internet shop construction service that has a 56% share of the market in Korea and that has already set up some 6, sites there. (As of December) 5/1Q 5/2Q 5/3Q 5/4Q No. of orders received 2,374 16,611 52,153 98,526 Funds in circulation 17,846, ,69, ,472,715 1,285,96,461 No. of orders received: 15,63 Funds in circulation: 289 million yen 17

18 Internet Use Support Business (Internet Infrastructure Business) Underlying Conditions in Q4 - (4) Credit Card Payment Processing Business Continues to be Favorable 114,524 18,786 stores (Million yen) (Stores) 2, 74,457 8,512 3, (Thousand cases) 18, 16, Amount of payments processed 56,452 63,987 25, 14, 37,4 2, 12, 29,472 1, 17,79 18,22 21,412 22,752 24,141 24,8 15, 8, 6, No. of payments processed No. of participating stores 1, 4, 2, 5, 2/4Q 3/1Q 3/2Q 3/3Q 3/4Q 4/1Q 4/2Q 4/3Q 4/4Q 5/1Q 5/2Q 5/3Q 5/4Q No. of payments processed 5,282 5,457 6,587 7,388 8,78 8,329 9,899 1,658 12,192 13,366 15,765 19,142 26,926 No. of participating stores 2,87 3,234 4,27 4,51 4,946 5,562 6,117 6,837 7,521 8,13 1,48 16,53 18,786 NB: Data for the amount of payments processed and the no. of payments processed is based on quarterly results, while the no. of participating stores is based on data as of the end of the quarter. 18

19 Internet Advertising Support Business (Media Business) Summary of Q4 Results (Million yen) <Change in Internet Media Business Total Sales> /4Q 5/1Q 5/2Q 5/3Q 5/4Q Media construction Advertising sales 2,3 1,944 1,587 1,581 1,946 Jword Online gaming Other

20 Internet Advertising Support Business (Media Business) Becoming No. 3 in the Industry in Terms of User Numbers 21, 2, Changes in number of users 19,835 19,76 2,218 2,578 2,525 2,9 19,816 19, 18, 18,111 18,64 17,753 18,266 18,588 18,877 17, 16, 15, 14, End of December 24 End of December 25 Ranking by number of users Number of users (1 people) Reach (%) Rank in PV Ranking by number of users 1.Yahoo! Number of users (1 people) 34,164 Reach (%) Rank in PV 1 1. Yahoo! 2. Rakuten 3. MSN 3,736 21,872 19, Rakuten 3. GMO 23,454 2, GMO 18, Nifty 19, Nifty 17, MSN 18, Microsoft 16, NEC 16, NEC 14, Amazon 15, Sony 12, Microsoft 14, NTT.Com 12, NTT.Com 14, Amazon 11, Livedoor 14,325 * Source: Netratings. As of December 1,

21 Internet Advertising Support Business (Media Business) Blog Business=Contributing Factor in the Increase in User Numbers <No. of blog members (new blogs)> <Change in Key Blog Page Views> 8, (Persons) 7, 6, Approx. 71, people 1,2, 1,, 8, 5, 4, 3, 2, 6, 4, 2, 1, 4 4Q 5 1Q 5 2Q 5 3Q 5 4Q Lolipoblog - 3,163 43,752 52,437 67,589 Yaplog 86, , ,633 33,82 38,824 Auto Page 37,4 58,57 85,776 11, ,685 JUGEM 39,16 51,465 63,325 93, ,96 5 年 /1Q 5 年 /2Q 5 年 /3Q 5 年 /4Q GMO Total 32,452 48, ,73 578,991 blogs.yahoo.co.jp 4,71 286,45 364,55 533,561 blogs.livedoor.co.jp 323,73 511, , ,6 Cyber Total 118, , ,62 196,865 exblogs.jp 381, ,11 272, ,582 plaza.rakuten.jp 762, , ,953 1,132,851 d.hatena.ne.jp 168, , , ,254 21

22 Internet Advertising Support Business (Media Business) Current Conditions Currently Despite a high number of page views, this is yet to contribute to earnings. Problem Cost, media power, and sales force Measures to Address these Problems Costs Ccut server-related costs Media power (product strategies) (1) Search-linked advertising Jword version upgrade (2) Long-tailed web traffic measures GMOFeedMe! (3) Shift from blogs to RSS feeders FeedBurner Japan (4) Uniform brand identity Header links Sales force (Sales strategies) (1) Internal group reorganization of the media business (2) Establishment of accounting planning team 22

23 Internet Advertising Support Business (Media Business) Market Trends and Product Strategies Measures to deal with the changing Internet market (1) Increasingly long-tailed web traffic and micro advertisements. Jword provides search-linked advertising, while GMO FeedMe! provides content-linked advertising. Search-linked advertising Major portals, etc. < Social networks, blogs, etc. Content-linked advertising 23

24 Internet Advertising Support Business (Media Business) Product Strategies Shift to RSS Feeders : FeedBurner Japan Measures to deal with the changing Internet market (2) User contact is now more frequent through RSS feeders than through browsers. Feed Burner and GMO Feed Me! will cater to this shift. <Readers that enter the URL directly to view blogs> <Readers that use an RSS reader (browsing software) to subscribe to blog articles> The number of regular blog readers can be measured. Advertisements can be posted in text accessed through RSS readers. New advertising revenue 24

25 Internet Advertising Support Business (Media Business) Product Strategies Uniform Brand Identity Common header links will be introduced across all media = Uniform brand identity Due to be introduced on yaplog. JUGEM, AUTOPAGE, MY POP, Free ML, and PAIPO READER sites! 25

26 Internet Advertising Support Business (Media Business) Change in the Number of JWord Plug-ins Cumulative total number of JWord plug-in copies installed Installed on over 3 million PCs! Has grown into Japan s biggest software product (As of January 2, 26) (Thousand cases) 35, <Jword Plug-ins Cumulative total> 3, 25, 2, 15, 1, 5, Nearly half of the PCs in Japan have the JWord plug-in! Dec. 23 Mar. 24 Jun. Sep. Dec. Mar. 25 Jun. Sep. Dec. Total plug-ins 12,46 14,892 16,687 18,435 2,263 22,271 24,591 26,882 29,442 26

27 Internet Advertising Support Business (Media Business) Product Strategies Search-linked JWord Jword plug-in functions strengthened! Jword multi-search tab bar functions added! Multiple search engines can be easily compared at the same time on the same browser! 2. The customer s registered site will be displayed. 1. Click on the JWord tab. * The screen images are currently being developed, and may differ from those shown here. 27

28 Internet Advertising Support Business (Media Business) Underlying Conditions in Q4 JWord Business Conditions: Personnel & Productivity Emphasis on profit = productivity realized! Will maintain productivity whilst focusing on sales in the future. <Quarterly Jword Sales and Changes in the No. of Sales Staff and Sales per Person in the GMO Group> (Persons) 3 Target exceeded! 14, 12, 2 1, 8, 6, 1 4, 2, Apr. 25 May 25 Jun. 25 Jul. 25 Aug. 25 Sep. 25 Oct. 25 Nov. 25 Sales per person per day 62, 63, 77, 73, 79, 88, 114, , 121, No. of staff Dec

29 Internet Finance Business Summary of Q4 Results Improved profit margin through improved finance costs and credit costs! <Change in Internet Finance Business sales> (Million yen) 6, 5, 4, (Million yen) <Change in Internet Finance Business operating profit> Profit less 179 million yen amortization of consolidation adjustment account 7 3, 2, Profit less 185 million yen amortization of consolidation adjustment account 1, Q 5/1Q 5/2Q 5/3Q 5/4Q Sales 4, Operating profit 4 4Q 5/1Q 5/2Q 5/3Q 5/4Q 692 1,288 29

30 3% 25% Internet Finance Business Underlying Conditions in Q4 - (1) Personal Finance Conditions 1.3% The operating profit spread is closer to that of the major players now thanks to reduced finance costs and improved credit costs. Finance costs Bad debt charges Personnel expenses Advertising and promotional expenses Other operating expenses Operating profit <December 25 Income/expenditure spread across consumer finance companies> 1.1% 1.1% 2.1% 1.7% 3.8% 3.5% 2% 7.8% 6.% 6.3% 6.5% 7.1% 7.6% 7.6% 15% 1% 1.4%.8% 3.9% 2.% 1.% 5.% 1.8% 2.%.9% 1.2% 5.% 4.5% 3.5% 1.2% 6.3% 1.9% 1.8% 1.4% 2.1% 5.3% 5.3% 5% 7.1% 8.3% 7.2% 7.% 3.4% 5.% 6.1% % Leading Company T Leading Company A Leading Company P Leading Company AI Leading Company C Orient Credit Co., Ltd. Orient Credit Co., Ltd. * Figures shown for companies included in this comparison are non-consolidated figures, and have been calculated by multiplying figures as of the end of December 25 by a factor of 4/3. * The spread denominator is the average balance of operational loans from the start of April 25 to the end of December 25. After inclusion in the GMO Internet Group * The figures for Orient Credit Co., Ltd. after its inclusion in the GMO Group have been calculated by multiplying the total actual figures from October 25 to December 25 by a factor of 4, and the spread denominator is the average balance of operational loans from October 25 to December 25, However, the credit cost spread is calculated by multiplying the average monthly figures by a factor of 12, to make adjustments for seasonal factors. 3

31 Internet Finance Business Underlying Conditions in Q4 - (2) Change in 12-month Moving Average for Credit Costs Credit costs are on the decline, even when overpaid expenses are included. 12% Results Plan 1% 8% 6% 4% 2% Credit costs Credit costs+overpaid expenses % Apr 24 Jul Oct Jan 25 Apr Jul Oct Jan 26 Apr Jul Oct Jan 27 * A 12-month moving average spread is used for both credit costs and credit costs+overpaid expenses. 31

32 Internet Finance Business Topic - (1) Improving Customer Service Dramatic improvements in customer service possible through tie-ups with financial institutions Service to be launched from April Direct deposit hours Direct deposit fees Now 9 am 2:5 pm weekdays Covers 16.1% of customers Customer pays Future 24 hours a day, 365 days a year Covers 1% of customers Only to be made available to ebank, convenience store (and mega-bank) customers. No charge Only to be made available to ebank, convenience store (and mega-bank) customers (Direct deposit proxy service will also be possible.) Direct debits Not available as yet Will be made available Only to be made available to ebank, (and mega-bank) customers 32

33 Internet Finance Business Topic - (2) Net Card Synergistic Benefits Introduction of a card-less payment facility to the Group s value chain Will enable the efficient acquisition of members. Using the Group s security and net-based payment processing know-how to realize a safe, functional, and cost-competitive card service. Net card GMO Internet Group To be newly introduced Domain acquisition Web hosting Internet Infrastructure Business Card function for settlement Security of payment (GeoTrust) Value chain Credit card payment processing (Payment Gateway) Media Business Advertising support SMEs and SOHO operators Approx. 46, companies Blog advertisement Other media SOHO customers Regular customers (2 million plus) 33

34 Internet Finance Business Topic - (3) Net Card Strengths and Growth Process Maintenance costs are low, as no plastic cards are issued. Net cards can be used safely on the Net for transactions with SOHO companies. July 1* October 1* Synergistic benefits achieved through the Group s services and finance business A: Free loans to regular customers April 1* B: Business loans to SOHO operators C: Card function added for payment processing for SOHO operators D: Shopping card function added For SOHO operators Functions SOHO operators SOHO customers Regular customers 1Cash advances 1Business loans 2Groups service benefits 1Cash advances 1 Business loans 2 Groups service benefits 3 Monthly settlement cards 1Cash advances 1Business loans 2Groups service benefits 3Monthly settlement cards 4Cards for purchasing 1Cash advances 2Shopping cards 3Points programs * Date would be changed 34

35 Internet Finance Business Topic - (4) Change in Loan Amounts for New Operating Assets Dramatic increase in monthly loan amounts in light of the full-scale deployment of new products Aiming to achieve a monthly loan amount of 4,5 million yen. Hundred million 5 45 Results Plan Net Card (Small business loans) Net Card (Retail loans) Omatome Loans Betty Loans Retail loans Mar 25 Jul Nov Mar 26 Jul Nov Mar 27 Jul Nov Mar 28 Jul Nov Mar 29 35

36 Part 3 FY 26 Strategies 36

37 Overview of the GMO Internet Group ~ Current and future moves Becoming Japan s Internet Division! Internet Use Support Business Internet Advertising Support Business Internet Finance Business Currently Growth Web presence = Establishment of a framework for increased sales and profits commensurate with data volume. Start recovering investments Realize traffic of 2 million plus (no. 3 in the industry) and this will then start contributing to earnings. Move to Net-based finance Start working in three business areas to round out finance products and transition into Internet-based finance. Future moves Solution sales Strengthen card business User retention Move to 1 ID system Introduction of points system Single payment system Jword Business Maintain profitability and increase personnel numbers. Dramatically improve product strength through plug-in modifications. FeedBurner FeedMe! Backed by increasingly long-tailed traffic and changes in user behaviour. Increased reach and click rates. Personal finance Bolster marketing. Tie-ups with ebank. Promotion of Net card business. VC Business Sourcing of investors and contributors. Refining operations to become a full-service Internet group. 37

38 Mid-term Image of Income Growth Growth will further accelerate, driven by the entry into the finance business! Sales Internet Finance Business Increase in ARPU Finance, VC, etc. JWord Content-linked Internet Advertising Support Business (Media Business) Internet Use Support Business (Internet Infrastructure Business)

39 Internet for Everyone 39