fy2003 presentation of q1 results · 2018-04-27 · 7 q1 fy2003 overview of consolidated profit...

1

May 19, 2003(JASDAQ:9449)

Global Media Online Inc.Global Media Online Inc.

FY2003Presentation of Q1 Results

2

Results Presentation Program

Part 1: Overview of consolidated results for Q1 FY2003　

Part 2: Business conditions by segment　

Part 3: Results forecasts　

Part 4: Future growth story　

※ These presentation materials include future forecasts based on assumptions, predictions and plans valid as of May 19, 2003. Actual results may differ greatly from that 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.

3

Q1 FY2003 Overview of Consolidated Results

【Part 1】

4

Highlights in Q1 FY 2003（1）

　■ Consolidated sales increased 23.9% from the same period last year, to 3,584 million yen.

　　⇒ Dramatic increase in revenue from Internet advertising media business, and good performance in the IxP business.

　■ Consolidated operating profit and ordinary profit saw massive increases on last year of 163.0% and 147.1% respectively to stand at 533 million yen and 468 million yen. 　　

　　⇒Increased earnings from affiliates and increased profits through thorough budget control, in addition to increased revenue as detailed above.

　■ Net profit was 383.9% up on last year, at 192 million yen.

　⇒ Improved net profit ratio with a contraction in the losses of affiliate companies.

5

Highlights in Q1 FY2003（2）

　■ Strong Opt-in Mail sales (Internet Advertising Media Business) 　　⇒ Sales power was enhanced with the sourcing of new small and midsize agencies

through Magclick, Inc., opt-in mail became more powerful as a medium with increased subscriber numbers, and March seasonal factors were also a contributing element.

　■ Healthy Domain renewals （IxP Business）　　

　■ iSLE Inc. (Currently: GMO Hosting and Technologies) makes a strong sales transition (IxP Business）

　　⇒ Steady increase in customers through a multi-channel sales strategy (Direct sales/

OEM /agencies) and the introduction of new products. 　　※ iSLE Inc. changed its trading name to GMO Hosting and Technologies, Inc. from May 1, 2003.

6

Q1 of 2003Q4 of 2002

Idea cube Inc.

U cast communications Inc.　　　

Payment one Inc.

Magclick inc.

Kabegami.com. inc

Magforce inc.

GMO media and solutions inc.

GMO magazines inc.

E-sumai inc.

Daiichi-tsushin inc.

Global media online inc.

Isle inc.

Name of company

40.6100.0

（100.0）

84.6100

（50.9）

Magclick inc.

Kabegami.com. inc

Magforce inc.

GMO media and solutions inc.

GMO magazines inc.

E-sumai inc.

37.0100.0

（100.0）

81.5100

（50.9）

100.0

Internet Advertising Media

I x P

Business segment

（35.0）

47.640.6

Parent company

82.6

Percentage of voting rights

(%)

Idea cube inc.

U cast communications inc.　　　　

Payment one inc

Global media online inc.

Isle inc.（present GMO hosting and technologies inc. ）

GMO communications inc.

（former Daiichi-tsushin inc.）

GMO research institute inc.

Onamae.com inc.

Name of company

（35.0）

47.640.6

Affiliated equity method

companies

Parent company

82.6

100100

82.0

Parent company andconsolidated subsidiaries

Percentage of voting rights

(%)

Classification

Q1 FY2003 – Scope of Consolidated Results

※The Point Mail Business was taken over by GMO Media and Solutions, Inc. and therefore from this period, GMO Communications, Inc. (formerly Daiichi-Tsushin, Inc.) will be involved in a different business segment.

※For reasons of financial consequence, from this period, GMO Research Institute and Onamae.com Inc. became consolidated subsidiaries.

Note: Proportions of voting rights (shown in parentheses) are for indirect possession.

GMO Communications, Inc. (formerly Daiichi-Tsushin, Inc.) moved into different business segments.

7

Q1 FY2003 Overview of Consolidated Profit & Loss・The Internet Advertising Media Business saw an expansion in Opt-in Mail sales. 　

・ Both the Server Business and Domain Business continued to perform well.

Sales

Operating profit

Ordinary profit

Net profit

EPS

Q1 of 2002 Q1 of 2003 Year-on-year comparison

2,893

202

189

39

1.45

3,584

533

468

192

6.97

Up 23.9%

Up 163.0%

Up 147.1%

Up 383.9%

Up 380.6%

(million yen) (million yen)

(yen) (yen)

8

Changes in Sales and Profit Margins (Consolidated)

(million yen)

It is clear that sales are on the increase and profit margins are improving.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

-5%

0%

5%

10%

15%

20%

Sales 2,030 2,316 2,641 2,893 3,032 3,076 3,311 3,584

Operating profit margin -0.30% 0.70% 1.30% 7.00% 11.00% 10.40% 9.90% 14.90%

Ordinary profit margin -3.40% 4.30% -3.30% 6.60% 8.90% 9.10% 8.10% 13.10%

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

9

0

1000

2000

3000

4000

Total 2,893 3,032 3,076 3,311 3,584

Server 1,050 1,145 1,210 1,239 1,234

Access 753 714 676 657 632

Domain 207 247 171 202 278

Computerization support andconsulting

- - - - 274

Others 6 3 3 9 58

Internet ads media 876 921 1,014 1,203 1,108

Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

Changes in Sales by Business (Consolidated)（million yen）

＜I x P Business＞　・Server　・Access　・Domain　・Computerization support and consulting　・Others

＜Internet Advertising Media ＞

　・Mail advertising　・Media content　・Desktop advertising

From this period, the new category, computerization support and consulting, was included in calculations.

※The change in GMO Communications, Inc.’s business segment and the new addition of the Computerization support and consulting category in the calculations this quarter have had an effect on the breakdown of Server Business sales and Internet Advertising Media Business sales. Sales for the Server business and the Media business based on the original categories would be 1,292 million yen and 1,330 million yen respectively.

10

Quarterly Sales Ratios by Business (Consolidated)（%）

※The change in GMO Communications, Inc.’s business segments and the new addition of the computerization support and consulting category in the calculations this quarter have had an effect on the breakdown of Server Business sales and Internet Advertising Media Business sales. Sales for the Server Business and the Media business based on the original categories would be 1,292 million yen and 1,330 million yen respectively.

From this period, the new category, Computerization support and consulting, was included in calculations.

0

20

40

60

80

100

Server 36.3 37.8 39.3 37.4 34.4

Access 26 23.5 22 19.8 17.6

Domain 7.2 8.2 5.6 6.1 7.8

Computerization support andconsulting

- - - - 7.6

Others 0.2 0.1 0.1 0.3 1.6

Internet ads media 30.3 30.4 33 36.4 30.9

Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

11

Changes in Profits and Earning Capacity (Consolidated)

（million yen）

Rapid recovery due to growth in existing business and improved earnings in new business.

-250

-150

-50

50

150

250

350

450

550

Operating profit -5 15 33 202 333 320 329 533

Ordinary profit -70 100 -87 189 269 281 271 468

Net profit -144 10 -62 39 91 111 -34 192

EBITDA -161 100 -209 250 290 442 209 560

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

12

Changes in Expenses（Consolidated）

（million yen）

Small increase in personnel expenses due to staff increases in the Internet Advertising Media and Computerization support and consulting businesses.

0

500

1000

1500

2000

2500

3000

3500

Personnel expense 326 427 445 507 572 607 659 741

Advertising, sales promotion expenses 388 369 586 567 576 544 586 577

Depreciation, rent 203 234 236 252 263 261 270 286

Subcontracting expense, outsourcing expense 97 144 115 150 161 204 229 232

Communication expense 265 266 225 206 121 80 83 84

Rent 183 214 215 208 199 210 204 170

Commissions paid 245 208 305 295 336 313 367 434

Media expense 65 106 150 66 61 91 104 97

Transferred from allowance for doubtful debts 36 61 85 78 111 120 124 61

Others 223 268 242 356 293 321 351 364

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

13

Changes in the Operating Profit Margin and Cost Structure (Consolidated)

The operating profit margin is showing an increasing trend.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

Operating profit margin

Personnel expense

Advertising, salespromotion expenses

Depreciation, rent

Subcontracting expense,outsourcing expense

Communication expense

Rent

Commissions paid

Media expense

Transferred from allowancefor doubtful debts

Others

14.9%9.9%10.9%11.0%7.0%1.3%0.7%

14

-764-374

0139235

-491-256

-103

-287-407118

-764

-1,278

446170

-111110

-102

513Increase and decrease

13,02813,792Total of liabilities, minority equity and shareholders’ equity

8,7229,096Total of shareholders’ equity

An increase accrued from equity swap

Acquisition of GMO’s own stocks

3,3114,4321,708-364-364

3,3114,2931,473

127-108

Capital stockCapital surplusEarned surplusOther gaps in appraisal of securitiesOwn stocks

＜Shareholders’ equity＞

2,3882,491Minority equity＜Minority equity ＞

1,9162,204Total of liabilitiesRepayment of long-term loans14421Fixed liabilities

1,9011,783Current liabilities＜Liabilities＞

13,02813,792Total of assets

Mainly market value evaluation of the stocks

4,5655,843Fixed assets

Steady sales in the mail advertising business

5,8272,131

331649

△478

5,3811,961

442539

△375

　　Cash and deposits　　Accounts receivable – trade　　Deferred tax asset　　Other assets　　Allowance for doubtful debts

8,4627,948Current AssetsNotesQ1 of 2003Q1 of 2002<Assets>

(million yen)

Q1 FY2003 Balance Sheet (Consolidated)Increases in both the current assets ratio and equity ratio.

15

52Loss from investments by the equity method

5,690Balance of cash and cash equivalents at the end of the term

184Increase in cash and cash equivalents with increase in the number of consolidated subsidiaries

5,519Balance of cash and cash equivalents at the beginning of the term

-13Total of cash flow

-11Other increase and decrease

Payment of dividends-85Payment of dividends

-96Cash flow from financial activities

62Other increase and decrease

152Revenue accrued by collection of loans

-356Expenditure incurred by loans

Additional acquisition of the stocks of Magclick inc.

-77Expenditure incurred by acquisition of the capital of subsidiaries

-94Expenditure incurred by acquisition of intangible fixed assets

-313Cash flow from investing activities

133Other increase and decrease

Payment of corporate tax, etc.-186Payment of corporate tax, etc.

-207Increase in accounts receivable

61Increase in allowance for doubtful debts

76Depreciation charge

467Current net profit before adjustment of taxes, etc.

397Cash flow from operating activities

Q1 FY2003 Cash Flow Statement(million yen)Cash flow from operating activities 397 million yen after tax.

16

Changes in the No. of Employees（Consolidated）

(persons)

※The number of employees shown refers to the number of employees at the end of each quarter.

Increases in full-time regular employees in the Internet Advertising Media business and casual staff in GMO Communications, Inc.

0

50

100

150

200

250

300

350

400

450

500

Full-time employee 168 240 253 315 321 358 370 393

Part-time employee 192 147 148 175 150 233 270 395

Total 360 387 401 490 471 591 640 788

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

17

（thousand yen）（thousand yen）

Per-Capita Sales and Ordinary Profit (Consolidated)

※Average number of employees during the term is calculated counting full-time employees as 1 and part-time employees as 0.5.

With the launch of the Computerization support and consulting business, per-capita sales fell, but the profit ratio rose.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

-400

-200

0

200

400

600

800

1000

Per capita sales 7,872 6,953 8,103 7,344 7,459 6,866 6,675 6,339

Per capita ordinary profit -272 301 -269 481 663 628 547 829

Average number of employees

during the term

258 333 326 394 406 448 496 565

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

18

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

IxP business 2,025 2,122 2,074 2,114 2,567

Internet advertising media

business

876 921 1,014 1,203 1,108

Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

0

100

200

300

400

500

600

IxP business 143 224 218 196 391

Internet advatising mediabusiness

58 109 101 132 141

Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

Change in Sales and Profit by Business Segment (Consolidated)

Sales Operating profit

While there was a fall in sales for the Internets advertising media business due to segment changes, both segments experienced increases overall in real terms.

※As GMO Communications, Inc. made the transition from the Internet Advertising Media Business to the IxP Business segment, part of the Mail Advertising Business sales are added into the IxPBusiness. According to the conventional method, IxP Business sales and operating profit would be 2,274 million yen and 357 million yen respectively, and Internet advertising media sales and operating profit would be 1,330 million yen and 174 million respectively.

（million yen）（million yen）

A part of the sales of the Internet advertising media business was added on to the IxP business due to change in the segment.

A part of the sales of the Internet advertising media business was added on to the IxP business due to change in the segment.

19

【Part 2】

Business Conditions by Segment

20

Business Conditions by Segment - Sales Summary(million yen）

※The change in GMO Communications, Inc.’s business segment and the new addition of the computerization support and consulting category in the calculations this quarter have had an effect on the breakdown of Server Business sales and Internet Advertising Media Business sales. Sales for the Server business and the Media business based on the original categories would be 1,292 million yen and 1,330 million yen respectively.

14715151513Others

3,5843,3113,0763,0322,893Consolidated sales-90-6-12-11-7Elimination of inter-segment transaction

3,6753,3183,0883,0432,901Subtotal

1,1081,2031,014921876Segment total

1,1081,2031,014921876Mail advertising, media content, desktop advertising

Internet advertising media2,5672,1142,0742,1222,025Segment total

274－－－－　Computerization support and consulting

278202171247207　Domain

1,2341,2391,2101,1451,050Server

632657676714753　Access

IｘPQ1 of 2003Q4 of 2002Q3 of 2002Q2 of 2002Q1 of 2002Business

21

Server Business

Sale of e-mail advertisements40.6％Magclick inc.

Management of the site for real estates and advertising50.9％e-sumai, Inc

Desktop advertising business （KabeGami）100.0％KabeGami.com, Inc.

Media content business100.0％GMO magazines, inc.

Information gathering about the Internet100.0％GMO research institute inc.

Computerization support and consulting business100.0％GMO communications Co., Ltd.

82.0％Onamae.com Co., Ltd

Desk top advertising business (second browser）47.6％U cast communications inc.

Equity method companies

Ord

inary pro

fit an

d loss

Server business

（Rental server service (hosting service））

82.6％ILSE inc.（present GMO hosting and technologies, inc. ）

Internet advertising media business

Other media businesses100.0％Magforce Co., Ltd.

Planning and development/management of mail media

Opt-in mail

84.6％GMO media and solutions inc.

Computerization support and consulting operations

Home page production and management support business

Domain business

（Domain registration service）

Access business

（Internet connection service）

Parent company

Global Media Online inc.

ＩxＰ business

Conso

lidated sale

s/conso

lidated o

peratin

g profit

35.0％

40.6％

Idea cube inc.

Payment-one, inc.

Name of company /equity position

Other media businesses

Settlement business (credit card billing service）

Business descriptionBusiness segment

22

0

200

400

600

800

1000

1200

1400

0

2000

4000

6000

Server 575 967 1018 1,050 1,145 1,210 1,239 1,234

Average unit price N.A N.A N.A 5,368 5,364 5,021 4,465 4,279

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

0

100

200

300

400

500

600

700

800

900

1000

Server 501 553 617 672 728 908 934 968

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

Server Business: Changes in sales and the number of contracts plus future issues.（million yen） Sales see a 23.2% YoY increase.

（million contracts）

＜Q1 Achievements＞・The capture of cross-over demand, agency policies and pull marking all worked to keep new contract growth steady. ・Strong development of new small-mid sized enterprise and SOHO customer base. Began expansion of solutions sales to major corporations. 　＜Future Issues＞・To further boost sales power and improve services.・To enhance customer service by upgrading the support system, etc. ・To increase sales unit price by providing value-added services.

Sales Compared to Q1 last year…　　　23.2% jump in sales　　　　　　　　↓

＜Factors behind increased sales＞　　　　　

・Driven by market expansion due to brand penetration and the spread of BB.

Number of contracts

Effect of M&A and expansion of low-priced services associated with the M&A

※With the inclusion of the Computerization support and consulting business from this quarter, part of server sales are now included in this category. Under the conventional categories, sales this quarter would be 1,294 million yen.

（yen）

Trusted from Crayfish Co., Ltd.

Change in a part of the sales segment

1,294 million yen at the former segment (see below.)

23

Trends in the Rental Server Industry＜Comparison with other major players in the domestic rental server business ＞　　　　Company Name　　　　　　　No.of Contracts 　 Vs.3 months ago　 Period　　Global Media Online Group* 96,881 　　(+3,436) 　　　2003.3　Firstserver 　　　　19,000 　 (+1,000) 　 2003.2

Estore 17,886　　 (‐ 408) 2003.3　Admiral Systems 　　　　　　　 10,567 　 (+ 149) 　　　2003.3

* Our figures include 9,500 contracts consigned from Crayfish Co., Ltd. The figures for other companies were taken from company press releases, etc.

＜Types of Servers Operated in Small-Mid Sized Enterprises (SMEs)＞

・Around 40% of SMEs that use the Internet rent servers. ・Development of the SME customer base is important given the potential demand.

Source: “Survey on status of information security measures” Ministry of Public Management, Home Affairs, Posts and Telecommunications (Sept. 2003)

36.8

3.241.5

2.1

11.4

5

WWW server Mail server

39.6

3.832.2

2

15.1

7.3

Hosting (rental）service

Housing service

Own facility

Others

No server

No response

24

Access Business










Ord

inary pro

fit an

d loss

Server business






Opt-in mail




Domain business


Access business


Parent company


ＩxＰ business

Conso

lidated sale

s/conso

lidated o

peratin

g profit

35.0％

40.6％

Idea cube inc.

Payment-one, inc.





25

0

200

400

600

800

1000

1200

0

500

1000

1500

2000

2500

Access 888 879 834 753 714 676 657 632

Average until price N.A N.A N.A 2,048 1,945 1,856 1,823 1,774

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Access 122,579 122,336 121,983 122,553 121,986 121,076 119,720 118,409

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

Access Business: Changes in sales and membership plus future issues.

（million yen）The fall in revenues on a monthly basis will ease with sales expected to level out from Q1→Q2

Q1 saw a 16.1% fall in revenues compared to the same time last year. 　　　　　　　　　　　　　　　　　＜Factors behind falling sales＞　

・Fall in demand for dial-up connections with the spread of BB, and intensified competition in the broadband market. 　　　　　　　　　　　　　　　　　　　　　　　　　　　　　

　　　　　　　　　

＜Q1 Achievements＞・Introduction of IP telephony service. ・Enhanced mobile option functions. ・Introduction of the new service “BBPlus.”　　　　　　　　

　　　　　

＜Future Issues＞

・To increase customer unit prices and attract corporate members through boosting the BBPlus service lineup.

・To differentiate ourselves and attract customers by enhancing services for inter Q members ⇒ Strengthen Only One strategy.

・Attract new members and tap into change-over demand by providing speeds compatible with new BB services.

（members）

Sales

Membership

（yen）

26

Domain Business










Ord

inary pro

fit an

d loss

Server business






Opt-in mail




Domain business


Access business


Parent company


ＩxＰ business

Conso

lidated sale

s/conso

lidated o

peratin

g profit

35.0％

40.6％

Idea cube inc.

Payment-one, inc.





27

0

50

100

150

200

250

300

350

0

2000

4000

6000

8000

10000

Domain 287 161 217 207 247 171 202 278

Average unit price N.A N.A N.A 7,108 6,240 8,582 6,569 8,778

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

220

240

260

280

300

15

20

25

30

35

40

Cumulative numbers N.A N.A N.A 243 254 261 277 287

Number ofregistrations/updatings

31 18 28 29 39 20 30 31

(*) Cumulativeregistration numbers

208 225 249 270 291 305 328 346

Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

Domain Business: Changes in sales and registrations, plus future issues. 　（million yen）

（thousand registrations）

Compared to Q1 last year…

34.3% increase in sales　　　　　　　　　　　　　　　　　　　↓

＜Factors behind increased sales＞　

・With the total number of domains managed standing at around 290,000, there is robust renewal demand.

・Pull marketing was effective in generating a marginal increase in new registrations.

＜Q1 Achievements ＞

・Agency management system commenced operations (Feb. 13) 　⇒ A type of sales promotion tool

・ Commencement of one-year registrations for .info and .biz domains.　　　

＜Future Issues＞

・To generate new demand by developing sales channels (agents, etc.) other than Pull sales

　・To retain customers by generating synergy effects with server products.

Sales

Number of domain registrations（thousand registrations）

Note: From this period, the number of domains is graphically represented by the cumulative number of domains managed, rather than cumulative registration numbers.

Domain renewal demand generated steady sales.

Start of general-purpose “jp” domain registration

28

Changes in the total number of JP domain registrations (cumulative)*

* Prepared by GMO using materials released by JPRS.

(thousand registrations)

Trends in the Domain Industry

No. of JP domain registrations⇒516,537 （increased by 13,631 within 3 months）　　　　　　　

＜Breakdown＞

●Association plus region types (“co.jp,” “ne.jp”）⇒298,391●General purpose （“.jp”, “Japanese.jp”）⇒218,146 ＜Source: JPRS. As of Jan. 2003 ＞

＜Rankings of general purpose JP domain name registration service providers＞

No. 1　Onamae.com/ Global Media Online

No. 2　ＯＣＮ/ NTT Communications

No. 3　Domain Name For Use (D4U)/HumeiaRegistry ＜Source: JPRS. As of May 6, 2003 ＞

Steady increase in JP domains with Onamae.com the number-one ranking domain provider.

460

470

480

490

500

510

520

Number of jp registrations 488 482 493 502 516

Q1/02 Ｑ2/02 Q3/02 Q4/02 Q1/03

29

Computerization support and consulting operations, Home page production and management support business.










Ord

inary pro

fit an

d loss

Server business






Opt-in mail




Domain business


Access business


Parent company


ＩxＰ business

Conso

lidated sale

s/conso

lidated o

peratin

g profit

35.0％

40.6％

Idea cube inc.

Payment-one, inc.





30

Computerization Support and Consulting Business: Results and Future Issues (1)

Homepage production and management support business & Solutions sales for enterprises - GMO

■Tangible demand developmentGMO sales department compiles manuals and theoretical approaches based on successful marketing ventures to be used to source large-scale customers.

■Q1 AchievementsSales of 5,978 millionLaunch of the new service “Web diagnostic tool” (Feb.) Launch of SEO Service　　

■Future IssuesTo increase sales through synergy effects with domains, servers and other products. To focus efforts on marketing proposals for the promotion of new products.

31

Computerization Support and Consulting Business: Achievements and future issues (2)Marketing of solutions for SOHOs and small-mid sized enterprises – GMO Communications

■ PUSH marketing for SOHOs and small-mid sized enterprisesConcentrated on building a direct sales team and on conducting MYLINE marketing so as to compile a database of prospective customers, sourcing 49,000 prospective corporate customers for computerization support.

■Q1 AchievementsSales of 180 million yen（excl. media sales）Compilation of a new potential customer database95 sales staff150 call-center staff 　　

■Future IssuesTo source more prospective customersTo prepare for the full-scale July launch of the computerization support business

32

Internet Advertising Media Business










Ord

inary pro

fit an

d loss

Server business






Opt-in mail




Domain business


Access business


Parent company


ＩxＰ business

Conso

lidated sale

s/conso

lidated o

peratin

g profit

35.0％

40.6％

Idea cube inc.

Payment-one, inc.





33

-400

-200

0

200

400

600

800

1000

1200

1400

Sals 348 280 397 832 876 921 1,014 1,203 1,108

Operating profit -15 -78 -242 23 58 109 101 133 141

Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

-1000

0

1000

2000

3000

4000

5000

Sale 0 0 0 1,857 4,014

Operating profit 0 0 0 -312 401

1998 1999 2000 2001 2002

Internet Advertising Media Business: Changes in sales and profit, plus future issues.（million yen）

* Sales and operating profit for FY2001 is simply the total figure for the media-related companies before the internal offset.

Quarterly sales and operating profit

* Sales and operating profit for FY2001 is simply the total figure for the media-related companies before the internal offset.

（million yen）

Q1 2003Drastic increase in sales and operating profits in real terms※In March 2003, the Point Mail business previously run by GMO Communications, Inc. was transferred to GMO Media and Solutions, Inc. From Q1, GMO Communications made the transition from the Internet advertising media business segment to the IxP business segment. (Calculations based on the previous arrangement give sales of 1,330 million yen and an operating profit of 176 million yen.)

　　　　　　　　↓＜Factors behind increased sales and operating profit ＞・ Good performance by Opt-in mail services. ・Healthy sales.・Reduction in losses of incubation subsidiaries. ・Costs limited by consolidation and integration of business. ＜Future Issues＞・To further strengthen Opt-in mail services (attract customers and promote rich media advertising) 　・To further strengthen marketing (develop new agencies)・To turn loss-making subsidiaries into profitable ones. ・To cut costs through further business integration.

Annual sales and operating profit

Acquisition of ‘Info-mail’Acquisition of ‘Point Mail’

‘Fukubiki.com’ starts. Acquisition of ‘Mail In’

Segment change

34

The State of the Internet Advertising Media Business■ Conditions in Q1 2003

　　Driven by powerful Opt-in Mail services, both sales and operating profit increased dramatically. 　　　

　Opt-in Mail

Mail Magazines

Wall paper

My Pop

Mail advertising

Desktop advertising

■ Conditions in Q2 2003

Mailadvertising

Desktop advertising

Opt-in Mail

Mail Magazines

Wallpaper

My Pop

Continues to perform well with steady expansion in membership and the network of agencies.

Returned to profitable figures on a monthly non-consolidated basis as planned in March 2003. With increased sales, further improvements in expenditures are expected.

Continue to cut expenditure. Aiming to remain profitable throughout the quarter.

Efforts focused on attracting members. Sales are on the increase along with increased membership.

Continued efforts to attract members. Aiming to return to profitable figures on a monthly non-consolidate basis by the end of Q3.

Continued expansion in membership numbers and the network of agencies with efforts being focused on promoting products with a high unit price.

　　Opt-in Mail Services and marketing to be strengthened with a focus on making unprofitable subsidiaries profitable.

Sales leveled out despite demand for frame-based advertising products being supplemented with planned and managed products.

Efforts focused on developing demand by introducing segment-specific products, rich media products, and planned and managed products.

35

Opt-In Mail Services: Changes in memberships and sales 　

Memberships

Sales Increasing steadily with increases in membership numbers.

Changes in overall membership and gross sales for the GMO Group’s Opt-In Mail Services (M@ilin,

Fukubiki.com, Point Mail)

・Sales represent gross sales prior to the deduction of agency commissions. 　

・These figures represent Opt-In Mail Service products only and exclude Mail Magazines and Web-related sales figures.

Increasing steadily （Aiming to expand scale, and focus on quality improvements, such as database cleaning. )

0

100

200

300

400

500

0

100

200

300

400

500

600

700

800

Membership (10,000members)

251 274 322 349 370

Sales (million yen) 477 502 516 608 698

Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

36

Opt-In Mail Services: No. of distributions and unit price　No. of Distributions

Unit DistributionPrice

Expanding steadily along with increasing membership.

Changes in total distributions and unit distribution price for the GMO Group’s Opt-in Mail Services

(M@ilin, Fukubiki.com, Point Mail)

Slight increases continuing.　（Marginal increase predicted in the future with the spread of rich media advertising.

・ These figures represent Opt-In Mail Service products only and exclude Mail Magazines and Web-related sales figures.

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

2

4

6

8

10

12

Number of distribution(1,000 distributions)

41,883 54,137 61,592 69,130 75,413

Unit distribution price(yen)

11.4 9.3 8.6 9 9.3

Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

37

Opt-In Mail Services: Sales conditions

No. of orders receivedAverage price for orders received

Dramatic increase in orders with an increase in the number of new agencies.

Magclick, Inc.　　No of agencies Q1 Development of new agencies and expansion of mail advertising customer base.

Change in the total number of orders received and the average price of those orders for the GMO Group’s Opt-in Mail Services (M@ilin,

Fukubiki.com, Point Mail)

Change in the no. of agencies doing business with Magclick, Inc.

・ These figures represent Opt-In Mail Service products only and exclude Mail Magazines and

Web-related sales figures.

Slight decrease (Increase predicted with increasing membership numbers and the spread of rich media advertising from now on.)

・The number of agencies includes all agencies dealt with at some stage during the quarter, even if just once.

0

50

100

150

200

Number of agencies 50 89 107 146 156

Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

0

500

1,000

1,500

2,000

2,500

0

50

100

150

200

250

300

350

400

Number of ordersreceived

1,309 1,471 1,626 1,854 2,175

Average price for ordersreceived (1,000 yen)

365 342 319 328 320

Q1/02 Q2/02 Q3/02 Q4/02 Q1/03

38

MemberName of the

service

Ergo-Brains

iBRIDGE

GMO Group

Name of company

DeMail

　　　Competition in the Opt-in Mail MarketSales 　Jan. 2003 to Mar. 2003

Membership Term-to-term comparison

As of March 31, 2003　Unit: 10,000 members

Sales

Unit: million yen

Term-to-term comparison

Unit: ％Unit: 10,000 members

370

210

PC

Mobile

320

50PC

Mobile

+ 22

+0

＋22

＋9Note 1

PC

Mobile

PC

Mobile

118

　　96

115Gross sales

Note 1: The gross sales are estimated from the reported sales of opt-in mail advertisement, by assuming the commissions for agencies of 30%.Note 2: The figure is prepared by the Company using the Company’s official data. Note 3: The sales of GMO Group is the total of opt-in mail service only and do not include mail magazine, etc. of each company.

Fruit Mail －－Not disclosed Not disclosed

615

83

698

104 ＋10Note 2

766 111

39

【Part 3】

Results Forecasts

40

70.0%38.5%0% Increase or decrease

140250-Increase or decrease (b-a)

3409007,850Current forecast (b)

2006507,850Previous forecast (a)

Current net profitOrdinary profitSales

Revised Consolidated Results Forecast

Reason for revision： Increased sales of high-profit-margin products and a downward revision of initial expense forecasts due to the efficient use of administration expenses.

Upward revision of ordinary profit and net profit this quarter.

41

【Part 4】

Future Growth Story

42

.com　.jp　.co.jpDomain

acquisition

Credit Card Settlement

Mail advertising

For Internet Solutions…

Around 300,000Around 300,000registrationsregistrations

Used by around Used by around

100,000 100,000 companiescompanies

120,000120,000 usersusers

Opt-in Mail3,3,７７00,00000,000 usersusers

6,000,0006,000,000 usersusers

　Sales Market Place Rental Server

Hosting

Provider

LAN construction

Provision of a comprehensive range of corporate Internet solutions.

Home page Home page productionproduction

Attract customersMail advertising

Desktop advertising

Desktop advertising

4,0004,000 producedproduced

SecurityElectronic certification・SSL

43

Entry into the Security Business (1)GeoTrust Japan, Inc. established to develop security and electronic certification

business (server certification, corporate authentication, personal authentication, etc.)

82.6% stake

100% stake

GeoTrust Japan, Inc.

Global Media Online Inc.

GMO Holdings and Technologies, Inc.

＜Ownership Structure＞＜GeoTrust Services＞Digital certification screening and issuance. Price and speed are factors differentiating GeoTrust from its competitors.

44

Listed companies

Major corporations

Small-mid sized enterprises

SOHOs and Individuals

Major player Company V

138,000 yen/yearRequired documentation

Certified copy of the commercial register, Certificate of seal-

impression, paper application form

Screening: 1-2 weeks

GeoTrust Japan, Inc.

34,800 yen/year

Proprietary system for automated

screening

Screening within 24 hours

Entry into the Security Business (2)　

45

Entry into the Security Business (3)＜Comparison of SSL server certification issuing services ＞

SSL/Authentication

Rejection list

Anti-copy features

E-mail address

Fax number

Telephone number

Address

Company name

Server information

Tools

Authentication system

Certificate issue time-frame

Browser support

Certificate duration

Encryption

Price

Cannot be broken downIndependent

×○

×○

×○

×○Tool specifics

×○

×○

△○

○○

○○

Users Certified copy of register,

Certificate of seal impression

Uses domain information

At least 1 weekWithin 24 hours

Over 98%Over 98%

1 year1 year

128bit128bit

138,000 yen34,800 yen

Industry LeaderCompany V

GeoTrust Japan, Inc. GeoTrust’s Strengths

○Efficient electronic certificate issuing system.

○Authentication system with patent pending.

○Automation makes for a reasonable pricing schedule.

○Certificates are supported by over 98% of browsers.

46

0

50

100

150

200

250

300

350

400

450

Software (*) 32.8 50.1 74.5 106.9 144.9 192.9

For companies 30.1 47 72 108.3 158.8 225

For individuals 0.5 0.7 0.9 1.2 1.4 1.6

2001 2002 2003 2004 2005 2006

＜Forecasts on the scale of the electronic certification business market ＞

［Source:Ministry of Public Management, Home Affairs, Posts and Telecommunications & Accenture data］

Entry into the Security Business (4)

（100 million yen） Expected to be worth 41.95 billion yen by FY2006.

（*） Route key, etc.

47

Establishment of a Direct-Sell Marketing (Push marketing) System (1)

From the second half of the quarter (July) GMO Communications will work on building a system for the full-scale implementation of direct-sell (Push) marketing. 　　　　　　

1．Compilation of a prospective customer database 　⇒Around 49,000 corporate customers sourced through MYLINE marketing. Visits will be conducted to survey and database the IT status of companies. (Domain ownership, server usage, type of Internet connection, etc.) Number of sales staff (as of May 31)　⇒Sales staff:　95　⇒Call-center staff:　1502.　Establishing GMO brand – “ GMO for Internet Solutions”3． Thorough promotion of “9199 quick response 2003”

48

Establishment of a Direct-Sell Marketing (Push marketing) System (2)Aiming to enhance customer satisfaction levels

“9199 quick response 2003”

●This is the GMO Group’s motto for the year, adopted to show our commitment to responding quickly to the needs of our customers, whether by responding to inquiries via telephone and email or visiting customer’s homes. ●We are constantly working to respond quickly to our customer’s needs through our “9199 quick response” system to enable our customers to get the most out of using our services.

49

The Internet for Everyone

Thank you.

fy2003 presentation of q1 results · 2018-04-27 · 7 q1 fy2003 overview of consolidated profit...

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