GMO Internet Q2/FY2024 Earnings
During July, GMO Financial Holdings took additional provisions for doubtful accounts at GMO-Z com Securities (Thailand) for the second quarter of the fiscal year ending December 2024, and as a result, provided a dividend forecast that is significantly below the FY2023 payouts.
It also implied that GMO Internet Group’s second quarter would not come out great, and indeed, despite a strong performance in the infrastructure segment, overall results were flat year-on-year due to the loss provisions taken in the Thai business.
Group Restructuring
GMO Internet Group will execute a group restructuring effective January 1, 2025, with GMO Internet Group becoming a pure holding company, and any operating businesses moving into GMO Ad Partners, which is going to change its name to GMO Internet.
Business Segments
About two thirds of GMO Internet Group’s sales come from the Internet Infrastructure segment, with Internet Finance (FX & Securities Trading) and Cryptoassets (Mining, Exchange & Payments [Stablecoin]) making up 18.7% of sales, and Online Advertising & Media bringing in the residual 12.4%.
As stated above, loss provisions in the Thai brokerage unit led to a flattish year-on-year profit picture.
Cryptoassets Segment
Cryptoassets remained profitable for a third straight quarter, increasing revenue by 86% year-on-year, and profits by JPY 0.8bn. Much of that increase in revenue can be attributed to the positive development in the crypto markets, especially the Bitcoin price.
Internet Finance Segment
Stock trading commissions were down 17.2% year-on-year, after the first quarter of FY2024 had seen a spike due to the Japanese equity markets recording all-time records. With trading volume only down 4.5%, this points to declining commission rates, especially in light of “zero fee trading” offered by industry heavyweights Rakuten Securities and SBI Securities. With a market share of only 1.7%, it is questionable whether this business can be carried through by FX trading (20% market share) and CFD trading (profits up 33% year-on-year).
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