Japanese Internet Giant GMO Posts Strong Q3 Numbers For Crypto Division

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Japanese IT company who recently entered the crypto space, GMO Internet, has published a presentation of their results for the third quarter of the fiscal year 2018, on Monday, November 12th.

They have been referring to their results as important, quoting some record-breaking increases in profits in comparison with the Q3 2017, with crypto-related business bringing in almost $300,000 more than during the same quarter last year.

Record high profits

According to the document, GMO’s net sales, operating profits, and ordinary profits have hit the record high, as they by far surpassed the numbers reached in the Q3 last year.

The company published a transparent overview of the profit increase compared with the same quarter last year:

  • Net Sales – 22.0%
  • Gross Profit on Sales – 24.5%
  • Operating Profit – 44.4%
  • Ordinary Profit – 40.3%

According to the report, the overall profit of the company before taxes reached an increase of 54%.

Looking at GMO’s net sales, cryptocurrency business made a revenue of 2.6 billion yen (approximately $23 million), which represent no growth compared to the previous quarter. However, it represents an increase in terms of percentage of total net sales, climbing from 5.5% to 5.7%. 

Given the bear market, keeping steady could be interpreted as a good sign and is still 2 billion yen and 1.7 billion yen more than the company’s first quarter of 2018 four quarter of 2017, respectively.

The overall profit GMO recorded from cryptocurrencies in Q3 was 0.1 billion yen ($880,000).

Lucrative segment

GMO takes special pride in the fact that their crypto segment managed to keep the profit rate stable despite the unfavorable market conditions, emphasizing that only a year has passed after the launch of the new business unit.

GMO has a wide network of mining operations, counting a hashrate of 674 Petahash per second (PH/s), which also recorded a rise quarter-over-quarter. However, the company reports that during the second and third quarter, their profit from conducting mining operations substantially declined due to the unfavorable market conditions.

Concerning cryptocurrency mining, GMO revealed their plan to grow its operation to 800 PH/s during 2019, which would make them more competitive.

However lucrative it may seem, cryptocurrencies-related activities on the exchange and mining operations take up only 4.2% of GMO’s business, with reported 197,000 accounts.

A postponed new product and a new stablecoin

Although GMO has been focused on mining operation development, which has brought the company 464.9 million of JPY ($4.08 million) in Bitcoin (BTC) and Bitcoin Cash (BCH), their B3 ASIC miner, scheduled to become available in October, was delayed due to the alleged problems with shipment of some electronic parts.

GMO also took time to inform the public of their plans to issue a new stablecoin called GYEN pegged to Japanese Yen aimed to support transactions with overseas exchanges in order to minimize price volatility risk and increase the liquidity of its trading platform.

The Japanese IT giant concluded their presentation with the announcement of the annual report for the fiscal year 2018, scheduled for February 12, 2019.

Formidable numbers with great perspective

Throughout the whole document, GMO is emphasizing that numbers presented have been achieved despite the overall state of the cryptocurrency market, which has been in a steady decline since January. It feels like the company is trying to tell us that, once the market finally recovers, their operations will reach new heights.

One of the few negatives in their report is the actual shareholder’s return, as the dividend per share dropped since the same quarter 2017 by 0.5, again, caused by the unfavorable market environment.

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