The Group's growth and business strategies as Explained by Masatoshi Kumagai
GMO Internet Group Growth Strategy
Our common value foundation of GMOism
We have been repeating and practicing this GMOism since we started our internet business in 1995. As you can see, 8,000 partners from both domestic and international locations regularly gather to recite it.
The common value foundation of GMOism has allowed all group companies to continue to grow in the same direction. GMOisms are updated every year. We believe that our ability to survive in the internet industry is due to our continuous reading, updating, sharing, and thorough implementation of GMOism across all our group companies. Part of this, the Spirit Venture Declaration, is available to the public, so please take a look at it.
Quantitative Target "55-years plan"
The Spirit Venture Declaration also includes the statement, 'All quantitative goals in the GMO Internet Group are based on the 55-year plan.' This concept has become a common language among the group's partners and serves as a premise for formulating internal annual goals. The year 2023 comes at the midpoint of 55-year plan, and the Internet revolution we are aiming for is in its second half. To achieve our 55-year plan, we will need to grow at least 15% each fiscal year. We will continue to aim to achieve this goal through sustained growth.
In the latter half of the Internet revolution, AI takes center stage.
Here is a graph of the cycles of past industrial revolutions and the technological innovations that triggered them. We can see that the world economy repeats business cycles of 50 years each. It is now known as the Fourth Industrial Revolution, and it has been 29 years since Windows 95 became the starting point of the Internet Revolution. In the latter half of the Internet Revolution, we are confident that AI will lead the way in making our world even more convenient.
Become a group that thrives over hundreds of years.
GMO Internet Group has continuously sought the optimal organizational structure to thrive in the rapidly evolving internet industry and consistently create value. In preparation for the latter half of the Internet revolution, our group shifted from its current business holding company structure to a position closer to that of a pure holding company in January 2025. This is the first step towards building a solid management foundation to achieve the goal of “Become a group that thrives over hundreds of years.”
We will continue to enhance our group structure to achieve sustainable growth.
The transition to a holding company structure holds significance for two key reasons.
First, "Promoting independent management."
Our group has long embraced a management approach that delegates authority to each group company, fostering independent management. By further advancing this delegation, we enable more agile decision-making and accelerate operational speed.
Second is enhancing group synergies to their full potential. We believe that the Company will become more similar to a pure holding company and that each group company will be aligned horizontally, enabling smoother creation of ideas and maximization of synergies. With these two points, we will further accelerate the pace of growth and ensure achieving of sustainable growth.
Under this structure, we believe our role as the holding company should focus on the following four functions.
First, enhancing group synergies to their full potential. We will promote projects requiring cooperation across the entire group which will serve as a foundation for the creation of group synergies among companies.
Next, creating new growth drivers. We will provide support for businesses in the Group that are expected to become new growth drivers. Our group has grown as an aggregation of number one services, and we will foster and strengthen new number one businesses. Regarding one and two that I just mentioned, I will present two examples later.
And third, enhancing group structural efficiency. As we develop our group management, we will continue to search for the best formation for sustainable growth of the entire group. Following our transition to a holding company structure, we have encountered new kinds of cases, which I will speak of later.
Finally, serving as a hub for sharing group management expertise. It underpins the management of group companies through know-how on group management, know-how on the use of AI, and the cultivation of group brands.
The current group structure is as shown here. Two areas are numbered with red circles. These areas are for increasing the efficiency of the group structure and maximize synergies.
The first step of our reformation was the transfer of our business to the former GMO AD Partners. The second step is the management integration of GMO Research & AI and GMO Town WiFi, both listed on the Growth Market. In such way, we will accelerate value creation through strategic reorganization.
You may have noticed that some companies in this figure are listed with larger size. GMO Payment Gateway, GMO Internet, and GMO Financial Holdings have each obtained their own issuer ratings and have also raised their own funds, and we expect them to become a larger presence within the Group.
This is the reorganization scheme between our company and the former GMO AD Partners. The infrastructure and other businesses that had been operated by the Company were transferred to GMO AD Partners.
As a result, the Company will be positioned as a pure holding company and on January 1 of this year, the effective date, the former GMO AD Partners changed its name to GMO Internet and was listed on the TSE Prime Market.
Next explains another case of improving group structure efficiency. GMO Research & AI and GMO Town WiFi, both currently listed on the Growth Market, will merge their operations and start anew. Both companies are developing their businesses to solve consumers' issues, and we expect them to generate strong synergies, particularly in customer engagement. The merged company name will be changed to GMO Product Platform this October.
With this reorganization, two newly structured entities are set to achieve significant growth: GMO Internet (TSE Prime: 4784), which inherits our founding business, and the newly formed company (TSE Growth: 3695) resulting from the integration of GMO Town WiFi and GMO Research & AI. We invite you to look forward to the future development of both companies.
- Notice Regarding Transition to a Holding Company Structure and the Execution of an Absorption-Type Company Split Agreement (Simplified Absorption-Type Company Split) with GMO AD Partners Inc., a Consolidated Subsidiary | GMO Internet Group, Inc.
- GMO Research & AI, “Notice of Business Integration between the Company and GMO Town WiFi, Inc.
Strengths of GMO internet Group
We have three strengths
- Independent management
- Operations and development of our own technology
- Solid recurring revenues
1. Independent management
We believe that the uniqueness of our group lies in our group management system. Its feature is speed management through decentralisation of authority. In the rapidly evolving internet industry, we believe that a decentralized organizational structure is more effective than a centralized one. Each group company pursues the No. 1 strategy in their core competencies under the "GMOism" and creates growth products. As a result, this independent management system has created a strong management base with diversified risk management strategy. Operations and development of our own.
2. Operations and development of our own
In order to keep winning in the fast-changing Internet industry, we believe it is important to be a company that develops and operates its own products. For this reason, we are carefully paying attention to ratio of engineers, creators, and directors who engage in manufacturing. Currently, they are accounting for approximately 50% of total employees of 8000, but we are planning to raise to 60%. Solid recurring revenues.
3. Solid recurring revenues
We believe our sustainable growth since our inception of business has achieved by our revenue model which calls “Stock revenue.” It is broadly known as subscription or recurring revenue, but these models are slightly different from our essential revenue model. We refer to solid recurring revenues which mean we refer to solid recurring revenues which mean “indispensable products that will not disappear” as long as the Internet industry continues and come from “recurring products business model.”
Above three strengths are supported by our organizational strength, which market analysts positively described such as “ironclad organization“. The source of our strength is based on the sharing and thoroughness of “GMOism,” which is the collective name for our company motto and corporate philosophy.
Internet Infrastructure Business
Aggregation of overwhelming No. 1 services
Domain Business
Domain names such as “.com,” “.net,” and “.jp” serve as the gateway and address of the internet. In the domain business, we operate Domain issuance and wholesale (Domain Registry) business, Domain registration and retail (Domain Registrar) business. Both segments hold over 80% of the domestic market share, establishing us as the clear No.1 leader in Japan. This means we are responsible for 80% of the Japanese websites that appear on search engines such as Google Japan and Yahoo! Japan.
Cloud and Rental Server (Hosting) Business
One-half of all corporations and offices in Japan use our services. Actually, every day, 60% of the people who visit Google Japan or Yahoo! JAPAN are customers in our data centers. For example, one out of every two business cards exchanged, or one out of every two stores in town, is already our customers.
E-commerce solutions (EC Platform ) Business
We provide a way that makes it easy for anyone to open an online store, and help customers set up their “head office or official store” instead of participating in a mall-type store. We are developing our business with multiple brands, from long-tail to high-end.
Security Business
In anticipation of the ever-accelerating need for security in the future, we are now especially focusing our efforts on this security business, consist of three areas.
- Cryptographic Security – Preventing eavesdropping, data tampering, and impersonation using authentication technology by GlobalSign.
- Cybersecurity – Combatting cyberattacks with top-tier white-hackers from GMO Cybersecurity by Ierae and GMO Flatt Security.
- Brand Security – Providing impersonation monitoring and takedown support by domain and trademark experts.
1. Preventing Eavesdropping, Tampering, and Identity Spoofing. (Cryptographic Security)
Based on the technology of this certification authority, we expand our business since then Covid-19 period with “Electronic Seal GMO SIGN.” Currently, the company has the No.1 market share in Japan in terms of the number of subscriptions and transmissions. Although these services are free of charges, we are also seeing more fee-based services, which we see as a positive factor for stock revenue.
2. Countermeasures against cyberattacks. (Cyber security)
It is hard to find an official data of number of white hackers who are technicians who use their knowledge of cyber security for socially correct purposes, but we believe 40% of the domestic workforce is employed by us. We have excellent partners (employees) who win international hacker contests. In cyber security, not only we have large corporate clients, but also provide training to improve the skills of the Cyber Defense Force in the Self Defense Forces in Japan, and support the Metropolitan Police Department which they called Cyber Investigations. Therefore, we have received several certificates of appreciation and awards.
3. Monitoring and removal support for impersonation threats. (Brand security)
The Internet is full of counterfeit products and spoof sites. We monitor, report, and deal with such counterfeits, and our services are mainly used by companies that take care of their brands. We monitor, report, and deal with such counterfeits, and our services are mainly used by companies that value their brands.
In Feb 2025, launched the "Internet Security for Everyone" project.
Since launching our internet business in 1995, GMO Internet Group has been committed to the expansion and advancement of the internet. However, the reality is that a certain number of individuals misuse the internet with malicious intent. As an infrastructure provider supporting both internet and service infrastructure, we have always felt a strong sense of responsibility "something must be done." Now, as the internet plays an increasingly critical role as a social infrastructure, and with the rise of AI and robotics, the importance of security has never been greater.
We have brought together the technologies of our group’s security-related companies to launch a new project, "Internet Security by GMO," under the slogan "A Safe Future for Everyone." With this initiative, GMO Internet Group aims to create an environment where everyone can easily implement security measures, ensuring a safer and more secure internet society. We look forward to your continued support and enthusiasm for this new endeavor.
Payment and Settlement Business
GMO Payment Gateway, one of our group companies, conducts over one trillion yen in payments per month. You can see “GMO” or “GMO-FG (one of our group companies)” logo on the rolls of receipts. As the leading company in the payment processing business, the largest in Japan in both value and number of payments processed, we expect to continue to grow in the future.
Internet access (provider) Business
Our Internet connection service has launched since the company's establishment in 1995, for more than 20 years. We provide optical fiber access services such as “GMO Hikari Access” and “docomo Hikari”, and mobile access services such as “WiMAX” at the best prices available anywhere to satisfy more customers.
The group listed companies that develop internet infrastructure businesses are as follows. Please see the IR sites of each company for more information.
- GMO Payment Gateway, Inc. (Payment and Settlement Business)
- GMO Internet, Inc. (Domain Business、Cloud and Rental Server Business, Internet access Business)
- GMO GlobalSign Holdings K.K. (Security Business, Cloud and Hosting Business)
- GMO Pepabo, Inc. (Domain Business, Cloud and Hosting Business, EC Support Business)
- GMO Financial Gate, Inc. (Payment and Settlement Business)
Internet Advertising and Media business
We are attracting broad customers by advertising agency, provision of ad platforms, and operation of its own media. In this segment, profit growth continues through the strengthening of in-house products, proprietary media, and stock-based offerings. The group companies listed below are involved in the Internet advertising and media business.
For more information, please visit the IR sites of each company.
Internet Finance Business
We have entered this business field in 2005 because of the strong affinity between the existing Internet infrastructure business, Internet advertising and media business, and various synergistic effects that could be expected.
With our strength of “in-house development and operation”, we have become one of the top-ranked brokers in Japan in terms of trading volume for both FX and CFDs by providing our customers with more free and open next-generation financial trading services that are easy and convenient to use.
The group's listed companies that operate internet financial businesses are as follows.
Crypto Assets Business
We have been able to leverage our expertise in the online financial business, and number of accounts and assets under custody are expanding steadily.
The group's listed companies that are developing Crypto Assets businesses are as follows. Please see the IR site for more details.
GMO Aozora Net Bank
On July, 2018, GMO Aozora Net Bank has launched as next-generation Internet banking business by joint venture agreement with Aozora Bank.
With its management philosophy of “Everything we do is for our customers, Becoming the No. 1 technology bank,” we have combined our cutting-edge technology with Aozora Bank's expertise in bank and risk management to provide a unique, smart, next-generation service at a low price. It is an online bank with utilizing APIs, but no branches at all.
We have recently seen a rapid increase number of corporate accounts, and mostly newly established corporations are using the services. There are approximately 10,000 of corporations established in Japan each months, and we open new accounts with over 4,000 companies of them, which should be a tremendous share.
In Q4 2024, we achieved our first quarterly operating profit, driven primarily by the expansion of corporate accounts. In our internet banking business, we will continue to focus on a solid recurring, based revenue model as we drive further growth. We appreciate your continued support and look forward to the future.
Global Operations
As described “Internet Infrastructure Business” section, our business is centered on the Internet infrastructure, which is the Number one records in Japan, with focusing on Asia region. Our overseas business channels are divided into wholesale (“.shop” domain and SSL) and direct selling. The direct selling is not under the “GMO” brand, but served by unified overseas brand “Z.com.” We will continue to contribute to the further spread of our internet services around the world by providing innovative services through direct selling by “Z.com” with “the world's No.1 service and the world's easiest-to-remember domain name”.
