Japanese IT giant GMO Internet, Inc. has reported its consolidated financial results for the first quarter of 2019, ended March 31, 2019. During the period the firm noted a lackluster performance in its over-the-counter (OTC) foreign exchange (forex) business.
A lot of services fall under the GMO Internet umbrella, including its online financial services for retail traders – GMO Click – and its cryptocurrency business which covers its digital asset exchange – GMO Coin – and mining operations.
The Japanese firm’s online financial services segment for traders is called the Internet Finance segment. During the first quarter of 2019, GMO focused on increasing its customer base and transaction volume.
This led to the number of OTC FX accounts increasing by 11.4 percent year-on-year to reach 789,000. The number of securities accounts also climbed by 13.6 percent on an annual comparison, hitting 385,000 accounts.
OTC FX Trading was Weak in Q1 for GMO Internet
Although accounts increased during the period, the profitability of OTC FX trading, which accounts for more than half of net sales and profit for the segment, was weak and was not strong enough to offset a decline in transaction volume. According to the report, this dip in transaction volume was caused by a sudden fluctuation in exchange rates in the FX market earlier this year.
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Overall, net sales for the Internet Finance segment came in at ¥6.4 billion ($58.4 million). When measuring this against the same quarter of 2018, this is down by 21.5 percent. Operating profit also fell by 55.5 percent year-on-year at ¥1.5 billion.
GMO Coin Net Sales Soar 163.1 Percent YoY
GMO’s cryptocurrency segment continues to record operating loss for the firm. As highlighted in the statement, this is mainly the result of low volatility.
Despite this low volatility GMO Coin, which engages in spot trading and leveraged transactions of cryptocurrencies, managed to expand its customer base by increasing accounts to 245,000. This represents an uptick of 70.1 percent year-on-year. Nonetheless, the growth in transaction volume was weak due to low volatility.
Despite the low volatility, net sales for the exchange surged by 163.1 percent year-on-year to reach ¥507 million. This is because in the first quarter of 2018 GMO Coin recorded a temporary loss on valuation of proprietary positions for the period.
Taking a look at the Tokyo-headquartered firm’s crypto mining business, net sales rose by 77.7 percent from the same quarter of the previous year to ¥786 million. However, this figure is down when measuring against the previous quarter, due to a decline in hash rates.