Monex Group Inc

TSE:8698

Earnings Call Transcript 2021-Q1

[Operator]

Good day, and welcome, everyone to the Monex Group announcement of financial results for 1Q of fiscal year ending March 31, 2021, call hosted by Mr. Oki Matsumoto. My name is Matthew, and I'm your event manager.

[Operator Instructions]

I would like to advise all parties that this call is being recorded for replay purposes. And with that, I would like to hand it over to your host, Mr. Matsumoto. Please proceed.

[Oki Matsumoto, executive]

Okay. Thank you. Hi. Good day, everybody. This is Oki Matsumoto, CEO of the Monex Group. Today, I am with our CFO, Toshi Katsuya; and also the President of the TradeStation Group, John Bartleman.

So this first quarter was quite a good quarter for us amid the coronavirus COVID-19 situation. I think we navigated the business quite well. The operation is very smooth. And with the customer -- more customers at home and trading online, and the market produced good volatility. So our core businesses are all good.

If you go to Page 4, as you see, our pretax profit was up 67% more year-on-year compared to the first quarter of the last fiscal year. So this is the -- for the consolidated basis. But at the same increase for the Japan segment as well. So basically, across the globe, we have a quite good increase in profitability. As you can see on the bottom of this page, the -- and as I said, we navigated very well in the COVID-19 situation. And also, whereby the other -- some of our competitors have got programs in system operation, we had a very smooth operation during the period. And we do have a quite high remote working ratio as well. So we are really surviving good in this situation.

If you go Page 5 for Japan segment on year-on-year, again, this is the quarter versus quarter a year ago. So on year-on-year basis, the market trading value is 56% increase whereby at Monex, it was 72% increase. So we beaten the market. And also, as you can see at the bottom, the new account acquisition is 87% increase as well. So both in the transaction volume as well as the new account growth, we did quite good.

If you go to Page 6 on the U.S. Again, year-on-year market trading volume is 76% increase, whereby TradeStation's number is plus 133%. And also the new account addition for this quarter is plus 223% year-on-year. So again we had a quite good quarter in the U.S. side as well.

If you on to Page 7. So we are doing quite good in the core business, especially in Japan and the states. And in addition to that, we are building the noncore businesses and trying to transform our business model.

In Japan, we are trying to create asset management model, and we successfully launched Monex Activist Fund, so we are working on this transformation very strongly. In TradeStation as well, it is trying to diversify the revenue source away from the commissions from customers, increasing the payment for order flow. We are doing the -- we launched the crypto business and also you can trade, which is education platform, which John will explain further later. So we are in both in the state as well trying to broaden our business base.

In the Coincheck, the business is -- has become quite solid. And on top of that, we are adding new businesses such as staking and coin lending and IEO. And also now we are preparing for the service to support the virtual shareholders meeting in Japan using the blockchain technology. So we're doing quite interesting as well in Coincheck. Basically, the core business is for the Monex TradeStation Coincheck group, and in addition, on top of that, we try to transform the business model and then adding a new revenue source.

If you go to Page 8, this is the -- for the main 3 segments. We see that Japan, we kicked off the Monex Activist Fund with the JPY 4.2 billion in managed assessing custody under management. And also, we launched the first ever cryptocurrency CFD among the Japanese broker dealers. So we're doing those kinds of things.

In the states, John will explain later, but we're doing a quite interesting things to increase our account base as well as broadening the revenue source. And the Crypto Asset, we keep the number one position in the various aspects, and in addition to that, as I said, we are starting building up the new businesses.

With those efforts, if you go to Page 9, of the, roughly speaking, JPY 2 billion pretax profit for this quarter. Japan created JPY 1.15 billion pretax profit, which is quite good, like 60-something percentage more than the last year. U.S., the situation is not easy, like the very low rates, but generated JPY 0.53 billion profit before tax and it's doing quite steady. Crypto Asset, it's a very volatile business, but it's created a black ink. And Asia Pacific business is actually quite strong. And also, our investment business is doing great and then making some money. So the -- all 5 segments are in the black ink. And so we are growing our businesses quite in a balanced way.

So from here, let me hand it to Toshi, our CFO, to analyze some of the -- our results.

[Toshihiko Katsuya, executive]

Thank you, Oki. I'm Toshihiko, CFO of the Monex Group, and I would like to explain the figures for the financial results for the first quarter.

Please take a look at the Page 14. Firstly, I will explain this first quarter figures by comparing with that of the previous fiscal year and then elaborate on details comparing with the previous quarter from January to March this year. Our total operating revenue after deducting the financial expenses increased 11% year-over-year to JPY 13.2 billion, but the major factor of this increase came from 3 segments: Japan, U.S. and Asia Pacific, where stock markets continue to be very active while the Crypto Asset segment against the backdrop of stagnant or cryptocurrency markets decreased revenues.

SG&A went up by 6% to JPY 11.2 billion mainly due to an increase in valuable costs, both in the Japan and the U.S. segment, while the Crypto Asset segment reduced by G&A. The annual profit attributable to the owners of the company went up by 67% year-over-year to JPY 2 billion, and EBITDA was JPY 4 billion or 25% up year-over-year.

Page 15 describes the performance of each segment. The revenue of all the segments except for the Crypto Asset segment increased and so did the profit, and of all the segments except for the U.S. segment, and all the segments remain in black.

Let me explain each segment briefly. The revenue of the Japan segment increased 21.7% year-over-year due to an increase in the brokerage commission against a backdrop of the very active stock market, while the FX revenue dropped. SG&A also increased 11.2% mainly because of an increase in the valuable costs and depreciation expenses. The U.S. segment increased revenue by 8.7% Y-on-Y largely due to an increase in the brokerage commissions and other commissions, while the net financial income declined. The SG&A also went up by 11.9% due to an increase in the variable cost and depreciation expenses. The Asia Pacific segment also increased the revenues by 15 -- 8.8%, thanks to very active Hong Kong stock market. And SG&A, especially the variable costs are increased as well by 24.4%. On the other hand, the Crypto Asset segment decreased its revenue by 36.1% because of the sluggish cryptocurrency markets, but SG&A, such as personnel expenses and outsourcing expenses declined by 36.4%.

The Investment segment increased revenues by JPY 157 million, reflecting the valuation gains on venture investments and became profitable.

Now let's get over to Page 22. I will compare the first quarter performance with the fourth quarter of the last fiscal year. The consolidated performance during the first quarter, the total operating revenue was JPY 13.2 billion, 3% up to JPY 13.2 billion. And the quarterly profit was JPY 1.4 billion, 88% up Q-on-Q. This sharp increase came from the JPY 1 billion other expenses in the previous quarter, resulted from the valuation loss on the investment securities and the impairment loss over of the fixed assets that is Japan equities tradings platform.

Page 23 explains the breakdown for each segment. The revenue of 3 segments: Japan, U.S. and Crypto Asset dropped, while Asia Pacific and the Investment segment increased its revenues. As for the profit, all the segments, except for the Crypto Assets, increased profits and it is highly noticed that all segments continue to be profitable in the 2 consecutive quarters.

Now let's go to the Japan segment on Page 24. The revenue of the Japan segment has slightly decreased by JPY 11 million, 0.2% down Q-on-Q. Brokerage commission increased by JPY 436 million, thanks to a favorable market trading volume by individuals, 11% up Q-on-Q. And our U.S. stock related revenue also increased, but the FX revenue went down by JPY 469 million due to the tightened spreads of the FX.

Page 25 is the expenses of the Japan segment, which decreased by JPY 86 million, 1.5% down Q-on-Q. And variable expenses increased due to the revenue increase, but we managed to slightly decrease all the expenses.

Moving on to the U.S. on Page 26. Its revenue decreased by $922,000, 1.8% down on Q-on-Q. The brokerage commitment went up by $800,000 due to a continued volatile markets as well as the other revenues such as our payment order flow fees by $2.2 million, but net financial income went down because of the Feds are further interest rate cuts this fiscal -- this quarter.

Page 27 shows the expenses of the U.S. segment, which decreased by $1.27 million, 2.8% down Q-o-Q. The commissions are paid and associated dues dropped by $1 million because of the increase in the equities and option transactions, which commission rates are lower than futures. As well as a volume discount as we gained more volume. The compensation and benefits decreased by $1.1 million in spite of the $1.6 million in the surveillance pay in April because of -- which is offset by a decrease in the salary and bonus reserves.

Finally, going to the Crypto Asset segment on Page 28. The revenue dropped by JPY 436 billion, 34.7% down Q-on-Q due to lower trading volume in all the coins, while the bitcoins are more active.

Page 29 shows the expenses of the Crypto Asset segment, which also dropped by JPY 270 million, 27.4% down Q-on-Q. In the previous quarter, a payment from the Coincheck to Monex Group as an annual asset -- as annual settlement of the management fee increased significantly. But these management fees are decreased by JPY 200 million to a normal level this quarter, that results in a decrease in the total expenses of the Coincheck.

Well, that's all from me about the consolidated performance.

[Oki Matsumoto, executive]

Okay. Thank you, Toshi. So let me briefly talk about the each segment's business update.

Please go to Page 33. This is the Japan segment. As you can see on the left hand side chart, the -- our share of the Monex Securities in the Japanese share trading increased, roughly speaking, like 0.5 or 0.6 percentage points. So we are doing not only better than the market, but also we are doing better than our competitors, so increasing shares. The margin balance is increasing and as you can see on the right side, for the U.S. equity trading because of the TradeStation in the group, we do have a lot of advantage in the U.S. share business in Japan. And the transactions and the active accounts number increased by 370% and the 240%, respectively, year-on-year.

So it's a huge increase. And also that only the connection with the TradeStation, but also we do have a very professional other had of the U.S. share -- the business in Japan, Mr. Okamoto. So we are providing a very high level services to our Japanese customers and then this U.S. equity trading business is really growing.

On the Page 34. As regard to transforming into asset management business. Monex Activist Fund, I will explain the data, but we successfully launched it. The mutual fund business growing nicely. And we have this smartphone application service ferci. For the novice, newcomers to the market we started Independent Financial Advisor service. And also, as I said before, we started a Cryptoasset CFD service first among the Japanese broker-dealers.

Go to Page 35 for the Monex Activist Fund. This is managed by Japan Catalyst and the Monex asset management. So the -- so this is the Activist Fund. It's a kind of innovative idea that we raised money from the Japanese retail customers and then use those money to engage issues in Japan.

I myself is heavily involving engagement. And not only we professionally engaged with issuers, we do somehow collect the voices from retail investors as well, who are in the same ecosystem as Japanese issuers and then provide those voices together with our professional opinion to the issuer. And then we make a feedback of the -- what management needed to say to those opinions, and then feed them back to the retail investors. By doing that, we provide the -- not just a financial product, but the investment -- a new investment experience we are delivering to our retail customers.

By doing that, we can make the Japanese investment chain complete and also activate the Japanese capital markets. So that's what we are working on.

If you go to Page 36. We started the fund with JPY 4.2 billion, just sold through Monex Securities without the sales support. This is just the online marketing and in the Monex Securities' history, the start investment fund with like JPY 4 billion is the, I believe, the biggest so far in history. And going forward, we are going to sell the fund through other broker-dealers, too, like our competitors as well as we will sell this fund to the domestic and international institution investors as well. And we'll be aiming to reach assets under management to the JPY 60 billion in the year. And of course, even bigger after that.

As regard to the engagement idea, it's not just the like foreign activist fund stand like visiting Japan and then tell the issuer to sell the business and then use that proceeds to buy back shares. We are not going to do that. We are more like discuss with the issuers, how to transform their business, or as you know like 10% of Japanese companies are subsidiary and over the listed company who are listed, it's very strange structure. So we would like to fix that structure. And through that activity, we can capture some good return as well.

So -- but the engagement we are going to do is going to be not like stating money out of issuers more because we are Japanese -- we are managing Japanese investors money. So we need to sustainability grow these issuers equity value and the enterprise value. So our engagement study is going to be more like it will be a serious engagement, but it will be like working together with the insurers. That's just the tighting and then try to straight money out of issuance pocket.

Now let me switch to John to talk about the U.S. business, John?

[John Bartleman, executive]

All right. Thank you, Oki. Good morning, everyone. So as you've seen, overall, the U.S. business, we really had a great quarter despite everything that's been going on. We've been able to do this with roughly 90% of our team working from home. We have about 100% of our technology staff working remotely and about 80% of our brokerage staff.

In addition, in the early part of this quarter, we went through a reduction in force of almost 10% of our workforce. And even under all these conditions, it's really been incredible to have the system stability that we've had where competitors have really had some major issues over this quarter. We've also had outstanding operational and risk management processes. Have really held up well in this high volatility environment, including getting through the oil collapse that happened. We saw a lot of other players in the space gotten hit pretty hard with that. So we were able to make it through even with this tough working environment without any issues. So overall, a really great quarter.

If we look at Page 37, on the left side, you can see the really outstanding growth in brokerage commissions and fees even in the environment where we have commission-free plans. We've seen sustained growth here, driven primarily by equities and the strong payment order flow we've got this quarter. So overall, a really good quarter. Haven't seen such activity since the financial crisis in 2008. If you look on the right side of the account growth, again, another quarter of really strong growth, now over 110,000 accounts, which we've had this quarter just over 18,000 gross funded accounts come on board. So a really strong pipeline. And multiple things that we've been putting in place really helped with this. So we have our commission-free plans that went in place late last year. We have a new marketing website that has really helped us really optimize search engine optimization and search engine marketing, which we've shifted a lot of our marketing dollars to. It's a lot more efficient. So this website is really helping with that. In addition to our real expansion in education content, provides great materials for our customers, but also great materials for search engine optimization.

We've also spent quite a bit of time enhancing and rolling out our web API. This has been a strong area of growth for us. We have our partner with trading view, who's our largest partner, but we now have 76 API partners on board, and our business development team is continue to really expand that funnel. And we see this as a large area of growth for us as we feel that we can power third-party applications and platforms with our brokerage and data capabilities. So that's a strong area for us. And we've also obviously launched our crypto trading, crypto lending and our YouCanTrade platform. So all of this is generating a lot of interest and excitement in the industry and really leading to strong account growth.

If we shift over to Slide 38. You can see in the lower left, our account conversions. It's really starting to decline. We feel that the vast majority of our accounts that we convert have. So we should see that continue to decline moving forward. As it relates to TradeStation crypto, put a lot of energy into various parts of getting this launched and enhanced we now are able to operate in 40 states in the U.S., still waiting on New York, the largest one. We expect to be getting work back to you on shortly.

We have launched this quarter our iOS and Android mobile application that's been integrated with the TradeStation mobile app. So that should get some real movement in account growth and training with this product.

We also launched what we call Crypto Earn. It's a really interesting product. Now with our crypto lending business, we're able to lend our customers' positions and provide interest to them on positions that they're holding. So we just launched this earlier this week. We went live in sort of a test period right now with 2% interest we're paying on U.S. DC stablecoin, 1% on Bitcoin and 0.5% on Ripple, Ethereum, Bitcoin cash and Litecoin.

So we expect to be able to elevate those rates over time as we really scale out our lending offering. But this is we think a real differentiator and provide customers generate more yield, particularly with the U.S. stablecoin product and getting introduction into the crypto space with that. So we're also working on a very simplified mobile application that will allow customers to invest in stablecoin and earn this higher yield that aren't necessarily into trading, but just looking for a better vehicle.

We're also almost finished with our TradingView API integration. So TradingView is, in our minds, the de facto charting platform on the web for crypto traders. And our integration with that should see real accelerated growth in the accounts and trading through that platform. So really excited to get that live in September. On the YouCanTrade side, we have launched our iOS social networking application a few weeks ago. So now with that in place, we feel we have a starting point for customers to really have a social network and start sharing ideas and join friends, so we'll be working on that over the next couple of quarters to really enhance that offering.

Our community members have grown to 9,000 so far. But again, this is really without a community launch, it was hard to promote something, but now that we have this application live, we'll start seeing that to accelerate. We're seeing about 5% of those members subscribing with a paid subscription to one of our channels. Over time, we expect that rate to probably settle in the, let's say, the 2% to 3% range of our overall community membership. But really starting to grow strong and expect to really see more growth in this area. We have launched 2 new channels this quarter. So now we have 7 total channels of premium content. And we have 2 live free shows that we're producing content daily. This is a great tool for us to attract traders, but we're also looking at the possibility of attracting investors with this offering with different types of channels and content directed to various types and styles of trading and investing. And our team is exploring -- introducing more of an investor offering than our business line with a combination of digital and human wealth management at some point in time, as we can diversify our overall business offering and start attracting the wallet share of someone who's not necessarily an active trader, but more of an investor as well.

So a lot of exciting things happening here on the U.S. side, and we're just hopeful that this volatility will continue. And with that Oki, I'll turn it back to you.

[Oki Matsumoto, executive]

Okay. That's great. Thank you, John. So U.S. is doing very strong in this situation. Now let me talk a little bit about the Japan crypto business.

If we go to Slide 39, the Coincheck, we're holding #1 position in the various aspects. And on top of that, we are expanding lending business and some accumulation, the program and also some are collaborating with the Monex Group. So Monex Group is sprinkling BTC to our shareholders so that they open account at the Coincheck, that kind of thing.

If you go to Page 40, so core visions of Coincheck. We reduced the risk and the cost of Coincheck dramatically. And we do have a strong, solid internal control process in place. And we do have ability to add new coins, which is very rare in Japan. We do have a strong team, which can communicate with FSA as well. So our core business of Coincheck in Japan as a pre currency broker, it's very, very solid and big and strong. And on top of that, we are building new businesses like the lending and the staking and IEO and also this virtual shareholder meeting support, which you can see on the Page 41.

So with this COVID-19 situation, there are more demand for these virtual shareholders meeting. And from the listed companies to non-listed startups. And using blockchain technology, we can do also a very complicated thing for the boating as well. And by doing it, this share business, it still can be a good business. And in addition, through that, we can create a lot of relationship with lots of companies in Japan, which may result into the businesses with the Monex Securities investment banking side or do the relationship with the companies in Japan. We itself grow into the other new businesses, leveraging, for example, blockchain.

So this business -- it's got a lots of interesting possibilities. So this is not just one of the new business initiative, it's got more meaning for us.

Page 42 is the -- in addition to Coincheck, inside Monex Group, we are incubating lots of blockchain-related initiatives, including consulting business, blockchain consulting business or using blockchain to manage the whole genome -- GENEX. It's a quite interesting potential business, especially given this COVID kind of situation.

Page 43 is Asia Pacific business. As you see on the left-hand chart, the transaction volume and new account opening both grew a lot. And Page 43 -- and by the way, as regard to Hong Kong business also argument on the Hong Kong business, but we do see a very large potential opportunity in Hong Kong, whereby China is making a Greater Bay Area, GBA, including Hong Kong. So China is trying to make Hong Kong actually kind of bigger, and we do have interesting positions there. So that's something that we are pursuing and the right hand side is the -- our joint venture in Mainland China, which is -- it's more about steadily producing profit.

Page 44 is our Investment business. This Monex Venture 1 fund is doing quite good. And then we are preparing for the Monex Venture 2, the second one as well. And the both on balance sheet are investment as well as fund investment. We are having a very good investment results.

Lastly, Page 45, the ESG. We disclosed this materiality metrics. And we -- the management is tackling with each theme on this ESG materiality matrix. As you can see on the bottom right, we have had the kind of educational sessions about the ESG, with the Board and the employees, so we are having quite good financial results for this quarter. And -- but not only that, we're working on this more mid- to long-term initiatives as well.

So overall, we had a good quarter. It's very balanced and among this past COVID-19 situation. And on top of that, we're adding new initiatives like Activist Fund and decreased the business in the state. And we're adding a new revenue sources. And so that's what we're doing. So we feel that -- very constructive on our business. And also, we feel confident that we can continue to produce the solid profitability. We need to reduce the cost in Japan, which we are managing the system investment scheduled very carefully. And also at the end of the day, we need to increase more on the revenue side, which we are working on right now.

Okay. Let me stop here, and then I'd like to open up for Q&A.

[Operator]

[Operator Instructions]

And we have a few incoming questions. The first one is coming from the line of Trond Hermansen.

[Trond Hermansen;Sector Asset Management, analyst]

Yes this is Trond Hermansen from Sector Asset Management in Oslo. I'm particularly interested In the Monex Activist Fund, as you mentioned. And -- but I have a question on the size of because even though you reach, let's say, as you said 60 billion, sorry JPY 60 billion and -- but it's not such a big amount if you want to engage with the company. So I mean how big you have to be before you can invest -- assuming that we have a diversified portfolio or in the fund. How much do you have to hold of a company to be able to pressure them a little bit?

[Oki Matsumoto, executive]

Okay. Thank you very much for the question. First of all, JPY 60 billion is a 1-year target. And we do have about JPY 43 billion assessing customary security customers, and we try to mobilize 10% of that into this Activist Fund. Spending like a couple of 3 years. So that -- we're talking about $4 billion. In addition to that, trying to correct some raise funds from other broker dealers as well as from institutional investors, try to create like a $10-billion type of fund. Having said that, what we have is not just the size. We -- I have accessed connectivity, access to the management. We have -- we are already selecting the investees and then start talking to those management. But when we say or select 10 names, like 8 or 9 out of those 10 companies I know the outside Director on board or CEO, himself or herself directly or at least just one person in between, which I can reach to those people. That's number one.

Number two, my -- I have a strong exposure to the media, and I can discuss with them and then try to obviously provide pressure to issuers through those media relationship as well. Number three, my classmates like a top 5 or 10 -- let's say top 5 bureaucrats over the each branch of Japanese government, like somewhere between number 2 to number 5 at [indiscernible] or at MOS, those places, I know the those very senior bureaucrats very closely. And then when you engage, the Japanese issuers, you do need to know the framework what the government wants to do on that industry. And also sometimes, unfortunately, Japanese issuers, they listen more to bureaucrats than to shareholders. And I can arrange that kind of a relationship as well. And lastly, the -- we do have retail investors. And we correct the voices from our retail investors and then engage to the such and such CEO of the company. So I tell them not only just our -- the professional opinion but also we -- I say, okay by the way your customers or your family or your users, those retail people are saying the same thing for your management of such -- those kind of things, which probably will have a very strong, how do you say, impact to the Japanese CEOs. So we are going to make our fund big. But even before that, I think we do have -- through those holistic engagement, we do have some special power to issue, and also because of that several or many activist funds or institutional investors are approaching to U.S. because they want to somehow work with us because I or we can be closer to the issuers ERs or Is so that in a sense, from our point of view, we can leverage those other institutional investors voting power as well. So we have a quite unique setup for this idea.

[Trond Hermansen;Sector Asset Management, analyst]

That sounds very good. Just a quick follow-up question. You said that 25% of this fund will be invested in publicly listed current and subsidiary companies? You think that just the management of these companies finally understand that this is a practice that has to get evolved? And as you said, to resolve the another longer discount, do you think that this really will get tractional going forward.

[Oki Matsumoto, executive]

Well, as you may know, 10% of the peer fee market cap for 10% of Japanese listed companies are upset subsidiary of listed companies. That's ridiculous. Yes. I started talking to the -- for example, like a very large Japanese prestigious listed company, who has got subsidiaries listed and then telling them why the hell are you doing this? This is stupid. This is not good for you. This is not good for your subsidiary, shareholder. It is not good for anyone. And then telling them why you keep it? And then why don't you just buy a mall, for example. And they say -- one example is that they said, okay, we are actually thinking that because back in like 30 years ago, sometime, it was kind of boom for listing subsidiaries. And then current management doesn't really even understand why the hell those subsidiaries are all still listed.

So of course, there are some companies who just keep those subsidiaries as a kind of pocket over the people to throw out. I mean there are some companies who want to fix this issue. So I think there is -- we are not going to try to fix entire market. We are working on -- that's the issuers who are going to get on our proposals. So I think we do have a quite interesting chances to make some changes.

[Operator]

And we have another incoming question, which is coming from the line of Michael Herzig.

[Michael Herzig, analyst]

I just wanted to say, firstly, congratulations on some really strong results from the standpoint of your performance -- your key performance indicators. From my perspective, I don't think there's much more you could be doing to execute. It's been a very, very strong environment clearly for retail investment activity, and you seem to be benefiting from that in a challenging environment for commissions, and obviously, low interest rates -- 0 interest rates and not getting any interest income when your carry.

My question is, there -- you reported your results intraday, and you saw the reaction of your stock in the afternoon session. I'd just like to get your reflections on what you think is going on with the perception of the marketplace and the perception of the marketplace is not matching up to the reality of your strengthening fundamentals and very strong financial balances. And I'd also like to hear if you have any comment on the potential for consolidation activity to begin in the very fragmented domestic market. I'm not sure if you saw, but there was a story in the [ Nike ] that ran about a day ago about SBI acquiring a small broker code [indiscernible]?

[Oki Matsumoto, executive]

Okay. First of all, thank you very much for your wise. That means to me. And I, myself, I actually got very disappointed to see today's afternoon session, our share price action. It was -- I felt it was unfair. The -- I guess the last several days because of the expectation for the online broker sector, and also as regard to us, because the Bitcoin price kind of soared last few days. And then there are some kind of imagination that the -- we may produce a very good result in Coincheck, which is -- we reported something good, but like last couple of days, action is not the first quarter results. It's a July number. But there are some -- the gap in the expectation. And then the old news out and maybe some investors who bought up the market decided to take profit.

But anyway, today's price action was very disappointing to me because I thought that our result is quite strong, solid, very balanced and well structured. It's not just we are lucky, we did all good operation to capture this opportunity. And also we're doing new initiatives very strongly. I don't know the Japanese -- it's code of the Japanese investors, I don't know the -- at the end of the day, we just need to show the steady results, continuous results. On the contrary, our PBR is unfortunately like 0.8, but by providing solid results and future perspective, we should make it back to 1 and then to like 2. PBR being 1 is our share price by next JPY 300, and the PBR 2 mean like JPY 600. We have to aim to go the range. But anyway, today, after the price action was not good.

But I don't think that is the, how do you say, in the constant, how do you say, I don't think -- I think it's just kind of a short-term trader, just the bolt up and then to profit out. That's all.

As regard to consolidation, I think that will continue to happen. But Divested is very, very short. Remember that SBI bought [Foreign Language] a real asset management like a couple of months ago. And then the shareholder of [indiscernible], the same shareholder of the [indiscernible].

So if we -- I created a relationship with this shareholder when they acquired [indiscernible], I believe. And then this Divested is a very, very small, small company. But I think there will be more -- those, how do you say, rolling up of the small broker deals into the large houses, both in online and online broker like us or SBI to roll up the small broker and they make it into IFA or the someone like Nomura. I don't think someone like Nomura is going -- is interested in loading up those are small houses. It'll be more like online guys, including us to our product a small brokers and make it into IFA. That will probably continue to happen, I think.

And as regard to -- among the large online brokers, SBI, Rakuten, Monex will stay independent. Mostly, I don't know with the management changes, I'm not clear what is going to happen. And coins.com, it's not listed anymore, but you saw that their results will just disaster us. They know some sort of, how do you say, the management kind of discipline or whatever. But as regard to -- among SBI, Rakuten, let's see, Monex, I don't think the whole consolidation is going to be [indiscernible] for a while.

[Michael Herzig, analyst]

Okay. I think your comment about your stock price activity makes sense kind of buy the dream, sell the news, particularly given the move in crypto in the last couple of weeks. I know you can't comment on your July activities, but do you see your recent trends of keeping up with market share and market activity continuing in July?

[Oki Matsumoto, executive]

Yes. The entire trading volume level of July has started coming down a little bit this latter part of July, but still it's holding up in Japan. And in the States, actually, it is really holding up compared to like average of the first quarter. So overall -- I'm also hoping good. And crypto obviously, we did the BTC already. We started seeing a very good transaction volume happening in the Coincheck. So the overall activity there for Monex Group is quite good.

[Operator]

And we have one more incoming question, which is coming from the line of Takashi Ito.

[Unknown Analyst]

I'm [ Maximo Tasahi ] on for Takashi Ito of ARGA Investment. And last year, in May, when I met you in New York City, I think we were discussing about how the retail investor experiences should go towards a more social media gaming type experience. And after that, I realize that such a company exists in the U.S. called Robinhood. And this company has recently had a $8 billion valuation in the private markets. So looking at the speed and scale of Robinhood's valuation, of course, the U.S. market has 3x the population of Japan. But I feel that this valuation gap is a very interesting way of looking at opportunity. So I'm wondering Matsumoto san, how you feel about this opportunity that maybe Robinhood is showing us?

[Oki Matsumoto, executive]

Okay. I would like to ask John to add comments after me as well. But the -- yes, the -- unfortunately, the -- somehow the valuation for the Japanese shares different from valuation the U.S. shares or U.S. private equities. And the TradeStation should have much more -- I mean, entire Monex, altogether, including Coincheck and the Monex and TradeStation only rank us $600 million. But obviously, TradeStation alone could -- was the same. And if you look at like Robinhood, it can grow further. That is kind of the financial engineering wise, we need to -- or we hope to somehow unlock that variation. But currently, we are somehow in a sense trapped, and we will continue to work on -- of course, showing the strong result is the most important. But we try to work on how we present ourselves or if there is any good other way to unlock the valuation, we will pass to that. John, can you add your perspective?

[John Bartleman, executive]

Yes, definitely. So Robinhood was a great example of how to activate this young audience in the U.S. So they were the first really successful firm that offered commission-free trading. And it is with their more tech and West Coast appeal and the early social networking and influencer campaigns that they ran with, got them off in a trajectory that the other brokers in the U.S. really couldn't match. So they've done a tremendous job at that, but they've scaled at a point where, obviously, we've seen in this last 2 quarters seems significant regulatory issues on their side as well as technical issues. So definitely the growing pains going on there, but they're really able to tap into something.

In this, we agree completely with the idea of building a more social media network type effect in providing that more of a community environment and gamification. So it's something we've definitely been focused on here on the U.S. side and want to drive more growth. I mean, from a valuation perspective, it's interesting how they'll be able to monetize the customer base that they bring on board. They have a lot of really small customers it, but we'll see the success, but definitely something that we're trying to leverage. And like I said, trying to unlock some of that value because we are seeing similar types of effects and growth trajectory, but those guys are able to unlock some really amazing potential. So we'll see.

[Unknown Analyst]

Can I ask you if you feel there's any difference between you and Robinhood in terms of software capability, marketing capability? And thirdly, whether there are regulatory restrictions that make it hard for you to do what Robinhood is doing in the Japanese market?

[John Bartleman, executive]

So I mean what they tapped into, like I said, this young audience, and they just caught fire, and they've got now the brand recognition and with that younger audience. So it's something we definitely look to try to replicate. And from a technology and offering perspective, there's really not a lot of difference. I would say, Robinhood perfected the simplicity and that was one of the things that they started with. Now they -- like I said, they're run running into a lot of technical issues and scaling this and regulatory issues with how they've been structured and handling that growth. But there's really no -- I mean, we feel we have more capabilities. Obviously, we come from the more high-end of the market with analytics capabilities that they just don't have. But with a younger audience is just getting used to this, they don't know that they need the tools that we have. So it's how do we sort of step into that funnel and have these customers graduate up to a platform and product offering more like a TradeStation. So that's the challenge we're faced with and trying to solve.

[Oki Matsumoto, executive]

One thing, as regard to applying Robinhood model into Japanese market is not easy because we do not have a payment for order flow in Japan. And with that payment for order flow, Robinhood model doesn't work. So in Japan, free commission model doesn't really work. It has to be premium or you're going to have to add some sort of the margin lending and then charge interest on that and such and such. So that makes the model a little bit different. That is one difference between Robinhood and that kind of thing in Japan.

[Operator]

We don't have anymore incoming questions.

[Oki Matsumoto, executive]

Okay. Thank you very much. And it's -- as we said, we feel confident level of ourselves is much higher than before. As regard to produce the current profit as well as to build the business for the future. Unfortunately, it's not -- it doesn't seem to be evaluated in the market, but that may be creating interesting opportunities as well. But anyway, we will keep working hard on our business plans. And if you have any further questions, opinions, criticism or whatever, please come to us, and we are more than happy to discuss with you. Thank you very much.

[Operator]

Thank you very much, everyone. That concludes your conference call for today. You may now disconnect. Thank you for joining, and enjoy the rest of your day.