Japan-based Monex Group says that TradeStation and crypto losses caused its revenue drop

Japanese financial services company, Monex Group, recently released its financial result for the third quarter of the fiscal year 2023.  According to the report, the nine-month period between April 2022 and December 2022 has brought a significant drop in the company’s profits. However, the report also pointed out that the fault lies with the crypto and TradeStation business.

According to the press release, the operating income reached ¥69,691 million ($16,127 million), which is a 15.8% drop YoY. Meanwhile, the quarterly net profit also saw a drop, this time even more painful, coming in at 85.2% YoY. The final number resulted in a drop to ¥1,853 million.

The company also saw a drop in basic earnings per share, which fell from ¥48.19 in 2021 to ¥7.27. Monex also saw a drop in its shares listed on the Tokyo Stock Exchange, where they fell by over 40% throughout 2022. This is not really a surprise, given that most technology companies and investment service providers saw the same problem.

On the plus side, early 2023 has brought a rebound that has caused many to become optimistic about the future.

The crypto segment had the largest negative impact

In the report, the company split its business into three main segments – the Japanese segment, the US segment, and the crypto assets segment. In the Japanese segment, the profits have been fairly stable, while the US segment has brought significant improvement in earnings during 2022. However, the crypto segment recorded a massive loss due to the year-long crypto winter.

Now, the company expects that the crypto market will see a recovery, which will mean that its crypto segment will join the Japanese and US segments in a solid performance.

As for TradeStation, Monex noted that it recorded a loss of ¥3,808 million between April and December 2021. However, in 2022, the loss was ¥2,089 million. While it is still quite sizable, the company has noted that there is a serious improvement compared to the figures of the year before and that this improvement comes from its mid-year change of strategy.

When the cost of remodeling the business strategy is removed from the profits, the remaining profit is still at ¥1,000 million. Meanwhile, profitability went up, partially because of the cost reductions and partially because of higher financial income that was driven by interest rate hikes. All in all, it translated into favorable results for Japanese operations.

The impact of the crypto sector still had the strongest influence on the firm’s overall performance, as the company dropped from ¥14,942 million in profits to ¥748 million YoY.