GMO Internet Group - Company History

Kumagai Masatoshi founded Voice Media in Setagaya, Tokyo in May 1991 to plan, build and sell equipment for two-way audio services running over NTT’s Dial Q2 premium-rate line — a billing network that charged callers by the minute and settled through the phone bill. In November 1995 he switched trades outright to internet access and renamed the company interQ. Signing up for a Japanese ISP then took weeks of paperwork, and nothing was sold by the minute; interQ reused the Dial Q2 rails so that a subscriber needed no mailed ID and no credit card, and was online at $0 (¥20) a minute.

The network behind it was rented, not built. Member firms and individuals installed and ran the access points and shared the connection revenue — a franchised ISP that reached 51 points of presence nationwide within six weeks while the capital spending stayed off interQ’s books. Hosting followed in November 1997, and with it a move to Shibuya. Six years in, the company had two subscription businesses that customers rarely cancel, and it was selling the line directly to the end user in an industry where advertising agencies and telephone companies had held that access.

In 1998, with revenue still in the low billions of yen, Kumagai wrote a 55-year plan: ¥10 trillion of sales and ¥1 trillion of ordinary profit by 2051. Most of his listed contemporaries published a first medium-term plan at IPO; GMO had a half-century of numbers while still private. The listing came in August 1999 — the first independent internet venture in Japan to go public, and one that met the earnings tests on its own operating profit rather than on a trading house’s or a carrier’s capital. A domain business started the following month, completing the access–hosting–domain stack that still sits under everything else.

In September 2000 the subsidiary MagClick — later GMO AD Partners, and later still GMO Internet, Inc. — listed on Nasdaq Japan at the Osaka exchange. Nine years from founding, the group already had two tiers of listed equity, and a way of funding growth that did not run through the parent’s balance sheet. In April 2001 the company renamed itself Global Media Online, folding the initials GMO into the corporate name, and the following month took Ile (now GMO GlobalSign Holdings) private-to-group by share exchange to deepen hosting.

Acquiring by share exchange became the habit, and the GMO brand spread across the subsidiaries as they were renamed. In February 2004 the parent moved from JASDAQ to the Second Section of the Tokyo Stock Exchange. A month later it bought into paperboy&co. (now GMO Pepabo), reaching the consumer end of hosting, and in September it acquired Card Commerce Service — the company that, renamed GMO Payment Gateway, would become the group’s single largest profit engine. The core of the next twenty years was assembled before anyone called it a core.

2005 was both the year the model set and the year it overreached. GMO Payment Gateway listed on Mothers in April, the parent reached the TSE First Section in June, and GMO Hosting & Security listed on Mothers in December — three group companies on Tokyo exchanges in a single year, each with its own share price to raise money and pay people with. In the same months GMO bought 94.28% of the consumer lender Orient Shinpan for $227.3M (¥25bn), committed roughly $254.2M (¥28bn) against a target of ¥50 billion in loan balances, and set up an online brokerage.

The premise under that purchase was then rewritten from outside. The December 2006 revision of the Money Lending Business Act abolished grey-zone interest, refund claims surged, and auditors required provisioning against ten years of past interest: $89.2M (¥11bn) was booked and another ¥20 billion was still needed. Revenue grew 37% to ¥50.8 billion in FY06 and the group still lost ¥12.1 billion; FY07 brought a net loss of $149.4M (¥18bn), the largest in its history. At the June 2007 interim, net assets fell from ¥19.5 billion to ¥7.7 billion and the equity ratio from 7.7% to 0.5% — a company that had listed on its own operating profit was standing just short of negative net worth.

In August 2007 GMO sold the lending business to its own managers in an MBO for a symbolic $44,833 (¥5m); counting unrecoverable loans and investments, the total loss came to about $339.6M (¥40bn). Kumagai raised cash where he could — roughly 10% of GMO Hosting & Security, the eBank stake, all of GMO Internet Securities — then, at the end of the year, contributed his own property in kind and borrowed $25.5M (¥3bn) personally to fund a $50.1M (¥6bn) capital increase. A founder repairing a listed company’s capital out of his own pocket is not a common event in Japan, and out of it came the rule that has governed every commitment since: never risk more than a third of assets.

What followed was eight years of rebuilding on the businesses that could not be rewritten by regulation. GMO Payment Gateway moved to the First Section in 2008 and Pepabo listed the same year; the brokerage that had been sold in 2007 was re-entered in 2010 through Click Securities, then widened with FX Prime in 2012. Four more subsidiaries listed between October 2014 and October 2015, bringing the group to seven listed companies. FY15 closed at $1.0B (¥126bn) of revenue and $122.3M (¥15bn) of operating profit, with infrastructure and security together producing 95% of that profit.

GMO went back into finance by a route it could survive. In 2016 it agreed with Aozora Bank to run an internet bank jointly and took a stake in Aozora Trust Bank; that became GMO Aozora Net Bank, which opened for business in July 2018. Crypto came in between — an exchange in September 2017, mining that December — and by 2018 payments, FX, a bank and crypto formed a financial stack around the infrastructure businesses.

Mining then tested the rule. Falling coin prices and semiconductor costs forced a special loss of $337.7M (¥37bn) in FY18 and a net loss of ¥20.7 billion, the worst since 2007. But the shape of the damage was different: operating profit that year reached a record ¥21.8 billion, because the subscription core had never been staked. The third-of-assets limit had held the new venture to a size the group could absorb, and the two-layer structure — bedrock businesses funded heavily, new fields capped — became the explicit form of GMO’s capital discipline. Acquiring YJFX (now GMO Gaika) in 2021 and issuing the GYEN and ZUSD stablecoins under US licences extended finance without repeating 2005.

The name caught up with the structure in September 2022, when the parent became GMO Internet Group — its fourth name, and one that had to distinguish it from the operating subsidiary already called GMO Internet. That April the TSE’s market reorganization had put the parent on the Prime Market and sorted nine subsidiaries across Prime, Standard and Growth. Cybersecurity was added by acquisition — Ierae Security in 2022, Flatt Security in 2024 — and GMO AI & Robotics Shoji followed in June 2024, positioned by Kumagai as “glue” between the AI and robot industries: infrastructure, not manufacturing.

In January 2025 the parent hived off everything it still operated — domains, cloud, hosting, ISP and ad media — into the former MagClick, which took the name GMO Internet, Inc. and moved to the Prime Market under its own code. The founding operating name passed down to a grandchild company and the parent became a holding company with no business of its own, so that decisions on AI and robotics would not queue behind running an ISP. FY25 closed at $1.9B (¥286bn) of revenue and $394.9M (¥59bn) of operating profit — a fifteenth consecutive year of revenue growth and a record operating profit, absorbing ¥9.5 billion of provisions and exit costs in Thai brokerage, across more than twelve listed subsidiaries.