Ly Corporation · TSE:4689
Ly — Z Holdings — FY2020 Q2 Earnings Presentation
63 slides from Ly's earnings presentation, Oct 30, 2020
Slide 1: Z Holdings Corporation Business Results FY2020 Q2
Security Code: 4689 Z Holdings Corporation Business Results FY2020 Q2 (July – September) October 30, 2020
Slide 2: FY2020 Q2 Financial Results – Topics
FY2020 Q2 Financial Results – Topics Revenue YoY +15.4%; operating income YoY +20.5% Q2 Financial • Leveraged our diversified business portfolio, taking advantage of various results group companies and services • Results for H1 (Apr - Sep): Revenue YoY +15.1%; op. income YoY +29.8% • Out of EC trans
Slide 3: Table of contents
Table of contents 1 FY2020 Q2 Financial Results 2 Business Topics 3 Investment Policy and Measures in H2
Slide 4: Consolidated Results
Consolidated Results
Slide 5: FY2020 Q2 Consolidated income statement
FY2020 Q2 Consolidated income statement Increase in revenue and operating income Item FY2019 Q2 FY2020 Q2 YoY Revenue 245.5 (¥B) 283.3 (¥B) +15.4 % Operating income 39.4 (¥B) 47.6 (¥B) +20.5 % EBITDA 57.8 (¥B) 71.7 (¥B) +24.0 % Equity in earnings of associates and joint venture*1 -5.0 (¥B) -3.4 (¥B)
Slide 6: FY2020 H1 Consolidated income statement
FY2020 H1 Consolidated income statement Increase in revenue and op. income also in H1 Item FY2019 H1 FY2020 H1 YoY Revenue 484.1 (¥B) 557.2 (¥B) +15.1 % Operating income 75.6 (¥B) 98.2 (¥B) +29.8 % EBITDA 111.9 (¥B) 147.1 (¥B) +31.5% Equity in earnings of associates and joint venture* -10.9 (¥B) -7.
Slide 7: FY2020 H1 – Summary
FY2020 H1 – Summary Offset impact of COVID-19 by various services Market condition/changes in H1 Our Group’s status New buyers/stores in Yahoo! JAPAN • Broader use of e-commerce Shopping/PayPay Mall E-commerce • Decrease in travel-related demand Decrease in O2O transaction value → rapid recovery → r
Slide 8: Leveraged our diverse business portfolio
FY2020 H1 – Summary Leveraged our diverse business portfolio, taking advantage of various group companies and services 7
Slide 9: Approx. 90% working from home
Yahoo Japan Corporation – Total shift to new work style presupposing online workplace since Oct 1 Aim to further improve operational productivity under the new work style Ad placed in nation-wide newspapers (July 16) Approx. 90% working from home*1 Operational productivity*2 Results of employee surv
Slide 10: Business Topics
Business Topics
Slide 11: Commerce Business
| Commerce Business
Slide 12: FY2020 Q2 Commerce business – KPI results
FY2020 Q2 Commerce business – KPI results Q2 Actual results Item YoY Major measures/Major factors of change (¥B) EC transaction value 784.9 +29.8 % Merchandise transaction value 599.9 +24.4 % • Expanded due to consolidation of ZOZO (Excluding ZOZOTOWN Main Store: YoY+12.0%) Shopping business transac
Slide 13: Commerce Business
Commerce Business
Slide 14: Yahoo! JAPAN Shopping, PayPay Mall – Status
Yahoo! JAPAN Shopping, PayPay Mall – Status Large increase in no. of new buyers and new stores amidst COVID-19 New buyers* Applications for new stores YoY +38.0% YoY +34.0% H1 H1 H1 H1 FY2019 FY2020 FY2019 FY2020 * Users who have no purchase history in Yahoo! JAPAN Shopping and PayPay Mall in the la
Slide 15: Promotion of PayPay STEP (loyalty program)
Promotion of PayPay STEP (loyalty program) Max. 20% bonus provided based on use of multiple services ＋ Increase in % ¥ ¥ ¥ ¥ ¥ ¥ of bonus granted Linkage between Premium Using 3+ Using PayPay & Other benefits member services credit card Yahoo! JAPAN ・ ・・ Shopping － +2% +1% +1% +α Better buys in Yaho
Slide 16: Promotion of PayPay STEP (loyalty program)
Promotion of PayPay STEP (loyalty program) Strengthen sales promotion to users of multiple services, and expand PayPay Ecosystem Increase in transaction value EC Payment Finance PayPay Ecosystem × 33 mil* Loyalty program Increases in Increases in active no. of payments/ Membership card holders/credi
Slide 17: X (Cross) Shopping – Status
X (Cross) Shopping – Status Inventories in brick and mortar stores will be available for purchase in PayPay Mall (November) Introduced/scheduled to be introduced (As of end of September) 8,622 offline stores 66 tenants Examples of companies to which X Shopping is introduced* Pick up also NEW possibl
Slide 18: Strengthening of delivery/logistics
Strengthening of delivery/logistics Leverage improved logistics and clearly label pre-defined “Blue Ribbon Delivery" in UI/UX Scheduled to be launched within FY2020 Shopping Mall Definition of Blue Ribbon Delivery Highly convenient delivery for users ▶ Quick delivery NEW (Blue Ribbon Delivery) ▶ Man
Slide 19: Commerce Business
Commerce Business
Slide 20: O2O business – Results
O2O business – Results Quickly recovering backed by "Go To Travel" campaign O2O business transaction value (Ikyu.com, Yahoo! JAPAN Travel, Yahoo! JAPAN Loco, Pass Market) FY2020 Q2 Transaction value +60.0% (¥B) Transaction value YoY Growth rate +53.3% 200 YoY ＋53.3% +32.0% 180 +40.0% +30.3% 160 +20.
Slide 21: PayPay / Z Financial
y=)PayPay Z financial
Slide 22: Scenario finance initiative – Status
Scenario finance initiative – Status Steadily increased after launch of scenario-type insurance services (YAHUOKU!) Travel Smartphone/home Hotel cancellation appliance repair warranty insurance Purchased by 10% of eligible users* Launched Launched in in FY20 Q1 FY20 Q2 Aim to achieve 200,000 contrac
Slide 23: PayPay – KPI
– KPI Accelerated growth resulting from penetration of cashless payment due to COVID-19 No. of PayPay payments No. of merchants* No. of registered users (quarter) (quarter-end) (quarter-end) Oct 19 Surpassed 33 mil 5.1X 486.56 mil 1.7X 2.56 mil 2.2X 32.46 mil YoY YoY YoY 1.55 mil 14.74 mil 96.12 mil
Slide 24: Bank (current JNB) – Effects of linkage with PayPay
Bank (current JNB*) – Effects of linkage with PayPay Steady increase in new openings of accounts and use of service No. of applications for personal No. of new personal accounts No. of new corporate accounts loans made via PayPay May 28 via JNB via PayPay via JNB via PayPay Released PayPay mini app
Slide 25: Multi-partnership strategy
– Multi-partnership strategy Enrich services through collaborations with financial services of other companies and provide diverse options for our users Securities Credit card A Securities A Card FOREX Bank A FX A銀行 B Securities B Card A Bank B FX B銀行 B Bank Asset management Insurance A Asset Manage
Slide 26: Media Business
| Media Business
Slide 27: FY2020 Q2 Total advertising revenue – Results
FY2020 Q2 Total advertising revenue – Results Q2 Actual Item YoY Major measures/Major factors of change results (¥B) Total advertising revenue 83.8 +2.0 % • Decrease in ad placements due to COVID-19 (FY20 Q2 YoY -¥6.3 B) • Ad placements from some industries are recovering but demand still remains sl
Slide 28: Media Business
Media Business
Slide 29: Consolidation of mybest, Inc.
Consolidation of mybest, Inc. Create synergies in multiple fronts by strengthening “product comparison media” Consolidated Synergy areas June 2020 Provision External Increase in of services referral Company profile ad revenue Established October 2016 Content Representative Toru Yoshikawa Media Artic
Slide 30: Integrated Marketing Solution – Overview/status
Integrated Marketing Solution – Overview/status New marketing based on “who is interested in what” Overview of Integrated Marketing Solution Sales promotional solution New service that integrates ads and sales promotions E-commerce seamlessly (from announcement to encouraging purchase Media/Ads Sear
Slide 31: Sales promotional solution – PayPay Consumer Gift
Full-scale rollout of sales promotional solution – PayPay Consumer Gift Capturing the digital shift in manufacturers’ sales promotional budget Manufacturers Yahoo Japan Users Sales promotion of products Increase in advertising revenue Purchase products Reduction in cost of user Visualization of ad e
Slide 32: Sales promotional solution – PayPay Retail Gift
Full-scale rollout of sales promotional solution – PayPay Retail Gift “Buyer Targeting”; a new feature added to PayPay Retail Gift Promotes repeat purchase by targeting identified past buyers Purchase promoted item in specified store First campaign (Pay by PayPay) Purchase PayPay Retail Gift Yahoo!
Slide 33: Collaborations in ad sales with SoftBank Corp.
Collaborations in ad sales with SoftBank Corp. Positive effects of sales collaborations expanding even further Major measures in FY2020 Q2 More proposals to SoftBank Corp.’s top clients Revenue from synergies in FY2020 H1 More new proposals to clients * new to Yahoo Japan JPY 6.8 B Stronger online s
Slide 34: Outlook of Search Advertising & YDN
Outlook of Search Advertising & YDN Market in a recovery trend, but still expect severe conditions to continue Ad revenue by products（YoY growth rate） Outlook for H2 Search Advertising YDN YDN +14.0% +12.7% Uplift due to product improvements +12.4% Decrease in retargeting ads due to iOS14 +10.7% Pau
Slide 35: Investment Policy and Measures in H2
Investment Policy and Measures in H2
Slide 36: Expand focus areas aggressively for mid-long business growth
Further acceleration in digitalization of corporate/consumer activities due to COVID-19 and DX promoted by the Japanese government Expand focus areas aggressively for mid-long business growth 35
Slide 37: Current business conditions
Current business conditions Continuous investments necessary for mid-long business growth Shopping business transaction value No. of valid credit card holders/transaction value (YoY growth rate) (YoY growth rate) Valid credit card holders Transaction value +85.9% +61.0% +56.9% +48.8% +53.2% +58.5% +
Slide 38: Focus investment areas in H2
Focus investment areas in H2 Active investments in focus areas (mainly Commerce business) Increase loyal customers and EC (merchandise) repeat purchase Expand active card holders Credit card ・・・ Make additional bold investments for the future to be created 37
Slide 39: Example of investment made in H2
Example of investment made in H2 Shopping Payment/Financial "Cho PayPay Matsuri" Strengthen sales Change in benefits (Super PayPay Festival) promotion with launch of new services and （Oct 1-） （Oct 17- Nov 15） functions On Sundays only, PayPay Bonus Best deals using PayPay, also to non-SoftBank carri
Slide 40: FY2020 – Investment policies & full-year guidance
FY2020 – Investment policies & full-year guidance H1 Full-year guidance Suspend inessential expenditures and flexibly invest with an eye on business performance Revenue JPY1.14 T （YoY +8.3%） H2 Expand focus areas aggressively Op. income JPY160 B to refuel mid-long business growth （YoY +5.1%） 39
Slide 41: Business integration with LINE – Status
Business integration with LINE – Status Working towards completing the integration in around March 2021 Concluded Business Alliance LINE Successor succeeds LINE business MOU (Aug 3) SoftBank Corp. and through corporate demerger (Feb) NAVER J. Hub Acquired completed tender offer Share exchange with Z
Slide 42: Creating a large future that can only be shaped by Z Holdings
Creating a large future that can only be shaped by Z Holdings To be accomplished in FY2020 Business Expand/deploy Full-scale rollout of integrated scenario finance integration marketing with LINE solution
Slide 43: Appendix
Appendix
Slide 44: Factors of change in operating income
Factors of change in operating income Item Q2 (¥B) YoY Major factors of change (¥B) FY2019 Q2 Results 39.4 • Increase due to consolidation of ZOZO +32.7 Revenue +37.8 +15.4 % • YJ Card +2.2 • eBOOK +2.1 Cost of sales +1.9 +1.9 % Increase due to consolidation of ZOZO +1.7 SG&A +27.8 +27.0 % Increase
Slide 45: FY2020 Q2 Impact from consolidation of ZOZO
FY2020 Q2 Impact from consolidation of ZOZO Consolidated from Nov 2019 Item ZOZO FY2020 Q2 (¥B) FY2020 Q2 (excl. ZOZO) (¥B) YoY Revenue 32.7 250.6 +2.1 % Operating income *1 6.1 41.4 +4.9 % Net income 4.1 22.8 -7.7 % Net income attributable to owners of the parent 2.0 20.9 -11.8 % *1 Reflects amorti
Slide 46: FY2020 Q2 Statement of financial position
FY2020 Q2 Statement of financial position Consolidated (IFRS) The Japan Net Bank, Limited (JGAAP) YJ Card Corporation (JGAAP) FY2020 FY2020 FY2020 FY2020 FY2020 FY2020 (¥B) Difference (¥B) Difference (¥B) Difference Q1 Q2 Q1 Q2 Q1 Q2 Assets 3,980.3 4,112.2 131.8 Assets 1,109.3 1,230.2 120.8 Assets 5
Slide 47: Financial data – CAPEX and Adjusted FCF
Financial data CAPEX Adjusted FCF (¥B) (¥B) Impact of ZOZO consolidation Operating CF 216.3 Right-of-use assets Investment CF Property & equipment/Intangible assets - Adjusted FCF 234.3 29.9 8.0 18.7 0.3 0.3 11.6 21.8 18.0 -32.3 -18.0 -20.7 FY2019 Q2 FY2020 Q2 FY2019 Q2 FY2020 Q2 Note: Exc
Slide 48: Financial data – Net interest-bearing debt and leverage
Financial data Interest-bearing debt/Net interest-bearing debt Net leverage ratio (Excludes banking business) (Excludes banking business) (¥B) 6,000 (¥B) 2.50 Lease liabilities 1,176.7 EBITDA Approx. 1.98 x 523.2 Securitization 104.0 5,000 Net interest-bearing debt 2.00 Loan Net leverage r
Slide 49: Major funding activities
Major funding activities Amidst market uncertainties due to COVID-19, issued a total of ¥200 B corporate bonds Refinanced the funding for acquiring ZOZO, and secured stable sources of funds Series Amount (¥B) Interest rate Redemption 14th Series Unsecured Bonds (1.5 year bond) 25 0.20 % Dec. 2021 15
Slide 50: PayPay Corporation – Capital structure
PayPay Corporation – Capital structure (shareholding ratio) May 2018 As of end of As of end of As of end of After conversion of preferred stocks （At founding） May 2019 Mar 2020 Sep 2020 & Yahoo Japan 50 % 25 % 25 % 25 % Paytm’s exercise of stock option*2 SoftBank 50 % 25 % 25 % 25 % Yahoo Japan 32 %
Slide 51: Business integration with LINE
Business integration with LINE Post-integration structure Exchange Ratio 50% 50% 1 ： 11.75 General shareholders JV （LINE） No. of Z Holdings shares before/after share exchange 34.7% 65.3% Integrated company 4.8 B ▶ 7.7 B shares shares 100% 100% - All incremental shares are issued to JV Succeeding - N
Slide 52: Z Holding's group structure
Z Holding’s group structure President & Representative Director Kentaro Kawabe President & President & Representative Representative Director Director Kentaro Kawabe Tomoaki Tanida ・・・ Commerce Commerce business Consolidated subsidiaries Group companies directly under Business (E-commerce, Finance,
Slide 53: Business segment breakdown
Business segment breakdown Advertising Display advertising (Programmatic, reservation), ZOZO ASKUL, ZOZO, Affiliate-related services, Reservation-related services, Corporate system-use fees of Business Services YAHUOKU!, Payment-related services, Banking-related services, Credit card-related service
Slide 54: Definition of EC transaction value
Definition of EC transaction value YAHUOKU!, PayPay Flea Market, Reuse business ZOZOUSED Yahoo! JAPAN Shopping, Shopping business PayPay Mall, ZOZOTOWN, LOHACO, Charm Merchandise ASKUL BtoB Other Yahoo! JAPAN Tickets, EC transaction value (Merchandise) Ouchi-Direct Ikyu.com, Yahoo! JAPAN Travel, O2O
Slide 55: Advertising products
Advertising products Advertising Products Main Format Fee Calculation Placement Pages Type of Advertiser Search Search results Yahoo! JAPAN Ads “Search advertising” Text advertising pages Cost per-click Text Top page Major Yahoo! JAPAN Ads corporations/SMEs Banner Interior pages of “Display ads” ser
Slide 56: Z Holdings - Service map
Z Holdings - Service map Media Commerce Digital Contents ebookjapan Shopping Auction Fortune telling Game TOP page Weather/Disaster News Finance (Digital books) PayPay PayPay Mall Flea Market Sportsnavi GYAO! O2O Knowledge search (Sports news site) (Video streaming) Real Travel Loco estate booking Z
Slide 57: Image of our long-term revenue composition
Image of our long-term revenue composition Will continue to grow while drastically changing our revenue composition to meet the changes in the business environment Data solution Fintech E-commerce Integrated marketing solution, shopping advertising Search advertising, display advertising (excl. shop
Slide 58: Operating income – Long-term outlook
Operating income – Long-term outlook Businesses to be strengthened (Shopping advertising, Integrated marketing solution, Financial & Payment, Membership, Reuse business) - FY2022 Advertising income – base (Search advertising, display advertising) Invest in measures to expand users and EC transac
Slide 59: Released Integrated Report Portal
Released “Integrated Report Portal” Financial/non-financial information useful for investment decisions will be updated at a suitable timing Vision and Strategy Value Creation Business Performance Sustainability URL:（English） https://www.z-holdings.co.jp/integrated-report/en/ （Japanese）https://www.z
Slide 60: Materiality matrix for Z Holdings Group
Materiality matrix for Z Holdings Group The numbers and colors in the matrix 11 17 coincide with the SDG icons. Solving social Corporate Issues with 9 governance IT Data 4 Quality Education security 11 17 Disaster measures/ 8 9 Recovery support 5 Gender Equality Level of stakeholder concern Health &
Slide 61: Overall picture of CSR, Materiality, and our four UPDATEs
Overall picture of CSR, Materiality, and our four UPDATEs Contribution to Risk Reduction Value Creation Stakeholders the SDGs • E-commerce for • Data security/network convenient & #01 Industry, reliability comfortable life Developing 9 Innovation and Users • Minimization of • Driving a fintech socie
Slide 62: Disclaimer
Disclaimer Statements made at the meeting or included in the documents that are not historical facts are forward-looking statements about the future performance of Z Holdings Corporation (Company, Z Holdings, ZHD) and its consolidated subsidiaries and affiliates. The Company cautions you that a numb
Slide 63: Unleashing the infinite potential of all people
Unleashing the infinite potential of all people, with the power of information technology