Ly Corporation · TSE:4689
Ly — Z Holdings — Q3 FY2020 Earnings Presentation
51 slides from Ly's earnings presentation, Feb 3, 2021
Slide 1: Business Results FY2020 Q3 (October – December)
Security Code: 4689 Z Holdings Corporation Business Results FY2020 Q3 (October – December) February 3, 2021
Slide 2: FY2020 Q3 Financial Results – Topics
FY2020 Q3 Financial Results – Topics In Q4, we will make increasingly aggressive investments mainly in e-commerce and payment businesses. Full year outlook: Revenue JPY1.14 T (YoY+8.3%); op. income JPY160 B (YoY+5.1%) Revenue YoY +14.9%; operating income YoY -8.1% Q3 Financial • Revenue increased in
Slide 3: Table of contents
Table of contents 1 FY2020 Q3 Financial Results 2 Results by Business Segments/Topics 3 Business Integration with LINE
Slide 4: Consolidated Results
Consolidated Results
Slide 5: FY2020 Q3 Consolidated income statement
FY2020 Q3 Consolidated income statement Item FY2019 Q3 FY2020 Q3 YoY Revenue 275.4 (¥B) 316.5 (¥B) +14.9% Operating income 47.8 (¥B) 43.9 (¥B) -8.1% EBITDA 70.1 (¥B) 79.5 (¥B) +13.4% Equity in earnings of associates and joint venture*1 -6.2 (¥B) -2.7 (¥B) N.A. Net income attributable to owners of th
Slide 6: FY2020 Q3 Factors of change in operating income
FY2020 Q3 Factors of change in operating income Decreased due to aggressive investments, retirement loss from the system renewal in the credit card business, etc. (¥B) Increase in marketing expense due to aggressive +6.2 investments Loss on +15.3 +2.8 retirement of fixed assets Increase in other ZOZ
Slide 7: FY2020 H2 Status & outlook of aggressive investments
FY2020 H2 Status & outlook of aggressive investments Taking a more aggressive stance in Q4, capture growth opportunities mainly in Commerce business Q3 Q4 Sales activity Sales activity Field Details of investment/Investment effect Investment plan cost* (YoY/¥B) cost* (YoY/¥B) Total +10.8 Around +21.
Slide 8: FY2020 Consolidated business results - Guidance
FY2020 Consolidated business results - Guidance Aim for full year operating income of JPY160 B FY2020 full year guidance FY2020 Q4 Op. income outlook（QoQ） Commerce (¥B) No change in guidance business: Decrease in Increase in 43.9 gross income Media marketing expenditures business: Revenue Decrease i
Slide 9: Results by Business Segments/Topics
Results by Business Segments/Topics
Slide 10: Commerce Business
| Commerce Business
Slide 11: FY2020 Q3 Commerce business transaction value – Results
FY2020 Q3 Commerce business transaction value – Results Q3 Actual Item YoY Major measures/Factors of change results (¥B) EC transaction value 918.2 +33.0% Merchandise 697.8 +20.7% • Strengthened sales promotional activities (e.g. "Cho PayPay Matsuri”) Shopping business 394.7 +33.7% • Impact of conso
Slide 12: Commerce Business
Commerce Business
Slide 13: Yahoo! JAPAN Shopping, PayPay Mall – Status
Yahoo! JAPAN Shopping, PayPay Mall – Status Steady increase in no. of new buyers and average spending per buyer as a result of investments Ave. spending per buyer New buyers* (new & existing buyers) YoY +40.7% YoY +3.1% Q3 Q3 Q3 Q3 FY2019 FY2020 FY2019 FY2020 * Users who have no purchase history in
Slide 14: Yahoo! JAPAN Shopping, PayPay Mall – Status
Yahoo! JAPAN Shopping, PayPay Mall – Status In-house payment ratio reached the highest with disciplined investments Shopping advertising take rate*1 & In-house payment ratio*3 Ratio of sales activity cost*2 Shopping advertising take rate % of sales activity cost 60.1% 57.0% 54.8% 53.9% 52.1% Introdu
Slide 15: Commerce Business
Commerce Business
Slide 16: ZOZO, Inc.
ZOZO, Inc. Growth accelerating after joining ZHD Group GMV*1 Operating profit*2 New service: Technology × Fashion 20.0 (¥B) YoY (¥B) YoY 160 +126% 150% 140% Consolidation of +26% 140 ZOZO, Inc. +20% 100% To be launched on +13% 120% 15.0 +69% +73% March 18, 2021 (plan) 120 +0% +3% +34% 50% 100% 100 1
Slide 17: PayPay
y=)PayPay Z financial
Slide 18: PayPay – KPI
– KPI Steady expansion in user base and no. of merchants No. of PayPay payments No. of merchants* No. of registered users (quarter) (quarter-end) (quarter-end) Surpassed 35 mil (Jan.4) 1.8X 507.14 mil 1.5X 2.86 mil 1.6X 34.91 mil YoY YoY YoY 1.85 mil 22.43 mil 285.95 mil Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q
Slide 19: PayPay Securities
PayPay Securities (former One Tap BUY *Changed name on February 1) Will further expand financial services under PayPay brand Securities New account opening campaign underway PayPay mini app “Earn Bonus” Planning to expand new services with a focus on investment trusts Cumulative users exceeded 1.9 m
Slide 20: Media Business
| Media Business
Slide 21: FY2020 Q3 Total advertising revenue – Results
FY2020 Q3 Total advertising revenue – Results Q3 Actual Item YoY Major measures/Factors of change results (¥B) Total advertising revenue 93.4 +6.7% • Demand recovered in some industries (general online retailing/real estate/ automotive) • Demand continued to decrease in some industries (travel/job/f
Slide 22: Q4 Outlook by Business Segments
Q4 Outlook by Business Segments
Slide 23: FY2020 Q4 Outlook by business segments
FY2020 Q4 Outlook by business segments Item YoY Major measures/Factors of change EC transaction value (Merchandise) Around +10% • Strengthen additional sales promotional measures, expand loyalty program “PayPay STEP” Shopping business +Mid-20% • Wind down in the effect of consolidating ZOZO, Inc. •
Slide 24: Business Integration with LINE
Business Integration with LINE
Slide 25: Business integration with LINE – Status
Key message: 経営統合スケジュールは3月完了に変更はない Business integration with LINE – Status Working towards completing the integration in March 2021 2019 2021 Dec • Concluded DA on business Jan • Tender offer of ZHD shares by integration LINE Corporation 2020 Feb • LINE Successor succeeds LINE Aug • Concluded Busine
Slide 26: Business integration with LINE – Structure
Key message: 取引スキームやストラクチャーは当初予定から変更なし Business integration with LINE – Structure Transaction scheme & structure remain unchanged Post-integration structure through share exchange Share exchange ratio 50% 50% 1 ： 11.75 General shareholders JV （LINE） 34.7% ZHD shares 65.3% No. of ZHD shares issued be
Slide 27: Business integration with LINE – Recognition of goodwill and PPA
Business integration with LINE – Recognition of goodwill and PPA Goodwill to be recorded will vary depending on the acquisition cost of LINE Successor, etc. Assets Liabilities & Equity Acquisition Net assets cost Goodwill (ZHD share price*1 ) × (No. of ZHD shares to be Intangible fixed assets delive
Slide 28: Unleashing the infinite potential of all people
Unleashing the infinite potential of all people, with the power of information technology
Slide 29: Appendix
Appendix
Slide 30: Factors of change in operating income
Factors of change in operating income Item Q3 (¥B) YoY Major factors of change (¥B) FY2019 Q3 Results 47.8 • ZOZO +18.1 (Consolidated from November 2019) • ASKUL Group +9.5 Revenue +41.1 +14.9% • Advertising +3.1 • Ikyu +2.3 • eBOOK +2.1 • ASKUL Group +6.0 Cost of sales +7.1 +6.8% • eBOOK +1.0 • Adv
Slide 31: Impact from consolidation of ZOZO (Goodwill, PPA)
Impact from consolidation of ZOZO (Goodwill, PPA) Item Amount (¥B) Amount amortized (¥B) Goodwill 212.9 ― Amortization Item Amount (¥B) period (Straight line) Customer base 322.0 18-25 years (Shops/users) 3.3 PPA 502.1 (FY2020 Q3) Trademark* 178.7 ― Others 1.4 4 years * Indefinite-lived intangibles.
Slide 32: FY2020 Q3 Statement of financial position
FY2020 Q3 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 Q2 Q3 Q2 Q3 Q2 Q3 Assets 4,112.2 4,299.4 187.2 Assets 1,230.2 1,315.1 84.8 Assets 44
Slide 33: Financial data: CAPEX and Adjusted FCF
Financial data CAPEX Adjusted FCF (¥B) (¥B) Right-of-use assets Operating CF Investment CF Property & equipment/Intangible assets - Adjusted FCF 14.8 23.7 -35.4 -8.9 31.8 11.9 18.5 -397.7 1.3 17.3 19.9 -433.1 FY2019 Q3 FY2020 Q3 FY2019 Q3 FY2020 Q3 Note: Excludes banking business. Securitiza
Slide 34: Financial data: Interest-bearing debt and net leverage
Financial data Interest-bearing debt & Net interest-bearing debt Net leverage ratio (Excludes banking business) (Excludes banking business) (¥B) (¥B) Lease liabilities Securitization Loan EBITDA Net interest-bearing debt Bonds - Net interest-bearing debt - Net leverage ratio 3.50 1,177.7
Slide 35: Major funding activities
Major funding activities Refinanced the funding for acquiring ZOZO, Inc. 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 15th Series Unsecured Bonds (3 year bond) 80 0.35% Jun. 2023 16th Series Unsecured B
Slide 36: PayPay Capital structure (shareholding ratio)
– Capital structure (shareholding ratio) May 2018 As of end of 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 Dec 2020 & Yahoo Japan 50% 25% 25% 25% 25% Paytm’s exercise of stock option*2 SoftBank 50% 25% 25% 25% 25% Yahoo Japan 3
Slide 37: Collaborations in ad sales with SoftBank Corp.
Collaborations in ad sales with SoftBank Corp. Revenue from Major measures in FY2020 Q3 synergies in FY2020 Q3 Increase in proposals to SoftBank Corp.’s top clients Increase in new proposals to clients new to Yahoo Japan JPY 4.4 B* (FY2020 Q2: JPY3.7 B) Designing of DX packages for local governments
Slide 38: 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 39: Definition of EC transaction value
Definition of EC transaction value YAHUOKU!, PayPay Flea Market, Commerce business Reuse business ZOZOUSED Yahoo! JAPAN Shopping, PayPay Mall, Shopping business ZOZOTOWN, LOHACO, Charm Merchandise ASKUL BtoB Other Yahoo! JAPAN Tickets, (Merchandise) Ouchi-Direct EC transaction value Services Ikyu.co
Slide 40: 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 41: Z Holdings – Service map
Z Holdings – Service map Media Local Information Commerce O2O Weather/ TOP page News Finance Shopping Auction Real estate Travel Loco Disaster Transit information Knowledge Sportsnavi GYAO! PassMarket Maps PayPay Mall PayPay Flea Market Tickets search (Sports news site) (Video streaming) (Ticket sal
Slide 42: 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 43: 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 44: Released Integrated Report Portal
Released “Integrated Report Portal” Financial/non-financial information useful for investment decisions will be updated as needed Vision and Strategy Value Creation Business Performance Sustainability URL: (English) https://www.z-holdings.co.jp/integrated-report/en/ (Japanese) https://www.z-holdings
Slide 45: 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 46: 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 47: Carbon neutral initiatives
Carbon neutral initiatives (Announced: January 19, 2021) Aim to achieve neutrality well ahead of Japanese government’s “2050 Carbon Neutral” goal ZHD Group to announce Pursue early membership in ▶ mid-long environmental goals RE100 renewable energy initiative*1 by the end of FY2021 Declared “FY2023
Slide 48: Acknowledgment as a sustainable company
Acknowledgment as a sustainable company Named for the first time to DJSI World Index, a leading global index of ESG investment ◆◆◆ Also selected as Industrial Leader ◆◆◆ in Interactive Media, Services & Home Entertainment sector Received the highest evaluation in the following categories: Governance
Slide 49: Acknowledgment as a sustainable company
Acknowledgment as a sustainable company MSCI Japan Empowering FTSE4Good Index Series FTSE Blossom Japan Index ISS ESG Corporate Rating Women Index (WIN) 2020 Health & Productivity Stock Selection & Digital Transformation Stocks SNAM Sustainability Index 2020 Certified Health and Productivity (DX Sto
Slide 50: 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 51: Unleashing the infinite potential of all people
Unleashing the infinite potential of all people, with the power of information technology