Ly Corporation · TSE:4689
Ly — Z Holdings — FY2019 Earnings Presentation
64 slides from Ly's earnings presentation, Apr 30, 2020
Slide 1: Z Holdings Corporation FY2019 Full Year & Q4 Business Results
Z Holdings Corporation FY2019 Full Year & Q4 Business Results April 30, 2020 Security Code: 4689
Slide 2: Table of Contents
Table of Contents 1 FY2019 Summary 2 Business Topics 3 FY2020 Management Policy 4 Appendix
Slide 3: FY2019 Summary
FY2019 Summary
Slide 4: Announcement made at beginning of FY2019
Announcement made at beginning of FY2019 Re: Earnings Slides (FY2018 Full Year) 3
Slide 5: In FY2019, created the future in an unparalleled scale
In FY2019, created the future in an unparalleled scale: organizational restructuring, launch of new services, etc. Q1 Q2 Q3 Q4 Tie-up with SBI Signed DA for business integration Group with LINE Consolidation by Holding company SoftBank structure Tie-up with YAMATO HD Consolidation of ZOZO Mall Flea
Slide 6: Increase in both revenue and income for FY2019 (full year)
Increase in both revenue and income for FY2019 (full year) FY2019 Item FY2018 YoY Initial guidance Actual result Revenue 954.7 (¥B) Over ¥1 T 1.05 (¥T) +10.3 % Operating income 140.5 (¥B) 140.6 to 150.0 (¥B) 152.2 (¥B) +8.4 % EBITDA *1 199.6 (¥B) - 235.6 (¥B) +18.0 % Equity in earnings of associates
Slide 7: KPI for Q4 favorable despite increased impact of COVID-19
KPI for Q4 favorable despite increased impact of COVID-19 Item FY2018 Q4 FY2019 Q4 YoY Revenue 247.1 (¥B) 293.3 (¥B) +18.7 % Operating income 20.8 (¥B) 28.7 (¥B) +37.8 % EC transaction value (Merchandise) 479.0 (¥B) 611.1 (¥B) +27.6 % Shopping business 204.2 (¥B) 323.7 (¥B) +58.5 % Reuse business 20
Slide 8: FY2020 Impact of COVID-19 (Commerce business)
FY2020 Impact of COVID-19 (4/1－4/26 cumulative) Commerce business Present impact (4/1－4/26 cumulative) Response policy • Increase in demand due to “Stay Home” consumption • Bolster sales of XS (Cross- Merchandise ► Transaction values of Shopping) Engine* EC Yahoo! JAPAN Shopping + PayPay Mall:Approx
Slide 9: FY2020 Impact of COVID-19 (Media business)
FY2020 Impact of COVID-19 (4/1－4/26 cumulative) Media business Present impact (4/1－4/26 cumulative) Response policy • Swift delivery of reliable information • Time spent by logged-in users via smartphones: Media • Enhance enjoyable “Stay Home” Approx. +32% YoY content Demand decrease • Travel: Appro
Slide 10: Strength of Z Holdings Group – Diversified businesses and services
Strength of Z Holdings Group – Diversified businesses and services Business model that can generate stable earnings despite uncertainties EC Merchandise EC Merchandise Others Others Shopping Travel Real Estate Mall Premium Games Flea Market etc. Revenue composition Media （FY2019） News Search Media e
Slide 11: Preparing ourselves for various scenarios
Preparing ourselves for various scenarios; aim to realize mid-long business plans FY2020 Mid-long business plans Detect impact from COVID-19 ASAP; build Swift decision making to accommodate internal system that can immediately Management rapid changes in the industry. respond to changes in environme
Slide 12: Swift & optimal delivery of needed information and services
Current measures for COVID-19 Swift & optimal delivery of needed information and services Quick delivery of needed information Supporting users’ daily lives …and many more Prioritized shipping COVID-19 curation website “Stay Home Portal” useful antiseptics to medical for self-isolation institutions
Slide 13: Business Topics
Business Topics
Slide 14: Commerce Business
Commerce Business 13
Slide 15: FY2019 Commerce Business – KPI Results
FY2019 Commerce Business – KPI Results Item Actual result YoY Major measures / Major factors of change EC transaction value 2.59 (¥T) ＋14.3 % Merchandise*1 2.14 (¥T) ＋14.4 % • Expanded due to: • Consolidation of ZOZO (5 months) Shopping business 1.03 (¥T) ＋34.5 % • Launch of PayPay Mall • Excluding
Slide 16: FY2019 E-commerce business
FY2019 E-commerce business In addition to business base expansion, profitability improved Operating income, one of the largest among EC operators in Japan Transaction value Operating income (excl. financial & payment business) (¥ T) (¥ B) 2.59 80.1 2.26 YoY 61.3 YoY +14.3% +30.6% FY2018 FY2019 FY201
Slide 17: Commerce Business
Commerce Business
Slide 18: New e-commerce strategy around logistics
New e-commerce strategy around logistics More benefits to both “Sellers” and “Buyers” Logistics strategy Support for constructing EC website External provision of Tie-up with YAMATO HD X（Cross）Shopping XS（Cross-shopping）engine Provision of fulfillment service Display inventory of physical store
Slide 19: Commerce Business
Commerce Business
Slide 20: Synergy effect with ZOZO
Synergy effect with ZOZO After opening of “ZOZOTOWN” in PayPay Mall, new buyers and transaction value of fashion category both increased Fashion category – New buyers* Fashion category – Transaction value Predominantly No. 1 among all stores Merchant Merchant Merchant Merchant Merchant A B C D E FY2
Slide 21: Future synergies with ZOZO
Future synergies with ZOZO Collaborate in various fields leveraging enormous synergy potentials Item Expected impacts • Capturing of PayPay users Introduction of Scheduled • Reduction of cost for payment commissions in Q2 Short term PayPay utilizing group companies Collaborations with • Promote use
Slide 22: Commerce Business
Commerce Business
Slide 23: PayPay – KPI
PayPay – KPI Exponential growth in 1 ½ years since service launch No. of PayPay No. of merchants* No. of registered users payments (quarter) （quarter-end) (quarter-end) April 26 April 22 375 mil Exceeded 2.2 mil 2.15 mil Exceeded 28 mil 27 mil Approx. Approx. Approx. 17X 4.2X 4.5X YoY YoY YoY 0.5 mi
Slide 24: PayPay – Financial service
PayPay – Financial service Launched ”PayPay Atobarai* (Lump-sum payment) “ to some users ► Service provided by YJ Card Corporation ► Commission at settlement ¥300 (tax inclusive) per month ► For lump-sum payments only Currently commission waived (2020/4/15 – 7/31) To be provided to all users from su
Slide 25: On its way to a super app
On its way to a super app Link with internal/external services to enhance super app functions Launched PayPay Mall, Providing simulated investment Tie-up with Uber Eats PayPay Flea Market mini apps experience by smartphone securities, (4/1 - ) One Tap BUY (4/15 - ) May Sequentially introduce PayPay
Slide 26: Commerce Business
Commerce Business
Slide 27: Strongly promote “Scenario Finance”
Finance to be our third revenue pillar next to media and commerce Strongly promote “Scenario Finance” leveraging own services Provide financial products according to user action scenarios Car Mall Navigation (YAHUOKU!) Finance Finance Finance Finance Finance Cancellation Installments Repair insuranc
Slide 28: Media Business
Media Business 27
Slide 29: FY2019 Total Advertising Revenue - Results
FY2019 Total Advertising Revenue - Results Actual results YoY Item Major measures / Major factors of change (¥B) (YoY difference ¥B) • Result for Q4: ¥93B (YoY+9.3%) Total advertising revenue 341.0 ＋5.3 % (+17.1) Both paid search advertising and display advertising grew strongly • Improvement in dis
Slide 30: Media Business
Media Business
Slide 31: Collaborations with SoftBank
Collaborations with SoftBank (From FY2019 2H) In addition to acquisition of new clients, ad placements increased from existing ad clients Major projects Uplift effect in FY2019 2H New ad placement proposals to SoftBank clients Approx. ¥ 4.4B *2 New ad placement proposals to Yahoo! JAPAN clients*1 *1
Slide 32: Future deployment of integrated marketing solution
Future deployment of integrated marketing solution Personalization using accumulated data Use of group assets Provide advanced marketing solution services FY19 Q3 PayPay Consumer Gift FY19 Q3 Yahoo! JAPAN Job Search NEW NEW FY19 Q4 PayPay Retail Gift FY19 Q3 Yahoo! JAPAN BEAUTY Sales promotion CRM f
Slide 33: FY2020 Management Policy
FY2020 Management Policy
Slide 34: Management policy
Management policy A year in which many seeds were planted to create FY2019 the future (e.g. organizational restructuring, launching of many new services, etc.) FY2020 A year to nurture the seeds planted in FY2019 33
Slide 35: Focus areas
Focus areas 1 Promotion of portfolio management 2 Strengthening of tie-ups with SoftBank 3 Business integration with LINE 4 Appropriate financial discipline 34
Slide 36: Promotion of portfolio management
1) Promotion of portfolio management Providing 100+ services through group companies 35
Slide 37: Business model that can only be realized by the Z Holdings Group
1) Promotion of portfolio management Business model that can only be realized by the Z Holdings Group Commerce Media Monetization points base Integrated E-commerce Advertising marketing Membership O2O Finance solution Royalty Data solution Business Media/search EC transaction Payment traffic value t
Slide 38: Strengthening of tie-ups with SoftBank
2) Strengthening of tie-ups with SoftBank Establish/strengthen unparalleled business model with “Telecommunication carrier × Internet service” Range of services Mutually link customer base of both companies based on Yahoo! JAPAN ID User engagement ►Increase service use by SoftBank users ►Promote Bey
Slide 39: Business integration with LINE
3) Business integration with LINE March 17, 2020 Extraordinary Meeting of the Shareholders Proposal: Approval of share exchange agreement Results of Approved votes and approval ratio 99.68 % From presentation for the shareholders’ meeting Integration process underway/No changes in transaction terms
Slide 40: Appropriate financial discipline
4) Appropriate financial discipline Manage financial leverage to maintain Control investment & expenditure current credit rating Rating and Investment Japan Credit Rating • Suspend inessential expenditures for Information （R&I） Agency (JCR) the time being A+ Maintain AA- ► Against budget, cut cost b
Slide 41: Preparing ourselves for various scenarios
Impact of Covid-19 Again Preparing ourselves for various scenarios; aim to realize mid-long business plans FY2020 Mid-long business plans Detect impact from COVID-19 ASAP; build Swift decision making to accommodate internal system that can immediately Management rapid changes in the industry. respon
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 Full-scale Business provision of Full deployment of “Scenario Finance” integration integrated marketing with LINE solution
Slide 43: Unleashing the infinite potential of all people
Unleashing the infinite potential of all people, with the power of information technology
Slide 44: Appendix
Appendix
Slide 45: FY2019 Factors of Change in Consolidated Operating Income
FY2019 Factors of Change in Consolidated Operating Income Item Amount (¥B) YoY Major factors of change FY2018 Results 140.5 • Increase due to consolidation of ZOZO ＋57.4 (¥B) Revenue +98.2 +10.3 % • Advertising revenue +14.9 (¥B) • ASKUL Group +13.6 (¥B) • ASKUL Group +9.3 (¥B) Cost of sales +15.5 +
Slide 46: FY2019 Impact from Consolidation of ZOZO
FY2019 Impact from Consolidation of ZOZO Consolidated from Nov 2019 Item ZOZO FY2019（5 months） FY2019 (excl. ZOZO) YoY Revenue 57.4 (¥B) 995.4 (¥B) +4.3 % Operating income *1 8.9 (¥B) 143.3 (¥B) +2.0 % Net income 5.7 (¥B) 82.2 (¥B) +5.7 % Net income attributable to owners of the parent 2.8 (¥B) 78.7
Slide 47: FY2019 Q4 Consolidated Income Statement
FY2019 Q4 Consolidated Income Statement Item FY2018 Q4 FY2019 Q4 YoY Revenue 247.1 (¥B) 293.3 (¥B) +18.7 % Operating income 20.8 (¥B) 28.7 (¥B) +37.8 % EBITDA *1 41.1 (¥B) 53.6 (¥B) +30.2 % Other non-operating income and expenses -0.2 (¥B) -1.7 (¥B) n.a. Equity in earnings of associates and joint ve
Slide 48: FY2019-Q4 Statement of Financial Position
FY2019-Q4 Statement of Financial Position Consolidated (IFRS) The Japan Net Bank, Limited (JGAAP) YJ Card Corporation (JGAAP) FY2018 FY2019 FY2018 FY2019 FY2018 FY2019 (¥ B) Difference (¥ B) Difference (¥ B) Difference Q4 Q4 Q4 Q4 Q4 Q4 Assets 2,429.6 3,933.9 1,504.3 Assets 878.7 995.5 116.8 Assets
Slide 49: Financial index: CAPEX and Adjusted FCF
Financial index CAPEX Adjusted FCF (¥ B) (¥ B) 112.5 219.8 7.4 Impact of ZOZO 75.5 consolidation* 83.8 25.0 Right-of- -22.6 use assets -98.0 Operating CF -282.5 80.0 Investment CF Adjusted FCF -502.3 FY2018 FY2019 FY2018 FY2019 Note: Excludes banking business. * Includes right-of-use assets of ZOZO,
Slide 50: Financial index: Net interest-bearing debt and leverage
Financial index Interest-bearing debt/Net interest-bearing debt Net leverage ratio (Excludes banking business) (Excludes banking business) Lease liabilities EBITDA Securitization 1,086.4 5,800 Net interest-bearing debt 521.5 2.50 Loan 117.5 - Net leverage ratio Bond 4,800 Approx. 2.1 x 2
Slide 51: Major funding
Major funding Balance Category Events Purpose/effect Timing FY2019 Q4 Bank loan Syndicated loan Acquisition of ZOZO shares ¥389.1B*1 Nov. 2019 Funding using Securing of new joint management Working capital ¥55.5B Nov. 2019- funding method money trust Securitization of Securitization credit card Work
Slide 52: New Corporate Structure
New Corporate Structure From Y to Z — Structure that creates a greater future President & Representative Director Kentaro Kawabe President & President & Representative Representative Director Director Kentaro Kawabe Tomoaki Tanida ・・・ Commerce Commerce business Consolidated subsidiaries Group compan
Slide 53: Image of Our Long-Term Revenue Composition
Image of Our Long-Term Revenue Composition We 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 Paid search advertising, display advertising (ex
Slide 54: Operating Income – Long-Term Outlook
Operating Income – Long-Term Outlook Businesses to be strengthened (Shopping advertising, Integrated marketing FY19 ー FY22 solution, Financial & Payment, Membership, Reuse business) Advertising income – base (Paid search advertising, display advertising) By investing in measures to expand users
Slide 55: 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 Restaurant estate boo
Slide 56: 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 57: Business Segment Breakdown
Business Segment Breakdown Advertising Display advertising (“Premium Advertising”), 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 services an
Slide 58: 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, Yahoo! JAPAN Travel, O2O Yah
Slide 59: Advertising Products
Advertising Products Advertising Products Main Format Fee Calculation Placement Pages Main Advertiser Base Paid search Search results Sponsored Search® Text advertising pages Per-click rate Major corporations (Performance-based) *2 Text Banner Small and medium-sized companies Yahoo! JAPAN YDN and Di
Slide 60: PayPay – Business Model
PayPay – Business Model Maximize the base and develop various earning pillars O2O Ads Finance Z Holdings domain Accumulate data＋Increase balance PayPay domain No. of merchants Online linkage/ No. of users No. of payments offline merchants 59
Slide 61: PayPay Corporation – Capital structure
PayPay Corporation – Capital structure May 2018（At founding） May 2019 As of end of March 2020 Shareholding ratio Shareholding ratio Shareholding ratio Yahoo Japan 50 % 25 % 25 % SoftBank 50 % 25 % 25 % Common stock SoftBank Group - 50 % 50 % Total 100 % 100 % 100 % Yahoo Japan - - 50 % SoftBank - -
Slide 62: Business Integration with LINE
Business Integration with LINE Post-integration structure Exchange Ratio 1 ： 11.75 50% 50% JV （LINE） No. of Z Holdings shares before/after share exchange General 4.8 B shares ▶ 7.7 B shares shareholders 34.7% 65.3% Integrated company ー All incremental shares are issued to JV 100% 100% ー No. of treas
Slide 63: 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) and its consolidated subsidiaries and affiliates. The Company cautions you that a number of
Slide 64: Unleashing the infinite potential of all people
Unleashing the infinite potential of all people, with the power of information technology