Ly Corporation · TSE:4689
Ly — Z Holdings — FY2019 Q3 Earnings Presentation
76 slides from Ly's earnings presentation, Feb 5, 2020
Slide 1: Z Holdings Corporation FY2019-3Q Business Results
Z Holdings Corporation FY2019-3Q Business Results February 5, 2020 Security Code: 4689
Slide 2: Table of Contents
Table of Contents 1 FY2019-3Q Financial Results 2 Business Topics 3 Strategic Measures 4 Appendix 1
Slide 3: FY2019-3Q Financial Results
FY2019-3Q Financial Results
Slide 4: FY2019-3Q Consolidated Income Statement
FY2019-3Q Consolidated Income Statement Item FY2018-3Q FY2019-3Q YoY Revenue 242.5 (¥B) 275.4 (¥B) +13.6 % Operating income 36.5 (¥B) 47.8 (¥B) +30.9 % EBITDA *1 50.2 (¥B) 70.1 (¥B) +39.6 % Equity in earnings of associates *2 -6.2 (¥B) and joint venture -9.1 (¥B) n.a. Net income 14.6 (¥B) 26.9 (¥B)
Slide 5: FY2019-3Q Factors of Change in Consolidated Operating Income
FY2019-3Q Factors of Change in Consolidated Operating Income Op. income growth exceeded 30% (the first in 11 quarters), due also to ZOZO Item Amount (¥B) YoY Major factors of change (¥B) FY2018-3Q Results 36.5 • Increase due to consolidation of ZOZO +24.1 Revenue +32.8 +13.6 % • Advertising revenue
Slide 6: FY2019-3Q Impact from Consolidation of ZOZO
FY2019-3Q Impact from Consolidation of ZOZO Consolidated from Nov. Item ZOZO FY2019-3Q（2 months） FY2019-3Q (excl. ZOZO) YoY Revenue 24.1 (¥B) 251.3 (¥B) +3.6 % Operating income *1 4.2 (¥B) 43.6 (¥B) +19.3 % Net income 2.8 (¥B) 24.1 (¥B) +64.8 % Net income attributable to owners of the parent 1.4 (¥B
Slide 7: Business Base: Each business base showing YoY growth
Business Base Each business base showing YoY growth No. of Time spent by logged-in EC transaction value Credit card transaction value monthly logged-in user IDs users via smartphones* ¥690.4B ¥568.7B 50.11Mil IDs 2B hours YoY +15% YoY +61% YoY +6% YoY +20% Q 3 4 1 2 3 4 1 2 3 4 1 2 3 Q 3 4 1 2 3 4 1
Slide 8: FY2019 Expected Full Year Results (Consolidated Basis)
FY2019 Expected Full Year Results (Consolidated Basis) Op. income: higher end of guidance due to consolidation of ZOZO Net income: near the lower end of guidance due to PayPay’s active investments (4Q) Item FY2019 (Full year guidance) FY2019 (Expected full year results) YoY Revenue Over ¥1 T ¥1.04 T
Slide 9: Business Topics
Business Topics
Slide 10: Commerce Business
Commerce Business 9
Slide 11: FY2019-3Q Commerce Business – Uses
FY2019-3Q Commerce Business – Uses Business base growing steadily Membership Finance O2O Item Details O2O transaction value grew ＋16% YoY 3 3 despite impact of typhoons and O2O consumption tax hike Credit card transaction value grew 2 ＋61% YoY Payment backed by cashless rebate program 2 Payment Base
Slide 12: FY2019-3Q Commerce Business – KPI Results
FY2019-3Q Commerce Business – KPI Results Item Actual result YoY Major measures / Major factors of change EC transaction value 690.4 (¥B) ＋14.6 % Sale of goods 578.1 (¥B) ＋14.9 % • Approx. +7% growth excluding impact from Shopping business 295.2 (¥B) ＋36.6 % consolidation of ZOZO (2 months) • Expand
Slide 13: Our Shopping Business vs. Retail Market
Our Shopping Business vs. Retail Market Our transaction value surpassed market growth, despite consumption tax hike （%） 40 Item Amount YoY Shopping business 30 transaction value (excl. ZOZOTOWN 232.0 (¥B) +7.4 % 20 main store) 10 Item YoY 0 Retail sales value* -3.8 % -10 July Aug Sep Oct Nov Dec Sho
Slide 14: FY2019 Commerce Business – Targets and Expected Results
FY2019 Commerce Business – Targets and Expected Results (Full Year) Expecting to surpass high initial targets partly due to consolidation of ZOZO Item Full year initial targets Full year expected results EC transaction value ＋Double-digit % +13-15 % (Sale of goods) Shopping business +20 % +30 % Nega
Slide 15: FY2019-3Q Commerce Business – Breakdown of Operating Income
FY2019-3Q Commerce Business – Breakdown of Operating Income % of non-Yahoo Japan companies in operating income increased due to ZOZO. Striving for a solid operating income base by maximizing group synergies ZOZO Breakdown of operating income for Commerce business (¥ B) Ikyu ZOZO (2 months from Nov.)
Slide 16: Commerce Business – Future Image of Our Shopping Business
Commerce Business – Future Image of Our Shopping Business E-commerce ecosystem that fulfills diverse needs Aim to become profitable by improving efficiency in sales promotions, etc. Consignment contract in fashion field Shopping Mall Cross-listing Marketplace that has *1 Safe store and items + easy
Slide 17: Commerce Business
Commerce Business
Slide 18: PayPay Mall
PayPay Mall Strict selection of stores Listing fee 3% Premium online shopping mall Mall 511 785 Note: PayPay Mall is a business of Yahoo Japan Corporation. (Launched in Oct.) （End of Dec.） “PayPay” is a registered trademark of Yahoo Japan Corporation. Companies that have not opened stores or listed
Slide 19: PayPay Flea Market
PayPay Flea Market Sales commission Cumulative downloads 10% Flea market app that allows simple and value-for-money deals using PayPay Exceeded 2 mil Free app download ranking in Japan Flea Market No.1 in shopping category Note: PayPay Flea Market is a business of Yahoo Japan Corporation. Source: Ap
Slide 20: Commerce Business
Commerce Business
Slide 21: ZOZOTOWN PayPay Mall Store – Flying Start
“ZOZOTOWN” PayPay Mall Store – Flying Start Transaction value steadily expanding since grand opening (Dec. 17) 6W ZOZO 5W Fashion category 4W Overwhelmingly NO. 1 3W 2W 1W Merchant A Merchant B Merchant C Merchant D Merchant E Merchant F Merchant G Note: Results of PayPay Mall + Yahoo! Shopping (Dec
Slide 22: ZOZOTOWN PayPay Mall Store – Buyers
“ZOZOTOWN” PayPay Mall Store – Buyers Acquiring new users as planned Breakdown of buyers Approx. 60 % of ZOZOTOWN NEW PayPay Mall buyers Main Store Existing New customers acquired after the are new customers customers opening of PayPay Mall Store for ZOZO 21
Slide 23: Segregation Between ZOZOTOWN Main Store and PayPay Mall Store
Segregation Between “ZOZOTOWN” Main Store and PayPay Mall Store Fueling growth with 2 engines, leveraging customer/business bases of both companies Focus measures Focus measures ZOZOTOWN Main Store PayPay Mall Store • Improve UI/UX • Expand categories (Shoes/ZOZOMAT) Mass market Fashion lovers segme
Slide 24: Growth Strategy
Growth Strategy Collaborate in various fields leveraging enormous synergy potentials Items Expected impacts • Capturing PayPay users Working as Introduction of Short term • Reduction of cost for payment commissions PayPay utilizing group companies one team, we Collaborations • Promote use by SoftBan
Slide 25: Commerce Business
Commerce Business * ASKUL
Slide 26: ASKUL: Working together to further enhance corporate value
ASKUL Working together to further enhance corporate value Management Structure Results Feb. 5 ASKUL Group Board of directors resolved proposal on new 3Q Operating income ¥1.5 B（YoY +175%） independent directors Note: After eliminations for consolidated statements March 13 Extraordinary shareholders
Slide 27: Media Business
Media Business 26
Slide 28: FY2019-3Q Media Business – Uses
FY2019-3Q Media Business – Uses 3 Paid search Display advertising Growing mainly in smartphones advertising YDN, etc. Premium ads Brand Item Details Panel YDN ＋6% YoY growth Prime Total advertising Display 3 revenue Shopping Others Advertising Time spent by 2 logged-in users via +20% YoY growth smar
Slide 29: FY2019-3Q Total Advertising Revenue - Results
FY2019-3Q Total Advertising Revenue - Results Actual results YoY Item Major measures / Major factors of change (¥B) (YoY difference ¥B) ＋5.7% Total advertising revenue 87.6 (+4.6) +6.0 % Paid search advertising 43.8 • Successful results from improvement in display options (+2.4) ＋5.3 % Display adver
Slide 30: FY2019 Media Business – Targets and Expected Results
FY2019 Media Business – Targets and Expected Results (Full Year) Business sluggish in 1H, but catching up in 2H. Total advertising expected to be within target range. (Decrease in ad placements due to novel coronavirus pneumonia is taken into account) Items Full year initial targets Full year expect
Slide 31: Media Business
Media Business
Slide 32: Integrated Marketing Solution
Integrated Marketing Solution Releasing products that can visualize advertising effects User actions Encounter Search Visit store Purchase (Pay) ＜Fields＞ Paid-search Advertising Display ads Digital ads (Online) Integrated marketing solution Visit PayPay PayPay measurement Sales Coming Consumer Gift
Slide 33: Integrated Marketing Solution — Monetization and Visualization
Integrated Marketing Solution — Monetization and Visualization of Advertising Effects Marketing that merges online with offline, and visualizes effects Monetization Visualization of advertising effects ＜Online＞ ＜Offline＞ ＜Payment＞ Display advertising Sales promotion Premium ads PayPay Consumer Gift
Slide 34: New product – PayPay Retail Gift
New product – PayPay Retail Gift Sales Promotion • Campaigns notified on online ads in Yahoo! JAPAN services prompt users to purchase products in participating stores. • Users enter a lottery draw on the campaign website, and go to the participating 2nd Initiative Released on Jan.14 PayPay Retail Gi
Slide 35: Strategic Measures
Strategic Measures
Slide 36: Strategic Measures: PayPay
Strategic Measures p>) PayPay
Slide 37: PayPay – KPI
PayPay – KPI Business base expanding steadily, backed by cashless rebate program No. of PayPay No. of merchants No. of registered users payments (quarter) （quarter-end) (quarter-end) Surpassed 100 mil 285.95 mil Approx. 1.91 mil 1.85 mil Surpassed 24 mil 22.43 mil in January alone as of end of Janua
Slide 38: PayPay – Rankings
PayPay – Rankings Ranked high in various rankings App ranking Usage ranking of cashless payment Rank Type Usage rate App Store 1 Credit card 84.8% Best of 2019 Next to credit cards, 2 PayPay 37.2% No. 2 in No.1 Top Free App 3 WAON 34.7% ranking 4 nanaco 32.7% usage rate 5 Prepaid card 32.6% 6 Suica
Slide 39: PayPay – Campaign Measures
PayPay – Campaign Measures Conducting strategic campaigns with new campaigns aimed at bringing cashless payments closer to consumers 2018 2019 2020 Payments made with PayPay Balance at Dec.～ Feb.～ Jun.～ Oct.～ Feb./Mar.～ participating restaurants receive 40% cashback 1st 2nd Wakuwaku campaigns New ca
Slide 40: PayPay – Aspiration
PayPay – Aspiration Promote financial services, our focus area for 2020, under a “multi-partner” strategy Offline Utility bill + Tax Online/O2O Convenience store Hair salon Utility charge Tax EC Taxi Hotel Air ticket Restaurant Retail shop Drugstore Mobile phone bill Ticket Movie ticket 2020 Focus a
Slide 41: Business Integration with LINE
Business Integration with LINE 40
Slide 42: Outline of Business Integration with LINE
Outline of Business Integration with LINE In the process of business integration Structure after business integration Schedule Concluded definitive Dec. 23, 2019 integration agreement on business integration 50% 50% JV （LINE） Jan. 31, 2020 Concluded stock exchange Minority shareholder agreement 65.3
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: FY2019-3Q Cumulative Consolidated Income Statement
FY2019-3Q Cumulative Consolidated Income Statement FY2018-3Q FY2019-3Q Item YoY (cumulative) (cumulative) Revenue 707.5 (¥B) 759.6 (¥B) +7.4 % Operating income 119.6 (¥B) 123.5 (¥B) +3.2 % EBITDA *1 158.4 (¥B) 182.0 (¥B) +14.9 % Other non-operating income and expenses 0.6 (¥B) *2 9.6 (¥B) +1330.3 %
Slide 46: FY2019-3Q Statement of Financial Position
FY2019-3Q 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 4Q 3Q 4Q 3Q 4Q 3Q Assets 2,429.6 3,927.1 1,497.5 Assets 878.7 996.7 118.0 Assets
Slide 47: 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 48: Z Holdings – Business Model
Z Holdings – Business Model Business model with variety and scalability Commerce Media E-commerce Integrated Advertising Membership O2O Finance Paid search Royalty marketing Monetization Display points Data solution No. of payments/transaction value Time spent by logged-in users Base EC transaction
Slide 49: 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 50: 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 51: 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 52: Z Holdings – Service Map
Z Holdings – Service Map ヤフーのサービスマップ Media Commerce Digital Contents ebookjapan Shopping Auction Fortune telling Game TOP page Weather/Disaster News Finance (Digital books) PayPay PayPay Sportsnavi GYAO! Mall Flea Market O2O Knowledge search (Sports news site) (Video streaming) Real Travel Restauran
Slide 53: Business Portfolio
Business Portfolio The size of the circles illustrates revenue size. Red circles: businesses of Yahoo Japan Corporation; blue circles: businesses of consolidated subsidiaries Disclosed segments Commerce business Media business EC Finance Others Media Breakdown Sales of goods Service Yahoo! Paid Adve
Slide 54: 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 55: Definition of EC Transaction Value
Definition of EC Transaction Value YAHUOKU!, PayPay Flea Market, Reuse business*1 ZOZOUSED Yahoo! Shopping, Shopping business PayPay Mall, ZOZOTOWN, LOHACO, Charm Sale of goods ASKUL BtoB Other EC transaction value Yahoo! Tickets, Ouchi-Direct (Sale of goods) Ikyu, Yahoo! Travel, O2O Yahoo! Dining S
Slide 56: 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 Yahoo! Display Ad Banner Small and medium-sized Network compani
Slide 57: PayPay – Business Model
PayPay – Business Model Maximize the base and develop various earning pillars O2O Ads Finance Yahoo Japan domain Accumulate data＋Increase balance PayPay domain No. of merchants Online linkage/ No. of users No. of transactions offline merchants 56
Slide 58: 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 59: Z Holdings
Z HOLDINGS
Slide 60: Z Holdings and LINE to Combine with Equal Spirit
Security Code：4689 Z Holdings and LINE to Combine with Equal Spirit Reference: Reposts of slides used in previous announcements November 18, 2019
Slide 61: Our Vision
Our Vision Provide the Best User Experience in Japan World-leading AI Tech Company Based in Japan and Asia 60
Slide 62: Our Business Model
Our Business Model Maximize user actions with the power of AI No.1 No.1 # of Users # of Corporate Clients Matching needs through AI Conversion No.1 Payment E-Commerce O2O Advertising 61
Slide 63: Best Combination with Complementary Product and Service Portfolios
Best Combination with C o m p l e m e n t a r y Product and Service Portfolios Wide Reach Deep Engagement Largest Media Service Largest Communication Service User Base MAU 67.4 mil people * MAU 82.0 mil people * *Source: Nielsen “TOPS OF 2018: DIGITAL IN JAPAN”, *Source:2019/12 3Q Earnings Report To
Slide 64: Major Pillars for Synergy Strategies
4 Major Pillars for Synergy Strategies Marketing Business Expansion in User Base New Business ／ Fintech Business System Development 63
Slide 65: Marketing Business: Scale Expansion and New Business Opportunities
Marketing Business Scale Expansion and New Business Opportunities Further strengthen market position in Accelerate initiatives in domestic Internet Ads Market Integrated Marketing Solution Sales Promotion 22% 30% • One-stop brand new service combining from advertisement to sales promotion, bringing
Slide 66: Expansion in User Base
Expansion in User Base Giant leap in transaction value by integration of LINE users and ZHD’s E-Commerce services Expansion of E-Commerce Business MAU 82.0 mil people Massive Referral Traffic 65
Slide 67: Fintech Business
Fintech Business Maximize the Base and Develop Pillars for Fintech Business Bank Security／FX Insurance Credit Card Line Bank Preparatory Corp No. of cumulative No. of cumulative registered users registered users Base 20.0 mil 36.9 mil （As of Nov. 17th 2019） （As of Sep. 30th 2019） 66
Slide 68: Accelerate and strengthen AI development
New Business ／ System Development Accelerate and strengthen AI development fundamental base of all service line-up AI Base Resources (Engineers) Know-How (Experience) * Services listed above show our major services (not covering all the services) 67
Slide 69: Accelerating the Mid-Long Term Growth
A c c e l e r a t i n g t h e M i d - L o n g Te r m G r o w t h Japan/Asia based AI Tech Company Creating the Future by enhancing group synergies Consolidated Revenue of No.1 AI Tech Company in Approx. 1.2(¥T) Japan and Asia 207.1(¥B)（Jan. 2018～Dec. 2018） 954.7 (¥B) （Apr. 2018～Mar. 2019） FY18 将来 Fu
Slide 70: Post-Merger Corporate Governance
Post-Merger Corporate Governance Valuing Corporate Governance with Equal Spirit in Conformity with the Principles of the CG Code Internal Directors Independent Outside Directors Z Holdings Z Holdings Corp. Z Holdings Corp. President and CEO Director Kentaro Kawabe Takao Ozawa LINE LINE Corp. LINE Co
Slide 71: Leadership at New Z Holdings
Leadership at New Z Holdings President, Representative Director Representative Director and Co-CEO and Co-CEO Kentaro Kawabe Takeshi Idezawa 70
Slide 72: Post-Merger Corporate Structure (Planned)
Post-Merger Corporate Structure (Planned) Consolidated （telecom） 50% 50% ＜Governance＞ ■Internal Directors：6 ‐ZHD：3 JV Other Shareholders ‐LINE：3 ■Independent Outside Directors：4 Listed on the New 1st Section of TSE 71
Slide 73: Transaction Structure Summary
Tr a n s a c t i o n S t r u c t u r e S u m m a r y Current Structure Step1 LINE to be unlisted through TOB Cash Cash 55.4% 44.6% 27.4% 72.6% 27.4%→ % 0 Minority Minority Minority Shareholders Shareholders Shareholders LINE Shares LINE Shares Listed Minority Shareholders Listed *The structure is pa
Slide 74: Transaction Structure Summary
Tr a n s a c t i o n S t r u c t u r e S u m m a r y Step２ Step3 Z Holdings Shares owned by SBKK to be transferred to LINE Share exchange and LINE Business to be integrated under Z Holdings 50% 50% LINE Shares Consolidated or Cash Private JV（old LINE） ZHD Shares ZHD Shares Private Minority Sharehold
Slide 75: Timeline (Planned)
Ti m e l i n e ( P l a n n e d ) Oct. 2020 Now end of 2019 - beginning of 2020 (Target) Jan. 2020 - Sep. 2020 Announcement Signing of DA Close (MOU) Various applications/examination/procedures • Anti-Trust Law（Japan/Korea/Taiwan/U.S. etc.） • Corporate Reorganization; TOB 74
Slide 76: Z Holdings
Z HOLDINGS