Ly Corporation · TSE:4689
Ly — Z Holdings — Q1 FY2021 Earnings Presentation
77 slides from Ly's earnings presentation, Aug 3, 2021
Slide 1: FY2021 Q1 Business Results
Security Code: 4689 Z Holdings Corporation Business Results FY2021 Q1 August 3, 2021
Slide 2: FY2021 Q1 Financial Results – Topics
FY2021 Q1 Financial Results – Topics Revenue and income both increased, driven by the growth of Advertising/Commerce Businesses due to integration with LINE, etc. Revenue: JPY373.3 B (YoY +36.3%) – the highest first quarter revenue Adjusted EBITDA: JPY86.3 B (YoY+11.2%) • Group Total advertising rev
Slide 3: Table of Contents
Table of Contents 1 Topics/Consolidated Business Results – Whole Group 2 Topics/Business Results – By Segment 3 International Business Development 4 FY2021 Business Results Forecast
Slide 4: Table of Contents
Table of Contents 1 Topics/Consolidated Business Results – Whole Group 2 Topics/Business Results – By Segment 3 International Business Development 4 FY2021 Business Results Forecast
Slide 5: FY2021 Q1 Consolidated Business Results Whole Group
FY2021 Q1 Consolidated Business Results Whole Group • Both revenue and adjusted EBITDA increased due to positive impacts from integration with LINE, etc. Item FY2020 Q1 FY2021 Q1 YoY Revenue ＆ Adjusted EBITDA1 (Adjusted EBITDA Margin) (¥B) Revenue 273.8 (¥B) 373.3 (¥B) +36.3% 373.3 332.0 316.5 273.8
Slide 6: FY2021 Q1 Consolidated Business Results LINE
｜ FY2021 Q1 Consolidated Business Results1 LINE • Achieved operating profit, without one-time gains and losses, due to growth in the Advertising business and streamlining of marketing expenses, etc. • Continue to aim for full year operating profit by balancing the growth in the Advertising business
Slide 7: Whole Group – Total Advertising Revenue
Whole Group – Total Advertising Revenue Whole Group • In addition to impact of LINE integration, recovery in advertisers’ demand and digital shift in advertisers’ sales promotion & ad budgets, etc., drove revenue to JPY 133.3 B (YoY+68.4%) Group Total Advertising Revenue Group Total Advertising Reve
Slide 8: Whole Group – EC Transaction Value
Whole Group – EC Transaction Value Whole Group • Achieved JPY817.2 B (YoY+15.5%) due to expansion of each transaction value driven by LINE integration, etc. EC Transaction Value 1 EC Transaction Value - YoY Growth Rate (¥B) 918.2 9.2 +37.4% 816.3 817.2 +33.0% 784.9 9.9 211.1 41.4 9.5 86.5 +29.8% 707
Slide 9: Measures to Increase the No. of LINE Official Account
Measures to Increase the No. of LINE Official Account Whole Group • Began fully introducing LINE Official Account as Z Holding’s BtoC communication infrastructure • Aim to accelerate top-line growth in each business by increasing the no. of accounts Cross-sell to Yahoo Japan Ad Clients Introduce to
Slide 10: Conclusion of Master Agreement Regarding YAHOO! JAPAN License Agreement
Conclusion of Master Agreement Regarding YAHOO! JAPAN LICENSE AGREEMENT Whole Group • Existing YAHOO! JAPAN LICENSE AGREEMENT will be terminated upon the closing of the sales of Verizon Media (expected in second half of 2021), etc. • Enables greater flexibility in the use of brand, technology and bu
Slide 11: Table of Contents
Table of Contents 1 Topics/Consolidated Business Results – Whole Group 2 Topics/Business Results – By Segment 3 International Business Development 4 FY2021 Business Results Forecast
Slide 12: Change in Reporting Segments
Change in Reporting Segments Whole Group • Introduced 3 new business segments: Media, Commerce & Strategic by classifying businesses according to the growth phase of each business FY2020 FY2021 Q1 – Commerce Media/Advertising, Search, Marketing solution, Vertical Media Business Business Media/Advert
Slide 13: Media Business
Media Business
Slide 14: Business Targets and Strategies: Media Business
Business Targets and Strategies Media Business Business Targets Pursue full-funnel, 1:1 marketing • Ad revenue: aim for YoY double-digit growth (including sales promotional products, etc.) • Adjusted EBITDA margin: 40-50% as a guide Major Strategies/Focus Areas to Achieve Business Targets Generate n
Slide 15: Status of Business Strategy: Media Business
Status of Business Strategy: Media Business Generate New Revenue Sources Through Development & Deployment of Advertising/Sales Promotional Products • Accelerate increase in LINE Official Account to establish 1:1 full-funnel marketing Desired Future of Media Business Measures to Increase the No. of L
Slide 16: Business Overview (Yahoo Japan – Total Advertising Revenue)
｜ Business Overview (Yahoo Japan – *Pre-Integration ZHD Total Advertising Revenue) Media Business • Although the impact of COVID-19 continues in certain industries, capturing of rebounding demand in the overall market and product improvements, etc., have resulted in strong performance • Significantl
Slide 17: Business Overview (LINE – Total Advertising Revenue)
｜ Business Overview (LINE – Total Advertising Revenue) Media Business • Performing favorably due to measures to improve products and distribution logic, etc. • Aim for further growth in Display ads by improving unit prices and in Account ads by increasing the number of charged accounts Total Adverti
Slide 18: Business Results (P/L): Media Business
Business Results (P/L) Media Business (JPY Million) FY2020 Q1 FY2021 Q1 YoY Revenue 75,694 148,424 +96.1% Yahoo Japan (pre-integration ZHD) Advertising revenue 65,988 76,763 +16.3% Search advertising 35,568 43,331 +21.8% Display advertising (Programmatic) 1 26,139 28,909 +10.6% Display advertising (
Slide 19: Commerce Business
Commerce Business
Slide 20: Business Targets and Strategies: Commerce Business
Business Targets and Strategies Commerce Business Business Targets Aim to maximize transaction value by refining fundamental value • Aim to become No.1 in domestic EC (merchandise) transaction value in Japan, in early 2020’s • Strengthen social commerce using LINE; our new growth driver Major Strate
Slide 21: Enhance User Experience Through Improvement of Essential Service Quality
Status of Business Strategy: Enhance User Experience Through Improvement of Essential Service Quality Commerce Business • Aim to improve delivery quality and sustainably enhance user experience through collaboration with YAMATO HOLDINGS CO., LTD. (“YAMATO”) • % of Blue Ribbon Delivery in transaction
Slide 22: Instant Delivery Demonstration Experiment: PayPay Direct by ASKUL
Status of Business Strategy: Enhance User Experience Through Improvement of Essential Service Quality Commerce Business • Began demonstration experiment1 on instant delivery service of daily necessities, “PayPay Direct by ASKUL,” in collaboration with ASKUL and Demae-can • Understand the instant del
Slide 23: Differentiate Through Social Commerce Using LINE
Status of Business Strategy: Differentiate from Competitors Through Social Commerce, Etc. Using LINE Commerce Business • Rapid increase in transaction value since launch of LINE GIFT1. Marketing activities to go into full swing in stages. • Aim to expand lineup through group synergies (e.g. Introduc
Slide 24: Business Overview (Merchandise Transaction Value)
Business Overview (Merchandise Transaction Value) Commerce Business • Shopping business transaction value maintained positive growth despite difficulty in overcoming the level of the same quarter last year • Reuse business transaction value achieved double digit growth due to higher spend per YAHUOK
Slide 25: Business Results (P/L): Commerce Business
Business Results (P/L) Commerce Business (JPY Million) FY2020 Q1 FY2021 Q1 YoY Revenue 175,327 195,979 +11.8% Merchandise EC 140,168 160,006 +14.2% Shopping business 65,293 74,810 +14.6% Reuse business 12,842 14,034 +9.3% ASKUL online BtoB business 62,033 71,161 +14.7% Services EC 956 2,837 +196.7%
Slide 26: Strategic Business
Strategic Business
Slide 27: Business Targets and Strategies: Strategic Business
Business Targets and Strategies Strategic Business Business Targets Create new revenue pillars around Fintech • More than YoY+20% increase in revenue • In the future, achieve JPY 100 B-level adjusted EBITDA Major Strategies/Focus Areas to Achieve Business Targets Establish basis for monetization by
Slide 28: Expanding the User Base of PayPay
Status of Business Strategy: Establish Basis for Monetization by Expanding the User Base of PayPay Strategic Business • From August 17, payment with LINE Pay will be available in PayPay merchants (merchant presented mode only) • Improve usability and maximize the Group’s overall payment GMV by incre
Slide 29: Business Overview (PayPay’s Major KPIs)
｜ Business Overview (PayPay’s Major KPIs) Strategic Business • Various KPIs continue to perform well, driving the growth of the cashless payment market • Quarterly PayPay GMV grew to JPY1.2 T, driven by expansion of users and frequency of use which increased the no. of payments PayPay GMV No. of Pay
Slide 30: Market Environment (PayPay)
｜ Market Environment (PayPay) Strategic Business • Japan's QR/barcode payment market is growing rapidly, expanding the base of cashless payments • PayPay’s growth exceeded the market growth rate, with a market share of over 68%. Further expansion to come. Japan’s QR/Barcode Payment Market – Payment
Slide 31: Business Overview (Major KPIs of Credit Card Business)
｜ Business Overview (Major KPIs of Credit Card Business1) Strategic Business • Steady growth in user base and revolving balance, the main source of revenue • Aiming to accelerate growth in the number of card holders while strengthening sales promotion activities in conjunction with the upcoming laun
Slide 32: Business Overview (Major KPIs of Banking Business)
｜Business Overview (Major KPIs of Banking Business) Strategic Business • Changed trade name from The Japan Net Bank, Limited to PayPay Bank Corporation on April 5, 2021 • No. of accounts, deposit balance and loan balance steadily increasing due to successful acquisition of PayPay users No. of Accoun
Slide 33: Business Results (P/L): Strategic Business
Business Results (P/L) Strategic Business (JPY Million) FY2020 Q1 FY2021 Q1 YoY Revenue 20,990 28,354 +35.1% Fintech 20,990 28,049 +33.6% YJ Card1,2 10,211 11,450 +12.1% PayPay Bank2 7,637 8,023 +5.1% Other fintech (LINE Fintech, etc.) 3,141 8,575 +172.9% Other Strategic Business (AI, LINE Search, L
Slide 34: Table of Contents
Table of Contents 1 Topics/Consolidated Business Results – Whole Group 2 Topics/Business Results – By Segment 3 International Business Development 4 FY2021 Business Results Forecast
Slide 35: International Business Development
｜ International Business Development LINE • Overwhelming reach and market share in Asian countries and regions, mainly Taiwan, Thailand and Indonesia • Generating revenue mainly from advertising, stickers, and game businesses based on messaging Taiwan 19 mil DAU1 Overview of International Business 2
Slide 36: International Business Development
｜ International Business Development LINE • Focus on expansion of EC/O2O and Fintech services based on messengers and payments to generate new revenue Fintech O2O Pure Internet bank • Mobile banking, lending service Taxi dispatch service Taiwan • Exceeded the following in just 3 months since • Offic
Slide 37: Table of Contents
Table of Contents 1 Topics/Consolidated Business Results – Whole Group 2 Topics/Business Results – By Segment 3 International Business Development 4 FY2021 Business Results Forecast
Slide 38: FY2021 Full Year Guidance
FY2021 Full Year Guidance Whole Group • No change from previous guidance announced in Business Results Briefing for FY2020 Full Year & Q4 (held on April 28, 2021) Segment Item Estimate YoY Revenue ¥1.52 to 1.57 T +26.1 to 30.2% Whole Group Adjusted EBITDA ¥303.0 to 313.0 B +2.8% to 6.2% Advertising
Slide 39: Unleashing the infinite potential of all people
Unleashing the infinite potential of all people, with the power of information technology
Slide 40: Appendix
Appendix
Slide 41: Whole Group – Financial Information
Whole Group – Financial Information
Slide 42: FY2021 Q1 Factors of Change in Operating Income
FY2021 Q1 Factors of Change in Operating Income Whole Group (¥B) Q1 YoY Difference YoY Major Factors of Change (¥B) • Increase due to LINE consolidation +70.4 • Yahoo Japan +12.2 Revenue 373.3 +99.4 +36.3% • ASKUL Group +7.3 • ZOZO +5.4 • Increase due to LINE consolidation +7.9 Cost of sales 119.5 +
Slide 43: Adjusted EBITDA – Breakdown of Adjustment Items
Adjusted EBITDA – Breakdown of Adjustment Items Whole Group (¥B) Stock Depreciation Loss on Adjusted EBITDA compensation & retirement of Impairment amortization fixed assets loss expense Other 86.3 Op. income ＋depreciation & amortization ± EBITDA adjustment +0.3 -0 +2.9 -2.6 items EBITDA adjustment
Slide 44: Impact from Consolidation of LINE
Impact from Consolidation of LINE Whole Group Item LINE FY2021 Q1 (¥B) FY2021 Q1 (Excl. LINE ) (¥B) YoY Revenue 70.4 302.8 +10.6% Operating income 4.6 46.7 -7.6% Net income 0.08 30.8 +12.0% Net income attributable to owners of the 0.08 26.5 +16.6% parent 43
Slide 45: Impact from Consolidation of LINE (Goodwill, PPA)
Impact from Consolidation of LINE (Goodwill, PPA – Provisional Values) Whole Group • Measured based on assumptions such as estimated future cash flows, discount rate, declining rate for existing customers, future revenue generated from the trademarks, and royalty rates • Began amortizing PPA from FY
Slide 46: Impact from Consolidation of ZOZO (Goodwill, PPA)
Impact from Consolidation of ZOZO (Goodwill, PPA) Whole Group Item Amount (¥B) Annual Amortization Amount (¥B) Amortization Period (Straight Line) Goodwill 212.9 - - PPA 502.1 13.2 - Customer base (Shops/users) 322.0 - 18-25 years Trademarks1 178.7 - No amortization Others 1.4 - 4 years 1. Indefinit
Slide 47: FY2021 Q1 Consolidated Statement of Financial Position
FY2021 Q1 Consolidated Statement of Financial Position Whole Group (¥B) FY2020 Q4 FY2021 Q1 Difference Assets 6,696.6 6,693.3 -3.3 Cash and cash equivalents 1,065.7 1,078.0 +12.3 Trade and other receivables 480.1 412.9 -67.2 Loans in credit card business 407.9 392.1 -15.8 Investment securities in ba
Slide 48: Financial Data
Financial Data Whole Group CAPEX1 Adjusted FCF2 (¥B) (¥B) 31.8 234.3 29.6 216.3 5.6 11.9 23.7 18.8 18.7 6.7 0.9 0.3 61.1 44.5 23.7 18.1 14.8 18.5 24.0 19.9 -8.9 17.9 18.4 -18.0 -26.4 17.0 -97.6 -42.6 -126.0 -28.4 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Property and Equipment/Inta
Slide 49: Financial Data
Financial Data Whole Group Interest-Bearing Debt & Net Interest-Bearing Debt1 Net Leverage Ratio2 / Adjusted net leverage ratio3 (Excludes banking business) (Excludes banking business) (¥B) (¥B) 1,431.8 1,357.9 700 3.00 165.6 2.57x 1,204.0 1,176.7 1,177.7 169.1 600 138.0 2.50 110.7 104.0 109.6 118.0
Slide 50: User Base
User Base Whole Group Yahoo Japan - Number of Monthly Logged-in User IDs LINE - Monthly Active Users (Million) (Million) June 2021 Global MAU1：188 50.7 51.3 51.1 52.7 51.9 166 167 167 169 171 12 11 10 13 13 48 49 50 47 47 21 21 21 21 21 84 86 86 88 89 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Jun-20 Sep-20
Slide 51: Major Subsidiaries and Affiliates in Overseas Business
｜ Major Subsidiaries and Affiliates in Overseas Business LINE Country/Region Business Name of Company Type of Company - LINE Taiwan Limited Consolidated subsidiary Fintech LINE Pay Taiwan Limited Consolidated subsidiary Taiwan Fintech LINE Bank Taiwan Limited Equity method affiliate O2O JDW Co., Ltd
Slide 52: Media Business
Media Business
Slide 53: Major Services and Products of Media Business Segment
Major Services and Products of Media Business Segment Media Business Item Breakdown Yahoo! JAPAN Ads Search advertising Yahoo! JAPAN Ads “Search advertising” Display advertising Programmatic advertising Yahoo! JAPAN Ads “Display advertising” (Programmatic-based), etc. Reservation advertising Yahoo!
Slide 54: Advertising Products
｜ Advertising Products Media Business Item Fee Calculation Placement Pages Type of Advertiser Search advertising Cost per-click Search results pages Major corporations/SMEs Display advertising Programmatic Top page Yahoo! JAPAN Ads “Display advertising” Cost per-click Interior pages of service sites
Slide 55: Advertising Products
｜ Advertising Products Media Business Item Fee Calculation Placement Pages/Product outline Type of Advertiser Display ads Cost per-click Major Timeline Timeline tab Cost per-view corporations/SMEs Cost per-click Major LINE NEWS NEWS tab Cost per-view corporations/SMEs Cost per-click Major Chat List
Slide 56: Integration of Advertising Platforms
｜ Integration of Advertising Platforms Media Business • Completed integration of display advertising platforms (reservation/programmatic advertising) Before 1. Flexible ad placements that meet various purposes Separate advertising platforms Flexible ad placements that meet various purposes and Yahoo
Slide 57: Commerce Business
Commerce Business
Slide 58: Major Services and Products of Commerce Business Segment
Major Services and Products of Commerce Business Segment Commerce Business Item Breakdown Merchandise EC - Yahoo! JAPAN Shopping, PayPay Mall, ZOZOTOWN, LOHACO, Charm, LINE SHOPPING, Shopping business LINE FRIENDS, LINE GIFT Reuse business YAHUOKU!, PayPay Flea Market, ZOZOUSED ASKUL online BtoB bus
Slide 59: KPI - Definition of EC Transaction Value
KPI - Definition of EC Transaction Value Commerce Business Items Major services EC transaction value - Merchandise - Yahoo! JAPAN Shopping, PayPay Mall, ZOZOTOWN, LOHACO, Charm, LINE SHOPPING, Shopping business LINE FRIENDS, LINE GIFT Reuse business YAHUOKU!, PayPay Flea Market, ZOZOUSED ASKUL onlin
Slide 60: Social Commerce – LINE GIFT
｜ Social Commerce － LINE GIFT LINE • A service that allows users to give gifts to family and friends connected through LINE • Two types of gifts: “E-Gifts” – suitably priced for casual presents; “Delivery Gifts” – available in wide price ranges to suit various purposes User Attribute Givers 2% 3% Re
Slide 61: Strategic Business
Strategic Business
Slide 62: Major Services and Products of Strategic Business Segment
Major Services and Products of Strategic Business Segment Strategic Business Items Breakdown Fintech - YJ Card1 - PayPay Bank - PayPay Asset Management, PayPay Insurance, Magne-Max, YJFX!, Other fintech LINE Pay, LINE Securities, LINE Score, LINE Pocket Money, LINE BITMAX, etc. Others AI, LINE Searc
Slide 63: YJ Card Corporation – Business Results
YJ Card Corporation1 – Business Results Strategic Business Revenue/Operating Income (non-consolidated IFRS)2 Statement of Financial Position (JGAAP)2 (¥B) (¥B) 10.9 11.1 11.4 FY2020 Q4 FY2021 Q1 Difference 10.2 10.5 Assets 489.5 500.6 11.1 Cash and cash equivalents 17.7 35.1 17.3 Trade and other rec
Slide 64: PayPay Bank Corporation – Business Results
PayPay Bank Corporation – Business Results Strategic Business Revenue/Operating Income (non-consolidated IFRS)1 Statement of Financial Position (JGAAP)1 (¥B) (¥B) 8.1 8.4 8.3 FY2020 Q4 FY2021 Q1 Difference Assets 1,338.7 1,401.1 62.3 7.0 6.8 Cash and cash equivalents 306.5 330.4 23.8 Trade and other
Slide 65: Capital Structure (Shareholding Ratio)
｜ Capital Structure (Shareholding Ratio) Strategic Business 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 Dec 2020 Jul 2021 & Yahoo Japan 50% 25% 25% 25% 25% Paytm’s exercise of stock option2 SoftBank 50% 25% 25% 25%
Slide 66: Non-Financial Information
Non-Financial Information
Slide 67: Acknowledgment as a Sustainable Company
Acknowledgment as a Sustainable Company Whole Group • Acknowledged by various evaluators • Aim to maintain/enhance a high third-party evaluation after integration, to secure our position as the industry-leading ESG issuer Note: As of 2021, Z Holdings Corporation receives an MSCI ESG Rating of AA. TH
Slide 68: External ESG Evaluations
External ESG Evaluations Whole Group S&P Global - DJSI MSCI ESG Rating1 Interactive Media, Services & Score rising Home Entertainment sector every year since 2018 Selected as an Industry Received AA rating Leader Named for the first time to MSCI Japan ESG Select Leaders Index (June 2021) Received th
Slide 69: Materiality Matrix for Z Holdings Group
Materiality Matrix for Z Holdings Group1 Whole Group 11 17 The numbers and colors in the matrix Solving social coincide with the SDG icons. Corporate issues with 9 governance IT Data security 4 Quality Education 11 17 Disaster measures/ 8 9 Recovery support 5 Gender Equality Level of stakeholder con
Slide 70: Overall Picture of CSR, Materiality, and Our Four UPDATEs
Overall Picture of CSR, Materiality, and Our Four UPDATEs1 Whole Group Contribution to Stakeholders Risk Reduction Value Creation the SDGs • E-commerce for • Data security/network convenient & #01 Industry, comfortable life Users reliability Developing 9 Innovation and • Minimization of • Driving a
Slide 71: Carbon Neutral Initiatives
Carbon Neutral Initiatives (Announced: January 19, 2021) Whole Group • Aim to achieve neutrality well ahead of Japanese government’s “2050 Carbon Neutral” goal ▶ Pursue early membership in RE100 ZHD Group to announce mid-long renewable energy initiative1 environmental goals by the end of FY2021 Decl
Slide 72: Issuance of Green Bonds
Issuance of Green Bonds Whole Group • In July 2021, publicly offered JPY 20 B green bonds (unsecured straight bond) in the domestic market • Aimed to accelerate carbon neutral initiatives, including the construction of energy-efficient data centers Item Details Issuer Z Holdings Corporation Term 7 y
Slide 73: Green Bond Framework
Green Bond Framework Whole Group • Acquired a second-party opinion from Sustainalytics on the alignment with the Green Bond Principles 2018 (ICMA) and Green Bond Guidelines 2020 developed by Japan’s Ministry of the Environment Use of Proceeds Reporting Criteria 1 Criteria 2 Allocation reporting
Slide 74: Projects to Be Funded by Green Bonds
Projects to Be Funded by Green Bonds Whole Group • Strengthen ESG/SDGs initiatives by allocating the funds to projects related to “FY2023 100% Renewable Energy Challenge” declared by Yahoo Japan Corporation in January 2021 Item Data Center Renewable Energy Construction, refurbishment, acquisition, S
Slide 75: Released Integrated Report Portal
Released “Integrated Report Portal” Whole Group • Financial/non-financial information useful for investment decisions will be updated as needed Vision and Strategy Sustainability Value Creation Business Performance URL: (English) https://www.z-holdings.co.jp/integrated-report/en/ (Japanese) https://
Slide 76: 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 77: Unleashing the infinite potential of all people
Unleashing the infinite potential of all people, with the power of information technology