Ly Corporation · TSE:4689
Ly — Z Holdings — FY2021 Q3 Earnings Presentation
77 slides from Ly's earnings presentation, Feb 2, 2022
Slide 1: FY2021 Q3 Business Results
Security Code: 4689 Z Holdings Corporation Business Results FY2021 Q3 February 2, 2022
Slide 2: FY2021 Q3 Financial Results – Topics
FY2021 Q3 Financial Results – Topics Revenue: JPY409.1 B (YoY +29.2%) / Adjusted EBITDA: JPY97.9 B (YoY +24.0%) Revenue reached a record high, driven by advertising Full-year adjusted EBITDA guidance revised upward to over JPY330 B • Group total advertising revenue reached a record high of JPY153.4
Slide 3: Revision of FY2021 Consolidated Business Results Guidance
Revision of FY2021 Consolidated Business Results Guidance Whole Group • Full-year revenue guidance revised to approximately JPY1.57 T and adjusted EBITDA upward to JPY330 B+, due to income increase resulting from an upswing in advertising business, improvement in expenditures, decrease in fixed cost
Slide 4: Transition to the Prime Market
Transition to the Prime Market Whole Group • As announced by Tokyo Stock Exchange on January 11, 2022, scheduling to transition to the Prime Market on April 4, 2022. Initiatives toward Transition to the Prime Market Exercise of Stock Acquisition Rights (Illustrative Image)1, 2 1 Acquisition of ZHD s
Slide 5: Initiatives to Integrate Loyalty Programs
Initiatives to Integrate Loyalty Programs Whole Group • Moving towards the integration of loyalty programs, PayPay Bonus is now accepted in more places, enhancing the convenience for PayPay users. • Aim to expand ZHD’s ecosystem by utilizing one of the largest user base in Japan to encourage cross-u
Slide 6: 2030 Carbon Neutrality Declaration
2030 Carbon Neutrality Declaration1 Whole Group • ZHD Group as a whole, aims to achieve carbon neutrality where greenhouse gas (GHG) emissions are reduced to net-zero by 2030. • Contribute to the realization of a sustainable society by encouraging carbon neutral initiatives both in and out of the ZH
Slide 7: Table of Contents
Table of Contents 1 Consolidated Business Results – Whole Group 2 Topics/Business Results – By Segment 3 FY2021 Business Results Forecast
Slide 8: Table of Contents
Table of Contents 1 Consolidated Business Results – Whole Group 2 Topics/Business Results – By Segment 3 FY2021 Business Results Forecast
Slide 9: FY2021 Q3 Consolidated Business Results
FY2021 Q3 Consolidated Business Results Whole Group • Growth in revenue and adjusted EBITDA due to positive impacts from integration with LINE, etc. Quarterly revenue reached JPY400 B for the first time. Item FY2020 Q3 FY2021 Q3 YoY Revenue ＆ Adjusted EBITDA1 (Adjusted EBITDA Margin) (JPY B) Revenue
Slide 10: FY2021 Q3 Consolidated Business Results: LINE
｜ FY2021 Q3 Consolidated Business Results1 LINE • While growth investment in LINE GIFT and financial services increased, achieved a consolidated operating profit for the fifth consecutive quarter as a result of an expanding advertising business. Revenue (YoY) Operating Income (JPY B) (JPY B) 82.2 74
Slide 11: Whole Group – Total Advertising Revenue
Whole Group – Total Advertising Revenue Whole Group • In addition to the impact of LINE integration, recovery in advertisers’ demand, etc., drove revenue to JPY153.4 B (YoY +64.2%). Group Total Advertising Revenue Group Total Advertising Revenue – YoY Growth Rate (JPY B) 153.4 Comparison with revenu
Slide 12: Whole Group – EC Transaction Value
Whole Group – EC Transaction Value Whole Group • Achieved JPY977.5 B (YoY +6.5%) as a result of expansion of transaction value driven by LINE integration, etc. Group EC Transaction Value1 Group EC Transaction Value - YoY Growth Rate (JPY B) 977.5 918.2 43.6 +33.0% 9.2 844.1 131.0 816.3 817.2 211.1 9
Slide 13: Table of Contents
Table of Contents 1 Consolidated Business Results – Whole Group 2 Topics/Business Results – By Segment 3 FY2021 Business Results Forecast
Slide 14: Media Business
Media Business
Slide 15: Updates on Business Strategy: Measures Taken in LINE Display Advertising
｜ Updates on Business Strategy: Measures Taken in LINE Display Advertising Media Business • Talk Head View Custom performing well, successfully capturing December’s high advertising demands and winning brand advertisers. • LINE Display Advertising maintains high growth due to increase in advertisers
Slide 16: Updates on Business Strategy: LINE VOOM
｜ Updates on Business Strategy: LINE VOOM Media Business • LINE Timeline revamped and transformed into LINE VOOM, launched in November 2021. • Video Play DAU rose significantly. Transforming into a video platform to expand video advertising. Launch of LINE VOOM Video Play DAU1, 2 Rebranding Renamed
Slide 17: Business Overview (Yahoo Japan – Total Advertising Revenue)
｜ Business Overview (Yahoo Japan – *Pre-Integration ZHD Total Advertising Revenue) Media Business • Quarterly revenue exceeded JPY100 B for the first time, due to the capturing of rebounding demand in the overall market, and product improvements, etc. Total Advertising Revenue Total Advertising Reve
Slide 18: Business Overview (LINE – Total Advertising Revenue)
｜ Business Overview (LINE – Total Advertising Revenue) Media Business • Display ads: Achieved YoY +31.0% growth due to increase in advertisers’ demand and introduction of new products. • Account ads: Performing steadily due to solid growth in the number of accounts opened, etc. Total Advertising Rev
Slide 19: Commerce Business
Commerce Business
Slide 20: Main Service Platforms of the Shopping Business
Main Service Platforms of the Shopping Business Commerce Business • Aim to become No.1 in domestic e-commerce merchandise transaction value by maximizing transaction value of the whole Group: bringing together the features and advantages of each service, and drawing out collective strengths to meet
Slide 21: Measures to Increase LINE Official Accounts
Updates on Business Strategy: Measures to Increase LINE Official Accounts Commerce Business • The number of registered friends, which is a focus area, is expanding rapidly. Spreading gradually as a CRM tool in e-commerce. • Consulting provided through LINE’s sales team. Message open rate and CTR hav
Slide 22: Updates on Business Strategy: LINE GIFT
｜ Updates on Business Strategy: LINE GIFT Commerce Business • Significant increase in transaction value through marketing campaigns, etc. Cumulative number of users surpassed 20 million. • Rich product lineup achieved through strengthened collaborations within the Group. Aims to become a daily socia
Slide 23: Updates on Business Strategy: Yahoo! JAPAN Mart by ASKUL
Mart ｜ Updates on Business Strategy: Yahoo! JAPAN Mart by ASKUL Commerce Business • Rebranded to “Yahoo! JAPAN Mart by ASKUL” for full launch. Number of stores increased to nine. • The number of orders is also increasing steadily. Several dozens of stores will open in the next fiscal year in the eff
Slide 24: Business Overview (Merchandise Transaction Value)
Business Overview (Merchandise Transaction Value) Commerce Business • Shopping business transaction value landed at JPY477.8 B (YoY +21.1%) contributed by the “Cho PayPay Matsuri (Super PayPay Festival),” etc. • Reuse business transaction value achieved double-digit growth due to higher spend per YA
Slide 25: Strategic Business
Strategic Business
Slide 26: Updates on Business Strategy: PayPay's Initiatives
｜ Updates on Business Strategy: PayPay’s Initiatives Strategic Business • Since the introduction of payment fee, the number of merchants signed up to the PayPay My Store Lite Plan1 is increasing steadily, contributing to increased revenue. • “Profit before acquisition cost2” achieved profitability i
Slide 27: Launched PayPay Card and PayPay Atobarai
｜ Updates on Business Strategy: Launched PayPay Card and “PayPay Atobarai1” Strategic Business • Launched “PayPay Atobarai” on February 1, 2022. Providing multiple payment services/functions around PayPay. • Aim to enlarge ZHD Group ecosystem through diversification of payment methods and to increas
Slide 28: Updates on Business Strategy: LINE's NFT Business
｜ Updates on Business Strategy: LINE’s NFT Business Strategic Business • NFT Market β launched in June 2021. NFT business expanding due to competitive advantages leveraging LINE’s features. • LINE NEXT established in December 2021. NFT business to be expanded in Japan and globally. LINE NFT Business
Slide 29: Business Overview (PayPay's Major KPIs)
｜ Business Overview (PayPay’s Major KPIs) Strategic Business • Various KPIs performed well even after the introduction of payment fee to small and medium-sized merchants. Quarterly PayPay GMV grew to a scale of JPY1.5 T. PayPay GMV No. of PayPay Payments Cumulative PayPay Registered No. of PayPay Me
Slide 30: Business Overview (Major KPIs of Credit Card Business)
｜ Business Overview (Major KPIs of Credit Card Business) Strategic Business • Launched PayPay Card on December 1, 2021. Will accelerate membership growth utilizing Group company assets. • Quarterly transaction volume exceeded JPY700 B for the first time driven by increased usage during the sales sea
Slide 31: Business Overview (Major KPIs of Banking Business)
｜ Business Overview (Major KPIs of Banking Business) Strategic Business • After the change of trade name to PayPay Bank Corporation, acquisition of PayPay users increased, and the no. of accounts, deposit balance and loan balance are growing steadily. No. of Accounts Deposit Balance Loan Balance (Mi
Slide 32: Major KPIs of LINE's Financial Businesses
｜ Business Overview (Major KPIs of LINE’s Financial Businesses） Strategic Business • Tapping into potential financial needs through LINE, LINE Securities accounts and LINE Pocket Money loan balance are growing steadily. • In global financial business, providing financial products that meet local use
Slide 33: Table of Contents
Table of Contents 1 Consolidated Business Results – Whole Group 2 Topics/Business Results – By Segment 3 FY2021 Business Results Forecast
Slide 34: FY2021 Revised Full-Year Guidance
FY2021 Revised Full-Year Guidance Whole Group • Full-year revenue guidance revised to approximately JPY1.57 T and adjusted EBITDA upward to JPY330 B+, due to income increase resulting from an upswing in advertising business, improvement in expenditures, decrease in fixed cost, etc. Segment Item Esti
Slide 35: Unleashing the infinite potential of all people
Unleashing the infinite potential of all people, with the power of information technology
Slide 36: Appendix
Appendix
Slide 37: Whole Group – Financial Information
Whole Group – Financial Information
Slide 38: FY2021 Q3 Factors of Change in Operating Income
FY2021 Q3 Factors of Change in Operating Income Whole Group (JPY B) FY2021 Q3 YoY Difference YoY Major Factors of Change (JPY B) • LINE consolidation +82.2 Revenue 409.1 +92.5 +29.2% • Yahoo Japan +8.9 Cost of sales 126.3 +12.9 +11.4% • LINE consolidation +8.9 SG&A 221.7 +62.6 +39.3% - (Major items)
Slide 39: Factors of Change in Net Income Attributable to Owners of the Parent
FY2021 Q3 Factors of Change in Net Income Attributable to Owners of the Parent Whole Group (JPY B) FY2021 Q3 YoY Difference YoY Major Factors of Change (JPY B) Operating income 61.0 +17.0 +38.8% - Other non-operating income 4.6 +2.3 +107.7% • Deemed gain on change in equity holdings +2.4 Other non-o
Slide 40: Adjusted EBITDA – Breakdown of Adjustment Items
Adjusted EBITDA – Breakdown of Adjustment Items Whole Group (JPY B) Stock Adjusted EBITDA Depreciation Loss on compensation & retirement of Impairment expenses Other 97.9 Op. income ＋depreciation & amortization fixed assets losses amortization ± EBITDA adjustment items +0.1 +0.2 +0.02 +3.0 EBITDA ad
Slide 41: Impact from Consolidation of LINE Corporation
Impact from Consolidation of LINE Corporation Whole Group Item LINE FY2021 Q3 (JPY B) FY2021 Q3 (Excl. LINE ) (JPY B) YoY Revenue 82.2 326.9 +3.3% Operating income 0.8 60.1 +36.8% Net income -11.0 28.8 +4.5% Net income attributable to owners of the parent -11.0 23.6 +12.4% 40
Slide 42: Impact from Consolidation of LINE Corporation (Goodwill, PPA)
Impact from Consolidation of LINE Corporation (Goodwill, PPA) 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, royalty rates, etc. • Began amortizing PPA from FY2021 Q1
Slide 43: Impact from Consolidation of ZOZO, Inc. (Goodwill, PPA)
Impact from Consolidation of ZOZO, Inc. (Goodwill, PPA) Whole Group Item Amount (JPY B) Annual Amortization Amount (JPY 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
Slide 44: FY2021 Q3 Consolidated Statement of Financial Position
FY2021 Q3 Consolidated Statement of Financial Position Whole Group (JPY B) FY2021 Q2 FY2021 Q3 Difference Assets 6,886.7 7,119.8 +233.1 Cash and cash equivalents 1,196.3 1,235.6 +39.3 Trade and other receivables 308.5 362.3 +53.8 Loans in credit card business 392.9 460.4 +67.5 Investment securities
Slide 45: Financial Data: CAPEX and Adjusted FCF
Financial Data Whole Group CAPEX1 Adjusted FCF2 (JPY B) (JPY B) 66.1 151.2 126.6 61.1 30.7 44.5 18.1 34.4 23.7 14.8 18.5 -8.9 -26.4 -24.6 31.8 -42.6 29.6 11.9 23.7 5.6 22.5 0.05 6.7 35.4 24.0 22.5 -231.7 19.9 17.0 -266.1 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Property and Equipm
Slide 46: Financial Data: Interest-Bearing Debt and Net Leverage
Financial Data Whole Group Interest-Bearing Debt & Net Interest-Bearing Debt1 Net Leverage Ratio2 / Adjusted net leverage ratio3 (Excludes banking business) (Excludes banking business) (JPY B) (JPY B) 1,757.3 1,624.4 3.00 177.9 2.55x 1,431.8 186.0 800 2.52x 1,357.9 234.0 2.50 105.0 700 165.6 2.03x 1
Slide 47: User Base
User Base Whole Group Yahoo Japan - Number of Monthly Logged-in User IDs LINE - Monthly Active Users (Million) (Million) December 2021 Global MAU1：190 54.5 54.7 169 171 173 174 51.1 52.7 51.9 167 10 10 9 12 11 50 52 53 48 49 21 21 21 21 21 86 88 89 89 90 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q3'20 Q4'20 Q1'
Slide 48: Change in Reporting Segments
Change in Reporting Segments Whole Group • Introduced 3 new business segments: Media, Commerce, and Strategic by classifying businesses according to the growth phase of each business. FY2020 FY2021 Q1 – Media/Advertising, Search, Marketing solution, Vertical Commerce Media Business Business Media/Ad
Slide 49: Business Results (P/L): Media Business
Business Results (P/L): Media Business Media Business (JPY Million) FY2020 Q3 FY2021 Q3 YoY Revenue 90,449 167,070 +84.7% Yahoo Japan (pre-integration ZHD) Advertising revenue 79,223 86,283 +8.9% Search advertising 42,917 47,904 +11.6% Display advertising (Programmatic)1 29,914 32,045 +7.1% Display
Slide 50: Business Results (P/L): Commerce Business
Business Results (P/L): Commerce Business Commerce Business (JPY Million) FY2020 Q3 FY2021 Q3 YoY Revenue 202,043 213,661 +5.8% Merchandise EC 158,369 174,221 +10.0% Shopping business 72,744 87,335 +20.1% Reuse business 14,847 15,130 +1.9% ASKUL online BtoB business 70,777 71,755 +1.4% Services EC 6
Slide 51: Business Results (P/L): Strategic Business
Business Results (P/L): Strategic Business Strategic Business (JPY Million) FY2020 Q3 FY2021 Q3 YoY Revenue 22,675 29,053 +28.1% Fintech 22,675 28,474 +25.6% PayPay Card1,2 10,901 13,618 +24.9% PayPay Bank2 8,477 8,279 -2.3% Other fintech (LINE Fintech, etc.) 3,295 6,576 +99.6% Other Strategic Busin
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 LINE VOOM LINE VOOM tab Cost per-view corporations/SMEs Cost per-click Major LINE NEWS NEWS tab Cost per-view corporations/SMEs Cost per-click Major Chat Lis
Slide 56: Commerce Business
Commerce Business
Slide 57: Main Service Platforms of Shopping Business
Main Service Platforms of Shopping Business Commerce Business Existing E-commerce Quick Commerce Social Commerce Shopping Mall Shopping Mart Mall-type Mall-type Direct sales Direct sales Affiliate Immediate delivery Mall-type E-commerce store (Approx. 390 mil. (Approx. 1,700 (Approx. 830,000 (No. of
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, MySmartStore Reuse business YAHUOKU!, PayPay Flea Market, ZOZOUSED ASKUL n
Slide 59: KPI - Definition of EC Transaction Value
KPI - Definition of EC Transaction Value Commerce Business Item Major Services EC transaction value - Merchandise - Yahoo! JAPAN Shopping, PayPay Mall, ZOZOTOWN, LOHACO, Charm, LINE SHOPPING, Shopping business LINE GIFT, LINE FRIENDS, MySmartStore Reuse business YAHUOKU!, PayPay Flea Market, ZOZOUSE
Slide 60: Social Commerce － LINE GIFT
｜ Social Commerce － LINE GIFT Commerce Business • 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 Attribute1
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 Item Breakdown Fintech - PayPay Card1 - PayPay Bank - PayPay Asset Management, PayPay Insurance, Magne-Max, Other fintech LINE Pay, LINE Securities, LINE Score, LINE Pocket Money, LINE BITMAX, etc. Others AI, LINE Search, L
Slide 63: Business Structure of PayPay Card and PayPay Atobarai
Business Structure of PayPay Card and PayPay Atobarai Strategic Business Instrument Available at Credit Line Revolving/Installment Payment Main Revenue Sources Provided by Top-up & Pay Payment from PayPay merchants • Payment fee from PayPay PayPay app - - PayPay Balance (Online/offline) merchants Co
Slide 64: PayPay Card Corporation – Business Results
PayPay Card Corporation1 – Business Results Strategic Business Revenue/Operating Income (Non-Consolidated IFRS)2 Statement of Financial Position (JGAAP)2 (JPY B) (JPY B) 13.6 FY2021 FY2021 Difference Q2 Q3 11.1 11.4 11.5 10.9 Assets 542.8 757.3 +214.5 Cash and cash equivalents 86.2 72.7 -13.4 Trade
Slide 65: 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 (JPY B) (JPY B) 8.9 FY2021 FY2021 8.5 Difference 8.4 8.3 Q2 Q3 8.1 Assets 1,468.2 1,567.8 +99.6 Cash and cash equivalents 475.3 386.9 -88.3 Trade a
Slide 66: 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 Dec 2021 & Yahoo Japan 50% 25% 25% 25% 25% Paytm’s exercise of stock options2 SoftBank 50% 25% 25% 25
Slide 67: LINE NFT Business Service Map
｜ LINE NFT Business Service Map Strategic Business • Rapid spread of blockchains as crypto-assets and as NFTs, has expanded into all industries including digital content, gaming items, and the field of metaverse. Issue Trade/Manage Use/Reproduce Crypto-asset Issuer Crypto-asset Exchange Metaverse Cr
Slide 68: International Business
International Business
Slide 69: 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. International Business Revenue4 Taiwan 21 mil MAU1 （J
Slide 70: Non-Financial Information
Non-Financial Information
Slide 71: 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 received an MSCI ESG Rating of AAA
Slide 72: External ESG Evaluations
External ESG Evaluations Whole Group S&P Global – DJSI MSCI ESG Rating1 Approx. 320 companies selected Score rising every year since 2018 around the world Named as DJSI World Index Received Highest Rating: constituent for two AAA Named for the first time to MSCI Japan consecutive years ESG Select Le
Slide 73: 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 74: 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, reliability comfortable life Users Developing Innovation and 9 • Minimization of • Driving a
Slide 75: Released Integrated Report Portal
Released “Integrated Report Portal” Whole Group • Financial/non-financial information useful for investment decisions are kept up to date Vision and Strategy Sustainability Value Creation Business Performance URL: (English) https://www.z-holdings.co.jp/integrated-report/en/ (Japanese) https://www.z-
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