Ly Corporation · TSE:4689
Ly — Z Holdings — Q1 FY2020 Earnings Presentation
62 slides from Ly's earnings presentation, Jul 31, 2020
Slide 1: Z Holdings Corporation Business Results FY2020 Q1
Security Code: 4689 Z Holdings Corporation Business Results FY2020 Q1 (April – June) July 31, 2020 0
Slide 2: Table of contents
Table of contents FY2020 Q1 Financial Results 1 & Impact of COVID-19 2 Business Topics 3 Company-wide Initiatives 4 Appendix
Slide 3: FY2020 Q1 Financial Results - Topics
FY2020 Q1 Financial Results - Topics Revenue increased YoY 14.8%; net income decreased YoY 16.9% • Revenue increased due to growth of Commerce business; Shopping business transaction value increased YoY 85.9% • For the first time, op. income of Commerce business surpassed that of Media business, Q1
Slide 4: FY2020 Q1 Consolidated income statement
FY2020 Q1 Consolidated income statement Increase in revenue and operating income leveraging diversified business portfolio Item FY2019 Q1 FY2020 Q1 YoY Revenue 238.6 (¥B) 273.8 (¥B) +14.8 % Operating income 36.1 (¥B) 50.6 (¥B) +40.0 % EBITDA *1 54.0 (¥B) 75.3 (¥B) +39.5 % Other non-operating income
Slide 5: Factors of change in operating income
Factors of change in operating income Growth in Commerce business and cost cuts contributed to increase in op. income Q1 Cost cuts (variable/fixed cost) Against budget: approx. JPY 10.2 B (¥ B) Commerce Media ZOZO business business consolidation Fixed cost ↓ Breakdown Marginal Marginal Op. income* ↑
Slide 6: Impact of COVID-19
Impact of COVID-19
Slide 7: Business environment under COVID-19
Business environment under COVID-19 Expansion of domestic EC market Increase in value of online media EC Merchandise Media/Advertising • Increase in cocooning consumption Macro • Increase in time spent online due to due to restraint from going out environment restraint from going out • Use of EC rec
Slide 8: FY2020 Q1 – KPI results
FY2020 Q1 – KPI results Slight increase in total advertising revenue, but strong growth in transaction value of EC (merchandise) business Item FY2020 Q1 YoY Merchandise transaction value 653.6 (¥B) +37.4 % Shopping business transaction value 379.3 (¥B) +85.9 % Reuse business transaction value 202.0
Slide 9: Provision of service/functions adapted to users’ needs during COVID-19
Provision of service/functions adapted to users’ needs during COVID-19 Commerce Media/Search Media/Search – new functions Mall Maps Newly installed a Displayed COVID-19 tab Congestion radar inventory in physical stores News Search Shopping Special feature: How do we live with the Congestion status o
Slide 10: Most trusted Japanese platform operator
Third party survey results Most trusted Japanese platform operator Nielsen, April 2020 Nikkei BP Consulting, Web Brand Survey Toyo Keizai, 2020 CSR Ranking Monthly Total Report 2020 Spring/Summer (April) No. 1 No. 1 No. 1 Total digital users in Web brand survey in 【Governance+Social】 division Rank B
Slide 11: Challenging a new work style adapted to the “new normal”
Challenging a new work style adapted to the “new normal” Transition to a new work style leveraging information technology (From Oct. 2020) Before After Ad placed in nation-wide newspapers（July 16） (1) Remote work 5 times/month (Max.) ▶ No limit (2) Flex time Core time (10:00-15:00) ▶ Abolish core ti
Slide 12: Our target for this fiscal year
Our target for this fiscal year EC Merchandise Others Will aim to increase both revenue and operating income for the full Revenue composition year leveraging our diverse （FY2020 Q1） business portfolio Media 11
Slide 13: Business Topics
Business Topics
Slide 14: Commerce Business
| Commerce Business
Slide 15: FY2020 Q1 Commerce business – KPI results
FY2020 Q1 Commerce business – KPI results Item Q1 Actual results YoY Major measures/Major factors of change EC transaction value 707.3 (¥B) +21.1 % Merchandise transaction value 653.6 (¥B) +37.4 % • Expanded due to consolidation of ZOZO (Excluding ZOZOTOWN Main Store: YoY+42.4%) Shopping business tr
Slide 16: Commerce Business
Commerce Business
Slide 17: PayPay Mall – New measure: X (Cross) Shopping
PayPay Mall – New measure: X (Cross) Shopping Supporting retailers to expand sales route & maximize sales X Shopping Introduced/Scheduled to be introduced (As of end of June) ONLINE OFFLINE 32 tenants (6,666 offline stores) Able to check Immediately inventory in brick available in brick and Examples
Slide 18: Commerce Business
Commerce Business
Slide 19: Future synergies with ZOZO
Future synergies with ZOZO Creating synergies in various fields Item Expected impacts • Construction of ecosystem with shopping business Implemented Short term Collaborations in • Easy listing of items purchased from ZOZOTOWN in in July reuse business PayPay Flea Market • Capturing of PayPay users T
Slide 20: Commerce Business
Commerce Business
Slide 21: PayPay – KPI
PayPay – KPI Each KPI growing steadily, despite declining trend in offline use due to COVID-19 No. of PayPay payments No. of merchants* No. of registered users (quarter) （quarter-end) (quarter-end) Approx. 9X 428.5 mil Approx. 2.9X 2.31 mil Approx. 3.5X 30.04 mil YoY YoY YoY 0.79 mil 8.44 mil 47.48
Slide 22: PayPay – Developments in monetization services
PayPay – Developments in monetization services FY2020 April 15 May 28 June 1 Within this fiscal year Finance Finance O2O Finance Bonus management “PayPay Atobarai*” Loan for individuals PayPay Pick Up Investment (Lump-sum payment) Insurance Business loan O2O Fall 2020: Information Plan to expand to
Slide 23: Commerce Business
Commerce Business
Slide 24: Reorganization of financial brands
Reorganization of financial brands Financial brands to be unified to PayPay, to make full use of our diverse portfolio Now Sequentially from fall 2020 Credit card Yahoo! JAPAN Card ▶ PayPay Card Bank The Japan Net Bank ▶ PayPay Bank Securities ▶ PayPay Securities Insurance Yahoo! JAPAN Insurance ▶ P
Slide 25: Multi-partnership strategy
Multi-partnership strategy Enrich services through collaborations with financial services of other companies and provide diverse options to our users Securities Credit card A Securities A Card FOREX Bank A FX A銀行 A Bank B Securities B Card B FX B銀行 B Bank Asset management Insurance A Asset Managemen
Slide 26: 2020 Fall Vol. – promotional measures for brand integration
Vol. 1 Various promotional measures for brand 2020 Fall integration coming up! Card (Details to be announced) ・・・ 25
Slide 27: Scenario finance initiative - progress
Scenario finance initiative - progress Launching financial products that fit the nature of each service (YAHUOKU!) Travel Mall Car Navigation Cancellation Repair warranty Loan Installments Car insurance insurance Launched in FY2019 Q4 Launched in FY2020 Q1 Launched in FY2020 Q2 Repair service provid
Slide 28: Current Situation and Outlook (Commerce Business)
Current Situation and Outlook (Commerce Business)
Slide 29: Current situation and outlook
Current situation and outlook Growth expected to decline due to relaxed cocooning consumption, termination of government’s promotional measures on cashless payment, and changes in our point-reward program Shopping business transaction Government’s State of emergency lifted (5/25) value （YoY growth r
Slide 30: Media Business
| Media Business
Slide 31: Integration of advertising platforms
Integration of advertising platforms (Sequentially introduced to advertisers from July) Integrated display advertising/services into one platform Before 1. Flexible ad placements that meet various purposes Separate advertising platforms Flexible ad placements that meet various purposes Yahoo! JAPAN
Slide 32: Integration of advertising platforms: Changed classifications
Integration of advertising platforms: Changed classifications to accommodate rebranding of ad products Before After Classification Main products Classification Main products Paid search Yahoo! JAPAN Ads Sponsored Search Search advertising advertising “Search advertising” Yahoo! JAPAN Ads “Display ad
Slide 33: FY2020 Q1 Total advertising revenue - results
FY2020 Q1 Total advertising revenue - results Item Q1 Actual results YoY Major measures/Major factors of change Total advertising revenue 79.1 (¥B) +1.2 % • Decrease in ad placements due to COVID-19 Search advertising 35.4 (¥B) -11.6 % (Q1 -¥9.7 B) Display advertising 43.6 (¥B) +14.7 % • Increase in
Slide 34: Media Business
Media Business
Slide 35: Integrated marketing solution - New service
Integrated marketing solution - New service (Measurement of store visits) Visualized Yahoo! JAPAN Ad’s referral effect User actions Encounter Search Visit store Purchase (Pay) PayPay PayPay Measurement of Consumer Display Search Retail Gift store visits advertising advertising Gift Launched in Launc
Slide 36: Measurement of store visits – example
Measurement of store visits – example Begin verification of store visit measurements in selected industries Ad contact Visit store Wi-Fi Wi-Fi Wi-Fi Yahoo! JAPAN Ads Car dealers Mobile phone shop Supermarket Check ad effects through report on collected results Note: The structure of measurement is p
Slide 37: Strengthened sales activities
Strengthened sales activities Collaborations with SoftBank Joint business plan Acquisition of new clients Set clear goals with clients and conclude annual Increase ad placements by existing clients contract for collaborations as a business partner • Large-scale clients (SoftBank clients) • Mid-small
Slide 38: Current Situation and Future Outlook (Media Business)
Current Situation and Future Outlook (Media Business)
Slide 39: Current situation and outlook
Current situation and outlook Outlook of advertising demand continues to be uncertain under COVID-19 Total advertising revenue （YoY growth rate） +8.9% +7.4% State of emergency lifted (5/25) +8.8% +10.0% +2.8% -1.5% Declaration of state of emergency nation-wide (4/16) -2.6% 2020 Jan Feb Mar Apr May J
Slide 40: Company-wide Initiative
Company-wide Initiative
Slide 41: Business integration with LINE
Business integration with LINE • Procedures and measures under the competition laws of some countries have not been completed*, due in part to the impact of the global spread of COVID-19. • We are currently not aware of any material issues relating to the procedures required, etc. • The completion o
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
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: FY2020 Q1 Factors of change in consolidated operating income
FY2020 Q1 Factors of change in consolidated operating income Item Actual results YoY Major factors of change FY2020 Q1 Results 36.1 (¥B) • Increase due to consolidation of ZOZO +33.6 (¥B) • eBOOK +2.3 (¥B) Revenue +35.2 (¥B) +14.8 % • YJ Card +2.2 (¥B) • Ikyu -3.5 (¥B) • Increase due to consolidatio
Slide 46: FY2020 Q1 Impact from consolidation of ZOZO
FY2020 Q1 Impact from consolidation of ZOZO Consolidated from Nov. 2019 Item ZOZO FY2020 Q1 FY2020 Q1 (excl. ZOZO) YoY Revenue 33.6 (¥B) 240.2 (¥B) +0.7 % Operating income *1 7.3 (¥B) 43.3 (¥B) +19.8 % Net income 4.9 (¥B) 22.5 (¥B) -19.0 % Net income attributable to owners of the parent 2.4 (¥B) 20.
Slide 47: FY2020 Q1 Statement of financial position
FY2020 Q1 Statement of financial position Consolidated (IFRS) The Japan Net Bank, Limited (JGAAP) YJ Card Corporation (JGAAP) FY2019 FY2020 FY2019 FY2020 FY2019 FY2020 (¥B) Difference (¥B) Difference (¥B) Difference Q4 Q1 Q4 Q1 Q4 Q1 Assets 3,933.9 3,980.3 46.4 Assets 995.5 1,109.3 113.8 Assets 554.
Slide 48: Financial data
Financial data CAPEX Adjusted FCF (¥B) (¥B) Impact of ZOZO consolidation* Right-of-use assets 85.1 Property & equipment/Intangible assets 109.1 29.0 3.6 -24.0 18.8 0.3 -97.6 0.9 Operating CF 25.3 Investment CF -28.4 17.5 - Adjusted FCF -126.0 FY2019 Q1 FY2020 Q1 FY2019 Q1 FY2020 Q1 Note: E
Slide 49: Financial data
Financial data Interest-bearing debt/Net interest-bearing debt Net leverage ratio (Excludes banking business) (Excludes banking business) Lease liabilities EBITDA Securitization 1,204.0 8,000 Net interest-bearing debt 3.00 702.9 Loan 110.7 - Net leverage ratio Approx. 2.74 x Bond 7,000 9
Slide 50: Major funding activities
Major funding activities Amidst market uncertainties due to COVID-19, issued a total of ¥200 B corporate bonds Refinanced the funding for acquiring ZOZO, and secured stable sources of funds Series Amount Interest rate Redemption 14th Series Unsecured Bonds (1.5 year bond) 25 (¥B) 0.20 % Dec. 2021 15
Slide 51: Z Holding’s new corporate structure
Z Holding’s 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
Slide 52: 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 53: 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 54: 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 Loco estate booking Z
Slide 55: 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 56: 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 57: 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 58: Advertising products
Advertising products Placement Advertising Products Main Format Fee Calculation Type of Advertiser Pages 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 59: PayPay Corporation – capital structure
PayPay Corporation – capital structure Shareholding ratio May 2018 May 2019 As of end of March 2020 As of end of June 2020 （At founding） Yahoo Japan 50 % 25 % 25 % 25 % SoftBank 50 % 25 % 25 % 25 % Common stock SoftBank Group - 50 % 50 % 50 % Total 100 % 100 % 100 % 100 % Yahoo Japan - - 50 % 50 % S
Slide 60: Business integration with LINE
Business integration with LINE Post-integration structure Exchange Ratio 50% 50% 1 ： 11.75 General shareholders JV （LINE） No. of Z Holdings shares before/after share exchange 34.7% 65.3% Integrated company 4.8 B ▶ 7.7 B shares shares 100% 100% - All incremental shares are issued to JV Succeeding - N
Slide 61: 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 62: Unleashing the infinite potential of all people
Unleashing the infinite potential of all people, with the power of information technology