Slide 1: LY Corporation Business Results FY2023 Q2
LY Corporation Business Results FY2023 Q2 November 7, 2023 Security Code: 4689
Slide 2: FY2023 Q2 Business Results - Topics
FY2023 Q2 Business Results - Topics • Q2 revenue came to JPY441.2 B (YoY +11.9%), and adjusted EBITDA to JPY103.3 B (YoY+28.1%). • Both set new records for highest Q2 revenue and income. • Media Business: A gradual recovery of advertising business led to increases in revenue and income. The growth r
Slide 3: Table of Contents
Table of Contents 1 Consolidated Business Results – Entire Group 2 Business Results/Topics – By Segment 3 Future Initiatives
Slide 4: Consolidated Business Results – Entire Group
Table of Contents 1 Consolidated Business Results – Entire Group 2 Business Results/Topics – By Segment 3 Future Initiatives
Slide 5: Entire Group – Performance
Entire Group Entire Group – Performance • Revenue rose as a result of the consolidation of PayPay, while cost optimization and a selective focus on key business areas led to an increase of over 25% in adjusted EBITDA. Revenue/YoY Growth Rate Adjusted EBITDA/YoY Growth Rate Adjusted EBITDA Margin (JP
Slide 6: Factors Behind Change in Adjusted EBITDA
Entire Group Factors Behind Change in Adjusted EBITDA • In addition to a recovery trend in LY Corporation’s gross profit, efforts to reduce fixed costs proceeded better than planned. Factors Behind Change in Adjusted EBITDA Improvements in FY2023 Q2 (SG&A/Adjusted EBITDA) (JPY B) (JPY) LY Corporatio
Slide 7: Factors Behind Change in Operating Income
Entire Group Factors Behind Change in Operating Income • Although Other (including one-time valuation gain that materialized last year) decreased, operating income rose by 14%. (JPY B) (JPY B) FY2022 FY2023 Growth in YoY Q2 Q2 adjusted Increase in Loss on Increase in EBITDA1 depreciation2 Increase i
Slide 8: Factors Behind Change in Adjusted Net Income
Entire Group Factors Behind Change in Adjusted Net Income • Approximately 6.1x increase as a result of the recognition of the tax effect of the merger. (JPY B) (JPY B) FY2022 FY2023 EBITDA YoY Q2 Q2 adjustment Decrease in items1 (YoY+512.1%) Operating income 49.7 56.7 +6.9 income tax expense +7.2 57
Slide 9: FY2023 Consolidated Full-Year Guidance
Entire Group FY2023 Consolidated Full-Year Guidance • Although the rate of progress for adjusted EBITDA for the entire Group remains at 55%, guidance still holds. Following the merger, we plan to review cost allocation for the entire Group from FY2023 Q3. FY2022 FY2023 Anticipated Cost Allocation fo
Slide 10: Business Results/Topics – By Segment
Table of Contents 1 Consolidated Business Results – Entire Group 2 Business Results/Topics – By Segment 3 Future Initiatives
Slide 11: Media Business – Performance
Media Business Media Business – Performance • Performance of advertising business underwent a gradual recovery, leading to increases in both revenue and income. Revenue/YoY Growth Rate1 Adjusted EBITDA/YoY Growth Rate1 Adjusted EBITDA Margin (JPY B) (JPY B) +4.5% +11.3% Growth +5.4% Growth +2.1% Rat
Slide 12: Entire Group – Total Advertising Revenue
Media Business Entire Group – Total Advertising Revenue • While the growth rate of search ads has slowed, display ads are on a gradual recovery trend. Entire Group – Total Advertising Revenue1 Entire Group – Total Advertising Revenue YoY Growth Rate1 (JPY B) 151.5 151.7 145.1 147.3 +22.9% Account Ad
Slide 13: Search Ads
Media Business Search Ads • While revenue decreased from less profitable ads on partners’ websites, revenue from ads on LY Corporation’s websites increased following UI/UX improvements. Search Advertising Revenue/YoY Growth Rate Factors Behind Change in Search Advertising Revenue (JPY B) Growth Rate
Slide 14: Account Ads
Media Business Account Ads • A pricing revision undertaken in June of this year and improvements to features served to expedite growth. No. of Paid LINE Official Accounts (Global/Japan)1 Initiatives (Thousands) 356 Operational Optimization with Monetization Solutions Generative AI, etc. 315 • Exclus
Slide 15: Commerce Business – Performance
Commerce Business Commerce Business – Performance • Improvements in e-commerce transaction value resulted in increased revenue and income. Revenue/YoY Growth Rate1 Adjusted EBITDA/YoY Growth Rate1 Adjusted EBITDA Margin (JPY B) (JPY B) +6.9% +85.6% +4.2% +0.6% +1.5% +24.2% +16.9% Growth +7.1% -3.0%
Slide 16: Business Overview (E-Commerce Transaction Value)
Commerce Business Business Overview (E-Commerce Transaction Value) • E-commerce transaction value achieved positive YoY growth this quarter. Group E-Commerce Transaction Value1 Group E-Commerce Transaction Value1 - YoY Growth Rate (JPY B) 1,118.2 +13.5% 1,026.2 87.8 1,029.8 43.7 980.3 982.5 84.7 78.
Slide 17: Business Overview (Domestic E-Commerce Transaction Value)
Commerce Business Business Overview (Domestic E-Commerce Transaction Value) • Shopping growth continues to improve while travel recorded double-digit growth. Domestic Shopping Transaction Value1 Domestic Reuse Transaction Value1 Domestic Services Transaction Value1 – YoY Growth Rate – YoY Growth Rat
Slide 18: Synergy with ZOZO and ASKUL
Commerce Business Synergy with ZOZO and ASKUL • LY Corporation’s strengths, particularly user base and technical capabilities, contributed to ZOZO and ASKUL’s growth. ZOZO – Expanding Customer Base ASKUL – BtoC Achieved Profitability Contribution to LY Corporation’s Ecosystem (JPY B) BtoC Avg. Numbe
Slide 19: Strategic Business – Performance
Strategic Business Strategic Business – Performance • Achieved profitability for the first time as a result of selectively focusing on key business areas. Revenue/YoY Growth Rate² Adjusted EBITDA² Adjusted EBITDA Margin (JPY B) (JPY B) +144.4% 0.6 +129.0% +110.6% Growth +115.9% Rate -2.7 1.0% 69.5 -
Slide 20: PayPay Business Overview
Strategic Business PayPay Business Overview • Consolidated revenue and EBITDA continued to grow, although QoQ growth of consolidated GMV remained flat. No. of Registered Users GMV (Consolidated) 1,2 Revenue (Consolidated)3 EBITDA (Consolidated)4 (Mil) (JPY T) (JPY B) (JPY B) 59.95 3.0 3.0 51.4 2.3 5
Slide 21: PayPay Card – Major KPIs
Strategic Business PayPay Card – Major KPIs • Synergy with PayPay contributed to a 30% growth in transaction volume. Active Cardholders Transaction Volume1 Revolving Balance (Mil) (JPY B) (JPY B) 10.73 1,111.0 317.3 10.42 1,079.2 10.04 294.2 9.58 976.4 971.9 9.05 259.8 842.7 230.0 202.9 YoY +18.6% Y
Slide 22: PayPay Bank – Major KPIs
Strategic Business PayPay Bank – Major KPIs • Steady business expansion has brought about double-digit growth for each KPI. Revenue No. of Accounts Deposit Balance Loan Balance (JPY B) (Mil) (JPY B) (JPY B) 10.9 7.37 1,693.3 649.5 7.18 1,666.9 1,688.8 10.3 6.96 624.4 613.2 10.2 10.2 1,585.2 6.68 1,5
Slide 23: Future Initiatives
Table of Contents 1 Consolidated Business Results – Entire Group 2 Business Results/Topics – By Segment 3 Future Initiatives
Slide 24: Future Initiatives
Future Initiatives Cross-Use Search Commerce Fintech Generative AI 1 Reinforcement 2 Media/Search Communication, Payment & coupons, Content Database user experience store info 3 Commerce Entertainment Local Bargains/convenience/new discoveries LINE Account linkage/LYP Premium membership PayPay Messe
Slide 25: Future Initiatives: Cross-Use
Future Initiatives 1 Cross-Use 2 Search 3 Commerce 4 Fintech 24
Slide 26: Future Cross-Use Concept
1. Future Cross-Use Concept • Further reinforcing linkage among LINE, Yahoo! JAPAN, and PayPay, while promoting cross-use. No. of monthly users Approx. 96.00 mil¹ No. of monthly users No. of registered users Approx. 54.00 mil¹ Approx. 60.00 mil² Implementing measures to promote cross-use of services
Slide 27: Measures to Promote Cross-Use – Account Linkage
1. Measures to Promote Cross-Use – Account Linkage • Linkage between LINE and Yahoo! JAPAN accounts has begun, and the number of links is steadily growing. Overview of Account Linkage Results/Effects Results to Date (As of November 6, 2023) Account linkage Account linkage from Oct 2023 FY2024 (sched
Slide 28: Measures to Promote Cross-Use – LYP Premium
1. Measures to Promote Cross-Use – LYP Premium1 • Scheduled for release on November 29, with new LINE membership benefits added to attract new members. Current Membership Benefits (Excerpt) New LINE Membership Benefits Yahoo! JAPAN Exclusive Listing in Yahoo! Unlimited use of 12 mil+ Ability to add
Slide 29: Measures to Promote Cross-Use – LINE Renewal
1. Measures to Promote Cross-Use – LINE Renewal • Promoting further cross-use among LINE users with the (planned) renewal of LINE app. Home Tab1 Chats Tab1 VOOM Tab1 Shopping Tab1 Place Tab1 New portal for news Augmented video content Shopping experience New discoveries with and other content and ot
Slide 30: Future Initiatives: Search
Future Initiatives 1 Cross-Use 2 Search 3 Commerce 4 Fintech 29
Slide 31: Search – Areas of Reinforcement
2. Search – Areas of Reinforcement • Augmenting search traffic and key query domains. Augmenting Search Traffic Percentage by Key Query Domain (Commerce/Local/Knowledge)1 Approx. 80% of Yahoo! JAPAN Search users come from Yahoo! JAPAN Top Page By Revenue Ongoing Measures to Enhance the Yahoo! JAPAN
Slide 32: Search – Initiatives
2. Search – Initiatives • Various initiatives underway. • New ad product launches planned from second half of FY2023. 1st Half of FY2023 – Initiatives 2nd Half of FY2023 – Initiatives LINE Search Local Knowledge Commerce1 Yahoo! JAPAN Search Improved UI/UX for Enriched celebrity profiles Shopping Se
Slide 33: Search – Generative AI
2. Search – Generative AI • Preparing to launch new search experiences utilizing generative AI. Application to Search1 Application to Knowledge Search (Chiebukuro)1 • Provision of new search experiences including Chat-type • Response from both humans and AI UI • Generating high-quality questions to
Slide 34: Future Initiatives: Commerce
Future Initiatives 1 Cross-Use 2 Search 3 Commerce 4 Fintech 33
Slide 35: Commerce
3. Commerce • Both LINE and Yahoo! JAPAN Search will provide convenient commerce experiences at great value. A wide variety of NEW NEW NEW commerce experiences LYP Premium Membership1 Integrated Commerce Search1 Shopping Tab1 LYP Premium + XXX 1. The content depicted in these images is under develop
Slide 36: Future Initiatives: Fintech
Future Initiatives 1 Cross-Use 2 Search 3 Commerce 4 Fintech 35
Slide 37: Fintech
4. Fintech • Reorganized financial businesses and consolidated overlapping businesses. Credit Card Banking Securities/FX Insurance Consumer Loans LINE Bank Insurance (Japan) Securities Consolidated • Cancelled launch Reorganized Terminated service Business PayPay Card • Reallocated securities busine
Slide 38: Fintech – Service Linkage
4. Fintech – Service Linkage • Other financial businesses expanding due to service linkages centering on PayPay. Linkage between PayPay and Other Financial Businesses Linkage between LINE and PayPay (Planned)2 PayPay Card – Transaction Volume1 PayPay Bank – No. of Accounts PayPay Payments via LINE A
Slide 39: Finance – Growth Cycle
4. Finance – Growth Cycle • Propelling the growth of financial services with the backing of LINE and Yahoo! JAPAN. Expanding PayPay’s user base No. of Earn Points users1 Sending unparalleled Engaging users Securities user traffic 12.00 mil2 No. of mini app No. of valid cardholders subscriptions Card
Slide 40: Action to Implement Management Conscious of Cost of Capital and Stock Price
Action to Implement Management That Is Conscious of Cost of Capital and Stock Price
Slide 41: Adopting cost of equity as primary indicator for cost of capital
Action to Implement Management That Is Conscious of Cost of Capital and Stock Price • Aiming to promptly achieve a positive equity spread with cost of equity as the primary indicator for cost of capital. Capital Policy Issues Current Status Analysis and Measures Capital efficiency Cost of equity Urg
Slide 42: Measures to Recover Adjusted EPS
Measures to Recover Adjusted EPS • Aiming for a prompt recovery in adjusted EPS by improving profitability and optimizing equity with a clear capital allocation policy. Capital Allocation Policy1 (Cumulative Approximate Value for FY2023-2025) Current Status and Measures (JPY B) (Adjusted EPS, JPY) C
Slide 43: 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 LY Corporation (Company) and its consolidated subsidiaries and affiliates. The Company cautions you that a number of important factors c
Slide 44: Create an amazing life platform that brings WOW! to our users.
Create an amazing life platform that brings WOW! to our users.