Slide 1: FY2020 Full Year & Q4 Business Results
Security Code: 4689 Z Holdings Corporation Business Results FY2020 Full Year & Q4 April 28, 2021
Slide 2: Handling of personal information in LINE Corporation
Handling of personal information in LINE Corporation • LINE: Blocked access from China and revised Privacy Policy; Transfer of data storage to Japan is in progress • ZHD: Established “Special Advisory Committee of Global Data Governance” consisting of external experts to review & evaluate handling o
Slide 3: Impact on LINE service usage/business results
Impact on LINE service usage/business results • No significant change in use of LINE by users, businesses, governmental agencies/municipalities after media coverage • Aiming for early recovery of trust, services will be provided with greater transparency considering advice from Special Advisory Comm
Slide 4: FY2020 Summary
FY2020 Summary A year of nurturing the seed we planted in FY2019, with a primary focus on supporting users during the pandemic COVID-19 measures 3 focus areas set forth at the start of fiscal year Business integration • Integration completed on Provided approx. 120* features/ 1 with LINE March 1, 20
Slide 5: FY2020 Full Year Financial Results – Topics
FY2020 Full Year Financial Results – Topics Revenue: JPY1.20 T (YoY+14.5%) － 2 consecutive years of double-digit growth Adjusted EBITDA: JPY294.8 B (YoY+18.8%) － Increase in income EC transaction value: JPY3.22 T (YoY+24.4%) － Growth driver: Shopping business • In Commerce business, transaction valu
Slide 6: Table of contents
Table of contents 1 FY2020 Full Year Financial Results 2 Results by Business Segments/Topics 3 Medium- to Long-Term Outlook 4 FY2021 Management Policy & Outlook
Slide 7: 1. FY2020 Full Year Financial Results
1. FY2020 Full Year Financial Results
Slide 8: FY2020 Full year financial results
FY2020 Full year financial results • Increase in revenue and op. income; achieved full year guidance presented in Q2 earnings results briefing • Achieved JPY 294.8 B (YoY +18.8%) for adjusted EBITDA, our new management index FY2020 Item FY2019 YoY Guidance Results Revenue 1.05 (¥T) 1.14 (¥T) 1.20 (¥
Slide 9: Difference between operating income and adjusted EBITDA
FY2020 Difference between full year operating income and adjusted EBITDA • From FY2021, will change management index from op. income to adjusted EBITDA in order to exclude accounting effects (¥B) Loss on retirement Stock Impairment 294.8 Items Breakdown Other loss Depreciation of fixed compensation
Slide 10: Results of aggressive investments made in FY2020 H2
Results of aggressive investments made in FY2020 H2 • In H1, restrained expenditures (Approx. JPY20 B) against budget due to COVID-19 • Captured the growth opportunities mainly in Commerce business, allocated the restrained expenditure to H2, and made flexible investments Q3 Q4 Sales activity Sales
Slide 11: 2. Results by Business Segments/Topics
2. Results by Business Segments/Topics
Slide 12: Commerce Business
Commerce Business
Slide 13: EC transaction value (Full year)
EC transaction value (Full year) Commerce Business • Large growth (YoY +45.1%) in Shopping business transaction value; total EC transaction value exceeded JPY 3T • Refueled growth in transaction value of Reuse business due to reduction in listing fee for PayPay Flea Market (January 2021) and increas
Slide 14: Commerce Business
Commerce Business
Slide 15: “Cho PayPay Matsuri” – Results
“Cho PayPay Matsuri” – Results (Grand finale: March 27 – 2:00 am March 29, 2021) Commerce Business • Commemorating the integration with LINE, Yahoo Japan and LINE promoted the event together • Significant growth in various KPIs compared to previous “Cho PayPay Matsuri (2020/11/14-16)” due to success
Slide 16: Yahoo! JAPAN Shopping, PayPay Mall – Status
Yahoo! JAPAN Shopping, PayPay Mall – Status Commerce Business • Transaction value recorded +25.6% for 5 year CAGR as a result of past investments, etc. Constantly acquired new customers while retaining existing customers • In-house payment ratio reached 68.2% in Q4 (record high), succeeded in captur
Slide 17: Commerce Business
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Slide 18: PayPay – KPIs
– KPIs Commerce Business • Favorable continuous growth in various KPIs driven by “Cho PayPay Matsuri” • No. of PayPay payments for FY2020 surpassed 2 billion (YoY approx. 2.5X) No. of PayPay payments No. of merchants* No. of registered users (quarter) (quarter-end) (quarter-end) YoY 1.6X 615.59 mil
Slide 19: Major KPIs of Credit card and Banking businesses
- Major KPIs of Credit card and Banking businesses Commerce Business • Rapid growth in major KPIs of Fintech business due to strengthened collaborations with PayPay; established a foundation for growth in financial services • Credit card and Banking businesses will change trade names to PayPay* to f
Slide 20: Scenario Finance initiative – Progress & result of Repair Warranty
Scenario Finance initiative – Progress & result of Repair Warranty Commerce Business • Launched Repair Warranty in December 2020 in Yahoo! JAPAN Shopping and PayPay Mall; no. of contracts steadily increasing • Set a record for a single day on the final day of “Cho PayPay Matsuri” (March 28) (No. of
Slide 21: Media Business
Media Business
Slide 22: Total advertising revenue (Full year)
Total advertising revenue (Full year) Media Business • Maintained positive growth by offsetting fluctuating user demand and advertisers’ appeal due to COVID-19 by sales activities and product improvements • Some industries are greatly affected by the state of pandemic, and future demand will continu
Slide 23: Media Business
Media Business
Slide 24: Integration of ad platforms
Integration of ad platforms Media Business • Completed integration of platforms for display advertising (reservation/programmatic) on April 1 • In the future, offline sales promotional solutions will also be integrated to this platform, aiming to establish a full- funnel marketing platform ▶ Will de
Slide 25: LINE
LINE
Slide 26: LINE Corporation – Financial results (Quarter)
LINE Corporation – Financial results (Quarter) LINE • Business results improving even after the delisting of LINE Corporation in December 2020 • Even without the one-time gain/loss, operating income became profitable in H2 due to revenue growth and reduced losses in former-Strategic business Revenue
Slide 27: LINE Corporation Core business – Advertising
LINE Corporation Core business － Advertising LINE • Advertising revenue grew YoY +26.0%; steady growth in display and account ads, the core products • No. of LINE Official Accounts also grew YoY+26.3% thanks to digitalization and use of LINE for sales promotion becoming increasingly widespread Reven
Slide 28: 3. Medium- to Long-Term Outlook
3. Medium- to Long-Term Outlook
Slide 29: Business/service growth policy
Business/service growth policy • Aim for a dramatic business growth through bold strategic investments mainly around the 3 “sources of actions” Dramatic Media Business Commerce Business Strategic Business business Media, Advertising, growth EC (merchandise), O2O, etc. Fintech, Healthcare, etc. Sales
Slide 30: Medium target for FY2023
Medium target for FY2023 • Revenue of JPY 2T with a target of approx. 1.7x growth in 3 years • Adjusted EBITDA of JPY 390 B while making bold investments for long-term profit growth Revenue Adjusted EBITDA ¥ 2T Strategic investments ¥ 1.2T ¥294.8 B ¥390 B Increase revenue Maintain profit growth Appr
Slide 31: Business goals and major investments
Business goals and major investments • In the next 5 years, make additional strategic investments to achieve goals for each business segment • Strengthen data governance & security for mid-long growth, and increase investments towards the end of 5 years Business Goal Major investments Timing & size
Slide 32: Major synergy roadmap
Major synergy roadmap • In the short term, main focus expected to be in product & sales force coordination, and on cost synergies (e.g. integration of overlapping fields) • In the medium term, realize business synergies utilizing Japan’s strongest assets (Yahoo! JAPAN, PayPay, LINE, etc.) Business S
Slide 33: 4. FY2021 Management Policy & Outlook
4. FY2021 Management Policy & Outlook
Slide 34: FY2021 Management policy
FY2021 Management policy Build a robust data governance structure and aim to materialize integration synergies with LINE Whole group By businesses Maximize ad efficiency for clients and enrich marketing solutions Media (Mutual distribution of ads, collaboration of sales force, enrichment of Strength
Slide 35: Business integration – Z Venture Capital & Z Entertainment
Business integration － Z Venture Capital Corporation＆ Z Entertainment Corporation • Integration/reorganization of CVC function and entertainment businesses of Yahoo Japan and LINE • For entertainment business, achieve cost and business synergies (cross-sell among services, upsell, etc.) Z Venture Ca
Slide 36: FY2021 Full year guidance
FY2021 Full year guidance • Aim for increase in Revenue: JPY 1.52 - 1.57 T (YoY+26.1 - 30.2%) Adjusted EBITDA: JPY303 - 313 B (YoY+2.8 - 6.2%) Revenue Adjusted EBITDA Whole group ¥1.52 - 1.57 T ¥303.0 B - 313.0 B YoY +26.1 - 30.2% +2.8% - 6.2% By businesses Estimate Growth rate（YoY） Advertising reve
Slide 37: Unleashing the infinite potential of all people
Unleashing the infinite potential of all people, with the power of information technology
Slide 38: Appendix
Appendix
Slide 39: Financial Information
Financial Information
Slide 40: FY2020 (Full Year) Factors of change in operating income
FY2020 (Full Year) Factors of change in operating income Item Full year (¥B) YoY Major factors of change (¥B) FY2019 Results 152.2 • ZOZO +90.4 (Consolidated from November 2019) • LINE +25.2 (Consolidated from March 2021) Revenue +152.9 +14.5% • ASKUL Group +11.5 • eBOOK +8.6 • YJ Card +7.2 • eBOOK
Slide 41: FY2020 Q4 Consolidated income statement
FY2020 Q4 Consolidated income statement FY2020 Q4 Item FY2019 Q4 YoY Actual results Revenue 293.3 (¥B) 332.0 (¥B) +13.2% Operating income 28.7 (¥B) 19.8 (¥B) -30.7% Adjusted EBITDA*1 65.3 (¥B) 63.7 (¥B) -2.5% Equity in earnings of associates and joint venture*2 -7.3 (¥B) -9.3 (¥B) n.a. Net income at
Slide 42: FY2020 Q4 Factors of change in operating income
FY2020 Q4 Factors of change in operating income Item Q4 (¥B) YoY Major factors of change (¥B) FY2019 Q4 Results 28.7 • LINE +25.2 (Consolidated from March 2021) Revenue +38.7 +13.2% • ZOZO +5.8 (Consolidated from November 2019) • ASKUL Group +0.8 • LINE +3.2 • Yahoo Japan +1.5 Cost of sales +0.5 +0.
Slide 43: Impact from consolidation of LINE (Goodwill, PPA)
Impact from consolidation of LINE (Goodwill, PPA – provisional values) • Measured based on assumptions in estimated future cash flow, discount rate, diminishing rate of existing customers, future revenue generated by subject trademark rights, and royalty rate, etc. • PPA to be amortized from FY2021
Slide 44: Impact from consolidation of ZOZO (Goodwill, PPA)
Impact from consolidation of ZOZO (Goodwill, PPA) Item Amount (¥B) Amount amortized (¥B) Goodwill 212.9 ― Amount Amortization period Item (¥B) (Straight line) Customer base 322.0 18-25 years (Shops/users) 3.3 PPA 502.1 (FY2020 Q4) Trademark* 178.7 ― Others 1.4 4 years * Indefinite-lived intangibles
Slide 45: Financial data
Financial data CAPEX Adjusted FCF (¥B) (¥B) Right-of-use assets Investment CF Operating CF Property & equipment/Intangible assets Adjusted FCF 35.1 83.9 17.3 23.7 132.2 6.7 18.1 44.5 17.8 17.0 -26.4 -48.3 FY2019 Q4 FY2020 Q4 FY2019 Q4 FY2020 Q4 Note: Excludes banking business. Securitization of cred
Slide 46: Financial data
Financial data Interest-bearing debt & Net interest-bearing debt Net leverage ratio (Excludes banking business) (Excludes banking business) (¥B) (¥B) Lease liabilities Securitization Adjusted EBITDA Net interest-bearing debt 3.50 Loan Bonds 7,000 Net leverage ratio Net interest-bearing debt 3.00 1,3
Slide 47: Whole Group
Whole Group
Slide 48: New business categories (plan)
New business categories (plan) • Introduce 3 new business categories: Media, Commerce & Strategic by classifying businesses depending on its growth phase • To be implemented from FY2021 Q1 Business categories (-FY2020) New business categories (From FY2021 Q1 – plan) Commerce Media/Advertising, Searc
Slide 49: User base
User base Yahoo Japan - Number of Monthly Logged-in User IDs LINE - Monthly Active Users (YoY) (YoY) (Million) (Million) Global MAU： 52.7 Japan Taiwan Thailand Indonesia 187（+1.0%） （+2.8%） 51.3 48.4 169 171 43.9 165 164 165 （+2.6%） 39.0 11 19 14 41 27 49 46 44 43 42 21 21 21 21 20 80 84 88 68 75 17/
Slide 50: 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 YAHUOKU!, Business Services Payment-related services, Banking-related services, Credit card-related service
Slide 51: Commerce Business
Commerce Business
Slide 52: Definition of EC transaction value
Definition of EC transaction value Commerce Business YAHUOKU!, PayPay Flea Market, Commerce business Reuse business ZOZOUSED Yahoo! JAPAN Shopping, PayPay Mall, Shopping business ZOZOTOWN, LOHACO, Charm Merchandise ASKUL BtoB Other Yahoo! JAPAN Tickets, (Merchandise) Ouchi-Direct EC transaction valu
Slide 53: EC transaction value (Quarter)
EC transaction value (Quarter) Commerce Business EC transaction value EC transaction value – Growth rate (¥B) (%) Services & Digital content EC Shopping business Reuse business 1,200 Other merchandise EC Total Reuse business +85.9% Shopping business 1,000 918.2 816.3 +58.5% 784.9 +51.3% 800 220.3 71
Slide 54: FY2020 Q4 Commerce business transaction value – Results
FY2020 Q4 Commerce business transaction value – Results Commerce Business FY2020 Q4 Actual Item YoY Major measures/Factors of change results (¥B) EC transaction value 816.3 +14.3% Merchandise 719.8 +17.8% • Increase in use by new/existing customers due to strengthened sales Shopping business 406.9 +
Slide 55: Measures to improve delivery quality – Blue Ribbon Delivery
Measures to improve delivery quality – Blue Ribbon Delivery • Blue Ribbon Delivery labelled to items that meet criteria designated by Yahoo Japan (e.g. shipment delay rate, speed from product order to shipment) • Ave. shipping speed of Blue Ribbon Delivery stores reduced by 30% thanks also to cash b
Slide 56: Fintech
Fintech
Slide 57: FY2020 Q4 Statement of financial position
FY2020 Q4 Statement of financial position Consolidated (IFRS) PayPay Bank Corporation (JGAAP) YJ Card Corporation (JGAAP) FY2020 FY2020 FY2020 FY2020 FY2020 FY2020 (¥B) Difference (¥B) Difference (¥B) Difference Q3 Q4 Q3 Q4 Q3 Q4 Assets 4,299.4 6,696.6 2,397.2 Assets 1,315.1 1,338.7 23.6 Assets 500.
Slide 58: YJ Card Corporation – Business results & KPIs
YJ Card Corporation – Business results (IFRS) ＆ KPIs Operating revenue/Operating income (YoY) (Mil) 7.52 （+4.9%） (¥B) 7.16 6.33 Operating revenue 42.7 4.68 Operating income Active cardholders （+7.6%） 3.60 39.7 (YoY) 35.9 17/3 18/3 19/3 20/3 21/3 24.0 (¥B) 2,428.1 15.1 （+20.1%） 4.0 2,021.7 （+10.8%） T
Slide 59: PayPay Bank Corporation – Business results & KPIs
PayPay Bank Corporation – Business results (JGAAP) ＆ KPIs Ordinary income/Ordinary profit* (YoY) (Mil) 5.12 （+11.8%） (¥B) No. of accounts 4.58 3.77 4.07 Ordinary income Ordinary profit (YoY) 38.1 （+17.2%） 18/3 19/3 20/3 21/3 32.5 (¥B) 1,216.8 28.4 29.0 （+32.2%） 803.8 920.3 Deposit balance 750.3 (YoY
Slide 60: PayPay Capital structure (shareholding ratio)
– Capital structure (shareholding ratio) 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 Mar 2021 & Yahoo Japan 50% 25% 25% 25% 25% Paytm’s exercise of stock option*2 SoftBank 50% 25% 25% 25% 25% Common Yahoo
Slide 61: Media Business
Media Business
Slide 62: Advertising products
Advertising products Media Business Advertising Products Main Format Fee Calculation Placement Pages Type of Advertiser 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 “D
Slide 63: Total advertising revenue (Quarter)
Total advertising revenue (Quarter) Media Business Total advertising revenue Total advertising revenue – Growth rate（YoY） (¥B) (%) Display advertising (reservation) Total Display advertising (programmatic) Search advertising Search advertising Display advertising 97.3 +16.1% +14.7% 93.0 93.4 7.7 +11
Slide 64: FY2020 Q4 Total advertising revenue - Results
FY2020 Q4 Total advertising revenue - Results Media Business FY2020 Q4 Item YoY Major measures/Factors of change Actual results (¥B) Total advertising revenue 97.3 +4.6% • Demand continued to decrease in some industries due to COVID-19 - Travel: Affected by 3rd wave of COVID-19 and reissuance of sta
Slide 65: 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 issues
Slide 66: Collaborations in ad sales with SoftBank Corp.
Collaborations in ad sales with SoftBank Corp. Media Business Major measures in FY2020 Q4 Revenue from synergies in FY2020 Q4 Increase in proposals to SoftBank Corp.’s top clients Increase in new proposals to JPY4.4B * clients new to Yahoo Japan (FY2020 Q3: JPY4.4 B) Designing of DX packages for loc
Slide 67: LINE
LINE
Slide 68: Social commerce – LINE GIFT
Social commerce － LINE GIFT LINE • Rapid increase in transaction value since service launch in 2015. Main users: young female • Leveraging ZHD’s group assets, will focus on expansion of product lineup and acquisition of new customers LINE GIFT Transaction value*1 User attribute Sender Receiver 2% 3%
Slide 69: LINE Overseas business – Status
LINE Overseas business – Status LINE • Businesses operated across Asian countries and regions, mainly in Taiwan, Thailand and Indonesia • Focused on partnership strategy with local companies to develop UI/UX tailored to the culture and customs of each country and region Thailand 49 million MAU • OMO
Slide 70: Non-Financial Information
Non-Financial Information
Slide 71: Released “Integrated Report Portal”
Released “Integrated Report Portal” • Financial/non-financial information useful for investment decisions will be updated as needed Vision and Strategy Value Creation Business Performance Sustainability URL: (English) https://www.z-holdings.co.jp/integrated-report/en/ (Japanese) https://www.z-holdin
Slide 72: Materiality matrix for Z Holdings Group
Materiality matrix for Z Holdings Group 11 17 The numbers and colors in the matrix Solving social coincide with the SDG icons. Corporate issues with 9 governance IT Data 4 Quality Education security 11 17 Disaster measures/ 8 5 Gender Equality 9 Recovery support Level of stakeholder concern Health &
Slide 73: Overall picture of CSR, Materiality, and our four UPDATEs
Overall picture of CSR, Materiality, and our four UPDATEs 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 fintech socie
Slide 74: Carbon neutral initiatives
Carbon neutral initiatives (Announced: January 19, 2021) • Aim to achieve neutrality well ahead of Japanese government’s “2050 Carbon Neutral” goal ZHD Group to announce Pursue early membership in RE100 renewable energy initiative*1 ▶ mid-long environmental goals by the end of FY2021 Declared “FY202
Slide 75: External ESG evaluations
External ESG evaluations • Aim to maintain/enhance a high third-party evaluation after integration, to secure our position as the industry- leading ESG issuer S&P Global - DJSI MSCI ESG Rating* Interactive Media, Services & Score rising Home Entertainment sector every year since 2018 Selected as an
Slide 76: Acknowledgment as a sustainable company
Acknowledgment as a sustainable company MSCI Japan Empowering FTSE4Good Index Series FTSE Blossom Japan Index ISS ESG Corporate Rating Women Index (WIN) 2020 Health & Productivity Stock Selection & Digital Transformation Stocks SNAM Sustainability Index 2020 Certified Health and Productivity (DX Sto
Slide 77: 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