We will now start the briefing session on the FY 2024 Q3 Business Results of LY Corporation. Thank you very much for your participation. In this session, we will use the LY Corporation business results presentation posted on LY Corporation's website. Let me first introduce the participants from LY Corporation: Mr. Takeshi Idezawa, President and Representative Director, CEO; Mr. Ryosuke Sakaue, Executive Corporate Officer, CFO; Mr. Yuki Ikehata, Executive Corporate Officer, Marketing Solution Company CEO; and Mr. Makoto Hide, Executive Corporate Officer, Commerce Company CEO. Now, in the third quarter results for fiscal year 2024, after that there will be a Q&A session. The entire session is scheduled to last for about one hour, but please note that this session is also broadcast live.
For those of you watching the live broadcast, if you experience any problems with the audio or video, please try to move to a different server from the bottom of the screen. Now, let's begin.
I'm Sakaue of LY Corporation. Thank you very much for taking time out of your busy schedule to participate in the financial results briefing for the third quarter of fiscal year 2024. I will cover the financial results of the third quarter. There are three topics. First, the third quarter results: ad account advertising and PayPay consolidated grew, resulting in increased revenue and profit. The entire group revenue grew 6% year-on-year, and consolidated adjusted EBITDA grew by 17.5%. For the shareholder return, this year's dividend forecast has been revised upward from JPY 5.56 to JPY 7. We will continue to consider share buyback using the remaining buffer for additional investment and capital policy.
On BEENOS acquisition, by acquiring BEENOS, the largest player of intermediary cross-border EC in Japan, we will aim for a four-year CAGR of 10% in cross-border EC transaction value, bringing the reused business back to growth track. This part will be explained later by Mr. Hide, CEO of Commerce Company. These are the agenda items I will cover today. First, I will explain the consolidated business results for the entire group. This is third quarter results. Revenue and profit increased in the third quarter. The quarterly revenue exceeded JPY 500 billion for the first time. The progress of the entire group and each segment, adjusted EBITDA and adjusted EPS against the guidance, exceeded 75% and are progressing well. This is group-wide performance trends. As was in the first half of the fiscal year, the increase in revenue and profit was driven by account advertising and PayPay consolidated.
Revenue growth was 6% year-on-year. Adjusted EBITDA grew by 17.5% year-on-year. Enhanced profitability thanks to fixed cost optimization has led to stable profit growth, with adjusted EBITDA margin improving to 25.6%. This is entire group performance analysis. Sales growth in each segment and disciplined cost investments are the main reasons for the increase in profit. Revenue growth was driven mostly by the strategic businesses, while media and commerce also grew. As the third quarter is the year-end sales season, a certain level of investment in sales promotion was made. Although the sales promotion expenses increased year-on-year, investments continued to be disciplined. SG&A expenses improved due to foreign exchange gains and lower depreciation, resulting in higher year-on-year profit. To strengthen the shareholder return, we have made.
当初、1株当たり5.56円を予定しておりましたが、日中に開示した還元方針だったり、安定的な利益成長が直近の業績等を進捗しておりますので、そういったことを。
The business performance and profit is progressing well. We have made an upward revision to JPY 7. We will continue to pay stable dividend.
On the share buyback, in addition to conducting share buyback for the purpose of shareholder return, we will also look at the capital efficiency and conduct buyback at the appropriate timing. The total shareholder return of 70% or higher for the five-year period from 2025 to 2029 on a cumulative basis will be targeted. This is on capital allocation. Taking into account dividend forecast revision, we updated the outlook for capital allocation. Cash inflows increased mainly due to the improved operating cash flow driven by higher adjusted EBITDA. For cash outflows, due to the company's revised dividend forecast and increased base shareholder returns as a result of share buybacks by subsidiaries. On the other hand, base investments decreased from the original plan due to higher receipts from share sales and others, although there were expenditures for inter-group M&A.
As a result, the remaining balance of the additional investment and capital policy buffer increased by JPY 80 billion compared to the plan. We will continue to consider share buyback using the remaining buffer as the funding source. Remaining buffer will be rolled forward to FY 26 and beyond. Next, I will explain our performance by segment. This is on media business performance. Account advertising continues to be the growth driver for the media business, resulting in increased revenue and profit. Margin for the account ad is very high, so margin grew to 39.8%. This is the breakdown of media business revenue. Overall, media business revenue grew by 3.4% year-on-year, and advertising revenue grew by 3.5% year-on-year. Account advertising maintained high growth of 19.7% year-on-year. Search ads grew by 2% year-on-year, while revenue from the partners' websites stabilized. Display ads weakened slightly due to lower demand in certain industries.
This is similar to the previous period. As part of the growth initiative, we have been talking about LINE renewal. Initially, we explained that the release will be in FY 2024. However, we are currently reviewing the tab structure with generative AI and profitability in mind. Therefore, the renewal will be implemented in phases starting in FY 2025. This is on media business performance analysis, EBITDA analysis. Despite an increase in cost of sales due to higher sales promotion costs linked to sales, the profit growth was achieved thanks to the revenue growth and improvement in SG&A expenses through continuous cost control. Account ads, the number of paid accounts grew steadily, and account ad plan sales expanded in the third quarter as well, with an increase in the number of pay-as-you-go accounts and pay-as-you-go billing, and the revenue from the account advertising continued to grow at a high rate.
This is on commerce business. Revenue and profit increased mainly due to growth in shopping and travel, despite the impact of deconsolidation of ValueCommerce and IPX. Margin also remained in the high teens range. This is on commerce business. Yahoo! Japan Shopping's sales promotion measures in November and December generated favorable results. Also, in December, Yahoo! Japan Hometown Tax was launched, which increased the number of users and order unit price. As a result, Yahoo! Japan Shopping transaction value increased by 9.5% year-on-year. On travel, the number of reservations increased in part to sales promotions by Yahoo! Travel and Ikkyu, and achieved a significant growth of 25.1% year-on-year. This is on commerce business performance analysis. Revenues grew in ZOZO, ASKUL, Yahoo! Japan Shopping, Reuse, and Travel businesses.
In terms of the costs, both the cost of sales and SG&A expenses improved due to the deconsolidation of ValueCommerce and IPX. As a result, Adjusted EBITDA increased by 19.9% year-on-year. This is on strategic business. PayPay Corporation continued to drive sales and profit growth, with revenue up 19% year-on-year to JPY 91.1 billion. Adjusted EBITDA was JPY 18 billion due to the growth in the sales and the continued improvement in profitability through cost control. As a result, the margin expanded to 19.8%. This is strategic business revenue breakdown. All businesses continued to grow steadily. For PayPay Corporation, it grew by approximately 20% year-on-year due to growth in transaction value from campaigns and other initiatives, as well as increase in interest income from the expansion of revolving payment balances. PayPay Bank saw steady growth in housing loans and increased revenues due to increase in loan balances.
Other fintech grew by 27.7% year-on-year due to strong performances of LINE Pay Taiwan and LINE Credit. This is the EBITDA YOY change for the strategic business. Despite higher cost of sales at PayPay Bank due to the rate hike, profits increased as a result of revenue growth and the reduction of SG&A owing to decrease by outsourcing costs and etc. Next page, please. This is a PayPay consolidated business overview. PayPay consolidated GMV grew 26.5% year-on-year thanks to successful marketing campaigns such as the PayPay Festival and the point redemption campaign run by the Tokyo Metropolitan Government in December, and consolidated revenue also grew by 20.7%. Consolidated EBITDA grew significantly to JPY 15.7 billion due to factors such as more efficient marketing spending and lower outsourcing costs.
In addition to the sustained high growth of the payment business, we will also strengthen the collaboration with PayPay Bank in the future and pursue growth as a comprehensive financial platform. Specifically, we will further expand our financial business by utilizing banking functions such as deposits, loans, payroll accounts, and remittances provided by PayPay Bank, as well as by developing products led by PayPay. Next page, please. Last but not least, the third point is about the acquisition of BEENOS Inc. announced on December 19 last year, and this will be explained by the CEO of Commerce Company, Mr. Hide.
はい、それではコマースカンパニーのヒデでございます。
Hi, this is Hide, the CEO of Commerce Company. Let me share our thoughts on the acquisition of BEENOS. Next page, please.
まずは本案件の概要について。
This is the outline of this deal.
The tender offer price is approximately JPY 54 billion, and the IRR is estimated to be over 10%, surpassing our internal investment criteria. The deal is expected to contribute to the consolidated P&L and is expected to make a profit contribution early on from the top line and the cost synergies. Adjusted EPS contribution of JPY 0.15 is anticipated in the first year. We concluded the tender offer agreement on December 19 last year, and we plan to start the tender offer as soon as we get clearance for competition law and other regulations. Next page, please. Now, I will explain the background to this transaction. First, the positioning and the current state of the reuse business in our commerce segment. In terms of scale, the reuse business accounts for one-third of the domestic merchandise transaction value.
In terms of profit, Yahoo! Japan Auction, the main service in our reuse business, is a good reference with over 50% Adjusted EBITDA margin. It's a highly profitable business within the commerce segment and a core stable revenue business for the company. On the other hand, due to changes in the external environment and intensifying competition, growth is slowing, and urgent efforts to prioritize the resource deployment are required to expand growth. Next page, please.
次に、当社のリユース事業の。
This is the current state of the domestic reuse market where we operate our reuse business. Since its launch in 1999, Yahoo! Japan Auction has been a pioneer in online reuse services and has led the market growth. Since then, the domestic online reuse market has continued to expand steadily, with a sustained high single-digit growth.
In recent years, inflation, moderated reluctance toward reused goods, ethical consumption, and inbound demand have served as tailwinds in establishing the foundation for further growth.
また、
The competitive landscape is such that the domestic top two companies occupy the majority of the online reuse market in Japan. LINE Yahoo exerts a lot of competitive advantage, but further growth drivers are needed.
次のページをご覧ください。
Next page, please.
続いて、本案件の狙いである。
The overview of the intermediary cross-border EC market, which is the intention behind this deal and also a focus area for our reuse business going forward. The intermediary cross-border EC market continues to grow steadily, with over 30% CAGR over the past three years, which is higher than the growth rate of the domestic C2C market. In addition, continued trend of weak yen and the expansion of the global reuse market, high growth is likely to continue in the future.
Currently, we have a competitive position in the intermediary cross-border EC domain, and our transaction value continues to grow at double digits. Further expansion of the intermediary cross-border EC domain is an extremely important initiative in the growth strategy for our entire reuse business. Next page, please.
次に、
For more information on the target company, BEENOS. BEENOS's main business is cross-border e-commerce, and through its main service, Buyee, the company purchases and delivers products on behalf of overseas users when they purchase goods on Yahoo! Japan Auction and other sites. According to the latest results for cross-border e-commerce business, both sales and operating profit increased by approximately 20%. They also enjoy a high take rate, and the most recent results show a take rate of 16%.
BEENOS is the number one company by annual transaction value in the domestic intermediary cross-border EC market, and by further strengthening our partnership with this company with a proven track record, we aim to capture the growth of the intermediary cross-border EC market. Next page, please. Last but not least, I will explain the synergies we anticipate from this deal. Due to BEENOS's unique strength and the growth of the intermediary cross-border EC market, we expect organic growth of 7% CAGR over the four years from FY24 to FY28. In addition to the organic growth, we expect post-merger synergies. On the Yahoo! Japan Auction and Yahoo! Japan Flea Market, which are services for sellers, we can expect an increase in the number of items listed.
By operating as one with BEENOS, the service provider for buyers, we will aim for 18% CAGR in cross-border EC transaction value over the four years from FY24 to FY28. Specific measures to create synergy would involve the following: carry out joint sales promotion for overseas buyers, offer preferential sales commission to sellers on our site, and strengthen our collaboration with LINE Taiwan and Thailand to attract more customers. In sum, the reuse market is a promising market with further room for growth, and by accelerating our efforts in the intermediary cross-border EC domain with high growth rates, together with BEENOS, we hope to further grow our core stable revenue business, the reuse business. This concludes my explanation. Thank you very much for your attention.
結算説明会開始から5分程度、一部音声にトラブルが発生しておりました.
There has been a problem in the audio for the first five minutes after the start of the session.
I would like to apologize for that. Now, we would like to start the Q&A session. If you have a question, please press the raise hand button on Zoom. Once the moderator calls your name, please raise your question. Please limit your question to two questions at a time, and please stop after each question. Also, please note that the questions asked in English will be interpreted consecutively. Let me repeat. If you have a question, please press the raise hand button on Zoom. When it is your turn to ask a question, the moderator will call your name. Please limit your questions to two questions at a time, and please stop after each question. Please note that questions asked in English will be interpreted consecutively.
それでは、質疑応答を開始いたします。
We will now begin the Q&A session.
ではまず最初に、ゴールドマンサックス証券の村方様。
I would like to invite Ms. Munakata.
Munakata of Goldman Sachs to unmute and repeat your question. I am Ms. Munakata. I have two questions. First is on display ad negative growth. What is the actual of the third quarter? If you break it down between Yahoo and LINE, what would be the percentage? In your material, it mentions that Talk List is also weakening. Could you also explain the background? Is it due to the overall advertising market or unique to your company? Do you expect this to continue? Munakata-san, thank you for your question. The product-by-product growth rate is not disclosed, but Ikehata-san will talk about the qualitative aspect. This is Ikehata-san. Thank you for the question. As Sakaue-san mentioned, the details I will not be able to disclose, but in the third quarter, the display ad, the factor coming from the slowness of the demand had an impact on a recurring basis.
We received revenue from cosmetics and health food. The revenue from such industry was rather slow, and last year, there were big titles in games and entertainment. We had a large revenue on the application service, but this was absent this period. Although this is one time, it both impacted LINE and Yahoo. The countermeasures and outlook for the future, including last round or the round before, we communicated the measures, and they remain the same. The LINE and Yahoo in both of these spaces, the user retention is taken by the video-based media, so we need to improve that. News Smart Channel, Talk List, profitability is not the only area, but in response to the total change in user behavior, Yahoo application renewal, and both LINE and Yahoo application renewal would be necessary so that we can create a service experience and media experience.
On cosmetics and health food industry, another reason for the revenue decline is the impact of the advertising. We need to make it more competitive versus other media. So that is a continuous effort that we need to make: ID linkage, user ID linkage, and also integration of the advertising platform. Those are measures we will continue into next fiscal year so that the data utilization platform will be strengthened, and we will aim at raising the impact of advertising in the medium term. These initiatives will continue. In the third quarter, the trend will be the same. This trend will continue. We need to raise this negative growth to flat growth towards next fiscal year. Talk List and News being weak on News. The sales revenue was large to begin with, so the slowdown was large.
On Talk List, the product and distribution volume was increased to a certain extent. So there was weakness coming from the reaction of that. Thank you very much. My second question on LINE renewal. I would like to raise a question on this topic. Sakaue-san mentioned that you will postpone to FY2025. If you could talk in more detail about the content of the renewal? Given the external environment, are you reviewing the renewal, or is there any delay in the development and impact of the business performance? Now, you're going to do the renewal within FY2025, so the impact will likely be felt in 2026. Is that the right understanding? This is Idesawa. Let me reply to your question. I'm partially repeating Sakaue-san's explanation. There are two elements. One is initiative related to GenAI. LINE Yahoo is working on developing AI agents. So that is one initiative.
On the topic of display ad, we need to maintain the profitability. So those are two points we are taking into consideration to postpone the schedule of the renewal. The impact to the business performance within FY2025, we will do renewals in stages. So no major business performance impact is expected in 2025. So inclusive of upside, the contribution will start from second half of 2025 to 2026. This will have a significant impact to the users. So we are repeating tests and carefully moving forward.
ありがとうございます。
Thank you very much.
ありがとうございました。
Thank you for the question. Next question from SMBC Nikko, Mr. Maeda, please. Unmute yourself and please ask your question. Hi, this is Maeda from SMBC Nikko. I have two questions. My first question is
スターマッチの契約終了ということを聞きました。
I heard that the StoreMatch contract is ending.
Also, going forward, the alternative ad that you will be developing, what kind of aspiration do you have for the new product? And on that point, how is it going to impact the top line, and how would that reduce the cost? And in the collaboration of e-commerce for LINE and Yahoo, do you need a new product? Also, for the StoreMatch and R∞, I think you are developing an alternative product. So can you give us the background to that? So I think your question is why we are changing the StoreMatch. Mr. Hide will respond to that question. Yes, the StoreMatch and the STORE's R∞ as an alternative, we are developing our internal ad platform. So for the launch, the function that was provided by ValueCommerce will be developed, and that will be the phase one.
And going forward, in terms of scalability, as you pointed out, the most important thing is that for our marketing solution platform and the ad platform used by commerce must be integrated. As Mr. Ikehata mentioned earlier, LINE ID and Yahoo ID will be integrated so that we can offer a comprehensive marketing solution. So that's why we have the Connect One concept. And to realize this, we are going to internalize our ad platform, which will be linked to the ad platform by marketing. So that from recognition to marketing, we can offer a full-funnel marketing solution. So in terms of scalability going forward, it will have an impact on the profitability and the revenue of the commerce. But from recognition to conversion, we will be able to offer a full solution for marketing and sales promotion.
So we will be able to offer that as a comprehensive solution to each of our clients. So for the revenue, at this point, we don't expect a material change. And the cost has been disclosed by ValueCommerce. So they will be losing our business. And in terms of cost, there will be an impact from that perspective. My second question is regarding the display ad. Fuji TV
さんの広告収入が全部流れてくることはないと思うんですが、
I'm going to put everything to shift to the online marketing for branding marketing for high-quality display ads. I think there will be a migration to a more reliable media. So have you seen any signs of that shift? I think the impact will be quite significant. So can you tell us any change in that trend? Okay, so Mr. Ikehata, I will answer that question because that will be the demand from the sales perspective.
Yes, this is Ikehata speaking to address your question. Regarding your question, we as a company are talking to the ad agencies and also clients. We are starting to see signs of new activities. Normally, for January to March quarter, especially at the end of March, the brand companies would deploy big budgets, but compared to those normal years, clearly, already in February, things are moving. I cannot say for sure the incident you mentioned had triggered this, but we can see that customers and clients are moving earlier than normal to discuss about the ad opportunity, and the negotiation has been completed in some cases, so compared to the normal years, I think for ad revenue, especially for the branding strategies and also the reservation type of ad, we may see a shift from the traditional media.
The negative in the display ad may contract, and this may be just a one-off, but is this impact big enough to reduce the decline in your display ad? At this point, it's difficult to assess the magnitude of this shift. But at this point, we don't expect the impact to be big enough to offset the negative in the display ad for Q4. Next, Sato-san from Jefferies, please unmute and state your question. I'm Sato from Jefferies Securities. Can you hear? Yes, we can hear. I have one major question. Sorry, I have two questions. My first question, this time, the third quarter business results, for each segment, I would like to ask you to make a comment. Was it in line with your internal target, or was it higher or lower than your internal target on media, e-commerce, PayPay related?
My second question, towards next year and beyond, you are working on various plans. Third quarter is now over, so on the medium-term plan or on your strategy, are there any comments that you can share at the moment? What do you have in mind? If you can share with us some hints. So those were my two questions. Thank you. Third quarter segment results on media, it was almost in line with our internal targets for profit. We suppressed spending the cost, so several hundred million JPY overshoot of the profit. That is the media. Commerce, the situation is similar. Yahoo shopping transaction value was quite good, but as a result, on revenue and EBITDA, they were almost in line with the internal plan. For the strategic segments, PayPay revenue and cost reduction progressed more than our anticipation.
strategic segments, in terms of EBITDA, the landing was higher than our internal plan. Towards next fiscal year, currently, we are under development of the plan. So next time, we would like to share why a mid-single digit and adjusted EBITDA 5%-10% range, hopefully in the upper higher part of the range, is our target that we are hoping to achieve. Did this answer your question? I have one more additional question. In the fourth quarter, media business, or each segment, how much shall we anticipate? So this one, search, auction, display, what would be the anticipated growth rate if there's any change in the range in the fourth quarter compared to third quarter? For Q4, our expectation will be the same growth as the third quarter. That is how it is progressing. The search ad, the impact of Microsoft will settle down.
It has bottomed out in the third quarter already. Understood. Thank you. Thank you very much. Next, Okasan Securities. Okumura-san, please. Please unmute yourself and ask your question.
ありがとうございます。岡三証券奥村です。
This is Okumura from Okasan Securities. Can you hear me? Yes, we can. Thank you. I have two questions.
一点目、実績とかと関係なくて申し訳ないんですけども
It's not related to the results, but
業績に影響を与える要素として
As a factor that could impact your future performance, the Crystal intelligence of OpenAI is the question that I want to ask you. LY is paying the usage fee, and there was an explanation that the group will be able to use that. What kind of impact do you expect for the group? In utilizing this new tool, there's going to be some positive factors, but to LY, would you be paying the usage fee? And if so, what is the magnitude of the usage fee?
資本政策バッファーの還元とか
Would that impact your performance and also impact your shareholder return policy or the buffer for additional investment? That's my first question. Yes, I will have Mr. Idezawa answer that question. Thank you for your question. Basically, for the Crystal project, this is using GenAI for the corporates. This will be a good thing for us. We would like to actively consider this at this point. The data production issue and the environment that is required are things that we need to work on. Also, short term, we do not expect any material impact. And also, in terms of the format, as LY, there's no commitment, financial commitment. According to the usage volume, we will be paying the appropriate fee. So in that sense, the impact on the financial results for FY25, we do not expect any material impact for FY25.
Having said that, with GenAI, the process can become more efficient. I think the efficiency gain can be achieved. Also, we will work on this project with a forward-looking attitude.
ありがとうございます。
Thank you very much.
補足として、
As a follow-up question, may I ask? But my concern is that there could be unfair conditions for this collaboration because you have the parent and the subsidiary relationship. And is this also related to the LINE app's renewal? Well, to SoftBank, who is our parent company, we have been communicating that we will make the appropriate judgment as a listed company. So you do not need to be concerned about that. And regarding the LINE app renewal, the Crystal project is not impacting our renewal plan. I see. Thank you very much. My second question is, M&A and share buyback, and also M&A.
今回のキャピタルアロケーションの動向をご報告いただき、非常にすごく分かりやすい。
You updated your capital allocation policy, which is very clear.
So in the remaining one year, about 70 billion yen. I see Q5, JPY 370 billion. Capital allocation buffer, given what you are considering for M&A opportunity, what is the balance you're thinking between share buyback and M&A opportunity? That's my second question. Thank you very much. Also, at this point, there are uncertainties over the progress of the M&A pipeline. So we will not be able to offer you a clear response. But as I mentioned in the presentation, we are not trying to force ourselves to fully utilize the budget by looking for M&A opportunity.
This could be carried over to FY26 and also consider shareholder return as a use of this capital. Thank you very much. Thank you very much. Next, from Citigroup, Tsuruo-san, please unmute and raise your question. Yes, I have unmuted. This is Tsuruo from Citigroup. I'm Tsuruo from Citigroup. I have two questions. My first question is on EPS guidance and the dividend increase.
How do the two relate to each other? The adjusted EPS progress is good. It is above 80%. And on EPS, the upper limit, JPY 19.4 or higher than that, so will you be able to aim that range? You have increased the dividend. So what is your outlook of the EPS in making that decision? In the future, are you planning to keep at JPY 7, or are you going to include progressive dividend as well? Thank you for the question. On EPS guidance, the progress of EBITDA is high, so the upper limit, well, we will likely land above the upper limit. And overall, the business performance is strong. Those are the reasons for the decision of increase in dividend. In the future, are we going to increase every year?
That we cannot make a promise, but 7 JPY is the minimum line, and we will take into account the business performance. We're not going to keep it at 7 JPY, but we would like to strengthen our shareholder return. Thank you very much. The second question, this is more of a big picture question. SB OpenAI lab will start, and on top of that, SoftBank Group itself is joining the AI camp by making massive investment to pump up the profit of OpenAI. And what kind of opportunity do you see? The Google search engine-related opportunity or other businesses? SoftBank Group is supporting heavily OpenAI, and what is your company's view on that? Mr. Ikehata will reply to that question. There are two major points. One is for users, the service to see the GenAI utilization will be further strengthened.
Under each service, we are promoting the introduction of AI agents for users as an entry point to GenAI, the chat and search window, and Yahoo top page. This has a strong synergy, so we will further progress in introducing AI agents. That is the major policy. The second point is internal work, internal process. We talked about Crystal in various business processes. We will make updates, and those updates will be a very strong one, and we will be utilizing Crystal and other tools. The relationship with OpenAI, for us, is very beneficial, so we will continue to strengthen the relationship. There are various options for the end users. Until now, we have been saying our stance is multi-vendor, but depending on the application, there are various possibilities, so that is the direction. Another point I would like to reconfirm.
OpenAI is likely to become a strong business partner, so your options will expand and risk is declining. Is that the correct perspective? Yes, that is the correct understanding. Thank you very much. Thank you.
それでは次に
The next question is from UBS Securities. Ms.Zhai , please. Please unmute yourself and ask the question. Thank you very much. This is Zhai from UBS. I have two questions.
一つ目は
The next one is regarding the commerce business. This fiscal year, the hometown tax impact was quite significant. And what was the actual impact, and also the yen amount?
どれぐらい占めているのか。
Account for the YOY GMV growth. And the reason why I ask this question is, last year, the GMV base, I think, was low to start. So Q3, initially, the YOY growth was expected to be high.
And then with Yahoo! Japan hometown tax contribution, I thought that the growth could have been higher. ちょっと御社のご見解について伺いたいです。 I would like to ask for the company's view. Yes, Mr. Hide will take that question.
はい、ご回答申し上げます。
Yes.
レガーリングの影響ですけれども
Regarding the impact of Yahoo! Japan hometown tax,
今期の全体の成長率は今。
The Q3 overall growth was 9.5% for Yahoo! Japan Shopping. And out of this 9.5% growth, the impact is not as big as 2%. So around 1-1.5% was the contribution coming from Yahoo! Japan hometown tax. And the release was conducted in mid-December, so the period was quite short. So it did have a contribution for a single month of December, but for the quarter, the impact is not that big.
はい、ありがとうございます。
Thank you very much for that answer.
2点目についてですけれども
My second question is, regarding the strategic business,
私は
I just think
当初計画を。 上回っているかと思います。
Much higher compared to the original guidance.
control. How the revenue growth contributed and also how the cost management contributed, which factor was greater than expected in terms of the impact to growth. And also going forward regarding the monetization opportunities. Furthermore, if new monetization methods are added, what would they be. What are going to be new monetization opportunities? When would that be happening, and what is the magnitude of the impact? So from the medium to longer-term view, can you share your thoughts on the monetization opportunities? Yes, for the strategic business, in terms of which of the revenue or cost contributed more to the profit growth, to be honest, both. The impact on the revenue and cost control both had a significant portion to the profit growth. The Tokyo Metropolitan Government had the sales campaign, and also PP Festival was quite successful after a long time. So it contributed to the GMV growth. And for cost control from Q1, we have been revisiting the outsourcing framework and also reviewed other campaigns to make improvements.
So both impacted to contribute to a better EBITDA. And going forward, regarding the new pillars of monetization that you ask, at this point, we don't have anything specific in the pipeline. So the payment and the settlement fee will be growing, and also the revolving balance is building up as a recurring fee. So they will continue to generate a stable revenue.
ありがとうございます。
Thank you very much. My follow-up question is,
業務委託費の
regarding the outsourcing expenses, regarding the cost management on that.
で
I think that it started mainly from this fiscal year. And going forward, are there further rooms for reduction? For example, in Q1 of next fiscal year, you will have gone through one cycle, so there's not much further room for cost reduction on that point. How should I interpret this?
Well, relatively speaking, this fiscal year, we focused on reducing the outsourcing fee, and also the unit price of the outsourcing resources are higher. So we tried to internalize those work, and the difference of the spending impacted the profit level. So the impact is quite big for this fiscal year, but we will continue to internalize and use in-house engineers for those capabilities. So to a certain extent, we do expect a certain level of impact to be incurred next fiscal year as well.
それでは次に.
Thank you very much. Next, Kumazawa-san from Daiwa Securities. Please unmute and state your question. Thank you very much.
聞こえておりますでしょうか.
Can you hear me? Yes, we can hear you. On page 22, the acquisition of BEENOS.
さんは. BEENOS. メルカリさんをかなり委託、cross-border ECで支援されてるらしいです.
Supported Mercari on the cross-border EC.
Once BEENOS is part of the LY Corporation Group, will the company be able to continue to support Mercari, or are they going to increase the business or decrease the business with Mercari? Mr. Hide will reply to this question.
はい、小松の秀からご質問を.
I'm Hide of Commerce. The TOB will be. It's yet to happen, so we have not had the concrete discussion. BEENOS is a platform, and it's not just our company's product, but other merchants or other players' involvement is the source of a competitive advantage of BEENOS. BEENOS is a fair platform, and BEENOS will continue to do business with other partners. That's what we desire, and we also confirm that BEENOS's stance is also the same. Through our own effort, the products that are demanded, with high demand from overseas consumers, will be offered through our auction and Yahoo! Japan Flea Market.
Thank you very much. That's it from myself.
それでは次に
Next, the question is from Nagao-san from BofA Securities. Please unmute yourself and state your question.
ビオベ証券の長尾でございます。
This is Nagao from BofA Securities.
それからYahooですか。
Online website and Yahoo website. I think the renewal is now pushed back and postponed.
お話をイデザ社長からいただきました。
Mr. Idezawa mentioned about the GenAI as the moving piece of this concept. How about the usability? From a user's perspective, I do expect to see a big evolution by using GenAI. GenAI will be equipped into different media. How do you think about the future state of media for Line and Yahoo from a mid to long-term perspective? Can you give us some ideas about your product strategy? Yes. Mr. Idezawa will take the question. We are actually in the midst of discussing that topic to plan for the business opportunities.
From a user's perspective, we need to offer something that's going to be a game changer as an experience for the users. Also, at the right timing, we hope to offer you more information, but we expect the user experience to change. And we are planning many initiatives to achieve that. Thank you. I have a lot of expectations for that. My second question is on page 8 of the presentation regarding the capital allocation. As you earlier, Mr. Sakaue, the CFO,
正しいか別として無理に使い切るもの.
That you were not able to spend all of the cost. You don't need to force yourself to spend all the budget that could be brought forward to FY26. So if you are going to a little over to FY26, what would be the magnitude of that? I understand that there will be a lot of moving parts, but what are your thoughts?
Because investors, I think, are considering their investment allocation, assuming that you will be fully utilizing this capital. So how should we think about the capital that will not be consumed? And what will be the ratio of that? Well, at this point, it's still difficult for us to give you a clear answer. So maybe when we announce our full-year results, maybe we can offer you more updates on that question. So apologies for not being able to respond. I see. So if I may, I have one follow-up question. I guess share buyback.
資本を効率的に活用するという観点。
In order to use capital in an efficient way is a very significant methodology. So in that sense, what are your thoughts around share buyback and also your thoughts on M&A? Is it going to change going forward? And are you going to
進捗と言いますか、考え方。
You will actively consider those options.
Would you also be updating if there's going to be upside or downside vis-à-vis the business plan? Well, we don't expect to make any changes. For M&A opportunities, like the BEENOS transaction, we are looking for a category number one company which will be able to generate synergy with our company. And we'll make sure that we clear the investment criteria. So that thought remains unchanged. For share buyback, we need to consult the parent company. But basically, we understand that our ROE is low. So we would like to consider the share buyback quite strongly. And that remains unchanged too. Thank you. Thank you very much.
終了予定時刻となりますので、最後の方の質問といたします。
Next question will be the last question from Nomura Securities. Matsuno-san, please unmute and state your question. I'm Matsuno from Nomura Securities. I have two questions.
The first is that from April 1st, PayPay Bank will be under PayPay, and the investment will be 75% within the industry. There are missing parts, and fintech companies were not integrated in the past. So I think this is a good direction. PayPay Card was combined, and that was a good thing. When PayPay Bank is also combined, what kind of concrete things can you do? And in the future, what kind of target are you setting? You talked about some individual aspects, but PayPay and Card and Bank, by combining these entities, what kind of things can you do? Is 75% the maximum? I'm hoping that you will raise to 100%. Can you talk about the outlook? PayPay Bank synergy. Once we have a concrete plan, once it is under PayPay consolidation, we can talk about more. But there are two things.
PayPay Card on the app, there's a blue PayPay and red PayPay. Depending on the campaign, the balance was able to be increased on the PayPay app, the opening of the bank account or providing loans. If we can focus on them, we have huge potential. Another point, we have already started as a deposit revolution. We have dollar deposits and yen deposits offering 2% interest rate. In the short term, we were able to acquire accounts. Using the PayPay app, the awareness is to be raised so that the PayPay Bank business will grow. As a basis, it was the same for the card. The banking system, there's some legacy system. Using the insight and know-how of PayPay, the bank's system itself will be modernized. The development will be faster. Those are the areas we would like to focus.
The ownership percentage, we have counterparties. So for now, we are considering 75%. My second question, share buyback. Your company in a five-year period, 70% or higher total shareholder return is being presented. So you do have a target. The amount, rather than amount being important, whether this is attainable or not, that is questioned by the market. So when I interview SoftBank, there are different views being shared. So inside the group, including SoftBank, the share buyback is possible. That kind of explanation I'm hoping to hear. In the future, I do note you have your policy. How are you going to execute this? When the share price is rising, then the window will be opened. As you say, the share price level is a factor. And on shareholder return, A Holdings, there's an environment where they can consider in a positive manner.
So we would like to communicate by monitoring the timing. That's it. Thank you very much.
質疑応答を終了といたします。
This will conclude the Q&A session.
さかうえより一言ご挨拶を申し上げます。
Mr. Sakaue will make a closing remark.
はい、ちょっと冒頭音声の方が乱れたようで。
Yes, apologies that we have some audio issue at the outset of this session. The business is growing steadily, especially for top line. We know that there are expectations for top line growth. So next fiscal year onward, we will continue to focus on the revenue growth. And we hope to enjoy your continued support and also feedback from you. Thank you very much for joining us today. This will conclude the earnings call for Q3 of FY24 for LY Corporation. Thank you very much for joining us today.