Business Results FY2019-3Q - Z Holdings Corporation February 5, 2020
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Z Holdings Corporation
FY2019-3Q
Business Results
February 5, 2020
Security Code: 4689
Table of Contents
1 FY2019-3Q Financial Results
2 Business Topics
3 Strategic Measures
4 Appendix
1
FY2019-3Q Financial Results
FY2019-3Q Consolidated Income Statement
Item FY2018-3Q FY2019-3Q YoY
Revenue 242.5 (¥B) 275.4 (¥B) +13.6 %
Operating income 36.5 (¥B) 47.8 (¥B) +30.9 %
EBITDA *1 50.2 (¥B) 70.1 (¥B) +39.6 %
Equity in earnings of associates *2 -6.2
and joint venture
-9.1 (¥B) (¥B) n.a.
Net income 14.6 (¥B) 26.9 (¥B) +84.2 %
Net income attributable to owners
of the parent
15.0 (¥B) 23.8 (¥B) +58.9 %
Diluted EPS ¥ 2.96 ¥ 5.01 +69.7 %
*1 Change in EBITDA is mainly due to application of IFRS 16, Leases
*2 Mainly due to PayPay Corporation 3
FY2019-3Q Factors of Change in Consolidated Operating Income
Op. income growth exceeded 30% (the first in 11 quarters), due also to ZOZO
Item Amount (¥B) YoY Major factors of change (¥B)
FY2018-3Q Results 36.5
• Increase due to consolidation of ZOZO +24.1
Revenue +32.8 +13.6 % • Advertising revenue +4.1
• YJ Card +2.0
• Increase due to consolidation of ZOZO +2.1
Cost of sales +3.1 +3.1 % • Increase due to growth in ad revenue
SG&A +18.4 +17.9 % Increase due to consolidation of ZOZO +17.7
(major items only↓) • Increase due to consolidation of ZOZO +3.3
• Increase in depreciation expense of right-of-use assets due to
+8.7 +66.1 % application of IFRS16 (rental expense decreased instead)
YoY Depreciation and amortization • Increase in software, servers, etc.
difference • Increase due to consolidation of ZOZO +1.4
Sales promotion cost -4.1 -21.1 % • Decrease in point reward cost
Personnel expenses +3.6 +15.7 % Increase due to consolidation of ZOZO +2.9
Shipping cost +3.3 +53.7 % Increase due to consolidation of ZOZO +3.9
Commissions expenses +3.1 +265.8 % Increase due to consolidation of ZOZO +2.5
Business commissions +2.8 +20.0 % Increase due to consolidation of ZOZO +1.9
Advertising and promotional expenses +1.2 +62.1 % Increase in expenses related to PayPay Mall, PayPay Flea Market
FY2019-3Q Results 47.8 +30.9 %
4
FY2019-3Q Impact from Consolidation of ZOZO
Consolidated from Nov.
Item ZOZO FY2019-3Q（2 months） FY2019-3Q (excl. ZOZO) YoY
Revenue 24.1 (¥B) 251.3 (¥B) +3.6 %
Operating income *1 4.2 (¥B) 43.6 (¥B) +19.3 %
Net income 2.8 (¥B) 24.1 (¥B) +64.8 %
Net income attributable to
owners of the parent
1.4 (¥B) 22.4 (¥B) +49.5 %
*1 Reflects amortization of identifiable assets as a result of PPA
Amortization period
Goodwill Total • PPA is provisional 212.9 (¥B) Item Amount
(Straight line)
Customer base 322.0 (¥B) 18-25 years
Total • PPA is provisional 502.1 (¥B) (Shops/users)
PPA FY19-3Q (2 months） 2.2 (¥B) Trademark*3 178.7 (¥B) -
Amortization
FY19-full year (5 months) *2 5.5 (¥B) Others 1.4 (¥B) 4 years
*2 Estimate figure for 4Q
*3 Indefinite-lived intangibles 5
Business Base
Each business base showing YoY growth
No. of Time spent by logged-in
EC transaction value Credit card transaction value
monthly logged-in user IDs users via smartphones*
¥690.4B ¥568.7B 50.11Mil IDs 2B hours
YoY +15% YoY +61% YoY +6% YoY +20%
Q 3 4 1 2 3 4 1 2 3 4 1 2 3 Q 3 4 1 2 3 4 1 2 3 4 1 2 3 Q 3 4 1 2 3 4 1 2 3 4 1 2 3 Q 3 4 1 2 3 4 1 2 3 4 1 2 3
FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19
6
FY2019 Expected Full Year Results (Consolidated Basis)
Op. income: higher end of guidance due to consolidation of ZOZO
Net income: near the lower end of guidance due to PayPay’s active investments (4Q)
Item FY2019 (Full year guidance) FY2019 (Expected full year results) YoY
Revenue Over ¥1 T ¥1.04 T +9 %
Operating income ¥140.6 to 150.0 B ¥150.0 B +7 %
Net income attributable to
owners of the parent ¥79.0 to 85.0 B ¥77.0 to 80.0 B -2 to +2 %
Basic EPS ¥14.8 to 15.9 ¥15.8 to 16.4 +7 to 12 %
Dividend per share ¥8.86 ¥8.86 Same
7Business Topics
Commerce Business
9FY2019-3Q Commerce Business – Uses
Business base growing steadily
Membership
Finance
O2O
Item Details
O2O transaction value grew ＋16% YoY
3
3 despite impact of typhoons and
O2O
consumption tax hike
Credit card transaction value grew
2
＋61% YoY
Payment
backed by cashless rebate program
2 Payment
Base Shopping business transaction value
expanded ＋37% YoY
1
1 E-commerce E-commerce
due to consolidation of ZOZO
10FY2019-3Q Commerce Business – KPI Results
Item Actual result YoY Major measures / Major factors of change
EC transaction value 690.4 (¥B) ＋14.6 %
Sale of goods 578.1 (¥B) ＋14.9 %
• Approx. +7% growth excluding impact from
Shopping business 295.2 (¥B) ＋36.6 % consolidation of ZOZO (2 months)
• Expanded due to launch of PayPay Mall
Affected by curtailment in sales promotional cost for
Reuse business*1 204.1 (¥B) - 5.8 %
YAHUOKU!
Despite impact of typhoons and consumption tax hike,
112.2 (¥B) ＋12.7 % • Travel business grew approx. +15%
Services and digital contents*2
• Dining reservation business grew approx. +18%
• Increase in new card holders due to cashless rebate
Credit card transaction value 568.7 (¥B) ＋61.0 % program
• Increase due to synergies with PayPay
*1 Changed name from YAHUOKU!
*2 Changed name from Non-sale of goods 11Our Shopping Business vs. Retail Market
Our transaction value surpassed market growth, despite
consumption tax hike
（%）
40
Item Amount YoY
Shopping business 30
transaction value
(excl. ZOZOTOWN
232.0 (¥B) +7.4 %
20
main store)
10
Item YoY
0
Retail sales value* -3.8 % -10
July Aug Sep Oct Nov Dec
Shopping business (excl. ZOZOTOWN main store)
*Source: METI Preliminary Report on the Current Survey of Commerce Retail industry
12FY2019 Commerce Business – Targets and Expected Results (Full Year)
Expecting to surpass high initial targets partly due to
consolidation of ZOZO
Item Full year initial targets Full year expected results
EC transaction value
＋Double-digit % +13-15 %
(Sale of goods)
Shopping business +20 % +30 %
Negative low-
Reuse business* ＋Mid-single digit%
single digit %
*Changed name from YAHUOKU! 13FY2019-3Q Commerce Business – Breakdown of Operating Income
% of non-Yahoo Japan companies in operating income increased due to ZOZO.
Striving for a solid operating income base by maximizing group synergies
ZOZO Breakdown of operating income
for Commerce business (¥ B)
Ikyu ZOZO (2 months from Nov.) 4.2
Ikyu 2.4
ASKUL ASKUL 1.5
The Japan Net Bank 1.0
The Japan Net Bank YJ Card 0.5
Other consolidated subsidiaries 3.3
YJ Card
Yahoo Japan 14.4
Other consolidated subsidiaries Total operating income for
Yahoo Japan 27.5
Commerce business
Note: After eliminations for consolidated statements. Operating income for each company is
rounded down, thus the sum of all operating incomes may differ from the total amount. 14Commerce Business – Future Image of Our Shopping Business
E-commerce ecosystem that fulfills diverse needs
Aim to become profitable by improving
efficiency in sales promotions, etc.
Consignment contract in fashion field
Shopping Mall
Cross-listing
Marketplace that has *1 Safe store and items + easy
every kind of item search/comparison + best buys + returnable
within 14 days
Next-rank shopping
Value Propositions experience*1 *2 ZOZOTOWN and LOHACO are
category-specific marketplaces that have
Category-specific original product lineup and high-quality
marketplace*2 delivery service
15Commerce Business
PayPay Mall
Strict selection of stores
Listing fee
3%
Premium online shopping mall
Mall 511 785
Note: PayPay Mall is a business of Yahoo Japan Corporation. (Launched in Oct.) （End of Dec.）
“PayPay” is a registered trademark of Yahoo Japan Corporation.
Companies that have not opened stores or listed
Providing a fun and value-added shopping products in Yahoo! Shopping are joining PayPay
experience to as many users Mall one after the other.
★★★ Limited period campaign ★★★
10 B Yen Giveaway Campaign in PayPay Mall
+9% PayPay Bonus Lite
（Until March 31, 2020） (A few examples)
17PayPay Flea Market
Sales
commission
Cumulative downloads
10%
Flea market app that allows simple and
value-for-money deals using PayPay
Exceeded 2 mil
Free app download ranking in Japan
Flea Market No.1 in shopping category
Note: PayPay Flea Market is a business of Yahoo Japan Corporation. Source: AppAnnie (Total of iOS & Android;
“PayPay” is a registered trademark of Yahoo Japan Corporation. Cumulative total for Nov. 2019 to Jan. 2020)
Acquiring new users: Only 5% overlap of users between PayPay Flea
Market and YAHUOKU!
Purchase can be made also from website in addition to app;
further reach to users (released on Jan. 29)
Conducting listing campaign whereby sales commission is
virtually 3%, lowest in industry (until March 31) to promote use
18Commerce Business
“ZOZOTOWN” PayPay Mall Store – Flying Start
Transaction value steadily expanding since grand opening (Dec. 17)
6W ZOZO
5W
Fashion category
4W
Overwhelmingly NO. 1
3W
2W
1W Merchant A
Merchant B
Merchant C Merchant D Merchant E Merchant F Merchant G
Note: Results of PayPay Mall + Yahoo! Shopping (Dec.17, 2019 - Jan.26, 2020)
20“ZOZOTOWN” PayPay Mall Store – Buyers
Acquiring new users as planned
Breakdown of buyers
Approx. 60 % of
ZOZOTOWN NEW PayPay Mall buyers
Main Store
Existing
New customers
acquired after the
are new customers
customers opening of
PayPay Mall Store
for ZOZO
21Segregation Between “ZOZOTOWN” Main Store and PayPay Mall Store
Fueling growth with 2 engines,
leveraging customer/business bases of both companies
Focus measures Focus measures
ZOZOTOWN Main Store PayPay Mall Store • Improve UI/UX
• Expand categories
(Shoes/ZOZOMAT) Mass market
Fashion lovers segment • Strategic promotions
• Re-entering China (ZOZO
CHINA) MORE FASHION New users
• Strengthen fashion
• Media business (WEAR) FASHION TECH New brands category
Mall
Strategically increase users
22Growth Strategy
Collaborate in various fields leveraging enormous synergy potentials
Items Expected impacts
• Capturing PayPay users Working as
Introduction of
Short term • Reduction of cost for payment commissions
PayPay
utilizing group companies
one team, we
Collaborations • Promote use by SoftBank users through in- will create
with SoftBank store promotions and reward program
the future of
Media/Advertising • Joint promotion of advertising business using
business ZOZOTOWN and WEAR, with Yahoo Japan. e-commerce
• Collaborations with YAHUOKU!, PayPay Flea Market,
Collaborations with
ZOZOUSED
Reuse business
• Construction of eco-system with Shopping business
Cooperation among • Use of data science
engineers • Improvement in product recommendation
Mid term Collaboration in
Use of ZOZOBASE
logistics
23Commerce Business
ASKUL
Working together to further enhance corporate value
Management Structure Results
Feb. 5 ASKUL Group
Board of directors resolved proposal on new 3Q Operating income ¥1.5 B（YoY +175%）
independent directors Note: After eliminations for consolidated statements
March 13
Extraordinary shareholders meeting
Improve profitability
Balance logistics cost-cutting and improved
quality in delivery
Capital and business alliance with Z Holdings Further strengthen collaboration with Yahoo
will be maintained and continued Japan (Expand sales from store in PayPay Mall)
Aim to achieve profitability by FY ending May 2023
25Media Business
26FY2019-3Q Media Business – Uses
3
Paid search Display
advertising
Growing mainly in smartphones
advertising
YDN, etc. Premium ads
Brand Item Details
Panel
YDN
＋6% YoY growth
Prime Total advertising
Display 3
revenue
Shopping
Others
Advertising
Time spent by
2 logged-in users via +20% YoY growth
smartphones
2 Time spent by logged-in users
Base
Number of monthly
1 Number of monthly logged-in user IDs
1
logged-in user IDs +6% YoY growth
27FY2019-3Q Total Advertising Revenue - Results
Actual results YoY
Item Major measures / Major factors of change
(¥B) (YoY difference ¥B)
＋5.7%
Total advertising revenue 87.6
(+4.6)
+6.0 %
Paid search advertising 43.8 • Successful results from improvement in display options
(+2.4)
＋5.3 %
Display advertising 43.8
(+2.2)
• Positive impact of multiple product measures
+1.5 % (e.g. Programmatic distribution in PC Brand Panel slots)
YDN, etc. 26.1 • Revenue decrease due to termination of some products
(+0.3)
• Effect of anti-tracking (approx. negative ¥0.4 B)
Premium advertising ＋11.6 % • Growth in shopping ads
(incl. shopping ads) 17.6 • Strong growth in high-priced products (e.g. video ads)
(+1.8)
28FY2019 Media Business – Targets and Expected Results (Full Year)
Business sluggish in 1H, but catching up in 2H.
Total advertising expected to be within target range.
(Decrease in ad placements due to novel coronavirus pneumonia is taken into account)
Items Full year initial targets Full year expected results
Total advertising revenue ＋Mid-single digit to double digit % +3 to 6 %
+Low to mid-
Paid search advertising +High-single digit %
single digit %
+Mid-single
Display advertising ＋Mid-single digit to high-single digit %
digit %
29Media Business
Integrated Marketing Solution
Releasing products that can visualize advertising effects
User actions Encounter Search Visit store Purchase (Pay)
＜Fields＞
Paid-search
Advertising Display ads
Digital ads
(Online)
Integrated
marketing
solution
Visit PayPay PayPay
measurement
Sales Coming Consumer Gift Retail Gift
Brick & (tentative name)
promotion Soon Released in Released in
mortar Feb. (plan)
3Q 4Q
(Offline)
31Integrated Marketing Solution — Monetization and Visualization of Advertising Effects
Marketing that merges online with offline, and visualizes effects
Monetization Visualization of advertising effects
＜Online＞ ＜Offline＞ ＜Payment＞
Display advertising Sales promotion
Premium ads PayPay Consumer Gift
YDN, etc. PayPay Retail Gift
Visit measurement
Paid search advertising (tentative name)
Sponsored Search Coming Soon
Utilize payment data
32New product – PayPay Retail Gift
Sales Promotion • Campaigns notified on online ads in Yahoo! JAPAN services prompt users to
purchase products in participating stores.
• Users enter a lottery draw on the campaign website, and go to the participating
2nd Initiative
Released on Jan.14
PayPay Retail Gift stores.
• PayPay Bonus Lite given for purchase of applicable product with PayPay payment.
Example of test marketing: Lawson, Inc. & Kirin Brewery Company, Limited
Notify campaign Enter lottery/draw Visit store Pay Bonus given
PayPay Bonus
Ad Lite with every
purchase
Lottery
See ad in Draw a lottery
Go to store Pay with PayPay Get PayPay Bonus Lite
Yahoo! JAPAN in Yahoo! Zubatoku
Illustrative purpose only
33Strategic Measures
Strategic Measures
35PayPay – KPI
Business base expanding steadily, backed by cashless rebate program
No. of PayPay No. of merchants No. of registered users
payments (quarter) （quarter-end) (quarter-end)
Surpassed 100 mil 285.95 mil Approx. 1.91 mil 1.85 mil Surpassed 24 mil
22.43 mil
in January alone as of end of January on Feb. 2
Approx. 3x
14.7 mil
0.72 mil
8.4 mil
96.12 mil
0.5 mil 5.9 mil
47.48 mil
21.6 mil
3Q 4Q 1Q 2Q 3Q 3Q 4Q 1Q 2Q 3Q 3Q 4Q 1Q 2Q 3Q
FY18 FY19 FY18 FY19 FY18 FY19
36PayPay – Rankings
Ranked high in various rankings
App ranking Usage ranking of cashless payment
Rank Type Usage rate
App Store
1 Credit card 84.8%
Best of 2019 Next to credit cards,
2 PayPay 37.2%
No. 2 in
No.1
Top Free App 3 WAON 34.7%
ranking 4 nanaco 32.7%
usage rate
5 Prepaid card 32.6%
6 Suica 30.7%
Ranking of penetration rate of cashless
Google Play 7 Rakuten Edy 23.6% payment across 47 prefectures 2020 –
Best of 2019 Survey outline
8 Rakuten Pay 19.0%
• Survey period: October 10 - 14, 2019
Users’ Choice App 9 LINE Pay 18.1%
• Survey planned by: Nikkei Business
category Winner 10 PASMO 15.4% Publications (NIKKEIxTREND, Nikkei
Business)
• Survey consigned to: Macromill
37PayPay – Campaign Measures
Conducting strategic campaigns with new campaigns aimed at bringing
cashless payments closer to consumers
2018 2019 2020 Payments made with PayPay Balance at
Dec.～ Feb.～ Jun.～ Oct.～ Feb./Mar.～ participating restaurants receive
40% cashback
1st 2nd Wakuwaku campaigns New campaigns 50% cashback for Yahoo! Premium members
¥10 B ¥10 B
Period: Feb. 1 - 29
campaign campaign Point Reward Project for Consumers
using Cashless Payment 6,500+ stores nationwide
＋
Approx. 210,000 Coke ON Pay supported vending
Acquiring new users Making PayPay payments a daily habit machines
Participating companies
Main targets Focus areas
※ Max. cashback amount ¥500/payment, ¥1,500/period
Payments with credit cards (incl. Yahoo! Card) are not
entitled for this cashback.
Electronic Convenience Large restaurant
Drugstores Online Supermarkets
appliance stores stores chains Campaign for supermarkets is scheduled in March
38PayPay – Aspiration
Promote financial services, our focus area for 2020, under a “multi-partner” strategy
Offline Utility bill + Tax Online/O2O
Convenience store Hair salon Utility charge Tax EC Taxi Hotel Air ticket
Restaurant Retail shop Drugstore Mobile phone bill Ticket Movie ticket
2020 Focus area Aim to become
a “Super App”
Financial services P2P/Social
Loan Investment Person to Splitting the bill
person transfer (“Warikan”)
Deferred payment Insurance
Donation
Tie-up with various financial institutions
inside and outside the group
Note: Items in golden letters already accept payments by PayPay. 39Business Integration with LINE
40Outline of Business Integration with LINE
In the process of business integration
Structure after business integration Schedule
Concluded definitive
Dec. 23, 2019 integration agreement on
business integration
50% 50%
JV （LINE）
Jan. 31, 2020 Concluded stock exchange
Minority shareholder agreement
65.3%
34.7% Extraordinary general meeting
（Combined company）
March 17, 2020
of the shareholders
100% 100%
Various applications, examinations,
Successor procedures
Responses to anti-trust law
• Stock exchange ratio (ZHD) 1：11.75 (LINE) Organizational restructuring,
• No. of Z Holdings shares will increase from 4.8 B to 7.7B TOB, etc.
T&Cs due to stock exchange
̶ All incremental shares are issued to JV Completion of business
̶ No. of treasury stocks to be allocated - TBD Oct. 2020 (plan)
integration
41Unleashing the infinite potential of all people, with the power of information technology
Appendix
FY2019-3Q Cumulative Consolidated Income Statement
FY2018-3Q FY2019-3Q
Item YoY
(cumulative) (cumulative)
Revenue 707.5 (¥B) 759.6 (¥B) +7.4 %
Operating income 119.6 (¥B) 123.5 (¥B) +3.2 %
EBITDA *1 158.4 (¥B) 182.0 (¥B) +14.9 %
Other non-operating income and
expenses
0.6 (¥B) *2 9.6 (¥B) +1330.3 %
Equity in earnings of associates
and joint venture
-10.1 (¥B) *3 -17.1 (¥B) n.a.
Net income 70.0 (¥B) 79.5 (¥B) +13.5 %
Net income attributable to owners
of the parent
70.1 (¥B) 75.0 (¥B) +7.0 %
Diluted EPS ¥12.94 ¥15.43 +19.2 %
*1 Change in EBITDA is mainly due to application of IFRS 16, Leases
*2 Includes gain on change in equity interest in PayPay Corporation (¥10.8 B)
*3 Mainly due to PayPay Corporation 44FY2019-3Q Statement of Financial Position
Consolidated (IFRS) The Japan Net Bank, Limited (JGAAP) YJ Card Corporation (JGAAP)
FY2018 FY2019 FY2018 FY2019 FY2018 FY2019
(¥ B) Difference (¥ B) Difference (¥ B) Difference
4Q 3Q 4Q 3Q 4Q 3Q
Assets 2,429.6 3,927.1 1,497.5 Assets 878.7 996.7 118.0 Assets 353.0 583.3 230.2
Cash and cash Cash and cash Cash and cash
equivalents
546.7 729.9 183.1 equivalents
249.5 280.1 30.6 equivalents
30.0 143.9 113.8
Trade and other Trade and other Trade and other
receivables
328.2 499.1 170.8 receivables
22.6 21.5 -1.1 receivables
12.6 25.4 12.8
Loans for credit Loans for credit Loans for credit
card business
253.3 346.7 93.4 card business
－ － － card business
252.5 342.5 90.0
Investment Investment Investment
securities for 419.5 419.9 0.4 securities for 419.5 429.9 10.4 securities for － － －
banking business banking business banking business
Property and Property and Property and
equipment
133.8 133.0 -0.8 equipment
0.5 0.6 0.1 equipment
5.7 4.9 -0.7
Intangible assets 165.2 683.9 518.6 Intangible assets 6.1 6.3 0.1 Intangible assets 20.4 28.8 8.4
Liabilities 1,519.0 2,875.2 1,356.1 Liabilities 823.4 940.7 117.3 Liabilities 326.0 554.3 228.2
Trade and other Trade and other Trade and other
payables
394.5 636.4 241.9 payables
15.3 15.4 0.1 payables
166.6 280.8 114.1
Deposit for Deposit for Deposit for
banking business
768.6 888.3 119.7 banking business
803.8 920.3 116.4 banking business
－ － －
Interest-bearing Interest-bearing Interest-bearing
liabilities
215.2 1,066.0 850.7 liabilities
－ － － liabilities
144.8 261.2 116.4
Equity 910.5 1,051.9 141.4 Equity 55.2 55.9 0.6 Equity 26.9 28.9 1.9
Note: Figures before internal transactions within the Note: Figures before internal transactions within the
Group are eliminated. Group are eliminated. 45New 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 Group companies directly under
Business (E-commerce, Finance, etc.) directly under Z Holdings Z Financial
Media Media business Consolidated subsidiaries
Business (Media, Advertising, etc.) directly under Z Holdings
46Z Holdings – Business Model
Business model with variety and scalability
Commerce
Media
E-commerce Integrated Advertising
Membership O2O Finance Paid search
Royalty marketing
Monetization Display
points
Data solution
No. of payments/transaction value Time spent by logged-in users
Base
EC transaction value No. of logged-in user IDs
47Image of Our Long-Term Revenue Composition
We 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
Paid search advertising,
display advertising
(excl. shopping advertising)
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 ・・・ ・・・ ・・・ Future
48Operating Income – Long-Term Outlook
Businesses to be strengthened (Shopping advertising, Integrated marketing
FY19 ー FY22
solution, Financial & Payment, Membership, Reuse business)
Advertising income – base (Paid search advertising, display advertising)
By investing in measures to expand
users and EC transaction value, and
FY23 startup of new businesses, etc., achieve:
￥225.0 B ▶ Double-digit revenue growth
Record high
FY18
¥140.5 B Businesses to be
strengthened will be FY23 – Future
Maintain the growth driver to
over ¥140 B expand income By monetizing users’ activated
income level
economic actions:
FY18 FY19 FY20 FY21 FY22 FY23 … … … … Future
Results Period for structural reform Next development stage
▶ Bring income to an expansionary phase
Note: Other business and adjustments are prorated to businesses to be strengthened and
advertising income – base, according to their composition ratio. 49Materiality 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 &
5 10 safety Network
◆Diversity/inclusion management reliability 6 Clean Water and Sanitation
8 99
4 Rewarding データ利活用
Contribution
Using data 8 Decent Work and Economic Growth
9 Supporting workplace
による貢献
the future
◆Improving media literacy 13 generation
Response Risk
to climate management 9 Industry, Innovation and Infrastructure
change 12
Sustainable
9
production/ 10 Reduced Inequalities
consumption ◆Correct AI use
11 9
◆Relationship with local community ◆Sound advertising market 11 Sustainable Cities and Communities
10 4 9
◆Accessibility ◆Illegal/harmful content
12 Responsible Production and Consumption
13
◆Pollution/waste
13 14 16 13 Climate Action
◆Bio-diversity ◆Fair competition
14 Life Below Water
◆Anti-corruption
6
◆Water/land use 16 Peace, Justice and Strong Institutions
Importance to Z Holdings Group
17 Partnerships for the Goals
Note: Big circles are especially important to the stakeholders and the Z Holdings Group, and need to be dealt with focus. 50Z Holdings – Service Map ヤフーのサービスマップ
Media Commerce Digital Contents
ebookjapan
Shopping Auction Fortune telling Game
TOP page Weather/Disaster News Finance (Digital books)
PayPay PayPay
Sportsnavi GYAO! Mall Flea Market O2O
Knowledge search
(Sports news site) (Video streaming)
Real Travel Restaurant
estate booking reservation
Retty (Restaurant information) kurashiru (Recipe video service) ZOZO ASKUL LOHACO Ikyu.com Ikyu.com
（Fashion online （B to B EC） （B to C EC） (Hotel) (Restaurant)
shopping）
Local Information Search Finance／Payment／Fintech
PayPay TaoTao
Transit information Map Search Real-time search Credit card Online wallet
oT
(Smartphone payment) （Cryptocurrency trading）
YJFX The Japan Net Bank
Car navigation Vocal assistant Blockchain
（FX） (Internet banking)
No. of monthly logged-in user IDs: 50.11mil
Customer
Yahoo! Premium member IDs: 22.83mil
Base Note: As of end of Dec. 2019
For corporations Big Data／AI PIM CSR
Sponsored Yahoo! Display Research Scoring Internet
search Ad Network
Premium Crowdsourcing e-Mail Calendar Kids
service fund raising
51Business Portfolio
The size of the circles illustrates revenue size. Red circles: businesses of
Yahoo Japan Corporation; blue circles: businesses of consolidated subsidiaries
Disclosed
segments
Commerce business Media business
EC
Finance Others Media
Breakdown Sales of goods Service
Yahoo! Paid
Advertising PayPay Mall Display search
Shopping
Business
Value
services YAHUOKU! ZOZO ASKUL Ikyu YJ Card Japan Net Bank
Commerce
(For
corporations)
ZOZO
Personal YJ Card Japan Net Bank
PayPay Flea Premium
services YAHUOKU! ebook Japan
Market members
(For individuals)
LOHACO YJFX
Note: Please refer to KPI trend for revenue by segments and revenue breakdown of segments.
The contracts of business services are concluded with corporations; the contracts of personal services are concluded with individual users. 52Business Segment Breakdown
Advertising Display advertising (“Premium Advertising”), 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 services and
(For corporations)
Commerce others, Real estate-related services
Business LOHACO, ZOZO, Yahoo! Premium, Personal system-use fees of YAHUOKU!, Credit card-related
Personal Services
services, Pet supplies-related services, Telecommunications carrier-related services, Banking-
(For individuals)
related services, E-book-related services, FX-related services and others, Payment-related services
Others Banking-related services
Paid search advertising “Sponsored Search”,
Advertising
Display advertising (“Yahoo! Display Ad Network (YDN)”, “Premium Advertising”)
Media Business Services
Media-related services, CRM-related services and others
Business (For corporations)
Personal Services
Video-related services and others
(For individuals)
Advertising
Business Services
Others Utilities payment-related services and others
(For corporations)
Personal Services
Yahoo! Mail, Yahoo! Address Book, Utilities payment-related services and others
（For individuals)
Note: The contracts of business services are concluded with corporations; the contracts of personal services are concluded with individual users.
The same product may be classified in different segments depending on the contractor. 53Definition of EC Transaction Value
YAHUOKU!, PayPay Flea Market,
Reuse business*1
ZOZOUSED
Yahoo! Shopping,
Shopping business PayPay Mall, ZOZOTOWN,
LOHACO, Charm
Sale of goods
ASKUL BtoB
Other
EC transaction value Yahoo! Tickets, Ouchi-Direct
(Sale of goods)
Ikyu, Yahoo! Travel,
O2O
Yahoo! Dining
Services and
digital contents*2
Other Fee-based digital contents
(Services and digital contents)
*1 Changed name from YAHUOKU!
*2 Changed name from Non-sale of goods 54Advertising Products
Advertising Products Main Format Fee Calculation Placement Pages Main Advertiser Base
Paid search Search results
Sponsored Search® Text
advertising pages
Per-click rate
Major corporations
(Performance-based) *2
Text
Yahoo! Display Ad Banner Small and medium-sized
Network companies
YDN and (YDN) *1 Per-view rate
Video
others (Performance-based) *2 Top page *1
Per-impression page Interior pages of
Yahoo! Premium
Banner view rate service sites *1
DSP
(Performance-based) *2
Display Brand Panel Per-impression page
advertising Rich ads
Prime Display view rate Major corporations
(including video) Banner
Others (Guarantee-based) *3
Banner ads Per-guaranteed period
Premium Text ads rate, etc.
Advertising Others (Guarantee-based) *3
Text
Yahoo! Shopping
Banner
Yahoo! Shopping
PR Option Conversion-based
stores
*1 Includes In-feed advertising on timeline view pages.
*2 Advertising that is programmatically or manually managed on a real-time basis to optimize advertisings effects.
*3 Advertising for which specific placement is reserved in advance.
*4 Includes listing fee of 3% for PayPay Mall. 55PayPay – Business Model
Maximize the base and develop various earning pillars
O2O Ads Finance Yahoo Japan domain
Accumulate data＋Increase balance
PayPay domain
No. of merchants
Online linkage/ No. of users No. of transactions
offline merchants
56Disclaimer
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 important factors could cause
actual results to differ materially from those discussed in the forward-looking
statements.
Such factors include, but are not limited to, the items mentioned in “Risk Factors”
in “Results for the Fiscal Year Ended March 31, 2019.” Unauthorized use of the
information or the data in this document is not permitted.
Unless otherwise specified, English-language documents are prepared solely for the convenience of
non-Japanese speakers. If there is any inconsistency between the English-language documents and the
Japanese-language documents, the Japanese-language documents will prevail.
57Security Code：4689
Z Holdings and LINE
to Combine with Equal Spirit
Reference: Reposts of slides used in previous announcements
November 18, 2019Our Vision
Provide the Best
User Experience in Japan
World-leading AI Tech Company
Based in Japan and Asia
60Our Business Model
Maximize user actions with the power of AI
No.1 No.1
# of Users # of Corporate Clients
Matching needs through AI
Conversion No.1
Payment E-Commerce O2O Advertising
61Best Combination with C o m p l e m e n t a r y Product and Service Portfolios
Wide Reach Deep Engagement
Largest Media Service Largest Communication Service
User Base
MAU 67.4 mil people * MAU 82.0 mil people *
*Source: Nielsen “TOPS OF 2018: DIGITAL IN JAPAN”, *Source:2019/12 3Q Earnings Report
Top 10 internet services in Japan 2018
Media SNS
E-Commerce Fintech
Advertising Messenger
Service Base
* Services listed above show our major services (not covering all the services)
624 Major Pillars for Synergy Strategies
Marketing Business Expansion in User Base
New Business ／
Fintech Business
System Development
63Marketing Business
Scale Expansion and New Business Opportunities
Further strengthen market position in Accelerate initiatives in
domestic Internet Ads Market Integrated Marketing Solution
Sales Promotion
22% 30% • One-stop brand new service combining from
advertisement to sales promotion, bringing consumers
CY2018
319.5 (¥B) from online into the real-world to make purchases in
（CY2018） physical stores
Internet Ads Market
（Media Fee）
8%
1,448 (¥B) Official Account
108.2 (¥B) • Convey various types of targeted information to multiple
（CY2018） users that is not possible through email or social media
promotions
Source：Dentsu “Advertising Expenditures in Japan (2018)”
64Expansion in User Base
Giant leap in transaction value by integration of LINE users
and ZHD’s E-Commerce services
Expansion of
E-Commerce Business
MAU 82.0 mil people
Massive
Referral Traffic
65Fintech Business
Maximize the Base and
Develop Pillars for Fintech Business
Bank Security／FX Insurance Credit Card
Line Bank
Preparatory Corp
No. of cumulative No. of cumulative
registered users registered users
Base
20.0 mil 36.9 mil
（As of Nov. 17th 2019） （As of Sep. 30th 2019）
66New Business ／ System Development
Accelerate and strengthen AI development
fundamental base of all service line-up
AI Base
Resources (Engineers) Know-How (Experience)
* Services listed above show our major services (not covering all the services)
67A c c e l e r a t i n g t h e M i d - L o n g Te r m G r o w t h
Japan/Asia based
AI Tech Company
Creating the Future by
enhancing group synergies
Consolidated
Revenue of
No.1 AI Tech Company in
Approx. 1.2(¥T) Japan and Asia
207.1(¥B)（Jan. 2018～Dec. 2018）
954.7 (¥B) （Apr. 2018～Mar. 2019）
FY18 将来
Future
68Post-Merger Corporate Governance
Valuing Corporate Governance with Equal Spirit
in Conformity with the Principles of the CG Code
Internal Directors Independent Outside Directors
Z Holdings
Z Holdings Corp. Z Holdings Corp.
President and CEO Director
Kentaro Kawabe Takao Ozawa
LINE
LINE Corp. LINE Corp.
President and CEO Director and CWO
Takeshi Idezawa Jungho Shin
69Leadership at New Z Holdings
President, Representative Director Representative Director
and Co-CEO and Co-CEO
Kentaro Kawabe Takeshi Idezawa
70Post-Merger Corporate Structure (Planned)
Consolidated
（telecom）
50% 50% ＜Governance＞
■Internal Directors：6
‐ZHD：3
JV Other Shareholders ‐LINE：3
■Independent Outside
Directors：4
Listed on the
New
1st Section of TSE
71Tr a n s a c t i o n S t r u c t u r e S u m m a r y
Current Structure Step1
LINE to be unlisted through TOB
Cash Cash
55.4% 44.6% 27.4% 72.6% 27.4%→ % 0
Minority
Minority Minority Shareholders
Shareholders Shareholders
LINE Shares LINE Shares
Listed
Minority
Shareholders
Listed
*The structure is partially omitted or simplified
*The procedure may be changed within the scope of the purpose of this merger and with the agreement of all parties
concerned 72Tr a n s a c t i o n S t r u c t u r e S u m m a r y
Step２ Step3
Z Holdings Shares owned by SBKK to be transferred to LINE Share exchange and
LINE Business to be integrated under Z Holdings
50% 50%
LINE Shares Consolidated
or Cash
Private JV（old LINE）
ZHD Shares ZHD Shares
Private Minority
Shareholders
Minority
0%→ 45% （LINE Business）
Shareholders
Listed
Listed
• Exchange Ratio (Z Holdings) 1：11.75 (LINE)
• Based on the ratio, number of outstanding shares will increase from 4.8
Transaction
*The structure is partially omitted or simplified billion shares to 7.7 billion shares
Summary
̶ All incremental shares are issued to JV
*The procedure may be changed within the scope of the purpose of this merger and
̶ No. of treasury shares to be allocated is undecided
with the agreement of all parties concerned
73Ti m e l i n e ( P l a n n e d )
Oct. 2020
Now end of 2019 - beginning of 2020
(Target)
Jan. 2020 - Sep. 2020
Announcement
Signing of DA Close
(MOU)
Various applications/examination/procedures
• Anti-Trust Law（Japan/Korea/Taiwan/U.S. etc.）
• Corporate Reorganization; TOB
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