FY2019-1Q Yahoo Japan Corporation Business Results - August 2, 2019

 
FY2019-1Q Yahoo Japan Corporation Business Results - August 2, 2019
Yahoo Japan Corporation
      FY2019-1Q
   Business Results

       August 2, 2019

                        Security code: 4689
FY2019-1Q Yahoo Japan Corporation Business Results - August 2, 2019
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
  Yahoo Japan Corporation (Company, Yahoo! JAPAN) 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.
FY2019-1Q Yahoo Japan Corporation Business Results - August 2, 2019
Table of Contents

         1     FY2019-1Q Financial Results

         2     Summary of Business Segments

         3     Strategic Measures

         4     Appendix
                                              1
FY2019-1Q
Financial Results

                    2
FY2019-1Q Consolidated Income Statement

                                Item                                            FY2018-1Q                            FY2019-1Q           YoY

  Revenue                                                                        231.8 (¥B)                           238.6 (¥B)          +2.9 %
  Operating income                                                                  47.5 (¥B)                            36.1 (¥B)        -24.0 %
  EBITDA *1                                                                         60.0 (¥B)                            54.0 (¥B)        -10.0 %
  Other non-operating income and
  expenses*2
                                                                                       0.6 (¥B)                          11.0 (¥B)     +1,510.8 %
  Equity in earnings of associates
  and joint venture*3
                                                                                       0.2 (¥B)                           -5.9 (¥B)    -2,930.5 %
  Net income                                                                        32.6 (¥B)                            27.8 (¥B)        -14.7 %
  Net income attributable to owners
  of the parent
                                                                                    32.6 (¥B)                            27.3 (¥B)        -16.2 %
  Diluted EPS                                                                              ¥ 5.74                             ¥ 5.40       -5.9 %
*1 Change in EBITDA is mainly due to application of IFRS 16, Leases
*2 Gain on change in equity interest in PayPay Corporation (¥10.8 B) is recorded in other non-operating income and expenses
*3 Mainly due to PayPay Corporation
                                                                                                                                                    3
FY2019-1Q Factors of Change in Consolidated Operating Income
        Decrease in income for 1Q is as expected due to one-time gain recorded in FY2018-1Q

                              Item                    Amount (¥B)                                 Major factors (¥B)

                 FY2018-1Q Result                          47.5
             Revenue                                       +6.7     ASKUL+2.1; Advertising revenue +1.8

             Cost of sales                                  -0.8
             SG&A   (major items only↓)                     -9.3
                                                                    Increase in depreciation expense of right-of-use assets due to application of
               Depreciation and amortization                -5.6    IFRS 16 (rental expense decreased instead)
                                                                    Increase in software, servers, etc.
    YoY                                                             Promotional cost for Yahoo! JAPAN app, point rewards for Commerce Business,
difference
               Sales promotion cost                         -2.8    point rewards for acquiring credit card membership

               Personnel expenses                           -1.0    Hired approx. 450 new recruits (70% engineers)

               Content provider fees                        -0.8
               Business commissions                         -0.6
               Advertising and promotional expenses         -0.5
             Other revenue & expenses                       -7.9    One-time gain: Gain in sale of IDC Frontier 7.9 (FY2018-1Q)

                 FY2019-1Q Result                          36.1
                                                                                                                                                    4
Business Base

 Each business base (commerce, media, financial & payment) expanding steadily
            EC transaction value               No. of monthly logged-in user IDs                               Credit card transaction value

(¥ B)                                         (Mil IDs)                                                      (¥ B)

 700        More than 2X since                 60     16 consecutive quarters of                             450     More than 4X in
 600        new EC strategy*                          YoY double digit growth                                400     3 years
                                               50
                                                                                                             350
 500
                                               40                                                            300
 400                                                                                                         250
                                               30
 300                                                                                                         200

                                               20                                                            150
 200
                                                                                                             100
 100                                           10
                                                                                                              50

   0                                            0                                                              0
       Q1   2 3 4 1 2 3 4 1 2 3 4 1                 Q 1   2   3   4   1   2   3   4   1   2   3   4    1           Q1   2 3 4 1 2 3 4 1 2 3 4 1

             FY16        FY17   FY18   FY19               FY16            FY17            FY18        FY19              FY16    FY17    FY18   FY19

*Began in October 2013
                                                                                                                                                      5
FY2019 Full Year Guidance (Consolidated Basis)

    Steady progress - no change in guidance
           Item              FY2019 (estimate)         YoY        Progress

Revenue                            Over ¥1 T        +5 to 7 %           24 %

Operating income            ¥ 140.6 to 150.0 B       ±0 to +7 %   24 to 26 %

Net income attributable
                              ¥ 79.0 to 85.0 B       ±0 to +8 %   33 to 35 %
to owners of the parent

Diluted EPS                      ¥ 14.8 to 15.9      ±0 to +8 %   34 to 36 %

Dividend per share                         ¥ 8.86        Same                n.a.
                                                                                    6
Summary of
Business Segments

                    7
Revenue Growth Image by Segments

Commerce Business is the key strategic driver
                                                  Data solution
for a dramatic growth and
earnings diversification                          Fintech
                                     New fields
                                     to pioneer

                                                  E-commerce
                                                  (excl. ASKUL Group)

                                                  Integrated marketing solution,
                      Commerce                    shopping advertising
                       business
           Media
                                                  Paid search advertising,
          business                                display advertising
                                                  (excl. shopping advertising)

                                                                                   8
Commerce Business

                    9
FY2019-1Q Commerce Business – Uses

                                        Commerce Business base

                          Membership
                                           growing steadily
                Finance
       O2O

                                          Item                      Details

                                           2        Credit card transaction value exceeded

                                       Payment      ¥400 B, +49% YoY

         2    Payment                      1        Shopping transaction value
Base
                                       E-commerce   maintained high YoY growth of +17%
         1   E-commerce
                                                                                             10
FY2019-1Q Commerce Business – KPI

                Item               Actual result     YoY            Measures / Factors of change

EC transaction value               584.0 (¥B)      +8.8 %

 EC transaction value
                                   475.6 (¥B)      +5.4 %
 (Sale of goods)

                                                             Yahoo! Shopping grew approx. +20%
                                                             Negative 6% growth in LOHACO
     Shopping transaction value    204.0 (¥B)      +16.5 %   (including LOHACO store in Yahoo!
                                                             Shopping)

      YAHUOKU! transaction value   200.4 (¥B)      +0.7 %

 EC transaction value                                        Travel (O2O) grew over +30%
                                   108.4 (¥B)      +27.0 %
  (Non-sale of goods)                                        Dining reservation also grew over +20%

                                                             Grew due to linkage with PayPay, sales
Credit card transaction value      423.5 (¥B)      +48.8 %   promotional activities

                                                                                                      11
New Service: PayPay Mall

                                                                                        To be launched in Fall 2019
                       NEW                                           Mall

                                                                                   Premium shopping mall
                                                              Items of PayPay
                                                                                  Features
                                                                 Mall will be
                                                              displayed in both   1. Only for stores that meet our criteria
                                                                  websites        2. UI/UX that is optimized for each product
                                                                                  category
                                                                                  3. Return/exchange allowed
                                     * Illustrative purpose only                  (Within 14 days from receiving product)
                                      Photo: Aflo
                                                                                  4. Inventory linked with brick and mortar stores
                                                                   Shopping       5. Also linked to Yahoo! Shopping
                                                                                                                            PayPay Mall
                                                                                                                             listing fee

Note: “PayPay” is a registered trademark of Yahoo Japan Corporation.
                                                                                                                               3%
                                                                                                                                           12
New Service: PayPay Flea Market

                                                                            To be launched in Fall 2019

                                                                            Smartphone app that
                                                                                focuses on
  NEW
                                                                              simple buy and sell
                                                     Flea Market       Features

                                                                       1. Specializes in flea market
                                                                       2. Linked with YAHUOKU!
                                                                                                      Sales
                                                                                                   commission

                                                                                                    TBA
Note: “PayPay” is a registered trademark of Yahoo Japan Corporation.
                                                                                                                13
FY2019 Full Year Commerce Business – Targets

Aim for double-digit growth for EC transaction value (sale of goods)
  leveraging new services: PayPay Mall, PayPay Flea Market, etc.

                   Item                            Target (YoY)

 EC transaction value
                                                  +Double-digit %
 (sale of goods)

    Shopping transaction value                                    +20 %

    YAHUOKU! transaction value                 +Mid-single digit %
                                                                          14
Media Business

                 15
FY2019-1Q Media Business – Uses
                              Display
       Paid search
       advertising
                            advertising             Media’s user base steadily
                      YDN, etc.     Premium
                                                  growing mainly in smartphones
                                     Brand
                                     Panel             Item                    Details
                         YDN
                                     Prime              2
                                     Display
                                                   Time spent by
                       Premium
                         DSP
                                   Shopping
                                                  logged-in users   +19% YoY growth
                                   Advertising
                                                        via
                                                   smartphones

         2   Time spent by logged-in users
                                                        1           +11% YoY growth
Base                                                Number of
                                                                    16 consecutive quarters
                                                  monthly logged-
         1 Number of monthly logged-in user IDs
                                                    in user IDs     of double digit growth
                                                                                              16
FY2019-1Q Total Advertising Revenue - Results

                   Item                        Actual result    YoY                          Measures / Factors of change

  Total advertising revenue                    78.2 (¥B)       +2.4 %
                                                                         While CTR improved with a new measure (change in QuickLink
                                                                         Option displays), low-single digit revenue growth because:
                                                                         •    Effect of last year’s UI measures wore out
   Paid search advertising                     40.1 (¥B)       +1.6 %
                                                                         •    PC and tablets decreased more than expected
                                                                         •    One-time opportunity loss (no monetization for some queries),
                                                                             etc.

   Display advertising                         38.0 (¥B)       +3.1 %
                                                                         Negative YoY growth (¥1.4 B decrease) impacted by:
                                                                         • Decrease in non-YJ* revenue due to measures against ad frauds
         YDN, etc.                             24.8 (¥B)        -6.1 %
                                                                         • Decrease in unit price of smartphone web ads as a result of anti-
                                                                           tracking

         Premium advertising
                                               13.1 (¥B)       +26.9 %   Growth in shopping ads, etc.
         (incl. shopping ads)
* Non-Yahoo Japan Corporation ad distribution partners
                                                                                                                                               17
Impact of Anti-Tracking

             Background               Impact on our total advertising revenue

       Anti-tracking intensifying        FY2018 Total advertising revenue

       due to rise in awareness                  Approx. ¥325 billion

       towards privacy protection
                                    Paid search advertising   Approx. ¥165 B

   ▶ Decrease in retargeting ads          YDN, etc.           Approx. ¥110 B

   ▶ Difficult to measure ad                                    Web      Large
                                                                        impact
     effects correctly                      Smartphone
                                                                App
                                            PC
       Lower unit price of
      smartphone web ads             Premium Advertising      Approx. ¥50 B
                                                                                 18
Short-Term Measures to Increase Advertising Revenue

  1     Raise log-in ratio and promote                                         3      Integrate ad platform to maximize
        targeting based on Yahoo! ID                                                  ad effect

                                                                                            Now                        Around fall 2019 (plan)

                                                                                   Segmented products                       Integrate into
  2      Focus in three areas that have                                                                                      Yahoo! Ads
                                                                             Guarantee
         room for growth                                                      -based
                                                                                               Premium advertising

                                                                                                     YDN                  Guarantee-based
             AD                         AD                         AD
                                 APP                                         Performance        Premium DSP
                                                                                -based                                    Performance-based
                                                                                                    Others

      Video                      App                   Dynamic
                                                                                    Insufficient use of data           Provide distribution functions
       ads                       ads                     ads*                          across products               that meet purpose of advertisers

• Products such as “dynamic display ad” that can automatically personalize                                           Increasingly convenient
                                                                               Complicated ad management
  ad creatives according to user behavior history                                                                      ad management tools
                                                                                                                                                        19
Mid- to Long-Term Measures to Increase Marketing Revenue

Create new monetizing models & multiple earnings bases
        Integrated Marketing Solution                                             O2O

          Online commerce ads
                                                       Comprehensive service that uses
                               For stores of
 Test marketing                Yahoo Japan                   PayPay to encompass
 underway                        Group’s
                                EC services            user attraction, payment and CRM
                          Focus:
                          Increase transaction value   Monetization planned to being in

 Release
        Offline commerce ads                                     FY2019-4Q
 β ver. in fall                                                       Mainly for
                                 Mainly for
 Planned:                                                             merchants
                                manufacturers
 PayPay coupon &
 sampling solution with
 major drug stores and     Focus:                                 Focus:
                           Expand product sales                   Reservation &
 convenience stores                                               traffic referral, etc.   20
FY2019 Full Year Media Business – Targets

    Current full year outlook: low-single digit YoY growth
    New measures will be added to achieve initial target
                Item                                  Target (YoY)

 Total advertising revenue                      +Mid-single digit to double digit %

    Paid search advertising                                    +High-single digit %

    Display advertising                     +Mid-single digit to high-single digit %

                                                                                       21
Strategic Measures

                     22
PayPay

         23
PayPay – KPI

Business base for smartphone payment –steadily growing
No. of registered users       No. of merchants                         No. of payments                      Name awareness

                                                                                                            ▶1st ¥10B ▶2nd ¥10B
 Exceeded 9.5   mil                                                                                          Campaign Campaign

 in August                                                   1Q
                                                                                                                                          Company A
                                                                                                     1Q
                                                                                                                                           Company B
                                                                                                                                           Company C
                                                             4Q

                                                                                                     4Q
                                                             3Q
                                                                                                     3Q
                                                                                                                                   Source: Survey by
                             3Q         4Q         1Q                3Q         4Q         1Q                                     PayPay Corporation
                          Cumulative Cumulative Cumulative        Cumulative Cumulative Cumulative

   As of end of June           As of end of June                        As of end of June                          Maintaining
     (cumulative)                (cumulative)                             (cumulative)
                                                                                                                     No.1
    8.44 mil                      0.7 mil                              74.09 mil                          after start of campaign
                                                                                                                                                       24
PayPay – Recap of Second Campaign

              Campaign resulted in a large increase
               in the number of PayPay payments
    1st ¥10 B campaign              2nd ¥10 B campaign

                                                         25
PayPay - Measures

Payment and bonus provision in both offline and online worlds
 Offline                                                                                                                                         Online

                                                                                                 FY18 result                                   Yahoo! Shopping

            PayPay
            bonus
                                                                                             ¥700B
                                                                                                  equivalent                                Fixed-term T Points
                                                                                                   payment
                                                                                                   possible                                   To be changed to
                                               PayPay Money Lite
                                                 PayPay Bonus                                                                                 PayPay Bonus Lite
                                               PayPay Bonus Lite                                                                                (Aug. 2019 - )

                                                                                                                                                 YAHUOKU!

                  Payment                                                                      Payment
                                        From June, can be used in Yahoo! JAPAN EC services                                                    Sales proceeds

                                                                                                                                             Can be topped up to
           • PayPay Money Lite: Balance topped-up from bank accounts, etc., and from sales proceeds of YAHUOKU!                                PayPay balance
                                No expiry. Balance transfer feature and bill-splitting feature available. Cannot be cashed.                     (Jun. 2019 - )
           • PayPay Bonus: Balance presented as bonus and from campaigns, etc. No expiry.

           • PayPay Bonus Lite: Balance presented as bonus and from campaigns, etc. with short expiry. Expires in 60 days from provision.
                                                                                                                                                                   26
PayPay’s Potential

 Comparison of cashless payments                                                       Advantages of PayPay

              Credit cards   Transportation IC    Smartphone payment                        Short term                       Mid-long term

                                                                                      • Payment commission               • Marketing
                                                 • Cheap payment
                                                                                      *Free until end of Sep. 2021 for
            • High payment   • High payment        commission                                                            • Use of data
                                                                          Merchants    user scan payment
              commission       commission
Merchants                                        • Store device                       • Can retrieve sales               • Financial advice from
            • Store device   • Store device
                                                   unnecessary                          proceeds quickly                   PayPay
              necessary        necessary
                                                 *For user scan payment

                                                                                                                         • Excellent user
                                                                                                                           experience
            Can be used in   Can be used in      Will be available in      Users
                                                                                         Receive PayPay                  • Convenience of
 Users      few mom and      few mom and         many mom and pop                            Bonus                         super app
              pop stores       pop stores              stores                                                            *App that can make all sorts of
                                                                                                                         payment-related actions in daily life
                                                                                                                         convenient

                                                                                                                                                                 27
Change in Capital Structure

                              28
Consolidation by SoftBank Corp.

To achieve further growth and improve corporate value
          Until June 26, 2019                       From June 27, 2019

 AI                                          AI
           SoftBank Group Corp.                       SoftBank Group Corp.
        (SoftBank Group Japan Corporation)         (SoftBank Group Japan Corporation)

  66%                       36%                            66%

                                                           SoftBank Corp.
      SoftBank                Yahoo Japan                  45%
       Corp.                  Corporation
                     12%                            Yahoo Japan Corporation
                                                  (From Oct. 1, Z Holdings Corporation)

                                                                                          29
Under the New Structure, We Aspire to Be:

World’s largest “information communications group” to
           create a future that can’t be rivaled

     Wide array of Internet services           Communication (5G)
                                            /Smartphone/Robot/IoT, etc.

                                                                      IoT

                                                © SoftBank Robotics

           A total of 100 million+ user base & big data
                                                                            30
Synergies with SoftBank

         Synergies created                   Future synergies

                                       Digital
                                                          Corporate
                                      marketing
     users          subscribers                          sales power
                                      products

    Collaborative measures for
        Premium members,
                                  &      Collaborative measures
                                           in digital marketing
      E-commerce benefits

   EC transaction value                 Ad revenue
                                                                       31
Yahoo Japan Corporation Aspires to:

 Make our users’ lives convenient to a surprising (!) extent
            through Yahoo! JAPAN services
 Online world
                                             Even more
                                             convenient

 Offline world

                                              New entry

                                                               32
Appendix

           33
FY2019-1Q 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        1Q                                             4Q           1Q                                                4Q          1Q
Assets                2,429.6   2,586.4      156.8      Assets                    878.7       892.5            13.8    Assets                   353.0        487.0       134.0
  Cash and cash                                            Cash and cash                                                  Cash and cash
  equivalents
                        546.7     565.1        18.3        equivalents
                                                                                  249.5        227.0      -22.4           equivalents
                                                                                                                                                  30.0       124.6            94.5
  Trade and other                                          Trade and other                                                Trade and other
  receivables
                        328.2     323.9       -4.3         receivables
                                                                                    22.6        25.6            2.9       receivables
                                                                                                                                                  12.6         26.6           14.1
  Loans for credit                                         Loans for credit                                               Loans for credit
  card business
                        253.3     271.1        17.8        card business
                                                                                      -           -              -        card business
                                                                                                                                                 252.5       269.6            17.0
  Investment                                               Investment                                                     Investment
  securities for        419.5     418.4       -1.0         securities for         419.5        418.4           -1.0       securities for            -            -             -
  banking business                                         banking business                                               banking business
  Property and                                             Property and                                                   Property and
  equipment
                        133.8     124.6       -9.2         equipment
                                                                                     0.5         0.6            0.1       equipment
                                                                                                                                                   5.7          5.4       -0.2

  Intangible assets     165.2     172.9          7.6       Intangible assets         6.1         6.0           -0.0       Intangible assets       20.4         24.9            4.5

Liabilities           1,519.0   1,770.9      251.8      Liabilities               823.4       836.9            13.5    Liabilities              326.0        459.4       133.3
  Trade and other                                          Trade and other                                                Trade and other
  payables
                        394.5     396.9          2.3       payables
                                                                                    15.3        17.4            2.1       payables
                                                                                                                                                 166.6       195.2            28.5
  Deposit for                                              Deposit for                                                    Deposit for
  banking business
                        768.6     802.2        33.6        banking business
                                                                                  803.8        815.0           11.1       banking business
                                                                                                                                                    -            -             -
  Interest-bearing                                         Interest-bearing                                               Interest-bearing
  liabilities
                        215.2     454.5       239.3        liabilities
                                                                                      -           -              -        liabilities
                                                                                                                                                 144.8       250.8        105.9

Equity                  910.5     815.4     -95.0       Equity                     55.2         55.5            0.3    Equity                     26.9        27.6            0.7

                                                       Note: Figures before internal transactions within the          Note: Figures before internal transactions within the
                                                       Group are eliminated.                                          Group are eliminated.
                                                                                                                                                                                     34
Image 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
                                                                                                        (excl. ASKUL Group)

                                                                                                        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

                                                                                                                                         35
Operating Income – Long-Term Outlook
 Businesses to be strengthened (Shopping advertising, Integrated marketing
                                                                                                        FY19 ー FY22
  solution, Financial & Payment, Membership, YAHUOKU!)
 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
                    Maintain                          the growth driver to                              FY23 – Future
                   over ¥140 B                           expand income
                  income level                                                            By monetizing users’ active economic
     FY18 FY19 FY20 FY21 FY22 FY23                      …          …   …    …    Future                 actions
    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.
                                                                                                                                     36
Materiality Matrix for Yahoo Japan Corporation
                                                                                                                                                                                  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 Yahoo! JAPAN
                                                                                                                                                                                  17
*Big circles are especially important to the stakeholders and Yahoo Japan Corporation, and need to be dealt with focus.                                                                Partnerships for the Goals

                                                                                                                                                                                                                                 37
Yahoo! JAPAN Service Map                                         ヤフーのサービスマップ
                                              Media                                                                              Commerce                                                             Digital Contents
                                                                                                                                                                                                                                ebookjapan
                                                                                                                                          Shopping                                  Fortune telling           Game
         TOP page                  Weather/Disaster                 News                        Finance                                                                                                                         (Digital books)

                                                                                                                                           Auction
                                          Sports navi                               GYAO!                                                                                                                   O2O
       Knowledge search
                                          (Sports news site)                        (Video streaming)                                          ASKUL                                 Real                    Travel                Restaurant
                                                                                                                                               (B to B EC)                           estate                  booking               reservation

           Retty (Restaurant information)                    kurashiru (Recipe video service)                                                  LOHACO                                                                       Ikyu.com
                                                                                                                                               (B to C EC)                            OYO LIFE           Ikyu.com
                                                                                                                                                                                                                            (Restaurant)

     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                                               Japan Net Bank
                  Car navigation                                      Vocal assistant                                                                                                                                       Blockchain
                                                                                                                                           (FX)                                               (Internet banking)

                                                                                                                  No. of monthly logged-in user IDs: 49.01mil
                                                              Yahoo! JAPAN
                                                              Customer Base                                               Yahoo! Premium member IDs: 21.90mil

                                                       B to B                                                                   Data/AI                                         PIM                                         CSR

                           Sponsored        Yahoo! Display                          Research                                      (Data          Scoring                                                                           Internet
                             search          Ad Network
                                                                 Premium                                  Crowdsourcing                                                    e-Mail             Calendar               Kids
                                                                                                                                   solution)     service                                                                           fund raising

                                                                                                                                                                                                                                                  38
Business Segment Breakdown
                                                   Paid search advertising “Sponsored Search”,
                    Advertising
                                                   Display advertising (“Yahoo! Display Ad Network (YDN)”, “Premium Advertising”)
   Media
  Business          Business Services              Media-related services, CRM-related services and others

                    Personal Services              Video-related services and others

                    Advertising                    Display advertising (“Premium Advertising”)
                                                   ASKUL, 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
 Commerce                                          others, Yahoo! Real Estate, Real estate-related services
  Business                                         LOHACO, Yahoo! Premium, Personal system-use fees of YAHUOKU!, Credit card-related services,
                    Personal Services              Pet supplies-related services, Telecommunications carrier-related services, Banking-related
                                                   services, E-book-related services, FX-related service and others, Payment-related services
                    Others                         Banking-related services

                    Advertising                    Display advertising (“Premium Advertising”)
    Others          Business Services              Utilities payment-related service and others

                    Personal Services              Yahoo! Mail, Yahoo! Address Book, Utilities payment-related service and others

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.
                                                                                                                                                                                          39
Advertising 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
                                                                                                                                                                        40
Definition of EC Transaction Value

                                            YAHUOKU!

                                             Shopping           Yahoo! Shopping,
                                             Business           LOHACO, Charm
                   EC transaction value
                     (sale of goods)
                                           ASKUL BtoB

 EC transaction                                 Other           Yahoo! Tickets, Ouchi-Direct
      value                                 (sale of goods)

                                                                Ikyu, Yahoo! Travel,
                                                O2O
                                                                Yahoo! Dining
                   EC transaction value
                   (non-sale of goods)          Other
                                                                Fee-based digital contents
                                          (non-sale of goods)
                                                                                               41
Shopping Advertising Take Rate*1 and Percentage of
Point-Reward Expenses*2 in Yahoo! Shopping

         Shopping advertising take rate                % of point-reward expenses

0
       FY2016                                                FY2017                                            FY2018                  FY2019
         1Q            2Q            3Q           4Q           1Q            2Q            3Q           4Q       1Q     2Q   3Q   4Q     1Q

*1 Shopping advertising take rate = Shopping-Related Advertising revenue / Yahoo! Shopping transaction value
*2 Point-reward expenses related to Yahoo! Shopping / Yahoo! Shopping transaction value
                                                                                                                                                42
PayPay – 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 payments
          offline merchants

                                                                                    43
Transition to a Holding Company Structure through Company Split

Transition to a holding company structure for an expeditious promotion of business strategies

           Until September 30, 2019                        After October 1, 2019

Listed                                   Listed
         Yahoo Japan Corporation
                                                      Z Holdings Corporation

              Management of
             the whole group               New
                                         company
                                                              New
                                                            company Finance
                                                                 intermediate
                                             Yahoo Japan
                                                                    holding
                                             Corporation
              Operation and                                        company
             development of
           businesses/services

                                                                                                44
Organization Chart of Yahoo Japan Corporation
                                                                                                                               As of the end of June 2019

                                                President & Representative
                                                      Director / CEO
                                                                                                                                     Board of Directors
                                                      Business Promotion Group                  CFO
                                                                                                                                         Audit and
               Media Services Group                                                   (Chief Financial Officer)
                                                                                                                                        Supervisory
                                                       Shopping Services Group                                                          Committee
                                                                                                 CTO
                                         Commerce        O2O Services Group
   Media                                                                              (Chief Technology Officer)
                                         Company
  Company     Search Services Group
                                         (1,754)
  (2,314)                                             YAHUOKU! Services Group
                                                                                                 CISO
                                                                                  (Chief Information Security Officer)
                                                       Payment Services Group
             Marketing Solutions Group
                                                       Financial Services Group                  CDO
                                                                                          (Chief Data Officer)

      Technology Group(1,045)                       Corporate Group
                                                                                                  CSO
      System Management Group                  Finance Management Group                 (Chief Strategy Officer)

                                                Legal Management Group
             Data Group                                                                          CCO
                                               People Development Group               (Chief Conditioning Officer)
            Science Group                 Social Responsibility Promotion Group
                                                                                          Internal Audit Office

                                                                                  Note: Figures in parentheses are number of
      Services Management Group                  Policy Planning Group
                                                                                                                 employees.

                                                                                                                                                            45
Consolidated Subsidiaries and Affiliates
                                                                                           As of the end of Jun. 2019

 Major consolidated subsidiaries
  ASKUL Corporation                                                 Astmax Asset Management, Inc.
  Carview Corporation                                               CLASSIFIED Corporation
  Dynatech inc.                                                     eBOOK Initiative Japan Co., Ltd.
  GYAO Corporation                                                  Ikyu Corporation
  Passrevo Corporation                                              The Japan Net Bank, Limited
  ValueCommerce Co., Ltd.                                           YJ Capital Inc.
  YJ Card Corporation                                               YJFX, Inc.
  Y’s Insurance Inc.                                                Y’s Sports Inc.
  Z Corporation Incorporated

 Major affiliates
  BuzzFeed Japan Corporation                                        CRITEO K. K.
  OYO TECHNOLOGY&HOSPITALITY JAPAN KK                               PayPay Corporation
  SRE Holdings Corporation (*former Sony Real Estate Corporation)
                                                                                                                        46
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