Z : FY2020 Q1

Security Code: 4689

Z Holdings Corporation Business Results

FY2020 Q1 (April - June)

July 31, 2020

0

Table of contents

1		FY2020 Q1 Financial Results
	& Impact of COVID-19

2

Business Topics

3

Company-wide Initiatives

4 Appendix

FY2020 Q1 Financial Results - Topics

Q1 Financial results

Full year financial results

Business topics

Revenue increased YoY 14.8%; net income decreased YoY 16.9%

• Revenue increased due to growth of Commerce business; Shopping business transaction value increased YoY 85.9%
• For the first time, op. income of Commerce business surpassed that of Media business, due to synergy effects among group companies (Yahoo Japan, ASKUL, ZOZO, etc.) and company-widecost cuts
• Slight increase in total advertising revenue (YoY +1.2%) due to decrease in ad placements impacted by COVID-19
• Net income decreased YoY due to recording of gain on change in equity interest in PayPay Corporation in FY2019 Q1

Aim for 2 consecutive terms of increase in revenue & op.

income; continue to leverage our diversified business portfolio

Unify brands of our financial services to "PayPay"; promote multi- partnership strategy

2

FY2020 Q1 Consolidated income statement

Increase in revenue and operating income leveraging diversified business portfolio

		Item		FY2019 Q1	FY2020 Q1	YoY
		Revenue		238.6	(¥B)	273.8 (¥B)	+14.8 %
		Operating income		36.1	(¥B)	50.6	(¥B)	+40.0 %
		EBITDA *1		54.0	(¥B)	75.3	(¥B)	+39.5 %
		Other non-operating income and expenses		*2 11.0	(¥B)	-1.9	(¥B)	n.a.
		Equity in earnings of associates and joint venture *3		-5.9(¥B)	-3.7	(¥B)	n.a.
		Net income attributable to owners of the parent		27.3	(¥B)	22.7 (¥B)	-16.9%
		Diluted EPS		¥5.40	¥4.78	-11.5%
		Net leverage ratio *4		0.56 X	2.74 X	n.a.
*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							3
*4	Net leverage ratio＝Net interest-bearing debt/EBITDA Excludes banking business. Figures for the most recent 12 months used for calculating EBITDA. Includes impact of IFRS16.

Factors of change in operating income

Growth in Commerce business and cost cuts contributed to increase in op. income

					ZOZO
(¥ B)	Commerce	Media
		business	business	consolidation Fixed cost ↓	50.63
		Marginal	Marginal	Op. income* ↑	+3.27
		income ↓	Gross income +7.31
		income ↑
		+6.89	-3.00
		36.16			40.05

FY2019 Q1

FY2020 Q1

Q1 Cost cuts (variable/fixed cost)

Against budget: approx. JPY 10.2 B

Breakdown

• Commerce business: ¥5.08 B
• • Sales promotional cost for Shopping business, YAHUOKU!
• Media business: ¥3.89 B
• • Sales promotional cost for apps, etc.
• Others: ¥1.26 B
• • Reduction/postponement of
    CAPEX
  • Travel expense, etc.

* Reflects amortization of identifiable assets as a result of PPA

4

Impact of COVID-19

Business environment under COVID-19

Macro

environment

Expansion of domestic EC market

EC Merchandise

• Increase in cocooning consumption due to restraint from going out
• Use of EC recommended by government

Increase in value of online media

Media/Advertising

• Increase in time spent online due to restraint from going out

Secondary				•	Increase in new buyers
Our business				▷ Q1 YoY+54%
positive
impacts	environment			•	Increase in new stores
					▷ Q1 YoY+37%

Shopping

Mall

• Increase in usage time via PC
  ▷ Q1 YoY+9.7%

Macro

environment

Negative Our business impacts environment

• Logistical constraints due to oversupply
• Decrease in demand for office supplies/BtoB products due to remote working

• Reduction in advertisers' marketing budget
• Decrease in advertising demand from specific industries (e.g. travel/recruitment)

6

FY2020 Q1 - KPI results

Slight increase in total advertising revenue, but strong growth in transaction value of EC (merchandise) business

Item		FY2020 Q1		YoY
Merchandise transaction value		653.6	(¥B)	+37.4 %
Shopping business transaction value		379.3 (¥B)	+85.9 %
Reuse business transaction value		202.0 (¥B)	+0.8 %
Credit card transaction value		556.3	(¥B)	+31.3 %
Total advertising revenue		79.1	(¥B)	+1.2 %

7

Provision of service/functions adapted to users' needs during COVID-19

Commerce		Media/Search		Media/Search - new functions

Mall

Displayed inventory in physical stores

Shopping

Stay Home

Feature

(The Japan Net Bank)

Business loan support to corporations/individual proprietors

Newly installed a COVID-19 tab

News

Special feature: How do we live with the coronavirus?

Search

Info on government's special cash handouts by municipalities

Maps

Congestion radar

Search

Congestion status of facilities

Transit

Information

Congestion status of train routes

8

Third party survey results

Most trusted Japanese platform operator

Nielsen, April 2020	Nikkei BP Consulting, Web Brand Survey	Toyo Keizai, 2020 CSR Ranking
Monthly Total Report	2020 Spring/Summer (April)

No. 1

No. 1

No. 1

Total digital users

in Web brand survey

in 【Governance+Social】 division

Rank

Brand

MAU

Reach

Rank

Website

Score

Difference

Rank

Company

Points

1

Yahoo Japan

79.50 mil

63.6％

1

Yahoo! JAPAN

118.3

+11.7

1

Z Holdings

100.0

2

Google

73.45 mil

58.8％

2

Rakuten Ichiba

116.2

+1.4

2

NTT Docomo

99.4

3

LINE

66.89 mil

53.5％

3

Google

99.4

+0.8

2

Omron

99.4

4

Rakuten

57.70 mil

46.2％

4

Amazon.co.jp

98.1

-1.5

4

Seiko Epson

98.9

5

Amazon

52.35 mil

42.0％

5

YouTube

94.9

+6.5

4

SOMPO Holdings

98.9

Source: Nielsen April 2020, Monthly Total Report

Source: Nikkei BP Consulting, Web Brand Survey 2020

Source：Toyo Keizai, Top 500 CSR companies most

Total no. of digital users TOP10

Spring/Summer (April)

trusted under COVID-19 (July)

9

Challenging a new work style adapted to the "new normal"

Transition to a new work style leveraging information technology (From Oct. 2020)

	Before			After		Ad placed in nation-wide
		▶			newspapers（July 16）
(1) Remote work	5 times/month (Max.)	No limit
		▶
(2) Flex time	Core time (10:00-15:00)	Abolish core time
(3) Subsidies	¥3,000/month	▶	Max. ¥7,000/month
(subsidy for tele-	(Telecommunication
	communication expense)			subsidy/allowance for remote work)
(4) Transportation	Payment of commuter	▶	Stop paying commuter pass
fee (Actual transportation expense
pass fee
			to be paid instead)
	Allowed employees' side
			Accept outside workers as gig
(5) Gig workers	business	▶
workers
Did not accept outside
			Begin "Gig Partner" program
	workers as gig workers

10

Our target for this fiscal year

EC Merchandise

Others

Revenue composition

（FY2020 Q1）

Media

Will aim to increase both revenue and operating income for the full year leveraging our diverse business portfolio

11

Business Topics

Commerce Business

FY2020 Q1 Commerce business - KPI results

Item	Q1 Actual results	YoY	Major measures/Major factors of change

	EC transaction value	707.3 (¥B)	+21.1 %
	Merchandise transaction value	653.6 (¥B)	+37.4 %
				• Expanded due to consolidation of ZOZO
					(Excluding ZOZOTOWN Main Store: YoY+42.4%)
	Shopping business transaction value	379.3 (¥B)	+85.9 %	•	Expanded due to PayPay Mall
				• Increase in cocooning consumption due to
					restraint from going out
	Reuse business transaction value	202.0 (¥B)	+0.8 %	•	Expanded due to PayPay Flea Market
	•	QoQ increase in YAHUOKU! due to increase in
					visitors
	Services and digital contents	53.7 (¥B)	-50.5 %	• Large decrease in O2O service due to restraint
		from going out
	transaction value
				Gradually showing signs of recovery from June
	Credit card transaction value	556.3 (¥B)	+31.3 %	• Increased due to synergies with PayPay despite
		decrease in offline usage due to restraint from
					going out (Mainly travel/dining out)

14

Commerce Business

PayPay Mall - New measure: X (Cross) Shopping

Supporting retailers to expand sales route & maximize sales

	X Shopping		Introduced/Scheduled to be introduced (As of end of June)
ONLINE			OFFLINE		32 tenants (6,666 offline stores)

Able to check	Immediately
inventory in brick	available in brick and
and mortar stores	mortar stores

Examples of companies to which X Shopping is introduced

Target market - expanding

			X Shopping Approx. ¥149 T
							Physical stores*
Merchandise
	EC*						c. ¥139 T
	c. ¥10 T						+
							Merchandise EC*
							c. ¥10 T
	As-is		To-be

* METI 2019 International Economics Research for Building a Domestic and Foreign Integrated Economic Growth Strategy (E-Commerce Market Survey)

16

Commerce Business

Future synergies with ZOZO

Creating synergies in various fields

		Item		Expected impacts
Short term		Collaborations in	•	Construction of ecosystem with shopping business
	•	Easy listing of items purchased from ZOZOTOWN in
	reuse business
			PayPay Flea Market
		Introduction of	•	Capturing of PayPay users
		•	Reduction of cost for payment commissions
		PayPay
			utilizing group companies
		Collaborations with	•	Promote use by SoftBank users through in-store promotions
		SoftBank		and provision of benefits
		Media/Advertising	•	Joint promotion of advertising business with Yahoo Japan,
		business		using ZOZOTOWN and WEAR
		Cooperation among	•	Use of data science
		engineers	•	Improvement in product recommendation
Mid term		Linkage in logistics	・	Use of ZOZOBASE

Implemented

in July

To be

implemented in

Q2

18

Commerce Business

PayPay - KPI

Each KPI growing steadily, despite declining trend in offline use due to COVID-19

No. of PayPay payments	No. of merchants*		No. of registered users
(quarter)		（quarter-end)		(quarter-end)
Approx. 9X	428.5 mil	Approx. 2.9X	2.31 mil	Approx. 3.5X	30.04 mil
YoY		YoY		YoY

0.79 mil

8.44 mil

47.48 mil

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q3

Q4

Q1

Q2

Q3

Q4

Q1

FY2018

FY2019

FY2020

FY2018

FY2019

FY2020

FY2018

FY2019

FY2020

*No. of merchant applications to PayPay (e.g. stores, taxis)

20

PayPay - Developments in monetization services

		FY2020
April 15	May 28	June 1
Finance	Finance	O2O
Bonus management	"PayPay Atobarai*"	Loan for individuals	PayPay Pick Up
	(Lump-sum payment)
	Fall 2020:
	Plan to expand to all
	users this fall
	※Currently available only
	to limited users

Within this fiscal year

Finance

Investment

Insurance Business loan

O2O

Information distribution Display of coupons

*Atobarai: Deferred payment

21

Commerce Business

Reorganization of financial brands

Financial brands to be unified to PayPay, to make full use of our diverse portfolio

					Now		Sequentially from fall 2020
		Credit card			Yahoo! JAPAN Card	▶	PayPay Card
		Bank			The Japan Net Bank	▶	PayPay Bank
		Securities				▶	PayPay Securities
		Insurance			Yahoo! JAPAN	▶	PayPay Insurance
				Insurance
		FOREX				▶
		Asset				▶	PayPay Investment Trust
		management

Note: Company names scheduled to be changed after approval in shareholders meeting in each company and after approval by governmental agencies, etc.

23

Multi-partnership strategy

Enrich services through collaborations with financial services of other companies and provide diverse options to our users

	Securities	Credit card
FOREX	A Securities	A Card	Bank
	A FX		A銀行
	B Card	A Bank
	B Securities
	B FX		B銀行
		B Bank

Asset management	Insurance
A Asset Management	A Insurance

B Asset Management

B Insurance

24

Vol. 1

Various promotional

measures for brand 2020 Fall integration coming up!

Card

(Details to be announced)

・・・

25

Scenario finance initiative - progress

Launching financial products that fit the nature of each service

(YAHUOKU!)	Travel	Mall

Car Navigation

Repair warranty

Launched in FY2019 Q4

Repair service provided to home appliances/smartphones purchased in YAHUOKU! (Max. warranty: purchase price) Warranty provided by:

Mitsui Sumitomo Insurance Co., Ltd.

Loan

Launched in FY2020 Q1

Application and usage of credit card loan

Provider: The Japan Net Bank

Cancellation

insurance

Launched in FY2020 Q2

Coverage of users' cancellation

fee for reservations of "Yahoo! Scheduled to be sequentially launched from Q3 onwards JAPAN plan" provided by Ikyu

Corporation Insurance provided by: Mysurance

26

Current Situation and Outlook

(Commerce Business)

Current situation and outlook

Growth expected to decline due to relaxed cocooning consumption, termination of government's promotional measures on cashless payment, and changes in our point-reward program

Shopping business transaction	State of emergency lifted (5/25)
value （YoY growth rate）
						Government's
			Declaration of state of		+94.0%		individual number
			emergency nation-wide (4/16)			card point
					+86.9%			program*
				+76.7%	+35.5%
+61.0% +55.5% +58.8%
Termination of government's cashless payment
					promotional measure (6/30)
				Change in our point-reward program (7/1-)
2020	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	・・・

Note: Figure for July is the cumulative figure for July 1 - 26, 2020 and the comparison with the same period last year.	28
*Japanese government's program to promote registration of individual number card and cashless payment.

Media Business

Integration of advertising platforms (Sequentially introduced to advertisers from July)

Integrated display advertising/services into one platform

Before

Separate advertising platforms

1. Flexible ad placements that meet various purposes

Flexible ad placements that meet various purposes

and issues faced by advertisers (from awareness,

Yahoo! JAPAN

Yahoo! JAPAN Promotional Ads

acquisition to loyalty) provided in one-stop

Premium AdsYahoo! JAPAN Display Ad Network

ReservationProgrammatic

Sequentially introduced from July onwards

Integrated to "Yahoo! JAPAN Ads"

Display advertising

Reservation advertising

Programmatic advertising

2.	Easy to use ad management tools
	Renewed to easy-to-use/operate & intuitive tools
3.	Optimal distribution algorithm suited for purpose
	From a distribution algorithm mainly geared to
	website referral, renovated to an optimal distribution
	algorithm that suits ad purpose

30

Integration of advertising platforms: Changed classifications to accommodate rebranding of ad products

	Before	After
Classification	Main products	Classification	Main products
Paid search	Sponsored Search	Search advertising	Yahoo! JAPAN Ads
advertising	"Search advertising"
			Yahoo! JAPAN Ads
			"Display ads"
YDN and		Programmatic	（Programmatic-based)
YDN, Criteo, etc.	Former YDN and others
others	advertising
			Shopping ads
Display		Display	(Programmatic-based)
advertising		advertising	Yahoo! JAPAN Ads
	Premium Advertising		"Display ads"
Premium	Reservation	（Reservation-based)
	Former Premium Advertising
Advertising	advertising
	Shopping advertising		Shopping ads
		（Reservation-based)

31

FY2020 Q1 Total advertising revenue - results

Item	Q1 Actual results	YoY		Major measures/Major factors of change
Total advertising revenue	79.1 (¥B)	+1.2 %
Search advertising	35.4	(¥B)	-11.6%	•	Decrease in ad placements due to COVID-19
	(Q1 -¥9.7 B)
Display advertising	43.6	(¥B)	+14.7 %
				•	Increase in traffic to media services due to COVID-19
	38.1	(¥B)	+21.5 %	•	Successful product-related measures (e.g. addition
Programmatic advertising		of header bidding)
				•	Increase in shopping advertising revenue in line with
					growth in shopping business
	5.5	(¥B)	-17.1%	•	Decrease in ad placements due to COVID-19,
Reservation advertising		despite increased ad placements by governmental
					authorities

32

Media Business

Integrated marketing solution - New service (Measurement of store visits)

Visualized Yahoo! JAPAN Ad's referral effect

User actions

Encounter

Search

Visit store

Purchase (Pay)

		Measurement of	PayPay	PayPay
		Consumer
Display	Search	Retail Gift
store visits
advertising	advertising	Gift
		FY20 Q1	Launched in	Launched in
			FY19 Q3	FY19 Q4

Digital (Online)	Brick-and-mortar (Offline)
Yahoo! JAPAN Ads	Yahoo! JAPAN Sales Promotion

Integrated marketing solution

34

Measurement of store visits - example

Begin verification of store visit measurements in selected industries

Ad contact		Visit store

Wi-Fi

Wi-Fi

Wi-Fi

Yahoo! JAPAN

Ads

Car dealers		Mobile phone shop		Supermarket

Check ad effects through report on collected results

Note: The structure of measurement is provided by SoftBank Corp. This initiative is expected to be deployed in full scale as soon as we are prepared to provide explanations on how we measure store visits and how we handle data (incl. how to stop measurement) to our individual users.

35

Strengthened sales activities

Major client

Major

proposal

Topics

Collaborations with SoftBank

Acquisition of new clients

Increase ad placements by existing clients

• Large-scaleclients (SoftBank clients)
• Mid-smallscale clients（Yahoo! JAPAN clients）
• For SoftBank clients
• • Proposals leveraging data use
• For Yahoo! JAPAN's existing clients
• • Build operational support system, new proposals/planning for ad placements
• Established horizontal sales organization in both companies, in May
• Q1 Revenue from synergy: Approx. ¥3 B* （FY2019 H2 ¥4.4 B)

Joint business plan

Set clear goals with clients and conclude annual contract for collaborations as a business partner

• Large-scaleclients
• Proposals leveraging data use
• Mid-longterm collaborations throughout the clients' marketing planning

Visualize	Formulate	Decide most
Business	Marketing	suitable
issues	plan	ad distribution

• No. of companies w/ contract*：YoY+133%
• Transaction amount of contract*：YoY+54%

* Gross revenue before deduction of incentive payments

* Actual result as of July 9, 2020

36

Current Situation and Future Outlook

(Media Business)

Current situation and outlook

Outlook of advertising demand continues to be uncertain under COVID-19

Total advertising revenue

（YoY growth rate）

+8.9%	+7.4%
+8.8%
State of emergency lifted (5/25)
	+10.0%

+2.8%

-1.5%
Declaration of state of emergency	-2.6%
nation-wide (4/16)

2020

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep ・・・

Note: Part of the figure for July includes expected figures.

38

Company-wide Initiative

Business integration with LINE

• Procedures and measures under the competition laws of some countries have not been completed*, due in part to the impact of the global spread of COVID-19.
• We are currently not aware of any material issues relating to the procedures required, etc.
• The completion of the business integration is expected to be later than initially anticipated (October 2020).
• A revised schedule will be announced as soon as it is confirmed.

* For details, please refer to our IR News dated June 30, 2020, "Announcement Regarding Progress Toward Implementation of the Business Integration".

40

Creating a large future that can only be shaped by Z Holdings

Unleashing the infinite potential of all people, with the power of information technology

Appendix

FY2020 Q1 Factors of change in consolidated operating income

Item	Actual results	YoY	Major factors of change

		FY2020 Q1 Results	36.1	(¥B)
						• Increase due to consolidation of ZOZO +33.6 (¥B)
		Revenue	+35.2	(¥B)	+14.8 %	• eBOOK +2.3 (¥B)
		• YJ Card +2.2 (¥B)
						• Ikyu -3.5 (¥B)
						• Increase due to consolidation of ZOZO +1.5 (¥B)
		Cost of sales	-1.6 (¥B)	-1.6 %	• Decrease in advertising cost of sales due to decrease in advertising
		revenue (excl. shopping ads)
						• ASKUL Group -1.8 (¥B)
		SG&A	+22.4	(¥B)	+22.3 %	Increase due to consolidation of ZOZO +24.8 (¥B)
	YoY	(Major items only↓)
					• Increase due to consolidation of ZOZO +5.1 (¥B)
	difference	Depreciation and amortization	+7.0	(¥B)	+40.0 %
	• Increase in software, servers, etc.
		Shipping cost	+6.7	(¥B)	+113.8 %	Increase due to consolidation of ZOZO +6.6 (¥B)
		Personnel expenses	+4.9	(¥B)	+20.4 %	Increase due to consolidation of ZOZO +4.6 (¥B)
		Commissions expenses	+2.6	(¥B)	+193.0 %	Increase due to consolidation of ZOZO +2.4 (¥B)
		Business commissions	+2.3	(¥B)	+16.6 %	• Increase due to consolidation of ZOZO +3.2 (¥B)
		• Yahoo Japan -0.8 (¥B)
		Sales promotion cost	-4.6 (¥B)	-27.4 %	• Decrease due to cost cuts
		• Increase in point-reward cost due to increase in transaction value
		FY2020 Q1 Results	50.6	(¥B)	+40.0 %

44

FY2020 Q1 Impact from consolidation of ZOZO

Consolidated from Nov. 2019

Item

ZOZO FY2020 Q1

FY2020 Q1 (excl. ZOZO)

YoY

Revenue

33.6

(¥B)

240.2

(¥B)

+0.7 %

Operating income

*1 7.3

(¥B)

43.3

(¥B)

+19.8 %

Net income

4.9

(¥B)

22.5

(¥B)

-19.0%

Net income attributable to

2.4

(¥B)

20.2

(¥B)

-26.0%

owners of the parent

*1 Reflects amortization of identifiable assets as a result of PPA

Amortization period

Goodwill

Total

212.9 (¥B)

Item

Amount

(Straight line)

Total

502.1 (¥B)

Customer base

322.0

(¥B)

18-25

years

(Shops/users)

PPA

Trademark*2

178.7

(¥B)

-

Amortization

3.3 (¥B)

(FY2020 Q1)

Others

1.4

(¥B)

4 years

*2 Indefinite-lived intangibles

45

FY2020 Q1 Statement of financial position

Consolidated (IFRS)

(¥B)	FY2019	FY2020	Difference
Q4	Q1
Assets	3,933.9	3,980.3	46.4
	Cash and cash	880.1	902.5	22.4
	equivalents
	Trade and other	386.7	399.4	12.6
	receivables
	Loans in credit	342.2	342.9	0.7
	card business
	Investment	415.8	422.9	7.1
	securities in
	banking business
	Property and	131.2	131.1	-0.0
	equipment
	Intangible assets	679.3	677.4	-1.9
Liabilities	2,886.0	2,948.3	62.2
	Trade and other	487.2	474.0	-13.1
	payables
	Customer deposit	903.1	1,009.4	106.3
	in banking
	business
	Interest-bearing	1,086.4	1,194.9	108.4
	liabilities
Equity	1,047.8	1,031.9	-15.8

The Japan Net Bank, Limited (JGAAP)

(¥B)	FY2019	FY2020	Difference
Q4	Q1
Assets	995.5	1,109.3	113.8
	Cash and cash	323.3	425.6	102.2
	equivalents
	Trade and other	20.5	21.8	1.2
	receivables
	Loans in credit	－	－	－
	card business
	Investment	425.8	432.9	7.1
	securities in
	banking business
	Property and	0.6	0.6	-0.0
	equipment
	Intangible assets	7.0	6.9	-0.0
Liabilities	941.0	1,053.6	112.6
	Trade and other	15.5	15.8	0.3
	payables
	Customer deposit	920.3	1,033.6	113.2
	in banking
	business
	Interest-bearing	－	－	－
	liabilities
Equity	54.5	55.6	1.1

YJ Card Corporation (JGAAP)

(¥B)	FY2019	FY2020	Difference
Q4	Q1
Assets	554.2	566.4	12.1
	Cash and cash	127.4	126.7	-0.7
	equivalents
	Trade and other	14.8	26.2	11.3
	receivables
	Loans in credit	337.4	337.4	0.0
	card business
	Investment	－	－	－
	securities in
	banking business
	Property and	4.8	4.7	-0.1
	equipment
	Intangible assets	29.4	29.5	0.1
Liabilities	523.2	533.7	10.4
	Trade and other	265.5	272.9	7.4
	payables
	Customer deposit	－	－	－
	in banking
	business
	Interest-bearing	245.3	249.3	3.9
	liabilities
Equity	30.9	32.6	1.6

Note: Figures before internal transactions within the Group are eliminated.

Note: Figures before internal transactions within the
Group are eliminated.	46

Financial data

CAPEX

Adjusted FCF

(¥B)			(¥B)
 Impact of ZOZO consolidation*				85.1
 Right-of-use assets
 Property & equipment/Intangible assets			109.1
29.0
3.6			-24.0
	18.8	0.3	-97.6
		0.9		Operating CF
25.3			-28.4
	17.5		Investment CF
		-	Adjusted FCF	-126.0
FY2019 Q1	FY2020 Q1			FY2019 Q1	FY2020 Q1

	Note: Excludes banking business.	47
* Includes right-of-use assets of ZOZO, Inc.	Securitization of credit card receivables is added in operating cash flow.

Financial data

Interest-bearing debt/Net interest-bearing debt	Net leverage ratio
(Excludes banking business)	(Excludes banking business)

 Lease liabilities		1,204.0	 EBITDA
 Securitization		 Net interest-bearing debt		702.9
 Loan		110.7	- Net leverage ratio	Approx. 2.74 x
 Bond		93.0
- Net interest-bearing debt
(¥B)		446.5	(¥B)
	702.9
453.1
				257.0
87.1
	553.7	181.7
118.0
		Approx. 0.56 X
118.0	102.3
130.0				102.3
FY2019 Q1		FY2020 Q1	FY2019 Q1		FY2020 Q1

Note: Net interest-bearing debt＝Interest bearing debt - Cash and cash equivalents	Note: Net leverage ratio＝Net interest-bearing debt/EBITDA
Figures for the most recent 12 months used for calculating EBITDA.	48
Includes impact of application of IFRS 16.	Includes impact of application of IFRS 16.

Major funding activities

Amidst market uncertainties due to COVID-19, issued a total of ¥200 B corporate bonds

Refinanced the funding for acquiring ZOZO, and secured stable sources of funds

	Series	Amount	Interest rate	Redemption
	14th Series Unsecured Bonds (1.5 year bond)	25 (¥B)	0.20 %	Dec. 2021
	15th Series Unsecured Bonds (3 year bond)	80 (¥B)	0.35 %	Jun. 2023
	16th Series Unsecured Bonds (5 year bond)	70 (¥B)	0.60 %	Jun. 2025
	17th Series Unsecured Bonds (7 year bond)	15 (¥B)	0.79 %	Jun. 2027
	18th Series Unsecured Bonds (10 year bond)	10 (¥B)	0.90 %	Jun. 2030

49

Z Holding's new 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

50

Image of our long-term revenue composition

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

Search advertising, display advertising

(excl. shopping advertising)

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

・・・

・・・

・・・ Future

51

Operating income - long-term outlook

• Businesses to be strengthened (Shopping advertising, Integrated marketing solution, Financial & Payment, Membership, Reuse business)
• Advertising income - base (Search advertising, display advertising)

			FY2023
		￥225.0 B
			Record high
FY2018
¥140.5 B			Businesses to be
		Maintain		strengthened will be
			the growth driver to
	over ¥140 B		expand income
	op. income level
FY18	FY19	FY20 FY21	FY22 FY23	…	…	…	…	Future

Results	Period for structural reform	Next development stage

Note: Other business and adjustments are prorated to businesses to be strengthened and advertising income (base), according to their composition ratio.

• FY2022

Invest in measures to expand users and EC transaction value, and start up new businesses, etc. to achieve:

• Double-digitrevenue growth

FY2023 - Future

Monetize increasingly activated users'

economic actions to:

▶ Bring income to an expansionary phase

52

Z Holdings - Service map

	Media
TOP page	Weather/Disaster
Knowledge search	Sportsnavi
(Sports news site)

NewsFinance

GYAO!

(Video streaming)

Commerce

Digital Contents

Shopping

Auction

Fortune telling

Game

ebookjapan

(Digital books)

PayPay

PayPay

Mall

Flea Market

O2O

Real

Travel

Loco

ZOZO

ASKUL

LOHACO

estate

booking

Retty (Restaurant information)

kurashiru (Recipe video service)

（Fashion online	（B to B EC） （B to C EC）	Ikyu.com	Ikyu.com
shopping）		(Hotel)	(Restaurant)

Local Information		Search		Finance/Payment/Fintech

Transit information	Map	Search	Real-time search	Beauty	Credit card	Online wallet	PayPay	TaoTao
(Smartphone payment)	（Cryptocurrency trading）

Car navigation	Vocal assistant				Job search	YJFX	The Japan Net Bank	Blockchain
						（FOREX）	(Internet banking)

For corporations

Data/AI

PIM

CSR

Research

Crowdsourcing

e-Mail

Calendar

Kids

Internet

fund raising

Customer Base

No. of users: Approx. 80 mil *

* Annual logged-in user IDs.

53

Materiality matrix for Z Holdings Group

								11 17
					Corporate		9	Solving social
						Issues with
					governance		Data	IT
							security	11 17
					8		9	Disaster measures/
Level					Recovery support
5	10		Health &		Network
	safety
◆Diversity/inclusion	management		reliability	9
8
of			4				9
		Rewarding		デContributionータ利活用
stakeholder	9		Supporting	workplace		Using data
				による貢献
		consumption			◆Correct AI use
		◆Improving media literacy	13	the future
		generation			Risk
			Response
			to climate	12			management
			change
				Sustainable				9
				production/
concern	11					9
◆Relationship with local community		4	9	◆Sound advertising market
10
◆Accessibility	13		◆Illegal/harmful content
		13 14	◆Pollution/waste	16
		◆Bio-diversity			◆Fair competition

◆Anti-corruption

6 ◆Water/land use

Importance to Z Holdings Group

The numbers and colors in the matrix coincide with the SDG icons.

1. Quality Education
2. Gender Equality
3. Clean Water and Sanitation

1. Decent Work and Economic Growth
2. Industry, Innovation and Infrastructure

1. Reduced Inequalities
2. Sustainable Cities and Communities
3. Responsible Production and Consumption
4. Climate Action
5. Life Below Water

1. Peace, Justice and Strong Institutions
2. 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.

54

Business segment breakdown

		Advertising	Display advertising (Programmatic, reservation), ZOZO
		Business Services	ASKUL, ZOZO, Affiliate-related services, Reservation-related services, Corporate system-use fees of
		YAHUOKU!, Payment-related services, Banking-related services, Credit card-related services and
		(For corporations)
	Commerce	others, Real estate-related services
		LOHACO, ZOZO, Yahoo! JAPAN Premium, Personal system-use fees of YAHUOKU!, PayPay Flea
	Business	Personal Services
		Market sales commission, Credit card-related services, Pet supplies-related services,
		(For individuals)	Telecommunications carrier-related services, Banking-related services, E-book-related services, FX-
			related services and others, Payment-related services
		Others	Banking-related services
		Advertising	Search advertising, Display advertising (Programmatic, reservation)
	Media
	Business Services	Media-related services, CRM-related services and others
	Business	(For corporations)
		Personal Services	Video-related services and others
		(For individuals)
		Advertising
	Others	Business Services	Utilities payment-related services and others
	(For corporations)
		Personal Services	Yahoo! JAPAN Mail, Yahoo! JAPAN 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.	55
The same product may be classified in different segments depending on the contractor.

Definition of EC transaction value

Merchandise

EC transaction value

Services and

digital contents

Reuse business	YAHUOKU!, PayPay Flea Market,
ZOZOUSED
	Yahoo! JAPAN Shopping,
Shopping business
PayPay Mall, ZOZOTOWN,

LOHACO, Charm

ASKUL BtoB

Other	Yahoo! JAPAN Tickets,
(Merchandise)	Ouchi-Direct

		O2O	Ikyu, Yahoo! JAPAN Travel,
		Yahoo! JAPAN Dining
		Other	Fee-based digital contents
		(Services and digital contents)

56

Advertising products

		Advertising Products		Main Format	Fee Calculation		Placement	Type of Advertiser
				Pages
	Search	Yahoo! JAPAN Ads "Search advertising"		Text			Search results
	advertising		Cost per-click		pages
			Yahoo! JAPAN Ads		Text		Top page	Major
				Banner			Interior pages of	corporations/SMEs
			"Display ads"
						service sites
			(Programmatic-based)
		Programmatic		Video	Cost per-view
				Partner sites
		advertising
		Shopping ads						Yahoo! JAPAN	Tenants of Yahoo!
				Text banner	Cost per-conversion		Shopping	JAPAN Shopping,
			(Programmatic-based)
								PayPay Mall	PayPay Mall
	Display
	advertising				Rich (incl. video)	Cost per-impression		Top page,
			Yahoo! JAPAN Ads					Interior pages of	Major corporations
				Banner	(Reservation-based)
					service sites
			"Display ads"
		Reservation		Text	Cost per-guaranteed
		(Reservation-based)
		advertising				period, etc.		Yahoo! JAPAN	Tenants of Yahoo!
				Banner
					(Reservation-based)		Shopping	JAPAN Shopping,
									PayPay Mall	PayPay Mall
			Shopping ads		Text banner	Cost per-guaranteed
			(Reservation-based)		period, etc.

57

PayPay Corporation - capital structure

					Shareholding ratio
				May 2018	May 2019	As of end of March 2020	As of end of June 2020
			（	At founding
			）
		Yahoo Japan		50 %	25 %	25 %	25 %
	Common stock	SoftBank		50 %	25 %	25 %	25 %
	SoftBank Group		-	50 %	50 %	50 %
		Total		100 %	100 %	100 %	100 %
		Yahoo Japan		-	-	50 %	50 %
	Preferred stock*	SoftBank		-	-	50 %	50 %
	SoftBank Group		-	-	-	-
		Total		-	-	100 %	100 %

・April 2020 onwards, may be converted to common stocks (conversion rate=1:1) ・Voting rights ratio after conversion: 36%

As of end of June 2020		25.0%
Voting rights ratio

58

Business integration with LINE

Post-integration structure

50%							50%
			General			JV		（LINE）
			shareholders
34.7%							65.3%

Integrated company

100%100%

Succeeding company

Exchange Ratio

1 ： 11.75

No. of Z Holdings shares before/after share exchange

4.8 B ▶ 7.7 B

sharesshares

• All incremental shares are issued to JV
• No. of treasury shares to be allocated is undecided

59

Disclaimer

Statements made at the meeting or included in the documents that are not historical facts are forward-looking statements about the future performance of Z Holdings Corporation (Company, Z Holdings) 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 "Consolidated Financial Statements and Independent Auditor's Report" (Japanese only). 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.

Unleashing the infinite potential of all people, with the power of information technology