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Edited Transcript of 4689.T earnings conference call or presentation 30-Oct-20 7:30am GMT

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Q2 2021 Z Holdings Corp Earnings Call Tokyo Nov 30, 2020 (Thomson StreetEvents) -- Edited Transcript of Z Holdings Corp earnings conference call or presentation Friday, October 30, 2020 at 7:30:00am GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Kentaro Kawabe Z Holdings Corporation - President, Representative Director, President Corporate Officer & CEO * Ryosuke Sakaue Z Holdings Corporation - Managing Corporate Officer, Executive VP & Group CFO * Takao Ozawa Z Holdings Corporation - Senior Managing Corporate Officer, Executive VP, COO & Director ================================================================================ Conference Call Participants ================================================================================ * David Gibson Astris Advisory Japan, K.K. - Chief Investment Advisor & Founder * Eiji A. Maeda SMBC Nikko Securities Inc., Research Division - Senior Analyst * Han Joon Kim Macquarie Research - Analyst * Haruka Mori JPMorgan Chase & Co, Research Division - Analyst * Hiroko K. Sato Jefferies LLC, Research Division - Equity Analyst * Masato Araki Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst * Mitsunobu Tsuruo Citigroup Inc., Research Division - Director & Analyst * Yoshitaka Nagao Nomura Securities Co. Ltd., Research Division - Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- [Interpreted] We would like to start our presentation on the FY 2020 second quarter business result presentation. We are scheduling this meeting to last for 90 minutes, and we would like to start right away. Mr. Kawabe, please. -------------------------------------------------------------------------------- Kentaro Kawabe, Z Holdings Corporation - President, Representative Director, President Corporate Officer & CEO [2] -------------------------------------------------------------------------------- [Interpreted] This is Kawabe from Z Holdings. Thank you very much for your usual support. If you have any problem for the audio part, please raise your hand. For the interim and the financial result, I usually explain. Therefore, I would like to present the overall from my side for the financial results. Now for the topics that I would like to share. The first quarter was hit very hard by the COVID-19. And taking all measures, we were cautiously running our businesses, and the incessant expense was suppressed in order for us to be prepared. That was the first quarter. And second quarter, basically, we have been running on the management as a same trend. Various services and groups has been impacted. However, the good part has been offsetting the negative. Therefore, our business result has become a positive one. Year-on-year, the revenue increased 15.4% and operating income increased Y-o-Y 20.5%. And especially the topics that I would like to share is about service digital businesses, the O2O part. After the state of the emergency declared in Tokyo, this was the area which had a very large dip. However, this quarter, the connection with the operation of go-to campaign of the governmental works, our business here has been growing year-on-year by 2.0% -- excuse me, 51.2%. And we had a traffic increase, and we were able to grow to the year-on-year 2.0% increase for the media service traffic. This was the real result of the first half and the second quarter. And actually, 90% of our workers are working from home -- work from home, and we were able to achieve this. Therefore, organizing wide, we were able to grow organically. And in the second half, I would like to elaborate on this later on. Overall speaking, the digital online, we consider this as a great chance to grow. Therefore, we are going to be making an strong investment while -- putting in the strong investment. The Y-o-Y 8.3% increase in our revenue are something that we would like to aim for JPY 1.14 trillion and operating income JPY 160 billion. So this is our target, which is now on the guideline, and we would like to work in that way. I would like to elaborate this later on. And now I'd like to go into the details, please. This is the second quarter consolidated results, 15.4% for the revenue and operating income 20.5% increase. And even for the first half, we see the same trend. The revenue went up by 15.1%, and operating income went up nearly 30.80% (sic) [29.8%]. So the background of this increase was -- let us explain. The left-hand side, it depicts the impact from the COVID-19. And because we have very wide area of operation, within every area, we were hit by the COVID-19. But then there were areas where we grew, which is shown on the right-hand side. At the same time, there were some dips as well. And within that situation, centering around Yahoo -- the wide range of businesses centering around Yahoo! and the -- thanks to the companies who are joining in with our groups and because of our diverse operation, our portfolio was stable, which contributed to our revenues and operating income and the management power that we were able to suppress. Our cost was also great in order to contribute to the strong result of the second quarter and the first half. At the stock market, we are always said that consumer discount is a negative point because we have various diverse portfolios in the market. However, from my side, within such historical unprecedented ages, we were able to come to this very strong result. So we consider this is thanks to the portfolio management that we were able to continue on stably. So on the online, having diverse businesses, I think it is good and effective. Therefore, we would like to keep on working on enriching our online works too through this age of difficulties. So on the risk portfolio, we had a risk case. That was one feature for us. And the other thing is within this COVID-19 environment, more than 90% of our workers have been staying at home working remotely, and we were able to achieve this result. Therefore, the capability of the organization itself was showing a great capacity in the first half. Part of the area of customer support operations handling some personal information. Other than those people, most of the people were working at home during this 6 months. And if the -- if we are going to be having a negative way of production, then it will be bad. However, for those coming over to the offices, compared to work at home, we were able to have the same level of performance. So as of October 1, we will be moving full-fledged to online, and we have announced that, and we will have new security measures to meet the remote work environment. And surrounding around Yahoo!, Z Holdings will be, all in all, online-centric organization as a whole. We have such a capability, and we believe that, that caliber will further grow in the future. Next page, please. We go through different business sectors, and the first sector is Commerce business. Regarding Commerce business, the e-Commerce transaction value in the consolidated statement grew by 29.8%. Merchandise transaction value went up by 24.4%. And for the digital transaction value, because of the reasons that I have mentioned before, it grew by 51.2%, a dramatic growth. Going back to merchandise transaction value, it trended very favorably. And along with that, credit card transaction, even though it went down in offline area, in the online area, we were able to grow dramatically, registering a growth of 26.6%. Next page, please. So let's look at Yahoo!'s e-Commerce status. Within the first 6 months of COVID-19, e-Commerce as a whole grew. And within that market backdrop, Yahoo! Shopping and PayPay Mall were able to ride on the wave and acquire new buyers as well as new stores, and both grew by more than 30%. We have new buyers, and we have new stores, and we want to drive them to continue using our services more than ever before. To realize that, we will implement due measures. Next page, please. One of those measures is a PayPay STEP expansion. PayPay STEP is for PayPay users, and we have already launched this loyalty program. The more you use PayPay, the bonus points will increase. And regarding the conditions for providing those bonus points, we included Yahoo! as well as credit card usages as well. So maximum wise, you will be able to enjoy 20% more bonus points as compared to BAU. So please take a look at Page 15. We are expanding PayPay STEP, which is our loyalty program. And this slide summarizes the important aspects. We want multiple users to leverage on diverse services that we provide. E-Commerce market is expanding as a whole. So we want to enjoy the synergetic impact of group companies. And the more you use, you will be able to enjoy more PayPay bonus points. And that is the gist of the measure that we are implementing right now. PayPay is growing the most amongst all the services that we have. Therefore, we want PayPay users to use Yahoo! services, and that will lead to the best growth that we can enjoy as a whole. Please turn to Page 16. Other than that, we have different measures, and Yahoo! Shopping and PayPay Mall are launching those services. Given COVID-19, we are going to solicit brick-and-mortar stores to leverage on online services. On PayPay Mall, we have the mechanism to introduce inventories of brick-and-mortar stores under cross-shopping mechanism. And also, we will enable payment online as of November. So by having the users conduct payment online, when they go to the stores to pick up their products, they will not have to go through the register. And also, there will be on-the-spur shopping when they go to the real brick-and-mortar stores. And also, when you go to e-Commerce and you actually get delivery by mail, but you have other delivery options. For example, you can pick up after work or after school. And also, in the brick-and-mortar stores, you will be able to get PayPay bonus points and also you will be able to pay in advance. You will link the inventories of brick-and-mortar stores to online, and that will activate O2O so that off-line businesses can leverage on our online mechanism. Please turn to Page 17. We want users to continue leveraging on our services, and we are coming up with new measures to enhance our logistics services. We announced in March about the alliance with Yamato Holdings. So next-day delivery will be enhanced. But nonetheless, there are some other logistic problems. And we are going to leverage on our expanding delivery options, so that, as you can see on the right, we have Blue Ribbon Delivery, which the users must pay extra. But nonetheless, by having this icon to show that this particular product can use Blue Ribbon Delivery, the shoppers can have a choice. And this will be provided sometime in 2020. Next is O2O business, and please turn to Page 19. I have repeated this before, but in Q1 because of the emergency declaration and the restrictions of outings, E2E -- O2O went down. It went down by about 55% year-on-year. But in Q2, we had Go To Travel campaign. And because of that positive impact, we grew by 53%. We joined Go To Travel, and we came up with a right UI to show the fact that the users can leverage on Go To Travel. And regarding Go To Travel, the percentage discount will be provided. And so many people want to stay at high-end hotels. And it so happens that Ikyu handles many high-end hotels and inns, and we are enjoying high level of reservations through, and we are enjoying a V-shaped recovery. And Go To Eat started as of April, so after Q3, we want to leverage on the campaigns being led by the government agencies, so that throughout the full year, we will be able to leverage on this tailwind. Page 20, please, and this is on PayPay and financial services that we provide. Page 21. Firstly, finance, we are promoting scenario-type finance initiative. On Yahoo!, users use different services. And when different clicks are done through the site, we will be able to promote and actually solicit those users to go for another services. One is YAHUOKU smartphone/home appliance repair warranty and another one is Yahoo! Travel Hotel cancellation insurance. Say when you go YAHUOKU! and buy a second-hand product, you're worried that maybe it might break soon. So we provide repair warranty. And in travel, you can make a reservation through Go To site. But then maybe COVID-19 might be more prevalent in the future and you have to cancel the reservation, and you don't want to be charged for the cancellation. And there is an insurance that will cover for such a cancellation fee. So we can make proposal based on the context under which the users are using our services. And because of that, the coverage rate is about 10% now. So these products are very favorably received by the users. And we hope that within this fiscal year, we will be able to achieve 200,000 contracts. We are the lagging participant of this segment, but we want to leverage on these products to make a very quick growth. Next is Page 22, PayPay, which is used for payment. We live under COVID-19, and because of that, cashless payment is growing and different KPIs of PayPay are improving. And the best growth is seen in number of PayPay payments. As of -- per month, there are about 160 million payments. And user-wise, we have surpassed 33 million. So we want to promote the usage of mobile payment in the retail sector, and we have much leeway for further growth. So we want to be #1 to lead this growth. So within that condition, the PayPay is now becoming larger. And for the monetization or in the black link, we consider this is going to be realized faster. Of course, we're going to be taking commission for payment. However, the important part about PayPay is that by providing our services to the users, we're going to be gaining the profits. And regarding the financial services that we have, right now, we would like to change them into the name of PayPay -- having the PayPay name on top. And the PayPay Bank, this is current Japan Net Bank, and we are trying to change the name of the bank currently. And for this, the new bank account is now opened based on PayPay and the personal loan application is going to be based on the PayPay loans, therefore, most of the loan application is going to be coming from PayPay. So steadily, we are going to be working on top of PayPay for our financial services. Please go to Page 24 about PayPay financial services. From the viewpoint of PayPay, which is going to be the payment services, but it's not just going to be PayPay, but it is also going to be the collaboration with other financial institutions. And by doing so, we're going to be increasing the lineup of the financial services, such as credit and securities and banks. And every service is going to be upon the name PayPay. And the users utilizing the other services, utilizing other banks and financial institutions services could also be used from the PayPay services too. By doing so, we would like to offer various finance platform, and PayPay is going to be becoming such a useful platform. That was about the Commerce for the payment in finance area. Now next, I would like to go into the Media business. Please go to Page 26. And regarding this -- regarding the revenue for ad, we had 2% higher year-on-year. We're also impacted by COVID and the client is having a tighter purse. But we are working on -- for the search advertising, right now, the ad placement is decreasing, but then we are considering that they are going to be coming back. The most big one that has been growing was the display type of the advertisement search because there is a media need and the traffic has been increased in the e-Commerce. Because of cocooning consumption, the consumption has grown. And because of that, the shopping advertisement also grew, slightly around 20% increase. So offsetting those, we were able to come to the 2.0% growth for revenue. And after that, I would like to elaborate what happened here for Yahoo!. For the very first time, I'm going to be touching upon this. In June, we have been consolidating a venture company called myBest. They have now become part of our group. So this services is that when users are going to be opting out for some services or products, the contents and articles are provided by the company, especially by a good experience starting from the smartphone users in order to make the users make a decision about their purchasing. And it is not going to be -- so usually, the Internet users are intended to be utilizing the vertical media even further. And having such a vertical media, this is going to be maximizing our comprehensive power. Therefore, we ask them to come on board. And the trigger that we have merged in acquisition of this company is that in the Commerce area, we wanted to be exerting various synergies and services with the capability of myBest. And this is now on Page 29. And another focal point that we would like to achieve this fiscal year is that the integrated market solution, and I would like to share what is going on currently. The integrated marketing solution is that. The multibig data held within our group and ideas going to be linked in stock and utilized to become a source of marketing services. And the financial result, the last time, the PayPay Consumer Gift and PayPay Retail Gift, we have been announcing the 2 new marketing solution. And I would like to explain starting from Page 30 onward. First of all, regarding the PayPay Consumer Gift, this product, for instance, let's say about drink product and there's a seal for PayPay code. And when PayPay reads this QR code, the PayPay bonus will be granted to the buyers. And this is a campaign recognition from the Yahoo! Advertisement and then till the payment made. So this is going to be a sales promotion measures from end-to-end. And the manufacturers are usually paying the sales budget, and this budget is usually used for shelves at the shops, utilized that off-line in the past. However, from here on, we consider that this is going to be shifting over to digital use. Therefore, from the initial scheme, we aim to become an operator who is going to be working on the digital shift for the sales and promotion fee from the clients and we have confidence in this. We would like to consider this and focus on this very highly and deeply because PayPay appeal and value is heightening within -- as a marketing tool. And currently, this is not recognized on our P&L yet because it is going to be changed into PayPay bonuses. But on the other hand, by this solution, relative value of the advertisement it is proving, therefore, the advertisement placement is increasing by 2.5x. Therefore, if we are becoming much more appealing for this solution of sales and promotion part, which is now a channel to the users, we may be able to secure this as a commission before it goes to the user side. Therefore, we consider that it is going to be linked to the digital shift of the user side. This is Page 31. This is the another one, PayPay Retail Gift solution. For this solution, irrespective of a product within a retail shop, let us say that users will buy some product and that is going to be triggering the PayPay bonus. So it's going to be the marketing tool that is linked to the shop. And in quarter 3, we're going to be narrowing down on the target and to earn the target to make a purchase. So by the campaign, by PayPay Retail Gift, for the users that we had a personal purchase in the past, we will be distribution -- distributing coupons and advertisement. So we can continuously approach our customers. And from the client's point of view, the conversion rate will go up. So this is a very -- a favorable marketing solution for the clients. So retention-oriented new solution is the product that we plan to sell full-fledged going forward. So far, I have explained about the integrated marketing solution in which we can expand the sales. And other than that, we are conducting different measures to increase our advertising revenue. And the most representative measure is the collaboration with SoftBank. And as you can see on the left, we conducted different activities with SoftBank. And in the first half, we were able to enjoy the revenue synergy of JPY 6.8 billion with SoftBank. Please turn to Page 33. We have put our effort so that we were able to grow 2% in advertising. And in the second half, we can see some improvement in the market. But YDN and also search advertising, we believe that we will still be in a challenging situation. Under COVID-19, the environment is dampening. And also, there are different policy changes about the providers. And so given that backdrop, we have to understand that the situation will be quite challenging for some time being. Please turn to Page 34. I have explained to you about the endeavors of Q2. And what was the macroeconomic environment that we had to deal with. So having said that, what will be the business plan for the second half? Please turn to Page 35. Let me give you some overall perspective. In the first half, there was cocooning consumption under COVID-19 and many consumers shifted more or less toward online activities and that will continue in the second half as well. Under COVID-19, as governmental agencies are not totally digitalized and under the new Suga administration, I believe that digitalization of the public sector will be promoted. So digital online and Internet are all related and that market will grow. So we believe that for Z Holdings, this is a very great opportunity for us to grow further, so from the mid- to long-term perspective. We try to reduce the cost in the second -- first half because of uncertainties. But in the second half, we will go aggressively so that we will be able to grow our focus areas. Please turn to the next page. Shopping and credit cards that are related to shopping are the areas that we are focusing on. In the first part of 2020, we said that we want to be #1 in this area. Because of the given environment, the market is ripe for further growth. We are not going to stay put, but rather go forward with our plan to enhance our shopping and credit card businesses. We want to be #1 in this area, and we will further accelerate the growth by conducting further investment in the second half. Please turn to Page 37. What are the tangible plans we have in e-Commerce and credit card? We are going to focus on our activities so that we can realize mid- to long-term growth. And we will be aggressive in conducting investments. We understand that digitalization is expanding. And for the new areas that we believe that there is an opportunity, we want to be dynamic in making the right investment. Please turn to Page 38, talking about tangible examples of our investment. For the bonus of PayPay, we are making some changes. Sunday for SoftBank users, there was bonus of 10 -- or 5%. But as of October, we have plus 5% bonus for non-SoftBank carrier users as well. And November 11 was the major promotional campaign date, but we are going to rename it to Super PayPay Festival. And starting from October 7, we have Yahoo! Shopping and PayPay Mall promotion activities and these did not exist in the first half. And this will come into play in the second half so that these will be areas of further investment. And in the second half, we will strengthen our scenario-based finance initiatives. So promotions needed to ramp up those activities will be conducted and new functions will be added accordingly. Even under COVID-19, we are seeing digitalization of different sectors. So we want to conduct aggressive investment in those new areas as well. We are blessed with the opportunity to grow the market. So we want to be #1 in e-Commerce, and that will be the pivotal focus for the second half, but we will work on the vicinity as well. So based on that backdrop, what are our plan for the full year? In the first half, uncertainties were prevalent. So we try to reduce our expense and try to hold on the unnecessary investment. So it was quite defensive in nature. And we leveraged our diversified business portfolio, and we were able to learn what is the best way to grow our revenue and operating profit even given the backdrop that we live in right now. So in the second half, digitalization is becoming prevalent. So whether it be public or private sectors, we are going to invest in areas that we can grow mid to long term. That being said, we want to be offensive in conducting aggressive investment. So for revenue, we know that there are uncertainties related to COVID-19, but we want to grow revenue by 8.3% year-on-year, landing at JPY 1.14 trillion. Operating income-wise, in the second half, we will be aggressive in conducting investment for the future, and we want to increase operating income by 5.1% year-on-year, registering JPY 160 billion. So even under COVID-19, we want to register revenue of JPY 1.14 trillion and operating income of JPY 160 billion. And so these 2 are the major numbers that we want to reach. And last topic is on the integration with LINE. So in August, we received clearance from JFTC. And so we are working to complete the integration by March 1, 2021. So in March next year, we are assuming the integration of the management and operation. And with this completion, the new -- a briefing session of our new strategy is probably going to be held, so we plan to hold such meeting. Regarding that, when the schedule is set, we would like to notify you. Please go to Page 41. In the first half of our fiscal year, we have been saying that we are going to be definitely achieving these 3 points. And then COVID-19 came and we went into a very untransparent world. But as you saw, as of today, regarding these 3 points, within this condition -- even under such conditions, we were able to achieve positively. We still have 6 months to go. However, we're going to be achieving these 3 points for sure. And for the full year guidance, we are going to be following the guidance and are going to be focusing to create a large future that only can be shaped by Z Holdings. Therefore, we would like the support from the investors continuously, and thank you very much for your support. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- [Interpreted] (Operator Instructions) Firstly, SMBC Nikko Securities, Mr. Maeda, please. -------------------------------------------------------------------------------- Eiji A. Maeda, SMBC Nikko Securities Inc., Research Division - Senior Analyst [2] -------------------------------------------------------------------------------- [Interpreted] I have 2 questions. So shall I ask you one question at a time? Or shall I pose you 2 questions? -------------------------------------------------------------------------------- Unidentified Company Representative, [3] -------------------------------------------------------------------------------- [Interpreted] So please ask 2 questions together. -------------------------------------------------------------------------------- Eiji A. Maeda, SMBC Nikko Securities Inc., Research Division - Senior Analyst [4] -------------------------------------------------------------------------------- [Interpreted] My first question is on advertising. Please turn to Page 33. And starting from the second half, you still believe that the situation is quite challenging. So if you can give some color regarding numbers and in terms of the impact of retargeting because of iOS 14 prohibition. I want to know what kind of data impacts there are. And if you can provide me with some numbers, I will appreciate it. So please give me what the assumptions in giving the outlook for advertising? Second question, it is on Commerce. You mentioned about Yahoo! Shopping organic growth, which was 12%. And as compared to Q1, I think it went down. And I understand that there was no preconsumption tax -- hike consumption. But do you think there was any impact for the promotion cost reduction? And after the second half, you will conduct the promotion. And also last October because of the consumption tax hike, there was a dampening of the Commerce, but now you don't have such a consumption tax increase problem. So do you think you will look better in the second half? -------------------------------------------------------------------------------- Unidentified Company Representative, [5] -------------------------------------------------------------------------------- [Interpreted] So Mr. Sakaue, our CFO, will answer those 2 questions. -------------------------------------------------------------------------------- Ryosuke Sakaue, Z Holdings Corporation - Managing Corporate Officer, Executive VP & Group CFO [6] -------------------------------------------------------------------------------- [Interpreted] Thank you very much, Mr. Maeda, for your question. About Q3 outlook for advertisement, Page 33 is YDN and search advertising only. So regarding the advertising revenue for Q3, which we have already disclosed, it is a single-digit negative or flat. That is the outlook that we have for the overall advertising revenue for Q3. So by product, regarding search advertising, we believe that it will be in the single-digit-middle range negative as in the case of Q2. Year-on-year-wise, in Q3, we had UI initiatives and a year has passed. So there will be the absence of the positive impact of UI. So that is a negative factor impacting us for Q3. And also because of COVID-19, there was reduction of advertisement placement, which occurred in Q2 as well and continued in Q3. Second type of advertising is display. Compared to Q2, it will go down again, but it will be in the single-digit positive range. In display, we have Premium. And regarding the demand of Premium, it is going down. So the trend will be in the negative as in the case of Q2, so we cannot expect a quick recovery in advertising segment. About the programmatic, it's about positive 10%, plus or minus, and I believe that, that will be the case for Q3. So regarding display programmatic, there are different factors. And I cannot pinpoint on the impact of iOS, but of course, there are impacts of iOS. And also, we have aggregated everything into one platform. So we discontinued some of the products. And regarding YDN, we had UI merits last year, but we do not have that this Q3. So because of all those factors, for display programmatic, it will be positive 10%. So that is the answer for your first question. If it is okay with you, I would like to move on to the second question, which is Q2 Commerce. Mr. Kawabe explained in the presentation. And in Q2, we reduced promotion and that was an impact. But in September last year, because of the pretax spike, there was the last minute sales. So it was a hard comparison and there was a negative impact this Q2 in September. And in July, we have already factored in those aspects to forecast September. Talking about the second half, last October, because of that tax increase, people stopped buying, and that will be the comparison that we will be making. And in October, it was pretty warm, but this year, it's not that warm. So we are trending favorably in October. And we will be investing in the promotion. So regarding Q3, we want to increase the transaction value of Commerce. Did I answer your question, Mr. Maeda? -------------------------------------------------------------------------------- Eiji A. Maeda, SMBC Nikko Securities Inc., Research Division - Senior Analyst [7] -------------------------------------------------------------------------------- [Interpreted] Moving to Page 33. When I listened to your presentation, it seems that the graph bars are going down, but it might be actually slightly below as compared to Q2 or will be on par with Q2. Looking at the arrows, it seems that the arrows are dipping, but actually, it's not really dipping, but more or less flat or the same as Q2. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- [Interpreted] Now let us invite Mr. Nagao from Nomura Securities. -------------------------------------------------------------------------------- Yoshitaka Nagao, Nomura Securities Co. Ltd., Research Division - Analyst [9] -------------------------------------------------------------------------------- [Interpreted] This is Nagao from Nomura Securities. I have 2 questions, too. First of all, for this first -- the guidance, we were saying that the operating profit income of JPY 160 billion and you are growing by JPY 50 billion per quarter. And then in the second half, we're going to be having JPY 60 billion. And by quarter, this is going to be a JPY 300 million increase. In order to manage the second half, therefore, the card and shopping is probably going to be invested by your side. And as a result of large investments in those areas, what is going to be the positive effect? When it is going to be seeable? And how should we follow the track of our -- your investment? For instance, within the shopping businesses, maybe it could be transaction value. And in the next term, let us say that maybe you might be focusing on 20 or 30. So may you might be indicated how much you're going to be investing and how much effect is going to be showed. So I would like to know how we can track down your investment and how the effect is going to be seeable from our side. That's the first question. And second question is about the advertisement. Within the general public, looking at the TV spot advertisement, it is coming to recovery from the September to December. However, it seems to be a slight gap with your work, for instance, maybe the Go To plan scheme, the traffic of the users on the internet is coming slower because maybe you might be impacted too much by the Go To scheme. So the iOS or the product flows, is it larger than assumed? So it seems to be that you're conservative about the advertisement business. But -- and for the demand side, if you can inform us on that, it is going to be easier for us to track you. So please explain on that, please. -------------------------------------------------------------------------------- Kentaro Kawabe, Z Holdings Corporation - President, Representative Director, President Corporate Officer & CEO [10] -------------------------------------------------------------------------------- [Interpreted] Thank you very much for your question. First of all, for your first question, I would like to answer, this is Kawabe. And regarding the first question and the second question, I think our CFO is going to be adding comments, too. For about the investment that we're going to be investing in the second half, what is going to be the source or the target of our investment was your question, I understand. And within the e-Commerce, we do have KPIs, for instance, number of buyers or else to the competitors, how are we recognized. And those are going to be our impact which is visible. And that is going to be all converted into the transaction value. However, the investment in the second half, the market environment is very much changed. Therefore, the e-Commerce market as much of COVID-19 is lasting, we are going to be investing within the largening market. Therefore, we will going to be making investments. That transaction value is going to be increased in the very short term. But then we are also going to be considering about making investments in the mid to long run, too. Therefore, within 1 to 3 years, the transaction value that is going to grow. And how is it going to be growing from our initial point, I think you should follow in such a long span. And I would like Mr. Sakaue to help me on this, too. -------------------------------------------------------------------------------- Unidentified Company Representative, [11] -------------------------------------------------------------------------------- [Interpreted] I do not have anything to add on the first question, says our GCTO. And regarding the second question, I would like to answer says Mr. Fujimon -- sorry, Mr. Sakaue. -------------------------------------------------------------------------------- Ryosuke Sakaue, Z Holdings Corporation - Managing Corporate Officer, Executive VP & Group CFO [12] -------------------------------------------------------------------------------- So regarding the search advertisement, the demand is very much impacting the search advertisement. So we just mentioned that it's going to be around the first digit half. And the UI measures is going to be decreasing and that demand is going to be lasting negatively. So negative impact is 50-50 is what we read. Especially for the search advertising, it is broadly about the tourism industry, including the trains and air industry. Those are the travel industry that we are considering and this is also the weaker industry. Although we do have Go To Travel campaign, it is weaker than last year. And the bigger client, another one is about the human resource industry. It is on the recovery. However, compared to last year, it is still ongoing weak. Therefore, we are impacted by the lower demand from the customer side. And on the display, regarding the programmatic advertising, the Q2 trend is what we said is going to be coming slower and I think you understood that. How -- and the traffic of the internet compared to Q1, the number of traffic is declining and that is impacting us. That is all from my side. -------------------------------------------------------------------------------- Yoshitaka Nagao, Nomura Securities Co. Ltd., Research Division - Analyst [13] -------------------------------------------------------------------------------- [Interpreted] I have another question. You will be conducting investment in the future and you will focus on Commerce. Are you talking specifically about e-Commerce? Or are you including PayPay so that the investment will be focused more or less around the finance business as well? So this is a follow-up question that I would like you to answer. -------------------------------------------------------------------------------- Unidentified Company Representative, [14] -------------------------------------------------------------------------------- [Interpreted] For now, we are focusing on e-Commerce. And of course, fintech is inclusive. PayPay is different because PayPay is a payment service. So that is outside the scope of e-Commerce that we are talking about. -------------------------------------------------------------------------------- Operator [15] -------------------------------------------------------------------------------- [Interpreted] Next, Sato-san of Jefferies Securities. -------------------------------------------------------------------------------- Hiroko K. Sato, Jefferies LLC, Research Division - Equity Analyst [16] -------------------------------------------------------------------------------- [Interpreted] I am Sato of Jefferies Securities. Can you hear me okay? -------------------------------------------------------------------------------- Unidentified Company Representative, [17] -------------------------------------------------------------------------------- [Interpreted] Yes, we hear you okay. -------------------------------------------------------------------------------- Hiroko K. Sato, Jefferies LLC, Research Division - Equity Analyst [18] -------------------------------------------------------------------------------- [Interpreted] I have one question. Heading towards the second half, you will be conducting aggressive investment. And you mentioned about the full year and your operating income will be JPY 60 billion. So about half will be the budget -- or I believe that you have budget for the investment. And I want to know what is the overall investment budget that you have to conduct aggressive measures. -------------------------------------------------------------------------------- Unidentified Company Representative, [19] -------------------------------------------------------------------------------- [Interpreted] And that -- Mr. Sakaue, our CFO, will be responding to that question. -------------------------------------------------------------------------------- Ryosuke Sakaue, Z Holdings Corporation - Managing Corporate Officer, Executive VP & Group CFO [20] -------------------------------------------------------------------------------- [Interpreted] We do not disclose any particular figure. But as questioned by Maeda-san and Nagao-san, regarding advertising revenue, we cannot see how it will trend, specifically in the future. And advertising profitability is very high, but revenue is suffering. And so unfortunately, the profit on the advertising will be in the negative range. And other businesses, we want to conduct aggressive investment. -------------------------------------------------------------------------------- Hiroko K. Sato, Jefferies LLC, Research Division - Equity Analyst [21] -------------------------------------------------------------------------------- [Interpreted] Well, listening to you regarding offensive investment, are you talking more or less about promotional? -------------------------------------------------------------------------------- Unidentified Company Representative, [22] -------------------------------------------------------------------------------- [Interpreted] Yes, of course, we will improve the functions. But when you look at the breakdown of the investment, the ballpark figure will be for the promotion activities, and you will be focusing on in the scenario of finance and fintech and e-Commerce. You're right. You're exactly right. So we will be focusing on e-Commerce and fintech. -------------------------------------------------------------------------------- Hiroko K. Sato, Jefferies LLC, Research Division - Equity Analyst [23] -------------------------------------------------------------------------------- [Interpreted] Well, I actually have 2 questions. The second question, I know that Retty has been listed today. And I guess you can access Retty over your LINE as well. And you have Ikyu online reservation. Retty has as an online reservation mechanism as well. And LINE joined in March, and [Demica] will be playing a part in this market as well. So if you can collaborate with those entities, maybe you might be able to expand your services. I know that you cannot comment about LINE now, but Ikyu and Retty, and it seems that the iconic characters are the same. And so what is your midterm perspective? -------------------------------------------------------------------------------- Unidentified Company Representative, [24] -------------------------------------------------------------------------------- [Interpreted] Thank you for your question. After the integration with LINE, if we have some similar services, we will have the product committee to conduct comprehensive discussion as to what we should do about similar services. If there is an overlap of users, more or less, we will be integrating the similar services. Restaurant-wise, we have different targets. Ikyu is targeting on high end, and YAHUOKU and Retty cover wide range of users, and YAHUOKU targets on chain restaurants. So there are different segments of users that we are targeting at. We don't have any concrete plan now. But after the integration, we want to conduct tangible discussions and decide how to go about it. -------------------------------------------------------------------------------- Hiroko K. Sato, Jefferies LLC, Research Division - Equity Analyst [25] -------------------------------------------------------------------------------- [Interpreted] Going back to my first question, you mentioned about aggressive investment budget. And in terms of the logistics, which has not turned well in the first half, are you going to invest in logistics as well in the second half? -------------------------------------------------------------------------------- Unidentified Company Representative, [26] -------------------------------------------------------------------------------- [Interpreted] We will incorporate Reuse. E-Commerce is in the stage of expansion. So there are opportunities. So including Reuse, we will try to figure out where is the area for best investment. -------------------------------------------------------------------------------- Hiroko K. Sato, Jefferies LLC, Research Division - Equity Analyst [27] -------------------------------------------------------------------------------- [Interpreted] You will be collaborating with ZOZO and you just closed the second quarter. So you just start turning on the engine of collaboration with ZOZO. Well, in Q1, you talked about different collaborations. But looking at the numbers, I got the impression that not much has been conducted. And so is it correct to understand that you will go full fledged as the second half? -------------------------------------------------------------------------------- Unidentified Company Representative, [28] -------------------------------------------------------------------------------- [Interpreted] As mentioned in the financial results explanation of ZOZO yesterday, we are still going for PDCA activities. So once we can find out what are the promising segments, we will invest in those areas. -------------------------------------------------------------------------------- Operator [29] -------------------------------------------------------------------------------- [Interpreted] Now let us invite Mr. David Gibson from Astris Advisory. -------------------------------------------------------------------------------- David Gibson, Astris Advisory Japan, K.K. - Chief Investment Advisor & Founder [30] -------------------------------------------------------------------------------- My 2 questions in English. Your integration committee for LINE and Z Holdings has been meeting. Can you give us an image of what do you think will be the key things that you're looking to integrate an opportunity within the 2 businesses? My second question relates to PayPay. I see that Paytm has purchased an 8% option in it. Could you elaborate, provide any details of why they did that? Is that new or existing shares or price they'll pay? -------------------------------------------------------------------------------- Kentaro Kawabe, Z Holdings Corporation - President, Representative Director, President Corporate Officer & CEO [31] -------------------------------------------------------------------------------- [Interpreted] Thank you very much for your question. The first question will be answered by me and then the second one by Mr. Sakaue. If the integration with LINE goes smoothly, it will be completed in March. And right now, different discussions are underway amongst the executives. To promote PMI, there are 2 important points. One is to collaborate amongst the people so that we can come up with one team. The second point is the multitude of services that we have and how we can integrate and enjoy the synergetic impact of the integration. And so we have to define how we are going to operate different services. Talking about the first point, we are both internet companies, and we are competing with GAFA, and we are one of few companies that are competing with GAFA. So there are commonalities, and I am sure that we can come up with a great team. Talking about the second point, right now, we are just trying to explain what services we have. So the business plan will come in the future. Simply put, for PMI, teamwork and service are the 2 important points. And we have the CEO structure. So Mr. Idezawa of LINE and myself will work together and shake hands so that we will be able to run PMI in a smooth manner. Then Mr. Sakaue, CFO, will be answering the second question. -------------------------------------------------------------------------------- Ryosuke Sakaue, Z Holdings Corporation - Managing Corporate Officer, Executive VP & Group CFO [32] -------------------------------------------------------------------------------- [Interpreted] About Paytm option. And when PayPay was established, Paytm was a technical adviser from day 1 and contributed to the growth of PayPay. And in order to pay back for the contribution they made, we actually issued the option for new shares. So regarding the conditions of those options, we would like to refrain from talking about it. Yahoo! and SoftBank will lead the management of PayPay, and Paytm will work on the technology area because they are well versed in the payment of cashless services in India. -------------------------------------------------------------------------------- Operator [33] -------------------------------------------------------------------------------- [Interpreted] And from Macquarie Securities, let us introduce a question from Mr. Han Joon Kim. -------------------------------------------------------------------------------- Han Joon Kim, Macquarie Research - Analyst [34] -------------------------------------------------------------------------------- I have 2 questions on Commerce as well. The first one, if we look at Page 13 of the presentation, we're looking at about 38% year-over-year growth in new buyers. So apart from the tax impact that we had this quarter, as we think a few quarters out, should we be thinking about this kind of 30%, 40% type of growth as the right level of growth that we should be seeing for Yahoo! and PayPay Mall? Or are we seeing some form of dilutive impact from the average order value that will cause the overall growth rate to be slower than this? So if you can help us understand the dynamics between user growth and AOV growth, that will be great. And then the second question is the kind of GMV mix between Yahoo! Shopping and PayPay Mall. If you can kind of provide us with how the mix within shoppings are moving and what implications that has for the take rate or the advertising revenues that you generated from these 2 businesses? -------------------------------------------------------------------------------- Unidentified Company Representative, [35] -------------------------------------------------------------------------------- [Interpreted] Thank you very much for your question. So going to Page 13, you want to know what will be the trajectory of the growth given the increased tax. And second question is on e-Commerce take rate prospect. That's my understanding of your questions. And so Mr. Ozawa, who is in charge of e-Commerce, will be responding to those questions. Do we have Mr. Ozawa? We are remotely working. So please be patient with us. -------------------------------------------------------------------------------- Takao Ozawa, Z Holdings Corporation - Senior Managing Corporate Officer, Executive VP, COO & Director [36] -------------------------------------------------------------------------------- [Interpreted] Yes, this is Ozawa speaking. So I would like to provide the answer. Regarding the new buyers and new stores, whether there will be increase in tax or not, we are trending well. People do not go to brick-and-mortar stores, but they go to online stores. So online shopping tenants are growing favorably, and we believe that new stores will be opened in the future following the trend that we are showing on Page 13. And also, PayPay user traffic is referred to the Yahoo! Shopping and PayPay Mall. And so we have budget to solicit the traffic to go to Yahoo! Shopping as well as PayPay Mall. And so if it works well, we believe that we can enjoy the continued growth of new buyers. Going to the second question of pay rate. With more stores in e-Commerce, there will be more advertisement because the tenants will like to make their stores stand out more amongst the others. So they will be securing budget for the advertising, and we are seeing some growth in the advertising. So take rate is trending as we have expected. And regarding the third quarter, it is trending well as well. We do not expect the take rate to go down. And for GMV for Q1 and Q2 because of the right take rate level, we were able to obtain the appropriate level of revenue as well as operating income. Revenue goes up, but due to the investment, it will impact the operating income. That's all from me. -------------------------------------------------------------------------------- Operator [37] -------------------------------------------------------------------------------- [Interpreted] Now this is Mr. Tsuruo from Citigroup Securities. -------------------------------------------------------------------------------- Mitsunobu Tsuruo, Citigroup Inc., Research Division - Director & Analyst [38] -------------------------------------------------------------------------------- [Interpreted] This is sensitive, maybe. So maybe you might not be able to answer or you might -- so this is about the -- making the monetization of PayPay. Within the presentation, maybe the monetization could come earlier is what you have been mentioning. So how was it traditionally? So was it, I think, a balance of 2 years for the breakeven point? And how do you see this? And there are many, many apps, too, coming in. So what kind of a room of profitability that you can consider? So what's your logic behind this, please? -------------------------------------------------------------------------------- Unidentified Company Representative, [39] -------------------------------------------------------------------------------- [Interpreted] Thank you very much for your question. Regarding PayPay, because hit by COVID-19, the cashless payment is becoming increasingly larger in the market. So we would like to continue on to make this area larger, and upon that, work on fintech. Within the big platform of PayPay, the fintechs, we would like to have a user experience that is going to be starting up a rocket start and we would like to prepare for that currently right now. So rather than having profitability, we are focusing on making it larger. That is our priority and we're going to be focusing on making this area larger. So the anti-financial is something that we're going to be referencing on anti-financial, the Japanese cashless payment or settlement. First of all, we would like to have the fintech become larger and broadly taking roots in Japan. Therefore, we're going to be prioritizing in making the area larger for the time being. -------------------------------------------------------------------------------- Mitsunobu Tsuruo, Citigroup Inc., Research Division - Director & Analyst [40] -------------------------------------------------------------------------------- [Interpreted] And the second question is about capital allocation. There's -- so debt to EBITDA is 2.0%. And how are you going to be having this 2.0% in the leverage ratio, and you're going to be having a dilution according to your schedule? And what is going to be happening with the dividend? -------------------------------------------------------------------------------- Unidentified Company Representative, [41] -------------------------------------------------------------------------------- [Interpreted] Mr. Sakaue is going to be answering for this one. -------------------------------------------------------------------------------- Ryosuke Sakaue, Z Holdings Corporation - Managing Corporate Officer, Executive VP & Group CFO [42] -------------------------------------------------------------------------------- [Interpreted] Regarding the debt, the net debt and the EBITDA, the multiplication, it is excluding the banking businesses, and it is going to double to the earlier part of double. And we would like to control in that level. Issuing bonds, we would like to maintain the ratings. And in order to do so, we would like to maintain this level. And for the second one, regarding the dividend payment, right now, along with LINE, we are currently trying to create the midterm strategy. According to the strategy and the investment strategy that is to come over, we are going to be discussing how to return the dividend to the shareholders, too. At the early point of March, we would like to schedule a briefing for the new strategy. And at that timing, we would like to explain. That is what we are considering right now at this point. -------------------------------------------------------------------------------- Operator [43] -------------------------------------------------------------------------------- [Interpreted] (Operator Instructions) Then Mr. Nagao of Nomura Securities, please. -------------------------------------------------------------------------------- Yoshitaka Nagao, Nomura Securities Co. Ltd., Research Division - Analyst [44] -------------------------------------------------------------------------------- [Interpreted] This is my second round. I have one quick question. In July to September period, I want to know the situation about Reuse. GMV went up. On the other hand, Yahoo! Shopping, there was a negative repercussion and it is slowing down. And it seems that there is a divergence between the 2 segments. Is it because of the behavioral changes of the consumers? Or is it due to promotional changes? Reuse is revamping, and I want to know what kind of initiatives you undertook to recover Reuse. -------------------------------------------------------------------------------- Unidentified Company Representative, [45] -------------------------------------------------------------------------------- [Interpreted] Thank you very much for your question. Reuse has been growing, and you want to know what has happened, and you want to know the relationship with shopping. Mr. Ozawa will be answering that question. -------------------------------------------------------------------------------- Takao Ozawa, Z Holdings Corporation - Senior Managing Corporate Officer, Executive VP, COO & Director [46] -------------------------------------------------------------------------------- [Interpreted] This is Ozawa speaking. About C2C, as compared to Q1, we conducted promotion. And there was a tax hike last year and C2C is not impacted by tax hike. And so because of that, there was a difference between Shopping and Reuse. So Reuse, i.e., YAHUOKU!, was not impacted. Of course, B2C is inclusive, so it actually impacted, but not Reuse. And so regarding Shopping, we are controlling the promotional cost, and we have been impacted by the reduction of promotional costs as well as the negative impact of the tax hike. That's all for me. -------------------------------------------------------------------------------- Operator [47] -------------------------------------------------------------------------------- [Interpreted] From Mitsubishi UFJ Morgan Stanley, Mr. Araki, please. -------------------------------------------------------------------------------- Masato Araki, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst [48] -------------------------------------------------------------------------------- [Interpreted] This is Araki from Mitsubishi UFJ Morgan Stanley. I have 2 questions at large. One is -- it was already mentioned about the plan. Please refer to Page 57. It was that schedule was a very long-term schedule that you already had. And in 2024, March, you are going to be focusing on the certain amount. And then after that, ZOZO and LINE have been announced to be merged. And this time, after the integration with LINE, we do not see any indication that you're going to be announcing the mid- to long-term or midterm plan. But I think Mr. Kawabe has mentioned a thing about the planning. And within the guidance, the guidance has been thinking about the LINE integration, and you've been opening up for JPY 160 billion. And also you were mentioning about a schedule for becoming #1 in the e-Commerce. But at current, the midterm plan is shown on 57, Page 57, and this number, does it include LINE and ZOZO or not, is something that I would like to know? And becoming #1 in e-Commerce, when is it going to be happening? What is the schedule? And the integration with LINE and the new plan, is it going to be coming? So the JPY 252 billion, does it include LINE or not, is something that I would like to know? And the second question is also referred to by other colleagues. This is about Page 17 and Y-o-Y. There was a positive 17%. Was it impacted by the consumption tax? About the sales promotion when we consider from the sales promotion side, the JPY 16 billion was used in the second quarter. So the used amount is decreased, but then the first quarter was JPY 12.2 billion, therefore, increased from that perspective. So is it just can we just consider this as a consumption tax issue? Or else, did you just decrease the sales promotion costs or not? So I would like to know more about this, please, because this stood weak at 12%. -------------------------------------------------------------------------------- Unidentified Company Representative, [49] -------------------------------------------------------------------------------- [Interpreted] I would like to answer the first question, and second question will be answered by Mr. Sakaue. For the first question, well, I'm very sorry that we might have confused you. So once again, let us organize. The conclusion is that anything announced has not changed. It is unchanged. Therefore, important thing is in JPY 225 billion operating income. That is going to be a target for FY 2023. And in addition, in the early 2021 -- or 2020s, early 2020s, we would like to become #1 in e-Commerce. And that is going to be unchanged, too. So again, early in the 2020s, we're going to be targeting that. So in order to achieve that, such as FY 2023 operating income of JPY 225 billion, we have to do every measure in order to work on this. And so maybe we could include about merger and acquisition on top of our organic growth and I would like you to understand it that way. And in March, we intend to hold a strategic business briefing session. Maybe that could have confused you. And as a company, we are integrating the companies. So the strategic meetings that -- and the briefing that is possibly going to be held around March, we're going to be explaining how it is beneficial to the users when LINE and the companies are going to be integrated. And for the investors, within the integration, we would like to explain how we are going to be beneficial to the investors, too. So right now, we assume that we are going to be building what we have right now. And if what we are going to be announcing is going to be drastically changing, we would like to communicate beforehand. And did I answer your first question? -------------------------------------------------------------------------------- Masato Araki, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst [50] -------------------------------------------------------------------------------- [Interpreted] So you mean that JPY 225 billion that you are targeting, so far, it is going to be unchanged as of March explanation, right? -------------------------------------------------------------------------------- Unidentified Company Representative, [51] -------------------------------------------------------------------------------- [Interpreted] So right now, we are focusing to target this target amount, and we are going to be making some strategic planning on top -- focusing on this. So if this is going to be drastically changing, then we would like to consult you beforehand. Thank you. And for the second question and the answer. So this is about EC for Q2. And right now, at this point, the consumption tax has gone higher, and that was a repercussion. And sales promotion is growing in some area. So I would like you to image because we do not disclose the numbers, but then it could be about Reuse, Go To travel, O2O. From the government, we have 35% supplementary budget. And on top of that, for the quarter 2, we are now utilizing the sales promotion expenses. And because of that, it seems that we are stronger in that aspect from Q2 compared to Q1. And regarding the promotion for the Shopping, it is unchanged from -- compared to Q1 level for Q2. So I think -- or we think that this is a repercussion from the hike of the consumption tax is what we guess. -------------------------------------------------------------------------------- Operator [52] -------------------------------------------------------------------------------- [Interpreted] Next, from JPMorgan, I would like Mori-san to pose her question. -------------------------------------------------------------------------------- Haruka Mori, JPMorgan Chase & Co, Research Division - Analyst [53] -------------------------------------------------------------------------------- [Interpreted] I have 2 questions. First question is on PayPay user engagement. I know that you showed us different KPIs. From your perspective, I understand that there are new services coming in. And I want to know what seems to be the most promising services and what are the others that do not look promising. And touch payment will be launched by LINE. And what is the need amongst the users for the touch payment/contactless payment? Let's move on to the second question, which is on the positioning of credit card business. I understand that it is trending favorably. And you want to catch up with Rakuten and be #1. And if that is the case, you had to put more effort. And I want to know whether you want to be #1 and accelerate your investment or you are satisfied with the current steady growth. -------------------------------------------------------------------------------- Unidentified Company Representative, [54] -------------------------------------------------------------------------------- [Interpreted] Thank you very much for your question. Answer to your first question, regarding PayPay, the number of PayPay payment is increasing. Because of COVID-19, people want to avoid using cash. And also, instead of shopping at physical stores, people shop online. And because of that, number of payments using PayPay is increasing more than expected. Having said that, restaurants are the major venues for the usage of PayPay. But as far as this year is concerned, especially up until October, the usage went down, so unit price per user was below our expectation. We launched mini application and I don't know we're disclosing any particular figures or not. We are providing bonus to PayPay and the users are leveraging on PayPay bonus and the actual bonus is increasing, bonus which is being accumulated by the users. And also, the delivery option is increasing as well. Talking about loan, PDCA has not been completed yet. So volume-wise, I believe that we can increase loan business as well. Going to your second question on credit card, maybe Mr. Ozawa might be able to chime in later. But basically, we want to be #1 in card business. YJ Card is our plastic card, and we have plans to provide the credit screening functions over the net as well. So inclusive of all those services, we want to be #1, not only on the plastic card side. And PayPay is growing dramatically, and we have very simple UI. And I'm sure that once we can provide more services such as loan, we believe that there will be explosive growth, and that is the major strategical point that we are pursuing right now. Any comment from Mr. Ozawa? -------------------------------------------------------------------------------- Takao Ozawa, Z Holdings Corporation - Senior Managing Corporate Officer, Executive VP, COO & Director [55] -------------------------------------------------------------------------------- [Interpreted] I have a few points to add. In PayPay, we want to increase the number of payment per usage. And so right now, PayPay is used at convenience stores for small payments. And so it is more or less like a charge card, i.e., the debit card. So we want to grow the amount of payment made per transaction by the users. So touch payment, i.e., contactless payment is more or less for the small tickets and some people feel cumbersome to use cash for a small payment. So we want to leverage on that segment. But in order to increase the amount of usage per transaction, we have the deferred payment and mobile can be used as if it's a credit card. That's the scheme that we will be pursuing to increase the price per purchase. We have plastic cards, and on the other hand, we have mobile payment, which is conducted without any card. So you use QR code or you use the touchless payment. And we can have the ticket amount on par with the credit card ticket price, and then we will be able to compete with others. And so I believe that PayPay can provide a brand-new strategy, which is not implemented by other credit card companies. -------------------------------------------------------------------------------- Operator [56] -------------------------------------------------------------------------------- [Interpreted] It is now past the finalization time. Therefore, this is going to be the last question. Mr. David Gibson from Astris Advisory, please. -------------------------------------------------------------------------------- David Gibson, Astris Advisory Japan, K.K. - Chief Investment Advisor & Founder [57] -------------------------------------------------------------------------------- Actually, 2 very short ones. What was -- in the quarter, what was the proportion of shopping GMV from PayPay Mall, please? That's the first one. And the second one simply, in the first quarter, I think you saved or had temporary cost savings of about JPY 10 billion plus. How much of that actually continued into the second quarter? -------------------------------------------------------------------------------- Unidentified Company Representative, [58] -------------------------------------------------------------------------------- [Interpreted] Thank you very much for your questions. Please give us a few minutes to respond to your questions. So Mr. Sakaue, our CFO, will be responding to those questions. -------------------------------------------------------------------------------- Ryosuke Sakaue, Z Holdings Corporation - Managing Corporate Officer, Executive VP & Group CFO [59] -------------------------------------------------------------------------------- [Interpreted] I think you were asking about the question pertaining to the share of PayPay Mall. We do not disclose any specific number. But all in all, it's about 40%. So Yahoo! Shopping and Mall, total-wise, about 40% is PayPay Mall and 60% is Yahoo! Shopping. That is the breakdown. Gradually, we are seeing a steady growth of share by PayPay Mall. That's the answer to your first question. Going to the second question about the cost reduction. At the beginning of the year, we walked you through our plan for the cost reduction. And for Q3, it's not JPY 10 billion per se. But as mentioned in the presentation, we want to focus more or less on the future investment. Of course, we will reduce, of course, unnecessary area. But as for the future, we want to be aggressively conducting investment in the right area. -------------------------------------------------------------------------------- Operator [60] -------------------------------------------------------------------------------- [Interpreted] We would like to conclude our Q&A session. Lastly, Mr. Kawabe, any comment from your side, please? -------------------------------------------------------------------------------- Kentaro Kawabe, Z Holdings Corporation - President, Representative Director, President Corporate Officer & CEO [61] -------------------------------------------------------------------------------- [Interpreted] Thank you very much indeed for coming over to our session despite your busy schedule. So the 6 months have passed within the FY 2020, which was unseeable. And we are going to be -- so we were able to achieve a very positive note, and thank you very much for your support. So it is unseeable today what is going to happen. But then with a stable portfolio, within this COVID-19 situation, we would like to increase our revenue and operating profit income because we have already found measures to do so. And worldwide digitalization is going on. And in Japan, it is indeed accelerating because it was delaying in taking part. But with the COVID-19, it is going to be accelerating even further. We are going to be grasping the opportunity, therefore, to secure the position that we have been considering, and we would like to land to the numbers that we have are going to be achieving and targeting. Therefore, we would like your continuous support, and we would like to keep on communicating with you. With that, thank you very much for staying with us for a long time. -------------------------------------------------------------------------------- Operator [62] -------------------------------------------------------------------------------- [Interpreted] With that, the briefing session of Z Holdings is concluded. Thank you very much for your participation indeed. [Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.]