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Hello. This is Shonosuke Hata from Kakaku.com. Thank you for joining us today. I would like to explain our financial results for the first quarter.
First of all, please turn to Page 3, which shows our consolidated operating results. Revenue in the first quarter was JPY 14,015 million, up 16.6% Y-o-Y. Operating profit was JPY 5,374 million, up 33.9% Y-o-Y. The OP margin was 38.3% and profit before income taxes was JPY 5,645 million, up 42.3% Y-o-Y. Profit attributable to owners of the parent company was JPY 4,170 million, up 51.6% Y-o-Y.
The progress rate against the forecast for the current fiscal year was 21.7% for revenue and 20.7% for operating profit. In addition, sales and operating profit were in the 47% range of the first half forecast, which is roughly in line with the internal plan.
Please see Page 4 for the quarterly revenue result by business. Sales of Kakaku.com were JPY 4,957 million, 35.4% of total sales. Sales of Tabelog were JPY 5,373 million, 38.3% of total sales and sales of New Media and Solutions and Finance were JPY 3,685 million, 26.3% of total sales.
As I will discuss in further detail later on, the performance of Kakaku.com was slightly below our internal plan, while the performance of New Media and Solutions and Finance was slightly above our internal plan and Tabelog was generally in line with our initial budget.
Page 5 shows consolidated operating expenses. Advertising expenses were JPY 1,839 million and commissions were JPY 1,900 million, both up year-over-year. This was due to an increase in T-Point related expenses and the rise in expenses for sales agents resulting from the recovery of the Tabelog business.
The increase in personnel expenses was due to the fact that mid-career hiring in addition to the hiring of new college graduates generally went according to plan, resulting in an increase in personnel compared to the fourth quarter of the previous fiscal year. In addition, there was a slight increase due to bonus payments.
Page 7 shows the operating results by business. I will discuss the details on the following pages, but revenue of Kakaku.com was down 8.5% Y-o-Y, that of Tabelog was up 43.1% and that of New Media and Solutions and Finance was up 29.3%.
I will now explain the results by business, starting with Kakaku.com. Kakaku.com is divided into 3 segments: shopping, service and advertising. First, please see Page 8 for an overview of the shopping business as a whole.
In the first quarter, revenue in the shopping business was JPY 2,113 million. Revenue of durable goods was down 3.5% Y-o-Y and that of consumer goods was down 10.8% Y-o-Y. In durable goods, issues on the supply side have been prolonged since last year as the lockdowns in China led to further delays in manufacturing and shipping in addition to existing component shortages.
In consumer goods, heightened demand for furniture and other stay at home-related products has settled down, resulting in the 10% Y-o-Y decline.
See Page 9 for further details on the shopping business. As for durable goods, the supply side issues I mentioned are clearly reflected in the number of new product registrations. The number of new product registrations was slightly higher than in the third and fourth quarters of the previous fiscal year. But compared to the first quarter of the previous year, the number of new product registrations was down 47.6% for PCs and 2.1% for home appliance and electronics.
There were various influences in the previous year and the year before last, including special demand related to COVID-19, but if we compare the number of customer referrals from the first quarter of this fiscal year to pre-COVID levels, customer referrals were 103% for laptop PCs, 91% for LCD TVs and 88% for washing machines. Customer referrals, especially for home appliances, were slightly lower than pre-COVID levels due to supply problems.
Then on the right side of Page 9, in consumer goods, demand for items such as gardening supplies and sofas, which had grown during the pandemic, settled down.
The outlook for the future depends partly on the recovery from COVID-19, but the fashion category is already recovering due to increased opportunities to go out and customer referrals increased to 104% of the pre-COVID level, which is higher than the same period of the previous year and the year before last during the pandemic.
Next, please turn to Page 10, where I will explain about the service business of Kakaku.com, the service business is divided into 4 domains. Revenue in personal finance, including credit cards and loans, was down 8.2% Y-o-Y. The telecommunications domain was down 19%, the automotive domain was down 11.6% and the other domain was up 7.7%.
Please see Page 11 for details on each domain of the service business. Trends by domain are summarized on the left side. In Personal Finance, although the number of credit card issuances was still declining, the number of applications for card loans was on the rise.
In telecommunications, the number of applications for optical fiber lines declined. Although some sales were generated, applications for overseas Wi-Fi remained low, but the number of applications for overseas Wi-Fi is expected to increase as the demand for overseas travel recovers.
Next, in the automotive domain, applications for used car availability and estimates as well as applications for car insurance estimates decreased. I will talk about this in the section on advertising as well, but the automobile industry has been most strongly affected by supply side issues, such as production cuts due to the shortages of parts.
In the other domain, applications for changing energy providers and those for moving cost estimates increased. In particular, the number of applications for changing energy providers increased slightly due to the government's request for energy conservation.
Next, on the right side, I would like to explain the progress of some of our initiatives, some of which have already been completed before the first quarter. First, in the personal financial domain, we have improved the card loan comparison page, which had been difficult to compare on the smartphone version, by adding items such as screening time and funding time to make it easier for users to use the service.
Next, in the telecommunications domain, we have improved the search function, so users can make a more detailed search to find the combination of Wi-Fi routers, including both home routers and mobile routers and telecommunication providers that best fits their needs. For instance, they may want to choose the same provider as their smartphone to get a discount on their monthly fee.
Next, please see Page 12, this is about Kakaku.com Travel, a new service, which we launched on June 20. At this time, we are not providing information on sales, profits or other KPIs since the service was just released. But I would like to explain what kind of service we are offering.
Just like other categories on Kakaku.com, Kakaku.com Travel aggregates various travel-related information on the Internet, allowing users to search across 9 travel sites for accommodation plans of over 20,000 hotels at once. With an emphasis on providing more detailed information, combined with the user-friendly interface, Kakaku.com Travel allows users to search by preferences such as traveling area, accommodation type and special options to find accommodations to fit a variety of needs and occasions.
It also provides an overview of available accommodation plans, a calendar view of prices, general information about the hotel as well as reviews and satisfaction ratings by guests. As for these reviews and satisfaction ratings, we are incorporating ratings from 4travel, a site operated by Kakaku.com and other companies to provide more in-depth information.
We have provided some screen captures on this page. I believe that we have created a map search function that is unparalleled in its ease of use. We also provide in-depth information on the hotels, including many photos. We thereby hope to provide a satisfactory service to our users with a volume of information and an interface that is second to none on other travel websites.
Next, on Page 13, we have the advertising business of Kakaku.com. Advertising placements from home appliance and electronics manufacturers and automobile manufacturers remained at low levels due to the prolonged supply side issues, such as the material shortages. As a result, banner and tie-in ads were down 7.2% Y-o-Y. Network and listing ads, which were mainly Google ads that do not involve direct sales were down 25.1%. I think we can say that overall online advertising was a little sluggish.
Page 14 shows revenue by industry of advertisers. Ads from digital and home appliances manufacturers decreased 24.8% Y-o-Y. The decline in new products was particularly reflected in the decrease in advertising placements.
Next, advertising by PC manufacturers were up 57.2% Y-o-Y, recovering quite well. I mentioned earlier that the number of new products was low, but the supply volume is gradually increasing, especially for laptop PCs. As for computer manufacturers, there is less differentiation between the new and old products than for consumer electronics manufacturers.
And with increasing consumer demand, so there has been a considerable recovery in terms of advertising. Advertising by automobile manufacturers increased 2.9%, a slight Y-o-Y rise but remained at low levels as in the previous year.
Next, I would like to explain operating results for the Tabelog business. Please turn to Page 15. In the Tabelog business, overall results were generally in line with internal plans. Revenue of the restaurant promotion business was up 57.6% Y-o-Y, the premium user membership business was down 6%, and the advertising business was up 14.8%.
In the restaurant promotion business of Tabelog, revenue of the promotion service increased 22.4% Y-o-Y and the online reservation service increased 210.9% Y-o-Y.
On Page 17, let me explain the details of Tabelog's promotion service. The number of contracted restaurants was 44,400 at the end of the first quarter, a slight increase from the fourth quarter of the previous year. As for ARPU on the right side, in the first quarter, no state of emergency declaration was issued and there were no contract suspensions from restaurants, resulting in ARPU of JPY 21,900.
Next, please see Page 18 regarding the online reservation service. Although the first quarter was in a recovery stage from the effects of COVID-19, the number of contracted restaurants to our online reservation service increased steadily, resulting in 61,000 restaurants at the end of the quarter.
ARPU for the online reservation service rose to JPY 9,400 as the total volume of online reservations increased. It increased by only JPY 100 from the third quarter of the previous fiscal year. However, since the number of contracted restaurants has increased since then, if you multiply ARPU by the number of contracted restaurants, we were able to make progress as planned.
Page 19 shows the overall number of contracted restaurants, including the online reservation service and the promotion service. At the end of the first quarter, the number of contracted restaurants totaled 65,700.
Next, Page 20 shows the number of online reservations. In the first quarter, the total number of online reservations was 12.24 million, which was a considerable recovery, up 40% from the same period before the pandemic. The number of persons per reservation did not return to the pre-COVID level but showed a significant increase from the same period of the previous year and the year before with an average of about 3 people in this first quarter.
This concludes my report on the progress of the Tabelog business in the first quarter.
Next, on Page 21, I will report on the recent situation of Tabelog. The number of online reservations is currently declining due to the resurgence of COVID-19 infections. Although the number of online reservations continued to increase until the last week of June, it began to decrease slightly in July. In the week of July 25, the number was 85.7% of the pre-COVID level. Although we are seeing cancellations and a decline in reservations, if we compare this to the growth in the number of infections, we can say that the actual decrease is not as great as 1 might expect.
Next, on Page 22 and the following pages, I will explain the results of New Media and Solutions and Finance. First, here is the breakdown within the New Media and Solutions and Finance. Revenue in the recruitment domain was up 59.3% Y-o-Y. The real estate domain was up 8.2%. Travel and transportation was up 86.9%, entertainment and hobbies was down 6.7% and the finance domain was up 3.8%.
Please see Page 23 for details about the recruitment domain. The graph on the left shows the number of monthly users and revenue for Kyujin Box. The number of monthly users increased to 19.1% Y-o-Y, and revenue increased 59.3% due to higher conversions and unit prices. This growth was slightly above but mostly in line with the internal plan.
On the right side, we have described the release of the app as a topic for Kyujin Box. The Android App was launched on June 9, and the iOS App is scheduled to be launched during the current fiscal year. By increasing the number of app users, we hope to further increase the overall KPIs, including unit prices and conversions.
On Page 24, we have the travel and transportation domain. Travel demand during the Golden Week holidays and the summer holiday season has been recovering steadily. And revenue of LCL, a comparison sites for express buses prices was up 147.1% Y-o-Y. As you can see in the comments on the right side, sales recovered to 80% of the pre-COVID-19 level.
As for Time Design, the number of domestic travelers increased significantly with sales up 61.6% Y-o-Y, exceeding the pre-COVID level. Sales for 4travel, which mainly consists of overseas travel-related ads remained at a low level due to the delay in the recovery of overseas travel demand.
Regarding the current situation and future outlook following the resurgence of COVID-19, it is difficult to make an outlook for bus travel, but Time Design's domestic dynamic package solution incurred little impact from the resurgence of COVID-19 as the demand for luxury resorts is not decreasing and hotels are almost fully booked.
Next, Page 25 is about entertainment and hobbies. Revenue of eiga.com was up 15.6% Y-o-Y; that of gaie was down 1.7%; that of Kinarino was down 20.8%; and that of webCG was down 17.9%. The 20.8% decline in Kinarino reflected the fact that the advertising market as a whole was quite weak in the first quarter.
Regarding movies, due to the pandemic, there were a few blockbuster movies in the previous fiscal year and the year before last. In the first quarter, under review, however, ad placements recovered considerably. You can see 3 examples for recent movie releases on the right side and sales increased due in part to the success of these major films, especially Top Gun Maverick.
Finally, Page 26 is about the real estate and finance domains. As for Sumaity, the number of monthly users decreased 23.3% Y-o-Y, but sales increased to 8.2%, which was generally in line with the internal plan.
On the right, in Kakaku.com Insurance, revenue has been growing quite steadily since the year before last, and the preceding year. In the first quarter under review, revenue was up 3.8% Y-o-Y, a favorable result.
This concludes my explanation on the progress by business and the results of the first quarter.
Next, I would like to explain some topics for initiatives going forward. Pages 28 and 29 describe the policies and general measures. But for specific initiatives, please see Page 30. We have 3 main areas of focus for Kakaku.com used cars, low-cost SIM cards and mortgages. We have been working to make it easier for users to select products and services that are becoming increasingly complicated and difficult to understand.
For used cars, for example, we have introduced a chatbot function to narrow down the used car inventory. As for low-cost SIM cards and mortgages, which are difficult to understand, just by looking at numbers and specs alone, we are working on making it easier for users to select products by adding various guides and functions to narrow down their choices. These efforts are not limited to the current fiscal year as the services are becoming increasingly complex, we will continue to pursue content that meets the needs of consumers.
Next, on Page 31, we provide information on the future initiatives for Tabelog. As shown on the left side of the page, we will make functions for searching for restaurants and making reservations more hybrid for users. For restaurants, we would like them to operate more efficiently, mainly by promoting DX or by using Tabelog's promotion service. By combining these services, we hope to help further revitalize the restaurant industry.
One such service is the mobile order service, which we announced on July 26. We have yet to start full-fledged sales and operations, but we have already begun providing the service to restaurants.
The main feature of this service is that instead of ordering and paying in an analog manner from the waiter or having to use a tablet like similar services used by major restaurant chains, you can place your order and complete the payment process from your own smartphone.
For users, this service is designed to make ordering more efficient by reducing the time and effort to call the wait staff. And for restaurants, the service is designed to make operations more efficient by reducing labor costs.
We are launching this service in order to enrich the food service industry. The graphs at the bottom of the page are the same as the ones we showed you last time. We currently have 61,000 contracted restaurants for the online reservation service, and we would like to further expand this to 260,000 restaurants.
Page 32 explains initiatives for Kyujin Box. On the left side, we explain what kind of content we are pursuing. On the right is a key visual for some ads we are running, mainly on YouTube in order to further increase awareness and enhance the image of Kyujin Box, this is something we plan to continue in the future.
The following pages are reference materials and there are no major changes, but we have included various indicators, which we hope you will find interesting.
This concludes my overview of the results of the first quarter. Thank you very much.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]