Mercari Inc

TSE:4385

Earnings Call Analysis

Mercari Eyes 10% GMV Growth, Enhanced Group Synergy

Mercari celebrated its tenth anniversary, reaching JPY 1 trillion in GMV and a record operating profit of JPY 17 billion—a JPY 20.7 billion increase—on consolidated sales of JPY 170.2 billion. Despite issues like inflation affecting the U.S. market, with an 11% GMV decrease, it's actively engaging dormant users, aiming for a 20% revenue increase, and targeting enhancements towards Gen Z for future growth. The domestic market saw a 10% GMV growth, and Fintech advanced with a 30% revenue increase, showing promise as Mercari’s second revenue pillar. Moving to IFRS, the company envisions a balanced growth with profitability, projecting a 30-40% adjusted operating profit margin. By integrating Marketplace and Fintech, they aim to leverage group synergy for higher user value, lower payment fees, and optimized user experience. Their pivot to a global standard governance structure with a nomination committee is designed to nurture a diverse and inclusive organization. Lastly, Mercari reinforces its commitment to ESG, driving towards sustainable business growth.

Robust Financial Performance and Innovative Pursuits

In a year where balancing growth and profitability was paramount, the company achieved record high consolidated sales of JPY 170.2 billion and an increase in operating profit by JPY 20.7 billion. This success is attributed to disciplined investments beginning from the second half of FY 2022, focusing on initiatives with long-term benefits. The company's emphasis on innovation is evidenced by its engagement with emerging technologies like Generative AI and LLM, aiming to integrate these into its marketplace and establish a second revenue pillar within the group.

Expanding Environmental and Social Contributions

The adoption of a rigorous calculation model in partnership with the University of Tokyo's Research Institute for an Inclusive Society has led the company to help avoid approximately 530,000 tons of greenhouse gas emissions annually. In addition, the company saved around 43,000 tons of apparel from waste in Japan, demonstrating its commitment to sustainability and the circular economy.

Strengthening Governance Structure

The transition to a company with nominating committees is expected to enhance governance. The company is focused on a transparent and effective governance structure, which will include an Audit Committee with a majority of independent external directors. This move aligns with the company's intention to create a global organization that values diversity and technological innovation.

Strategic Business Initiatives

The company is working with external partners to develop a comprehensive ecosystem that circulates tangible and intangible assets. Its plan for global expansion, particularly in the U.S., aims to bolster its presence by developing product improvements and marketing strategies to target dormant users and the Gen Z demographic, who are key to future growth.

Commitment to Long-Term Value Creation

On its 10th anniversary, while reflecting on critical events such as COVID-19 and geopolitical tensions, the company has reinforced its strategy with a long-term view. Fintech and U.S. operations are poised to become crucial business pillars, facilitating the group's ambition to accelerate growth and innovation.

Impressive Marketplace and Fintech KPIs

The Marketplace's GMV grew by 10% year-on-year, culminating in JPY 1 trillion, with a user base exceeding 22 million. The adjusted operating profit margin surged to 44%, reflecting strong profit and growth dynamics. In contrast, U.S. operations faced a downturn due to inflation, resulting in an 11% GMV reduction; however, targeted cost reexamination mitigated operating losses.

Accelerated Investments and User Growth in Innovative Services

The company has seen a substantial uptake in its newer services like Mercard and Bitcoin transactions, with user accounts reaching significant numbers shortly after launch. Meanwhile, Fintech's credit balance remains robust at JPY 117.8 billion, with a collection rate of 98.7%, signifying a strong and growing service.

Enhanced Headcount Strategy and Cost Management

With a strategic focus on hiring talent, especially engineers poised to contribute to future growth, the company has undertaken a prudent approach towards managing its personnel and fixed costs.

Product and Marketing Advancements Driving User Engagement

Ongoing product evolution, including a large-scale update to the Mercari app and the launch of loyalty programs, have contributed to tangible business improvements and increased user activity.

FY 2024 Outlook: Pursuing Growth While Maintaining Profitability

Looking ahead, the company seeks to achieve more than 10% GMV growth, prioritize GMV growth acceleration, and aim for an adjusted OPM of 30%-40%. Further enhancement of the Fintech segment, including an increase in Mercard users and credit business growth, are planned to reinforce the profit base. In the U.S., efforts will center on re-engaging dormant users and harnessing the purchasing power of Gen Z. The company's transition to IFRS standards for financial reporting showcases its dedication to global comparability and transparency.

Investor Takeaway

The company is positioned for continued success with a robust strategy emphasizing disciplined investments and a focus on growth in key areas. Governance improvements and a commitment to addressing environmental and social issues underpin its operations. Its agility in adopting new technologies and expanding its global footprint, particularly in the U.S. and Fintech sectors, prepare it for a promising future.

Earnings Call Transcript 2023-Q4

[Unidentified Company Representative]

It is time, so we would like to begin Mercari's FY 2023 full year financial results briefing. First, our CEO, Shintaro Yamada, will talk about the midterm policy. After that, SVP of Corporate and CFO, Sayaka Eda, will talk about the FY 2023 full year results as well as the FY 2024 objectives. Yamada will take the stage first.

[Shintaro Yamada, Chief Executive Officer]

Thank you very much for joining the FY 2023 full year financial results briefing for Mercari. I am Shintaro Yamada, the CEO of Mercari. This is the agenda or topics that we will be covering today. First of all, I would like to give you a summary of the previous fiscal year, and Eda will take you through the details later.

At the full year financial results briefing last year, we introduced about three points as our policy for FY 2023. As a result, with respect to management that balances growth and profits, we started to make disciplined investments from the second half of FY 2022 and prioritize initiatives that led to long-term benefits. So we have been managing by balancing growth and profit. And we have seen solid results, such efforts have borne fruit, and our consolidated sales landed JPY 170.2 billion, and consolidated operating profit reached a record high of JPY 17 billion, increasing by JPY 20.7 billion. Moreover, the domestic marketplace, which just celebrated a decade in service commencement has grown at scale to a GMV of JPY 1 trillion.

With respect to two, strengthening group synergies, we launched services initiatives that improve GMV growth and profitability of our marketplace, making efforts to strengthen group synergies at full swing. We will introduce this more in detail later, but although it's early days, Mercard is helping to improve ARPU, and we hope that it will contribute even more to our businesses next fiscal year and beyond.

Finally, three, to build a global organization. In order to be successful globally, we believe it's essential to have a global standard organization. With respect to our service, we updated Mercari's internal system and strengthen our technological foundation. And regarding our organization, the Board decided to strengthen governance by becoming a company with nominating committees. Moreover, our ESG efforts have been well placed by evaluation agencies.

Next, I would like to talk about the Mercari Group's mid- to long-term policy. We celebrated our 10th anniversary in February this year. And on that occasion, we defined our new group mission, as you see here, to circulate all forms of value to unleash the potential in all people. The belief based on which I started this company that by connecting individuals with the power of the Internet, we can circulate our precious resources and everyone around the world can live enrich lives remains unchanged. Since Mercari began in 2013, we created new businesses drawing on the group's collective strengths.

On the occasion of our 10-year milestone, we have introduced a new group mission that embodies our desire to unleash potential so that we may continue to be a presence that can unleash the potential in all people around the world to not be afraid of making mistakes and to take on bold challenges. Already around the world, we are seeing new possibilities come to life with new technologies such as block chain and Metaverse that enable people to buy and sell time, services and content freely. There is still a wealth of value and things experiences people that is -- that are waiting to be discovered, to be tapped, and there are also people that are in need of such values.

As a global tech company, Mercari hopes to bring people together with technology using cutting edge technologies such as LLM and blockchain to enable transactions of not only things about skills and digital assets and to provide new user experiences. By creating an ecosystem that circulates tangible and intangible objects, we hope to unleash people's potential. Regardless of your background, we hope that people around the world will be able to do new things, do what they love, contribute to people in society and live unique, enrich lives. We will continue to grow our business so that we may realize such a world.

We believe a circular economy is a necessary platform to achieve our mission. More transactions in Mercari means that more items are being reused and save from landfills. And as a result, we can prevent greenhouse gas emissions, which accompany production of new things and thereby contribute to reducing the environmental impact. This slide shows a positive impact contribution to reducing greenhouse gas emissions through our Mercari business. Last year, we calculated our contribution in the apparel category, but we added more categories this year and working together with the University of Tokyo's Research Institute for an Inclusive Society through Engineering, Value Exchange Engineering division, we adopted a rigorous calculation model.

As a result, with transactions in Mercari Japan and U.S. for the categories of apparel, sneakers, electronics, books and music, we helped avoid approximately 530,000 tons of greenhouse gases a year. When we take into consideration apparel trade in the Mercari Japan, approximately 9% of total apparel thrown away in Japan each year or 43,000 tons were saved from becoming waste. We will continue to be a planet-positive company that contributes to the environment and society through the growth of our business in realizing a society in [varies] types of value can be circulated smoothly.

We have strived to create a global organization based on the assumption that our -- at the General Shareholders' Meeting in September this year, shareholders will vote in favor of our proposal to become a company with Nomination Committees, we will further strengthen our governance. In the past, we have implemented a Senior Executive Committee to transfer business execution authority to executing departments, strengthen the supervisory function of the Board of Directors, majority comprised of independent external directors and established Nomination and Compensation Committees comprised of mainly independent external directors.

By becoming a company with Nomination Committees, the Board comprises a diverse directors who recommend a direction the company should head towards after discussing and deliberating on the management policy strategy required to fulfill our group's mission and executive officers authorized by the Board of Directors will expediously perform such duties. Furthermore, we will establish the Nomination Committee, Compensation Committee and an Audit Committee, a majority of which are made up of individual external directors, clarify the selection process of Board members, objectively determine officers' compensations and audit the organization with Audit Committee members and internal audit division working in [concert] to put in place a governance structure that is highly transparent and effective.

Here are the two midterm milestones in which achieving our mission. First, we will work with external partners to create a circular economy ecosystem. Over the past decade, Mercari has brought people together with technology to enable the seamless transaction of physical objects. Going forward, we will create an ecosystem that can seamlessly circulate all forms of value, not just simple objects, using technology, collaborating with a wide range of external companies and individuals. By doing so, we hope to become an essential player in the realization of a circular economy.

Next is global expansion. Since our early days, we have aspired to become a global marketplace. Like we have done in the past, we will prioritize our growth in the U.S., but be prepared to enter a third market when the opportunity presents. Moreover, to become globally successful, we want to strengthen our efforts to create a borderless organization that enables our global talent to thrive.

Next here are our midterm objectives and major investment areas. Firstly, as Mercari Group, we believe that our technological progress is the wellspring of our competitive power. Generative AI and LLM have drawn much attention recently, and there is great potential for the application in Mercari as well. Thus, we will strengthen our technological foundation in these areas and creating an environment in which our talented engineers can perform at their best to lead the market as an essential player for the realization of a circular economy. We will -- so we will -- with the Marketplace, we will become an essential player.

And with respect to Fintech, we want to make sure that we are capitalizing on our group synergy to maximize Mercari's GMV and also reduce payment processing fees, and we hope the Fintech business will become the second pillar of revenue in Mercari Group.

And in the U.S., we will become known as the easiest and safest selling app. So this is what we would like to achieve over the midterm.

Mercari celebrated 10 years since our service launch, but during this decade, we have grown significantly by focusing on advanced product development and bold and disciplined investment. However, when we look back on the last few years, we have had to deal with uncertainties, including COVID-19 and the war in Ukraine, but we believe we could have been bolder in achieving our mission without fear of making mistakes. With the new mission in the next 10 years in mind, we will fortify the group's revenue base by developing Fintech and U.S. as the second and third pillar of business following our Marketplace. And while maintaining discipline, we will actively invest to accelerate growth at the Mercari Group.

And we hope to become a presence that can circulate all forms of value to unleash the potential in all people.

This concludes my presentation, and I would like to give the floor to Eda. Thank you for listening.

[Sayaka Eda]

Good afternoon. This is Eda, the CFO. I would like to take you through the financial results of FY 2023 and talk about the FY 2024 objectives.

Here are the highlights of FY 2023. This year, we have made disciplined investments in priority areas and continue to reexamine our cost to ensure -- to balance the growth and profitability and by -- and we have marked record high net sales and operating profit. Moreover, to realize group synergy, we have launched new services and measures such as Mercard Loyalty program and Bitcoin transaction service, and these new initiatives are off to a great start.

The Marketplace GMV grew 10% year-on-year for the full year, reaching JPY 1 trillion, and MAU has surpassed 22 million. By balancing growth and profitability, our adjusted operating profit margin was 44%, realizing steady growth and high profitability. Moreover, we have made a significant internal system upgrade to the Mercari app, which enables us to develop our product more quickly.

With respect to Fintech, we accelerated investments in Mercari Bitcoin transaction, but our existing services, mainly fixed amount payment, has been doing well, recording adjusted operating profit for the full year. The number of Mercard issued has surpassed, 1.25 million in just over 7 months. And we're also seeing great traction with our Bitcoin transaction services with 530,000 accounts, more than 530,000 accounts being opened in a little over 3 months.

In the U.S., a tough external environment, such as inflation has slowed down our business and thus, GMV decreased 11% year-on-year. To realize a lean management structure, we reexamined various costs. Therefore, our adjusted operating losses have shrunk year-on-year. We have also seen improvements. We implement the measures to simplify listing and to make it easier for buyers.

Thus, the number of products listed are on the increase, and we have seen improvements in the number of purchases as well.

Next, here are the full KPI summary. Here is a full KPI summary for Marketplace, Fintech and U.S. Marketplace GMV grew by 10% year-on-year, landing at JPY 984.6 billion, and the adjusted operating profit margin improved by 13 points, finishing at 44%. The Fintech user base grew to 15.71 million, and the credit balance was JPY 117.8 billion, with a collection rate of 98.7%. The U.S.

GMV decreased by 11% year-on-year to $1.01 billion. MAU decreased by -- decreased to 4.77 million.

And this is the net sales and operating profit by segment for Q4. I will forego a detailed explanation. And this is the net sales and operating profit by segment for the full year. Again, I will refrain from going into details. Here are the trends in consolidated net sales in OP by quarter.

The consolidated sales for Q4 grew by 18% year-on-year, landing at JPY 44.1 billion, thanks to the steady growth of our Marketplace and the Fintech credit service, the consolidated operating profit improved due to updates and disciplined investments, continuous revision of cost and normalization of impact from fraudulent use. As a result, the group's profitability base was strengthened. And so even though we invested in new Fintech services, the operating profit increased by 466% to JPY 5.4 billion.

Here are the trends in consolidated net sales in OP for the full year. This is the consolidated headcount, which was 2,101 by the end of June. We have continued to be selective in hiring talent, and we also reviewed fixed costs, including personnel costs in the U.S. So Q-on-Q, the number of employees have decreased. In FY 2024, we will continue to hire robustly, mainly focusing on engineers that can contribute to our future growth.

From here, I will describe each business. First, looking back at the past year for Marketplace. This year, we manage our business by focusing on balancing top line growth and profitability. We made disciplined investments in initiatives that have long-term impacts such as referral campaigns and measures to encourage listing. These worthwhile and the MAU surpassed 22 million and the full year GMV grew by 10% year-on-year.

The adjusted OPM to 44%, so we have grown steadily and realized high profitability.

With respect to our product, we have completed a large-scale update to the Mercari app, which now enables us to add new function and make modifications more quickly. We also began a Loyalty Program, so we have made great progress over the past year to work closely with Fintech and to maximize group synergy.

Here are the full year GMV/MAU/Net Sales and adjusted OP transfer Marketplace. Disciplined investments with long-lasting impact has yielded amazing results as the net sales and OPM grew significantly year-on-year.

And here are the GMV/MAU quarterly trends. Joint marketing initiatives with Fintechs, such as Mercard and crypto asset acquisition campaigns have helped steadily increase MAU. In addition, Mercard has uplifted ARPU and Entertainment and Hobby categories did well, thereby increasing Q4 GMV by 15% year-on-year. In line with GMV growth, net sales have increased year-on-year. And with disciplined investment and reexamination of costs, the adjusted OP grew by 63% year-on-year.

The adjusted OPM also increased significantly to 46%.

Here is the Q4 cost breakdown for Marketplace. Investment in joint Fintech campaigns, et cetera, increased in Q4. Those are advertising expenses slightly increased Q-on-Q, but we have continued to achieve high adjusted OPM. Next, about Fintech. We launched Mercard and Bitcoin transaction service, and we have spent the year preparing to maximize group's synergies.

Our credit service, namely the fixed-amount payment has grown steadily as well, fortifying our profit base. Thus, although we invested in new services, we have booked adjusted operating profit for the full year. With the addition of Mercard, the credit balance grew to JPY 117.8 billion. By strictly controlling credit using our proprietary credit AI, we have improved collection rate. Thus, this business has grown healthily.

Moreover, it's still early days but Mercard, which has topped 1.25 million cards issues seems to be contributing to the improvement of ARPU. When we compare the ARPU before and after obtaining the Mercard, it grew by 10% to 60%. So we have high expectations for future group synergies.

Moreover, with crypto assets, although it's only been three months since service was launched, we have opened 530,000 accounts. We know that 80% of people who sign up to this service are first-timer crypto assets. So we have reached our target of casual users. And thus, this business too is off to a good start.

Here are the full year net sales and adjusted OP for Fintech. Credit has mainly drove growth and the total net sales and net sales, excluding internal transactions have grown rapidly. Furthermore, despite having invested in Mercard user acquisition, usage, promotion and crypto asset user acquisition, we have booked operating profits for the first time for the Fintech business.

Here are the quarterly trends. In addition to great trends and fixed-amount payment usage, Mercard is also off to good start. So the total net sales grew by 42% year-on-year. And net sales, excluding internal transactions grew by 56% year-on-year, so both have grown at a high rate. Fintech profitability continues to improve, but to maximize group synergies, we have made active investments in Mercard user acquisition and usage promotion, thus we have booked adjusted operating losses of JPY 0.6 billion in Q4.

Here are the trends in credit balance and collection rate. Fixed-amount payment continues to do well. And with the addition of Mercard, the credit balance was JPY 117.8 billion. The credit balance continues to increase steadily, but the credit logic update that we implemented last year began to show in Q4, thus, the collection rate improved by 0.6 points year-on-year to 98.7%, so we have established our operating healthy service.

Here are the number of users and verify users. These are also increasing steadily. Identity verification rate is extremely high at 88.8%. And this high rate leads to building a safe and secure usage environment and because users' IDs have been verified, this enables seamless usage of our credit services. Thus, it has contributed to the growth of our business as well.

Next, I would like to talk about the U.S. business. Like last year, we continue to be impacted by external forces such as inflation. But by simplifying listing and with product improvements, including personalization, number of listings increased year-on-year. And in the fourth quarter, we saw improvements in the number of purchases, so we are seeing signs of recovery.

We have undertaken marketing activities targeting existing and dormant users, and we have implemented new plans to reduce the shipping costs for small packages as well as new bundle options. These initiatives that promote purchases and reduced burden on buyers have had positive impacts. Since we have seen positive impact, we will continue these efforts in FY 2024.

Here are the full year trends and GMV/MAU net sales and adjusted operating income.

Next, here are the quarterly trends in GMV and MAU. Due to external factors such as inflation, purchases have slowed and GMV decreased by 14% year-on-year. On the other hand, number of listings have increased as a result of listing simplification. And thus, we are seeing positive signs such as increase in the number of purchases.

Here are the quarterly trends in net sales and adjusted operating income. [indiscernible] management made possible by reexamining our cost through the fiscal year -- throughout the fiscal year and making more selective investments has significantly improved our operating losses year-on-year.

From here forward, I would like to explain the business objectives for FY 2024. We will continue to balance growth and profitability in FY 2024, but with the next 10 years in our sight, we will accelerate growth of our existing businesses and also create new businesses. And in order to achieve our group mission, we will continue to create a global organization for a diverse talent from all across the world, and separate supervision and execution and further strengthen governance by becoming a company with Nomination Committees. Furthermore, from Q1, we will begin disclosing our performance based on IFRS standards for better international comparison. However, the difference in Japan and IFRS standards are not significant.

With Marketplace, we will focus on top line growth. We will accelerate product evolution improvements and undertake effective marketing, capitalizing on our 10th anniversary to achieve more than 10% GMV growth. Although we will prioritize GMV growth acceleration, we will make disciplined investments to achieve adjusted OPM of 30% to 40%.

With Fintech, we will further maximize group synergies by increasing the number of Mercard users. Moreover, the credit business is already doing well, but we will continue to focus on its growth to strengthen our profit base -- our business base and also stabilize long-term financing in line with credit growth.

In the U.S., we will continue to make product improvements to reactivate dormant users and undertake effective marketing to get back on our growth trajectory and also focus on product updates such as Gen Z users who will drive our future growth.

This is the overview of the group synergies we would like to create. In Japan, these synergies include Marketplace and Fintech working as one, enabling us to maximize the use of both assets to efficiently improve products UX and undertake marketing, contribute to GMV with higher ARPU, reduced payment collection fees and expand usage of our credit services. We also hope that this will further improve the profitability of the entire Japan region.

Here are the business objectives for Marketplace. In FY 2023, we have grown rapidly and achieved high profitability as a result of the investment policy we updated in the second half of FY 2023. We will continue to make disciplined investments, but also focus on top line growth. In addition to investing in marketing and improving our product, we will focus on areas that we want to strengthen, such as cross-border transactions, category growth and large-scale B2C merchants, thereby achieving more than 10% GMV growth and adjusted operating profit margin of 30% to 40%.

Here are details of areas we will enhance. Since we began our cross-border transaction service in 2019, it has grown steadily. In FY 2024, we will select focus regions and expand partners who will act as proxy services for buyers. We will also begin cross-border sales from Mercari Shops to achieve further growth. To grow our categories, we will focus on big markets with ample room for growth, equip our service with optimal UX and undertake marketing activities in time with peak seasonal demand.

With respect to B2C, we will focus on even larger merchants, especially we use outlet merchants that are a good fit with Mercari. We will also strengthen our listing function with API connections, et cetera, to make significant contributions to GMV. In addition, we will use Gen AI and LLM, et cetera, to continue to improve our product with better UI and promote cross usage to further accelerate growth.

With these initiatives, we will focus on top line growth in FY 2024, but this slide summarizes our approach to the targets. As I have already mentioned, we will continue to balance growth and profitability but prioritize GMV growth acceleration in FY 2024. Therefore, we will carefully examine the effectiveness of our investments, but make aggressive investments if we determine that they will contribute significantly to GMV growth. On the other hand, if ROI does not meet our expectations and GMV growth acceleration cannot be sufficiently expected, we may rethink our investment, and as a result, our adjusted OPM may increase. This is the business objective for Fintech.

We will contribute to maximize seeing Mercari GMV and over the midterm, we hope that this will become the second pillar of revenue. With this in mind, we will focus on enhancing group synergies and strengthening our profit base, revenue base. To maximize group synergies, we will increase investments to focus on Mercari user acquisition. On the other hand, we have built a strong revenue base. And as we expect this business to grow, we do not foresee significant operating losses.

Furthermore, we will continue to promote transactions by strengthening UX, for example, enabling bitcoin payments within Mercari.

To strengthen our revenue base, we will continue to improve the accuracy of our proprietary credit AI and enhanced collection efforts to help grow our credit service and maintain or improve our collection rate. We will also diversify our financing to ensure a healthy financial platform.

This is a one-page summary of our financing approach. The steady growth of our credit business means a higher credit balance. As such, to ensure healthy growth of our credit service and expansion, we are liquidating our receivables to procure funds. We have liquidated receivables for Merpay Smart Payments with specific financial institutions with a maximum amount set to JPY 50 billion and JPY 60 billion for fixed-amount payment. But in FY 2023, for -- part of the fixed-amount payment, we have carried out a nonrecourse long-term financing.

Including the amount we also added in July 2023, the total comes out to be JPY 44 billion. We continue to expect growth of our credit business we will continue to undertake nonrecourse financing regularly. This will help us realize both business growth and a healthy financial foundation.

Lastly, for the U.S. We want to be recognized as "the easiest and safest selling app", especially among Gen Z who have a keen interest in reuse. And we aspire to become an essential player in the realization of the circular economy in the U.S. as well. In FY 2024, we will make enhancements to the product to improve user retention and focus on effective marketing so that we may get back on our growth trajectory.

In addition, we will also focus on Gen Z, who will drive future growth. According to our research, 42% of Gen Z shop from the reuse market on a daily basis. This percentage is significantly higher than other age groups. However, a lower percentage of Gen Z also answered that they use large reuse sites on a daily basis. And this is -- this percentage is far lower than other generations.

As a result, we will update our UX to target Gen Z to make it even easier to list, form communities for certain categories and expand our face-to-face transaction services, which are in high demand in the U.S.

Lastly, I would like to talk about our ESG efforts. We had defined a materiality as important topics that relate to creating value to contribute to solving social and environmental issues through our businesses and creating the management foundation necessary for continuous growth. Yamada talked about our 10-year milestone and our new group mission earlier, but we have updated our materiality as well for the first time in two years. By implementing the action plan based on this new materiality, we will realize sustainable business growth. We will announce details when we issue the Impact Report at the end of September.

Finally, we would like to reemphasize our commitment to accelerate growth over the next decade. We will continue to balance growth and profitability, grow GMV in the Japan region by maximizing group synergies, get back on the growth trajectory in the U.S., and lastly, conduct research for new businesses with great growth potential and global expansion. To realize this, we believe having a global standard diverse organization where employees from all around the world can thrive is paramount, so we will continue to promote D&I and also reinforce our technological progress.

This concludes our FY 2023 full year announcement. Thank you very much.