Z Holdings Corp

TSE:4689

Earnings Call Transcript 2019-Q1

[Operator]

Thank you very much for your patience. Thank you very much for coming to our session despite your very busy schedule. We would like to start Yahoo Japan Corporation FY 2018 First Quarter Business Results Presentation. We will be providing live presentation, and we also archive the content, so please be aware of that fact.

I would like to introduce the members from Yahoo Japan Corporation. We have Mr. Kentaro Kawabe, President and Representative Director. We have CFO, Corporate Officer, Mr. Ryosuke Sakaue.

Today, we will have the presentation by Mr. Kawabe. Q&A will be solicited after the presentation, and we plan to end this session by 6:00 PM. Now Mr. Kawabe, please.

[Kentaro Kawabe, executive]

Good afternoon. So this is the first presentation of Q1 under my leadership. Firstly, these are 3 major topics I would like to touch upon for Q1. Firstly, Paid Search Advertising revenue achieved double-digit growth year-on-year. Secondly, this fiscal year, we mentioned that we are going to focus on mobile payment business expansion. We have established a joint venture. And so I would like to give you the details about this endeavor. Thirdly, in order to improve our corporate value, we will be conducting capital alliances, and we made announcement along this line, and also conducted share buyback. These 3 are the major topics for Q1.

From here onward, I would like to delve into the details. Firstly, revenue. Year-on-year, it went up by 9%, recording JPY 231.8 billion. Regarding the payment piece, we have made some changes in the accounting policy. And so simply put, we are providing with a net figure, so there is no difference in the profit. But in terms of the prior accounting method, we were able to grow by 11% regarding the revenue.

Under the new leadership, we would like to create the future, therefore, we will be investing in the necessary area, and we have mentioned that in our previous result presentation as well as during the IR day. So we have to increase our KPI, and we have to increase the top line, i.e. revenue, and that will drill down into the operating profit.

So regarding the revenue, the top line, we were able to increase in 2 digits year-over-year in the first quarter, and we are very happy to get this result.

Now let's move on to operating income. There was a decline of minus 8.9% year-on-year, recording JPY 47.5 billion. I would like to walk you through the details, so please turn to Page 10, and this shows the factors of change. In FY 2017 first quarter, our operating income was JPY 52.2 billion. At that time, in terms of ASKUL, we were able to receive the insurance proceeds, which was a positive figure. But in terms of 2017 Q1, netting all these factors, the operating income was JPY 48.2 billion. And when you look at the increase in the advertising revenue and also regarding e-Commerce-related SG&A increase and also, there are some other extraordinary increase, and if we net-net the 2018 first quarter, we estimate it for JPY 48.7 billion. But we mentioned about the investment in 3 areas, so JPY 30 billion will be the investment. And in Q1, for Media, it was JPY 500 million, and Commerce-related, JPY 600 million, and these are the amounts that were used. So in FY 2018 Q1, the actual figure was JPY 47.5 billion.

And I'm sure that you are interested in the actual figure. And so in terms of JPY 30 billion that we will be investing, did we use it appropriately. Since Q1 is the very first quarter of the full year, and so I understand that you want to compare with the previous quarter, but figure-wise, you see as indicator over here. And in terms of budget, we are executing the budget as scheduled.

And so in terms of expenses, after our Q2 and heading toward the second half, I believe that the expense amount will go up. And regarding the expense for the full year guidance, there is no change.

And you see the results by segments. You see the breakdown by segment in revenue as well as operating income buckets. Regarding Media business, we are trending very favorably, whether it be revenue our operating income. As far as Commerce business is concerned, revenue trended well. However, regarding operating income, ASKUL Group has both positive and negative impact. And e-Commerce transaction value is increasing, and therefore, the expenses increase accordingly. Therefore, we encounter the reduction in operating income. And so that was all about revenue and operating income.

And I would like to talk about the Media business. So for the Media business, this is an area where we had been explaining using various KPIs [indiscernible]. Here, we have this page view. And during Mr. Miyasaka's time, we had been using daily unique browser, DUB. And especially around the latter half of Mr. Miyasaka's time, we looked at DAU of application. So those were the KPIs that we have been using. But under this new management, we're going to become a data-driven company. And so especially when we say data-driven, we're going to be looking at KPI that makes sense in a data-driven company, especially in trying to explain the Media business.

Now of course, we internally discuss what will be the best KPI, but I guess, one very good KPI would be monthly logged-in user IDs, keeping track of how this has been growing. It's going to be very important in measuring how far we are -- we have been able to become a data-driven company. And of course, this is a KPI that we already had from before. But when I am going to explain around Media business, I am going to be, firstly, using this monthly logged-in user IDs and its track. So this is because all data comes from the logged-in user IDs. So in order to enhance the service or quality of the service, we really have to look in the data coming from the logged-in user IDs. And so that's exactly why we're going to be looking at monthly logged-in user IDs as 1 important KPI.

As of June this year, the figure grew by 12%. In other words, that's 44.33 million IDs. And this KPI is something that we introduced for the first time. How much time is being spent by logged-in users? This is what we're looking at in this map. We are a media company, so we have users -- a number of users, and also, we need to look at the time spent. And of course, these people have to be logged in. So time spent by logged-in users, we specially focus on whether or not it's via smartphones, and we know that it grew by 22% year-on-year, a very steady growth. If people stay more, there must be reasons. There are several. But it's really about having more video content. And on Yahoo!, we look at how long people look at the video. And actually, the video viewing time has doubled.

And another slide to explain more about the video views. If there's any incident or perhaps emergencies, Yahoo! users come to Yahoo! News, and that's something that we see even today. But before people, just used to look at text news that we offer. However, ever since last year, we have been investing a lot in offering video news. And so real-time news is something that we're trying to offer through [indiscernible], and so we're going to be utilizing this content. So especially during, for example, emergencies, we want users to be able to watch live video news. And during this first quarter, for example, in June 18, there was an earthquake in Northern Osaka. And at that time, we also had been able to offer 24-hour live video news, and the number of viewers tripled. So it does tell that even within Yahoo!, users are watching more video news.

Another thing, another point again about data-driven move. So we utilize data, we utilize AI, but actually, Yahoo! is utilizing data and AI in trying to do really, a lot of things. And for example, in Yahoo! Knowledge Search, we utilized AI and data to improve the type of services we'll be able to offer. We have kukai that we internally developed. It's a supercomputer. And so approximately 600 million [ hunters ] or posts, in order words, questions and answers raised in Yahoo! Knowledge, can now be analyzed. And we'd be able to delete any unfavorable contents. But if it's a very good reference, we want to make sure that it has higher exposure. And so we're able to do this internally. Now if we try to analyze all these 600 million posts, it was done manually, and it took approximately 9 months for people to do that. But now we're able to utilize kukai. And by doing this, the 9 months has now been shortened to approximately 1 day. So this is an immense improvement in productivity. And of course, as long as we have the source computer power, this is something that we should be able to utilize in various areas. And we're trying to make sure we'd be able to leverage our data-driven capability.

So now Yahoo! is in new management organization, and we have 3 areas we want to become #1. And the first is to become #1 in Internet advertising revenue. So this is something I'd like to delve into a little more. First of all, again, in this first quarter for the ad-related revenue, it increased by 8% year-over-year, marking JPY 76.4 billion. We have Display and Paid Search. You can see the breakdown on this chart.

And I guess, one thing that I must mention here is about Paid Search Ad revenue. For the first time, as a matter of fact, in 5 years, we have been able to mark a double-digit growth. In other words, a growth by 13.8%. Of course, there has been a lot of effort behind that.

And especially, I have highlighted some things that we have been doing. So on the Paid Search Advertising, we decided to change the display design. We did also trials and errors and found that this seems to be the most effective. But then, not only that, we decided to offer optional function to complement categories. So these are working well that's why we're now marking this double-digit growth. So it's not just about 1 single tweakings around, but it's these continuous work that enabled us to mark this very good double-digit growth now.

And also, one thing that we're also working on is about, again, video advertising. It's about making sure we have more video contents in the ad. And so video advertising revenue via smartphones has now grown approximately 3x year-over-year. In addition to this, again, we've had lots of text contents, but now we're trying to switch more to video contents. And so we're trying to make sure we'd be able to offer more video ads, and this is something that I do believe we have been communicating with you from before. But for example, it's like a grand panel. In smartphone, we have been doing some trials from before, but we are now able to put this on top page of Yahoo! because this is where we have the best DAU. And this is something that we've launched ever since July and so -- July 21. And so in terms of the revenue impact, we don't find it yet in the first quarter, but we expect that we should be able to see the contribution from second quarter and onwards. And we do believe we should be able to accelerate this part of the revenue.

Now I would like to talk about the Commerce business. Firstly, regarding this slide, we have diversity of elements in Commerce business, and there are some services that are stable and others that are challenging, and they are still in the deficit. But we would like to record a surplus in those areas as well. So there is a very wide variety of mix in the Commerce business, which might be difficult for you to understand as a whole. And so this just captures its totality. On the top, you see the bar that is stable, i.e. YAHUOKU! and Premium membership and Yahoo! Travel, O2O and also Financial & Payment businesses, these are depicted on the top as stable businesses. And under 0, you see Yahoo! Shopping and YJ Card.

And let's talk about the pink bar, which is above 0. It is very stable. And you see that continuously, this segment is recording surplus, i.e. operating income. Now about the area under 0, we have Yahoo! Shopping and YJ Card. And these are the challenging domains we are trying to make a turnaround, especially red, which is Yahoo! Shopping, and the deficit is decreasing. And so business-wise, Yahoo! Shopping is under our management. And we can control the future of this Shopping. And as you know, YJ Card started after Yahoo! Shopping. So still, you see some deficit being recorded by YJ Card. But I know that after the investment phase, we will be able to make a turnaround in YJ Card but also contribute surplus to our business. So this bar chart shows that all the business segments under Commerce business are under our control.

Yahoo! Shopping is one of the challenging areas that we are working at. And we try to record profit, and advertisement is very important. I think it is depicted by the red curve. And as you see from the guidance, mid-4% take rate is the target that we are maintaining. And the white bar is the point we want expenses. And expenses actually fluctuate because it all depends on our investment scheme, and it all depends on the purchase pattern of the shoppers. And so there is no direct relationship between the 2, but rather take rate is trending in a very stable manner, not being impacted by the point-reward expenses.

And we are putting our efforts 3 in #1 areas. And the second area is the #1 in EC transaction value, which is sale of goods. Firstly, let's recapture the definition of EC transaction value. On Yahoo!, we conduct different e-Commerce transactions, and the total is JPY 2.1 trillion. And this is, once again, the transaction value. And when you extract the sale of goods, you see JPY 1.8 trillion. And this is the current sale of goods, EC transaction value. In the past few years, we put our effort in increasing this number, and that is why we are enjoying JPY 1.8 trillion. And further breakdown of this JPY 1.8 trillion is YAHUOKU!, Shopping and ASKUL and others, as you can see on this slide. We have JPY 1.8 trillion for sale of goods, and we want to focus on this area, so that we can be #1 here in Japan.

Regarding our sale of goods, EC transaction value, it shows the first quarter result. We were able to increase 10% year-on-year, recording JPY 469.9 billion. And in order to create this transaction value, we depend on Yahoo! Premium members. And we have alliance with SoftBank, and that is giving us positive momentum. And we were able to exceed 20 million IDs. And so in terms of only-Internet subscription, we are the largest, enjoying more than 20 million IDs. And I believe, once again, that we are #1 service in the Internet-only dependent business.

And we are putting most effort in Shopping. And in terms of its transaction value, it increased by 25% year-on-year, recording JPY 175.2 billion. But a year ago, in FY 2017 in Q1, SoftBank was -- we provided tenfold award points. So in 2016 through 2017 Q1 comparison, the transaction value increased by 40%. So the bar is very high. And on that high bar, we were able to still increase by 25%. So having said that, we are pretty proud of the result of Q1 regarding Shopping transaction value. The transaction value increased by 25%, and advertisement take-rate didn't change. We were able to maintain mid-4% area.

And so regarding the Shopping advertisement revenue, year-on-year, it increased by 28%, recording JPY 7 billion. So the transaction value increased by 25%, and advertisement revenue went up by 28%. So if you compare the 2, the advertising revenue increase was higher than that of transaction value increase.

Next, let's talk about Yahoo! Auction, YAHUOKU!. During IR Day, I mentioned about the sense of urgency regarding YAHUOKU!, and I made a commitment to change the situation. And based on what I have already mentioned, in terms of YAHUOKU!, it was under auction-related transaction value, and so you have all the other businesses such as trading of used items, and so it was a ballpark figure. But under the new definition, we decide to segregate the 2. So we have 1 under YAHUOKU!, and the second basket comprise of other transaction value. And so this will be the segmentation that we will be providing.

So when you only look at YAHUOKU! transaction value, the figure for Q1 was JPY 217.6 billion, increased 0.6% year-on-year. And so we can say that it is relatively flat year-over-year. So as mentioned during IR Day, we have this strong sense of urgency, and we believe that we will be able to grow this area furthermore. Therefore, we would like to leverage on the substantial value of YAHUOKU!, and smartphone first should be the approach and change the user experience accordingly. And we will try to try new endeavors, so that we will be able to trigger the momentum of YAHUOKU! once again. And that's all about what we are doing for becoming #1 in EC transaction value.

The third area we want to become #1 is about mobile payment. And so this is something I'd like to introduce a little more. So I think this is something that we had been introducing from before, in other words, our works around mobile payment. It's about creating a joint venture with SoftBank, and we've also made press release explaining this. But here, I would like to explain around -- a little more around the systems, schemes behind this. We did make a press release today. So this PayPay Corporation offering this PayPay service. So Yahoo! is going to invest 50%, and the remaining 50% comes from SoftBank Corporation. So this is how we are going to create this company. And this PayPay Corporation is going to be offered technologies from Paytm Inc. And this is going to be the scheme to make sure we'd be able to have a very good start in offering this mobile payment service.

So this PayPay mobile payment, how can this become #1 in Japan? So this is our thoughts. We do believe we have 4 areas of our -- of strength. First is, of course, the group synergy we can enjoy with SoftBank. For example, already, with e-Commerce, we have this alliance with SoftBank, and that is how we have been able to increase the transaction value. So again, SoftBank is a very important partner in this scheme as well. But at the same time, as we increase the number of merchants, we need to have very good sales capability. That's also one strength we have. And also, we have very large user base through our communication business that we've had, which can be leveraged in this PayPay service.

Second is about Yahoo! Wallet. We already have 40 million or more accounts. And this, of course, is one of the largest user-based type of service in Japan. So we'd like to make sure this 40 million-plus accounts can be -- can seamlessly utilize this mobile payment. And this is really going to be 1 very important foundation in becoming #1 in mobile payment. This is cashless, but it doesn't mean the entire society will suddenly transform into cashless society just because we have this service. We need to propose how this service can be used. So otherwise, people would not really start to use this service.

Yahoo!, SoftBank, be it net or real, we have various services, more than 100. And so to these 100-or-more services, we need to make sure that PayPay service can be utilized. By doing this, we want to be able to propose customers the ease of use of mobile payment. And for example, merchants that enables you to go through credit card settlement or perhaps noncontact payment terminal. I'm sure there are a lot of cases as such, but we do believe this service that we're offering can be used by more merchants because you don't need to have very large terminals. All you need to have is a little, like a display that's showing a QR code. So the entry cost is going to be very small. In other words, there is no initial cost required for merchants and smaller merchants or other many merchants who were reluctant in adopting such terminals still would be able to adopt this type of service because they'd be able to do just -- all they need is just a QR code. And it's also going to be offered free to the merchants for the first 3 years.

And another very important part in this scheme is Paytm. They have the cutting-edge technologies, and we are able to utilize, make full use of their technology. Mobile payment, I don't think there is a dominant winner yet in Japan. Even if you look around the world, I think there's just very few number of companies that's been able to really win over the popularity in terms of mobile payment. But if we'd be able to utilize Paytm's cutting-edge technologies, I think we do have this great opportunity in maintaining great presence in the entire mobile payment arena.

So again, Paytm. This is India's -- it's India's leading company in smartphone payment service. Their greatest asset, first of all, is the 300 million or so users using their service every day through 8 million merchants. And that's exactly how they're able to brush up on their technologies day by day and being able to really measure their user experience. User experience is so important because that's exactly what's going to determine if people would use your service. And they actually do have a great foundation in making sure they'd be able to brush up your technology, so that user experience can be enhanced, and more users would want to use it, and that's exactly what we'd be able to utilize. And strength of Paytm also includes the fact that they're being invested by SoftBank Vision Fund, Alibaba Group and Ant Financial. And again, this Ant Financial is also one of the very few companies that's really successful in this area. And so that's another way that we'd be able to enjoy the leading-edge technology via Paytm.

So mobile payment. As I have been discussing from before, if we'd be able to start this service, we'd be able to apply it in other services that we have. I do believe it's going to offer very strategic function. And so that is why we want to make sure we succeed with this -- we have success of this service with the commitment that we'd be able to create another Yahoo! And of course, with this mobile payment, we will try to make sure we'd be able to adjust this to fit the Japanese market. But it's really about time machine management that we want to work on. Again, looking for what we have been able to do in the past as we try to utilize the power of Paytm now.

But how are we going to monetize this? As a matter of fact, many people have already asked us this question, and this slide summarizes our schemes behind monetizing. Of course, we do need a very good infrastructure if we want to monetize as well because that's going to enable many users in Japan be able to use this service. So that starts with acquiring merchants and increasing users.

How can we become #1 in this area is something that I've already explained before. But if we'd be able to set this infrastructure, which is being used by many people, that would enable us to enjoy strengthening existing business and creates a way in launching other new businesses as well. But for the existing businesses, I think, again, I mentioned earlier that I'm going to make a large commitment as such as trying to create another Yahoo!. But if we'd be able to strengthen our existing businesses, we should be able to leverage our capability in other areas, be it advertising, e-Commerce or credit cards. But then, once we have this mobile payment service and if we'd be able to create the good user base, we should also be able to start launching other businesses. It could be, for example, O2O, and trying to referring customers to restaurants and other stores, but then, at the same time, we should be able to go into finance areas because there will be lots of financial services required. And that's going to give us a way in going into Fintech areas. Paytm, Ant Financial have been able to create profit because they have been able to find their way into even the largest services area.

This is the photo that we took at PayPay Corporation. This is like a kick-off meeting that we had conducted in our office. The actual development is conducted in Tokyo and New Delhi's headquarters of Paytm and R&D Toronto.

And so these are the 3 areas that we collaborate through the Internet and to come up with a new solution. So once we get together, we have Chinese, Korean, Indian and Japanese, and we conduct a heated discussion to come up with the vision of the next-generation mobile payment. And this will be a generic mobile payment scheme that we want to use all over the world. And so we are promoting cashless society here in Japan, and these are the members who are working together. At the center, you see a gentleman in this posture, and this is Vijay, President of Paytm. And the person behind him is Mr. [ Nakaima ] who's going to be the President of PayPay. And there's another Indian in the front, and he is Harinder, CTO of Paytm. These are the core members. We are quite international community, and we are putting our full force effort in completing the development.

Lastly, I would like to talk about the endeavors that we had conducted in Q1 to improve our corporate value. This will be the last subject that I will be touching upon. The major point is share buyback that we have already announced. We provided you with the press release with details. And so I would like to be quite succinct. The important point is why we decided to go for share buyback. There are 3 reasons. Firstly, SoftBank is a telecom company, and we are coming up with a very positive synergy. Shopping transaction value went up, and the Premium membership went up. And also, regarding mobile payment that we will be pursuing shortly, there is a positive synergy with communication in the company, Softbank Corporation. And so SoftBank Corporation. became one of our shareholders, so that we can further reinforce our collaboration.

And secondly, SoftBank and Altaba, i.e. ex Yahoo! Inc. were the companies that held Yahoo! JAPAN. In that scheme, there was some constraint for the management of Yahoo! JAPAN. But Altaba sold their shares, so JVA is terminated, thus, we were able to enjoy more freehand regarding our management.

And thirdly, we wanted to improve our capital efficiency and also make a robust shareholders' return. And these are the 3 reasons we decided to go for share buyback. And these are on par level. We can improve our corporate value and also be able to pursue further shareholders' returns.

Now let me walk you through how we improve our EV in Q1. This is a diagram that we use quite often. This shows how our users interact over the net. We have been in this business for 22 years, and we do have a much -- a track record, therefore, we do have share in each and every domain depicted over here. And so we are working in each area, and so that we can reinforce linkage between these boxes, thus, increasing value-added services. Of course, we cannot do everything all at the same time, especially in Japan.

So we focus on smartphone, and there are other venture companies who are doing very well regarding their focus on smartphone. So we would like to actually strengthen the relationship between these boxes, so that there will be more positive cycles. We have a strategic partnership with Retty on smartphone. If you want to select restaurant, you can use Retty as a service, and Retty is growing very rapidly. So we will collaborate with Retty in selecting restaurants and making reservation and conducting payments.

So in this action diagram about users, you go for exploration of restaurants. And if you want to go there, you go and eat there, and then you pay using our payment services.

The second example of our strategic partnership is with dely, Inc. And we have made it our affiliated consolidated company. And it has a recipe service site called Kurashiru. And in the realm of smartphone, they are growing usership very rapidly, so we want to collaborate with dely. Regarding recipe and food, you take meal 3 times a day. As you know, regarding Yahoo! JAPAN, we want to focus on daily use services, and that is why we are enjoying the number of users now. As I believe that there is a very good affinity with dely, so we have video, and we have the capital partnership with dely. And so that we can focus on the encounter, meaning that you encountered good recipe and good food. And if you want to explore or search, you do that over the net, and maybe you might want to cook that recipe that night and through e-Commerce like [ Groo ], you can actually purchase through the net. And I think that this will be the positive flow we want to create in the future, and that is why we decided to have a capital relationship with dely.

We are working with venture companies, so that we can reinforce Yahoo!'s business. And also, we want to assist in the expansion of those venture companies. And so we will pursue this win-win equation. And that being the case, we will conduct our capital partnership with those entities in the future as well.

Last but not the least, to increase our enterprise value, we are collaborating with SoftBank Vision Fund. So far, I mentioned about alliance with domestic venture companies, and this slide shows the collaboration with global unicorn companies. Vision Fund is investing in multiple unicorn companies, and there might be companies that are a good fit to Japan or good affinity with Yahoo! JAPAN. So we want to be their Japanese partner, so that we can develop new businesses. So SoftBank KK and Yahoo! JAPAN will work together, and so that we can introduce unique businesses of global unicorns here in Japan. Vision Fund invested in these venture companies. And Paytm, we have a technological alliance with them already. And in the future, there are many interesting and intriguing companies, so we would like to pick and choose the ones that are a good fit to Japan and will increase our EV. We will be looking forward to developing businesses with them here in Japan.

So under the new management, as I have mentioned to you before, we want to leverage on our Internet technology. And in the physical world, we want to create the new future, and the future that we create can only be shaped by us. So we would like to be very creative in coming up with a very creative future.

Thank you very much for your attention. I made my best effort to explain the gist of Q1. So I would like to hear some questions from you. Thank you.

[Operator]

[Operator Instructions] So can we ask the person at the very front row?

[Masaru Sugiyama, analyst]

Sugiyama from Goldman Sachs. I have 2 questions. First question is about the structure behind PayPay. So this is an equity method entity. You have Yahoo! Wallet, but are you going to be transferring Yahoo! Wallet business to this PayPay service? That's my question. But also around e-Commerce, this JPY 20 billion amount of investment, is this going to be used for investing in PayPay service?

[Kentaro Kawabe, executive]

Yes. So I would like to first respond, but I'd like to also ask Mr. Sakaue to answer anything around the financial numbers. So first of all, mobile payment service. This PayPay scheme and Yahoo! Wallet are going to be 2 separate schemes. But we are going to be linking ID, so Yahoo! Wallet users can effortlessly be able to use PayPay. Ultimately, if you look at it from a perspective of the user's, be it real or online, there's no difference in trying to make any settlements. So in the end, we hope to be able to put everything onto PayPay. But can you -- I'll ask Sakaue-san to go for the investment.

[Ryosuke Sakaue, executive]

Yes. So the mobile payment service. PayPay is going to be, of course, the main part, both SoftBank and Yahoo! We're trying to work out what's going to be the division of role. We're trying to finalize what's going to be the frame. We should be able to finalize that. And once we do that, we should be able to tell you more about this JPY 20 billion investment and how much we'd be able to -- how much we're going to be taking responsibility. But that's something that I would like for you to wait until our announcement in October.

[Masaru Sugiyama, analyst]

So my second question. Can I go to the Page 10 of your presentation material? It's the waterfall chart. So there's -- there aren't many new adjustment costs, but this SG&A, it's JPY 13.3 billion? So during the Q4 guidance, the guidance you gave at Q4, some of the human resource or any other investment was for JPY 15.4 billion. So out of that JPY 15.4 billion, JPY 13.3 billion already has been used in Q1. Is that how I'm supposed to take it? And also, the increase in SG&A, it seems like it's more than the increase of sales revenue. So in other words, SG&A cost really increased even after you made all these initiatives. Or was there any special one-off reasons behind that?

[Kentaro Kawabe, executive]

Well, yes, thank you for your first part of the question. This is something that we discussed in the previous announcement. So that JPY 15.5 billion, the part that relates to that JPY 15.5 billion is this minus JPY 4.5 million here. So it's not like we used most part of that JPY 15 billion. But can you elaborate a little more about the latter part of your question you just mentioned?

[Masaru Sugiyama, analyst]

Yes. So there's an increase in revenue that had an impact in increasing profit by JPY 5.9 billion, however, it seems like SG&A increased more than that JPY 5.9 billion. So shopping part has achieved breakeven, I think. But I wasn't exactly sure how am I supposed to take this part of the balance. Was there any, like, a one-off reason why SG&A increased so much? Or was there any reason why you were not able to increase the profit?

[Kentaro Kawabe, executive]

Well, yes. So with -- we have IDC Frontier, Inc. This is something that we already knew. So SG&A, we decided to spend in the commerce part with this IDC Frontier sales in mind. And so that is why you see this balance a bit strange, but the JPY 7.9 billion, even with that, we are -- we were certain that we should be able to keep on growing the sales revenue. But then that shopping part, turning positive, that was about FY 2017, just to make sure.

[Unknown Executive]

[Foreign Language]Any other question? Person wearing a white shirt.

[Keiichi Yoneshima, analyst]

I am Yoneshima, Crédit Suisse Securities. I have 2 questions. Firstly about the advertisement revenue. In Q1, you did very well. And in your previous business result presentation, you mentioned that the advertisement is trending down. But the search-related advertisement went up dramatically. And I thought that back then, you should have known this positive trend. But I wonder why you gave such a conservative figure in the past. But in terms of video, you almost did, so regarding the advertisement revenue, you mentioned about a single digit, maybe up until the middle point this single digit, was the growth that you had mentioned. But did you change your guidance or forecast for this fiscal year?

[Kentaro Kawabe, executive]

Regarding search-related advertisement, we made some improvements. And because of these improvements, we are seeing such a growth. And as a result of that, we are seeing good numbers. In the past performance result presentation, we were not able to see such a positive impact. For the full year, we cannot make any comments. But in terms of Q2 up until September, I believe that the trend that is similar to Q1 will continue in Q2. And so maybe in the first half, a 10% growth can be expected. But we are seeing some negative trend in display and that will continue in Q2. And regarding the impact of excess, we don't know what kind of repercussion it will have in Q3 or Q4, but maybe in FY '18, it will be in middle of single digit. I guess the last time you said that they will be in the first half of single digit, but will be mid versus single digit.

[Keiichi Yoneshima, analyst]

A second question, I don't know whether you can talk in details, but for Yahoo!, what is the optimal shareholders' composition. You have SoftBank KK having 10%. But if you look at the consolidated figure, maybe Softbank KK can have more than 10%, because 10% will not make you the equity method affiliate. And so if SoftBank KK can have more than 10%, you will be able to grow furthermore, I believe. And from our Yahoo!'s point of view, Altaba decided to sell their shares. So SoftBank KK will have more shares. So do you plan to have stronger linkage with SoftBank KK? Do you plan to have stronger alliance with other companies? For example, the companies in the Vision Fund? So my question is, do you want to have stronger relationship with SoftBank KK? Or with other entities as well? What is the ideal composition of the shareholders?

[Kentaro Kawabe, executive]

Regarding the announcement for share buyback, we have been discussing about the topic that you have mentioned internally. And in making the share buyback, since we are listed, we need to maintain our independence. So we did not want SoftBank group to have more than 50%, but we need to have positive synergetic impact. So we want SoftBank KK to have more shares. And so there are pros and cons, so we have to strike a good balance between the 2 factors. So with the SoftBank KK, whether we're going to have some kind of alliance or capital partnership, we believe that either way we should have stronger linkage. Altaba still holds more than 20% of Yahoo! JAPAN's share. So in terms of the synergy, if we can come up with a positive relationship with third-party, which we can enjoy a positive synergy, we will be able to improve the enterprise value of Yahoo! and some third-party that we might be working with. And this is a discussion that we usually have internally.

So when you look at the market capital of Yahoo!, I don't know what will be the approach after SoftBank KK. But JV has been terminated, so from -- on top of the point of view, they do have a freedom to sell a shares. So as a listed company, we have the freedom to decide on the direction. So SoftBank Group as a whole, will not be able to determine the course of what will happen to the shares.

[Unknown Analyst]

My question is about PayPay. I have 2 questions.

[Unknown Executive]

Can you state your name?

[Yoshitaka Nagao, analyst]

I am Nagao from Nomura Securities, sorry. So my first question, as you try to increase merchants, only, I'm sure it's going to be important that you increase the number of merchants, so you're going to be collaborating with SoftBank. But can you explain what kind of collaboration this is going to be? For example, what kind of service resource of SoftBank are you going to utilize in increasing the number of merchants? So that's my first question.

[Kentaro Kawabe, executive]

So that's your first question, thank you. Yes, so SoftBank would have their own capability, and if we're going to utilize this in increasing merchants, of course, this is something that we're already leveraging but I think there are 2 things that I can raise here. One is about national client, because SoftBank would have good network. So people who would have lots of chains or networks. So we do have this division of labor, in a sense, with SoftBank, so they'd be looking at the large, national customers. But then when it comes to more individuals, each merchants, and this is something that we have to send lots of people nationwide to capture such merchants. To do this, you need to make sure you have the right sales group, you need to recruit them, you need to have good knowledge behind controlling them, and SoftBank, I mean, there's a lot of knowledge. And as we tried to do Yahoo! BB, I mean this is something that I really feel. So I think those are the 2 things that I can say. And of course, it's not that SoftBank would have a specific team to really say about how to control the sales. It's not like that. But this is something that, yes, is a capability that we see, their management capability that we do believe we can expect in utilizing.

[Yoshitaka Nagao, analyst]

Yes. So my second question, so payment app, is that going to be linked in Yahoo!'s existing contents or app? Or are you going to be developing new app or new app service? And also the investment, if you look at the press release, like so there's like credit card or e-money, but doesn't it also have to with bank accounts? So can you also explain around the scheme?

[Kentaro Kawabe, executive]

Well, that's going to go into a little more detail. I think I should ask Mr. Ozawa to respond to that question.

[Takao Ozawa, executive]

Yes. So first of all, around the app. So I -- well, there are going to be 2 types. So our own app, but then also YJ Top app. We're also going to be putting in the YJ app as well. We are -- we still have to see which would have more user frequency. But naturally, we think top app of YJ and the users can already -- users who's already using YJ apps be able to use this app to do the settlement. So maybe that would be more convenient. But then PayPay -- the new app from PayPay, will have lots of new functions. So we still will have to see which the customers or users would favor more. And also bank accounts that you mentioned, yes, we are going to be linking this to the user's bank account. We have Yahoo! Wallet. And in the mid-long-range, we want to make should we'd be able to link this to PayPay, like Mr. Kawabe just mentioned. So we don't want to limit the way users be able to use. In the end, we want to make sure that users be able to enjoy the service in a very favorable manner. So thank you very much.

[Unknown Executive]

Any other question? So gentleman wearing a blue shirt sitting in the fourth row.

[Eiji Maeda, analyst]

I'm Maeda, SMB Nikko Securities. I have 2 questions. In terms of YAHUOKU!, you have a total, the word is the transaction value onto itself, and it is flat. So it seems that the initiative is not really working so you want to revamp it. And if you have any plans, can you elaborate on it?

[Kentaro Kawabe, executive]

So maybe Mr. Ozawa might be the right person to talk about it.

[Takao Ozawa, executive]

Yes. Regarding the numbers, we decided to just show you YAHUOKU! because we need to have a sense of urgency and we need to understand what is the real number that is related to YAHUOKU! only, and you see that it is flat. And it did not happen suddenly, but in the last Q4, the number has been flat. And I believe that it has been flat for the past few years. And needless to say, Mercari grew. And looking at situation that we analyze, it's not really Mercari that is causing this at our end. Of course, we cannot neglect that, but you know that the unit price is different. So Mercari is stronger for less than JPY 3,000, and YAHUOKU! is stronger for items above JPY 3,000 and Mercari is strong from women and we are strong in men. And YAHUOKU! is very hobby-oriented and apparel and toys and commodities. They are more sold in Mercari. So the shopping trend is different. As regarding YAHUOKU! segment, in the past few years, what should I say? We see some saturation. And that is the sense of the market that we have. Mercari is strong the new segment, and we need to cater to that new segment as well. But at the same time, we thought that the current existing segment is saturated, but in reality, maybe it's not really saturated. Looking at the conversion rate, it is quite flat for the past few years, and I believe that we should put more effort to reignite the existing segment. And in terms of Mercari, they have a new segment that caters to the used recycling items. And so those are the 2 segments that we have to work at. And regarding UI and UX, in the past 5 years, we did not innovate, and we need to learn a lesson from that. And we need to refresh and be innovative regarding in the existing segment. So regarding Mercari's segment, or water, we need to actually acquire customers in a different way. So commodity and hobby-related items can be combined together. As a free market is the -- a stance that we took and we show the fixed price, but maybe that doesn't really appeal. So what are we going to do? We have Yahoo! Shopping and regarding Amazon, they have a new and old and you can mix and match in your purchase. And so when you do shopping at Yahoo! Shopping, you can see YAHUOKU! items at the same time. And so mix and match will be important. So one is a hobby-oriented and another is a inexpensive apparel. We need to have a different point of view and strategy for those 2 segments.

[Eiji Maeda, analyst]

Second question. So JVA with Altaba has been terminated, and you said that there will be more freedom of management and you will be able to have a partnership with different entities. But what are other new freedom or expansion that you can enjoy given the current situation?

[Kentaro Kawabe, executive]

Regarding our business, I just -- it's business as usual. And since we are not a direct participant, I cannot give you the details. But in terms of the management, in the past we need to get the approval from Altaba. But with the termination of JVA, we no longer have to get any approval. Any other question? [Foreign Language]

[Masato Araki, analyst]

[Foreign Language] Araki with Mitsubishi UFJ. Again, my question is about mobile payment. And I think you were able to explain about some of the strength, and you said, like, you have a lot of services exceeding hundred. And so can you explain about this a little more, what you mean here? And so others would also offer point. I mean, point incentive is something very important. But I do believe that you, Mr. Kawabe, mentioned before that it's not exactly about point, maybe it's about experience. But can you again remind us how you're going to differentiate yourselves?

[Kentaro Kawabe, executive]

Yes. So mobile payment, as we tried to disseminate this, we don't believe just by offering point incentive, people will start to use the services. But then you have all these hundred or so services. But where are we going to prioritize? This is something that we'd have to think together, I mean with what the competition is, we don't want to just tell everything. But to give you a very simple example, so it's about making sure that people -- first of all, they would be using their money in real store and I'm sure they'd be able to find an alternative in Yahoo! oOnline, be it our restaurant. And so of course, they'd be using the money in real restaurant store. But for example, Yahoo! Travel, I mean, even if you use Yahoo! Travel, you'd be use -- you'd be able to use the support online even though you're going to an actual physical hotels, et cetera. So any services that sort of integrates real and online is where we're focusing on. You're going to be using mobile payment even though you're going to be getting the service at real facility. So it's really about making sure we'd be able to offer lots of support through this mobile arena or online arena. That's exactly what we're trying to do.

[Masato Araki, analyst]

What about point programs?

[Kentaro Kawabe, executive]

Yes. So point program, I think I should ask Mr. Ozawa.

[Takao Ozawa, executive]

Yes. So we have Yahoo! Wallet, we have Yahoo! Shopping and we have tea points there. So we have this point incentive programs. And we're -- it's not that we're trying to do something similar, but we are going to continuously think about what kind of a customer incentive programs we'll be able to launch. What's that going to be? That's something we'd like to announce in a separate occasion, but we are going to have such incentive programs. With that said, in terms of priority, it's going to be really different on how we try to differentiate e-commerce. So there is this special occasion, there's the user experience, and that's exactly why users would use their money. So that's the baseline. And so if you look at the entire Yahoo!, so e-Commerce you would have this kind of incentive, but it'd be right confusing if we don't offer that same type of incentive we're trying to -- when we're trying to launch other programs. So we don't want to confuse our users, but it's going to be a different prioritization with the schemes that we have with, for example, Yahoo! Shopping.

[Masato Araki, analyst]

So also the 13.9 SG&A, I think you used to have a little more details, like in percentage, but can you also give us the details this time?

[Takao Ozawa, executive]

Yes. So for the -- well, the breakdown itself really hasn't changed. So shopping really is about half or a little over half. Other areas, so the remaining 50%, would be divided by a little more in Yahoo! Auction, but others, for example settlement, et cetera, I mean other portion will be used by other -- lots of areas. But that trend itself hasn't really changed.

[Unknown Executive]

Any other question? The person sitting at the center. Please give the microphone to that lady.

[Haruka Mori, analyst]

I am Mori of JP Morgan Securities. I have 2 questions. Firstly about mobile payment. During IR day, you said that you wanted to make a start dash and that was the emphasis that you've made. You used the phrase start dash, but what kind of image do you have regarding this phrase? So at the time of launch, you want to have a large number of merchants? What do you mean by start dash? Can you elaborate on this phrase?

[Kentaro Kawabe, executive]

You want to have many merchants where you can use our service, and also user experience must be superb. So those 2 are important. And at the time of launch, we want to maximize on these 2 parameters. And once we maximize on those parameters, you know that it's very difficult to come up with cashless society in Japan overnight. But we believe that steadily, we will be able to create cashless society, and we want to promote that as much as possible.

[Haruka Mori, analyst]

You said that you want to increase individual store being your member merchant as well, but what's ball park figure that you have?

[Kentaro Kawabe, executive]

Well, if you try to compare the individual store and the franchise, of course, franchise will be more than the individual. But regarding the user experience, we have to incorporate them because if that's the case, we will not be any different from the Suica, for example.

[Haruka Mori, analyst]

Second question, this is on shopping. I want to understand about the logistics. Rakuten came up with logistic scheme. It is not for growth, but it is a necessity, and that is true for Amazon as well as Rakuten. But so far, Yahoo! hasn't mentioned much about logistics. So can you tell me your need to long-term vision regarding logistics?

[Kentaro Kawabe, executive]

In Commerce business, we need to improve our service quality and we need to increase our transaction value and we need to do away with the bottleneck. And in order to pursue these 2 points, logistics is the key. Having said that, we want to leverage on the group synergy and improve our logistics. Concretely speaking, we have ASKUL within our group company and they do have a logistic assistance, so we're going to manage that. And in terms of SoftBank Group, through Vision Fund, we know that they have invested in the global logistics company that will transform the landscape. So as a group, we want to work with them and challenge new waters to transform the logistics in a mid- to long-term vision. And right now, we are still discussing the possibility amongst ourselves. So logistics, it's mandatory. And we have to make it a success, of course. And there are companies that are succeeding and others that are not succeeding. So we are learning lessons from them. And through ASKUL, we are indirectly working in the logistics so we know what is the direction that we should head towards. And one last, minor prices are going up because of the situation that the logistic companies are in right now. And so right now, we are trying to look at different options, and we don't know whether Yahoo! or any group company will handle the logistics. But for Yahoo! Shopping, we need to have a stable quality and unfortunately right now, the logistics is quite unstable quality-wise. And so we need to resolve this problem. And we are trying to find out what is the right timing and which is the entity that should handle logistics. But I don't not have any -- an answer at this point in time. Any other question?

[Unknown Executive]

[Foreign Language] So can we go to the middle row on the man in pink shirt.

[Mitsunobu Tsuruo, analyst]

My name Tsuruo from Citigroup. My first question, I guess -- well, my 2 questions are both about PayPay. But first is a very simple question. So SoftBank brother company includes Alibaba, which under that would be -- I mean and also there's Alipay. But why did you choose Paytm to partner with? I'm sure there must've been a lot of reasons, like upfront cash perhaps would be different. But why did you choose Paytm, specifically? And also other players are already operating in Japan, how are you going to differentiate with Alipay if you are?

[Kentaro Kawabe, executive]

Thank you. So well, during the announcement for the press, I was also asked why isn't Yahoo! doing it on your own, but I guess I would be responding to that question the same way with you. But of -- so first of all, we did of course have the option of doing it with Yahoo! Wallet, but there's also some other nearby companies that would have already embarked on this endeavor. So there was the option of partnering with these companies. So we wanted to look around what would be the best options. So I'm trying to -- I would go there for various reasons. Paytm, I was also interested. And so with Mr. Ozawa and other members, I actually went to New Delhi to see what was going on. Using the service is one thing, but how Paytm are able to buy new merchants, their sales activity, that's something that we did go to look at. So it's not just about the product, but then as you saw in the photo, there's a lot of great harmony amongst the engineers in Paytm. And so I thought that it's going to be important -- it's going to be best if we were able to have this very good alliance partnership with Paytm. And that's going to be the way to enable us to become #1 in this mobile payment. And that's why we decided to go into a partnership with Paytm. So to answer your question, we thought our waveform will -- people's harmony really, we were able to find that in Paytm. And I know that there's a Nikkei article that's already saying today that perhaps we're not going to find much uniqueness, Yahoo! JAPAN is not going to find much uniqueness in the service. But more than that, I wanted to make sure Japan be able to convert into a cashless society. It's not about uniqueness, it's about becoming #1. That's what we feel, and that's really all the reasons why we decided to partner with Paytm.

[Mitsunobu Tsuruo, analyst]

My second question. Well, if that's going to be the case, what is the competitive advantage of Paytm? Of course, technological capability, that's one thing, but a lot of top brands -- brand payment companies with great -- have great technologies anyway. But so Paytm is a de facto standard in India. And that competitive advantage, can it be duplicated? Or can you also leverage that even in Japan? So digital payment, this micro payment is really the mainstay. And so there's taxi, there's lots of ride share schemes. But strategically speaking, how are you going to take all -- I mean, are you going to be looking at all those?

[Kentaro Kawabe, executive]

Well ride share, that's something that has not really picked up at all in Japan. So I can't really compare ride share. But Paytm, the competitive advantage of Paytm, I'm sure Ozawa-san will be able to explain more.

[Takao Ozawa, executive]

Yes. So with this alliance with Paytm, we looked at entrepreneur and financial, we looked at Paytm. And so we would have our source codes. We -- there's lots of service level that we be really looking at, and Ant Financial and Alibaba will be investing in Paytm. And within there, I think Ant Financial's CFO is in Paytm board. And so they're really communicating a lot and making decisions. Simply put, it's a system that's really easy to localize because there's Paytm Canada. I mean, I mentioned earlier that there is an R&D in Toronto. And so what's -- the news and intel that's localized in Canada. So it's really about reading QR code for settlement. And that alone you don't really -- it's not really much about the competitive edge or competitive advantage, it's really about scalability to -- and it's really about making sure you'll be able to make settlement to have the accurate processing. And actually, 2 people that be able to do this really accurately and fast and they be using really similar source codes anyway. And so I can't really tell you specifically, but these are the companies that would have capital alliance with. And we're choosing whether we'd be able to localize this really fast. And so again, we chose Paytm. We discuss a lot, but how to monetize from the service? So within our policy, we would have this pay fee, the fee of the service, and we're thinking down the road, fee probably would be just nullified and people are not going to be using much cash. That's going to be the premise. And as we look down the road, how are we to monetize in that new world? And in India, like you've already heard from Mr. Kawabe, finance business O2O. The finance business really don't go that fast, but O2O business really catches up speed. And so we were able to discuss a lot with Paytm in that. So again, Paytm service, you can localize it really easily. But then at the same time, monetizing, when we discuss around that, there were a lot of things that we thought same -- in the really same way. So we're -- we -- through this alliance, we're able to obtain their technological support. But the scalability, I mean Canada service, the scale is really small compared to India. But in India, there's a great scale there. The system is operating really smoothly, stably. And in India, there's like 8 million merchants and how to register all those 8 million stores, I can't really say specifically here because that's going to require long -- much more time. But they have this great system, and that's going to enable us to make a really starting dash. So this app user, I mean bad users, we have to delete that. But all the systems, Paytm already have that, which you don't really see at the front side. But it's really -- that's really the core part of the competitive advantage. And that's really what we looked at.

[Unknown Executive]

[Foreign Language] It is almost 6:00. So the next person will be the last person to ask question. Okay, on the right-hand side, the person sitting on the second row. I'm sorry for the rest of the people.

[Shinsuke Iwasa, analyst]

I am Iwasa of Mizuho Securities. I have 2 questions. Firstly, you mentioned about the increase of logged in ID users. What services are increasing? And what is a hook? And what is the design of the hook so that you will be able to further increase the logged in users?

[Kentaro Kawabe, executive]

Well, in the past few years, we have defined the methodology. So in terms of our commerce business, you have to log in. And the rate of log in is 100%, almost. And in terms of Media business, we did not talk much about data-driven increase of the business. So we just wanted to expand the reach instead of increasing logged in users. Therefore, we want to increase logged in users at Media business. Of course, we are going to encompass the non-logged in users as well, but we want to increase the logged in users in Media business and that is why we were able to grow the logged in users over the past few years. Once you log in, we provide very convenient services in a Media business so that we can further increase the number. The typical example will be Yahoo! Weather, and there are different personalized services and you have to log in and register yourself to get that service. And you can increase the higher accuracy of the weather report that you get. Another point regarding Yahoo! Shopping, in the past few years, the number of shoppers increased, and that means that they contributed a lot in the increase of logged in users.

[Shinsuke Iwasa, analyst]

Another question, I want to ask you about advertisement. Regarding the media expense, last year it increased by 18%. And this year, people say that at least it will grow by 15% and a search advertisement it increased by 13%. But in terms of the media share, you had 30%, but now it is decreasing and you want to be #1 again. And I think there's a big gap between what you were aiming for and your status quo. And so in order to increase the share, you are to enjoy the momentum of the search advertisement. And in order to outdo the growth of the market, what kind of vision do you have? What is the image of the growth regarding different types of advertisement?

[Kentaro Kawabe, executive]

Well, maybe Mr. Miyazawa might be the better person to answer that question.

[Gen Miyazawa, executive]

[Foreign Language] Market, as a whole. Regarding the growth, there are different statistical figures and there are some differences. But all in all, the range is deemed to be between 10% to 15%. And we are underperforming the market growth, so we have to put more effort. Regarding the search advertisement, we are trending quite favorably in Q1. But then we are not going to be rest assured. But we want to grow our display advertisement so that, that can be supported by the search advertisement. So first floor will be search and the second floor will be the display advertisement and third floor will be shopping commerce advertisement. So we want to have a three-tier approach.

[Shinsuke Iwasa, analyst]

Regarding display segment, what is happening?

[Kentaro Kawabe, executive]

As you can see in the presentation material, smartphone in-paid and premium advertisement are trending favorably year-on-year. However, regarding including brand panel, PC advertisement has a high ratio and the unit price is high, but then it is declining. Therefore, when you look at the total growth, the decline of the segment offset the growth of other segment. So since that is the situation, how we can stop the decline of PC and at the same time, how we can increase the top line of smartphone? These are the 2 pillars that we have to work at. Fortunately, the time spent and the number of users of video advertisements are increasing. So we want to focus on smartphone and increase the top line of the advertisement. That means that we can first do the second floor -- or the second tier and the third tier by increasing the total transaction and value if we can maintain the take rate of 4% to 5%, I believe that we will be able to create robust third tier.

[Shinsuke Iwasa, analyst]

Amazon had their performance result announcement in the morning and globally, they have revenue of JPY 200 billion. And in terms of EC data, they can get more advertisement. And looking at data attributes, in terms of the third tier, take rate is 4% to 5%. And I believe that the assumption is from the shopping site. But what is the potential of getting more advertisement from national clients?

[Kentaro Kawabe, executive]

I think there is a very big potential. So it's not the advertisement budget for major media, but then there is budget for the shelves and other small shelves, and we can use that budget for the third tier. And LOHACO is one of the example in which we can enjoy the potential of growing that third tier. We don't have any concrete idea or proposal that we can share with you today. But internally, we are conducting discussion so that we can digitalize the advertisement budget that is traditionally secure for the shelves of different stores. I believe that there is much potential. We can use the shopping data. And regarding Yahoo! Shopping and YAHUOKU! and lLOHACO, we will be able to advertise the products of national clients. And we are conducting that endeavor in LOHACO and we are going to see how it trends and so that we can have it across the board. And on top of that, I believe that mobile payment will come into play. There are franchise merchants that can deal with mobile payment. And we can understand who's buying the national clients their products. We can analyze using a data-driven approach. And so we can have the right approach to the right customer and that will be quite possible.

[Shinsuke Iwasa, analyst]

But as mentioned by Mr. Miyazawa, where's the budget from?

[Kentaro Kawabe, executive]

There are different buckets of budget and we have to identify where we will be able to get the budget from our clients, and we will try to explain to you when time is ripe.

Dely, we acquired this company, and please do understand that in terms of our national client in food, we did not have a strong foothold in the food segment. But with dely as one of our affiliated companies, we will be able to leverage on in this company. So it all depends on how we can mix and match different products that we can provide for advertisers.

[Unknown Executive]

Thank you very much. This is the end of our presentation. Thank you very much for your participation.