Z Holdings Corp

TSE:4689

Earnings Call Transcript 2022-Q2

[Operator]

[Interpreted] Thank you for joining the Z Holdings Conference Call for FY 2021 Q2 Business Results Briefing. Today, we will be explaining based on materials uploaded on the website. The attendees from Z Holdings are as following: Mr. Kentaro Kawabe, President and Representative Director, Co-CEO; and Mr. Takeshi Idezawa, Representative Director, Co-CEO; Mr. Takao Ozawa, Director, Senior Managing Corporate Officer; Mr. Ryosuke Sakaue, Senior Managing Corporate Officer, GCFO, Group Chief Financial Officer; Mr. In Joon Hwang, Senior Managing Corporate Officer, CGIO, Chief Global Investment Officer.

First, Mr. Kawabe will be walking you through the FY 2021 Q2 business results. Then we are going to be opening up the floor for question and answers. We expect the conference to last for 1.5 hours. Without ado, we would like to commence. Mr. Kawabe, please?

[Kentaro Kawabe, executive]

[Interpreted] I am Kentaro Kawabe of Z Holdings. Thank you very much for joining our FY '21 Q2 briefing despite your busy schedule. We closed Q2, and about 8 months have passed since the business integration with LINE this March. And since then, I have been putting my utmost effort in PMI with Mr. Idezawa, our Co-CEO. Today, I will explain the progress of PMI. Next page, please.

First, here are the topics of Q2 financial results. What are the highlights? I believe that we were able to attain very solid tangible results. Ever since I became the president, I went through different challenges and tried different waters. And I believe that within those years, business integration with LINE was a major challenge. But for the results of this Q2 financial results, I am very satisfied with what we were able to attain.

Revenue was JPY 377.6 billion, and adjusted EBITDA was JPY 100.8 billion, both of which achieved year-on-year growth of over 30%. The top priority of the group has been the strengthening of data governance. But at the same time, in the first half, we had been putting steady efforts in implementing various PMI measures, such as realizing business and cost synergies as well as selecting and focusing on particular business in light of the integration. Details, including the outcome, will be explained later. Next page, please.

On October 18, we received a final report from the Special Advisory Committee regarding the handling of data LINE, which has caused concerns and inconveniences. Based on the recommendations from the committee, we will sincerely address the opinions and suggestions made by the users and experts. We will enhance transparency to society and create an environment where users can enjoy our services with a sense of security. At this time, the impact of this matter on the group's consolidated business results for FY '21 is expected to be minimal.

First half progress made in PMI. In addition to some updates of business synergies explained in Q1, in Q2, we worked on cost synergies and businesses that needed to be addressed. Next page, please.

The main cost synergies for FY '21 are consolidation of offices of group companies and reduction of operating expenses of LINE Pay, which is attained through the integration of different payment business. Including optimization of financing costs and reduction of content procurement costs, we expect a total cost synergy of JPY 10 billion in FY '21. In FY '22 and onwards, we aim to realize further cost synergy by internalizing some of LINE data centers. Next page, please.

As one of the measures to focus on our priority businesses, the group made an additional investment in Demae-can in September. Through this investment, Demae-can will aim at becoming #1 in distribution volume in the domestic food delivery market while strengthening the last mile delivery in quick commerce as well. But then the demonstration experience started in Itabashi store in July, and it provided us with encouraging results. Consequently, we opened our second store in Shibuya Ward in October. We are making preparations to accelerate store openings in 23 wards of Tokyo.

In e-book business, we aim to be #1 in transaction value in Japan through the collaboration with NAVER. We, therefore, decided to privatize eBOOK Initiative Japan, our subsidiary company. Both NAVER, WEBTOON and LINE Manga, which is based on in the application domain, enjoy global position. By integrating eBOOK's business, which is strong in web browsers, we aim to become #1 in transaction volume in Japan and strengthen our structure to expand globally. Next slide, please.

I will now explain each of the three agenda items in the order listed year. Next page, please. Firstly, all group consolidated business results. Next page, please. Both revenue and profit increased due to the effect of the integration with LINE. Both revenue and adjusted EBITDA grew more than 30% year-on-year, demonstrating the steady progress of PMI. Allow me to remind you that we have changed our management index to adjusted EBITDA from this fiscal year. So when we say increased profit, it denotes a rise in adjusted EBITDA. Next page, please.

Next, LINE's consolidated business results. Yet again, we achieved an operating profit in Q2 as a result of the growth in advertising business and the streamlining of investments, including marketing expenses. This is the fourth consecutive quarter that we have achieved an operating profit, excluding the quarter when onetime gains were recorded. We aim to achieve an operating profit for the full year while continuing balancing growth in the advertising business and disciplined investment.

This shows the whole group total advertising revenue. In addition to the effect of the integration with LINE, recovery in advertisers' demand drove a strong growth in Q2, resulting in total advertising revenue of JPY 139.9 billion, up 67% year-on-year. Next page, please.

Here is e-commerce transaction value. Given the increase in stay-home consumption in FY '20 and the last minute demand before the end of the government's cashless incentive program, year-on-year comparison for Q1 was quite challenging. But in Q2, merchandise e-commerce improved, growing 13.3% (sic) [ 14.3% ] year-on-year due in part to the impact of the emergency declaration. Service EC transaction value, mainly in O2O business, continue to face difficulties. But the overall result JPY 844.1 billion, up 7.5% year-on-year. Next page, please.

Next topic's in business results by segment. Next page, please. Firstly, Media Business. For each segment, I will first explain the strategies and measures to achieve our business goals and then touch upon this status. Next page, please. In Media Business, we will promote sales collaboration for top clients to expand the number of advertisers. In Q2, Yahoo!, LINE and SoftBank collaborated in selling ad package products. We began distributing Yahoo! Japan Ads in LINE NEWS section in October. In the future, we plan to distribute LINE ads to some of the ad sections of Yahoo! JAPAN. Preparation is underway to realize ID linkage in the early part of FY '22.

In the medium term, we plan to leverage on our strong group assets to expand our sales promotion domains. We will promote and cross-sell LINE Official Accounts, which play an extremely important role as a communication infrastructure. We expect the greatest synergy to exist in Media Business and, therefore, are determined to proceed with these measures. Next page, please.

LINE display advertising, one of our growth drivers is expanding steadily. Continuous improvements of distribution accuracy that enhance the functionality of advertising platforms as well as expansion advertisers through new business development are contributing to revenue growth. The launch of new advertising products such as Talk Head View Custom and LINE NEWS TOP AD is expected to further bolster our growth.

In addition to the round-the-clock display in chat list, which was launched in Q1, we will continue to strengthen the profitability of sections and expand revenue. Next page, please.

This is Yahoo!'s advertising revenue. Q2 advertising revenue was JPY 93.7 billion, up 11.9% year-on-year. Although the impact of COVID-19 continues to linger in some industries, revenue remained strong due to the recovery in demand from advertisers as well as the improvements in products. Next page, please.

And this is the LINE total advertising revenue. Display ads and account ads, our core products, performed steadily, and advertising revenue for Q2 was JPY 46.1 billion, up 29.8% Y-o-Y. In line with the growth of display ads, the number of accounts opened is steadily expanding, and account ads are also performing steadily. Next page, please.

Next is about Commerce Business. Next page, please. In the Commerce Business, we will strengthen marketing, enhance searchability and logistics in order to refine fundamental value and improve service quality. In marketing, we will enhance effective sales promotional campaign and integration of loyalty program. In searchability, we endeavor to improve first view. In the area of logistics, we will collaborate with Yamato Holdings, and through Blue Ribbon Delivery, we will work to improve user experience. In addition, in order to differentiate ourselves from our competitors, we will provide a new purchasing experience by utilizing group assets centered online. Next page, please.

About Natsu no PayPay Matsuri, or Summer PayPay Festival, in July achieved the same transaction volume as the Cho PayPay Matsuri, Super PayPay Festival, in November last year, with less point reward expense. The same level of transaction value and return on investment is steadily improving. And as a result, the number of people repurchased at grand finale increased by 31% compared to last November. Next page, please.

On October 20, we had advanced opening of MySmartStores, together with NAVER, which was successful in Korea. We will use LINE to differentiate ourselves from competitors and develop our own domain market. Stores could open official LINE per stores and are able to send sales promotion messages, such as campaign announcement and coupon distribution. They can also provide one-on-one customer support in chat and complete pre and postpurchase follow-up online. In addition, we are planning to attract customers by leveraging LINE and Yahoo!, which reaches most of the Internet users in Japan. We can expect to incorporate customers, which has been a challenge for stores. Next page, please.

These are measures to expand our official LINE accounts. Cross-selling to merchants who have opened Yahoo! Shopping and PayPay Mall is progressing smoothly. In just 3 months since the introduction, the number of stores applying has increased to approximately 20,000, and the share of transaction value has grown to 71%. At present, we are focusing on increasing the number of registered friends through various measures. Going forward, we aim to increase the number of messages delivered and the active rate while promoting the superiority of the CRM function. Next page, please.

We will also focus on the development of social commerce. The transaction volume of LINE GIFT expanded significantly in Q2 with Y-on-Y growth of 184.3%. We also started collaborating with Yahoo! JAPAN, and the number of merchants is increasing as of October 27. The number of stores applying is approximately 1,300, and further expansion is expected. From October 11, we started handling payment by PayPay, and group collaboration is steadily progressing. Next page, please.

Now about KPI for Commerce Business, shopping business transaction value landed at JPY 387 billion, plus 20.8% year-on-year, contributed by Natsu no PayPay Matsuri. Reuse businesses conventionally weak in Q2, but thanks to higher spend in Yahoo! and the expansion of PayPay Flea Market, the business achieved high single-digit growth. Next page, please.

Lastly, I will brief you on the Strategic Business. Next page, please. In the Strategic Business, we aim to capture cashless markets by expanding PayPay and to increase revenue from financial services. PayPay strategy and initiatives will be explained later. And LINE Pay's operating expense has decreased significantly due to the improved efficiency through the linkage with PayPay. On increasing revenue from financial services, after linking with PayPay, growth is accelerating, and the foundation for revenue growth has been established. We are currently working on the rebranding of our financial services and will provide convenient and seamless financial services to further expand the group's ecosystem centering from PayPay. Next page, please.

Now this is the update on PayPay's growth potential. Compared to other nations, Japan's contactless payment rate is still low, but with the Japanese government's cashless promotion measures and the growing need for contactless payments by COVID, the cashless market is expected to expand tremendously. PayPay has established a dominant position in the domestic QR/barcode payment market with a market share of over 68%. It's not just only the cashless market but also by tapping into the cash market, which accounts for the majority of consumers spending in Japan, therefore, PayPay aims to achieve further. Next page, please.

PayPay monetization will be achieved in three tiers. The first tier will be the base earnings, and the second tier will increase user frequency by sales promotion centered on services for merchants. And the third tier, the financial services, will be the pillar of monetization. Next page, please.

As we announced, we introduced payment fees for small- and medium-sized merchants starting October 1. Thanks to your support, the impact of the introduction of payment fee had been extremely small. In fact, of the number of merchant cancellation being 0.2% and PayPay GMV declined 0.1%. And the GMV of small- and medium-sized merchants reached a record high in October, and it is continuing to grow, too. As PayPay My Store is steadily being introduced, we will endeavor to work together to promote cashless payment and DX of merchants. Next page, please.

Integration of domestic QR code payment is to be achieved through linkage of MPM, CPN and seamless UI. While balancing companies remain unintegrated, PayPay and LINE will work together to ensure safety and security and deliver an unparalleled convenience for users. We aim to maximize users and transaction value while pursuing cost synergies through cost efficiencies achieved through the integration of the domestic payment business. Next page, please.

Now I will brief you on LINE's financial business. Starting just 2 years since service launched, number of LINE Securities accounts reached 1 million while the cumulative total amount of loans executed for LINE Pocket Money reached JPY 30 billion. LINE Securities achieved 1 million accounts in the shortest time in the online securities industry, thanks to the support of many users for its speedy online account opening and the ability to trade stocks from a single share on the LINE app. LINE Pocket Money uses original credit model that allows flexible credit, and the balance of loans is growing steadily. Next page, please.

Various KPIs performed well, driven by expansion of users and increase in number of payments as a result of the increased use frequency. And the cumulative PayPay registered users surpassed 42 million, thanks to the good impact from Natsu no PayPay Matsuri. The payment is increasing, and each of the businesses are growing steadily. Next page, please.

On October 1, YJ Card Corporation changed its trade name to PayPay Card Corporation. The business is performing steadily. With regards to banking business, after the change of trade name to PayPay Bank Corporation, acquisition of PayPay users increased, and the number of accounts, deposit balance and loan balance are growing steadily. Next page, please.

Lastly, I would like to explain the business results forecast for FY 2021. Next page, please. This is a full year guidance for FY 2020. Although there are some factors contributing to increase in profit, which were not factored in at the beginning of the term, such as termination of Yahoo! JAPAN license agreement, there is no change from the previous guidelines. Going forward, we will disclose information in a timely and appropriate manner if there is an event that will have a significant impact on revenue or adjusted EBITDA on the entire company. Next page, please.

And that is all from my side. Thank you for your kind listening. And we will be quite open for your discussions after this.

[Operator]

[Interpreted] Thank you very much, Mr. Kawabe. [Operator Instructions]

In receiving English questions, we will provide you with consecutive interpretation.

Now firstly, SMBC Nikko, Mr. Maeda, please?

[Eiji Maeda, analyst]

[Interpreted] I have two questions. Question number one about the progress of this fiscal year's target and what will be your outlook for the second half. So looking at the numbers, it seems that you are progressing very steadily. At the beginning of the fiscal year, I understand that there might be some changes given the current situation, and please elaborate on that. And in the second half, EBITDA might be lower. But do you think that there will be more costs or expenses that you might make in the second half?

And secondly, I want to know what are the assumptions that you have for the third and fourth quarters going forward. This is one question. So the second question is on PayPay business. You mentioned about the three-tier structure of PayPay, and you said that financial services, the top tier, will be the most important, and you introduced some of the services. So what is the magnitude of scale that you have online? LINE has a Pocket Money as well as Securities. And are you going to integrate LINE business with PayPay? What is the progress of financial services? And what will be the magnitude of scale that you will be pursuing going forward?

[Kentaro Kawabe, executive]

[Interpreted] Thank you for your two questions. About the progress of our guidance as well as the forecast for the second half, Mr. Sakaue will talk about that. And regarding tier 3 of PayPay, I will respond first. So Mr. Sakaue, please take the first question.

[Ryosuke Sakaue, executive]

[Interpreted] Mr. Maeda, thank you very much for your question. Regarding the progress of the first half, when you look at the whole group revenue, we were able to attain about 60% of the full year figure that we are targeting at. As explained, Yahoo! master license has been terminated because of the buyout. And for the second half, about JPY 9 billion can be reduced because of the termination of the license agreement. And at the very beginning of the year, we did not include that in the profit. So this is a factor that will give us an uplift in our EBITDA. But we did not change the guidance.

When you look at our future investment, due to data governance that we have concentrated in the first half, we had appended on some of the investment. And so we will go back to our original plan and conduct the investment. And there are some investments that we are holding or parking for some time. And given all those factors, we did not make any revisions to the full year guidance.

About the second half thoughts and assumptions for each segment. Firstly, for Yahoo! advertising, in the first half, we have been impacted by COVID-19 in 2020, so we had a good boost. But in the second half of FY '20, in terms of the year-on-year growth rate of the second half as compared to the first half of FY '21, I think, will be milder. Regarding the annual guidance of Yahoo! advertising, we believe that we will fall within the range that we have forecasted.

Second, about LINE advertising business. In the first half, we saw the same trend as that of Yahoo! advertising. And in the second half, as in the case of Yahoo! advertising, in terms of the second half of FY '20, it was revamping. And so as in the case of LINE, for the year-on-year growth rate, I think, will be milder as compared to the first half. As to the guidance, I believe that LINE will be able to capture more of the numbers in the guidance as compared to Yahoo!. So I believe that LINE will be able to realize the numbers indicated in the guidance.

About commerce, we focus on shopping GMV. And last year, we had a stay-home consumption, and there are some fluctuations in the first half. And last year, we had PayPay Matsuri twice, and so in the second half of this year, I think the growth will be relatively mild. This fiscal year, we are working on promotion, but we are going to pick and choose how we are going to invest in the promotion. And so including the merchandise and services, we are going to focus on those areas for promotion. I know that the promotion has a direct link to GMV, but we are working on the essential improvement, the fundamental improvement in commerce. So instead of focusing on GMV increase, we are working on the fundamental improvements we can make in our Commerce Business. So that was a long answer to your first question.

[Kentaro Kawabe, executive]

[Interpreted] This is Kawabe speaking. I want to add more color to the first question. In the first half of this year, we had issues related to data governance, so LINE and Z Holdings Group, as a whole, worked on cybersecurity and data protection as well as data governance. So that was the top priority. As a result, there are some investments that were delayed until the second half. So in the second half, we are going to steadily work on the -- in business that we were initially planning. Maybe we might be able to exceed our forecast. But nonetheless, we want to put our very best effort in investing for the future.

Now about the second question. So the third tier, PayPay finance area. So we have about 43 million in PayPay right now. And we have our different PayPay crowned services. And we are going to further increase the collaboration amongst those services and provide a different rewards when you use PayPay-related services. Therefore, we will be able to increase the users to more than 43 million. So going back to your question about LINE's finance business, we want to align ourselves with the LINE users to provide due services. And of course, we want to grow LINE financial services as well. So today, we do not have any plan to integrate LINE and Pay's financial services, but we are going to have the mutual referrals of users. Especially from PayPay to LINE, there will be referrals. PayPay has the first-party role in growing the finance business, so we are going to be very active in conducting referrals from PayPay to LINE. Thank you.

[Operator]

[Interpreted] Next question here is from Jefferies Securities. Sato-san, please?

[Hiroko Sato, analyst]

[Interpreted] This is Sato from Jefferies Securities. I have two questions. But first of all, quick question is about the Strategic Business segment. In the second quarter, in the other income, there was about JPY 15 billion included. Is it going to be pushing up the overall operating profit? And I would like to know the contents. That's my first question.

[Kentaro Kawabe, executive]

[Interpreted] Yes, so Sakaue-san will be answering your questions.

[Ryosuke Sakaue, executive]

[Interpreted] For the first question, this is about the selling value for the YJF selling. This is the onetime of income. And this is going to be a transaction by cash, and this is a positive for our EBITDA as well. Now I understand. So this is a one-off income. Therefore, when we distract this, the operating profit is about JPY 40 billion -- JPY 49 billion. So yes, please just distract JPY 15 billion simply.

[Hiroko Sato, analyst]

[Interpreted] Now I understand. And for the Internet advertisement, the iOS impact. That impact part, as long as I look at the figures, the LINE advertisement and the Yahoo! advertisement, it does not have to be -- it does not seem to be impacted. But going forward, for a long sale, will they be impacted? So if there should be any impact, what is the scale of the impact that you see? I suppose you remedy and have lots of countermeasures, therefore coming down to this figure. But now you're entering the second half. And if there should be any concerns from your side, I would like to know. That is my second question.

[Kentaro Kawabe, executive]

[Interpreted] Thank you. For the second question, Mr. Sakaue, our CFO, is going to be sharing the numbers. And for product, I would like to answer.

[Ryosuke Sakaue, executive]

[Interpreted] Regarding the numbers, this is not disclosed. But second quarter, both Yahoo! and LINE, in total, was about 100 million level. In the second half, for the quarter level, I think this level is going to continue, is what we assume. In order to minimize this, whether it be LINE or Yahoo!, we have been making countermeasures for the privacy level issue. And to start from LINE and Yahoo!, including use, the first-party data is filled by various media. And we are using IT for -- or targeting advertisement. So that is the impact that we are closing in. And Kawabe-san is going to be adding comments.

[Kentaro Kawabe, executive]

[Interpreted] Maybe I might be overlapping. The impact to this IDFA is about the browser issue. The browser issue could be disappearing. But for us, we have media first, and the ID log-in is possible with us. Therefore, compared to other media, we have a smaller impact. And with the application IDFA acquirement, maybe the users are afraid because the [indiscernible] type of message stands out. But we're already communicating with the users. Therefore, our countermeasure has been permeating. Therefore, the impact is smaller than we have assumed. And regarding the LINE, LINE also put in some countermeasures. So Idezawa-san, would you like to comment regarding the countermeasure from the LINE side?

[Takeshi Idezawa, executive]

[Interpreted] About countermeasure from the LINE side, from the end of October, LINE data and the data with the advertisement is the integrated under control, and we have provided services. And this is one just case. But specifically, we have launched LINE and Yahoo! countermeasures. So that was the answer.

[Hiroko Sato, analyst]

[Interpreted] So can you accept another question?

[Kentaro Kawabe, executive]

[Interpreted] So when everybody else has a question, we can come back to you. Thank you very much.

[Operator]

[Interpreted] From Okasan Securities, Mr. Okumura.

[Yusuke Okumura, analyst]

[Interpreted] I am Okumura of Okasan Securities. I have two questions. First, the question is about SmartStore. So when you think about the monthly revenue of that store, what will be your target merchant? And what kind of understanding you have of the competitors? And how do you plan to go forward with this plan? And in terms of the payment fee, you will be generating some income. But what will be the fee for the SmartStore?

Second question is on PayPay. Regarding transaction value, Y-o-Y, you were able to grow. But when you look at the quarter and quarter comparison, it is flat. So in terms of campaign and your relationship with the things that competitors are doing, can you tell me whether you are trending as expected or not?

[Kentaro Kawabe, executive]

[Interpreted] The first question about SmartStore, who is our target and who are our competitors and what is our upper hand, and what is the image of net-net inflow. In terms of PayPay Q-on-Q, I will respond to that. So the first question. Thank you very much for asking about MySmartStore. In terms of the annual revenue of the target, and I guess you want to know whether we are targeting a large or small and medium. We are targeting at SME. And of course, going forward, we want to upgrade MySmartStore to target at the major companies. But then in terms of LINE OA as well as PayPay My Store, we are focusing on SME, so we can provide e-commerce functions to those SMEs.

Regarding the business model, in terms of the fee, we have the payment fee of 3.5% and the transaction of [ 2.50% ]. And in terms of the point, it was [ 0.24% ] -- or rather [ 2.5% ] and [ 3.24% ] in the past. I believe that compared with the competitor, we are starting at the low figure. And advertising and other additional services will be added on. So net-net, we are trying to find out what will be the final figure. It's a new launch, and we are still at its incipiency. So in the future, we are going to add more to the percentage that we will be able to gain as the income rate.

So who are our competitors? As you know, BASE and GMO provide similar services. And globally, Shopify is providing similar service. And all in all, I think we belong to the same category, but there are some differences. We can link with LINE OA, and also we can connect with PayPay in the future. And LINE and Yahoo!, there will be user referrals. So we are not stand-alone. So others are stand-alone card service, but in our case, that is not the case. There are collaborations. And so we have LINE and LINE OA for communication and payment, and also we have PayPay as a payment scheme. And so by uniting those services, whether it be seller or buyer, we want to be a market that will be selected by them. We are still in the test launch phase, and we are adding functions. And even after our launch, there will be additional functions. So we will look at NAVER and try to evolve uniquely here in Japan. That's all for me.

[Ryosuke Sakaue, executive]

[Interpreted] So going to the second question about Q-on-Q growth, and you feel that the growth is relatively weak. And going forward, I think this will be very important point. PayPay is used in different scenes of payment, and the merchants are aligning themselves to the environment. And in terms of tax payment, we are seeing many people who want to use PayPay for tax. So for auto tax during Q1 and also invoice payments, they use the PayPay. So Q1-wise, it grew very dramatically because of those two factors.

And it's not that there was any negative factor that dampened the growth in Q2. So 1,100 municipalities are using PayPay for invoice payment. In the past year, our transaction value grew sixfold. There are some seasonal factors. And I believe that for the reasons that I have mentioned before, we will be going past in Q1 as compared to other quarters going forward as well.

[Operator]

[Interpreted] Next question from JPMorgan Securities, Ms. Mori, please?

[Haruka Mori, analyst]

[Interpreted] I have two questions. One is about the business results. Mr. Sakaue mentioned about the license agreement, and you have purchased stock that, therefore, this is upon the book, and JPY 9 billion was the amount. And for the sales of the YJF, about JPY 15 billion, was that already within the schedule and the budget or not? And if it was not included, is it going to be -- appear on top of the revenue and the profit?

Second question is about the three-tier PayPay structure for the finance business. And for the second tier, this is O2O services to the merchant. And if possible, I would like to know the of introduction rate for the PayPay scheme. And upon answering that, for the second tier, the service that is provided from your side, how do you image the start of the business? And please explain by the schedule and the timing, too.

[Takeshi Idezawa, executive]

[Interpreted] Thank you very much for your question. So the first one was YJFX of JPY 15 billion, whether it was within the budget or not? And the second question was about the My Store part for the second tier for the financial business. For first part, Mr. Sakaue will be explaining. And the second part will be explained by Mr. Kawabe.

[Kentaro Kawabe, executive]

[Interpreted] For the first point, YJFX. At the initial year, we have been looking at this. Therefore, it was included within the guidance. That concludes my answer.

[Ryosuke Sakaue, executive]

[Interpreted] And regarding the My Store, for the small- to mid-sized merchants and for the payment fee is now implemented. And for the PayPay My Store, if the merchants are going to be utilizing the scheme, then the payment fee is going to be lower. So we have been proposing such to be adopted by the merchants within the bundle. And this is not to be disclosed. However, the merchants are working on the bundle scheme in a very high number.

The DX that was sales promotion, which was done on paper, we would like to be working on such a similar scheme, too. However, the My Store will be having various services. We have not created the service yet, but then maybe we could be like soliciting the workers or maybe controlling the workers that could be provided by PayPay or for Vision Fund. There may be -- Vision Fund has a very interesting services for the mid- to smaller-sized businesses. Therefore, through My Store, we would like to provide various services. That was my answer.

[Haruka Mori, analyst]

[Interpreted] So I would like to confirm for PayPay My Store, for the income from the My Store, is it okay to understand that the income is not coming directly to you? And so for this term and next term, maybe the income profit for this area could be expanding. However, for PayPay market, you are not thinking that this income from this scheme is going to be not large.

[Takeshi Idezawa, executive]

[Interpreted] So if you're talking about Z Holdings PayPay My Store, we're not going to be earning anything from the contract. And we are going to be developing various services. But immediately, it is not the case that we're going to be having big revenues.

[Operator]

[Interpreted] Next, Citigroup Securities, Mr. Tsuruo, please?

[Mitsunobu Tsuruo, analyst]

[Interpreted] I am Tsuruo of Citigroup. First question, it is about LINE synergy. And you mentioned about the highlight. And I believe that for Q2, LINE was a major highlight. But what is the impact of JPY 10 billion reduction in the second half? And I understand that there will be cost in the second half for PMI, and I want to know how much will be invested. And if you have any plan for the next fiscal year, please tell us about PMI. And I understand that shopping was improving from 0% to 2%. And when you look at the numbers, depending on the amount, since you have been impacted by the Olympics, there were some ups and downs. So can you tell me some ballpark figure for the monthly figure? And looking at that, I can understand what will be the strength of the growth in the second half.

[Kentaro Kawabe, executive]

[Interpreted] Thank you very much for your question. The first one is cost synergy with LINE, and you want to know what kind of impact that will be in the second half, and we will be investing in PMI, and what will be the amount of PMI-related investment and, in FY '22, what kind of synergy we have in plan. So regarding cost, Mr. Sakaue will answer. And about -- after FY '22, myself and Mr. Idezawa will be answering. And the second question is on e-commerce, I believe. And you want to know what was the trapping in the summer. Was that your question?

[Mitsunobu Tsuruo, analyst]

[Interpreted] No. I want to know what was the monthly growth of transaction value.

[Kentaro Kawabe, executive]

[Interpreted] You're talking about Q2. You want to know what was the growth rate of transaction value for Q2. Is that your question?

[Mitsunobu Tsuruo, analyst]

[Interpreted] Yes, I want to know the monthly figure is -- in terms of ZOZO, it was slow in August. So I want to know whether that was the case in your business or not. And if that's the case, what is the underlying strength that you see going forward?

[Kentaro Kawabe, executive]

[Interpreted] So you want to know the trend. So you are not interested in traffic, but rather you're interested in GMV.

[Mitsunobu Tsuruo, analyst]

[Interpreted] That's right.

[Kentaro Kawabe, executive]

[Interpreted] Okay. Then Mr. Ozawa will answer that question. So I will answer about the synergy cost with LINE. And Mr. Sakaue will take the question.

[Takao Ozawa, executive]

[Interpreted] Regarding the cost synergy of JPY 10 billion. So in April of the first half, we were able to enjoy the synergy. So this JPY 10 billion will be 50-50 on the first half and the second half. And in the second half, what will be the investment for synergy, and I think that was your question. Ever since the beginning of this fiscal year, I have been saying that we will be investing about JPY 20 billion for growth. So regarding the first half, we cannot disclose you any tangible numbers, but we did not invest that much in the first half. And so the majority of that investment is planned for the second half.

Needless to say, regarding the progress of the investment, we are going to see how it will evolve and try to check and balance as we go along. And so we will disclose you the numbers in the end of the second half. So that's the answer for the first half.

[Kentaro Kawabe, executive]

[Interpreted] So the latter half of the first question will be responded by myself, Kawabe. So what will be realized as the synergy in FY '22 and beyond? This fiscal year, we have been taking different measures, and I believe that we can see more progress, whether it be quick commerce, LINE GIFT or LINE account expansion. These will progress in FY '22 and beyond. And on top of that, we have been strengthening our data governance, and our top priority was given to that. As so we are working on ID linkage so that we can link different services. But in this fiscal year, we will continue with the development. But most probably, we will not be able to launch those services. So in FY '22, based on ID linkage, we want to have more advanced service collaboration, and I believe that we will be able to enjoy that.

Talking about cost synergy, as you can see in the financial results document, LINE is scheduled to build a new data center. And in the past, it was on lease, but we will be internalizing that so that we can enjoy the cost synergy. That's another plan that we have on mind. So that's all for question number one. Let's move on to question number two. Mr. Ozawa will respond to that. Or rather, Mr. Sakaue will respond to that.

[Ryosuke Sakaue, executive]

[Interpreted] Regarding monthly movement of Q2, I will answer, and Mr. Ozawa might add color to it. Regarding July, we have Cho PayPay Matsuri, so that's the unique environment. And so in the period between July to September, July has the highest GMV. And year-on-year, it was more than 30%. Regarding August and September, firstly, talking about August, I guess it can be applicable to all the retail segments, but it was quite weak. So August and September grew by the higher part of 10% to 20%.

You mentioned about the Olympics. And I guess it's not because of the Olympics, but it's a seasonal influence that we see every year in August. And so whether it be ZOZO or other e-commerce, we see some seasonal impact as usual. Okay. So Mr. Ozawa, please provide us with some follow-ups.

[Takao Ozawa, executive]

[Interpreted] May I?

[Ryosuke Sakaue, executive]

[Interpreted] Okay.

[Takao Ozawa, executive]

[Interpreted] You mentioned about ZOZO. Traffic went down because of the Olympics. Yahoo! Shopping and PayPay Mall numbers, we are focusing on how it would trend. In terms of the sundry items and day-to-day item-wise, there was no traffic reduction, and we were able to see increase in GMV. So regarding ordinary commerce, the impact of GMV was negligible. But in terms of fashion because of the Olympics, there might have been some impact, and I'm communicating with ZOZO. And Olympics is a very special environment, and we have to understand that, that is a unique factor. And we have a monthly GMV. But last year, we did not have a Cho Cho Matsuri in July. But in the second half, in November, we will have a Cho Cho PayPay Matsuri like last year. And so I guess that we completed one cycle.

Regarding Cho Cho PayPay Matsuri, Yahoo! was not able to do very well regarding e-commerce festival. And we want this Cho PayPay Matsuri to be the annual event so that we will be able to compare the numbers from year-to-year. That's all.

[Mitsunobu Tsuruo, analyst]

[Interpreted] Another point, may I? So in terms of October, it is growing by 15% to 20% as in the case of August and September.

[Ryosuke Sakaue, executive]

[Interpreted] You're talking about GMV, right?

[Mitsunobu Tsuruo, analyst]

[Interpreted] Yes, I'm talking about GMV of October.

[Ryosuke Sakaue, executive]

[Interpreted] So we see the continuation of trends that you saw in August and September. So it is now latter half of 10%. Mr. Ozawa would like to add some comments.

[Takao Ozawa, executive]

[Interpreted] Not to have any misunderstanding. Last year, we did not have any Cho PayPay Matsuri. And this year, we're going to complete one cycle, which means in November. And so I guess after November, we want to continue the momentum. But I do not want to mislead you. Cho PayPay Matsuri, a year has passed, so there will be the reiteration of what we did last year.

[Operator]

[Interpreted] From Mitsubishi UFJ Morgan Stanley Securities, Mr. Araki, please?

[Masato Araki, analyst]

[Interpreted] I have two questions, too. First of all, the YJFX. And so the sales value was JPY 15 billion. And so is it on the revenue? What's the confirmation? And for other revenue, fourth quarter of JPY 4.8 billion, and at the second quarter, it was JPY 5 billion, JPY 4.8 billion to JPY 5 billion. And whether or not this is included in the second quarter or not is what I would like to ask. And for second question, this question refers to Ozawa-san. Within the PayPay Services, there's the service called Buy Now Pay Later, and it is going to be released on April 2022, April 14, and it is going to be launched around summer. Therefore at this present, 2021, is it going to be provided for all the merchants or not is the question.

The PayPay Buy Now and Pay Later and the relation with the YJFX is something I would like to ask, and this is related to Yahoo! JAPAN. And PayPay has accumulated knowledge. Therefore, you have been working on YJ. Or else, are there any reasons that you do not work with NP? And Yahoo! Shopping and Yahoo! Buy Now Pay Later, I want to know why you separate the scheme.

[Kentaro Kawabe, executive]

[Interpreted] Thank you very much for your question. For the first one, this is going to be explained by Mr. Sakaue. And second question will be answered by Mr. Ozawa.

[Ryosuke Sakaue, executive]

[Interpreted] For the YJFX issue, after the sales, the sales is going to be finished, completed at second quarter. So it is about the several millions of yen. And it is partially including the YJFX. I would like you to understand like that. And the second question from Ozawa-san.

[Takao Ozawa, executive]

[Interpreted] Thank you very much, Mr. Araki, for your question. So I have to say one thing. First of all, with PayPay Buy Now Pay Later, whether it's going to be applied for everyone and for every merchant or not was the question, and the answer is no because we are in delay. And I'm very sorry that we were not able to share the information. I cannot mention in detail, but we are adjusting, and now we have come to this point. And regarding this, as soon as we are now settled with our next schedule, we would like to disclose the information.

And regarding the NP, we're going to be utilizing NP and work on Yahoo! Shopping. And the BNPL, this is buy now pay later, and the user's need is very high in demand. And through PayPay, the BNPL was not provided. Therefore, in Yahoo! Shopping, we wanted to service the users as soon as possible and wanted to see the numbers and see the impact. That is why we are now utilizing NP to launch the service. Going forward, the PayPay's Buy Now Pay Later, if that is going to be launched, then as scheduled, we would like to open a scope for all users and all the merchants. And NP can be pay later, not even for the Yahoo!, too. And ZOZO also has another pay later scheme, too. And BNPL is something that we focus very much. Therefore, we're now looking where to prioritize. That is my answer.

[Masato Araki, analyst]

[Interpreted] And I would like to confirm one thing. So you mean that you're working with NP currently. But gradually, maybe if there is going to be some new knowledge accumulated with the YJ Card, then you're going to be consolidating and utilizing the YJ?

[Takao Ozawa, executive]

[Interpreted] Thank you very much for the confirmation. It's just one option, but we have not decided on that. And we have a counterpart partner, NP. Therefore, I cannot answer on that currently.

[Masato Araki, analyst]

[Interpreted] And if you cannot answer right now, but there is the issue about PayPal and Paidy. And Paidy is providing a very sophisticated service to Amazon. And Paidy seems that their transaction value is #1 in Japan. And speaking about this buy now pay later, Amazon, that seems to be very well. Therefore, are there -- were there any option to be coupling up with the Paidy or not?

[Takao Ozawa, executive]

[Interpreted] Various options could be available, but we're now focusing so much on PayPay. So all the users could be paying by PayPay and that's unparallelly convenient, and that's going to be a big benefit for the users. That is our view. Therefore, we would like to maximize that idea.

[Operator]

[Interpreted] Next, Ace Institute, Mr. Sawada, please?

[Ryotaro Sawada, analyst]

[Interpreted] I am Sawada of Ace Institute. I have two questions. First, about shopping. We have shortage of semiconductors as well as electronic components. And therefore, the final product is in shortage as well. So I want to know what kind of impact there is in your shopping business. Second question, with PayPay, you will be charging. And what is the trend of the merchants that you see? And if you can disclose as much as possible, I would appreciate it. And I know that the application for [indiscernible], I want to know how it is trending given the end of October.

[Kentaro Kawabe, executive]

[Interpreted] So the first question would be answered by Mr. Ozawa and myself. And second one, I will answer. About the impact of the shortage of semiconductors, Mr. Ozawa will respond regarding Commerce Business. But all in all, we purchased many servers for future investment, and we are seeing some delay in the deployment of service. But how about it compared to automobile industry? Well, comparatively speaking, we are not impacted that much.

[Takao Ozawa, executive]

[Interpreted] Now this is Ozawa speaking. We are not seeing any tangible negative impact. We have the electronic products, and there might be some impact, and we are trying to have everything in our radar. And if there is anything that we have to disclose, we would do so immediately.

And second question is about PayPay merchants status quo. I already explained in my explanation of the financial results, but we are asking for the payment fee for SMEs. But in terms of the cancellation of the merchant, it was very minimal. The media has been talking much about it. But maybe there might have been some issues of the samples that they have looked at.

We look at the total universe of the merchants and the cancellation was only 0.2%. And the negative impact on GMV was only 0.1%. So the impact was quite minimal. And as mentioned before, even though we are asking for the payment fee, SMEs are very active. And in terms of transaction value of October, it was a record high. And we conduct a campaign, vis-a-vis the merchants, and they really appreciated the campaign, and the registration to My Store is increasing. And so we want this payment business to be sustainable. And we decided to charge SMEs, and this was a turning point. But the merchants did extend us understanding, and we are trending favorably.

[Operator]

[Interpreted] From Macquarie Capital Securities, Mr. [ Sai ], please?

[Unknown Analyst]

[Interpreted] I have two questions. One is about EC in November. You schedule for another Cho PayPay Matsuri. But compared to the past, you would like to be much more effective as what you were saying. For instance, within the EC or the commerce segment, are you going to be focusing much more on the promotions cost? And so if I focus on there, there was JPY 33.8 billion cost for this -- in the March 1, and in second quarter, it was JPY 23 billion. Therefore, is it going to be higher than JPY 23 billion? That's one question.

And for the second question, this is a very detailed question, excuse me. Within your profit and loss for the withholdings, earnings and losses, profit and loss or the items sold, so it's about the equity method. And it seems that this is expanding its balance differences. So I understand this is coming from the PayPay, but are there any specific factors? Or are there any things that is included otherwise? And I would like to know in detail, please?

[Kentaro Kawabe, executive]

[Interpreted] Thank you very much for your question. For the first question about PayPay Matsuri and various commerce campaign is launched, and the cost effectiveness is something that we focus. This is our direction for this fiscal year, and how -- which level are we going to be looking at the cost was the question, I suppose. Therefore, Sakaue-san is going to be answering. And for the equity method for the company with under equity method, the numbers were questioned. And so both of the questions will be answered by our CFO, Mr. Sakaue.

[Ryosuke Sakaue, executive]

[Interpreted] For your first question regarding the promotion or regarding Q3 compared to Q2, maybe it could be rather the same or slightly larger for promotion cost. That is what we assume at this present point. That's the answer for your first question.

And for the equity method, your second question. So more than half comes from PayPay alone. And next, Demae-can follows. This is already shared. And to capture that part -- this is the negative part. And the remainder is part of the overseas business for LINE. It is within the red for the equity method. So those are making the total.

[Unknown Analyst]

[Interpreted] Now I understand well. So this is a follow-up question. For the fourth quarter Q4, at this point, are you having a plan for Cho PayPay Matsuri like last year, previous year? And when that is going to be launched, how do you consider about the cost?

[Ryosuke Sakaue, executive]

[Interpreted] For Q4, this is still underway for a discussion. Therefore, we are not able to share anything for Q4 yet.

[Operator]

[Interpreted] Let's move on. CLSA Securities and Mr. Oliver Matthew, please?

[Oliver Matthew, analyst]

My first question, could you tell us the PayPay loss amount in the second quarter, please? And the second question, what are the biggest projects that you have delayed into the second half that you mentioned?

[Kentaro Kawabe, executive]

[Interpreted] And so the first question will be answered by Mr. Sakaue. And the second question will be answered by myself.

[Ryosuke Sakaue, executive]

[Interpreted] So regarding the loss of PayPay for Q2, the number is not disclosed, but the ballpark figure is about the same as last year.

[Kentaro Kawabe, executive]

[Interpreted] I'm going to the second question, the largest project that has been delayed for the second half. As mentioned in my presentation, we have been working on the data governance issue. So data protection and cybersecurity and data governance have been given a top priority. So Yahoo! ID and LINE ID linkage and also different service linkage that can come from the linkages of those IDs, those have been postponed. And so it's not that there has been one large project, but rather all the projects related to ID linkages have been postponed to the second half. So that is the overall explanation.

[Operator]

[Interpreted] From Credit Suisse Securities, Saito-san, please?

[Takeshi Saito, analyst]

[Interpreted] This is Saito from Credit Suisse Securities. I have only one question for the Demae-can from Z Holdings. Z Holdings has been existing for the Demae-can. And I think the investment was coming from the LINE only in the past. But this time, Z Holdings itself has been investing. Therefore, I would like to know the background for this investment. And in line with this, Kawabe-san has been -- always been saying that utilizing Demae-can will be covering up the last one mile. About where is your goal for this business? And in order to achieve your goal, I would like to know what is going to be needed upon your view.

[Kentaro Kawabe, executive]

[Interpreted] Thank you very much for your question. The [indiscernible] company has been announcing the forecast for the hit product for next year, including this year, too. And for 2 years in a row, they have been assuming that food delivery is going to be a very hot topic in Japan. Therefore, food industry and food services is going to be growing from here on, which we share the same view. And when we integrated LINE, we have been announcing several strategies and local vertical area. We have been mentioning about food delivery. Food delivery is going to be our top priority focus, is what we have been determining at that point.

So not only in LINE but with Z Holdings as a whole, we're going to be supporting this food delivery area. Therefore, we have been investing from the Z Holdings. The other question, to answer that, the e-commerce business started from the early 2020s for us, and we wanted to become #1 at that point. And in order to grow the e-commerce or in order to be substantial among our competitors, it all comes down -- boils down to the user experience. So the delivery that is really reaching the customer by Amazon is so great, Rakuten's item is so large, and therefore, people will opt for Rakuten.

So anyhow, the users are going to be choosing the platform because of the user experience. And we as a platform has one of the largest items on our platform. And we, through the loyalty program, the users are benefiting various things. And compared to other environments, we too are very strong in providing benefits to the users. It's all, let us say, the logistics will be excellent, and the delivery will be on time, uncomparable to other companies. And with the partnership and cooperation with Yamato, we're going to be delivering the items to be delivered to the users at the next day or the next 6 days. And maybe in some products, a product will be reaching the order within just 15 minutes, and that's something awesome. So that is going to be a differentiator, too.

So that's one of the points that we would like to aim for. And for the second -- the second of such testing site has been starting launch, and Idezawa-san has been going there to the user. And then he tried out delivery for a product, and he had this product with his hand within 15 minutes at 1 day, and 20 minutes within another day. Therefore, for such quick delivery -- quick delivery is going to be one of the very big differentiator for the e-commerce. That is something that we want to aim.

[Operator]

[Interpreted] Next, David Gibson from Astris Advisory.

[David Gibson, analyst]

On the Page 4 of the presentation about next year FY '22 onwards for the LINE data centers and benefits, could you give us an image of the scale of benefits? Are we talking JPY 10 billion or tens of billions? That's my first question. The second is, you said, this year, the focus is working on improving the fundamentals of the Commerce Business. If that's the case, what is the target for next year? Is it the same target to improve the fundamentals? Or is it a shift to growth or something else?

[Kentaro Kawabe, executive]

[Interpreted] Thank you very much for your question. First, about the LINE data center internalization, what will be the scale, Mr. Sakaue, our CFO, will respond. And regarding FY '22 commerce plan, Mr. Ozawa will be talking about that. So first question.

[Ryosuke Sakaue, executive]

[Interpreted] So regarding the first question, I cannot disclose you any quantitative figure. We have pre-integrated Yahoo!, and we invested in data centers. And on the cash flow statement, you see the amount of CapEx that we made. And so the ballpark image of the data center investment will be along that line. And so maybe you will be able to understand based on the number that you see in the past cash flow statement.

[Takao Ozawa, executive]

[Interpreted] This fiscal year, we try to review the fundamental functions of commerce. For example, we have logistics, and we have product selection. And as compared to the competitors, we were not doing well, so we are in the negative. So we want to be on par with them at least. So this is an endless effort. So for logistics, we need to improve and also make it easy for the users to select and come up with more assortments. And so this is a never-ending journey. And so far, we have been leaning towards marketing in order to grow our Commerce Business, but we are going to incorporate the fundamentals of the Commerce going forward as well. And so in FY '22, the improvement of fundamentals will be a given.

And on top of that, we will work on quick commerce and also social commerce using LINE platform. And also the synergy of LINE and PayPay will be used in the former, for example MySmartStore. So these are the trials that we have not tried in the past, and I believe that we will be able to enjoy more GMV. And in FY '22, we are going to go full fledged for those new endeavors. So the improvement of fundamentals will continue. But in FY '22, we will work on new businesses that will contribute to the growth of GMV. That's all.

[David Gibson, analyst]

So just to clarify, next year, is GMV growth, not necessarily profit growth, correct?

[Takao Ozawa, executive]

[Interpreted] Yes, you're right. We are working on GMV growth, and that is constantly on our mind. And of course, we have to control the cost depending on the market environment as well as the internal financial situation. But being in charge of Commerce, I am very determined to grow GMV.

[Operator]

[Interpreted] Next from Ace Research Institute, Mr. Sawada, please?

[Ryotaro Sawada, analyst]

[Interpreted] This is Sawada from Ace Research Institute. Well, first one is in details, it is about LINE. And conventionally, the distribution has been done outsourced, and it was about JPY 20 billion of scale. And [indiscernible] and within the group, do you think you're going to be capturing this and working in-house or not? It's going to be something that I would like to confirm.

Second issue, for the LINE data governance issue. The final report has been received by yourself already. So you're going to be working on this. But I think you've come to one milestone. Is it the case? Please explain.

[Kentaro Kawabe, executive]

[Interpreted] Thank you very much for your question. For the first one, Mr. Sakaue will be answering. Second question will be answered by both co-CEOs.

[Ryosuke Sakaue, executive]

[Interpreted] For the first question, several months ago, [indiscernible] company has been already announcing. And we're now under the discussion of what they have been announcing. Right now, we are under the TOB terms. Therefore, I would not like to comment further.

[Kentaro Kawabe, executive]

[Interpreted] For the second point, for the -- for your question, the special -- there wasn't reporting from the Special Council Advisory (sic) [ Special Advisory Committee ]. And Idezawa-san will be explaining, and Kawabe, myself, would be answering from my position. Thank you very much for your question.

On October 18, the reporting has been announced, and we were shared with the final version of the report from the special advisory. Therefore, to answer to their questions, we are now coming to one milestone. However, we have to be strengthening the accountability and the measurement. And for LINE, we would like to go into the next phase, which is going to be much more strengthened for the accountability and the countermeasures. That is going to be continuously done daily basis.

[Takeshi Idezawa, executive]

[Interpreted] From the Z Holdings side, the special reporting has been coming to the final point. And as you say, this is one big milestone for us. However, they were very strict on comments, and we need to be -- we have received some proposals to continuously improve ourselves. Therefore, LINE is going to be prepared under such recommendations. And not just LINE but the Z Holdings Group and companies within the Z Holdings, there were various recommendations that all the group companies should follow, too. Therefore, we would like to expand the measures for other group companies, too.

Starting on the point of the user side, and we're going to be focusing on the three LINE model and the governance vertically and horizontally. It's not only about LINE but for all the companies within Z Holdings should be implemented, and we are going to be continuously working on that. And that was my answer.

[Operator]

[Interpreted] It is about time to end this session. So we would like to close the Q&A session. Lastly, we would like to hear the closing remarks from Mr. Kawabe.

[Kentaro Kawabe, executive]

[Interpreted] Thank you very much for your active participation. At the outset, I mentioned that in 2018, I became the head of Yahoo!, and I mentioned that we are going to create a very robust future. We went through different waters to challenge ourselves. And at the same time, we generated profit, and the new management is determined to grow the top line. That is our objective. And in FY '21 Q2 results, I guess we were able to demonstrate our caliber.

The priority is the growth of the top line, but we are not going to be in the red. However, we will try to have positive EBITDA. And heading toward FY 2023, we are aiming at the record-high revenue. And I think we were able to be on track heading toward FY '23. We will continue our investment. And at the same time, we will work on the top line. So please take a look at the top line and going forward as well.

Thank you very much for your participation.

[Operator]

[Interpreted] And that completes Z Holdings' conference call on the financial results. Thank you very much for participating until the very end.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]