LY Corporation

Thank you very much for joining us. My name is Saka Ue of Z Holdings Corporation. Thank you very much for taking the time out of your busy schedule to join us. Let me now present the overview of Q1 business results. Next page, please. First of all, let me start with Q1 business results topics. Both revenue and adjusted EBITDA renewed the highest record for Q1. PayPay started services four and a half years ago and turned profitable in adjusted EBITDA for the first time. In media business, account ads revenue grew in double digit and the search ad revenue also grew by 5.2% year on year. Commerce business adjusted EBITDA margin It exceeded 20% with subsidiaries' growth as well as profitability improvement through cost optimization. And through the selective focus on key businesses, we'll be reorganizing domestic financial business. This is the agenda that I'd like to follow. Let me start with consolidated business results of the whole group. This shows the group-wide performance. Revenue and adjusted EBITDA both showed the double-digit growth. Revenue growth is mainly due to the pay-pay consolidation and media business revenue increase. Adjusted EBITDA increased with lower fixed cost. and also pay-pay consolidation and turning into the profitable business in strategy business and the selective focus on key businesses. Adjusted EBITDA margin improved to 23.2%. It shows the factors of change in adjusted EBITDA. We have been reducing business commissions and increasing efficiency in sales promotion cost. Last fiscal year, we started the selective focus on the key businesses and we are steadily decreasing the fixed cost. Excluding the listed subsidiaries and pay-pay consolidation, our Z-holdings adjusted EBDA greatly improved. In addition to the growth of Azozo and Asco, the profitability of the pay-pay consolidation improved and adjusted EBDA increased as a result. It shows the factors of change in operating income. Although depreciation and PPA amortization increased, with the growth of the adjusted EBITDA, the operating income grew 19.3% year-on-year. In April 2023, the AI company business of LINE was inherited to Works Mobile Japan through absorption type demerger or split. and we booked the transfer profit through the business separation which is included under the others. It shows the factors of change in adjusted net income. Equity in losses of associates and joint venture improved with business growth and cost optimization. As our equity ratio in Webtoon changed, we booked gain on change in equity interest, adjusted net income, grew by 34.8% year-on-year. Until now, we did not give you the details below the adjusted EBITDA, but now we are giving more details. As a background of that, the improvement of the capital efficiency we believe is one of the important management issues, and we understand that it is important to streamline the capital. Realizing the continuous profit growth is the most important thing in our mind, so we continue to expand the profit. Next is selective focus on key businesses. As we start LINE Yahoo!, we would promote selective focus on the key businesses, mainly overlapping businesses. Domestic financial businesses, we had Zee Financial and LINE Financial, two companies. And through this reorganization, we have consolidated the functions to Zee Financial. So below Zee Financial, there is Line Securities and Line Credit Corporation. As for generative AI, I would like to talk about the two perspectives, including applications in services and increasing work efficiency.

First of all,

the applications in services. As for free market using the chat GPT, we will start to provide a feature to assist composition of text to explain items. And we are also considering the introduction to Yahoo Auction. As for LINE, we started the service to auto-generate visual images using generative AI. In terms of work efficiency improvement, in order to improve the productivity of the engineers, we have introduced GitHub Copilot. We concluded an agreement to use all APIs provided by OpenAI. All the employees of the other divisions will be using generative AI to pursue operational productivity and service quality improvement as well as new service creation. Let me now talk about the new structure after the merger in October. As we announced the business results, we also disclosed the new structure. We will streamline the board of directors in order to speed up the decision-making. We will promote the delegation of the authorities, so the company CEO will have authority and responsibility for the management of business domains. And we also promote the product-based businesses. As for the organizational structure, we will have three categories, first the seven companies and cross-sectional technologies and corporate administration. As MC announced at the beginning, today I am joined by Mr. Hide, Mr. Kataoka, Mr. Ikehata. They will become the company CEOs of commerce company, media company, and marketing solution company from October. So under this new structure, we will pursue product innovation and profitability improvement. This shows the consolidated four-year guidance. In addition to adjusted EBITDA, we have disclosed the revenue guidance of media business and commerce business. We'll touch upon this later, but we are seeing the signs of ad market bottoming out in media business. So, excluding the commerce ad of FY23, we expect a low single-digit growth of the ad revenue. In commerce business, we plan to start the LYP premium from November this year and we expect that the user base to expand. As our subsidiaries are growing, the FY23 commerce revenue is expected to be in mid to high single digit.

Now, let me move on to each segment, business results and topics by segment. First, media business performance trend. In Q1, despite the impact of market conditions on display ads, revenue increased due to recovery in ads on media sections and the consolidation of line music. Adjusted EBITDA is down despite the hiring freeze since the second half of last year due to a new graduate hiring and increase the corporate expense allocation to the media business. Next, please. This is group-wide total advertising revenue. Total revenue's growth rate, excluding shopping-related ads, is up 1.2% YOY, indicating signs of bottoming out.

Next, please.

This is factors of changes in display ads. Revenue of shopping-related ads is down due to the impact of strategic effort to improve the efficiency of sales promotion expenses in the commerce business. Revenue of reservation ads is down due to the ongoing shift to programmatic advertising. In the short term, we will implement initiatives such as ID linkage and sales team integration to generate synergies. Integration of the Line and Yahoo sales teams is expected to generate upside through analytics across both platforms and a proposal of integrated solutions. In the long term, we intend to increase sales through the integration of advertising platforms and capture the video advertising market.

Line official accounts.

The number of paid accounts increased 35.6% year-on-year. To further enhance functionalities and strengthen linkage with Z-holding services, we have implemented a revised fee plan on June 1. Even after the fee revision, the number of paid accounts continued to increase, and the churn rate did not deteriorate. so a positive contribution to the revenue is expected in the mid to long term. Next page, please. Commerce business performance trend. Reduced promotion expenses at Yahoo Shopping and Line EC led to a significant improvement in profitability with adjusted EBITDA growing 24.2% year-on-year and adjusted EBITDA margin exceeding 20% as a result. Next, please. E-commerce transaction value. This is the overall situation. Domestic merchandise transaction value is down 1.9% year on year. However, there is a sign of bottoming out. Next, please. Domestic e-commerce transaction value categorized into each area. Domestic shopping transaction value is down 8% year-on-year. However, this represents an improvement from the previous quarter and is in line with our expectations. Domestic reuse business continue to grow steadily, driven mainly by PayPay free market, which is expanding its user base. In the domestic service business, The positive impact of the reopening has run its course, but the travel business still continued to do well. Next, please. This is profitability improvement and other initiatives in the commerce business, especially Yahoo! Shopping. We are making a steady progress in terms of user retention, product enhancement, and profitability, with continued improvement in Yahoo! Shopping growth margin of 22 points from Q1 last year. We are also enhancing the service offering, essentially resulting in higher ratios of new users repeating in the following month, as well as Blue Ribbon delivery. As a second half initiative, we are launching LYP Premium Membership in November this year, which is expected to increase our commerce service usage by line and paper users. The improvement in retention rate and profitability prior to the launch of LYP premium membership should provide a solid base for the growth in the second half. Next, please. Strategic business performance trend. The highlight of Q1 is that adjusted EBITDA of consolidated PayPal turned positive. Revenue grew significantly year on year. driven mainly by the growth of PayPay and PayPay card. Adjusted EBITDA, improved year-on-year and Q-on-U due to the improved profitability of PayPay and impact of selection and concentration initiative, including finance business reorganization. Going forward, we will improve profitability by optimizing costs and reviewing loss-making businesses in addition to the growth of PayPay. This slide shows a PayPay business overview. Consolidated revenue continued to grow by more than 40% year-on-year, allowing consolidated EBITDA to turn positive for the first time. Consolidated GMV continued to grow significantly driven by increases in the number of users as well as in the number of payment transactions. Going forward, we will continue to promote integrated management with PayPayCard, offering seamless payment experience, centering on smartphone apps to further expand and diversify our business. These are PayPayCard's major KPIs. The number of active card members is growing steadily, partly thanks to the synergy with PayPay. Also, with an increase in unit price per transaction, transaction volume grew significantly by 28.2% year-on-year. Next is PayPay Bank's major KPIs. This is the last slide. PayPay Bank is also improving its KPIs steadily thanks to synergies with PayPay. The number of accounts is maintained double-digit growth due to acquisition through PayPay mini-apps. Deposit balance is growing steadily, along with the increasing number of accounts. Lastly, business efficiency improvement, one of the management policies this year, is progressing well on both fixed cost reduction and the selection and concentration, contributing to the improvement of Q1 earnings, with Peipei resulting

in positive EBITDA.

The other policy of the group of building a foundation for renewed growth from FY24 onward will be addressed with ID linkage starting in October and LOIP premium membership starting in November, and the preparation is going on smoothly so far. We are off to a good start in FY23 in line with our plan, with a sign of bottoming out in the advertising market. This concludes my presentation. Thank you.

Now you take questions. First, from JP Morgan Securities, we have Mori-san. Thank you. My name is Mori of JP Morgan. Thank you very much for this opportunity. I have two questions, if I may. First question is about the Q1 adjusted EBTA results. In comparison to your expectation, how was it? I think that the progress has been pretty good. So if it exceeded your expectations, where did it come from? Could you talk about different segments or an item of cost reduction? If you can give us some more details. For the SG&A, 10 billion reduction. is what we see. So the 30 billion reduction of the fixed cost is what you mentioned at the beginning of the fiscal year, and line securities and banks have been excluded, and the effect of that has been big. So vis-à-vis your target of the cost reduction, probably you'll be exceeding that 30 billion. So if you can talk about the details in Q1. My second question is about advertising. You mentioned that the signs of bottoming out are being seen. So these are signs, or as a background of these signs, market factor and also your initiatives. Could you talk about those two to let us know what have been happening? And in Q2 and onwards, the market could recover further. Is that something that we can expect? And as for the initiatives, line account the fee revision we will start to see some effect of that so in comparison to q1 probably the market and your initiatives will go to the next level is that something that we can expect sorry to be wrong but a neighbor engine the integrated commerce engine is being introduced so could you give us some update on that and advertising including advertising if you decide to do so, what would be the potential? What are the expectations in the medium term? Thank you. Thank you very much for your questions. The first question is about the Q1 EBTA factors. and where they came from. And the second is about advertising market and our initiatives and the background of the bottoming out and what would be happening in Q2 and onwards. And the third is about the commerce search. So, Ikehata-san will talk about the market in response to your second question. But let me answer to your questions. In Q1, I just said EBDA. Compared to our expectations, it was better because of the SC&A reduction through the efforts of the employees have gone well. By segment, commerce and strategic segment, those two are the areas that we are seeing the bigger improvements. Relatively speaking, this is something that we are working as a corporate-wide, so business commissions and sales promotions, those two factors, we have been trying to improve the efficiency, and that's something that we have been doing at the company-wide level, and we made good progress. If I may add about the line securities, In terms of EBTA, this is deconsolidated from April, so we are currently transferring this. So in Q1, line securities deficit is not booked in the EBTA. So that condition continues to be the same in Q2 and onwards. As for line bank, in the previous quarter, we made a provision to some extent. Q1 was within the level of the provision. So in Q2 and onwards, whether there will be some add-ons, that is not going to be the case. In Q2 and onwards, the forecast, the guidance is that for the fixed cost reduction, we are making good progress. At the same time, in the second half, LIP premium and ID linkage Those are planned, so product quality would be very important, and we need to go in further to build such foundation, but we want to make sure that we manage this well. And as for the EVTA guidance for the four-year, we want to make sure that we achieve that target, and that's going to be unchanged. The second part about the advertising, the initiatives in search, line, official account and display, we have various measures and initiatives that we have been adding. So we are building the foundation for growth. In Q2 and onwards, as for the forecast, the low single-digit is what we mentioned in terms of range. So in Q2 and onwards, the low single-digit growth is what we expect for the full year. The market conditions are still uncertain, so that is what we can say. Now, as for the commerce search, we are testing various things, so we are still evaluating them, and we will continue to do so. We are still in the testing phase. So, Ikehata-san will answer to your second part of your question. Yes, Ikehata is going to answer to your second question. The market is bottoming out. We see some signs, as we said, in the background, if I may add. The advertising market as a whole, if I may talk about that, the companies and partners and the agencies, Through the conversations with them, the ad budget of one company going back to the level is not something that we are seeing. We are still seeing a plateau or the flat situation. But I think that the companies are now obliged to more efficiently utilize their budget. and they are more aware of such budget management. So more specifically, for example, digital marketing and digital advertising, allocating budget for those is something that we are seeing. So in the second half, gradually, the recovery trend is something that we expect. And as you commented about official account and fee revision, And that's something that might contribute in the second half. So in response to that, yes, that is the case. And as we presented the fee plan revision and the cancellation, we did not see the negative impact. So this plan change, This gives us the continuous revenue to us. So we are working so that we can see the gradual improvements. I'd like to clarify something about the commerce search. In relation to neighbor, we have not yet introduced that. So about the commerce query, we are considering many things. right now so that is our answer to your comment thank you this one thing one follow-up question this term i think that the human result was better than the expectation but the guidance numbers are maintaining those numbers and also If you have a buffer in the second half, you want to invest that for the future. Well, for the medium to long-term growth, we would like to invest, but we also need to think about the fiscal discipline and the investment efficiency. So we are not going to make a wasteful investment in order to achieve our target. So that means that if the investment efficiency is not so good, it is possible that we have a short-term profit, but that could damage the medium to long-term. So it's difficult to say, but we would like to consider all of those factors.

Thank you.

Sorry, I asked three questions instead of two. Thank you very much.

Next question is from SMBC NICO Securities. Maeda-san, please unmute yourself. Yes, Maeda from Nikko. Thank you very much. For PayPay business and the commerce business, especially regarding commerce and shopping, I have questions. For PayPay, consolidated EBITDA was $1.7 billion. Quota in the previous year was $2.4 billion. So what were the factors behind the improvement? And also previous year, 2.4 billion, is it with the PayPay card as well? Is it included? Because this year, 1.7 billion, other than PayPay card's contribution, do we have sufficient profits there within 1.7 billion? What is the breakdown? Payments and promotion services and other finances? was a positive profit of 1.7 billion what is the breakdown you know so this positive profit is it sustainable going forward or sometime in the future are you going to record expenses and this might fall into negative profit once again so if you could give us those details that would be great regarding shopping this year you are prioritizing cost control and efficiency improvement but if you look at your competitors because of the tough business situation it seems that they are rather investing so so probably the company can invest rather than protect given the current situation so at this point in time even if you spend promotion costs the structure of shopping itself going forward For the yield of users, you cannot secure that probably in the future. Therefore, is your priority still cost reduction, or is it time for you to turn more offensive on your shopping business at this point in time? What is your stance? For the first question about PayPay improvement breakdown, Sakaue would like to answer. The second question will be answered by Mr. Hide, who is in charge of commerce. For the reason for the improvement in PayPay, revenue, including GMB, There was a huge growth in sales and revenue that pushed up the gross margin. The fixed cost has gone up a little bit. However, we have compensated for that with the increase in revenue. There was some acquisition cost, but even after that, we were able to earn enough gross profit. That's why we had a positive profit. In terms of breakdown, the payment business is still the main business there. for pay-pay so the payment business is the driver actually of the positive profitability for the positive profit whether this is sustainable or not was the question rather than that we are focusing on the growth of the cashless in market therefore we would like to continue to spend necessary promotion costs sales promotion costs while paying attention to the profitability Hide is going to respond to your second question. Yes, I would like to address the second question. Once again, whether we are activating the commerce investment or not was the question. As you alluded in a question, at the moment, the cost or investment efficiency improvement is our priority. That's the first and foremost our priority. But after this phase, once again, we would like to promote regrowth. And once again, we want to promote the growth of the size of the business. In terms of the cost reduction, rather than investing by compensating compromising on investment the service quality product quality we are focusing on that and this is a new company so we want to have a good asset level for this company for the investment the first milestone is lyp premium in november and id linkage with that So mainly from the second half, we are promoting the regrowth of Yahoo Shopping. So for that, we would like to actively utilize the assets of the new company. That was my response. Sorry, there was one missing part regarding the first consolidated PayPay EVA. This slide shows the PayPay cards included as well. So this slide shows page 22 includes PayPay cards. Thank you very much. Thank you.

Next from Goldman Sachs Securities, Munakata-san. Please unmute yourself. Munakata speaking from Goldman Sachs. Thank you very much for this opportunity. I have two questions, please. First is about strategic business. Another is ID linkage related question. First question is about strategies. So the selective focus on the core businesses have been going on. So PayPay has turned profitable and Q1. Now PayPay turning profitable, the position of the line pay, could you explain that? The optimum business structure What do you think would be the optimum business structure in the future? The second question, in terms of the management of the private information, you mentioned or the media reported that there are some challenges in relation to that. So could you talk about the current status? And in October, you plan to have an IT linkage. Do you expect some issues or delay in IT linkage? Thank you. Thank you very much. About the strategic segment, I'd like to respond, Sakaue. And as for the private information related, Idezawa will answer to your question. About the strategic segment, your question is about LinePay. LinePay currently, the digital content online, still use Line Pay. So discontinuing the service or integrating the entities is not something that we are planning to do. At the same time, we have been selecting and concentrating on the different key businesses, and we'll continue that. And there are a lot of possibilities that we'd like to pursue. So that's my answer to your first question. Yes, about the ID linkage. As we planned from the beginning of October, we will start the ID linkage and we're preparing for that. And so we would like to explain to the users in detail and we'd like to proceed smoothly. Thank you for your question. Thank you very much.

Next is from Citigroup Global Markets. Tsuru-san, please. Yes, thank you very much. Congratulations on the very strong performance. First question, this is about strategic focus. ChatGPT and generative AI, in your current situation, what are the pros and cons of that? In the chart, you said that you started to use generative AI. On the other hand, in the search ads, Microsoft, for the overseas markets, I think including Japan, that's where they are taking market share. That's what they are saying. So very wild argument probably this is. But for the search engine, Bing+, ChatGP+, maybe theoretically it's possible to switch to that. So what are the pros and cons of these possibilities, please? So you just asked one question. Okay, I will go to my second question. My second question is about cost reduction. For the last quarter, there was 10 billion yen SGA reduction. But for the selling expenses, what is the progress so far in cost reduction at the moment compared with the expectation at the beginning of the year? At the moment, how much progress did you make? And eventually, how much is possible by the end of this fiscal year? Those are the two questions. Yes, thank you. First question was about generative AI. The second question was about the progress and the outlook on cost reduction. I would like to take up both of the questions. For generative AI, there are pros and cons. in the presentation today we showed you positive aspects such as efficiency improvement of our work this is a very effective technology for that and in terms of the business in the industry where we are playing generative ai can be the driver of various innovations and changes Therefore, in different services today, we are prioritizing discussion of the use of general AI. With that, we would like to come up with new services and user experiences. If we do that, we can promote more use of Internet. That would be all positive for our company. And also for search engine parts, there was a question you asked. There are various search experiences, including overseas examples. There are many. So we are investigating into those cases, use cases. In that sense, for the generative AI, does that lead to the UI improvement and also search engine improvement? We are trying to figure out what will be the benefits. What kind of energy engine and technological base should we use? Including that question, we are discussing all these aspects within our company. So when the time is right, we would like to give you more details and respond to your questions in more detail. Regarding the second question, cost reduction, the progress is favorable and it is actually faster than what we had planned. originally. In the beginning of the year, we said 30 billion yen reduction. Regarding this 30 billion yen, we think we can hit this target expectation. And furthermore, how much more can we go? For Q3 and Q3, we would like to wait and see, and we would like to update you on the progress when the time comes. anyways outsourcing expenses and other fixed expenses during q1 we were able to reduce it to a certain extent that was a great achievement we think so that's my answer thank you may i there is a follow-up question regarding cost reduction 30 billion yen you said you have a good So what is the run rate? So that means for against the annual reduction target, how much did you do so far? Could you give us a quantified answer? Sorry, this is undisclosed information, but the plan internally is 30 billion. We are on trend as well as some extra at the moment. Thank you. Second question regarding search engine for using generative AI, UI, Accuracy, you are trying to improve, you are looking at these possibilities. Is it just about AI, or are you looking at ChatGPT as well? Because they are the latest, right? Most advanced. You have Hyperclove, but it's still lagging behind, according to Mr. Miyata of SoftBank. So for ChatGPT, are you including it as one of the candidates for your search engine? Are you considering that possibility as well? Regarding a specific product, we like to refrain from mentioning specific products, but we are evaluating various different products in trying to figure out the possibilities. At this point in time, we cannot tell you our judgment on which product is good and bad. On this point as well, we will have to give an update in the future. Thank you very much. Those are all questions from myself. Thank you very much.

Next from UBS Securities, we have Fukuyama-san. Please unmute and ask your question. Thank you. This is Fukuyama of UBS. I have two questions. First is about ID linkage. Second is about Yahoo login user number. So about ID linkage and LYP premium and the advertising and commerce rippling effect, the impact on the top line. So in the second half, do you think that you can expect some impact? Could you give us the update in terms of timeline? The ID linkage, you mentioned that several years might be necessary. So what would be the timeframe before we see the effect or impact? So as much as possible, please give us some explanation. That's my first question. The login user number. I think that the slight decrease was observed in the past two quarters. So what were the reasons? In order to increase the number of users, the portal itself needs to be more attractive so UI and UX can be renewed to attract more young users. Maybe you need to innovate the product. So as of now, what are the things that you're considering? Could you give us some update? Thank you. Yes. to your first question about the effect of the ID linkage and second is the ID login user which is slightly declining and the reasons behind that and what are we doing to counter that. I'd like to answer to that and to the second question, Kataoka-san, we talk about Yahoo login and also media in a wider range. So ID linkage, until now, as I answered, we do not expect everyone to give us consent. So gradually, we would make progress in ID linkage and the number of combined or linked IDs, the media and content targeting can be done, and as a result, the ad targeting will progress. So ID linkage, as we make a progress gradually, the media use or ad art will see the positive impact. So that's what we expect. More specific numbers and so forth are not disclosed. Second question about the number of login users. Sorry, I cannot give you the answer right away, but login is down to some extent but there has been some seasonal factors so kataoka-san can explain further including the future trend yes this is kataoka speaking so about login yes younger users and attracting them we believe is necessary and in that sense line together with the line the id linkage starting in october and the linking the functions and features and services. Yahoo login user, we plan to increase the number. And also, high login ratio is, in comparison to PC and the smartphone, the apps have a higher login ratio. So we want to make sure that we can work with apps so that the indispensable functions for the users can be added, so that we can increase the login ratio. So when we have the higher login ratio, as Sakawa said, the revenue per login will be higher than those users who do not login. So that would lead to the top-line growth. Thank you. About the commerce, yes, Hide can answer to your question. Yes, this is Hide. LYP premium impact, how do we expect that on commerce? LYP premium, by providing it, the biggest thing is that the LINE user becoming premium members. I think that's the biggest thing. So LINE... will be added to the yahoo premium and they will become at the new lyp premium members so those people who have not used yahoo shopping can become the members and then the just like the yahoo premium the commerce point can be provided in the preferential way so that can be used as a hook so that's the structure that we expect so as for the impact the size of it it will be linked to the member a number of members so usually first of all the new user acquisition will increase rather than the overall gmv so from the second half to the next year we want to make sure that we'll take root so that we can eventually increase the GMV. So that's what I expect. Thank you. Thank you very much for your answers.

Thank you.

Next is from Nomura Securities, Masuno-san. Please unmute yourself. I have two questions. One is about PayPay. The other is about base cash flow. Regarding PayPay, in pay-pay cards in the quarter three or four billion yen positive profit is there so probably you can go a little bit more so is that the situation today for MVA it is a little bit weak but can you bring it up I think that there are many measures that you can possibly take in order to improve it and also regarding the

card.

Is the gold selling very well? What is the basis for sustainability of the card business? Second, non-financial business. Second question. We talked about non-financial, but the business cash flow is also important because EBITDA ratio is two times.

So,

If it's an Internet company, three times or four times leverage would not be a problem at all. So in terms of BS and cash flow, what is your basic stance about those BS and cash flow? That's the two questions. Thank you very much. The first question was about pay-to-pay, and the second is about BS and cash flow. So I would like to take up all of these questions. regarding the unconsolidated pay-pay profit level sorry this is not disclosed from the company so that's the answer rather than pay-pay card pay-pay growth was the driver of the consolidated profitability positive profitability regarding mpa the P2P and the friends to friends money transfer that is one area and there are others as well like merchants and promotions you can continue to use the same merchants so that's how we like to increase the MTU for the net increase of cards a major driver is a peipei atobarai and that's what we are the PP cards and the new registration or sign up for the PP cards is likely so On top of that, Seikyusho Barai, not only Seikyusho Barai, Peipei Ato Barai can be used. From April, it became available. So for Ato Barai, there are many usage that we are providing. Therefore, there is some contribution to Peipei cards from that as well. For the BSN cash flow, what you said is correct. The basic stance is except for finance business, as you can see in the appendix, for the net leverage ratio, it is from two to three times. That's the internal benchmark we are looking at as a guideline. So within that range, we would like to control for the net business and in managing the BS as an internet company, For bank business and payment business, it's different. But for the bank business, there is a capital adequacy that we have to watch. And also for the card business, well, payments come before. That's the business model. So the liquidation and securitization of the credits is something we are looking at so that we can minimize the cost for securing capital. For the unconsolidated pay-pay, the charged balance payment is still majority. Therefore, basically cash conversion is negative because the money is accumulating in the first place. Therefore, in terms of the funds for the pay-paying unconsolidated, there is no issue with that. Sorry, those were the comments that I can make. Regarding leverage of three times, Maybe another 300 billion is something you can make in terms of the leverage. So you can spend 300 billion yen for something else. So please consider this possibility. Thank you very much.

Thank you. Next, Okumura-san of Okasan Securities. Please unmute and ask your questions. Okumura speaking of Okasan. Thank you very much. Two questions, please. First, a point of clarification. So ID linkage is done, and this is something that is provided to the users who link the ID free of charge. And if that is the case, ID linkage might be able to accelerate. So like the Yahoo premium, the monthly billing, is that something that you will continue? So that's something that I'd like to clarify. That's my first point. Second point. is that the equity investment loss in Q1, excluding PayPay, I think that you're improving this. And as a breakdown, the content and commerce payment, the business environment, how did it improve? And what would be the future direction? Do you think that the current speed of improvement will continue? Thank you. Those are the two questions. Thank you very much. First question, LYP premium member, when you link the ID, providing this free of charge is not something that we are considering. Attractive point provision is something that the people can use so that we would emphasize that the premium member attractiveness to gain the number of the members. So in terms of collaboration with the Salk Bank, So SoftBank users can continue to use the premium membership with higher point provision. As for the second question, the equity investment losses, I think there is still room for further improvement, and this time in the appendix, as you can see, The negative number in others is more than half of it, so those are unspecified companies, so overseas financial business mostly, and the business expansion is happening, and the red number is being reduced. As they disclosed, they are trying to become profitable in FY25, so equity investment, we believe, can turn to profit with that. As we said previously, from 23 to 25, internally 24 and 25 in FY, we want to make those business profitable. And if the businesses are not profitable in FY25, is it meaningful to continue? not, we might make a judgment. So that's the kind of a guideline that we have. So the equity investment number from the red number to the profitable number, we would, of course, want to move to the equity investment gains rather than losses. Thank you. So the profitability improvement will continue. Thank you very much. Thank you. That's all.

We are getting closer to the ending time, so we would like to take one more question from Kumazawa-san, Daiwa Securities. Please unmute yourself and ask a question. Thank you very much. Thank you very much. One question. In October, there will be ID linkage, and you are consolidating the database, which is incurring some costs, I assume. Has it been already accounted for? What is the pace of recognition? So it will be largest in the September quarter. Thank you very much. Regarding the cost for ID linkage in Q2, if there is any additional major expenses or not? And the answer is no. We already have the assets. We are using them. So for the ID linkage, there is any specific additional cost or expenses for that? so you don't have to worry about that part. Of course, for the ID linkage, in order to promote this, there may be some promotional costs and expenses in the future, which we would like to consider, but that is the limitation. It is limited to that. Thank you very much. Thank you very much. With this, we would like

We are now limiting the time to 60 minutes and we had a variety of questions and many questions. So if you need some additional explanation, please ask questions to IR team. So as first quarter, I think that we made a good start. So we want to make sure that we grow top line and also generate profit. That is most important thing. So we'd like to make sure that we do this at the same time. So thank you very much for your participation today.