LY Corporation

Thank you very much for participating in our third quarter business results briefing today. Before we start, allow me to express our deepest sympathies to the victims of the Noto Peninsula earthquake that occurred on New Year's Day. We at L.Y. Corporation are committed to making contributions for the earliest possible recovery through various services we provide. We'd also like to apologize for your concerns and inconveniences caused by the information leakage that we announced on November 27 last year, which was caused by an unauthorized access. We are currently making every effort to formulate and implement measures to prevent the recurrence. We will provide more details at a later date. we will continue to make strenuous effort to ensure that our users and business partners can use our services with greater sense of safety and security.

This is Sakaue from LY Corporation. I'd like to explain the third quarter financial results. First, I'd like to explain the topics of the financial results for the third quarter fiscal 2023. Adjusted EBITDA for the third quarter was 109.8 billion yen, which was plus 17.4% year-on-year, and we revised upward our full-year guidance for adjusted EBITDA. Revenue also reached 475 billion, a record high for the third quarter. Consolidated results, total advertising revenue grew 3.7% YOY due to recovery in display advertising. Domestic merchandise transaction value turned to positive growth due to an improvement in shopping transaction volume. For strategic business, thanks to improved profitability from selective focus and business growth, adjusted EBITDA remained positive and full-year profitability is expected. Some additional topics. NYP PREMIUM. got off to a good start from November 29th, with daily new memberships more than doubling from the Yahoo premium days. New AI-driven services for ad creatives and delivery are planned to launch in April 2024. We will aim to utilize new technologies to grow ad revenue. Adjusted EPS is recovering at a faster-than-expected pace due to the effects of selective focus in key business areas, post-optimization, and one-time factors. I will now explain according to this agenda. Next, please. First, the consolidated business results for the entire group. Revenue increased mainly driven by growth in account ads, PayPay, Zozo, and Askool. Adjusted EBITDA increased by double digits in the third quarter due to cost optimization and the effect of selective focus. As a result, adjusted EBITDA margin was 23.1%, maintaining the same level as the first half. This shows factors behind change in adjusted EBITDA. Gross profit improved mainly in the media business, and SG&A expenses improved mainly in business commissions. factors behind change in operating income, excluding the re-measurement gain from the consolidation of PayPal that took place last year. Depreciation increased, but adjusted EBITDA grew, and operating income grew by 33% year-on-year. Next. This shows the factors behind change in adjusted net income. Corporate income tax grew, but increase in operating income and improvement in equity in earnings of affiliates as well as the absence of the impairment loss on DMAICON from the previous year resulted in a significant increase in adjusted net income. This slide shows the adjusted EPS trend. Due to growth in adjusted EBITDA and also one-time tax effect from the merger, adjusted EPS is recovering faster than expected. Taking into account the capital allocation policy explained in the second quarter, we will continue our efforts to bring adjusted EPS back to the pre-merger level as soon as possible. Next, efforts to utilize AI. In order to improve the efficiency of our development work, last October, we introduced GitHub Copilot. Since its introduction, we have seen a reduction in coding time, and improvements in development work indicators. In the area of search advertising, we plan to launch an automatic creative generation function in April of this year. This is expected to improve the efficiency and effectiveness of ad operations. In display advertising, we are enhancing the automatic targeting function, which was launched in April last year for line ads, and is scheduled to be launched in March this year for Yahoo. This is our consolidated full year guidance for PESCO 23. As a result of steady progress in selective focus, we have revised adjusted EBITDA upward to 390 billion yen. Adjusted EBITDA for each segment has been accordingly revised. Revenue was revised downward to 1.82 trillion as a result of selective focus and cost optimization. In addition, after the merger, the allocation of company-wide costs has been revised from the third quarter. Personnel costs and data center and internal infrastructure costs that had been recorded as adjustments were allocated to each segment and retroactively adjusted to fiscal 2022 that's shown in this table. Next, I'd like to explain our business results and topics by segment. First, the media business performance. Advertising saw continued gradual improvement from the second quarter, resulting in higher revenue and income. In particular, account advertising led the increase in income and improved margins, with adjusted EBITDA margin reaching 39.1%. As explained in the guidance slide, from the third quarter, We have reviewed the allocation of company-wide costs and made retroactive adjustments to the first quarter of fiscal 2022. Other segments have also been retroactively adjusted in a similar manner. In the third quarter, several services were transferred from other segments to media. The main one is the member services business, which was transferred from commerce to the media segment.

This is the entire group total advertising revenue. Search ads growth turned negative, but display ads turned positive in the third quarter as advertising market conditions gradually improved. Account ads grew by more than 20% year-on-year for the second consecutive quarter. Shopping-related ads, which had been declining due to cost optimization in the commerce business, started to pick up. As a result, the overall growth rate, including shopping-related ads, continued to improve moderately.

Next page, please.

Next is the breakdown of search advertising revenue. As explained in the previous quarter, about 80% to 85% of our search advertising revenue are from LY Corporation's website. Revenues from our search ads displayed in our partner sites are shown as the partner's website. The highly profitable LY Corporation's website saw an increase in revenue in the third quarter as well thanks to the effects of UI UX improvements. Next page, please. Let me explain account linkage and LYP Premium. The number of linked accounts grew steadily, reaching 23.22 million at the end of January. The number of daily LYP Premium new membership has more than doubled since the launch of the service on November 29 last year. Compared to Yahoo Japan Premium, we will continue to implement campaigns and mass marketing to attract and acquire new restaurants. Next page. This is account advertising. The number of paid accounts continued to increase as a result of pricing revisions last June. As a functional enhancement or improvement, measures to link with the group services were implemented last December. We reinforced features to enable users to friend line official accounts from Yahoo Japan Maps and Yahoo Japan Search to propel referrals. We also expanded a feature which enables one-stop setting for managing multiple accounts last year in November. We believe that these functions will enable companies and stores to reduce operational costs and further promote the acquisition and use of accounts. We will continue to enhance functions and improve operational efficiency to steadily grow the line of visual accounts. Next page. This page shows the performance of the e-commerce business. Revenue and income grew by 2.7% year-on-year, mainly due to an improvement in domestic merchandise transaction value, including Zozo and Asko. Adjusted EBITDA also grew by 6.1% year-on-year for the same reasons. Next page, e-commerce transaction value. The year-on-year growth rate of domestic merchandise transaction value, which had been negative since the fourth quarter of fiscal year 2022 due to the reduction of sales promotion expenses, returned to positive in the third quarter, up 1.7% year-on-year. The overall growth rate of domestic merchandise was 0.1% year-on-year, maintaining positive growth. Next is the overview of domestic e-commerce transaction value. Domestic shopping transaction value continued to recover, returning to a near flat level year-on-year. Domestic services transaction value slowed down due to the absence of the previous year's nationwide travel incentive program, resulting in a year-on-year decline of 7.4%. This is a strategic business performance. Revenue achieved growth of 17.5% year-on-year, mainly due to growth in PayPay and PayPay Card. Adjusted DA increased steadily due to progress in reducing and reviewing loss-making businesses by consolidating business duplicates, while selectively focusing on key business areas, as well as growth and efficiency improvements in continuing businesses, including PayPay. This is a business overview of PayPay. In the third quarter, the number of registered users, consolidated GMV, and consolidated revenue grew by more than double digits year on year, and the business is steadily expanding. Consolidated EBITDA was also positive in the third quarter. In addition to an increase in the number of registered users, MTU and the number of settlements, also grew by double digits year-on-year, and the business continues to grow while improving profitability. This slide shows the key KPIs of PayPay Card. Due to synergies with PayPay, the number of active cardholders continued to grow by double digits, and transaction volume grew strongly by 28.1% year-on-year. The revolving balance also grew steadily, expanding sharply to 45.5% year-on-year.

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This is major KPIs of PayPay Bank. PayPay Bank also enjoys synergies with PayPay, which results in the growth in major KPIs. The number of accounts has maintained double-digit growth due to acquisition via PayPay mini-apps. Loan balance grew strongly by 32.1% year on year due to the promotion campaigns of housing loans and business loans. Next page. This concludes my presentation. Thank you very much.

We will now have questions and answer session. JP Morgan Securities. Mori-san, please unmute and ask your question. Mori from JP Morgan. Thank you for the explanation. Two questions. First, about the LYP premium. So you have disclosed end of December membership, number of members. Almost no change from the previous quarter is what it seems. And you said that the double new sign-ups. So what's your expectation about the number of members here? For example, end of March, what's the number you have in mind? And next term, after promoting for a full year, and I expect you to do that kind of promotion, what's the potential for you to acquire memberships? Is it like 30 million you're aiming for or even higher? And I think it's a service that leads to various synergies. So what is the current situation and what's your expectation going forward? That's my first question. May I continue with the second? Yes, ask both questions together, please. Second question, next fiscal year, Your investment policy, what's your current thinking as of now? This term, from the second half of last term, you have subdued hiring and you had various cost-cutting measures. And this year's guidance resulted in high profit growth. Now, next term onwards, are you going to increase investment? That's my expectation. So LYP premium and there's also Pepe line linkage. And so what is the policy of investment you have in mind? If possible, like you want to maintain 10% profit growth with various investment, that kind of target, if you have any, please share. Thank you. So first about the LYP premium. Second is next term's investment policy. So Saka Ue will answer both questions. LYP premium, as of end of March, from one year, we want to get it back to the year-ago level. So for 2023, by the end of third quarter, It was declining from Q1 to Q3. But with this new membership system and its new perks, by end of March, we want to bring it flat. And then next term onwards, we want to have actual increase. In terms of target numbers, we do have some internal numbers. They are not to be disclosed. But we think that we can increase further. So several million members we think we can increase. So we do want to add that to the membership numbers. That's the first question. About the investment for next fiscal year, we're putting together a budget now and there's a vigorous debate going on internally. So in May, we plan to announce the business results for the full year and the actual numbers we would like to disclose at that time. But the The big framework is that this fiscal year we have reduced the fixed cost to various measures, so we have become more muscular and more profitable. So we want to maintain that posture for the fixed cost, and we will continue on next fiscal year. On the other hand, though, measures that lead to top-line growth, sales promotions for top-line growth, that is what we're discussing. So for those where we can get good profitability, we would like to make solid investments. So second point, I'm not able to give you a concrete answer, but those are my answers. So for the second question, if I may follow up just one point. As of now, next fiscal year, what will be the biggest profit driver? what item yes well one is the strategic segment a pay pay to be specific so for profit growth i think that will be the major driver in addition to that account ads and the e-commerce overall in q3 hit bottom and gradually it's coming back so those are the areas combined together shall be the profit-increase drivers. Thank you very much.

Thank you very much. Moving on from SMBC, Mr. Maeda, please unmute and ask your question. Thank you. I am Maeda. I'm from SMBC Nikko Shoken. I have two questions. First is about revenue. You reduce the projection for the revenue. Could you tell us a bit about the background here? And for each segment, if you take a look at it for the advertisement, it is about the same as the original plan, but in case of commerce, it is declining. and also for the strategic business for which the revenue is not disclosed. Could you tell us a bit about how it is changing? And also you talked about the selective focus on the areas. So business has been in decline. Could you tell us a bit about the... The reason here is related to the low promotion. So for each segment, could you tell us a bit about the fourth quarter and maybe focusing on the direction of each business? This is my first question. My second question is about pay-per-business. Promotion costs will be utilized, and in certain areas, EBITDA will be reduced, or maybe it goes down to the deficit. That's something I have in my mind, but still, the third quarter was good, and then starting the fourth quarter onward, could you tell us how this will fare? And also, next year, next term, do you think you will be able to maintain the positive growth or the profit? Thank you for your question. The first question is about the background of the revision of the revenue and also the fourth quarter projection. And then the second question is about pay-pay. Thank you for your questions. Saka, we'll answer both your questions about the revision of the revenues. There are two major reasons for that. For the commerce segment, And also for the strategic business segment, we reduced the projected revenue from the beginning of the term. There are different reasons for that. For the commerce segment, We have more stringent investment principles, so we make sure that we will be able to have good gains out of this investment. So we try to be stringent and have higher discipline. That's the reason why in the commerce area we have negative impact. And also for the commerce, initially we thought that we were more proactive in looking into the future, so we were... more bullish here. For the strategic business, we tried to work on the selective focus on this, but after a while, we saw some big reduction. So the And also for the pay-pay, for the promotion, we have been more selective in the discipline. Also, we had some more discipline for the investment. That's the reason why we have seen the decline. So for the commerce and also strategic business, there has been a decline. That's the background. For the fourth quarter direction, I'd like to explain to you one by one. For media business, ultimately, as can be seen in the guidelines, that will be the lower part of the lower of the single digit, that will be the final figure. And then for the account ads, perhaps that will be around 15% to 20% plus, so that we will continue to be like this in the fourth quarter in the display ads. We are seeing the recovery of the market, so Therefore, the display market, we do believe that in Q4, we will have this kind of a trend of recovery as in the case of Q3. And then, in the case of such as the partner, the site is negative, and for the line, it UYUX has been improved about one year ago, maybe slightly more than one year ago. In November or December, two years ago, we have seen the increase of the UIUK. So then there have been benefits, but after a while, this will be going down to the normal level. So that's the reason why there has been a So this is the direction that we see in the media. And then in the case of commerce, for Zozo and ASCO, I think you are able to understand the situation because they are listed. So the situation in Q4 would be almost the same as Q3. And then in Yahoo Shopping, in terms of GMV, For the Yahoo Japan Shopping loan, we will have the positive growth, perhaps the double digit. And then for the strategic segment, there is no major change from the third quarter onward to the fourth quarter. Then to answer your second question, which is about PayPay, For Q4, the promotion costs associated with the Peipei Matsuri or Feifei Festival will be bigger in Q4. So this is the seasonal factor. So maybe it might be difficult to have a profit in the fourth quarter. And this is something we already have in mind. And starting next year, we will continue to aim for the profit generation. There could be some changes of the strategies, but starting next year, we'd like to continue maintaining the profit. And at the same time, we'd like to continue having growth on the revenue as well. So we'd like to do both the revenue and income in the profit. Thank you.

Thank you. from Goldman Sachs. Munakata-san, please unmute. Munakata from Goldman Sachs Securities. Thank you for this opportunity to ask the question. I want to also ask two questions. The first question, looking back to the quarter, about the momentum of the media business, is what I want to ask about. Quarter on quarter, the revenue is coming back, it seems, but the How do you look at the market condition in Q3? That's what I like to ask about. Especially the display ad recovery trend. Is it market environment driven? Is that the main factor? Or do you see some good strong signs internally? That's the first question. Second question about shopping, the search related ads. You talked about that in the previous meeting. I think that started in November. What's the current situation? How are you seeing it? Neighbor and other browsers is the product that these sales. So personally, I have a lot of expectation for that. So what's your expectation for the next year as well, the shopping search ads? So first question, two, three, media ad momentum, Ikehata will answer, and then shopping search ads, like to answer later, SSA that is. Ikehata here. First point, let me answer the question. Third quarter, the ad market as a whole, well, digital advertising, market environment was that the market deterioration has hit the bottom. So very gradually, we're starting to see the trend of recovery, and that is continuing, it seems. Especially for third quarter, especially in December, the advertiser, it's a time when they're able to spend their budget, generally speaking. So recovery up to before the deterioration of market that hasn't been seen but compared to the worst times the advertisers propensity to spend is higher and we have been able to capture such spending so gradual recovery is what we expect so the impact of the ad market environment Is that the only reason for the recovery in display ads in third quarter? The answer is no. In addition to the market environment recovery, two major points, Line Display, Yahoo Display, the product development part, including the automation function, we have incorporated or we have been getting good feedback from the advertisers. So that's been effective. And also Q3, especially from October, we have integrated the sales organization. And so sales activity has become slim, very efficient, no slack. And we feel that and we see that in the results as well. And so the improvement in the market, that is one factor, but there are other factors as well. as well that we are witnessing. So that's my response. Thank you. Second question about the shopping search ads. So the initial speed, the response from various advertisers, they're starting to place more ads. And so the feedback is good. I think we've made a good start. In terms of the size, how much we will actually see, we have to continue to watch. So we're trying to strengthen search again and add revenue. We want to reach tens of billions level. So that's what we're aiming for.

Thank you very much.

Thank you. Moving on, from City Group Securities, Tsuruo-san, please unmute and raise your question. Thank you. Can you hear me all right?

My name is Tsuruo.

Yes, we can hear you. I have two questions. One is on page 8 on the right-hand side. In three years or four years, EPS will be 18.7 yen, we will realize. But looking at the progress at this point, on the third quarter, it is 17.4 yen, which is adjusted in the EPS. So on the third quarter, do you foresee any negative factors? No. So for the full year, you have to revise upward the projection. So maybe... you might be able to accelerate this process not in three years down the road, but maybe earlier. And then on page nine, utilizing AI for the search ads. You will have the automated generation of creatives. So you have the AI, you are delegating the AI. CapGP could be used. The Google search engines could be used, could continue to be used. So there have been some discussions here. So you can have the dedicated proprietary AIs because you tell us about it. and also about the selection of the search engines that you are thinking of working on. So I'm sorry I have to ask you many more questions here. Thank you. The first question was about EPS, and the second is the search AI and also search engines. So I'd like to answer these two questions for myself about the EPS. For this year, there has been a guidance revision for Q4, so the 18.7 yen may be realized here on an accelerated basis. We're not able to deny that, and I don't deny that. And then also about the integration, there has been the tax effect, and several yen has been saved in terms of cash. So that has been the background with which we were able to report that figure. So we'd like to continue working on the realization of 18.7 yen. So that's the first and foremost we have to work on. Starting next year, next term, we will have further goals. Now, we will work on the budgeting and also the revenue guidance. So we will announce that in March. Oh, excuse me, April. So we will decide and announce to you the final figures for that. And then about the search engines, about the AI, this AI part is related to technology, so this cannot be disclosed. And also, with regards to the contract with Google, this will be valid till the end of the fiscal year 2025, which is March 25. So at this point, we are still discussing within this company. Needless to say, when we use the term, the search engines, we have chat GPT kind of AI. Maybe there is a major trend to combine the search engines with the AI. So we try to be cautious in making decisions, looking into all the possibilities. This is a major decision that we will make. So we would like to make sure that we will report to you when we draw some conclusion here. So at this point, We do have the contract with Google, so we'd like to continue doing what we have now. And also at the same time, we look into the utilization of generative AI so that we'll be able to understand what we have to do down the road. Thank you. Thank you very much. Just one more thing. The tax effect was there, and for the EBITDA, the upward revision was there. And so that means that we have the accelerated pace of the realization of the goals. So in the next three to four years, we will attain 18.7 yen. The last term, we said that we will do that in three to four years, but now things are changing. Maybe there will be three years, not four years. So 18.7 yen might be able to be attained at an earlier stage. Could you tell us a bit about it? Thank you very much. So when we say three years or four years, about this, yes, thank you for your comment. We'd like to put that into the next year's, next term's projection. So when we are able to attain the goal of 18.7 yen on a stable basis, we'd like to make a comment at that time. Thank you very much. That's all from me. Thank you.

Next, Simplex Asset Management. Honma-san, please. Simplex Asset Management, Honma, here. Thank you for this opportunity. Let me ask the question. In Q2, you talked about the capital allocation policy. What's your latest on that about buying your own shares? You have this capital buffer. So this is after you earn operating income. And so what is your idea about the equity? And as was asked, I think you are seeing strong response, and I would hope to see there is acceleration in this. The background to this is you have the plan to maintain listing, and you're going to extend the time limit, and so I think you have some time. And SBKK Miyakawa's explanation talked about this in the neighbor's interview article on the website. the need for sales. Is that being recognized? I really want to know about that, please. So that's one question about capital allocation. So Sakawe will respond. So no change from what we announced. So that was for three-year cumulative. So for the capital buffer, 500 billion. So it's not that operating capital has accumulated, but compared with others, if there is this thing that seems attractive, then flexibly we want to use that capital. And in terms of shareholders' comments, it's difficult for me to comment, but in terms of response from my holdings, we have communication and in terms of achieving listing requirements we will seek cooperation and at the certain timing we will discuss how to do this and we'll make decisions accordingly and if there's anything that we should disclose we will make sure to do that quickly thank you thank you very much

Next, Masuno-san from Nomura Securities. Please unmute and raise your question. Masuno from Nomura. I have two questions. First is about strategy, and the second is the business, and the next is commerce. And the customers are doing well. What worked well? My first question. And then in the case of banks, There has not been a sharp rise of the number of accounts, number of members. Could you tell us about the kind of measures that you are planning to make, if any? So do you think you will do something? Or maybe you could work on the structural reforms starting Q4. Or are there any structural reforms that you are planning to do for the strategy business, for the commerce business, for food shopping, UMB? is close to the double digit, which is stronger than I expected. LRP is not growing rapidly. Could you tell us how you were able to do this? For LRP, premium will have further growth for the next term. So could you tell us a bit more about the commerce business? Thank you. First is about the strategic segment, the second is about the shopping related business. So I'd like to explain. For the strategic segment, the cardholder, the acquisition has been doing well. Therefore, we have the PP credit. We had the PP atobarai, which was a previous term. So it's a PP up. We have been strongly pushing this sale. And also gold card has been introduced. So these are the driving factors for that. And with that, we are able to see the growth in the value and also in terms of the number of the card folders for the PayPay card and for the banks. And certainly we try to think of the overall picture, incorporating both PayPay and PayPay card, the bank. And then there is no further strong efforts made for that. So we have not done anything drastic. PayPay Bank should be good in terms of usability. We have to enhance the service quality. And then after that, we have to work on some new measures to increase the acquisition of the number of users. So as in the case of card and the banks, we have to say that banks are lagging behind. That means that we have room for improvement. That's how we are looking at PayPay Bank. And then about the strategic segment, about the structural reforms, from now on, we don't have anything in mind at this moment. So we have been working on the strategic segment. We try to make sure that we'll see the growth in the certain businesses that are classified as a strategic segment. Hide-san will answer the second question about the shopping GMB. Allow me to make some additional comments for fourth quarter GMB. That would be the single digit to the double digit. The most important is the cost optimization. Two years ago, in November and December, we started out this kind of initiative, and this has fed through. So that means that the cost standard has been lowered, and then in the last one year, the YY had been doing. So that's the reason why we have seen the increase of this. So we have organic growth for that. And then in the case of premium, as you just mentioned, we will see the increase of the number of members in the years to come. So this is not necessarily for quarter four, but rather that would be something we will have in the fiscal year 24. And about next year, we are in the process of discussion, so we'd like to report to you on the next briefing. Thank you. That was the supplemental remark. About next year, you said that the impact had set through, so this is for the several quarters, and then if you see the increase of the premium, then compared with Q4, we are not able to see, I am not able to foresee any situation where it is lower than the Q4. Certainly, there could be some defects for Q4, and then that means that this will be effective for Q3 next year. And then on top of that, we have strategic initiatives, so we will have further discussions to come up with the direction for next year. Thank you very much.

Thank you. CLSA, Mr. Oliver Matthews, please unmute and ask your question.

Hello. Thank you for the presentation. I have two questions. The first question on commerce. Could you comment what you think is the overall e-commerce growth in Japan for the market? And how you see your own strategy compared to that? It still seems to me you have too many platforms. So I want to understand how you think about your e-commerce business on the high level strategic. My second question, I think you're planning to revamp the Line app. I expect you've been working on this in the few months since the last analyst meeting. Could you tell us what is the most exciting, say, one or two points for that line revamp that's going to come along? Thank you.

Thank you for the first question. Hide will answer. So commerce market, Japanese e-commerce market, what's our view about that? And what would be our positioning in that market? That was the question, I believe. And so the e-commerce market in Japan as a whole, fiscal 23, the impact of COVID disappeared. And so it was supposed to COVID in fiscal 23. So e-commerce, well, it grew substantially during COVID as a market. So the market growth as a whole for fiscal 23 has decelerated a bit. That's our understanding for the market growth. The official growth numbers, we need to wait, but our sense is single digit, middle single digit, around 5% growth, market growth total is what we think happened. And we have been working on more efficient costs. So compared with the market growth, I think for fiscal 23, we're a little bit lower, but as we responded earlier, that's run its course so next fiscal year we're aiming for a growth that exceeds the market growth that's my answer so the second question will comment and then kataoka in charge of media will also make a comment about the renewal of the line application within two major things. First, a shopping tab is going to be created. So many users of LINE will be provided a shopping experience. It's sort of like a portal to shopping. And so we talked about e-commerce earlier. So we hope to invite the users to experience shopping. So that's a big challenge, but we'll We want to do that. So Messenger app and the gift, there's good affinity. We see that in Line gift and the Kakao gift also successful in Korea. So we want to further introduce this. So we want to try to lure the users to shopping more broadly. And then there's the portable. So Kataoka Media will explain about the second new function, Kataoka here. So as was mentioned, Line app has one of the largest user base in Japan. And so it's being used by a huge number of people for communication. We want to expand the usage further. And as Sakawa said, commerce is one thing, then the portal is the other. So usage of news and also... create other reasons for people to come or use, like search. There is a lot of potential for usage and the monetization from search. And so we will do portal as well. And so we will try to expand usage. So that's what we're considering internally. Thank you.

Thank you. Could I just ask you a follow up online shopping? I think you had you tried e-commerce before and it didn't work very well. So what's different? What have you learned and why do you think this time will succeed?

I can respond to that.

So fundamentally, LY is promoting commerce, and the direction is different from when we were just Yahoo. Now we have a bigger reach by coming together with Align. I think that is the difference from before. And one of the initiatives is line shopping tab. And also, we want high-quality members. LYP, premium member initiative is what we're doing. So the reach is bigger, and we have people who will become members who come through Line, and we can drive that movement further. So with that as our pillar, we would like to further vitalize the customer base. In addition to that, next fiscal year onwards, Line and PayPay collaboration will start. And so within Line, we will have more PayPay users And so if you become a PayPay user, you have PayPay points from Yahoo Shopping and Line service. So reach of Line and PayPay point and more users, those three. So we would like to use our assets more effectively. And so we think that we can make this initiative a more bigger, broader one than before. That's my answer.

Got it. Thank you.

Thank you very much. We are soliciting questions. If you have any questions, please press the Zoom button of raising your hand. Allow me to repeat myself. If you have any questions, please raise your hand in your Zoom. Thank you. Mr. Okamura of New Garbama, please unmute. Thank you very much. I'm from New Garbama. I'm Okamura. You have been talking about EPS or mid-term goals of EPS. and the progress level is very high, so we tend to believe that you are able to accelerate the achievement of that. So the answer is that you try to achieve on a continuous basis or on a sustainable basis. Could you tell us a bit about what you mean by the sustainable basis? I'm sorry, this is a very basic question. Thank you. I am . I'm sorry I use the complicated term. When I say on the sustainable work, the sustainable term, I'm talking about something that could continue. So this is not about one of things, but rather we'd like to realize something that can continue. So that's something we have in mind. And also, when I say 18.7 years, We could achieve 18.7 yen per one year, and then we could drop to the lower figure. So we don't want that. So we'd like to continue attaining 18.7 yen after we reach it for a long time. I understand that. Thank you. So in thinking about this goal, The EPS, as you know, is done by the earnings and the per share figures. So in what way you are able to have good growth for the PL. And then also you have to pay attention to the number of shares. In the case of your company, LY Corporation, I'm sure you have the limitation of the holding of the shares. So in terms of PL, in terms of businesses, The most important would be how you are able to raise the level in your actual operation rather than the number of stocks. Yes, the PL growth is important. That's the single most important factor. And in terms of the increase of the shares, we cannot deny that we do not do that. However, the most important is to increase the level of revenue and profit. So we have parent company, and so we ourselves would not be able to have the entire control. So the PL, the improvement of the PL, is the most important factor. Thank you very much.

Thank you.

It is the scheduled time to close, so this will be the last question. Point 72. Please unmute and ask your question. Can you hear? We hear you. Page 10 of the presentation material. So this time,

adjusted EBITDA.

So this adjustment at the bottom, that was the biggest factor. So adjustment allocation, I want to know for each segment, how did you allocate those costs? So allocation for the adjustments, let me respond to that question. So media segment, about 52 billion yen has been allocated based on the allocation rule change. So that would be minus 52 billion yen impact to profit. For commerce segment, minus 12 billion. So that... So the cost was moved to the commerce side. And then for strategic segment, that was plus 12 billion yen. So the strategic segment, because it has many subsidiaries in this segment, so allocation was actually reduced. So all in all, 52 billion was allocated to each of the segments based on the change in the allocation rules.

I see.

Thank you.

Second question. Adjusted EBITDA.

From looking at this from the outside, it's become more difficult to understand. It's adjusted or modified each term. So next term onwards, I want to see you use an indicator that's closer to the real Ibita. Is that possible? hear you and we take that opinion and would like to consider it. Thank you for your suggestion. Thank you.

Thank you very much for your time and the busy schedules for this past hour. We try to be secure, as was mentioned by the President. And then for the next year, we'd like to create something new, something that can make you say, wow, this will be very important next year. So we'd like to make sure that all of us will do our best effort in this regard. We'd like to ask for your continued support Thank you.