LY Corporation

Thank you for joining the LY Corporation F525 Q1 Earnings Briefing.

Before we begin, we have some information to share. This briefing will use the earnings presentation materials available on the LY Corporation website.

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If you experience any issues with audio or video, please try switching to an alternate server from the link provided at the bottom of the screen. We will begin shortly. Please wait until then. So, Thank you. you We will now begin the LY Corporation Fiscal 25 first quarter earnings briefing. Thank you very much for taking the time to join us today. In this session, we will use the earnings presentation materials available on the LY Corporation website. Joining us today from LY Corporation are President, Representative Director and CEO Takeshi Idezawa Executive Corporate Officer and CFO Ryosuke Sakaue Executive Corporate Officer and Corporate Business Company CEO Yuki Ikehata, Executive Corporate Officer and Commerce Company CEO Makoto Hide. These are the officers attending today. First, Sakaue will explain the earnings results for the first quarter of fiscal 25. This will be followed by a Q&A session. Today's session is scheduled to last approximately one hour.

This session is being live streamed.

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Let us now begin the presentation.

Thank you so much for taking the time out of your busy schedules to join us for the fiscal 25 first quarter earnings presentation. I'll first provide an overview of our first quarter results.

Next page, please. This is the overview.

First, our consolidated performance. tracked the full-year guidance with both revenue and profit increasing. Revenue and adjusted EBITDA both reached record highs for a first quarter. As for mid-to-long-term growth initiatives, the phase line revamp began in July, starting with some tabs. We are upgrading line mini-app functionality and sales capabilities as well to encourage greater usage. AI features are being rolled out across our services, aiming to drive the Gen AI take-up in Japan. Next page.

I will explain in the order shown in the agenda here.

First, the consolidated results. The progress against the full-year guidance did not reach 25, but our revenue tends to be higher in the second half due to the year-end shopping season and fiscal year-end demand, and our Q1 results therefore are within internal expectations. Consolidated performance trends, revenue and profit growth were mainly driven by account ads and PayPay consolidated. While we continue to invest to implement AI into services and grow our commerce business, ongoing optimization of fixed costs resulted in an adjusted EBITDA margin of 25.7%. So, consolidated EBITDA comparison, biggest contributor to revenue was the strategic business, but media and commerce also grew. Although SG&A increased, revenue growth absorbed these cost increases. Excluding the one-time gain from the deep consolidation of value commerce in the previous fiscal year, adjusted EBITDA grew by 7.1% year-on-year. This talks about commerce and media together consolidated total advertising revenue. So in addition to account ads, commerce ad revenue continues double-digit growth driven by increased transaction value due to promotional investments and product improvements. Next. This is consolidated e-commerce transaction value. Domestic shopping transaction value was up 5.9% year-on-year. Yahoo! Shopping saw a 6.9% year-on-year increase with growth also seen from Zozo and Asko. Domestic service-related transaction value grew by 7% year-on-year, supported by an increase in travel bookings. Reuse transaction value achieved positive growth driven by the growth of Yahoo flea market and the consolidation of Binos. Now the transaction volume or value for Binos reflects only the month of June, not so large. So it's the Yahoo flea market that drove the GMV growth. share repurchase and cancellation situation in line with our capital allocation policy we executed share repurchase and cancellation of treasury shares through a tender offer announced in may 25 we repurchased shares worth approximately 116.2 billion yen which were cancelled effective july 1st in june 25 we announced the plan to repurchase up to 38.5 billion of shares through market purchases. Period of purchase runs through the end of September with cancellation scheduled for the end of October. We remain committed to enhancing shareholder returns and improving capital efficiency. As for capital allocation, reflecting the share repurchases conducted in the first half, we have updated our outlook. We will continue to focus on improving capital efficiency and further expanding positive spread. Line revamp situation. So left, you see the tab structure. The shopping tab has been added with the revamp. The shopping tab will be rolled out to some users in a phased manner from September 2025. The wallet tab, this was released at the end of July 25 from Android OS, and new features are being added progressively. Other tabs are also scheduled to be renewed sequentially during the second half of the year. So the Shopping and Wallet tabs which are to be revamped, the newly introduced Shopping tab serves as a portal for LINE Commerce services. Initially, the main offerings will include LINE Gift and the LINE Shopping service launched in May. We plan to enhance personalization through data utilization and introduce AI-based product recommendations. Line shopping is a recommendation-driven e-commerce mall tailored to each user. The concept is casual discovery shopping. like discovering items while browsing a magazine. Through the Shopping tab, we aim to grow transaction value and boost Japan's e-commerce penetration, which remains still very low. The Wallet tab, its UI and UX have been revamped, and this will function as an entry point for mini-apps. By combining merchant-focused sales efforts and user campaigns, we aim to expand mini-app usage. Additional wallet functionalities are planned to be added in the future. so in this fiscal year by the end of july ly corporation has launched 14 services leveraging gen ai on yahoo with services such as ai assistant ai topic and review summer summary we enhanced user experiences in information search news comprehension and shopping support Online, AI has been integrated into daily usage with services such as Line AI, which enables users to ask questions conversationally, and TalkSuggest, which generates context-aware reply suggestions. We will continue accelerating AI deployment across our services to promote usage and drive Gen AI adoption in Japan. Pepe's planned listing. So we received some questions since the announcement, so we'd like to respond to that. We intend to maintain our current capital structure with Peipei even after the company's IPO, ensuring that Peipei remains a consolidated subsidiary. We will continue to support Peipei's business development and corporate value growth as its parent company.

Next, I will explain segment results and topics.

Next slide, please.

This is on performance trend of the media business. Account advertising continued to drive the growth of the media business and the overall business. Although revenue increased, SG&A also rose, resulting in an year-on-year decrease of 7.4% in adjusted EBITDA. Next slide, please. This is media business revenue. Search advertising revenue decreased, but advertising revenue increased by 1.4% while on Y. Display advertising saw its first positive growth in three quarters, indicating a bottoming out. Next page, please.

This is media business performance analysis.

Profit decreased due to increased SG&A expenses. There are two major factors for this increase of SG&A. One is sales promotion costs increase due to increased point costs for LYP premium members. The premier members increased, and linked to that, the sales promotion costs increased. The second factor is costs related to the integration of advertising platforms and the development of AI infrastructure, which have risen. Next page, please.

This is on search advertising.

Let me add some more information. On search advertising, revenue decreased due to slowdown of ad placements from some advertisers. The slowness is not due to the penetration of AI search, but changes in ad demand. additionally revenue from partner sites have also decreased going forward we will explore diverse monetization methods including the growth of search linked shopping ads next page please This is on account advertising. In the first quarter, the number of paid accounts continued to increase steadily. Pay-as-you-go billing accounts also increased, with revenue growing at a high rate of 18.3% year-on-year. Next page, please. This is online mini-apps. The number of online mini-apps and MAU have grown significantly, with usage expanding. In terms of functionalities, We plan to implement features in stages, such as payments using payment information from app stores and the ability to register payment information within the mini app for payments. We are also strengthening our sales force, establishing a sales subsidiary buying yahoo business partners which is focused on the food and beauty sector we will increase the number of sales office in the future this is on commerce business performance trend revenue increased primarily due to growth in yahoo shopping and travel but operating profit decreased due to higher hgna expenses and the impact of one-time gains recognizing the previous fiscal year the margin remained at the high teens range Next page, please.

This is on commerce business revenue and the breakdown. For Line Yahoo,

It increased year-on-year by 5%. Shopping saw a slight decrease in revenue due to the impact of the deconsolidation of IPX despite strong performance of Yahoo Shopping. Reuse saw an increase in users of Yahoo! The Market. And Venus was consolidated, resulting in a year-on-year revenue increase of 14%. Service EC saw a year-on-year increase of 10% due to continued strong performance in travel. Zozo and Asco also grew. Next page, please.

This is Commerce Business EBITDA.

Revenue was, as shown on the slide, with cost of sales slightly increasing, mainly due to ASCO. Within SG&A, the business commission increased. This is due to the cost related to Zozo's acquisition of LISC and the operation of ASCO's new logistics centers. As a result, the adjusted EBITDA, excluding last year's one-time gains, remains largely flat year-on-year.

Next page, please.

This is strategic business performance trend. PayPay consolidated continued to grow with revenue increasing by 22.1% year-on-year to 96.6 billion yen. Adjusted EBDA driven by revenue growth and continued cost control surpassed 20 billion yen for the first time in a quarter. As a result, the margin reached 21.7%. Next page, this is on strategic business revenue. PayPay consolidated. We started consolidation with PayPay Bank and PayPay Securities starting from the first quarter, resulting in an year-on-year increase of 23.2%. PayPay and PayPay Card continue to grow in GMV. and interest income increased due to the expansion of revolving loan balances. Peipei Bank saw increased revenue due to growth in loan balances. Other financial services also remained strong, growing at 15.1% year-on-year. This is on strategic business performance analysis. Cost of sales increased at Peipei Bank. due to the increase of the procuring cost. For SG&A, it decreased due to a reduction in other SG&A expenses, primarily due to the absence of costs related to the withdrawal of line pay domestic services in the first quarter of the previous fiscal year. significant increase in profit was achieved due to substantial growth in revenue. Next page, please. This is PayPay business overview. PayPay's consolidated GMV increased by 24% year-on-year, driven by growth in the number of transactions per user and the average payment amount. Consolidated revenue and EBITDA now include PayPay Bank and PayPay Securities, reflecting the new consolidation scope starting this quarter. Revenue increased by 24.6% due to growth in payment and banking, and EBTA expanded to 218 billion yen. In summary, the first quarter results marked a solid start in line with the guidance. We are steadily advancing initiatives aimed at mid- to long-term growth, such as the line renewal, expansion of mini-apps, and implementation of Gen AI in services. We will strengthen this momentum in the second half and beyond to lay the groundwork for growth. in the future. Additionally, we are working to enhance capital efficiency and strengthen shareholder returns through share-by-vaccine cancellations to sustainably enhance corporate value. That concludes our presentation.

Thank you for your attention. Now we will start a Q&A session.

Please use the Zoom raise hand function if you have a question. And when your turn comes, I will call your name. Please ask the question at that time. Once again, if you wish to ask a question, please use the raise hand function in Zoom. You will be prompted and your name will be called and then it will be your turn to ask the question. Now, please limit yourself to two questions per person, and please ask one question at a time. For questions asked in English, there will be consecutive interpretation into Japanese, so it will require some time. And the response will be delivered through simultaneous interpretation in English. Let's begin the Q&A session. Are there any questions?

From SMBC Securities, Maeda-san, please unmute and ask your question, please.

SMBC Nikko Securities, my name is Maeda. I have two questions. First question. So search ads, I think the market itself is slowing, but your revenue has fallen even more than I expected. You say some clients, but to the extent possible, explain what is happening. And in the second half onwards, is the impact going to continue? And was that reflected in the plan to begin with? So this search ads, Why is it sluggish? Can you explain? That's the first question. About the search app, let me explain, and maybe Ikehata may supplement from a sales perspective. In terms of demand from advertisers, HR, travel and temp service, these large clients, internally, they have made system updates to enhance productivity of ads. And so there has been lower demand, placement of ads. So if the placement goes down for the top client, then that impacts others and the bidding price tends to come down. And so that's why we have an overall negative figure. And from the second half of last fiscal year, we have seen that kind of a trend. We've been focusing on this, watching carefully, but the slowing of demand for the search ad was stronger than expected in this quarter. So for the second quarter, in the second half, we cannot be optimistic is what we are thinking. So the negative rate in Q1, I don't know if it will be the same, but we should expect this kind of decline in demand for this business. Ikehata, if there's anything to add. Thank you. Thank you for the question. This is Ikehata. Sakaue has laid out the main points about this and especially we have received large sums from this one particular company and they have changed the standards for ad placement and that has directly impacted our business. For this, on a continuous basis we will continue to discuss with this particular client and we need to maintain communication so that there will be a restart of their business but the system updates and the placement standard the change is the reason so i we think it might take a little time so q2 onwards throughout this fiscal year relatively speaking this kind of situation may continue as sakawe also So at the beginning of this fiscal year, this kind of drop, to be honest, we did not expect this magnitude of a drop. And so in terms of the ad revenue projection, how much have we reflected this? The search ads, we have to be very cautious. But for official account ads, It's growing more than we had anticipated at the outset for display ads. As we explained in the presentation, we're catching up to YOY flat level. So in terms of the impact to the ad business as a whole, well, we're trying to control it so that there is no impact by combining the various different types of ads.

Thank you.

Thank you. Second question about LINE mini apps and what's the progress to date? and quantitatively what's been the acceptance at what timing in what way are you going to try to monetize this is i think it's now usable on the web and the application i think are spreading and i think there's a lot of potential for monetization so talk about what you see in terms of its potential and talk about the current situation of the line mini apps Ikehata will mainly respond. As we showed on the slide, the mini-apps, third parties are now developing them. And the MAU basis, it is growing steadily. That's the current situation about the monetizing and the concept. Ikehata will explain. Thank you for the question. This is Ikehata about the mini-app penetration, as Sakaue just mentioned. And also, it's in the presentation material. YOY mini-app numbers grew by 55%. So this kind of growth, this kind of speed indicates a strong growth. I think you can interpret it that way. It's not just the number of the mini-apps. How much is it used? I think that is very important. Is it an app or service that is used well? And in that aspect as well, it's growing close to 50% year on year. In terms of MAU, the mini-app services that we're providing, they're for offline restaurants or beauty parlors. and for retail stores. So many are for brick-and-mortar stores. So in terms of the frequency, there's still room for improvement. So in addition to the number of apps, increase in MAU, well, that increase in MAU part is a little bit delayed, and I think we need some tuning of the service. But it's growing and it's spreading. And in terms of how to monetize this, maybe we talked about this last time, three major ways that we are currently preparing and starting to provide. One is to place ads within the apps. That's the service. So with more ads, with more apps, the line Yahoo, and inventory will increase, more opportunities to show them. And so there's direct impact with the number of apps. And the other is the payments. So when you have an e-commerce application that is released, if a product is bought, then we will receive certain commissions. So that's another business model we have in mind. And third is the charging to digital content. I think it's easy to imagine with games. In a game, if there is a subscription or some kind of charge,

that would provide us with some commission.

That's another model that we have in mind. In terms of the number of apps in this world and how widespread they are, I think you can see, well, it's 23,000 mini apps and the number of application services in the broader society is much larger. So if we're able to increase the Ad inventory will increase and the number of services that will lead to payment will increase. So we think that there is a big business potential. And as we explained in the presentation, it should be flow from the wallet tab. And so there's that perspective of making apps, and there will also be a secondary effect in terms of routing users. So there's a lot of room for growth, is what we think. Thank you very much.

Next, from Goldman Sachs Securities, Ms. Munakata, please unmute and ask your question. I'm Munakata from Goldman Sachs. Thank you for giving me the opportunity to ask questions. I have two questions. First question is also related to search advertising. AI search was not the background of this slowdown. That's how you explained. In terms of AI search, how are they being used? Can you compare with the AI surge? And SG&A has been increasing 5.8 billion yen to be specific. How much impact is coming from AI? Can you describe that? And also, can you update on the future forecast? That is my first question. This is Saka Ue.

Let me reply.

on yahoo search ai mode switching is also possible and the utilization rate is amid a single digit that is the portion out of the total ai search and related license fee The Q1 booking was a single billion, and that is the breakdown. How they are being used, well, how to relate it, demand, usage is going into AI search. and our company do not plan to block use of AI search but rather promote proactive use and we have launched PC version and we are thinking of further promoting the use of AI search monetizing method we are not certain yet but Generally speaking, once the internet user number increases, then there will be room for monetization. So we are not going to go against the shift to AI search. Thank you very much. My second question is line renewal. Shopping tab will be replaced in stages in the future. You talked about magazine-like shopping behavior, so you need to encourage users to push this tab and open this tab. What are the appealing points to users to promote this service? While the tabs will be replaced, rather than major marketing campaign uh shall we have the image of gradual change let me reconfirm that again also the boom tab will be removed so video ad positioning what is your concept in the future for video advertising on shopping tab um hide will reply so i will first answer to your question on boom boom and will be replaced with shopping tab the boom content the timeline is yet to be determined but home tab will be converted into a new media and boom will be integrated or merged to the home tab and we are making preparation right now Hide will reply to the first part of your question. This is Hide of Comas. From this fiscal year in line, we're going to add this shopping service. As you have commented, Yahoo Shopping, like conventional mall, is different from this new service. The conventional Yahoo shopping, the number of products listed is tens of millions of products, and customers will do the search and also proactively search on the product they want and compare the prices. That was the behavior. But in line, the service that is suitable in line, line shopping is to focus on the most popular product in and provide them at a reasonable price or combination with the social service so as a functionality we are thinking of social or buying and also gift is already growing and successful. There's already 10 million or more users or purchasers who are using fine gifts. So we are going to differentiate this service from the conventional service and the launch timing will be from this fiscal year and we will develop for the next two to three years and merchants the yahoo shopping merchants can easily apply to a line commerce and we are to provide convertibility between the two services so that our service will be easily used and that is the enhanced value we plan to provide that is it Thank you very much.

Thank you.

From Okasan Securities, Okumura-san. Please unmute and ask your question.

Thank you.

Okumura from Okasan Securities. Do you hear me? Yes, we hear you. Two questions, please. About the line-up renewal or the revamp, I want to ask about that as well. On page 12, you explain about this, and you talk about the wallet tab. So the final outcome is that PayPay will be implemented here from the next fiscal year. If PayPay is included here, how would the users' UX change? And on your media's top line, what would be any positive change? So instead of the short term, I want to ask what you intend to do next year and what kind of changes you expect from the next fiscal year onwards. On the wallet, we will make it easier for users to use PayPay. Concrete dates have not been set yet. We are making preparations. So PayPay, we will make it possible to use them. Walline, we have 90 million users who visit. And PayPay, we have expanded the number of users to 70 million, but there's still the gap of 20 million. or a difference of 20 million. So pay-per-consolidation through this is one major pathway. And then in the line app, there's shopping and existing digital contents, mini apps. And the PayPay payment should be usable in a more seamless manner so that people can earn points. And I think that will enhance the Line app user experience. And so that will be a positive for the Line app as well. So within the wallet, it will connect with PayPay. We're making preparations for that.

Thank you. Thank you. Second question about the listing of Peipei.

From the previous session, no major updates in terms of timing or the size, but looking at the materials that you have provided, you will maintain consolidation after listing. So you have clearly indicated that in your explanation. So, you're intending to negotiate so that your ownership ratio does not go down? Is that what this indicates? And for the minority shareholders, what kind of message do you want to send in adding this kind of explanation? So in terms of IPO timing and magnitude, it's undecided. We're making preparations. And since as soon as they are decided, we will communicate that to you. The point of this is, as we explained in the previous meeting, some investors asked about whether it's no longer going to be consolidated and there's going to be one-off impact to the profit loss. So there were those questions. Therefore, we wanted to indicate that we're going to maintain consolidation. So it's not that we expect any profit loss by change in ownership. So that is what we wanted to make clear with this message. In terms of the percentage of our ownership, It will depend on how we will do the IPO of PayPal, how we're going to generate the liquidity. That's still something to understand. We have no intention of reducing in a dramatic way, but there might be some things that we will consider. And in any case, we will make sure that it will remain a consolidated subsidiary.

Thank you.

Thank you for the detailed explanation.

Thank you very much.

Next, Kishimoto San of Mizuho Securities. Please unmute and ask your question. I'm Kishimoto of Mizuho Securities. Thank you for the opportunity to ask a question. I have one question. The media segment margin, this time there is a cost incurred for the integration of advertising platform. Is it only for the first quarter or will it be booked for the second quarter and beyond? In the explanation, you said that this integration will take place throughout this fiscal year, so please let me know the progress. And also, what is your expectation on the top-line contribution of this integration of the platform? On the integration of the ad platform, the process will take for the full year. So for SG&A, some amount will be incurred from the second quarter and beyond as well. That is factored in. The synergy or add-on effect of this integration is not factored into the plan if there's any comments to add. Thank you for the question. Platform integration will be done throughout the year. This is something we need to proceed very carefully. As was explained, the top line of this fiscal year the rather than impact of the platform integration in each a platform's function development and sales activities and other various success will be the driver for the yoy single digit growth and so the top line growth contribution of the integration will start from next fiscal year in terms of the scale as of today it's rather difficult to say that particular amount will be the contribution from platform integration, but single digit or low single digit YOY growth in order to achieve that this integration is one of the important initiative. Thank you very much.

Thank you very much. Next, from Daiwa Securities, Kumazawa-san, please unmute and ask your question. Kumazawa-san of Daiwa Securities, we are not hearing your voice.

Please unmute and ask your question.

Regrettably, we are not able to hear Kumazawa-san, so I'd like to move on to Masuno-san of Nomura Securities. Please unmute and ask your question.

Masuno-san from Nomura.

Can you hear? Yes, we hear you. About the account ads,

new sales company that you created and so on all the offline companies you said you want to increase the number of such clients all around Japan that was established in July And this second half, I think you have not reflected that in the plan, but how much effect do you see for the mid-range? So, Ikehata will supplement, but in July, line Yahoo business partners was established, and that will increase personnel cost, but in the guidance that has already been incorporated, reflected, so it's not going to increase the personnel cost further. Anything Ikehata would like to add? Ikehata here. Just a small supplement to that comment. In July, it was established as a company. We've just started. So for this fiscal year, in terms of headcount, we are going to gradually increase and expand activities. In terms of the account ads, in terms of the business structure that we currently have, the SMB or the local... small and medium-sized companies were trying to increase the number of cases and increase sales. And we occasionally comment on this in the presentation, but for the account ads, we wanted to provide functions or expand functions and solutions that are easy to use by those shops. And we're going to try to enhance our activities and sales. And we should have better communication with these local players as we conduct sales. And the Yahoo online business partners is going to play that role. So the product itself should be constructed and updated steadily, and the sales personnel and organization should be developed. And toward the second half of this fiscal year, there should be a gradual impact to revenue. So on that point, so what revenue, what sales, what kind of sales going to increase with this? Account ad sales would first increase. In addition to that, mini app sales will also be conducted. So if there's a monetization of mini app, mini app sales should also increase. Those two areas is where we see increases. so in june a number of account ads was strong july onwards may be even stronger or better I think we will be prepared to improve it further, but it's just been established in July. So for the second half, our sales capability should be strengthened, but for the short term, August, September, October, in that kind of short term, we shouldn't expect too big a change. Understood. Second question about the pay-per-consolidated. So the PayPay's payment number compared to the credit card number and a new bank opening, well, the number was as expected, but the EBITDA pro forma basis increased substantially. And so in terms of cost efficiency and sales efficiency, There must have been some improvement because just the numbers would not have increased profits so much. So what's been the improvement in the efficiency that led to better margins? This is Sakaue. I'd like to respond. So the Peipei Matsuri or Peipei Festival that we do regularly was shorter in this quarter, and so that's why acquisition cost was a little low. And this is a one-time thing, but we sold the card credit, and there has been a reversal of... the non-performing reserve and so EBITDA increased as a result of that.

So if that's the case,

that will not happen or it will disappear from q2 so the promotion time was a shorter but you still had sales so you didn't have to use so much money to acquire business is that going to continue yes you can understand that way And sales of card credit, we do several times a year as a credit. So Q2 onwards will not happen so much. But this trend of increased profit we think will continue without major change. And finally, a request. So, adjusted EBITDA was increasing 3%, but excluding 4.2 billion one-time event last year was 7% increase. So, with adjusted EBITDA, you're adjusting that again. So, I think that's confusing that you're doubly adjusting. So you should adjust all of that together. And also operating profit, 11% decline, but there was 3.1% last term, 70.1 billion one-time impact this year. And so if you exclude all of that, it's 22% increase. That's very confusing. So please adjust all of those things together. Yes, understood. We take your opinion. So EBITDA, there is the adjustment and there's the cash basis profit and for value commerce, there was a cash in. So this resulted in this. But I understand fully your point that this may be confusing. We cannot change during the term, but it's something we'd like to consider for next fiscal year onwards. Thank you. That's all for myself.

Thank you very much. Next, Ms.

Jai of UBS Securities, please unmute and ask your question. I'm Jai of UBS Securities. Can you hear my voice? Yes, we can. I have two questions. First question, related to Peipei. GMV YOY growth was larger than the number of payment. Last fiscal year, you also implemented Peipei Matsuri Festival. So what are the factors of the increase? Can you explain in more details? And is it sustainable for the next several quarters? And slightly related to the previous question, the operating profit and adjusted EBITDA, between them, what were the adjustments being made? Usually, adjusted EBITDA is higher than operating profit, but this time it seems to be lower. Can you explain that point in more detail? The reason for the increase of the GMV, the average payment amount increased and we are using points or coupons to try to increase the average payment amount and also former pay later payment style, which is currently called a credit, we are enhancing the linkage. So those were the factors that drove GMV higher than the growth of the number of payments. The EVTA should be larger. If there is any additional explanation needed, IR will get back to you. Basically, depreciation and NY consolidation adjustment items are adjusted. And basically, that is how adjustments are made. My second question is on commerce. recently the commerce gmv and shopping ad related take rate it seems like it is gradually rising Is it just a quarterly fluctuation that we don't need to be concerned, or are there any special initiatives that are bringing about this trend, which will likely to continue? Hide of Commerce will answer your question. On quarterly basis, there are some volatility, but on full-year basis, gradually take rate is rising the bottom was two years ago when GMB was also down here on here but after that the overall activities have risen and also there are competitive pressure and sellers appetite to place ad has increased so from two years ago take rate has gradually come up and we do expect this uh to further increase in the future

It's close to closing time, so next will be the last question. CLSA Securities, Ms. Oliver Matthews, please unmute and ask your question.

Hello, my first question. Could you just clarify, when people select AI search in Yahoo, are you paying extra costs to Google for that? Is it separate from your existing contract with Google?

Is there another separate contract for AI payment?

And yes, there is. And so we are paying to Google for that AI search.

OK. Hopefully, you could renegotiate that in your next contract with them. It seems a bit unfair. Second question, could you tell us more about the line official accounts? How big do you think the total market is for that? And how much do you think you can grow line official accounts over the next two to three years? Thank you.

Ikehata will respond.

Ikehata here.

Thank you for the question. So account ads themselves. So what's the addressable market for that? In Japan, sales promotion market, a very big market is the addressable market. On the other hand, within that, there's digital and part of CRM. If you break it down in that way, realistically, what we can address is three hundreds to 500 billion yen and how much presence we can establish there. And the next one to three years for that kind of a market, what can we achieve? We'd like to refrain from giving you concrete numbers, but high growth rate we have already shown to you and we're going to work hard to realize that or maintain that.

Okay, thank you.

Thank you very much.

It's time to close the session. So with this, we would like to close the Q&A session. Lastly, Mr. Saka will give a few words of closing. Thank you very much for participating in our session. this term as well. There are some strengths and weaknesses in the segment but we have broad services and overall we do expect that we can achieve the full year guidance and we would like to ask for your continued support with this. We would like to close the FI 2025 Q1 financial results briefing for LY Corporation. Thank you very much.