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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you very much for joining us today. For now, I would like to start that the business Results Announcement for the Z Holdings Corporation's on the second quarter of the fiscal year 2019. We're going to live broadcast to the Internet, and then also, we're going to distribute and archive videos at the desk. Thank you very much. Okay then, I'd like to introduce the attendance from the Z Corporation: President and CEO, Mr. Kentaro Kawabe; Managing Director and the CFO, Mr. Ryosuke Sakaue. First of all, the President, Mr. Kawabe, is going to make a presentation. And for the first half of 2019, please dare to look at the Appendix on -- distributed at this meeting. And Q&A, there is a setup after the presentation is made, and I'd like to close the meeting at 6:00 in the evening. Okay? I'd like to start the presentations, please.
Thank you very much for joining us today in your busy schedule. Thank you very much. And Z Holdings, we have become Z Holding Company since October 1, so this is has been a fast business results announcement after we have become Z Holding. So that's -- first of all, I'd like to explain about what is Z Holdings before getting into the actual performance. And also, I'd like to invite questions later. Thank you very much. So far, well, we have been operating as a -- Yahoo! JAPAN had the split debt of business operations, so from effective October 1, Z Holdings now become delisted companies. And now, we'd like to shift it into the holdings structure. And now, the Yahoo! JAPAN is the wholly-owned subsidiary of Z Holdings. And then also, we have the spinout debt, the financial businesses, so that we can have a better governance on the financial businesses is called the Z Financial. It's also wholly-owned subsidiary of Z Holdings. And other than that, the other major subsidiaries will also be directly reporting to Z Holdings. And I just would like to put all these in the managing, all these companies, as the group companies. But when it comes to debt, the disclosure segments would not change so that Commerce and Media. These are those debt, at the unit of disclosures, work just like this. Now you can understand that this disclosure and units of this Commerce and the Media, that we're going across all these different subsidiaries. I hope, I sincerely hope you understand that. Now just wait for a minute. Would you please show that to Page 4, please? It seems like that the slide is different from the presentation. Just wait a minute. I want you to look at the Page 4. You should go back one page again, please. The previous page of this slide, would you please show? Would you please just go back to one previous page? Okay, thank you very much. And next. Okay. Thank you. We're very sorry. Thank you very much for waiting. And this is debt structure of company's holdings company, but when it comes to the business, there's no some much substantial change of business, and we are providing a lot of e-Commerce and the Media service on the Internet. And by having more traffic, increasing the number of traffic is on the services, we'd like to take advantage of that traffic for that a lot of debt-monetizing engines on top of that. And these are all debt-monetizing engines. The more debt-monetizing engines we have, then we can have more scalable and a flexible business entity. So that's -- this is the -- for both of the core parts and the monetizing and the services. These are all the variety we'd like to operate together. Then what happens after this onward is, which is very important, the future of Z Corporations. And then now, it's not -- we're not the offense -- at the defensive, and also, we'd like to be offensive to create a future by ourselves. Whether our future is, is in that, for example, and making all the people's daily life on the online and Internet. But now, what's important here is that we need to take advantage of Internet technology, for creating a new off-line environment in the world. This is what's important. So that's why we'd like to expand the scope of the business into also for, not all for online, but offline. And then now, for example, at the same time, and the e-commerce Fintech is in the 2 core businesses and also, the integrated marketing solutions. These are the 3 major pillars of business. And then we had a midyear briefing also yesterday that now, we'd like to combine this data solution business together with these 3 pillars. So I would like to just to grow this data solution, that's for the first pillar. And when it comes to the holding structures and including ZOZO, a lot of different brands will go -- would be operating under this old umbrella at Z Holdings, so that's why we'd like to have the interworking and some synergy and the user experiences, synergy among all these different brands. And I'd like to take advantage of a lot of assets and resources.
And first of all, we'd like to focus on and concentrate on some of the specific businesses. For example, counting the PayPay is the current target of this and the considerations and the focusing of the resource and then assets. And I'd like to go -- that's in #1. So consequently, we would like to make that begin the company, the domestic platform, which has the best understanding of the citizen in Japan. To put it another way, who is it platform are getting stronger and more competitive? So that we just not compete with them, we'd like to have the standout, so remarkable presence in the Japanese domestic market and as a Japanese domestic platformer. So I hope you understand about this. Okay, then. Would you please look at the slide about this? This is the -- okay, so next, I'd like to get down to the financial results for the second quarter FY 2019. At this time, my presentation will focus on the -- only for the second quarter because now in the -- when we encounter the first quarter, and as some investors and analysts have just indicated some concerns over our financial results in the Q1, so that's what I'd like to focus on. How we improve it into the future. That will be the focus of my presentation. So then, will you please look at the information, the packet at your hand about the results of the first half as a whole. So let me focus on the Q2. So the -- what happens in the Q2. This is the results in the Q2, and the revenue have grown by 5.3% year-on-year. And the operating income, for the first half, in the past 10 quarters, we have grown by double-digit growth, 11.2% year-on-year, and the net income have grown by 8.6% year-on-year. So after the 11 quarters, we were able to grow by 2 digits. And this shows the breakdown of why we were able to obtain that.
Regarding the increase of revenue, I'm sure that you were concerned about ASKUL, but we were able to come up with a new organization. And we are improving, and it contributed JPY 7 billion. And I will talk more about advertisement, especially premium advertisement, and we were able to see some strong growth, and the contribution from this one is JPY 2.7 billion. And after the end of the first quarter, I know that the investors and analysts were quite concerned about our earnings, and we buckled our belt so that we try to control the cost as much as possible. As a result, we were able to gain the revenue, a result of JPY 39.4 billion. And regarding the KPI that resulted in JPY 39.4 billion, I would like to tell you that we are growing steadily. And for mid- and long-term perspective, we want to further grow our business. And from that vantage point, we are looking at e-Commerce and Media business as well as services, and as you can see on this slide, we are trending very favorably. And the analysts and investors are worried about the guidance, and at least that is my understanding. So firstly, we announced about ZOZO, so whether there will be an impact with or without ZOZO.
And also a PayPay Mall and PayPay Flea Market, we launched a major campaign. And some of you are worried whether we might launch a big campaign again, and that might impact the numbers. So even we conduct campaign and even without ZOZO, we will be able to achieve more than lower end of the operating income guidance. And regarding operating income, the progress is more than 50%. And as we go closer to the net income, we are seeing a steady growth. So with or without ZOZO, with or without major campaign, we will be able to follow the guidance and be able to attain the lower end or more at the operating income guidance. And that's all for the overall results. And from here, I would like to talk about the business topics by the segment that we disclosed. Since we are in the holdings structure, amongst the disclosed business area, I would like to talk about how each entity that belongs to each business area is contributing to the growth. And I would like to get your feedback later to see whether this kind of categorization is right or not. So on Commerce business, I will talk about Yahoo! and ASKUL as well as Ikyu. Before going into the details, I would like to explain to you the general framework of Commerce business. You are very familiar with this business structure, we have the base, which is e-Commerce transaction value; and then also the payment and what is the rate of in-house payment; and on top of that, we have a different demonetization engines. So regarding the base business, we have e-Commerce and payment, and both trended very favorably. And including a breakdown, you see the details here. Firstly, the overall e-Commerce transaction value, we were able to increase by 12% year-on-year. And amongst this, we are putting effort in shopping transaction value, and it grew by 22%. And just taking Yahoo! Shopping, we grew by 25%. So from these numbers, you understand that we are continue growing. And in terms of sales of goods, EC transaction value, we grew as well. And amongst other businesses, credit card transaction value increased the most, and there are 2 points. Firstly, e-Commerce transaction value increased. That's point number one. And point number two is PayPay. PayPay is expanding in scale. And regarding PayPay, YJ Card is the card that is most used, which means that there are more YJ cardholders. And not only for PayPay payment, but for other credit card purposes, YJ Card is being used in the cashless environment. Therefore, in terms of the credit card transaction product, it grew double as compared to EC transaction value. The credit card transaction value is increasing, and this business already is in the surplus. So that's all that, all regarding the overall commerce business. So let's take a look at the individual entity. Firstly, PayPay Mall. We launched this in October, so this will be reflected in Q3 more or less. And we have a PayPay Mall and PayPay Flea Market. And over our Yahoo! platform, we have new users. And for those, we provide premium as well as simple-to-use e-Commerce experience. And so we launched 1 of the other 2 services. Regarding PayPay Mall, within Yahoo! Shopping, there are people who list their items, and they have a major power. And on Yahoo! Shopping platform, we have many tenants, and we selected top-notch tenants so that they can have their stores in PayPay Mall. As regards to the buyers, including the PayPay Mall, I would like to provide a good experience and for the e-Commerce shopping. And we are focusing on PayPay users and selected stores are to be included on the platform. And this year, we would like to expand up to 600 tenants. And so we conducted a major promotion starting today. And last December, we had JPY 10 billion giveaway campaign, and that led to a dramatic growth in PayPay users. And we have the online version of that campaign as of today. And on a daily basis, we look at the transaction value, and we know the progress. And we are trending very favorably, and at least, that's what I hear as a report. Another one is a Flea Market, this is unlike a fixed-stock-price PayPay Mall. Flea Market is different in nature. So PayPay users will be able to benefit from a Flea Market as well if you are users. And if you're a seller, you have YAHUOKU! as well. And in YAHUOKU!, there are 2 types of prices, which is fixed, another one is variable. Therefore, in order to make it simpler, we made Flea Market totally variable in terms of price, and we started this in October. And before the campaign, it was trending well. And in Shopping category, there were a couple of times in which we're able to be #1. Today, PayPay Mall is #1, and Flea Market is ranking the third today. And as of today, we started a new campaign. And if you can meet all the conditions, you will be able to get, at the most, 20% PayPay bonus. Nonetheless, for Z Holdings e-Commerce, we have new programs under the name of PayPay Mall and PayPay Flea Market. And regarding the total transaction value, we would like to outperform the second-ranking and the first-banking companies. Next about ASKUL. We will take -- with ASKUL, we'd like to maximize the corporate value for all the parties concerned. And we work together closely with ASKUL, 2 major actions, one of which is reinforcing the corporate governance. So at the General Shareholders' Meeting, we have exercised a lot of the voting rights. And just temporality, now we have no independent directors, so that we'd like to have the situations in the correct. So that's why -- so for all these appointments, committees, members will now working together and discussing together, and they could in ASKUL. So that's why I'd like to make the governance with independent directors as soon as possible. So that also in LOHACO, we'll have the store space and also join the PayPay world. So those are looking for both the PayPay Mall and LOHACO and the ASKUL. These are for the benefit for the PayPay Mall we'd like to have. We think that's about the daily and the customer they offered for LOHACO and they are looking for LOHACO, and they can acquire the new customers and users, so that this is a win-win situation between both the PayPay Mall and the LOHACO. The last of the Commerce business, let me talk about the Ikyu. Now we had the media, a briefing for the ZOZO TOB. But now, in order to grow the ZOZO within our group, that's for the PMI, would be that preceding indicators, is the Ikyu. So this is what I explained. So that in many cases, we have the question about what happens with Ikyu. So that's why today, I'd like to set up a section to explain it. In this second quarter, about now in about transaction value, we have grown by 20% year-on-year and the operating income has grown by 40% from the year earlier. And when it comes to acquisitions, and with this acquisition, we have the synergy with each other. So now that the transaction have become 6x, and also operating income have been come in over the 15x not just before the merger, so -- and the acquisition. So that's why there's a lot of the M&A we have experienced, but it is one of the typical case of a good success.
But when it comes to Q3 ending into the October, a big natural disasters, that's really affected the travel/tourism industry. So that's why -- and it's still uncertain what kind of growth we expect in the Q3. That's about the Commerce business. Let me explain the Media business. And mainly, this is that they're provided only by the Yahoo! Corporation. But first of all, the assumption is that we have a foundational service. And on top of that, we have a lot of monetizing engines we put on top of that. And when it comes to monetizing engines, therefore, the advertising is the major monetizing engine after Media. So when it comes to these foundations, just shown here that now, we have -- we now observe a very good growth and including the mobile phone platform. Then let me explain about the other breakdowns of the business of this advertising. All in all, now we have the total EBITDA revenue have grown by 3.5% year-on-year. And when we have some major concerns indicated by investors in Q1 end at that time, and then we have -- since then, we have about over 1% of improvements. Particularly, premium advertising is particularly remarkable. So now, we have about plus JPY 3.6 billion. That's 30.8% growth year-on-year -- is now and grown by the premium advertising. So this mean that we have the enhancing business with our distributors and also the other enhancement with our collaboration and cooperation with SoftBank. And when it comes to Shopping advertising, as part of this the premium advertising, so that the Shopping advertising, e-Commerce is very favorable. That's why all the pushed up this premium advertising business. And now, we have over 30% of the growth. I mentioned about 3.5% of growth of total advertising revenue is not satisfactory, so we'd like to do more.
So when it comes to that specific strategy in a mid- and long-term basis, this integrated marketing solution is starting from the awareness and eventually end purchasing it offline shop. This will be as an old entity and the coverage and a comprehensive strategy. So that's why you can, for example, if someone would like to sold JPY 500,000, that's thousand and thousand bottles of beverages, they -- it would be just paid about the total budget of something to the Yahoo!, or that kind of business model can be available. So we also made the press release today about this integrated marketing solutions. And we are also talking about the Yahoo! sales promotions. But in the downstream of this Yahoo! marketing solution is that what's most important for the -- in the conversion is the Commerce advertising. And we have online Commerce advertising, offline advertising, advertising. So the end is in Q2, since then, we have a rapid growth of PayPay. So that's why we now try to focus on the Commerce advertising offline with testing and also for just a test market.
And in this context, this PayPay consumer gift is implemented in the end of the Q2, so let me explain about this specific promotion. And this -- what is the PayPay Consumer Gift? That means that this is the addition like broadband or full package services, for example, and we've implemented on some of the products. And when the user use the PayPay and the payment to buy it, the user can have the benefits and incentives. So that they are going to know that, and they go visit this offline store and the use the PayPay for making the payments. Then by scanning the secure code, the user can get -- purchaser can get the PayPay bonus. So for the advertisers and after the awareness of the brand partner advertising, and then also, with will lead to it and the traffic of actual -- to the actual store front of the users and where everything can be visualized. And for the Yahoo! -- so this is by given the PayPay bonus, this is charge of the PayPay bonus will be paid by the advertisers. So then also, we can monetize from end to end and comprehensively from the -- having awareness to the actual purchase and so forth. So that this ITO EN is the benefit of clients of this specific program. And actually, we'll put into effects, and now we're drawing a lot of -- and more than 100 inquiries from a lot of many potential advertisers about this program. This is one of the most promising and the measures for in the mid- and long-term basis. The other thing is enhancing our salesforce capability. So in June, now Z Holdings have become this is consolidated subsidiary of SoftBank in June. And now, we have one of the sales into working sales cooperation and part of that synergy were SoftBank. For one thing, a Mr. Kukita, Senior Managing Director of become that now -- for that in the directors of Yahoo!. And then we have amassed the team, a taskforce team, the mixture of -- there's Softbank and the Yahoo! resources, so that we can -- how we can help to collaborate to push to promote the businesses together. So that only we have the Yahoo! result in the Q1, Q2, and we have a more remarkable result we expect in the Q3. And that's all for Media and marketing solution, the results and endeavors that we have undertaken in Q2. Last but not the least, I will talk about the strategic measures, which are forward-looking. There are 3 main pillars.
The first one is finance business. We have Z Financial, which is a separate entity, including Yahoo!, Z Financial, so we'll work together with other parties for new endeavors.
In the end of Q2 and the beginning of Q3, we announced the business alliance with SBI Holdings. We have YJFX as well as Yahoo! Finance and the Japan Bank. We will link our business with SBI Holdings so that merits can be provided to the users. And at the earliest, we will be able to provide new services by the end of this year. And so we have Mr. Takamura, the Representative Director, and we had one-on-one meeting and decided to start from the low-hanging fruit.
Regarding Z Financial, business scale-wise, since we are still at its incipiency, we want to have business alliances with other entities who are in the industry before us. By doing so, we plan to expand our business. Next PayPay. So around this time of last year, i.e., October 5, we launched PayPay. And during that time, of course, there was no user. But we were committed to come up with the second Yahoo! by launching PayPay, and I believe I said that last year. And right now, I am very sure that what we have envisioned is becoming a reality. We are most focused on the number of PayPay transactions because the more we have, the more we can be sure that PayPay is used on a day-to-day basis. And therefore, the daily and monthly regular usage is very important, and we are focusing on the number of PayPay transactions. And in Q2, 96.12 million transactions were conducted. A year ago, it was in the magnitude of 10,000 to 20,000. But then, just looking at Q2, you see such a dramatic growth. But we have the consumption tax hike. And also, actually, the government initiatives impact is very hard. And 96.12 million is the number for 3 months. But when we closed October, we found out that the number of transaction was 85 million. And so you can compare that 1 month total is slightly less than 3 month total. And next KPI that we have focused on is the number of merchants. And the sales are reinforcing their effort. And the government is going for cashless society. And small and medium merchants wanted to use our platform. And right now, 1.54 million merchants are catering to PayPay. And in the end of September, we had 14.74 million registered users. A year ago, it was 0. So this is a dramatic growth. And the momentum is still there in October. And when we closed October yesterday, there were 19 million registered users. So in a matter of 1 month, there has been an increase of 4 million to 5 million. And so I am committed to create yet another Yahoo! through PayPay. And from these numbers, you can understand the pace at which we are realizing our vision. And you might think that there is no more leeway left for us for growth given these numbers. And that is the concern that I hear from investors and analysts, but I do not agree with you because we conduct the research of our results against others. And last year, we had 10 billion giveaway campaign, and awareness has plateaued. But in terms of user intent, after the consumption tax hike, the user intent rose. And also as compared to the competitors, you see a big gap between our increased use intent. And so some word-of-mouth is working, saying that PayPay is more beneficial given the program. And they start using PayPay to begin with. And I believe that, that will create yet another momentum in which there will be an increase in user intent. We have 18 million registered users, and I believe that we can enjoy more registered users. And also, when you look at the ratio we're doing cash and cashless, the ratio of cash is higher than cashless. So once again, there is more leeway for growth. As mentioned in Z Holdings, we are focusing our management resources to the area that we will be growing. And that is the merit for having Z Holding structure. And right now, we are dedicating resources into PayPay, and we want to have upper hand in the function as well. And as you can see, in the second quarter, we launched these new functions. So convenience and safety are combined together to come up with these new functions. Even though we have more functions that people don't use, then it beats the whole point. And so we will make the function easily usable. As in terms of giving away that 20% to each and every person, we will not do that anymore. But rather, we will be more focused at the interest of PayPay users. I understand that they want to know which category is most useful, and they look forward to Wakuwaku PayPay. And in the third quarter, we have a campaign with Uniqlo, i.e., HEATTECH. It's a buy 1 and get 1 free. And this was really well received, and we were able to increase the number of PayPay users. And we are conducting different promotions. And today, we have a press release.
And in terms of YAHUOKU! Dome, for next season, we will change Oku PayPay Dome, and I'm sure that HOOQ is doing well. So leveraging on the popularity of HOOQ, we would like to aggressively further promote PayPay. The last item of strategic measures is ZOZO. In September, we announced TOP of ZOZO, and tender offer is still in process. And so regarding the acquisition of 50.1% stake, we don't know whether this will come into fruition or not. But whether this will become a reality or not, we will continue pursuing business alliance, and so the negotiations and development are underway.
So I believe that in December, we will have ZOZOTOWN for the first time in PayPay Mall, and this will be their first time to have their store in the mall. And also, I believe that ZOZO's transaction value will increase, and we will have different initiatives to realize this.
Anyway -- and by the cooperations that are working together with ZOZO, we can about to increase in the growth of the further transaction values and revenue of the e-Commerce business so that I'm going to report about the progress of this cooperation with ZOZO in the future announcement meeting. So just like this, now, we have become Z Holdings. And by taking advantage of a lot of different brands and engines, and I'd like to offer an Internet user in Japan a lot of the convenience and the benefits. So we will become that a really strong presence in the -- domestic platform has a strong presence in Japan, and I hope for your cooperations. However, sorry that we're getting a little bit longer because we need to explain about the Z Holdings at the initial of my presentation. Thank you very much. Thank you for your attention.
Okay then, we'd like to open the floor to question. If you have a question, we're going to bring you the microphone, so that the first you mention your name over your company and your name. And would you please make your question concise, and I'd like to limit the question for 2 questions for each. And if you have any coupled questions, would you please pause then make the first questions and then after getting the response to the first question, make that second questions. And the language of the question could be either Japanese or English.
Okay, please raise your hand if you have any question, please. Okay. The ones who in the -- sitting down to the front row and one in the black suit, please?
I'm Sugiyama, and I have 2 questions. My first question is that the -- it's not mentioned in the presentation, but when it comes to sponsored search, you have a negative growth this quarter. So what is the factor of this negative growth over the paid search, sponsored search? And PC is one of the factors, but when it comes to -- and the traffic and the KPI, there's not so much difference in trend. So that I'd like to know about the specific reason, please?
Okay. I'm going to respond to the question. In Q2, so the improvements of user interface we implemented last year, and now we have it pushed up by the JPY 3 billion. That would be pushed down, which has run its course. But also, we keep making some improvements in the user interface, so that's why we have about the another JPY 3 billion, the push-up, so they offset with each other. And when it comes to the volume of search, it's not that much different, so almost flat when it comes to the actual number of searches. But when it comes to that, one of the products and some minor products, we have discontinued that specific product of the -- related to the sponsored search. That will have the impact of JPY 200 million to JPY 300 million, so that would be just a draft of the -- so this is due to the termination of one specific product.
Okay. My second question is about YJ Card and the Japan Net Bank. Now you have a Z Financial, and these 2 financial services are about the Z Holdings -- Financials. And so for example, they have a bigger business for this credit card. But these 2 financial businesses, first of all, it don't have to be branded as PayPay? And also in the case of YJ part? And how do you integrate that to point programs among these different brands of services, including PayPay? Or how are you going to reconstruct all these financial businesses, brand?
It's been an older, pretty difficult question to answer today. But generally speaking -- anyway, we'd like to provide a better user experience, so that's why we'd like to make it -- all of things would be easier for the user to understand. This is a -- would you please that the -- I would like to make this an answer to the question. Thank you very much.
Any other question, please raise your hand. A person is sitting in the front wearing blue shirt.
I am Sawada of Ace Research Institute. I have 2 questions. Firstly, in the second half, you have integrating marketing solution, and you will be invigorating the customers. And what kind of measures do you plan to take to realize that?
So maybe we can ask Miyazawa to answer that question?
Regarding our integrated marketing solution, the development of PayPay, it will be a key factor in letting us become successful. And 1 year later of its launch, PayPay has penetrated faster than we had expected. As we will be able to visualize more areas for marketing purpose. So I guess the trend of PayPay is very positive. So we will link with PayPay so that we will see what our consumers are doing and we will be able to hear people saying that they want to try out new products. And -- but some of the products, we are still in the test phase. And so we will continue conducting tests so that the product can be more usable for the customers.
But looking at our most recent numbers, I can say that we are trending quite favorably. We have a different product portfolio, and we want to have a full menu and we are allocating resources to realize a full menu.
[Second question is on PayPay Mall. Only limited stores can have their tenants on the mall. In Yahoo! Shopping, it seems that there were some competitions among the tenants. And so how do you plan to have the tenants of PayPay Mall compete with each other?
Okay, then. Mr. Ozawa, please?
And there are different approaches. Regarding PayPal Mall products, they are cross-listed on the Yahoo! Shopping. And after October 16, the Yahoo! Shopping, people buying our products on PayPay Mall. And so for the current users of Yahoo! Shopping, they will be able to pick and choose amongst the competition of the tenants.
In terms of PayPay Mall tenants, they know that their products will be cross-listed on Yahoo! Shopping. And so it's not an island structure, but then these are interlinked as we can say that tenants are competing with each other on both PayPay Mall and Yahoo! Shopping platform. But when you look at PayPay Mall, we have electronic device companies and they try to compete with the players from the same industry. So in terms of PayPay Mall, at this point in time, we are not seeing any price hike. And we will have excellent retailers as well as other manufacturers release come into play on PayPal Mall, so I believe that there will be robust competition on these platforms.
Okay. Any other question? Could you raise please your hand? Okay, please. And the first row from the front and the person who wearing blue shirt, please.
[ Ben Palmer ] with SMBC Nikko Securities. I have 2 questions. My first question is that when it comes to premium advertising, had been growing favorably, and would you be a little more specific about this, the effects of this advertising?
And will it be sustainable growth about this? It is only for one time? Or now you only think you're -- there's some sales force and the sales capability so that you can either speed up this growth in the future? And also, when it comes to that -- a lot of that the -- and internal advertising the PayPay. So then how does it relate with each other?
Okay. Mr. Sakaue is going to explain about the effects, and also.
I'm going to talk about these distributors and for this sales activities, and Mr. Miyazawa is going to respond.
When it comes to that, the shopping, advertising and the media advertising, and when we can break down between the 2, for shopping advertising have grown by about JPY 1.5 billion year-on-year and the rest of the growth is due to that media advertising. So this is the breakdown between these 2. Shopping advertising and media advertising rate of growth and that advertising and will include some of the negative growth of the PC base.
When it comes to sustainability of this growth, they're getting into this fiscal year from this -- from the May of the first quarter, and since like that, there are no have some negative factors in the -- this advertising and so that's why we have to change the policy of the sales so that we can offer some more higher-unit prices, not so much dependent on the cookies. So they will be our focus. So then, we had to switch it to the strategy like this.
And so now in the Q2, it seems like that all this premium advertising will be more of our primary focus of our sales strategy intentionally. So we will maintain this current a -- the sales and activity efforts in the second half because when it comes to the performance advertising, there are other [ ITP ] or that kind of impacts will a -- will continue, we should have for the time being, so that's why we'd like to also the switching to this strategy of sales like this.
And when it comes to our completion with Softbank in terms of sales activity, have been enhanced from this Q2 further. So the -- still, it does not deliver so much clear course, than now getting into the second half of the next fiscal year, and we are in the very mid and long-term in the foundations for working together. So that's why it would be continuous and sustainable.
Okay. My second question is about PayPay. In the integrated marketing solution, you also -- you making use much of the PayPay. But when you look at PayPay business alone and the business structure of PayPay is that, although the transaction value will increase still, that you cannot have so much profit, right? But on the other hand, you have a big loss with the promotion for PayPay.
When you look at the PayPay alone and any business model and the forecast or change in the business model so that you can have the profit only for the PayPay alone? Or are there any value, for example, ASKUL for summer day, and the payments or quid pro quo from this and offering that the PayPay service to the other brand or anything? Do you have any kind of a strategy like that?
And the PayPay business and there's 2 story there -- 2-staged business. The one thing is for the payment business, and the second storied is that the additional service we're monetizing that payment. But when it comes to the structure, this -- when it comes to the payment service and the -- we charge for that as the tenants about the charging for the payment as -- but that depends on the tenants.
We -- for something that we charge and some things we don't. So that -- but now the tenants actually using a service, although it's chargeable, and we can charge them. But now to see when I spend on the promotion for our acquired users, that's why, still, we're making loss. But eventually, other way on the spending for the user incentives. But now if we shrink, that's the spending for the user incentive, we can make it a breakeven. But now we think that in order to make the PayPay for another twin of Yahoo! we'll have another [ added ] to that. We have another additional new business model. So that's why we have a big expectation in the future fintech solutions, combined together with PayPay. So for example, some kind of loan with some interest rates or some integrated marketing solutions that can be integrated to it and be [ dealt ] with PayPay. And in the future, if we can get them all integrated and that the PayPay business can grow also further along. But we can look at the first story.
First, the floor portion of these 2 storied, a structures and now -- and we can also have some profitability of this, a charging for the use of the PayPay. But now in the account phase, it's still beginning of the phase that we'll try to acquire more user for PayPay. That's why we're paying that kind of a lot the promotion. That's why it's not so soon that we can make that PayPay business alone will be profitable.
But when it comes to that, and how we can take advantage of it for the brands? Or isn't it the working brands? But any way, we can now focus on, that any increasing the transaction value as much as possible, and we'd like to set up a lot of that, the monetizing engines. So that's why we're still in too early to just talk about that detailed strategy. Ozawa-san, do you have any other comments?
Yes. When it comes to the payment business, credit card is a good analogy for the business model when it comes to the payment business. And I think that we're getting close to that business model of the credit card because this is a service to just a grabbing that timing of the payments. And also, the PayPay is -- are the charging type of the payment method, but now we are learning about a lot of the other example of the China or the other competitors. And now this is not the prepaid, but also postpaid or just the credit payment type of service will be available for PayPay. Then getting all the more closer to the credit card business, a card and also the super applications in the China, for example, and buying that financial products or that the application for that loans products.
So now in the China, it had been very favorable and successful. That's why also that kind of business model within our scope of the -- a business. And also, O2O business model, this is offline -- and online-to-offline. So a -- it would be the models, whether it's using the PayPay in the business to the actual so far. So this is of O2O, the online-to-offline, would be that the new business model that can be realized over the PayPay. So that for the short-term business, O2O and the financial business will be that big opportunity for us to monetize the PayPay. All right. Thank you very much.
Any other question? The second row on the front.
I am Araki of Mitsubishi Morgan. First one is premium advertisement. I know it is growing. And I want to know which product is growing. I'm not talking about the sales effort, but then the product that is growing.
And then, Miyazawa-san, please?
Brand panel is growing and the smartphone too as well. You have the top banner on the smartphone that is growing. And we are providing video as well, and that is growing as well. And sales are emphasizing video. So I believe that the growth is being driven by video.
Another question, which is PayPay advertisement. How is the revenue booked? Is the character in the advertising of PayPay and that advertisement, is it included in your revenue?
It is included in our revenue.
So in terms of premium advertisement, didn't that commercial increase the revenue?
Well, there has been some contribution to the revenue, but not that large.
I have another related question. You mentioned about ITO EN's case. And regarding the revenue share, PayPay and Yahoo!, do you share? Or does Yahoo! get the entire revenue from ITO EN? What is the revenue model?
So regarding ITO EN, we 100% booked our revenue. But in the future, it will be case-by-case. Depending on the contribution ratio between the 2 parties, there will be the allocation of revenue amongst 2 parties. But for now, the 2 new products, all the revenues are for Yahoo!.
Regarding the PayPay revenue, so you have the TV commercial, you said that there has been some contribution to the premium advertisement. And so even if there has been the contribution from that commercial, do you think that's all closed within the group revenue?
Well, there has been commercial, so we're amid the actually promoted, and that contribution was higher than that of PayPay TV commercial. But then nonetheless, PayPay TV commercial is included in the premium advertisement revenue.
There, sitting in the third row from the front, please. In the middle block, please.
I'm Mori from JPMorgan Securities. I have 2 questions. The first question is about that your forecast of the advertising business, and starting from the beginning of the year, I have just -- the environment have changed. So that's why, and what's your views and then ideas about the current market?
And when it comes to that, the penetration of PayPay among users is the better than you had expected. So that's why in the integrated marketing solutions, and in the initial forecast about, you're going to recognize that the revenue profits in Q3, right? So that -- it seems like that you -- it seems like that you're going to have that the momentum, you can also recognize that kind of profits in this quarter?
Now currently, our focus is still conservative. But and -- on a full year basis, about the high of one single digits will be that -- and I mean that the higher single digit, so the single digits growth is that including -- it's excluding that cooperation with the -- and Softbank or the other. So that's also for the pay to charge and the YDN, a -- the base forecast. And when it comes to the other, and it will have been successfully integrated marketing solutions. We're going to have another upside, we expect, based on this conservative forecast.
And but the [ autoflow ] will run its course of efforts. But when it comes to that, a lot of the product integration of display advertising is going on. So it's not so a major product that, okay, the -- some of the products would be discontinued and will be shifted onto the YDN. We're integrating these products and product realignments is going on, so that's why -- and it still is not sure that some are terminated, but it will be integrated into the YDN. If it be successful, we can push that the growth and further from the higher single-digit growth. But now, and looking at this, it will be about the -- still, that's the high of the single digits, would be the growth. You see where our forecast is conservative.
When it comes [ SS ], if [ SS ] also, over the same, from the flat or the higher single-digit growth, it will be quite similar to that trend in the first half.
My second question is about my question of the PayPay Mall. This is really the basic question, but what kind of user do you expect? How would the user use for the PayPay?
For example, in the case of -- for the user of the Rakuten, how much users will shift to the PayPay Mall? When you were study using PayPay Mall, what were the reason they're using both of this Amazon, Rakuten and PayPay Mall? Or just -- do you think any specific reason they have shifted and migrating into the PayPay so that -- well I think that most of the users have some kind of e-commerce activity already in the Japanese market, so that what would be the targeting and what will be the behavior you expect from the users? And how do you just encourage them shifting from the other shopping sites to the PayPay Mall?
And today, and not just of PayPay, Y!Mobile and PayPay, Yahoo! premium members, Softbank, this all members first join and use this PayPay Mall. This is the fast expectations. They have exactly -- the product is exactly the same, same pricing, and now the user will use their PayPay Mall. So this is for the marketing. And so when it comes to all these users still, they still keep and use the shopping and Rakuten and Amazon, although they can expect for the price. But for example, some problem in delivery, or in the case of Yahoo! Shopping and it's bit difficult for the product layout. So this are the reason.
So that's why we'd like to fill the gap with this PayPay Mall. So that is not that the -- it's not that I would like to just make that really competitive, comparing to this, in Rakuten and Amazon. But for all those where the Softbank subscribers still do not use and Yahoo! Shopping and a couple of that, the -- to the thousand users, and now seemed to not use that, the charter that we have for shopping mall, although they are the Softbank subscriber. That's why we have to encourage them more to try the shopping mall, the selling from the PayPay Mall. So that's why delivery or function, they'll have to be enhanced and boosted. And also from December, then it's also when they'll join the PayPay Mall.
And when it comes to PayPay Mall, is only the shopping mall that can offer ZOZO. So there will be -- can be a competitive edge. So this is the risk, okay? And just to supplement the -- now a lot of PayPay Bonus. The more that they're using the PayPay, they can have more of the PayPay Bonus, so that's why. And if only for the offline and they can spend all these PayPay Bonus. But if you can use both offline and online, they can make use of that the -- a lot of the PayPay bonus in a lot of ways. So that's why.
And the e-commerce is one of the good shopping side of the where of the place, where that's the -- they can use that, a lot of the shopping points. That's why. And this would like to just lead them to use that for this online and PayPay Mall for their shopping, spending their points. That's it.
Any other question? Yes. The person wearing a black or bright blue tie.
Thank you. I am Nagao of Nomura Securities. I have 2 questions. First question, credit card-wise for the 4 to 5 consecutive quarters, you're accelerating the growth of the credit card. And you have YJ Card behind PayPay and maybe that is one of the factors. And in PayPay, what is the ratio of payment by YJ Card?
And along with that, the question, I have a second question. You mentioned about PayPay Bonus. And in terms of PayPay Bonus, most are used offline? These are my 2 questions.
So Mr. Ozawa or maybe Mr. Tanida might be able to answer those questions. And so IR will get back to you later, but you have not disclosed. So it seems that IR doesn't disclose the numbers.
No, we don't disclose the numbers. But if necessary, the IR department will follow up with that question.
So in -- I don't know whether I can say this or not. But in terms of Yahoo! Shopping's PayPay usage, is it okay if I disclose the number?
No, I cannot disclose the number, but I can at least say that it is quite high. And offline is the base of the usage of bonus. But now in terms of the online and the day of the 5th, and if it is not a PayPay or not a YJ Card, then you will not be able to enjoy the merit on the day with 5 in the number. So it is most efficient to have a closed user group within our Z Holdings.
So in terms of PayPay, the maximum is 20% payback/reward. And that is actually incorporated in our scheme of PayPay, and much of the revenue is registered under PayPay.
But in terms of the PayPay Mall and our Flea Market, we do have the payment being made as commissioned by the tenants so that can be a good factor for us to grow our business. So we have JNB and YJ Card that are easy to be used for PayPay because we can be in sync regarding the development of the functions that will enable the usage on PayPay. And so I believe that the ratio of YJ card and Japan Net Bank are very high.
Regarding YJ Card, as some people became the cardholder to use PayPay, but then, they started using in other environments rather than only PayPay. So therefore, we are seeing an improvement.
Second question. You have passed since you [ voice ] PayPay and you had the assumption at that beginning, but are there any changes as compared to your assumption? I am sure that there are pros and cons against your assumption. For example, maybe the ticket price was lower or maybe you believe that a number of merchants grew more than you had expected. So with a hindsight after 1 year, what are the pros and cons regarding the number of users and the number of transactions and also the number of merchants?
And we don't disclose the transaction value, but all these KPIs, we were able to outperform our expectations. We launched different campaigns, and that was one of the drivers. And also, the government is investing in a cashless society. And along with the consumption hike, that has been a good tailwind for us. And so we are going to create something akin to YAHUOKU!, and we are seeing some tangible result now.
And in terms of monetization, we want to accelerate this endeavor so that we will be able to run PDCA quickly. It will be in line with the demand of the users. And regarding the -- this PDCA, it has been faster than what we had expected. And so monetization-wise, we were only able to launch one integrated market solution.
So regarding PayPay, we want to accelerate the second tier, i.e., the monetization section faster. Ozawa-san, am I right?
Well, in terms of the frequency of usage, it was higher. So in terms of month, I thought that the frequency will be fixed amount.
And but then, people don't go to convenience stores without a wallet. I'm sure that some of you go to convenience store without a wallet and you just bring your smartphone, and that is why our PayPay has been used more than what we have expected. As frequency-wise, it overwhelmed our expectation. We learned about convenience stores, which is that through PayPay, we learned that many Japanese consumers visit convenience stores many times per day and that has been beneficial to us.
We want to demonstrate the convenience. So firstly, it was the incentive program, and people went for PayPay. And once they experienced how convenient PayPay, they will stick to using PayPay. So of course, [ Azuka ] is used without any incentives. So in terms of usability, we have to make more improvements, but people realize that PayPay is more convenient than using cash. And with the support of the government and the speed of penetration of this concept has been faster than expected. And but nonetheless, our cash is about 30% of a payment that is made in Japan so there are leeway for us to make more improvements.
Any other question? Okay. The -- okay, in this room and is sitting on the second row of the right-most block, please?
I'm Iwasa from Mizuho Securities. I have 2 questions. My first question is about the regulation of the platformer. So any -- do you have any ideas about the regulations on the platformer? And if we have any specified, for example, and operating the shopping mall of that, some unfair treatment of the -- some specific tenants is now all been mentioned and discussed.
So for example, if you try to leave in traffic to the ZOZOTOWN and they provide a lot of points for pushing that traffic to the ZOZO and site, it would be fair. I think that's, for example, about the -- and the discussions and the government, won't that be difficult for us to do that due to that result of the discussions with the government or their regulations? And what kind of impact do you think that about the discussion concerning the regulations of the platform or in the business?
Okay. First off, still the discussion going on. And so also it will be legalized when and how this still set. So I would like to leave it at that. I also have read reports compiled by the Fair Trade Commission yesterday. And -- but when it comes to don't be concerned, but we needed to -- we have to fulfill our accountability to explain to our tenants about this regulation if there's any. And we will be providing that information if they would help. But anyway, we need to proactive -- to have a more proactive communication with tenants when it comes to that issue.
My second question is about the -- so about -- would you be a little more specific about your enhancement, your cooperation with Softbank in terms of the sales activity? What kind of functions SoftBank would like to make use of? And the tenants or any stores, anything that I don't know, what kind of SoftBank feature and functions will contribute positively to your own business? Do you have any specific case?
And Mr. Miyazawa is going to explain the details, but generally speaking, Softbank, traditionally, is very strong corporate business sales. So that's -- and also, they want to try to push that and also the corporate business sales. So that meant to support the digital transformations will be an offer to the enterprise customers. So on -- we'd like to make the proposal about some package or proposal to push and help the digital transformations. This is what that SoftBank is doing. And part of the very important elements of this package is that -- and they are now proposing, how are you going to implement this -- those transformations at the marketing, so that we are focusing on whether have the specialty of digital marketing?
So that's where we're working together with SoftBank to propose that kind of solutions. So then actually -- so that's this digital media is -- some of the companies still and spend many and much of the marketing expenses on the very old 4 medias, including TV. So that's why we can make some proposals to the kind of traditional companies. I got to change that kind of marketing strategy, including the digital strategy. So that's why we think that digital marketing offered by that the -- this marketing solution offered by Yahoo! can be good essential elements of the package of the digital transformation proposal offered by the Softbank. And also, would you be -- Miyazawa-san, would you explain in more details?
Yes. And when it comes to the compilation with SoftBank, and that depends on -- in a cost-wide depending on the category of the customer. And now as was proposed is the enterprise customers, so digital transformation, support for the enterprise customers. So this means that the arm treasure data, a platform is proposed by the SoftBank and to consolidate and to all the customers' data and the cloud, and on which they can transform the marketing to more digitalized way. So this is a part of the -- part of the proposal, we can include it in the package of the Softbank. Softbank, a proposal, so the way we're working as united, one team with the Softbank. This is one thing.
The other thing is, I mean, this is for the enterprise market solutions. For second, and for those who are the distributors for selling that the Softbank, the softwares or also for the sales force and the PayPay, we -- they will recover about the small and the medium size of the enterprises a -- as a channel. So these are the quite different solution they offer. Even from the enterprise, for example, that -- and why do -- when do you start from this, the paid-type advertising, and for the first time, and this will be just a different level of marketing. And so that we offer the different packages for that we go along well with this, so the -- and the level and size of the companies.
So they will cover about the small to medium enterprises. So that -- and we already have the enterprise customer business, but also for the different -- the channel and the different person will work on that digital marketing to the SMEs. So this is also the part of the -- Mr. Kukita and become our directors and 2 have the better collaboration with Softbank. We are still in the middle of that.
So when it comes to that, now you're working together with Softbank, and so for example, just like the ad agency, and you also have to just propose some kind of the other channels or the other -- the media. And if this is case, you should have the function of ad agency.
Also we'd like to think about it. When it comes to this, then a kind of a business model, that depends on the choice of the advertisers. It's not that we -- it's not that we'd like to take all these they are putting in budgets as just ad agency and distribute to the Softbank, Yahoo! Japan or anything. It's not that. That depends on the choice of the customers.
Any other question? Any other question? If not, I guess we can go for the second round. Person in the front wearing a blue shirt, please?
IMS Research Institute. PayPay system problem is my question and I know it's impossible to completely do away with the system problem. But when you conduct the campaign and well-received the campaign is, there will be issues related to the systems side. So what are the technical situation right now? And as a management, how do you plan to recover from those technical problems?
On October 5, which was PayPay Day, it just so happens that it was a Saturday, and we had a 20% bonus, and it was a second day of Uniqlo campaign and all these factors happened at the same time. And so on October 5, we had a system failure, and users and Uniqlo and also merchants were inconvenienced by the system failure.
And as I have mentioned throughout the whole presentation, we have many users. So as in the case of other Yahoo! services, we know that PayPay is becoming one of the social infrastructures. And so we will be investing in the system so that there will not be any unexpected problem. And we will try to invest also that we can outdo the expectation. And PayPay Mall and PayPay Flea Market campaign was lost today, is we took different countermeasures on the system side. And we know that, so far, no problem has occurred. And so as an individual company, we do understand the severity of this problem.
And also, I want the investors to understand the following, which is in Japan, this is the first time for the society to go cashless and the pace is very quick.
So regarding the peripheral-related companies, we want them to invest as well because maybe the peripheral-relevant companies might be a bottleneck.
Regarding October 5 event, we are connected to POS. And because of that connection and the number of connected sockets was not right and it was a Saturday operations, so it was understaffed. And these are the situations on the third-party that is connected to us, and we did not push them to staff themself more and be cautious. And I know that we should work with the government so that the government will be able to talk with the parties to strengthen their system as well. And so we have to work together as an ecosystem, so that there will be no system failure on either party. So that will be the dialogue that I want to have with the relevant parties.
Any other question? Okay. All right. Thank you very much. That's all of this meeting today. Thank you very much for joining us today. Thank you.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]