Analysis of Operating Results (Full Year)

Consolidated Results

Revenue

  • For the fiscal year ended March 31, 2023, revenue increased by ¥221.4 billion (3.9%) year on year to ¥5,912.0 billion, increasing in all segments. Revenue increased by ¥89.5 billion in the Distribution segment, mainly due to a solid increase in revenue from ICT (Information and Communication Technology) related products and subscription services, by ¥74.8 billion in the Financial segment, mainly due to the consolidation of PayPay Corporation, by ¥40.2 billion in the Media & EC segment, mainly due to increased revenue from account advertising at LINE Corporation and search advertising at Yahoo Japan Corporation, in addition to increased commerce revenue, by ¥34.6 billion in the Enterprise segment, mainly due to an increase in demand for solutions associated with digitalization, and by ¥0.4 billion in the Consumer segment. The increase in revenue in the Consumer segment was mainly due to an increase in electricity revenue reflecting increases in transaction volume and price in the electricity market, while there was a decrease in revenues from sales of goods and others, and mobile revenue decreased due to factors such as the impact of mobile service price reduction.

Operating income

  • For the fiscal year ended March 31, 2023, operating income increased by ¥94.6 billion (9.8%) year on year to ¥1,060.2 billion. This mainly reflected the recording of ¥294.8 billion associated with a gain on step acquisition in connection with the conversion of PayPay Corporation into a subsidiary and an increase of ¥6.6 billion in the Enterprise segment. On the other hand, operating income decreased by ¥177.0 billion in the Consumer segment mainly due to the impact of mobile service price reduction, and by ¥26.8 billion in the Financial segment mainly due to the conversion of PayPay Corporation into a subsidiary.

Net income attributable to owners of the Company

  • For the fiscal year ended March 31, 2023, net income attributable to owners of the Company increased by ¥14.3 billion (2.8%) year on year to ¥531.4 billion. This mainly reflected increases in operating income and profit before income taxes, primarily due to the recording of a gain on step acquisition in connection with the conversion of PayPay Corporation into a subsidiary, and a decrease in income taxes associated with a decrease in taxable income, primarily due to the impact of mobile service price reduction, while there was an increase in financing costs and the recording of an impairment loss on equity method investments. The increase in net income attributable to non-controlling interests reflected the recording of ¥147.4 billion associated with a gain on step acquisition in connection with the conversion of PayPay Corporation into a subsidiary at the Z Holdings Group (Z Holdings Corporation and its subsidiaries) (currently, LY Group, LY Corporation and its subsidiaries).

Adjusted free cash flow*1

  • In the fiscal year ended March 31, 2023, adjusted free cash flow was positive ¥1,020.6 billion, an increase of ¥668.5 billion year on year. This increase reflected the decrease in net cash outflow from investing activities of ¥802.9 billion, while there were decreases in net cash inflow from operating activities of ¥60.2 billion and inflows from securitization of installment sales receivables. The decrease in net cash inflow from operating activities mainly reflected decreases in adjusted EBITDA and inflows related to deposits in banking business, along with an increase in outflows related to loans in banking business, while there were decreases in working capital requirements such as trade receivables and payables and income taxes paid. The decrease in net cash outflow from investing activities mainly reflected a cash inflow of ¥397.3 billion from the acceptance of the balance of cash and cash equivalents resulting from the consolidation of PayPay Corporation in the fiscal year ended March 31, 2023 and the following outflows recorded in the previous fiscal year: payments of ¥178.5 billion for the acquisition of trademarks and other assets in connection with the license agreement entered into by Yahoo Japan Corporation and payments of ¥115.2 billion for the purchase of shares of LINE Corporation (currently A Holdings Corporation) that were less than one unit as a result of the reverse share split.

[Notes]
  1. *1
    Free cash flow = net cash inflow from operating activities + net cash outflow from investing activities
    Adjusted free cash flow = free cash flow + (proceeds from the securitization of installment sales receivables - repayments thereof)
  2. *2
    Excluding adjustments for free cash flow of the LY Group and PayPay, etc., and loans to board directors, etc., and including dividend payments received from A Holdings Corporation. PayPay, etc. includes A Holdings Corporation, B Holdings Corporation, PayPay Corporation, and PayPay Card Corporation.
  3. *
    The Group has changed the accounting policy for transactions under common control from the book-value method to the acquisition method from the three months ended December 31, 2022. Accordingly, figures for the fiscal year ended March 31, 2022 have been retrospectively amended.

Revenue by segment

Revenue by segment
Revenue by segment

Consumer segment

  • Revenue

  • Segment income

Consumer segment revenue increased by ¥0.4 billion (0.0%) year on year to ¥2,883.1 billion. Mobile revenue decreased by ¥94.5 billion (5.9%) year on year. The decrease mainly reflected a decline in ARPU due to mobile service price reduction and effect of customer acquisition measures, expenses of which are deducted from revenue, while there was an increase in smartphone subscribers led by the Y!mobile brand. The decline in ARPU due to mobile service price reduction was mainly due to the effects of the introduction of new price plans under the SoftBank and Y!mobile brands and further switching of subscribers from the SoftBank brand to the Y!mobile and LINEMO brands. Broadband revenue decreased by ¥7.8 billion (1.9%) year on year. This decrease was mainly due to a decline in ARPU because of campaign initiatives, while there was an increase in subscribers of the SoftBank Hikari fiber-optic service. Electricity revenue increased by ¥153.9 billion (64.4%) year on year. This increase was mainly due to increases in transaction volume and price in the electricity market. Revenues from sales of goods and others decreased by ¥51.1 billion (8.1%) year on year. This was due to factors including a decrease in sales volume of mobile devices associated with a decrease in the number of mobile device upgrades.

Operating expenses*3 were ¥2,420.7 billion, an increase of ¥177.4 billion (7.9%) year on year. This increase was mainly due to an increase in the cost of goods related to electricity, while there was a decline in the cost of products associated with the abovementioned decrease in sales volume of mobile devices.

As a result, segment income decreased by ¥177.0 billion (27.7%) year on year to ¥462.4 billion.

[Note]
  1. *3
    Operating expenses include cost of sales, selling, general and administrative expenses, and other operating income and other operating expenses.

Enterprise segment

  • Revenue

  • Segment income

Enterprise segment revenue increased by ¥34.6 billion (4.8%) year on year to ¥750.3 billion. Within Enterprise segment revenue, mobile revenue increased by ¥6.8 billion (2.2%) to ¥320.0 billion, fixed-line revenue decreased by ¥4.6 billion (2.5%) to ¥182.1 billion, and business solution and others revenue increased by ¥32.5 billion (15.0%) to ¥248.2 billion. The increase in mobile revenue was mainly due to an increase in telecommunications revenue. The decrease in fixed-line revenue was mainly due to a decrease in the number of subscribers to telephone services. The increase in business solution and others revenue was mainly from increased revenue from cloud services and security solutions as a result of capturing enterprise customers' demand for digitalization.

Operating expenses were ¥615.2 billion, an increase of ¥28.0 billion (4.8%) year on year. This increase mainly reflected an increase in costs following the abovementioned increase in business solution and others revenue, the recording of a provision for litigation, and a reversal of a one-time expense in the previous fiscal year, while there was a decrease in operating expenses due to the recording of a gain on step acquisition in connection with the conversion of HEALTHCARE TECHNOLOGIES Corp. into a subsidiary.

As a result, segment income increased by ¥6.6 billion (5.2%) year on year to ¥135.1 billion.

Distribution segment

  • Revenue

  • Segment income

Distribution segment revenue increased by ¥89.5 billion (17.9%) year on year to ¥590.0 billion. This increase was mainly due to solid growth in ICT (Information and Communication Technology) related products and subscription services such as cloud and SaaS, which have been strategic areas of focus.

Operating expenses were ¥565.8 billion, an increase of ¥88.1 billion (18.4%) year on year. This increase was mainly due to an increase in cost of sales associated with the increase in revenue.

As a result, segment income increased by ¥1.4 billion (6.0%) year on year to ¥24.3 billion.

Media & EC segment*4

  • Revenue*5

  • Segment income

Media & EC segment revenue increased by ¥40.2 billion (2.6%) year on year to ¥1,561.7 billion. Within Media & EC segment revenue, media revenue decreased by ¥0.5 billion (0.1%) to ¥633.9 billion, commerce revenue increased by ¥25.5 billion (3.2%) to ¥834.6 billion, strategy revenue increased by ¥15.5 billion (24.5%) to ¥78.5 billion, and other revenue decreased by ¥0.2 billion (1.5%) to ¥14.6 billion. The slight decrease in media revenue mainly reflected a decrease in display advertising revenue, which was adversely affected mainly by a market downturn, while there was an increase in account advertising revenue due to an increase in the number of message distributions of large enterprise customers in LINE Official account and an increase in the number of paid accounts of small and medium-sized merchants, along with an increase in search advertising revenue at Yahoo Japan Corporation. The increase in commerce revenue is mainly due to an increase in transaction value of the ASKUL Group (ASKUL Corporation and its subsidiaries) and the ZOZO Group (ZOZO, Inc. and its subsidiaries) and an increase in travel-related revenue due to the reopening of economic activity. The increase in strategy revenue mainly reflected an increase in revenue in the FinTech field.

Operating expenses were ¥1,401.9 billion, an increase of ¥39.9 billion (2.9%) year on year. This increase mainly reflected increases in cost of sales at the ASKUL Group and the LINE Group (LINE Corporation and its subsidiaries) and personnel expenses in step with growth in the workforce at the LINE Group.

As a result, segment income increased by ¥0.3 billion (0.2%) year on year to ¥159.7 billion.

[Notes]
  1. *4
    The Company has changed the accounting policy for transactions under common control from the book-value method to the acquisition method from the three months ended December 31, 2022. The Company added the Financial segment to the reportable segments from the three months ended December 31, 2022 and revised operating companies that comprise each reportable segment. Accordingly, figures of the Media & EC segment for the fiscal year ended March 31, 2022 have been retrospectively amended.
  2. *5
    In the fiscal year ended March 31, 2023, the Z Holdings Group (currently, LY Group), revised its management categories and reclassified the categories of certain services. Accordingly, the breakdown of Media, Strategy, and Other in the Media & EC segment revenue for the fiscal year ended March 31, 2022 has been restated to reflect these changes.

Financial segment

  • Revenue

  • Segment income

Financial segment revenue increased by ¥74.8 billion (110.8%) year on year to ¥142.3 billion. This increase was mainly due to the consolidation of PayPay Corporation on October 1, 2022.

Operating expenses were ¥154.7 billion, an increase of ¥101.6 billion (191.3%) year on year. This increase was mainly due to the effects of the abovementioned consolidation of PayPay Corporation.

As a result, segment income decreased by ¥26.8 billion year on year to negative ¥12.4 billion.

[Notes]
  1. *
    On October 1, 2023, Z Holdings Corporation, as the surviving company, completed an intra-group reorganization involving mainly itself and two of its core wholly owned subsidiaries, LINE Corporation and Yahoo Japan Corporation, and changed its trade name to LY Corporation.
  2. *
    From FY2023, segment name of Yahoo! JAPAN/LINE has been changed to Media & EC. Accordingly, the five reportable segments became Consumer segment, Enterprise segment, Distribution segment, Media & EC segment, and Financial segment. This change only pertains to the segment name, and there are no changes to the segment classification, scope, or measurement methods.

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