For the three months ended June 30, 2023, revenue increased by ¥67.7 billion (5.0%) year on year to ¥1,429.7 billion, increasing in all segments. Revenue increased by ¥34.1 billion in the Financial segment, mainly due to the consolidation of PayPay Corporation in October 2022, by ¥20.4 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 ¥7.6 billion in the Enterprise segment, mainly due to an increase in demand for solutions associated with digitalization, by ¥7.1 billion in the Media & EC segment, mainly due to increased revenue from account advertising and search advertising, and by ¥1.3 billion in the Consumer segment. The increase in revenue in the Consumer segment was mainly due to an increase in revenues from sales of goods and others associated with increases in unit price of smartphones, etc., while there was a decrease in mobile revenue due to factors such as the impact of mobile service price reduction in spring 2021.
For the three months ended June 30, 2023, operating income increased by ¥5.0 billion (2.1%) year on year to ¥246.3 billion. This mainly reflected increases in operating income of ¥13.2 billion in the Media & EC segment, which was primarily due to the recording of a gain on business transfer associated with the transfer of AI Company business operated by LINE Corporation to WORKS MOBILE Japan Corp., ¥2.9 billion in the Enterprise segment, and ¥1.7 billion in the Distribution segment. On the other hand, operating income decreased by ¥6.9 billion in the Consumer segment mainly due to the impact of mobile service price reduction.
For the three months ended June 30, 2023, net income attributable to owners of the Company increased by ¥19.6 billion (15.4%) year on year to ¥146.7 billion. This mainly reflected the recording of a gain on changes in equity interest associated with the change in the Z Holdings Group's (Z Holdings Corporation and its subsidiaries) equity interest in Webtoon Entertainment Inc. and an increase in operating income. Net income attributable to non-controlling interests increased by ¥8.2 billion (44.2%) year on year to ¥26.9 billion, mainly due to an increase in net income at the Z Holdings Group.
In the three months ended June 30, 2023, adjusted free cash flow was negative ¥46.2 billion, a decrease of ¥120.9 billion year on year. This decrease reflected a decrease in net cash inflow from operating activities of ¥85.2 billion and an increase in net cash outflow from investing activities of ¥97.5 billion, while there was an increase in cash inflow from securitization of installment sales receivables. The decrease in net cash inflow from operating activities mainly reflected an increase in working capital requirements such as trade receivables and payables and a decrease in deposits in banking business. The increase in net cash outflow from investing activities mainly reflected an increase in purchase of investment securities in banking business, a decrease in proceeds from sales/redemption thereof, and an increase in purchases of property, plant and equipment.
Consumer segment revenue increased by ¥1.3 billion (0.2%) year on year to ¥668.7 billion. Mobile revenue decreased by ¥5.8 billion (1.5%) year on year. The decrease mainly reflected a decline in ARPU due to the mobile service price reduction in spring 2021, 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 brand. Broadband revenue increased by ¥0.7 billion (0.7%) year on year. This increase was mainly due to an increase in subscribers of the SoftBank Hikari fiber-optic service. Electricity revenue decreased by ¥3.8 billion (6.8%) year on year. This decrease was mainly due to a decrease in transactions in the electricity market. Sales of goods and others revenue increased by ¥10.3 billion (8.5%) year on year. This increase was mainly due to an increase in unit prices of smartphones, etc.
Operating expenses*3 were ¥520.7 billion, an increase of ¥8.2 billion (1.6%) year on year. This increase was mainly due to an increase in the cost of goods of smartphones, etc.
As a result, segment income decreased by ¥6.9 billion (4.4%) year on year to ¥148.0 billion.
Enterprise segment revenue increased by ¥7.6 billion (4.3%) year on year to ¥184.1 billion. Within Enterprise segment revenue, mobile revenue increased by ¥0.8 billion (1.0%) to ¥78.1 billion, fixed-line revenue decreased by ¥2.5 billion (5.3%) to ¥44.0 billion, and business solution and others revenue increased by ¥9.2 billion (17.5%) to ¥62.1 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 ¥144.7 billion, an increase of ¥4.7 billion (3.3%) year on year. This increase mainly reflected an increase in costs following the abovementioned increase in business solution and others revenue.
As a result, segment income increased by ¥2.9 billion (7.9%) year on year to ¥39.4 billion.
Distribution segment revenue increased by ¥20.4 billion (15.7%) year on year to ¥150.6 billion. This increase was mainly due to solid growth in ICT (Information and Communication Technology) related products for enterprise customers and subscription services such as cloud and SaaS, which are also for enterprise customers and have been strategic areas of focus.
Operating expenses were ¥143.4 billion, an increase of ¥18.7 billion (15.0%) 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 ¥1.7 billion (31.0%) year on year to ¥7.2 billion.
Media & EC segment revenue increased by ¥7.1 billion (1.9%) year on year to ¥385.2 billion. Within Media & EC segment revenue, media revenue increased by ¥3.4 billion (2.2%) to ¥157.1 billion, commerce revenue increased by ¥1.3 billion (0.6%) to ¥206.5 billion, strategy revenue increased by ¥2.2 billion (12.8%) to ¥19.5 billion, and other revenue increased by ¥0.1 billion (6.5%) to ¥2.0 billion. The increase in media revenue mainly reflected the impact of the consolidation of LINE MUSIC Corporation in September 2022 and an increase in revenue from account advertising as the number of paid accounts increased due to the revision of price plans in June 2023 in LINE Official account. Another factor behind the increase in media revenue was solid growth in search advertising. Meanwhile, revenue from display advertising decreased due to factors such as the impact of business sentiment. 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), while there was a revenue-reducing effect associated with a control in sales promotion expenses related to e-commerce services. The increase in strategy revenue mainly reflected an increase in revenue in the FinTech field.
Operating expenses were ¥329.0 billion, a decrease of ¥6.2 billion (1.8%) year on year. This decrease mainly reflected the recording of a gain on business transfer associated with the transfer of AI Company business operated by LINE Corporation to WORKS MOBILE Japan Corp. and a decrease in sales promotion expenses, while there were increases in cost of sales at the ASKUL Group and personnel expenses at the LINE Group (LINE Corporation and its subsidiaries) and other companies.
As a result, segment income increased by ¥13.2 billion (30.8%) year on year to ¥56.2 billion.
Financial segment revenue increased by ¥34.1 billion (184.8%) year on year to ¥52.6 billion. This increase was mainly due to the consolidation of PayPay Corporation in October 2022.
Operating expenses were ¥54.4 billion, an increase of ¥37.8 billion (227.7%) 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 ¥3.7 billion year on year to negative ¥1.8 billion.
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