For the three months ended June 30, 2024, revenue increased by ¥106.1 billion (7.4%) year on year to ¥1,535.7 billion, increasing across all reportable segments. Revenue increased by ¥70.3 billion*1 in the Distribution segment mainly due to solid increase in revenue from ICT (Information and Communication Technology) related products and subscription services, by ¥23.1 billion in the Media & EC segment mainly due to increased commerce revenue and media revenue, by ¥20.5 billion in the Enterprise segment mainly due to an increase in demand for solutions associated with digitalization, by ¥13.1 in the Consumer segment mainly due to an increase in revenues from sales of goods and others and mobile revenue, and by ¥10.5 in the Financial segment mainly due to the growth of PayPay Corporation.
For the three months ended June 30, 2024, operating income increased by ¥57.6 billion (23.4%) year on year to ¥303.9 billion, increasing across all reportable segments. The Media & EC segment saw an increase of ¥41.9 billion in operating income mainly due to the recording of profits associated with the loss of control of subsidiaries in LY Group (LY Corporation and its subsidiaries). Furthermore, operating income increased by ¥8.4 billion in the Consumer segment, by ¥7.5 billion in the Financial segment, by ¥1.3 billion in the Enterprise segment, and by ¥0.4 billion in the Distribution segment. Notably, with the growth of PayPay Corporation, the Financial segment turned profitable in terms of segment income during the three months ended June 30, 2024.
For the three months ended June 30, 2024, net income attributable to owners of the Company increased by ¥15.8 billion (10.8%) year on year to ¥162.5 billion. This is mainly due to the aforementioned increase in operating income, while the increase was partly offset by the absence of the gain on changes in equity interest associated with the change in the LY Group's equity interest in Webtoon Entertainment Inc., which had been recorded in the same period of the previous year. Net income attributable to non-controlling interests increased by ¥11.2 billion (41.7%) year on year to ¥38.1 billion, mainly due to an increase in net income at the LY Group.
In the three months ended June 30, 2024, primary free cash flow was positive ¥95.6 billion, an increase of ¥48.3 billion year on year. This increase reflected an increase in net cash inflow from operating activities, while there were an increase in net cash outflow from investing activities excluding long-term growth investments and a decrease in cash inflow from securitization of installment sales receivables. The increase in net cash inflow from operating activities mainly reflected an increase in EBITDA and a decrease in necessary working capital such as trade receivables, payables, and inventories, as well as a decrease in income taxes paid and an increase in income taxes refunded. This increase in net cash outflow from investing activities excluding long-term growth investments mainly reflected an increase in purchase of investment securities in banking business, a decrease in proceeds from sales/redemption of investment securities in banking business, and an increase in purchases of property, plant and equipment and intangible assets. Expenditure related to long-term growth investments was ¥43.9 billion.
Consumer segment revenue increased by ¥13.1 billion (2.0%) year on year to ¥681.7 billion. Mobile revenue increased by ¥7.6 billion (2.0%) year on year. The increase mainly reflected the growth in smartphone subscribers, led primarily by the Y!mobile brand, and an improvement in ARPU compared to the same period of the previous year. While the number of users of the low-priced Y!mobile brand has increased, ARPU showed an improvement trend mainly due to contributions from the introduction of new price plans in October 2023. In the three months ended June 30, 2024, ARPU saw a slight increase year on year. Broadband revenue increased by ¥1.0 billion (1.0%) year on year. This increase was mainly due to an increase in subscribers of the SoftBank Hikari fiber-optic service. Electricity revenue decreased by ¥3.9 billion (7.3%) year on year. This decrease was mainly due to a decrease in subscribers and average price of the Ouchi Denki (Home Electricity) service. Revenues from sales of goods and others increased by ¥8.4 billion (6.4%) year on year to ¥139.2 billion. The increase was mainly due to an increase in unit prices of smartphones while the increase was partly offset by a decrease in the number of units sold.
Operating expenses*5 were ¥525.3 billion, an increase of ¥4.8 billion (0.9%) year on year. This increase was mainly due to increases in the cost of goods of smartphones, etc., sales commission and advertising expenses, while the increase was partly offset by a decrease in the cost of service of electricity.
As a result, segment income increased by ¥8.4 billion (5.6%) year on year to ¥156.4 billion.
Enterprise segment revenue increased by ¥20.5 billion (10.5%) year on year to ¥215.6 billion. Within Enterprise segment revenue, mobile revenue increased by ¥1.1 billion (1.4%) to ¥76.6 billion, fixed-line revenue decreased by ¥1.1 billion (2.4%) to ¥42.6 billion, and business solution and others revenue increased by ¥20.5 billion (26.9%) to ¥96.4 billion. The increase in mobile revenue was due to increases in mobile device sales and 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 due to taking over the business of WeWork Japan GK through subsidiary WWJ Corp. as well as increased revenue mainly from cloud services, IoT solutions and security solutions as a result of capturing enterprise customers' demand for digitalization.
Operating expenses were ¥174.1 billion, an increase of ¥19.1 billion (12.3%) year on year. This increase was mainly due to an increase in costs following the abovementioned increase in business solution and others revenue, the effect of the aforementioned business succession of WeWork Japan GK, and an increase in personnel expenses.
As a result, segment income increased by ¥1.3 billion (3.3%) year on year to ¥41.5 billion.
Distribution segment revenue increased by ¥70.3 billion (46.6%) year on year to ¥220.9 billion. This increase was mainly due to solid growth in ICT related products for enterprise customers and subscription services such as cloud and SaaS, which have been strategic areas of focus, and the effect of inter-segment transactions related to AI computing platform*7.
Operating expenses were ¥213.2 billion, an increase of ¥69.8 billion (48.7%) 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 ¥0.4 billion (6.1%) year on year to ¥7.7 billion.
Media & EC segment revenue increased by ¥23.1 billion (6.0%) year on year to ¥408.3 billion. Within Media & EC segment revenue, media revenue increased by ¥7.6 billion (4.5%) to ¥175.8 billion, commerce revenue increased by ¥11.2 billion (5.7%) to ¥206.9 billion, strategy revenue increased by ¥4.4 billion (22.5%) to ¥23.9 billion, and other revenue decreased by ¥0.03 billion (1.9%) to ¥1.7 billion. The increase in media revenue mainly reflected an increase in revenue from account advertising. The increase in commerce revenue was 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). The increase in strategy revenue mainly reflected an increase in revenue in the FinTech field.
Operating expenses were ¥310.2 billion, a decrease of ¥18.8 billion (5.7%) year on year. This decrease mainly reflected the recording of gain on loss of control over subsidiaries for IPX Corporation, LINE NEXT Corporation, and ValueCommerce Co., Ltd., while there were increases in expenses for sales promotion associated with product enhancement and expenses recorded due to the implementation of selective focus on key business areas.
As a result, segment income increased by ¥41.9 billion (74.5%) year on year to ¥98.1 billion.
Financial segment revenue increased by ¥10.5 billion (20.0%) year on year to ¥63.1 billion. This increase was mainly due to the growth of PayPay Corporation, driven by an expansion in gross merchandise value.
Operating expenses were ¥57.5 billion, an increase of ¥3.1 billion (5.6%) year on year. This increase was mainly due to an increase in sales promotion expenses related to point rewards, etc., due to the aforementioned expansion in gross merchandise value by PayPay Corporation.
As a result, segment income increased by ¥7.5 billion year on year to ¥5.7 billion.
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