Analysis of Operating Results

Consolidated Results

Revenue

  • Consolidated Results Revenue
  • For the nine months ended December 31, 2021, revenue increased by ¥366.8 billion (9.6%) year on year to ¥4,173.8 billion. Revenue increased by ¥286.3 billion in the Yahoo! JAPAN/LINE segment, mainly due to increased revenue in connection with consolidation of LINE Corporation, by ¥64.1 billion in the Consumer segment, mainly due to an increase in revenues from sales of goods and others, and by ¥21.2 billion in the Enterprise segment, mainly due to an increase in demand for solutions associated with digitalization. On the other hand, revenue decreased by ¥18.1 billion in the Distribution segment, mainly due to absence of revenue for large-scale project orders from municipalities recorded in the same period of the previous fiscal year, while there was a solid increase in revenue from subscription services.

Operating income

  • Consolidated Results Operating income
  • For the nine months ended December 31, 2021, operating income decreased by ¥20.4 billion (2.4%) year on year to ¥821.2 billion. Operating income increased by ¥34.3 billion in the Yahoo! JAPAN/LINE segment that included an increase associated with the consolidation of LINE Corporation, and by ¥12.1 billion in the Enterprise segment. On the other hand, operating income decreased by ¥56.4 billion in the Consumer segment mainly due to the impact of the switch from the SoftBank brand to the Y!mobile and LINEMO brands, the introduction of new price plans, and reversal of contract liabilities related to Half-Price Support of ¥11.0 billion as a one-time increase in revenue in the same period of the previous fiscal year, and by ¥1.3 billion in the Distribution segment.

Net income attributable to owners of the Company

  • Consolidated Results Net income attributable to owners of the Company
  • For the nine months ended December 31, 2021, net income attributable to owners of the Company decreased by ¥12.9 billion (3.0%) year on year to ¥420.8 billion. The decrease mainly reflects a decrease in operating income, an increase in share of losses of associates accounted for using the equity method of ¥17.1 billion, and an increase in impairment loss on equity method investments of ¥12.9 billion mainly due to impairment of Demae-can Co., Ltd stock, while there was an increase in financing income of ¥18.3 billion due to gains on valuation of investment securities and a decrease in financial costs of ¥11.3 billion mainly due to a decrease in losses on valuation of investment securities recognized in the same period of the previous fiscal year.

Adjusted free cash flow*1

  • Consolidated Results Adjusted free cash flow
  • In the nine months ended December 31, 2021, adjusted free cash flow was positive ¥236.1 billion, a decrease of ¥294.5 billion year on year. This reflects a decrease of ¥9.5 billion in net cash inflow from operating activities and an increase of ¥328.7 billion in net cash outflow from investing activities. The decrease in net cash inflow from operating activities mainly reflected a decrease in inflows related to deposits and an increase in outflows related to loans in the banking business, and a decrease in income taxes refunded due to absence of those related to dividends paid among the Z Holdings Group (Z Holdings Corporation and its subsidiaries) recorded in the previous fiscal year, while there was a decrease in outflows associated with an increase in trade and other receivables. The increase in net cash outflow from investing activities mainly reflected payments for purchases of property, plant and equipment and intangible assets associated with the acquisition of the trademarks and other assets for ¥178.5 billion in connection with the license agreement entered into by Yahoo Japan and payments for acquisition of investments associated with the purchase of shares of LINE Corporation (currently A Holdings Corporation) that were less than one unit for ¥115.2 billion 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 both A Holdings Corporation and the Z Holdings Group, and loans to board directors, etc., and including dividends received from both A Holdings Corporation and Z Holdings Corporation.

Revenue by segment

Consumer segment

  • Revenue

    Consumer segment Revenue
  • Segment income

    Consumer segment Segment income

Consumer segment revenue increased by ¥64.1 billion (3.1%) year on year to ¥2,108.4 billion. Mobile revenue decreased by ¥54.8 billion (4.3%) year on year. The decrease reflects a decline in ARPU due to mobile service price reduction and reversal of contract liabilities related to Half-Price Support of ¥11.0 billion as a one-time increase in revenue in the same period of the previous fiscal year, while there was an increase in subscribers led by the Y!mobile brand. The decline in ARPU due to mobile service price reduction was mainly due to the effects of an increase in subscribers switching from the SoftBank brand to the Y!mobile and LINEMO brands and introduction of new price plans under the SoftBank and Y!mobile brands. Broadband revenue increased by ¥7.3 billion (2.4%) year on year. This increase was due to an increase in subscribers of the SoftBank Hikari fiber-optic service. Moreover, electricity revenue increased by ¥47.5 billion (62.3%) year on year. This increase was due to an increase in revenues reflecting an increase in sales volume in the wholesale electricity market and an increase in subscribers of the Ouchi Denki (Home Electricity) service. Revenues from sales of goods and others increased by ¥64.2 billion (15.9%) year on year. This increase was due to an increase in unit price of mobile devices associated with the rise in the composition of high-priced mobile devices and a recovery of mobile device sales in the nine months ended December 31, 2021, which had declined in the three months ended June 30, 2020 due to the COVID-19 outbreak.

The total of operating expenses (cost of sales and selling, general and administrative expenses) and other operating income and loss (other operating income and other operating expenses) was ¥1,589.7 billion, an increase of ¥120.4 billion (8.2%) year on year. This increase was mainly due to an increase in the cost of products pertaining to an increase in unit purchase price associated with the abovementioned rise in the composition of high-priced mobile devices, and an increase in the cost of products related to the Ouchi Denki service, an increase in sales-related expenses pertaining to the increase in mobile device sales, and an increase in telecommunications network charges due to an increase in the number of SoftBank Hikari subscribers.

As a result, segment income decreased by ¥56.4 billion (9.8%) year on year to ¥518.7 billion.

Enterprise segment

  • Revenue

    Enterprise segment Revenue
  • Segment income

    Enterprise segment Segment income

Enterprise segment revenue increased by ¥21.2 billion (4.2%) year on year to ¥528.9 billion. Within Enterprise segment revenue, mobile revenue increased by ¥6.0 billion (2.7%) to ¥233.1 billion, fixed-line revenue decreased by ¥1.6 billion (1.1%) to ¥140.4 billion, and business solution and others revenue increased by ¥16.7 billion (12.1%) to ¥155.5 billion. The increase in mobile revenue was mainly due to an increase in smartphone subscribers following growing demand for telework. 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, digital marketing advertising services, and security solutions as a result of capturing enterprise customers' demand for digitalization arising from the COVID-19 outbreak.

The total of operating expenses (cost of sales and selling, general and administrative expenses) and other operating income and loss (other operating income and other operating expenses) was ¥423.7 billion, an increase of ¥9.1 billion (2.2%) year on year. This increase mainly reflects an increase in costs following the abovementioned increase in business solution and others revenue.

As a result, segment income increased by ¥12.1 billion (13.0%) year on year to ¥105.2 billion.

Distribution segment

  • Revenue

    Distribution segment Revenue
  • Segment income

    Distribution segment Segment income

Distribution segment revenue decreased by ¥18.1 billion (4.8%) year on year to ¥361.7 billion. This was mainly due to absence of revenue for large-scale project orders from municipalities recorded in the same period of the previous fiscal year, while there was solid growth in subscription services such as cloud and SaaS, which have been strategic areas of focus.

The total of operating expenses (cost of sales and selling, general and administrative expenses) and other operating income and loss (other operating income and other operating expenses) was 343.4 billion, a decrease of ¥16.7 billion (4.6%) year on year. This decrease was mainly due to a decrease in costs of products in connection with the abovementioned decrease in revenue.

As a result, segment income decreased by ¥1.3 billion (6.8%) year on year to ¥18.3 billion.

Yahoo! JAPAN/LINE segment*3

  • Revenue*4

    Yahoo! JAPAN/LINE segment Revenue
  • Segment income

    Yahoo! JAPAN/LINE segment Segment income

Yahoo! JAPAN/LINE segment revenue increased by ¥286.3 billion (32.8%) year on year to ¥1,160.1 billion. Within Yahoo! JAPAN/LINE segment revenue, media revenue increased by ¥216.9 billion (87.2%) to ¥465.6 billion, commerce revenue increased by ¥46.4 billion (8.4%) to ¥600.9 billion, strategy revenue increased by ¥19.8 billion (31.5%) to ¥82.8 billion, and other revenue increased by ¥3.2 billion (42.3%) to ¥10.7 billion. The increase in media revenue mainly reflected the recovery of advertising demand and the product improvement initiatives, in addition to the consolidation of LINE Corporation. The increase in commerce revenue is mainly due to an increase in revenue of the ZOZO Group (ZOZO, Inc. and its subsidiaries) and the ASKUL Group (ASKUL Corporation and its subsidiaries), in addition to the consolidation of LINE Corporation. The increase in strategy revenue mainly reflected an increase in revenue in the FinTech field, in addition to the consolidation of LINE Corporation.

The total of operating expenses (cost of sales and selling, general and administrative expenses) and other operating income and loss (other operating income and other operating expenses) was ¥983.6 billion, an increase of ¥252.0 billion (34.4%) year on year. This increase mainly reflected an increase in expenses accompanying the consolidation of LINE Corporation and an increase in sales promotion expenses at Yahoo Japan.

As a result, segment income increased by ¥34.3 billion (24.1%) year on year to ¥176.5 billion.

[Notes]
  1. *3
    Along with the consolidation of LINE Corporation in connection with the completion of the business integration of Z Holdings Corporation and LINE Corporation in March 2021, the “Yahoo” reportable segment was renamed to “Yahoo! JAPAN/LINE” from the fiscal year ending March 31, 2022.
  2. *4
    In the fiscal year ending March 31, 2022, Z Holdings Corporation revised its management segments following its business integration with LINE Corporation in March 2021. Accordingly, “Strategy” has been added to the breakdown of revenue, and the breakdown has been revised with respect to certain services and subsidiaries. Additionally, revenues for the same period of the previous fiscal year have been restated to reflect these changes.

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