Analysis of Operating Results

Consolidated Results

Revenue

  • Consolidated Results Revenue
  • For the six months ended September 30, 2021, revenue increased across all segments by ¥295.8 billion (12.2%) year on year to ¥2,724.2 billion. Revenue increased by ¥193.7 billion in the Yahoo! JAPAN/LINE segment, mainly due to increased revenue in connection with consolidation of LINE Corporation, by ¥77.2 billion in the Consumer segment, mainly due to an increase in revenues from sales of goods and others, by ¥16.3 billion in the Enterprise segment, mainly due to an increase in demand for solutions associated with digitalization, and by ¥1.8 billion in the Distribution segment, mainly due to a solid increase in revenue from subscription services.

Operating income

  • Consolidated Results Operating income
  • For the six months ended September 30, 2021, operating income decreased by ¥18.8 billion (3.2%) year on year to ¥570.8 billion. While operating income increased by ¥17.2 billion in the Yahoo! JAPAN/LINE segment that included an increase associated with the consolidation of LINE Corporation, by ¥9.5 billion in the Enterprise segment, and by ¥0.3 billion in the Distribution segment, operating income decreased by ¥41.7 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.

Net income attributable to owners of the Company

  • Consolidated Results Net income attributable to owners of the Company
  • For the six months ended September 30, 2021, net income attributable to owners of the Company decreased by ¥7.8 billion (2.5%) year on year to ¥307.3 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 ¥7.1 billion, and an increase in net income attributable to non-controlling interests of ¥9.8 billion, while there was an increase in financing income of ¥13.8 billion due to gain on valuation of investment securities and a decrease in financial costs of ¥10.2 billion due to a decrease in loss on valuation of investment securities. The increase in net income attributable to non-controlling interests was mainly due to the effect of a decrease in the share of voting rights of Z Holdings in connection with the business integration of Z Holdings and LINE Corporation.

Adjusted free cash flow*1

  • Consolidated Results Adjusted free cash flow
  • In the six months ended September 30, 2021, adjusted free cash flow was positive ¥67.8 billion, a decrease of ¥349.8 billion year on year. This reflects a decrease of ¥62.3 billion in net cash inflow from operating activities and an increase of ¥297.6 billion in net cash outflow from investing activities. The decrease in net cash inflow from operating activities mainly reflected an increase in outflows associated with a decrease in trade and other payables, a decrease in inflows related to deposits in the banking business, and a larger decrease in income taxes refunded than a decrease in income taxes paid, while there was an increase in inflows associated with a decrease 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 (Z Holdings Corporation and its subsidiaries), 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 ¥77.2 billion (5.9%) year on year to ¥1,378.4 billion. Mobile revenue decreased by ¥34.6 billion (4.1%) 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 ¥6.6 billion (3.4%) year on year. This increase was due to an increase in subscribers of the SoftBank Hikari fiber-optic service. Moreover, electricity revenue increased by ¥19.9 billion (42.0%) year on year. This increase was due to an increase in subscribers of the Ouchi Denki (Home Electricity) service. The increase in revenues from sales of goods and others was mainly due to an increase in unit price of mobile devices associated with the rise in the composition of high-priced mobile devices and an increase in the sales volume of mobile devices associated with the recovery of mobile device sales 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 ¥1,013.8 billion, an increase of ¥118.8 billion (13.3%) 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 sales volume and an increase in the cost of products related to the Ouchi Denki service.

As a result, segment income decreased by ¥41.7 billion (10.3%) year on year to ¥364.7 billion.

Enterprise segment

  • Revenue

    Enterprise segment Revenue
  • Segment income

    Enterprise segment Segment income

Enterprise segment revenue increased by ¥16.3 billion (4.9%) year on year to ¥350.9 billion. Within Enterprise segment revenue, mobile revenue increased by ¥8.2 billion (5.6%) to ¥156.4 billion, fixed-line revenue decreased by ¥1.1 billion (1.1%) to ¥93.3 billion, and business solution and others revenue increased by ¥9.1 billion (9.9%) to ¥101.2 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, security solutions, and digital marketing advertising, 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 ¥276.8 billion, an increase of ¥6.8 billion (2.5%) 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 ¥9.5 billion (14.7%) year on year to ¥74.0 billion.

Distribution segment

  • Revenue

    Distribution segment Revenue
  • Segment income

    Distribution segment Segment income

Distribution segment revenue increased by ¥1.8 billion (0.8%) year on year to ¥236.2 billion. This was mainly due to solid growth in subscription services such as cloud and SaaS, which have been strategic areas of focus, in the six months ended September 30, 2021, while there had been an increase in revenue from large-scale project orders from the municipalities in the same period of the previous fiscal year.

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 ¥224.0 billion, an increase of ¥1.5 billion (0.7%) year on year. This increase was mainly due to an increase in costs of products in connection with the abovementioned increase in revenue.

As a result, segment income increased by ¥0.3 billion (2.5%) year on year to ¥12.3 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 ¥193.7 billion (34.8%) year on year to ¥751.0 billion. Within Yahoo! JAPAN/LINE segment revenue, media revenue increased by ¥141.9 billion (89.4%) to ¥300.5 billion, commerce revenue increased by ¥34.9 billion (9.9%) to ¥387.8 billion, strategy revenue increased by ¥15.5 billion (37.9%) to ¥56.3 billion, and other revenue increased by ¥1.5 billion (30.0%) to ¥6.4 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 ASKUL Group (ASKUL Corporation and its subsidiaries) and ZOZO, Inc., in addition to the consolidation of LINE Corporation. The increase in strategy revenue mainly reflected an increase in revenue in the FinTech*5 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 ¥635.5 billion, an increase of ¥176.5 billion (38.5%) 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 ¥17.2 billion (17.5%) year on year to ¥115.5 billion.

[Notes]
  1. *3
    Along with the consolidation of LINE Corporation in connection with the completion of the business integration between Z Holdings Corporation and LINE Corporation in March 2021, “Yahoo” changed its name of reportable segment 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 revenues, 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.
  3. *5
    FinTech is a term coined from the combination of finance and technology and refers to a variety of innovative services that combine financial services with information and communication technology.

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