Yahoo Japan Corporation (OTCPK:YAHOF) F3Q13 Earnings Call January 29, 2013 2:30 AM ET
Manabu Miyasaka – President and CEO
Toshiki Oya – CFO
Takao Ozawa – Operating Officer, Head of Shopping Company
Osamu Aranami – COO
Naoya Bessho – Operating Officer, Head of President’s Office
Yoshitaka Nagao – Nomura Securities
Takashi Watanabe – Goldman Sachs Japan Co., Ltd.
Taro Ishihara – Daiwa Securities
Yosuke Tomimatsu – Merrill Lynch
Shinsuke Iwasa – Mizuho Securities Co., Ltd.
Hiroshi Naya – Ichiyoshi Research Institute Inc
Taro Ishihara – Daiwa Securities
Unidentified Company Representative
Thank you very much for participating despite your busy schedule. We would like to start the Fiscal Year 2013 Third Quarter Business Results for Yahoo Japan Corporation. For this presentation we will have a live internet broadcasting and we will be distributing on-demand after this presentation.
So I would like to introduce the participants from my company. To your right, our CEO, Mr. Manabu Miyasaka. Next, our CFO, Mr. Toshiki Oya. Well, today’s procedure, Mr. Miyasaka will make a presentation about third quarter results. From the shopping company Mr. Ozawa will talk about the progress of Yahoo Shopping and the future initiatives and then we will go into Q&A. We plan to end this session at 6 PM. Let us start.
I am the CEO Miyasaka. I would like to expand about the financial results and the e-commerce is what you are very interested in. So Mr. Ozawa is going to make a more detailed presentation afterwards. So this is the fiscal year 2013 third quarter highlights.
Revenue year-over-year has increased by 9.3%; operating income has declined by 1.5%. This is the course under the new strategy for the e-commerce. The revenues coming from the e-commerce is basically zero, because we make this free of charge.
Another point is that we are going on the e-commerce revolution, we have decided that we will be very aggressive in promotion. So we have a very revised budget over the promotion of e-commerce revolution. So this is the reason why the operating income of minus 1.5% while the revenue increased.
In terms of the revenue for the quarter, this is the quarter revenue; you can see that the revenue has been increasing. In terms of the growth, it’s the next page year-over-year growth trends. You can see that the execution of the e-commerce strategy is the biggest impact but it has declined comparatively.
Going into the composition of the quarterly revenues. Overall, it has – it increased by ¥8.2 billion or 9.3%. The breakdown is the Marketing Solutions business, 13.3% increase. Consumer business, minus 6.7%. Other businesses there was a increase of 70.9%.
So the biggest portion of the business is Advertising business. I would like to talk more about our Advertising-related revenue. In terms of the advertisement, it has increased by ¥6.7 billion year-over-year, a 14% growth.
The breakdown of this is the Display Advertising was plus 25.9%, Paid Search Advertising increased by 7.7%. With Display Advertising, the premium advertising revenue year-over-year has declined by 5.2% but YDN and others has increased by 148.9%.
So the Premium Advertising, for the – you are seeing that revenue of advertising products excluding Brand Panel was mediocre, but that said, Brand Panel is doing well. So the other products so the prime display sector has been a bit slow.
Going to YDN, basically it’s the part of this is tracking more attraction. So this is the growth here. This is the quarterly revenue of advertising-related revenues via smartphones. It has increased by ¥5.5 billion year-over-year reaching ¥12 billion and the ratio has increased by 13.5% to 22.0%.
Next is the quarterly advertising-related revenue year-over-year growth trend. So for display, it’s 25.9% it’s showing high growth. The Paid Search Advertising, it has – the growth was 7.7% in terms of the growth trend, it’s ¥33 billion.
It’s the high proportion, but in terms of the revenue growth, you can see that the revenue growth has started to decelerate. In terms of the Paid Search Advertising, the system that we have despite this two years ago and gradually this impact has started to level off and this past year in terms of revenue in terms of the Paid Search Advertising have been putting in improvements.
So these effects have leveled off so that is the reason why this Paid Search Advertising has shown 7.7% growth. Going forward, maybe the single-digit level growth is what we are going to see for the Paid Search Advertising. That is our outlook for the Paid Search Advertising.
Next is the Paid Search Advertising revenue, it change by contributors by industry. You can see that in all the industries have seen a good trend. YDN, same situation, or across the board overall industry did well.
The premium advertising revenue overall is minus 5.2%. However, with the non-Brand Panel advertising has struggled. So overall it saw a decline of revenue by ¥7 billion.
So in terms of the quarterly e-commerce transaction value, so this is e-commerce including – it has increased by ¥31.3 billion. Transactions has increased that much. So it’s a year-over-year increase of 7.3%.
So at the year-end, shopping season, we have aggressive promotions in terms of shopping-related transactions. For the first time in a year we have been seeing an increase of transaction value while shopping has struggled but we have been able to see a increase for the first time in the one year.
The Auction business, you can see that we have accelerated the trend of the business for the four quarters in a row the year-over-year growth has been observed. So in this quarter, year-over-year it grew by 9.8%. So we are going to reach double-digit and it’s over 30% of these transactions came from smartphones.
So the quarterly profit trend is shown in this slide. Operating income growth trend is shown here. This is what we have. So based on these results, fiscal year 2013 full year business outlook has been revised. We have going to present upwards against what we have announced in October.
And this is the fiscal year 2013 full year business outlook year-over-year comparison. Please refer to this. So in the full year, our operating income is in the mid-single-digit level of gross operating income can be expected.
So this is the fiscal year 2013 fourth quarter business outlook. So as the trend seen in the third quarter, because we have now e-commerce strategy in the third quarter we want to continue this strategy.
We want to be aggressive in this strategy. So as a result, same as third quarter, the operating income, we are anticipating decline while the revenue will grow.
So fiscal year 2013 year-end cash dividend forecast is 10.5% year-over-year. So one thing I would do want to point to you today is the adoption of International Financial Reporting Standards.
Well, the details I think can be covered in the Q&A session. So from this page onwards, I would like to talk about the more details about each of the business segments.
First about the Marketing Solutions business. So this business, a fairly simply business with the media company at the center collecting users would be the core of the business and the users will accelerate the marketing solutions business will give advertisements to these users.
So, first of all, what is to be conducted is the Yahoo collecting a lot of users, especially for smartphones, tablets. Yahoo Japan, I think the issue was that Yahoo Japan it will be able – can Yahoo Japan be able to gather users to the smartphone tablets. But right now you are seeing that the top 20 services, DUBs is growing favorably.
Now, the DUB is the Daily Unique Browsers, on the other hand in terms of the app internet is being popular at the smartphones. So not only browsers, with the apps Yahoo Japan will be able to gather users. I think that has been a focus. You can see that we have 130 million and up of the cumulative downloads for apps.
So a year ago, when October to December, 65 million downloads and in the year, we have been able to double our downloads. So overall, will there be apps with the browsers we have been able to gather customers and users. I think we have been able to do that successfully.
Now, from this point onwards, I would like to refer to the initiatives that we have taken. To be able to increase traffic, what we have been doing, so first of all, what would be Yahoo News, which is one of our offerings; we have been able to offer official application of Yahoo News. I won’t be going into details, but per user using time these indices has improved.
So in the news app world among smartphones, there are various new ventures or rivals that have gone into this market. But Yahoo Japan, this news is the core of our business services. So we have offered this official apps and we want to protect the number one position in the news sector.
In terms of Yahoo Search, so on a daily basis, we have a very fierce share competition for search. So this is a thing that have been introduced previously. So to be able to offer better search results, we have original content so we have database.
So information can be shown in a hybrid manner. The recipe information can be shown. This is what we have providing as a service. Another thing that we do is in terms of the results of Yahoo Search this two characters and so this decoration, the skin can be decorated.
The users can use their favorite characters for search. So these kind of things can service. So gradually the service is increasing. So we have achieved 1 million daily unique browsers for this service.
So Yahoo smartphone optimization tool, since our release, we have been able to achieve 1 million downloads. So this is android app. So to optimize my phone battery how can do this? So people who are using their android smartphone this is a very impressing matter. So this is not a flashy app, but Yahoo as a company wants to become a tool on a daily basis.
So it’s very down to earth but it’s a indispensable tool. So Yahoo is a paper company that can provide these type of tools. So by providing this service, services revenue could get a great a support from our customers.
So Yahoo Analyst Search and Yahoo Search started to link displays to Yahoo Shopping pages. Of course, Yahoo Shopping and Auctions is conducting EC revolution and the new business is increasing and with that the customers and traffic has increased.
So Yahoo have these core services now with certain search we are trying to link this to Yahoo Shopping. So some of you may think that we should be more fast and aggressive in this, but from a long-term perspective, Knowledge Search with Search, whether there would be Knowledge Search and Search.
I think we have to use like this. So that is convenient for the users. So we don’t want to take a short-term view. So for instance with the – if these search results do only the Auction results, basically that will underline the competitive search and that in turn go under the competitiveness of Yahoo in itself.
So, for the e-commerce team and the media service team try to work together to have a optimal balance between these two types of services. So through these initiatives, I think we have been able to go forward with the initiatives to offer more good services to the users and how they are going to monetize this to attract more traffic in terms of P&L I would like to introduce to you some of our initiatives.
One is the Paid Search Advertising. So this is a local municipal level targeting, it’s now available. In terms of the Sponsored Search, going into the future, so, the change of the search engine has leveled off and last year we have taken lot of measures, various measures that affected more or less leveled up.
So year-over-year, this mid-single-digit level growth is what we are forecasting and we are saying that by emphasizing usability, well, of course, if you stretch yourselves, for instance, we can increase revenue if we stretch ourselves, but from a long-term perspective, I think we have to maintain a stance that the users come first and balance that with our revenue in the P&L. So year-over-year, mid-single-digit level growth is what we want to conduct.
Going to Display Advertising. Last year right now, the Brand Panel was struggling and we were taking various initiatives to try to revive this business, especially on branding advertising on the internet maybe difficult.
I think this was people were whispering about that but, through down to earth product improvements, the Brand Panel revenues year-over-year, we have been able to increase the revenue by 12%.
Of course, market conditions of course it comes into play but more than that, we have made these products so it will sell and everyone’s efforts put in place in which ad it was not the thing that we were doing but, so, the only place that you can do branding advertising is the top page.
So this is a rich ads of that we have been – without going to these rich ads and that has been appreciated very highly, so the rich ads in total top Brand Panel revenues was 30%.
And with this, I think this is balance is important is visibility and the advertising team and the top page development team are working together. So that the top page users and traffic is not being badly affected by this initiative.
Next this is the revenues of YDN. It has been growing rather favorably, it has more than 2.4 times as much as revenues we have this year. And next – and last year, November last year, from the margin solution the company have proposed that new advertising proposals.
And they have announced and part with the announcement of the EC revolutions that one of the pillar of that new strategy is that we need to make full use of both arts and technology for improving that effectiveness of the advertising. It would be technology-driven at the same time, we need to provide and that’s more artful and artistic expression.
This is that new strategy for Yahoo Advertising. So first of all, let me introduce our new technology. The first one is the Private DMP Service. This is Data Management Platform. This is coming out from that U.S. BrightTag and we have a capital tie-up with U.S. BrightTag and we try to take advantage of the technology for providing DMP. This is 0.2 seconds and it’s shown here.
This mean that, it’s just a big data, it’s not just installing and analyzing, but after installing and analyzing we are going to analyze that big data on a real-time basis. So, that this is using at a real-time is very important.
Now the using the analyzer data, but we need to analyze the data instantly at the current data on a real-time basis again. So this is why we are going to build all the DMP working with the BrightTag. And this is also where that the other pillar of our service is the Premium DSP, this is Demand Side Platform.
This means that’s the high-end of targeting where available so that with using the DSP in a more that’s the high-end Premium DSP available with us. And more specifically we would like to take advantage again with our big data and we would like to use that's a result of the Prime Display for providing more effective advertising.
That's all the private DMP and Premium DSP but both of these technologies are based on the big data. And as a part of the advertisement business. But looking from the clients and now, let’s go ahead with our big data but the client could not and cannot analyze the data by themselves, because they don’t have any ways or system.
So we would like to provide the solution for them. Now we are working together with the BrainPad Company and we established a JV for consultations for this big data analysis. So that once the client store the big data and on the Yahoo and they can analyze and we are providing that analyzing resources like the data scientist.
And last of all, we need to just base more on the apps and let me call it rich advertising but also we’d like to start the video advertisement business. So this is about, this is the video analogy is the platform on which we would like to provide the video advertising distribution, So that we can provide more branding advertising on a video basis on internet.
Next we will talk about the consumer business. First one is the Yahoo Shopping. And this is the cycle of – we have already explained and again, and again in the past. This is the ecosystem.
First of all, what we have to do first is that to increase the number of data buyers and need to have more merchandisers to be sold on the sites. So that’s why we make an service free and everything on a free of charge. This is that the e-commerce revolutionary.
Then what happened in the first quarter of this e-commerce revolutions and now we have more than 90,000 applications for store opening in the quarter and this is about 60 times in the many applications that we have on a quarter-on-quarter basis.
And on the left hand side, these are the corporate, the applications on the right hand side is that these individuals should have well balanced between the corporate sellers and also the individual sellers.
So as a result of that, this is that total number of applications, then actually what happens on actual store opening and when you look at this, this is the total number of that store ideas and 29,411, so that we have a 10,000 more stores opened quarter-on-quarter basis and then also it is described in the slide, but this is on an account issuance basis.
This means account ID basis. This mean that, not with that on definition, only the store opening. But after we have the applications and of the screening of the applications we issue that accounts to the actual sellers.
So now, some of this with 29,000 are getting ready for actual opening of the store but they think they include orders that the stores now we have over close to this 30,000. And as a result of that what happens with the number of products to sell on the sites and now we have the 30% more products are now being sold a competitor that end of year-over-year basis and months.
But still when it comes to the number of sellers, number of products it’s not announced still. So that we needed to activate that for all those number of products and sellers more aggressively.
So what happened with the transaction value on a monthly basis and just like this, the total monthly transaction values have been growing just like this in the three months in a row compared to the previous months. Just like this, and this three months in a row growth of the transaction values from the previous months, this means that actually, October to December 2011.
So this is the first time and past two years. And, it’s not only that we have a very favorable months in the three months but also we have been successful in the holiday shopping season in December.
And that was one of our focus of the strategy that this is the top page and all this exposed and that’s in the top page and we are promoting this in shopping seasons and that we have achieved a record high transaction values in December and holiday season and we could get off to a very good start in the e-commerce revolution.
And last of all and finally, we would like to have this ecosystem for all these cycles. When we look at the quarterly now we have an very favorable result of the transaction value, but now, first of all, we would like to increase the number of the sellers and like to increase the number of products and the merchandisers.
So that we can cover all the merchandisers and for the online retailers. So, we are happy that we can sell the advertising for e-commerce but still, we like to focus on the very initial part of the cycle.
There is an increase in the number of sellers, increase in number of product that’s sold on the site. Now, because in the past 14 years, we have been taken by the gradually and a very steady efforts for growing this. So that we like to anyway initially to focus on this initial process of this cycle.
Next let me talk about Yahoo Auction, YAFUOKU. And also we would like to increase the number of the products to be auctioned in a day but first of all we would like to start from the increase in number of buyers in this case, because from all this, to offer the bidding products.
Those are first things that starting from the bidders after they have expensed actual bidding and acquire a product they all those people would turn out to be that, those who offer their products at auctions. So that, first the first step is to increase the number actually the buyers, that’s why we provide them free of charge for the loyalty and this membership fee.
But the result is that now we have a 30% more the bidders and the new bidders and competitive than last quarter. So this 30% growth of the new bidders is that we don’t have any older data but the data is available after 2008. So compared to the 2008 and after that and we had a record high in the new bidders registration.
And as a result of that, this is that actual with the transaction value on the Yahoo Auction like this and just like the shopping and have been growing and making recovery in four months in a row. Now after the 2007 this mean that after the Lehman shocked the financial crisis, we’ve been struggling and again and again we have been struggling, but now it seems like that we can now see the light at the end of the tunnel.
And also in auctions we have a tried to increase the number of those who offer the products and for example B2C now we have more than triple of the number of B2C offers. And those number of products and offered by the corporate, they are companies, or that’s for all this professionals to show that they will have more number of products.
Now, but also we think that we are providing also the search services and so like to providing the shopping site systems on which that older people participated in auctions can have the easier transactions. And now we have 16,968 is the total of stores in the Yahoo Auctions now and eventually this is that the closer cycle of the Yahoo Auctions.
First of all, we’d like to increase the number of buyers and the buyers will turn out to be – those who offer the products and then also we can – and there is a loyalty because where they charge they loyalty – into Yahoo Auctions. So these are the shopping, the auctions.
Now, we have successfully increased the number of the sellers and those will offer the products, but on the other hand but we need to be very careful and to secure the safety of the market because some of the malicious are fraudulent and the merchants they also try to break into the markets.
So that’s why taken the advantage of what were the expense and practice and technology we would like to protect the market. But so far, we don’t – had any growth about the troubles or the items related due to that violation of the guideline for those – for the compensation for the missed items have not grown.
So that, so far that’s alright. But, we need to eliminate for any of these malicious and fraudulent practice or the illegal conduct. So that's why still we need to do our utmost best. Next let me talk about the premium membership business.
Assure again, this is part of the e-commerce revolutions, and we have released for the auction the premium, the benefits and also the premium membership of the auctions, but now after that bidding on the high priced items and have been – also this is a non-premium members, but now still we have this in the growth and there is a number of premium memberships.
And when we have offered, we offer that Yahoo Wi-Fi for only for the premium members. So this is very, very reasonably-priced offer only for that premium members, this is one of the benefit for them. Now last of all, let me talk about settlement and finance and other businesses.
Also for this and with the linkage and working with the Yahoo Japan ID and T-POINT has been growing better favorably. And last of all, we need to just explain about the most important points today and this is about, when you look at that on a quarterly basis and now we have a negative growth on the profit.
So that we like to explain about this from the management perspective. Since we have founded the company and we have experienced in the positive growth in both revenue and profits 16 times.
But now we have the negative growth for the first time since the foundation of the company, but we try to insist on that positive growth and profit, but rather than that that could become the number one e-commerce that’s why we changed the strategy and announced the EC revolutions and we make aggressive investment and spending for the future of the e-commerce.
So it seems with that now we have the negative growth in profit and everything is on our scenario now. And like this, now that we have made this challenge and we would like to insist on the winning in the e-commerce market like this. And also the other thing is that in e-commerce market we’d like to provide the better services and we like to be the number one.
But what we have done so far is that, when it comes to revenues and for example the loyalty and then also the monthly and the tenant fees and everything will be free of charge that will lead to the decrease in profits.
And other than that, we have invested for the promotion not only for the internet advertising and I don’t remember when we have made that kind of heavy amounts of investments for the TV commercials, but anyway that is one of the aggressive investments of advertising.
And the other thing is that and we got Paid Search Advertising I mentioned earlier, but this now have switched through that distribution systems and then we have some additional benefit for this in accuracy.
But now this effect have run its cost. So then we don’t have that kind of additional profits and also in the last Q3 we have increased the number of subsidiaries, so that’s why it was just additional profits, but also one again.
We don’t have that additional portion and then last of all, that the raise of the premium membership fee last year and it is also one that caused all the three additional effects of last year and now also the push to the profits to the lower on a year-over-year basis.
But these are all everything we always have factored in. So that’s why what’s important is what should we do next to make up for this. And we don’t think that we will keep making this negative growth but we need to overcome.
And the current situation is we would like to have and some specific set of actions to make a turnaround one of which is that the e-commerce and e-commerce could be that next growth driver and this means that for example and we like to just – and advertisement was the only focus for growing, but now we like to – now on we have two pillars, e-commerce and advertising.
Two separate businesses and initially as I mentioned earlier then shopping then we have – and the growth in the transaction value in three months in a row and then also we have a very favorable business also in Auctions. So then we again are off to a very good start.
In terms of advertising, there are various pillars of growth and we are preparing for that, number one is YDN, going forward this is going to have continuous growth and Premium Advertising with rich creativity.
We’d like to polish our capabilities in this area. And utilizing big data, this should be aggressive in utilizing advertising and video advertising business is going to be started. So these are things we have touched upon. Utilizing these new growth pillars, we would like to grow strongly overcoming the doubling of the various effects.
I have touched upon and the premium membership in terms of the – we want to add value to Yahoo Premium members and utilize various new talents to obtain new members. So through the premium members we would like to get close to 10 million of these memberships.
So, premium memberships, EC revolution and new advertisement initiatives and of course the base business that we have right now, but combining this for 2013, 2014 the operating income will be in the mid-single-digit level but that said, through the new growth ratios.
You see the premium memberships in advertisement we’d like to go back to the growth trajectory after that. So this time to be able to jump further we have crouched down, so that we can jump higher.
Of course, we will not continuing to be crouching down, we’d like to jump higher than before and ultimately what we are targeting is by 2010 some years, we’d like to bring operating income to ¥330 billion as double the current level and another one is that we want to become number one in transaction value, not only in operating income.
But in transaction value we want to be number one, so we have a higher goal and we would like to focus on a business. So that is the business results figures for 2013 third quarter. Thank you.
So Mr. Ozawa from Shopping Company he is going to report about the progress on the shopping business and operating initiatives. Mr. Osawa, please.
So I am Ozawa, coming from Yahoo Shopping Company. Thank you for your attention. As Mr. Miyasaka has explained, they were saying they were going to crouch down and then jump higher. So have very important responsibilities on the shoulders.
My fundamental long-term perspective, I still hope your perspective is on that level, but of course we are very focused in paying attention to the short-term results as well. So maybe I will be taking about ten minutes or so. I would like to explain so that you can continue to place expectations on our business.
So, Mr. Miyasaka has more or less given us the summary, but let me be repetitive but, on the seventh of October this was a new strategy has been announced. So there are three strategies in this that will be on the fees, free of charge whether making easier to have comment on it in terms of the function.
But this is alone for ten years, so the service level is not good but this is kind of the matter of fact but we are developing a new system. And this is within Yahoo Japan in terms of customer acquisition this is what we have to focus upon within the Yahoo Japan ecosystem.
So these are the three strategies that we have announced. So in this three strategies how this quarter have developed I would like to touch upon these points. So the actual initiatives that we took up to the mid-January there were about 100 initiatives that we have conducted in these areas.
In terms of the tenant fee we have brought this down meaning that we have 90,000 applications, right now, just like we going to start Yahoo BB, so we have a lot of backlog in terms of tenants and we are trying to go through and process them swiftly and with the number of stores that’s increasing, store acquisitions we have done that and in terms of the stores where we have acquired and the existing stores.
So we have tried to improve the tools for the stores. So there were 20 tools improvement or new functionalities provided in terms of tools for stores and the improvement of the shopping sites, whether it be the buyers or the sellers, if we ask through questionnaires, people say that Yahoo Shopping is very difficult to use.
So, it’s meaning to use that, so we have very harsh feedback. So I was very focused on this, but we have really one initiative that we have taken especially on focusing the platforms. We have lot of improvement on the smartphone pages. So I have gone through this, but of course I will refer to them and I will then go back.
Well, in terms of attracting more customers, as Mr. Miyasaka has pointed out, so we have 26 access through the linked with the top page of Yahoo Japan and that was the thing we have done to attract more customers. So more than 100 initiatives not only touching upon the fee base, we have conducted improved functions tools in attracting our customers we have taken more than initiatives.
But from my point of view, well, we just started to cover the holes, in a bucket full of holes. So I think that was what we have conducted in this quarter. I would also just like to explain according to this diagram. So we have received 90,000 applications, well, I will just skip this, especially the SMEs.
There isn’t a lot of more SME stores and you talk about long tail, super long tail. So these people, these stores will be very busy and they do not have the focus to try to the business in e-commerce, so they have their own physical stores. I’ve seen people say maybe one additional way of income from e-commerce.
So they don’t have this exclusive person in charge of e-commerce. So these people think, the SMEs think that you want to do business on the internet more conveniently. So we have developed the tools that people can open stores only on the smartphones. They only have to have a smartphone.
I think this is the first ever for the shopping mall, this started on January 22, whether be on the PC or the smartphone, it’s only five minutes since – that we could start a store. Of course, there is some screening. So once you go through the screening and actually start the store, if you use this tool it can be done in five minutes.
So we get started this service on January 22. So this actually attracted more than couple of thousand more stores because of this tool. So we have started to release this to individuals or actually just the other time, we have 40,000 plus people who had some pre-reservation of this tool and there is couple of hundreds of stores that opened using this tool.
So, there is a lot of long tail merchandise that have come on this side. So from a professional point of view maybe that type of merchandize that cannot sell. Well, people they are saying this is quite the same compared to what happened in Yahoo Auction when we started that service.
So this is another initiative that we announced this month. The local government can directly begin to open these stores. So this is an initiative to simulate the local government. This is a very important thing to simulate the local e-commerce evolution. So the long tail industries or some products that is a feature of the local municipality, of course, we can ask some companies to this piece of merchandize.
So this local government will pay advertisement and then display products. So we have 18 local government and we would like to expand this business just to all the 1,700 local governments in Japan. So this is one other type of long tail products that we are looking at.
So of course, as you know, in terms of the head and the tail, in terms of the head, in terms of the short-term perspective this is where the actual turnover comes. So this is a lot of big companies and these big companies have started to place stores. And these are the types of product companies that have started to participate on Yahoo Shopping.
So we cover both the head and the tail of the curve. So, more sellers, more products, we have been able to achieve that and as a result what’s happening is that more robust competition is happening.
So this healthy competition to be able to stimulate that, the promotional tools is necessary for the sellers and these are various initiatives that we took. So I have received a lot of initiatives.
So these are sales promotional tools. For instance, of course advertisement is the best thing for us, but for instance coupon, issuing coupons or to offer prices and obtaining their addresses and then giving out advert notices to e-mail. So other companies has been having this function for ten years ago but we didn’t have that. But we have been able to provide the service.
For instance, 2500 stores registered for this offering prices tool and there is about 1 million e-mails that were placed for these prices, for coupons, very last coupon the start coupon, 9,000 types of coupons has been registered in two months and 450,000 in total, so about 710,000 are cumulative in total has been acquired in terms of this. So more than 50,000 coupons were actually used.
So the sales promotion tools have been more extensive, so even if the same part of the same 100 stores are showing the same products, some people say that we get coupons, so we will send it for free.
So, I think these tools, especially has been developed and we have smartphone pages, pages for smartphone optimization tools for smartphones. I think I was shameful that we didn’t have these tools but I think we have been able to show the results once we have been putting these tools into place.
And this the latest tool is the store creator and this is all for beginners tools to build up the page. So that if we like to selling a ¥10 million, ¥20 million in a month and offer that store creators pro for all those that in the big stores.
But we have renewed and improved the technically the store creator pro also and with also that we are providing the tools for them. This is now we have more sellers, more products and now the competition is encouraged and at the same time we need to just improve that the selling platform.
For the Yahoo Shopping and we like to just make that site more attractive also looking from the buyers perspective. So we are doing a lot. And now we are having more and more smartphone platform users.
So now for the smartphone users we have made a big improvement for them for example, and that depends on a day for example, 60% or 100% even and some day’s transactions. So, when it comes, also when optimizing the ranking, because the ranking is a very, very favorable for the Japanese and then also we are doing lot of promotion activities and also for the smartphones.
Now, we have the transaction value of the smartphone have grown more than 50%, that’s year-over-year basis on a quarter. And also now the catch up with – for the all this smartphone and the daily unique browsers and I think we have successfully delivered good business volume mix.
Next renewing that the sites based on the trend. So, we didn’t changed many anyway for the past seven years, so that we have renewed that top page and for the first time in the seven years and now also have made a very good fruit for us and just like this and also the cart, also we have improved the carts for the business.
But there are convergent rates and we have made all these improvements including the cart for the smartphone. And also on top of that starting from today, when we try to sell of the longer tailed products and now we are accepting the more individual sellers. But how – for all these products can be sachets, if offered by the individuals.
So that we have two separate views for products offered by the individuals and offered by the corporates. So it’s still in a experimental stage but now we are starting today this is very – and likely where you have some very strange and awkward products also be offered.
But anyway, I would like to appeal that anything can be available, so that we like to be very aggressive on this. And now we are having more the top users join in the market. So that’s why we have about specific the top page for tablets. So this is the larger visuals and the page it will be released on the February 5.
This is the tablet version of the page. By doing all this now the sites will become more attractive for the buyers I think. And now we are going into this cycle through this process and now what happens next is that I’ll mention that we just repair the holes in the buckets and that we need to flow the water in these repaired buckets.
So, this is actually what we have done so far for the flowing the water on the repaired buckets. So this is that our promotion by using the mail. So we have been very careful in not making all this mail as spam mails, that for example, those who have just put the product under cart, but not – didn’t proceed to the natural purchasing for all these users.
So we have just push to those users to proceed with that buying process by using the e-mail and that’s been very effective and also we make much use of this in the top page of the Yahoo Japan in the calculation.
And also, inside the Yahoo Search and ranking also will be shown, so this is just the hot selling items on the Yahoo Shopping site will be displayed and part of the Yahoo Search and also introduced at the corporation with the Yahoo Knowledge Search share will grow.
And as a result of all these measures and this is the total number of store openings and the total transaction value has been declining and for the long-term like this and we announced the new strategy at this moment of time and adding and implemented.
All these kinds of measures and we made a turnaround and the study to come back again and now we get ready to compete in the market now. It’s not all and I just mentioned that I repaired the hole of the buckets, so that what would be next and first of all, we like to acquire more stores.
Now we have applications of 90,000 but still out of this 90,000 and many of them are still do not start to actual opening of stores but now they like to again open the store one after another one including the local governments. And we like to provide that the system assistance.
So that we like to enhance our system development resources, so that we can assist them to open more stores. So that how the store opens and we have more products and we also improve the more specific tools and the store creator pro and store creator and for all these steps and the supporting tools will be brushed up and improved.
And the store creator pro is a lead version of the store existing store creators and also for the largest store operators and providing 50 APIs as a way to make public. So that for the largest stores can take advantage of APIs and to build up their own stores on the sites.
These APIs will be offered this summer and with this API there is a largest store operators can be edge out and can operate in the stores and also we are providing some – all these in the new top page for the tablets.
Now we have the categories, only half of the competitors would like get them double, we have more product categories and if we have them more products and a more shopping opportunities and some of the buyers were just confused what product should be bought.
So that’s why the recommendation, duration and searching for all these elements will be just technically an integrated and offered to deliver the solutions for that potential buyers for easily searching the products.
For example, the advertising and in the distributions based on the experience and this can be also be and the further recommendations and functions of the e-commerce, in other words we still try to develop that and when it comes to enhancements of the joy and the customers we like to have more collaboration with Yahoo Japan.
So that we can enhance that all this push of joy in the customers. This is the important point is that enhancing the advertising and first of all we like to maximize that transaction value and now we have the more sellers and all the sellers will try to use that advertising.
So that will allow this so that’s why first of all the making that’s a very strong and shopping more. But now we are thinking about where will be that advertising should be offered for all these sellers in the future. We have always started this up. That’s all my presentation. Thank you very much.
And in summary, now we have the merchandizing and we have the traffic, now we understand we have – sure have that’s in the more transaction volumes and there is still where all the common things – we have tons more things we have to do and anyway that we have taken many actions and actually so far that we have made a B shape to turnover and recover the business. That’s all. Thank you very much.
So, we would like to go into the Q&A Session.
Yoshitaka Nagao – Nomura Securities
Thank you very much for your presentation. I am Nagao from Nomura Securities. I have three questions. So, I will ask them one at a time. So, the third quarter Shopping business have maximum value has gone well. So if you break it out, it gives the number of users increased or the ASP has increased or is it both? So I would like to ask more in detail what was the reason why the third quarter transaction have increased this much?
Yes, in terms of the breakdown, so in terms of the conversion rate in ASP, looking in terms of the UU I think we have been very aggressive in terms of promotion inside Yahoo and outside of Yahoo and that has increased. In terms of the conversion ratio, to be frank it’s still in the midst of improving.
In December, on November, December it was still on recovery check and from December we have started to see a turnaround in terms of the conversion rate it’s still below the previous year. In terms of ASP, it is gradually going up. So in terms of the number of users and the ASP has driven the results from October and November and December that has become better. And in terms of – it has improved month over month. So that has been the reason really.
Yoshitaka Nagao – Nomura Securities
Thank you very much. So the second point I want to ask is that, including the corporations individuals you have 90,000 people have made reservations to open stores, so what would be the pace of the store openings? So, at the end of the fourth quarter or at the end of next fiscal year what will be the progress of the store openings I would like to ask that?
Well in terms of the actual number of store openings, we don’t have an internal target, but I think we can’t really – because we don’t have any size or concrete outlook on that.
Yoshitaka Nagao – Nomura Securities
In terms of the transaction value overall, Mr. Ozawa has explained about that. So if you a very big company participate that’s good, and in terms of technological partnership is going, but how are you going to approach these new big businesses?
So, I think in terms of towards consumers, I think Yahoo is strong but I don’t think the Yahoo is particularly strong towards the business. So how are you going to market your service to these big corporations?
Mr. Ozawa, maybe you would like to answer this question?
Well, API collaboration I think, that is a very important trigger. So the conferences we have conducted in March and we want to announce this API in March, so one thing we want to stretch focus is that we can make a call very easily. So this E-commerce new strategy the large corporations are receiving this very – appreciating this. And the manufacturers actually are behaving very interestingly.
So towards the existing retailers and maybe they have some thoughts. So they are looking at Yahoo Shopping as one of the direct marketing source. We have all service, we have direct marketing schemes and we would like to collaborate with the manufacturers. For instance, for instance is being kept on this so we like to link with that. So we have to routes basically.
Not even manufacturers but the retailers or the distributors they are operating stores we are doing this proactively. So I think this is the right from various aspects and from our point of view, during 2014, we would like to establish the vehicles of that we can link the manufacturers, distributors and retailers. Thank you.
Yoshitaka Nagao – Nomura Securities
Thank you very much.
I am from Barclays Securities. I have several questions. And my question number one is about advertising. When it comes to display advertising, the President, Miyasaka mentioned that now set ad will be in the middle of the single digit growth. But what’s your prospect of the growth for the display ad?
Particularly YDN premium advertising, we should combine them all or whether we should think it separately for example in a negative and premium advertising, but now doing lot of counter measures, you can make a turnaround for that. Or that and kind of the specifics I like to know particularly for the display advertising, including display advertising. What’s your idea on that?
Okay, well, when it comes to growth, the growth is that premium advertising or YDN we think let’s get them separated, so that I will explain that for separate, for the YDN in 2.04 times in the Q3 was a very strong growth we experienced and also in the Q4 again it would be close to double of growth we expect.
But the next year and farther we are going to have the more the basis of that the growth will slow down. But when it comes to premium advertising and we have a Brand Panel and other types of prime display or the other categories and there are some other categories but when it comes to brand panel, we think that, – like to enriching the brand panel more.
So that I think the brand panel grows more the double-digit growth and there are other categories we had to try to do utmost better now. Many of these advertisements will be migrated into that brand panel. So that it would be flat that best case scenario and it maybe likely just in the single-digits minus and negative growth we would expect.
Okay, thank you very much. My second question is about the Yahoo Shopping. Now you have a turnaround and a positive growth now, but when it comes that in – now we have more products that work with many of the items would be resulted in the search or that you make e-mails and promotions or.
An order for all these kind of measures, all these kinds of measures are all been effective or there is any difference in the effectiveness of all these counter measures you have taken?
Honestly, and it’s a mixture of good and bad and what’s effective is that we use that’s all to the top page advertising. It was very effective but it was – we need to think about the balance between advertising revenues and then also effectiveness in the ecommerce but it was very clear that will have effectiveness and on a top page advertising.
But when it comes to the result of the search, and we are experimenting lots and testing a lot and what will come out with rich specific, key words. We anticipated for several thousand key words are used, so if we increase this to the 200,000 and then lot of the more of the items on the Yahoo Shopping products will be resulted and will be shown in the results.
So, but we need again to take a balanced approach. So that I just think the faucets of the top and on the other hand, for example, the email promotion and recommendation mails, so e-mails you could do recommendations, this is sensitive to the potential buyers and this can be implemented within the scope of our e-commerce business.
So, but it was also very, very effective. So these two measures are very effective I think. So, for us particularly the e-mail promotion was very good. So this is sort of about pushing strategy, the pushing operation aggressively to the potential buyers.
Okay, thank you very much. My next question is about, also related to e-commerce and for the raise of the consumption taxes from the effective April and you are operating the mixture of individual and corporates sellers, but do you have any ideas how to deal with that or the negative or positive impact on the e-commerce with this raise of the consumption tax effective April?
There is a difference between shopping and auction and when it comes to shopping and I think the B2C is that main and that business model show particularly for some of the expenses appliances or durable goods will it be sold more before that raise of the consumption tax by the end of March.
So we expect some kind of a good impact, but we need to get ready for the reaction in full after the April. So that’s why starting from April that business will slowdown after that. But when it comes to auction, the mainstay of the business model is the C2C. So, it’s not like the shopping sites because it’s C2C.
So we expect still there is some demand growth as expected auction due to although the raise of the consumption tax.
My last question is about also again on advertising. You mentioned that you like to start the video advertising, but when it comes to media and for the video advertising would be there for example, delivery platform like or also you are going to distribute into outside of your platform?
I am not from a marketing solutions company, when it comes to the special distributions and initially our goal would be one of the main platforms in the media but when we make the announcement on November at you stream the point of media would also be utilized for as a media.
So you stream is one of the major third-party media, but is there any other media you are negotiating?
Yes, we are still in the middle of negotiating. So that once we have fixed that deal we are going to make an announcement.
Okay, thank you very much.
Next question please.
Takashi Watanabe – Goldman Sachs Japan Co., Ltd.
Watanabe from Goldman Sachs. Well, I have one question for advertisement and would like to – answer my question. The display advertisement personally I think there is still a lot of upside especially for the – excluding Brand Panel at the top page, so the others. So it’s YDN and I think there is some brand panel, non-Brand Panel appetite.
So how you are going to monetize that? I think that will be determined by the display advertisement team. So what I want to ask is that going forward, how much potential the upside do you think you have.
So YDN, I think they are doing well and the Premium DSP I think that's another hopeful candidate.
Takashi Watanabe – Goldman Sachs Japan Co., Ltd.
So CPM basis and you operating that and if you get the advertisement for the national client, I think – fully plighted to your revenues. So offering various advertising products, so, by offering these products in five years time, how much upside potential do you think you can achieve. You have some of the targets, some target I would like to hear about that?
Well, in terms of our personal ambition I do have my target, but if I say something here, I think it’s very misleading. So I would like to refrain from mentioning any numbers. But as you have pointed out, so we have introduced the private D&P business.
Utilizing the data, utilizing premium at the high ASP this is where it will be sold. I think there is still a lot of potential in this type of business. But at this point prime display, this was the type of advertisement that we have been doing, but we have offered this very powerful part of YDN.
On top of that, this Premium DSP there is new big pillar is what we want to construct. So I think we can place expectations on these type things. But for instance, this year it has grown display advertisement volume has grown more than 20%. For next fiscal year over 20% increase in revenues so that’s the type of growth that we can expect for display advertisement. Well, I would like – the highest growth rate as possible we will do our best.
Well just to add up, so for us what YDN means. When visiting in a way it has been very focused on this previously trends we are focused on this. We have the video and we have search results and we have timeline and we call the statistical visits that is pages, for instance YDN PV. In terms of Yahoo Japan, the biggest page view comes from the strategic pages. But in terms of the actual revenues it’s still coming from the very small proportion coming from the page search.
So I think, try to increase that part of revenue is what the. So we have timeline, we have video advertisement, but I think the static pages were the first to come out. So we have a lot of assets related to it.
So YDN, I think, once it goes well then it has – the increase for instance Premium DSP, video advertising, a few of them take various measures. I think that the huge potential for this type of services and I think the rest is up to us and how much we can utilize this.
Takashi Watanabe – Goldman Sachs Japan Co., Ltd.
My second question is, I would like Mr. Ozawa to answer this question, but in terms of shopping, so you have introduced the tool meaning that, so people can easily open stores using this tool.
I think one other talent is that sending of these merchandize I think, sending it out. So I think that’s very cumbersome. So for instance if you sell something you put it into fiber boxes, ask to get it send it out, people who are working or people who are not specifically is the merchandisers that very cumbersome. So what ideas you have to resolve these type of challenges?
Well, that's a very difficult question to answer, but – you have entered there one, and you have entered it 10, I think this is a different approach. For individuals, you have only one inventory.
I think it’s very difficult for us to support that visiting your home, and well, asking there will be services to do that whether there be one or ten, originally we should do that as a fulfillment service when the orders are placed. So the store operators can just let us do the rest even if you would raise one.
That's the idea, but right now practically speaking, I think for the business entities that have a bigger level of inventory for the fulfillment service we or Amazon, it’s a type of service – it’s offering this type of service and we have at last being able to do that.
So for individuals, with another you are working trying to help that, I think in the short term it would be very difficult for us to offer that type of service. Personally speaking if you can call me, I’ll be able to do that, but I think that’s the level of service that we have right now.
Takashi Watanabe – Goldman Sachs Japan Co., Ltd.
Well, in terms of the – for instance the courier services for instance – Yamato if they come over to pick it up, I think for Yahoo Hong Kong and Yamato they have this kind of collaboration. Is that the type of potential that we should be looking at?
Well, in terms of the tie-up with these – this courier services, I think that’s one thing that we can do, but whether they will be able to do that within the cost or with some extra cost necessary, we have not been able to adjust that. Well, as a potential, I think the courier services are visiting you and I think that’s the type of service that we will be thinking. Do you have any other question?
Taro Ishihara – Daiwa Securities
I am Ishihara from Daiwa Securities Company. I have three questions. The first question is about – you have accepted 90,000 applications for the store opening and also and the idea is – actual idea is that- but this means that the technical problems or that then you have the lack of resources to handle all of this 90,000 applications? What is the reason?
Okay, let me explain that. First of all, more precisely, more accurate and these 90,000 where they are divided into 10,000 and 80,000, so this is 10,000 applicants have already have opened the store in the EC mall. So that’s why they can have some premium condition they can open the store because we could not offer that light tool for the building the page.
That’s why one we could offer was a very difficult and some technical difficulty too for them to use so that's why all the 10,000s have the experienced shop operator. But the 80,000 applicants had to wait for this 21 and we can offer that kind of tools for them to build up the page and store.
So, this 80,000 can be divided into further 40,000 for each, they are corporate 40,000 and 40,000 for individuals and effective January 29 today and we released that stores the space for this the half of the 40,000 out of the 80,000, we issued that IDs for them. But still this 5,000 out of this for all these ID owners have already built up their stores but still rest of them have some difficulty in building up their own stores and still they getting ready for them and but not able to open the stores as of today.
So, then now I mentioned earlier for all these rest of them can open the stores, just in five minutes even with a smartphone. So, that’s just observing the situations and if there is a need we like to promote any additional promotion measures.
Taro Ishihara – Daiwa Securities
Okay, thank you very much. My second question is about again shopping. So far net profits and the revenues from that fees but in the future you like to migrate it on the business model and based on the advertising, right? The advertising based business model and do you have any specific buyable picture of it? How you can handle that advertising revenues on that or do you expect some announcement on that?
We cannot explain in detail today, but we have a lot of discussion internally already and I am very sorry to disclose the details. But anyway, please look forward to the future announcement on that.
Taro Ishihara – Daiwa Securities
Okay and my last question is that, IFRS and going through the next year, if I understand next year that we’d like to comply with the IFRS. Do you have any impacts for example I think that there will be some impact or any message and why do you migrate and you adapt to this IFRS from next year?
Yes, I think that M&A is very important and actually part of the reason that we adopted IFRS is that’s encourage and doing more M&A that’s part of the reason. And if we have to just depreciate the goodwill and sometimes it’s very difficult for us to make the organic growth. So that for expanding M&A strategies, it’s part of the reason now are going to adopt this IFRS, yes.
Taro Ishihara – Daiwa Securities
Okay, thank you very much.
Let’s go to the next question.
Yosuke Tomimatsu – Merrill Lynch
Yosuke Tomimatsu from Merrill Lynch. I have four questions. Number one is the YDN potential. Going forward the YDN or from the targeting the advertising, so this paid will it exceed the revenue or the Paid Search Advertisement is that the expectation?
The Paid Search Advertisement is a single-digit growth so, doubling the operating income to be able to get that long-term vision. So I think the average advertisement has to grow that will be difficult to achieve.
So what will be the actual source of this potential, growth potential for instance? So will there the accuracy of the targeting is going to be better? If the ASP is going to go up? Which will be the growth driver for the mid-term?
I will start first and then Aranami will follow-up. Well the biggest potential will be coming from the inventory, well, I said inventory but in terms of where to expose the advertise spend there is a lot of potential, so we have to go there another to is the media service company will be working for this.
The medial service company will be center to aggressively developing products and increase the inventories. So this will be synergetic growth. On top of that, in terms of another point is that, advertising technology, so utilizing data, pulling up ASP, increasing the volume at the same time increasing the ASP?
I think that’s what we want to do for growth. Of course we have to make either site of Yahoo, but Yahoo is a company that generates traffic internally. So our internal traffic I think that’s added value that we have. So internal traffic increase is what we want to focus on going forward at the end. Let’s turn over to Aranami.
Yes, Mr. Miyasaka has actually said it, that’s what I want to say, but in terms of the scale, the sponsor, whether the business would be exceeding the sponsored search, well, until it reaches the same level, we will continue to put efforts. And in terms of the driver I think we basically did two. One is the utilization of the data; number two is the rich expression.
So the rich advertising video advertisement and these two will be the drivers, that’s what I think. Well, the second question is that, in terms of paid search advertise spend you are talking about the mid-to-single-digit level growth.
So, smartphones, tablets, PCs maybe it’s not sense to try to divide it, but in terms of the total growth maybe it will grow in a single-digit. So in terms of the number of growth of the queries, but if in terms of it will – what and so we think why you are thinking that revenue growth below that is that the number of queries is going to go down or in terms of the advertisers, so they are looking more to YDN which has been effective.
Yosuke Tomimatsu – Merrill Lynch
So I would like to have to your view in terms of the paid search – your total about the paid search ad?
Well, in terms of the queries, I have given you the outline, the total number of queries has been growing. But it can continue forever, maybe we have a situation that the trajectory will start to slowdown in this one or two years, the biggest that’s going to come in is that the PC queries is going to go down and the smartphones, tablets is going to grow. For the smart devices for tablets, I think vis-à-vis going to grow, but for PC which has a huge portion I think the growth is going to staggering. I think this will offset each other more or less.
Yosuke Tomimatsu – Merrill Lynch
Thank you. The third point or question is that, in terms of the personal information, how you are going to deal it. So the government or professor from (inaudible) university has a committee and they are discussing about how to handle the personal information and I think you are top the legal division has said that it’s heading the wrong direction.
So, is it – we think this has sent a message that maybe this shadows your future growth. So what will be the risk to your company if there is no reason to worry? Can you then if that is the case can you explain?
Well, we are conducting activities, so that there will be no concerns. So Mr. Bessho would you like to explain about this?
Well, the government – I am Bessho; the government is saying that we are observing, so we are trying to work so that will not go to the wrong direction. In terms of the current regulation the rules still lacks. That still have loop holes, lot of companies if they can actually conduct the business, but I think basically they are holding back because they are concerned about being pointed up on the whole society. I think basically the company’s position is that we should show good behavior and get approval from the public. So if that is the case, I think as a company we will be able to go towards the good direction.
Yosuke Tomimatsu – Merrill Lynch
Well, lastly about the EC business. So the settlement, is this unanticipated to conduct the settlement within Yahoo, so for an external parties? So maybe the external parties are saying that that can be conducted outside. So the EC traffic, if that increases, maybe if we just make the settlement left to the external companies, maybe you can say that the strategy has been a success.
Are you really focused on the settlement should be conducted in Yahoo or maybe just if we just insist on doing settlement internally would not that contain the growth of the e-commerce strategy?
Well, I have never thought that leaving the settlement to other external companies will lead to the growth of the company. So having the settlement internally with the settlement to data with the customers is very important, it means that we will be able to understand the customers better. It means that we will be able to offer a better service.
Another point is that in terms of security having the settlement function internally and guarantee services as well, I think the good shopping for us and the settlement service is the two wheels – pairs of wheels for the vehicle. So, for the external party, the settlement is a great way of business.
Yosuke Tomimatsu – Merrill Lynch
So I think the external parties just think that they want, you think the merchandiser you the merchandiser, not the settlement compared to the merchandisers. Well,
Well for the Yahoo Shopping, well, because we have made charge in terms of links there is no constraints, you can link it externally so depending on the merchandisers. Maybe put a link and then I think people – they can shop at their own site.
So it’s not the case that we have it strictly regulated. And so it’s not an issue for you. And so because if you settle it externally, basically we won't be able to be on the top ranking in terms of the shopping.
Well, just let me add up, in terms of settlement, if you just look – you are not just looking at settlement, you are looking at the total purchasing process, so as Yahoo you need to provide procurement appreciation process. It’s what we want to provide to the customers that would be safety, security, the .com and the settlement is outside of cargo.com.
So, the customers, I think they are feeling uncertain whether they can actually show their card number to them. So depending on where they buy from, maybe the customers will feel uncertain. If they have to, you can give their credit number if you mention to external parties.
But if you place in Yahoo, it’s internally done, so that it’s safe and secure to the customers. So, one other point I want to make is that, there are some information that we get in exchange of what we are offering for free. So whether you have to purchase it or not, so you can do that external with settlements not conducted externally you won’t be able to get the information.
So if once a person purchases something, we will be able to send our e-mail. So in terms of the data how much and what amount, et cetera, we can give that back to future pricing strategies. So, this is the type of data that we want. Another data we want is the inventory data. For us the inventory, so when we are offering the ranking, it means that we won’t be showing a product that the inventory is zero.
So, I think that’s one of the value adds. So, as far as we are offering these free of charge, there is some data that we want to get in exchange of this. Well, maybe I be told by the President, I’ve been very frank with you, but that’s our intention. Let’s simplify in terms of the settlement, in terms of the procurement, we want to be concluded within our internal company.
Okay, now the time is limited. So, do you have any questions? With the next question we would like to – make the next question the last one, is there anyone? Okay, thank you very much for your joining us today. That’s all thank you very much. Thank you.
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