SoftBank Corp. (OTCPK:SOBKY) Q2 2022 Earnings Conference Call November 4, 2022 5:00 AM ET
Company Participants
Kazuhiko Fujihara – Board Director, Executive Vice President and CFO
Conference Call Participants
Yoshio Ando – Daiwa Securities
Daisaku Masuno – Nomura Securities
Mitsunobu Tsuruo – Citigroup Securities
Satoru Kikuchi – SMBC Nikko Securities
Shinji Moriyuki – SBI Securities
Chiba Kitz – JP Morgan Securities
Hideaki Tanaka – Mitsubishi UFJ Morgan Stanley Securities
Yusuke Okumura – Okasan Securities
Operator
Thank you so much for waiting. We would like to begin SoftBank Corporation Investor Meeting for the six months ended September 30, 2022. We would like to introduce today’s attendees. SoftBank Corporation, Board Director, Executive Vice President and CFO, Fujihara; Finance Unit, Finance and Accounting Division, Vice President and Head, Naito; Finance Unit, Strategy, Finance Division, Vice President and Head, Akiyama. Today’s presentation will be broadcast live via the Internet.
Now CFO, Fujihara will explain an overview of the business results.
Kazuhiko Fujihara
This is Fujihara. Thank you so much for participating today’s meeting, taking time out of your busy schedule. This is today’s agenda. First, I would like to talk about the consolidated results for the six months ended September 30, 2022. And second, I would like to talk about PayPay consolidation, which we completed on October 1st. And the third, we would like to explain about the full year forecast for fiscal year 2022, including the upward revision.
Today, we cover a variety of topics. First, I would like to talk about the first half of fiscal year. This is results for the fiscal year. Q2 increased in revenue, but decreased in profit. On October 1st, we had PayPay consolidation. So therefore, we have remeasurement gain of PayPay, which is expected to be recognized in the next fiscal year, and we are – steadily improving.
Next, we would like to talk about the revenue. The revenue increased in all segments. Here is the breakdown. Yahoo! JAPAN/LINE and distribution are both above JPY 30 billion, which contributed the most. As for the full year, JPY 900 billion has not been changed but in the second quarter – sorry, second half of the year, PayPay will be included. Therefore, against JPY 5.9 trillion and we are quite positive. And next is about adjusted EBITDA, Yahoo! Japan and Z Holdings are the only reported before EBITDA.
So, as you can see at last fiscal year, we had the one-time part on the gain on sales of YJFX so therefore this year we see – this fiscal year, we see the little bit of decline. And here is the operating income. As a whole, JPY 72.3 billion negative year-on-year, which was due to the impact of price reduction, mobile service price reduction. As for the enterprise, it shows decrease however, it’s due to one-time factor. And as for consumer, we have reinforced recruitment. Therefore, it shows negative. However, as for the full year, we are expected to reach the target.
Let me talk about each segment. As for consumer, the revenue of consumer segment is overall JPY 7.1 billion positive year-on-year. Sales of goods and others is minus JPY 35.3 billion and minus 11.9%. However, the second quarter is plus 29% even though we see some negative figure, but it shows the remaining of the Q1. As for the electricity, you can see we have a great contribution and we have some campaigns in terms of broadband area. Therefore, we see revenue decreased despite subscriber increase. In terms of mobile, we have minus JPY 29 billion, minus 3.6%.
Let me talk about – operating profit of consumer segment. As for sales of goods and others, as for gross profit, it’s minus JPY 24 billion, and we have recovered in the second quarter. Now the electricity, the sales increased by JPY 75 billion. However, due to the cost increment due to the increment of electricity price in the market, which shows the negative impact.
And also, sales commissions and sales promotion expenses shows minus JPY 1.7 billion, but as for the breakdown, acquisition – customer acquisition-related expenses were minus JPY 21 million. There is deferred expense this semester. However, the cause of this negative impact is from the previous year. And depreciation and disposals are minus 1.3% due to the shutdown of the – the shutdown cost. And also, as for others, we have plus 1.3%, which is contributed by cost reduction efforts.
And next, enterprise. Business solution was the main focus. So, this quarter, in the first half of this year, business solution and others showed JPY 13.2 billion positive and 13% plus. As for this quarter, we have been able to book remeasurement gain of business integration. However, due to the provision for litigation against PayNet. So, therefore, we have some minus JPY 9 billion.
Excluding one-time factor, the business as a whole, we are on steady growth. So, we are going to put even more effort to achieve the target in the second half of this fiscal year. And regarding recurring revenue, we would like to – we have achieved 10.7% increase year-on-year so we would like to focus on non-recurring revenue even more.
Now next is Yahoo! JAPAN and LINE segment. It shows positive – JPY 33.9 billion year-on-year. However, segment income shows minus JPY 16 billion year-on-year. That’s due to the absence of gain on sale of YJFX and also a remeasurement gain of business integration of LINE MUSIC, that’s why it shows minus JPY 5.8 billion [sic – JPY 5.9 billion] of one-time factor.
Now, distribution business, especially revenue increased by 15% year-on-year. Income was up by JPY 100 million of both revenue and income increased in distribution business, and chart on the right-hand side is for your reference. Talking about the net income. Financial income/loss, we saw big numbers here. One, litigation-related expenses or provision for our litigation, JPY 9 billion.
And last year, we had valuation gain and this fiscal term, valuation loss happened. And PayPay has been improving which contributes to the total performance. Income taxes coming back positively and progress-wise, 44.7% year-to-date, but taking into account of revaluation gain of PayPay, we should be able to revise full year forecast upward CapEx.
We focus on 5G this year, which has been doing well. We have more CapEx than last year in terms of 5G investment and progress-wise, 40.5% so we should accelerate further for the rest of the fiscal year. IFRS 16 increased by JPY 14.7 billion due to a colocation contract renewal. From balance sheet perspective, we recorded a bigger number than usual, but just IFRS 16 impact. Free cash flow, a little bit lower than last year, down by JPY 7 billion, but for the full year, we are looking at JPY 600 billion. Decline in EBITDA and operating income are negative factors, but – should be offset by income tax.
For investment, we invested heavily in PayPay, but PayPay doesn’t need that heavy investment anymore. And even though we pay a lot for 5G investment, but still overall, investment is a little bit down from last year. Net interest-bearing debt and net leverage rate, excluding Z Holdings, we see a decline by JPY 0.6 million – excuse me, JPY 60 million – JPY 6 million.
Balance sheet, total assets, JPY 13 trillion – even paying dividend, we see positive number and fair value should be applied for PayPay as of end of September. Then, total equity to total assets increased to 23.4% even after dividend payments. I will talk more about it later.
Now let me share with you KPIs. Mobile subscriber numbers which – is progressing well, about 7% increase year-on-year. Churn rate, a little bit higher than last year, but recently, we see a slight improvement. Net additions by the quarter is shown here. Smartphone net additions, JPY 400,000 for the quarter or JPY 70,000 up year-on-year and again, it’s been going well compared to previous quarters.
Main subscribers’ net addition JPY 200,000 or JPY 14,000 increased from last year. Another KPI ARPU which I’m sure interested in, ARPU decreased by JPY 200. Let me clarify one thing on the right-hand side about Y!mobile last year, 200 may look very strong, if you will. What happened last year was an introduction of a [inaudible] plan for Y!mobile and also, we did one month free for basic charge in FY ‘21. So, that was a one-time impact last year.
On top of that, voice and value-added service has been growing better than our – at the beginning of the fiscal year forecast that contribute to JPY 230 total ARPU forecasted for full year. At the beginning of fiscal year, we were looking at JPY 270, if you look at the bottom right corner. And we got feedback in the first quarter and maybe you overestimated which turned out to be true. So, second quarter, we were looking at JPY 200, and for the full year, we forecast JPY 230.
Broadband going well and electricity, we are very cautious doing this business because of the volatility of the market. And the Yahoo! LINE, those numbers were already disclosed by those businesses. For revenue, both increased. Next chart shows ESG related topics. In September, we published Integrated Report 2022.
Now I would like to talk about PayPay consolidation. As announced, we established B Holdings and jointly managed by SoftBank and Z Holdings. As planned on October 1st, we executed this plan. Our voting rights is 46.1% as for our economic stake in PayPay and after the exercise of stock acquisition rights by Paytm, our boarding rights in PayPay has been 66%, and our economic interest will be 43.6%, which has no change.
And this is the segment change due to PayPay consolidation, newly establishing financial segment, major operating companies that constitute the finance segment; PayPay, PayPay Card, PayPay Securities and SB Payment Services. As for the registered users exceeded 51 million, which is 21.1% up year-on-year. On October 3rd, when we announced strategies, monthly users, MTU exceeded 25 million, which is almost half of the registered users and this has also increased by 12% compared to the previous quarter.
The number of payment transactions which PayPay is mostly focused on and GMV was up 43.4% year-on-year and the code payment market share of GMV of code payment is 67%. We still see more space to grow in this area and PayPay profitability, revenue and EBITDA are all going well. Since last October, we have no longer providing free of charge campaign and now we are very close to the position that we are able to see the PayPay’s turnaround.
You may be interested in how the PayPay profitability and its structure. So, this is about total take rate against the cost ratio, and total take rate was 1.1% last fiscal year, which was not covering the costs. However, this quarter, now total take rate grew by 1.6% which can cover cost of goods sold and fixed costs. So, as we call second and third layers, the finance services, as we accumulate around this service, we should be able to improve this total take rate further.
As for PayPay’s strategies, including PayPay Card, the Atobarai, the deferred payment would be a great contribution to increase the payment – the number of transactions. And we should be able to advance our services much closer to the users’ convenience. And we would like our customers to be able to use both QR and card payments, both. We would like to update as we move forward around this initiative.
And next is about SB Payment Service, which was explained in the first presentation today. This is an exciting business. And here, both revenue and operating income are growing steadily, continuing growing in revenue and operating income. As for GMV of SB Payment Service, as you can see, even for the first half of this fiscal year, we grew steadily. So, this company started for the in-group communications payment. However, now this business has grown to the non-telecommunications which are driving force of the growth.
Now let me talk about impact of PayPay consolidation. Revaluation gain, JPY 294.8 billion is confirmed in line with the consolidation and the change of accounting method, we recognized intangible assets. And annually, JPY 26 billion estimated amortization of intangible assets take place. So, all in all, operating income plus re-measurement gain and PPA amounts to JPY 767.4 billion. And net income for FY 2022 first half, considering the impact of JPY 189 billion on net income is JPY 426.3 billion or 80% of initial forecast.
As you can see on the slide, revenue stayed the same, but adjusted EBITDA and operating income, we revised upward in terms of forecast. By the segment, consumer even though performance is very good, but we remain the forecast as is. Enterprise provisions for litigation, which was not anticipated at the beginning of the year is now reflected here. Financial JPY 19 billion negative, and others JPY 40 billion negative, including strategic investments that are under discussion and also potential early shutdown of 3G equipment. So those are included in others.
Now let me talk about changes in accounting policies for transactions under common control. Most specifically, PayPay acquired at fair value and that was the same treatment done by Z Holdings. So, it was treated as the same way as acquisitions from outside the group, so PPA or goodwill need to be recognized.
So, the whole series of transactions are treated that way. It’s an appropriate treatment of a company that has been independent for some time and we go back as far as possible. So, we decided to apply the same treatment to Z Holding consolidation, which took place in June 2019. We made a press release as of 2nd of November for these changes of accounting policies from pooling of interest methods to acquisition method. So impacts are reflected like this. Numbers of FY ‘29 [sic – FY ‘19] were amended accordingly.
Impact of PayPay consolidation is shown here on the slide. On the right-hand side, illustration of PayPay share revaluation. PayPay were losing money, so book value was zero, but revaluation gain turned out to be JPY 294.8 billion from common shares and from preferred shares JPY 128 billion, of which, JPY 65 billion is OCI. Every quarter, preferred shares are revalued, so revaluation of preferred share was recognized as of 30th of September. On the – excuse me, left-hand side, again, the valuation gain from PayPay consolidation, JPY 294.8 billion and PPA amortization, JPY 28 billion – of that Z Holding JPY 23 billion and PayPay, JPY 5 billion.
Those are P/L impact and from B/S perspective, impact-wise 2.7% or 3% from total equity perspective. So, balance sheet has improved and net assets over JPY 3 trillion, cash flow remains the same. Reflecting those numbers and taking into account of which – retrospective amendment. Revenue stays the same, but operating income and adjusted EBITDA and net income were adjusted as you can see on the slide.
By the segment, full year adjusted forecast and FY ‘21 full year retrospective numbers were shown on Page 43, we will keep track of those numbers going forward. That’s all from myself. Thank you very much. Again, we have covered varieties of topics, and you may have a lot of questions. And now we are moving into Q&A session.
Question-and-Answer Session
Operator
Now we would like to move on to the question-and-answer session. [Operator Instructions] First, Ando-san from Daiwa Securities. Please unmute and ask your questions.
Yoshio Ando
Can you hear me?
Kazuhiko Fujihara
Yes, we can hear you.
Yoshio Ando
Two questions. One is about ARPU revision and on the other hand, consumer operating income remains the same. So which means that cost may increase, I believe, so the breakdown and your plan against that, please explain.
Kazuhiko Fujihara
First, about ARPU, JPY 40 up means a several million will be up and so this fiscal year, we will see the pressure – the cost pressure, which is more than JPY 10 billion, and towards the second half of this fiscal year, we would like to bring forward a shutdown schedule and we would like to keep some strategy investment as well as the promotion expense. So, we are considering in different aspects. So regarding the sunset shutdown, so that – yes that is included under others. And also, we will provide – allocate to the certain segment later on. But for now, it’s under others.
Yoshio Ando
And yes, I was surprised to see JPY 30 billion or JPY 40 billion for other costs. And you mentioned that is also including some strategy investment. I would like to know more about it. And also, sunset shutdown cost means you’re going to book some more expense?
Kazuhiko Fujihara
So strategy investment, and sunset, which accounts more in this JPY 30 billion to JPY 40 billion. As for sunset from ADSL, PHS and we are doing along with our schedule and where to remove first. And we are trying to bring it forward as early as possible. That’s why we are going to bring the cost also forward as well. We are constrained what we can do in the right way. And in the first half of this fiscal year, we were a little bit behind the promotion cost. Therefore, in the second half of this fiscal year, we would like to put a little more on the promotion – sales promotion.
And as for our strategy investment, we haven’t determined specifically in which segment so therefore, we are still under consideration. In terms of the actual amount of the – investment. So, this JPY 30 billion to JPY 40 billion will be booked to this fiscal year.
Yoshio Ando
Regarding the next fiscal year, is it going to be the profit increase factor?
Kazuhiko Fujihara
Yes, that could be said so. Which means, the second half of this fiscal year, we have a little more space to work around.
Yoshio Ando
Thank you so much.
Operator
Next question is from Masuno-san of Nomura Securities. Please unmute and speak.
Daisaku Masuno
I have two questions. First, about ARPU. Why do you think it’s going well? Advertisement and content and devices are all related to ARPU for SoftBank. Voice and value-added service, you mentioned are doing well. So again, what’s the background behind steady progress of ARPU?
Kazuhiko Fujihara
Well, ARPU is still a challenge, to be honest. That challenge or concern is shared by the senior management. And, of course, we have tried a lot of initiatives to improve ARPU and value-added services, for example, need to be focused even more and our sales team continues to work on that. And for voice, we thought that it will be even more challenging because of COVID-19 and other reasons in the environment. But now people are going out more than before and we think that we could revise our full year forecast. So that’s the background.
Daisaku Masuno
Talking about value-added services, content, advertisement, device insurance, what’s doing well?
Kazuhiko Fujihara
Well, device insurance is good and thanks to the huge customer base, we can be confident more so than last year.
Daisaku Masuno
Thank you very much. Then second question about change of accounting methods. PayPay’s fair value was JPY 136 billion as of 30 of September, but as of October 1st, JPY 294 billion. So 2 times increase first, end of September and second, 1st of October.
Kazuhiko Fujihara
Yes, revaluation gain comes in as of October 1st, then Z Holdings revaluation.
Daisaku Masuno
Looking at your press release for shareholders’ equity, JPY 318 billion. Does that mean increase by JPY 314 billion? Are there other things happening, but that was a huge event?
Kazuhiko Fujihara
When we applied equity method pooling, we didn’t use a goodwill, but now we used goodwill after the change of accounting method. Yes, back then when Z Holding was consolidated in ‘19. So it reversed back to year as of today.
Operator
And next, Citigroup Securities at Tsurou-san. Please unmute and ask your questions.
Mitsunobu Tsuruo
Thank you so much for this opportunity. One thing – related to Ando-san’s question around electricity. The pressure due to the inflation. I would like to hear more explanation.
Kazuhiko Fujihara
The annual increase of the cost is around JPY 10 billion. Yes, there is a pressure of that amount. I mean, so absorbed. So it means not annual to exceed JPY 10 billion is for annual full year.
Mitsunobu Tsuruo
And the question one is regarding Z Holdings’ business results, in which I attended the presentation, the advertisement income looks still optimistic. Miyauchi-san is leading the synergies of those Group CEOs and – but how you are going – how you have incorporated the deterioration of the business performance of Z Holdings this time? And what about next fiscal years’ plan?
Kazuhiko Fujihara
Thank you for your question. Regarding Z Holdings, I cannot make any straight comment as a parent company, but Z Holdings, there are some potentials we expected. But regardless of the further situation of Z Holdings, we will remain as a parent company. So Z Holdings have focused on the expenses and other business activities. So therefore, I’m not looking at this in too negatively, so but please refer to the Z Holdings’ report.
Mitsunobu Tsuruo
My second question is CapEx. So, it will be the same through the next fiscal year. So, the price – the cost reduction will be focused on the network. The core network has been reduced and 5G is not moving as fast as planned. So, the breakdown of the price reduction through the next fiscal year, if you could touch upon, that will be great.
Kazuhiko Fujihara
As for base station deployments and then this year, we are in the phase to expand the coverage, so which we are still focusing on. And we are committed to accelerate the coverage and I believe that we are not touching the competitive field.
Mitsunobu Tsuruo
So, the breakdown of the core network and base stations, can you elaborate on that?
Kazuhiko Fujihara
I would like to explain around that later.
Mitsunobu Tsuruo
Thank you.
Operator
Kikuchi-san from SMBC Nikko Securities. Please unmute and speak.
Satoru Kikuchi
Thank you very much for taking my questions. Two questions, maybe a little bit detail about increase of acquisition cost. First quarter, I believe JPY 21 billion and second quarter looks about the same. Is my understanding correct? JPY 21 billion for first quarter and JPY 21 billion for second quarter. You mentioned that you don’t expect increase next quarter or next year. But I wonder if you’re okay with that, because next year you may expect decrease of profit in consumer business. So I wonder if acquisition costs may have an impact, because maybe you may focus too much on ARPU rather than acquisition cost?
Kazuhiko Fujihara
Thank you for your question. Talking about acquisition cost compared to last year, first quarter, second quarter, maybe we – implemented a lot of initiatives. So, amortization for the current term may be big, but again, we don’t feel a significant change in the business environment. Going forward, acquisition costs may not increase or decrease dramatically which we have been anticipating. Looking at the trend now for the last half of this fiscal year, maybe business environment may be changed. So I can’t say anything firm now. But again, you don’t – you should not expect any surprise at the end of the fiscal year, because at the – since the beginning of the fiscal year, we keep saying that fiscal year ‘23 will be the bottom so that kind of view remains the same.
Satoru Kikuchi
So let me make sure I understand correctly. The first quarter, JPY 21 billion; second quarter, JPY 21 billion and second quarter compared to last year remained the same, but for the full year, you keep the full year forecast. So, for the second half of the year, you may need to increase acquisition costs for the second half of this fiscal year?
Kazuhiko Fujihara
Yes, it’s more likely that more activities will take place in the second half of the fiscal year than first half. But because there are other external factors like regulations and others. So, we – I can’t say anything concrete at the moment.
Satoru Kikuchi
Thank you. Next question is about electricity business. First half, you recorded a loss, but you should expect improvement in the second half of the year because of evolution of the upper limit. And electricity business users decreased a little bit compared to previous quarter. So, I wonder if there are any specific reasons why or it’s a general trend?
Kazuhiko Fujihara
Yes, it’s true. In the first half, we saw some challenges because of the market. But we took down the upper limit, so we should be able to recover more in the last half of the fiscal year, we should hit a double-digit for the full year. Acquisition of electricity users, we can’t stretch further, taking into account the pricing. So, we are not really actively acquiring users, but we may accelerate our acquisition activities once the market condition changes. Telecom carrier doing business is not something unique or strange. So, we stay flexible in terms of how we approach the business.
Satoru Kikuchi
Thank you very much.
Operator
Thank you so much. Next, SBI Securities, Moriyuki-san. Please unmute and ask your questions.
Shinji Moriyuki
This is Moriyuki. Can you hear me?
Kazuhiko Fujihara
Yes, we can hear you.
Shinji Moriyuki
And related to the previous question, the sales promotion-related cost was expected around JPY 60 billion and the second half of the year, it may be accelerated, but against the JPY 60 billion in the first half of the fiscal year, is it upward or downward? What’s the factor? Can you tell me more? If it’s downward, then in order to recover in the second half of the fiscal year, considering the remaining time of this fiscal year, do you have to accelerate more?
Kazuhiko Fujihara
Yes, in the first half, among JPY 60 billion, which included the gross profit of mobile devices as well. So, in the second quarter, we have recovered around this. And then customer acquisition related expenses is somewhere that we have expected in the beginning of the fiscal year.
Shinji Moriyuki
I see. So, the margin of mobile devices, depending on debt.
Kazuhiko Fujihara
Yes, that’s one factor and also in the second half of the fiscal year.
Shinji Moriyuki
What’s the reason that you are able to get to margin on that?
Kazuhiko Fujihara
In the second quarter, yes, it did well. It was much stronger compared to the first quarter; the number declined drastically and now the price of Apple has increased.
Shinji Moriyuki
So, compared to Q1, I think Q2 and moving forward should be better. And the second question related to the previous question around minus operating income of JPY 40 billion and the cost would be reduced by JPY 50 billion and which included the amortization.
Kazuhiko Fujihara
So the cost reduction will be brought forward and next fiscal year could be showing the positive profit. If you bring this cost reduction impact brought forward. As you can see here, as for the others by segment of 400 billion – sorry, JPY 40 billion. We cannot categorize in certain segments right now, but next fiscal year, there may be some pressure from electricity and others, we would like to even make further efforts to be able to absorb all this impact.
So regardless of this sunset scheduled bringing forward you consider this JPY 40 billion was something that we originally planned. But what we could do with this, I mean, JPY 40 billion.
Shinji Moriyuki
And so this additional one you’re talking about sunset?
Kazuhiko Fujihara
Yes, as for sunset originally what we planned had been already included in the certain segment. And on top, we have put under others.
Shinji Moriyuki
Thank you.
Operator
Next, Chiba-san from JP Morgan Securities. Please unmute and speak.
Chiba Kitz
Thank you for taking my questions. Well, just one question actually about our net addition. Could you break it down by month? You are doing well, but in the quarter, there were some movements in the market like new iPhone introduction or competitors’ activities.
Kazuhiko Fujihara
Well, first quarter, second quarter getting better compared to Rakuten, for example. Rakuten changed their price point in mail. So and the trend-wise, we saw some changes and related to KDDI, I think you can imagine how it happened. But overall trend, we are looking at following wind. That was true in July and August, also a strong trend maybe outside factors contributed positively to us. And in general, again, we are looking at very steady progress of our net adds.
Chiba Kitz
Thank you so much.
Operator
Due to time constraints, we will take questions from two more people. One is Mitsubishi UFJ Morgan Stanley Securities, Tanaka-san. Please unmute and ask your questions. Mitsubishi UFJ Morgan Stanley Securities, Tanaka-san.
Hideaki Tanaka
Can you hear me? This is Tanaka.
Kazuhiko Fujihara
Yes.
Hideaki Tanaka
One question about enterprise business. In the second quarter, the provision of litigation and the remeasurement, and again, so I think for the second half of this fiscal year, the target – to achieve the target may be a bit harder. So, what do you think?
Kazuhiko Fujihara
Yes. As for the enterprise segment, the employees in the field are positively and aggressively working with confidence and we have more and more opportunities to propose different solutions to the clients – potential clients, but still taking the time to materialize such proposals. That’s why it’s not shown as actual figure.
However, there will be a demand from different clients towards the end of the year. So there will be some seasonal factors we can expect. As for the cost, we are looking at severely, we still like to work hard around that. So as for this rather than recurring revenue, you would like to achieve the target through the solutions. And yeah, there are a lot of opportunities, continued opportunities, so we would like to also keep working on the recurring revenues as well.
Operator
Now Okumura-san from Okasan Securities. Thank you for your patience.
Yusuke Okumura
Thank you for taking my question. Two questions. First, about enterprise competitive environment. Solutions were doing good in the second quarter, but since July, NTT Docomo, we consolidate – we organized their businesses, and going forward, I wonder if that could have an impact on your Enterprise Solution business?
Kazuhiko Fujihara
I don’t think that we are disadvantaged in terms of a competition. So we are in a good momentum and we hope to show intangible results.
Yusuke Okumura
The second question about the Z Holdings. From a parent company’s perspective, Z Holdings media top line is a challenge, so they are trying to save costs. That could have a negative impact on growth. So EBITDA that they are committed to for the next fiscal year, from parent company’s perspective, do you think that they should meet the commitment no matter what? Or you don’t think that Z has to reduce investment just to hit the committed numbers?
Kazuhiko Fujihara
For commerce, they depended too much on royalty point or shopping point and – they needed to find other area to expect growth rather than a point. For next year, the numbers they were committed for a long time. So I’m sure they are sticking to that. But going forward, they should not overstretch, so we hope that that they will grow appropriately in line with their business performance.
Yusuke Okumura
Thank you very much.
Operator
That’s all for Q&A session. Thank you very much. Now I would like to close the Investor Briefing on earnings results for the six months ended September 30, 2022. This briefing will be broadcast on-demand on the website later. Once again, thank you very much for your participation despite a busy schedule.
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