Base Co., Ltd.

This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear.

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0:04 We would now like to start the financial results presentation for BASE, Inc. for the Fourth Quarter for Fiscal Year ended December 2021.

Because of the COVID that we are going to be holding this online. It will be live streaming and questions can be submitted in the chat box, even during the presentation.

Before the questions received, we will be responding during the Q&A period. 0:37 Furthermore, we will be archived streaming the video presentation of today's presentation.

The speakers today will be to Yuta Tsuruoka, Representative Director and CEO. Harada, I'm CFO and Yamamura COO.

We would now like to start the presentation meeting, please refer to page 2. 1:17 Let me start, this is what I am sending every time from Tsuruoka, I will give the executive summary at the beginning and there will be providing the performance update and on my bad later, I would like to talk about the midterm strategies and policies for fiscal year 2022.

1:42 Page 4 this is what I'm repeating every time which is the mission of our company. Payment to the people and power to the people ever since our foundation so for individuals as well as for a small teams, or the longtail market, the impairment there-off is the role of the internet.

Therefore on the part of this, this is also our mission to enable a payment into the people and this is an important focus of our business. 2:16 And in terms of payment to the people for the longtail people to provide the easy solutions as well as payment solutions are the freedom of the business on the internet.

This is the value that we would like to provide. This is how we will enable a payment to the people and power to the people.

2:40 Page 5, here, this is the outline chart of our business showing the money flow. Left hand side is purchases.

The flow of money is shown here at the right hand top is the BASE business. This is the original business from our foundation, this is the 10th year of our business.

This is our main business. BASE is providing [Indiscernible] support as well as support for opening online shops.

Right hand button is Pay.JP. This is for businesses not using a BASE on their website as well as services online payment services can be provided.

It is an API that we are providing as a payment service provider we are providing payment support. This is our Pay.

JP business. Left hand side is the business that we are providing for purchases which is called PayID for the purchases and PayID account can be created and easily check out, it can be enabled without the input of personal information or payment information.

This is what we are providing in terms of PayID. Regarding the relationship of the three businesses.

I will give the further elaboration when I discussed the midterm strategy today. 4:13 Page 7, let me proceed to the executive summary in terms of topics, I'd like to mention that the consolidated net sales, gross profit and operating profit were all within the full-year forecast.

Furthermore, the businesses and BASE business had record high CAGR, midterm growth has been maintained to ¥200 billion BASE GB has been exceeded pay, the other business also recorded ¥50 billion as well. 4:47 No in terms of number of active shops, we have had an increase of 13,000 driving GMV for the PAY business, very strong growth has been achieved during the period.

For the quarter, I think consolidated sales record its highest level of ¥2.7 billion for the PAY business GMV, it was the highest ever GMV for the BASE business, for the fourth quarter of last year. 5:26 Furthermore on my part, I would like to talk about the midterm strategies for the longtail and market the great positions will be solidified further in terms of strategy and new payment plan I will be introduced to this – I will be further explained later in my presentation.

5:48 Page 8, now this is the result for the fiscal year ending December ’21, the grey on the left hand side is the results and forecast is showing on the right hand side and the progress rate showing on the right hand side. In terms of net sales as well as our gross profit on sales was within range SG&A was lower and the operating profit is at the high end.

Paying exceeded the range and that is how we have ended the fiscal year 2021. 6:28 And page 9, for page 9, the high medium-term growth of BASE as shown for 2021, there has been impact of 20 was grew significantly because of COVID-19 and 21 exceeded that level.

Now in terms of the CAGR is 60% has been exceeded and we have also grew over the high growth period fiscal year 2020 as well. 7:02 Next, page 10.

This is a result for the fiscal year ending December 2021. I'm looking at the three KPIs.

Left hand side is the monthly GMV, the number of the monthly active shops are multiplied by the monthly average GMV per shop is how it is calculated the grey is the forecast and the green shows the actual results. 7:27 We have been emphasizing the number of monthly active shops that has exceeded expectations in terms of monthly average or GMV per shop was lower than expectation.

Factors is because of third quarter, the COVID The impact has the – impact has become smaller for the full quarter. There is still a continuing impact [Indiscernible] has been very effective and monthly GMV recorded the highest of levels.

Now for this is paid business and we don't have a track record as long as these, but in terms of CAGR in the mid-term we have achieved significant growth and for the period ending – ended December 2021, we have shown significant growth. 8:23 Page 12 is the review of the fiscal year ending December 2021.

Left hand side is the summary of the management policies announced in the Q4 presentation. Right hand side shows the actual implementation of these policies.

In the meantime, we are making forward looking investment with discipline and at the beginning of the fiscal year promotion expense excluded operating profit has achieved the plan and we have also enhanced our corporate value – we have also made improvements in the board as well. By making go forward-looking investment shops increase as well as product increase has been achieved and by forward-looking investment, we are driving growth.

9:16 Now page 13. So, we are making investment during promotion and [Indiscernible] as well as the web advertising as well as sales promotion efforts have been implemented.

We have achieved the plan in the long-term market it is the most preferred service. So we have been making contribution in that regard.

9:39 On page 14, in January, we announced that the online shopping saved 1.7 million this is the largest openings in terms of active shops in Japan. Promotion will make a strong contribution to openings going forward as well.

Now another area of forward-looking investment is in the product development area for this area and what we have planned in terms of the number of employees was not achieved [Indiscernible] without sourcing in terms of development, we have been able to strengthen our functions. Now in order to promote to a wide range of users and in order to have existing shops grow strongly.

We have been able to make a significant contribution. 10:35 Page 16 and I would like to talk about the specific initiatives underway.

In terms of function areas, launch shops have requested the CRM enhancement as well as operations efficiency, tools that have been provided to enable this process. 10:52 Page 17, supporting group in existing shots, advertisement functions have been expanded.

This is for Instagram as well as the Google, external collaboration has been made. The advertising function officers been provided in order to promote the usage, Facebook and Google.

Seminars are conducted for the shops, we had good participation from many shops, increasing usage, external integration will be promoted further because it is advantageous to have a storefront type of platform. We hope that we can provide more information regarding the support we can provide in this area.

Now Page 18, assisting increases in a shop sales. The brand unique viewpoint as well as the product appeal will be expensed better.

In Page Addition App has been included, it's not just an online shop creation, but the free pages can also be added through the BASE service. Why the expression on the internet has been enabled?

12:18 Page 19 supporting great in existing shops pop-up space as well as permanent storage space have been promoted as well. In Shibuya, [Indiscernible] has now permanent storage space, not just for apparel, but from the sign beverage and food space and has been provided in the contact area.

We have established the BASE market for the first time in the region for outsourced sales. 12:54 Page 20.

So, far, we have been working with many regional banks and financial institutions in collaboration for fiscal year 2021 We have established new partnership, so that we can expand the usage and business sales channel enhancement has been made. 13:14 On page 21, now for this area, in terms of personal information protection, we have implemented measures on the BASE.

So, we are participating in the creative economy Association through this effort. The personal information can be set to private setting, the function under the specified the commercial transaction act.

BASE is supporting this process, when it is established personal information has to be disclosed in the past. But now domestically by using these personal information it can be anonymized, and this is evaluated very highly by many users today.

14:07 Page 22. This is regarding the support that we are providing for the shops on finances.

Crowd funding campfire where we are investing, we are enhancing collaboration and card can be used for withdrawing the funds your bank can be used as well. So, we have made headway in this regard for the fiscal year.

Now, I will pause here. And now Harada will continue, I'd like to talk about the performance of our company.

14:53 Please refer to page 24, which is the performance for being as thorough Tsuruoka is already mentioned in terms of the revenues or sales as well as gross profit on sales, we have been able to achieve the plan for the BASE business. On the other hand for GMV, we have achieved a growth of 20% for the PAY business continuously high growth there has been achieved more than 50% Y-on-Y basis.

15:25 Next, the results for the quarter on page 25. In the fourth quarter for the BASE, this is all PAY business.

We have been able to grow the GMV in a steadfast manner. I will skip over this page.

Next is balance sheet. As of the end of December, we had ¥24 billion and ¥15 billion for net assets and total assets.

So we have been able to maintain a very good balance sheet. In terms of shareholder composition.

We did the stock split on the first of April with that investment business has increased that we have been able to diversify our shareholder composition. 16:14 Here on what I'd like to talk about the consolidated results, trends in GMV for basis as well as PAY YoY, Q-on-Q.

We have been able to grow our business and I said [Indiscernible] in terms of the sales, it has continued to grow on Q-on-Q basis as well as YoY basis. The sales mix on a Q-on-Q basis, there is no change, and this is gross profit.

In terms of mix, there is no change and therefore it has remained flat. 16:50 Next is SG&A, for the fourth quarter promotion expenses was ¥1 billion.

It was the most significant expenditure so far and TVCM as well as web advertisement will continue and for this quarter sales promotion again things have been executed in December through coupons. By so doing the SG&A expenses have grown significantly in the quarter.

17:21 And next is trending number of employees, increased by 50 headcount year-on-year for our product area and we are continuing to strengthen our resources and next is strengthened operating profit column was grey is the operating profit excluding promotional expenses and black is the actual operating profit. If you look at the grey, because gross profit increasing, you can see that it is continuing to increase as well.

17:54 Promotional expenses have been increased as a result as a SG&A has increased as well. And the operating profit for was minus ¥10.5 billion.

So that is all in terms of consolidated basis. Now I would like to talk about the BASE business specifically.

GMV ¥31.7 has been recorded last year in the second quarter increased significantly because of COVID. We have been able to surpass the level of last year.

18:30 Next is Trends in GMV on a Q-on-Q basis for each vintage, GMV has continued to increase. Therefore, this was very successful.

KPI breakdown of GMV is shown here in these graphs, monthly GMV on our left as we saw in accounts has reached ¥1038 for the first time in the middle, 62,000 monthly active shops and that has shown the increase by 10,000 shops per year and on the right hand side a monthly average GMV per shop and Q-on-Q because of the coupon it has been grown, but on the other hand on YoY it has stayed flat. This is take rate 7.7%.

So that means that there was a slight decrease Q-on-Q, but the main factors were as follows because of the seasonality and sales promotion, the unit price increased, and the mix of the payment methods changed therefore, that has brought about the decrease in the take rate, and this is explained shown in this graph. 19:52 On the left hand side, the payment factors affecting the purchase commission, a payment unit price has increased by about 10% Q-on-Q and the payment method the mix, the ratio of the payment method with the purchases commission has declined a little bit therefore, on the right hand side, the purchase commission portion has declined by about 0.1% on the right hand side.

20:24 Now here is the net sales and gross profit for net sales and in accordance with the growth in the GMV net sales grew as well. On the other hand profit gross margin although the take rate was declined however, because of the cost of sales declined as well therefore, gross profit itself increased slightly.

20:45 Now, we would like to share with you some business topics for this fourth quarter and review, we have been able to develop new products and in this quarter, in order to improve the purchasers experience to tribute to the increase the sales of the shops and next page the methods for promoting the purchase by purchasers in order to assist in increasing shop sales. From this page on, I would like to talk about PAY business.

In PAY business, on YoY 38% has been recorded as the growth rate, but in the first quarter of 2020 There was a Go-To campaign running about a ¥1 billion impact and excluding this temporary GMV and YoY about 50% high rate of growth has been recorded. 21:46 And here is a trend in GMV by year of opening.

Now high-growth has been achieved. The factors are because of the existing merchants, growing their own GMV year by year.

Also additionally, there has been a secure increase in GMV by new merchants. That's why we have been able to achieve with high growth.

And here the net sales and gross profit for PAY business as we have shown you in the gross of GMV and net sales and gross profit also grew, as we said in the previous slide and in this quarter, the net sales and gross profit both grew securely in accordance with the growth in GMV. I have spoken pretty quick, but this concludes my part.

22:42 Now, I again Tsuruoka is going to speak about the our medium-term management policy as well as the policies for the fiscal year ending in December 2022. It's going to be a little bit lengthy, but please bear with me.

Now what we are doing at BASE, and we would like to do with our current business assets. 23:07 So in the first part, I'd like to summarize this, our mission targeting individuals and SMBs.

and we need, we would like to empower those people in the long-tail portion. That is where we have placed on a mission.

And all the members of our company have been spending their time and dedicating themselves to contribute to this part over the past 10 years. In December 2012, the company was established in November of that year, we started the services over the past 10 years, we have committed to the same mission in order to provide a product to empower those people in the long-tail portion of the market.

I think it does quite a good years. And so without any risks, and I think that we have been able to provide an environment for payment services can be provided to those people and largest number of new merchants as well as the number of their active shops has have been achieved.

And I think over the past 20 years, we have been able to a great leap forward at BASE. 24:16 Now on page 49.

This is about the growth in financial services. This is the new slide we added this time.

BASE shop is being targeted to provide a YELL BANK by purchasing the receivables to provide funds and to shorten the cycle of the bank transfer so that the shops can withdraw money in the following day. And as I said in the outset, you don't have to pay the withdrawal fees, don't have to go to the bank and read through Visa cards you will be able to use the proceeds of your sales at convenience stores and other stores utilizing Visa cards.

So these services have been provided and in the middle there is the growth of YELL BANK. This has shown the steady growth as well and also there the user examples and you will be able to have an access to the examples of use case on the website.

25:11 On page 50, this is about the PAY.JP as Harada as I mentioned earlier, currently, this has shown in the stronger growth than BASE’s growth. And those are startups and web services that are not a supported authority by BASE along and online payments API is provided for that those are targets and the number of merchants is increasing and GMV is also steadily growing.

So, including the quite recent months and since the launch of the service, we believe that we have the secure the steady growth and you see the math and example the PAY.JP, you will find those merchants who cannot be seen in the BASE or easy shops, and you can see this list of merchants who are utilizing this service and then you can be able to understand what profiles of the services will be offered to these. 26:08 And next page 51, Pay ID growth at the last financial briefing session I think that the services were explained, storefront type online shop creation service is being provided by BASE while, the – we also hold the purchasers assets and this is what we have committed to since the foundation and even now this is we believe the competitive advantage of us so Pay ID which has a purchaser assets, we believe that this is very important and when online shop is created on BASE and then he automatically Pay ID payment service will be introduced with increase of the base shops and GMV and in accordingly Pay ID users also increasing.

The User Account acquisition costs must be incurred to some extent, but the 7.7 million users a Pay ID, there has been no [Indiscernible] cost before acquiring these processes that can still outpace. So, we have been able to acquire a merchant and then that will lead to the customer's assets on Pay ID.

So, this conversion has been steady done, and the strategy went well and also the increase in the GMV by shopping app also has been achieved. 27:39 And on page 52, this is what we explained at the last meeting, the same material we used and there has been a BASE shopping application and last year for purchasers, the brand that we are providing to purchasers are integrated into Pay ID.

So, regarding the brand of BASE where the online shops can be easily created. So, this is a brand new targeting merchants.

BASE for merchants and Pay ID for purchasers. So, we have clearly demarcated different two brands, we started the new year and Pay ID over the coming 10 years, we'd like to be committed more strongly to Pay ID.

So we have a very forward looking attitudes to this business. 28:26 Next, page 53.

This is what we have at BASE, and they're consolidated really GMV, green shows the BASE GMV, and blue portion shows the Pay GMV and on consolidated basis for fiscal year 2021, ¥169 billion, we have continued steady growth since the foundation of the business and the GMV has reached a certain volume, and this is the assets from merchants on our platform. 29:02 Page 54 One decade, One value.

This year, we are commemorating the 10th anniversary at BASE. When I was 22 years old, I founded this company called the BASE and therefore I have been with this for 10 years in order to make advancement in society, in order to provide the right appropriate values to the society.

I think that one set of values could be realized within 10 years. And a BASE group and a BASE company which we run have been accumulating one set of values over the past 10 years.

With this yardstick of 10 years we have been creating a developing business. 29:48 Now we are commemorating 10th anniversary, and this is the last year to conclude the 10 years and we are going to have a breaching year to transfer into the new decade.

So I believe that this is a very important crucial year, in order for me to consider what will come in the next 10 years, I needed to consider how we should spend this one year and so we came up with this medium term management plan and policy for this fiscal year. 30:17 There are two major directions or policies that are being written in this presentation slide deck and this is what we like to aim for the next 10 years.

So far we have had a BASE business and a PAY.JP and Pay ID and Pay ID is solely for the business for purchases. And why have been – have we been doing these three businesses?

Actually we have been asked this question many times, our mission is payment to the people and the power to the people, this is a corporate mission and payment to the people. The payment a solution, payment network are created on our own for providing a richer values for purchasers and merchants.

We thought that such provision of products and services would be indispensable, that group needed to create a platform unique, which is unique. Therefore we have been deploying the various types of businesses so far.

Over the past 10 years, we have been regarded as the EC oriented company, but regarding the next 10 years on top of this EC business, but we'd like to be recognized as a payment service company. So we would like to spend the next 10 years so that we will be recognized that such so this is going to be the first year in the next decade.

31:40 Based on a PAY.JP, we have merchants assets and Pay ID, we have customer assets. Both assets will be directly connected rather than relying on existing payment solutions but creating our own unique proprietary Payment Solutions and by connecting directly merchants and customers so that we can create and provide the unique and proprietary payment service.

I’d like to give you more details that are, there is another pillar within BASE. This is the number of large-scale shops on a monthly average GMV per shop for larger scale shops.

Since foundation we have been supporting long-tail customers or merchants and 10,000 or 20,000 are sold but per shopper, however, that GMV has grown significantly, as you can see here. 32:44 And personally 10 years ago, those customers in long-tail that means that their sales are not supposed to be very large.

I thought that that there was a preoccupation at such but in 10 years BASE and then the actually the sales volume is not proportionate with the small team. Although small team is running the business, but the GMV can be large, we would like to support such merchants with small team and in this 10th year, this is the concluding year of EC business, we’d like to find the merchants which will be able to provide the diversify the sales in long tail.

So that small team will be able to have an access to BASE services. And we’d like to be selected by those merchants by offering appropriate services for them.

33:45 On page 52, sorry, page 57. I think it is self-explanatory if you look at this page, so far individuals and small teams are not supposed to generate large sales volume.

And this is the topic that we have held in our mind since the foundation of business. But in 10th year, we have over 200 people in our a team as resources, as hard as I mentioned, in terms of financial strengths and think that their financial BASE has grown significantly, which is quite different from what it was at the foundation, and individuals and teams, irrespective of the sales volume and if they would like to create their own online shops, and we'd like to adjust ourselves to be able to supply services to them as well.

Not confining ourselves within the existing range of the services that we like to provide services to more diversified matters BASE. 34:47 We are asked a question frequently Shopify (ph) as the storefront service provider in the global market.

We are not envisioning the size of Shopify, but there are those merchants who are not able to utilize the Shopify, we'd like to cover those merchants who are not able to have an up to date access to the Shopify, we like to strengthen products and services in order to encompass a such patient – such merchants. We have been focusing long-tail and a storefront market.

35:23 I think BASE has been the sole way for entering into the storefront business, we didn't want it to widen our scope of business, we wouldn't have been able to capture such business scale. But in this 10th year, we have started try – started to try to adjust ourselves to this direction and I think with my personal commitment, and I think it is a good timing for us to make trial to embark on this area.

35:57 So here is the big change. In addition to the monthly free plan, conventional plan, we have made announcement this new monthly fee plan.

And I think service provision will start from everybody again. Today at 3 o'clock p.m., we made announcement on this new plan.

So far, whoever who wanted to make the creative the online shopper could have an access to this, but there were many other people who wanted to have larger scale of sales who did not select BASE. So now we think that BASE is a good timing so that those people will be able to select the BASE and the product solutions will be evolving pricing itself, since the foundation of the business, we have had a peculiar concept regarding the set price setting.

And I think that the for large-scale merchants who will be able to enjoying the benefits of this service at the lowest pricing range in the market. 37:05 We have defined ourselves at the Long Tail service provider over the past 10 years.

But going forward, Long Tail EC is going to be the slogan for the next 10 years and we have very strong commitment whereby bring about this change in the fee structure. 37:26 Now, in addition to the monthly fee plan, but also the product development and sales marketing is being developed to cover all the small teams as well as individuals, we’d like to evolve ourselves to be such a platform.

So as a result in the Long Tail Market, we’d like to establish the position strong position to so that we'll be able to pursue further growth and a position, a higher positioning market. And so far, you see the conventional targets and a new focus targets and these are the customers who will be added as the new targets, and I hope that these two groups of customers will choose BASE.

38:11 In short term, the scout team will be established in order to acquire new protect merchants. And this is what we like to do.

So this has been written in this table, from the individuals in the longtail will select the BASE when they would like to create their online shops and any kinds of people in the Long-Tail section will choose BASE, we'd like to be such a platform. 38:36 And a pricing on page 60.

So, this is in line with monthly sales and here is the comparison of fee rates in line with the monthly sales. Now the new pricing scheme targeting the new market segments and then in this target, new target segment, this is going to be the lowest pricing with very competitive pricing.

Are those individuals or small teams who did not want to take risks so far, but now, they would like to take some risks and to grow further their sales and a BASE will be the first platform of choice for them. And with the lower fee rate and then what will happen to the base take rate and the existing plan will continue to be offered and ¥5980 monthly fee will be paid with the 2.9% take rate.

Of course, these have been securely calculated and designed internally. So, when it comes to the level of take rate as you see here, this is what we are envisioning comparing to other companies, this is going to be the lowest level of take rate in the industry, by comparing to other companies take rate seems to be much higher.

So as I said earlier, we have been pursuing their customers in the Long Tail Market and from those individuals who had zero sales and through TVCM and branding Campaign has been done with this assets we accumulated in the past even with the low pricing, because of the steady growth in the user acquisition and still will be able to maintain this take rate level. So, overall this is the image that you can see and please feel relieved.

40:39 And GMV growth is going to be stronger than we have seen so far. As for example, the pay-as-you-go functions will be added going forward and regarding such a new functions and there will be a positive impact.

So in terms of take rate and also in medium to longer-term perspective, I think there will be positive effect and pay-as-you-go functions. For example, in EC there is always a problem for the chargeback, when there is chargebacks and there will be a guarantee by BASE if a customer would like to utilize such service and then on the payment fees and zero point something fraction of 1% will be added in order to use such services by paying several hundreds of yen will not be selected but adding several percentage points on to the current fee and then the additional services will be a used.

So take rate. I believe we'll be able to sit – stay as it is and then I think that this structure will allow us to maintain the gross profit margin going forward.

41:57 Sorry about the lengthy explanation, regarding page 62, this is – the trend future trends of GMV in 2024, we are aiming at the GMV of ¥300 billion and CAGR of plus 30%. This is what we like to achieve.

And without this new plan, we announced that this is the level we will not be able to achieve without the announcement of the new plan and this is what we are aiming at Long Tail commerce market is going to expand that we’d like to cover the entire Long Tail Market in the future. So this is one of the passing points.

42:34 We’d like to continue to evolve into a large platform, which will be able to provide a new added value to customers. So this is our target metrics and data continue to keep you updated on this.

Now, structure of GMV, this is three KPIs that we are always providing you monthly active shops for months and the monthly average GMV per shop and the monthly GMV are expected to grow and monthly GMV will be impacted by this change in the take rate. I think having said that the new acquisition from the smaller team that I think the smaller teams will feel relieved to user base therefore, I think that there will be positive impacts on all KPIs and under longer-term, I think that this will be reflected significantly on the GMV.

So through the change that we announced today. We believe, we would like to see such positive trend change.

43:39 Page 64, this is the increasing factories in the monthly average GMV per shop. By providing a monthly Pay Plan and the largest scale shops active shop number will be increased and therefore the ratio of the larger scale shops will be increased and therefore, higher monthly average GMV per shopper will be expected.

So, trend until 2024 even after achieving this level in GMV. The come – this seems to be a little lower than the existing GMV target.

This is not the stretch goal, but we are focusing on the Long Tail Market even after this growth and this store front upper players in Japan and the smallest monthly GMV will be realized those. So, this is what we are in [Indiscernible].

44:40 Page 65, we take rate the special rates, special fee rates have been offered to some merchants. And before creating this new plan we have conducted various calculations and verifications and what effects have been realized this so far is provided here and take rate has been provided or special rates have been offered for those shops.

Sorry, those are shops with normal rates, actually GMV of who are offered a special rates creating the GMV which is a 50 times higher than the other shops with the normal rates and I think that that there will be a positive impact and the new fee plan that's compared to the special existing special rates, this new price plan is lower than the special rates therefore, it is very competitive in entering into the market. 45:47 Page 66.

Now, Long Tail Market, we are not never satisfied with the current sides and then beyond your expectation we'd like to capture the demand and gross profit is expected to decrease in the short-term, but in the low-medium to long-term we are going to recover. So, we are expecting to see such trend in the gross profit.

If you have any questions about this, I hope that they will answer them ask them later. And this is about the take rate and at the outset of the presentation I talked about the medium to long-term perspective this is about the payment.

46:33 Payment to the people and the power to the people this is our mission for the days to create the online shops and this is the BASE when mission BASE PAY.JP and a Pay ID these existing assets will be utilized and a buy now pay later function, it will be offered, we’d like to start this offering. At BASE, we have a secure merchant assets, online merchant assets and BASE shopping cart UI as well, which can be controlled by us.

And we have such established merchant assets for purchase at which they have a Pay ID, over 7.7 million users as assets. 47:18 So, in principle through other companies payment network, which will not be utilized, and the credit will be offered to the purchasers directly and they will purchase in the shops and then the purchasers or commission can be reduced or at the merchant who will be able to provide the added value such as installment payment service for the purchase arts.

And recently, this has become a big news and BNPL, in order for us to embody our mission, I think this is the core business and since the foundation, I wanted to create our own payment network, in order to embody this mission BNPL can embody what we have been aiming at within this group, we would like to be very aggressive in allocating resources in this BNPL function. 48:15 Next, page 68.

I think, these globally, these, the NPL players are very active in a global market. We have merchants as assets and different from other players in the BNPL, we don't have to be falling into the competition in acquiring a merchant for customers.

Without spending acquisition cost, we have a structure which will allow us to acquire customers. So credit will be a given to recover on that that technology, which is most important, if we can carry out this and the right appropriate BNPL services will continue to be offered.

So with this in mind, we'd like to start this service. 49:01 Next is also about the size of domestic markets.

As you can see, instead of a credit card as the payment solution. So far, they have two people have to offer and apply for the credit card at the other's websites.

And that is the behavior of the consumers at the timing of the purchasing goods and getting the credit which will happen at same time and the payment method will be flexible and more diverse and ready to provide such services. Sorry about the lengthy presentation.

49:37 Regarding page 70. This is the evaluation of SG&A.

As I said at the beginning today, regarding the announcement of new fee plan, we’d like to capture wider Long Tail Market and this is the decision we made and we are going to make the ¥25 billion in three years and in December 2025, we'd like to return to profitability, ¥24 billion in cash and deposits and over ¥15 billion in net assets. We have a very strong financial base in making try on this and we have no choice, but to utilizing this assets.

Greater base of customers, we will be able to place trust in us and we'd like to continue to grow by capturing larger market. 50:33 On page 71, this is policies for FY2022.

So, now BASE will be the focus business. And not only opportunity a short-term profit, but also the long-term profit growth will be aiming by making the forward-looking investments more than ever, in the next 10 years, with stronger, larger and wider market to be captured going forward, do we like to do some initiatives for that?

And please read you through other items and Pay ID and BNPL development will be promoted and also financial businesses, we are going to upgrade the final functions and if there will be take rate impacts, which are not priced yet. 51:21We'd like to continue to see such impacts on the take rate and Pay ID, there will be a revenue generating from new customers and in the new financial services business, there will be revenue for these have not been factored in yet in the take rate now.

So, in the gross profit and profitability is a BASE as a whole. These new revenue sources, we will be able to make contribution to the whole company group.

So that such revenue, new revenue will exceed the existing revenue source. 51:53 Next, as I said in the middle of my presentation, the teams with the largest sales volume we will be able to use BASE and the personnel and outsourcing costs will be incurred.

In order to enhance our execution capabilities. Therefore 20 people will be assigned to the scout team, about the 300 larger scale shops are targeted for new acquisition.

Of course, and backstage there are many people working already on this and I thought that we will make a good start. In terms of product development, we are going to acquire new large-scale merchants with a change in the pricing in terms of product development, we'd like to offer products, the improved product, so that the larger scale merchants will be able to use.

52:48 On page 73. Now, this is about further strengthening of the governance, we are going to further accelerate, we’d like to enhance our corporate governance.

So, this is what we wanted to disclose to you. 53:03 On page 74 This is the basic policy related to sustainability.

The – soon, we are going to disclose the more details on our website and what we cherish as the important points and how we are able to make contribution to the better society. We will clarify them in order to be needed by the society we would like to create such values by BASE as a whole.

Sorry about the long presentation that this concludes my part. 53:31 Thank you very much we like to open the Q&A session now.

55:34 What about the general performance compared to the fourth quarter? And with the COVID cases increasing?

Has that had an impact?

55:42 I would like to respond to that question. This is how that the speaking, unfortunately for the January actual, we are not discussing the numbers I'm sorry about that.

But in Japan and from the end of January, the quasi-emergency declaration has been issued to ban lockdown has not been recommended, there for the impact of the COVID is very limited.

56:16 Regarding new shops opening has slowed down, what is the reason for this? Is it because of the change in the environment?

Or is it because of the competitive landscape change?

56:28 I would like to respond to the question. I'm Yamamura regarding anything to rule, most banter is the changes in the external environment, COVID impact has become a lower.

The query analysis as well as needs a trend have been investigated and the relationship is very clear. Now regarding the impact of the competition, it is very limited in terms of service or brand awareness, we have made investments significantly and therefore, in terms of the competitive landscape, the impact is does not exist, on the other hand.

57:13 From last year, in terms of acquisition strategy, not just the shop opening, but to put the shops to become active is very important. This indicators have been optimized, and strategies are also reflecting this indicator as well.

57:40 Regarding a new pricing plan. What triggered you to decide to launch this new monthly fee plan?

57:51 Okay, let me respond to a question. Tsuruoka speaking regarding the pricing plan.

Since the foundation of the business, I personally have been wondering what to offer, personally BASE at the foundation has been using the PayPal as a payment solution 3.4% plus ¥40. That was the fee structure to provide services to merchants.

Into 2017, when we added the three percentage point on to that, we thought that the PayPal like low cost fee, the monthly fee was not charged by PayPal and with that though charge, I thought that it will be ideal for buttons to be able to use service at low costs, which does that then size of the BASE, we will not be able to make the business viable. So we added three percentage points.

58:47 And after that, we saw the steady growth in products and the take rate, I think that we have been able to provide added values, which is corresponding to the take rate we are securing and over the past one or two years because of the impacts of COVID-19. irrespective of the size of the team and even small teams are now able to generate largest size of the sales and I think in this new era, and the such merchants will not select the base.

So we are not responding to the service needs of those merchants. That's what I held in my mind in 2020, ’21.

Particularly a positively or negatively BASE has been given the tailwind because of the COVID-19 with the unprecedented speed of growth, we have been able to expand our GMV. 59:38 For us, rather than relying on us.

But this is given by windfall from the changes in the society. I think we have been granted these advantages over the past two or three years.

And this is what I have been thinking about over many years. And I thought that this is a good timing for us to offer this new service and looking at the year coming to 10 years for BASE as well as the next decade for merchants.

I think that this is a good decision now. And this is the very competitive pricing.

But having said that there's still high in the industry, high take rate will be maintained in the industry, because of the commitment that we have made to the merchants. And this is the greatest advantage we have.

So we like to continue to have a long relationship with merchants so that we can have a long journey towards far away from here. 60:31 And this is what we wanted to achieve in development of our products.

So long explanation. Personally since several years ago, I have been looking at the good time to announce this, but over the past 12 months, I have been thinking about what BASE should look like in net 10 years from today.

So, I thought that this is a good time for us to make a decision to offer this new Pay plan. Thank you.

61:00 We have received two questions. So first question is regarding growth and learn.

300 active shopper increase is the objective, what is the visibility of 300. For existing shops, how many it will go to the new plan.

61:22 I would like to respond regarding your first point, regarding 300 and what is the probability of achieving this? No.

Regarding this new plan, testing has been conducted in advance and the sales or productivity numbers have been identified based on that [Indiscernible] team will be – has been aligned and we believe that the 300 is achievable according to our plan. 61:57 Now to your second question for the existing shops, 170,000 sales will mean that the new plan is more advantageous, for the BASE average sales are when it is exceeded.

When the average exceeded we believe that they will migrate to the new plan. However, the impact is not entirely clear.

Therefore, we are not discussing at specific number in this regard.

62:36 Next on an automated basis. Question is about BNPL, is it going to be proprietary developed in house or are you going to partner with somebody else?

And in BNPL expanding and then profitability may be compromised? And so, what will be the financial strengths and merchants industry format?

Do you think that the merchant are suitable for BNPL and [Indiscernible] securities, BNPL a service of a BASE, what is their competitive advantage comparing to other companies and what will be the targets?

63:18 So, there are something that I can talk about and others which are we are not able to talk about, is it going to be enhanced development? In principle?

Yes, we are going to develop it in house. Of course, for different parts of types of businesses, we may consider partnering with other companies, but majority of the service shall be developed in house.

And what else? 63:46 The second question?

Well, of course, there is a potential to work with partners, but in principle, we will develop in house [Indiscernible] this is the pay later page merchants with our own the BASE, this is quite different from BNPL, [Indiscernible], the credit will be offered per transaction. Per transaction, there will be a payment to be made at the convenience store front.

And what we are considering in our new BNPL is not based on the transaction. But for Pay ID users we are going to provide credit.

64:22 At the end of the month, there'll be monthly closing whether or not that they will prefer to pay in installments or in the lump sum in the following months. But it's not going to provide a lump sum payment, but rather credit card function will be adjusted to the online services.

This is what we are envisioning in providing services. 64:45 This is written in the materials, we use today after they and foreign or anything that our service will be closer to those offerings.

And currently, of course, there are regarding, there are different ways of thinking about balance, but we don't want to put it on the balance sheet. But in principle, we'd like to make it an off balance.

But in expanding our business going forward, we'd like to opt for the most appropriate method. 65:22 So, another question is what is the advantage of us in comparison with similar services, These characteristics or merchants are based on a PAY.JP and be an appeal other players will not be able to provide services to the merchants, because BASE us needed to select whether or not such service will be adopted.

So in terms of merchant acquisition, I think we have an advantage and the asset of the purchases, even after acquiring the merchants, there is another challenge for other players to acquire purchases, but for us we have already have existing assets and purchases, and with the expansion of BASE, there will be increased number purchases with the introduction of new payment plan and GMV – large GMV merchants will be starting to use BASE. Through certain large scale merchants and a pay ID acquisition could be done as well.

We believe that this is strength and including the shopping cart, UI can be controlled by yourselves. For example, other payment solutions could be offered of which will be very different from other payment solutions through our UI, and we have a merchant platform as well.

And we are also able to provide the services for purchases. 66:43 Since the foundation of our business of BASE.

We have envisioned these in designing the services for respective customer base and I think the where we have a very strong competitive advantage. In the coming 10 years and this structure will be utilized to fully and we'll be able to see the results in 10 years or rather not in 10 years, but 5 years from today.

Am I answering your question?

67:09 [Foreign Language].

67:18 We have received the following question. Regarding 300 shops acquisition has been mentioned, are you going to expect the transfers from competitors or lunch shops so that they will open a new.

Second with a new plan, the background on making this decision should be confirmed. Do you think that existing migration is taking place and from other platform are you going to attract from elsewhere?

Or is it the on a natural course, that you are contemplating at the moment?

68:03 Now, regarding the new plan with a certain level of sales shops, we believe that the advantages of plan can be offered compared to a competition. Therefore, in the short-term, the people with the existing net shops will be receiving this plan promote this and therefore, most of the 300 shops will be the existing shops and that is according to our plan.

68:35 No talking about [Indiscernible] question, I would like to respond on my part for existing customers. From BASE, going to other platforms, that is also taking place partially, but in the recent past acquisition structure of other competitions such that take rate base is high, they are going to other platforms, this structure existed, there was also a trend existing in the recent past from certain users.

And therefore, we want to make sure that users of this kind they will continue to select BASE, that is the strong motivation for us with the COVID impact in existing BASE sales have been deviating, but the customers that do we should have acquired or the users that we want to empower have not been using a BASE that is what – that was the motivation for us. We wanted to make improvements.

69:45 From other platforms, are you going to be attracting traffic to a BASE, we do not want to implement the half measure, therefore, as much as possible for new as well as existing users. For users of other platforms as well as new users, we will do our utmost to attract to all these different users.

70:10 This is the last question on page 70. Regarding the sales promotion plan for this fiscal year seems to be decreased significantly from the previous year.

So what is the background for this decrease?

70:28 Yes, the background for this decrease it since FY2018, in order to enhance the recognition awareness of the brand, we have made a significant investment last year, we have grown significant trade investment in that area. And I believe that the awareness has been acquired and then maintenance is the next phase.

So we are expecting to see decline in the sales promotion fee. Regarding the acquisition side and the marketing acquisition efficiency shall be enhanced and this costs including the scout team development in order to acquire the largest scale merchants and we are going to enhance the efficiency in spending.

71:20 Today, we have talked about the next 10 years for our company, as I have outlined in my presentation, and this is the last year of the first decade as well as the bridge era for the next 10 years. Therefore, I personally, we would like to implement what we had in mind.

And therefore we have a specific question. So please refer them to IR.

Payments of the people upon to the people is the mission of our company. You may wonder why payment to the people is a mission when it is easy platform.

But we are now able to embark upon what we wanted to do over the past 10 years in the next decade going forward. 72:05 Therefore, as purpose exists in our society, and corporate philosophy should be implemented in the next 10 years.

We will take on this challenge on in the long-term and 10 years going forward. We hope that unimaginable a new value can be provided.

And I hope that we can continue to work with you in that regard. I'm sorry that the session has been extended.

Thank you very much and I'd like to ask for your continued support going forward.