Thank you very much for joining in ZOZO's conference call for the third quarter of FY25 ending in March 2026. Today, we have on the call from ZOZO Director, Executive Vice President, and CFO Koji Yanagisawa and me, and it will be the two of us who will be answering to your questions tonight.

First, CFO Yanagisawa will take you through the financial results. Good evening, everyone.

I'd like to walk you through the third quarter financial results for FY25 ending in March 2026. First, I'd like to walk you through the highlights of the third quarter of FY25.

As for the third quarter, GMV increased by 9.1% year-on-year to ¥502.8 billion. GMV excluding other GMV increased by 11.9% year-on-year to ¥483.1 billion.

EBITDA increased by 9.5% year-on-year to ¥60.6 billion, and EBITDA margin was 12.6%, down 0.2 percentage points from the same period last year. Progress against the revised company plan announced on July 31st is as follows: GMV excluding other GMV 73.9%, and EBITDA 79.1%.

Regarding GMV, we were affected by lower demand due to persistently high temperatures in the second quarter. Furthermore, while we implemented aggressive promotions against a high base from the same period last year, the effect of some sales events fell short of expectations in the third quarter, resulting in a slight shortfall against plan.

On the other hand, EBITDA exceeded the progress plan, benefiting from lower logistics and shipping costs and lower than budgeted promotional expenses. Next, this is the quarterly trend in consolidated performance.

For the third quarter accounting period, GMV excluding other GMV increased by 11.3% compared to the same period last year. This overlaps partially with the earlier explanation of the third quarter cumulative results, but ZOZOTOWN's business fell slightly short of its plan, as sales of fall and winter products showed limited growth.

Meanwhile, LINE Yahoo Commerce exceeded our plan for having more days of Honki no ZOZOMATSURI. As for List, we fell short of our plan due to factors including industry headwinds and changes to the US tariff system.

EBITDA increased 14.9% year-on-year, with the EBITDA margin reaching 13.6%. While GMV and gross margin were below plan, EBITDA improved faster than expected, primarily driven by shipping and logistics-related cost reductions.

Next, I'd like to share the main topics of the third quarter. The first one is about the termination of our production business.

Our production business was designed around a made-to-order model to address chronic inventory problem in the apparel industry. However, demand from brands fell short of expectations and we faced challenges in achieving profitability.

After a comprehensive review of the business's future viability, we have decided to discontinue this operation. In connection with this business liquidation, we recorded an extraordinary loss of ¥700 million in the third quarter.

We have also suspended accepting new orders effective October 20, 2025, and we will continue to sell the existing inventory and plan to cease sales once it is fully depleted. Next is about the K-Fashion zone, which opened on November 6th.

On the same day, we also welcomed the opening of MUSINSA, a leading Korean fashion platform, and at launch, it featured approximately 140 brands, and by the end of December, this had expanded to 2,015 brands with around 200,000 listed SKUs, and further expansion is planned going forward. Sales got off to a strong start, broadly in line with our initial expectations, and it's been gaining traction primarily among women in their early 20s, with Korean brands known for their strong trend sensitivity showing particularly strong performance.

Next, I'd like to present an overview of the key performance details. Let's go to page 9 of the handout.

First, we will analyze the changes in EBITDA compared to the previous year's results at the end of the third quarter. EBITDA increased by approximately ¥5.25 billion from ¥55.42 billion in the previous year to ¥60.67 billion in the current quarter.

There are mainly four factors attributable to the increase in EBITDA. First, gross profit increased due to higher GMV in the ZOZOTOWN business and LINE Yahoo Commerce, +¥6.68 billion.

Second, sales increased due to growth in the advertising business, +¥400 million. Gross profit increased due to the consolidation of List and other businesses, +¥4.97 billion.

Fourth, the reduction in variable costs driven by the containment of logistics-related personal expenses resulting from the streamlining of logistics centers, +¥420 million. On the other hand, there are mainly three factors that reduced EBITDA.

First, an increase in fixed costs due to a rise in consolidated headcount associated with the consolidation of List, the occurrence of one-time expenses related to M&A in the first quarter and others, -¥2.59 billion. An increase in actual PR expenses to attract customers, promote sales, and cover List's standalone expenses, approximately -¥3.9 billion.

There was an increase in other expenses due to success fees paid to FA related to M&A and others in the first quarter, and this was -¥730 million. Next, I'd like to go to page 21 of the handout.

This is the breakdown of SG&A. The SG&A to GMV ratio was 21.8%, a decrease of 1.0 point from the same period of last year.

While GMV increased due to consolidation of List, incremental SG&A expenses were either zero or minimal for certain items related to List alone, and this contributed to a decrease in the SG&A expense ratio. Mainly, there are two factors that drove up the SG&A ratio.

First, amortization of goodwill related to the acquisition of List, that's +0.3 point. Second, in addition to expenses recorded for List alone, advertising expenses increased due to higher web advertising spending for ZOZOTOWN, and that's +0.2

point.

On the other hand, there are mainly four factors contributing to the decrease in the SG&A ratio. First, lower shipping costs resulting from improved economic terms with the delivery contractor starting October 2025, driven by both expanded consolidation scope and delivery efficiency initiatives, that's -0.7

point.

Second, a decrease in logistics-related labor costs driven by improved operational efficiency, including inventory optimization at logistics centers and labor savings from automation initiatives, as well as an expanded scope of consolidation, and that's -0.5

point.

The other two are the following: one, a decrease in payment collection commission due to the expansion of the consolidation scope, -0.2 point; and a decrease in rent expense due to the expansion of the consolidation scope, -0.2 point. Next is page 24 of the handout.

Here, we show the actual promotion-related expenses. In Q3, actual promotion expenses amounted to 4.9% of GMV, and the actual promotion-related expenses include advertising costs and point-related expenses that are deducted from sales.

The increase was driven mainly by three factors: first, we increased web advertising for ZOZOTOWN; and second, promotional expenses rose due to initiatives such as acquiring new members and reactivating dormant members; and third, we recognized expenses solely for List, with advertising accounting for a large portion of SG&A. While the aforementioned three factors worked to increase the actual promotion expenses, the elimination of PGA Tour sponsorship expenses from prior fiscal years had a greater impact, and as a result, the SG&A ratio decreased by 0.4 point compared to the same period last year.

Please note that the actual promotion expenses for the third quarter were largely used as planned. However, as mentioned in the opening slide of the earnings summary, the cumulative amount for the first three quarters remains below plan, and the remaining budget will be utilized in the fourth quarter, on a full-year basis, we expect to use the budget as planned.

The following are ZOZOTOWN's KPIs, and please note that the following indicators do not include results from LINE Yahoo Commerce, List, or B2B businesses. Let's first go to page 25 of the handout.

This is the number of buyers. The number of total buyers increased by 280,000 from the previous quarter to 12.8 million.

This is the breakdown: the number of active members increased by 310,000 from the previous quarter to 12.11 million, and the number of guest buyers decreased by 30,000 from the previous quarter to 680,000. In Q3, we continued to successfully acquire new members by increasing our web ad and friend referral campaigns year-over-year.

In addition, re-engagement initiatives for dormant members have delivered positive results, with the impact of reactivation now becoming visible. Moving on to page 28 of the handout, this is the number of shops on ZOZOTOWN.

At the end of the third quarter, the number of shops stood at 1,712, a net increase of 26 from the previous quarter. The number of new stores opened in the third quarter was 46, including stores like MUSINSA, which is the one that I mentioned earlier, this is Korea's leading fashion platform, and there are Toys "R" Us and Babies "R" Us, comprehensive specialty stores for toys and baby products, and And One, an apparel brand popular mainly among young consumers, and more.

Let's now go to page 30 and 31 of the handout, average retail price and average order value, starting with average retail price. With respect to average retail price, it came to ¥4,277, a 2.1% year-on-year decrease.

Price increases for new fall and winter merchandise have moderated from the brands, with prices now broadly in line with last year's levels. The average retail price fell due to a higher proportion of sales items compared with the same period last year.

On the other hand, if you can kindly turn to page 31, we have information about our average order value. Average order value stood at ¥9,328, -1.0% year-over-year.

The number of items purchased per order rose, supported by an improved cross-selling ratio, which was driven by a higher markdown ratio. However, the decline in average retail price outweighed these effects, leading to lower average order value.

Also, the volume of promotions offering free shipping on purchases of ¥12,000 or more remained at the same level as the previous year, and the effect of this promotion on increasing the number of items purchased per order was limited. Lastly, this is the full-year consolidated earnings and dividend forecast for the current fiscal year.

There are no changes to the earnings forecast. This concludes our presentation for today.

Let's start the Q&A session. If you have questions, please raise your hand with a button.

When you are pointed, please unmute and state your company and name, then ask your questions. Any questions?

I will wait for 15 more seconds. All good?

No questions? Seems like there are no questions, and what we'd like to do is to go ahead and end this conference call.

Thank you very much for taking time out of your busy schedule to attend this meeting today. Goodbye.