Manabu Miyasaka - President and Chief Executive Officer Toshiki Oya - Chief Financial Officer

Masaru Sugiyama - Goldman Sachs Keiichi Yoneshima - Barclays Securities Shinsuke Iwasa - Mizuho Securities Group Yoshitaka Nagao - Nomura Securities Yosuke Tomimatsu - Bank of America Merrill Lynch

Good afternoon, everybody. I would like to give you the business results of FY 2015 Q1.

Please take a look at our highlight. Revenue-wise it was JPY110.5 billion, year-on-year growth of 10.6%.

Comparatively speaking, in terms of operating income, we had to invest in e-commerce and big data and also credit card. We have already I mentioned and that that we will be investing in new businesses, therefore we made much investment and therefore we only increased by 0.8% in terms of the operating income.

And in terms of the quarterly, it was minus 8% because in terms of our last year, we had the Japan Net Bank acquisition gains but this quarter we did not have the gains of that nature therefore, we have a difference. And in terms of the advertisement-related revenue, we increased by 9.5% and in terms of paid search advertisements, we had a growth of single-digit negative regime and we were able to control our situation accordingly.

On the other hand display advertisement did well and we were able to grow by 30% year-on-year. So in the current situation we grew dramatically.

E-commerce did well and we grew by 11.3%. And this is the highlight for Q1.

Firstly in terms of page view, smartphone registered more than 50% and we celebrated that mark and DAV is more like unique users and we were able to grow by 50%. But in terms of page view which is quantitative figure, smartphone exceeded PC and for the first time in our history, we were able to increase smartphone in May, which exceeded the page view of PC.

We are shifting to smartphone and one point was whether we can increase our advertisement business especially display. In May 20, we released Yahoo Japan's startup page in full timeline view format and we are growing very dramatically in terms of the advertisement and display did very well and so the smartphone display gave the momentum of the growth in advertisement and we can grow page view more and not only the page search, but we will be able to grow the display in smartphones as well and that is a very historical moment for our business.

And in terms of domestic e-commerce, we grew by 11.8%, Auction grew by 6.9% and as compared to the fourth quarter we did very well and especially we grew in the shopping business and the shopping grew by 23.1% and this is a dramatic growth as compared to the previous quarter. This is the monthly page view.

Last May was 40.4% and year before was 25.9% and now we did more than 50%. And so in the past it was PC which gave the growth of smartphones, but now the situation is reversed and now we are centered around our smartphone business.

This is the trend of monthly page views and red one is the smartphone usage and the green portion is PC. And PC is doing well as well and smartphone has been growing very dramatically and we have been focusing on that, but then that does not mean that we are not doing well in PC.

I think we are growing our share in PC. There are different survey and research data and some research data mentions that Yahoo's PC's share is declining and but based on our research data that we use, we are very strong in PC and on top of that we are growing our share in smartphones.

In terms of the revenue year-on-year, we grew by 10.6%. In terms of operating income, net increased by 0.8% recording JPY49.1 billion and in terms of the net income, it was negative 8.3% year-on-year, recording JPY33.3 billion.

But last quarter, meaning year-on-year, last Q1, we had a Net Bank impact and that was about JPY8.7 billion and so if we exclude that portion of the gain which we recorded in Q1 of 2014, we did relatively well in this quarter as well. And out of JPY110.5 billion, our quarterly revenue, the largest is the marketing solution which is centered around advertisement and display advertising very well.

So we grew by 11.4% and another pillar is consumer business. Auction did very well as well, and so this contributed to the revenue.

Shopping-wise, I will talk about the details later. But we are still in the stage of investment and therefore shopping, we do not focus on the revenue but rather we are in the investment stage, so consumer-wise we did 0.8% growth year-on-year and other business-wise we have YJ Card Incorporated.

Therefore, year-on-year we were able to grow by 33.6%. This shows the quarterly margin.

In terms of the operating margin, YJ Card is consolidated and we have a different impact of the consolidated entities and so we have different business models. In terms of Yahoo, we had a very high operating margin and by consolidating different group companies, the operating margin might decline momentarily.

But in terms of the ratio of net income attributable to owners of the parent, it is on par with the previous quarters and it is about 30% and we will be able to maintain this level. Now, let's go into details of different KPIs.

In the past three years we wanted to convert ourselves from PC to smartphone companies and that was the main topic that we pursued. And in terms of DUB we were able to become number one in smartphone and in terms of page view in May, we were able to have a higher number in smartphone as compared to PC.

So I guess, we were able to reach the goal that we have upheld three years ago. And now, not only growing in smartphones and generically speaking, we want to increase the usage of applications via smartphone and we want to be growing in that arena.

And so we will have the ECE revolution and we would like to further expand the transaction value and that will be the next three-year challenge that we will be working at. Now in terms of DUB in Q1 of 2014, we were able to do above 50% in terms of smartphones, and now it is 60%.

DUB-wise smartphone actually registers about 60%. PC and smartphones and tablets will be different devices that we will be catering to and there will be different user packed in and so we believe that ID is very important and we have to understand the customers and fully leverage on the big data that we have.

And so we want to increase the number of ID users as a multi-device parameters pertaining to the users must be understood via ID. And so in terms of active user IDs we did more than 30 million and this is a major milestone that we are enjoying.

So after this is over and now we would like to come to the companies with the more application usage by the users. So that for example, the weather and the news and navigations, these are the specific areas on - the users will be checking on a daily basis, we might call it daily habit.

Daily habit applications, when we look at this ranking and this is just we have the overwhelmingly strong area in these daily habits areas. But now that we have to cover and there is a smartphone business also and on a smartphone if we have the strong in areas and then PC, this is the basic ideas so that when it comes to daily habits, so this is the ranking of - daily ranking that is shown here on this slide but basically they will be in the top three in terms of the usage of these applications just like shown here on this slide.

So there are solidified at the foundation of this application business. So the other application is not included in here and the e-commerce and the gain or also we would like to push up then also that the other types of applications on the top ranking.

And when it comes to e-commerce, total domestic transaction values is now JPY311 billion. So now we have achieved that double digit growth and particularly the shopping is very favorable just like here on this slide, this red line represents that the transaction values grows year-on-year basis for the Yahoo shopping and Q4 in 2013 and then we have about last minutes a demand immediate before that is raising the consumption tax and now in the next year, we have some directional fall after that but these are the two peaks and the bottoms of all this extraordinary factors.

But after we implemented that e-commerce revolutions and announcements of the revolutions after Q3 in 2013, now we are making a turnaround from the declining trend of the e-commerce and the Yahoo shopping and now we have achieved more than 20% of growth. And then also the latest figure is very favorable so I think that we have now beyond the steady growth - growing trend.

And also for that is they need before that this the evolutions and we have some kind of a few years in a row where we experienced some kind of minus the growth but now similar to it we have in the turnaround and now we have over the 5% to the 10% of growth is now available just like this also for the auction. And the last time, we went through that and I mentioned that and we would like to and a shifting from the first aboard type of the businesses and growth but also I would like to make some kind of a upfront investment for some of the selected and promising businesses.

So that's why we have classified into Core Businesses and Investment-Stage Businesses. And the core businesses remained at advertising, auctions and the membership services and these added all and the core businesses, which are now generating basic profits and for this we would like to try to push out that profits as much as possible and after having this profit, we would like to take advantage of the profits for making that the upfront and proactive investments for the next future businesses so the shopping in credit card.

So, and also these are the settlement business are classified as the Investment-Stage Businesses. So let me explain about each of these business and Core Businesses and Investment-Stage Businesses one by one.

First of all, for first one, first of the Core Businesses is the Advertising Business. Advertising Business compared year-on-year basis, now we have a 9.5% growth.

So, now the paid search and we - the control with us after the growth would be with the end of minus 1% growth. This is the way we have controlled.

So now the display ad have grown substantially and also the in-feed space advertising has been very favorable. And next slide represents that about the quarterly advertising-related revenue trends for both this display advertising and paid search.

And the paid search, when we look at the size of the - that revenue is still the largest business but still now we are shifting from the PC to the smartphone and those are the quality over the quarter has changed. That's why the margin has declined like this and again for this a minus 2.1 plus 0.6 minus 1.8, but this is just about within the control of a plan to control range of this a specific margin of this business.

And growth of that business like this and on the other hand we would like to grow farther for this display advertising, particularly how we can grow this display advertising business in smartphone is a key and extending from that two previous quarters, it had a starting to and a surging and now we have an annual growth of close to the 30% like this. So what has pushed up this business and again, I mentioned earlier the smartphone as the primary reason which pushed up our business growth of this advertising.

So now we have a closer to 40% in that advertising revenue ratio from smartphone. But particularly is the renewal of the Yahoo top page have contributed a lot, no describable business trend and then we would like to, we had invited the customers to the Yahoo, the top page and encouraged users to find out their own specific services by themselves, but now the renewal after making this we have a - not just encouraging customers to find out that information but the best information is trying to find out that it is best suited to customers.

This is the major change. After shifting this, the top page now also we are making substantial investment for the big data analysis so that's taking advantage of the analysis of the big data where we try to recommend the best suited informations.

And now we have fully compared it and migrated to this new top-up page. So this is the major change that's the paradigm shift, the ones we are sort of worried about and some we are worried about that we have the dramatic decline of access because the user could not catch up with that is kind of a major change over the top page and we would have utmost support this new renewal when [indiscernible] going to customer service, but now we can successfully do soft land on this new top page.

And we have been successful so far. The other thing is that's the major change in that's in in-feed advertising is there is a new format we have introduced for advertising in this new format and also for this in-feed advertising have been the favorable.

So and all-in-all, and now we have a very successful period for the advertising. When you look at the page view and in total as a - now we will have just in-feed advertising is very difficult to place in the e-commerce.

But when we look at the media rather than the pages, I think that we still have a leeway to timing this in-feed type advertisings. So that's why we want to just expand this similar type of format into the other media service.

So this is the historical illustrations of the changing of advertising business since its foundations and advertising business has been the core business and pillar business since the foundation of Yahoo Japan. But now the core products have changed year by year.

In the past few years YDN have been the most substantial pillar of our business. And so without all this YDN we use timeline and then also premium DSP and are the new technology to render services we think that is going to support this business.

So that's all about advertising business. Next, let me talk about the auction business.

When it comes to auction business, it has been also growing on a steady base, steady level with the 7%. So once we have - the auction has experienced a bit of minus growth but now we have a very steady growth of just about a, those in a lower end to the middle of this single digit growth.

But still we have to improve the growth of these auctions. So now we're in a dominant positions of the Auction Business.

But how we can further improve our business. So this is a major challenge for the Auction Business and what we have to do is that we need to redefine the market.

So far the Yahoo auction, Yahoo was offered a price for to ask for exchange in the selling of the product, which are not used in the households but when we look at this, it leaves us a market for the household goods is at JPY1.5 trillion. It's only that, but when it comes to used car it has JPY2.6 trillion for the real estates.

Now it has the JPY4 trillion of the market so then we have the - not there is a 100% of much of this JPY1.5 trillion but we have to break into that new domain and the total of these used products and real estate and old mobile markets, in total we have JPY80 trillion and we like to expand the business based on this. When it comes to real estate, I had announced that now we're working together with these real estates so that we can provide and we like to offer the platform in which there is also real estates and the transactions will be activated together with the real estates.

And in terms of used cars, Carview has a long history and know-how and also networking of the industry so Carview and Yahoo will work together to further accelerate and invigorate the used car market. And that is all about Yahoo.

And then, and the third core business is membership services. Yahoo Japan has been providing services to the premium members and we have been only talking about a premium membership business but from this quarter we will talk about monthly paid membership including Yahoo Premium Members as well.

So other than premium members we do have different monthly paid membership as well. Therefore we will be growing advertisement and e-commerce and on top of that, that we would like to focus on a stable business segment which is the monthly paid membership.

So in order to show that direction of our company, we would like to talk about the membership services including the monthly paid membership ID, so that you will be able to understand what we are doing. If you - provide you with cumulative number, it is about 15.54 million IDs on a monthly basis who are paying fees for the membership services and in terms of 15.54 million IDs how can we further grow the membership.

We would like to focus on two major segments. Firstly, say monthly fee might be JPY100, JPY500 or JPY1000 but we have to come up with attractive services and contents that people will be willing to pay that monthly fee.

And also we would like to diversify our distribution channel. So there are two points.

We will develop new content and services and secondly, expand our distribution channel. Say, we have entertainment pack and for the premium members they can get more points, the loyalty points and a video monthly flat fee might be another services and also news might be another area that we can grow as a monthly stable income.

So we will be focusing on those types of services. Regarding the distribution channel we will focus our energy as well.

Entrance of a premium members, Yahoo is the only channel that we use to expand our premium membership but by leveraging other channels we were able to grow further more. In the past two years we used SoftBank channel and we grew and so learning lessons from that we would like to develop new solutions and services and try to serve the members who we can capture through other distribution channels as well.

So that is all about our core business. From here onward I would like to talk about the investment stage businesses namely shopping and credit card businesses.

Firstly shopping, no matter which KPI you look at, we are showing a very favorable trend. In terms of the store IDs we were able to have more than 300,000, an increase of 2.4 times monthly year-on-year and in terms of the number of items we increased by 47% on a monthly year-on-year basis.

And we have more than 170 million items. And also the convergent rate went up as well.

And the number of buyers grew by double-digit. In the past the conversion rate did not go up dramatically.

So we tried to have traffic going into our shopping site but by increasing our conversion rate we were able to really leverage on the traffic that we have. And so we have the mechanism to lead the traffic to the shopping site.

And as we are trying to leverage on the point mechanism. And in terms of the average number of purchases per user we are seeing an increase as well.

And by increasing the convergent rate we can actually lead the traffic to our shopping site and once that person buys one, the very person will purchase again. So we are seeing a very virtuous good cycle and we were able to increase by 23% this quarter year-on-year.

We had an ecosystem, in 2013 October we announced the e-commerce strategy, and I've mentioned about the shopping strategy that we will be leveraging so all the transaction value must be increased because the new strategy will increase the number of buyers and transactions by new and the more items there are, more shoppers will be there and the more items will be listed on the shops, so this is a very good cycle that we would like to run and operate. And grey was the color that we used to show the status growth but now the red portion is increasing.

You see more shoppers and more buyers and more items and more sellers so we hope that more buyers as well as the larger transaction value portion can be read in the end of the day. In terms of the advertising-related revenue part of the rise, it is showing a favorable trend, but we need more time to turn it to red and so we have to change the number of buyers and we want this circle to be totally red in the future.

How can we actually increase more buyers? There are three user segments that we are addressing so that they can be solicited to do their shopping at our site.

Namely Yahoo premium members and YJ Card holders and SoftBank subscribers are the segments that we're addressing. In terms of the premium members, they are the Yahoo premium members but when they shop they go to other e-commerce sites.

And I think that is such a pitiful case. So, for Yahoo premium members we have a potential pointer system, specifically speaking, they will get fivefold points and also if you use the application they can get three fold or and total you will be able to enjoy 10 fold points.

So these are the preferential measures that are being taken. And so premium members will be enticed to do their shopping at our site.

Another segment is the SoftBank subscribers, they have about 45 million subscribers all together on a line basis and many of them are not experienced in e-commerce. Shopping is a universal service and I believe that should be the case.

So whether you have high literacy or low literacy, whether you are young or old, you should be able to enjoy shopping. Having said that, we developed a new technology with SoftBank and in a minute or rather in a matter of ten seconds, you can complete a purchase.

And we are creating such a flow and this will be released in October according to our plan. So in the past you have to enter your ID, you have to enter your personal information and address and using smartphone it was so cumbersome.

But if you use Yahoo Shopping site you will be able to instantaneously do the shopping and SoftBank has many subscribers. So I hope that we will be able to cater to their needs.

Another endeavor, we want cater to about 100 million people living here in Japan, but not only that but we want to expand our scope abroad as well. We will be collaborating with Alibaba Group and so in terms of the stores opened here in Japan site we want the non-Japanese to leverage on it as well.

Tmall has about 350 million people. So instead of 100 million we would like to address 350 million people who exist as potential shoppers in China.

And we will start this in full. Now I would like to explain about the credit card or the payments/settlement business.

We started the credit card business and in terms of the valid cardholders, we exceeded 1 million. And in FY 2015, in Q4, we believe that we can increase this to 1.6 million to 1.7 million or rather 1.4 million to 1.6 million.

In terms of issuing cards, it is a costly proposition and so we will not just blindly issue cards but we have the premium members and e-commerce users and people who do shopping on the Internet. Those will be the main segment that we will be investing in.

So we will try to efficiently acquire new users. So now, we have about 1 million as the total numbers and for focusing on that these members so that we will have to put emphasis on this the utilizations, we would like to have more active users.

And this year, we're going to have a continuous growth, at the same time we make that the upfront investment for that this and credit card and settlement and businesses and the e-commerce. But I would like to continue our efforts in country we are doing.

That's all my presentation. Thank you very much.

Let’s open the floor to questions. If you have a question, would you please raise your hand, we are going to pass the microphone to you, and would you please mention your name and the company - the name of your company, please.

And if you have any - you have multiple questions, would you please make question one by one, one for each. Okay?

Is there anyone who has a question? Okay.

One and the one wearing the grey jacket and sitting in the second row from the front, please

Thank you very much. I'm Sugiyama from Goldman Sachs, I have two questions.

My first question is that now an impact of the timeline format introductions, the page view and the staying hours and the staying minutes and also what's the impact on the YDN and actually the percentage or the actual values or what have the impact on the revenues, if you can disclose please?

Okay. With the introducing the timeline format, the number of clicks have substantially increased and also CBC also units, advertising, the price for the click also have grown and this is in-feed type of advertising so they were included in the top page and advertising would be embedded in that in-feed space but we are going to have more advertising positions but on the other hand without click it doesn't make any sense.

So in this sense but clicks weights is really favorable and also unit price is very steady. So both the quality and quantity have been favorable for growth.

This is our conclusions. And when we count the percentage of the total advertising business is that when we made the announcement in April and when we conducted this meeting, we - I mentioned about 40% is the growth of this YDN advertising growth and we cannot find out what would be the percentage due to this, the timeline format but now this Q1, now we have YDN the growth was 60% so it seems like about 20% was pushed up with this, the new format of advertising we suppose.

Okay, thank you very much. My next question is growth of the YDN and after the May and now we are using that - this new format again and have contributed only one and half months since you've started this format but now after July, we expected about the 3 months was of the impact and also the branded panel and added down to YDN.

So based on the launching that kind of different format of advertising and after July, what do you expect about the mobile and display advertising growth after July. What do you expect?

Yes. And now we have a little bit more on that basis of the, so the organic growth would decline but we will expect that we have a positive impact of this timeline format.

So also in the first half we expect about again the 60% of growth on YDN and when it comes to video advertising, currently still we couldn't see any - it's too early to find out the specific impacts all of the video advertising. So we do not incorporate that.

Thank you.

Any other questions? Yes.

The person sitting at the center, second row from the front.

I am Yoneshima of Barclays Securities. I joined you after you already started your presentation so maybe you have already mentioned about it, and my question is a follow-on.

You have a timeline format at different sites, and I want to know what sites you have a timeline format and as President Miyasaka said, you can further expand that format. And my question is quite qualitative, but what are the pages and sites I can leverage on the timeline format and how much would that booster the advertising revenue?

Can you give me a ballpark figure?

Well, do you have anything to say?

I am [Yasava] in charge of media. We have top page and news which use a feed-in advertisement and for other media as well we will try to see whether there is any affinity with feed-in, sports, news, you tend to read a content, as I guess it has a high affinity with in-feed advertisement.

But then there are some media that does not really suit the timeline format. So we are not going to force that media to use the feed-in format.

And so we will always think about the user experience this, and whether it is a good affinity or not. We have Yahoo partners as well and we will be aggressively assisting in making the partners sign into feed-in, so with the news agencies we will try to collaborate so that in-feed advertisement format again be conducted and we can convert their site into the timeline format.

May I then? As a potential, so within Yahoo Japan we can further expand our services and also we will expand to the partners' site as well, in terms of leveraging on the new timeline format.

And in terms of the advertisers we are talking to a limited segment, but in the future, we will further broaden our scope and also in terms of personalization and that uses big data by improving the accuracy and CPC might improve further more. So it's very difficult to quantitatively explain to you the impact.

But I'm sure that there will be a broader impact of timeline format.

I see that your timeline in-feed advertisement is trending favorably and in terms of the advertisement revenue, you will further increase it in the single-digit area. But do you think you might be able to reach the two-digit increase, do you tangibly feel any positive impact?

We gave a forecast for Q1 and at that time, in terms of the advertisement revenue we mentioned that the growth will be the higher end of the single digit and in reality, we ended up an increase of 9.5%. And so there were several points increase that has been enhanced.

And therefore after Q2 and onward, I believe that we will be able to grow the advertising revenue in the higher half of the single digit. Thank you.

I have another question. My last question.

You mentioned about the ecosystem of shopping and the red portion is increasing, and I believe that in the end of the day the advertisement will boost the revenue of the shopping you have more sellers and more buyers, and what would be did trigger for the sellers or the shops to have the advertisement do you think will be the transaction value that will trigger more advertisers to have advertisement or what is the triggering event that will boost more advertisement?

In terms of the transaction value, I think we are trending very favorably and so as an ecosystem, i.e. as a site, I think the sellers are being attracted to our site.

And in terms of the advertisement on top of display we have a PR option and we are providing more choices. For example, in Q1 the marketing service is not that large yet, we were able to increase it to 1.3 billion and we are seeing a favorable trend for the increase and in terms of total transaction value of FY 2015 we will be aiming at a high growth and take grade-wise we will like to be focus on that parameter as well but in FY 2015, we will be more or less focusing on the investment.

So in terms of the advertisement or contribution to the total revenue, it will happen sometime after 2016. Thank you.

Do you have any question? Okay, there sitting next, please.

I'm Iwasa from Mizuho Securities. I have three questions.

My first question is that it's concerning question of the previous persons but in what we call in-feed advertising and you answered about the in-feed advertising but it seems like that's your - the forecast of the advertising based on the in-feed advertising should be higher than the current forecast, but now you mentioned that about ¥2 billion would be that's the growth of the in-feed advertising so it account for about 4%. Over the total advertising revenues in this Q1, this is only about one and half months so if we have about fully contribution of the three months contributions and when we think about also the more clicks by the users, we expect about - expected the values and the contribution of the - this over the total advertising revenues in this Q1, this is only about one and half months.

So if we have about fully contribution of the three months contributions and when we think about also the more clicks by the users, we expect about - expected the values and the contribution of the advertising will be more substantial and within any of the specific problem, you can expect the double digits growth as advertising as a whole and then also it would be a very profitable business. So it would have pushed up all of that in the profitability and margin of the business annually.

So are you just little bit conservative of this kind of a forecast?

Okay. First of all, when it comes to advertising, the other factor is that sponsored search, let me talk about sponsored search.

In this Q1 about 1.8% minus is that growth year-on-year this Q1. So I mentioned earlier and it has been - as we expected it was a minus 1.8%.

And the major factor is that declining PC have been stabilized a bit, so the advertising distribution to the partner sites to the smartphone have declined. This is the other factor and this trend will continue for the time being.

And when it comes to Q2, this page search will be - that's about a little of the 1% of [indiscernible]. So for - annually we have business forecast and we were going to have the same trend in annually, so when it comes to sponsors such as like this, it seems like that's a - in the Q2, it seems like that's the margin of decline of the paid search would be larger than we expected.

But when you go advertising for the partner site on the smartphone and it is not so much profitable so the impact on the profitability is a little bit limited. So compared to that, that should decline in revenues and the contribution to that, the profit is not that much.

And when it comes to the other factors we don't include is that's the video advertising was not included in the forecast. So it seems like a little bit conservative as you have mentioned but anyway that's - and the higher single digits to that close to the double-digit growth we expect.

Okay, thank you very much.

My second question is about, you also mentioned to that the share of the portal side is increasing. But the other media reported that the share and the other player have the [indiscernible] as now they have the lower market share with another major player, but it was reported in the media, so what would be the difference in that - this of the survey or the analysis or the - what makes the difference with your estimates and the other media's investigations?

Yes, actually I supposed that this question will come out so that I have - I'd like to show you some - one of the informations, a lot of research companies are implementing, conducting surveys with a lot of different users. So, this is based on research and for example, Nielsen this is based on Nielsen and then also and when it comes to Google, actually this is the patterns of the market share between Yahoo Japan and Google; left hand side, this is [indiscernible] visitors on PC and also is shown on the right hand side.

And there is no any major dramatic change in the market share or just like this on the trend. So based on our own data and Nielsen it is shown like this.

So there is no any major change in the share just like that. This is our perspective.

Okay, thank you very much. And last of all, now when it comes to [indiscernible] had become the Chairman and the change of central management, so it will be just a little bit change in the positioning of the Board of Directors and in this circumstance [indiscernible] For example and for the best [indiscernible] cash and so now you are concerned like investment in overseas market and you are going about - think about how to do with - and send relationship with [indiscernible].

So it doesn’t change on the - central management, is there any change and we expect in the future and the business as a whole I would like to know about it. And now we have Chairman [indiscernible], there is no any major change, and also came to Japan and - Japan we have some kind of cost discussions and when shall I we don’t have about any - the lower - final level of the discussion of what we should do with the - type of is not that but we will like to have a more that and high level discussions, but what happens the Internet and 10 years ahead futures and kind of - long-term and high level discussions with the chairman.

And so and it’s really informative we have that kind of discussion with the chairman, so it’s not that for example. But we don’t think that kind of any short term change, M&A in the next year, but whether, then we like to have, more long-term, perspective and then we have imports and so I think that for example how we can be proactive enough to a grab that in the future trend of Internet.

So in the sense that’s - it’s a good informative and yes that’s really impact I think.

Any other question. Yes, person sitting at the very - in the center.

I am Nagao of Nomura Securities, I have three questions. So one at a time, firstly it is about advertisement.

You mentioned about - customers who might be using in-feed advertisement. And so do you think you will be able to grow in the future of holistically, speaking.

Do you have any take on this subject?

So the advertisers of SS might switch to MP, is that your question.

Yes, that’s my question.

Okay [indiscernible] of marketing solution company. In terms of SS customers - conducting cross-sell.

The answer is no. We are approaching in the advertisers who will be a good fit for in-feed and we have very limited channel of approach and of course we will further expanded.

So using online and we will try to approach advertisers and also intend of headsets are users we will systematically - but then there is a future now yet. Thank you.

Second question it is about - net flex over all country Japan this for and did that do you think the strategy - or change and net flex will we have charge distribution give advertisement and in terms of it will be either initial portal to lead the traffic and so I want to know what is the future of strategy of so that you can further grow the business.

We did not talk much about beta today we would like to further grow business and that is one of our core businesses. You mentioned net flex and I am sure that them coming to Japan will change the total landscape in Japan and we thinking about different strategy but then the time is not right for us to talk about in details yet.

Anyhow we will focus on especially on certain around other than UGC and we would like to be the dominant player and we do not have any intention to get that position away.

In terms of being Q1 was you did very well and in July you had a very good start and in terms of the transaction value what will be the total amount in July.

Regarding July we have in the close the month yet. So this will be about part figure.

Year-over-year we will be going about 30%. And Q2 customer based will further increase so for the fiscal year we in growing by 20% and we definitely want to secure that number.

Thank you.

[Indiscernible] I have a two questions first one is that now what panel has been struggling so a you have to start again for working together with distributors and also when you mentioned that front panel and PC is - it seems like it can be the problem that how are we going to reconstruct the channel and how do we think that rebuild this business of this front panel. Do you have any idea?

Okay. Yes, you are right and I just pointed out now we have some kind of weakness here in this area so that which advertisement and old video advertisement should be fully utilized and also the front panel.

Two, we would like to just emphasis more in front panel. And now we have started discussions with let say to the major ad agency and so that we can rebuild this business strategy.

So I think I’m sure that we can able to build it.

Okay, my next question is that your business with [indiscernible] revenue share was - SG&A or now it would be excluded so and it’s included in SG&A, what is the specific generator we have to look at?

I’m going to check it off and get it back to you later.

Thank you.

Any other question?

I’m Tomimatsu of Merrill Lynch. I have a question for [indiscernible] advertisement.

For major it’s that android proceeded IOS in terms of AMP advertisement. Not Yahoo application, but news application-wise it seems that there was a time lag and in terms of the growth for Q2, do you think there is more leeway for further growth?

And based on that assumption in terms of Q2 I believe that - will be a major driver of growth and in terms of Q1, you did not provide guidance figure, but I guess they will be at the single-digit and negative operating income and in terms of the second quarter, can you give us some guideline and if you do have any intention to disclose that number, can you tell me what is your take for Q2?

So, one question at a time please. Okay?

So in terms of the application in browser and iOS, your question is we gradually increase the distribution. Well, we just conducted a test in bits and pieces.

So whenever you access I guess you happen to see some test. And after May 20, we are 100% converted to timeline.

And so in Q2, it's full-fledged endeavor. IMES, our media company, after May 20, we officially started timeline and in terms of application, we are conducting tests, and if the tests are actually accepted by the audience or not there is a difference and so depending on the test schedule, iOS and Android had different schedule, but from here onward for all the web and applications we will have timeline and in-feed advertisement.

Regarding news, we just started the distribution and we did not go full-fledged because of the test schedule.

So in terms of our news applications users you are increasing and in terms of news application you do not have in-feed in the Q1 timeframe, but you will have in Q2. So that will be a major impact right?

Yes, it is true because I guess we will see some impact because we will have in-feed and timeline in news applications. Regarding forecast in Q1, at the very beginning we mentioned that we will have a single-digit negative increase of profit, but in the end of the day, we were able to turn positive because we did pretty well.

And in Q2 what will be the forecast, of course, there will be ups and downs, but I guess our initial forecast will not change. In terms of revenue, it will be about 10% growth and in terms of profit, I think we will be about the same as that of Q1 level.

As I have mentioned in the presentation, we will grow our revenue, but at the same time, we will be aggressive in conducting investment in the area that we want to grow. So when you look at the profit and loss in Q2, the total scheme will not change.

I want to confirm regarding SS there will be a decline so that will be a negative factor and you changed the contract with the Google and in terms of the negative factor of SS, I believe that it will not dramatically impact your profit. So SS minus one might be minus 3% rather, but it seems that you have this profit scheme that will not dramatically impact your profit, am I correct in the understanding of the SS impact and so if my understanding is correct, I do not think that reduction of SS will not dramatically negatively impact your profit.

In terms of the new contract with Google, in terms of sponsored search revenue increase, the revenue will decrease by 2% to 3% and now we are in the negative regime and the negative number will further increased by two to three points. Having said that in terms of smartphones upon the site decline, the impact of that on our profit is not that large, therefore that portion's decline will not dramatically impact our overall profit.

In terms of Tpoint, I know that you are leveraging on Tpoint's scheme especially in shopping. When you think about YDN and potential, I believe that you will be using Tpoint data, and maybe you can use that for targeting your advertisement and so anybody who use the [indiscernible] or one who went to a certain kind of store, you will be able to mix and match different information and so online and offline can be merged together to come up with more targeted advertisement.

So as a Tpoint scheme, do you think that you can really maximize usage and are you really going through that project and if you can come up with more targeted advertisement based on Tpoint information when will that kind of advertisement be launched?

I believe that there will be a major change and may I answer the previous question. We would like to increase the number of pages that can be converted to timeline format.

And we will do that quantitatively speaking in both Yahoo as well as non-Yahoo sites. And just visually making a timeline will not to be suffice, but we need to have the big data-based advertisement, as well as article.

So it's very important to use the big data behind the scene and I mentioned about credit card and shopping as the investments that we're making because it's very visible. But we are making CapEx in the area of big data.

So more than shopping credit card we are making much investment in a continuous manner in big data and we will be in doing that and the more we do the in-feed advertisement, the more we will be investing in big data. So we will have upper-hand in the competitive landscape.

And as a company, we have a multi-big data, we have commerce data and we have search data and we have article browsing data and we have such abundant data. We have multiple big data, but are we really maximizing on the treasure that we have?

Well, we cannot say yes in totality. And so we have much big data from diverse sources, so we have D&S, a data and science headquarters has been established and this entity is going through the ways to leverage on big data.

And so we will be able to pursue both a quantitative and qualitative goal. We do have big data and we haven't really maximized on the data and data and science headquarters department is putting their very best effort to go through that.

And the rest of all in the new formation of the board of directors, you have dramatically changed the board of directors organization so that there are a lot of perspective from the governance, but when it comes for the President, Mr. Miyasaka is the only person who is actually executing the businesses because only one, Mr.

Miyasaka is the only one if we can actually be getting bolder in the execution of all these businesses and this seems like a little bit strange and what happens for the future, and I had difficulty in thinking about what happens in the future, but this new formation and the new organization of all board of directors and executives come out there with the other person has to stay there in the board of directors.

What did you change like this Board of Directors organizations and would you please explain the background of this change?

Yes, well, so let's see and they would be - get separated, that's the management and executions. So now there is no problem they can for - many kinds of benefits for the shareholders, I think and a decent and new formation of the Board of Directors is very, very strong formation for the business.

And so far Mr. Son was Chairman and also Yahoo Inc.

providing the advice for having some very good informative discussions, now we have a new Chairman and [indiscernible] and this is - he is really that legal expert of that international global Internet business so that we can have, now we are in that environment we can have that kind of, they believe, informative inputs from these two giants in the global Internet business so that they serve a good environment for us. On a long-term basis, I'm convinced that there will be that the comments will change and looking at this new formation from the short-term and the long-term perspective, but I personally think that from the long-term basis and long-term perspective, I think that this is a wonderful formation and we have informed the shareholders, I think.

Okay. So occasionally and what happens with that say, the stocks and share owned by the Yahoo Inc.

So now when I look at this Board of Directors organization what happens with the decisions made by this new Board of Directors because now you have more officials from Yahoo Inc., also you have more directors from SoftBank so that when it comes to basic standing point of the Board of Directors, is there any change about this, for example and how to handle that kind of for example stocks owned by the Yahoo Inc. or something like that?

Yes. And so this is that Board of Directors at Yahoo Japan have to act for the maximization of benefit of Yahoo Japan's shareholders, there isn't any difference, any change.

And whatever the formations or whatever the compositions of this Board of Directors, there is not any change.

Okay, thank you very much.

Do you have any other question? Okay, that's all the procedures and agenda for today's meeting.

Thank you very much. Thank you.