Economic Headwinds and PayPay Consolidation Pressures Near-Term Margins; FVE Decreased to JPY 440

Yahoo Japan, which is the portal site organized by Z Holdings, is the first and largest internet portal in Japan. We think it has benefited from Japan’s ageing population, in that many Japanese people tend to hold on to older technology and habits, including Yahoo Japan’s portal service. Yahoo Japan has a strong brand name, and SoftBank, its parent, has helped to promote its internet services together with SoftBank’s telecom services in Japan. Yahoo Japan’s Premium Membership has been promoted through SoftBank Mobile and Y Mobile retail stores, and in March 2016, the membership fee increased from JPY 380 to JPY 462 per month. The high-margin search and display advertising business has brought Z Holdings continuous net cash inflow, and the company has a solid balance sheet with JPY 438.5 billion in net cash.