Yahoo Japan (4689): FY17 Q1 Results Comment
Key Points
- Yahoo Japan (YJ) kicked off FY17 with a good Q1, with many key performance indicators reaching record highs. For example, the number of daily active users of all YJ’s applications surpassed 40mil; the number of Yahoo! Premium Membership IDs shot up 41% YoY; shopping transaction value grew rapidly at 40% YoY; credit card transaction value doubled from a year ago; and the number of Yahoo! Wallet accounts topped 37.3mil. YJ’s supercomputer is No. 2 in the world in the energy-efficient supercomputer rankings. This is encouraging news given its efforts to become a multi-big-data-driven company.
- The cumulative impact of improvements in products and services, as well as YJ’s successful collaborations with SoftBank (9984) were the main reasons for this strong performance.
Revenue rose 4.1% YoY thanks to an increase in the advertising-related revenue - including Paid Search Advertising and Premium Advertising, as well as the consolidation of eBOOK Initiative Japan Co., Ltd. during FY16. - Despite ongoing investment in sales promotional activities and data facilities, OP managed to expand by 2.6% YoY. This was owing to revenue growth, plus the recognition of insurance proceeds from the fire at the logistics centre of ASKUL Corporation (2678).
- Overall, the company’s progress in each business is in line with our expectations. For more details, please see our January 18th, 2017 report Yahoo Japan (4689): The Road to a Brighter Future. As of Q1, the company has achieved 22.7%, 26.6% and 27.6% of PSA’s FY17 revenue, OP and net income estimates, respectively. We believe that the company will strengthen its investment in e-commerce and data in the remaining quarters, which may put pressure on profit growth. Consequently, we keep our forecasts unchanged.
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
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