LINE and PayPay account linkage to be postponed LINE Yahoo 15 billion yen to strengthen security

LINE Yahoo

On the 8th, LINE Yahoo announced its full-year and fourth-quarter financial results for fiscal year 2023, and also explained its future business strategy and response to information leaks due to unauthorized access. Account linkage between LINE and PayPay, which was originally scheduled for 2024, will be postponed. The company also announced that it will renew the Yahoo! JAPAN app in the first half of 2024.

LINE Yahoo CEO Tsuyoshi Idezawa apologized to users and related parties for the information leak caused by unauthorized access, and emphasized that the company would “focus on establishing security governance.” He said that the system separation from NAVER will be carried out ahead of schedule.

In FY2014, we will revamp the LINE Yahoo! apps. Synergy with LYP

In fiscal 2024, we aim to grow our services through the renewal of LYP Premium, LINE, and the new Yahoo! JAPAN app.

As for LYP Premium, the number of subscribers increased by more than 1 million due to a large campaign in February, expanding to 24.44 million. In this campaign, we strengthened new acquisition by granting benefits of about 10,000 yen per person and 3 months free, and as a result, many synergies were recognized, such as increased usage of Yahoo! Shopping, especially LYP subscription from LINE and e-commerce sending. It is said that the customers have responded well.

LINE and PayPay account linkage to be postponed LINE Yahoo 15 billion yen to strengthen security

As the number of people who will reach the end of the free period will increase in the future, we believe that “now is the time to take action” (Ryosuke Sakagami, Senior Executive Officer and CFO), and we will increase the number of members by enhancing the benefits of LYP Premium, such as “LINE Pri” and “Support for multiple profiles.” To go. “If we see a winning path to paid conversion, we would like to run similar campaigns.”

The renewal of the LINE app is progressing smoothly, and we will strengthen support for search, shopping, local services, etc. by the end of 2024.

This is also the first time that we have announced the renewal of the Yahoo! JAPAN app. In addition to the home tab, it will be updated during the first half of 2024, with a “trend tab” that provides trend information based on search rankings, a “follow tab” for user-selected themes, and an “assist tab” that supports users’ lives and actions. Add.

15 billion yen for NAVER separation and security governance

The issue is “security governance.” In October of last year, an information leak occurred due to unauthorized access, and the company received an administrative recommendation from the Personal Information Protection Commission and administrative guidance from the Ministry of Internal Affairs and Communications, and it has also been pointed out that the capital structure with NAVER is a problem.

Discussions are underway between parent company SoftBank and NAVER regarding the capital structure, and although CEO Idezawa said, “I can’t say anything from LINE Yahoo’s standpoint,” SoftBank is requesting that it have a majority stake. LINE Yahoo will continue to separate NAVER in terms of systems and services.

LINE and PayPay account linkage to be postponed LINE Yahoo 15 billion yen to strengthen security

Regarding our relationship with NAVER, we will terminate all outsourcing relationships with NAVER, not only in the operation of systems and networks for employees, but also in services and business areas. Due to these factors, countermeasure costs are expected to be approximately 15 billion yen in fiscal 2024.

In addition, the timing of account linkage between LINE and PayPay, which was originally scheduled for 2024, has been revised and has actually been postponed. Take the lead in implementing measures to strengthen LINE Yahoo’s security.

Furthermore, Junho Shin, representative director and CPO, and Taku Oketani, director and CSO, will be removed from the board of directors, promoting separation of management and execution. Mr. Shin will continue to be involved in execution as CPO in charge of products. “It’s not about taking responsibility or demotion, but separating management and execution,” CEO Idezawa said.

Regarding the impact of NAVER’s separation on LINE services, Shin Jun-ho, CPO, explains, “For the past 15 years, LINE has been operating the core engine independently, so there aren’t that many elements of collaboration.”

’23 financial results are record high

The full-year results for FY2023 are as follows: sales increased 8.5% year-on-year to 1,814.6 billion yen, operating income increased 24.7% year-on-year to 417.9 billion yen, and adjusted EBITDA margin was 22.9%. Due to the growth of PayPay, adjusted EBITDA of the strategic business became profitable for the first time in the fiscal year. Additionally, improvements in LINE Yahoo’s gross profit and selling, general and administrative expenses contributed to the increase in profits.

In the media business, revenue increased due to growth in account advertising, and margin improved to 36%. The commerce business also saw an increase in sales and profits due to a recovery in domestic product sales volume and cost optimization.

LINE and PayPay account linkage to be postponed LINE Yahoo 15 billion yen to strengthen security

Domestic shopping transaction volume decreased by 1.7% year-on-year to 1,665.8 billion yen, but it improved significantly in the fourth quarter due to factors such as the LYP Premium initiative, and is on a recovery trend with an increase of over 10% compared to the same month last year. In particular, synergy effects from LYP Premium have been seen in e-commerce, and the customer referral effect from LINE is said to be high. For this reason, we will strengthen the guidance for shopping in the LINE renewal scheduled for 2024.

The strategic business centered on PayPay had sales of 289.9 billion yen and adjusted EBITDA of 11.5 billion yen. This was the first time that the strategic business turned a profit for the full year. PayPay’s consolidated transaction volume increased by more than 2 trillion yen to 12.5 trillion yen, with sales of 211.5 billion yen and consolidated EBIDTA of 9.8 billion yen.

In fiscal 2014, we will strengthen integrated commerce search in the search field. Furthermore, Yahoo!’s search engine is currently being used under a contract with Google, which is due to expire in March 2025. There have been reports that the company is considering changing its search engine, but it has decided to extend its contract with Google for two years until March 2027 and continue to use Google’s search engine. Additionally, in the advertising business, we will strengthen monetization of account advertising by improving its functionality.

Guidance for FY2024 is revenue of 1.93 trillion yen (up about 7% year-on-year) and adjusted EBITDA of 430-440 billion yen (up 3.6-6% year-on-year). Promote sales growth through LYP Premium, LINE renewal, Yahoo! JAPAN app renewal, etc. We will work on strengthening security governance as a major issue.

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