Earnings Transcript for BAINF - Q1 Fiscal Year 2021

Yuta Tsuruoka: [Interpreted] Thank you very much for attending our Web Conference Today. Against the COVID-19, we are going to be holding this meeting online. Now, we will be streaming this presentation and chart you can use to take your questions even during the presentation. Regarding the questions that we have received, they will be addressed at the Q&A session at the end. An archived distribution will also be made for today's presentation. Let me introduce the speakers to you. My name is Tsuruoka, Representative Director and the CEO of BASE.

Ken Harada: [Interpreted] My name is Harada, Director and CFO.

Kenji Yamamura : [Interpreted] My name is Yamamura, COO and Director.,

Yuta Tsuruoka: [Interpreted] So without further ado I will be talking about the business outline. This follows the executive summary for our company today. Please refer to Page 4. This is something that I'm referring to every time, which is the mission of our company. Payment to the People and Power to the People is our mission. It was founded in 2012. And since then, for individuals as well as for a small team so the empowerment that are out there is the objective of our company. Ecommerce stores as well as payment tools have been developed to empower the people and therefore for individuals as for as well for small teams to empower as well as to visualize. So that internet business can be promoted to enjoy various lifestyles. This is how we wish to make the contribution as a company. Please refer to Page 5. This is the offline chart of our business. This is something I'm referring to every time. The area in green is the base business. This was our founding business from the very start for individuals as well as for SMBs or the long tail market. People can engage in ecommerce and establish shop easily with smartphones or PCs. Payments support and opening online shops can be enabled on the ecommerce platform for individuals and SMBs. And on the bottom side is the PAY.JP for startup companies with engineers. A payment service provider – is what we're providing in terms of the payment support, this is a payment services as well. But there is no overlap between BASE and PAY.JP. So the KPIs are also completely different. On the left hand side is the PAY ID in our groups for the purchases that we are providing and this product. BASE is for individuals as well as those being to or wishing to establish online shops and the payment support is provided in the form PAY.JP. About the PAY ID, it is different for the purchasing, so one click online shopping is enabled through this product. PAY ID will allow the shopping – the 1 million shops on this. For example, this is a service centre we are providing to do purchases. So these are the three main businesses pursued by our company. Let me now talk about the executive summary of performance for this quarter. The first and foremost setting topic is the GMV for the BASE business grew at a high rate of 105.4% year-on-year, maintaining high growth rates. In number of stores was 78.6%. This is also a very strong growth and that has been continuing. In January and April emergency efforts provision has been made. However, the impact on the business is really limited. In terms of sales as well as a gross profit were as expected and in the second quarter and onwards we believe that performance will be in line with the plan. For the first quarter in terms of the sales as well as a gross profit is prevailing at the maximum level. We hope that this momentum can be continued going forward. Slide 8, this is the BASE online shops. With 81% increase year-on-year on a cumulative basis, we have exceeded the 1.4 million shops mark. Page 9, in calculating for the GMV the important to KPIs are listed here. They are the three listed here. At the left we have the monthly GMV. In the middle is the number of active shops per month, which will be required to calculate the GMV and on the right hand side is a monthly average GMV per shop. Compared to the previous quarter, the revenues are subject to seasonality, therefore there is a decline. However, in terms of the number of active shops month it is prevailing at very high levels. This is also driving the monthly the GMV growth. In this quarter individuals as well as small teams have been using BASE extensively. Some examples are shown here six shops are shown here. And basically these are individual shops using the smartphones, some are using the PCs, but they're mostly using smartphones, these online shops can be established immediately. These are the six shops that have been established by individuals and small teams. And payment options have expanded as you can see on Page 11. In this folder Amazon Pay has been added new on Page 10 as you can see for individuals as well as for small teams, payment terms can be utilized. This is one of the unique characteristics of the BASE. Therefore, we are trying to expand the services. And also Easy Pay is shown on the same page. These supplement payment solutions can be immediately used by individuals as well as small teams. This is a unique position domestically in planting business in various ways. And through this BASE Easy Pay you can checkout transactions take place and this is when we are able to pose to commissions and therefore together with the – our customers we are able to grow our business. Now, let me talk about some of the new functions introduced in the quarter on Page 12. Shop Design Function is provided by our company. We will talk about No-Code, HTML, CSS does not have to be written easily intuitively net or shops that can be established on a No-Code basis and this is a characteristic of the BASE. And you can also add video now and maps can be inserted as well. There are new assumptions are provided to – for added creativity. I believe that No-Code service for long tail customers is the unique strength of BASE both domestically as well as globally. This is being strongly supported by our users today. Page13, marketing information is provided here of after in shops, online shops are established, SNS activities can be linked and through advertising, they can attract more traffic. We would like to also contribute in this area and therefore we are increasingly partnering with the outside partners and to enable such a process. This is the Instagram Ads App as well as the Google Merchandise Cooperative App you can execute advertising directly from the shop, or they can be linked in with Google so that it will be reflected in the Google search. By so doing the online shop operation can be facilitated for the end users by utilizing BASE. This is the well, view that we wish to further expand going forward. Page 14, this is also very important in establishing the brand for our customers. A purchase completion mail being sent by BASE, HTML which brand expressive mail can be sent. And on the cart page, it was based on BASE domain so far. However, the cart page domain is reflecting the shop page now, so more diverse functions are increasingly incorporated in order to enhance the brand value of the uses of BASE. Now, I'd like to ask Mr. Harada to continue.

Ken Harada: [Interpreted] This is Harada, I'm the CFO. I would like to talk about the highlights for the quarter. Please refer to Page 16. This is the financial highlights for the Q1 results. On a consolidated basis last year in the second quarter, the BASE business GMV increased significantly. And for this quarter, the trend has continued in terms of strong growth, in terms of sales as well as a gross profit and in terms of increased too on year-on-year basis. However, in terms of operating profit and SG&A promotion expenses have declined and therefore, we have been able to oppose to a profit. Page 17 please, this is the P&L for the first quarter. This is the same explanation as the last page. So I shall not leave at this point. Going on to the next page is the balance sheet. In terms of the balance sheet compared to the previous year, there is no significant change. However, on a continuous basis in terms of cash 22.5 million is the cash that we have and utilizing this year will continue to make investment in the second quarter onward. Page 19, this is the trend in GMV on a consolidated basis BASE and PAY together. BASE is providing the payment service. In terms of GMV increase will determine the sales and gross profit. BASE and PAY are both payment services, but there is no – both online in the GMV and they are both independent of the – independent of each other. Next, is looking at the net sales and trend. BASE and PAY in terms of net sales is linked to GMV and we are generating commissions and based on the growth in GMV we have been able to increase net sales. Next page is the trend and ratio of net sales my business. BASE is accounted for 90% and compared to the previous quarter and there is no significant change. It has remained flat. Next is consolidated gross profit both for PAY and BASE, the cost of goods is to be the variable cost to be equivalent to the payment made to the store operators and therefore we only have a minor increase. And regarding the gross profit year-on-year, it is about twice as large and GMV is because is also twice as large and because of this reason we are seeing this gross profit increase. Now gross margin on the other hand is a 58.8%, which is flat more or less from the previous quarters and the gross profit of BASE business is about 66%. On the other hand for PAY business it's about 10%. Therefore, the BASE business composition increases as a result, the consolidated gross margin increases there is a structure of our business, but as is explained in a previous page. Now the sales composition is that over Q-on-Q there is no major change and therefore gross margin is almost flat. So that is the structure of gross margin. Next is regarding SG&A expenses and SG&A are divided into three components. The first is the promotion and the personnel expenses and others. And for this particular quarter, we have invested in the promotion and personnel expenses for BASE businesses. And that was explained in the previous results announcement. During the first quarter, we have also focused on promotional expenses as well as hiring of personnel that we've invested this quarter. But for promotions, we actually had lower numbers, but in the second quarter and onwards, we will make sure that we will invest in promotion expenses for sure, going forward. And for the personnel expenses, we will continue to work on hiring – work and hiring is progressing quite well and therefore we are having higher personnel expenses so far in SG

Q - Unknown Company Representative: [Interpreted] We would now like to proceed to the Q&A. Please use the chat box on the right hand top of the screen and the moderator will be reading out the question. We will allow some time for people to write in questions. Now, we would like to proceed to the Q&A period. This one question is from anonymous person regarding fiscal to BASE monthly trend, please elaborate further?

Ken Harada: [Interpreted] I will respond. This is Harada speaking. In the first quarter for the monthly BASE business trend little pleasing [ph], in terms of peak it was a January basically, February is less in the number of days therefore, it will be lower but in March it will revert back to a higher level. Now, regarding January there was emergency declaration issued compared to previous is the Q-on-Q decline was less. Thank you very much.

Unknown Company Representative: [Interpreted] Second question by the BASE active shops is around 3000. What is driving this growth?

Kenji Yamamura: [Interpreted] This is Yamamura. Let me respond. What are the drivers for increasing never effective shops? There are new shop openings and also continuity is being maintained. These are two factors driving the growth. But the first quarter the COVID-19 has an impact last year. From April to May there was growth in the number of shop openings, but inclusive of promotion we have continued investment even after COVID-19 was – the impact was less and therefore that is driven the growth into this first quarter.

Unknown Company Representative: [Interpreted] Third question, regarding a promotion expense, how do you evaluate this? Do you have a KPI to evaluate this?

Kenji Yamamura: [Interpreted] I will respond. This is Yamamura speaking once again. Regarding promotion, TV CM is to advance brand awareness. On the other hand, digital marketing is implemented which is a web promotion, which will lead directly to acquisitions. For TV brand awareness, the service awareness will be an important KPI and whether this is leading to new openings. It's also a KPI for the evaluation. In terms of the acquisition of customers, a new shop openings as well as conversion to active shops is also important KPI. We are looking at this by every immediate arm in making decisions for investment. Thank you very much.

Unknown Company Representative: [Interpreted] Same person question four. Third quarter element, how do you intend to continue the growth?

Kenji Yamamura: [Interpreted] So, let me respond to that question. For third quarter element, we have been continuing growth, but in terms of important KPIs the number of active shop is important KPI for us and how this is going to increase will be driving the achievement of performance. New openings will be very important inclusive of the progression we will continue to make investment to accumulate growth in this area. In order to maintain continuity of product improvement is important first and foremost, inclusive of minor improvement new functions will be incorporated. So that continuity will be maintained and active shops number will be maintained in the third quarter element.

Unknown Company Representative: [Interpreted] Now compared to last three quarter, you have reduced the promotion expenses. Why is that the case?

Kenji Yamamura: [Interpreted] This is Yamamura speaking. I'd like to respond to that. Regarding promotion, it may look suppressed, but in the first quarter of 2020 compared to that, it is about two times in terms of investment for promotion. So we are continuing to do so. In that context for fiscal year 2021, we will continue to drive this process in the annual and promotion will be driven. We will be looking into the market as well as the peers and the appropriate timing we will make our decision. For the first quarter therefore, it may look smaller compared to the full year expenditure, but we will continue to make investment in the safer standard from second quarter onwards. So let me say that it is according to schedule.

Unknown Company Representative: [Interpreted] And the GMV trend for April and May if you can have and year-over-year number would be appreciated.

Ken Harada: [Interpreted] Now, this is Harada speaking. For May GMV number, we do not have the data yet. So I rather not comment on that. However, regarding April, as the last chart shows, basically, well, its April to June last year, there was a significant increase and therefore we have negative growth number for GMV for April. Having said that though, for this fiscal year, so January to April this year GMV is going to hit the highest level. Thank you very much.

Unknown Company Representative: [Interpreted] And the next is from Mizuho Securities Mr. Tony Matthew raised some questions. And on Page 27 – looking at GMV on page 27, it seems that new shops are performing quite well. However, the Q-on-Q reduction for existing stores seems to be larger, even despite the seasonality and therefore are there any structural reasons that existing shops are having difficulties in growing? And after this particular quarter, do you expect that existing store would also have a very nice growth in a future.

Kenji Yamamura: [Interpreted] Thank you for the question. And factors contribute in this is that in the second quarter last year at that particular timing among the existing shops, some are dormant and because of the COVID impact, they started to do some business and therefore, the recovery from – recovery because of the COVID is now seizing out and therefore it is performing slightly lesser than before. And therefore there's no specific reason or structural reason that existing store would have lower sales. So going forward, the most recent number is going to be continued and that is our forecast at this point. Thank you very much.

Unknown Company Representative: [Interpreted] And next question is once again from Mr. Tony Matthew of Mizuho Securities. Compared to BASE business, PAY business seems to be provided to the customer above the certain size and since that's a PAY.JP's strength and reason for existence, perhaps could you explain your need to compete and win this competition with Stripe or if you have other factors, because your customer base seems to be larger companies than the PAY base business.

Yuta Tsuruoka: [Interpreted] Right Stripe and other payment service providers are competing with us in some cases, we are fully aware. But PAY.JP is providing the libraries, which is very easy to use for engineers and also we are providing a very fair payment rate, so that the merchants will choose us against other players. And think about this. And considering these factors, I think that we were able to grow to this age and therefore we try to a grow PAY.JP business in a gradual manner. Now, we provide PAY ID, which is for the purchases and ID management of service provider. And of course, we need to get the BASE overview we need to provide the services for purchases for sure. And in addition, empowerment for the purchasers is considered to be very important. That is a must which we have to do. And therefore it is not just the ecosystem for the BASE. However, we need something beyond that need to be captured through the payment services and that will contribute to the medium to long term position for the BASE business as well. So PAY.JP is provided Pay company and for the merchants, other than doing BASE is going to be covered. And on the other hand, we empower the purchasers through the PAY ID so that we can solidify our foundations. I believe that the PAY.JP is quite a good product from that point of view. Thank you very much.

Unknown Company Representative: [Interpreted] So that is all in terms of the questions that we have received. And so we will again allocate some time for you to writing questions for several minutes. Thank you. We have received a question. So let us resume with Q&A. This is an anonymous question with [indiscernible] the partnerships have been established. Has this proven to be effective?

Kenji Yamamura: [Interpreted] In terms of business we are now considering how to proceed going forward currently, therefore, the impact should they build going forward. Currently, there is no significant impact to on our performance because of the business partnership. Thank you.

Unknown Company Representative: [Interpreted] There are more questions coming in, please wait for few seconds. Once again, the anonymous person, regarding expansion of the third party function, how are you going to increase the number of functions?

Kenji Yamamura: [Interpreted] Now third party expansion and enhancement is that – the priority at this point in time is as mentioned earlier, for example, Instagram and Google, we are able to connect to their site and that is mostly the target. We'd like to establish our official applications solidly. So it is not that we are relentlessly expanding the third party rather than that, we will focus on important partners for example including the logistics services with Yamato that we try to have a very solid business. Thank you very much.

Unknown Company Representative: [Interpreted] Another anonymous question regarding PAY, what is the driver for gross profit?

Ken Harada: [Interpreted] I would respond. This is Harada. Regarding the PAY business, basically in terms of gross profit margin it's around 10% also, that is how it has been preparing take rate is about 2.7%. Therefore, basically it remains unchanged. Therefore GMV is very important in driving gross profit forward. Now if you look at the GMV the number of merchants as well as active shops, the average GMV is the important factors. Both have been growing in the near term. The active shop seems to be growing this business. Now in terms of BASE to incur promotion expenses or to acquire new shops is not what we're trying to do. But rather it's a more organic in terms of acquisition and this is also a remaining very strong. Thank you.

Unknown Company Representative: [Interpreted] Next, this is a question from Joseph. In order to increase number of active shops, could you elaborate on examples of functional enhancement in order to increase the number of active shops?

Kenji Yamamura: [Interpreted] Right, the functions related to active shops, just to reiterate Instagram advertisement could be uploaded. And also, they could upload the ads for Google Apps and such promotional functions are being enhanced at this point and promotions as well as the CRM using the parts of the participants and attach functions. It's going to be further enhanced. Thank you very much.

Unknown Company Representative: [Interpreted] Thank you, anonymous question. For BASE business the take rate was around 8.4% to – from 8.4% has gone down to 8.1%. And you said that it is going to improve in the first quarter, but they remained 8.1%. How should we evaluate this trend?

Ken Harada: [Interpreted] Let me respond. The fourth quarter was 8.1%. January was 8.2%. So there was a temporary improvement. The factors driving the improvement was not a significant phenomenon, but in terms of payment breakdown has changed, the mix has changed. Now regarding the change in composition for January to March, during the first quarter, there is no change compared to the fourth quarter. As a result, the take rate though remains flat. For the full year 8.1% is the target. This remains, but depending on the quarter, depending on the month, there could be some changes, and the payment value could have a impact on take rate, but to have a significant improvement or significant decline, not contemplated for the time being.

Unknown Company Representative: [Interpreted] Next is the question from anonymous person, Naver [ph] of South Korea, a tougher – with a tight holding to launch the new service in June that I heard such story and are they a new competitor against your business?

Yuta Tsuruoka: [Interpreted] Well, there are some other company strategies and therefore it is not that we have concrete information. However, we are carefully monitoring and watching the competitive landscape and I think about the nature of the business, BASE business as you can see we are becoming one business and there are 10s of 1000s of stores, generating the stores of about JPY100,000 on level of sales and that cannot be overturned quickly. And this is sort of a cumulative business that you need to gradually increase the business volume. So we have accomplished so far as the greatest barrier to the entry. But we should not be complacent, we should – have to be very careful in wondering what is our strategy to make inroads into the market? And we will be very alert and we will take any necessary actions. And we'd like to cover the long tail market. We need to empower the long tail market then that is the strategy for us. Thank you very much.

Unknown Company Representative: [Interpreted] Next anonymous question, when shop earnings increase, like the shops are likely to increase, so that means that the GMV per shop could decline going forward. Is that your take?

Kenji Yamamura: [Interpreted] This is your Yamamura speaking. Yes, in terms of [indiscernible], when we have more shop openings shops tend to increase or average transaction value is likely to decline. But on our part JPY100,000 or so shops increasing in number is positively evaluated to buy a bond and against this backdrop, we have a unique position in the market. So we do believe that phenomenon will occur. But long term market expansion is positive for us. And therefore we will continue to increase the number of active shops going forward. That's our view. Thank you very much.

Unknown Company Representative: [Interpreted] Mr. Tony Matthew of Mizuho Securities, Shopify, Stripe and all these are expecting a financial services across. And do you think that the strategy for their financial services, which fits your business model as well?

Yuta Tsuruoka: [Interpreted] Well, at this point what we are doing the LBank businesses where we already announced that services. And there are some data unique to us. And there are some cash flow, which is only available for us and we'd like to fully utilize on our position. And there might be some financial services that we can provide. And from a medium to long term point of view, that may be a great opportunity. So we would make an inverted market where no other third party can do. And of course, we'd like to launch such services. It's very much possible that we could launch such services in the future although the resources are very limited. Therefore, we'd need to set clear priorities and at an appropriate timing, we would provide appropriate product into our markets, and we should steadily prepare for such possibilities. But looking at the overseas players, we will carefully monitor the trends in this industry, and we will identify our unique area and we'd like to do an empowerment for our demographic. Thank you.

Unknown Company Representative: [Interpreted] Our next question, PAY ID data utilization as well as their monetization, what is the schedule in this regard?

Yuta Tsuruoka: [Interpreted] In terms of project within this year, we want to promote the PAY ID project. We have the scale now. And we have increased the BASE GMV. This could be a very important factor and we hope to empower another domain. PAY ID on the purchases empowerment is what we would like to promote going forward. But within the year we are not factoring in the impact to the for this fiscal year. But we will continue to make preparations inclusive of products and we will implement what we can as we proceed going forward.

Unknown Company Representative: [Interpreted] The next is a question from anonymous person. On Page 36, the GMV seems to be increasing However, on Page 27 for existing customers, there seems to be a reduction in the sales and can you offset the decline by acquiring the new purchasers and in the most significant – in the most recent situation, there are state of emergency and what is the impact from that and what is the progress so far?

Ken Harada: [Interpreted] Basically, GMV structure so far was such that, as you can see on Page 27, well, second quarter from last year and onwards are inclusive of a COVID impact and therefore, we are seeing some irregularities. However, based upon the growth of trend of GMV, the GMV, which were from the stores opened in the past were a flat or gradually minor increase. And on top of that, there are other GMVs generated by newly opened shops. So that is the structure. And therefore, in the second quarter of last fiscal year, because of a COVID there are significant increase in GMV. Once that – one tiny pack seizes out. And then the number that you see in first quarter of this fiscal year or prior to that will be the trend. And from the second quarter last year and onwards because of COVID movements by the shops as well as the purchasers trend. There are significant changes quarter-on-quarter and therefore it is very hard to identify the future trend. And to answer to your question, we've seen the most recent – the coalition of the state of emergency and there might be some near effect going forward, but with the emergency – state of emergency declination, there are some increase in restaurants categories on the other hand the fashion items, are seeing some decline in GMV. However, on the whole the change – proportion of the change is very small. And in the second quarter of last year for instance, the purchasers have been making some hybrid nesting consumptions as well as the try to access to masks and because of that we had a surge in the second quarter, and the nesting consumptions as well as mask sales, we'll see this stabilizes going forward. And in the fourth quarter last year as well as the first quarter this year, quarter-on-quarter basis, it is almost flat. So that's what we are seeing at this point. Thank you very much.

Unknown Company Representative: [Interpreted] Next from Anon Sung [ph]. Regarding first quarter and April, GMV growth has been driven by which category? Please elaborate further.

Kenji Yamamura: [Interpreted] In terms of categories for the first quarter and April, it doesn't have any specific category grew significantly. So there was no unique characteristic. Similar to the past fashion apparel was accounting for about half and that category continued to grow successfully. And from last year, the brick and mortar shops and restaurant and food business are also opening their online shop. So these have remained very strong.

Unknown Company Representative: [Interpreted] Next from Okasan Securities, [indiscernible] raised question. Now, in regard to the individual inflows, are there any changes in regards to the organic inflow of the individuals and also have you able to see some – confirmed the benefits of promotional activities?

Kenji Yamamura: [Interpreted] No, individual shops increases or inflows organic versus the advertisement was invested in both. Therefore, there's no change in the proportions of contribution between the two. And in regard to the benefits of promotion activities, in order to win awareness there are some benefits to organic growth and we are measuring the impact and we believe that we have positive impact in increasingly organic inflow of the shops.

Unknown Company Representative: [Interpreted] Next anonymous question for the transport – for the new shop openings, what about the size? Is it the more individual or more SMBs in the – in terms of effectiveness? Which – is SMB or individual that is making more contribution?

Kenji Yamamura: [Interpreted] No, regarding classification of SMBs and the individual is very difficult to do. If we look at the individual businesses, there's about seven – accounting for about 70% for the BASE business. And in the recent past the same category uses – are using this significantly. So rather than SMBs individual proprietors are driving the growth. Thank you.

Unknown Company Representative: [Interpreted] Next from anonymous person, question is, what is your plan to make inroads to overseas market?

Yuta Tsuruoka: [Interpreted] Well, being a product of this point shop is only provided for the Japanese residents and purchasers can access from outside of Japan. But the shops cannot be opened on our site for non-residents in Japan. So for a long term point of view, we want our shops to be available for non-residents of Japan. But we have a very robust growth from the Japanese residents as well. So at this point, we'd like to focus on growing the Japanese residents at this point and at appropriate timing we'd also like to think about the opening shops from overseas.

Unknown Company Representative: [Interpreted] Two questions from a Joseph Sun [ph]. First question, regarding shop retention rate, please elaborate.

Kenji Yamamura: [Interpreted] No, over the past several years our product improvements have been made. And against this backdrop, the retention rate is improving. Therefore for the first quarter, compared to the previous quarter positive trend has continued.

Unknown Company Representative: [Interpreted] Second question is that there are something that BASE can lose from Shopify and vice versa as well. And how do you describe all these learnings from Shopify?

Yuta Tsuruoka: [Interpreted] Well, I'm not sure what could be learned – what Shopify can learn from BASE, but BASE was established in 2012 and Shopify has been operated at the time on a global basis and of course, when we established base we are always adored to be something like Shopify. So the spirit of supporting the shops and also try to represent that in our products and I know that Shopify is much ahead of us. So I'd like to learn everything possible. And compared to Shopify, we are focusing on empowering the individuals. And I think, we are more towards individuals, and we are focusing on long tail. And Shopify has been giving empowerment for the large companies and small companies. And we'd like to replicate that for the long tail of markets or customer base. And there are so many things that we can learn from that point of view and if we'd like to add on to our experiences, and we'd like to demonstrate in our services. Thank you.

Unknown Company Representative: [Interpreted] Mizuho Securities, [indiscernible]. Regarding existing customers, shops with Instagram advertising, is that growing better than others? Do you need money to grow the business? Do you think that the scale is advantage? If that is the case, I don't think it is aligned with the mission pursued and promoted by [indiscernible], please elaborate.

Kenji Yamamura: [Interpreted] Regarding Instagram advertising, I'd like to address that. It's about the several 100,000 is the monthly sales. Therefore, it is as if they can implement Instagram advertising. So it's limited currently. But we hope to enhance further partnership with Instagram, but the impact is still limited.

Yuta Tsuruoka: [Interpreted] On the other hand, regarding shop0 scale, does that drive revenue scale? You can say that shops 20 will be successful. But over the several years utilizing social media and shops becoming larger is also another phenomenon, that's the way we are seeing strong growth of shops to sell. Speed as well as front loading trends will become more important – sensitivity to trend will become important. Funding is not everything in terms of competition. According to my view, I don't think that is the case. Therefore, various shops will have their own way of growth. In the fall various expression of shops are being introduced – definition – shops have different as well and the method of growth there will be different from shop to shop. I hope that most shops will utilize our platform. For the long tail players, I hope that more abundance can be enjoyed.

Unknown Company Representative: [Interpreted] A question from anonymous person, Instagram ad app, as well as Google Ads coordination apps, it seems that this is a eight apps free of charge. Are you thinking of making it in a fee structures for that so that we can earn more profits?

Kenji Yamamura: [Interpreted] Do we apply fees for using such app? It's not that we never considered, but there's no plan of start charging on the use of such apps. But on the other hand is from Instagram apps and Google linking apps and that itself whether that will be contribute to the growth of the shop itself we are assessing the validity. Once we finish the validity then assessment and then we will think about whether we should charge the fee or not that is the situation

Yuta Tsuruoka : [Interpreted] We have completed answering all the questions. And therefore we would like to bring this web conference for the results of the first quarter of fiscal 2021 to a close. We will continue to focus on the empowerment of long tail players in the market so that we can contribute to a more diverse society going forward. I'd like to ask for your continued support. Thank you very much for your attendance today.