Q1 2024 KDDI Corporation Earnings Press Conference

July 28, 2023

Oh, the Chisholm disasters working with other carriers.

On the right vehicle mounted portable shipboard base stations deployed using Starlink are expected to total about 200 units by the end of March 'twenty 'twenty four.

By strengthening snuggled connecting we will contribute to building safe and secure society.

We will leverage the Saturday telecommunication service starting to connect here the everywhere throughout Japan.

The left Starlink will be used as backhaul lives for <unk> base stations to expand the communication areas to include all hundreds famous mountains and tourist destinations in Japan five G will be deployed by the end of this fiscal year as well underwrite is expansion of coverage.

Recently high speed large capacity communications service was made available for maritime the youth as well, we will seek to make customers experience more comfortable as well.

And Hot Wi Fi makes safety confirmation information gathering and cashless payment possible.

In festivals, where many users together in locally concentrated manner, we can expect it to help mitigate the conditions and communication lines.

Now let me go on to discuss satellite goes strategy and strengthening our management.

First in the communication area.

<unk> revenues have shown steady growth.

I'll dive brand total ARPA revenues increased year on year.

Shown on the left.

On the right Auto brand communications, our booth revenues reached a negative year on year. It goes of $2 9 billion yen.

We will continue to aim for a rebound during the first half of this fiscal year.

Multi brand I D and five cheap penetration rate was a steady growth.

All they wrote brand Ids increased by 190000 year on year.

On the right fiber penetration rates showed steady growth with about 60% of the customers.

Another brand, having five G available.

Based on this situation, we will seek to enhance the attractiveness of a you further.

Popular content with high data cut demand are included in a communications service plans reasonably in June we launched a new partnership with pick him up and he cartoon service with Emma you over $10 million.

A monthly data usage has increased steadily by 25% year on year as you can see on the right.

And in particular, when changing models about 80% of the cost of us choose the unlimited plan.

Going forward in response to the growing data demand, we will strive to enhance the attractiveness of unlimited plans.

Next is business segment performance next core is driving growth and performance is progressing within expectations on the left operating revenues totaled $281 3 billion yen of which next core was one.

<unk> hundred 6 billion up by 21, 8% year on year.

Right side shows Q1 topics.

Next core achieved double digit topline and bottomline growth in particular business Dx drove revenue and profit growth, especially in I O T. Iot connections expanded steadily by $8 5 million year on year.

As for our business infrastructure services, we extended our connectivity datacenter and integrated our contact center and BPL services.

Next is connectivity data center business.

On the left tail of houses strength lies not only in its space and equipment, but also in its ability to provide an interconnected environment.

It provides an optimal connection environment with the accumulation of hyper scaler in favorable locations, where traffic is concentrated in response to customer needs for a direct connection near users without delay.

As shown on the right side.

Telehealth has been expanding the number of global connections with such connectivity as a strength.

It ranks fourth in the world.

And first.

Among telecom carriers.

Yeah.

Next is datacenter business strategy, the strategic direction can be broadly categorized into connectivity data center and Hyperscale data center.

Connectivity datacenter is highly profitable and does not require large investments.

Telehealth will focus on this area too.

To capture market growth and achieve further business growth.

Based on this strategy, we signed a business transfer agreement with Canada's number one connectivity datacenter in June of this year as shown on the right.

We will work to enhance our value further by enhancing connectivity and expanding the space offered.

Our datacenter business is expanding globally.

In addition to Europe , including London, which is number one in the world in terms of connectivity, we established a three pillar structure opening one in Bangkok in Asia in May and in Canada, and North America as shown in the Pie chart on the right overseas sales account for about 70% of our datacenter business.

<unk>.

Okay.

Next is contact center and Bto business rely our communications NK D. D. I Evolver will launch a new company.

LTE is link on September one.

Through a management integration based on the spirit of equality Alcaeus links strengths include one of the largest contact centers in Japan, and global expansion, including North America and Asia. In addition, the capabilities of Mitsui <unk> company and K D. D. I group will be leveraged to provide total solutions.

Through this management integration, we became the second largest player in the industry as shown on the right.

Going forward, we aim to become a leading digital V. P O company by integrating the strengths of both companies.

We are expanding our initiative on connected left side, we are expanding our business in seven regions around the world with the number of Iot lines installed and connected cars exceeding $20 million.

Right side shows our efforts with Toyota with whom we have built the foundation of this business together.

We have worked to get together for over 20 years, starting with collaboration on car Telematics service in 2002.

Going forward, we will continue working together to build a next generation global communications platform and develop the global snuggled connecting infrastructure.

Next is financial business left side.

Our customer base is steadily expanding.

Transaction volume of settlement alone totaled three nine trillion yen the number of au pay card members reached $8 8 million and the number of Au <unk> Bank accounts reached $5 3 million in June mortgage loans disbursement by EOG boom bank exceeded three trillion on acute.

If basis, we are receiving support from many customers right side shows the effectiveness of promoting the financial business. You know not only helps the growth of <unk> financial group, but also has synergies with a U.

Contributing to the telecom business.

Synergies for Au include contribution to value added ARPA revenue and churn rate reduction left side finance related value added ARPA revenue was up by 13, 7% year on year right side shows that the use of multiple financial services reduces.

Churn rate.

We will continue to promote cross use of financial services to achieve growth of the entire group.

Next is on our regional co creation initiative C. A T V business.

<unk>, we announced the transfer of our CATV related business to J Com in January 2024.

By consolidating our CATV related business with J com.

We will maximize the business by leveraging the strengths of both companies and reinforcing our support for CATV operators, thereby contributing to industry development and regional co creation.

Next is generative AI, we will promote its internal use with a view to commercialization.

In May we introduced K DDI AI chat to 10000 employees. In addition, we established a company wide cross functional organization to create and share best practices internally and link to commercialization to achieve this we need to develop AI R&D human resources.

As shown on the right side. In addition to providing AI specialized training at <unk> University, we offer a development practice through participation in the company wide cross functional organization.

Regarding carbon neutrality.

We are deploying renewable energy business and accelerating initiatives to net zero carbon emissions left side boom, All Prefecture, K DDI and au renewable energy signed an agreement in June to promote G X, we will strengthen our cooperation to promote renewable energy N V. P. P.

<unk>.

We began operating a sustainable base stations in May as shown on the center to achieve net zero carbon emissions 20 $473 65.

Furthermore, right side.

He joined our E 100 in July with a goal of 100% renewable energy across the group by $20 50.

The last slide is today's summary.

Regarding consolidated results the progress of Q1 of fiscal year, ending March 'twenty 'twenty four is within expectations.

Profit was affected by roaming revenue decrease and impact of accounting treatment the previous year, but focus areas showed solid results, we will strengthen snuggled connecting through infrastructure improvement and partner collaboration and satellite growth strategy and strengthening of management communications.

Our <unk> revenues progressed steadily toward first half rebound.

In the business segment next core drove the growth.

Leveraging its strengths we will further promote connectivity datacenter digital T V P O and connected.

Financial business achieved growth Synergizes with au.

We consolidated CATV business into J com to contribute to industry development and regional co creation.

In addition, we will promote initiatives toward a decarbonize society and utilization of generative AI, we will promote our initiatives for our medium to long term sustainable growth.

Thank you very much for your kind attention.

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Thank you for waiting.

We will now begin the financial results briefing and Q&A of K D. D. I Corporation for the first quarter of fiscal year, ending March 'twenty 'twenty four.

Thank you very much for taking time out of your busy schedule to join us today.

Sure.

I am miyagawa of Investor Relations Department and will serve as the moderator today.

This briefing will be broadcast live on the Internet with simultaneous Japanese to English interpretation.

The presentation will be available on demand on our IR website at a later date.

Thank you for your understanding in advance.

Let me introduce the participants today.

Ammonia executive Vice President and executive director of personal business sector.

Yoshimura senior managing Executive Officer, CTO, and executive director of technology sector.

Who I had up senior managing executive officer, and executive director of solutions business sector.

Matsuda director and executive director of business exploration and development Division.

So shoji, managing executive officer, CFO , and executive director of corporate sector.

I get the executive Officer, and executive director of Corporate Management Division.

Today, three financial results related materials.

And two T. S E disclosures a total five materials are posted on our IR website.

Please refer to the disclaimer in the materials regarding statements made in these documents performance targets and projected subscriber numbers et cetera explained in the Q&A session today.

Managing Executive Officer, Social G will first explain the financial results summary.

Followed by Q&A.

Ms space with high Shoji. Please.

Thank you very much for taking time out of your busy schedule to attend K D D ice financial results briefing today.

Before the Q&A session.

Let me share with you the summary of the financial results for the first quarter of fiscal year, ending March 'twenty 'twenty, four and our initiatives in the first quarter of fiscal year ending March 'twenty for both operating revenues and operating income progressed as expected against the full year forecast left side operating revenues were.

One trillion $332 6 billion yen.

23% progress against the full year forecast and operating income on the right side was $266 7 billion with a progress rate of 24, 7%.

Next I will explain the factors behind the decrease in operating income of 36 billion yen.

From the left group N V I know and roaming revenues were down by 10.5 billion yen multi brand communications ARPA revenues were down $2 9 billion yen Dx revenues were up one 7 billion and the financial business was down 12 point now.

Billy again.

Excluding the negative $18 2 billion accounting change impact of the previous fiscal year.

The financial business posted an increase of 5.2 billion yen the decrease in roaming revenues and the accounting change impact year on year, which were expected from the beginning of the fiscal year led to profit decline, but the focus areas remained solid.

This is the summary of the financial results for Q1 of fiscal year, ending March 'twenty, 'twenty, four and our initiatives.

I just explained the consolidated results.

We will strengthen snuggled connecting through infrastructure improvement and partner collaborations instead.

And satellite growth strategy and strengthening of management.

Communications ARPA revenues progressed steadily toward first half rebound.

In the business segment next core drove the growth.

Leveraging its strength, we will further promote connectivity data center digital B P O and connected.

Financial business achieved growth Synergizes with au.

We consolidated C. A T D business into J com to contribute to industry development and regional co creation.

In addition.

We will promote initiatives toward a decarbonize society and utilization of generative AI.

We will promote our initiatives for our medium to long term sustainable growth.

Thank you very much again for today.

Thank you very much monitoring exhaust the size yohji no ready to entertain questions from all of you.

In order to make sure that we have two questions as many.

People as possible I would like to limit the questions to two to.

One person if you have two questions. After first question is answered it. Please ask the second question and as was announced previously.

We will take questions from those of you had been registered and connected the system an adverse one by one.

Let me explain how to ask questions.

If you have any questions. Please.

Quick the raise hand icon on the team and if your name is called.

After the announcement of your company name and your name. Please on mute yourself and go ahead with questions, we'll receive questions on to the scheduled ending time.

Yeah.

The first question.

Mr. Ando from Daiwa Securities, Please mute yourself and ask questions.

Andrew speaking can you hear me yes.

So I have two questions. The first question is about Pooh revenues.

In the first quarter, if you looked at the single most.

Then.

Or are there any amongst where you had ear when your gross already and.

There was some impact from Oems, but.

In the second quarter are you expecting.

As much yet.

Fact from the previous fiscal year.

So in the first quarter or you're not going to see that much effect, but you are going to see rebound in the second quarter, which one is what are you expecting. Thank you for your question I sort of Abu revenues I like to ask Emily to ammonia to ask a question.

As for the first quarter, our booth a status on the monthly basis, whether we have had a year on year growth.

Well on that point in June we were very close but on a monthly basis, we haven't been able to reach the complete a positive territory yet.

In mid July .

We may be able to reach a very close.

Point, but the question is whether how much we can add up more.

And in we are going to see the impact in the second quarter as well.

We saw in the first quarter.

Oh.

The support and discount.

And so we would like to improve the communication up.

There's a follow up question on that.

So the our booth support discount and also handset subsidy.

I think there are two different approaches and this year is that the correct way to look at that and then this.

First quarter.

What was it you have seen that impact and that's why you have ended up with this result is that correct.

With regard to the support to discount.

Well.

There was some discount.

For us.

Tens of periods of time, but that at the time.

Time has expired.

And the support discount had ended and there was.

An impact from that.

So.

Well.

So that means that.

John said support.

Has not increased.

That is correct, we don't have that view.

And then the second question is about roaming.

Yeah.

If you look at the waterfall chart.

There was a negative impact of 10 billion plus impact.

But for the full year 60 billion yen.

And then there'll be 10 billion plus or close to 20 billion yeah.

In.

Uh huh.

The improvement that you're expecting but if you look at the status of your first quarter.

Compared to your assumption.

Do you think the pace has been slowing down as compared to your initial anticipation.

And also.

The vote.

Yeah.

On top of that.

Is there any possibility that there will be more requests for roby.

If you can explain about that that would be appreciated. Thank you.

As for our roaming revenues.

I would like to ask lots of the to answer the question.

Thank you for the question.

So with regard to the new agreement Oh, I'm rubbing with Rakuten mobile we have made announcement in June in May but at the beginning of this fiscal year. As you said, we had expected 60 ballooned in decline.

Decline in revenues, but with this new agreement or a new forecast for this fiscal is.

That said there will be an improvement or a 10 billion to 20 billion yen and after the first quarter and silver I think we are in line with our new expectation.

And for the second point.

On a regular basis, we are having discussions with our rock them.

There is additional area for roaming you know there was the business Centre district.

So we are still under negotiation.

The Asian food area.

For this this shift so we like to continue to have discussion with Rakuten mobile.

That's all thank you.

And it doesn't does that answer your question, yes. So you know what small we.

We will take the next question.

Please use the raise hand button on zoom, if you have any questions.

Next question is from F. N B C N equals securities Kikuchi Sun. Please on mute yourself and ask your question.

This is kikuchi speaking thank you I have two questions.

First.

So your profit went down but it is in line with your plan.

So in your focus areas.

You will increase the profit contribution this year and next year.

You will increase your profit from there so the focus areas.

If you could update us on the status of focus areas. That's my first question.

First in Dx.

Sales the operating revenue.

The business.

Duane is growing but the profit does not seem to be growing as much so in which areas, which service do you plan to grow your profit going forward.

It's growing but finance the housing loan and settlement.

So there are various areas of which area do you plan to grow the profit and what is your forecast.

So that's my first question.

Thank you very much.

So focus areas Dx and finance.

First <unk> Dx.

Area will be responded by quite often.

Yes. Thank you for the question so first in Dx domain.

We have next core so we have three areas designated under net score and the sales revenue is growing steadily in particular.

O T.

N D S business Dx is leading this momentum.

In profit.

One 7 billion yen.

So overall the growth seems to be small.

In the first quarter was in line with the plan second quarter and onward.

Yeah.

Well, we are growing we will grow year on year. Thank you I hope this answers your question.

Next on the finance financial business.

<unk> will respond.

Yes, so a financial business.

In the current quarter.

Excluding the one time.

Factor It was $5 2 billion plus.

The growth driver is the mortgage loan and the credit card business. Those two continued to be strong.

And those two will continue growing.

In addition.

In this current quarter.

The fixed interest rate with mark to marketed and that was 2 billion yen.

So interest rate.

Well there were some news today.

Our interest rate is expected to rise going forward. So this I can we can expect profit contribution from that factor. Thank you I hope this answers your question.

My follow up question.

In business Dx.

It's growing.

Any particular service.

Which.

Service in particular.

Will contribute to your profit.

Business Dx.

It's relatively Iot related and the development and operation.

So both.

Our expanding and profit is growing.

Thank you I understand.

My second question.

I would like to know the details later so my second question is the churn rate is rising and it's a big concern concerning.

And maybe just because they felt that soft inc.

Compared to a year or two ago.

It is up by 40% to 50%.

And.

From three years ago. It is double and I think you are feeling that offsetting that with new subscribers.

But.

But with it.

To capture new customers is E D acquisition cost increased cost and so.

Hey, eat your reduction in the sales related cost is not progressing well.

So what is your forecast.

Do you think you can control this or not.

The governments guideline changed.

So what is your forecast on that background. So.

If you could share with us your view on ensuring rate.

So churn rate forecast.

I'm, a MEO will respond.

Frisch.

On churn rate.

First quarter was <unk> 96.

On a year on year basis. This was up 5.4 0.04.

So that is a multi brand.

If we look at the on the brand by brand basis.

Au churn rate is declining.

And you cube is pushing up the churn rate or ARPA au users are staying.

So that is a favorable trend.

So Youtube is pushing up the rate because of two reasons. One is that the proportion of youku is increasing.

And so that is one factor.

The other is.

Now in the market.

Sure.

Our Sim stack.

Hand alone or the.

Customers that are not cost conscious.

The frequent.

Uh huh.

Buyers are.

Increasing.

And that is impacting the churn rate somewhat.

Yes.

Sure.

So.

We will analyze how we allocate our costs by customer.

And.

Okay.

So that we will not spend too much cost on the customers, who do not have large lifetime value and capture them, we will try to.

Efficiently capture.

Customers.

For a U.

Like we've been doing so far.

Bundle plan with OTT.

Will be enhanced to improve our retention and going forward. We will also strengthen the bundling with financial services. So on au site.

Churn rate will continue declining we think.

So you queue.

And puzzle.

So the.

Okay.

No the mix is worsening.

I think.

Now the.

Deterioration is milder.

So the deterioration of mix, meaning theres, all our pool in the churn rate.

They're both becoming milder.

For our pool.

Yeah.

In June .

Our booth at the New U U price plan was announced and we think this will have an impact.

We've only seen the results for June and July and we'll have to scrutinize further.

Looking at July results.

The Arb will increase from the new price plan and.

I D.

The penetration to the stores what does not.

Sufficient in June so weakened somewhat but we've seen a recovery in July so ideas recovering in ARPA was rising.

So I think we're moving in the positive direction.

In addition.

After this new price plan was announced a you do you do and you Q2, a U is now in a better balance.

So another area were seeing an improvement.

We think this new price plan had a good impact. Thank you. That's all I got those I must up thank you very much.

Let us move to the next question if you have any questions.

Please click on raise hand item on there too.

That's question.

And I'm Gonna Securities Mr. Messina, Please on mute yourself and ask questions.

Most of them from Nomura Securities I have two questions.

First one is about the profit increase and decrease.

Honestly speaking roaming revenues decline and.

Financial fitness business accounting Oh, it was something that I had expected, but if you. If you look at the waterfall chart. There was a minus 6 billion yen in the others.

And the initial originally the polar charge improvement contribution.

And the rationalization and mid term.

It's something that we had expected but that was not the case, maybe poly charge was a onetime factor was that too and that's a rationalization of streamlining and second third and fourth quarters are we going to see some results.

There was in the first quarter.

In the annual.

And there was some skus.

In the first quarter and are we going to see improvements in the second quarter onward.

And so that's that was about rationalization, but in terms of natural expenses I think in new U K mobile plan expense.

2980.

In fixed line and 20 gig.

It's quite simple to understand and you don't have to spend.

Spent too much money to acquire contracts. So it's not about the rationalization, but organically you can actually promoted sales are with the new Youtube facetime. So inclusive of that can you answer the question.

Thank you very much for the question.

First of all on the profit.

6 billion yen negative figure in others.

The main contributors.

<unk> 4 billion yen, whereas is from.

The electricity power sector.

Yes.

But actually this has been already incorporated in our plan. So it is not out of our expectations. So it is in line with expectation. So the way you generate profit.

If you look at that compared to our internal plan actually it was a fun the upside.

That's how we do how we are in terms of profitability.

And that's for UQM mobile.

I like to ask him EMEA to answer the question.

Are the new plans for U K mobile as I said.

It is going in a very positive direction.

As we see it.

As you said rightly.

The call me call me plans of Youtube price scheme, the propulsion is increasing.

Much more than we had expected.

That more customers are using this club and <unk>.

And.

Mostly.

Prior to the new plan, we had S M and L plus and for M. L.

The share was not that large for them I know, but.

Oh, what is the equivalent of immuno, which is called me talk talk on the call Me call me plans the share of these two plants are increasing.

More recently is 70% of the customers are choosing these two plants. So I think we are in a very positive direction. That's all thank you.

Hey, there.

Then the electricity power.

Is this is it a one time event and 90 billion Oh once you're in you're in Florida, three year period that the rest of it shouldn't affect what was that what was the effect in the first quarter are we going to see those results in second quarter onward.

So was it a the poorest sector was it the one time phenomenon.

Well, that's a perfect business.

So this was a one time phenomenon.

Threat.

For the first quarter, what was the biggest contributor.

We are selling to our existing in the market.

So the unit price of sitting power was our expenses last year, but it was cheaper this year and that's where the procurement because it was a.

Less but the.

Oh sure it was increase indicia, so that's why the.

The cost of increase and in June .

The U T ball you do these.

Oh, a charged immigration was a modified and we also have modified our plan in line with that and that's for the new adjustment.

The parsoes procurement adjustment amount was added.

If there is any change in the procurement sector. We can pass this on to the customers.

When we charge customers and that would be contributing more.

And also the fuel.

Adjustment.

The fee cap, which was eliminated last year. So from a two July onward, Ah Theres no such an negative factors, who we're going to turn into a positive territory.

So there will be close to 10 billion improvement for the full year.

So that's all for the electricity business.

And.

I saw the rationalization.

And for the three year period 100 billion yen effect is something that we had expected and announced.

But upon to March 'twenty 'twenty.

The cute accumulatively. It HED then yeah. It is expected for two months of 'twenty 'twenty four.

And we are doing the restructuring in profit.

And though there was not much effect that we've seen in the first quarter, but there will be more in the second quarter onward.

That's all.

So in the second third and fourth quarter, you are going to see a positive 10 billion yen or more that you're going to see.

Well among 100 billion up until last year, we had achieved a 50 billion yen. So cumulatively, we're talking about it.

A D V. The onion so.

For the full year, so debating in improvement is expected and there was not much that we've seen in the first quarter.

So the larger portion I will be realized from the second quarter onward.

Thank you few assured my second question is about the share buyback of your ships.

It shows it shows so to trying to 50 billion yen I intend to vote was announced.

So going forward.

So one year behind but it may present, as announced and explained about a.

The share buyback.

Uh huh.

E P S a target and the EPS target then share buyback so you agree to it.

We plan to achieve these both both of these targets is that.

Unchanged.

And.

It is your policy to accept.

The repurchase.

A subscription if theres an alpha yes.

That's where the future policy for a share buyback of 250 billion yen Lewis of T.

T O be takeaway bid was announced and it was not a done are in with a view of our E. P. S. Target we have been meticulous you're doing this 200 billion yen, but something that we had a and asked from all of them.

And of course, if we can increase this and that would also affect EPS, but the 300 billion is the one that we have a supply for the Cisco you also achieving E. P. S.

Maybe this was the explained in the previous meeting, but do we haven't given this up and you're still trying to.

Our aim to achieve this target.

And in order to achieve this target to V. P. S. In every I S.

Possible way, we're going to seek to achieve.

Achievement, but so we're not a blindly and randomly.

Doing the.

Share repurchase so we're doing a proper measures and if theres any offer for the purchase.

It depends on the amount, but if there is a huge amount of tougher then we may seek other methodologies. So we'd be very flexible in addressing this issue.

Maybe Toby I put the question was not that.

Appropriate so you are going to seek.

E P S and looking at the profitability in sheer number of shares. So it is not going to be changed from the first quarter onward.

That is correct.

Thank you.

Thank you very much.

So you know what.

We will take the next question.

Please.

Use the raise hand button on zoom.

Yeah.

Next question.

Mitsubishi <unk> Morgan Stanley Securities Tanaka, San please on mute yourself and ask you a question.

Hi, This is telecom thank you very much.

I have two questions.

First multi brand I D number of multi brand I D. The net increase is.

Two a 28000.

It seems a bit weak.

So what is the background to that and you too you revise your plan.

And you said, you're moving in the right direction, but the churn rate at with Youku is rising.

So, including all that this maybe a bit weak growth and I D could you explain.

Yeah.

Thank you.

So more number of multi brand I D ammonia will explain.

First number of I D. As you mentioned it's 28000.

The reasons are in July and June in June when you queue introduce this new price plan.

The store operation was not sufficient.

And so we slowed down in June .

And because of that.

This number may be a bit weak.

In July we are back to normal.

So going forward, we think we can meet your expectation.

Next about churn rate or churn rate is rising.

Like I mentioned earlier.

The Sim Uh-huh standalone or the mobile subscribers are mobile users are.

Increasing so we are not pushing ourselves too much to capture them.

So that is our intention.

We want.

The customers are that have reasonable lifetime value that meets the cost level.

Who are willing to subscribed with us.

So we will not allocate money on thin per se.

Yeah.

So the number of I D.

Well, we will continue.

Increase.

But it may seem weak in some points, but we will see the balance with our pool. So that we can increase the revenue the overall revenue as a whole.

Yeah.

Oh, one question. So you introduce the new plan.

And the maybe the administrative side the back office had some confusion on the storefront and was back to normal in July so the number of applications or the U K. The number of visitors was not Oh did not fall, but it was the procedure that slowed down.

Yes.

So the number of visitors that did not change.

Uh-huh compared to unlike the S. N L days, we needed to explain a little more with the new plan.

So we explained to our customers but.

Our customers that did not make the decision on the spot and.

Went home without a decision on that day.

And so that was some shortcomings on our part and we improved that.

And.

In July we were able to close the contracts in the store on that day.

So my next question switched on as well it was not answered.

So the business D X the profit did not grow much.

In the first quarter.

What is the reason for that.

Thank you.

Go ahead I will explain.

So the reason it did not grow in the first quarter was.

<unk>.

Our next core.

On a year on year basis.

Oh, both sales and profit grew by double digits and the driver is business I O T.

Business E X I O T under business Dx.

And in other areas.

Like corporate Dx managed.

And M 365, Microsoft M M 365.

Sales.

Increases, but profit is not that large.

So.

Profit did not grow as much as we thought.

Another is data center related.

Fuel price increase in the first quarter or first half last year was not existent, but this year it is evident.

So that is another reason the profit is not as large and we already incorporated this chapter in the plan. So as a result, the it seems like the profit is not growing strongly.

Okay.

So the business that you are aiming for is growing the next core is growing but Microsoft 365 margin is low.

But mark was a 365.

Yes.

It's not that it's not a promising or.

From the second quarter.

What is the biggest factor that will push up or improve the profit margin for the second quarter onward.

In data center.

From second quarter onward, the fuel price increase.

Oh, well this will be gone and the Apple to Apple so that will be a positive factor.

And in corporate Dx.

M 365 is one.

We go to our customers.

And then the next stage is managed service, we can deploy a more profitable services in the next stage, which will bring us profit.

Yeah.

So.

The deals from last year or.

Accumulation of deals from last year.

In the first quarter, we are 110% year on year.

The accumulation of deals.

So the number of deals is increasing steadily. So we think the profit will increase steadily going forward. Thank you that's all for me.

Okay.

Thank you very much.

Close to our ending time, Oh, sorry, but we liked to.

I'll take one last question from one person if you have any questions. Please.

Please.

Quick raise hand icon on the two.

The last question.

Mr. Xu from Citigroup Global markets, Japan.

Yeah.

I would like to ask about roaming.

From August there will be a collections that will be started to gradually so talking about 10 billion to 20 billion in benefits from roaming from what timing are in what I'm Gonna Chew, though you're going to see that effect and what are you going to spend that money I'll be going to you're going to spend.

The improvement of competing in this or profitability improvement philosophically.

My in my understanding are raising auto revenue is are your priority. So probably you are going to spend more on profitability. That's my guess, but a is that correct.

Thank you very much.

In the first half of your question. It was not a order book are you asking about roaming revenues from Rakuten.

Sorry, yes.

And then I'm not sure that will respond.

Thank you very much for your question.

For the full year.

In the first quarter as I said, we were just as expected. So we're not going to see particularly improvements from the second quarter, but between 10 billion to 20 billion in the first quarter as well as in second quarter onward, Oh well.

Are you expecting to make progress.

And.

There will be at several of the discussions that will take place as we go along with the other body and how we are going to land on is what Tobey are going to also discuss it with the other party.

Does that answer your question.

Well there are two parts to my question so that revenue.

How are we going to are you going to spend our money on.

The strategic approaches or initiatives or profitability. Because this is the money that you want to get.

But you had not expected the initially well I'll answer the question.

It just just as for the full year prospect and we're just looking at the first quarter and there could be some changes in the environment going forward. So at this moment I swear that beside expected.

Oh, we are going to do make oh, it makes them, a pud revision or forecast or spend the.

The money on any specific items will not have yet to decide if there's any change in the environment going forward, we would incorporate that in our business for guests.

Does that answer your question.

Yes. Thank you.

Thank you very much.

So we have used up all the time.

Well, we'd like to conclude.

The.

Financial results briefing on the first quarter of March 22, before Katie Diego appreciate it. Thank you very much for attendance.

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