LY Corporation

LY Corporation reported consolidated revenue of JPY 553.9 billion, up 13.1% year on year, and adjusted EBITDA of JPY 154.8 billion, up 23.1% year on year. The company said gross profit growth exceeded internal projections and margin improved to 28%. By segment, Media revenue grew 2.6% and adjusted EBITDA rose 14.2%; Commerce revenue grew 12.5% and adjusted EBITDA rose 10.2%; and Strategic revenue grew 34.9%, with adjusted EBITDA reaching JPY 35 billion, up nearly JPY 14 billion year on year. On PayPay consolidated, registered users exceeded 74 million, GMV rose 23% year on year, revenue grew 27.4%, and EBITDA grew 59.1%. Looking ahead, management said Q1 was better than expected and that full-year guidance remains unchanged; they expressed confidence they can achieve the full-year plan and said they may be able to exceed it in the near term, while noting Media progress was below 25% of guidance because revenue is expected to concentrate in the second half.

CEO Takeshi Idezawa emphasized the strategic importance of shifting to AI agents, saying Agent i is being built around deeper navigation, long-term memory of preferences, and broader daily usage across LINE and Yahoo! JAPAN. He also described Kakaku.com as important in the AI era because its specialized data and conversion points can be connected to AI-driven discovery and transactions, especially in Tabelog, restaurant reservations, product information, and hiring. His tone was confident and strategic, repeatedly stressing speed, must-win domains, and the need to act now rather than risk missing the opportunity.

CFO Ryosuke Sakaue led with the quarter’s hard numbers: revenue of JPY 553.9 billion, up 13.1%, adjusted EBITDA of JPY 154.8 billion, up 23.1%, and margin at 28%. He highlighted that Media, Commerce, and Strategic all grew gross profit, with Media benefiting from cost control and Commerce recovering to a profitable level after ASKUL pressure, while PayPay consolidation also boosted profit. On capital allocation, he said the dividend increase already announced is not expected to change and that the three-year capital allocation plan would not change under current assumptions; for Kakaku.com, he said the expected total acquisition cost is about JPY 690 billion and that the IRR hurdle is 10%, including assumed debt leverage and synergies.

Analysts focused heavily on the Kakaku.com tender offer, asking why LY is pursuing the deal, how the 10% IRR hurdle will be met, and what happens if the acquisition fails. Management said the main synergies are Tabelog, then Kakaku.com’s data and services for better AI-based navigation in Agent i, and they described the deal as strategically important in the AI era because many of Kakaku.com’s services are high-quality conversion points. On the media side, analysts asked about search-ad weakness and the sustainability of margins; management said the search decline is starting to stabilize, that higher unit prices are offsetting lower search volume, and that Q1 margins were helped by slower-than-planned SG&A spending, but second-quarter profit growth may normalize.