This article first appeared on GuruFocus .
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Revenue:Consolidated revenue was JPY553.9 billion, up 13.1% year on year.
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Adjusted EBITDA:JPY154.8 billion, up 23.1% year on year, with margin improving to 28%.
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Media Business Revenue:Grew 2.6% year on year.
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Media Business Adjusted EBITDA:Up 14.2% year on year, with margin expanding to 41.8%.
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Commerce Business Revenue:Increased 12.5% year on year.
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Commerce Business Adjusted EBITDA:Rose 10.2% year on year, with margin improving to 17.3%.
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Strategic Business Revenue:Grew 34.9% year on year.
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Strategic Business Adjusted EBITDA:Reached JPY35 billion, with margin expanding to 26.9%.
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PayPay Revenue:Up 28.4% year on year.
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PayPay GMV:Maintained strong growth, up 23% year on year.
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PayPay EBITDA:Saw strong growth of 59.1% year on year.
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Other Fintech Revenue:Grew 81.7% year on year.
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LYP Premium Direct Members:Increased to 6.82 million, up 36.8% year on year.
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Agent i DAU:Expanded to 12 million.
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MINI Apps:Reached 35,000, with MAU of 22.18 million, growing over 50%.
Release Date: August 03, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Consolidated revenue grew 13.1% year on year to JPY553.9 billion, with adjusted EBITDA up 23.1% to JPY154.8 billion, exceeding internal projections.
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Agent i's domain agents expanded to 25, with DAU reaching 12 million, showing strong progress in the shift to AI agents.
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Media business achieved double-digit adjusted EBITDA growth of 14.2% year on year, with margin expanding to 41.8% due to successful cost management and AI-driven productivity improvements.
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Commerce business returned to profitable growth with adjusted EBITDA up 10.2% year on year and margin improving to 17.3%, driven by strong performance in Shopping and Reuse.
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Strategic businesses, including PayPay, saw revenue grow 34.9% year on year, with PayPay's GMV up 23% and EBITDA up 59.1% year on year, supported by high take rates.
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LYP Premium direct members grew 36.8% year on year to 6.82 million, with plans to reach 10 million subscribers through new plan offerings.
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Partnership with 7-Eleven is expected to enhance LYP Premium membership value and expand digital touchpoints through MINI Apps and Official Accounts.
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The tender offer for Kakaku.com is expected to create synergies by combining user touchpoints, data, and payment platforms, with a clear focus on high-priority domains like Tabelog.
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Yahoo! Shopping transaction value grew 8.6% year on year, driven by PayPay points promotions and AI-powered features, while Reuse transaction value grew 18.4%.
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Management expressed confidence in surpassing full-year guidance, with Q1 performance exceeding internal plans and no major risks identified for Q2.
Negative Points
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Search and display ads continued to decline year on year, with search ad revenue facing structural challenges due to AI-driven reductions in user queries.
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Media and Strategic revenue progress was below 25% of full-year guidance in Q1, relying on seasonality and expected second-half concentration.
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Display ad market remains tough, with advertisers becoming more selective and a structural shift to video media, which the company lacks sufficient inventory for.
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The Kakaku.com tender offer carries execution risks, including potential failure, which could force the company to pursue a backup plan involving organic development or alternative partnerships.
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SG&A expenses are expected to normalize from Q2, potentially slowing profit growth compared to Q1's exceptional performance.
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The company faces uncertainty in monetizing Agent i, with no specific monetization strategies yet implemented, only validation and preparation underway.
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The tender offer for Kakaku.com involves significant debt leverage, and the 10% IRR target includes synergies, which may be uncertain.
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Commerce business faced pressure from ASKUL, which offset some gains, though the impact was mitigated by new consolidations.
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The number of search queries is not expected to increase, and the company must rely on higher unit prices to offset this decline, which may not be sustainable.
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The partnership with 7-Eleven is still in early stages, with concrete impacts on KPIs like LYP Premium members and MINI App usage yet to be fully realized.
Q & A Highlights
Q: What is the strategic rationale behind the tender offer for Kakaku.com, and how does LY Corp plan to achieve its 10% IRR target given the current yield? A: CFO Ryosuke Sakaue explained that the biggest expected synergy is in the Tabelog domain, which is a "must-do" area for the company. The plan is to leverage Kakaku.com's highly specialized data and customer platforms (Tabelog, Kakaku.com, and Kyujin Box) to enhance Agent i's navigation capabilities and complete transactions via AI. Regarding the IRR, Sakaue noted that the 10% target includes synergies, with a focus on more certain cost-side synergies, and that debt leverage is included in their assumptions.
Q: What is the backup plan if the tender offer for Kakaku.com fails, especially in the restaurant and AI agent domains? A: CEO Takeshi Idezawa stated that this is a "must-have domain" and that the speed of AI-driven change is rapid. If the deal fails, LY Corp has a backup plan that includes changing partners, leveraging synergies with the SB Group (as done with PayPay), or making large organic investments to start up. Idezawa emphasized that waiting several years to try again would be too late, making this a "last opportunity."
Q: How should investors interpret the 12 million DAU for Agent i, and what is the monetization strategy? A: CEO Takeshi Idezawa clarified that the 12 million DAU is a combination of average DAU for Agent i, Yahoo! Finance, and LINE Talk Room. While this is a good starting number, the target is 100 million users. Specific monetization has not yet begun, but the company is validating multiple directions, including user subscriptions, providing AI functions to companies using Official Accounts or MINI Apps, and AI advertising.
Q: Can you elaborate on the partnership with Seven & i Holdings and its expected impact on KPIs? A: CEO Takeshi Idezawa explained that the partnership involves two main initiatives. First, LYP Premium members will receive digital rewards and coupons usable at 7-Eleven physical stores, which is expected to increase membership numbers. Second, the joint development of Official Accounts and MINI Apps aims to enhance digital touchpoints, leveraging 7-Eleven's 20 million daily customers and LINE Yahoo!'s 100 million digital customers. Further initiatives will be announced as plans are finalized.
Q: What is the current status of the Search Ads business, and how is the decline in search volume being offset? A: CFO Ryosuke Sakaue confirmed that the decline in search volume is within expectations, as AI provides quick responses, reducing the need for re-queries. However, the company is offsetting this by improving unit prices per click through better use of data, which is helping to stabilize revenue. The product mix shift towards higher-margin products like account ads and LYP Premium is also contributing to gross profit improvement.
Q: What is driving the strong growth in the Shopping & Reuse business, and what is the impact of the Yahoo! JAPAN Shopping plan revision? A: CFO Ryosuke Sakaue attributed the strong performance to time-limited PayPay points promotions, which have built a healthy ecosystem, and improvements in cost efficiency. In the Reuse business, the growing entertainment market, particularly trading cards, is driving double-digit growth. Regarding the shopping plan revision, Sakaue noted that while there was some churn among small stores, the overall impact was positive, leading to cleaner search results and improved monetization.
Q: What is the outlook for the advertising market, and what are the challenges for LY Corp's Media business? A: Executive Corporate Officer Yuki Ikehata stated that advertisers are becoming stricter about return on investment and more selective in their investments. The overall market is tough due to a shift to video, and LY Corp has insufficient video inventory, which is a structural issue. However, text-based display ads are improving thanks to AI utilization. The company is working on improving advertising effectiveness and media space to collaborate with advertisers on investment returns.
Q: Will the strong Q1 profit momentum continue into Q2 and beyond, and is the full-year guidance achievable? A: CFO Ryosuke Sakaue acknowledged that Q1 performance surpassed internal plans, partly due to slower SG&A spending. While Q2 may see normalization of costs and potential seasonality changes (e.g., hometown tax), the company remains confident in achieving and potentially exceeding the full-year guidance. The Media segment has accumulated good profit, providing a buffer for the second half.
Q: What is the impact of the Kakaku.com tender offer on dividends and share buybacks? A: CFO Ryosuke Sakaue confirmed that the announced dividend increase will not be impacted by the tender offer. The three-year capital allocation plan remains unchanged based on current assumptions.
Q: What is driving the growth in the Reuse business, and which KPIs are improving? A: Executive Corporate Officer Makoto Hide explained that growth is coming from the entertainment category, particularly trading cards, which have high ticket items and are growing in both domestic and international markets. Both Yahoo! Flea Market and Yahoo! Auction are growing, with increases in the number of sellers, buyers, and conversion rates.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
