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LY Corporation
(4689)
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Rating:71Outperform
Price Target:
¥573.00
▲(2.85% Upside)
Action:Upgraded
Date:08/04/26
The score is driven primarily by solid underlying financial quality (high margins) but tempered by uneven/declining recent free cash flow and meaningful leverage. Earnings-call takeaways are a net positive on strong Q1 growth and fintech/strategic momentum, though ad-market headwinds and the Kakaku.com deal execution risk are notable. Technicals and valuation are supportive but not decisive, with neutral momentum and a reasonable (not cheap) P/E plus a modest dividend yield.
Positive Factors
Broad revenue and EBITDA growth
Strong top-line growth alongside faster EBITDA expansion indicates operating leverage across LY’s platform businesses. If maintained, this combination can strengthen internal funding capacity, support investment in new services, and improve the durability of earnings over the next several quarters.
Negative Factors
Structural advertising pressure
AI-driven reductions in repeat search activity and weaker display advertising challenge a core monetization channel. Continued advertiser shifts toward video and greater ROI scrutiny could pressure inventory demand, limit media growth, and require sustained product investment to defend platform economics.
Read all positive and negative factors
Positive Factors
Negative Factors
Broad revenue and EBITDA growth
Strong top-line growth alongside faster EBITDA expansion indicates operating leverage across LY’s platform businesses. If maintained, this combination can strengthen internal funding capacity, support investment in new services, and improve the durability of earnings over the next several quarters.
Read all positive factors
LY Corporation (4689) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
¥3.50T
Dividend Yield1.41%
Average Volume (3M)16.05M
Price to Earnings (P/E)17.3
Beta (1Y)0.14
Revenue Growth8.06%
EPS Growth41.68%
CountryJP
Employees29,863
SectorGeneral
Sector StrengthN/A
IndustrySoftware - Application
Share Statistics
EPS (TTM)29.69
Shares Outstanding6,888,742,000
10 Day Avg. Volume15,155,690
30 Day Avg. Volume16,045,733
Financial Highlights & Ratios
PEG Ratio0.41
Price to Book (P/B)0.88
Price to Sales (P/S)1.30
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
¥590.00Price Target Upside5.91% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)29.19
Revenue Forecast (FY)¥2.30T
LY Corporation Business Overview & Revenue Model
Company Description
LY Corporation engages in the online advertising and e-commerce businesses in Japan. The company offers LINE, a communication app; and Yahoo! JAPAN, an internet service that provides search, news, weather, shopping, auction, and other services. It...
How the Company Makes Money
LY Corporation primarily generates revenue through monetization of its internet platforms. Key revenue streams include: (1) Advertising: selling digital advertising inventory (e.g., display and other performance-oriented ads) across its owned-and-...
LY Corporation Earnings Call Summary
Earnings Call Date:Aug 03, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Nov 05, 2026
Earnings Call Sentiment Positive
The call reported broad and material positive performance: consolidated revenue and adjusted EBITDA grew strongly (13.1% and 23.1% YoY respectively), profitability expanded, fintech/PayPay and strategic businesses showed robust double- and triple-digit growth, Agent i adoption and LYP Premium subscriber momentum are clear positives, and commerce and reuse businesses performed well. Key risks discussed include continued pressure on search and display advertising volumes driven by AI (structural), nascent monetization of Agent i, execution and IRR uncertainty around the large Kakaku.com tender offer, and the likelihood that some Q1 margin benefits were aided by temporary slower SG&A spending and seasonality. On balance the positive growth, margin expansion and strategic initiatives outweigh the challenges and execution risks, though the company faces meaningful near-term and structural advertising-market headwinds and sizable M&A execution risk.Positive Updates
Consolidated Revenue Growth
Consolidated revenue of JPY 553.9 billion, up 13.1% year-on-year; adjusted EBITDA JPY 154.8 billion, up 23.1% year-on-year, with overall adjusted EBITDA margin improving to 28%.
Negative Updates
Search and Display Ad Pressure
Search ad volumes remain down due to AI answering reducing repeat queries; display ads were down year-on-year and Media & Strategic progress in Q1 was below the expected 25% of full-year guidance, reflecting seasonality and a tough ad demand environment.
Read all updates
Q1-2026 Updates
Positive
Negative
Consolidated Revenue Growth
Consolidated revenue of JPY 553.9 billion, up 13.1% year-on-year; adjusted EBITDA JPY 154.8 billion, up 23.1% year-on-year, with overall adjusted EBITDA margin improving to 28%.
Read all positive updates
Company Guidance
Management said they remain confident they can achieve—or even exceed—the full‑year guidance after a strong Q1, where consolidated revenue was JPY 553.9 billion (+13.1% YoY) and adjusted EBITDA JPY 154.8 billion (+23.1% YoY) with an overall margin of 28%; Media revenue rose 2.6% YoY with adjusted EBITDA up ~14% and a margin of 41.8% (↑4.2 pp), Commerce revenue +12.5% with adjusted EBITDA +10.2% (margin ~17.3%), Strategic revenue +34.9% with adjusted EBITDA ≈ JPY 35.0 billion (margin 26.9%), PayPay consolidated revenue +28.4% (registered users >74m, GMV +23%, PayPay revenue +27.4%, EBITDA +59.1%), Agent i expanded to 25 domains and 12 million DAU (100m user target), LYP Premium direct members 6.82 million (+36.8% YoY, 10m subscriber target), shopping transaction value ~+9% (Yahoo! Shopping ~+8.6%) and reuse +18.4%, and management noted Media and Strategic revenue were under the ~25% Q1 pacing due to seasonality but expect concentration in H2; they also reaffirmed the planned Kakaku.com tender offer (~JPY 690 billion total cost; expected economic ownership 49.9% LY / 50.1% Bain) as a strategic move to lift synergies and meet their IRR discipline.LY Corporation Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
69
Positive
Cash Flow
63
Positive
| Breakdown | TTM | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.10T | 2.04T | 1.92T | 1.81T | 1.67T | 1.57T |
| Gross Profit | 1.55T | 1.51T | 1.39T | 1.29T | 1.16T | 1.07T |
| EBITDA | 499.38B | 470.68B | 452.51B | 366.13B | 389.81B | 298.70B |
| Net Income | 203.04B | 193.69B | 153.47B | 113.20B | 178.87B | 77.32B |
Balance Sheet | ||||||
| Total Assets | 11.61T | 11.21T | 9.52T | 9.41T | 8.66T | 7.17T |
| Cash, Cash Equivalents and Short-Term Investments | 1.20T | 1.07T | 1.19T | 1.62T | 1.81T | 1.43T |
| Total Debt | 2.28T | 1.96T | 1.69T | 1.88T | 1.91T | 1.67T |
| Total Liabilities | 7.89T | 7.49T | 6.10T | 5.97T | 5.34T | 4.19T |
| Stockholders Equity | 3.00T | 3.00T | 3.00T | 3.04T | 2.92T | 2.68T |
Cash Flow | ||||||
| Free Cash Flow | 503.10B | 0.00 | 366.77B | 263.55B | 209.00M | 214.54B |
| Operating Cash Flow | 542.61B | 662.85B | 466.51B | 334.56B | 93.05B | 266.31B |
| Investing Cash Flow | -558.76B | -625.90B | -485.28B | -414.75B | 319.79B | -303.90B |
| Financing Cash Flow | 109.10B | -30.04B | -437.15B | -110.80B | 105.79B | 91.63B |
LY Corporation Technical Analysis
Positive
557.10
Price Trends
523.88
Negative
478.65
Positive
439.23
Positive
Market Momentum
1.42
Negative
49.80
Neutral
31.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4689, the sentiment is Positive. The current price of 557.1 is above the 20-day moving average (MA) of 513.69, above the 50-day MA of 523.88, and above the 200-day MA of 439.23, indicating a neutral trend. The MACD of 1.42 indicates Negative momentum. The RSI at 49.80 is Neutral, neither overbought nor oversold. The STOCH value of 31.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4689.
LY Corporation Peers Comparison
UnderperformOutperform
Sector (55)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | ¥31.55B | 13.95 | ― | 3.23% | 12.93% | 27.79% | |
79 Outperform | ¥738.57B | 40.37 | 29.50% | 1.24% | 18.37% | -8.77% | |
71 Outperform | ¥3.50T | 17.28 | ― | 2.19% | 8.06% | 41.68% | |
71 Outperform | ¥32.90B | 10.52 | 11.34% | 2.70% | -2.14% | ― | |
65 Neutral | ¥54.00B | 42.61 | ― | ― | 32.22% | 312.16% | |
55 Neutral | $6.65B | 3.83 | -15.92% | 6.20% | 10.91% | 7.18% | |
47 Neutral | ¥8.97B | 7.38 | 9.61% | 1.30% | -8.20% | 125.15% |
* General Sector Average
JP:4689
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LY Corporation Corporate Events
LY Corporation Backs Higher Bain Capital Bid in Kakaku.com Tender Offer Battle
Oct 26, 2026
LY Corporation, a major player in Japan’s digital services and internet sector, is deepening its strategic collaboration with Bain Capital through an indirect joint investment in BCPE Blitz Cayman, L.P. The initiative centers on Kakaku.com, ...
LY Corporation and Bain Capital Raise Kakaku.com Tender Offer Price Ahead of Going-Private Bid
Sep 16, 2026
LY Corporation, a Tokyo Stock Exchange Prime Market-listed internet services group, is jointly pursuing a going-private transaction for Kakaku.com, Inc. with Bain Capital through BCPE Blitz Cayman, L.P. The deal targets Kakaku.com’s common s...
LY Corp Delays LINE MAN Capital Raise but Maintains Earnings Outlook
Aug 28, 2026
LY Corporation said it will delay the completion of a planned capital increase in its consolidated subsidiary LINE MAN CORPORATION PTE. LTD., shifting the timing from August to the end of October 2026 to allow more time for coordination among cont...
LY, Bain Face Rival Bid in Intensifying Kakaku.com Tender Battle
Aug 21, 2026
LY Corporation and Bain Capital, through their vehicle BCPE Blitz Cayman, L.P., continue to plan a tender offer for Kakaku.com shares and share acquisition rights, despite the expiration of a tender agreement with major shareholder Oasis Managemen...
LY Corporation Delivers Strong First-Quarter Profit Growth and Confirms FY2026 Outlook
Aug 3, 2026
LY Corporation reported solid growth for the three months to June 30, 2026, with revenue rising 13.1% year on year to ¥553.99 billion and operating income up 6.4% to ¥101.18 billion. Net income attributable to owners of the parent climbe...
LY Corporation and Bain Capital Vehicle Advance Tender Offer to Take Kakaku.com Private
Jul 29, 2026
LY Corporation and Bain Capital-backed BCPE Blitz Cayman, L.P. are moving forward with a plan to take Kakaku.com, Inc. private via a cash tender offer. The structure uses a Cayman Islands limited partnership as the tender offeror, reflecting the i...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.