Ly Corporation Unsponsored Adr ((YAHOY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In its latest earnings call, LY Corporation showcased a robust financial performance with a notable increase in adjusted EBITDA and strategic business growth. However, the company also faced challenges in display and search advertising sectors. The management’s focus on platform transformation and preparation for PayPay’s IPO reflects a forward-looking strategy, albeit with some uncertainty in strategic business forecasts.
Adjusted EBITDA Growth
LY Corporation reported a 13.5% year-on-year growth in adjusted EBITDA, reaching JPY470.8 billion. The EBITDA margin also expanded to 24.6%, highlighting the company’s operational efficiency and strong financial health.
Significant Share Repurchase
The company announced a significant share repurchase program of up to JPY150 billion. This move aims to enhance capital efficiency and reflects management’s confidence in the company’s future prospects.
Media Business Performance
The media business segment showed strong performance, with highly profitable account ads driving an 11.6% year-on-year growth in adjusted EBITDA. The margin in this segment increased to 38.8%, underscoring its profitability.
Strategic Business Growth
Revenue in the strategic business segment surpassed JPY300 billion, with PayPay consolidated achieving a remarkable 17.7% year-on-year growth. This highlights the segment’s importance in LY Corporation’s growth strategy.
PayPay’s High Growth Trajectory
PayPay’s total consolidated GMV rose by 23.4% year-over-year, with consolidated EBITDA surging to JPY45.5 billion. This growth trajectory positions PayPay as a key driver of LY Corporation’s future success.
Commerce Ads Revenue Decline
Despite a major growth in the second half of FY ’23, commerce ads revenue experienced a decline. The company attributed this to disciplined sales promotion investments.
Challenges in Display Advertising
Display advertising revenue declined by 1.4% year-on-year, primarily due to decreased demand in certain industries. This remains a challenge for the company moving forward.
Search Advertising Revenue Struggles
The search advertising segment faced difficulties, with partners’ website revenue declining despite improvements in LY Corporation’s website functionality.
Flat EBITDA Growth in Media
Although media revenue grew, EBITDA growth is expected to remain flat due to costs associated with the implementation of generative AI technologies.
Uncertainty in Strategic Business Forecast
The preparation for PayPay’s IPO has led to withheld financial forecast numbers for PayPay consolidated in fiscal ’25, creating uncertainty in the strategic business forecast.
Forward-Looking Guidance
Looking ahead, LY Corporation anticipates high single-digit growth in both revenue and profit for FY 2025. The company plans to transform its LINE Official Account and LINE MINI App into business platforms, evolve PayPay into a digital financial platform, and deploy AI agents in consumer-facing services. Additionally, a JPY150 billion share repurchase is planned to improve capital efficiency, with a cumulative total payout ratio of over 70% targeted over the next five years.
In summary, LY Corporation’s earnings call highlighted a strong financial performance with significant growth in key business segments. However, challenges in advertising sectors and uncertainty in strategic forecasts remain. The company’s forward-looking strategies, including platform transformations and PayPay’s evolution, indicate a commitment to sustained growth and innovation.