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LY Corporation
(4689)
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Rating:71Outperform
Price Target:
¥493.00
▲(13.26% 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
High profit margins
LY's platform economics generate durable profitability: very high gross margin (~74%) and healthy EBIT/EBITDA margins (~15%/~24%) reflect scalable digital offerings and low incremental costs. These margins provide cash to reinvest in AI, fintech and subscriptions and cushion cyclical ad revenue volatility.
Negative Factors
Structural ad-market headwinds
AI-driven reductions in repeat search queries and shifts in advertiser ROI focus are structural threats to LY's largest legacy revenue stream. Persistent declines in search/display volumes and tighter format competition can compress ad inventory pricing and reduce long-term ad revenue predictability absent substitution by new monetization models.
Read all positive and negative factors
Positive Factors
Negative Factors
High profit margins
LY's platform economics generate durable profitability: very high gross margin (~74%) and healthy EBIT/EBITDA margins (~15%/~24%) reflect scalable digital offerings and low incremental costs. These margins provide cash to reinvest in AI, fintech and subscriptions and cushion cyclical ad revenue volatility.
Read all positive factors
LY Corporation (4689) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
¥3.42T
Dividend Yield1.44%
Average Volume (3M)15.02M
Price to Earnings (P/E)17.1
Beta (1Y)0.15
Revenue Growth8.06%
EPS Growth41.68%
CountryJP
Employees29,863
SectorGeneral
Sector StrengthN/A
IndustrySoftware - Application
Share Statistics
EPS (TTM)29.69
Shares Outstanding6,884,784,700
10 Day Avg. Volume17,618,049
30 Day Avg. Volume15,020,503
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
¥500.00Price Target Upside14.86% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)26.22
Revenue Forecast (FY)¥2.27T
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 generates revenue primarily through monetizing its digital platforms and user traffic. Key revenue streams include: (1) Advertising revenue: sale of digital advertising inventory (e.g., display and other online ad formats) and perfo...
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
435.30
Price Trends
438.38
Positive
424.15
Positive
414.23
Positive
Market Momentum
16.56
Negative
75.17
Negative
95.81
Negative
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 435.3 is below the 20-day moving average (MA) of 462.59, below the 50-day MA of 438.38, and above the 200-day MA of 414.23, indicating a bullish trend. The MACD of 16.56 indicates Negative momentum. The RSI at 75.17 is Negative, neither overbought nor oversold. The STOCH value of 95.81 is Negative, 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 |
|---|---|---|---|---|---|---|---|
77 Outperform | ¥28.95B | 11.86 | ― | 0.66% | 16.53% | 76.82% | |
75 Outperform | ¥729.73B | 39.80 | 31.15% | 1.36% | 18.37% | -8.77% | |
71 Outperform | ¥3.42T | 17.05 | ― | 1.68% | 8.06% | 41.68% | |
67 Neutral | ¥49.59B | 44.36 | ― | ― | 30.21% | 488.52% | |
66 Neutral | ¥32.11B | 10.26 | 12.02% | 5.34% | -2.14% | ― | |
63 Neutral | ¥9.55B | 7.86 | 1.68% | ― | -8.20% | 125.15% | |
55 Neutral | $6.65B | 3.83 | -15.92% | 6.20% | 10.91% | 7.18% |
* General Sector Average
JP:4689
LY Corporation
506.30
31.38
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LY Corporation Corporate Events
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...
LY Corporation Completes Final Reporting on Data Leak Prevention Measures
Jul 21, 2026
LY Corporation has completed its final reporting to Japan’s Ministry of Internal Affairs and Communications and the Personal Information Protection Commission on measures taken to prevent a recurrence of the major information leakage caused ...
LY Corporation and Bain Capital lodge binding bid to take Kakaku.com private
Jul 1, 2026
LY Corporation and Bain Capital have escalated their previously non-binding approach to Kakaku.com into a legally binding proposal to take the price-comparison and online services operator private. The move follows due diligence and board approval...
LY Corporation to Absorb LINE Healthcare After Ending Telemedicine Service
Jul 1, 2026
LY Corporation will merge its wholly owned subsidiary LINE Healthcare Corporation through an absorption-type merger effective September 1, 2026, as part of a broader reorganization of overlapping businesses within the group. The move follows the J...
LY Corporation details SoftBank-led control structure and governance safeguards
Jun 30, 2026
LY Corporation disclosed the structure of its controlling shareholders, confirming that A Holdings Corporation directly holds 62.4% of voting rights and is classified as its largest and major shareholder, while SoftBank Group Corp., SoftBank Group...
LY’s PayPay to Take Control of T&D Financial Life in Push Into Digital Insurance
Jun 4, 2026
PayPay Corporation, the fintech arm of LY Corporation, will acquire 70.2% of TD Financial Life Insurance Company from TD Holdings, funding the all-cash deal from its own reserves. The move will make TD Financial Life a consolidated and specified s...
LY Corporation Corrects FY2025 Results, Upgrades PayPay GMV Figure
May 28, 2026
LY Corporation has revised its previously disclosed consolidated results for the fiscal year ended March 31, 2026, correcting an error in the reported gross merchandise value of its strategic subsidiary PayPay Corporation. The company emphasized t...
LY Corporation Cleared to Lift Stake in LINE MAN to Nearly 61%
May 27, 2026
LY Corporation said Thai authorities have confirmed that no regulatory approvals or permits are required for its planned additional acquisition of shares in LINE MAN CORPORATION PTE. LTD., which it already consolidated as a subsidiary in September...
LY Corporation Raises Year-End Dividend and Reaffirms Aggressive Payout Policy
May 15, 2026
LY Corporation’s board has approved a year-end dividend of JPY7.30 per share for the fiscal year ended March 31, 2026, matching its prior forecast and slightly above the previous year’s JPY7.00. The total dividend payment will be about...
LY Corporation Expands Stock-Based Pay Plan to Wider Group of Directors
May 15, 2026
LY Corporation plans to partially revise its existing trust-based restricted stock unit remuneration plan so that all directors, excluding those on the Audit and Supervisory Committee, become eligible rather than only executive directors. The move...
LY Corporation and Bain Capital Propose Take-Private Deal for Kakaku.com
May 14, 2026
LY Corporation, together with an investment fund advised by Bain Capital Private Equity, has submitted joint proposals to Kakaku.com, Inc. regarding a potential capital policy overhaul, including taking Kakaku.com private. The move reflects LY Cor...
LY Corporation Delivers Strong FY2025 Earnings and Lifts Dividend as It Expands Consolidation Scope
May 8, 2026
LY Corporation reported consolidated revenue of ¥2.04 trillion for the fiscal year ended March 31, 2026, up 6.2% year-on-year, with operating income rising 8.3% to ¥341.3 billion and net income attributable to owners of the parent increa...
LY Corporation Posts Record Revenue and Profit Surge on PayPay and Commerce Growth
May 8, 2026
LY Corporation reported record consolidated revenue of ¥2.04 trillion for the fiscal year ended March 31, 2026, up 6.2% from the previous year, driven mainly by PayPay’s consolidation and the addition of BEENOS and LINE MAN in its comme...
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.