LY (4689) Q1 2025 earnings summary

Executive summary

• Revenue grew 7.6% year-on-year to ¥463.1 billion, with adjusted EBITDA up 21.7% to ¥121.7 billion, both record Q1 highs.

• Growth was driven by PayPay in Strategic Business, ASKUL and ZOZO in Commerce, and account advertising in Media.

• Share buyback of JPY 150 billion (up to 6.41% of shares) announced to maintain Prime Market listing, enhance shareholder returns, and improve EPS and ROE.

• Product and app enhancements, including Yahoo! JAPAN app redesign, are aimed at driving future growth.

• Net income attributable to owners rose 38.1% to ¥51.5 billion; basic EPS increased to ¥6.87.

Financial highlights

• Adjusted EBITDA margin increased to 26.3% due to improved profitability.

• Media segment revenue up 4.4% to ¥177.6 billion; adjusted EBITDA up 14.2% to ¥69.6 billion.

• Commerce segment revenue up 5.8% to ¥207.3 billion; adjusted EBITDA up 15.7% to ¥41.3 billion.

• Strategic segment revenue up 20.9% to ¥79.1 billion; adjusted EBITDA up 1,384.7% to ¥6.0 billion, with PayPay achieving first quarterly operating profit.

• Operating income surged 79.8% year-on-year to ¥106.8 billion, aided by gains on loss of control of subsidiaries.

Outlook and guidance

• Revenue is expected to be higher in the second half due to seasonality; current progress is in line with expectations.

• FY2025 revenue forecast at ¥1,935.0 billion, up 6.6% year-on-year; adjusted EBITDA expected at ¥430.0–440.0 billion, up 3.6–6.0%.

• Adjusted EPS projected at ¥14.3–15.3 for the full year; share buyback expected to improve adjusted EPS by JPY 0.4 for FY2024.

• No major one-time factors anticipated for the remainder of the year; any significant items will be disclosed.

• Cost control measures will continue, with SG&A expected to rise in line with revenue, especially for e-commerce and PayPay.