LY (4689) Q2 2026 earnings summary

Executive summary

• Consolidated revenue for Q2 FY2025 was JPY 505.7 billion, up 9.4% year-over-year, with adjusted EBITDA rising 11.3% to JPY 125.4 billion, both record Q2 results.

• Strategic and commerce segments drove growth, with AI agentization and expansion of LINE Official Accounts and mini apps as key future drivers.

• A ransomware attack at group company ASCO led to a system failure and partial data leakage, with ongoing recovery and strengthened group-wide information security.

• Dividend forecast was raised to JPY 7.3 per share following a major share repurchase and cancellation.

Financial highlights

• Adjusted EBITDA increased by JPY 11.7 billion year-over-year, driven by revenue growth in strategic and commerce businesses, outpacing expense increases.

• Adjusted EPS increased 41.1% year-over-year to JPY 9.23.

• Total advertising-related revenue grew 2.4% year-over-year, with commerce advertising achieving double-digit growth.

• Domestic shopping transaction value rose 13.1% year-over-year, and reuse business grew 15.7% year-over-year.

• Share repurchase of 63.4 million shares for approx. JPY 32.2 billion, all cancelled.

Outlook and guidance

• Revenue was slightly behind guidance due to search advertising decline, but adjusted EBITDA and EPS are on track.

• Q3 and Q4 search ad revenue expected to remain as negative as Q2, with no major recovery anticipated in the near term.

• Media and search business expected to remain flat over the next three years, with growth driven by OA and mini apps.

• Targeting a doubling of OA and mini app sales from JPY 140 billion to JPY 280 billion within three years.

• Testing of new Home tab and phased LINE app revamp scheduled within the year.