LY Corporation Q4 FY2025 earnings call

• AI agent rollout: Accelerated to evolve line-based experiences and integrate AI into existing services. Agent I for consumers enables easy finding of product information and will evolve into an AI agent supporting everyday activities. Agent I for Business incorporates AI capabilities into apps and official accounts to accelerate digital transformation for businesses, including in customer service, operations, and analytics.
• Monetization opportunities around AI: Leverage LYP payment platform for consumer AI subscription offerings, plan to launch agent-based ads in FY2026, promote conversion-based monetization in commerce, and build new AI-driven monetization models across touchpoints.
• Shareholder returns and capital efficiency: Plan to increase dividends per share to 11 yen, target ROE of 8% or more in FY30, formulated new three-year capital allocation policy balancing growth investments with shareholder returns.

Consolidated revenue in fiscal 2025 grew 6.2% year-on-year. Adjusted EBITDA was up 5.5% year-on-year. Media business: Revenue grew by 0.4% year-on-year, with digestive EBITDA margin at 38.2%. Account ad growth pushed up ad revenue, but generative AI costs and related costs increased, leading to a 2.2% year-on-year decline in digestive EBITDA profit. Account app revenue kept growing at 15.3%. LINE Mini App added tab in February and launched digital content billing feature in April, with number of mini-app and MAU expanding. Digital transformation solution to stores: Will launch restaurant option in June, beauty option in first half, aiming to achieve 100,000 stores. LINE Revamp and LYP Premium: New Home tab started in March, LYP premium with Netflix saw 28% year-on-year increase in direct subscribers excluding non-paying users. Commerce business: New consolidation and contributions from Yahoo! Japan Shopping travel led to higher revenue, but adjusted EBITDA declined by 12.8% year-on-year. E-commerce transaction value grew significantly. Strategic business: Revenue increased by 30.6% year-on-year, adjusted EBITDA margin grew to 21.1%, and adjusted EBITDA grew more than 40 billion yen year-on-year, mainly due to PayPay consolidation and new consolidation of Line Bank Taiwan.

Next fiscal year, plan to increase dividend per share to 11 yen. Aim to achieve ROE of 8% or more in FY30. For FY26, forecast revenue of 2.24 trillion yen, adjusted EBITDA of 585 billion yen, and adjusted EPS of 30 billion yen. Expect double-digit growth in revenue and profit company-wide in FY26, supported by growth in commerce business and account and advertising, and will reduce fixed costs and strengthen operational efficiency.

• Temporary impact of ASCO system outage. - Impact of Middle East conflict on the advertisement market.

Q: Your plan for this fiscal year EBITDA, 565 billion, which is 10 billion plus higher than previous forecast. Could you explain the reason?

A: Compared with three months ago, it has been increased. Strategic segment, the other day, PayPay announced the guidance. The upper limit is reflected to our number. The second point is that three months ago, ASCO part and Lineman announced we're not very certain, but an ASCO and Lyman budgets were confirmed and some upside was added.

Q: About Agent I, initial reaction and impact on top line and cost in this fiscal year?

A: After announcement, received some reaction, but more people using it yet to show vividly. Concerning cost, in SoftBank Group, able to control AI cost, no big cost increase for Agent I. Concerning revenue, just beginning, currently working on validation, cannot talk about specific numbers yet.