LY Corporation

Thank you very much for joining LY Corporation financial results briefing for FY2026 first quarter. Before we begin, we have a few requests. For this briefing, we will be using the presentation materials available on the LY Corporation website. Please also take note that this briefing is being live streamed. Please wait while we prepare to begin. Thank you for your patience. We will now begin the LY Corporation FY2026 First Quarter Financial Results Briefing. Thank you very much for joining us today. For this briefing, we will be using the presentation materials available on the LY Corporation website. Attending today's briefing is LY Corporation President and Representative Director CEO Takeshi Idezawa, Director and Chief Financial Officer Ryosuke Sakaue, Executive Corporate Officer Media Search Domain Lead Hiroshi Kataoka, Executive Corporate Officer, Commerce Domain Lead, Makoto Hide Executive Corporate Officer, Corporate Business Domain Lead, Yuuki Ikehata are in attendance. First, Sakaue will present the financial results for the first quarter of fiscal year 2026. This will be followed by a Q&A session. The briefing is expected to last approximately one hour. Please take note that this briefing is also being live streamed. We will now start the briefing.

This is Sakaue of LY Corporation. Thank you very much for taking the time out of your busy schedule to join us at FY2026 Q1 Financial Results Briefing. Let me explain the summary of the financial results. There are three topics. First of all, It is about consolidated business results. The LOI Corporation's gross profit grew with performance exceeding the internal projections. More specifically, the consolidated revenue was 553.9 billion yen up 13.1% year-on-year. Adjusted EBITDA 154.8 billion yen up 23.1% year-on-year. Strong growth were achieved. The second point is that the Agent I's domain agents expanded to 25 domains. DAU expanded to 12 medium. So we are seeing the good progress in terms of the shift to AI agent. The third is tender offer for Kakaku.com Inc. We aim to create synergies by combining user touchpoints, products, data, and payment platform of two companies. Please go to the next slide. This is the agenda that I'd like to follow. First of all, about the Q1 consolidated results. Both revenue and profit made steady progress toward achieving the four-year guidance. In media and strategic revenue, the progress was below the 25% of the guidance. This is due to the seasonality, basically, and we assume that the revenue will concentrate in the second half, so we believe that the final results are in line with expectations. Once again, this is the trend of the overall results. Revenue grew 13.1% year-on-year. The speed of the growth has accelerated. I just said EBITDA grew by 23.1% year-on-year, significant growth. Margin improved to 28%, the major improvement, so the level of profitability is increasing. PayPay consolidation expanded the profit, and this has been the case in the past, but in addition, the higher gross profit of LY Corporation contributed to overall profit growth. So this was the major characteristic of Q1 results. Looking at the individual businesses, the media, commerce, and strategic gross profit grew in all segments. In addition, in media segment, the cost management was successful. That led to the EBITDA increase of 14.8 billion yen. On the right hand side, there were newly consolidated subsidiaries in the last fiscal year that offset the negative impact coming from ASCO. So I just said EBITDA grew as much as 23.1% year on year. Next page. What we are focused upon is the shift to Agent I, user navigation enhancement between LINE and Yahoo Japan, and also additional feature of the long-term memory of the user preference. Those are driving greater everyday usage. And also the Agent I agent has expanded to 25 and we are improving the usability. Through those initiatives, the Agent I user grew to the 12 million DAU. Next page. This is about the collaboration with 7-11. Last week we made announcement and once again LINE Yahoo has over 100 million digital customers. 7-11 has about 20 million per day physical customer and as you can see in the middle we have a OIP premium, an official account and mini app we would like to For the LIP premium members, we provide a higher rewards rate and also the coupons that can be utilized in the 7-11 stores. We plan to enhance the membership value as well as referrals. As for the official account and mini app, through the expansion of the digital touchpoint such as digital membership and mobile order, we would like to improve the convenient and rewarding shopping experience. Next is buy segment. Looking at the media business, the shift in the revenue mix progressed and the revenue grew steadily by 2.6% year-on-year. Manchester Depita was 14.2% year-on-year and achieving the double-digit growth. The margin increased to 4.2 point and expanded to 41.8%. Now we have a new level of the margin. This is the analysis of the media business. The portfolio transformation of this segment is progressing, and the search and display ads were down year on year. However, the account ads continue to show the high growth. Also, LIP premium, the user number increased. So user subscription including the LIP premium, this is a new perspective, has also grew and contributed to the revenue. Adjusted EBITDA, with the higher revenue of the account ad and LIP premium, the gross profit improved. and by using AI, the productivity improved and SG&A expenses were reduced and the adjusted EBITDA grew by 14%. Next, the number of the paid accounts. has been growing. Total is right now 500,000 and we exceeded that level. As for the revenue, it's expanding in line with our plan. Next. And as for the mini apps, in Q1, the number has reached 35,000, MAU 22.18 million, higher than 50% growth continued. So it's growing very rapidly.

DX Transformation Solutions for Stores and CRM is another initiative. In June, we began offering restaurant options, a digital transformation service for restaurants, and started to monetize. The service is off to a strong start. We also plan to launch the service for hair and beauty salons during the second quarter. Additionally, the CRM options, which enables more advanced management of line official accounts, was launched in June for a monthly fee of 5,000 yen. It supports centralized management of customer information and communication optimized for each user. Through these monetization enhancements, we aim to achieve sustainable revenue growth of account advertising. Please turn to the next page. This is on LYP premium. The number of direct members excluding free users through mobile phone carrier benefits has steadily increased to 6.82 million, up 36.8% year-on-year. Going forward, we aim to reach 10 million subscribers including new plan users. As part of our new plan offerings, we launched the lower-priced Light Plan Enjoy Pack in July and plan to introduce the Line Music New Plan in the fall or later. Going forward, We talked about the benefits with the 7-11 offline benefits, and we intend to further strengthen the benefits and establish the media business as a key driver of earnings. Next page, please. This is commerce business revenue increased by 12.5% year-on-year, achieving double-digit growth. Adjusted EBDA also rose 10.2% year-on-year, achieving double big-digit growth. After ASCO's pressure, we now were able to come back to the profitable level. The adjusted EBDA margin improved significantly to 17.3%, a level close to the previous fiscal year. Next page, this is on commerce business performance. Line Yahoo's revenue grew 11.2% year-over-year, excluding the consolidation effects of Binos and Lineman, driven by strong performance in shopping and reuse. Adjusted EBITDA posted double-digit growth driven by revenue growth at Line Yahoo and the contribution from the consolidation of subsidiaries despite the impact of ASCO. This is on transaction value. Starting this fiscal year, the disclosure classification for commerce transaction value has been revised to align with that of the P&L. As a result, transaction value no longer includes media or equity method affiliates, providing a clearer view of each service's growth. For details, please see page 24 of the supplementary materials. Shopping transaction value, this is mostly Yahoo Shopping, grew 9.1% year-on-year, continuing its growth trend. Reuse transaction value also performed strongly, up 18.4% year-on-year. Service transaction value also maintained double-digit growth. Please see next page. This is on shopping and reuse business. Yahoo Shopping posted strong performance with a transaction value up 8.6% year-on-year, driven by the time-limited pay-pay points promotions, the strengthening of product categories such as gourmet food, and the enhancement of AI-powered features. In the reuse business, the entertainment market expanded, and measures such as shipping fee refunds and coupon distributions proved successful, driving double-digit percentage growth in transaction value. Please see next page. This is on strategic businesses. Revenue grew 34.9% year-on-year, maintaining strong growth. Adjusted EBITDA also reached 35 billion yen, an increase of nearly 14 billion yen year-on-year. Along with the revenue increase, the margin expanded to 26.9%, continuing strong top-line growth and improved profitability. Please see next page. Revenue maintained as strong, with the revenue of Peipei consolidated up 28.4% year-on-year. Other fintechs saw significant growth of 81.7% year-on-year, driven by the impact of the new consolidation of Lineback Taiwan and the growth of Line Fintech. Adjusted EBTA rose significantly by 64.4% year-on-year as the substantial increase in revenue offset higher at S&G expenses and other costs. Please see next page. This is some PayPay consolidated business overview. The number of registered users expanded to over 74 million and GMV maintained strong growth up 23% year-on-year. Driven by increases in online payment GMV and interest income, revenue grew by 27.4% year-over-year, exceeding the growth rate of GMV, while EBDA also saw strong growth of 59.1% year-over-year. Thank you for watching. Overview is shown here. The tender offer price will be determined based on whether Kakaku.com acquires treasury shares from KDDI or not. The total acquisition cost is expected to be approximately 690 billion yen in either case. This is a joint proposal with Bain Capital and we aim to enhance Kakaku.com's long-term corporate value. By combining the strengths of both companies, the economic ownership ratio is expected to be 50.1% for Bain Capital and 49.9% for LY Corporation. Please see next page. When this transaction is completed, we will leverage LINE Yaku's extensive user touchpoint, data, and payment infrastructure to drive synergies. There are four specific points shown here. We will drive user traffic to Kakaku.com's media platform and integrate Kakaku.com with Agent I and payment experiences, and we aim to deepen and expand DX solutions for the restaurants and HR domain. This deal is yet to be closed, so I will not go into the details. However, when this transaction is finalized, further details will be provided separately. Please see next page. This concludes the summary of our first quarter financial results. Thank you very much.