Growth Strategy | Growth Strategy | Integrated Report Portal

In the management of the Group, which belongs to the internet industry that is constantly advancing due to technological innovation, a flexible financial strategy is the key to stable growth over the medium- to long-term. Through appropriate capital allocation, the LY Corporation Group aims to achieve continuous growth and maximize corporate value with an awareness of both financial soundness and capital efficiency.

Using business profits generated mainly from the Media Business as a basic source of funds, the Group proactively implements measures for growth, such as upfront investments, capital expenditures, and capital and business alliances. In addition, the Group has a capital allocation policy^*3 in place to implement shareholder return measures to increase corporate value. For the cumulative amount from FY2023 to FY2025, we expect a cash inflow of approximately JPY1.1 trillion, which can be broken down to an operating cash flow of JPY955.0 billion and the merger effect and financing of JPY200.0 billion. The cash generated will be allocated to base shareholder returns and base investments in the amount of JPY640.0 billion. The remainder, JPY515.0 billion, is planned to be secured as a buffer for additional investments and capital policy (e.g., share buybacks, M&A, etc.).
Furthermore, to meet the continued listing requirements of the Tokyo Stock Exchange’s Prime Market and to return profits to shareholders, we have repurchased approximately JPY150.0 billion of our own shares and canceled approximately 6.4% of total number of outstanding shares^*4.

In the event of large-scale acquisition or merger (M&A), the LY Corporation Group considers issuing corporate bonds and using bank loans. In these cases, the Group raises funds under the financial discipline of “maintaining a net leverage ratio (excluding the financial business^*2) of 3 times or less” while keeping an appropriate level of financial soundness.

In addition, since shareholder returns are also important for increasing corporate value over the medium- to long-term, we will proactively consider and implement shareholder return measures within the scope of our capital allocation policy, including direct measures such as share buybacks, in addition to dividend payments, while giving due consideration to the balance with growth investments.

With regard to capital efficiency, we consider it an important issue in our financial strategy to restore and even exceed the return on equity (ROE) and other ratios to the levels before the business integration with LINE Corporation. In improving capital efficiency, our basic policy is to grow net income, which is the numerator, and we plan to achieve adjusted EBITDA of JPY430 to 440 billion in FY2024, an increase of approximately 3.6 to 6.0% over the previous year, through disciplined cost investment and growth in business and services. When one-time gains^*5 of FY2023 is excluded to calculate the actual performance, adjusted EBITDA for FY2024 is expected to increase by approximately 6.0-8.5% year on year. We aim for adjusted EPS to exceed JPY20 in FY2025 by eliminating equity in losses of affiliates and joint ventures through improved profitability of equity-method affiliates by FY2025, in addition to the improvement effect of share buybacks and the growth of adjusted EBITDA.

1. *1 Net leverage ratio＝Net interest-bearing debt/Adjusted EBITDA (Figures for the last 12 months used for calculating adjusted EBITDA).
2. *2 Financial business includes PayPay Corporation, PayPay Card Corporation, and financial subsidiaries of Z Financial Corporation (e.g., PayPay Bank Corporation) as well as the financial subsidiaries of LINE Financial Plus Corporation.
3. *3 As of May 8, 2024
4. *4 Decided in August 2024. Cancelled on September 30, 2024.
5. *5 Excludes ASKUL Corporation’s compensation for damages: JPY9.4 billion.