Interim report
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Results for the Three Months Ended June 30, 2026 (FY2026-1Q) [IFRSs] August 3, 2026 Company Name: LY Corporation Share Listings: Prime Market of TSE Code No.: 4689 URL: https://www.lycorp.co.jp/en/ Representative: Takeshi Idezawa, President and Representative Director, CEO Tel: +81-3-6779-4900 Contact: Ryosuke Sakaue, Director, CFO Scheduled Dividend Payment Date: － Financial Results Supplementary Briefing Materials to Be Created: Yes Financial Results Investors Meeting to Be Held: Yes (for Financial Analysts) 1. Consolidated Results for the Three Months Ended June 30, 2026 (April 1, 2026–June 30, 2026) (Amounts less than one million yen are omitted) (1) Consolidated Business Performance (April 1, 2026–June 30, 2026) (Percentages represent year-on-year changes) Revenue Operating income Profit before tax Net income Net income attributable to owners of the parent Total comprehensive income Millions of yen % Millions of yen % Millions of yen % Millions of yen % Millions of yen % Millions of yen % Three-month period ended June 30, 2026 553,987 13.1 101,175 6.4 99,117 13.8 75,387 24.9 58,060 19.2 84,397 11.3 Three-month period ended June 30, 2025 489,631 5.7 95,071 (11.0) 87,070 (0.7) 60,373 (0.2) 48,716 (5.5) 75,839 2.8 Adjusted EBITDA Adjusted net income Adjusted EPS Basic earnings per share Diluted earnings per share Millions of yen % Millions of yen % Yen % Yen Yen Three-month period ended June 30, 2026 154,895 23.1 66,532 54.3 9.70 60.3 8.47 8.44 Three-month period ended June 30, 2025 125,864 3.4 43,119 1.8 6.05 7.1 6.84 6.80 (2) Consolidated Financial Position Total assets Total equity Equity attributable to owners of the parent Ratio of equity attributable to owners of the parent Millions of yen Millions of yen Millions of yen % As of June 30, 2026 11,612,455 3,723,854 3,004,765 25.9 As of March 31, 2026 11,205,191 3,713,509 2,998,805 26.8 2. Dividends Dividends per share 1Q 2Q 3Q Year end Full year Yen Yen Yen Yen Yen Fiscal year ended March 31, 2026 － 0.00 － 7.30 7.30 Fiscal year ending March 31, 2027 － Fiscal year ending March 31, 2027 (Estimates) 0.00 － 11.00 11.00 (Note) Revision in dividends previously announced: None 3. Consolidated Performance Estimates for FY2026 (April 1, 2026–March 31, 2027) Revenue Adjusted EBITDA Adjusted EPS Millions of yen % Change YoY Millions of yen % Change YoY Yen Fiscal year ending March 31, 2027 2,240,000 10.0 585,000 17.8 30.0 (Note) Revision in performance estimates previously announced: None For details, please refer to 3. Outlook for Fiscal Year Ending March 31, 2027 (April 1, 2026–March 31, 2027) in (1) Qualitative Information Regarding the Consolidated Business Performance on page 6 of the Results for the Three Months (Attachments).
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Notes (1) Significant changes in scope of consolidation during the period: None Newly consolidated: None Excluded from consolidation: None (2) Changes in the accounting principles and accounting estimates 1) Changes due to IFRSs: None 2) Changes other than 1): None 3) Changes in accounting estimates: None (3) Number of stocks issued (common stock) 1) Number of stocks issued (including treasury stocks) As of June 30, 2026 6,884,784,536 shares As of March 31, 2026 6,884,244,856 shares 2) Number of shares of treasury stocks As of June 30, 2026 25,517,496 shares As of March 31, 2026 25,635,999 shares 3) Average number of common stocks outstanding (cumulative from the beginning of the fiscal year) Three months ended June 30, 2026 6,858,892,103 shares Three months ended June 30, 2025 7,124,599,693 shares Note: The number of shares of treasury stocks includes the shares of LY Corporation (the "Company") held by the Stock Delivery Trust (J-ESOP), the Board Incentive Plan Trust, and the Stock Delivery ESOP Trust (as of March 31, 2026: 20,196,214 shares; as of June 30, 2026: 20,101,019 shares). (4) Formula for each management index ・Adjusted EBITDA: Operating income + depreciation & amortization (*1) ± EBITDA adjustment items (*2) ・Adjusted net income: Net income attributable to owners of the parent ± EPS adjustment items (*3) ± tax equivalent on some EPS adjustment items ・Adjusted EPS: Adjusted net income/average number of common stocks outstanding (cumulative from the beginning of the fiscal year) (*1) Depreciation & amortization: Depreciation, depreciation of right-of-use assets, etc. (*2) EBITDA adjustment items: Gains/losses on non- recurring and non-cash transactions within operating revenue and expenses, etc. (loss on retirement of fixed assets, impairment losses, stock compensation expenses, gain on remeasurement relating to business combinations, other transactions with undetermined cash outflows (one-time provisions, etc.), etc.). Also, gains/losses on sales of shares held by certain funds. (*3) EPS adjustment items: ± EBITDA adjustment items + amortization of identifiable intangible assets arising from business combinations ± non-recurring gains/losses in other non-operating income/expenses * Review of the Japanese-language originals of the attached consolidated quarterly financial statements by certified public accountants or an audit firm: Yes (optional) * Explanation of the proper use of performance estimates, and other special notes • The performance estimates, etc., and other forward-looking statements contained in this document are based on the information currently available to the Company and premised on assumptions that have been deemed reasonable by the management. For a variety of reasons, actual performances, etc., could differ significantly. • Supplementary materials to the earnings results are published on the Company's website (https://www.lycorp.co.jp/en/ir.html) on Monday, August 3, 2026.
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―1― ○Table of contents of attachments 1 Qualitative Information Regarding the Consolidated Operating Results······························ 2 (1) Qualitative Information Regarding the Consolidated Business Performance······················· 2 (2) Qualitative Information Regarding the Consolidated Financial Position··························· 7 2 Interim Condensed Consolidated Financial Statements and Significant Notes························ 8 (1) Interim Condensed Consolidated Statement of Financial Position······························· 8 (2) Interim Condensed Consolidated Statement of Profit or Loss··································· 10 (3) Interim Condensed Consolidated Statement of Comprehensive Income·························· 11 (4) Interim Condensed Consolidated Statement of Changes in Equity······························· 12 (5) Interim Condensed Consolidated Statement of Cash Flows····································· 14 (6) Notes to Interim Condensed Consolidated Financial Statements································ 15
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―2― 1 Qualitative Information Regarding the Consolidated Operating Results (1) Qualitative Information Regarding the Consolidated Business Performance 1. Business Results Summary (April 1, 2026–June 30, 2026) ■ Highlights Revenue came to 553.9 billion yen (up 13.1% year on year), and adjusted EBITDA came to 154.8 billion yen (up 23.1% year on year). Both set new records for the highest performance to date in the cumulative consolidated first quarter. Three Months Ended June 30, 2025 (billion yen) Three Months Ended June 30, 2026 (billion yen) Year-on-Year Change (billion yen) Year-on-Year Change (%) Revenue 489.6 553.9 64.3 13.1 Adjusted EBITDA 125.8 154.8 29.0 23.1 The revenue for the cumulative consolidated first quarter of the fiscal year ending March 31, 2027 amounted to 553.9 billion yen (up 13.1% year on year), representing the highest cumulative consolidated first quarter revenue to date. This was due to an increase in revenue from the consolidation of BEENOS Inc., LINE MAN CORPORATION PTE. LTD., and LINE Bank Taiwan Limited implemented in the previous fiscal year, and an increase in revenue mainly from PayPay's consolidated revenue in the Strategic Business, account advertising and LYP Premium in the Media Business, as well as Yahoo! JAPAN Shopping in the Commerce Business, among others. Adjusted EBITDA for the cumulative consolidated first quarter of the fiscal year ending March 31, 2027 amounted to 154.8 billion yen (up 23.1% year on year), representing the highest cumulative consolidated first quarter earnings to date. This was due to the increased revenues mentioned above, despite an increase in selling, general and administrative expenses mainly due to higher sales promotion costs, commission expenses, and personnel expenses.
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―3― 2. Segment Business Results Summary (April 1, 2026–June 30, 2026) Revenue and Adjusted EBITDA by Segment Three Months Ended June 30, 2025 (billion yen) Three Months Ended June 30, 2026 (billion yen) Year-on-Year Change (billion yen) Year-on-Year Change (%) Media Business Revenue 177.5 182.0 4.5 2.6 Adjusted EBITDA 66.7 76.1 9.4 14.2 Commerce Business Revenue 215.9 242.8 26.9 12.5 Adjusted EBITDA 38.1 42.0 3.9 10.2 Strategic Business Revenue 96.5 130.2 33.7 34.9 Adjusted EBITDA 21.3 35.0 13.7 64.4 Other Revenue 2.0 1.9 (0.1) (5.1) Adjusted EBITDA 0.9 1.3 0.3 38.2 Adjustments Revenue (2.4) (3.1) (0.7) ― Adjusted EBITDA (1.3) 0.2 1.5 ― To t al Revenue 489.6 553.9 64.3 13.1 Adjusted EBITDA 125.8 154.8 29.0 23.1 Notes: 1. In the third quarter of the fiscal year ending March 31, 2026, services have been transferred between segments following an internal reorganization. As a result, the financial results for the fiscal year ended March 31, 2025 have been retroactively adjusted. 2. From the first quarter of the fiscal year ending March 31, 2027, services have been transferred between segments following an internal reorganization, and the allocation standards of expenses related to the back office, data centers, and internal infrastructure were revised. Accordingly, the segment information for the previous fiscal year has been revised and restated. 3. Figures in Adjustments represent inter-segment transactions and general corporate expenses not belonging to any reporting segment.
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―4― 1) Media Business in the Cumulative Consolidated First Quarter The revenue of the Media Business for the cumulative consolidated first quarter amounted to 182.0 billion yen (up 2.6% year on year). Adjusted EBITDA amounted to 76.1 billion yen (up 14.2% year on year) due to an increase in revenue, as well as a decrease in selling, general and administrative expenses which mainly include personnel expenses and generative AI-related expenses. ・ Account advertising: Revenue increased 13.3% year on year, maintaining a high growth, due to an increase in the number of paid accounts and expansion of pay-as-you-go billing in LINE Official Account. ・ Display advertising: Revenue decreased year on year from both programmatic advertising and reservation advertising. ・ Search advertising: Revenue decreased year on year from both LY Corporation's websites and partners' websites. ・ User subscriptions, etc.: Revenue increased 12.5% year on year as "LYP Premium with Netflix," launched in February 2026, continued to perform well, with LYP Premium membership steadily increasing. 2) Commerce Business in the Cumulative Consolidated First Quarter The revenue of the Commerce Business amounted to 242.8 billion yen (up 12.5% year on year) due to increased revenue from the consolidation of BEENOS Inc. and LINE MAN CORPORATION PTE. LTD., as well as increased revenue from Yahoo JAPAN Shopping and the ZOZO Group. Adjusted EBITDA increased 10.2% year on year, to 42.0 billion yen, as the increase in revenue absorbed the increase in selling, general and administrative expenses, including sales promotion costs, advertising, and personnel expenses, resulting from the above consolidation of subsidiaries. 3) Strategic Business in the Cumulative Consolidated First Quarter PayPay consolidated GMV (*1) for the cumulative consolidated first quarter amounted to 5. 5 trillion yen (up 23.0% year on year) while maintaining steady growth. Furthermore, the loan balance of PayPay Bank Corporation came to 1,334.8 billion yen (up 37.5% year on year). The revenue for the cumulative consolidated first quarter amounted to 130.2 billion yen, representing a 34.9% increase year on year, as a result of growth in PayPay consolidated, increased revenue from the consolidation of LINE Bank Taiwan Limited in June 2025, and increased revenue from the expansion of the LINE Pay Taiwan business. In addition, adjusted EBITDA amounted to 35.0 billion yen (up 64.4% year on year), as the increase in revenue absorbed the increase in selling, general and administrative expenses, which were mainly personnel expenses, sales promotion costs, advertising expenses, and commission expenses. (*1) Payments via "PayPay Balance," "PayPay Debit," "PayPay Balance Card," "PayPay Credit," "PayPay Card (physical card)," "VISA Debit Card," "Alipay," etc. are included. The use of the "Send/Receive" function of "PayPay Balance" between users and ATM withdrawals using the cash card function of the "VISA Debit Card" are not included. The figures represent the sum of GMVs of PayPay Corporation, PayPay Card Corporation, and PayPay Bank Corporation, with internal transactions eliminated. Figures are rounded down to the nearest billion yen and then rounded off to the nearest 100 billion yen.
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―5― Major services/products of each segment Media Business Search advertising LY Ads Search Ads Account advertising LINE Official Account, LINE Promotion Sticker, LINE de Obo (Participate with LINE), LINE Flyer Display advertising Programmatic advertising LY Ads Display Ads (Auction) Reservation advertising LY Ads Display Ads (Guaranteed) Other LINE Part Time Jobs User subscriptions, etc. LINE STICKERS, LINE GAME, LINE Fortune, LINE MUSIC, LINE Manga, LYP Premium, ebookjapan, Yahoo! JAPAN Mail Commerce Business LY Corporation Shopping business Yahoo! JAPAN Shopping, LINE Brand Catalog, LINE GIFT, LINE SHOPPING (*2), overseas e-commerce (LINE SHOPPING (Taiwan, Thailand), GIFTSHOP , MyShop) Reuse business Yahoo! JAPAN Auction, Yahoo! JAPAN Flea Market, Buyee Services e-commerce Yahoo! JAPAN Travel, Ikyu.com, LINE TRAVEL (Taiwan), LINE MAN ZOZO, ASKUL ZOZO ZOZOTOWN, ZOZOUSED, Lyst ASKUL ASKUL BtoB business (ASKUL, SOLOEL ARENA, APMRO, FEED DENTAL), LOHACO, Charm Strategic Business Fintech PayPay (Consolidated) PayPay, PayPay Card, Credit Engine, PayPay Bank, PayPay Securities Other fintech PayPay Insurance, LINE Pay Taiwan, LINE Bank Taiwan, LINE Score, LINE Pocket Money, LINE BITMAX (*3), LINE FX (*2) LINE SHOPPING in Japan terminated its service on June 1, 2026. (*3) LINE BITMAX terminated its service on June 1, 2026.
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―6― 3. Outlook for Fiscal Year Ending March 31, 2027 (April 1, 2026–March 31, 2027) For the fiscal year ending March 31, 2027, the Group aims to increase revenue and income by continuing to reinforce products in key growth domains through disciplined investments. The Group expects a revenue of 2,240.0 billion yen (up 10.0% year on year), an adjusted EBITDA of 585.0 billion yen (up 17.8% year on year), and an adjusted EPS of 30.0 yen (up 4.4% year on year).
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―7― (2) Qualitative Information Regarding the Consolidated Financial Position Assets, Liabilities, and Equity 1. Assets Total assets at the end of this consolidated first quarter amounted to 11,612,455 million yen, having increased 407,263 million yen, or 3.6%, since the end of the consolidated fiscal year ended March 31, 2026. The major components of the change in assets were as follows: ・The principal reasons for the change in cash and cash equivalents are as stated in "Cash Flows" below. ・Loans in the banking business increased compared with the end of the consolidated fiscal year ended March 31, 2026, mainly due to the increase in housing loans. 2. Liabilities Total liabilities at the end of this consolidated first quarter amounted to 7,888,600 million yen, having increased 396,918 million yen, or 5.3%, since the end of the consolidated fiscal year ended March 31, 2026. The major components of the change in liabilities were as follows: ・Customer deposits in the banking business increased compared with the end of the consolidated fiscal year ended March 31, 2026, mainly due to an increase in deposits from customers. ・Interest-bearing liabilities increased compared with the end of the consolidated fiscal year ended March 31, 2026 mainly due to an increase in borrowings. 3. Equity Total equity at the end of this consolidated first quarter amounted to 3,723,854 million yen, having increased 10,345 million yen, or 0.3%, since the end of the consolidated fiscal year ended March 31, 2026. Cash Flows At the end of this consolidated first quarter, cash and cash equivalents amounted to 1,200,934 million yen, up 132,902 million yen from the end of the consolidated fiscal year ended March 31, 2026, out of which deposits with the central bank for the banking business amounted to 411,030 million yen. The following is a description of the movements in the main components of cash flow and the factors contributing to the changes for the period under review: Cash flows from operating activities amounted to a total cash outflow of 25,220 million yen, primarily owing to an increase in loans in the banking business, increase in investment securities in the securities business, and payment of income taxes, despite the recognition of profit before tax for the period under review and an increase in customer deposits in the banking business. Cash flows from investing activities amounted to a total cash outflow of 64,194 million yen, primarily due to the purchase of investment securities in the banking business and purchase of other investments, despite proceeds from sales/redemption of investment securities in the banking business. Cash flows from financing activities amounted to a total cash inflow of 218,123 million yen, primarily due to the net increase in short-term borrowings and proceeds from long-term borrowings, despite outflows mainly due to payment of dividends.
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―8― 2 Interim Condensed Consolidated Financial Statements and Significant Notes (1) Interim Condensed Consolidated Statement of Financial Position (Millions of yen) As of Mar. 31, 2026 As of June 30, 2026 Increase/decrease Amount Amount Amount Change (%) Assets Cash and cash equivalents 1,068,032 1,200,934 132,902 12.4 Call loans in banking business 52,788 23,643 (29,144) (55.2) Trade and other receivables 539,360 572,465 33,105 6.1 Inventories 32,335 31,714 (620) (1.9) Loans in credit card business 1,252,928 1,274,116 21,188 1.7 Investment securities in banking business 1,550,844 1,560,105 9,261 0.6 Loans in banking business 1,615,955 1,750,419 134,463 8.3 Other financial assets 714,667 763,859 49,191 6.9 Property and equipment 259,634 255,318 (4,316) (1.7) Right-of-use assets 198,026 215,616 17,590 8.9 Goodwill 2,191,690 2,197,888 6,198 0.3 Intangible assets 1,309,654 1,303,561 (6,092) (0.5) Investments accounted for using the equity method 192,262 221,575 29,313 15.2 Deferred tax assets 119,529 115,749 (3,780) (3.2) Other assets 107,481 125,486 18,004 16.8 Total assets 11,205,191 11,612,455 407,263 3.6
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―9― (Millions of yen) As of Mar. 31, 2026 As of June 30, 2026 Increase/decrease Amount Amount Amount Change (%) Liabilities and equity Liabilities Trade and other payables 2,218,513 2,239,268 20,754 0.9 Customer deposits in banking business 2,701,160 2,799,901 98,741 3.7 Interest-bearing liabilities 1,961,998 2,283,191 321,192 16.4 Other financial liabilities 92,274 94,928 2,654 2.9 Income taxes payable 43,127 28,693 (14,434) (33.5) Provisions 37,180 36,787 (393) (1.1) Deferred tax liabilities 191,944 184,476 (7,467) (3.9) Other liabilities 245,482 221,353 (24,129) (9.8) Total liabilities 7,491,682 7,888,600 396,918 5.3 Equity Equity attributable to owners of the parent Common stock 252,134 252,287 153 0.1 Capital surplus 1,699,597 1,678,946 (20,651) (1.2) Retained earnings 996,061 1,014,900 18,838 1.9 Treasury stock (13,338) (13,272) 65 － Accumulated other comprehensive income 64,350 71,904 7,553 11.7 Total equity attributable to owners of the parent 2,998,805 3,004,765 5,959 0.2 Non-controlling interests 714,704 719,089 4,385 0.6 Total equity 3,713,509 3,723,854 10,345 0.3 Total liabilities and equity 11,205,191 11,612,455 407,263 3.6
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―10― (2) Interim Condensed Consolidated Statement of Profit or Loss (Millions of yen) Three Months ended June 30, 2025 Three Months ended June 30, 2026 Increase/decrease Amount Amount Amount Change (%) Revenue 489,631 553,987 64,356 13.1 Cost of sales 134,348 152,549 18,200 13.5 Selling, general and administrative expenses 260,212 300,263 40,051 15.4 Operating income 95,071 101,175 6,103 6.4 Other non-operating income 1,926 6,089 4,162 216.0 Other non-operating expenses 7,135 6,569 (566) (7.9) Equity in profit (loss) of associates and joint ventures (2,792) (1,576) 1,215 － Profit before tax 87,070 99,117 12,047 13.8 Income tax expense 26,696 23,729 (2,966) (11.1) Profit for the period 60,373 75,387 15,014 24.9 Profit for the period attributable to: Owners of the parent 48,716 58,060 9,344 19.2 Non-controlling interests 11,657 17,326 5,669 48.6 Profit for the period 60,373 75,387 15,014 24.9 Earnings per share attributable to owners of the parent Basic (yen) 6.84 8.47 1.63 23.8 Diluted (yen) 6.80 8.44 1.64 24.1
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―11― (3) Interim Condensed Consolidated Statement of Comprehensive Income (Millions of yen) Three Months ended June 30, 2025 Three Months ended June 30, 2026 Profit for the period 60,373 75,387 Other comprehensive income Items that will not be reclassified to profit or loss Remeasurements of defined benefit plans (1,646) (70) Equity financial assets measured at FVTOCI 3,861 788 Share of other comprehensive income of associates 6 (67) Subtotal 2,221 650 Items that may be reclassified subsequently to profit or loss Debt financial assets measured at FVTOCI 783 (44) Exchange differences on translating foreign operations 12,460 8,403 Subtotal 13,243 8,359 Other comprehensive income, net of tax 15,465 9,009 Total comprehensive income 75,839 84,397 Total comprehensive income attributable to: Owners of the parent 60,535 65,008 Non-controlling interests 15,303 19,389 Total comprehensive income 75,839 84,397
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―12― (4) Interim Condensed Consolidated Statement of Changes in Equity Three Months ended June 30, 2025 (Millions of yen) Equity attributable to owners of the parent Non- controlling interests Total equity Common stock Capital surplus Retained earnings Treasury stock Accumulated other comprehen- sive income Total Balance at April 1, 2025 250,128 1,880,031 838,017 (11,704) 41,696 2,998,170 420,745 3,418,915 Profit for the period 48,716 48,716 11,657 60,373 Other comprehensive income, net of tax 11,819 11,819 3,646 15,465 Total comprehensive income for the period － － 48,716 － 11,819 60,535 15,303 75,839 Transactions with owners and other transactions Issue of common stock 869 1,095 1,965 1,965 Payment of dividends (10,260) (39,617) (49,877) (8,829) (58,707) Transfer of accumulated other comprehensive income to retained earnings (2,294) 2,294 － － Purchase of treasury stock (116,228) (116,228) (116,228) Changes attributable to obtaining or losing control of subsidiaries － 46,363 46,363 Changes in ownership interests in subsidiaries without losing control (1,018) (1,018) 78,019 77,001 Share-based payment transactions 1,040 1,040 1,040 Other (1,067) (26) 172 (921) 188 (733) Total 869 (10,210) (41,938) (116,055) 2,294 (165,040) 115,741 (49,299) Balance at June 30, 2025 250,997 1,869,821 844,796 (127,760) 55,810 2,893,665 551,789 3,445,454
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―13― Three Months ended June 30, 2026 (Millions of yen) Equity attributable to owners of the parent Non- controlling interests Total equity Common stock Capital surplus Retained earnings Treasury stock Accumulated other comprehen- sive income Total Balance at April 1, 2026 252,134 1,699,597 996,061 (13,338) 64,350 2,998,805 714,704 3,713,509 Profit for the period 58,060 58,060 17,326 75,387 Other comprehensive income, net of tax 6,947 6,947 2,062 9,009 Total comprehensive income for the period － － 58,060 － 6,947 65,008 19,389 84,397 Transactions with owners and other transactions Issue of common stock 153 195 348 348 Payment of dividends (11,933) (38,133) (50,067) (10,316) (60,383) Transfer of accumulated other comprehensive income to retained earnings (606) 606 － － Purchase of treasury stock (11) (11) (11) Changes in ownership interests in subsidiaries without losing control (9,071) (9,071) (4,597) (13,669) Share-based payment transactions 357 357 357 Other (198) (482) 76 (604) (89) (693) Total 153 (20,651) (39,222) 65 606 (59,049) (15,003) (74,052) Balance at June 30, 2026 252,287 1,678,946 1,014,900 (13,272) 71,904 3,004,765 719,089 3,723,854
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―14― (5) Interim Condensed Consolidated Statement of Cash Flows (Millions of yen) Three Months ended June 30, 2025 Three Months ended June 30, 2026 Amount Amount Cash flows from operating activities: Profit before tax 87,070 99,117 Depreciation and amortization 41,441 47,899 Increase (decrease) in allowance for doubtful accounts (7,348) 4,583 Equity in (profit) loss of associates and joint ventures 2,792 1,576 (Increase) decrease in call loans in banking business 33,000 29,535 (Increase) decrease in trade and other receivables (12,442) (29,353) Increase (decrease) in trade and other payables (20,157) 25,870 (Increase) decrease in loans for credit card business (23,441) (21,491) (Increase) decrease in loans in banking business (44,018) (125,495) Increase (decrease) in customer deposits in banking business 160,119 87,283 (Increase) decrease in investment securities in securities business (24,629) (54,837) Other (43,965) (43,618) Subtotal 148,422 21,070 Interest and dividends received 1,112 2,265 Interest paid (4,346) (5,696) Income taxes―paid (50,164) (42,860) Net cash inflow (outflow) from operating activities 95,023 (25,220) Cash flows from investing activities: Purchase of investment securities in banking business (131,304) (145,071) Proceeds from sales/redemption of investment securities in banking business 38,197 137,722 Purchase of other investments (55,922) (44,447) Proceeds from withdrawal of time deposits 13,866 19,525 Other (82,939) (31,923) Net cash inflow (outflow) from investing activities (218,103) (64,194) Cash flows from financing activities: Net increase (decrease) in short-term borrowings 172,997 176,380 Proceeds from long-term borrowings 122,140 108,980 Repayments of long-term borrowings (9,381) (10,836) Proceeds from issuance of corporate bonds － 15,000 Proceeds from issuance of commercial papers 295,500 121,000 Redemption of commercial papers (236,000) (107,000) Dividends paid (49,879) (50,069) Repayment of lease liabilities (10,356) (9,831) Other (119,269) (25,500) Net cash inflow (outflow) from financing activities 165,749 218,123 Effects of exchange rate changes on cash and cash equivalents 9,097 4,193 Net increase (decrease) in cash and cash equivalents 51,766 132,902 Cash and cash equivalents at the beginning of the period 1,043,944 1,068,032 Cash and cash equivalents at the end of the period 1,095,711 1,200,934
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―15― (6) Notes to Interim Condensed Consolidated Financial Statements 1. Reporting Entity LY Corporation (the "Company") was incorporated and is domiciled in Japan. A Holdings Corporation is the parent company of the Company and its subsidiaries (collectively, the "Group"). The ultimate parent company of the Group is SoftBank Group Corp. The re gistered address of the Company's head office is 1-3 Kioicho, Chiyoda -ku, Tokyo, Japan. The nature of the Group's principal businesses is described in "6. Segment Information." 2. Basis of Preparation Compliance with International Financial Reporting Standards The Group's interim condensed consolidated financial statements have been prepared in accordance with Article 5, Paragraph (2) of the standards for preparing quarterly financial statements established by Tokyo Stock Exchange, Inc. Based on Article 5, Paragraph (5) of said standards, certain items that are required to be disclosed according to IAS 34 of the International Financial Reporting Standards ("IFRS") have been omitted from the financial statements. 3. Going Concern Assumption Not applicable. 4. Material Accounting Policy Information The Group's material accounting policy information in preparing the interim condensed consolidated financial statements is the same as those applied to consolidated financial statements for the previous consolidated fiscal year. 5. Use of Estimates and Judgments In preparing the interim condensed consolidated financial statements under IFRS, the management is required to make judgments, estimates, and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, revenue, and expenses. Actual results may differ from those projected estimates. The estimates and underlying assumptions are continuously reviewed. Revisions to accounting estimates are recognized in the period in which the estimate is revised as well as in future periods. The judgments, estimates and assumptions that have significant impact on the amounts in the interim condensed consolidated financial statements of the Group are consistent with those described in the consolidated financial statements for the previous consolidated fiscal year.
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―16― 6. Segment Information The Group's reporting segments are business segments for which it is possible to obtain financial information separate from the overall compositional structure of the Group. The Board of Directors of the Company regularly examines this information in order to decide on allocation of business resources and to evaluate business performance. The Group's reporting segments comprise three business segments, the Media Business, the Commerce Business, and the Strategic Business. The Media Business mainly plans and operates each service for the purpose of planning, sales, and placement of advertising products, provides information listing services, and provides other corporate services. The Commerce Business mainly sells products, plans and provides services via the internet to small and medium -sized business enterprises and to individuals. The Strategic Business mainly offers payment and finance-related services. The Other segment contains business segments not covered in the reporting segments, including services related to cloud, etc. The accounting policies adopted for each reporting segment are the same as the Group's accounting policies as those referred to in "4. Material Accounting Policy Information." Segment income is adjusted with the operating income in the interim condensed consolidated statement of profit or loss. The adjustment figures for segment income are general corporate expenses not belonging to each reporting segment. General corporate expenses principally comprise general and administrative expenses not belonging t o any reporting segment. Inter -segment revenue is based on actual market prices. From the third quarter of the fiscal year ended March 31, 2026, services have been transferred between segments following an internal reorganization. Furthermore, from the first quarter of the fiscal year ending March 31, 2027, services have been transferred between segments following an internal reorganization, and the allocation standards of expenses related to the back office, data centers, and internal infrastructure were revised. Accordingly, the segment information for the previous cumulative consolidated first quarter has been revised and restated.
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―17― The Group's segment information is as follows: Previous cumulative consolidated first quarter of the fiscal year ended March 31, 2026 (April 1, 2025–June 30, 2025): (Millions of yen) Reporting segment Other Adjustment figures Consolidated figures Media Business Commerce Business Strategic Business Total Revenue Sales to customers 176,017 215,424 96,288 487,729 1,902 － 489,631 Intersegment sales 1,549 522 244 2,317 120 (2,438) － Total 177,566 215,946 96,532 490,046 2,023 (2,438) 489,631 Segment income 49,184 19,530 29,338 98,054 528 (3,511) 95,071 Other non- operating income 1,926 Other non-operating expenses 7,135 Equity in profit (loss) of associates and joint ventures (2,792) Profit before tax 87,070 This cumulative consolidated first quarter of the fiscal year ending March 31, 2027 (April 1, 2026–June 30, 2026): (Millions of yen) Reporting segment Other Adjustment figures Consolidated figures Media Business Commerce Business Strategic Business Total Revenue Sales to customers 180,802 242,170 129,216 552,189 1,798 － 553,987 Intersegment sales 1,295 726 1,035 3,057 121 (3,179) － Total 182,097 242,896 130,252 555,247 1,919 (3,179) 553,987 Segment income 58,265 20,510 24,075 102,850 373 (2,049) 101,175 Other non- operating income 6,089 Other non-operating expenses 6,569 Equity in profit (loss) of associates and joint ventures (1,576) Profit before tax 99,117
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―18― 7. Interest-Bearing Liabilities The components of interest-bearing liabilities are as follows: (Millions of yen) As of March 31, 2026 As of June 30, 2026 Borrowings 1,208,219 1,482,241 Corporate bonds 474,344 489,369 Lease liabilities 205,201 223,975 Other 74,232 87,604 Total 1,961,998 2,283,191 8. Dividends The total amount of dividends was as follows: Three Months ended June 30, 2025 (April 1, 2025–June 30, 2025) Resolution Total dividends (millions of yen) Dividends per share (yen) Record date Effective date Board of Directors meeting held on May 16, 2025 50,075 7.00 March 31, 2025 June 5, 2025 Three Months ended June 30, 2026 (April 1, 2026–June 30, 2026) Resolution Total dividends (millions of yen) Dividends per share (yen) Record date Effective date Board of Directors meeting held on May 15, 2026 50,215 7.30 March 31, 2026 June 5, 2026 9. Other Non-operating Income The components of non-operating income are as follows: (Millions of yen) Three Months ended June 30, 2025 Three Months ended June 30, 2026 Gain or loss from financial instruments at FVTPL ― 3,638 Other 1,926 2,450 Total 1,926 6,089 10. Other Non-operating Expenses The components of non-operating expenses are as follows: (Millions of yen) Three Months ended June 30, 2025 Three Months ended June 30, 2026 Interest expenses 2,657 3,633 Other 4,477 2,935 Total 7,135 6,569
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―19― 11. Earnings Per Share Basic quarterly earnings per share attributable to owners of the parent and diluted quarterly earnings per share are calculated on the following basis: Three Months ended June 30, 2025 Three Months ended June 30, 2026 Basic quarterly earnings per share (yen) 6.84 8.47 Profit for the quarter attributable to owners of the parent (million yen) 48,716 58,060 Profit for the quarter not attributable to owners of the parent (million yen) － － Profit for the quarter used in the calculation of basic earnings per share (million yen) 48,716 58,060 Weighted-average number of common stock (1,000 shares) 7,124,599 6,858,892 Diluted quarterly earnings per share (yen) 6.80 8.44 Adjustments on profit for the quarter (million yen) － － Increase in the number of common stock (1,000 shares) 39,256 21,800 (Note) In calculating the basic quarterly earnings per share and the diluted quarterly earnings per share, shares of the Company held by the Stock Delivery Trust (J-ESOP), the Board Incentive Plan Trust, and the Stock Delivery ESOP Trust are processed as treasury stocks. Thus, said number of shares are deducted from the number of shares at the end of the period and the weighted average number of shares. 12. Related Party Transactions The Group's ultimate parent company is SoftBank Group Corp. Transactions between the Group and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed herein. Related party transactions and outstanding balances Previous cumulative consolidated first quarter of the fiscal year ended March 31, 2026 (April 1, 2025–June 30, 2025): There are no significant related party transactions or unsettled balances of receivables and payables. This cumulative consolidated first quarter of the fiscal year ending March 31, 2027 (April 1, 2026–June 30, 2026): There are no significant related party transactions or unsettled balances of receivables and payables.
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―20― 13. Contingencies The committed lines of cash advances mainly consist of the shopping limits and cashing limits that are granted to c ustomers in the Group's credit card business. The amount of remaining balances are as follows: (Millions of yen) A s of March 31, 2026 As of June 30, 2026 Remaining balance 10,648,136 10,345,835 T he remaining balance of the shopping limit and cashing limit do not indicate that the total amount of the balance will be used in the future because a) customers may use the credit card within the limit at any time and do not always use the full amount of the limit and b) the Group may change the limit arbitrarily. The remaining balance of the credit lines becomes due within a year as it is payable on demand. 14. S ignificant Subsequent Event (Capital and Business Alliance to Establish a Medium- to Long-Term Strategic Partnership with Seven & i Holdings Co., Ltd.) On July 31, 2026, the Company, together with its parent company, SoftBank Corp. ("SoftBank"), and the Company's consolidated subsidiary, PayPay Corporation ("PayPay"), entered into a business alliance agreement (the "Business Alliance") with Seven & i Holdings Co., Ltd. ("Seven & i") and SEVEN -ELEVEN JAPAN CO., LTD. ("SEVEN-ELEVEN") to establish a strategic partnership in the digital domain. On the same date, SoftBank and PayPay also entered into a capital alliance agreement (the "Capital Alliance") with Seven & i, and based on this Capital Alliance, decided to subscribe for treasury shares to be disposed of by Seven & i. (the "Disposal of Treasury Shares") through a third-party allotment. (1 ) Business Alliance T hrough this Business Alliance, PayPay will promote the integration of 7iD into PayPay ID, introduce PayPay Point s, undertake the development of the Seven Eleven app and collaborate on promotional initiatives, as well as facilitate the mutual utilization of data held by the parties , etc . Through these initiatives, PayPay aims to enhance the customer experience provided by SEVEN -ELEVEN while expanding opportunities to leverage PayPay 's digital financial platform centered on its payment services. (2 ) Capital Alliance Through this Disposal of Treasury Shares, PayPay will acquire 48,309,178 shares of common stock of Seven & i (representing an ownership ratio of 2.13% of the total number of issued shares, excluding treasury shares), for a total acquisition price of 100.0 billion yen. The payment amount for the acquisition of the common stock through this Disposal of Treasury Shares will be 2,070 yen per share, with the payment date scheduled for August 17, 2026. The Disposal of Treasury Shares is subject to the satisfaction of certain conditions precedent, including the effectiveness of the securities registration statement to be filed by Seven & i. (3 ) Financial impact A s a result of these alliances, "Other financial assets" in the consolidated statement of financial position is expected to increase by 100.0 billion yen. As of the date of approval of these condensed consolidated financial statements, the financial impact of the alliances cannot be reasonably estimated because the details of the Business Alliance are currently under review. U nless otherwise specified, English-language documents are prepared solely for the convenience of non- Japanese speakers. If there is any inconsistency between the English-language documents and the Japanese- language documents, the Japanese-language documents will prevail.