Company Reports

Hakuhodo's June-quarter billings and operating profit grew 7.5% and 19.4%, respectively, driven mainly by domestic growth that more than offset declines overseas.

While Dentsu and Hakuhodo DY Holdings have long dominated the ad market in Japan as a duopoly for decades, these agencies faced headwinds such as slowing economic growth in Japan and digitalization in the ad industry.

Hakuhodo's March-quarter revenue rose 0.3% while operating income increased 7.6%, mainly driven by a recovery in overseas profitability. Management guides for 6% revenue growth and 4.5% operating income growth in fiscal 2026.

Shares in Dentsu, Hakuhodo, and LY have fallen 12%, 15%, and 19%, respectively, since September 2025. Advancements in artificial intelligence tools that enable automation in planning, creation, and execution of ads have accelerated investor concerns about AI's impact on ad-related stocks.

While Dentsu and Hakuhodo DY Holdings have long dominated the ad market in Japan as a duopoly for decades, these agencies faced headwinds such as slowing economic growth in Japan and digitalization in the ad industry.

Hakuhodo's December-quarter revenue and operating income grew 1.5% and 29.6% year over year, respectively, attributable to growth in Japan billings that more than offset the decline in overseas billings and improvements in profitability across segments, driven by cost-optimization efforts.

While Dentsu and Hakuhodo DY Holdings have long dominated the ad market in Japan as a duopoly for decades, these agencies faced headwinds such as slowing economic growth in Japan and digitalization in the ad industry.

We initiate coverage of Hakuhodo DY Holdings, the second-largest advertising agency in Japan. Hakuhodo is an active acquirer, and its overseas business currently accounts for 15% of total billings.

While Dentsu and Hakuhodo DY Holdings have long dominated the ad market in Japan as a duopoly for decades, these agencies faced headwinds such as slowing economic growth in Japan and digitalization in the ad industry.