Rakuten Group Q2 FY2023 Financial Results Highlights

・The Rakuten Group recorded its highest revenue ever for the second quarter of a fiscal year with consolidated revenue reaching 497.2 billion yen, up 9.7% year-on-year (YoY) in Q2 FY2023.

・The Rakuten Group recorded Non-GAAP operating losses of 39.4 billion yen in Q2 FY2023, a significant improvement of 41.0 billion yen YoY. Factors contributing to this marked improvement include reduced roaming costs due to the capital expenditure plan being revised in line with the new roaming agreement and the further development of Rakuten Mobile’s own base station network, as well as reduced customer acquisition and network-related costs. Rakuten Group’s consolidated Non-GAAP EBITDA was also profitable, recording 33.6 billion yen, an improvement of 50.3 billion yen YoY. The Rakuten Group expects to be Non-GAAP EBITDA positive on a consolidated basis for FY2023.

・Revenue in the advertising business in Q2 FY2023 grew significantly to 50.2 billion yen, achieving double-digit growth of 12.7% YoY^*1. The business is on track to reach 200 billion yen in revenue for FY2023.

・In Q2 FY2023, the average number of monthly active users across the Rakuten Group in Japan^*2 reached 40.5 million, up 8.2% YoY. The Rakuten Ecosystem customer base continues to expand, with the percentage of all users using two or more services over the past 12 months steadily increasing to 76.7%.

・Revenue for the Internet Services segment in Q2 FY2023 reached 294.7 billion yen, up 11.7% YoY. In this segment, domestic e-commerce revenue for Q2 FY2023 was 216.7 billion yen, achieving double-digit growth of 13.5% YoY, while domestic e-commerce gross merchandise sales (GMS)^*3 reached approximately 1.5 trillion yen for the quarter, with double-digit growth of 10.0% YoY.

・Rakuten Ichiba has continued to grow post-pandemic, with the number of purchasers increasing by 2.5% and purchase prices increasing by 3.4% YoY, respectively. In addition, advertising sales were strong as transaction value increased, contributing to earnings growth. Rakuten Travel has also recorded strong growth as travel demand recovers.

・Rakuten’s overseas businesses continue to steadily expand their customer bases, with the total number of Rakuten TV users and registered Rakuten Viki users reaching 77.7 million, up 42.1% YoY, and 74.6 million, up 25.2% YoY, respectively in Q2 FY2023.

・The FinTech segment achieved significant growth in both revenue and profit for Q2 FY2023, with revenue of 181.0 billion yen, up 13.3% YoY, and Non-GAAP operating income of 33.0 billion yen, up 31.2% YoY.

・The number of credit cards issued by Rakuten Card reached 29.24 million as of the end of June 2023, up 9.5% YoY. Rakuten Card’s shopping gross transaction value (GTV) for Q2 FY2023 grew to 5.2 trillion yen, up 16.3% YoY, and its GTV market share^*4 reached 23.6% as of May 2023.

・Rakuten Securities recorded 9.24 million customer accounts as of the end of June 2023, up 14.8% YoY. Rakuten Securities Holdings applied for listing on the Tokyo Stock Exchange Prime Market on July 4, 2023. In addition, the number of Rakuten Bank customer accounts (non-consolidated) totaled 14.05 million as of the end of June 2023, up 10.8% YoY as the customer base continues to steadily increase.

・Rakuten Payment revenue jumped to 17.0 billion yen in Q2 FY2023, up 47.1% YoY. Growing user numbers for Rakuten Pay and Rakuten Edy and an expanding merchant partner network contributed to the significant increase in sales.

・In the Mobile segment, Rakuten Mobile as an individual business recorded revenue of 52.2 billion yen, an increase of 13.3% YoY. At the same time, due to a significant decrease in revenue from the Energy business caused by Rakuten’s Denki’s rate revisions and other factors, revenue for the Mobile segment in Q2 FY2023 was 80.1 billion yen, down 0.9% YoY. The segment recorded Non-GAAP operating losses of 82.4 billion yen, an improvement of 39.1 billion yen YoY.

・Operating losses continued to contract from their peak in Q1 FY2022, the result of rising ARPU (average revenue per user) due to increased subscriber numbers and data usage following the launch of the Rakuten SAIKYO Plan and revised marketing initiatives.

・The total number of MNO subscriptions (both individual and business)^*5 was 4.91 million as of the end of July 2023 (preliminary figures). Since the launch of the Rakuten SAIKYO Plan in June 2023, churn (individual and business) has trended further downwards, hitting 1.93% in June 2023, and the increase in the number of new MNO contracts has continued to accelerate since December 2022. In Q2 FY2023 MNO ARPU (individual and business) increased to 2,010 yen, up from 1,274 yen in Q2 FY2022^*6, and average data usage also increased^*7.

・Rakuten Symphony recorded revenue of approximately $72 million in Q2 FY2023. Additional deliveries from projects are expected to be reflected in earnings in the second half of this year. In addition, the company announced on August 2, 2023 that it has signed a Memorandum of Understanding with VEON Ltd., a global digital operator that provides converged connectivity and online services, with the goal of accelerating the reconstruction of Ukraine's infrastructure through collaboration on open radio access networks (Open RAN) and digital services.

Notes
*1 Total sum of advertising sales in Japan recorded in each segment (Internet Services, FinTech and Mobile). Includes internal Group transactions.
*2 Number of active users in June 2023. Figures are for Rakuten members who earned at least 1 Rakuten Point in the relevant month.
*3 Domestic e-commerce GMS = Rakuten Ichiba, Rakuten Travel (GTV on checkout basis), Rakuten Books, Rakuten Books Network, Rakuten Kobo (domestic), golf business, Rakuten Fashion, Rakuten Dream businesses, Rakuten Beauty, Rakuten 24 and other first-party daily necessities shops, Rakuten Car, Rakuten Rakuma, Rakuten Rebates, Rakuten Seiyu Netsuper, Rakuten Ticket, cross border trading, etc. Excludes some tax-exempt businesses and includes consumption tax.
*4 Calculated by Rakuten Bank with reference to the Ministry of Economy, Trade and Industry’s Survey of Selected Service Industries (Credit Card Industry).
*5 Definition revised as of Q2 FY2023. Past figures have also been adjusted to align with the newly revised definition.
*6 Sales of each service divided by the average of the number of subscriptions at the end of the most recent quarter and the number of subscriptions at the end of the previous quarter. Q2 FY2023 figures are preliminary figures.
*7 Past figures for churn and ARPU have been adjusted to align with the change in calculation method starting in Q2 FY2023 to include the total number of individual and business subscriptions.