4755.T

• Consolidated Financial Summary

  • Q2 FY2026 consolidated revenue reached a record high JPY 665.5 billion, up 11.6% YoY; consolidated EBITDA also hit a record JPY 150.3 billion, up 11.7% YoY.
  • Non-GAAP operating income was a record JPY 42 billion, up ~110% YoY; IFRS operating income was JPY 20 billion, more than double the year-ago figure.
  • Net income attributable to owners of the parent returned to positive for the first time since Q2 2020, reaching JPY 227.2 billion, making this the fourth consecutive positive quarter for pre-tax income.

• FinTech Business Reorganization

  • Rakuten Card, Rakuten Bank, and Rakuten Securities will be integrated under the Rakuten Bank umbrella, effective October 2027 (full first fiscal year ending March 2028). The insurance business will remain separate for the time being.
  • Management expects total synergies of ~JPY 33 billion (JPY 25 billion financial, JPY 8 billion marketing) in FY ending March 2028, growing to JPY 85 billion in total annual synergies by FY ending March 2030.
  • Synergies will come from cross-customer acquisition, deeper product penetration, and improved deposit growth: customers who use both Rakuten Card and Rakuten Bank (via the Money Bridge feature) have 4.3x higher deposit balances than non-users.
  • This reorganization is not for fundraising purposes, and management has no current plan to sell shares in Rakuten Bank.

• AI Strategic Development

  • Rakuten is leveraging AI to amplify ecosystem synergies via three strategic pillars: engage (more personalized user touchpoints), expand (broaden usage scenarios and cross-service use), and differentiate (end-to-end transaction completion that generic AI agents cannot deliver).
  • LLM implementation on the Rakuten Ichiba e-commerce platform has already delivered measurable gains: A/B testing shows attributed orders up 0.52% and attributed GMS up 0.87%, equal to a JPY 12.8 billion annualized GMS uplift; AI assistance reduced time-to-purchase by 41% and increased average order value by 17%.
  • On Rakuten Travel, AI-assisted bookings have 13% higher average order values and 29% more family/group bookings, reflecting AI's ability to simplify complex trip planning.
  • 17 Rakuten services have already launched integrated AI agents, with 7 more launching imminently and over 50 in development. Rakuten recently announced the Rakuten AI Super Agent, which connects service agents across the ecosystem, handles complex cross-service tasks, and integrates with third-party tools and external AI agents to drive more traffic to ecosystem partners.

• Balance Sheet and Financial Policy

  • The firm recorded JPY 17 billion in one-off impairment losses on logistics fixed assets this quarter, which eliminated all remaining balance sheet risk for company-owned e-commerce logistics warehouses after additional impairments booked in FY2025. Management will convert the warehouses to internal use to reduce long-term operating costs and improve e-commerce competitiveness.
  • Credit spreads on Rakuten's corporate bonds and CDS spreads have improved steadily over the past year, reflecting ongoing market improvement in the firm's financial standing.
  • Financial policy remains focused on self-funding mobile investment needs without excessive external financing. The firm raised ~JPY 200 billion via share sales of held investments this quarter, redeemed all perpetual subordinated bonds and JPY 20 billion in senior bonds without refinancing, and plans to redeem all upcoming December 2026 bonds with cash on hand.

• No formal full-year fiscal guidance was revised or reaffirmed in this presentation, but management reaffirmed its original JPY 200 billion 5G network investment plan, which is now largely complete. • Management projects that the integrated FinTech business will deliver JPY 85 billion in annual synergies by the fiscal year ending March 2030, up from an expected JPY 33 billion in FY ending March 2028. • Rakuten Mobile management expects churn rate and ARPU trends to continue improving, and the segment to keep progressing toward sustained profitability as pre-marketing costs normalize. • Management expects ongoing AI-driven revenue and margin improvements across all segments as more AI agent deployments roll out over the coming quarters.

1. Internet Service Segment: Revenue of JPY 338.1 billion, 4.2% year-over-year (YoY) growth; Non-GAAP operating income of JPY 23.1 billion, 68.6% YoY growth. This segment contributed 50.8% of total consolidated revenue. Key sub-segment results: domestic e-commerce GMS grew 5.3% YoY to JPY 1.5 trillion; Rakuten Travel GTV grew 17.2% YoY, with global GTV growing 78.5% YoY driven by Rakuten Travel Xchange; advertising revenue grew 15.6% YoY to JPY 65.6 billion; Rakuten France will be closed, while international assets including Viber, Viki, and Rakuten Kobo see steady profitability improvement.
2. FinTech Segment: Revenue of JPY 295.4 billion, 27% YoY growth; Non-GAAP operating income of JPY 69.2 billion, 60.1% YoY growth. This segment contributed 44.4% of total consolidated revenue. Key sub-segment results: Rakuten Card shopping GTV grew 9.4% YoY to JPY 7.1 trillion, Non-GAAP operating income grew 16.2% YoY to JPY 17.4 billion; Rakuten Bank reached 18.46 million accounts, deposits grew 13.9% YoY to JPY 13.3 trillion, ordinary profit grew 26.1% YoY to JPY 30.2 billion, with a capital adequacy ratio of 11.4% and ROE of 22%; Rakuten Securities reached 14.39 million general accounts, assets under custody grew 48.3% YoY to exceed JPY 60 trillion, with Japanese GAAP operating income more than 2.4x YoY; Rakuten Payment revenue grew 12.2% YoY to JPY 29.1 billion, Non-GAAP operating income grew nearly 80% YoY to JPY 3.2 billion; Insurance business posted revenue of JPY 20.7 billion and operating income of JPY 1.5 billion, with ongoing restructuring to improve profitability.
3. Mobile Segment: Revenue of JPY 121.4 billion, 8.3% YoY growth. This segment contributed 18.2% of total consolidated revenue. Non-GAAP operating loss was JPY 32.3 billion, a JPY 4.1 billion improvement YoY; EBITDA declined 28.4% YoY, primarily due to higher energy costs for Rakuten Electricity and pre-marketing expenses for new customer acquisition. Excluding pre-marketing costs, the segment generated JPY 28 billion in profit, up 11.8% YoY. Key metrics: total mobile accounts reached 10.8 million, churn rate fell to 1.3%, 20GB+ user share increased 3.6 percentage points, and ARPU is growing steadily; Rakuten Symphony continues to grow its customer and partner base. 5G network construction is largely complete, per original plans.

• Higher energy prices have negatively impacted profitability at Rakuten Electricity within the mobile segment in the current quarter. • Intense competition for retail bank deposits creates pressure to grow deposit balances for Rakuten Bank, which the FinTech reorganization is intended to address. • Mobile market competition remains intense, particularly during traditional peak acquisition seasons, requiring ongoing marketing investment that near-term profitability. • Prior logistics business decisions led to JPY 17 billion in one-off impairment charges this quarter, though management notes all remaining logistics balance sheet risk has now been eliminated.

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