Rakuten Group,Inc. Q1 FY2026 earnings call

Ecosystem Synergy

• Rakuten's connected ecosystem of 70 services has 45.88 million monthly active transacting users, driven by a single common brand, shared Rakuten ID and unified points program. Between 2020 and 2025, 38.71 million new users joined the ecosystem, with an average of 4.6 services used per new user.
• Customers using two segments generate 5.4x more revenue than single-segment customers, and three-segment customers generate 13.5x more revenue. Churn rate drops sharply as the number of services per user increases: 85% of new users for mobile and fintech are acquired from existing ecosystem users, enabling lower customer acquisition cost (CAC) and higher lifetime value (LTV) via a low-CAC acquisition → high-LTV upsell strategy.

AI Strategy

• Rakuten holds unique, rare combined online and offline user data, and AI amplifies ecosystem advantage by improving personalization, expanding use cases, and differentiating transaction capabilities that external general AI agents cannot easily replicate.
• The company is pursuing a two-pronged AI agent strategy: building domain-specialized agents for each service, and a cross-ecosystem super agent that can plan and execute multi-service tasks to capture early user intent, moving Rakuten into upper-funnel discovery.
• AI investment covers the full infrastructure stack, with a hybrid strategy of partnering with top global AI firms (Anthropic, OpenAI) while building custom, cost-efficient domain models trained on Rakuten's proprietary data. 11 AI agents are already live across core services, including Rakuten Travel which contributed to the segment's strong GTV growth.

Overall Financial Results

• Consolidated revenue reached a Q1 record of 643.6 billion yen, up 14.4% YOY. Non-GAAP operating income was 36.6 billion yen, up 36.3 billion yen YOY, marking the first Q1 profit since Rakuten's full entry into mobile. EBITDA hit 108.8 billion yen, the first time Q1 EBITDA exceeded 100 billion yen.

Fintech Segment Reorganization

• Planned reorganization will enable internal funding cycles to reduce external high-interest debt, accelerate cross-service usage via integrated applications, commonize corporate and personal customer bases, and enable seamless AI-powered financial services with centralized user data and streamlined eKYC verification.

1. Internet Services (Shopping, Travel): Revenue of 317.6 billion yen, accounting for 49.3% of total consolidated revenue. Non-GAAP operating income was 21.2 billion yen, a 65.6% year-on-year (YOY) increase. Key sub-segment results: Domestic EC gross merchandise sales (GMS) grew 4.8% YOY to 1.5 trillion yen, with 4.0% revenue growth and 29.2% operating income growth to 31 billion yen; Rakuten Travel GTV grew 16.4% YOY, driven by 69.7% growth in inbound demand and 8.1% growth in domestic travel; Rakuten Advertising revenue grew 13% YOY to 61.9 billion yen; International revenue reached 459 million USD, a 7% YOY increase, with Rakuten Viki growing steadily. The company will terminate the Rakuten France marketplace by the end of FY2026.

2. Fintech: Revenue of 275.3 billion yen, accounting for 42.8% of total consolidated revenue, growing 23.1% YOY. Non-GAAP operating income was 58.5 billion yen, a 33.8% YOY increase. Key KPIs: Rakuten Card shopping GTV grew 18.5% YOY to 6.8 trillion yen, with non-GAAP operating income up 15.7% to 16.8 billion yen; Rakuten Bank reached 18.07 million accounts (up 7.3% YOY), deposit balance of 12.9 trillion yen (up 12.9% YOY), ROE of 21.7% and capital adequacy ratio above 10%; Rakuten Securities surpassed 14 million general accounts as of April 2025, with 7.53 million NISA accounts and deposited assets of 50.3 trillion yen (up ~40% YOY), operating income up 92.5% YOY to 14.6 billion yen.

3. Mobile: Revenue of 131.2 billion yen, accounting for 20.4% of total consolidated revenue, growing 18.5% YOY. Non-GAAP operating loss was 38 billion yen, a 13.3 billion yen improvement YOY. Rakuten Mobile (core consumer business) revenue grew 23.9% YOY to 108 billion yen, with a 12.7 billion yen improvement in non-GAAP operating income; subscriber count reached 10.36 million, with a net increase of 373,000 in Q1 (15% higher than last year's Q1), and churn improved to 1.76% (down from 1.99% QoQ, 1.45% in April). Pre-marketing cash flow (excluding growth investment costs) reached 28.7 billion yen. Rakuten Symphony (enterprise business) is growing steadily with increasing customers and partners.

• Management maintained the long-term target of reducing net debt to EBITDA for non-fintech businesses to below 5x by 2027, and maintained medium/long-term targets of a 5% medium-term and 10% long-term consolidated equity ratio.
• The company set a slightly conservative year-end FY2026 target of ~6x for the non-fintech net debt to EBITDA ratio; the ratio already improved to 5.6x as of end-March 2025, beating the interim target, driven by higher EBITDA and increased valuation of listed securities.
• Management confirmed confidence in continued profitability improvement for the full year driven by ecosystem synergy and AI-enabled cost reduction and revenue growth, after a strong Q1 start to FY2026.

• Labor shortages are slowing base station construction for Rakuten Mobile, though the company is mitigating this by bringing more upstream construction processes in-house to accelerate deployment.
• Persistently high inflation could weaken consumer consumption momentum and increase logistics, labor, and infrastructure costs; the company noted it can absorb moderate cost increases via AI-driven efficiency gains, but extreme hyperinflation would create negative impacts.
• The company maintains high gross interest-bearing debt; while proactive maturity management is progressing, it remains exposed to market risks from foreign exchange and interest rate fluctuations for future debt financing.
• The planned fintech reorganization is still in progress, and full synergy realization has not yet been confirmed.

Q: Yomiuri Newspaper asked: Rakuten recorded its first profit since entering mobile in Q1 FY2026. How do you assess this result, and what is your expectation for full-year profitability? / A: Management noted the profitability improvement reflects the long-expected LTV growth from ecosystem synergy between mobile and other Rakuten businesses, which is now becoming explicit. They confirmed the strong Q1 momentum will continue, with additional AI efficiency gains and fintech reorganization expected to drive further profitability improvement throughout the full year, and management expressed confidence in continued strong results going forward.

Q: Nikkan Kogyo asked: Do you have any new service plans for Rakuten Mobile, and do you plan to raise prices following competitor price increases? / A: Management confirmed they will expand services for under-served segments including children and seniors, building on the positive reception of its fraud protection insurance for elderly users, and will actively pursue content bundling partnerships where possible. They also noted they will strengthen network security and fraud prevention. Management declined to comment on specific pricing plans, noting Rakuten is still a latecomer with low market share, so pricing decisions will consider the full competitive landscape.

Q: Okasan Securities asked: What are the core drivers of the planned fintech reorganization, will it reduce group financial leverage, and why is it structured to benefit minority shareholders? / A: The primary driver is reducing exposure to high external interest rates: existing out-of-group funding for Rakuten Card and Rakuten Securities incurs high interest costs, so internalizing funding via the reorganized structure cuts interest expense. Additional drivers include enabling organizational synergies and supporting the development of a single integrated fintech app for AI-powered seamless services. CFO Kaga clarified that fundraising itself is not an objective of the reorganization; the core goal is to stop fund outflows to external lenders and unlock internal synergies.

Q: Asset Management One asked: The non-fintech net debt to EBITDA ratio improved to 5.6x, ahead of the FY2026 year-end target of ~6x. What is behind this improvement, and how will fintech reorganization impact leverage? / A: The improvement came from two factors: first, a strong increase in group EBITDA that is growing ahead of plan, and second, an increase in the market valuation of Rakuten's holding of listed securities, which is included in net debt calculation and reduced the net leverage ratio. Management confirmed the company is on track to hit long-term deleveraging targets, with a conservative base case of flat net interest-bearing debt for the full year. On fintech reorganization, management reiterated that financing is not the core objective and declined additional comment.