Rakuten Group releases highlights of first quarter 2024 financial results, digital platforms and services

Overall performance


・Rakuten Group achieved year-over-year revenue growth in all three segments: Internet Services, FinTech and Mobile in the first quarter of FY2024. Consolidated revenue reached 513.6 billion yen, a record high for the first quarter, up 8.0% year-on-year.


・The Rakuten Group posted non-GAAP operating losses of 25.4 billion yen in the first quarter of fiscal 2024, a significant improvement of 43.5 billion yen year-over-year as a result of higher revenues, improved profitability in domestic growth investment activities in the European Community and foreign companies, strong performance in various FinTech companies. companies, and improved losses at Rakuten Mobile. The Group is making steady progress towards its goal of achieving profitability by fiscal year 2024. Consolidated EBITDA*1, an indicator the Rakuten Group uses to assess its ability to generate cash flow, was profitable for the quarter, recording 52 .8 billion yen, an increase of 49.3 billion yen year-on-year.


・As announced during the previous earnings results, the refinancing risk for bonds maturing in 2024 has been addressed. The liquidity shortage for corporate bonds maturing in 2025 has also been largely addressed through the issuance of 2 billion US dollar-denominated senior notes and 50 billion yen in private placement notes in April 2024. The Group is targeting early redemptions of domestic hybrid corporate bonds. bonds at their first redemption date in 2025. From 2024 onwards, the Group will continue to increase cash flow within the group, including optimizing working capital, and reduce interest-bearing debt through various capital purchase activities, while maintaining financial stability. through a disciplined financial policy.


Internet Services segment


・The Internet Services segment achieved growth in both revenue and profit in the first quarter of 2024, with revenue of 285.7 billion yen, up 5.4% year-over-year, and non-GAAP operating income of 13.6 billion yen, up 14.8% year-on-year.


・In this segment, domestic gross merchandise sales (GMS)*2 from e-commerce reached 1.3 trillion yen, down 4.7% year-on-year, due to the effect of nationwide travel support that partially ended in July 2023 and revisions to Rakuten’s Super Point Up program in December 2023, and the reorganization of its online payments business. At the same time, GMS’s growth rate improved quarter-on-quarter (QoQ) and operating revenues have increased by approximately 20% year-on-year if temporary factors such as the transfer of various costs to domestic e-commerce are excluded. Additionally, Rakuten Travel achieved extremely strong growth in gross transaction value (GTV) for inbound travel, up 243% year-over-year.


・The advertising industry recorded an increase in revenue*3, with revenue reaching 51.8 billion yen, up 7.2% year-on-year in the first quarter of 2024.


・Rakuten’s overseas businesses continued to steadily expand their user base, especially its digital content businesses, with significant improvements in profitability. The total number of Rakuten TV users and registered Rakuten Viki users were 103 million, up 43.8% year-over-year, and 86.79 million, up 23.0% year-over-year, respectively. Overall operating income for the four overseas digital content and communications platform companies*4 has also improved significantly as the companies aim to achieve profitability in the near future.


FinTech segment


・The FinTech segment achieved high growth in both revenue and profit in the first quarter of 2024, with revenue of 193.5 billion yen, up 15.1% year-on-year, and non-GAAP operating income of 39.3 billion yen, up 47.4% year-on-year.


・Rakuten Card continued to expand its customer base and average spend per customer, driving steady growth in gross shopping transaction value to 5.6 trillion yen, up 12.5% ​​year-on-year. In addition, the company has significantly improved operating margins by keeping the level of bad debt-related costs low and optimizing marketing costs. As a result, non-GAAP operating revenues increased significantly to 15.3 billion yen, up 22.7% year over year.


・As of April 2024, Rakuten Securities had surpassed 11 million customer accounts*5, and the number of Rakuten Bank customer accounts (unconsolidated) reached 15.24 million as of March 31, 2024, an increase of 10.9% year-on-year, as customer The base of these fintech services continues to grow steadily.


・Rakuten Payment’s non-GAAP operating income for the first quarter of fiscal 2024 was 810 million yen, achieving operational profitability on a quarterly basis for the first time, thanks to measures aimed at expanding the number of trading partners and users. The Rakuten Pay app will be integrated with the Rakuten Point Card app by December 2024 and with the Rakuten Edy app in the near future. The company aims to accelerate synergies between FinTech services and strengthen its role as a key point of contact directing users to the Group’s services.


Mobile segment


・The Mobile segment posted revenues of 99.8 billion yen, up 3.6% year-over-year in the first quarter of 2024. Driven by continued cost savings and higher subscriber numbers at Rakuten Mobile, non-GAAP operating losses amounted to 71.9 billion yen, an improvement of 30.7 billion yen year-on-year.


・Rakuten Mobile as an individual company recorded non-consolidated revenue of 62.0 billion yen, up 7.1% year-on-year, while non-GAAP operating losses were 73.0 billion yen, an improvement of 25.9 billion yen on an annual basis. EBITDA was a loss of 33.5 billion yen, an improvement of 28.2 billion yen year-over-year. The company is implementing several initiatives to achieve monthly EBITDA profitability by 2024.


・The total number of MNO subscriptions (both individual and business) has grown significantly to 6.8 million*6 as of May 13, 2024. The adjusted MNO churn rate for the first quarter of FY2024 was 1.27%*7, with the ARPU for MNO subscribers for March 2024 was 2,024 yen*8.


Comments

*1 EBITDA = non-GAAP operating income + depreciation, etc. EBITDA also includes property tax payments.


*2 Domestic GMS = Rakuten Ichiba, Rakuten Travel (GTV on a checkout basis), Rakuten Books, Rakuten Books Network, Rakuten Kobo (domestic), golf company, Rakuten Fashion, Rakuten Dream companies, Rakuten Beauty, Rakuten 24 and other daily necessities stores, Rakuten Car , Rakuten Rakuma, Rakuten Rebates, Rakuten Seiyu Netsuper, Rakuten Ticket, cross-border trade, etc. Excluding some tax-free companies and including consumption tax.

*3 Total sum of advertising sales in Japan recorded in each segment (Internet Services, FinTech and Mobile). Including internal group transactions.

*4 Total non-GAAP operating income of Rakuten Viber, Rakuten Viki, Rakuten Kobo and Rakuten TV.

*5 10.91 million customer accounts as of March 31, 2024.

*6 Includes Rakuten Saikyo Plan, Rakuten Saikyo Plan Business, and Rakuten Turbo plans, excluding Business Continuity Plan plans (BCP is a business plan sold for business continuity purposes). Based on provisional figures.

*7 Churn rate excluding B2C customers who cancel within the same month as activation. Churn rate for the most recent quarter divided by the average of the number of subscriptions for the end of the most recent and immediately preceding quarter. Includes individuals and businesses and excludes BCP and MVNE.

*8 Calculated based on the average of MNO subscriptions excluding MVNE and BCP for end Q1 FY2024 and end Q4 FY2023.

*Please note that information contained in press releases is current as of the date of issue.