Rakuten Group Q1 FY2022 Financial Results Highlights

Overall Performance

・The Rakuten Group recorded revenue growth in all three segments in Q1 FY2022: Internet Services, FinTech and Mobile. Consolidated revenue achieved double-digit growth, up 11.7% year-on-year (YoY), coming to a total of 437.1 billion yen and marking the highest revenue ever recorded by the Rakuten Group in the first quarter of a fiscal year.

・In Q1 FY2022, the average number of monthly active users (number of unique users) across the Rakuten Group in Japan surpassed 36 million, up 11.2% YoY. The percentage of users who use two or more services reached a record high of 74.8%1. In addition, the percentage of Rakuten users who are also Rakuten Mobile subscribers reached 11.3%. Rakuten continues to expand synergies between its mobile business and other Rakuten services (as of March 2022)2.

・Rakuten Mobile reached 97% population coverage*3 for the Rakuten 4G network area as of the end of March 2022. Due to strategic investment in future growth including the buildout of the Rakuten Mobile service area ahead of plan in the Mobile segment, the Rakuten Group recorded Non-GAAP operating losses of 98.3 billion yen in Q1 FY2022. Excluding non-recurring operational items such as investment in the Mobile and Logistics businesses and profit fluctuation in the Investment business driven by significant market volatility, Non-GAAP operating income was 42.0 billion yen. With roaming expenses decreasing in line with the expansion of the Rakuten network area and the number of chargeable subscribers increasing, Mobile segment profitability is expected to improve as planned from Q2 FY2022 onwards.

・Looking ahead to the year 2030, Rakuten announced highlights of the "Vision 2030" mid to long-term business plan that aims to achieve sustainable topline growth, an operating income margin for consolidated results that exceeds 20%, and significant profitability for Rakuten Mobile and Rakuten Symphony.

Internet Services segment

・Revenue for the Internet Services segment was 245.8 billion yen, up 9.3% YoY, in Q1 FY2022. Segment income was 18 billion yen, down 56.7% YoY, impacted by a high 30.6 billion yen recorded in the same period of the previous fiscal year due to a valuation gain in investments made in shares of a fintech company and other factors.

・In this segment, revenue for domestic e-commerce was 182.5 billion yen, up 11.9% YoY, while operating profit was 21.5 billion yen, up 77.3% YoY. Rakuten Ichiba greatly contributed to this result, as the service continues to achieve strong growth even after the impact of increased demand due to stay-at-home trends that began two years ago in Q1 FY2020.

・In Q1, domestic e-commerce gross merchandise sales (GMS)*4 exceeded 1.3 trillion yen, up 10.0% YoY. In addition to growth within Rakuten’s e-commerce services, the number of customers using multiple Rakuten services continues to grow and contribute to the increase in total domestic e-commerce GMS, with expanded cross-use between Rakuten Ichiba and other e-commerce services such as Rakuten Seiyu Netsuper (up 48.6% YoY), Rakuten Beauty (up 23.5% YoY) and Rakuten Travel (up 43.2% YoY). In addition, Rakuten Travel’s gross transaction value (GTV) has also recovered to outperform the industry average.

FinTech segment

・In Q1 FY2022, the FinTech segment recorded revenue of 158.1 billion yen, up 4.3% YoY. Segment profit was 22.8 billion yen, a decrease of 7.3% YoY, due to factors such as proactive investment in systems designed to support the further growth of Rakuten Card, as well as decreased commission earnings and the impact of declining share prices in domestic and international markets for Rakuten Securities.

・In April 2022, Rakuten Card surpassed 26 million cards issued. In addition, a recovery in offline consumption led to a 26.1% YoY increase in shopping gross transaction value (GTV) in Q1. Rakuten Card currently commands a 22.4% market share of Japan’s shopping GTV as of February 2022, as the company makes steady progress towards achieving its Triple Three goals.

・In March 2022, Rakuten Bank surpassed 12.3 million customer accounts, the largest number among digital banks in Japan*5, and its total balance of deposits (non-consolidated) increased 36.1% YoY. As the banking industry continues its shift towards digital services, Rakuten Bank will leverage its advantage as Japan’s largest digital bank and its unique synergies with the Rakuten Ecosystem to further accelerate growth, aiming for long-term goals of reaching 30 million accounts, on scale with Japan’s megabanks, and achieving deposits of 30 trillion yen, exceeded only by Japan’s megabanks.

・Rakuten Securities surpassed 7.68 million general securities customer accounts in March 2022. Since 2018, Rakuten Securities has held the record for the highest number of new account openings in the industry6 for four consecutive years. The company ranked number one in the industry not only in the number of newly-opened NISA and iDeCo accounts7, but also total sales of investment trusts*8, which reached 691.9 billion yen in Q1 FY2022, as Rakuten Securities grows into an industry leader.

・In the Payment business, Rakuten Point Card and Rakuten Edy were introduced at all Seiyu stores nationwide as of April 2022, which already introduced Rakuten Pay and Rakuten Check. The company also launched the redesigned Netsuper app, which allows customers to place orders both at the store and online, as it continues its full-scale rollout of the “online merges with offline” (OMO) strategy of the new collaborative program between Seiyu and the Rakuten Group.

Mobile segment

・Rakuten Mobile reached 97% population coverage*3 for the Rakuten 4G network area as of the end of March 2022. The company continues to drive the expansion of both its outdoor and indoor network coverage: The total number of outdoor 4G base stations surpassed 44,000 as of the end of April 2022, and indoor coverage has also expanded as the number of "Rakuten Casa” compact antennas (femtocells) for indoor use nationwide reached 40,000 units as of March 2022. Over 90% of the total volume of data used by subscribers is consumed on the Rakuten Mobile network area (as at April 25, 2022.)

・The total number of subscriptions for the MNO and MVNO services surpassed 5.68 million*9 as of March 2022.

・The Mobile segment revenue rose to 80.4 billion yen in Q1 FY2022, a significant increase of +44% YoY. Factors contributing to increased revenue include the increased number of users who have started paying for mobile service and increased device sales. At the same time, due to the buildout of mobile base stations accelerating ahead of plan, the Mobile segment recorded losses of 135.0 billion yen. With roaming expenses decreasing in line with the expansion of the Rakuten network area and the number of chargeable subscribers increasing, Mobile segment profitability is expected to improve as planned from Q2 FY2022 onwards.

*1 Percentage of users of two or more services in the past 12 months divided by the number of users of all services in the past 12 months (as of the end of March 2022). *2 As of the end of each month, the percentage of users with a Rakuten Mobile subscription in a given month among users who have used a Rakuten Group service in the last year. *3 Night-time population coverage by outdoor base stations. The population coverage ratio is calculated based on the number of the approximately 500 meter zones used in the national census which have area coverage of more than 50%. Please check the coverage map for current coverage. In certain limited areas, as measures are still underway to close public service radio stations, only 5 MHz of bandwidth are available for the service. Once these closures are completed, 20 MHz of bandwidth will become available for service in these areas. *4 Domestic e-commerce GMS = Combined transaction amount for 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 Delivery, Rakuten 24 and other first-party daily necessities shops, Rakuten Car, Rakuten Rakuma, Rakuten Rebates, Rakuten Seiyu Netsuper, cross border trading, etc. Excludes some tax-exempt businesses, includes consumption tax. *5 As of March 2022. Research by Rakuten Bank. *6 Comparison of number of new account openings from 2018 to 2021 for major online brokers in Japan. Top five companies by number of accounts (in alphabetical order): au Kabucom Securities, Matsui Securities, Monex Securities, Rakuten Securities and SBI Securities (which, in addition to SBI Securities, also includes the number of accounts of SBI Neo Mobile Securities from April 2019 onward, SBI Neotrade Securities from October 2020 onward, and Folio from August 2021 onwards). As of March 30, 2022. Source: Rakuten Securities research. *7 NISA is a comparison of major online brokers in Japan. Top five companies by number of accounts (in alphabetical order): au Kabucom Securities, Matsui Securities, Monex Securities, Rakuten Securities and SBI Securities. iDeCo is a comparison of major iDeCo operation management institutions. As of March 30, 2022. Source: Rakuten Securities research. *8 Comparison of major brokers in Japan (in alphabetical order): Daiwa Securities, Nomura Securities, Rakuten Securities, SBI Securities and SMBC Nikko Securities. As of the October-December quarter in 2021, SBI Securities no longer discloses total sales of investment trusts. As of May 10, 2022. Source: Rakuten Securities research. *9 Number of subscribers are preliminary figures.