Rakuten Group, Inc. · TSE:4755
Rakuten — Q4 2024 Earnings Presentation
72 slides from Rakuten's earnings presentation, Feb 14, 2025
Slide 1: FY2024 Fourth Quarter and Full Year Consolidated Financial Results
FY2024 Fourth Quarter and Full Year Consolidated Financial Results February 14, 2025 Rakuten Group, Inc.
Slide 2: Agenda
Agenda 1 FY 2024 Earnings Summary 2 Segment Results ・Internet Services Segment ・FinTech Segment ・Mobile Segment 3 Finance 4 AI 2
Slide 3: 1. FY 2024 Earnings Summary
1. FY 2024 Earnings Summary 3
Slide 4: Triple 20
Triple 20 +20% Marketing productivity +20% Operational productivity Data Group Services +20% Productivity for clients 4
Slide 5: Promoted Triple Project to Generate JPY 10.5bn Profit in FY2024
Promoted Triple 20 Project to Generate JPY 10.5bn Profit in FY2024 Main initiatives for FY 2024 Profit generated by using AI FY2025 target Customer support AI-based operational improvements ~2x YoY AI coding Used AI in coding and code reviews Ads Improved the accuracy of targeted advertising using A
Slide 6: Rakuten Ecosystem Expanding Centering on Mobile
Rakuten Ecosystem Expanding Centering on Mobile モバ イル * CAC = Customer Acquisition Cost 6
Slide 7: 28 years of consecutive revenue growth since founding
* FY 2024 Consolidated Revenue JPY 2.3 tn 28 years of consecutive revenue growth +10.0% YoY since founding Mobile 1997~ 2003~ 2010~ 2014~ FinTech Internet Services Adjustments 1997 2004 2012 (inter-segment transactions etc) * Before 2011, IFRS had not yet been adopted. Financial results were based o
Slide 8: 34.4% of Consolidated Revenue Growth in FY 2024 Attributed to Rakuten Mobile
34.4% of Consolidated Revenue Growth in FY 2024 Attributed to Rakuten Mobile Growth not Rakuten Mobile attributable to revenue growth and Rakuten Mobile (JPY bn) Group revenue uplift from Rakuten Mobile subscribers* FY2023 FY2024 Consolidated Consolidated Revenue Revenue *Uplift for each month is ca
Slide 9: Rakuten Mobile Subscribers Drive Usage of Group Services
Rakuten Mobile Subscribers Drive Usage of Group Services Comparison of total GTV for each service over the past year between Rakuten Mobile subscribers and non-subscribers with similar purchasing patterns before becoming Mobile subscribers* (Rakuten Ichiba) +46.9% +14.9% +27.9% * Difference in avera
Slide 10: Difference in Number of Services Used by Those With and Without a Rakuten Mobile
Difference in Number of Services Used by Those With and Without a Rakuten Mobile Subscription Grows Over Time Rakuten Mobile (MNO B2C): Changes in service usage by subscribers and non-subscribers over two years since signing a contract* 3.02 3.17 2.76 2.47 2.05 +2.36 +2.43 +2.24 services 1.23 +2.09
Slide 11: Achieved All Earnings Targets Set at the Beginning of FY
Achieved All Earnings Targets Set at the Beginning of FY 2024 Consolidated Rakuten Mobile Non-GAAP OI Profit Self-funding at the Monthly EBITDA for the Full Year Group Level Profit Achieved Achieved Achieved 11
Slide 12: Achieved Profitability in FY2024 Non-GAAP OI and IFRS OI
Achieved Profitability in FY2024 Non-GAAP OI and IFRS OI Significant improvement in profitability at Rakuten Mobile, robust growth in the Internet Services and FinTech segments, and cost improvements through the implementation of the Triple 20 Project led to consolidated annual profit for the first
Slide 13: Rakuten Mobile Achieved Monthly EBITDA Profitability
Rakuten Mobile Achieved Monthly EBITDA Profitability * Achieved profitability through strong subscriber acquisition and increased ARPU due to improved network quality, ongoing cost control, and increased ad revenue due to the Rakuten Mobile Saikyo Thanks Festival held in December 2024 Rakuten Mobile
Slide 14: Established Self-Funding at the Group Level
Established Self-Funding at the Group Level Covered capital needs in FY2024 without relying on new debt at Rakuten Group, Inc. Internet Services EBITDA*2*3+ CF from FinTech*4 Mobile business EBITDA JPY 175.8 bn JPY - 110.5 bn Working capital improvements + and Rakuten Mobile self funding*5 (lease fi
Slide 15: FY 2025 Earnings Targets
FY 2025 Earnings Targets Further improve Rakuten Mobile consolidated full-year Non-GAAP OI EBITDA profitability Financial indicators are described in 3. Finance section below 15
Slide 16: 2. Segment Results
2. Segment Results 16
Slide 17: Internet Services Segment
Internet Services Segment 17
Slide 18: Internet Services Segment: FY 2024 Financial Highlights
Internet Services Segment: FY 2024 Financial Highlights ◼ Despite temporary factors*1 that hindered YoY growth, steady revenue growth was achieved, primarily in the Domestic E-Commerce and International divisions ◼ Non-GAAP OI increased significantly due to the International division turning profita
Slide 19: Internet Services Segment: FY 2024 Key KPIs
Internet Services Segment: FY 2024 Key KPIs Domestic EC Domestic EC GMS under same Investment business GMS*1 YoY conditions IRR - 1.5% Calculation excluding impact of 4.6% + 17% YoY SPU/0/5 rule revisions (Dec YoY 2023), end of nationwide travel JPY 6.0 tn support (July 2023), transfer of Payment On
Slide 20: Domestic EC: FY 2024 Financial Results
Domestic EC: FY 2024 Financial Results Excluding temporary factors, top line was boosted mainly by Rakuten Ichiba and Rakuten Travel, and efforts to improve the profitability of growth investment businesses were successful, resulting in a significant increase in profits Aiming for mid- to high-singl
Slide 21: Increased GMS due to Higher Penetration of Rakuten Mobile Users
Increased GMS due to Higher Penetration of Rakuten Mobile Users Rakuten Mobile subscribers have 1.5x higher GMS on Rakuten Ichiba on average than non-subscribers, and 1.1x higher GTV on Rakuten Travel (see slide 9) An increase in the number of Rakuten Mobile subscribers into each business leads to a
Slide 22: Rakuten Mobile's Saikyo Thanks Festival held in Dec 2024
Rakuten Mobile’s Saikyo Thanks Festival held in Dec 2024 – A Big Success Distributing coupons to Rakuten Mobile subscribers No. of customers sent from Rakuten Link that can be used in over 30 group services app to Rakuten Ichiba (millions) Rakuten Mobile Saikyo Thanks Festival Luxury benefits appear
Slide 23: Improving Customer Experience with AI
Improving Customer Experience with AI Utilizing personalization technology and LLM, able to provide search and product discovery experiences that are more tailored to user needs, and by suggesting products to users through personalized feeds, able to stimulate latent purchasing demand Review Summary
Slide 24: Merchant Management Support Using AI
Merchant Management Support Using AI Rakuten Ichiba has been offering the store management support tool "RMS AI Assistant Beta Version" since March 2024 Product name Function name Product description creation support AI R-Storefront (Product management) Product image processing support AI AI to help
Slide 25: RMS AI Assistant Beta Version Used by Over 30,000 Merchants Since Launch
RMS AI Assistant Beta Version Used by Over 30,000 Merchants Since Launch As of Jan 2025, 64% of merchants have used the service Not yet used Merchants Business 9.1% 36% used at least 17.7% efficiency once 10.0% improved RMS AI Assistant 64% Survey conducted in Jun 2024 *2 50% showing satisfaction Us
Slide 26: International BU: Non-GAAP OI Turned to Profit in FY2024
International BU : Non-GAAP OI Turned to Profit in FY2024 *1*2 Strong revenue growth driven by Rakuten Kobo and Rakuten Viber Cost-cutting and profitability improvement initiatives in each business including Rakuten Rewards have been successful, resulting in a full-year operating profit Revenue (USD
Slide 27: FinTech Segment
FinTech Segment 27
Slide 28: FinTech Segment: FY2024 Highlights
FinTech Segment: FY2024 Highlights Achieved continuous Revenue growth and a significant OI increase due to expansion of customer base, especially Rakuten Bank and Rakuten Securities Direct contribution profit (before indirect costs) of the FinTech segment exceeded JPY 200bn for the first time Revenu
Slide 29: FinTech Segment: FY2024 Key KPIs
FinTech Segment: FY2024 Key KPIs Rakuten Card Rakuten Bank Rakuten Bank Shopping GTV Accounts*1 Deposit Balance*1*2 + 13.7% YoY + 11.6% YoY + 16.9% YoY JPY 24.0 tn 16.48 mm JPY 12.0 tn Surpassed 12mm Accounts (Jan ’25) Rakuten Securities Rakuten Securities Rakuten Securities General Accounts NISA Ac
Slide 30: Rakuten Card: Significant Growth in Operating Income due to Increased Revenue
Rakuten Card: Significant Growth in Operating Income due to Increased Revenue on GTV Expansion and Higher Margin Continuous increase in Shopping GTV due to expansion of customer base and increase in average spend per customer contributed to revenue growth Achieved significant OI growth for the full
Slide 31: Rakuten Payment: Achieved Profitability for the Full Year
Rakuten Payment: Achieved Profitability for the Full Year. Aiming Further Growth Achieved profitability in Operating Income for the full year due to increased revenue on GTV expansion and ongoing cost control Aiming further increase in Operating Income for FY2025 Revenue*1*2 (JPY bn) Non-GAAP Operat
Slide 32: Rakuten Bank: Performance Highlights
Rakuten Bank: Performance Highlights (J-GAAP, Consolidated, Nine months ended Dec. 2024) *1 Interest income grew significantly due to an increase in various assets under management backed by growth in the number of accounts and deposit balances, as well as the policy interest rate hike. Accelerated
Slide 33: Rakuten Securities: Customer Base Expansion, Diversification of Revenue Mix
Rakuten Securities: Customer Base Expansion, Diversification of Revenue Mix Customer base significantly expanded due to zero domestic stock commissions (Oct. 2023) and the largest number in the industry* under new NISA Achieved substantial OI growth compared to Q4/23 right after zero commissions led
Slide 34: Collaboration with Mizuho Financial Group: Latest Progress
Collaboration with Mizuho Financial Group: Latest Progress Expanding collaborative services through deepening the alliance. We aim to further strengthen collaboration to achieve the continued expansion of FinTech ecosystem Payment Product and Service IT Administrative Integration Collaboration*1 Coo
Slide 35: Mobile Segment
Mobile Segment 35
Slide 36: Mobile Segment: FY 2024 Highlights
Mobile Segment: FY 2024 Highlights Rakuten Mobile's profitability improved significantly on a large increase in subscribers with improved network quality and higher ARPU Rakuten Symphony successfully increased revenue and cut costs by reviewing its operational structure while executing on projects R
Slide 37: Rakuten Mobile
Rakuten Mobile
Slide 38: Rakuten Mobile: Financial Highlights
Rakuten Mobile: Financial Highlights OI and EBITDA improved significantly due to increased service revenue, mainly due to improved ARPU Aiming for full-year EBITDA profitability in FY2025 Revenue (JPY bn) Non-GAAP Operating Income*3 EBITDA*3*4 and PMCF*5 (JPY bn) +38.0% YoY Q1/23 Q4/23 Q4/24 Q1/23 Q
Slide 39: Rakuten Mobile Achieved Monthly EBITDA Profitability
Rakuten Mobile Achieved Monthly EBITDA Profitability Strong subscriber acquisition and higher ARPU on improved network quality, continuous cost control, and increased ad revenue due to the Rakuten Mobile Saikyo Thanks Festival held in December 2024, led to EBITDA profit in the month of December 2024
Slide 40: Rakuten Mobile: Main KPIs
Rakuten Mobile: Main KPIs Total Subscribers*1*2 8.30mm 1.38% JPY 2,856 +40.3% MNO Service Revenue *5 (JPY mm) YoY 46,561 43,251 40,237 36,142 33,178 30,484 28,213 26,526 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 *1: Total of MNO, MVNE, and MVNO subscribers, including BCP, etc. subscribers. BCP
Slide 41: Rakuten Mobile Subscribers Increased by 1.55 million in 2024
Rakuten Mobile Subscribers Increased by 1.55 million in 2024 As network quality improved and awareness of the service increased, subscribers grew significantly since spring 2024, especially B2C subscribers In Q4/24, some B2B subscribers were transferred to BCP and others lines. Excluding this transf
Slide 42: Q4/24 B2C MNO Acquisitions Even Exceeded Q1/24 Level
Q4/24 B2C MNO Acquisitions Even Exceeded Q1/24 Level which included the Spring Peak Season New subscriber acquisitions grew YoY every quarter in FY 2024 Q4/24 also saw a large increase YoY, achieving the second highest number of acquisitions after Q2/24 +43.4% YoY +38.1% +15.6% +22.3% YoY YoY YoY Q1
Slide 43: Churn Increased Slightly due to Increased Market Liquidity
Churn Increased Slightly due to Increased Market Liquidity While closely monitoring the market, continuing to work on improving network quality and promoting subscriber acquisitions Adjusted MNO churn* 2.10% 1.68% 1.46% 1.38% 1.28% 1.22% 1.17% 1.12% Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 *
Slide 44: MNO Acquisition from Existing Rakuten Ecosystem Users are Rising
MNO Acquisition from Existing Rakuten Ecosystem Users are Rising *1 Various Rakuten Mobile subscriber promotion measures aimed at existing Rakuten Ecosystem users *1 have proved successful. Plan to continue strengthening our reach to existing Ecosystem users *1, increasing acquisition of highly loya
Slide 45: By Demographics, Subscribers are Growing Mainly Among Younger Generations
By Demographics, Subscribers are Growing Mainly Among Younger Generations Subscribers in each age group has grown as a result of promoting the use of the SAIKYO Family, Youth and Kids programs 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% ~12 13~22 23~29 30~34 35~39 40~44 45~49 50~54 55~59 60~ 45
Slide 46: Rakuten to Launch Spring Sales Campaign to Attract Younger Generation
Rakuten to Launch Spring Sales Campaign to Attract Younger Generation and Users of Rakuten Ecosystem 46
Slide 47: ARPU Trends
ARPU Trends *1 In addition to an increase in data usage, ARPU increased due to the introduction of paid options and higher ad revenue ARPU for Dec-24 exceeded 3,000 yen, thanks to the increase in ad ARPU following the Rakuten Mobile Saikyo Thanks Festival This Saikyo Thanks Festival is expected to b
Slide 48: Plan to Increase ARPU
Plan to Increase ARPU Continued organic growth in data ARPU, along with increased ad and option revenues, to drive ARPU growth Data Others Organic increase in data usage over time Growing ad ARPU Rakuten Mobile Saikyo Thanks Festival to be held regularly. Increase in data usage as 5G usage exp
Slide 49: Launch of Rakuten AI for Business, a Generative AI Service for Corporates
Launch of Rakuten AI for Business, a Generative AI Service for Corporates Available as a solution service for Rakuten Mobile's corporate plans Priced at JPY 1,100 (including tax) per license per month No need to build a specialized infrastructure at each company. No initial cost. Low-priced monthly
Slide 50: Promoting Capex to Further Improve Network Quality
Promoting Capex to Further Improve Network Quality Network quality is an important driver for acquiring new subscribers. In 2025, we expect capex to be approximately JPY 150bn to improve signal quality in stations and subways, reducing coverage holes by utilizing Platinum Band, and promoting forward
Slide 51: Updates on Project with AST SpaceMobile
Updates on Project with AST SpaceMobile Pilot test of commercial service scheduled in Japan in spring 2025 Planning to launch approximately 60 commercial satellites over 2 years. Aiming for nationwide coverage in 2026 51
Slide 52: Rakuten Symphony
Rakuten Symphony
Slide 53: Rakuten Symphony: Business Updates
Rakuten Symphony: Business Updates Starting two new Open RAN PoCs With growth expansion in mind, aiming to become a leading network software company Announced on Announced on Feb 13, 2025 January 21, 2025 Kyivstar Telkom Kenya Kenya Integrated network and online services Converged connectivity and o
Slide 54: 3. Finance
3. Finance 54
Slide 55: Solid Improvement in Losses Resulting in Consolidated Pre-Tax Profit in FY 2024
Solid Improvement in Losses Resulting in Consolidated Pre-Tax Profit in FY 2024 Continue to drive towards bottom line profitability Net income attributable to owners of Non-GAAP／ IFRS OI (JPY bn) Income before income tax the Company FY2020 FY2021 FY2022 FY2023 FY2024 FY2020 FY2021 FY2022 FY2023 FY20
Slide 56: Reconciliation Items between Non-GAAP and IFRS Operating Income for FY 2024
Reconciliation Items between Non-GAAP and IFRS Operating Income for FY 2024 (JPY bn) FY2023 FY2024 YoY Main Factors Non-GAAP Operating Income (Loss) (153.0) 7.0 +160.1 Amortization of Intangible Assets (13.6) (6.8) +6.7 Share Based Compensation Expenses (14.3) (15.9) (1.6) One-Off Items (31.9) 68.7
Slide 57: FY2024 IFRS Operating Income and Items Below
FY2024 IFRS Operating Income and Items Below (JPY bn) FY2023 FY2024 YoY Main Factors IFRS Operating Income (Loss) (212.9) 53.0 +265.8 Financial Income and Expenses 8.8 (27.7) (36.5) Equity Method Investment Gains (Losses) (13.7) (9.0) +4.7 Income (Loss) before Income Tax (217.7) 16.3 +234.0 Income T
Slide 58: Our Commitment: Financial Discipline
Our Commitment: Financial Discipline ➢ ➢ ✓ ✓ ➢ ✓ ➢ ➢ ✓ ✓ *1: Based on IFRS accounting. *2: Total interest-bearing debt from non-FinTech businesses (bonds and borrowings + lease liabilities) – Cash from non-FinTech businesses (cash and cash equivalents from non-FinTech businesses + listed securit
Slide 59: Non-FinTech Net Interest-bearing Debt / Non-FinTech Non-GAAP EBITDA
Non-FinTech Net Interest-bearing Debt /Non-FinTech Non-GAAP EBITDA *1*2 *3 Aim for Non-FinTech net interest-bearing debt*1*2 / Non-FinTech Non-GAAP EBITDA*3 to be within 5x by FY 2027 700,000 600,000 Non-FinTech total interest-bearing debt*1*2 500,000 Non-FinTech net interest-bearing debt*1*2 400,00
Slide 60: Financial Strategy
Financial Strategy Interest-bearing debt Interest-bearing debt maturing’ in 2025 maturing’ after 2026 by fH Already addressed £3, Diverse funding options o All bonds maturing in 2025 have been funded (including replacement of hybrid bonds) (In February 2025, a portion of the 2"¢ and 4th domestic sub
Slide 61: 4. AI
4. AI 61
Slide 62: Rakuten's AI-nization Plan
Rakuten’s AI-nization Plan Vision Augment human creativity with the power of AI Strategy Unique Data Online + Offline Growth Assets Channels “Flywheel” Execution Wave 1 Wave 2 Wave 3 Deep Learning at Scale Rakuten AI for Business Rakuten AI for Consumers 62
Slide 63: 2024: A Year of Strong Execution in AI
2024: A Year of Strong Execution in AI 35+ products, services, and features launched across Ecosystem ■ Deep Learning Applications ■ Rakuten AI for Business Rakuten Link AI ■ Rakuten AI for Consumers Rakuten AI for Rakutenians Rakuten Universal Rakuten AI 2.0 & 2.0 mini ■ Large Language Models Rakut
Slide 64: Deep Learning Applications are Delivering Results
Deep Learning Applications are Delivering Results Scaling foundational technologies across Ecosystem boosts sales and customer satisfaction SEMANTIC SEMANTIC DYNAMIC SEARCH RECOMMENDATION AD DISPLAY Deliver better results by understanding what Propose new options that customers More relevant ads cus
Slide 65: Rakuten AI for Rakutenians
Rakuten AI for Rakutenians 30,000+ employees have used AI to augment and automate everyday tasks, with 8,000+ using it daily Time to create sales materials Time to compose sales-related emails 48 less 54 less Average approx. Average of approx. 241 4h 50min/month, per person 90 hours 1h 48min a day,
Slide 66: Launched January 29th, 2025: Rakuten AI for Business
Launched January 29th, 2025: Rakuten AI for Business A new offering built on our learnings from Rakuten AI for Rakutenians that makes the power of AI accessible to Rakuten’s business partners, regardless of size, budget, or technical proficiency Designed for Japanese Business Trained extensively on
Slide 67: Rakuten AI for Consumers
Rakuten AI for Consumers Rakuten Link AI (October 2024) and Rakuten AI Assistant Beta (November 2024) are early milestones towards building a useful, trustworthy, ecosystem-wide AI companion for Rakuten customers OCTOBER 2024 AVAILABLE IN OPEN BETA Assistant Making generative AI accessible to One AI
Slide 68: Rakuten AI LLMs: High Performance. High Efficiency. Highly Collaborative.
Rakuten AI LLMs: High Performance. High Efficiency. Highly Collaborative. Our portfolio-of-models approach solves business problems with maximum flexibility and cost-effectiveness Rakuten AI LLMs: Unique Advantages Enables Smart Tradeoffs Built for Japanese Business Empowers the Community Helps Raku
Slide 69: Looking Forward: Rakuten's AI Priorities for 2025
Looking Forward: Rakuten’s AI Priorities for 2025 Staying the course with our proven strategy of making AI accessible, powerful, and useful for every business, customer, and partner in the Rakuten Ecosystem Scale the Scale Rakuten AI Scale Rakuten AI Foundation for Business for Consumers by continui
Slide 70: Looking Forward: Rakuten AI Innovation Platform
Looking Forward: Rakuten AI Innovation Platform Our operational model to accelerate AI development and deployment with the highest levels of efficiency Applications Rakuten AI for Business | Rakuten AI for Consumers | Rakuten AI Assistant | Responsible AI + Governance Analytics + Experimentation Uni
Slide 71: Rakuten
Rakuten
Slide 72: Forward-looking statements disclaimer
This presentation includes forward-looking statements that reflect management’s current assumptions and expectations of future events, and accordingly, they are inherently susceptible to uncertainties and changes in circumstances and are not guarantees of future performance. Actual results may diffe