Rakuten Group, Inc. · TSE:4755
Rakuten — Q1 2025 Earnings Presentation
70 slides from Rakuten's earnings presentation, May 14, 2025
Slide 1: FY2025 First Quarter Consolidated Financial Results
FY2025 First Quarter Consolidated Financial Results May 14, 2025 Rakuten Group, Inc.
Slide 2: Agenda
Agenda 1 Summary 2 Segment Results ・Internet Services Segment ・FinTech Segment ・Mobile Segment 3 Finance 4 AI 2
Slide 3: 1. Summary
1. Summary 3
Slide 4: Rakuten Mobile EBITDA excluding Property Tax
Rakuten Mobile, Inc. EBITDA excluding Property Tax (JPY mm) 102 Q1/25 -25,767 -20,099 EBITDA -50,637 Profitability excluding property tax -76,730 -87,546 Positive start to achieve 2025 full-year Q1/20 Q1/21 Q1/22 Q1/23 Q1/24 Q1/25 EBITDA profit 4
Slide 5: Rakuten Group Long-Term Growth Model
Rakuten Group Long-Term Growth Model 5
Slide 6: Rakuten Mobile: Invigoration and Expansion of the Ecosystem
Rakuten Mobile: Invigoration and Expansion of the Ecosystem Rakuten Mobile subscribers in Rakuten Ecosystem are steadily increasing. New Ecosystem users triggered by mobile contracts is also increasing, contributing to the vertical and horizontal expansion of the Ecosystem Rakuten Mobile users’ pene
Slide 7: Rakuten Group Becoming an AI Powerhouse
Rakuten Group Becoming an AI Powerhouse Continue to use AI in 2025 to promote “Triple 20” More than 13,000 employees use Rakuten AI for Rakutenians, our in-house generative AI tool, on a daily basis Custom AIs in Rakuten AI for Rakutenians Coding Content Data Document Creative CRM creation analysis
Slide 8: Record high Q1 revenue
Q1/25 Consolidated Revenue + 9.6% YoY Record high (JPY bn) +10.9% YoY Q1 revenue +15.6% YoY +6.9% Increase in revenue led by: YoY FinTech: Rakuten Card on an increase in shopping GTV, and Rakuten Bank on rising interest rates Internet Services: Domestic EC driven by Rakuten Ichiba, and overseas busi
Slide 9: Higher profit in all segments
Q1/25 Consolidated Non-GAAP Operating Income + 25.1 bn (JPY bn) Higher profit in YoY +21.7% YoY +25.8% YoY all segments +14.3bn YoY (Loss improvement for Mobile) Reduced loss from increased revenue at Rakuten Mobile, and large increases in profits at Rakuten Bank and Rakuten Payment drove significan
Slide 10: Consolidated EBITDA JPY 79.9bn
Q1/25 Consolidated EBITDA*1*2 +51.4% (JPY bn) YoY Consolidated +17.0% EBITDA JPY 79.9bn YoY +17.4% YoY +16.8bn YoY Non-FinTech EBITDA: JPY 19.8 bn Q1/24 Q1/25 ■ Internet Services Segment ■ FinTech Segment ■ Mobile Segment ■ Consolidation Adjustments *1: Non-GAAP EBITDA= Non-GAAP operating income + d
Slide 11: Further Improve Consolidated Non-GAAP OI
2025 Earnings Targets While caution is needed due to macro uncertainty, no need to change targets at this time Further Improve Rakuten Mobile, Inc. Consolidated Full-Year Non-GAAP OI EBITDA Profitability Q1: JPY -6.5bn, + 20.7 bn YoY Q1: JPY -0.3 bn, +25.1 bn YoY Excluding property tax: JPY 102 mm p
Slide 12: Impact of Reciprocal Tariffs
Impact of Reciprocal Tariffs Management centered on Rakuten Ecosystem makes the company less susceptible to the effects of economic fluctuations. High growth rates maintained even under various macroeconomic conditions in the past Remaining vigilant against future uncertainties, but continuing to pr
Slide 13: 2. Segment Results
2. Segment Results 13
Slide 14: Internet Services Segment
Internet Services Segment 14
Slide 15: Internet Services Segment: Q1/25 Financial Highlights
Internet Services Segment: Q1/25 Financial Highlights ◼ Revenues and profits increased in both Domestic EC and International Business Unit ◼ Core Domestic EC businesses such as Rakuten Ichiba drove growth through increased gross merchandise sales, while Rakuten Kobo led International growth thanks t
Slide 16: Internet Services Segment: Q1/25 Key KPIs
Internet Services Segment: Q1/25 Key KPIs Domestic EC Investment Business Figures adjusted to account GMS*1 for leap year impact in prior IRR*3 year, etc.*2 3.0% 4.4% + 18.5% YoY YoY JPY 1.4 tn Rakuten Travel Domestic Advertising International BU*5 Hotel Checkout GTV*4 Revenue Revenue + 48.1%vs 2019
Slide 17: New Structure for Commerce & Marketing Company
New Structure for Commerce & Marketing Company from March 29th, 2025 Ryo Matsumura Yoshiyuki Takano President of Senior Vice President of New Leaders Commerce & Marketing Commerce & Marketing Company Company Leveraging the Ecosystem for further scaling and continuous improvements in functions to Str
Slide 18: Domestic EC: Q1/25 Financial Results
Domestic EC: Q1/25 Financial Results User growth fueled GMS increase in shopping EC (Rakuten Ichiba, Rebates, etc.). +4.4% YoY, if adjusted for leap year and adverse weather impacts on cancellations for travel and publicly-operated sport events Logistics, Rakuten 24, Rakuten Books, and Rakuten Fashi
Slide 19: Rakuten Ichiba: Q1/25 Business Update
Rakuten Ichiba: Q1/25 Business Update Q1/25 growth in customers and average spend per customer fueled GMS growth Drive further GMS growth by leveraging Ecosystem for customer and their usage expansions, and continuously enhancing user/client experience Strengthen Collaboration with Rakuten Mobile En
Slide 20: Rakuten Travel: Q1/25 Business Update
Rakuten Travel: Q1/25 Business Update Despite declining domestic guest nights due to overall market contraction, GMS remains flat, a result of increased average booking values Inbound travel is achieving solid growth with expansion of its market share. Aim for further growth as a global OTA* by expa
Slide 21: International BU: Q1/25 Financial Results
International BU : Q1/25 Financial Results *1*2 Softened marketing spend by US companies drove weakness in Rakuten Rewards On the other hand, Rakuten Kobo, with strong sales of new color e-readers, and Rakuten Viber, with strong ad revenue, contributed to increased profits Revenue (USD mm) Non-GAAP
Slide 22: Impact of Reciprocal Tariffs (Internet Services)
Impact of Reciprocal Tariffs (Internet Services) While merchandise and service e-commerce show no immediate impact, we are closely monitoring future Japanese economic trends In International Business, we anticipate an impact on Rakuten Rewards, with US being the main market, due to reduced user spen
Slide 23: FinTech Segment
FinTech Segment 23
Slide 24: FinTech Segment: Q1/25 Financial Highlights
FinTech Segment: Q1/25 Financial Highlights Continued revenue growth, driven by Rakuten Bank and Rakuten Card Continued significant OI increase, driven by Rakuten Bank and Rakuten Payment Revenue Non-GAAP Operating Income * + 15.6% YoY + 21.7% YoY JPY 223.6 bn JPY 43.9 bn *Segment results from Q1/23
Slide 25: FinTech Segment: Q1/25 Key KPIs
FinTech Segment: Q1/25 Key KPIs Rakuten Card Rakuten Bank Rakuten Bank Shopping GTV Accounts*1 Deposit Balance*1*2 + 12.8% YoY + 10.4% YoY + 8.8%YoY JPY 6.3 tn 16.83 mm JPY 11.4 tn Rakuten Securities Rakuten Securities Rakuten Securities General Accounts*1 NISA Accounts*3 Deposited Assets*1*2 + 13.1
Slide 26: New Structure for FinTech Group Company
New Structure for FinTech Group Company from March 29th, 2025 Seiichiro Sonoda Koichi Nakamura President of Senior Vice President of New Leaders FinTech Group Company FinTech Group Company Further expansion of FinTech Ecosystem by transitioning to Strategy “mutual referral of customer base among Fin
Slide 27: Rakuten Card: Continued Expansion of Shopping GTV
Rakuten Card: Continued Expansion of Shopping GTV. Increased Interest Expenses Absorbed by Rakuten Bank Revenue boosted by continued growth of shopping GTV. While interest expenses rose with market rates, increase in external cash outflow was minor. Increase in expenses related to doubtful accounts
Slide 28: Rakuten Payment: Expanding Profitability
Rakuten Payment: Expanding Profitability. Leveraging Rakuten Pay to Grow Insurance Sales Revenue and operating income growth driven by GTV expansion Launching sale of insurance products on Rakuten Pay app in this summer, creating an "easy insurance enrollment experience" Insurance product launch on
Slide 29: Rakuten Bank (Consolidated): Performance Highlights
Rakuten Bank (Consolidated): Performance Highlights*1 (J-GAAP, FY2024*2) Continued growth in accounts and deposit balance. Interest income increased significantly due to growth in assets under management, Bank of Japan's policy interest rate hike and portfolio improvement greatly contributing to seg
Slide 30: Rakuten Securities: Continued Customer Base Expansion
Rakuten Securities: Continued Customer Base Expansion, Solid Revenue Growth Record-high revenue and profit growth, driven by continued customer base expansion and revenue diversification Strong trading income this quarter due to increased market volatility, but future market conditions pose a risk o
Slide 31: Insurance Business: Enhancing Product-Specific Acquisition Channels
Insurance Business: Enhancing Product-Specific Acquisition Channels Life Insurance: Strong face-to-face sales. Aiming to strengthen Ecosystem-driven O2O* sales General Insurance: Strong online sales, but continued losses due to remaining low-profit policies sold in the past. Aiming to improve profit
Slide 32: Impact of Reciprocal Tariffs (FinTech)
Impact of Reciprocal Tariffs (FinTech) Minimal impact on working capital and funding from market volatility. Deterioration in credit risk not seen Negative consumer/investor sentiment could affect consumption and stock market activities Potential Future Environmental Q1/25 (Jan-Mar) Impact Current I
Slide 33: Mobile Segment
Mobile Segment 33
Slide 34: Mobile Segment: Q1/25 Financial Highlights
Mobile Segment: Q1/25 Financial Highlights Rakuten Mobile's losses significantly improved YoY due to increases in subscribers and net ARPU Rakuten Symphony's revenue declined due to impact of timing of deliveries to its main customer, but new contracts are increasing, mainly in the cloud and OSS bus
Slide 35: Rakuten Mobile
Rakuten Mobile
Slide 36: Rakuten Mobile: Q1/25 Financial Results
Rakuten Mobile: Q1/25 Financial Results Achieved quarterly profitability in EBITDA excluding property taxes. Aiming to achieve full year EBITDA profit in 2025 Q1 PMCF (pre-marketing cash flow) of JPY 16bn, excluding customer acquisition expenses which are future investment Revenue (JPY bn) Non-GAAP
Slide 37: Virtualization Enables Efficient Network Deployment and Operations
Virtualization Enables Efficient Network Deployment and Operations Automation of every aspect of the network 37
Slide 38: High EBITDA Margins Achievable through Network Virtualization
High EBITDA Margins Achievable through Network Virtualization EBITDA margin positive in Q1/25. Expense level can be mostly managed, and as subscribers increases going forward, operating leverage will expand further (JPY bn) 22 24 25 25 22 56 62 63 46 43 51 40 41 38 40 Q1/24 Q2/24 Q3/24 Q4/24 Q1/25 M
Slide 39: Rakuten Mobile: Q1/25 Key KPIs
Rakuten Mobile: Q1/25 Key KPIs Total Subscribers*1*2 8.63 mm 1.56% JPY 2,827 MNO Service Revenue +31.9% (JPY mm) YoY 46,576 47,687 43,251 40,237 36,142 33,178 30,484 26,526 28,213 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 Q1/25 *1: Total of MNO, MVNE, and MVNO subscribers, including BCP, etc.
Slide 40: Aiming to Accelerate Net Increase in MNO Subscribers
Aiming to Accelerate Net Increase in MNO Subscribers from 300k lines per Quarter Subscriber acquisitions increased YoY in Q1. However, churn also rose due to higher liquidity during the spring sales season (details follow) Q4/23: Growth centered on B2B 807 subscribers (Thousand subscribers) 551 Tran
Slide 41: MNO (B2C) Acquisitions Continuing to Increase
MNO (B2C) Acquisitions Continuing to Increase, Keeping High Competitiveness YoY growth rate of MNO (B2C) acquisitions in Q1/25 exceeded that of Q1/24 Growth rate of MNP inflows in Q1/25 also exceeded that of Q1/24 and Q4/24 +16.9% +43.4% YoY YoY +38.1% +15.6% +22.3% YoY YoY YoY ■ 2023 ■ 2024 ■ 2025
Slide 42: Adjusted MNO Churn Rate
Adjusted MNO Churn Rate* Increase in Q4/24 was due to increased market liquidity driven by change in competitors’ pricing plans, while the increase in Q1/25 was due to the spring sales season Churn expected to improve as the sales season comes to an end Rose due to Revisions of spring Improved with
Slide 43: MNP Churn Rate Trend
MNP Churn Rate* Trend Other carriers have been revising their plans since autumn 2024 which temporarily increased liquidity, but the impact was short-lived. Increase in MNP outflow in March 2025 was due to seasonal factors and the temporary strengthening of campaigns by carriers Improving network qu
Slide 44: Investing in Base Stations to Improve Network Quality
Investing in Base Stations to Improve Network Quality Plan to add 10,000+α*1 stations by end of 2025 Expected to significantly reduce coverage holes and address congestion in densely populated areas 10,000 additional +α*1 (4G + 5G base station) stations Reduce VOC*2 94,000 * Reduce coverage holes Pr
Slide 45: Inflight Roaming Began in April 2025
Inflight Roaming Began in April 2025 Rakuten Mobile now available on select aircrafts for 18 international airlines with no additional application or fees* Aer Lingus Asiana Airlines Biman Bangladesh Airlines Cathay Pacific EgyptAir Emirates Airline Etihad Airways EVA Air ITA Airways Kuwait Airways
Slide 46: AST SpaceMobile: Successful Test in Japan
AST SpaceMobile: Successful Test in Japan (April 2025) Plans to launch about 60 commercial satellites by the end of 2026, with the aim of starting domestic services in Q4/26 *1 AST SpaceMobile service exclusively available in Japan through Rakuten Mobile *We also aim to be the strongest in satellite
Slide 47: Rakuten Mobile powered by AST SpaceMobile video
Rakuten pei fatee O-EA Powered by AST SpaceMobile , —— 9 a _\ VIDEO We are connected like this right now in real time, while the other side is connected via satellite. th T ch tk
Slide 48: Plan to Strengthen Subscriber Acquisition
Plan to Strengthen Subscriber Acquisition In addition to improving network quality and raising awareness, focus on channel and regional strategies in 2025 Accelerate pace of acquisition by promoting both online and offline acquisitions • Developing programs for different attributes and generations,
Slide 49: Aim to Raise Penetration through Shop+Regional Strategy
Aim to Raise Penetration through Shop+Regional Strategy Rakuten Mobile's subscribers in Tokyo as a percent of the population was 8% in March 2025 By implementing a shop+regional strategy, aim to accelerate subscriber acquisition by raising the base level of penetration nationwide Penetration rate of
Slide 50: ARPU Trends
ARPU Trends Due to fewer days in Q1/25 than Q4/24, data ARPU only increased slightly QoQ, but the upward trend continues with higher data usage Net ARPU, our benchmark for turning a profit, increased by JPY 118 YoY 2,812 2,821 2,801 2,857 2,827 (JPY) 800 762 746 749 845 ■ Ecosystem*2 35 36 91 56 ■ O
Slide 51: Reorganization of Group Structure to Boost Synergies with Mobile
Reorganization of Group Structure to Boost Synergies with Mobile at the Core Reorganization aims to increase revenue and improve operational efficiencies *Mobile data communication services (MVNO/MVNE services using Rakuten Mobile lines) will remain with Rakuten Communications. 51
Slide 52: Promote Upselling to Corporate Businesses by Expanding Solutions
Promote Upselling to Corporate Businesses by Expanding Solutions Starting in April 2025, products handled by Rakuten Communications added to the lineup to further satisfy customer needs Proposing comprehensive products and services that meet the specific needs of each industry *1 Type of solution NO
Slide 53: Rakuten Symphony
Rakuten Symphony
Slide 54: Rakuten Symphony: Q1/25 Business Update
Rakuten Symphony: Q1/25 Business Update Signed new contracts with 13 companies Concluded and enhanced partnership with 9 companies and accelerating solution deployment New Customers (including PoCs) New/Enhanced Partnerships Accelerating implementation of real Open RAN Veon Kyivstar Telkom Kenya lic
Slide 55: Impact of Reciprocal Tariffs (Mobile)
Impact of Reciprocal Tariffs (Mobile) No direct impact on procurement or supply. Monitoring the situation closely Potential Future Environmental Q1/25 (Jan-Mar) Impact Current Impact Changes Procurement: Procurement: Rising semiconductor prices could lead Handsets are outside the scope of to higher
Slide 56: 3. Finance
3. Finance 56
Slide 57: Financial Strategy
Financial Strategy Committed to original financial policy and strategy in an uncertain macro environment While closely monitoring the situation, our financial targets remain unchanged at this time *1: Based on IFRS accounting. *2: Total interest-bearing debt from non-FinTech businesses (bonds and bo
Slide 58: Corporate Bonds
Corporate Bonds Achieving stable financial management by flexibly addressing increasing volatility through diverse funding options Plan to redeem USD perpetual subordinated bonds on their first call date in April 2026 *First call date for subordinated bonds . 58
Slide 59: Impact of Global Macroeconomic Uncertainty (Finance)
Impact of Global Macroeconomic Uncertainty (Finance) Interest Rates: Spread compression driven by improvement in creditworthiness should offset potential rise in base rate increase, leading to lower borrowing costs Exchange Rates: Principal and interest on all previously issued foreign currency deno
Slide 60: 4. AI
4. AI 60
Slide 61: 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 61
Slide 62: Q1 2025: Another Quarter of Strong Execution in AI
Q1 2025: Another Quarter of Strong Execution in AI 15+ products, services and tools launched across Rakuten Ecosystem January February March Semantic Recommendations Rakuten Promotion Platform (Ads) Semantic Recommendations Launched on Rakuten France Shipped Keyword/CPC Recommendation Launched on Ta
Slide 63: Semantic Search: Double-Digit Growth in Ichiba Search GMS
Semantic Search: Double-Digit Growth in Ichiba Search GMS (Q1 2025) Achieved 10.7% YoY growth in search attributed GMS on Rakuten Ichiba through AI SEARCH ATTRIBUTION GMS KEY DRIVERS FOR GROWTH YoY uplift from AI • 2024 Jan: Launched semantic search with embedding for + 10.7% recall on Rakuten Ichib
Slide 64: AI Contribution to Ads through Rakuten Promotion Platform
AI Contribution to Ads through Rakuten Promotion Platform AI algorithm improvements are increasing advertiser return and Rakuten’s ad revenue Rakuten Promotion Platform Keyword/CPC* Recommendation Functionality Search Keyword Logic Improvements Simplifies merchant onboarding of items into search by
Slide 65: Rakuten AI for Rakutenians
Rakuten AI for Rakutenians Driving productivity and efficiency at scale across marketing, operations, sales, and engineering 16,000+ ~80% Custom AI tools/templates created to date Faster time-to-product-release using and 13,000+ employees using Rakuten AI every day AI-driven software development AI-
Slide 66: Language Models: Rakuten AI 2.0 LLM & 2.0 Mini
Language Models: Rakuten AI 2.0 LLM & 2.0 Mini Now Available as Open Models Next gen home-grown language models delivered best-in-class Japanese language performance at launch (Feb 12, 2025) RAKUTEN AI 2.0 8x7B RAKUTEN AI 2.0 MINI 1.5B MIXTURE-OF-EXPERTS LLM SMALL LANGUAGE MODEL 30x larger curated d
Slide 67: Rakuten AI Assistant: Introducing Snap & Ask
Rakuten AI Assistant: Introducing “Snap & Ask” An important update that makes AI-powered visual search accessible to everyone in Japan Step 1: Snap a Photo Take a picture of anything you’re curious about – a Japanese menu, a sign, or a product. Step 2: Ask Anything Translate AI instantly translates
Slide 68: Looking Forward: Rakuten's Vision for an Agentic AI Future
Looking Forward: Rakuten’s Vision for an Agentic AI Future Capitalizing on emerging trends and innovations to make AI accessible, powerful, and useful for every business, customer, and partner in the Rakuten Ecosystem 01 02 03 Foster Human + Invest in Accelerate Value Creation AI Agent Collaboration
Slide 69: Rakuten
Rakuten
Slide 70: 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