Expanding customer base fuels record high revenue for Rakuten’s Q2 FY2024 results
On August 9, Rakuten announced financial results for the second quarter of 2024 from its headquarters in Tokyo. Chairman and CEO Mickey Mikitani and leaders from the Rakuten Group shared updates and highlights from the company’s diverse portfolio of more than 70 services.
The Rakuten Group recorded year-on-year (YoY) revenue growth in all three segments in Q2 FY2024: Internet Services, Fintech and Mobile. During this quarter, the company recorded 537.3 billion yen in consolidated revenue (an increase of 8.1% YoY), marking its highest revenue ever recorded in the second quarter of a fiscal year.
The Group is making steady progress towards its goal of achieving profitability for FY2024. It continued to see EBITDA profitability for this quarter as well, with consolidated EBITDA of 66.8 billion yen, an increase of 98.6% YoY. Non-GAAP operating losses stood at 11.8 billion yen, a significant improvement of 27.6 billion yen YoY. This came as a result of increased revenue, improved profitability in domestic EC growth investment businesses and overseas businesses, strong performance in the Fintech segment, and improved losses and cost optimization at Rakuten Mobile.
Internet segment highlights
The Internet Services segment of the Group achieved significant growth in both revenue and profit in the second quarter, with revenue of 303.9 billion yen, up 3.1% YoY, and Non-GAAP operating income of 18.9 billion yen, up 30.3% YoY.
The Group noted improved profitability in domestic EC growth investment businesses during the second quarter of 2024. This was driven by the enhanced profitability of Rakuten Seiyu Netsuper after it became a wholly-owned subsidiary of Rakuten Group, as well as successful operational improvements and pricing adjustments in the logistics business.
In overseas businesses, Rakuten’s digital content businesses saw steady growth in their user base and significant improvements in profitability. Total operating income for the four overseas digital content and communication platform businesses (Rakuten Viber, Rakuten Viki, Rakuten Kobo and Rakuten TV) improved considerably by 2.7 billion yen, achieving quarterly profitability. Rakuten Viber’s revenue for the quarter increased 51.3% compared to 2022, driven by increased sales of telecom services and Business Messages.
Fintech segment expands customer base
Rakuten’s Fintech segment delivered substantial growth in both revenue and profit for the second quarter of 2024, with revenue of 202.7 billion yen, up 12% YoY, and Non-GAAP operating income of 42.3 billion yen, up 28.1% YoY.
Driven by a strong expansion in customer base and average spending per customer, Rakuten Card recorded shopping gross transaction value of 5.9 trillion yen, up 13.9% YoY. Optimizing marketing expenses and maintaining low bad debt-related expenses also contributed to the achievement of this double-digit profit growth.
“We will work to become the strongest and best connected network in Japan. Thanks to platinum band, our connection will only get better.”
Rakuten Group Chairman and CEO, Mickey Mikitani
Leveraging group synergies, Rakuten Bank acquired new customer accounts, resulting in a total of 16 million accounts as of July 29, 2024. With more customers using their Rakuten Bank account as their main account and for their everyday finances, the total balance of deposits increased to 10.9 trillion yen as of the end of June 2024, up 15.3% YoY. This accumulation of managed assets boosted interest income, leading to substantial revenue and profit growth.
Rakuten Securities’ continuous expansion of its customer base has also helped the company record its highest-ever revenue. The company surpassed 11.33 million customer accounts as of the end of June 2024, an increase of 22.7% YoY.
Sustained growth in the Mobile segment
The Mobile segment recorded revenue of 95.0 billion yen, up 18.6% YoY, in Q2 FY2024. Driven by increased subscriber numbers at Rakuten Mobile, MNO service revenue expanded and profitability further improved, leading to Non-GAAP operating losses of 60.6 billion yen, an improvement of 21.8 billion yen YoY.
The total number of subscribers (both individual and business) surpassed 7.7 million* as of August 7, 2024, driven by strong acquisition of subscribers through the Rakuten Ecosystem, especially among B2C customers. This quarter saw the addition of 610,000 subscribers, and the largest ever quarterly increase in B2C subscribers**.
“Rakuten AI-nization is all about augmenting human creativity with the power of AI. Our approach is simple: Focus on scaling the fundamentals to build practical, cost-effective solutions that empower customers, partners and Rakutenians around the world.”
Rakuten Group Chief AI & Data Officer, Ting Cai
The latest figures also show Rakuten Mobile users spending more across the Rakuten Ecosystem. Compared to non-subscribers, Rakuten Mobile subscribers spent 49.7% more annually on Rakuten Ichiba, 12.0% more on Rakuten Travel, and 25.9% more on Rakuten Card, contributing to the overall increase in the Group’s gross merchandise value.
Rakuten Mobile also launched commercial services using the “platinum band” 700 MHz spectrum on June 27, 2024. Ongoing efforts are being made to improve network quality, such as expanding the 5G network area, enhancing 5G base station traffic capacity and increasing the number of unique 5G users.
“We will work to become the strongest and best connected network in Japan. Thanks to platinum band, our connection will only get better,” commented Rakuten Group Chairman and CEO, Mickey Mikitani.
Rakuten’s unique AI approach
“Rakuten AI-nization is all about augmenting human creativity with the power of AI,” said Rakuten Group Chief AI & Data Officer Ting Cai. “Our approach is simple: Focus on scaling the fundamentals to build practical, cost-effective solutions that empower customers, partners and Rakutenians around the world.”
*Preliminary figures as of August 7, 2024. Total of MNO, MVNO and MVNE subscribers, including Business Continuity Plan (BCP is a corporate plan sold for business continuity purposes) subscriptions.
**Since essentially free mobile fees campaigns completely ended on July 1, 2022.
