Q1 FY2024 results: Rakuten presents record first-quarter revenue
On May 14, the Rakuten Group announced its financial results for the first quarter of 2024 from its headquarters in Tokyo. Chairman and CEO Mickey Mikitani and leaders from the Rakuten Group shared highlights from the past quarter from the company’s wide-ranging portfolio of 70+ services.
Rakuten Group saw year-on-year (YoY) revenue growth in all three major segments in Q1: Internet Services, FinTech and Mobile. During this time, the company recorded 513.6 billion yen in consolidated revenue (an increase of 8% YoY), marking its highest revenue recorded in the first quarter of a fiscal year.
The group achieved EBITDA profitability for the quarter, with consolidated EBITDA of 52.8 billion yen, an increase of 49.3 billion yen YoY. Non-GAAP operating losses stood at 25.4 billion yen, a significant improvement of 43.5 billion yen YoY. This success was driven by increased revenue, improved profitability in domestic EC growth investment businesses and overseas businesses, strong performance in various FinTech businesses and improved losses at Rakuten Mobile.
Additionally, Rakuten Travel saw outstanding growth in gross transaction value (GTV) for inbound travel, up 243% YoY and the advertising business recorded a strong increase in revenue, with sales of 51.8 billion yen, up 7.2% in Q1.
Internet Services segment sees revenue boost
The Internet Services segment achieved significant growth in both revenue and profit in the first quarter, with revenue of 285.7 billion yen, up 5.4% YoY, and Non-GAAP operating income of 13.6 billion yen, up 14.8 % YoY. Due to the partial ending of nationwide travel support, revisions to Rakuten’s Super Point Up Program and the reorganization of the online payment business, domestic e-commerce gross merchandise sales (GMS)*¹ were down by 4.7% YoY at 1.3 trillion yen. However, there was quarter-on-quarter improvement in the GMS growth rate, and operating income grew approximately 20% YoY when excluding temporary factors such as the transfer of various costs to domestic e-commerce.
Rakuten’s overseas businesses, especially the digital content businesses, saw steady user base growth as well as significant improvements in profitability. The total number of Rakuten TV users and registered Rakuten Viki users reached 103 million, up 43.8% YoY, and 86.79 million, up 23.0% YoY, respectively. Four of Rakuten’s overseas digital content and communications platform businesses – Rakuten Viber, Rakuten Viki, Rakuten Kobo and Rakuten TV – are positioned to achieve profitability in the near future, fueled by substantial improvements in operating income.
Strong growth in Rakuten Card and Rakuten Payment drives fintech gains
Rakuten’s Fintech segment delivered significant growth in both revenue and profit for Q1 FY2024, with revenue of 193.5 billion yen, up 15.1% YoY, and Non-GAAP operating income of 39.3 billion yen, up a remarkable 47.4% YoY.
“Japan’s cashless ratio has surged to nearly 40%. Our diverse payment options facilitate over 30 trillion yen in transactions, driven by strong teamwork.”
MICKEY MIKITANI, CHAIRMAN AND CEO, RAKUTEN GROUP
Driven by steady expansion in customer base and average spending per customer, Rakuten Card recorded shopping gross transaction value of 5.6 trillion yen, up 12.5% YoY. By maintaining a low level of bad debt-related expenses and optimizing marketing expenses, the company was able to grow its Non-GAAP operating income to 15.3 billion yen, up 22.7% YoY.
The customer base of Rakuten’s fintech services continued to expand with Rakuten Bank customer accounts (non-consolidated) totaling 15.24 million, up 10.9% YoY, as of March 31, 2024. Rakuten Securities, meanwhile surpassed 11 million customer accounts as of April 2024.
Rakuten Payment’s Non-GAAP operating income for the first quarter of 2024 reached 810 million yen, achieving operating profitability for the first time on a quarterly basis.
“Our Rakuten Pay platform leads in customer satisfaction*2 with growing app downloads and our first profitable quarter. Japan’s cashless ratio has surged to nearly 40%. Our diverse payment options facilitate over 30 trillion yen in transactions, driven by strong teamwork. We are committed to further improving services and expanding into valuable sectors like insurance and banking,” emphasized Mikitani in regard to the growth of Rakuten’s fintech services.
Mobile momentum: Revenue up, losses down as subscriber base expands
The Mobile segment recorded revenue of 99.8 billion yen, up 3.6% YoY in the first quarter of 2024. Driven by continuous cost reductions and increased subscriber numbers at Rakuten Mobile, Non-GAAP operating losses were 71.9 billion yen, an improvement of 30.7 billion yen YoY.
“The beauty of Rakuten’s AI solution is that it is incredibly user-friendly. Rakuten Ichiba merchants can seamlessly integrate it into their existing operations. In Q1, we launched RMS AI Assistant (Beta) for merchants, empowering them to swiftly analyze reviews and craft responses.”
Ting Cai, Chief Data Officer, Rakuten Group
Rakuten Mobile as an individual business noted non-consolidated revenue growth of 7.1% YoY at 62 billion yen. Non-GAAP operating losses stood at 73 billion yen, an improvement of 25.9 billion yen YoY, while EBITDA was a loss of 33.5 billion yen, an improvement of 28.2 billion yen YoY. The company is aiming to achieve monthly profitability for EBITDA within 2024.
The total number of MNO subscriptions (both individual and business) saw acceleration, reaching 6.8 million*3 as of May 13, 2024.
User-friendly AI solutions for Rakuten merchants
On the topic of Rakuten’s AI solutions, Rakuten Group Chief Data Officer Ting Cai said, “The beauty of Rakuten’s AI solution is that it is incredibly user-friendly. Rakuten Ichiba merchants can seamlessly integrate it into their existing operations. In Q1, we launched RMS AI Assistant (Beta) for merchants, empowering them to swiftly analyze reviews and craft responses. They can harness Rakuten’s AI to enhance their sales, and for those seeking advanced insights, Rakuten AI University offers comprehensive training in our technology and industry expertise.”
For more business-by-business breakdowns of Rakuten’s Q1 2024 performance, see the materials for investors in full here.
*1 Domestic GMS = 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 24 and other first-party daily necessities shops, Rakuten Car, Rakuten Rakuma, Rakuten Rebates, Rakuten Seiyu Netsuper, Rakuten Ticket, cross border trading, etc. Excludes some tax-exempt businesses and includes consumption tax.
*2 MMD LABO “Survey on the use of QR code payments in March 2024.” Conducted during March 22-25, 2024 / Survey target: n= 25,000 men and women aged 18 to 69. Main users of 4 QR code payment services.
*3 Includes Rakuten Saikyo Plan, Rakuten Saikyo Plan Business and Rakuten Turbo subscriptions, excluding Business Continuity Plan (BCP is a corporate plan sold for business continuity purposes) subscriptions. Based on preliminary figures.
