Record high revenue and Group-level profitability: Rakuten’s 2023 full year and Q4 financial results
On February 14, Rakuten announced financial results for the fiscal year 2023 and fourth quarter of 2023 from the company’s Crimson House headquarters in Tokyo. Chairman and CEO Mickey Mikitani, as well as leaders from the Rakuten Group, shared full year highlights from the company’s diverse portfolio of more than 70 services.
Rakuten reaches record revenue in 2023
Rakuten Group achieved a record-high consolidated revenue of 2.1 trillion yen, up by 7.8% year-on-year (YoY), marking 27 consecutive years of growth.
The group achieved Non-GAAP EBITDA profitability for the fiscal year for the first time in three years, with Non-GAAP EBITDA of 148.2 billion yen, an improvement of 218.1 billion yen YoY. In addition, the non-FinTech businesses (Internet Services and Mobile segments) were also Non-GAAP EBITDA profitable in Q4 FY2023.
The Rakuten Group recorded consolidated Non-GAAP operating income of 21.2 billion yen in December 2023, achieving profitability on a monthly basis as planned.
As a result of decreased operating losses in the Mobile business and strong growth in the FinTech segment, the Group recorded Non-GAAP operating losses in FY2023 of 153 billion yen, a significant improvement of 182.2 billion yen YoY.
The advertising business marked double-digit revenue growth of 12.9% YoY and hit its 2023 revenue target of 200 billion yen.
“Back in 1997, we were one of the first to market with the ‘business to business to consumer (B2B2C)’ model. Now this has evolved with our various services connecting organically and we have grown to become an ecosystem. From this year onwards, we will evolve further into into an AI empowerment company.”
Mickey Mikitani, Chairman and CEO, Rakuten Group
Internet Services segment revenue grows
Rakuten’s Internet Services segment achieved significant growth in both revenue and profit, with revenue of 1.21 trillion yen, up 9.8% YoY, and Non-GAAP operating income of 76.8 billion yen, up 18.9% YoY. Domestic e-commerce gross merchandise sales (GMS)* in FY2023 grew by 6.9% YoY, reaching 6.0 trillion yen.
In overseas businesses, Rakuten’s digital content businesses saw a steady expansion of their customer bases. The total number of Rakuten TV users and registered Viki users achieved double-digit growth of 42.8% YoY and 23.4% YoY, respectively.
Reflecting on the evolution of the company, Mikitani commented, “Back in 1997, we were one of the first to market with the ‘business to business to consumer (B2B2C)’ model. Now this has evolved with our various services connecting organically and we have grown to become an ecosystem. From this year onwards, we will evolve further into an AI empowerment company.”
FinTech forges ahead
The FinTech segment delivered strong revenue and profit growth in FY2023. Revenue for the segment was 725.2 billion yen, up 11.2% YoY, and Non-GAAP operating income was 122.9 billion yen, an increase of 36.8% YoY. As of December 2023, the number of Rakuten Cards issued was 30.07 million. Supported by the ongoing transition towards cashless payments, Rakuten Card’s annual shopping gross transaction value (GTV) jumped to 21.1 trillion yen, up 16.4% YoY.
Growing user numbers for Rakuten Pay and Rakuten Card and an increasing number of locations accepting these services contributed to an impressive increase in Rakuten Payments revenue to 75.0 billion yen in FY2023, up 35.7% YoY.
Rakuten Securities recorded 10.2 million customer accounts as of the end of December 2023, an increase of 18.1% YoY, while Rakuten Bank also continued to grow, with customer accounts (non-consolidated) reaching 15 million as of February 11, 2024.
Rakuten Mobile on the track to profitability
Driven by boosted subscriber numbers, the overall Mobile segment posted revenue of 364.6 billion yen, an increase of 3.9% YoY. The segment’s Non-GAAP operating losses and Non-GAAP EBITDA also showed improvement by 141.7 billion yen YoY and 159.9 billion yen YoY, respectively.
Rakuten Mobile as an individual business noted double-digit revenue growth of 17.7% YoY, bringing in 224.9 billion yen in FY2023. The company’s Non-GAAP operating losses contracted by 136.8 billion yen YoY due to increased subscribers. This signals steady progress towards achieving monthly Non-GAAP EBITDA profitability within 2024.
The total number of MNO subscriptions (both individual and business, including BCP customers) saw acceleration, reaching 6.09 million as of the end of December 2023.
“We believe Rakuten can lead the way and empower with Rakuten AI. We are committed to bringing value to our business partners, to all our services, to benefit our customers and to improve marketing, operation and client productivity.”
Ting Cai, Chief Data Officer, Rakuten Group
Road to becoming an AI empowerment company
Rakuten leaders also took this financial results presentation as an opportunity to emphasize the importance of leveraging AI for Rakuten’s businesses moving ahead.
Rakuten Group’s Chief Data Officer Ting Cai said, “We believe Rakuten can lead the way and empower with Rakuten AI. We are committed to bringing value to our business partners, to all our services, to benefit our customers and to improve marketing, operation and client productivity.”
For more business-by-business breakdowns of Rakuten’s FY2023 performance, see the materials for investors in full here.
*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.
