Rakuten Q2 FY2023 Earnings: Key Insights & Growth

Tokyo, Japan - Rakuten (TYO: 4755) has announced its Q2 FY2023 earnings.

Why it matters:

Rakuten's earnings are one of the key pillars for understanding the Japanese tech ecosystem.

Specifically, Rakuten is a communications, platform, and content provider, which gives us an accurate picture of the state of tech development in Japan.

The Key Points

Overall Performance

• Highest Q2 revenue ever: US$3.43 billion, up 9.7% YoY.
• Non-GAAP operating losses: US$272 million, improved by US$283 million YoY.
• Consolidated Non-GAAP EBITDA: US$232 million, up US$347 million YoY.
• Advertising business revenue: US$346 million, up 12.7% YoY.
• Average monthly active users in Japan: 40.5 million, up 8.2% YoY.
• Percentage of users using multiple services: 76.7%.
  

Internet Services Segment

• Revenue: US$2.03 billion, up 11.7% YoY.
• Domestic e-commerce revenue: US$1.49 billion, up 13.5% YoY.
• Gross merchandise sales: US$10.36 billion, up 10.0% YoY.
• Overseas customer bases continue to expand.
  

FinTech Segment

• Revenue: US$1.25 billion, up 13.3% YoY.
• Non-GAAP operating income: US$228 million, up 31.2% YoY.
• Credit cards issued: 29.24 million, up 9.5% YoY.
• Shopping gross transaction value: US$35.90 billion, up 16.3% YoY.
• Market share: 23.6% as of May 2023.
• Rakuten Securities customer accounts for 9.24 million, up 14.8% YoY.
• Rakuten Bank customer accounts for 14.05 million, up 10.8% YoY.
• Rakuten Payment revenue: US$117 million, up 47.1% YoY.
  

Mobile Segment

• Rakuten Mobile revenue: US$360 million, up 13.3% YoY.
• Mobile segment revenue: US$553 million, down 0.9% YoY.
• Non-GAAP operating losses: US$569 million, improved by US$270 million YoY.
• Total number of MNO subscriptions: 4.91 million as of the end of July 2023.
• MNO ARPU: US$13.87, up from US$8.80 in Q2 FY2022.
• Rakuten Symphony revenue: approximately $72 million.

The Big Picture

The Overall Performance segment shows a revenue growth trend, particularly in advertising, coupled with improved operating losses.

Meanwhile, the Internet Services segment shows a picture of solid domestic growth with the continued expansion of the overseas customer base.

The FinTech segment shows a significant growth in both revenue and profit, highlighting Rakuten's growing presence in financial technology services.

Credit card issuance, shopping gross transaction value, and market share are rising, reflecting customer confidence and market penetration.

The mobile segment, however, presents a mixed outlook.

While Rakuten Mobile has seen revenue growth as a standalone business, overall mobile segment revenue has declined slightly.

This illustrates the challenges and complexities of a highly competitive and evolving market.

Collaborations such as the Memorandum of Understanding with VEON Ltd. demonstrate Rakuten's commitment to innovative projects beyond its core business and point to potential strategic directions and new avenues for growth.

(US$1=JPY 144.90)