Q2 2020 Rakuten Inc Earnings Presentation
[music].
If necessary please download the presentation materials from the this is based on the corporate site.
[music] relations it today my read out in public safety guys.
I'd like to first here for missed when they get Tony talking about the impact of cool that 19 to Q2. It results followed by Mr. He wassa.
But you when they session with follow.
Now, let me introduce members of the exit the team of recruiting.
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Gerrick Ami.
Good day, everyone capital.
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Collegian Okamura.
The reality komori.
These child, except as well be present, an available for questions at the end of the presentation. Please shorted presentation slide.
No.
Well, what do you missed and they get Tony.
Good afternoon.
Thank you for a jumping.
<unk> your 2022nd quarter consolidated financial results meeting as has been explained by the Secretariat.
Unfortunately, due to cool that 19, we can't meet face to face.
But rather use in June as a woman or.
No without further Ado, well look to begin the presentation.
Due to prove it 19.
Very enterprises or faced would.
Impacts in different forms, but fortunately I would say thanks, a diversified portfolio indicates the Brooklyn and you true.
The our core business that is online business in Q2.
We saw consolidated revenue.
Up 13.4 person here on here.
As to global GGB that was up 12.6%.
Domestic ecommerce gms growth, especially shopping.
And I have to say that the trouble among others was heavily impacted but when it does exclude judge and the case of work with it you bought and others and then I would say the shopping ecommerce Gms growth was up 48.1% year on year.
I'd like to touch on that a later on after the end of first wave of Cobot 19. After early stage of emergency declaration or was there removed and yet we continue to grow.
And as to the ER.
Yep.
<unk> income.
Due to the sale of overdrive. It was a 3.3 billion and no gap.
Operating income.
Well, it's impacted due to the mobile business in logistics investment.
That's it was minus 32.6 billion.
As I said earlier, we have established unique ecosystem, especially in Fintech.
The revenue growth was 19.5% up year on year.
Non-GAAP operating income.
Again was up 24.2% year on year.
As I said earlier.
The travel business was hit hard but in our case in a group.
We are engaged in different kinds of businesses and therefore.
We successfully real <unk> reallocated that people.
No Sir restructured the business model and therefore, we're already seeing there.
The positive revenue.
Oh, the revenue was up and also as a local trouble as promoted we have seen recovery here as well and asked a rock with their mobile.
Thanks to a limit.
Program, we have achieved 1 million applications.
They were good in many ways, so popular and draw the we were out of inventory.
It takes about a one or two to fill that shortage.
And.
In the beginning.
No. We also received applications from its you bought.
And.
Well you're translated into extra contracts there was a time lag of about one to two month.
Yes, I would say that the mobile business has been growing quite successfully.
And.
In a nutshell.
In records on group.
Oh ecosystem.
Despite there's hardships, especially under COO bit 19.
He has managed to achieve a robust growth.
Number two.
Internet shopping.
Is seeing a increasing the amount.
So might think it as a one off type of search, but as far as we're concerned we are seeing the permanent change among consumer behaviors.
And we are now see the an increased number of positive cases.
About a month ago.
Well the situation how settle down somewhat yes, there was no slowdown in ecommerce growth.
And.
The.
Unified our shipping.
Service.
It's participated by about 80% of merchants.
And that is where we see a very strong growth.
If you purchased more than 3180 end undershipping fee would be.
Oh free so therefore, we expect that the this package would help us continue sustainable growth.
And well D., we have seen the the study mobile customer acquisitions I know so we are seeing.
Hey, rocket and communication platform strategy has been developed quite successfully NASS demonstrating the strength of record on ecosystem.
Now turning to the next page.
And George core business growth phase businesses and investments. These businesses, that's how we typically classify it businesses into except for a record and travel.
Well the.
Core businesses enjoyed the revenue an increase of 15.1%, Alberta, Inc., a 19.8% and even one trouble is included revenue was up 9.4% and operating income up 1.2%.
And for growth phase businesses revenue is up 27.2%.
And there was an divestment phase businesses the revenue as.
Up 64.7%.
No.
The answer to the impact of cool that 19.
Let's take a closer look.
In Q2, we saw the Oh, the ecommerce in nor could I need you Bob.
Increased 48.1% and that level of growth is still maintained since the beginning of most of August and Rockwood and securities.
No one daqing cashless by the Brockton Securities isn't one that we're seeing the.
Increase in.
Are there customers.
My Das enjoying revenue up 29.3% and operating income, 62.1% factors synergy of other businesses and as they worked and card.
When other card companies are suffering the sit back and all flying shopping other kids rocket encourage it has continued to achieve a city growth.
Especially in the field of digital entertainment or there's a content.
Brookstone GB in Europe.
As growing explosive Lee.
Yeah active users.
Were added went through it we know nolan and rather than Vicki.
And they're there.
And this quarter alone we have added 3.7 million users Robertson callable.
That is online education.
Marketing cobalt is enjoying growth in revenue it turn into black.
And for it is a quarter alone they registered users increased by 1.9 million as direct immobile.
Due to the requirement for work from home.
And because one more people seeing more time at home, including young population.
As I said earlier, we have received more than 1 million applications for the quarter and record them Viber.
<unk> was up 16.5 million.
If I may repeat.
Despite <unk> 19 intact.
And maybe because of that.
The ecommerce Gms and Japan was up 48.1% year on year.
And if you took a look at the details and then the new purchasers increased by 63.1% and there are those people.
It was came to a rock with then and then didn't come back, but they came back again and they're returning purchasers was up 80.9%.
And a record and card shopping GGB share.
Compared to other card companies like a and B.
Generally speaking.
Well you can be a these oriented card companies. It for all which are affiliated with the retail businesses and I would say they are doing fairly good.
Yes.
<unk> or Sim card companies don't was suffering negative growth and despite that.
Rocktenn card as you see here.
Continues to achieve is steady growth.
No fintech.
The rocketing card holders.
No topped 20 million.
And when I mentioned about the cardholders.
Well never do a number as disclosed.
We were wondering what are our business model could be copied by others, but actually we topped out winter moly, they're up it then bank accounts it exceeded 9 million.
Back sometime ago. It was about a 4 million it has more than jumbo down soon reached 10 million.
Especially indicates a marketable securities accounts.
It already reached 4.4 million.
And and the industry I.
I would say this is the fastest growing up business.
And as I said earlier and I cashless.
Transaction recruiting has a strong position not only represent card, but also rutledge and Eddie.
Correct.
That's correct and pay.
The debit card are always available.
And the cashless transaction.
We enjoy your rather sizeable market share.
Now about ecommerce.
What kind of initiatives are there as I said earlier.
Despite gold at 19, we are seeing increasing demand for ecommerce.
And this is not a one off type of event in fact.
The.
Thanks to improved service and Rockwood then it she bought among others, we are seeing such a sustainable growth.
In fact, a internet shopping as a part of daily life of consumers and therefore, the largest logistics is a key there and there are two points.
One is about.
The unified the shipping.
The this or uniforms shipping this or at least through worry free shopping experience I know so we have our own logistics network.
Which allows us at you introduce various initiatives right now.
About 70% of households are covered by our own much logistics network.
We won't do father increase it.
And with that.
In.
Various ways.
This contribute at your improvement the efficiency of operation of merchants.
We're also expanding logistics centers as you see here.
And we'll soon start the new center.
On June 15th this year.
In cheap on there as you know the New center was open and in first half of next year.
There will be another one in jewelry gone in Canada.
This is automated warehouse.
And why logistics is a key.
First of all for merchants.
As efficient and therefore less costly.
For those merchants that use a recruiting super logistics.
They enjoyed a nearly 40% of 40 points increase and growth compared to known users known using merchants.
The first though we have next day delivery or as Robert and hydrology packaging, a lower logistics costs.
And before for merchants.
They can reduce labor cost study goes there freed up.
Oh, they're able to free up their labor.
Using Robert and obligations notification for is the major delivery time.
Could be made or Jeremy I wrote down Super sale and shopping a marathon there could be cases, where a consumer might be buying from tens of the emergence if not hundreds any such a case. They all do is a items could be put into one package.
What is called the.
39 shops or three nine that is.
The emergence of would.
The a uniform shipping.
Compared to those will uniforms shipping.
Would those without.
Oh, they're achieving newly 40% of growth and therefore, afore emergence as well and consumers.
They prefer to buy from those stores would.
Uniform shipping and as a result, NPS improvement for both heavy and light users, we outperformed competitors and.
There may be some users that have that we're not satisfied where the shipping but now they're satisfaction level has improved greatly yes, we're going to more people going up till now I'd like to move onto the mobile.
Yes.
First.
The customer acquisition.
The Oh my acquisition for the Rocketing group is exemplified by the 20 million a exceeding 20 million for the erecting card and what we are trying to realize is for the looked and mobile.
Is the democratize a this mobile phone business, so even from a global perspective.
The Japanese.
Immobile.
Fees are very expensive so based on our very unique and strong technology, we can deploy a risk the kind of very.
Cheap or.
Good kind of a service now this is the new television commercial for the Rocktenn mobile and we'd like to introduce you to that.
[laughter].
Thank you.
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Yes.
<unk>.
Hi.
So.
Okay. You here so the threat of GE for the Rocktenn mobile is a cold limit.
We will be about a half the price of all our competitors and the reason can be explained a from the following a three point.
We have this technology the backbone Rocketing group is the only group in the World, which has the radio.
Access so that has been a me software I've had being created through the.
Software.
And we are also couldn't building a base stations.
And another appoint a is the a rocktenn groups ecosystem. So he's a three point a make it possible for us to reduce the mobile prices.
No speaking about the base stations.
Originally the plan.
Was to aim.
For 90% coverage of population by 2028, but.
The deployment has been accelerated at this point in time.
At the end of on June It was 5739.
And more than 10000 base stations have completed a there a buildup and we're waiting for.
For the connections at the moment.
And by March 2021, we're aiming Oh, we will be able to realize our target of 70% coverage of population and by next summer.
All the base stations will be deploying that will happen next summer. So it has been brought forward by seven years.
Originally I think on many of you were worried about the base stations or building a that was delayed but actually it's a being accelerated.
Now on mix or is the user.
Survey.
The overall satisfaction.
It is 80% of course, it has to be hundred percent.
But it's very easy to understand up pricing plan is very simple.
We just have one single and limit plan.
She is being.
Received very well.
By our users and the cost performance is good and the flat rate data plan in other words or they are the speed. The communication speed is also a receiving a tremendous satisfaction.
No speaking about a five GE a launch.
Oh, So the question was who who we are going to partner with.
As far as five GE rollout is concerned.
We have decided to partner with a Japanese.
Company.
Any see a which is very skilled in its technology, we will be developing to fiveg core together jointly.
So it will be on stand alone.
The five G fast.
Oh advantage or that kind of network will be developed together with any see recruiting a group, but is the only company, which has the being able to.
Create the software.
So what were the only ones who can do this met t. as well as an adult have been evaluating a this program very highly and they will be providing of a with a research and development a subsidy.
No Rocktenn mobile.
It's tough to one.
Or maybe it's like a an introduction of preliminary introduction.
And then now we are going to go into the second phase.
The U.S. government in the European governments, and the Middle East.
Governments.
Very interested in this strategy.
And.
Even a those companies us starting up in this area.
Area are showing interest in our on strategy. So we are going to be and building. The Rocktenn communications platform. The first step was virtualization. The second phase is a rocket and communications platform or artsy Pete on starting this fall here in Japan.
We will be a conducting tests.
And so in that sense.
This is a fool virtualization.
That will be a promoted.
It's very difficult to explain this in.
Words verbally so in order for you to understand what it would this is going to be like the the defacto or the present, a platform Ericsson or Samson a they had to be.
And I had to come out come in to build a the platform, but what we are trying to deployed globally.
Is.
The our C P a container based platform.
The communications platform Oh easily can you build a network.
It is I'm going to be shown in the following video fees, a watch that demonstration Odyssey constant coding.
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Thank you.
So.
I don't know if this is a good way to describe this.
Well, if I am to compare.
Well.
Very simply we have been able to build on the network.
Because we develop that technology by ourselves so it's really a revolution.
Dramatic Revolution that is going to happen in the network industry. So we've been I'm hearing a lot about open alright, and and also fully virtualized stuff.
Rocktenn mobile is a driving a this move.
So there's a lot of artificial intelligence involved here.
And container.
Which is a new technology for virtualization.
That will improve scalability automatically a that scalability can be achieved.
And not because it's cheap as a software but.
Not a very good a comparison, but it's like on the automobile a car buyer Tesla that's very fast.
So this container based power that is open platform is revolutionary.
And it will dramatically change.
The definition of a the platform.
How big is the market for that.
It's about 32 million 42 billion per year.
That's the what we are.
Uh huh.
Targeting.
So if we introduce RCP, how much will it cost cost stuff at least the.
A week, we will achieve 30% of cost reduction by introducing a this rocktenn communication platform the competition.
Might be becoming very severe in some countries. So.
For a future growth I think this there's tremendous potential.
No the strength of the Rocktenn <unk> fiscal system.
Oh, thanks to.
Everyone.
A recognition has become very global.
It's a 82.7% in Taiwan, 62.2% in U.S. friends at 79.7%.
And spanning 74.1% or the membership is also increasing.
So the concept that's.
A strategy that we are conceptualizing is to really become a number one.
Oh.
So rather than a in a limited.
Area This mobile.
Uh huh industry will be looking at the.
Well the entire mobile a market be it in payment or.
Other types of marketing using data.
And the transaction the finance.
All of that.
Has a very high value added nuts.
So a this is going to be our strategy of Roxanne everywhere.
Then card.
I said has reached 20 million membership. So we believe that the rocket immobile will exceed that number.
Those people who are paying 7000, you in a month if that can be reduced to 3000 yen that it's a like 50000 yen a year and if they have 'em five people in the family that would be 200000 yen and so forth that's a their calculations so the economic.
Advantage.
The economic benefit the of the Rocktenn card to us.
I will be exceeded by what looked immobile will provide so there's tremendous potential for the future.
Finally, as speaking about Corbett 19.
I need to to give you some additional information at the moment Limerock then group.
The majority of the employees.
Are working from home.
Well, if it's a the logistics the warehouse so they have to go there, but other than that most of employees work from home.
And.
We have a various oh systems to support a work from home.
So globally speaking our Alcobras 19 initiative I think is a quite stuff a good no as for the a partner so with providing a then support in recruiting a travel.
We want to provide unsafe or reassuring guidelines.
And also.
If there has to be some kind of contact like nails alone or a beauty oh, so loans, a we've tried to.
Provide a countermeasures against cobot 19, and as for Rocktenn real time, I'll take out a I would like you to use this until October the free of charge, a takeout is going to be implemented.
And.
Also the.
That's a work from home, sometimes little become very stressful. So we.
And provide our hotel rooms, a the offices or the vocation.
Staycation and et cetera can be provided.
No as for.
Our surety funds.
Or the donation to a ones hometown et cetera that is going to also be implemented.
No.
So in sustainability is another or commitment.
Over here you see.
This.
Indices a against.
Racial discrimination that was a promoted in the U.S. as well as other types of environmental.
Commitments.
That are being <unk> mobile TRID, so the E.S.G.
Indices that we have been selected a as a d. as.
To be a constituent.
In the U.S.G. in index or indices. So it's an P S and P.J.P. ex well the E.S.G. select leaders index or we have being evaluated highly as well as in empowering women.
I will say a it will give you the consolidated results but.
Could you please refer to page 67 of the appendix.
Page 67 of the appendix.
So cashless the era.
It is really going to arrive I may be repeating but the strength of direct and group is as indicated here.
Well there is a a uniform or common I'd.
So you can use that one I'd for credit cards debit cards E money QR code Barcodes point cards.
And the rocks and pay a is also a introduce though.
And a core.
Is a direct end point, which is another one in Japan. It in terms of Ah satisfaction. A we are a number one in terms of the points, a et cetera, approximately 5 million a merger.
Have been.
Participating and also for sleep God linkage.
Well I'm trying to stay home and not to a move around too much but if I have to.
Right the trains or take the bullet trains I will use a though duct and paid a sweet spot.
But platform so a photo cashless a strategy we have a very good a program.
And then if you can turn to page 70 to 73 rather.
So what is does the future hold for us.
Look the mobile.
We will.
Well, we are trying to achieve 20 million.
Oh, and a we will be making investments.
Which will brings a tremendous impact.
If you look at Q2.
Oh this is the.
Domestic ecommerce operating income breakdown that was 12.1, a in Q2 220, 19th.
And as that has increased to 20 a billion.
The recruiting a travel travel angora of course suffered a negative impact from called at 19.
So.
And then there's the logistics related investments, which can be recovered a which is minus 3.3.
So this 12.1.
Will exceed a.
20 billion and the minus 5.9 billion that will be recovered and the logistics related investment that will also be recovered and we will contribute to our revenue into our sales.
So the catalog shopping.
Is going to change its contents.
And the revenue is almost a three trillion, but we're aiming at a seven trillion or eight trillion.
So this kind of approach a will be unnecessary. So I hope the investors will.
Take a look at a this kind of approach I. Thank you very much that's all from.
So.
So I'd like to continue a with a consolidated results.
This is the the results a summary.
Well this quarter.
We achieved 347.3 billion, which was up 13.4% a year on year.
And.
Immobile logistics, a we have done some upfront investments. So it was 31.3 billion, but including the sale of Overdrive Holdings I for its operating income was was 3.3 billion yen.
Oh, if you exclude mobile logistics and investment business. It was 31.3 billion yen.
On page nine of the handled so we will see a the last three months a.
In summary.
So it was minus 4.5 billion yen before tax but.
Because of the a system of a consolidated Oh calculation.
We were able to register a 7.5 billion yen for this quarter. A this is a the a core.
Business as well as nonrecurring investments and future growth investments revenue and operating income the covert 19 did impact the.
Some of the business, but the overall the result was being very good.
And the rocks insecurities did very well, but all the other hand.
We registered some negative numbers a in the investments the future growth investments.
And.
We will continue to make investments for future growth investments are to be able to register a positive figures for the revenue and operating income no. This is the non-GAAP operating income breakdown.
Yes, so it was a three point.
Excuse me 3.2.
Being again, Oh for others, but for the operating income it was 7.6 billion yen and the domestic E C.
Was eight point, a 1 billion.
And then a minus 5.9, which it was one of one time, a slow slowing of growth by Covidien <unk> gene So the base revenue.
7.5 billion last year.
Has increased to 10.7 billion yen this quarter.
And then the deficit of minus 38.4 from a mobile is indicated that.
And so the Q2 operating income is minus 32.6 billion yen.
Looked in ecosystem a membership value a is explained a in its a page in Q2.
A membership value was 7.3 trillion yen.
I am I know a business is not included in this membership value.
[music].
No. This is the membership value a trend active users the growing steadily and also we are seeing up increasing accounts for Roclatan securities new customers as well as returning a customers can be seen.
Across use is also a growing.
So reluctant it you bought Rocktenn securities.
Contributed to the increase in the revenue and Oh, I, which was seven point.
Three a truly in a young for Q2 Twentytwenty now that concludes.
My presentation on the consolidated results.
This concludes the a presentation on a consolidated results.