Q3 2025 Rakuten Group Inc Earnings Call

Hello, everyone. Thank you very much for taking the time out of your busy schedules to join US today I will be explaining the results of rocked in group for the third quarter of 2025.

Here's today's agenda first I will explain the business performance then our CFO Hirose will explain the financial results followed by our Chief AI and data officer, Tim who will provide an update regarding our AI initiatives.

Speaker #1: Hello everyone, thank you very much for taking the time out of your busy schedules to join us today. I will be explaining the results of Rakuten Group for the third quarter of 2025.

To begin I will report on our consolidated results.

Speaker #1: Here is today's agenda. First, I will explain the business performance. Then, our CFO, Kenji Hirose, will explain the financial results, followed by our Chief AI and Data Officer, Ting Cai, who will provide an update regarding our AI initiatives.

Consolidated revenue for the third quarter of 2025 increased 10, 9% year on year to $628 6 billion yen with solid performance in core businesses across segments, we achieved double digit revenue growth in all segments. The Internet services segment Rose 11.1 person.

Speaker #1: Report on our consolidated revenue for the third quarter results. Consolidated revenue increased 10.9% year-on-year to ¥628.6 billion. With solid performance in core businesses across segments, we achieved double-digit revenue growth in all segments.

Sent year on year, the Fintech segment, 23% and the mobile segment, 12%.

Consolidated non-GAAP operating income was $38 6 billion yen up 212.8% year on year in Internet services. There was a rush of demand before the rule changes for hometown tax donations were implemented in October, but even excluding the profit increase attributable to this surge we achieve.

Hiroshi Mikitani: Although interest expenses are increasing, we expect positive growth in operating income for the full fiscal year. Rakuten Payment increased revenue by 14.4% year-on-year, driven by GTV expansion, in line with the continued increase in the number of users of the Rakuten PayApp. Operating income also increased 78.8% year-on-year, outpacing revenue growth, as a low-cost base was maintained. As with last year, we expect to achieve operating income for the full fiscal year. Rakuten Bank has already released its financial results. Deposit balances continue to expand, driven by a steady increase in new accounts and steady progress in customers using their accounts as their main account. For the Q4 to Q9 period, ordinary income increased by 41.4% to JPY 118.3 billion, while ordinary profit increased 55.3% to JPY 48.2 billion. ROE stood at a healthy 21.2%.

Speaker #1: The internet services segment rose 11.1% year-on-year, the fintech segment 20.3%, and the mobile segment 12%. Consolidated non-GAAP operating income was ¥38.6 billion, up 212.8% year-on-year.

Steady growth.

For this fiscal year as with last year, we aim to achieve full year profitability for both non-GAAP operating income and I far as operating income.

Speaker #1: In internet services, there was a rush of demand before the rule changes for hometown tax donations were implemented in October. However, even excluding the profit increase attributable to this surge, we achieved steady growth.

Consolidated EBITDA was 118.7 billion yen up 28.8% year on year at a record high for a third quarter for the full year, we expect to generate over 400 billion yen of EBITDA.

Speaker #1: For this fiscal year, as with last year, we aim to achieve full-year profitability for both non-GAAP operating income and IFRS operating income. Consolidated EBITDA was ¥118.7 billion, up 28.8% year-on-year, a record high for the full year. We expect to generate over ¥400 billion for the third quarter.

Regarding the number of subscribers of rocked in mobile we surpassed $9 5 million the other day.

As I will explain later, we continue to build strong momentum in B to C acquisitions, and we will continue to accelerate this while converting our growing b to b pipeline aiming to reach a total of 10 million subscribers by the end of 2020 five.

Speaker #1: EBITDA. Regarding the number of subscribers of Rakuten Mobile, we surpassed 9.5 million the other day. As I will explain later, we continue to build strong momentum in B2C acquisitions, and we will continue to accelerate this pipeline.

Speaker #1: EBITDA. Regarding the number of subscribers of Rakuten Mobile, we surpassed 9.5 million the other day. As I will explain later, we continue to build strong momentum in B2C acquisitions, and we will continue to accelerate this while converting our growing B2B. We aim to reach a total of 10 million subscribers by the end of 2025.

Hiroshi Mikitani: A significant factor in these strong results was the substantial growth in interest income, propelled by both an expansion in its middle-risk asset portfolio and Bank of Japan's policy interest rate hike. Rakuten Securities achieved double-digit revenue and profit growth, supported by customer base expansion, and an improving market environment. Both revenue and profit reached record quarterly highs. We will continue to acquire new accounts while expanding assets under management per customer, and improving utilization rates. In the insurance business, life insurance achieved strong sales of medical insurance, and general insurance continued strong sales led by online automobile insurance, contributing to revenue expansion.

Next I will explain the business performance by segment.

First a review of the Internet services segment.

In the third quarter, the Internet services segment achieved solid growth delivering revenue of 349.6 billion yen up 11, 1% year on year and non-GAAP operating income of 24.2 billion yen up 14.5% year on year in the day.

Speaker #1: Next, I will explain the business performance by segment. First, a review of the Internet Services segment. In the third quarter, the Internet Services segment achieved solid growth, delivering revenue of ¥349.6 billion year-on-year, and non-GAAP operating income of ¥24.2 billion, up 11.1% and 14.5% year-on-year, respectively.

Mastic EC business. In addition to strong performance in core businesses.

This improvement in the logistics business contributed to higher profits in the international business unit revenue grew primarily at rocked and Kobo and rocked in Viper, while an improvement in losses at the overseas advertising business also contributed leading to an expansion in segment profits.

Hiroshi Mikitani: Although general insurance experienced a temporary loss due to a conservative adjustment to the projected income and expenses of existing contracts, and increased insurance payments resulting from the Kyushu heavy rains, we aim to accelerate recovery and profit through selection and concentration of product offerings by sequentially discontinuing low-profit products and optimizing the portfolio. Finally, I will explain the mobile segment. Revenue increased 12% year-on-year to JPY 118.7 billion, with both Rakuten Mobile and Rakuten Symphony continuing to grow steadily. Operating loss improved by JPY 10.1 billion year-on-year, and EBITDA improved by JPY 16.4 billion year-on-year to a positive JPY 11.2 billion. I will now explain the business performance of Rakuten Mobile on a standalone basis. Revenue increased 31.2% year-on-year to JPY 95.2 billion, driven by higher service revenue from growth in subscribers and net APU. Operating loss continued to improve, narrowing by JPY 13.4 billion year-on-year to a loss of JPY 37.2 billion.

Speaker #1: In the domestic EC business, in addition to strong performance in core businesses, loss improvement in the logistics business contributed to higher profits. In the international business unit, revenue grew primarily at Rakuten Kobo and Rakuten Viber, while an improvement in losses also contributed, leading to an expansion in segment profits.

Here are the main kpis for the Internet services segment domestic E. C. G. M. S increased 14, 5% year on year to 1.7 trillion yen. The travel business grew seven 6% year on year led by inbound and other global GDP. The IRR of our investment business was plus.

Speaker #1: Here are the main KPIs for the Internet Services segment. Domestic EC overseas advertising business also grew 14.5% year-on-year to $1.7 billion, while other global GDV grew 7.6%.

17.8% revenue in the international business unit increased five 4% year on year to $487 million and revenue in the advertising business rose, 13.5% year on year to 64 billion yen each achieving solid growth.

Speaker #1: The IRR of our investment business was plus year-on-year, led by inbound, at 17.8%. Revenue in the international business unit increased 5.4% year-on-year to $487 million, and revenue in the advertising business rose 13.5% year-on-year to ¥60.4 billion, each achieving solid growth.

Regarding the domestic EC business G. M. S grew 14.5% as noted on the previous page due to the rush demand ahead of a change to hometown tax point allocation rule from October we expect a reactionary year on year decline in the fourth quarter revenue increased 10.0% year on year.

Speaker #1: Regarding the domestic EC business, GMS grew 14.5%, as noted on the previous page. Due to the rushed demand ahead of a change to the hometown tax point allocation rule from October, we expect a reactionary year-on-year decline in the fourth quarter.

Up to 265.5 billion yen and non-GAAP operating income rose, 33.6% to $33 9 billion yen operating income also benefited from the pricing revisions implemented in the logistics business in June going forward rocked in mobile and AI will continue to be the keys.

Hiroshi Mikitani: EBITDA improved by JPY 17.5 billion year-on-year to a positive JPY 7.8 billion. PMCF pre-marketing cash flow, which excludes customer acquisition-related costs that are upfront investments for future subscriber growth, was JPY 24.3 billion, also expanding steadily. We are steadily progressing toward our initial target of achieving full-year positive EBITDA. Next, let's look at the main KPIs. At the end of September, total subscribers reached 9.33 million. The adjusted M&O churn rate, excluding cancellations within the same month of contract, was 1.33%, and APU was JPY 2,873. M&O service revenue generated from the M&O network increased 24.7% year-on-year to JPY 53.9 billion. The net increase in M&O subscribers during Q3 was 405,000. Although July to September is typically a soft season, acquisition initiatives in collaboration with Rakuten Card continued to perform well, boosting activations. While churn increased slightly, the underlying trend continues to decline if we exclude the increase in same-month cancellations.

Speaker #1: Revenue increased 10.0% year-on-year to ¥265.5 billion, and non-GAAP operating income rose 33.6%. Operating income also benefited from the pricing revisions to ¥33.9 billion implemented in the logistics business in June.

So our growth strategy.

First let me talk about the synergy between racked in each of our and racked in mobile for racked in mobile subscribers, we have been offering benefits that make racked in each about more attractive such as five times S. P. You campaign points and early access sales for Super sale campaigns. We are also rolling out acquisition initiatives targeting.

Speaker #1: Going forward, Rakuten Mobile and AI will continue to be the keys to our growth strategy. First, let me talk about the synergy between Rakuten Ichiba and Rakuten Mobile. For Rakuten Mobile subscribers, we have been offering benefits that make Rakuten Ichiba more attractive, such as five times SPU campaign points and early access sales for super sale campaigns.

<unk>, who do not currently use either rocked in mobile or rocked in each of our and the results of these efforts are becoming to show in our numbers currently rocked in mobile subscribers account for 16.2% of racked in each of US monthly active users. Moreover, the gms per racked in mobile subscriber is 48.5% higher than that.

Speaker #1: We are also rolling out acquisition initiatives targeting those who do not currently use either Rakuten Mobile or Rakuten Ichiba, and the results of these efforts are numbers.

Non subscribers, we will continue to raise mobile penetration on racked and each of us to further drive usage. The graph on the right shows the proportion of racked in mobile subscribers among new rack in each of our users. This also continues to expand demonstrating racked and mobile's contribution to acquiring new users for rack and each of them.

Speaker #1: Currently, Rakuten Mobile subscribers account for 16.2% of Rakuten Ichiba's monthly active users. Moreover, the Gross Merchandise Sales (GMS) per Rakuten Mobile subscriber is 48.5% higher than that of non-subscribers.

Hiroshi Mikitani: For same-month cancellations, we have taken measures such as introducing a cancellation fee in April for contracts being canceled within one year. Starting this month, we introduced a contract administration fee for contracts with five or more lines. In any event, we will accelerate the pace of B2C acquisitions heading into Q4, while swiftly promoting early execution of our B2B contract pipeline, working toward achieving 10 million subscribers by the end of 2025. Here is the trend in M&P NetAdds. While some carriers have been revising their plans, our M&P NetAdds continues to trend upwards, with Q3 M&P NetAdds rising 71.4% quarter-on-quarter to 95,000 M&P subscribers. As M&P subscribers mainly use it as their main line, we expect them to contribute to further declines in churn going forward.

Speaker #1: We will continue to raise mobile penetration on Rakuten Ichiba to further drive usage. The graph on the right shows the proportion of Rakuten Mobile subscribers among new Rakuten Ichiba users.

Next I would like to talk about the use of AI and rocked in each of our in September we made an agent type AI tool available to users within the rock in each of the App. While this is a soft launch and not yet available to all we plan to roll it out to all users as we continue to make improvements to provide a better shopping.

Speaker #1: This also continues to expand, demonstrating Rakuten Mobile's contribution to acquiring new users for Rakuten Ichiba. Next, I would like to talk about the use of AI in Rakuten Ichiba.

Experience.

We also provide AI tools to merchants on racked in each of our since launching in March last year. We have added an improved various functions and the number of merchants using the tools on a daily basis has been increasing currently 23000 merchants use them at least once a month, we will continue to expand usage based on feedback.

Speaker #1: In September, we made an agent-type AI tool available to users within the Rakuten Ichiba app. While this is a soft launch and not yet available to all, we plan to roll it out to all users as we continue to make improvements to provide a better experience.

Speaker #1: We also provide AI tools to better assist shopping merchants on Rakuten Ichiba. Since launching in March last year, we have added and improved various functions, and the number of merchants using the tools on a daily basis has been increasing.

Contributing to improved operational efficiency at our merchants.

As I mentioned earlier the travel business is also achieving continuous growth led by inbound and other global travel G. T V. Rocked in travel is also promoting the use of AI in September we introduced an AI hotel search function on the smartphone browser version of racked in travel up to now.

Hiroshi Mikitani: As I mentioned earlier, this quarter's M&O churn rate, on an adjusted basis excluding cancellations within the same month of contract, was 1.33%. As I explained on the previous page, in a macroeconomic environment of persistent inflation, we believe the relative attractiveness of our plan has improved. Let me also touch on our corporate business. We now have over 23,000 corporate customers. Recently, by offering industry-specific DX solutions packaged together with our network, we have received strong feedback, translating into new customer acquisitions. Of course, we will not limit ourselves to packaged offerings. By accelerating the execution of our contract pipeline, our corporate business will also work vigorously toward achieving 10 million subscribers within this year. We continue to push initiatives to improve network quality. As of September, installation of 4,611 base stations has been completed.

Speaker #1: Currently, 23,000 merchants use them at least once a month. We will continue to expand usage based on feedback, contributing to improved operational efficiency at our merchants.

Speaker #1: As I mentioned earlier, the travel business is also achieving continuous growth, led by inbound and other global travel GTV. Rakuten Travel is also promoting the use of AI.

Users narrowed down conditions from preset options to search for hotels, but with this feature users can tell the AI their preferences as of speaking to a travel agent out of counter enabling us to propose accommodations that better match customer needs.

Speaker #1: In September, we introduced an AI hotel search function on the smartphone browser version of Rakuten Travel. Up to now, users narrowed down conditions from preset options to search for hotels, but with this feature, users can tell the AI their travel agent at a counter.

Turning to the international business unit revenue grew five 4% year on year to $487 million and non-GAAP operating income increased 78, 8% year on year to $4.2 million, achieving a significant increase in profit in the open commerce business.

Speaker #1: Enabling us to propose accommodations that better match customer preferences, as if speaking to their needs. Turning to the international business unit, revenue grew 5.4% year-on-year to $487 million, and non-GAAP operating income increased 78.8% year-on-year to $4.2 million, achieving a significant increase in profit.

Centered on racked and rewards revenue was flat due to a cautious stance among U S. Retailers, however by optimizing the cost structure in our overseas advertising business, we improved losses, allowing overall profit to grow in other businesses, we achieved revenue and profit growth backed by rocked and <unk>.

Hiroshi Mikitani: We will continue deploying new base stations to eliminate coverage holes and add capacity, implementing measures with an eye on next fiscal year's spring sales season. APU increased JPY 72 year-on-year to JPY 2,873. Q3 typically sees seasonality with higher data usage starting with the summer break, and this year was no exception. B2C data APU was the main driver of APU growth. Ecosystem APU at the top, in pink, was flat due to dilution from an increase in new contracts by light users. However, if we calculate ecosystem APU solely for users who have been contracted for more than a year, it was JPY 865, indicating steady growth in loyalty over time. Lastly, net APU has temporarily declined quarter-on-quarter due to higher SBU costs associated with front-loaded demand for the hometown tax rule change. This chart shows the trend in average data usage for B2C users.

Speaker #1: In the open commerce business centered on Rakuten Rewards, revenue was flat due to a cautious stance among U.S. consumers and the cost structure in our overseas retailers.

Bo and solid communications and advertising revenue at racked and vibrant.

Let me also touch on the drivers of racked in Cobos strong performance Brockton Kobo as an e-book company that we acquired in 2012. It not only provides content, but also develops and sells its own devices. As you can see the ebook market is continuously expanding within this expanding market.

Speaker #1: Improved losses, allowing overall profit to grow. In other businesses, we achieved revenue and profit growth backed by Rakuten Kobo and solid communications and advertising revenue at Rakuten Viber.

Speaker #1: Let me also touch on the drivers of Rakuten Kobo's strong performance. Rakuten Kobo is an e-book company that we acquired in 2012. It not only provides content but also develops and sells its own devices.

Cobos total registered users had been steadily increasing in particular the color devices launched in April last year has been a long running hit driving growth and content sales and the number of subscribers going forward Copa will continue to differentiate through the development of attractive devices aiming for firm.

Speaker #1: The e-book market is continuously expanding. Within this expanding market, Kobo's total registered users have been steadily increasing. In particular, the color devices launched in April last year have been a long-running hit, driving growth in content sales and the number of subscribers.

Other business expansion.

Next I will explain the Fintech segment.

Hiroshi Mikitani: As I mentioned earlier, Q3 has seasonality. As you can see, average usage rose 3 GB to 33.5 GB. We also aim to raise APU by expanding new services. From October, we launched the Rakuten Cyckeo U-Next package. While it is offered at a promotional price through January 2026, we expect it to contribute to higher data APU. We have also launched new security-related optional services, which have been very well received. Meanwhile, our original Rakuten Cyckeo plan will continue to be offered without any price change. As announced recently, Rakuten Mobile is advancing the introduction of a function called RIC that manages and controls RAN with AI. By automating everything from traffic pattern analysis and demand forecasting to base station utilization adjustment, AI optimizes the network, enabling low-cost operations, including reduced power consumption. We intend to pass these benefits back to customers through our monthly rate plans.

Segment revenue increased 23% year on year to 250.5 billion yen as the customer base continued to expand across services and non-GAAP operating income Rose 37, 9% to $55 2 billion yen turning to key kpis for each business Brockton card shopping.

Speaker #1: Going forward, Kobo will continue to differentiate through the development of attractive devices, aiming for further business expansion. Next, I will explain the fintech segment.

Speaker #1: Segment revenue increased 20.3% year-on-year to ¥250.5 billion as the customer base continued to expand across services, and non-GAAP operating income rose 37.9% to ¥55.2 billion.

G T V increased 11.7% year on year to 6.7 trillion yen at Rockford Bank number of accounts rose six 9% year on year to $17, three 2 million and deposit balances grew 10.1% to 12.2 trillion yen Brockton Securities total accounts rose.

Speaker #1: Turning to key KPIs for each business, Rakuten Card shopping GTV increased 11.7% year-on-year to ¥6.7 trillion. At Rakuten Bank, the number of accounts rose 6.9% year-on-year to 17.32 million, and deposit balances grew 10.1% to ¥12.2 trillion. Securities' total accounts rose.

10.4% year on year to 12.86 million and NESA accounts increased 15.5% to 672 million maintaining our industry, leading position, let me dive into each business' performance wrapped in card increased G. T V driven by an expansion of its customer base and higher spend per customer.

Speaker #1: 10.4% year-on-year to 12.86 million and NISA accounts increased 15.5% to 6.72 million. Let me dive into each million, maintaining our industry-leading Rakuten business performance.

Hiroshi Mikitani: Lastly, for Rakuten Symphony, we successfully secured six new customers across North America, Africa, and Asia. Regarding our sales partners, we have announced a strategic alliance with PolyStack Technologies to provide locally developed advanced cloud solutions for the public and private sectors of India. We will continue to expand our revenue base in various services. That concludes my presentation. Thank you very much. This is Hirose, and I will explain our financial strategy. Revenue increased 10.9% year-on-year to JPY 628.6 billion, and non-GAAP operating income rose by JPY 26.3 billion year-on-year to JPY 38.6 billion, achieving positive growths in revenue and profit for the 12th consecutive quarter. Below non-GAAP operating income, we recorded non-recurring items, including JPY 27.9 billion of impairment losses in the online supermarket business. IFRS operating income turned more positive, increasing by JPY 7.4 billion year-on-year to JPY 8 billion.

<unk> and it also benefited from last minute demand ahead of the hometown tax rule revision combined with the revision to the revolving payment fee rate from August rocked in card achieved revenue and profit growth. Although interest expenses are increasing we expect positive growth in operating income for the full fiscal year.

Speaker #1: Rakuten Card increased GTV driven by an expansion of its customer base and higher spend per customer. It also benefited from last-minute demand ahead of the hometown tax roll revision.

Brockton payment increased revenue by 14, 4% year on year, driven by G. T V expansion in line with the continued increase in the number of users of the rack didn't pay up operating income also increased 78, 8% year on year outpacing revenue growth as a low cost base was maintained.

Speaker #1: Combined with the revision to the revolving payment fee rate from August, Rakuten Card achieved revenue and profit growth. Although interest expenses are increasing, we expect positive growth in operating income for the full fiscal year.

Speaker #1: Rakuten Payment increased revenue by 14.4% year-on-year, driven by GTV expansion, in line with the continued increase in the number of users of the Rakuten Pay app.

As with last year, we expect to achieve operating income for the full fiscal year wrapped in bank has already released its financial results deposit balances continue to expand driven by a steady increase in new accounts and steady progress in customers using their accounts as their main account for.

Speaker #1: Operating income also increased 78.8% year-on-year, outpacing revenue growth due to a low-cost base last year. We expect to achieve operating income for the full fiscal year.

For the April to September period, ordinary income increased by 41.4% to $118 3 billion yen.

Hiroshi Mikitani: In financial income and expenses, derivative valuation gains and losses arising from currency swaps on foreign currency-denominated perpetual subordinated notes, which were a significant negative last fiscal year, swung to a large positive this fiscal year, contributing to a JPY 55.1 billion improvement. Perpetual subordinated notes are accounted for in equity, and hedge accounting cannot be applied. Therefore, gains and losses related to currency swaps are recognized in the income statement due to exchange rate fluctuations, etc., but there is no substantive impact on our financial position. As a result, we recorded quarterly profit before tax of JPY 8.7 billion. Quarterly profit was negative JPY 11.5 billion. However, this represents a significant year-on-year improvement, and we believe we have continued to demonstrate a strong recovery in performance.

Speaker #1: Rakuten Bank has already released its financial results. Deposit balances continue to expand, driven by a steady increase in new accounts and steady progress in customers using their accounts as their main account.

Ordinary profit increased 55, 3% to $48 2 billion yen.

Are always stood at a healthy 21.2% a significant factor in these strong results was the substantial growth in interest income propelled by both an expansion and its middle risk asset portfolio and bank of Japan's policy interest rate hike.

Speaker #1: For the April to September period, ordinary income increased by 41.4% to ¥118.3 billion, while ordinary profit increased by 55.3% to ¥48.2 billion. ROE stood at a healthy 21.2%.

<unk> Securities achieved double digit revenue and profit growth supported by customer base expansion and an improving market environment. Both revenue and profit reached record quarterly highs. We will continue to acquire new accounts, while expanding assets under management per customer and improving utilization rates.

Speaker #1: A significant factor in these strong results was the substantial growth in interest income, propelled by both an expansion in its middle-risk asset portfolio and the Bank of Japan's policy interest rate hike.

Speaker #1: Rakuten Securities achieved double-digit revenue and profit growth, supported by customer base expansion and an improving market environment. Both revenue and profit reached record quarterly highs.

In the insurance business life insurance achieved strong sales of medical insurance and General insurance continued strong sales led by online automobile insurance contributing to revenue expansion, although general insurance experienced a temporary loss due to a conservative adjustment to the projected income and expense.

Hiroshi Mikitani: In September 2024, we changed the online grocery service name from Rakuten Seyu Net Super to Rakuten Mart. In Q3, we decided to exit the Ibaraki warehouse by year-end and suspend service in the Kansai area due to low awareness of the online grocery business under the Rakuten brand in that region, slower-than-expected customer acquisition, as well as longer-than-expected time to build the product procurement process. In light of these business conditions, an impairment test on fixed assets led us to record a non-recurring loss of JPY 27.9 billion, including impairment of fixed assets. Going forward, we will improve profitability by strengthening and streamlining our procurement structure, enhancing collaboration with the Rakuten ecosystem, expanding our customer base, and rebuilding and optimizing our logistics network. Next, I will explain our financial strategy.

Speaker #1: We will continue to acquire new accounts while expanding assets under management per customer and improving utilization rates. In the insurance business, life insurance achieved strong sales of medical insurance, and general insurance continued strong sales led by online automobile insurance, contributing to revenue expansion.

<unk> of existing contracts and increased insurance payments, resulting from the Kyushu heavy rains, we aim to accelerate recovery and profit through selection and concentration of product offerings by sequentially discontinuing low profit products and optimizing the portfolio.

Speaker #1: Although general insurance experienced a temporary loss due to a conservative adjustment to the projected income and expenses of existing contracts and increased insurance payments resulting from the Kyushu heavy rains, we aim to accelerate recovery in profit through selection and concentration of product offerings by sequentially discontinuing low-profit products and optimizing the portfolio.

Finally, I will explain the mobile segment.

Revenue increased 12% year on year to 118.7 billion yen with both racked in mobile and racked in symphony continuing to grow steadily operating loss improved by 10.1 billion yen year on year and EBITDA improved by 16.4 billion yen year on year to a positive 11.2 billion yen.

Hiroshi Mikitani: Our financial policy is to enhance corporate value through building a stable financial base and appropriate capital allocation, and we are advancing various initiatives on both the business and financial fronts. As the specific financial target, we aim for a consolidated equity ratio of 10% in the long term, but given the solid asset growth in our FinTech businesses recently, we have set a medium-term target of achieving a level of 5%. In addition, we position as our leverage discipline, keeping the ratio of net interest-bearing debt of non-FinTech businesses to non-GAAP EBITDA of non-FinTech businesses within 5x. We will promote this in tandem with proactive management of maturity schedule, while driving company-wide efficiency, reducing working capital, and reviewing our business portfolio. Allow me to explain the background on setting the medium-term target for the consolidated equity ratio.

Speaker #1: Finally, I will explain the mobile segment. Revenue increased 12% year-on-year to ¥118.7 billion, with both Rakuten Mobile and Rakuten Symphony continuing to grow steadily.

I will now explain the business performance of racked in mobile on a standalone basis.

Revenue increased 31, 2% year on year to $95 2 billion yen driven by higher service revenue from growth in subscribers in net.

Speaker #1: Operating loss improved by ¥10.1 billion year-on-year, and EBITDA improved by ¥16.4 billion year-on-year to a positive ¥11.2 billion. I will now explain the business performance of Rakuten Mobile on a standalone basis.

Operating loss continued to improve narrowing by 13.4 billion yen year on year to a loss of $37 2 billion yen.

Speaker #1: Revenue increased 31.2% year-on-year to ¥95.2 billion, driven by higher service revenue from growth in subscribers and net OPU. Operating loss continued to improve, narrowing by ¥13.4 billion year-on-year to a loss of ¥37.2 billion.

EBIT improved by 17.5 billion yen year on year to a positive 7.8 billion yen P. M. C. S pre marketing cash flow, which excludes customer acquisition related costs that are upfront investments for future subscriber growth was $24 3 billion yen also expanding steadily we are.

Speaker #1: EBITDA improved by ¥17.5 billion year-on-year to a positive ¥7.8 billion. PMCF (pre-marketing cash flow), which excludes customer acquisition-related costs that are upfront investments for future subscriber growth, was ¥24.3 billion, also expanding steadily.

Hiroshi Mikitani: Our consolidated total assets expanded significantly from JPY 7 trillion at the end of 2018 to JPY 26 trillion at the end of 2024. The main driver of the JPY 19 trillion increase in total assets was the expansion of total assets in our fintech businesses, against the backdrop of solid growth in their customer base. In our fintech businesses, while we maintain ample capital as a risk buffer, the accounting-based equity ratio is generally low. For example, as of the end of 2024, Rakuten Bank's equity ratio was around 2% on an accounting basis, whereas its capital adequacy ratio under the Banking Act stands at a sufficient 11%.

Italy progressing toward our initial target of achieving full year positive EBITDA.

Next let's look at the main Kpis at the end of September total subscribers reached 9.33 million the adjusted immuno churn rate excluding cancellations within the same month of contract was 1.33% and op, who was 2873 yen Imino service revenue.

Speaker #1: We are steadily progressing toward our initial target of achieving full-year positive EBITDA. Next, let's look at the main KPIs. At the end of September, total subscribers reached 9.33 million.

Generated from the <unk> network increased 24, 7% year on year to 53.9 billion yet.

Speaker #1: The adjusted M&O churn rate (excluding cancellations within the same month of contract) was 1.33%. OPU was ¥2,873, and M&O service revenue generated from the M&O network increased 24.7% year-on-year to ¥53.9 billion.

The net increase in immuno subscribers. During Q3 was 405000, although July to September is typically a soft season acquisition initiatives in collaboration with racked in card continued to perform well boosting activations, while churn increased slightly the underlying trend continues to decline if we exclude.

Hiroshi Mikitani: Considering this change in the composition of total assets due to asset expansion accompanying the high growth of fintech businesses, we judged it reasonable to set a medium-term target of 5% while maintaining the long-term equity ratio target of 10%, taking into account the balance between capital efficiency and growth in both fintech and non-fintech segments. We believe the market has recognized our consistent execution of financial strategies aimed at strengthening our financial structure. In October, we issued our first yen-denominated perpetual subordinated bond in Japan and received strong demand totaling over JPY 500 billion from domestic and overseas investors against the JPY 82 billion offering size. The coupon was 4.691%, approximately 50 basis points lower than the post-currency swap rate on the US dollar-denominated perpetual subordinated bond we issued in December last year.

Speaker #1: The net increase in M&O subscribers during Q3 was 405,000. Although July to September is typically a soft season, acquisition initiatives in collaboration with Rakuten Card continued to perform well, boosting activations.

The increase in same month cancellations for same month cancellations, we have taken measures such as introducing a cancellation fee in April for contracts being cancelled within one year and starting this month, we introduced a contract administration fee for contracts with five or more lines in any event, we will accelerate.

Speaker #1: While churn increased slightly, the underlying trend continues to decline if we exclude the increase in same-month cancellations. For same-month cancellations, we have taken measures such as introducing a cancellation fee in April for contracts being canceled within one year.

Right the pace of beta see acquisitions heading into the fourth quarter, while swiftly promoting early execution of our b to b contract pipeline working toward achieving 10 million subscribers by the end of 2025.

Speaker #1: And starting this month, we introduce a contract administration fee for contracts with five or more lines. In any event, we will accelerate the pace of B2C acquisitions heading into the fourth quarter while swiftly promoting early execution of our B2B contract pipeline, working toward achieving 10 million subscribers by the end of 2025.

Here is the trend and M. N P. Net adds while some carriers have been revising their plants our M and P. Net adds continues to trend upwards with Q3 M. N P. Net adds rising 71.4% quarter on quarter to 95000, MMP subscribers as MMP subscribers, mainly use it as their main line.

Hiroshi Mikitani: As this perpetual subordinated bond is treated as equity for accounting purposes, they also contribute to strengthening our balance sheet. Our credit outlooks from domestic rating agencies were also revised upward to stable. Prices of corporate bonds issued in past years and our five-year CDS spreads also reflect improvements in our credit profile. With steady improvements in business earning power, we recognize that the market's assessment is improving thanks to our consistent execution of financial strategy. We will continue to work diligently on financial improvement and deepen dialogue with the market to further enhance our evaluation. Finally, with respect to our financial target of keeping the ratio of net interest-bearing debt of non-fintech businesses to non-GAAP EBITDA of non-fintech businesses within five times, this declined to 8.3x due to an expansion in EBITDA. We are progressing as planned toward the year-end target of around 8.5x.

Speaker #1: Here is the trend in M&P Net Ads. While some carriers have been revising their plans, our M&P Net Ads continue to trend upwards, with Q3 M&P Net Ads rising 71.4% quarter-on-quarter to 95,000 M&P subscribers.

We expect them to contribute to further declines in churn going forward.

As I mentioned earlier this quarter's immuno churn rate on an adjusted basis, excluding cancellations within the same month of contract was 1.33% and as I explained on the previous page in a macroeconomic environment a persistent inflation, we believe the relative attractiveness of our plan has improved.

Speaker #1: As M&P subscribers mainly use it as their main line, we expect them to contribute to further declines in churn going forward. As I mentioned earlier, this quarter's M&O churn rate on an adjusted basis, excluding cancellations within the same month of the contract, was 1.33%.

Let me also touch on our corporate business. We now have over 23000 corporate customers recently by offering industry specific Dx solutions packaged together with our network. We have received strong feedback translating into new customer acquisitions of course, we will not limit ourselves to packaged offerings.

Speaker #1: And as I explained on the previous page, in a macroeconomic environment of persistent inflation, we believe the relative attractiveness of our plan has improved.

Hiroshi Mikitani: We will continue to reduce interest-bearing debt and enhance cash flow generation across each business. Next, Ting, our Chief AI and Data Officer, will present our AI initiatives. Thank you. Hello everyone. I'm Ting Cai, Chief AI and Data Officer for Rakuten Group. Today, I will let my avatar share our latest updates with you as part of our initiative to leverage AI for better efficiency. I'm excited to share the progress we're making on AI-nization, our effort to infuse AI into everything we do for customers, partners, and Rakuten team members around the world. Our vision is to augment human creativity with the power of AI. We continue to build a sustainable competitive advantage through our unique data, ubiquitous channels, and growth flywheel. Today, we'll be highlighting recent AI-powered product launches. Rakuten has a golden opportunity to become the world's leading AI empowerment company.

Speaker #1: Let me also touch on our corporate business. We now have over 23,000 corporate customers. Recently, by offering industry-specific DX solutions packaged together with our network, we have received strong feedback, translating into new customer acquisitions.

By accelerating the execution of our contract pipeline, our corporate business will also work vigorously toward achieving 10 million subscribers within this year.

We continue to push initiatives to improve network quality as of September installation of 4611 base stations has been completed we will continue deploying new base stations to eliminate coverage holes and add capacity implementing measures with an eye on next fiscal year's spring sales season.

Speaker #1: Of course, we will not limit ourselves to packaged offerings. By accelerating the execution of our contract pipeline, our corporate business will also work vigorously toward achieving 10 million subscribers within this year.

Speaker #1: We continue to push initiatives to improve network quality. As of September, the installation of 4,611 base stations has been completed. We will continue deploying new base stations to eliminate coverage holes and add capacity.

<unk> increased 72, <unk> year on year to 2873 in the third quarter typically see seasonality with higher data usage, starting with the summer break and this year was no exception b to C data up who was the main driver of <unk> growth ecosystem op, who at the top in Pink was flat.

Speaker #1: An eye on next fiscal year's spring sales season. OPU increased 72 yen year-on-year to 2,873 yen. The third quarter typically sees seasonality with higher data usage starting with the summer break, and this year was no exception.

Due to dilution from an increase in new contracts by light users. However, if we calculate ecosystem op, who solely for users who have been contracted for more than a year. It was 865 yen, indicating steady growth and loyalty over time Lastly, net op, who has temporarily declined Q on Q due to higher S. P.

Hiroshi Mikitani: By infusing AI into existing apps and reinventing experiences, we're growing the Rakuten ecosystem with new uses and increased engagement. The rise of mobile technology gave users the ability to access information in real time on the go. It unleashed a new wave of applications and market leaders. AI is now enabling users to access intelligence with much less effort. With its diverse portfolio of services, Rakuten is uniquely positioned to take advantage of this opportunity and empower more people with AI. Our deep learning investments, search, ads, recommendations, and more, have generated material impact across the Rakuten ecosystem. Today, we are seizing the opportunity of AI agents that can better understand user intent, capture context, plan execution, iterate, and improve on their own. Tomorrow, we're looking to deliver better economics by leveraging a variety of tools, including further development of large and small language models.

Speaker #1: The main driver of OPU B2C data OPU was the growth. Ecosystem OPU at the top, in pink, was flat due to dilution from an increase in new contracts by light users.

New costs associated with Frontloaded demand for the hometown tax rule change.

Speaker #1: However, if we calculate ecosystem OPU solely for users who have been contracted for more than a year, it was ¥865, indicating steady growth in loyalty over time.

This chart shows the trend in average data usage for BTC users as I mentioned earlier, the third quarter has seasonality as you can see average usage rose three gigabytes to 33.5 gigabytes.

Speaker #1: OPU has temporarily declined in Q1 and Q2 due to higher SBU costs. Lastly, net costs are associated with front-loaded demand for the hometown tax rule change. This chart shows the trend in average data usage for B2C users.

We also aim to raise op, who by expanding new services from October we launched the rack and <unk> package. While it is offered at a promotional price through January 2026, we expect it to contribute to higher data offer. We have also launched new security related optional services, which have been very well received.

Speaker #1: As I mentioned earlier, the third quarter has seasonality. As you can see, average usage rose by 3 gigabytes to 33.5 gigabytes. We also aim to raise OPU by expanding new services. Starting in October, we launched the Rakuten Seikyo U-Next package, which is offered at a promotional price through January 2026. We expect it to contribute to higher data OPU.

Meanwhile, our original racked in psyche O plan will continue to be offered without any price change as announced recently wrapped in mobile is advancing the introduction of a function called Rick that manages and controls ran with AI by automating everything from traffic pattern analysis and demand forecasting.

Speaker #1: We have also launched new security-related optional services, which have been very well received. Meanwhile, our original Rakuten Seikyo plan will continue to be offered without any price change.

Hiroshi Mikitani: The goal, above all else, is to meet user needs with the most effective, cost-efficient solution. For example, while language models are powerful, they are way more expensive than traditional machine learning or deep learning tools for search. We know that not every user query needs a large language model. By building the right suite of tools and leveraging our ability to better understand user intent and orchestrate the execution plan, we can intelligently match our customers' needs with the tool that will give them the best outcome, and the best return on investment for Rakuten. In July, we proudly announced the general availability of Rakuten AI, our agentic AI platform. Since then, we have been sustaining momentum by shipping more AI agents for Rakuten Mobile, Rakuten Ichiba, and Rakuten Travel.

The base station utilization adjustment AI Optimizes, the network, enabling low cost operations, including reduced power consumption, we intend to pass these benefits back to customers through our monthly rate plans.

Speaker #1: Recently, Rakuten Mobile is advancing. As announced, the introduction of a function called RIC manages and controls RAN with AI. By automating everything from traffic pattern analysis and demand forecasting to base station utilization adjustment, AI optimizes the network, enabling low-cost operations.

Lastly for racked in Symphony, we successfully secured six new customers across North America Africa, and Asia also regarding our sales partners, we have announced a strategic alliance with poly stack technologies to provide locally developed advanced cloud solutions for the public and private sectors of India, We will continue to.

Speaker #1: Including reduced power consumption, we intend to pass these benefits back to customers through our monthly rate plans. Lastly, for Rakuten Symphony, we successfully secured six new customers across North America, Africa, and Asia.

Spanned our revenue base and various services that concludes my presentation. Thank you very much.

Speaker #1: Also, regarding our sales partners, we have announced a strategic alliance with Polystack Technologies to provide locally developed, advanced cloud solutions for the public and private sectors of India.

This is hirose and I will explain our financial strategy.

Revenue increased 10, 9% year on year to $628 6 billion yen and non-GAAP operating income rose by $26 3 billion year on year to $38 6 billion yen achieving positive growth in revenue and profit for the 12 consecutive quarter.

Hiroshi Mikitani: Rakuten AI is now the everyday assistant for Rakuten Mobile users, accelerating decision-making in Ichiba, and offering personalized experiences in travel. Our momentum continues as we expand AI-powered services across the Rakuten ecosystem. For example, Rakuten AI in Rakuten Ichiba enables users to make faster shopping decisions by helping them advance quickly from vague ideas to concrete actions. Leveraging our vast amount of shopping data, Rakuten AI can better understand user intent, provide relevant research, identify key factors to consider, help users to compare, and encourage them to make faster decisions. This is a win-win. Customers get useful, personalized guidance that helps them make a decision. Merchants sell more, and Rakuten drives more revenue. Rakuten Securities is leveraging AI analysis to create value for customers and contribute to Rakuten Group growth.

Speaker #1: We will continue to expand our revenue base in various services. That concludes my presentation. Thank you very much.

Speaker #2: This is Hirose, and I will explain our financial strategy. Revenue increased 10.9% year-on-year to ¥628.6 billion, and non-GAAP operating income year-on-year rose by ¥26.3 billion to ¥38.6 billion, achieving positive growth in revenue and profit for the 12th consecutive quarter.

non-GAAP operating income, we recorded nonrecurring items, including $27 9 billion yen of impairment losses in the online supermarket business.

<unk> operating income turned more positive increasing by seven 4 billion year on year to 8 billion yen.

In financial income and expenses derivative valuation gains and losses arising from currency swaps on foreign currency denominated perpetual subordinated notes, which were a significant negative last fiscal year swung to a large positive this fiscal year contributing to a $55 1 billion yen improvement perpetual subordinated.

Speaker #2: Operating income: we recorded non-recurring items including non-GAAP ¥27.9 billion of impairment losses in the online supermarket business. IFAR's operating income turned more positive, increasing by...

Speaker #1: Derivative valuation gains and losses arising from currency swaps on currency-denominated foreign perpetual subordinated notes, which were a significant negative fiscal impact last year, swung to a large positive.

Subordinated notes are accounted for in equity and hedge accounting cannot be applied therefore gains and losses related to currency swaps are recognized in the income statement due to exchange rate fluctuations et cetera, but there is no substantive impact on our financial position as a result, we recorded quarterly profit before tax of $8 7 billion yen quarterly profit was.

Speaker #1: This fiscal year, contributing to a ¥55.1 billion improvement. Perpetual subordinated notes are accounted for in equity, and hedge accounting cannot be.

Speaker #1: applied Therefore , gains and losses related to currency swaps are recognized in the income to statement due exchange rate fluctuations , etc. , but there is no substantive impact on our financial position .

Hiroshi Mikitani: It offers AI-powered services in high-impact investment-related areas such as overall rating, target stock price, industry financial assessment, and performance analysis. By leveraging AI to do research and resolve bottlenecks, investors are more confident to make investment decisions and complete more transactions. Following our announcement about the Rakuten Promotion Platform (RPP) in the last earning announcement, we are pleased to announce that RPP has been rolled out to all Ichiba stores. RPP leverages AI to optimize the timing, channel, and pricing of ads to deliver better ad content to customers, higher return for advertisers, and more profitability for the Rakuten Group.

Negative $11 5 billion yen. However, this represents a significant year on year improvement and we believe we will continue to demonstrate a strong recovery and performance in.

Speaker #1: As a result , we recorded quarterly profit before tax of ¥8.7 billion . Quarterly profit was -¥11.5 billion . However , this represents a significant year on year improvement and we believe we have continued to demonstrate a strong recovery in performance .

In September 2024, we changed the online grocery service name from rocked and say you and that's Super two rock Tenn marked in the third quarter, we decided to exit the ibaraki warehouse by year end and suspend service in the Kansai area due to low awareness of the online grocery business under the <unk> brand in that region and slower than expected customer acquisition.

Speaker #1: In September 2024, we changed the online grocery service from the name Rakuten Siu Net to Rakuten Mart. In the third quarter, we decided to exit the Ibaraki Warehouse by year-end and suspend service in the Kansai area due to low awareness of the online grocery business.

As well as longer than expected time to build the product procurement process.

In light of these business conditions, an impairment test on fixed assets led us to record a nonrecurring loss of $27 9 billion yen, including impairment of fixed assets.

Speaker #1: Under the Rakuten brand, in that region, customer acquisition has been slower than expected, and there has been a longer than expected time to build the procurement product as well as the process.

Hiroshi Mikitani: As a testament to this pervasive integration and expanding impact, and as a direct result of both diverse AI-powered service offerings and aggressive internal AI adoption, token usage on our AI platform has increased by 17x compared to one year ago, driven by concrete applications in coding, business productivity, and the release of multiple agents to production services. Finally, I'm excited to share a new development just announced on Tuesday. Rakuten and HP Japan are joining forces to bring the power of Rakuten AI to HP PCs. This partnership enables agentic AI with on-device LLM capabilities for both offline and online use. By integrating Rakuten AI and HP PCs, we empower users with better economics, performance, and reliability on the go, in the office, and at home. This partnership is a key first milestone towards making powerful agentic AI accessible to everyone.

Going forward, we will improve profitability by strengthening and streamlining our procurement structure enhancing collaboration with direct and ecosystem and expanding our customer base and rebuilding and optimizing our logistics network.

Speaker #1: In these business conditions, a test on impairment of fixed assets led us to record a non-recurring loss of ¥27.9 billion, including impairment of fixed assets.

Speaker #1: Going forward , we will improve profitability by strengthening and streamlining our procurement structure , enhancing collaboration with the Raketen and expanding our customer base and rebuilding optimizing our and logistics network .

Next I will explain our financial strategy.

Our financial policy is to enhance corporate value through building, a stable financial base and appropriate capital allocation and we are advancing various initiatives on both the business and financial fronts a.

Speaker #1: Next, I will explain our financial strategy. Our financial policy is to enhance corporate value through building a stable financial base and appropriate capital allocation.

Our specific financial target, we aim for a consolidated equity ratio of 10% in the long term, but given the solid asset growth in our Fintech business. As recently, we have set a medium term target of achieving a level of 5%.

Speaker #1: And we are advancing various initiatives on both the business and financial fronts. As a financial target, we aim for a consolidated equity ratio of 10% in the long term.

In addition, we position as our leverage discipline, keeping the ratio of net interest bearing debt of non fintech businesses to non-GAAP EBITDA of non fintech businesses within five times.

Speaker #1: But given the solid asset growth in our fintech businesses recently, we have set a medium-term target of achieving a level of 5%.

We will promote this in tandem with proactive management of maturity schedule, while driving company wide efficiency, reducing working capital and reviewing our business portfolio.

Speaker #1: In addition , we position as our leverage discipline , keeping the ratio of net interest bearing debt of non fintech businesses non-GAAP to EBITDA of non fintech businesses within five times .

Allow me to explain the background on setting the medium term target for the consolidated equity ratio.

Speaker #1: We will promote this in tandem with proactive management of our maturity schedule, while driving company-wide efficiency, reducing working capital, and reviewing our business portfolio.

Hiroshi Mikitani: Looking forward, we envision a future where agents are everywhere throughout the Rakuten ecosystem, not only helping users make their days more productive, and make it easier to access Rakuten Group services, but also serving as proactive assistants that improve every aspect of their life. Thank you.

Consolidated total assets expanded significantly from seven trillion at the end of 2018 to 26 trillion at the end of 2024. The main driver of the 19 trillion yen increasing total assets was the expansion of total assets and our fintech businesses against the backdrop of solid growth in the customer base.

Speaker #1: Allow me to explain the background on setting the medium-term target for the consolidated equity ratio. Our consolidated total assets expanded significantly from ¥7 trillion at the end of 2018 to ¥26 trillion at the end of 2024.

Fintech businesses, while we maintain ample capital as a risk buffer the accounting based equity ratio is generally low for example, as of the end of 2024 Rub 10 banks equity ratio was around 2% on an accounting basis, whereas its capital adequacy ratio under the banking act stands at a sufficient 11%.

Speaker #1: The main driver of the ¥19 trillion increase in total assets was the expansion of total assets in our fintech businesses. This growth occurred against the backdrop of solid growth in the customer base of our fintech businesses.

Speaker #1: While we maintain ample capital as a risk buffer . The accounting based equity ratio is generally low . For example , as of the end of 2024 .

<unk> this change in the composition of total assets due to asset expansion accompanying the high growth of Fintech businesses, we adjusted reasonable to set a medium term target of 5%, while maintaining the long term equity ratio target of 10% taking into account the balance between capital efficiency and growth in both fintech and non fintech segments.

Speaker #1: Rakuten Bank's equity ratio was around 2% on an accounting basis, whereas its capital adequacy ratio under the Banking Act stands at a sufficient 11%.

Speaker #1: Considering this change in the composition of total assets due to asset expansion accompanying the high growth of fintech businesses, we judged it reasonable to set a medium-term target of 5% while maintaining the long-term equity ratio target of 10%.

We believe the market has recognized our consistent execution of financial strategies aimed at strengthening our financial structure.

Speaker #1: Taking into account the balance of capital between efficiency and growth in both fintech and non-fintech segments, we believe the market has recognized our consistent execution of financial strategies aimed at strengthening our financial structure.

In October we issued our first yen denominated perpetual subordinated bond in Japan and received strong demand totaling over 500 billion yen from domestic and overseas investors against the $82 billion offering size. The coupon was $4, 691% approximately 50 basis points lower than the post <unk>.

Speaker #1: In October, we issued our first yen-denominated perpetual subordinated bond in Japan and received strong demand totaling over ¥500 billion from domestic and overseas investors against the ¥82 billion offering size.

Currency swap rate on the U S dollar denominated perpetual subordinated bond we issued in December of last year as this perpetual subordinated bond is treated as equity for accounting purposes. They also contribute to strengthening our balance sheet.

Speaker #1: The coupon was 4.691%, approximately 50 basis points lower than the post-currency swap rate on the U.S. dollar-denominated perpetual subordinated bond we issued in December last year.

Credit outlooks from domestic rating agencies were also revised upward to stable.

Prices of corporate bonds issued in past years in our five year Cds spreads also reflect improvements in our credit profile.

Speaker #1: As this perpetual subordinated bond is treated as equity for accounting purposes , they also contribute to strengthening our balance sheet . Our credit outlooks from domestic rating agencies were also revised upward to stable prices of corporate bonds issued in past years , and our five year CDs spreads also reflect improvements in our credit profile .

With steady improvements in business, earning power, we recognize that the market's assessment is improving thanks to our consistent execution of financial strategy. We will continue to work diligently on financial improvement and deepen dialogue with the market to further enhance our evaluation.

Speaker #1: With steady improvements in business earnings power, we recognized that the market's assessment is improving, thanks to our consistent execution of financial strategy.

Finally, with respect to our financial target of keeping the ratio of net interest bearing debt of non syntech businesses to non-GAAP EBITDA of non fintech businesses within five times. This declined to $8 three times due to an expansion in EBITDA. We are progressing as planned towards the year end target of around eight five times, we will continue to reduce interest.

Speaker #1: We will continue to work diligently on financial improvement and deepen dialogue with the market to further enhance our evaluation . Finally , with respect to our financial target of keeping the ratio of net interest bearing debt of non fintech businesses to non-GAAP EBITDA of non fintech businesses within five times this declined to 8.3 times due to an expansion in EBITDA .

<unk> debt and enhance cash flow generation across each business.

Next thing our Chief data officer will present, our AI initiatives. Thank you.

Speaker #1: We are progressing as planned toward the year-end target of around 8.5 times. We will continue to reduce interest-bearing debt and enhance cash flow generation across each business.

Hello, everyone, I'm, <unk> Tsai, Chief AI and data officer for racked in group today, I will let my avatar share our latest updates with you as part of our initiative to leverage AI for better efficiency IMAX.

Speaker #1: Next, Ting Cai, our Chief AI and Data Officer, will present our AI initiatives. Thank you.

Speaker #2: Hello everyone . I'm Ting Tsai , chief AI and Data officer for Rakuten Today I Group . will let my avatar share our latest updates with you as part of our initiative to leverage AI for better efficiency .

I'm excited to share the progress, we're making on AI nice nation, our effort to infuse AI into everything we do for customers partners and racked and team members around the world. Our vision is to augment human creativity with the power of AI, we continue to build a sustainable competitive.

Speaker #2: I am excited to share the progress we're making on AI Nization—our effort to infuse AI into everything we do for customers, partners, and Rakuten team members around the world.

Advantage through our unique data ubiquitous channels and grow flywheel today, we'll be highlighting recent AI powered product launches.

Speaker #2: Our vision is to augment human creativity with the power of AI. We continue to build a sustainable, competitive advantage through our unique data.

<unk> has a golden opportunity to become the world's leading AI empowerment company by infusing AI into existing apps and reinventing experiences we are growing the racked in ecosystem with new usage and increased engagement.

Speaker #2: Ubiquitous channels , and growth . Flywheel . Today , we'll be highlighting recent AI powered product launches . Rakuten has a golden opportunity to become the world's leading AI empowerment company by infusing AI into existing apps and reinventing experiences .

The rise of mobile technology gave users the ability to access information in real time on the go it unleashed a new wave of applications and market leaders.

Speaker #2: We're growing the Rakuten ecosystem with new uses and increased engagement. The rise of mobile technology has given users the ability to access information in real time, on the go.

AI is now enabling users to access intelligence with much less effort with its diverse portfolio of services wrapped in is uniquely positioned to take advantage of this opportunity and empower more people with AI.

Speaker #2: It unleashed a new wave of applications and market leaders. AI is now enabling users to access intelligence with much less effort. With its diverse portfolio of services, Rakuten is uniquely positioned to take advantage of this opportunity and empower more people with AI.

Our deep learning investments search ads recommendations and more have generated material impact across the rack and ecosystem. Today, we are seizing the opportunity of AI agents that can better understand user intent captured context plan execution iterate and improve on.

Speaker #2: deep Our learning investments , search ads , recommendations and more have generated material impact across the Rakuten ecosystem . Today , we are seizing the opportunity of AI agents that can better understand user intent , capture , context , plan execution , iterate and improve on their own .

On their own tomorrow, we're looking to deliver better economics by leveraging a variety of tools, including further development of large and small language models. The goal above all else is to meet user needs with the most effective cost efficient solution. For example, while language models are powerful.

Speaker #2: Tomorrow, we're looking to deliver better economics by leveraging a variety of tools, including further development of large and small language models.

They are way more expensive than traditional machine learning or deep learning tools for search we know that not every user query needs of large language model.

Speaker #2: The goal above all else , is to meet user needs with the most effective , cost efficient solution . For example , while language models are powerful , they are way more expensive than traditional machine learning or deep learning tools for search .

By building the right suite of tools and leveraging our ability to better understand user intent and orchestrate the execution plan, we can intelligently match, our customers' needs with the tool that will give them the best outcome and the best return on investment for <unk>.

Speaker #2: We know that not every user query needs a large language model. By building the right suite of tools and leveraging our ability to better understand user intent and orchestrate the execution plan, we can intelligently match our customers' needs with the tool that will give them the best outcome and the best return on investment.

In July we proudly announced the general availability of rack 10, AI Origen take AI platform.

Since then we have been sustaining momentum by shipping more AI agents for rack 10, mobile rock Tenn, Itchy bar and rack 10 travel rock Tenn, AI is now the everyday assistant for rack 10, mobile users accelerating decision, making in <unk> and offering personalized experiences in travel our momentum.

Speaker #2: For Rakuten . In July , we proudly announced the general availability of rack ten AI Argentic AI platform . Since then , we have been sustaining momentum by shipping more AI agents for rack Mobile , Rakuten , Ichiba and Rakuten Travel Rack .

Continues as we expand AI powered services across the <unk> ecosystem.

Speaker #2: Now, the TNI is an everyday assistant for Rakuten Mobile users, accelerating decision-making in Ichiba and offering personalized experiences in our travel. Momentum continues as we expand AI-powered services across the Rakuten ecosystem.

For example, racked in AI interact and <unk> enables users to make faster shopping decisions by helping them advance quickly from vague ideas to concrete actions leveraging our vast amount of shopping data wrapped in a I can better understand user intent provide relevant research.

Speaker #2: For example, Rakuten AI in Rakuten Ichiba enables users to make faster shopping decisions by helping them advance quickly from vague ideas to concrete actions.

Identify key factors to consider help users to compare and encourage them to make faster decisions. This is a win win customers get useful personalized guidance that helps them make a decision merchants sell more and racked and drives more revenue.

Speaker #2: Leveraging our amount of vast shopping data can , Rakuten AI better understand user intent , provide relevant research , identify key factors to consider , help users to compare and encourage them to make faster decisions .

Racked and securities is leveraging AI analysis to create value for customers and contribute to racked in group growth. It offers AI powered services in high impact investment related areas, such as overall rating target stock price industry financial assessment and performance analysis.

Speaker #2: This is a win-win. Customers get useful, personalized guidance that helps them make a decision. Merchants sell more and react in ways that drive more revenue.

Speaker #2: Rakuten securities is leveraging AI analysis to create value for customers and contribute to Rakuten Group growth . It offers AI powered services in high impact investment related areas such as overall rating , target stock price , industry , financial assessment and performance analysis .

By leveraging AI to do research and resolve bottlenecks investors are more confident to make investment decisions and complete more transactions.

Following our announcement about the racked and promotion platform our pp in the last earning announcement, we are pleased to announce that our P. P has been rolled out to all each of our stores are P. P. Leverages AI to optimize the timing channel and pricing of ads to deliver better ad content to customers.

Speaker #2: Leveraging AI to do research and resolve bottlenecks, investors are more confident to make investment decisions and complete more transactions. Following our announcement about the Rakuten promotion platform in the last earnings announcement, we are pleased to announce that our app has been rolled out to all Ichiba stores.

Higher return for advertisers and more profitability for the <unk> group.

Speaker #2: RRP leverages AI to optimize the timing, channel, and pricing of ads to deliver better ad content to customers. This results in higher returns for advertisers and greater profitability for the Rakuten Group.

As a testament to this pervasive integration and expanding impact and is a direct result of both diverse AI powered service offerings and aggressive internal AI adoption token usage on our AI platform has increased by 17 times compared to one year ago, driven by concrete applications.

Speaker #2: As a testament to this pervasive integration and expanding impact , and as a direct result of both diverse AI powered service offerings and aggressive internal AI adoption , token usage our AI on platform has increased by 17 times compared to one year ago , driven by concrete applications in coding , business productivity and the release of multiple agents to production services .

And coding business productivity and the release of multiple agents to production services.

Finally, I'm excited to share our new development, just announced on Tuesday racked in an H P. Japan are joining forces to bring the power of racked in AI to H P. P. CS. This partnership enables agent take AI with on device L. L M capabilities for both offline and online use.

Speaker #2: Finally , I'm excited to share a new development just announced on Tuesday . Rakuten , an HP Japan , are joining forces to bring the power of Rakuten AI to Hpcs .

By integrating racked in AI and H P. P. C's, we empower users with better economics performance and reliability on the go in the office and at home. This partnership is a key first milestone towards making powerful agentic AI accessible to everyone.

Speaker #2: This partnership enables agent AI with on-device LM capabilities for both offline and online use by integrating Rakuten AI and HPCs. We empower users with better economics, performance, and reliability on the go.

Looking forward, we envision a future where agents are everywhere throughout the rocked and ecosystem.

Speaker #2: In the office and at home, this partnership is a key first milestone towards making powerful, agentic AI accessible to everyone. Looking forward, we envision a future where agents are everywhere throughout the Rakuten ecosystem, not only helping users make their days more productive but also making it easier to access.

Only helping users make their days more productive and make it easier to access rocked and group services, but also serving as proactive assistance that improve every aspect of their life.

<unk>.

Oh yeah.