Q2 2026 Rakuten Group Inc Earnings Call
Speaker #1: 本日はお忙しい中。
Hiroshi Mikitani: Thank you very much for joining us at Rakuten Group FY2026 Q2 consolidated financial results. Already the flash report of the summary of the financial report has been disclosed 3:30 PM this afternoon. Please refer to content from the investors information page on the corporate website. If you have problem with the truncated image and video, please have selected different distribution server where there is a button at the bottom of the slide. Let's invite Mr. Mikitani for the presentation. Hello, everyone. First of all, the effect of the 2026, those families and individuals that have been affected, we would like to offer a heartfelt support. Two weeks before the earthquake, in fact, I was in Kumamoto. I visited Kumamoto as well, who had been severely struck by the earthquake.
Speaker #2: Thank you very much for joining us at Rakuten Group for the FY2026 second quarter consolidated financial results. The summary of our financial report was already disclosed at half past 3 this afternoon.
Speaker #2: Please refer to the content from the Investors’ Information page on the corporate website. If you are having problems with the truncated image and video, please select a different distribution server. The button is at the bottom of the slide.
Speaker #2: So, like Mr. Mikitani, for the presentation. Hello everyone. First of all, regarding the effect of 2026, to those families and individuals that have been affected, we would like to offer our heartfelt support.
Speaker #2: And two weeks before the earthquake, in fact, I was in Kumamoto. I visited Yomo as well, which had been severely struck by the earthquake.
Speaker #2: And for those people who have difficulties and have been deceived at Rakuten Group, we would like to do everything that we can. So we'd like to offer heartfelt support and also consolidate this into that.
Hiroshi Mikitani: Those people who have difficulties and the deceased, at Rakuten Group, we would like to do everything that we can. We'd like to offer a heartfelt support and also console the deceased through that. In terms of the topic today, this will be the summary. Number one, in summary and FinTech business reorganization and segment result. In finance, CFO Kaga-san will be presenting. Chief AI Officer, Data Officer, Ting Cai will be presenting this section. Without further ado, the summary. Rakuten Group, this is the Q2. In terms of the net income, we were able to achieve positive JPY 27.2 billion. Mobile business is a big challenge that we have executed, and that is a growth driver for us. In the meantime, since Q2 2020, we have been able to enjoy the positive result.
Speaker #2: So, in terms of the topic today, this will be the summary. Number one: summary and fintech business reorganization and segment results. In finance, CFO Kaga-san will be presenting, and Chief AI & Data Officer Ting Cai will be presenting this section.
Speaker #2: So without further ado, the summary. Rakuten Group—this is the second quarter. In terms of net income, we were able to achieve a positive result of ¥227.2 billion.
Speaker #2: The mobile business is a big challenge that we have executed, and that is a growth driver for us. In the meantime, since Q2 of 2020, we have been able to enjoy the positive results.
Speaker #2: So reflective of that, so in eight or six years—since in eight years, six years, it says—but this is not only a one-off, but this needs to be a perpetuating result that we would like to achieve in the coming years.
Hiroshi Mikitani: Reflective of that, in eight or six years, since in eight years, six years it says, but this needs to be a perpetuating result that we would like to achieve in the coming years. The consolidated revenue, the record high of JPY 665.5 billion. With the size of our business, year-on-year, 11.6% growth. We have been able to grow our business quite steadily. Each segment, all of them are on a growth trajectory. Also, in terms of consolidated EBITDA, is a record high for Q2, JPY 150.3 billion. Year-on-year, it's a growth by 11.7% in terms of the growth rate. Non-GAAP operating income is again MNO service, this is a record high, JPY 42 billion. Year-on-year is 109.6%, roughly 110% increase over this year.
Speaker #2: In consolidated revenue, we recorded a high of ¥665.5 billion. With the size of our business, year-on-year growth was 16.1%. So, we have been able to grow our business quite steadily.
Speaker #2: Each segment—all of them are on a growth trajectory. Also, in terms of consolidated EBITDA, it's a record high for the second quarter: ¥115.3 billion.
Speaker #2: Year on year, it's a growth of 11.7% in terms of the growth rate. And non-GAAP operating income is, again, ML service. This is a record high—42 billion yen.
Speaker #2: So again, year on year, it's 109.6%, roughly a 110% increase over this year. And with that being said, this is regarding the Fintech business.
Hiroshi Mikitani: With that being said, this is regarding the FinTech business.
Speaker #1: Final.
Hiroshi Mikitani: Funo.
Speaker #2: So Rakuten's fintech business,
Eiichi Kaga: Rakuten's fintech business, Rakuten Bank, Rakuten Securities, and Rakuten Card, and although this was not included this time, insurance and Rakuten Point Card or Rakuten Pay, we do have these entities, and respectively, they are top leaders within each industry, we believe. Regarding Rakuten Card, shopping GTV, JPY 27.7 trillion, that is Q2 result. Amazing result. And for digital bank, Rakuten Bank, the number of accounts, 18.46 million accounts. Very soon we will be achieving 20 million mark. And for Rakuten Securities general accounts, 14.39 million accounts. We are number one in the industry. These three companies will be under the umbrella of Rakuten Bank. For the details, we would like to talk about this later. But we do believe there are two major synergies. Straightforward financial synergies, that is one. And from marketing perspective, maximizing individual customer base.
Speaker #3: Bank, securities, and card, and although this time insurance was not included, as well as Rakuten Point Card or Rakuten Payment. We do have these entities and, respectively, their top leaders within each industry.
Speaker #3: We believe. So regarding card shopping, GTV was ¥27.7 trillion—that's the second quarter result, an amazing number. And for digital bank, Rakuten Bank, the number of accounts reached 18.46 million.
Speaker #3: So, very soon we will be achieving the 20 million mark, and for Rakuten Securities general accounts, 14.39 million accounts. We're number one in the industry.
Speaker #3: So, this has industry-leading growth and an overwhelming customer base. So, these three companies will basically be under the umbrella of Rakuten Bank. For the details, we would like to talk about this later, but we do believe there are two major synergies: straightforward financial synergies—that's one—and from a marketing perspective.
Speaker #3: Maximizing individual customer base. So, cross-use of customers or acquire new customers. So, we do believe that there will be significant synergies that could be generated.
Eiichi Kaga: Cross-use of customers or acquire new customers. We do believe that there will be significant synergies that could be generated. The total impact, 2029, 2028. Actually in October, we will integrate, which means that full year will be in fiscal year ending March 2028. That is JPY 25 billion approximately in financial impact and JPY 8 billion in terms of the marketing impact. Furthermore, with this growth for March 2030, JPY 85 billion of synergy effect presumably can be gained. Going forward, Rakuten Bank, the synergy with Rakuten Securities, we will be able to leverage their capabilities. Like I said, the number of accounts, Rakuten Bank, 18.46 million, and for Rakuten Card, overwhelmingly, the number of cards is extremely high. We will be able to refer customers and Rakuten Card, and Rakuten Securities. With NISA, it is leading the young customer base.
Speaker #3: So, the total impact, 2029, 2028. So, actually, in October, we will integrate, which means that the full year will be the fiscal year ending March 2028.
Speaker #3: So that's approximately ¥25 billion in financial impact, and ¥8 billion in terms of the impact. Furthermore, with this growth by March 2030, a synergy effect of presumably ¥85 billion can be gained.
Speaker #3: So, going forward, Rakuten Bank—the synergy with Rakuten Securities—we will be able to leverage their capabilities. And like I said, the number of accounts at Rakuten Bank is 18.46 million.
Speaker #3: And for Rakuten Card, overwhelmingly, the number of cards is extremely high. So we will be able to refer customers to Rakuten Card and Rakuten Securities. With NISA, it is leading the young customer base.
Speaker #3: So there, once again, will be synergy. So what kind of synergies? Rakuten Card, non-transfer of bank, and those people with bank transfer. At Rakuten Bank, the direct debit—the deposit amount—is 4.3 times.
Eiichi Kaga: There, once again, will be synergy. What kind of synergies? Rakuten Card, non-transfer of bank and those people with a bank transfer at Rakuten Bank, the direct debit, the deposit amount is 4.3 times. And without Money Bridge, that is 4.4 times difference. As we move into the world with interest rate, how can we go about opening more accounts, and have our customers deposit their balance in those accounts? These will challenge us. We believe that there will be a lot of benefits that we can gain from consolidating integration. Rakuten Card, Rakuten Bank, Rakuten Securities will be integrated. We want to increase the deposit, and also diversify the portfolio. Not just these three entities, but synergy with Rakuten Group can be generated. Through Rakuten Pay, this fintech ecosystem and Rakuten Group e-commerce. We will be connecting the two ecosystems.
Speaker #3: And with and without Money Bridge, that's a 4.4 times difference. So as we move into a world with interest rates, how can we go about opening more accounts and have our customers deposit their balances in those accounts?
Speaker #3: So these will be challenges, but we believe that there will be a lot of benefits that we can gain from consolidating integration. So card, bank, and securities will be integrated.
Speaker #3: We want to increase the deposit and also diversify the portfolio. And not just with these three entities, but also by generating synergy with Rakuten Group.
Speaker #3: So, through Rakuten Payment, this fintech ecosystem, and Rakuten Group e-commerce, we will be connecting the two ecosystems. Now, moving on to the buy segment results.
Eiichi Kaga: Moving on to by segment results.
Speaker #1: And.
Speaker #2: So the internet service segment, in terms of business results for the second quarter, revenue is ¥338.1 billion, and year-on-year it is up by 4.2%.
Hiroshi Mikitani: The internet service segment, in terms of the business result for the Q2, revenue is JPY 338.1 billion, and year-on-year is +4.2%. With AI utilization and other levers, non-GAAP operating income year-on-year is 68.6% increase, JPY 23.1 billion. Looking into the breakdown and content, the domestic EC, AG, MS, its year-on-year 5.3% increase, thereby JPY 1.5 trillion. Rakuten Travel GTV is a 17.2% increase. The investment, again, +17.6% for realizing IRR. International is also a very robust business growth, especially, it could be highlighted to the sense that advertising revenue year-on-year is JPY 65.6 billion. Data and AI, Rakuten Mobile DPI data inclusive, we are able to enjoy a great amount of momentum in growth. If I may reiterate, GMS, as you can see, is increasing and at the same time, the revenue is +5.3%.
Speaker #2: And with AI, utilization, and other levers, non-GAAP operating income is a 68.6% increase, so ¥23.1 billion. Looking into the breakdown and content, the domestic EC GMS, year-on-year, is a 5.3% increase, thereby ¥1.5 trillion.
Speaker #2: Rakuten travel, GTV, it's 7.2% increase. The investment again plus by 17.6% for realizing IRR. And inter-international is also very robust business growth. Especially it could be highlighted to the sense that advertising revenue year on year is 65.6 billion yen.
Speaker #2: So data and AI that are the mobile DPI data inclusive, we are able to enjoy a great amount of momentum in growth. And if I may reiterate, GMS is, as you can see, is increasing.
Speaker #2: And at the same time, the revenue is up by 5.3%. So non-GAAP operating profit is 30.8% positive. So the AI—how this could be well leveraged and utilized. Without AI, we will not be able to grow our business.
Hiroshi Mikitani: Non-GAAP operating profit is +30.8%. The AI, how this could be well-leveraged and utilized. Without AI, we'll not be able to grow our business. With that being said, AI, we are putting a lot of emphasis on AI. One of the examples I'd like to share with you is that what we are promoting and developing, AI Shop Manager. Allow me to introduce the Shop Manager. With Rakuten and Amazon, the biggest difference is that for Rakuten, it's based on the brick-and-mortar stores, and the store is the basis. In other words, the human touch shopping experience that we'll be able to offer. At the same time, in terms of hospitality, we like to offer the sense of omotenashi and hospitality from Japan.
Speaker #2: So with that being said, AI—we are putting a lot of emphasis on AI. But one of the examples I'd like to share with you is that what we are promoting and developing is an AI shop manager. Allow me to introduce the shop manager.
Speaker #2: So with Rakuten and Amazon, the biggest difference is that for Rakuten, it's based on brick-and-mortar stores, and the store is the basis.
Speaker #2: So, in other words, a human-touch shopping experience that we'll be able to offer. At the same time, in terms of hospitality, we would like to offer the sense of omotenashi, or hospitality, from Japan.
Speaker #2: The true, real store managers 24 by 7, or some sort of serving a few tens of thousands of customers at the same time, is not feasible.
Hiroshi Mikitani: The true real store managers, 24 by seven, or serving a few tens of thousands of customers at the same time is not feasible. The Shop Manager, the personality or the store characteristics or the product characteristic, having deep understanding of that, AI Shop Manager will be able to provide service 24 by seven. I think you're running a video of this AI Shop Manager. Welcome. This is your AI Shop Manager. May I help you? Do you have any concerns about your skin? Well, I don't like oily products. I want something that feels light and refreshing. Then I recommend a water-based gel formula or one with menthol if you prefer a cooling sensation. Those are the two popular products. First item is standard facial toner that emphasize a refreshing sensation. The second is moisturizing balance all-in-one gel. The red one looks good. What about the reviews?
Speaker #2: So, the shop manager's personality, the store characteristics, or the product characteristics—by having a deep understanding of those, the AI shop manager will be able to provide service 24/7.
Speaker #2: So, I think you're running a video of this AI Shop Manager. Welcome.
Speaker #4: お気軽に。
Speaker #2: This is your AI shop manager. May I help you?
Speaker #4: お肌で気になることは。
Speaker #2: Do you have any concerns about your skin?
Speaker #4: とにかくベタベタするのが。
Speaker #2: I don't like oily products.
Speaker #4: さっぱり使いたい。
Speaker #2: I want something that feels light and refreshing.
Speaker #4: I recommend a water-based gel formula, or one with menthol if you prefer a cooling sensation. Those are the two popular products. The first item is a standard facial toner, emphasizing a refreshing sensation.
Speaker #4: The second is a moisturizing, balanced all-in-one gel. The right one looks good. What about the reviews? The review is 4.6—very highly evaluated.
Hiroshi Mikitani: The review is 4.6, very highly evaluated. In the summer, it's light on your skin, and the next morning you don't feel you're shiny. Sounds good. I will go with that. Thank you very much. Please confirm your order once again. Is it okay to process your order with these details? Yes, it's true. Thank you. Thank you very much for your purchase. We'll be looking forward to seeing you again. Within this year, we're going to launch the service, and we're now extending our effort for the further development. The next I would like to highlight about the Rakuten Travel business. Again, it's a robust growth that we are enjoying. In terms of year-on-year, it's 17.2% in term of GTV. The domestic is 10% growth year-on-year, again, a very robust growth. On top of that, the global related, we have 78.5% year-on-year.
Speaker #4: In the summer, it's light on your skin, and the next morning, you don't feel your skin is shiny—it feels good. I will go with that.
Speaker #4: Thank you very much. So, please confirm your order once again. Is it okay to process your order with these details? 大丈夫。
Speaker #2: Yes, you're okay. Thank you. Thank you very much for your purchase.
Speaker #4: ありがとうございます。またのご来店。
Speaker #2: We'll be looking forward to seeing you again. So, within this year, we're going to launch the service, and we're now extending our effort for the further development.
Speaker #2: And the next I would like to highlight about the Rakuten travel business. So again, it's a robust growth that we are enjoying. In terms of year on year, it's 17.2% in terms of GTV.
Speaker #2: So, the domestic is 10% growth year on year, so again, a very robust growth. And on top of that, the global related, we have 78.5% year on year.
Speaker #2: Especially in terms of Rakuten Travel Exchange, we have been holding the other wholesalers' distribution in terms of the room accommodation inventory, in various countries.
Hiroshi Mikitani: Especially in terms of Rakuten Travel Xchange, we have been holding the other wholesalers distribution in terms of the room accommodation inventory, the various countries, the effective, of course, travel services, we are going to connect them all. We have 1,295 companies. The service companies are connected to Rakuten Travel Xchange. The sales of that is increasing, and the transaction value is increasing. That is a reason for the growth of the gross transaction value. Outside of that, the investment that are being made, we are working hard in order to improve the profitability of the business. Last year, the Q2 compared to that, is a growth by JPY 3.3 billion, the improvement of the losses. The international department, well, Rakuten Brand Marketing, they have worked hard, but they have not been able to achieve the ambitious goal.
Speaker #2: The effect of course travel services—we’re going to connect them all. So we have 1,295 companies; the service companies are connected to Rakuten Travel Exchange.
Speaker #2: And the sales of that are increasing. And the transaction value is increasing. So that is a reason for the growth of the gross transaction value.
Speaker #2: And outside of that, the investments that are being made—we are working hard in order to improve the profitability of the business. Last year, the second quarter compared to that, is a growth by ¥3.3 billion.
Speaker #2: The improvement of the losses. And the International Department—well, Rakuten Brands Marketing Press—they have worked hard, but they have not been able to achieve the ambitious goal.
Speaker #2: So, we are unfortunately closing down this operation, and that is something that we decided. So, the growth is 3.9%—long gap operating increase.
Hiroshi Mikitani: We are unfortunately closing down this operation, and that is something that we have decided. The growth is 3.9% growth, non-GAAP operating increase. A slight decline, but it is showing a very robust foundation of growth. Viber, Viki, Rakuten Kobo, and also Yac Universe. These are increasing their profitability steadily. Already mentioned earlier, the ad business. This is in fact showing a very healthy, strong growth. This quarter, year-on-year is 15.6%.
Speaker #2: It's a slight decline, but it's showing a very robust foundation for growth. Fiber, Viki, Rakuten, Kobo, and also US Yachting Universe—these are increasing their profitability.
Speaker #2: Steadily. And as already mentioned earlier, the ad business is in fact showing very healthy, strong growth. This quarter, year on year, is 15.6% positive.
Eiichi Kaga: Positive year-on-year. JPY 65.6 billion. Year basis, we are now being able to seek JPY 300 billion. AI utilization, for instance, in terms of contents created, the creation of the ad. In terms of the banner, static image, and the video ad, we are going to offer that. At the same time, massive amount of transactions and inspection, performance, and bidding, everything is going to be leveraging AI capability. At the same time, based on Rakuten's customer base database, we are going to effectively use the targeting ad.
Speaker #2: Year on year, so ¥65.6 billion basis. We're now being able to seek ¥300 billion, excuse me. And AI utilization, for instance, in terms of content creative, the creation of that.
Speaker #2: So in terms of banners, static images, and video ads, we are going to offer that. At the same time, a massive amount of course transactions, and inspection, performance, and bidding—everything.
Speaker #2: We are going to leverage AI capabilities. At the same time, based on Rakuten's customer database, we are going to effectively use targeted ads.
Speaker #3: すいません。
[Company Representative] (Rakuten Group): Segment.
Speaker #2: Moving on to the Fintech segment. Revenue and income — revenue was ¥295.4 billion, a very robust 25% year-on-year increase. Non-GAAP operating income was ¥69.2 billion year-on-year.
Eiichi Kaga: Moving on to the Fintech segment. Revenue and income. Revenue, JPY 295.4 billion. Very robust, year-on-year, 27% increase. Non-GAAP operating income, JPY 69.2 billion, year-on-year, 60.1% increase. Rakuten Card GTV, +9.4%, that is JPY 7.1 trillion. Rakuten Bank account, 18.46 million, and bank deposits, JPY 13.3 trillion. Deposit. Of course, it is very competitive to gain deposits, but it grew by 13.9% year-on-year. Securities general account, 14.39 million, 14.5% growth. Especially young people are opening accounts and NISA accounts. In July, we surpassed 8 million, growing by more than 20% year-on-year, and assets under custody, a +48.3% year-on-year basis, JPY 58.7 trillion. For Rakuten Card, the number of cards growing nicely. Shopping GTV and financial expense is going up. With a reorganization of our financial businesses, we will be able to minimize the downside expense.
Speaker #2: 60.1% increase. So Rakuten Card GTV plus 9.4%. So that's ¥7.1 trillion. Rakuten Bank accounts, 18.46 million. And bank deposits, ¥13.3 trillion. So, deposits—of course, it's very competitive to gain deposits.
Speaker #2: But it grew by 13.9% year on year. And securities general account: 14.39 million, a 14.5% growth. So especially young people are opening accounts and NISA accounts.
Speaker #2: In July, we surpassed 8 million, growing by more than 20% year on year. And assets under custody are up 48.3% on a year-on-year basis.
Speaker #2: So, a total of ¥58.7 trillion. For Rakuten Card, the number of cards is growing nicely. Shopping GTV and financial expense are going up.
Speaker #2: But with the reorganization of our financial businesses, we will be able to minimize the downside expense. And operating income, since we're controlling, so non-GAAP operating income is plus 16.2%.
Eiichi Kaga: Operating income, since we are controlling, so non-GAAP operating income is +16.2%, so JPY 17.4 was the result for Q2. For Rakuten Bank, we made financial result announcements already. Interest rate is going up, and given this backdrop, we are growing nicely. Ordinary revenue, JPY 78.4 billion, ordinary profit, JPY 30.2 billion, 26.1% year-on-year, and capital adequacy ratio, 11.4%, ROE 22%, accounts, 18.4 million. Well, the main accounts increased by 7.7%. It is now 6 million. Main account ratio is improving, and deposits grew by 13.9%, and expense ratio coming down. Our activities are materializing. For Rakuten Securities, especially with new NISA, we are gaining new accounts. It is growing, the number of accounts. It is growing and surpassing 15 million. Operating revenue as well as operating income, very robust, especially operating income under Japanese GAAP. It grew by 2.4x or more.
Speaker #2: So, 17.4 was the result for Q2. For Rakuten Bank, we have already made financial results announcements. Interest rates are going up, and given this backdrop, we are growing nicely.
Speaker #2: Ordinary revenue 78.4 billion, ordinary profit 30.2 billion, 26.1% year on year. And capital adequacy ratio 11.4%, ROE 22%, accounts 18.4 million. Main accounts the ratio well, the main accounts increased by 7.7%.
Speaker #2: It's now 6 million. So the main account ratio is improving, and deposits grew by 13.9%. And the expense ratio is coming down. So our activities are materializing.
Speaker #2: And for Rakuten Securities, especially with the new NISA, we are gaining new accounts. The number of accounts is growing and has surpassed 15 million.
Speaker #2: Operating revenue, as well as operating income, was very robust, especially operating income. Under Japanese GAAP, it grew by 2.4 times or more. And what's more, its assets under custody have exceeded ¥60 trillion.
Eiichi Kaga: What is more is assets under custody. It has exceeded JPY 60 trillion. Very steady, very stable performance is being achieved. Stock flow revenue. You can see the ratio here. The stock ratio is going up over the past quarters. Now, insurance business is not included in this reorg, but very steady. We are honestly saying revamping this business. Revenue and income. Revenue is JPY 20.7, and operating income, JPY 1.5 billion. We are generating profits. Going forward, we believe that we will be able to generate more profit. For Rakuten Pay, JPY 29.1 billion of revenue, +12.2% year-on-year, and non-GAAP operating income, JPY 3.2 billion, and year-on-year, it is close to 80%+. We have been working with different partners. As you know, the other day we announced with FamilyMart, we have started SPU-eligible services.
Speaker #2: Very steady, very stable performance is being achieved. The stock flow revenue—you can see the ratio here—the stock ratio is going up over the past quarters.
Speaker #2: And now insurance business is not included in this reorg. But very steady. We are honestly saying revamping this business. So revenue and income revenue is 20.7.
Speaker #2: And operating income was ¥1.5 billion, so we are generating profits. Going forward, we believe that we will be able to generate more profit. For Rakuten Payment, revenue was ¥29.1 billion, up 12.2% year-on-year.
Speaker #2: And non-GAAP operating income was ¥3.2 billion, and year on year, it is close to 80% plus. So we have been working with different partners. As you know, the other day, we announced a partnership with Family Mart.
Speaker #2: We've started SPU-eligible services. If you spend more than ¥3,000 per month, you can earn points plus 0.5% times. And now, with the mobile segment.
Eiichi Kaga: If you spend more than JPY 3,000 or more per month, then you can earn points, +0.5x. Now with mobile segment. In terms of revenue is JPY 121.4 billion, so year-on-year is +8.3%. Non-GAAP operating income is an improvement by JPY 4.1 billion. EBITDA, well, year-on-year is -28.4%, but in segment
Speaker #3: 売上。
Speaker #2: In terms of revenue, it is ¥121.4 billion. So, year-on-year, it’s a positive by 8.3. Non-GAAP operating income is an improvement by ¥4.1 billion.
Speaker #2: But EBITDA, well, year on year it's minus 28.4%. But in this segment, for one thing, it's the home straight—the energy crisis, Rakuten Electricity—the energy price has gone up.
Hiroshi Mikitani: Well, one thing is the home state, the energy crisis, the Rakuten electricity, the energy price has gone up. That is the main reason for that. Also pre-marketing cash flow. There was a new acquisition. What would happen without the new acquisition is a scenario. Already JPY 28 billion profit is being generated. This is +11.8%. Mobile, of course, account, it is going to achieve 10.8 million and, of course, the churn rate is going down. ARPU is also gradually going up steadily. Rakuten Symphony, the number of customers and the number of partners are also on the growth trajectory. In mobile, in the business specifically, if I can allude on that, 11.9% revenue, non-GAAP operating income is an improvement by JPY 6.7 billion. It is right in red with JPY 32.3 billion.
Speaker #2: That is the main reason for that. And also, pre-marketing cash flow. In other words, the new acquisition—what would happen without the new acquisition is a scenario.
Speaker #2: Already, ¥28 billion profit is being generated. So yes, this is a positive by 11.8%. So mobile, of course, accounts—it is going to achieve 10.8 million.
Speaker #2: And, of course, the churn rate is going down. R2 is also gradually going up steadily. Rakuten Symphony, so the number of customers and the number of partners are also on a growth trajectory.
Speaker #2: And mobile in the business specifically, if I can allude on that, saw 11.9% revenue growth. Non-GAAP operating income improved by ¥6.7 billion.
Speaker #2: So it's in red with the $32.3 billion. But as I said, the pre-marketing cash flow is $27.1 billion. So in terms of the number of outlets, it is increasing, and the marketing is quite active.
Hiroshi Mikitani: As I said, the pre-marketing cash flow, it is JPY 27.1 billion. In terms of the number of outlets is increasing, the marketing is quite active. Including all that, there is a major contribution in terms of the profitability of our business. Also in terms of March and April, the peak competitive season after that, gradually, we are still on a rise and on an increase. The churn rate again, the hopping, the targeting, the point accumulation, those customer, we have been able to contain that. Therefore, the churn rate compared, it was 1.8% for Q2. We have seen improvement in this area. Data usage has been growing nicely as well, ARPU as well. Going forward, the options is an area that we also want to grow. Data usage, like I said, is growing.
Speaker #2: So with that, including all of that, there is a major contribution in terms of the profitability of our business. And also, in terms of March and April, which are the peak competitive season, after that, gradually, we are still on a rise.
Speaker #2: And on an increase. So, the churn rate again—the hopping, the targeting, the point accumulation—those customers, we have been able to contain that.
Speaker #2: Therefore, the churn rate was 1.8% for the second quarter. We have seen an improvement in this area.
Speaker #3: データの利用。
Speaker #2: So data usage has been growing nicely as well. ARPU as well. So going forward, options is an area that we also want to grow.
Speaker #2: Data usage, like I said, is growing. So, 20-gigabyte-plus users' ratio share expanded by 3.6 percentage points. So, the network needs to be put in place.
Hiroshi Mikitani: 20 GB plus users ratio share expanded +3.6 percentage points. Network needs to be put in place. As we initially planned, we will make investment of JPY 200 billion. 5G construction has been more or less completed in this area. Also for Tokyo Metro, we only had 5 megahertz, but we will be growing to 20 megahertz bandwidth expansion. As you may know, with Ministry of Internal Affairs and Communications, creating Japan low Earth orbit satellite communication. As indirect subsidy operator, we have been selected. Our investment is JPY 248 billion we will be receiving. We would like to contribute toward resilience that maintains domestic communications infrastructure. Now regarding the finance, last week, there was a comment from KDDI, I would like to comment regarding roaming.
Speaker #2: So as we initially planned, we will make an investment of ¥200 billion, and 5G construction has been more or less completed in this area. Also, for Tokyo Metro, we only had five megahertz, but we'll be growing to 20 megahertz.
Speaker #2: Bandwidth expansion, and as you may know, with the Ministry of Internal Affairs and Communications, we are creating the Japan Low Earth Orbit Satellite Communication. So, as the indirect subsidy operator, we have been selected. Our investment is ¥248 billion we will be receiving. We would like to contribute toward resilience.
Speaker #2: That maintains domestic communications infrastructure. Now, regarding e-finance, last week there was a comment from KDDI. So, I would like to comment regarding roaming first and foremost.
Hiroshi Mikitani: First and foremost, Rakuten Mobile business, we have had roaming contract with KDDI, and we started the whole business with that, and the main goal was NTT's dominance. We wanted to shift from that situation so that we can democratize telecommunication. KDDI had supported our goal, and we were very grateful for that. Based on the contract with KDDI, we have come thus far. First of all, where we have the coverage, based on the contract, we will continue on from October onwards. Where Rakuten does not have a coverage, the roaming will be reduced gradually. That will be the approach we will be taking. I will stop here. Thank you.
Speaker #2: In the Rakuten Mobile business, we have had a roaming contract with KDDI, and we started the whole business with that. The main goal was to address NTT's dominance.
Speaker #2: We wanted to shift from that situation so that we can democratize telecommunication. And KDDI had supported our goal, and we were very grateful for that.
Speaker #2: So, based on the contract with KDDI, we have come this far. And first of all, where we have the coverage based on the contract, we will continue on from October and onwards.
Speaker #2: Where Rakuten does not have coverage, the roaming will be reduced gradually, so that will be the approach we will be taking. I will stop here.
Speaker #2: Thank you.
Speaker #3: こんにちは。
[Company Representative] (Rakuten Group): Onisago.
Speaker #2: Thank you for your kind participation. So, I would like to report on the finance. First of all, in terms of the summary of the second quarter, non-GAAP operating income was ¥42 billion.
Eiichi Kaga: Thank you for your kind participation. I would like to report on the finance. First of all, in terms of the summary of Q2, non-GAAP operating income was JPY 42 billion. IFRS operating income was JPY 20 billion after recording one-off item, including impairment losses on fixed assets in the logistics business. This represent more than double the figure of the same period last year. Since the one-off items are non-cash accounting item, we believe the group's underlying capacity to generate cash is steadily increasing. In addition to that, income before tax was positive, mentioned by Mr. Mikitani, the Q4 consecutive quarter since Q3 of last year We have been able to achieve positive. Furthermore, I would like to explain later, but the reversal of tax expenses arose in connection with the sales of shares we have.
Speaker #2: IFAS operating income was ¥20 billion after recording one-off items, including impairment losses on fixed assets in the logistics business. This represents more than double the figure from the same period last year.
Speaker #2: Since the one-off items are non-cash accounting items, we believe the Group's underlying capacity to generate cash is steadily increasing. In addition to that, income before tax was positive, as mentioned by Mr. Mikitani.
Speaker #2: This is the fourth consecutive quarter since the third quarter of last year that we have been able to achieve positive results. Furthermore, I would like to explain this later, but the reversal of tax expenses arose in connection with the sale of shares we held.
Speaker #2: And as a result, quarterly net income attributable to owners of the parent returned to profit for the first time in six years, since the second quarter of 2020.
Hiroshi Mikitani: As a result, quarterly net income attributable to owners of the parent returned to profit for the first time in 6 years, since Q2 2020. Regarding the one-off item I just mentioned, in this Q2, we recorded JPY 17 billion impairment losses on fixed assets and related items in the logistic business. The impairment resulted from the decision, following discussion with the counterparty of our warehouse leasing service, to terminate that service and convert the warehouse to our own use. Together with impairment recorded in fiscal 2025 on warehouse and the online supermarket logistic business, we have now impaired the entire book value of our own warehouses, which means that from a financial perspective, the associated balance sheet risk has been eliminated going forward. On the other hand, this is an accounting treatment reflecting the past asset and shift to more efficient management structure.
Speaker #2: Regarding the one-off item I just mentioned, in this second quarter, we recorded ¥17 billion of impairment losses on fixed assets and related items in the logistics business.
Speaker #2: The impairment resulted from the decision, following discussion with the counterparty of our warehouse leasing service, to terminate that service and convert the warehouse to our own use.
Speaker #2: Together with the impairment recorded in physical 2025 on warehouse held in the online supermarket logistics business, we have now impaired the entire book value of our own warehouses. This means that, from a financial perspective, the associated balance sheet risk has been eliminated going forward.
Speaker #2: On the other hand, this is an accounting treatment reflecting the past asset and shift to a more efficient management structure. At the same time, we intend to improve supply chain management in order to maximize the potential of our logistics facility, reduce operating costs, and create competitive advantage in e-commerce.
Hiroshi Mikitani: At the same time, we intend to improve supply chain management in order to maximize the potential of our logistic facility, reduce operating cost, fixed cost, and create competitive advantage in commerce. In terms of the Q2, accounting treatment in tax expense in connection with the sales of share we held, especially as a result of the sales of fair value OCI shares held by a group company. The gain on sales was not recognized through P&L, but transferred directly to retained earnings. On the other hand, an unrecognized tax effect recorded in OCI relating to this transaction was transferred, thereby recorded on the tax benefit. That is a negative tax expense on the P&L. The actual negative tax expense reflecting the fact that substantially no tax payment arises. That is the cause.
Speaker #2: And in terms of the second quarter, accounting treatment occurred in tax expense in connection with the sale of shares we held, especially as a result of the sale of fair value OCI shares held by a group company.
Speaker #2: The gain on sales was not recognized through P&L, but transferred directly to retained earnings. On the other hand, an unrecognized tax effect recorded in RCI in relation to this transaction was transferred, thereby being recorded as a tax benefit.
Speaker #2: That is a negative tax expense on the panel. The actual negative tax expense reflects the fact that substantially no tax payment arises. So that is a cause.
Speaker #2: In addition to that, this accounting treatment suggests that, as a result of our strategic investments to date, we have more than ¥1 trillion of net operating loss. This would offset a certain portion of future tax expenses.
Hiroshi Mikitani: In addition to that, this accounting treatment suggests that as a result of a strategic investment to date, we have more than JPY 1 trillion of net operating loss. This would offset a certain portion of a future tax expense, and as earnings improve further, that effect will materialize and contribute to maximizing our cash flow. Next. Now let's explain once again the significance of the reorganization of our fintech business scheduled to take effect on 1 October, including the financial perspective. The purpose of this reorganization is to operate one financial business in a more integrated manner, thereby accelerating growth and improving operational efficiencies. As Mikitani explained earlier, we expect to generate more than JPY 85 billion in synergies by the fiscal year ending March 2030. This reorganization is not intended as a means of fundraising for the company.
Speaker #2: And as earnings improve further, that effect would materialize and contribute to maximizing our cash flow. Next, I would like to explain once again the significance of the reorganization of our fintech business, scheduled to take effect on October 1, including the financial perspective.
Speaker #2: The purpose of this reorganization is to operate one financial business in a more integrated manner, thereby accelerating growth and improving operational efficiencies. As Mikitani explained earlier, we expect to generate more than ¥85 billion in synergies by the fiscal year ending March 2030.
Speaker #2: So, this reorganization is not intended as a means of fundraising for the company. Also, on May 20th, we disclosed that, while the transaction does require a certain capital contribution in order to carry out the reorganization, I would like to reiterate that we currently have no intention of selling shares of the bank.
Hiroshi Mikitani: Also, 20 May, we disclosed that while the transaction does require a certain capital contribution in order to carry out the reorganization, I would like to reiterate that we currently have no intention of selling shares of the bank. We recognize that the market assessment of our financial position continues to improve. The chart on the left shows the spread calculated from the yields on our corporate bond and the yields on the JGB government bond of corresponding maturity. The blue line shows the credit spread 1 year ago, and the red line shows the most recent level. Across the maturities, spreads are steadily tightening on the trend. On the chart on the right, CDS spread also show a relative improvement compared to the market index. To further enhance the market assessment of the company, we would continue working to strengthen our financial soundness.
Speaker #2: We recognize that the market assessment of our financial position continues to improve. The chart on the left shows the spread calculated from the yields on our corporate bond and the yields on the JGB government bond of corresponding maturity.
Speaker #2: The blue line shows the credit spread one year ago, and the red line shows the most recent level. So, across the maturities, spreads are steadily tightening on the trend.
Speaker #2: On the chart on the right, CDS spread also shows a relative improvement compared to the market index. To further enhance the market assessment of the company, we will continue working to strengthen our financial soundness.
Speaker #2: Lastly, our financial policy remains unchanged: self-funding, meeting the funding needs of the mobile business without relying on external financing. As I mentioned earlier, in the second quarter, we raised approximately ¥200 billion through the sales of shares that we have held.
Hiroshi Mikitani: Lastly, our financial policy remain unchanged. Self-funding, meeting the funding needs of the mobile business without relying on external financing. As I mentioned earlier, in Q2, we raised approximately JPY 200 billion through the sales of share that we have held. Going forward, we will continue to use such asset finance while securing the funds we need through the cash flow of each business and improvement in the cash conversion cycle. The bond redemptions are also proceeding smoothly in line with our policy. In addition to redeeming our perpetual subordinated bonds in full, the first call date on April, in June, we redeemed JPY 20 billion of senior bonds entirely with cash on hand without issuing refinancing bond. In terms of December, we will be able to redeem in full with the cash on hand as well.
Speaker #2: Going forward, we will continue to use such asset finance while securing the funds we need through the cash flow of each business and improving the cash conversion cycle.
Speaker #2: And also, the bond redemptions are proceeding smoothly, in line with our policy. In addition to redeeming our perpetual subordinated bonds in full at the first call date in April and June, we redeemed ¥20 billion of senior bonds entirely with cash on hand, without issuing a refinancing bond.
Speaker #2: And also, in terms of the December, we will be able to redeem in full with a cash on hand as well. So in 2027 onward, the bond redemption we would like to take a proactive approach in this range and the business cash flow maximizing them and the gross debt would be contained, of course, but refinance if it's being required in terms of the closely monitoring the market trends such as foreign exchange and interest rate, we would like to select our optimal means for a company.
Hiroshi Mikitani: In 2027 onward, the bond redemption, we would like to take a proactive approach in this range and the business cash flow maximizing them, and the asset will be contained, of course, but refinance if it's being required. In terms of closely monitoring the market trends such as foreign exchange and interest rate, we would like to select our optimal means for a company. That's all for the finance section. I'd like to invite about initiative of AI. Chief AI & Data Officer Ting will be taking this part.
Speaker #2: That's all for the finance section. I would like to hand over to Ting Cai, Chief AI and Data Officer, who will be taking this part.
Speaker #1: Thank you, Kagasan.
Ting Cai: Thank you, Kaga-san. Hello, everyone. I will share an update on the Rakuten AI vision and our execution momentum in Q2 2026. As we discussed last quarter, the strength of the Rakuten ecosystem lies in the synergy among its services. Now, AI presents a unique opportunity to amplify that synergy by attracting new users at lower cost, increasing cross-use, and bringing more value to our users and the businesses. We are doing that in three ways: engage, expand, and differentiate. Engage means making every touch point more relevant and useful. Expand means increasing the usage scenario and surface area where we can be helpful to our customers, guiding them from vague idea to concrete actions. Differentiate means guiding a customer all the way to task completion from online discovery to offline delivery, an end-to-end experience that general purpose agent cannot match.
Speaker #3: Hello everyone.
Speaker #1: We'll share an update on the Rakuten AI vision and our execution momentum in Q2 2026. As we discussed last quarter, the strength of the Rakuten ecosystem lies in the synergy among its services. Now, AI presents a unique opportunity to amplify that synergy by attracting new users at lower cost, increasing cross-use, and bringing more value to our users and businesses.
Speaker #1: We are doing that in three ways: engage, expand, and differentiate. "Engage" means making every touchpoint more relevant and useful. "Expand" means increasing the usage scenarios and surface area where we can be helpful to our customers.
Speaker #1: Guiding them from a vague idea to concrete actions. And by differentiate, we mean guiding a customer all the way to task completion—from online discovery to offline delivery and end-to-end experience—that a general-purpose agent cannot match.
Speaker #1: Together, these three areas add up to a durable competitive advantage built not only on data, but also by accumulating intelligence within the Rakuten ecosystem.
Ting Cai: Together, these three areas add up to a durable, competitive advantage, built not only just on data, but also accumulate intelligence within the Rakuten ecosystem. Today, we will share examples in each of the three areas. First, engage. The application of large language models goes beyond chat, and language models can understand the user intent, identify patterns, match and translate better than any previous technology. This is why we use large language models to enrich our item data, improve our ranking signal, and in this case, improve our understanding of user queries. Through LLM, we can better understand whether a user has made up their mind or not. Take two customer on Ichiba as an example. One customer search for specific model number, and in this case, he knows exactly what he wants, and we only return product that matches that exact model number.
Speaker #1: And today, we will share examples in each of the three areas. First, engage. The application of large language models goes beyond chat. Large language models can understand user intent, identify patterns, and match and translate better than any previous technology.
Speaker #1: And this is why we use large language models to enrich our item data, improve our ranking signals, and, in this case, improve our understanding of user queries.
Speaker #1: Through LLM, we can better understand whether users have made up their minds or not. Take two customers on Ichiba as an example. One customer searches for a specific model number.
Speaker #1: And in this case, he knows exactly what he wants. And we only return products that match that exact model number. With a set of limited choices, we accelerate his decision to check out.
Ting Cai: With a set of limited choices, we accelerate his decision to check out. Another customer searches for gift for summer holidays, she does not have any specific product in mind. In this case, we guide users through explorations, present a broader set of suggestions, expanded options, and increasing the bucket size. The impact is evident, as indicated by our recent A/B experiment. The test shows that attributed orders grew by 0.52%, and attributed GMS grew by 0.87%. At Rakuten Ichiba scale, this is quite remarkable. On an annualized basis, this is equivalent to JPY 12.8 billion GMS uplift. The second area is expand. How Rakuten AI can expand in a where, when, and how we serve our customer needs. This includes engaging them earlier in the purchase funnel and also recommend relevant products and services across businesses to dramatically increase cross-use.
Speaker #1: Another customer is searching for a gift for the summer holidays, and she does not have any specific product in mind. In this case, we guide users through exploration, present a broader set of suggestions, expand options, and increase the bucket size.
Speaker #1: The impact is evident, as indicated by our recent A/B experiment. The test shows that attributed orders grew by 0.52%, and attributed GMS grew by 0.87% at Ichiba scale.
Speaker #1: This is quite remarkable. Our analysis is based on this, which is equivalent to a 12.8 billion yen GMS uplift. The second area is expansion—how Rakuten AI can expand where, when, and how we serve our customers' needs.
Speaker #1: This includes engaging them earlier in the purchase funnel, and also recommending relevant products and services across businesses to dramatically increase cross-use. Specifically, we are embedding Rakuten AI into almost every business application.
Ting Cai: Specifically, we are embedding Rakuten AI into almost every business application, not only increasing their capability, but also connecting them with the rest of the ecosystem. In addition, we are expanding our touchpoints through Rakuten AI apps across the first surface area, whether it's a mobile apps, on the web, or on the desktop. As web traffic shifts from search to agent, we are very well-positioned to take advantage of this agentic shift to attract new users and increase usage of existing users. Finally, we are also expanding our distribution by bringing Rakuten AI to our partners. As announced in July, Rakuten AI for desktop is now pre-bundled on HP PCs, and this will help millions of users easily access the Rakuten ecosystem, leverage the computing power on their AI PC to reduce token costs, and also understand the local context to provide more relevant results.
Speaker #1: Not only increasing their capability, but also connecting them with the rest of the ecosystem. In addition, we are expanding our touchpoints through Rakuten AI apps across the first surface area, whether it's mobile apps, on the web, or on the desktop.
Speaker #1: As web traffic shifts from search to agent, we are very well positioned to take advantage of this agentic shift to attract new users and increase usage among existing users.
Speaker #1: Finally, we are also expanding our distribution by bringing Rakuten AI to our partners. As announced in July, Rakuten AI for desktop is now pre-bundled on HP PCs through Rakuten.
Speaker #1: And this will help millions of users easily access the Rakuten ecosystem, leverage the computing power on their AI PC to reduce token costs, and also understand the local context to provide more relevant results.
Speaker #1: As of today, 17 of all of our services are live with an AI agent. And seven more are near in the near-term deployment. And more than 50 are on the way.
Ting Cai: As of today, 17 of all of our services are live with an AI agent, and seven more are in the near-term deployment, and more than 50 are on the way. Each agent strengthens its own business and connects with the Rakuten ecosystem, expanding the potential of cross-use across Rakuten. Lastly, the last area is differentiate. As Rakuten AI deeply embeds into each business application, it can accomplish what other external agent cannot. From first chat to a complete transaction, all the way to delivery in the real world. Even providing customer service after purchase. For example, on Rakuten Ichiba, AI can now help customers to make decisions faster, and the time to purchase is reduced by 41%, and average order amount up 17%. Customers can understand the decisions they have to make faster and buy with greater confidence.
Speaker #1: Each agent strengthens its own business and connects with the Rakuten ecosystem, expanding the potential of cross-use across Rakuten. And lastly, the last area is differentiation.
Speaker #1: As Rakuten AI is deeply embedded into each business application, it can accomplish what other external agents cannot. From the first chat to a complete transaction—all the way to delivery.
Speaker #1: Delivery in the real world, even providing customer service after a purchase—for example, on Ichiba—AI cannot help customers make decisions faster. And the time to purchase is reduced by 41%.
Speaker #1: The average order amount is up 17%. Customers can understand the decision they have to make faster and buy with greater confidence. Similarly, on Rakuten Travel, it takes customers from discovery to booking in one flow.
Ting Cai: Similarly on Rakuten Travel, it takes customers from discovery to booking in one flow, and this is growing rapidly. Rakuten AI for travel launched at the end of April. Now average order is 13% higher for AI-assisted booking versus those not going through AI. Family and group trip booking are also up 29%. Such family and group trip booking is often very complex in nature, and this is exactly where AI can help to ease the decision-making. Just last week, we announced Rakuten AI Super Agent at Rakuten AI Optimism Conference. This means three things. First, we double down on cross-use. Rakuten AI Super Agent is about connecting the customer experience across all of our products and services so agent in one part of the ecosystem can hand off to another agent and complete another transaction.
Speaker #1: And this is growing rapidly. Rakuten AI for Travel launched at the end of April. Now, average order is 13% higher for AI-assisted booking versus those not going through AI.
Speaker #1: And family and group trip bookings are also up 29%. Such family and group tracking is often very complex in nature, and this is exactly where AI can help to ease the decision-making process.
Speaker #1: Just last week, we announced Rakuten AI Super Agent at the Rakuten AI Optimism Conference. This means three things. First, we double down on cross-use.
Speaker #1: Rakuten AI Super Agent is about connecting the customer experience across all of our products and services, so an agent in one part of the ecosystem can hand off to another agent and complete another transaction.
Speaker #1: Second, we are expanding what agents can do—handling complex tasks, achieving goals, and guiding users on the full journey from discovery to purchase across many services.
Ting Cai: Second, we are expanding what agent can do, handling complex tasks, achieving goals, guiding user on the full journey from discovery to purchase across many services. Third, we are connecting Super Agent to third-party services like maps, calendar, email, messengers, so it's easier for customers to track, communicate, and plan using their favorite tools and improve their productivity. Lastly, the Super Agent will interact with other external agents on the internet, which is critical to attract more agent traffic for our merchants, hotel, and business partners in the Rakuten ecosystem. I'd like to show you what a Super Agent can do. Please play the video.
Speaker #1: And third, we are connecting Super Agent to third-party services like maps, calendar, email, and messengers, so it's easier for customers to track, communicate, and plan using their favorite tools and improve their productivity.
Speaker #1: And lastly, the super agent will interact with other external agents on the internet, which is critical to attract more agent traffic for our merchants, hotels, and business partners in the Rakuten ecosystem.
Speaker #1: And I'd like to show you what the Super Agent can do. Please play the video.
Speaker #2: This video is about the transformation of Rakuten AI from an agent AI to a super agent, using travel as an example. The super agent will find the perfect travel plan among the agents based on your preferences, complete transactions, and connect with applications outside the Rakuten ecosystem.
Eiichi Kaga: This video is about the transformation of Rakuten AI from an AI agent to a Super Agent. Using travel as an example, the Super Agent will find the perfect travel plan and items based on your preferences, complete transactions, and connect with applications outside the Rakuten ecosystem to provide cross-service total solutions.
Speaker #2: To provide cross-service total solutions.
Speaker #1: To close, is that during this last slide? Okay. Now, to close, to give you a preview of the super agent, you can download Rakuten AI today. It is available on the web, iOS, Android, and on Windows, and very soon it will come to Mac as well.
Ting Cai: To close, is that showing the slide? Okay. To close, to get a preview of the Super Agent, you can download Rakuten AI today. It is available on the web, iOS, Android, and on Windows. Very soon, it will come to Mac as well. I'd like to close by saying this in Japanese.
Speaker #1: And I'd like to close by saying this in Japanese: "AIで新しい。"
Speaker #2: Let's create new value, expand possibilities with AI, and together build a better future. Thank you very much.
Ting Cai: Let's create new values, expand possibilities with AI, and together build a better future. Thank you very much. That concludes the report for the consolidated.
Speaker #3: 以上をもちまして決算。
