FY2014 Second Quarter Consolidated Financial Results August 4, 2014 Rakuten, Inc. This presentation includes forward-looking statements relating to our future plans, targets, objectives, expectations and intentions. The forward-looking statements reflect management’s current assumptions and expectations of future events, and accordingly, they are inherently susceptible to uncertainties and changes in circumstances and are not guarantees of future performance. Actual results may differ materially, for a wide range of possible reasons, including general industry and market conditions and general international economic conditions. In light of the many risks and uncertainties, you are advised not to put undue reliance on these statements. The management targets included in this presentation are not projections, and do not represent management’s current estimates of future performance. Rather, they represent targets that management strive to achieve through the successful implementation of the Company’s business strategies. The Company may be unsuccessful in implementing its business strategies, and management may fail to achieve its targets. The Company is under no obligation – and expressly disclaims any such obligation – to update or alter its forward- looking statements. Names of companies, products, and services and such that appear in this material are trademarks or registered marks of their respective companies.
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FY2014 Second Quarter Consolidated Financial Results · FY2014 Second Quarter Consolidated Financial Results August 4, 2014 Rakuten, Inc. This presentation includes forward-looking
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FY2014 Second Quarter
Consolidated Financial Results
August 4, 2014
Rakuten, Inc. This presentation includes forward-looking statements relating to our future plans, targets, objectives, expectations and intentions.
The forward-looking statements reflect management’s current assumptions and expectations of future events, and accordingly, they are
inherently susceptible to uncertainties and changes in circumstances and are not guarantees of future performance. Actual results may
differ materially, for a wide range of possible reasons, including general industry and market conditions and general international
economic conditions. In light of the many risks and uncertainties, you are advised not to put undue reliance on these statements. The
management targets included in this presentation are not projections, and do not represent management’s current estimates of future
performance. Rather, they represent targets that management strive to achieve through the successful implementation of the
Company’s business strategies. The Company may be unsuccessful in implementing its business strategies, and management may fail
to achieve its targets. The Company is under no obligation – and expressly disclaims any such obligation – to update or alter its forward-
looking statements. Names of companies, products, and services and such that appear in this material are trademarks or registered
marks of their respective companies.
2
23.4
14.8
Big Data: Predicting Composite Index Analyzing Rakuten Ichiba’s sales data, we can predict the Cabinet Office Composite
Excluding Accounting Error Impact at Travel* 21.0 22.4 +6.9%
Other Internet Services
Revenue 31.8 36.8 +15.5%
EBITDA -5.3 -5.1 -
Internet Finance Segment
Revenue 51.7 56.8 +9.8%
EBITDA 13.7 12.3 -10.6%
Others Segment
Revenue 9.4 11.7 +25.2%
EBITDA 2.3 1.2 -49.2%
Adjustments
Revenue -6.6 -11.2 -
EBITDA -0.2 -0.7 -
Consolidated
Revenue 127.7 138.3 +8.3%
EBITDA 31.5 29.7 -5.6%
* Adjusted for impact of accounting error in Q2/14 mainly related to coupons at Travel business
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14.8
*1: Edy Transaction Value = Amount settled by E-Money “Rakuten Edy” (including mobile and cards)
*2: Credit Card Shopping Transaction Value = Shopping Transaction Value of credit cards (including Rakuten group service use)
*3: Travel gross booking transaction value is before cancellation and retrospectively adjusted to include consumption tax
*4: Domestic E-Commerce GMS are retrospectively adjusted to include consumption tax for a part of businesses which previously excluded
consumption tax.
Domestic Gross Transaction Value 7/24
青木更新
7/31
Sisi
*1: Edy Transaction Value = Amount settled by E-Money “Rakuten Edy” (including mobile and cards)
*2: Credit Card Shopping Transaction Value = Shopping Transaction Value of credit cards (including Rakuten group service use)
*3: Travel (gross booking before cancellations, retroactively adjusted to including tax) = Domestic / international accommodation bookings, International
air tickets, Domestic / international dynamic packages, bus services, rent-a-car, pet hotel services
*4: Domestic E-Commerce (retroactively adjusted to including tax) = Ichiba, Auction, Package Media, Golf, Business, Download, Tickets, Internet
Off-track betting, toto, Showtime, Media rental, Dining, Salon, Mart, Kenko.com, Energy, Smart pay and Stylife
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14.8
Domestic
E-Commerce GMS
Half-Yearly Domestic E-Commerce GMS
YoY Growth
税込GMS
7/30
Sisi
7/31
Sisi
* Domestic E-Commerce GMS are retrospectively adjusted to include consumption tax for parts of some businesses which previously excluded
consumption tax .
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14.8
GMS Growth Trends after Tax Increase
Product Category Jun/14 GMS
YoY Growth
Faster
growth
Package Media (Rakuten Books) +33%
Medical goods +17%
Sweets +16%
Flowers / Gardening / DIY +15%
TVs / Audio / Cameras +10%
Slower
recovery
Cars and car goods -9%
Watches -8%
Cosmetics -5%
Bags / Luxury brands -4%
Furniture / Interior accessories -0%
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14.8
* Unique Buyers: Number of buyers sorted by e-mail address with purchasing records during the listed 3 month period
Rakuten Ichiba
Unique Buyers* and Transactions
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14.8
E-commerce through mobile devices increasing penetration
Ichiba Mobile & Tablet GMS Expanding
7/30
大野再鑑
税込GMS
7/31
Sisi (グラフのみ)
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14.8
Domestic E-Commerce GMS*1
Per Ichiba Merchant*2
*2: Number of merchants is average of two most recent half year ends
税込GMS
7/30
Sisi
7/31
Sisi
*1: Domestic E-Commerce GMS are retrospectively adjusted to include consumption tax for a part of businesses which previously excluded
consumption tax
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14.8
Rakuten Ichiba: Number of Merchants Jeremy footnote
7/30
7/30
大野再鑑
Jun/12 Jun/13 Jun/14
Number of
Merchants39,809 41,628 41,817
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14.8
7/22
Aoki
(グラフのみ)
For attractive and safe shopping mall for users and merchants, focusing on
nurturing merchants who chose Standard/Mega shop plans
Distribution of Merchant Plans
* Rakuten Ichiba’s main merchant plans are below • Ganbare Plan (Monthly fee: JPY 19,500, Commission on GMS: 3.5-6.5%, Listable items: Up to 5,000 items)
• Standard Plan (Monthly fee: JPY 50,000, Commission on GMS: 2.0-4.0%, Listable items: Up to 20,000 items)
• Mega Shop Plan (Monthly fee: JPY 100,000, Commission on GMS: 2.0-4.0%, Listable items: No limit)
Smaller-sized merchants typically choose Ganbare plan. Larger-sized merchants typically choose Standard or Mega plans.
7/30
Sisi
(グラフのみ)
50
23.4
14.8
*1: FY2012 revenue and operating income: Adjusted for correction of costs recorded in Q4/12 regarding dynamic package transactions
*2: Operating Income in Q1/14 : Adjusted for impairment loss of goodwill and intangible assets of Etpass (China)
*3: Operating Income in Q2/14 : Adjusted for impact of accounting error mainly related to coupons
Operating Income excluding accounting error: +15.8% YoY
※速報値
青木
7/24
*1
*1
*1
*1
*1
*1
*2
Rakuten Travel Results
*3
7/31
Sisi
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14.8
* Travel gross booking transaction value is before cancellation and retrospectively adjusted to include consumption tax.
Travel GTV = Transactions of Domestic / International accommodation booking, International air tickets, Domestic / International Dynamic
Package, Bus, Rent-a-car and pet hotel services
Gross bookings: +10.3% YoY
7/24
青木更新
Travel Business
Gross Booking Transaction Value
7/31
Sisi
52
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14.8
Travel : Internal Control Improvement
Since recording accounting error in 2012, Travel business
has continued thorough review of accounting processes
• Necessary corrections of accounting errors have been done
• Clarifying challenges and executing initiatives
(Challenges: appropriate design of accounting processes at launch of
new services, human resources and sufficiency of IT systems)
Initiatives • Tighter third-party audit and internal control checks
• Strengthening workforce at accounting department, conducting
stricter accounting scrutiny and thoroughly advising on start-ups by
accounting dept.
• Enhancing administrative functions at Travel Business and
developing stronger IT systems
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14.8
Viki Monthly Active Users Jeremy update
7/22
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14.8
Jeremy 7/30 Kobo Registered Users
* Kobo Inc. was consolidated from Q1/12
Kobo registered users as of June 2014: +38.8% YoY
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14.8
Jeremy 7/23 Kobo Quarterly Content Revenue Growth
Kobo’s global content revenue: +32.9% YoY in Q2
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23.4
14.8 6 Others Segment
⁃ Telecommunications
⁃ Professional Sports
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14.8
Fusion
Communications Number of “Rakuten Broadband LTE”
users accelerated (+88.6% YoY)
Operating Income: JPY 604 mm*,
in stable condition
Rakuten Baseball
Annual season tickets sales
(excl. wholesale) reached a record high
Sponsors and goods sales staying in
good shape
Average attendance per home game in
2014 season up to end of June +23% YoY
* Managerial accounting base (IFRS)
Jeremy 7/23
Jeremy 7/23
Telecom and Pro Sports Highlights
Jeremy 7/23
Wholesale
確認中8/3
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14.8
1. Strategic actions for growth
2. Profit-focused management
Highlights
59
23.4
14.8 7 FY2015 Topics
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23.4
14.8
Rakuten Card: Profit Impact due to IFRS 15
Rakuten Card plans to change customer acquisition costs accounting
according to IFRS 15*1
• Current : Expenses when incurred
• FY2015- : Capitalized and amortized over the period
to be recovered
Estimated impact based on past data
• Estimated profit increase*2: about JPY 4bn per year
*1: Direct costs relating to obtaining contracts under IFRS 15, “Revenue from Contracts with Customers” was published in May 2014
*2: Impact is net result and retroactively calculated based on FY2012 data. Actual results may vary when IFRS 15 will be adopted from FY2015.
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14.8
Moving to New Office
Rakuten Group Tokyo head office will be relocated in 2015
Expected one-time impact on P/L
Estimated cost increase: about JPY 4bn
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⁃ Financial Condition
⁃ Other Information
Appendix
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14.8 Financial Condition
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14.8
Rakuten Group
(Consolidated)
*1: Rakuten, Inc. , Rakuten Bank, Ltd. Rakuten Card Co., Ltd., Rakuten Securities, Inc. and Rakuten Life Insurance Co., Ltd are IFRS based