Rakuten Group Q2 2026 Earnings Call Transcript
Rakuten Group (OTC:RKUNY) released second-quarter financial results and hosted an earnings call on Monday. Read the complete transcript below.
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Summary
Rakuten Group reported a record high consolidated revenue of 665.5 billion yen for Q2 2026, marking an 11.6% year-on-year growth, with all business segments on a growth trajectory.
The company achieved a positive net income of 27.2 billion yen, with a record high consolidated EBITDA of 115.3 billion yen, growing by 11.7% year-on-year.
Rakuten's fintech segment showed robust performance with a 27% increase in revenue to 295.4 billion yen and a 60.1% rise in non-GAAP operating income to 69.2 billion yen.
The company plans to reorganize its fintech business, integrating Rakuten Bank, Securities, and Card under a single umbrella, aiming to generate 85 billion yen in synergies by fiscal year ending March 2030.
Rakuten's internet services segment revenue grew by 4.2% to 338.1 billion yen, with significant contributions from domestic e-commerce and advertising revenue, which increased by 15.6% year-on-year.
The mobile segment reported a revenue of 121.54 billion yen, with improvements in non-GAAP operating income and a reduction in churn rate to 1.3%.
Rakuten is emphasizing AI integration across its ecosystem, leveraging AI for enhanced customer engagement and operational efficiency, exemplified by initiatives like the AI Shop Manager and Rakuten AI Super Agent.
The company successfully improved its financial position with no external fundraising, utilizing asset finance and business cash flows to meet funding needs, and managed bond redemptions effectively.
Full Transcript
OPERATOR
Thank you very much for joining us at the Rakuten Group FY2026 Second Quarter Consolidated Financial Results. Already the flash report of the summary of the financial report has been disclosed at half past three this afternoon. Please refer to the content from the investor information page on the corporate website. If you have problems with the truncated image and video, please select a different distribution server via the button at the bottom of the slide.
I’d like to invite Mr. Mikitani for the presentation.
Mickey Mikitani, Chairman and CEO
Hello everyone. First of all, for those families and individuals that have been affected, we would like to offer heartfelt support. Two weeks before the earthquake, in fact, I was in Kumamoto. I visited Elmo as well, who had been severely struck by the earthquake, and those people who have difficulties, at Rakuten Group we would like to do everything that we can. We would like to offer heartfelt support and also consolidate into that. In terms of the topic of today, this will be the summary: number one being summary and Fintech business reorganization and segment results.
In finance, CFO Kaga-san will be presenting. Chief AI and Data Officer Ting Cai will be presenting this section. Without further ado, the summary: this second quarter, in terms of net income, we were able to achieve positive by amount of 27.2 billion yen. 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 result, so reflective of that.
So 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. In consolidated revenue, the record high of 665.5 billion yen, with the size of our business, 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, internal consolidated EBITDA is a record high for the second quarter, 115.3 billion yen; it’s a growth by 11.7% in terms of the growth rate. And non-GAAP operating income is again a record high, 42 billion yen, so on yen it’s 109.6%—roughly 110%—increase over this year. And with that being said, this is regarding the… Fintech business funnel. Rakuten’s Fintech business: bank, securities, and card—and although this was not included this time, insurance and Rakuten Point Card or payment. We do have these entities, and respectively they’re top leaders within each industry, we believe. Regarding card shopping GTV, 27.7 trillion yen—that’s a second quarter result, an amazing result. And for a digital bank, Rakuten Bank, the number of accounts is 18.46 million accounts, 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. So this has industry-leading growth and an overwhelming customer base. These three companies basically 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’s one—and from a marketing perspective, maximizing individual customer base, so cross-use of customers or acquiring new customers.
We do believe that there will be significant synergies that could be generated. So the total impact 2029, 2028—actually, in October we will integrate, which means that full year will be fiscal year ending March 2028. So that’s 25 billion yen approximately in financial impact and 8 billion in terms of the marketing impact. Furthermore, with this growth, for March 2030, 85 billion yen of synergy effect presumably can be gained. 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—Rakuten Bank 18.46 million. For Rakuten Card, overwhelmingly the number of cards is extremely high, so we will be able to refer customers. And Rakuten Card and Rakuten Securities, with NISA, are leading the young customer base, so there once again will be synergy. What kind of synergies? Rakuten Card non-transfer of bank, and those people with bank transfer: at Rakuten Bank, the direct debit deposit amount is 4.3 times.
And with and without Money Bridge, that’s 4.4 times difference. So 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’ll be a lot of benefits that we can gain from consolidating integration. Card, bank, and securities will be integrated. We want to increase the deposit and also diversify the portfolio.
And not just these three entities, but synergy with Rakuten Group can be generated, so through Rakuten Payment, this Fintech ecosystem, and Rakuten Group e-commerce, we will be connecting the two ecosystems. And moving on to by-segment results. Internet Services segment. In terms of the business result for the second quarter, revenue is 338.1 billion yen, year on year is plus 4.2%. With utilization and other levers, non-GAAP operating income is +68.6%, 23.1 billion yen. Looking into the breakdown: in content and domestic EC, year on year it’s a 5.3% increase, thereby 1.5 trillion yen. Rakuten Travel GTV is a 70.2% increase. The investment again is plus by 17.5%. For realizing IR and 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. So data and AI, including mobile DPI data, we are able to enjoy a great amount of momentum in growth. If I may reiterate, GMS is, as you can see, increasing, and at the same time the revenue is plus 5.3%, so non-GAAP operating profit is 30.8% positive. How AI could be well leveraged and utilized—without that we would not be able to grow our business.
With that being said, we are putting a lot of emphasis on AI. One of the examples I’d like to share with you is that we are promoting and developing a Shop Manager—an AI—to introduce a shop manager. With Rakuten and Amazon, the biggest difference is that Rakuten is based on brick-and-mortar stores, and the store is the basis. In other words, the human-touch shopping experience that we’re able to offer. At the same time, in terms of hospitality, we’d like to offer the sense of omotenashi and hospitality from Japan.
The true, real store managers, 24x7 serving tens of thousands of customers at the same time, is not feasible. So the Shop Manager, with the personality or the store characteristics or the product characteristics, having deep understanding of that, will be able to provide service 24x7. 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? I don’t like oily products.
I like something that feels light and refreshing. Then I recommend the 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 emphasizes a refreshing sensation. The second is moisturizing, balanced all-in-one gel. The last one looks good. What about the reviews? The review is 4.6. Very highly valued. In the summer it’s light on your skin, and the next morning you don’t feel your skin shiny.
It sounds good. I will go with that. Thank you very much. So please confirm your order. Once again, is it okay to process your order with these details? Yes, it’s okay. 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 further development. Next, I would like to highlight about the Rakuten Travel business. It’s a robust growth that we are enjoying. In terms of year on year, it’s 17.2% interim GTV. The domestic is 10% growth year on year, so again a very robust growth. On top of that, the global-related we have 78.5% year on year, especially in terms of Rakuten Travel Exchange. We have been holding the wholesalers’ distribution in terms of room accommodation inventory in various countries—the effective travel services—we’re going to connect them all.
We have 1,295 companies; the service companies are connected to Rakuten Travel Exchange, and the sales of that are 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 second quarter compared to that, is a growth by 3.3 billion yen—the improvement of the losses.
In the international department, Rakuten France marketplace—they have worked hard, but they have not been able to achieve the ambitious goal, so we are unfortunately closing down this operation. The growth is 3.9% growth. Non-GAAP operating increase is slightly decline, but it’s showing a very robust foundation of growth. Viber, Rakuten Kobo, and also the U.S.—these are increasing their profitability steadily. As already mentioned earlier, the ad business is showing very healthy, strong growth, and this quarter is 15.6% positive on year.
On a 65.6 billion yen basis, we are now being able to seek 300 billion. AI utilization, for instance in terms of content creative, the creation of that—banners, static images, and video ads—we are going to offer that. At the same time, massive amounts of transactions, inspection performance, and bidding—everything is going to be leveraging AI capability. At the same time, based on our Rakuten customer database, we are going to effectively use targeting ads.
So, good segment. Moving on to the fintech segment. Revenue 295.4 billion yen, so very robust. Year-on-year 27% increase. Non-GAAP operating income 69.2 billion, year-on-year 60.1% increase. So Rakuten Card GTV plus 9.4%, so that's 7.1 trillion yen. Rakuten Bank accounts 18.46 million and bank deposits 13.3 trillion yen. So deposits, of course, it's very competitive to gain deposits, but they grew by 13.9% year on year, and securities general accounts of 14.39 million, 14.5% growth.
So 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 plus 48.3% year-on-year basis, so a total of 58.7 trillion yen. So for Rakuten Card, the number of cards is growing nicely. Shopping GTV and financial expenses are going up, but with a 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%.
So 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 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%. It's now 6 million. So main account ratio is improving and deposits grew by 13.9% and expense ratio coming down.
So our activities are materializing. And for Rakuten Securities, especially with new NISA, we are gaining new accounts. It is growing, the number of accounts is growing and surpassing 15 million. And operating revenue as well as operating income, very robust—especially operating income. Under Japanese GAAP it grew by 2.4 times or more. And what's more is assets under custody, it has exceeded 60 trillion. 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. And now insurance business is not included in this reorg but very steady. We are honestly revamping this business. So revenue is 20.7 and operating income 1.5 billion. So we are generating profits, and going forward we believe that we will be able to generate more profit. And for Rakuten Payment, 29.1 billion yen of revenue, plus 12.2% year on year, and non-GAAP operating income 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 with FamilyMart we've started SPU-eligible services. If you spend more than 3,000 yen per month then you can earn points plus 0.5%. And now with mobile segment, revenue is 121.54 billion, so it's a positive 8.3. Non-GAAP operating income is an improvement by 4.1 billion yen. But EBITDA year on year is -28.4%. In the segment, for one thing is the home straight: the energy crisis—electricity, the energy price has gone up.
That is the main reason for that. And also pre-marketing cash flow—you know there was a new acquisition; what would happen without the new acquisition is a scenario. Already 28 billion profit is being generated, so this is positive by 11.8%. So mobile, of course, accounts are 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.
And mobile in the business specifically: 11.9% revenue, non-GAAP operating income is an improvement by 6.7 billion yen. So it's in red with a 32.3 billion, but as I said the pre-marketing cash flow is 27.1 billion. In terms of the number of outlets, it is increasing. The marketing is quite active. So with that, excluding all that, there is a major contribution in terms of the profitability of our business. And also in terms of March and April, the peak competitive season—after that, gradually, we are still on a rise and increase.
And churn rate—again, the hopping, the targeting, the point accumulation, those customers we have been able to contain that. Therefore the churn rate, it was 1.3% for the second quarter. So we have seen improvement in this area. So 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, so 20 gigabyte-plus users ratio share expanded plus 3.6 percentage points.
So network needs to be put in place. As we initially planned, we will make investment of 200 billion, and 5G construction has been more or less completed in this area. And also for Tokyo Metro, we only had 5 MHz but will be growing to 20 MHz—bandwidth expansion. And as you may know, with the Ministry of Internal Affairs and Communications creating Japan Low Earth Orbit Satellite Communication, as indirect subsidy operator we have been selected. So our investment is 248 billion we will be receiving. We would like to contribute toward resilience that maintains domestic communications infrastructure. Now regarding the ... Last week there was a comment from KDDI, so I would like to comment regarding roaming. First and foremost, Rakuten Mobile business—we have had a roaming contract with KDDI, and we started the whole business with that, and the main goal was the dominance—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. So 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 and onwards. 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. Thank you.
Mr. Kaga, Chief Financial Officer
Thank you for your kind participation. 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 yen. IFRS operating income was 20 billion yen after recording one one-off item including impairment losses on fixed assets in the logistics business. This represents more than double the figure of the same period last year. 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. For the fourth consecutive quarter since the third quarter 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 sale of shares we held, 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.
Regarding the one-off item I just mentioned, in this second quarter we recorded 17 billion yen of impairment losses on fixed assets and related items in the logistics 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 warehouses held in the online supermarket logistics 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 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. In terms of the second quarter accounting treatment crossing 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, the gain on sale was not recognized through P&L but transferred directly to retained earnings.
On the other hand, an unrecognized tax effect recorded in OCI in relation to this transaction was transferred, thereby recording a tax benefit—that is, a negative tax expense on the P&L. The actual negative tax expense reflects the fact that substantially no tax payment arises. In addition to that, this accounting treatment suggests that, as a result of strategic investment to date, we have more than 1 trillion yen of net operating loss, so this would offset a certain portion of future tax expense, and as earnings improve further, that effect will materialize and contribute to maximizing cash flow.
Next, I would like to explain once again the significance of the reorganization of the fintech business scheduled to take effect on October 1. Including the financial perspective, the purpose of this reorganization is to operate our 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 yen in synergies by the fiscal year ending March 2030.
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. 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 bonds and the yields on JGB of corresponding maturity.
The blue line shows the credit spread one year ago and the red line shows the most recent level. Across the maturities, spreads are steadily tightening. On the chart on the right, the 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. 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 yen through the sale of shares that we 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. Bond redemptions are also proceeding smoothly in line with our policy. In addition to redeeming our perpetual subordinated bonds in full at the first call date in April, in June we redeemed 20 billion yen of senior bonds entirely with cash on hand, without issuing a refinancing bond.
In December we will be able to redeem in full with cash on hand as well. From 2027 onward, for bond redemptions we would like to take a proactive approach in this range, maximizing business cash flow, and refinancing if required. By closely monitoring market trends such as foreign exchange and interest rates, we would like to select optimal means for our company. That's all for the finance section. I would like to invite the Chief Data Officer, Ting, who will be taking this part.
Ting Cai, Chief AI and Data Officer
Thank you, Kaga-san. Minasan, konnichiwa. 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 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 scenarios and surface area where we can be helpful to our customers, guiding them from vague ideas to concrete actions. And 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 agents cannot match. Together, these three areas add up to a durable competitive advantage, built not only on data, but also accumulated intelligence within the Rakuten ecosystem.
And 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 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 signals, and, in this case, improve our understanding of user queries. Through LLMs, we can better understand whether users have made up their mind or not.
Take two customers on Ichiba as an example. One customer searches for a specific model number and, in this case, 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 checkout. Another customer searches for gift for summer holidays, and 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 increase the basket 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 Ichiba scale. This is quite remarkable. On an annualized basis, this is equivalent to 12.8 billion yen GMS uplift. The second area is expand—how Rakuten AI can expand where, when, and how we serve our customer needs. 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, not only increasing their capability but also connecting them with the rest of the ecosystem. In addition, we are expanding our touch points through Rakuten AI apps across the surface area, whether it's 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. As of today, 17 of all of our services are live with an AI agent, and seven more are 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. And lastly, the last area is differentiate. As Rakuten AI deeply embeds into each business application, it can accomplish what other external agents cannot—from first chat to a complete transaction all the way to delivery in the real world, even providing customer service after a purchase. For example, on Ichiba, AI can help customers make decisions faster, and the time to purchase is reduced by 41%, and average order amount is up 17%.
Customers can understand the decisions they have to make faster and buy with greater confidence. Similarly, Rakuten Travel takes customers from discovery to booking in one flow, and this is growing rapidly. Rakuten Travel launched at the end of April. Now average order is 13% higher for AI-assisted booking versus those not going through AI, and family and group trip booking are also up 29%. Such family and group booking is often very complex in nature, and this is exactly where AI can help 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 an agent in one part of the ecosystem can hand off to another agent and complete another transaction. Second, we are expanding what agents can do—handling complex tasks, achieving goals, guiding users on the full journey from discovery to purchase across many services.
And 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. 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. And I'd like to show you what a Super Agent can do.
Please play the video. To close, here in this last slide. Okay, now 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, and very soon it will come to Mac as well. And I'd like to close by saying this in Japanese: AI the Atarashi let's create new values, expand possibilities with AI, and together build a better future. Thank you very much.
OPERATOR
That concludes the report for the consolidated.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.