Rakuten, Inc. (TOKYO:4755) today announced consolidated financial
reports (IFRS) for the six months ended June 30, 2014. The Rakuten Group
achieved revenue of ¥276,602 million, a 14.8% year-on-year increase, in
the first half of the current fiscal year. Operating income decreased
5.9% year on year to ¥44,776 million, due to continued advance
investments in Internet Services and the impact of a slowdown in the
stock market on the securities business, and net income attributable to
owners of the parent company amounted to ¥23,086 million, down 9.9%
compared to the same period of the previous year.
Qualitative Information, Financial Statements, etc.
1. Qualitative Information Concerning Consolidated Business Results
(1) Business Results for the Second Quarter of the Fiscal Year Ending
December 31, 2014
In the world economy during the first half of the current fiscal year
(January 1, 2014 to June 30, 2014), an improvement trend continued
despite the impact of reduced monetary easing by the U.S. and signs of
uncertainty regarding the economic outlook in emerging nations. The
Japanese economy continued on a moderate recovery track, underpinned by
the effect of monetary and financial measures, despite signs of
weakening seen in some areas due to the rebound following last-minute
demand associated with the consumption tax hike.
Meanwhile, according to the most recent White Paper on Information and
Communications released by the Ministry of Internal Affairs and
Communications (*), information and communications technology (ICT) such
as Internet and mobile phones is spreading rapidly in emerging nations
and newly developing regions as well. The number of Internet users
worldwide continues to rise, climbing from 1.02 billion globally in 2005
to 2.92 billion in 2014. The expansion of the ICT market, which
continues to show solid growth throughout the world, is considered to be
a paradigm shift, and it is believed that this market will take on even
greater importance in the future.
Under such an environment, the Rakuten Group further strengthened its
promotion of its growth strategy. Specifically, in the first quarter of
the current fiscal year, we acquired VIBER MEDIA LTD. (hereinafter
"Viber"), which operates a mobile messaging service and VoIP service on
a global scale, and made it a wholly owned subsidiary. We believe that
Viber's wide customer base will complement the Group's digital strategy,
while firming up our platform for global expansion of Internet Services
and Internet Finance services. In addition, in Internet Services, the
Rakuten Group enhanced its services for smart devices (smartphones and
tablet devices), and promoted Rakuten Ichiba's B2B2C marketplace model
to the world mainly through large-scale sales events such as the Rakuten
Super Sale, while in Internet Finance, the membership base for Rakuten
Card expanded further. Through these measures, the Rakuten ecosystem
continues to show solid expansion and growth.
(2) Segment Information
Business results for each segment are as follows:
In the Internet Services segment during the first half of the current
fiscal year, Rakuten actively worked on strengthening its services for
smart devices, promoting personalized marketing which utilizes big data,
and executing large-scale sales events such as the Rakuten Super Sale
among other initiatives in its core Rakuten Ichiba service. As a result
of these initiatives, the number of unique buyers and number of orders
performed strongly. Rakuten's domestic e-commerce gross merchandise
sales (transaction value) were favorable. In Travel services, demand was
strong among corporate customers and for car rental and inbound services.
In its overseas ventures, Rakuten focused on developing its
marketplace-model services. Consequently, gross merchandise sales for
these services have grown and are contributing to the expansion of
operations. With regard to advance investments in future growth fields,
management focuses on ROI while strictly controlling costs.
As a result, revenue for the segment rose to ¥165,949 million, a 16.9%
year-on-year increase. While profit from existing businesses continue to
grow steadily, segment profit declined 17.5% year on year to ¥22,714
million, reflecting ongoing advance investments in future growth fields.
(Millions of yen)
June 30, 2013
June 30, 2014
In the Internet Finance segment during the first half of the current
fiscal year, in credit card and related services, shopping transaction
value, accompanying an increase in Rakuten Card membership, rose 43.0%
over the same period of the previous year. Moreover, solid growth in
revolving balances resulted in a rise in income including commission
income, and notable growth continues in profit. In securities services,
revenue and profit declined compared to the same period of the previous
fiscal year when extremely high domestic stock trading value was
recorded due to the effect of stock market conditions. However, the
balance of investment trusts, which provide stable income, grew
steadily. In banking services, solid growth in loan balances led to
increased interest income from loans.
As a result of the above, the Internet Finance segment recorded ¥111,143
million in revenue, a 13.6% year-on-year increase, while segment profit
decreased 4.2% year on year to ¥20,675 million.
In the Others segment during the first half of the current fiscal year,
operating profit remained strong in telecommunications services due to
the growth of communication services for smartphones such as Rakuten
Denwa, and cloud services. In the professional sports division, sponsor
sales and sales of related goods were robust.
In addition, the Group acquired Viber, and made it a consolidated
subsidiary at the end of the first quarter of the current fiscal year.
As a result, revenue for the segment was ¥21,451 million, a 33.4%
year-on-year increase, while segment profit was ¥2,078 million, a 27.5%
*Source: 2014 Report on the Current Status of Information and
Communications (Ministry of Internal Affairs and Communications)
2. Qualitative Information about Consolidated Business Forecasts
The outlook for each segment for the current fiscal year is as follows.
Strong growth in revenue is expected for Rakuten Ichiba and Travel
services, and corresponding growth in profit is expected. Although it is
possible that the growth rate in the second half of the fiscal year
ending December 31, 2014 will be relatively moderate compared to the
second half of the fiscal year ended December 31, 2013, where the first
victory sale of the Tohoku Rakuten Golden Eagles baseball team in the
Nippon Series had considerable effect, the upward trend in gross
transaction value is expected to maintain its strong momentum amid
market expansion, enhancements to Rakuten Group services, and other
factors. Meanwhile, Rakuten plans to make strategic advance investments
while emphasizing ROI in new businesses such as contents services and
logistics services which are just emerging and where medium- to
long-term profit growth is expected.
In credit card and related services, revenue growth is expected to be
high, on a level with that of the fiscal year ended December 31, 2013.
Even taking into consideration the rise in marketing costs associated
with capturing new members, profit is expected to surpass that of the
fiscal year ended December 31, 2013. In banking services, robust profit
is expected following an increase in assets. Meanwhile, it is difficult
to make a forecast for securities services due to the substantial impact
of stock market conditions.
Stable profit growth is expected in telecommunications services. In the
professional sports division, earnings such as ticket revenue and
sponsor revenue may be affected by the performance of the Rakuten
Eagles. As for Viber, the industry as a whole is in a period of notably
high rapid growth, and it is difficult to estimate its future revenue as
of this time.
3. Matters regarding summary information (Others)
(1) Changes in significant subsidiaries during the current
(2) Outline of changes in accounting policies and accounting
Apart from the cases stated as follows, significant accounting policies
adopted by the Rakuten Group in this summary of consolidated financial
statements for the six months ended June 30, 2014 basically remain the
same as those adopted in the consolidated financial statements for the
previous fiscal year. In addition, income tax expense for the six months
ended June 30, 2014 is calculated based upon estimated annual effective
Impact from the adoption of the new accounting standards
The Rakuten Group adopted the following accounting standards from the
first quarter of the current fiscal year.
Financial instruments:presentation(Amended Dec. 2011)
Impairment of assets(Amended May 2013)
These standards have been adopted in accordance with their respective
transitional provisions, and the adoption of above standards has no
significant impact on the consolidated financial statements for the six
months ended June 30, 2014.
Changes in specified subsidiaries resulting in change in scope
of consolidation: No
Indication regarding execution of quarterly review procedures
Explanation about the appropriate use of earnings forecasts, and other
The above information was originally prepared and published by the
Company in Japanese as it contains timely disclosure materials to be
submitted to the Tokyo Stock Exchange. This English summary translation
is for your convenience only. To the extent there is any discrepancy
between this English translation and the original Japanese version,
please refer to the Japanese version. The following financial
information was prepared in accordance with International Financial
Reporting Standards ("IFRS").
*The full report is available at:http://global.rakuten.com/corp/investors/documents/pdf/14Q2tanshin_E.pdf
About RakutenRakuten, Inc. (4755:Tokyo), is one of the
world's leading Internet service companies. We provide a variety of
products and services for consumers and businesses, with a focus on
e-commerce, finance, and digital content. In both 2012 and 2013, Rakuten
was ranked among the world's 'Top 10 Most Innovative Companies' in
Forbes magazine's annual list. Rakuten is expanding worldwide and
currently operates throughout Asia, Europe, the Americas and Oceania.
Founded in 1997, Rakuten is headquartered in Tokyo, with over 11,000
employees and partner staff worldwide. For more information: http://global.rakuten.com/corp/.
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