august 6, 2018 rakuten, inc....aug 06, 2018 · ・rakuten marketing reorganization costs gains...
TRANSCRIPT
August 6, 2018
Rakuten, Inc.
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Revenue strong growth: +18.5% YoY
Global GTV: +16.4% YoY
Domestic E-Commerce GMS keeping good momentum
Revenue stream of Domestic E-Commerce is diversifying
Strong growth in FinTech:
Revenue +28.2% YoY, Non-GAAP OI +31.5% YoY
Ad revenue growth accelerating
Investment business maintains good momentum
- Gains from investment business: JPY 30.6bn, strong relationships with global ridesharing players
Ongoing investments to massively expand Rakuten Ecosystem
Global brand logo change
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(IFRS, JPY bn)
Q2/17 Q2/18 YoY
Revenue 228.0 270.3 +18.5%
Non-GAAP Operating Income 31.9 58.4 +83.1%
IFRS Operating Income 28.2 61.6 +118.3%
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Q2/17 Q2/18 YoY
Domestic E-Commerce
Revenue 95.0 101.5 +6.8%Operating Income 18.4 14.8 -19.1%
Communications & SportsRevenue 22.9 29.8 +30.6%Operating Income -0.3 -0.6 -0.3
Other Internet ServicesRevenue 45.3 57.7 +27.2%Operating Income -3.1 24.6 +27.7
Internet Services SegmentRevenue 163.2 189.0 +15.8%Operaing Income 15.0 38.9 +159.3%
FinTech SegmentRevenue 82.1 105.2 +28.2%Operating Income 18.2 24.0 +31.5%
AdjustmentsRevenue -17.3 -24.0 -6.7Operating Income -1.3 -4.4 -3.1
Consolidated
Revenue 228.0 270.3 +18.5%Non-GAAP Operating Income 31.9 58.4 +83.1%IFRS Operating Income 28.2 61.6 +118.3%
(IFRS, JPY bn)
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Q2/17
Operating Income
Q2/18
Operating Income
31.9
58.4 +5.7 -3.5 -0.3 -1.0
+30.6
-5.0 (JPY bn)
FinTech
Domestic E-Commerce ・Delivery cost
・SPU cost
・C2C marketing
Communications
and Sports
Other Internet Services
(excl. gains from investment business) ・Costs of logo change of PriceMinister
・Rakuten Marketing reorganization costs
Gains from
Investment
business
Investments for future
growth etc. ・Partnership cost
・NBA broadcasting rights
FinTech ・Rakuten General
Insurance consolidation +2.2
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Platform (MNO and Logistics etc)
Rakuten Ecosystem:
Massive Expansion Digital
contents Others
Ad
business
FinTech
Telecom
Membership
Data Brand
E-Commerce
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楽天太郎
総保有ポイント
99,999
新着メッセージ 2 通
通常ポイント
楽天ポイント
カード 楽天モバイル
楽天銀行 楽天Edy
楽天トラベル
楽天ペイ 楽天Express 楽天市場
楽天生命 楽天証券
999 期間限定ポイント
99,000
Rakuten Viber
Sales
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40
60
80
100
0 1 2 3 4
楽天市場 楽天ペイ 楽天トラベル
Aug Sep Oct Nov Dec
View Full Report
DASHBOARD
Device Statistic
Android Windows iOS Mac OS Linux
View Full Report
2% 8%
23% 30%
37%
for Biz
…
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Total Service Usage
Unique Users Cross Use
Rakuten Ecosystem
Membership Value
LTV (Life Time Value)* *LTV of each service
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Q2/18
Membership Value
JPY
4 trillion
Membership Value Target
JPY 10 trillion
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One
Delivery
Payment MNO
IDs
Brand
Points
Big
Data
Utilizing big data and Global
Network for Advertising
Business and Investment
FinTech Communications
E-Commerce
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Transition to
New Group Structure
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Background
Purpose
Company
Structure
More focus on the B/S management to allocate group assets efficiently
New Group Structure
Further investment in capital intensive businesses (MNO, logistics)
Enhance the expansion of Rakuten Ecosystem leveraging IDs, points and brand
Agile delivery / development of new services, adapting rapidly to the
needs of users (C2C, sharing economy)
Building framework for swift decision-making
To accelerate innovation
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Rakuten, Inc. Rakuten (Listed company)
Rak
ute
n M
ob
ile N
etw
ork
Raku
ten
Card
Raku
ten
Ban
k
Raku
ten
Secu
rities
Raku
ten
Insu
ran
ce H
D
Overs
eas S
ub
sid
iarie
s e
tc.
Internet Services
FinTech Mobile
Shareholders Shareholders
Current Structure New Structure (Image)
IDs・Points・Data・Brand
Overseas
Subsidiaries etc.
Company split
Commerce
Company
Media &
Sports
Company
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Q2 Results Announcement
Annual Shareholders Meeting
Effective Date
Aug 6
Mar 2019
Apr 2019
* Subject to approval of government authorities
Resolution of Company-split plan at Board of Directors Feb 2019
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One
Delivery
Payment MNO
ID
Brand
Point
Big
Data
FinTech Communications
E-Commerce
Utilizing big data and Global
Network for Advertising
Business and Investment
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Please watch the video
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Definition of locations:
Locations with merchant contracts for Rakuten Card, Rakuten Edy, Rakuten Point Card, and/or Rakuten Pay
Stores using Rakuten Pay with multiple service contracts are counted as one
Rakuten Pay, Rakuten Point Card, Rakuten Edy as of Jun/e 2018, Rakuten Card as of July 2018
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Expanding
Rakuten Pay App
※Under Development
Various payment solutions
P2P money transfer to be implemented
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Approx.
JPY 600bn*
* JPY 526.3bn CAPEX for 10 years (2018~28) + spectrum transfer cost
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Nagoya
area
Tokyo
area
Osaka
area
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Strategy expanding to external advertisers and external inventories
Rakuten Data Marketing (for external advertisers) has continued to receive strong orders
1H/18 Order Amount
+48.9%YoY
[Advertiser]
[Inventory] Internal
(Rakuten Site)
Internal (Ichiba Merchants etc)
External
External (National Brands)
2ndSTEP
(JPY bn)
79*
1stSTEP
Advertising
Revenue
(Joint Venture between Rakuten and Dentsu)
* Revenue includes internal transactions
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Growth in ad revenue* is accelerating YoY (FY17 +12.6% YoY → FY18 1H +17.8% YoY)
FY2017 FY2018
+19.1%
+13.0%
+26.0%
+16.3%
+11.4%
+19.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Jan
Feb
Mar
Ap
r
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Ma
r
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
[YoY: %]
[Average YoY]
+12.6%
[Average YoY]
+17.8%
Rakuten Ad Revenue YoY (As of June)
* Revenue includes internal transactions
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[Inventory]
[Advertiser]
Internal
(Ichiba Merchants etc)
1st step
2nd step
Internal
(Rakuten Site)
External (National Brands)
External
Current
Advertising Revenue
* Revenue includes internal transactions
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Q2/17 Q2/18 YoY
Revenue 228.0 270.3 +18.5%
Non-GAAP Operating Income 31.9 58.4 +83.1%
Non-GAAP Operating Income(excluding gains from investment business in Q2/18)
31.9 27.8 -12.9%
IFRS Operating Income 28.2 61.6 +118.3%
IFRS Operating Income(excluding gains from investment business in Q2/18)
28.2 31.0 +9.8%
(IFRS, JPY bn)
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Q2/17 Q2/18 YoY
Domestic E-Commerce
Revenue 95.0 101.5 +6.8%Operating Income 18.4 14.8 -19.1%
Communications & SportsRevenue 22.9 29.8 +30.6%Operating Income -0.3 -0.6 -0.3
Other Internet ServicesRevenue 45.3 57.7 +27.2%Operating Income -3.1 24.6 +27.7
Internet Services SegmentRevenue 163.2 189.0 +15.8%Operaing Income 15.0 38.9 +159.3%
FinTech SegmentRevenue 82.1 105.2 +28.2%Operating Income 18.2 24.0 +31.5%
AdjustmentsRevenue -17.3 -24.0 -6.7Operating Income -1.3 -4.4 -3.1
Consolidated
Revenue 228.0 270.3 +18.5%Non-GAAP Operating Income 31.9 58.4 +83.1%IFRS Operating Income 28.2 61.6 +118.3%
(IFRS, JPY bn)
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Q2/17 Q2/18 YoY
Non-GAAP Operating Income 31.9 58.4 +83.1%
Amortization of Intangible Assets (PPA) -2.0 -2.7 -0.7
Stock Based Compensation -1.7 -1.8 -0.1
One-off items 0.0 7.6 +7.6
IFRS Operating Income 28.2 61.6 +118.3%
(IFRS, JPY bn)
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+16.4% YoY
* Global Gross Transaction Value = Domestic E-Commerce GMS + Credit Card GTV + Edy GTV + Rakuten Point Card GTV + Overseas E-Commerce GMS + Ebates GMS
+ Digital Contents GTV + Rakuten Marketing GTV * Includes intercompany transactions for settlement and affiliate services
(JPY tn)
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(JPY bn)
Revenue YoYOperating
IncomeYoY
Card 45.3 +13.8% 8.6 +16.1%
Bank 20.4 +9.6% 6.5 +16.3%
Securities 14.4 +18.4% 5.3 +16.8%
Life Insurance 7.2 -10.8% 0.9 +22.2%
General Insurance 14.1 - 2.2 -
Others 3.8 +12.9% 0.5 +0.5
FinTech Total 105.2 +28.2% 24.0 +31.5%
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(JPY mm)
Operating Income +16.1% YoY from growth in shopping transactions and revolving balances
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1,491.0 1,519.6
1,701.3 1,690.71,793.4
Q2/17 Q3/17 Q4/17 Q1/18 Q2/18
(JPY bn)
Card Shopping Transaction Value
+20.3% YoY
396.2407.9
424.8447.4
470.9
Q2/17 Q3/17 Q4/17 Q1/18 Q2/18
(JPY bn)
Shopping Revolving Balance
+18.9% YoY
* Calculated on a managerial accounting basis, using different definitions from data in the Appendix.
Detailed credit card data is shown in the Appendix. Revolving balance is calculated on a principal basis.
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* Calculated on a managerial accounting basis, using different definitions from data in the Appendix.
Detailed credit card data is shown in the Appendix. Revolving balance is calculated on a principal basis.
579.3
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Operating Income +16.3% YoY due to increased growth of loan receivable balances
(JPY mm)
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*1: Based on IFRS which includes derivatives in structured term deposits. *2: Other deposits include deposits in foreign currencies and others.
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Boost in both revenue and operating income resulting from strong growth in domestic
stock brokerage trading
(JPY mm)
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Prompt, unified decision making, reinforcing governance
Providing the most optimal insurance service
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(JPY mm) (JPY mm) +22.3% YoY
Operating Income
-10.8% YoY Revenue
Termination of reinsurance policies caused a decline in revenue, however insurance
premiums continue to show strong growth, resulting in OI +22.3% YoY
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New Business ANP +32.1% YoY, driven by continuous and effective TV ads
New Business ANP in direct marketing channels*1 +55.1% YoY
1: Internet & mail-order *2: Annualized insurance premiums for new policies in Q2/18, excluding one-year cancer insurance for eligible Rakuten members which started from Q4/14. *3: Annualized insurance premiums for new policies through direct marketing channels in Q2/18, excluding one-year cancer insurance for eligible Rakuten members
which started from Q4/14.
Q2/18
New Business
ANP Growth*2
Q2/18
Direct Marketing*1
New Business ANP Growth*3
+32.1% YoY +55.1% YoY
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+11.1% YoY
(JPY bn)
*1: Domestic E-Commerce GMS includes consumption tax. Consumption tax not included in GMS for businesses not required to pay consumption tax.
GMS comprises Ichiba, Travel GTV on checkout basis, Books, Golf, Ticket, Brand Avenue, Dream businesses, Rakoo, Beauty, Mart, Delivery,
Rakuten Direct, Car Life, Rakuten Pay, Coupon, Rakuma, Rakuten Delivery Premium, Rebates, Raxy etc. *2: Definition of GMS for first party businesses was revised mainly upon the merger between Soukai Drug and Kenko.com. This has resulted in retroactive adjustments to
Domestic E-Commerce GMS
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* Domestic E-Commerce = Ichiba, Travel, Books, Golf, Ticket, Brand Avenue, Dream businesses, Rakoo, Beauty, Mart, Delivery, Rakuten Direct, Logistics
Car Life, Rakuten Pay, Coupon, Rakuma, Rakuten Delivery Premium, etc.
(JPY mm)
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Q2/18 GMS
+57.6% YoY
Fashion E-Commerce, Rakuten Brand Avenue, showed strong growth due to successful marketing
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Q2/18 GMS
+32.6% YoY
Rakuten Books showed strong growth due to SPU program
Rakuten Books
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61.5% 61.2%
62.3% 61.7%
65.0% 64.6%
65.9%
64.2%
68.3% 67.6%
70.6%
71.8% 72.1% 70.7%
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18
SPU started
* Ratio of the number of acquisitions from existing Rakuten members among new user acquisitions number of the each service
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Strong growth momentum despite starting to charge 3.5% commission fee
Engaging in aggressive marketing and leveraging Rakuten group services to accelerate growth
TV commercial Change funds in escrow to Rakuten Cash
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New Super Hodai and 24GB plan started on June 14
Commencement of Plus Wari campaign, allowing up to a JPY 10,000 discount on devices, plus no initial fees and 3 months free usage for second
line
From July 1, Unlimited Calling Plan upgraded from 5 to 10 minutes
Super Hodai Plus Wari
⇒~)
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Opened 59 shops in Q2/18 (5 partner shops, 54 shop-in-shops)
Total 277 shops (8 direct shops, 61 partner shops, 208 shop-in-shops)
as July 19
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Our Mission Objectives
Realize Global Innovation Company
through Investments
1. Strong Financial Returns
Invest in truly innovative companies
that will shape the future
Contribute towards creating the new
generation of “Unicorns”
2. Synergy with Rakuten
Ecosystem
Contribute to “Expansion” and
“Evolution” of Rakuten Ecosystem
Pursue strong financial returns and “Expansion” & “Evolution” of Rakuten Ecosystem
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Synergy
1. Strong Financial Return
2. Synergy with
Rakuten Ecosystem
Contribute to the “Expansion” and
“Evolution” of Rakuten Ecosystem
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Leading Corporate Venture capital
AUM: USD 3B
Global investment with 4 areas
1. Top Tier Corporate
Venture Capital
Efficient funding
Active Portfolio management
2. Create
“Unicorns”
Entrepreneurship
Rakuten’s Brand,
Membership & Data
Open Innovation
3. New Frontier
AI / Deep learning
Blockchain
Sharing Economy
Robotics
Healthcare, etc
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65
(JPY bn)
*1: Rakuten, Inc., Rakuten Bank, Ltd., Rakuten Card Co., Ltd., Rakuten Securities, Inc., Rakuten Life Insurance Co., Ltd., and Rakuten General Insurance Co., Ltd. are based on
IFRS non-consolidated balance sheets.
*2: Bonds and borrowings = Corporate bonds + CP + Borrowings.
66
Operating CF
(Excl. Tax)
Change in
assets &
liabilities
Increase in cash and
cash equivalents +45.5
Decrease in cash and
cash equivalents -14.9
Balance of cash
Dec 31, 2017
Balance of cash
Jun 30, 2018 Non-Financial Businesses Financial Businesses
Tax
Change in
investment
securities
Other
investing CF
Profit(adjusted)
Operating Investing Financing Investing
Financing Operating
* “M&A and investments” includes “Increase and Decrease in restricted deposits”, “Purchase of investment securities” “Acquisition of investments in associates and
joint ventures” and “Proceeds from sales and redemption of investment securities” of Non-Financial activities in addition to “Acquisition of subsidiaries”
(JPY bn)
Increase in cash and
cash equivalents
+6.2
M&A,
investments* Common
Tax
67
Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 YoY
Expenses related to doubtful accounts 7,031 7,499 7,377 7,983 8,078 14.90%
Ratio of expenses related to doubtful accounts*1 2.00% 2.08% 1.93% 1.99% 1.98% -
(JPY mm)
*1: Ratio of expenses related to doubtful accounts = (Expenses related to doubtful accounts) / (average of total balance of loan receivables at beginning and end of the period) × 4
*2: Balance of Rakuten Bank Super Loans guaranteed by Rakuten Card *3: Including allowance for credit guarantees from Q1/18 *4: Write-off for bad debt includes loss on transfer of loan receivables
Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 YoY
Rakuten Card 1,050,360 1,077,372 1,222,083 1,217,549 1,263,110 20.25%
Stage 1 (Normal) 986,137 1,011,882 1,151,449 1,148,457 1,196,212 21.30%
Stage 2 (1-2 months delinquent) 7,640 8,255 10,613 11,541 8,876 16.18%
Stage 3 (3 months-and-over-delinquent/Restructured Loans) 56,583 57,235 60,022 57,551 58,023 2.54%
374,897 380,470 379,549 388,818 387,696 3.41%
Stage 1 (Normal/Credit gurantees*2
) 343,127 347,481 346,454 352,702 350,442 2.13%
Stage 2 (30 days-and-over-delinquent/Credit gurantees*2
) 195 179 128 161 175 -10.51%
Stage 3 (Foreclosed credit guarantees) 31,575 32,810 32,967 35,954 37,079 17.43%
Others 1,692 1,656 1,623 1,563 1,504 -11.13%
Total balance of loan receivables 1,426,950 1,459,498 1,603,255 1,607,929 1,652,310 15.79%
Allowance for doubtful accounts 35,975 35,667 34,955 86,560 86,412 140.20%
Write-off for bad debt*4 6,609 7,848 8,165 8,395 8,222 24.40%
Rakuten Bank Super Loans
*3
* Mobile GMS Ratio = Ichiba mobile GMS / Total Ichiba GMS (includes feature phones, smartphones, and tablets)
66.6% Up 3.3 points YoY
Rakuten Card share of Ichiba GMS is consistently growing
70
* Includes GMS of Cartera acquired in Q1/17 and ShopStyle acquired in Q2/2017
+8.1% YoY
71
* Includes Cartera, ShopStyle, and Rebates.
+46.6% YoY
(USD mm)
72
Revenue
+1.9% YoY
Operating Income
USD -8.1 mm YoY
(USD mm)
73
* Unique IDs: Unique phone numbers excluding deactivations
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* Telco: Viber Out, In. Content: Service messages, ads, stickers and others
Monetization accelerating on strong growth in both Telco (Viber In/Out) and content revenue
Total Revenue
+69.1% YoY