Rakuten Group,Inc. Q2 FY2026 earnings call

Overall Financial Milestones • Positive net income attributable to parent owners was achieved for the first time in six years (since Q2 2020), marking the fourth consecutive quarter of positive pre-tax income, reflecting steadily improving underlying cash generation capacity. • All three core business segments delivered year-on-year revenue growth, with multiple key profitability metrics hitting record highs for the quarter.

FinTech Business Reorganization • Rakuten Card, Rakuten Bank, and Rakuten Securities will be integrated under the Rakuten Bank umbrella, effective October 1 2026. Management expects total synergies of approximately 25 billion yen by FY ending March 2028 (33 billion yen including 8 billion yen in marketing synergies), growing to 85 billion yen by March 2030. • Key expected synergies include customer cross-selling, increased deposit balances (Rakuten Bank customers using direct debit via Rakuten Card have 4.3x higher deposit balances) and expanded cross-ecosystem usage between fintech and Rakuten's e-commerce business. • Management confirmed there is no current plan to sell shares of Rakuten Bank as part of the reorganization.

AI and Digital Transformation • AI is positioned as a core strategic priority to amplify cross-ecosystem synergy and build durable competitive advantage, with three core focus areas: engaging users more effectively, expanding customer touchpoints and cross-service use, and delivering end-to-end differentiated experiences general-purpose agents cannot match. • Deployed large language models to improve search and product recommendation on Rakuten Ichiba; A/B testing showed 0.52% growth in attributed orders and 0.87% growth in attributed GMS, equal to a 12.8 billion yen annual GMS uplift. AI reduced time-to-purchase by 41% and increased average order value by 17% on Ichiba. • For Rakuten Travel, AI-assisted bookings have 13% higher average order value and 29% more family/group bookings, reflecting AI's ability to simplify complex booking processes. • The new AI Shop Manager, which provides 24/7 personalized customer service aligned with individual store characteristics, will launch to the public within 2026. Rakuten AI Super Agent, which connects services across the Rakuten ecosystem and integrates with third-party tools, was recently announced and is available for download now. • Rakuten AI is now pre-bundled on HP consumer PCs to expand distribution; 17 of Rakuten's services already have live AI agents, with 7 more launching imminently and over 50 planned for deployment.

Mobile Business Updates • Mobile subscriber churn has declined, ARPU is gradually increasing, and the share of high-data-usage customers continues to grow. 5G network construction is complete as originally planned, with additional spectrum secured for Tokyo Metro to expand coverage. • Rakuten Mobile will continue its existing roaming agreement with KDDI, but will gradually reduce roaming coverage in areas where Rakuten has built its own infrastructure. • Pre-marketing cash flow turned positive, with profitability continuing to improve gradually following the competitive peak season earlier in the year.

Balance Sheet and Financial Policy • A 17 billion yen impairment charge was recorded for logistics business fixed assets, which eliminates all remaining balance sheet risk related to the company's owned warehouses after full impairment. The business will shift to more efficient in-house use of facilities to reduce e-commerce operating costs. • Credit spreads on Rakuten's corporate bonds and CDS spreads have steadily improved, reflecting ongoing strengthening of the company's financial position. Management will continue working to improve market confidence in the company. • Financial policy remains focused on self-funding mobile business investments without relying on external financing. The company has raised ~200 billion yen via asset sales in Q2, and has completed scheduled bond redemptions using existing cash without refinancing, with upcoming December 2026 redemptions also set to be covered by cash on hand.

1. Internet Service Segment: Revenue of 338.1 billion yen, 4.2% year-on-year growth; non-GAAP operating income of 23.1 billion yen, 68.6% year-on-year growth. Domestic e-commerce GTV grew 5.3% year-on-year; Rakuten Travel GTV grew 17.2% year-on-year, with global transaction value up 78.5% year-on-year; advertising revenue reached 65.6 billion yen. International operations saw 15.6% year-on-year revenue growth, after closing the underperforming Rakuten France marketing unit. This segment contributed 50.8% of consolidated revenue.
2. FinTech Segment: Revenue of 295.4 billion yen, 27% year-on-year growth; non-GAAP operating income of 69.2 billion yen, 60.1% year-on-year growth. Rakuten Card GTV reached 7.1 trillion yen, up 9.4% year-on-year, with non-GAAP operating income up 16.2% to 17.4 billion yen. Rakuten Bank had 18.46 million total accounts (6 million main accounts, up 7.7%), deposits of 13.3 trillion yen (up 13.9% year-on-year), ordinary profit of 30.2 billion yen (up 26.1% year-on-year). Rakuten Securities had 14.39 million general accounts, assets under custody of 58.7 trillion yen (up 48.3% year-on-year), with operating income growing more than 2.4x year-on-year. Rakuten Payment revenue reached 29.1 billion yen (up 12.2% year-on-year), non-GAAP operating income of 3.2 billion yen (up ~80% year-on-year). Insurance revenue was 20.7 billion yen with operating income of 1.5 billion yen. This segment contributed 44.4% of consolidated revenue.
3. Mobile Segment: Revenue of 121.4 billion yen, 8.3% year-on-year growth; non-GAAP operating loss improved by 4.1 billion yen to 32.3 billion yen. Pre-marketing cash flow reached 27.1 billion yen, up 11.8% year-on-year. Total accounts hit 10.8 million, churn rate improved to 1.8%, and the share of users consuming over 20GB of data grew 3.6 percentage points. Rakuten Symphony customer and partner counts continue to grow. This segment contributed 18.2% of consolidated revenue. Consolidated overall: Q2 net income was positive 27.2 billion yen; consolidated revenue reached a record 665.5 billion yen, up 11.6% year-on-year; consolidated EBITDA hit a record 150.3 billion yen, up 11.7% year-on-year; non-GAAP operating income hit a record 42 billion yen, up ~110% year-on-year.

There is no explicit upward, downward, or maintained numeric guidance for full-year fiscal 2026 provided in the transcript. Management only provides forward-looking projections for the fintech reorganization synergy targets: 33 billion yen in total annual synergy by fiscal year ending March 2028, growing to 85 billion yen in total annual synergy by March 2030.

• Mobile business EBITDA declined 28.4% year-on-year in Q2, driven primarily by elevated energy prices from the ongoing energy crisis, creating ongoing pressure on mobile segment profitability. • The mobile segment still reported a non-GAAP operating loss of 32.3 billion yen in the quarter, even with an improvement in losses year-on-year. • The French international marketing unit failed to meet performance targets and was closed, indicating ongoing execution risk in some international operations. • Logistics operations required a 17 billion yen non-cash impairment charge in Q2 to reflect underperformance of previously acquired warehouse assets, though all balance sheet risk related to these assets has now been eliminated. • The company holds over 1 trillion yen in net operating losses, which will offset future tax expenses only as profitability improves, with no guarantee of full utilization of these losses.

No question and answer section was included in the provided transcript, so no key exchanges can be summarized.