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Rakuten Group: Double-digit growth and expanding e-commerce

Rakuten announced the financial year 2022 third quarter financial results from its headquarters in Tokyo. Chairman and CEO Mickey Mikitani and leaders from across the Rakuten Group took to the stage for a live-streamed presentation to share highlights from the company’s diverse portfolio of more than 70 services.

Rakuten Group: Double-digit growth and expanding e-commerce
Mikitani took center stage to share the vision for the Group. The Rakuten Group recorded revenue growth in all three segments in Q3 FY2022: Internet Services, FinTech and Mobile. Consolidated revenue achieved double-digit growth, up 15.8% year-on-year (YoY), reaching a total of 471.1 billion yen and marking the highest revenue ever recorded by the Rakuten Group in the third quarter of a fiscal year.

Continuing the strong growth from the previous quarter, domestic e-commerce* gross merchandise sales achieved double-digit growth.

“Regarding domestic e-commerce, user retention continued to improve for both Rakuten Ichiba and Rakuten Travel, resulting in double-digit growth of 13.1% YoY, ” shared Mikitani. Customer base expansion in Rakuten’s fintech services also contributed to the revenue increase.

In overseas businesses, revenue for U.S.-based cashback service Rakuten Rewards in Q3 FY2022 grew to 22.3 billion yen, up 15.2% YoY, as a result of successful marketing initiatives and recovery in consumer shopping habits.

Fintech powers ahead
Fintech performance was especially strong: In Q3 FY2022, the segment recorded increases in both revenue and profit. Revenue was 166.5 billion yen, up 10.3% YoY, and Non-GAAP operating profit was 25.2 billion yen, an increase of 19% YoY.

Rakuten Card continues to grow and has issued a cumulative total of 27.51 million cards as of the end of September 2022. Boosted by continued growth in the number of cards issued and high usage rates, Rakuten Card’s shopping gross transaction value (GTV) in Q3 FY2022 reached 4.6 trillion yen, up 27.4% YoY.

Emphasizing the significant expansion Rakuten Card has achieved, Mikitani reflected, “Only six years ago, Rakuten Card’s domestic share of credit card shopping was at less than 10%. This is now at 23% and increasing.”

Rakuten Mobile in the spotlight
“In little more than 2 years Rakuten Mobile has pulled off a miracle – not only building a brand-new technical architecture but also building a mobile network from the ground up. Now, in November 2022 we have achieved 98% population coverage,” shared Rakuten Mobile and Rakuten Symphony CEO Tareq Amin.

Mobile segment revenue rose to 89.3 billion yen in Q3 FY2022, a significant increase of 62.5% YoY. The total number of MNO and MVNO subscribers also reached 5.18 million as of the end of September 2022. Moreover, subscriptions are showing net growth, even after the conclusion of the essentially free service campaign for subscribers at the end of October 2022.

Amin pointed out that the business is still in Phase 2 of its growth plan, with more expansion to come in the near future. “We target to reach 60,000 base stations and reach population coverage of 99%…Rakuten Mobile has no desire to be the 4th mobile operator in Japan. I believe we are on our way to becoming the number one mobile operator in Japan.”

The average annual purchase amount on Rakuten Ichiba for Rakuten Mobile subscribers is 35,831 yen higher than for non-subscribers, greatly contributing to enhanced membership value. “Rakuten Mobile is contributing to significant synergies that are bringing benefits to the entire Rakuten Group,” Mikitani emphasized.

Just one year since its launch in August 2021, Rakuten Symphony has reached 14 customers as of Q3 FY2022 with orders exceeding US$3.1 billion. The cumulative sales revenue from launch until Q3 FY2022 reached US$315 million.

“Symphony is a collection of components that are extremely unique. I believe that what Tesla did for EV, Rakuten is doing for mobile networks,” Amin commented.

CT Bureau

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