Rakuten, Inc. (OTCPK:RKUNY) Q2 2020 Earnings Conference Call August 11, 2020 2:00 AM ET Company Participants Hiroshi Mikitani - Representative Director, Chairman, President and CEO Kenji Hirose - Group Executive Vice President, CFO Conference Call Participants Unidentified Company Representative Good afternoon. Thank you for joining and Welcome to Rakuten Second Quarter Financial Results meeting. I'd like to first hear from Mr. Mikitani talking about the impact of COVID-19 to Q2 results followed by Mr. Hiro ...

Financial Data and Key Metrics Changes - Consolidated revenue increased by 18.2% year-on-year, reaching ¥331.4 billion [6][38] - Global Gross Transaction Value (GTV) rose by 23.7% year-on-year [6] - Non-GAAP operating loss recorded at ¥18.1 billion, compared to an operating income of ¥16.1 billion in Q1 2019 [7][38] - IFRS operating income was a loss of ¥24.1 billion, impacted by stock options and amortization [38] Business Line Data and Key Metrics Changes - Core business revenue grew by 13.8% year-on-year, with operating income up by 3.1% [9] - FinTech revenue increased by 22.9%, with non-GAAP operating income up by 14.7% [7] - Mobile business launched on April 8, with significant investments leading to a loss of ¥25.1 billion [8][40] - Rakuten Ichiba and other e-commerce platforms saw a 57.5% growth in GMS year-on-year [14] Market Data and Key Metrics Changes - Domestic e-commerce GMS growth accelerated by 9.8% compared to Q4 2019 [6] - Rakuten's membership value increased to ¥6.2 trillion, up 32.7% year-on-year [40] - Cross-use ratio among services rose by 72.3% [41] Company Strategy and Development Direction - The company is focusing on a diversified ecosystem, reallocating resources to growing sectors due to COVID-19 impacts [7][11] - Emphasis on mobile and logistics as investment phase businesses, with plans for future growth [10][39] - The company aims to enhance its digital content and e-commerce platforms while adapting to the new normal [18][21] Management's Comments on Operating Environment and Future Outlook - Management noted strong growth in various categories despite the pandemic, particularly in healthcare and daily goods [14] - The company is optimistic about the future, with expectations for continued growth in membership and cross-use of services [40][41] - Management acknowledged challenges in the travel and sports sectors due to COVID-19 but expressed confidence in recovery [12][36] Other Important Information - The company has achieved 97% work-from-home implementation and is seeing productivity improvements [5][19] - Rakuten Mobile is positioned as the fourth player in the mobile market, with a focus on full virtualization technology [23][27] - The company is actively involved in community support, providing accommodations for mildly ill patients [22] Q&A Session Summary Question: What is the outlook for Rakuten's mobile business? - Management highlighted that Rakuten Mobile is expected to achieve success in Japan and evolve into a global platform, with significant investments in 5G technology [27] Question: How is Rakuten adapting to the COVID-19 pandemic? - The company is reallocating resources to growing sectors and enhancing digital services to meet changing consumer needs [11][21] Question: What are the challenges faced in the travel and sports sectors? - Management acknowledged significant setbacks in travel and sports due to cancellations but remains hopeful for recovery as conditions improve [12][36]

FY2020 First Quarter Consolidated Financial Results May 13, 2020 Rakuten, Inc. Consolidated Results 1 Q1/20 Results Highlights Consolidated revenue: +18.2% YoY Global GTV: +23.7% YoY Domestic E-Commerce GMS growth QoQ: +9.8% YoY －Shopping E-commerce GMS* growth +57.5% YoY in April Non-GAAP OI: JPY -18.1bn due to mobile business and logistics investment Rakuten diversified ecosystem enabled solid growth －FinTech: Revenue growth +22.9% YoY, Non-GAAP OI +14.7% YoY －Core business revenue growth +13.8% YoY －Busi ...

Financial Data and Key Metrics Changes - Revenue increased by 13.3% year-on-year, reaching 306 billion yen, with expectations to exceed 20 trillion yen in Global GDP [27][31] - Operating income for the last three months was 32.6%, with non-GAAP at 3.2% [31] - Membership value increased by 21.3% year-on-year, currently at 5 trillion yen, with a target of 10 trillion yen [26][35] Business Line Data and Key Metrics Changes - Domestic EC (E-commerce) grew from 9.4% to 14.5% year-on-year [17] - FinTech saw explosive growth in new accounts, reaching 28 million accounts, with Rakuten Bank receiving about 4,000 new applications daily [21][22] - Rakuten Card achieved a growth rate of 26.5%, significantly outpacing the industry average of 10% [22] Market Data and Key Metrics Changes - Rakuten's brand recognition in Japan is number one, with a target of reaching 70% recognition in the U.S. by the end of the year [15] - The introduction of a new shipping charge threshold is expected to drive growth by approximately 15% [20] Company Strategy and Development Direction - The company is focusing on launching Rakuten Mobile with a three-step approach to ensure network stability [4][5] - Emphasis on creating an intelligent network platform through mobile edge computing, aiming to revolutionize the mobile network industry [11][12] - Plans to enhance branding and establish closer relationships with the fashion industry through initiatives like Rakuten Fashion Week [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the successful launch of Rakuten Mobile, which is expected to be a game-changer in the industry [6][7] - The company aims to leverage its existing membership value and expand its FinTech services to dominate the market [22][35] - Management highlighted the importance of data-driven services to compete effectively against major players like Google and Amazon [25] Other Important Information - Rakuten Medical is undergoing Phase III tests and has received the Sakigake Designation for its innovative products [14] - The company is expanding its logistics capabilities with new centers to improve delivery services [17] Q&A Session Summary Question: What are the expectations for the launch of Rakuten Mobile? - Management confirmed a three-step approach for the launch, focusing on stability and gradual scaling [4][5] Question: How is the company addressing the growth in FinTech? - Management highlighted the explosive growth in new accounts and the strategic importance of integrating banking services with credit and debit card offerings [21][22] Question: What are the future revenue targets for advertising? - The company aims to achieve 300 billion yen in advertising revenue by 2021, leveraging its data advantages [25]