Rakuten Group(US:RKUNY)2023-11-10 22:16Financial Data and Key Metrics Changes - For Q3 2023, consolidated revenue increased by 10.1% year-on-year, with significant growth in the Internet and FinTech segments [6][9] - Non-GAAP operating income is expected to achieve profitability by December 2023, with consolidated EBITDA showing improved profitability [4][8] - The Internet Service segment saw a revenue growth of 13.9% year-on-year, while non-GAAP operating income grew by 16.2% [9] Business Line Data and Key Metrics Changes - The FinTech segment reported a revenue increase of 13.6% year-on-year, with non-GAAP operating income growth of 35.8% [12][14] - Rakuten Mobile's revenue grew by 21.6%, with a significant improvement in non-GAAP operating income and EBITDA [28] - The domestic e-commerce (EC) sector grew by 15.7%, with advertising sales increasing by 15.3% [10] Market Data and Key Metrics Changes - Rakuten TV users increased by 42.1% year-on-year to 84.4 million, while Rakuten Kobo and Viber also saw growth [11] - The number of Rakuten Bank accounts reached 13.3 million, with a total deposit balance close to ¥10 trillion [16] - The cashless payment market in Japan is growing, with Rakuten Pay ranked number one in customer satisfaction [17][19] Company Strategy and Development Direction - The company aims to leverage its ecosystem to enhance customer engagement and increase revenue through mobile services [40] - A focus on integrating AI into operations, termed "AI-nization," is expected to improve service delivery and customer satisfaction [61][64] - The partnership with Mizuho Securities aims to enhance the FinTech structure and maximize synergies [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving profitability in the mobile segment and emphasized the importance of network quality improvements [28][78] - The company is optimistic about sustaining subscriber growth and reducing churn rates, which are currently at competitive levels [78] - Future growth is anticipated through enhanced customer engagement and the introduction of new services [90] Other Important Information - The company plans to redeem ¥68 billion in subordinated bonds by December 2023, indicating a proactive approach to managing debt [55][60] - The introduction of zero-commission trades for domestic stocks is expected to enhance customer loyalty and increase account numbers [21][24] Q&A Session Summary Question: What are the factors behind the acceleration in mobile subscriber growth? - Management identified three key factors: reduced churn rate due to improved network quality, the introduction of the SAIKYO plan, and increased B2B contracts [78][81] Question: How effective will the SPU initiative be for gaining more users? - The SPU initiative is expected to attract more users due to its competitive pricing and point rewards system, potentially increasing the subscriber base significantly [90] Question: What are the implications of the NTT law on internet connectivity in Japan? - Management highlighted the potential for improved internet connectivity through deregulation and leveraging existing infrastructure [95] Question: How does the company plan to manage bond redemptions and maintain cash flow? - The company is focused on improving cash flow through mobile business growth and strategic partnerships, ensuring that bond redemptions will not pose a problem [98]