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| Rakuten© |
Qualitative Information, Financial Statements, etc.
1. Qualitative Information Concerning Consolidated Business Results
(1) Business Results for the Third Quarter of the Fiscal Year Ending December 31, 2014
In the world economy during the three quarters of the current fiscal year (January 1, 2014 to September 30, 2014), an improvement trend continued despite the impact of reduced monetary easing by the U.S. and signs of uncertainty regarding the economic outlook in emerging nations. The Japanese economy continued on a moderate recovery track, reflecting the effects of various measures, although attention must be paid to downside risks on economy such as a prolonged rebound following last-minute demand and an economic downswing overseas.
Meanwhile, according to the most recent White Paper on Information and Communications released by the Ministry of Internal Affairs and Communications (*), information and communications technology (ICT) such as Internet and mobile phones is spreading rapidly in emerging nations and newly developing regions as well. The number of Internet users worldwide continues to rise, climbing from 1.02 billion globally in 2005 to 2.92 billion in 2014. In particular, the number of smartphone users, who are the customer base for mobile Internet, is said to reach 1.75 billion.
Under such an environment, the Rakuten Group further strengthened its promotion of its growth strategy. Specifically, in the first quarter of the current fiscal year, we acquired VIBER MEDIA LTD. (hereinafter “Viber”), which operates a mobile messaging service and VoIP service on a global scale, and made it a wholly owned subsidiary. We believe that Viber’s wide customer base will complement the Group’s digital strategy, while firming up our platform for global expansion of Internet Services and Internet Finance services.
In addition, the Group decided in the third quarter of the current fiscal year to acquire Ebates Inc. (hereinafter “Ebates”), provider of the leading membership-based online cash-back site in the U.S., and made it a wholly owned subsidiary in October 2014. By integrating Ebates’ robust platform that drives e-commerce business for retailers with the business assets and technology of the Rakuten Group, we believe Rakuten Group can develop a unique and innovative e-commerce platform globally.
In addition, in Internet Services, the Rakuten Group enhanced its services for smart devices (smartphones and tablet devices), and promoted Rakuten Ichiba’s B2B2C marketplace model to the world mainly through large-scale sales events such as the Rakuten Super Sale, while in Internet Finance, the membership base for Rakuten Card expanded further. Through these measures, the Rakuten ecosystem continues to show solid expansion and growth.
(2) Segment Information
Business results for each segment are as follows:
Internet Services
In the Internet Services segment during the three quarters of the current fiscal year, Rakuten actively worked on strengthening its services for smart devices, promoting personalized marketing which utilizes big data, and executing large-scale sales events such as the Rakuten Super Sale among other initiatives in its core Rakuten Ichiba service. As a result of these initiatives, the growth rate for Rakuten’s domestic e-commerce gross merchandise sales (transaction value) was favorable, rising 16.7% year-on-year, even though the Rakuten Victory Sale that gave last year’s results a strong boost was not held this year. In Travel services, demand was strong among corporate customers and for car rental and inbound services.
With regard to overseas e-commerce services, Rakuten focused on developing marketplace-model services, including unification of systems. Consequently, gross merchandise sales for these services have grown and are contributing to the expansion of operations. As for strategic investments in future profit growth fields such as contents services, Rakuten is carrying out strict cost controls, and effects are beginning to appear which includes an increase in contents transaction value and reduction in fixed costs.
As a result, revenue for the segment rose to ¥252,705 million, a year-on-year increase of 14.7%, and segment profit declined 1.6% year on year to ¥38,852 million.
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(Millions of yen)
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||||||||
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Nine months ended
September 30, 2013
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Nine months ended
September 30, 2014
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Amount Change
YoY
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% Change
YoY
|
|||||
| Segment Revenue | 220,246 | 252,705 | 32,459 | 14.7% | ||||
| Segment Profit | 39,477 | 38,852 | (625) | (1.6)% | ||||
In the Internet Finance segment during the three quarters of the current fiscal year, in credit card and related services, shopping transaction value, accompanying an increase in Rakuten Card membership, rose significantly compared to the same period of the previous year.
Moreover, solid growth in revolving balances resulted in a rise in income including commission income, and notable growth continues in profit. In securities services, revenue and profit declined compared to the same period of the previous fiscal year when extremely high domestic stock trading value was recorded due to the effect of stock market conditions. However, the balance of investment trusts, which provide stable income, grew steadily. In banking services, solid growth in loan balances led to increased interest income from loans.
As a result of the above, the Internet Finance segment recorded ¥171,810 million in revenue, a 16.3% year-on-year increase, while segment profit increased 4.4% year-on-year to ¥33,406 million.
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(Millions of yen)
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||||||||
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Nine months ended
September 30, 2013
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Nine months ended
September 30, 2014
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Amount Change
YoY
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% Change
YoY
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|||||
| Segment Revenue | 147,747 | 171,810 | 24,063 | 16.3% | ||||
| Segment Profit | 32,006 | 33,406 | 1,400 | 4.4% | ||||
In the Others segment during the three quarters of the current fiscal year, in the professional sports division, sponsor sales and related goods revenue were robust. Meanwhile, the Group is making strategic investments in Viber, which was made a consolidated subsidiary at the end of the first quarter of the current fiscal year.
As a result, revenue for the segment was ¥33,375 million, a 28.4% year-on-year increase, while segment profit was ¥1,887 million, a 51.3% year-on-year decrease.
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(Millions of yen)
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Nine months ended
September 30, 2013
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Nine months ended
September 30, 2014
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Amount Change
YoY
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% Change
YoY
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|||||
| Segment Revenue | 25,984 | 33,375 | 7,391 | 28.4% | ||||
| Segment Profit | 3,877 | 1,887 | (1,990) | (51.3)% | ||||
2. Qualitative Information about Consolidated Business Forecasts
The outlook for each segment for the current fiscal year is as follows.
Internet Services
Strong growth in revenue is expected for Rakuten Ichiba and Travel services, and corresponding growth in profit is expected. Although it is possible that the growth rate in the second half of the fiscal year ending December 31, 2014 will be relatively moderate compared to the second half of the fiscal year ended December 31, 2013, where the Rakuten Victory Sale of Tohoku Rakuten Golden Eagles baseball team in the Nippon Series had considerable effect, the upward trend in gross transaction value is expected to maintain its strong momentum amid market expansion, enhancements to Rakuten Group services and other factors. Meanwhile, Rakuten plans to make strategic advance investments in contents services and other businesses which are just emerging and where medium- to long-term profit growth is expected.
Internet Finance
In credit card and related services, high revenue growth is expected to accompany the capture of new members. Cost control measures have succeeded, and profits are expected to expand steadily. In banking services, robust profit is expected following an increase in assets. Meanwhile, it is difficult to make a forecast for securities services due to the substantial impact of stock market conditions.
Others
Stable profit growth is expected in telecommunications services. In the professional sports division, earnings such as ticket sales and sponsor revenue are affected to a certain extent by the performance of the Rakuten Eagles. In mobile messaging services and VoIP services, the industry as a whole is in a period of notably high rapid growth, and it is difficult to estimate its future revenue as of this time.
3. Matters regarding summary information (Others)
(1) Changes in significant subsidiaries during the current period
No items to report.
(2) Outline of changes in accounting policies and accounting estimates
(Changes in accounting policies as required under IFRS)
Apart from the cases stated as follows, significant accounting policies adopted by the Rakuten Group in this summary of consolidated financial statements for the nine months ended September 30, 2014 basically remain the same as those adopted in the consolidated financial statements for the previous fiscal year. In addition, income tax expense for the nine months ended September 30, 2014 is calculated based upon estimated annual effective tax rate.
Impact from the adoption of the new accounting standards
The Rakuten Group adopted the following accounting standards from the first quarter of the current fiscal year.
| IFRS | Newly established or revised contents | |||
| IAS 32 |
Financial instruments:
presentation (Amended Dec. 2011) |
Clarification of the meaning of requirements of possession of current rights which are legally enforceable and clarification of offsetting criteria regarding settlement systems which apply gross settlement mechanisms that are not carried out simultaneously under existing IAS 32 | ||
| IAS 36 |
Impairment of assets
(Amended May 2013) |
Clarification of the guidelines on disclosures of a recoverable amount of cash-generating units, which include important goodwill and intangible assets with indefinite useful lives | ||
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Notes
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(1) Changes in significant subsidiaries during the current
period
Changes in specified subsidiaries resulting in change in scope of consolidation: No |
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New － (Company name － )
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Excluded － (Company name － )
|
| (2) Changes in accounting policies and changes in accounting estimates | |
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1. Changes in accounting policies as required under IFRS: Yes
2. Changes in accounting policies due to other reasons: No
3. Changes in accounting estimates: No
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| (3) Number of shares issued (Common stock) | |
| 1. Total number of shares issued at the end of the period (including treasury stocks) | |
| 1,327,609,700 shares (As of September 30, 2014) | |
| 1,323,863,100 shares (As of December 31, 2013) | |
| 2. Number of treasury stocks at the end of the period | |
| 6,033,034 shares (As of September 30, 2014) | |
| 6,033,466 shares (As of December 31, 2013) | |
| 3. Average number of shares during the period (cumulative from the beginning of the period) | |
| 1,320,186,520 shares (Nine months ended September 30, 2014) | |
| 1,315,596,482 shares (Nine months ended September 30, 2013) | |
- This quarterly financial report is not intended for the quarterly review based on the Financial Instruments and Exchange Act. At the time of disclosure of this quarterly financial results report, the review procedures for quarterly consolidated financial statements in accordance with the Financial Instruments and Exchange Act are not completed.
- Consolidated forecasts for the year ending December 31, 2014 are based on information that is available at the time of writing, but a number of known and unknown factors could cause actual results to differ from the projections.
*The full report is available at:
http://global.rakuten.com/corp/investors/documents/pdf/14Q3tanshin_E.pdf
About Rakuten
Rakuten, Inc. (4755:Tokyo), is one of the world's leading Internet service companies. We provide a variety of products and services for consumers and businesses, with a focus on e-commerce, finance, and digital content. Since 2012, Rakuten has been ranked among the world’s ‘Top 20 Most Innovative Companies’ in Forbes magazine’s annual list. Rakuten is expanding worldwide and currently operates throughout Asia, Europe, the Americas and Oceania. Founded in 1997, Rakuten is headquartered in Tokyo, with over 11,000 employees and partner staff worldwide.
For more information: http://global.rakuten.com/corp/.
Contacts
Rakuten Investor Relations
investor-relations@mail.rakuten.com / http://global.rakuten.com/corp/investors/
or
Rakuten Public Relations Email: pr@mail.rakuten.com Tel: +81-50-5817-1104
Source Rakuten (BUSINESS WIRE) ©
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