FY2020 Third Quarter Consolidated Financial Results
November 12, 2020 Rakuten, Inc. Rakuten Growth Strategy
1 ➢ Vision
2 Mission
Contribute to Society by Creating Value through Innovation and Entrepreneurship Global Innovation Leader
Japan’s Leading Tech Company Transforming Global Telecom
4 ➢ History and Track Record
5 Profile Ecosystem Rakuten Capital Platform (MNO & Logistics etc) IRR +23%* (Sep 2020) Founded 1997 by 2 staff Internet Ride Sharing EC FinTech * Users (Asset Financing) with 13 Merchants Communication Ad Membership Telecom business Brand FinTech Healthcare
Data * 2019 2019 (Affiliated Company) Digital Others Global Annual GTV Domestic EC Annual GMS content * Lyft and Rakuten Medical were transferred from Investment Business in Apr and Sep 2019 Services respectively, and treated as exited investments for return calculation Trillion yen 19 Trillion yen 3.7 Internet Services FinTech Contents & Communication
Global Japan Registered Membership Membership (as of Jul/20) (as of Jul/20)
(Ebates) 1.4 Billion 100 Million+ Branding
2019 2019 Non-GAAP Revenue Operating Income
1.3 Trillion yen 95 Billion yen Rakuten Growth and Innovation Track Record MNO entry
Revenue exceeds JPY 1tn Global GTV JPY 19 tn “EARTH MALL with Rakuten" Open J League entry Annual Rakuten Ichiba JPY tn GMS exceeds JPY 1 tn "Rakuten General Insurance” acquisition Revenue 1.3 “One Delivery” announcement “Rakuten Point Card” issuance “Viber” acquisition “Rakuten Edy” acquisition “Ebates” acquisition Global GTV Englishnization “Rakuma” launched US/France EC acquisition Partnership with FC Barcelona Listed on TSE 1st Section Baseball entry “Rakuten Bank” “Viki” acquisition acquisition
“Rakuten Securities” ”Kobo” and “Wuaki” acquisition “Taiwan Rakuten Ichiba” launched acquisition “Rakuten Life Insurance” “Rakuten point acquisition service” launched “Rakuten Ecosystem” announcement
“Rakuten Travel” ”Rakuten Books” “Rakuten Card” issuance launched US LinkShare acquisition IPO on Foundation the OTC market “Rakuten Ichiba” launched
* IFRS is applied from 2011. Related segments are summed up before 2013. "Others" includes Communication & Sports businesses, overseas businesses, minority investments, etc. * Mobile segment is added from 2019 due to disclosure segment change. 7 Growing New Businesses to Become No.1
# of Credit Card # of Internet bank # of MVNO holders (mm) accounts (mm) subscriptions (mm) * NO.1 NO.1 NO.1
9.1 2.3
2.6x 3.8x 11.3x
3.5 5.3 0.2
Jun/10 Jun/20 Jun/10 Jun/20 Dec/15 Dec/19 *No.1 in number of card holders 8 Overtaking Traditional Industries Domestic EC GMS vs Retail Sales Value Travel GMS Advertising Business Domestic EC GMS Rakuten Travel Rakuten Ad Revenue
CAGR CAGR CAGR
+31% +15% +18%
2011
2017
2013
2012
2015
2014
2019
2016
2018
2001 2010
2007
2003
2002
2005
2004
2009
2006
2008
2000
2011
2017
2013
2012
2015
2014
2016 2019
2018
2010
2007
2005
2006 2009 2008 Retail Industry Sales Value* Traditional Media Ad Travel Industry* Expenditure* CAGR CAGR CAGR
–0.1% –2.1% -3%
2011
2017
2013
2012
2015
2014
2019
2016
2018
2001 2010
2007
2003
2002
2005
2004
2006 2009
2008
2000
2011
2017
2013
2012
2015
2014
2016 2019
2018
2010
2007
2005
2006 2009 2008
*Ministry of Economy, Trade and Industry, Commercial sales value*Japan Tourism Agency, Travel Agency Transaction *Ad expenditure of news paper, magazine, radio, TV by type of business *Dentsu: 2019 Advertising Expenditures in Japan Credit Card Shopping GMS Bank Deposit Rakuten Bank Rakuten Card CAGR CAGR +74%
+19%
2011
2017
2013
2012
2015
2014
2019 2016
2018
2010
2007
2005
2006 2009 2008 Credit Card industry* All Banks* CAGR CAGR +7%
+3%
2011
2017
2013
2012
2015
2014
2019
2016
2018
2010
2007
2005
2009
2006 2008
*Ministry of Economy, Trade and Industry, Statistical survey on dynamics *Japanese Bankers Association, National bank deposit of specified service industries: Credit Card 9 A strong global workforce enabled by “Englishnization” ◼ Rakuten is a rare Japanese company that made English the official company language in all offices across the world ◼ ‘Englishnization’ makes it possible to acquire and retain global talent including the world’s top engineers
Employee nationality ratio*
Non-Japanese Japanese nationality nationality
23% 77%
Number of employee / nationalities*
20,000+ Over 70
* As of December 31, 2019 10 ➢ Strength of Rakuten Ecosystem
11 Rakuten is a Membership Company
Global Membership 1.4bn One Brand A single "Rakuten" brand for domestic and overseas services improves awareness and image of each service One ID - Membership More than 100 million users in Japan can use multiple services in the ecosystem with a single ID Rich data Enormous purchasing data of more than 100 million users connected to demographics, such as age and gender, and consumer interests. High Quality Data from 100M+ Rakuten Members
100M+ Rakuten Members
High Quality Data Purchase Data
Accurate Demographic Online and Offline Membership Attributes Purchasing Data / Geo Data in all areas
Retail, Sports, Entertainment and FinTech
13 Rakuten Ecosystem Expansion from online to offline
Sports/Golf
Dining
Beauty Department Salon Store Ad Gas Station Content Payment
E-Commerce FinTech
Convenience Fast Food Store Mobile ID Books /Music Online shopping DATA Supermarket
POINT Moving Drugstore Membership Value of Rakuten
Membership Value Q3/20 Target Membership Value
JPY 7.8tn JPY 10tn
MSV = Σ LTV – CAC LTV – CAC LTV LTV – CAC CAC Active Users … LTV – CAC Cross Use
15 Rakuten Everywhere - Online to Offline Expansion
Capturing the Consumer’s JPY 352 Trillion* Wallet Share
(JPY tn)
* Internal estimation based on public information 16 ➢ Innovation
17 Rakuten Ecosystem Global Expansion
Content Investments
EC Advertising
Health FinTech Care
Mobile
Become No.1 MNO in Japan with Low Pricing and High Quality Service
Transition of Applications Quality User Experience Data Usage Exceeded 1.6 Million Applications since launch Equivalent to other MNOs Twice as much as Become No.1 Other mobile carriers User Experience Data Usage Rakuten (MNO) ■Other MNOs ■Rakuten （per user / month） Number of Applications Average and Target 99.1 99.0
85.1 83.9 82.9 82.4 2x
(from September 30)
(from April 8th) Exceeded Free supporter program 1.6 Million started Full launch 5 Thousand 20 Thousand Games Voice App Other MNOs 2019/10 2020/04 2020/11 4G Availability Rakuten Experience Experience Average
Source：OPENSIGNAL (June 2020) Source: Ministry of Internal Affairs and Communications (March 2020) "Current status of mobile communication traffic in Japan" and Rakuten Mobile research Going Global with Rakuten Communications Platform
Developed and Deployed World’s First Virtualized Network Targeting the
◼ Redefined how mobile telco networks are designed, built, operated $1tn+ Mobile ◼ Significant reduction in CAPEX and OPEX due to virtualization, automation and open architecture industry via Traditional Site Deployment Rakuten Virtualized Site Deployment Innovation Integrated RRH Power + Antenna Power Board Rectifier & Battery GC Board
DU BBU
Rectifier & Cable & BBU Cabinet Antenna Battery RRU Jumper Rectifier & Battery AAU * ～40% lower CAPEX ～30% lower OPEX Rakuten Ecosystem Global Expansion
Content Investments
EC Advertising
Mobile FinTech
Health Care Based on photoimmunotherapy, Rakuten Medical is developing the
April 2019: Received Sakigake (fast Platform track) designation under the Sakigake Designation System Rakuten Medical is developing precision, cell-targeting investigational therapies May 2019: Obtained Japanese based on its Illuminox™ platform. Manufacturing/Marketing business license for pharmaceuticals and Drug Component medical devices. A targeting moiety March 2020: Applied for approval conjugated with one or more dyes leading to in Japan for head and neck cancer. selective cell surface (May: Received Conditional Early binding Approval System designation )
Device Component September 2020: Received Delivers the light that marketing approval to treat actives the drug unresectable locally advanced or recurrent head and neck cancer ➢ Growth Strategy
24 Q3/20 Highlights
Global GTV Consolidated Revenue Domestic EC GMS Shopping EC GMS
JPY 5.5 tn JPY 361.4 bn JPY 1.1 tn YoY +29.3 %
+15.2% YoY +13.2% YoY +11.7% YoY
Rakuten Card Rakuten Card Rakuten Securities Rakuten Bank Accounts Shopping GTV Holders Accounts
JPY 2.9 tn 20.76 mm* 4.72 mm* 9.45 mm*
+20.7% YoY *As of September 30, 2020 *As of September 30, 2020 *As of September 30, 2020
25 Evolving Powerful and Unique Rakuten Ecosystem
Digital ID Transformation Brand Data
Rewards Program
Communication
26 Online e-Learning Content
FinTech Seizing Digital Advertising Acceleration Data e-Commerce
5G Communications
27 Contribute to Society by Creating Value through Innovation and Entrepreneurship EC Core Businesses
29 Domestic E-Commerce GMS*1
（JPY bn）
Jul-Aug Domestic EC +15.6% YoY
*1 GMS comprises Ichiba, Travel GTV on checkout basis, Books, Golf, Ticket, Fashion, Dream businesses, Beauty, Delivery, Rakuten24 (Direct), Auto business, Rakuma, Rebates Rakuten Seiyu Netsuper, etc. *2 Eliminated internal transactions in some businesses. This has resulted in retroactive adjustments 30 Domestic E-Commerce Results*
（JPY mm）
excl. logistics-related investments/cost ＋12.0% YoY
* Domestic E-Commerce = Ichiba, Travel, Books, Golf, Ticket, Rakuten Fashion, Dream businesses, Beauty, Delivery, Rakuten24 (Direct), Logistics, Auto business, Rakuma, Rebates, etc.
31 Q3/20 Domestic E-Commerce Operating Income Breakdown
Logistics-related investments / costs, -3.2 others. （JPY bn） +5.9 -2.6
COVID-19 negative impact ・Rakuten Travel etc.
Boosted by COVID-19 ・Rakuten Ichiba 17.8 ・Rakuten GORA 15.1 ・Rakuten 24 (Direct) 15.2 ・Rakuma ・Rakuten Books ・Rakuten Fashion ・Rakuten BIC ・Rakuten Seiyu Netsuper etc.
Q3/19 Q3/20 Q3/20 Domestic E-Commerce Domestic E-Commerce Domestic E-Commerce Operating Income Operating Income Operating Income (excl. logistics-related investments/costs)
32 Domestic E-Commerce GMS
GMS over JPY4tn (Forecasted)
GMS over JPY3tn GMS over GMS over JPY2tn JPY1tn
33 EC market and Family Expenditure
Family Expenditure approx. JPY 300tn*1
EC market approx. JPY 20tn*2 Rakuten FY2019 Domestic EC GMS JPY 3.7tn
*1 Cabinet office ”Quarterly Estimates of GDP” *2 Ministry of Economy, Trade and Industry “E-Commerce Market Survey”
34 Domestic EC Services and Market Size by Item*
Clothing & Private Food, Daily necessities, Furniture, Home appliances, Footwear transportation, etc. Meals outside the home Culture & Recreation goods JPY 9.36tn JPY 8.89tn Recreation JPY 90.82tn JPY 24.18tn
Personal care services Books, etc. JPY 3.68tn JPY 3.42tn
Daily Leisure
* Market size by item: Estimated number referring to Ministry of Internal Affairs and Communications ”The Family income and Expenditure Survey 2019- Yearly Amount of Expenditures per Household” and Cabinet office ”Quarterly Estimates of GDP”
35 Shopping E-Commerce* GMS
Shopping EC GMS （YoY） Shopping e-commerce* GMS growing strongly
Q3/20 2 years CAGR +29.3% YoY
* Shopping e-commerce＝Ichiba + 1st Party (Rakuten Fashion, Books, Rakuten24 (Direct), Netsuper + Open EC (Rebates, Checkout) + Rakuma
36 Ichiba Purchase Amount and Retention Rate
Jul-Aug Q3/20 Monthly purchase amount User retention rate
Ratio of users who made a purchase on Ichiba in +10.9% Q2/20 repeating in Q3/20 YoY approx.75%
37 Rakuten Travel vs Travel Agency Industry
GMS rate of change from Jan 2020
Jan/20 Feb/20 Mar/20 Apr/20 May/20 Jun/20 Jul/20 Aug/20 Sep/20 ０ *1
Rakuten Travel GMS recovered more quickly than travel agency industry
Travel agency industry*2
Q4/20 Booking GMS YoY growth Expected to be positive
*1 Checkout GMS *2 Source: Japan Tourism Agency “Travel agency handling amount prompt report“
38 Rakuten Rewards (Ebates)
Rakuten Rewards GMS Logo Awareness* Expansion in the US
(USD mm) 4,705 4,219 25.4pt UP 2,970 2,930 2,686 2,746 2,537 2,418 2,058
Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Before rebranding As of Sep 2020
* Aided Rakuten corporate logo awareness survey conducted by Rakuten (Sep 2020)
39 EC Core Business: GORA
40 GORA Online Golf Course Booking Website Awareness No.1*
Online Booking Website Awareness No.1*
* Source: MACROMILL, ”A survey for golf course booking website” ( Internet survey, from Jan 23, 2020 to Jan 24, 2020, 1,034 people, 10’s –-60’s male and female who used golf course booking website in a year)
41 GORA Online Golf Course Booking Website Awareness No.1
42 Synergy with Rakuten Ecosystem
Q3/20 Cross-use Ratio of GORA users and Other Services of Rakuten Group* 76.8％
* Number of users who use GORA and more than one other Rakuten Group services / Number of total users of GORA
43 Q3/20 GORA GMS
Q3/20 +22.3% GMS Record High YoY
44 EC Growth Phase Businesses
45 Growth Phase Businesses: Further Expansion of Rakuten Ecosystem
(Books) Strengthen 1st party sales and lineup of each genre 1st Party
(Netsuper)
Aiming to acquire wide range of age groups focusing on young generation
Market Place Rakuten Ichiba Flea market app
B to C C to C
46 Evolution of Rakuten Fashion
App launch and expansion of Acceleration of acquiring Launched Rakuten awareness popular brands Fashion Luxury
Launched in
June 2020 ・・・
47 Fashion and Apparel Business in Rakuten ◼ GMS of fashion and apparel business of Rakuten (Ichiba + Rakuten Fashion) is no.1 in Japan E-commerce
Fashion and apparel related genre GMS*1*2
Approx. 2.3 times No. 1 GMS in Japan
ZOZOTOWN
*1 Comparing Gross Merchandise Sales in 2019 in ZOZO’s IR disclosure, and GMS in 2019 of fashion and apparel-related genre in Ichiba and Rakuten Fashion *2 Fashion and apparel-related genre in Ichiba: apparel, fashion accessories, sports goods and beauty goods, etc.
48 Further Expansion of Rakuten Ecosystem through Rakuma (1/2)
49 Further Expansion of Rakuten Ecosystem through Rakuma (2/2) User spending of Rakuma sales Age group of Rakuma users (Rakuten Cash) Rakuten Books 60’s 10’s Others Rakuten Point Card 50’s Rakuten Ichiba
20’s Other Rakuten Group Services 40’s Approx. 45% Rakuma
Below 30’s Rakuten Pay Approx. 70%
30’s Also spent in other High ratio of young age group Rakuten Group services * Rakuma users can spend their sales at Ichiba or nationwide stores by charging to Rakuten Cash. Based on the number of payments in April 2020 that users who charged their sales to Rakuten Cash in April 2020
50 EC Investment Phase Business
51 Strategies for Capturing E-commerce Consumer Demand
Goal
・Merchant Growth Strategy =Growth of Rakuten Ichiba ・Improve user convenience Issue ・ Increase fulfilment center coverage ・ and efficiency of own delivery Enhance cost and ・Expand logistics and last mile delivery operational efficiency to capture E-commerce demand ・Introduce uniform shipping for merchants growth under the pandemic for worry-free shopping experience
・Provide safe and reliable service to users
・Logistics support for Ichiba merchants
52 Logistics Centers Map
Nagareyama 2019
Hirakata 2019 Chuorinkan 2021 Preparing Narashino 2020 Kohoku 2020
Kawanishi 2018 Sagamihara 2018 Ichikawa 2020 Ichikawa 2019
53 Rakuten EXPRESS Population Coverage
Jan 2018： 4.0％ Jan 2019： 17.2％ Dec 2019： 47.7％ Jan 2020： 61.1％ Jul 2020： 62.5％
Sep 2020 63.5%
54 Rakuten EXPRESS Initiatives
Unattended delivery Combining orders in Non face-to-face service one delivery
We launched an Strengthening the development of (Planned) unattended delivery service non face-to-face pick-up Sending items in one box from ahead other delivery companies and multiple merchants delivery lockers
For COVID-19 countermeasures, Rakuten provides above services depending on user requests
55 Merchants Using Rakuten Super Logistics
Merchants preparing to use Merchants using now From Aug 2018 Approx. 9X
2018/8 2019/1 2020/1 2020/9
56 Rakuten Super Logistics Shipments
From Aug 2018 Approx. 9X
2018/8 2019/1 2020/1 2020/9
57 Rakuten Seiyu Netsuper Expand Strongly
Q3/20 GMS* Oct/20 GMS*
+35.9% +55.3% YoY YoY
* Order based Revenue (Product sales + Fees)
58 FinTech: Card
59 Rakuten Card Results ◼ Revenue +11.7% YoY and Operating Income +37.5% YoY from growth in shopping transactions, reversal of bad dedt accrual and cost control
(JPY mm)
60 Rakuten Card kept positive growth amidst COVID-19 and recovered quickly
Shopping GTV YoY 40% Back to previous growth rate level 30%
20% Before COVID-19 CAGR +23.0% Rakuten Card
10%
Before COVID-19 CAGR +7.1% Still lagging against 0% previous levels
-10% Credit card industry YoY Negative excluding Rakuten Card -20%
-30%
Jul/19
Jul/20
Jun/19
Jan/19
Oct/19
Apr/19
Feb/19
Sep/19
Jun/20
Dec/19
Jan/20
Nov/19
Aug/19
Mar/19
Apr/20
Feb/20
May/19
Aug/20
Mar/20 May/20
61 Keeping Healthy Asset Quality
Ratio of Expenses related to Doubtful Accounts*
2.5% 2.27% 2.31% 2.15% 2.05% 2.05% 2.13% 1.99% 1.98% 1.94% 2.0% 1.77% 1.63% 1.5%
1.0%
0.5%
0.0% Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20
* Ratio of expenses related to doubtful accounts = (Expenses related to doubtful accounts) / (average total balance of loan receivables at beginning and end of the period) × 4
62 Rakuten Card: No.1 Credit Card in Japan
Market Share by Shopping GTV in Japan*1 No.1
Number of Card Holders as of Sep 2020 20.76mm
No.1 in Customer Satisfaction Survey*2 for
11 Consecutive Years
*1 METI, Statistical survey of specified service, Credit Card category *2 Japan Customer Satisfaction Index 2019 63 Complete Everything with a Smart Phone
Change to Check spending Revolving
Payment Change Management Home Address
64 Rakuten Card Capturing Changing Consumer Behavior
Increasing Credit Card Increasing Contactless Spending in EC New Normal Cashless Ratio
Smartphone Centric Rakuten Card
18.6% 9.2% 20XX 2020 (As of end of Aug) 2015 Shopping GTV Market Share in Japan*
* METI, Statistical survey of specified service, Credit Card category
65 FinTech: Bank
66 Rakuten Bank Results ◼ Revenue +5.8% YoY from increase in service transactions while Operating Income -0.2% due to expenses associated with relocation of head office
(JPY mm)
* Joint venture in Taiwan (RAKUTEN INTERNATIONAL COMMERCIAL BANK CO., LTD.), a consolidated subsidiary from Q2/20, is not included in the figures above.
67 Rakuten Bank: No.1 Online Bank in Japan
Number of Bank Accounts 9mm in Online Bank* No.1
A B C D E Bank * Company disclosures
68 Group Synergies Accelerate Rakuten Bank’s Growth
Number of Account Applications 250,000 66.5% 70%
60% 200,000 51.3% Ratio of Existing Rakuten 50% Ecosystem Customers 150,000 Jul/2018: Rakuten 40% Bank Joined 30% 100,000
20% 50,000 10%
0 0%
Jul/17
Jul/15
Jul/16 Jul/19
Jul/18
Jul/20
Jan/17
Jan/15
Jan/19
Jan/16
Jan/18
Sep/17
Sep/15
Sep/16 Sep/19
Nov/17
Sep/18
Mar/17
Nov/15
Jan/20
Nov/19
Mar/15 Nov/16
Nov/18
Mar/19
Mar/16
Mar/18
May/17
May/15
May/19 Sep/20
May/16
May/18
Mar/20 May/20
69 “Money Bridge” Deposit Balance Exceeded JPY 2 Trillion
Aug/20 Bank Securities Account linkage service “Money Bridge” deposit balance 2 Trillion JPY
Jul/19 1 Trillion JPY
Approx. 1 year
70 Becoming Customer’s Main Bank Rakuten Bank supports essential daily transactions Customers can use Rakuten Bank’s account transfer (direct debit) for many institutions including utility charges
Q3/20 Q3/20 Number of payroll accounts Number of direct debit transactions
+51.8% +47.1% YoY YoY
71 Leading Position in Online Shift
Online Shift of Traditional Banks
Consolidation Digital Online Money Smartphone / of branches Bankbook Transfer App Centric
Rakuten Bank is in a Leading Position of Online Shift
72 FinTech: Securities
73 Rakuten Securities: Fastest Growing in Online Securities
Number of New Accounts Opening* No.1
Number of Accounts as of Sep/2020 Growth Rate 4.7mm No.1
Investment with Rakuten Points ✓ Investment Trusts ✓ Accumulation Type Investment Trusts ✓ Domestic Stocks ✓ Binary Option (Rakuopu), etc. Rakuten Points
*Source: Aggregated by Rakuten based on public information on each company's website 74 Rakuten Securities Results ◼ Revenue +31.8% YoY and Operating Income +40.6% YoY from growth in trading volumes of Japanese Stock and US Stock
(JPY mm)
75 Number of Accounts ◼ No. 1 in the number of accounts opened in 2018 and 2019 ◼ Acquired approx. 900,000 accounts in 2020. Rapid growth due to the Rakuten Ecosystem and further expansion of customer base
*Source: Aggregated by Rakuten based on public information on each company's website *Nomura Securities, Daiwa Securities: Number of remaining customer accounts, SMBC Nikko Securities: Number of total accounts 76 Increase Accounts leveraging the Rakuten Ecosystem Younger Generation building Assets for the Future ◼ Number of accounts has rapidly increased recently by leveraging the Rakuten Ecosystem ◼ The number of general consumer, mainly younger generation has increased significantly ◼ Especially asset formation services, such as Tsumitate NISA, iDeCo, etc. is attracting younger generation New Accounts Tsumitate NISA Accounts
As of Sep 2020
77 No.1 in Growth Rate: Best in Class for Asset Formation ◼ Expanding services that take advantage of the Rakuten Group’s strength. ◼ Accelerate growth of asset formation-related services 26.7 B JPY (As of Sep/2020) (+136.3% YoY)
304,116 2,054 B JPY As of Aug/2020 (+49.1% YoY) (+80.2% YoY)
1,300,071 754,943(+123.2% YoY) (+69.8% YoY) Industry Share: 25.9% As of Jun 2020
* Survey by Rakuten Securities (As of Oct/2020) 78 Increasing US Stock Trading, especially Smartphone Transactions using iSPEED ◼ US stock trades increased by 14x YoY in Sep. 2020, of which 53% are via iSPEED which began in Apr. 2020 ◼ Japanese stock trade also integrated into iSPEED. One-stop trading of Japanese and US stocks
News Chart Favorite Number of US Stock Trades by Channel
Web iSPEED MARKETSPEED IFAWeb Call center
79 FinTech: Insurance
80 Full Lineup and One-stop Service
One Stop Service
Life Insurance Comprehensive Insurance Desk
Comprehensive Operation General Insurance ✓ Marketing ✓ Call Center ✓ System ✓ Other Operations Pet Insurance
81 Insurance Business Results ◼ Revenue +6.7% YoY and Operating Income JPY +2.4 billion YoY from increase of new policies, cost reductions, and rebalancing of risk through reinsurance
(JPY mm) (JPY mm)
* Insurance includes Life Insurance, General Insurance, Pet Insurance and Insurance Agency. Detailed data is shown in the Appendix.
82 Growth Driver: Rakuten Ecosystem Synergies
1 Home Appliance Ichiba General Insurance Extended Warranty
Free Pet Insurance 2 for Pet Owners Pet Insurance Discount Program for Pet Owners
83 Growth Driver: Rakuten Ecosystem Synergies
Group credit life insurance and 3 Life Insurance Bank fire insurance for mortgage users General Insurance
Big Data Japan's 1st* flood risk 4 segmented type fire General Insurance insurance
* As of January 2020, Rakuten General Insurance research
84 Growth Driver: Rakuten Ecosystem Synergies
Life Insurance Collect and use 5 Rakuten Points General Insurance with Insurance
Rakuten Points are No.1 in total satisfaction survey Pet Insurance
*My voice com, Survey on points, July 2020
85 Future Growth with AI Assistant
AI assistant “ARIA” can support wide range of agency operations
✓ Manage schedule ✓ Create insurance product proposals etc.
86 FinTech: Payment
87 Rakuten Payment Provide Various Services
88 Comprehensive Lineup to Support Merchants Providing comprehensive services from store visit promotion to payment and marketing
Promotion of Sales Payment Store Visits Promotion
Bank
Data analysis / Marketing 89 Rakuten Pay expansion with unique value
Added value of Rakuten Pay
Approx.5mm ✓ Attract customers using Locations Online and Offline Rakuten Points
1mm* Transit e-money locations ✓ In-depth data analysis
✓ Safe and Secure Security
* As of end of Sep 2020
90 Strong Growth of Rakuten Pay
The Total Number of Rakuten Pay Users*
50Million （As of Sep 2020）
* Monthly active users with settlement based on registration of Rakuten ID. Cumulative number from each business
91 Attracting users to Rakuten Ecosystem 1 of 4 new Rakuten members is from Rakuten Payment
92 New initiative: Rakuten Pay - Suica Linkage
Railways is the mainstream Charge Suica with Rakuten of Japanese mobility Point to be released soon
Annual rides per year*
Charge Approx. 25bn
16x
Approx. 1.5bn Taxi Railway
* Ministry of Land, Infrastructure, Transport and Tourism “Annual statistical report of train”(2016) * General incorporated association, Japan Hires and Taxies association, “Changes in passengers carried and operating revenue” 93 Mobile
94 Unlimited 5G with No Additional Fee
Traditional Network Rakuten Virtualized Network
Integrated RHH + Rectifier & Antenna CAPEX 40% Power Board Battery Power GC Board DU BBU OPEX
Rectifier Cable BBU Cabinet RRU Antenna Rectifier & Battery AAU & Battery & Jumper
2,980 yen
95 DECLARATION Continually evolving
※1 *1 First year of service (2,980 yen/month) 0 yen SIM exchange fee 0 yen
※2 *2 5G service (certain areas only. Plans) 0 yen SIM re-issuing fee 0 yen
※3 Domestic calls with Rakuten Link *3 0 yen MNP transfer fee 0 yen
Contract sign up fee 0 yen Contract cancellation fee 0 yen
*1 Free offer limited to one contract and one application per customer. The number of eligible customers may change depending on the number of applications. Separate charges apply for product purchases, options fees, calls and others. *2 Included in price of plan. 5G service is available in certain areas. Please check the 5G services areas for more details. *3 When using Rakuten Link app. When not using app, 20 yen/30s. Certain numbers excluded. No. 1 Customer Satisfaction
No.1 Overall Satisfaction Overall satisfaction 80.0%
Pricing plan simplicity 91.8% No. 1 Cost performance 89.2% No. 2 au Flat rate data plan 85.4% No. 3 docomo Communication speed 75.8%
No. 4 SoftBank Communication quality and stability 70.8%
Satisfied/Slightly satisfied Dissatisfied/Slightly dissatisfied
* Source: MMD labo, November 2020. “November 2020 satisfaction survey of 4 major carriers” * Source: MMD labo, June 2020. “User survey after starting to use “Rakuten UN-LIMIT”
97 Accelerating 4G Network Buildout Plan by 5 Years
Summer 2021 5 years Population coverage ahead of schedule 96%
98 Using AST Communication Network for 100% Area Coverage of Japan
Broadband available Secure communication anywhere network, even in the event of a disaster
100% More rapid expansion of Global coverage 4G and 5G area coverage
BlueWalker 1 lift off (April 2019)
99 Accelerating Customer Acquisition with Coverage Area
Cumulative Number of Applications Exceeded 1.6 million (As of Nov 2020)
1.43 million
1.00 million
Jun/20 Jul/20 Aug/20 Sep/20 Oct/20 ・・・
100 Mobile Segment: Amount of Increased Fixed Assets
* (JPY mm) Amount of increased Tangible and Intangible Assets
91,352
76,859 76,034
58,639
45,500 47,086
17,744
5,817 827 928
Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20
*Acquisition basis *Includes amount of increased fixed assets of Mobile segment (Rakuten Communications, MNO business, MVNE & O businesses, Rakuten Viber, and Energy businesses)
101 Rakuten Mobile: Synergy with Rakuten Ecosystem
High retention High frequency of use Long-term service use
102 Going Global with Rakuten Communications Platform
Developed and Deployed World’s First Fully Virtualized Network Targeting the
◼ Redefined how mobile telco networks are designed, built, operated $1tn+ Mobile ◼ Significant reduction in CAPEX and OPEX due to virtualization, automation and open architecture industry via Traditional Site Deployment Rakuten Virtualized Site Deployment Innovation Integrated RRH Power + Antenna Power Board Rectifier & Battery GC Board
DU BBU
Rectifier & Cable & BBU Cabinet Antenna Battery RRU Jumper Rectifier & Battery AAU
～40% lower CAPEX ～30% lower OPEX
103 Mobile Technology
104 105 Rakuten Mobile is Created with a Unique Vision
VISION ARCHITECTURE TRANSPARENCY
COURAGE TO EXPLORE PERFORMANCE • DELIVERED SECURITY
Choice was cloud native, virtual network over A scalable solution in dense urban areas First & only cloud-native oRAN 5G Clean Telco legacy architecture with high traffic demands Supply chain transparency World’s largest ecosystem of technology 40% CAPEX & 30% OPEX efficiency companies led by US and its allies benefit on track Zero-trust policy
World’s First Open, Cloud-native Ultimate High Performance Unparalleled Trust and Security Virtualized, Automated Network OpenRAN Network Globally Recognized NW Performance
4G Availability Upload Speed Download Speed On-Network Time Experience Experience
98.6 18.9 46.9 89.3 98.5 % Mbps Mbps 86.6 % % 74.4 % 86.3 % 29 % Mbps 8.8 Mbps
Rakuten Average Global Rakuten Average other Rakuten Average other Tokyo Osaka Nagoya Mobile other Japan Mobile (On-Net) Japan MNOs Mobile (On-Net) Japan MNOs MNOs
No. 2 in the World*1 No. 1 in Japan*2 Increasing the time spend on our network significantly*2 Foundation for 5G network services Top NW performance despite we have only 1/6 of our competitor’s spectrum holding Opensignal Awards: *1 Global Mobile Network Experience Awards 2020 based on independent analysis of mobile measurements recorded during the period January 1 – June 28, 2019 & 2020. 95,867,800 devices with 403,023,311,230 measurements. *2 Quantifying the real ‘on-net’ Rakuten network experience October 2020, based on independent analysis of mobile measurements recorded during the period September 1 – 30, 2020 © 2020 Opensignal Limited. 106 One of the World’s Largest HetNet OpenRAN Deployment
URBAN SUBURBAN RURAL
4x4 4x4 2x2 2x2 2x2 2x2 + Wi-Fi* 2x2 + Wi-Fi 128x128 32x32 Split 7.2 Split 7.2 Split 2 Split 2 Split 2 Split 2 Split 2 Split 2 Split 7.2 Macro Mini Macro Small cell Enterprise Femto 5G NR
Integrated HetNet Approach allows us to manage existing spectrum better
107 30%-40% Better Coverage* Per Site
2 Transmit 2 Receive Other Operators Antennas
Cable Loss
B Radio Old School RRH/RU B Radio 80W Total Power RRH U Radio
High Cable Loss / PIM
Radio Radio
Radio 4 Transmit 4 Receive Antennas
Integrated Antenna & Radios 160W High Power RRH No Cable Loss No PIM (Passive Intermodulation) Fewer equipment in the site
Fewer sites required for national coverage *Compared to traditional network architecture 108 Rakuten Mobile Examples of Radio Units
109 4G Antenna with piggybacked Nokia Band-3 RU
110 Deployment Speed is Increasing
Sites Deployed / Month
1500
750
Simple Radio Solution Concrete Pole Automation June ‘20 Dec ‘20
We are increasing our site deployment rate from 750 sites to 1,500 sites per month
111 5G Enabled Fully Containerized VoRAN Launched Rakuten Big, Sub6 and mmWave 5G network
Rakuten products 5G Rakuten Rakuten BIG 5G mmWave 5G sub-6
Radio RCP LTE LTE LTE SW SW SW
Gues Gues Gues t OS t OS t OS 5G S W CPR VM VM VM I Hyperviser RCP Host OS Operation System Baseband Hardware & LTE SW Legacy Virtualized Stack Containerized stack Legacy custom-build hardware with oRAN compliant software deployed as VNF oRAN compliant software deployed as CNF proprietary software implementation (Virtual Network Function) on COTS hardware (Containerized Network Function) on RCP platform112 RGS+ RGS-e
VGA USB Features RGS • The RGS powers Rakuten Mobile’s central data center Fan Module • Dual Intel Xeon scalable processors HDD-BP • 1 front VGA port and 2 front USB port for chassis management PCIe Riser module 2 Super-cap module • Modularized PCIe risers, flexible and scalable I/O options deliver essential HW acceleration that serves demanding Telco services
Internal SAS • Unique tool-less designs throughout QCT products also attribute to Mezz module easy service and maintenance PCIe Riser module 1
RGSe Features
4 • The RGS-e powers Rakuten Mobile’s edge data centers CPUs (new) • Intel Xeon scalable processors
16GB x • Equipped with flexible I/O options for FPGAs, an additional M.2 SSD 24 for OS installation, and memory expansion 4 SSDs • Designed to flexibly support both 10Gb SFP+ and Dual 1GBbE RJ45 LoM Rackspace: 2U FPGA 1 CascadelakeCPU • Features tool-less power distribution board (PDB) and fan modules to minimize service downtime Memory:16GB x 6 1 SSD 16 Mobile base stations per server 113 4G Enabler for 5G Deployment
4G + 5G NR Sub-6 4G + 5G NR mmW Far Edge Near Edge Data Center 4G 5G Data Center 4G CU 5G CU OBF DU DU
DWDM DWDM 4G STU RCP Backbone RCP Backbone Radio
5G Operation System Operation System Radio CDC SKU 1 SKU 2 RGS-e RGS
Optical Switching Optical Switching & SDN
We will have the highest re-use of existing infrastructure for 5G
114 Contents Business
115 Growing Overseas Content Businesses due to COVID-19
Q3/20 vs Q4/19
Registered Users Registered Users Total Users* +8.9mm +5.4mm +11.0mm
* Total of registered users and non-registered AVOD (Advertising Video On Demand) users
116 Growing Overseas Content Businesses due to COVID-19
Q3/20 Revenue +23.1% YoY
117 Initiative for Expanding Rakuten TV Users
Expanded to 90mn households in 43 European Countries
118 Marketing Strategy
119 Strengths: Powerful and Unique Ecosystem
Global Membership 1.4bn One Brand A single "Rakuten" brand for domestic and overseas services improves awareness and image of each service
One ID - Membership More than 100 million users in Japan can use multiple services in the ecosystem with a single ID Rich data Enormous purchasing data of more than 100 million users connected to demographics, such as age and gender, and consumer interests.
120 Rakuten’s Unique Point Program
1. Rakuten Point ≒ Cash (1point＝1 yen, point usage rate: over 90%)
2. Ease of accumulation, use (Annual issued points: approx. 320 billion) ●SPU (Super Point Up Program) Use more Rakuten Group services, yield points at most 16times through shopping at Rakuteb Ichiba
●Available for various services in the Group such as Rakuten Ichiba, Rakuten and Rakuten Card
●Over 5million* available places nationwide both for on-line/off-line outside the Group services
Nurture customer loyalty / Platform chosen by customers
*Online (Rakuten Ichiba, Rakuten Travel Rakuten Pay Online, etc.) and off-line (Rakuten Pay, Rakuten Point card, Rakuten Edy) available places Enhancement of the SPU Program to accelerate Cross-Use ◼ Enhance and improve SPU program to accelerate cross-use while controlling costs
16x
122 Expansion of Cross-Use Ratio* ◼ Successful SPU program enhancing cross-use, resulting in an increased number of active users, contributing to growth in membership value 2 or more services
3 or more services
* Red line: Number of Rakuten members who have utilized two or more Rakuten services during the past 12 months of the listed month (as of end Jun 2020) * Blue line: Number of Rakuten members who have utilized three or more Rakuten services during the past 12 months of the listed month (as of end Jun 2020) (Applicable services limited to those which can earn Rakuten Points.) 123 Accumulate and Use with Rakuten Ecosystem ◼ Unify services used in daily life with Rakuten and create convenience of use across services by point
Pay Rakuten Ichiba purchases with Rakuten Card SPU+2x Ichiba
Invest monthly with Designate Rakuten Bank as earned points SPU+1x withdrawal account for Rakuten Card SPU+1x
Deposit interest rate increases by linking Rakuten Bank and Securities Rakuten Securities accounts Bank
124 Rakuten Mobile and Rakuten Ecosystem ◼ Approx. 15% of Rakuten Mobile applicants have never used Rakuten before ◼ 35% of those new Rakuten users have already started using various Rakuten services
15% of Rakuten Mobile applicants are new Rakuten Users 15%
6 months after launch, 35% of new Rakuten users have 25% 10% 5% started using others services
Ichiba * As of the end of Sep 2020 Bank 125 IT / Security
126 Trustworthy for our markets, customers, partners and employees
127 Working From Home
Video Conference Communication Chat Identification
File Sharing Information sharing Virtual Private Network Virtual Desktop Infrastructure
R Screen Protector
DNS Security Email Security Electronic Signature Information protection
128 Information Security Architecture in Rakuten Group
Rakuten-CERT ・Early Warning ・Collaboration between CSIRT ・Incident Response
Endpoint Security
Intelligence Threat ・Email security Operations Security
・Endpoint Detection and Response Incident & Response
・
・ ・ ・
Vulnerability Information
SIEM Forensic Digital Application Security scan Network ・App Scan ・Public Cloud Scan ・System Admin e-learning ・Network scan ・Web Development e-learning
Identity & Access Management ・Single Sign-On ・Mobile Device Management ・Active Directory ・Mobile APP Management
Infrastructure Security ・VPN ・DNS Security ・WAF ・Firewall ・Wi-Fi Security ・DDoS Measures ・Intrusion Detection System ・VDI
Risk & Compliance ・Governance ・Compliance ・Risk Management ・Cloud Guideline 129 Binding Corporate Rules
130 Privacy Protection
The Amendment Act of APPI GDPR CCPA APPI Japan EU USA Japan Enforcement 2015 Approved by EU Parliament in 2016 Signed by Gov Jerry Brown Enactment in 2020 Enforced on May 25, 2019 in June 2018 Enforcement 2022 January 1, 2020 tentative enforcement date 2015 2019 2020 2022
Transition from initial response Stakeholder Management Priority Setting to continued response ● Sharing importance and emergency of ⚫ Conducting data mapping ⚫ Preparing process for continued response CCPA compliance ⚫ Finding required tasks, organizing ⚫ Preparing training programs for ⚫ Forming consensus dependency among tasks, identifying areas all employees ⚫ Building progress monitoring and reporting of high-risk ⚫ Evaluating security structure ⚫ Setting priority tasks based on the above ⚫ Reviewing contracts with vendors ⚫ Creating roadmap 131 Data / AI
132 Rakuten = “Membership company”
133 Rakuten AI Platform Program
Mission: Empowerment of Rakuten membership management
134 Rakuten Super DB: Centralized Data Platform
70+ 43 Services with 1,000+ Services in Ecosystem 700+ TB of Data internal users
135 Customer DNA : Holistic Understanding of Rakuten members
4,000+ factual attributes from 90+ Life Style attributes predicted 38 services in Rakuten Ecosystem
Predicted lifestyle for owing cars, dogs and cats
136 AIris and PITARI : Targeting and Personalization AI
1,000+ personalized campaigns conducted Personalization Examle with MNO Website Generated 1.2M+ cross-use Rakuten including 400K+ MNO registrations Area Personalized messages Find Potential Customers
KDDI Area
* Example of banners used in March 2020
137 Ad Business
138 Advantage of Rakuten Ad Business 100+mn Rakuten IDs and accumulating both on/off- line data based on the IDs
On-line Off-line Point Card
etc. etc. 139 Impact of the 3rd Party Cookie Restriction
2019 Internet Ad Media Market*1
Performance Ad (JPY bn) 6.3% Video Ad 104.9 JPY tn 19.1% 1.6 318.4
Search Ad 40.2% Display Ad →Possible negative 668.3 33.3% impact of JPY 600bn*2 554.4 mainly in Display Ads
*1 Source: March 17th, 2020 / News release by Dentsu Inc. *2 Estimated by Rakuten 140 Advantage of Rakuten in Post 3rd Party Cookie Era
Login to Rakuten’s Rakuten internal Rakuten Services Ad distribution system Ad inventories
Ad Web Web App ID DMP distribution PW
Able to utilize st Restriction 1 Party data 3rd Party data (Acquire at Rakuten websites) （Acquire at outside websites）
141 Summary: Advantages of Rakuten
Search Messaging Portal + EC General services services services EC websites Rakuten
Volume ◎ ◎ ◎ 〇 ◎
Quality Accuracy × × △ △ ◎ of ID （Demographic/GEO）
Connection with FinTech × × △ × ◎ Data
ON-LINE × × △ 〇 ◎ Purchasing Data OFF-LINE × × △ × 〇
142 Expansion of Internal Inventory × External Advertiser
[Advertiser] External（National Brand） Q3/20 Ichiba×External Provision of External Advertiser Revenue +97.4% Provision of ad distribution (Main clients) Rakuten Group ad and performance YoY inventories to tracking with ●Advertiser’s advantage external advertisers Rakuten data to Promote customers to buy their products external advertisers [Inventory] directly from ads on Ichiba Internal External （Rakuten site） ●Rakuten’s advantage Provision of External ・Ichiba GMS expansion ad distribution Provision of Rakuten ・Expansion of internal ad revenue which is high and performance Group ad inventories margin tracking with to internal advertisers User Rakuten data to internal advertisers Place advertisers’ pages on Ichiba Internal (Ichiba Merchants, etc.)
143 Ad Business: Q3/20 Growth Analysis
Ad Revenue*1*2 [Advertisers] External（National Brands） Rakuten (JPY bn) ▲ % Internet Ad industry*3 +27.3% 18.7 YoY YoY
[Inventory] Internal External （Rakuten site） +10.8% +19.1% YoY YoY
Internal（Ichiba Merchants, etc.）
*1 Revenue includes internal transactions. *2 Revised numbers in certain businesses from Q2/19. This has resulted in retroactive adjustments. *3 Source: METI “Indices of Tertiary Industry Activity, Advertising Industry” 144 Corporate
145 Group Productivity Improvement
Trend of Group Productivity (excluding mobile, logistics and investment business)
Operating Income per Employee Operating Income / Total Cost
+69% +63%
2020 Q1 2020 Q2 2020 Q3 2020 Q1 2020 Q2 2020 Q3
146 Kaizen Activities Participated by All Employees
Trend of Domestic Participants of Kaizen Activities Number of activities (Number of participants) 2,339 (Accumulated base)
1,055 390
369 13 100
2016 2017 2018 2019 2020 （As of September 15)
147 Rakuten Group NPS® Score Trend
+9.1 points
+7.1 points Company A
+6.5 points Company B Q2/19 Q3/20
Net Promoter Score (NPS) Survey: Conducted by Rakuten through external panel / May 2019 - Aug 2020 ※NPS® is trademark of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.
148 Quality Improvement Activities
Number of quality improvement activities +181 631 450
280
143 79
2016 2017 2018 2019 2020 149 Rakuten Group Compliance Program
The number of incidents per employee dramatically decreased due to ongoing PDCA cycle of the compliance program 150 Improve image as employer of choice by new graduates and mid-term hiring
Shukatu Kaigi
1 Amazon Best Internship by students in 2019 2 Alphabet (Google) Realize self-propagating through 3 Rakuten internship No.1 4 ORACLE 5 Salesforce.com Total Ranking No.3 * Rakuten is only Japanese company to rank in top 10.
151 Back to Basics Project
Competitiveness Evolution -Competitive new diverse work -Pursue group optimization styles Back to Basics -Maximization of team strength -Enhancement of global talent -Reform human resource systems and Shikumika, execution -Enhancement of HR organization and HR development 2016~2018 2018~2019 2020~
• 1 on 1 meetings total 34 initiatives • Renewal of evaluation and compensation systems • Training system development etc 152 Rakuten: Total number of employees
20,000+ Employees in Japan Employees Overseas
Dec 2017 Dec 2018 Dec 2019 Sep 2020
*Rakuten Group Executive Officers and Employees 153 ESG
154 Rakuten Sustainability
For more details please visit our website https://global.rakuten.com/corp/sustainability/
155 Rakuten Group Code of Ethics
For more details please visit our website https://global.rakuten.com/corp/about/philosophy/ principle/#ethic
156 Rakuten joined the international initiative RE100
For more details please visit our website https://global.rakuten.com/corp/news/press/2019/1217_01.html
157 Rakuten Certified as an Eco-First Company ◼ Rakuten Certified as an Eco-First Company by the Japanese Ministry of the Environment in October 2020
158 Coexisting with COVID-19: Building a Safer New Normal
For more details please visit our website https://corp.rakuten.co.jp/newnormal/?l-id=socialdistance_to_newnormal
159 Rakuten Hometown Tax, Rakuten Clutch Special Charity Fund For more details please visit our website https://global.rakuten.com/corp/donation/
160 Awards and Recognitions
For more details please visit our website https://global.rakuten.com/corp/sustainability/recognitions/
161 Corporate Governance
For more details please visit our website https://global.rakuten.com/corp/sustainability/governance/
Positions Held or Career Summary Positions Held or Career Summary
Positions Held or Career Summary Positions Held or Career Summary
*1 : Outside directors stipulated under Companies Act of Japan *2 : Independent Director specified by the regulations of Tokyo Stock Exchange, Inc.
162 Consolidated Results
163 Q3/20 Consolidated Results Summary
(JPY bn) Q3/19 Q3/20 YoY
Revenue 319.1 361.4 +13.2%
Non-GAAP Operating Income 6.2 -28.7 -34.9
Non-GAAP Operating Income 28.3 +33.1% Excluding Mobile, Logistics and Investment Business 37.6
IFRS Operating Income 1.1 -39.8 -40.9
164 Q3/20 Non-GAAP Operating Income Breakdown
Domestic EC Upfront investments for future growth (excl. logistics related ・Logistics-related investments, costs: -2.6bn investments,costs, etc.) ・Rakuten Rewards (Ebates) rebranding costs: +1.6bn ・NBA broadcasting rights *1: +0.1bn ・Consolidation adjustment: +2.9bn , etc. (JPY bn)
Q3/19 +5.9 -3.2 Loss from Minority Growth slowed -3.1 +1.6 Investment Boosted by by COVID-19 Others*2 +5.8 COVID-19 (Travel, Ticket etc.) (excl. Minority -2.0 FinTech (Ichiba, GORA, Investment , 13.5 8.2 Rakuten24, Rakuten Rewards 6.2 Books, etc.) rebranding costs, NBA Q3/19 Q3/19 broadcasting Q3/20 Operating Income rights *1, etc.) Operating Income -43.3 Operating (excl. loss from Minority (excl. upfront Income Investment) investments for future growth, Mobile, loss from Minority Investment) -28.7
-0.5 Mobile Q3/20 Q3/20 Loss from Minority Investment Operating Income
*1 NBA broadcasting rights are included in “Others” of Internet Service Segment *2 “Others” segment mainly includes overseas EC businesses and Sports businesses 165 Hybrid Bond Issuance ◼ Issued subordinated bonds in November 2020 ◼ 50% of the total issuance amount is certified as capital by R&I, JCR, S&P
Issue Date Bond Name Issue Amount Bond Rating Capitalization (Payment Date)
R&I, JCR, S&P: 4th~6th November 4, R&I: BBB JPY 120bn 50% of total issuance Subordinated Bond 2020 JCR: BBB+ certified as capital
166 Recent Exits and Asset Financing
Exit Q4/19 Up to Q3/20 (Partial)
Business Selection and O-net Rakuten OverDrive Rakuten Rakuten Concentration *1 *2 (Optimization) Q4/18 Brazil Q2/20 USA Germany Q4/19 Q3/20 Q3/20
Asset Financing*3 Q4/20
*1 Exit of Marketplace business (formerly Buy.com) in the United States *2 Exit of Marketplace business in Germany *3 Monetization of Lyft shares using Collar (Variable Prepaid Forward Sales) Transaction 167 Asset Financing ◼ Mitigate stock price fluctuation risk using forward contracts while monetize shares through Collar (Variable Prepaid Forward Sales) Transaction
Position Value at maturity
Cash-in timing Q4/20
Cash-in amount
Approx. $714mm
168 Recovering Overseas Businesses Non-GAAP OI positive in all three businesses
Non-GAAP OI Trend
Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20
* Operating income of Rakuten Kobo and Rakuten VIKI has changed due to change in method of internal cost allocation. Past figures have been retroactively adjusted.
169