Annual Securities Report (“Yukashoken-Hokokusho”) Fiscal Year Ended December 31, 2020 Rakuten, Inc. and its Consolidated Subsidiaries This document has been extracted and translated from the Japanese original report (Yukashoken-Hokokusho) issued on March 30, 2021 for reference purposes only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. Table of Contents Cover Part I Information on the Company ......................................................................................................1 I. Overview of the Company ..............................................................................................................1 1. Key Financial Data and Trends ........................................................................................................1 2. Corporate History .............................................................................................................................4 3. Description of Business ...................................................................................................................6 4. Information on Subsidiaries and Associates ....................................................................................9 5. Employees ..................................................................................................................................... 11 II. Business Overview ......................................................................................................................12 1. Management Policy, Management Environment and Challenges .................................................12 2. Business Risk and Other Risk Factors ..........................................................................................15 3. Management Analysis of Consolidated Business Results, Financial Position and Cash Flows ...41 4. Material Business Agreements, etc. ..............................................................................................51 5. Research and Development Activities ...........................................................................................51 III. Equipment and Facilities ...........................................................................................................52 1. Status of Capital Expenditures, etc. ...............................................................................................52 2. Situation of Major Equipment .........................................................................................................52 3. Plans for Introduction, Disposals, etc. of Facilities ........................................................................53 IV. Information on the Company Submitting Financial Reports .................................................54 1. Information on the Company’s Shares ..........................................................................................54 2. Status of Acquisition of Treasury Shares, etc. ............................................................................ 100 3. Basic Policy on Dividends ........................................................................................................... 100 4. Corporate Governance ............................................................................................................... 101 V. Financial Information ............................................................................................................... 129 1. Consolidated Financial Statements ............................................................................................ 130 (1) Consolidated Financial Statements ......................................................................................... 130 1) Consolidated Statements of Financial Position................................................................... 130 2) Consolidated Statements of Income ................................................................................... 131 3) Consolidated Statements of Comprehensive Income ......................................................... 132 4) Consolidated Statements of Changes in Equity ................................................................. 134 5) Consolidated Statements of Cash Flows ............................................................................ 136 Notes to the Consolidated Financial Statements .................................................................... 138 1. General Information ............................................................................................................. 138 2. Accounting Policies .............................................................................................................. 140 3. Significant Accounting Estimates and Judgments ............................................................... 154 4. Segment Information ........................................................................................................... 157 5. Cash and Cash Equivalents ................................................................................................ 160 6. Accounts Receivable — Trade ............................................................................................ 161 7. Financial Assets for Securities Business ............................................................................. 162 8. Loans for Credit Card Business ........................................................................................... 162 9. Investment Securities for Banking Business ....................................................................... 163 10. Loans for Banking Business .............................................................................................. 164 11. Investment Securities for Insurance Business ................................................................... 165 12. Derivative Assets and Derivative Liabilities ....................................................................... 166 13. Investment Securities ........................................................................................................ 169 14. Other Financial Assets ....................................................................................................... 170 15. Allowance for Doubtful Accounts ....................................................................................... 171 16. Investments in Associates and Joint Ventures .................................................................. 172 17. Property, Plant and Equipment .......................................................................................... 175 18. Intangible Assets ............................................................................................................... 177 19. Deposits for Banking Business .......................................................................................... 180 20. Financial Liabilities for Securities Business ....................................................................... 180 21. Bonds and Borrowings ...................................................................................................... 181 22. Other Financial Liabilities .................................................................................................. 186 23. Provisions .......................................................................................................................... 187 24. Insurance Business Policy Reserves ................................................................................ 188 25. Employee benefits ............................................................................................................. 194 26. Income Tax Expense ......................................................................................................... 196 27. Common Stock, Capital Surplus, Retained Earnings and Treasury Stock ....................... 200 28. Revenue ............................................................................................................................ 201 29. Operating Expenses .......................................................................................................... 210 30. Other Income and Other Expenses .................................................................................... 211 31. Financial Income and Financial Expenses ......................................................................... 211 32. Earnings per Share ............................................................................................................ 213 33. Assets Pledged as Collateral and Assets Received as Collateral ..................................... 214 34. Hedge Accounting ............................................................................................................. 215 35. Contingent Liabilities and Commitments ........................................................................... 218 36. Share-based Payments ..................................................................................................... 220 37. Dividends ........................................................................................................................... 237 38. Classification of Financial Instruments .............................................................................. 238 39. Gains and Losses on Financial Instruments ..................................................................... 242 40. Fair Value of Financial Instruments ..................................................................................