Walk Together Corporate Report 2019 Contents In Japanese, Rakuten stands for “optimism.” 02 Our Philosophy This philosophy lies at the core of our brand. 04 History of Growth and Innovation 06 Value Creation Process 08 Social Value Created by Rakuten Walk Together 10 CEO Message 16 Feature: MOBILE "Walk Together" expresses our dedication to building a better, 19 Feature: LOGISTICS 22 Feature: FINTECH more optimistic future by empowering individuals, businesses and 25 Feature: TECHNOLOGY societies to realize their dreams. 28 CFO Interview We embrace new and disruptive ideas, are committed to acting on them 32 Segment Information and have the operational agility to implement and deliver at speed. 34 Management Team 36 Corporate Governance We walk together with our partners, making progress today 40 Compliance towards a more optimistic tomorrow. 42 CWO Message 44 Overview of Sustainability at Rakuten 46 Information Security and Privacy Protection 48 For Our Customers 50 COO Message 52 Talent Management 54 Innovation and Rakuten Culture 56 Advancing Sustainability with Our Partners 58 Tackling Climate Change 60 Social Initiatives 62 ESG (Environmental, Social, Governance) Data 63 Awards & Recognition 64 Financial Section 72 Corporate Information Our Brand The Rakuten brand represents optimism and empowers our members to EDITORIAL POLICY experience the joy of discovery with a sense of confidence and excitement. The Rakuten Corporate Report 2019 contains both financial data and information about environmental, Growing together with our global communities, we support individuals, businesses social and governance (ESG) initiatives. Non-financial information includes the history of our growth, our value creation processes and initiatives in various business areas. and societies to realize their dreams. This report was created with the aim of providing stakeholders with a fuller understanding of our business activities and the value provided by Rakuten, Inc. <Target audience> This idea is at the heart of each and every one of Rakuten’s services. Stakeholders, including shareholders and investors. <Period covered by the report> This report covers the 2019 fiscal year (January 1, 2019–December 31, 2019), but it also includes references to activities in FY2020. 1 Corporate Slogan MISSION Contribute to society by creating value through innovation and entrepreneurship Empowering people to realize their hopes and dreams. Embracing new thinking. Walk Rakuten changes the world through innovation. Together VISION Global Innovation Company At Rakuten, we drive disruptive innovation, engaging knowledge, creativity and passion from around the world to achieve ambitious goals, and help build communities in which people can pursue their dreams and live in happiness. Our Philosophy VALUES AND PRINCIPLES The Rakuten Group’s mission is to contribute to society by creating value through innovation and entrepreneurship. Rakuten Shugi (Rakuten Basic Principles) By providing high-quality services that help our users and partners As we work to realize the vision of the Rakuten Group, Rakuten employees are united by the grow, we aim to advance and enrich society. common values and principles represented by Rakuten Shugi. Consisting of the Brand Concepts and Five Principles for Success, Rakuten Shugi is the foundation of the Rakuten Group. To fulfill our role as a Global Innovation Company, we are committed With Rakuten Shugi as a common foundation, we place high value on the entrepreneurial to maximizing both corporate and shareholder value. spirit that drives us to get things done. By working with local communities and nurturing a robust corporate culture enabling each member of our diverse team to perform at their best, the Rakuten Group is committed to boosting corporate value and contributing to progress in society. 2 3 History of Growth and Innovation Since its founding in 1997, the Rakuten Group has been based on the idea of "empowering people and society through innovation." We have developed various businesses with the aim of being a Global Innovation Company, and we will continue to work on further improvement of corporate value and sustainable growth. At a time when few people shopped on the Other businesses, including credit cards and We accelerated our global expansion by acquiring We raised Rakuten’s profile as a global brand by Rakuten launches services based on the world’s internet, we established Rakuten Ichiba as an banking, were subsequently added to the Rakuten overseas businesses. We shifted our stock listing to forming partnerships with some of the world’s most first end-to-end fully virtualized cloud-native online shopping mall in which even small rural Group. We also announced the Rakuten Ecosystem the first section of the Tokyo Stock Exchange in popular sports teams. Brand integration led to mobile network, marking its emergence as a merchants without any knowledge of (economic sphere) as a concept designed to order to improve our corporate value and expand further expansion of the global presence of the full-scale low-price mobile carrier in its own computers could open online stores. maximize user migration across group services by our investor base. This transition from a Japanese Rakuten brand. right. organically linking various services within the start-up to a world-class internet service company Rakuten Group. marked the start of a new phase for Rakuten. 1997 – 2003 2004 – 2009 2010 – 2014 2015 – 2018 2019 – The birth and growth of Rakuten Ichiba Expansion of Rakuten Ecosystem Transformation into a true global company Establishment of a global brand Full-scale entry into the mobile carrier business February 1997 September 2004 May 2010 December 2013 January 2015 February 2019 ・ MDM, Inc. (currently Rakuten, Inc.) is founded. ・ Rakuten fully acquires Aozora Card Co., Ltd. ・ Rakuten begins to adopt English as its official ・ Rakuten changes the listing of its shares from ・ Rakuten fully acquires Vissel Kobe, and enters ・ Rakuten Mobile successfully trials the world’s (currently known as Rakuten Card Co., Ltd.). language with the launch of the the JASDAQ (Standard) market to the First the Japan Professional Football League (J. first end-to-end fully virtualized cloud-native May 1997 “Englishnization” project. Since then, Rakuten Section of the Tokyo Stock Exchange. League). mobile network. ・ Rakuten Ichiba, the internet shopping mall, November 2004 has attracted a highly diverse work force, begins service. ・ Nippon Professional Baseball (NPB) approves leading to accelerated innovation. November 2016 April 2019 the entry of "Tohoku Rakuten Golden Eagles" ・ Rakuten announces that it will become football ・ Rakuten Mobile, Inc. receives approval from into the league. March 2011 team FC Barcelona’s Main Global Partner. the Minister of Internal Affairs and ・ In the wake of the Great East Japan Communications for its 5th generation mobile February 2008 Earthquake, Rakuten responds to calls from communications system (5G) special radio ・ As the Rakuten Ecosystem expands, Rakuten users throughout Japan by expanding its social station deployment plan. commences social contribution activities, contribution activities, including the starting with the Rakuten IT School, with the establishment of an internet-based donation June 2019 aim of providing benefits to society beyond its campaign. ・ Rakuten is selected for inclusion in a major business activities. December 2016 international ESG index in recognition of its December 2011 March 2014 ・ Rakuten adopts the world’s most stringent sustainability initiatives and disclosure. April 2000 ・ Rakuten Ichiba achieves 1 trillion yen in gross ・ Rakuten fully acquires Viber Media Ltd., which privacy protection standards. As the first ・ Rakuten goes public through an IPO on the transaction value. operates mobile messaging and VoIP service Japanese company to be approved by EU Data October 2019 OTC market (currently TSE JASDAQ market). "Viber" worldwide. Protection Authorities, it becomes a leader in ・ Rakuten Mobile begins to provide services as a January 2012 the information security field. mobile carrier. ・ Rakuten fully acquires Canadian eBook Company Kobo, Inc. (currently Rakuten Kobo September 2017 November 2019 Inc.), a world leader in e-reading. October 2014 ・ Announcement of partnership with NBA team ・ Sustainability officially becomes part of the ・ Rakuten launches the Rakuten Point Card Golden State Warriors. Rakuten DNA with the adoption of the Rakuten service, allowing members to use their Rakuten Group Sustainability Policy. Points in actual stores throughout Japan. July 2012 ・ Rakuten fully acquires Ebates Inc., provider of December 2019 June 2005 ・ Rakuten designates English as its official leading membership-based online cash-back ・ Rakuten accelerates its initiatives against ・ Launch of Rakuten Card service. corporate language. site Ebates in the U.S. climate change after joining the global RE100 initiative. September 2013 Fall 2017 March 2001 ・ Rakuten fully acquires Viki, Inc., an emerging ・ Rakuten launches “Back to Basics,” a large- ・ Rakuten Travel, an online hotel reservation global provider of video streaming services scale human resource management reform service, is launched. based in the U.S. project designed to enhance human resource April 2020 development and foster a “one team” culture. ・ Rakuten Mobile launches “Rakuten UN- LIMIT November 2002 November 2013 2.0,” a full-scale mobile carrier service ・ Rakuten Super Point Program is introduced as ・ Tohoku Rakuten Golden