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Rakuten Reports Consolidated Financial Results (IFRS) for the Nine Months Ended September 30, 2014TOKYO --(Business Wire)-- Rakuten, Inc. (TOKYO:4755) today announced consolidated financial reports (IFRS) for the nine months ended September 30, 2014. The Rakuten Group achieved revenue of ¥424,216 million, a 14.7% year-on-year increase, in the three quarters of the current fiscal year. Operating income grew steadily, increasing 3.0% year-on-year to ¥73,116 million, despite strategic advance investments and a slowdown in the stock market. Net income attributable to owners of the parent company amounted to ¥42,323 million, up 16.5% compared to the same period of the previous year. 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 (News - Alert) 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.
Internet Finance 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.
Others 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.
*Source (News - Alert): 2014 Report on the Current Status of Information and Communications (Ministry of Internal Affairs and Communications) 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
Impact from the adoption of the new accounting standards
These standards have been adopted in accordance with their respective transitional provisions, and the adoption of above standards has no significant impact on the consolidated financial statements for the nine months ended September 30, 2014.
Indication regarding execution of quarterly review procedures
Explanation about the appropriate use of earnings forecasts, and other special matters
The above information was originally prepared and published by the Company in Japanese as it contains timely disclosure materials to be submitted to the Tokyo Stock Exchange. This English summary translation is for your convenience only. To the extent there is any discrepancy between this English translation and the original Japanese version, please refer to the Japanese version. The following financial information was prepared in accordance with International Financial Reporting Standards ("IFRS").
*The full report is available at:
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