Rakuten posts first profit in six years as fintech jumps 27%

Rakuten Group posted its first net profit in six years, reporting 7.7 billion yen in Q2 income versus a 50.96 billion yen loss a year earlier.

"The results reflect steady growth across all businesses and successful cost-control measures," Rakuten said in its Aug. 10 earnings release. Analysts on average had expected a 19.16 billion yen loss.

Consolidated revenue rose 11.6 percent year over year to a record 665.5 billion yen, with growth across all three segments. The FinTech unit led, with revenue up 27.0 percent to 295.4 billion yen and non-GAAP operating income up 60.1 percent to 69.2 billion yen. Internet Services revenue rose 4.2 percent to 338.1 billion yen, with operating income up 68.6 percent to 23.1 billion yen. Mobile revenue climbed 8.3 percent to 121.4 billion yen, narrowing its non-GAAP operating loss by 4.1 billion yen to 33.1 billion yen. Consolidated non-GAAP operating income more than doubled to 42.0 billion yen, while EBITDA rose 11.7 percent to 115.3 billion yen.

The turnaround marks a milestone for founder Hiroshi Mikitani, whose entry into Japan's saturated wireless market has weighed on earnings for years. Rakuten plans a FinTech reorganization effective Oct. 1 that it expects to generate 25 billion yen in financial benefits and 8 billion yen in marketing benefits by the fiscal year ending March 2028. Shares are down about 14 percent since the start of the year.

Within FinTech, Rakuten Card shopping gross transaction value rose 9.4 percent to 7.1 trillion yen, Rakuten Bank deposits climbed 13.9 percent to 13.3 trillion yen and Rakuten Securities added 14.5 percent more general accounts to reach 14.39 million. Rakuten Mobile reached 10.75 million subscribers, up 1.78 million year over year, with net ARPU of 2,516 yen. The company credited its AI chatbot with shortening purchase times and raising average order values on Rakuten Ichiba, gains that outweighed a 17 billion yen impairment charge tied to unprofitable warehouses. Membership value, a measure of forecast future profit from the user base, grew 16.1 percent to 10.7 trillion yen.

Rakuten is targeting a non-FinTech net interest-bearing debt-to-EBITDA ratio of 5x or less by December 2027, down from 6.2x in June. It raised about 200 billion yen through the sale of held securities in May and has secured funds for all 2026 bond redemptions.

The profit swing shows the mobile drag is easing as fintech and e-commerce carry the group. Investors will watch the FinTech reorganization, effective Oct. 1, for updated segment margins and the mobile path to breakeven.

This article is for informational purposes only and does not constitute investment advice.