Rakuten Reports Consolidated Financial Results (IFRS) for the Nine Months Ended September 30, 2013

  Rakuten Reports Consolidated Financial Results (IFRS) for the Nine Months
  Ended September 30, 2013

Business Wire

TOKYO -- November 7, 2013

Rakuten, Inc. (4755:Tokyo) today announced consolidated financial reports
(IFRS) for the nine months ended September 30, 2013. The Rakuten Group
achieved revenue of ¥369,725 million, a 32.1% year-on-year increase, in the
first three quarters of the current fiscal year. Operating income grew 22.9%
year on year to ¥71,020 million, and net income attributable to owners of the
parent company amounted to ¥36,339 million, up 13.0% compared to the same
period in 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, 2013

In the world economy during the first three quarters of the current fiscal
year (January 1, 2013 to September 30, 2013), the European debt crisis and a
slowdown in economic growth in newly developing regions posed risks of an
economic downturn. Meanwhile, in the Japanese economy, the recovery trend has
been strong, as consumer sentiment recovered and business confidence of
companies improved with the background of a rise in stock prices, in response
to monetary easing measures and other factors.

Under such an environment, the Rakuten Group enhanced its services for
smartphones, tablet devices and other smart devices, whose users have been
increasing in number at exponential rates, engaged in marketing utilizing big
data, and promoted Rakuten Ichiba’s B2B2C marketplace model to the world,
mainly through large-scale sales events such as the “Rakuten Super Sale”. We
also worked on enhancing logistics services through “Rakuten Super Logistics”,
our logistics agency services for corporate clients. In the Internet Finance
business segment, we aggressively expanded the business centering on Rakuten
Card, which has notable synergies with Internet Services. The revitalization
of the financial market also contributed to the growth in profits of the
finance business during the first three quarters of the current fiscal year.
Furthermore, we proactively developed the e-book service Kobo as well as video
streaming services in Japan and abroad with the aim of strengthening the
digital contents business which we position as one of the pillars of our
future growth strategy. Through these and other measures, the “Rakuten
Eco-System” continues to show solid expansion and growth.

                                                                 
(Millions of yen)
                            Nine months     Nine months     Amount
                           ended           ended           Change    % Change
                            September 30,   September 30,   YoY       YoY
                            2012            2013
Revenue                     279,838         369,725         89,887    32.1%
Operating income            57,776          71,020          13,244    22.9%
Net income

(Attributable to owners    32,168         36,339         4,171    13.0%
of
the parent company)
                                                                      

(2) Segment Information

Business results for each segment are as follows:

Internet Services

In the Internet Services segment during the first three quarters of the
current fiscal year, Rakuten actively worked on strengthening its services for
smart devices, promoting personalized marketing utilizing Big Data, and
running large-scale sales events such as the “Rakuten Super Sale” and the
“Rakuten Victory Sale” to celebrate the first league title victory of the
Tohoku Rakuten Eagles baseball team, among other initiatives in its core
“Rakuten Ichiba” service. We also strove to enhance our logistics services in
line with the B2B2C marketplace model through “Rakuten Super Logistics” among
other services. As a result of these efforts, we saw strong performance in the
number of unique buyers and orders. Domestic e-commerce gross merchandise
sales rose by 18.3% over the same period in the previous year, and we
continued to maintain a high level of growth. In Travel services, leisure
travel sales were strong, and we pursued a more diversified earnings base
through efforts such as car rental and inbound services (services for
reservations from foreign language websites), resulting in a 14.5%
year-on-year increase in gross transaction value.

At its overseas ventures, Rakuten focused on marketplace-model services while
also horizontally rolling out a range of strategic expertise including the
points program and the “Rakuten Super Sale”, which have proven successful in
Japan. Consequently, gross merchandise sales for these services have grown and
are contributing to the expansion of operations.

In addition, we offered new products and services in the e-book business and
video streaming services with a view to strengthening the digital content
business.

As a result, revenue in the Internet Services segment climbed 18.3%
year-on-year to ¥220,246 million. While profit from existing businesses
continue to grow, segment profit declined 7.6% year-on- year to ¥39,477
million as a result of continued investments in future growth fields.

(Millions of yen)
                Nine months        Nine months
              ended             ended             Amount Change  % Change
                September 30,      September 30,      YoY             YoY
                2012               2013
Segment         186,139            220,246            34,107          18.3%
Revenue
Segment        42,703            39,477            (3,226)        (7.6)%
Profit
                                                                      

Internet Finance

In the Internet Finance segment during the first three quarters of the current
fiscal year, the shopping transaction value for credit card and related
services rose 39.6% over the same period in the previous year, accompanying an
increase in Rakuten Card membership. Moreover, a solid rise in the revolving
shopping balance resulted in a rise in commission income, continuing notable
growth in profit. In securities services, revenue and profit grew
substantially, including a 260.0% increase over the same period of the
previous year in proceeds from domestic stock trading, supported by the
revitalization of the financial market. 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 ¥147,747
million in revenue, a 66.2% year-on-year increase, while segment profit grew
143.4% year on year to ¥32,006 million.

(Millions of yen)
                 Nine months        Nine months        Amount
               ended             ended             Change        % Change
                 September 30,      September 30,      YoY            YoY
                 2012               2013
Segment          88,921             147,747            58,826         66.2%
Revenue
Segment Profit  13,151            32,006            18,855        143.4%
                                                                      

Others

In the Others segment during the first three quarters of the current fiscal
year, operating income remained strong in telecommunications services due to
the growth of cloud services and call services for smartphones, in addition to
improvements in management efficiency. In the professional sports division,
the first league title victory of the baseball team since its establishment
contributed to record high attendance numbers as well as robust sales of
related goods.

As a result, revenue in the segment was ¥25,984 million, a 0.6% year-on-year
increase, while segment profit was ¥3,877 million, a 55.7% year-on-year
increase.

(Millions of yen)
                 Nine months        Nine months        Amount
               ended             ended             Change        % Change
                 September 30,      September 30,      YoY            YoY
                 2012               2013
Segment          25,818             25,984             166            0.6%
Revenue
Segment Profit  2,491             3,877             1,386         55.7%
                                                                      

2. Qualitative Information about Consolidated Business Forecasts

In the fiscal year ending December 31, 2013, we anticipate further expansion
in the use of our services in Japan including e-commerce and travel, resulting
in continued high growth. In financial services, although there will be a
certain degree of impact from financial conditions, we anticipate a continuous
growth in revenue created from synergies within the Rakuten Group. Aiming for
an early return in income, Rakuten will continue to make strategic allocations
of corporate resources and active investments in high-growth areas such as
e-books, in order to generate more mid-to-long-term revenue opportunities.

While making these forward-looking investments, Rakuten intends to surpass its
previous fiscal year’s financial results in the fiscal year ending December
31, 2013.

Rakuten, Inc. and its subsidiaries do not disclose earnings forecasts as these
business operations include an Internet service business characterized by high
uncertainty and financial related businesses such as securities business whose
results heavily depend on highly volatile markets. This precludes us from
making earnings forecasts.

3. Matters regarding summary information (Others)

(1) Changes in significant subsidiaries during the current period

No items to report.

(2) Outline of changes in accounting policies and accounting estimates

(Changes in accounting policies as required under IFRS)

Apart from the cases stated as follows, significant accounting policies
adopted by the Rakuten Group in this summary of consolidated financial
statements for the nine months ended September 30, 2013 basically remain the
same as those adopted in the consolidated financial statements for the
previous fiscal year. In addition, income tax expense for the nine months
ended September 30, 2013 is calculated based upon estimated annual effective
tax rate.

Impact from the adoption of the new accounting standards

The Rakuten Group started to adopt the following accounting standards from the
first quarter of the current fiscal year.

                                  
IFRS                               Newly established or revised contents
IFRS 13  Fair value measurement    Guidance of fair value measurements, which
                                    are required in other standards
          Financial instruments:    New disclosure for evaluation of the
IFRS 7   disclosures              effect and potential effect of offsetting
          (Amended Dec. 2011)       arrangements on an entity’s financial
                                    position

These standards have been adopted in accordance with their respective
transitional provisions, and the adoption of above standards has no
significant impact on the nine months ended September 30, 2013.


Notes
(1) Changes in significant subsidiaries during the current period

(Changes in specified subsidiaries resulting in change in scope of
consolidation): No
New - (Company name - ) Excluded - (Company name - )
(2) Changes in accounting policies and changes in accounting estimates
1. Changes in accounting policies as required under IFRS: Yes
2. Changes in accounting policies due to other reasons: No
3. Changes in accounting estimates: No
(3) Number of shares issued (Common stock)
1. Total number of shares issued at the end of the period (including treasury
stocks)
1,322,974,100 shares (As of September 30, 2013)
1,320,626,600 shares (As of December 31, 2012)
2. Number of treasury stocks at the end of the period
6,033,464 shares (As of September 30, 2013)
6,007,996 shares (As of December 31, 2012)
3. Average number of shares during the period (cumulative from the beginning
of the period)
1,315,596,482 shares (Nine months ended September 30, 2013)
1,313,854,321 shares (Nine months ended September 30, 2012)

         Rakuten, Inc. made a 100-for-1 stock split regarding shares of its
(Note)  common stock on July 1, 2012. Average number of shares during the
         period is calculated under the assumption that the stock split took
         effect at the beginning of the previous fiscal year.
         

Indication regarding execution of quarterly review procedures

  *This quarterly financial report is not intended for the quarterly review
    based on the Financial Instruments and Exchange Act. At the time of
    disclosure of this quarterly financial results report, the review
    procedures for quarterly consolidated financial statements in accordance
    with the Financial Instruments and Exchange Act are not completed.

Explanation about the appropriate use of earnings forecasts, and other special
matters

  *The Rakuten Group adopted IFRS for the first time in the year ended
    December 31, 2012, and from the previous year (December 2012 period) we
    disclosed consolidated financial statements in conformity with IFRS.
  *Rakuten, Inc. and its subsidiaries do not disclose earnings forecasts as
    these business operations include an Internet service business
    characterized by high uncertainty and financial related businesses such as
    securities business whose results heavily depend on highly volatile
    markets. This precludes us from making earnings forecasts.

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:
http://global.rakuten.com/corp/investors/documents/pdf/13Q3tanshin_E.pdf

About Rakuten

Rakuten, Inc. (4755:Tokyo), is one of the world's leading Internet service
companies, providing a variety of services for consumers and businesses,
including in the areas of e-commerce, eReading, travel, banking, securities ,
credit cards, e-money, logistics, portal and media, online marketing and
professional sports. In both 2012 and 2013, Rakuten was ranked among the
world’s Top 10 most innovative companies in Forbes magazine’s annual list.
Rakuten is expanding worldwide and currently operates throughout Asia, Europe,
the Americas, and Oceania. Is the headquarters of the company founded in 1997
with over 10,000 employees and partner staff worldwide, Tokyo. For more
information: http://global.rakuten.com/corp/.

Contact:

Rakuten Investor Relations
investor-relations@mail.rakuten.com
http://global.rakuten.com/corp/investors/
or
Rakuten Public Relations
Email: pr@mail.rakuten.com
Tel: +81-50-5817-1104
 
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