Rakuten Group Inc S/Adr

Thank you for your time today. From now on, we will start the RAKUTEN Group Co., Ltd.' 's quarter-finance and quarter-final settlement meeting in 2024. The settlement meeting will be held at 15.30. Please check the website of RAKUTEN Group Co., Ltd.' 's corporate website for investment information. If the audio or video is interrupted, please use another delivery server from the button displayed below the video you are watching. Translation also displays the translated subtitles by automatic translation. Real-time translation does not require editing. Please note that there may be mistakes or inaccurate content in the subtitles. Now I will explain by Mikita.

Hello, everyone. I'm Miki Taini from Rakuten Group. I would like to explain the settlement of the second quarter and the fourth quarter of the Rakuten Group in 2024. First of all, First of all, I would like to talk about a large-scale strategy. large language model, but Rakuten Group is also developing and using AI in various ways. At the very least, we are currently implementing a project called Triple 20. What is that? Let's use AI to increase marketing efficiency by 20%. and increase operating efficiency by 20% and increase client efficiency by 20%. This is what we have been doing from the beginning of last year, 2024. As a result, in terms of the promotion situation of the 2020 project, we have been able to make a profit of about 1.5 billion yen. Mainly, we are dealing with customer services through AI. We are also developing software in various ways, and we are coding the software with AI. We are also using AI for advertising. targeting high-quality advertising, and the improvement of UX, for example, the introduction of semantic search, etc. As a result, I think that about 1.5 billion yen was generated by the use of interest and AI. This year is about twice as much. We are thinking of using AI to make a profit of more than 2 billion yen. As you know, Rakuten Group has developed as an ecosystem. By adding mobile to this, we can achieve user acquisition and user engagement. We have succeeded in lowering the cost of cross-use and contract retention. As for sales, we have increased 28 units in a row. It increased by 2.3 trillion yen, about 10% compared to last year, in 2023. And 34.4% of sales increased due to Rakuten Mobile. Mobile is one of the major growth drivers. In particular, the number of RAKUTEN MOBILE participants is increasing, and ARP is increasing. Not only that, but the contribution of each service by mobile is also growing gradually. In the RAKUTEN market, when you enter RAKUTEN MOBILE, the purchase rate increases by about 50%. And in terms of RAKUTEN TRAVEL, the use of travel increases by about 15%. In addition, the use of Rakuten cards increases by less than 30%. Rakuten Mobile has made a very big contribution. In addition, by joining Rakuten Mobile, we have realized that we can use the services of the new Rakuten Group more and more. Compared to those who joined Rakuten Mobile or those who did not, For those who joined Rakuten Mobile, they are using a new service of about 3.17. Compared to those who did not use it, they are using an additional 2.43 service. I think you can see how powerful the contribution to the ecosystem of Rakuten Mobile is. In terms of the financial situation, we achieved black market share with continuous non-gap business profits in two periods. In 2024, we achieved black market share in two periods. As for Rakuten Mobile, we achieved black market share in a short period of time in December with EBITDA. We also achieved self-funding at the group level. I will explain it later, but we have achieved this as well. So, as you can see on the timeline, the non-gap operating profit that hit the bottom in 2022 was 70 billion yen in 2024, which is more than 1.6 billion yen last year. The operating profit of IFAS was 5.3 billion yen in 2024, which was 26.58 billion yen last year. As for Rakuten Mobile, In December of last year, EBITDA reached 2.3 billion yen, which is a short-term blackout. As for the funding, it is a large amount of the EBITDA of the mobile business. We are also working to improve the operating capital of Rakuten Group in various ways, including cash flow, internet service, fintech, and so on. If we combine these, it is better to get in than to leave, as I mentioned earlier. We are now able to cover the financial needs through business. Our goal for this year is to increase profits and sales, and we will achieve the closing of the two-year period with EBITDA based on Rakuten Mobile alone. Now, I would like to explain about the individual segments. First of all, the Internet service segment. Here, sales increased by 5.8% compared to the same period last year. We achieved sales of about 1.3 trillion yen. And in terms of non-GAAP operating profits, it increased by about 30%, which is 85.1 billion yen. Let's take a closer look. First of all, in the Rakuten Ichiba business, various efforts have been made. This has led to a partial change in the SPU program, which is 4.6% growth. And in terms of Rakuten Travel, it has increased by about 1.5 times compared to before the COVID-19 pandemic. Advertising business, this is a very profitable business, but this is a big growth driver in the past year, with a 7% increase of 2,221 billion yen. In terms of investment, IRR has achieved 17% of the investment. In terms of overseas international business, the sales have increased by 8.5% and we have achieved a black market. We have raised the sales of about 2 billion U.S. dollars. Therefore, not only domestic business but also overseas business is growing very rapidly. I would like to take a closer look at the domestic market. Compared to Apple, the exchange rate is 4.6%. Especially in the fourth quarter and January and February of this year, there is a considerable increase in the annual exchange rate. I think so. In terms of sales, Apple and Updute are 8.1%. In terms of non-gap operating profits, Apple and Updute are about 20% higher. After all, mobile penetration is a key to each e-commerce business, and in the Rakuten market business, The number of customers who use it is 20.2%, and the number of travelers is 16.8%. As you can see, it is growing like a spiral graph. We are also working on new efforts. Rakuten is a super sale. In addition, last December, we held a special event dedicated to Rakuten Mobile users. As a result, 330,000 people participated in this campaign, and 28.4 billion yen was sold through this campaign, and more and more people are using our super app Rakuten Link and Rakuten Ichiba. I would like to talk about the use of AI. One is to use AI in various ways at Rakuten market and other e-commerce services. For example, the review of products and services. As for the search engine, we will provide search results that match the past history and current high-performance history. For example, if you buy leather products often, If this person puts on a hairbrush, you can see the result of the checkup. On the other hand, if you are concerned about beauty, you can see the result of the hairbrush. By doing so, the personalized shopping experience is being realized more and more. The last client of the triple 20 is an empowerment. This is the editing of the store, and the exchange between the store and the customer, and the final analysis of the performance of the store. We are using AI to the maximum and are receiving a lot of good reviews. I think that it contributes to the increase in the number of hotel reservations and the increase in the number of hotel reservations. Currently, RMS is a software for retailers in Rakuten Market, and more than 64% of those who use it are using AI assistance. More than half of the stores are very active in improving business efficiency and improving sales. As for the international sector, sales have increased by 13.5% to about 2 billion U.S. dollars. And the non-GAAP operating profit is finally at 4,850 million U.S. dollars. This means that the net profit has increased by 9.3 million U.S. dollars in the same period of time last year. It has taken a long time, but I think that the international sector's contribution to business profits is growing. Next, I would like to explain the fintech segment. The fintech segment, Rakuten Bank, is already in a very good shape. The sales revenue is 8,204 billion yen, which is a 13.1% increase. The operating profit was 1,534 billion yen, which is nearly 40% of the total profit. As for the content of each business, the shopping price of Rakuten Card was 24 trillion yen, which is 13.7% higher. And the number of shares of Rakuten Bank is already 17 million. The asset size of Rakuten Bank is also 12 trillion yen, which is 17% higher. The number of shares of Rakuten Shoken is also 12 million shares, which is 17% higher. Rakuten Shoken's No. 2 share is probably the No. 1 market share, which is an overwhelming share. This is also about 30% growing at a cost of 6 million yen. Rakuten Shoken's share is also 36 trillion yen, which is almost 40 trillion yen, and it is growing by about 50%. As for Rakuten Card, it continues to grow as the number one card, but in addition to that, it has improved by 18.3% in terms of operating profits, and it has increased by 20.4% in terms of non-gap operating profits, which is very good. Rakuten Payment also has a sales of more than 9.7 billion yen, and it has been actively marketing. I think there are quite a lot of red dots in terms of PL, but Rakuten Payment has a growth of 4.5 billion yen. We are making improvements of 1.35 billion yen per year. As for Rakuten Bank, we are raising the price, so I think that many of you are gathering information, but I would like to explain it just in case. This is a link business highlight. The balance sheet is from April to March of the bank, so it is a financial situation of 9 months from April to December. The net profit is about 1,300 billion yen. and the operating profit is about 5 billion yen. In other words, the net profit is rising, but the net profit of non-currency is also increasing by 31.6%. In terms of capital, RE is 16.8%, and the capital ratio is 11%, so I think it is a fairly healthy balance sheet and financial situation. As for Rakuten Shoken, the number of courses is now 12 million courses. When we purchased it, it was about 300,000 courses. Finally, we have seen 12,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 Among them, Rakuten Shoken has been able to increase sales and increase profits. Another thing I would like to mention is the collaboration and cooperation with Mizuho Financial Group. We have been able to invest in Rakuten Shoken and Rakuten Card as a minority. It's not just about investing, but there are also various business partnerships in the form of benefits for both parties. I would like to explain the mobile segment. There are more and more people using Rakuten Mobile. The sales amount is 4,407 billion yen, which is an increase of 20.9%. The sales profit has also improved by 1056 billion yen compared to last year, which is an increase of 2089 billion yen. As for EBITDA, it is a sign of 3.63 billion yen, but it is also in the 2nd quarter. It is 11.99 billion yen. In short, we have achieved a black market. Hold on. Let's take a closer look at Dactymobile. As you know, the sales of the 4th quarter is 8.2 billion yen, which is 38% of the previous year. The non-gap operating profit, as you can see, In other words, PMCF is one of the performance indicators of the telecommunications industry globally. In the fourth quarter of 2020, it has become 1.1 billion yen. In other words, it has become a market share. If we don't spend money on 100% retention, we will be able to make a profit of 1.1 billion yen. As you can see, it has risen to the right side. EBITDA, marketing cash flow, this is from the surface to the head, and I think that it has come to the stage where the profits will rise firmly in the future. This does not simply mean that the cost has been reduced, but it also means that various operational efficiency improvements, data ARP increases, and contract acquisition are going well. In the future, we would like to use the data of Rakuten Mobile to further enhance the synergy with Rakuten Group and to expand the advertising business. Currently, this is based on December, so it has already reached 8.5 million yen. Then, the contract rate is also 1.38%, and the ARP is also increasing by 2,856 yen. The progress of the number of sessions is in the form that the season factor is large, so I think it is coming relatively smoothly. This is the case with Kaisen II, and we have improved the remittance rate and managed it well. In addition, in addition to the customer acquisition from the outside, The fourth quarter is about 240,000 new machines. We have obtained it by gathering from Rakuten market, Rakuten card, and so on. As a result, I think this is shocking data in a way, but young people, not young people, but young generations, the use rate of Rakuten Models has increased dramatically. In particular, people between the ages of 23, 34, 35, 40, and 50 are already exceeding 10% depending on the segment. On the other hand, older people who are over 60 years old are weak. How do you think about this? So-called smartphone net heavy users are becoming more and more likely to use Rakuten Mobile. And today, in the morning, we announced the new plan for the spring general election to win the Jack Nenso and Rakuten Ecosystem User. There was a new support campaign for students, and we also put out various additional points to support those who have become new social people. ARP is not only increasing the number of users in the ecosystem, but also the spread of 5G. Especially for young people, there are more and more people who use 50G and 70G and 100G at the same time. I think that more and more people are changing their home light fiber to our pocket Wi-Fi and tethering. In the future, for the improvement of ARP, I wrote four things here. The first is to use more data. The second is to further enrich the option menu and use it more comfortably. The third is advertising. We raised the advertising revenue in the spring and spring elections, but we will increase it. Rakuten Turbo, There is a service called FEMTOT, but we will use it. On the other hand, we will strengthen the guidance and training of customers to Rakuten Group, including this. We have announced Rakuten AI for Business for the people of Hojin through Rakuten AI for Business. The monthly price per license is 1,100 yen. I think it is a very easy-to-use price setting. We received a lot of questions. The number of contracts is already increasing. There are two mobile companies. The first is that the financial situation has improved considerably, and it will continue to catch up with the top three companies in the future. This will further improve the quality of the network. We are planning to invest 1.5 billion yen this year. In addition, it has become a hot topic in the world. The ACT Space Mobile, which has raised about 3 billion yen from the initial launch fund, has become very popular around the world. I also did it overseas, but it is a so-called direct smartphone service where video meetings can be held directly from the satellite. In March of this year, the experiment was completed, and after that, through the launch of the satellite, we were able to conduct a direct contact with the satellite at the high stage in 2026. We would like to provide such services. If we can do this, I think we will be able to realize a situation where only Rakuten Mobile can be connected to any natural disaster. Also, we want to make sure that people who do not live in rural areas or in remote areas will be able to use their mobile phones directly from the satellite. We also want to make sure that people can use broadband. Finally, I would like to talk about Rakuten Sinfo. The software that Rakuten Mobile bought and created is the only fully virtualized network in the world. We are now selling and integrating the software that supports that virtualized network overseas. In this week's new survey, Ukraine's Kyiv Star. and we are working on it. In the future, we are moving forward with the project to prevent the spread of the virus to Ukraine. On January 25th, we will do the same in Kenya. In addition to this, Robin.io Cloud and Operating Support Software, which is one of the major telecommunications companies in the United States, but we tend to do it exclusively. In other words, we sell the cloud technology that Amazon developed through e-commerce to Rakuten Mobile through Rakuten Symphony. As for Oran's software, we have not been the only one to sell it, but we have licensed this software, and we have taken a strategy to make it more and more used by external companies. I think this is also going very well. That's all from my business. Next, I would like to talk about finance and AI. I would like to start with Mr. Hirose, Chief Data and AI Officer of CFO. Thank you very much.

Hello, I would like to start with Mr. Hirose. First of all, I would like to talk about the ranking of profits. In terms of non-GAAP business profits and IFAS business profits, we have converted to black market in 2024. These are black market profits since 2019 respectively. In terms of interest rate interest rates, we have a black market profit of 1.6 billion yen in 2024. This has been the case since 2018. As for the long-term losses to parent companies, as I will mention later, in 2024, there will be a collapse of the DTA, which is minus 16.2 billion yen, which will greatly compress the red value. In the 24th year, the non-GAAP operating profit was 70 billion yen, while the IFAS operating profit was 530 billion yen. I will explain about this. First of all, there are three major items to be adjusted from the non-GAAP operating interest. There is a non-calculated cost of incineration, a stock return fee, and a non-formal item. As for the non-calculated cost of incineration, there was a one-off problem last year, so the reaction has been improved. The stock return fee is the fee for stock purchase. As for the non-formal item, the revaluation interest of AST is 106.9 billion yen, On the other hand, with the resumption of the system development plan in the health insurance industry, we have raised 156 billion yen in revenue and loss of the system. In addition to this, we will continue to develop software-centric business models. As a result, the non-formal item added up to 6.87 billion yen, resulting in a profit of 5.3 billion yen. Next, I would like to talk about the financial income statement and the total net profit. The total net profit of 16.3 billion yen is 16.3 billion yen, and the total net profit of 11.23 billion yen is 16.24 billion yen. I would like to talk about the financial policy. As for the business, we have been continuously promoting the continuous growth of the core business and the reduction of the cost of the overall efficiency. At the same time, we have been making significant improvements to the cost of driving. As for the financial side, we have been focusing on the reduction of the interest rate and the control of the active summoning schedule. As I said at the beginning, we have achieved three goals. We are aiming to achieve all of these. This year, we are aiming to continue the closing of Rakuten Mobile's 2-key EBITDA, and the closing of the joint operating profits. Based on these, we will continue to measure continuous improvement in credit, We are aiming to improve the health and well-being of our clients in the medium term. Specifically, our goal is to increase the net profit margin of non-financial businesses by 5 times the EBITDA ratio and increase the ratio of joint shares by 10%. I will now explain the EBITDA ratio of non-financial businesses. It was 11.7 times the EBITDA ratio in 2024. In 2025, we will aim for a 10-fold reduction. In 2026, we will aim for a 6-fold reduction, and we will be 5-fold closer to our goal. However, we will continue to control the active summoning schedule. As for the 25th anniversary, we have already purchased it, so what we will do after the 26th anniversary is to first measure the growth of the cash flow within the group including mobile. We will also manage the monetization of portfolio owned by Rakuten Capital. We will also consider the procurement of unauthorized production as needed. On the other hand, we are in a situation where we need to refinance at a fixed rate, but we have various ways of obtaining funds, including domestic fund-raising, joint fund, external fund-raising, long-term fund-raising, fund-raising type types, and of course bank loans, so we do not have any concerns about refinancing. We recognize that the condition of the fund-raising is continuously changing. Next AI. Good afternoon, everyone.