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.

My name is Ting. I'm the Chief AI and Data Officer at Rakuten Group. Today, I'm very proud to share with you an update of our AI-nization strategy and execution momentum. Our vision is to augment human creativity with the power of AI. We'll continue to leverage our strengths, ubiquitous data, and channel to build out this growth flywheel so we can continue to deliver more value to our customers and shareholders. We are executing our strategy in three waves, deep learning at scale, recruiting AI for business, and recruiting AI for consumers. And today, I will give you an update in all these three waves. And strategy is important, but nothing is more important than execution. 2024 has been a strong year of execution in AI. From January to December, we have been continuously shipping new AI product and services with quality and speed. And the reason that we will be able to achieve that velocity is because our judgment on the timing of our investment. We invest in Deep Learning Foundation from the building things from the very ground up so we can ship multiple applications across search, recommendation, and ads. Second, we were able to see what's around the corner and invested in GenAI application for businesses by combining with our domain expertise and the customer feedback was human in the loop. We were able to ship high quality services to our customers. And lastly, towards the end of last year, we launched consumer applications at much larger scale. At the same time, we are laying the foundation for the future, investing our large language model in a very cost effective way. Last year, this time, I talk about in 2024, we want to launch 10 semantic search-based application. I'm very proud to say that we delivered more than that. We launched 11 services based on semantic search. And the bonus is that we also were able to leverage the same technology for semantic recommendation and ads. By looking at all these different application, they all share something in common. That is, by leveraging AI's capability to deeply understand the user intent and connecting them with the services and product we have. And next, in the Rakuten AI for Business category, we have a saying of eating our own dog food, meaning that try our product services ourselves so we understand the customer pain point, can design the solution that actually solves the problem. Just one example, our sales team were able to use Rakuten AI for Rakutenian and save the time to prepare for the sales material, presentations, pitch deck, drafted email, and every minute saved is every minute they can spend with their customer and to develop deeper relationship. And two weeks ago, we launched Rakuten AI for Business, and it was designed for the Japanese business. It's very accessible and affordable. It was designed with the privacy and security in mind. By leveraging our expertise and experience in various domains, from operations, sales, marketing, and engineering, we were able to develop template and tools so all the businesses, big or small, can leverage AI in their daily work. And we also launched Rakuten AI for consumer applications by integrating the cutting edge technology into Rakuten Link, so you don't have to create another account, you don't have to pay another subscription, and you can use the best AI technology right there through Rakuten Mobile. And we also announced Rakuten AI Assistant, a new way of interacting with Rakuten group services through multimodality, through chat, through conversations, through image, through speech. So you can discover all of the Rakuten group services in one app. And recently, you probably heard the deep seek, and they are creating powerful model in a very cost-effective way. And that has been our strategy for the last two to three years. We have investing Rakuten AI, Rakuten large language model, And first, in March 2024, we launched our 7 billion model. That was the best in its class. Among the similar model sizes, it was the best performing in Japanese. And we did so by investing in Japanese specialized tokenizer leveraging our data, leveraging our engineering expertise, we were able to deliver a powerful model for the Japanese users. In December last year, we launched Rakuten AI 2.0. By leveraging a state-of-the-art mixture of expert technology, we were able to deliver a powerful model with less cost. And we also developed a small model, 1.5 billion, small language model from scratch. And that expertise within Rakuten Group put us in a very good position to leverage the latest open source algorithm and technology published to create even more powerful model. Such a good portfolio of models, big or small, enable business customer to make the flexibility to make additional trade-off. If you want the most powerful model, we have it. If you want a small model, we also have it. And it's all designed to reflect the Japanese culture, language, and business customs. This week, we also published our model to the open source community, so you can build on top of it. If 2024 was a year of learning, 2025 will be year of scaling. We will continue to scale our foundation to ship more impactful product, expand our Rakuten AI for business services to more customer in more industry, and infuse Rakuten AI into more consumer product. And we will do so through the Rakuten AI innovation platform. Building from a solid foundation, from data, from model to tools and application, we have all the ingredients to be successful. I want to thank all of the Rakutenians and all the business partners for the progress thus far. And thank you all for joining us in this journey. I look forward to sharing more updates with you in Q1 2025. Thank you.

Thank you very much. Thank you very much for participating in the fourth quarter of the fiscal year of the Rakuten Group Co., Ltd. in 2024. From here, it is time for questions and answers from the people involved in the media. Here are the seven speakers today. If you are a participant from the PC, click on the section at the bottom of the list of participants, and if you are a participant from your smartphone, tap on the details and you will be shown as a recipient, so please tap on that screen to receive a recipient. If you have read the name, please confirm that the mute has been removed and answer the question. I am afraid that the number of questions will be limited to those related to the settlement. It would be nice if you could ask one or two questions at a time. Now, I would like to ask a question to Mr. Nishigata of NHK, who is the chairperson.

I'd like to ask Mr. Mikitani two questions. It's been five years since you opened your business. I'd like to take a look back on the 24th year of your business and hear your thoughts on it. Second, I would like to ask you about what kind of challenges will be overcome in 2025 for the black market of mobile phone business alone? What kind of approach will you take to overcome this?

We have been working on a very challenging project called Rakuten Mobile for a long time. Obviously, we have seen that the contribution to the Rakuten ecosystem is very large in many ways. As you can see, the group has grown overall today. In that sense, this mobile factor is very large, and the number of users of Rakuten Mobile is increasing from 10 million to 20 million, and I think that it has been proven that it will make the services for our customers, so-called consumers, all-encompassing. In addition, by doing this challenging project, One is that it has become a muscle room, including other businesses. I think that the overall scrum of the group has become stronger as a result of the formation of a body room that considers more business efficiency and more operating funds. My second question is about EBITDA and黒字化 this year. We will continue to do what we have been doing so far. Through Rakuten Mobile, for example, we will increase advertising revenue further. Also, if you use 5G, you will know that the data up will increase, so we will increase it. As I explained today, the number of people in their 20s, 30s, and 40s has become very strong. However, the number of people in their 60s and 50s, especially those who are in their 60s, has become extremely small. In addition, the approach to the elderly and the urban area is strong, but it is still relatively weak when it comes to rural cities and prefectures, so we would like to strengthen the strategy of the region and further enhance the synergy of the Rakuten Group. Finally, the loss of profits due to the sale of our software through Rakuten Symphony abroad will be a very big thing. In some cases, I think it will be a joint business of Rakuten Group, so I would like to strengthen it. Since overseas business has also become profitable, I would like to further strengthen it here as well.

Thank you very much. Thank you very much. Next, I would like to ask Mr. Matsuda of Nikkei Shimbun, who is the host of this event.

I am Matsuda of Nikkei Shimbun. Can you hear me? Yes, we can hear you. I'd like to ask two questions. I'd like to ask Mr. Mikitani to talk about the short-term blackout of mobile phones. I think there was a heavy downpour in the first quarter of this year because of December, but is there a system that can continue to produce blackouts every month? Or is there still a part that is not enough? If there is a part that is missing, can you tell us where it is? The second point is related to the previous question, but I think the goal of this year's Tsuki Kurojika is to reach 10 million contracts. If you have a goal that you want to achieve this year for Tsuki Kurojika, please let us know. Thank you for your two points.

As I said in December, there was the Rakuten Mobile Big Thank You Festival, and it was a fact that the sales increased considerably from the beginning of the advertising revenue.

However, how many pages is this? 39 pages.

Next. As you can see, EBITDA has been making dramatic improvements like this. The season factor is large, especially in March. New people are signing up, so the marketing cost may be slightly involved in March and February. In that sense, from the beginning of the month, We cannot promise that EBITDA will become black market. However, our goal is to make it black market in the second half of this year. I think it is highly likely to be realized. As for the outlook for this year, first of all, we want to make sure that we get 10 million cases. One of the strategies is to strengthen the urban areas and the elderly. That is what we are thinking.

Thank you very much. Thank you very much. We are running out of time, so I'm afraid that there are only two questions left for the reporters. First of all, I would like to ask Mr. Onishi, a freelancer, to give a speech. I'm Onishi.

Thank you very much. First of all, congratulations, Mr. Mikitani and Ms. Kurojika. It's been a long five years, but the world has changed a lot in the meantime. Hyperscalers are on the brink of bankruptcy, and most of the Japanese government cloud is being taken away by them. The big investment is being made around the world. How will Rakuten get involved in this area? Will it aim to become a hyper-scaler? Or will it attack from a different angle? In the current stage of the water surface, Please tell us about the next development.

There are two. First of all, the international development of Rakuten Group as an ecosystem. And the other is Rakuten Symphony. I think there are two Rakuten Groups as an IT platform. At the first stage, the Rakuten Group based on the ecosystem, for example, Viber, Kobo, and BigKey, has made considerable profits. This is still a point and a point, but we are going to build this point and point in a line. And we are going to grow with the so-called simple business development of Rakuten while making it profitable overseas. I would like to promote that. In that sense, this kind of model is a so-called hyperscaler. Google, Amazon, Facebook, Spenta, or Apple, Microsoft are no longer doing it. Our model is another model, so I think it will still work. In order to do so, it's not just about raising points as a member, but by using AI, by providing very high user experience, Our goal is to develop consumer business with various services. We are developing Semantic Search, which I introduced today, in multiple languages, so I think we are moving forward step by step. Another one is Rakuten Symphony. This is also an international development of wireless networks that hyperscalers do not do. Rather than fighting hyperscalers, we are aiming for a new form of hyperscalers where hyperscalers cannot do it. For example, Viber is doing very well in Eastern Europe, the Philippines, and Vietnam. Also, Kobo, an electronic book, is doing very well in Canada, Europe, and Taiwan. I would like to pursue these two so-called strategies.

Thank you very much. Thank you very much. Please welcome Mr. Ishino of Freelance.

Excuse me, I'm Ishino from Freelance. I was thinking about it at this morning's meeting, but I think that Rakuten Mobile has been asking for a trial rate from before, but it seems that there is no need to do that with the current number of customers, but how much Are you really looking forward to it? Are you not going to do it anymore? Is it a problem because it's going well now?

Could you comment on that? Mr. Ishino, it's hard to talk about strategies. I'm sorry about that. In many ways, one of the options is to set up a free period. I think it is possible, but even so, it will come into the framework of how much you can give back to the customer, so I would like to think calmly about which is effective.

I see. Thank you very much. And the second point is, earlier in the presentation of Mr. Michite at AST, there was a story that Rakuten Mobile's users were the only ones who were in danger during the disaster. When T-Mobile started its service at Starlink in the United States, we received a fee from the users of the company, to be able to use direct communication, but Rakuten basically understands that it is for its own users, right? Even so, I wonder if there is a way to reach out to users of other companies while receiving a fee. It's a bit of an old story, but if you have any plans, please tell me.

Well, I think it would be good to have technical evaluation from experts. Basically, the problem of frequency range and the problem of satellite technology, As for us, we believe that only the technology of AST Space Mobile can be called broadband directly at this stage. I think you should also make a decision about that. As for the business model, we would like to consider it in the future. The biggest point is that when a major disaster occurs, not only Rakuten's mobile users, but also other people have capacity problems. I think we need to consider how to open it.

Thank you. Thank you very much. With that, we will now end the Q&A session. Thank you for joining us.

Thank you very much for joining us at the Q&A session of the 4th quarter and the 2nd quarter of the RAKUTEN Group Co., Ltd. in 2024. From now on, we will have the Q&A session from the organizers and analysts. Today's participants are these 7 people. If you are participating from the PC, please click on the subject in the list of participants, and if you are participating from your smartphone, please tap on the details to see the subject, and tap on the screen to see the subject. If you have read the name, please confirm that the mute has been released and ask the question. Now, I would like to answer the questions from the organizers and analysts. Mr. Okumura from Okasan Shoken, who is hosting the event, please answer the questions.

Thank you very much. I am Okumura from Okasan Shoken. Can you unmute yourself? Yes, I can hear you. Thank you very much. I would like to ask you one big question. Regarding the future profits of our company, the non-GAAP-influenced profits are expected to expand considerably in the second quarter of this year, and I think it's wonderful. However, this is not the profits of investors, so if you add up the capital gains in the past few years, it includes interest payments and external export profits. I'd like to confirm whether you have the final profit that belongs to the investor this year to be blacklisted. Also, after this is blacklisted, what kind of things do you have from the point of view of the ROE that you aim to sell? In addition to that, I think it's quite important from the point of view of the investor's health insurance, but I'd like to know what the conditions are to issue a reissue. Thank you for your answer, Mr. Mikita. I would like to ask Mr. Hirose, who is in charge of finance.

I would like to ask Mr. Hirose, who is in charge of finance. I would like to ask Mr. Hirose, who is in charge of finance. I would like to ask Mr. Hirose, who is in charge of finance. I would like to ask Mr. Hirose, who is in charge of finance. This is what we are showing you. Please understand that this is what we are showing you. As for the final profit, we do not have a special proposal, but our goal is to raise it firmly and improve the financial situation. I hope you will allow us to do so in the future. In this respect, I would like you to understand that we are not at the stage of discussing the ROE yet.

Thank you very much. Thank you. What is your opinion on decarbonization?

In terms of disbursement, we announced that we will continue disbursement for fiscal year 2024. In the future, we will think about the balance between the improvement of fiscal year and stable disbursement. Basically, we would like to prioritize the improvement of fiscal year.

Thank you very much. Thank you very much for your question.

That's all. I think the answer depends on how you think about it. Basically, we have divided the SIM of 30GB into 310GB. I think it's one of the reasons why the share price has risen by more than 40% when it was forcibly converted to disbursement success. After all, we are doing a mobile network like a device industry, and this is a business that has little change in terms of revenue. This is a business model that becomes a dramatic revenue increase if we exceed the profit-seeking branch point. One of them is the entrance barrier, but I think we managed to overcome the most difficult situation. Of course, we would like to do our best to make Yurishifu-sai a large-scale. That's why we are doing our best. That's all.

Thank you.

We are running out of time, so we will ask two more questions from the analysts. First, I would like to ask Mr. Hoshi Nomura, who is in charge of the exchange.

Mr. Hoshi Nomura, can you hear me?

Yes, I can hear you.

Thank you very much. I would like to ask two questions about the investment in facilities. The investment in facilities in 2025 will be 1.5 billion yen. What kind of difference will it make? such as the construction of a base station, ASD Space Mobile, and the implementation of two symphonies. Another point is that after the blackout of the operating profit, we will enter the next phase after 2026, but what kind of field should we focus on when investing in equipment? If there is anything in the company that is being planned, please let us know as soon as possible.

Regarding AST, we took the risk of the initial launch. Regarding this, there are almost no additional We can use Rakuten Mobile without investment or cost. There is no need for additional investment and cost. On the other hand, we were greatly dependent on the roaming of KDDR, and we are grateful for that, but it was also a very large cost burden, and the number of users and data has also increased. The quality of this network is not very good, and many people are satisfied with it. However, the number of users is increasing, so I think it is necessary to focus on additional 5G investment. When the number of users increases, it is necessary to increase the core. In other words, it will increase the quality of the network as the number of users increases. However, in terms of interoperability, I think it will be possible to further compress future roaming costs by investing in this.

Thank you very much.

The next question is from Mr. Nagao of Bank of America.

Thank you for your question. My name is Nagao from B of A. Congratulations to Mr. Mikitani, Mr. Kurojika, and Mr. Gurugrami. I'd like you to tell me one thing about Rakuten Mobile. How many subscribers do you have this year? You mentioned earlier that the approach of the senior age group is a little weak, but I think that the existing career group is the strongest in the future, so please tell us about the point of approaching it in what kind of way. That's all.

Well, it's a ground battle. Ground battle.

Ground battle.

President, what kind of work do you do on the ground? I work all over Japan. But as a goal, I think it is one of the goals to be on a large scale, so I would like to aim for 10 million people. Among them, this is an ad business, so it may be possible to accelerate it, and other companies also have various high-end marketing strategies and product strategies. We are looking forward to it, but our goal is to increase the number of 10 million cases. This will have a huge impact on Rakuten Group as a whole, and we want to realize this not only in Japan but also abroad. As for the elderly, unfortunately, I will be in this row this year. There are various ways to think about it, and it is a very good thing to be able to get the younger generation. On the other hand, ARP is very popular among people in their 60s. To be honest, I think there are a lot of people who are paying only 3 Giga, but I think there are a lot of people who are paying only 7,000 Giga. I think we are going to make a ground line so that people can recognize that it is so much money if we change it to those people. I don't know how to say it, but I think there are a lot of people who are paying too much. For others, this may be a profit margin, but we want to do it in a fair way anyway, so if you contact Rakuten Mobile, the call will be free, the short message will be free, and even if you go overseas, it will be free up to 2GB. It's 2,980 yen no matter how much you use it. I think it's a matter of carefully moving forward.

Thank you very much, Mr. Mikita. Thank you very much. With that, we will now end the questions from the analysts of Kikan Toshika. Finally, I would like to say a few words from Mr. Mikita.

We will continue to work hard to meet everyone's expectations by releasing more and more black paper. Thank you very much.

Thank you very much.