Rakuten Q2 FY2026: Non-GAAP operating profit jumps 296%, led by fintech

Rakuten (Rakuten Group) delivered higher revenue and earnings for the first half of fiscal 2026. Consolidated revenue reached ¥1,309.1 billion (up 12.9% year-on-year), while Non-GAAP operating profit surged 296.6% to ¥78.3 billion. On an IFRS basis, operating profit swung to ¥50.4 billion from a loss of ¥6.6 billion a year earlier, reflecting broad-based earnings improvement. Net loss attributable to shareholders narrowed sharply to ¥10.9 billion from ¥124.4 billion, and pretax income turned positive at ¥17.9 billion, the first black ink since H1 2019.

The profit recovery was fueled by AI-driven sales growth and cost savings across the group, a favorable interest-rate environment for the fintech segment, and ongoing subscriber gains with tighter cost control in mobile. Fintech led the way with a segment profit of ¥127.7 billion (up 46.9%), while the internet services business also posted higher profit. The mobile segment narrowed its loss by ¥17.4 billion to ¥71.1 billion.

Non-recurring charges weighed on IFRS operating profit, including a ¥17.0 billion impairment from converting a logistics warehouse for in-house use and an impairment related to exiting a European marketplace business. Excluding such items, the Non-GAAP result underscores a clearly strengthening recurring earnings base.

Rakuten’s three segments, Internet Services, Fintech, and Mobile, are managed on a Non-GAAP basis. Combined segment profit after mobile ecosystem contributions reached ¥100.9 billion, a sharp increase from ¥25.0 billion a year ago.

Internet Services
Domestic e-commerce grew gross merchandise value and revenue at Rakuten Ichiba, while marketing efficiency lifted profit. Rakuten Travel saw robust inbound demand and solid domestic bookings, driving significant revenue and profit growth. Investment-phase businesses also narrowed losses. Outside Japan, open commerce (including Rakuten Rewards) improved profit despite some service closures, helped by cost controls and the absence of prior-year restructuring charges. Video streaming service Rakuten Viki benefited from pricing adjustments and cost reductions. Revenue for the segment rose 4.1% to ¥655.8 billion, and segment profit jumped 67.2% to ¥44.2 billion.

Fintech
Every major service posted higher profit. Rakuten Card expanded its customer base and shopping transaction volumes. The bank business capitalized on the Bank of Japan’s rate hikes, boosting investment yield and significantly growing fund management revenue, while scale efficiencies enhanced profitability. Securities income surged amid active equity markets, and the insurance unit improved margins through portfolio selection. Rakuten Pay also saw higher transaction values. Overall, fintech revenue grew 25.1% to ¥570.8 billion, with segment profit up 46.9% to ¥127.7 billion, the group’s largest earnings contributor.

Mobile
Rakuten Mobile continued to add subscribers, driven by network quality improvements, brand recognition, and cross-use within the Rakuten ecosystem. Revenue rose 13.3% to ¥252.5 billion. While marketing spending increased, other costs were contained, reducing the segment loss to ¥71.1 billion from ¥88.5 billion a year earlier, an improvement of ¥17.4 billion. The carrier remains on track to shrink losses further and aims for full-year profitability, with planned capex to expand device lineup and enterprise solutions.

Total assets at the end of the period stood at ¥31,135.9 billion, up ¥2,331.5 billion from the prior year-end, mainly due to increases in financial assets at the securities business (up ¥2,983.9 billion) and loans at the banking arm (up ¥550.0 billion). Liabilities rose ¥2,367.5 billion to ¥29,817.7 billion, largely reflecting higher financial liabilities in the securities unit. Total equity edged down ¥36.0 billion to ¥1,318.2 billion, with the parent’s equity ratio at a low 2.9% and the consolidated capital adequacy ratio at 4.2%.

Cash flow from operating activities showed a net outflow of ¥301.7 billion (vs. an outflow of ¥134.0 billion a year earlier), driven by growth in securities financial assets and bank loans. Investing activities consumed ¥82.8 billion, including ¥84.9 billion for intangible assets and ¥59.9 billion for property and equipment. Financing activities saw an outflow of ¥967.4 billion, chiefly due to repayment of long-term borrowings at the bank. As a result, cash and cash equivalents decreased by ¥1,347.1 billion to ¥4,490.5 billion.

The company did not pay a dividend for the half-year (¥0), and the full-year dividend forecast remains undecided, as management prioritizes reinvestment for growth.

Rakuten flagged several risks and challenges in its financial report:

• Global economic uncertainty, including geopolitical tensions and financial market volatility, as well as a slow recovery in Japanese consumer spending, could weigh on results.
• Non-recurring asset impairments were booked: a ¥17.0 billion impairment from repurposing a logistics warehouse for internal use, and a ¥1.0 billion charge related to exiting a European marketplace, reflecting portfolio realignment costs.
• The mobile business remains loss-making, with ongoing investment needs for network quality and the risk of higher marketing costs due to competition.
• Fintech benefits from rising interest rates, but changes in monetary policy could dampen earnings.
• Overseas internet services include some underperforming operations, with potential additional costs from closures or restructuring.
• An accounting estimate change, extending the useful life of network equipment, boosted operating profit by ¥17.3 billion, which carries an offsetting impairment risk.

Rakuten did not provide specific full-year guidance figures, but said it aims for high single-digit revenue growth from the previous year’s roughly ¥2.5 trillion, along with positive Non-GAAP operating profit, positive pretax profit, and positive net income for fiscal 2026.

By segment, Internet Services plans to expand transaction volumes through AI and cross-ecosystem usage while improving loss-generating overseas businesses. Fintech is set for a reorganization effective October 1, 2026, with Rakuten Bank becoming the holding company’s parent; the move is expected to optimize funding and boost synergies, though related costs will be booked in the third quarter. Mobile will focus on network quality upgrades, including satellite-to-mobile connectivity, to accelerate subscriber gains and profitability.

A summary comparison with the prior year’s results (fiscal 2025) indicates the directional targets:

• Revenue: ~¥2.5 trillion → high single-digit growth
• Non-GAAP operating profit: positive → remain positive
• Pretax profit: loss → positive
• Net income (attributable to owners of parent): loss → positive