Rakuten momentum builds despite nine month net loss
Rakuten Group closed the first nine months of 2024 with a seventh straight net loss for that span, yet the story behind the headline points to a company that is regaining operating traction. For January through September, Rakuten reported a consolidated net loss of 151.2 billion yen, roughly 978 million dollars. Sales rose 10.5 percent to a record for the period, and the conglomerate booked an operating profit for the first time in six years during those nine months. Losses were concentrated in the mobile unit, even as subscriber numbers climbed. The company also recognized costs tied to stepping back from online supermarket services in some regions after customer growth lagged. Strength across ecommerce and financial services helped offset those headwinds.
Management credits an ecosystem effect for the top line resilience. The company said the connection between its mobile service, ecommerce marketplace, payments, and financial products is drawing customers deeper into its network of more than 70 services. A rush in hometown tax donations ahead of a government rule change that ended reward points on such donations benefited its internet business late in the year. Financial services, including card, banking and securities, generated higher fee and interest income.
Chairman and CEO Hiroshi Mikitani framed the push to grow mobile within that broader ecosystem. He said the synergy between mobile and other Rakuten services has exceeded internal expectations. He added a note on momentum with subscriber acquisition.
We hope we can continue to attract mobile customers at the current rate.
There is an important distinction between operating profit and net profit. Operating profit reflects the performance of a company’s core businesses before interest, taxes and some non cash items. Net profit reflects all costs, including interest on debt and other non operating factors. Rakuten’s mobile buildout required heavy upfront investment in network equipment and spectrum. Depreciation on those assets and financing costs still weigh on the bottom line, even as operations across the Group improved in 2024.
What changed in 2024
By mid year, Rakuten’s trajectory had shifted. In the second quarter, consolidated revenue reached 537.3 billion yen, up 8.1 percent year on year, an all time high for a second quarter. In the third quarter, revenue rose to a record 566.7 billion yen, up 9.3 percent year on year, and the Group posted non GAAP operating income of 12.3 billion yen, its first profitable quarter on that measure in five years. Liquidity improved as Rakuten Mobile raised about 170 billion yen through a sale and leaseback of network assets. Management said cash from Internet Services and FinTech helped reduce debt, while cost controls and efficiency gains took hold. AI aided efficiency, with Rakuten Mobile’s customer support costs reduced by more than 30 percent through online support and automation.
A return to operating profit
For the full year 2024, Rakuten reported record consolidated revenue of about 2.3 trillion yen, up 10 percent year on year, marking the 28th consecutive year of revenue growth. Non GAAP operating income turned positive at 7.0 billion yen, an improvement of roughly 160 billion yen from the prior year. IFRS operating income rose to 53.0 billion yen, up about 266 billion yen. Consolidated EBITDA grew to 326.0 billion yen, more than doubling from 2023. The Group said it achieved self funding in 2024, meaning it covered mobile capex needs and interest payments with internal cash generation and financing at the mobile unit, without adding new interest bearing debt at the parent level. Rakuten Mobile also posted its first month of EBITDA profitability in December, recording 2.3 billion yen.
Despite the turnaround in operating metrics, full year net income remained negative. Company figures for 2024 show a net loss in the low 160 billion yen range, a significantly smaller loss than in 2023. The gap between operating and net results reflects ongoing interest expense, depreciation and mark to market impacts related to currency hedging. To manage its balance sheet, the Group replaced dollar denominated undated subordinated bonds late in 2024 and retired about 40 billion yen of those bonds in early 2025, while continuing to spread out future redemptions.
Mobile turns a corner, but remains a heavy lift
Mobile was still the largest drag on profitability, yet the trend improved in 2024. Segment revenue rose to 440.7 billion yen, up 20.9 percent year on year. Non GAAP operating losses narrowed by 105.6 billion yen to 208.9 billion yen. On a standalone basis, Rakuten Mobile recorded revenue of 283.9 billion yen, up 26.2 percent, with a large improvement in EBITDA. The subscriber base reached 8.3 million by the end of December. Average revenue per user in the fourth quarter rose to 2,856 yen, helped by better network quality, growing data usage, the introduction of fees for some optional services, and higher advertising revenue linked to its marketing push. Commercial service on the 700 MHz spectrum, often called the platinum band for its stronger indoor reach, continued to roll out alongside ongoing 5G expansion. Rakuten also said it is working with AST SpaceMobile on satellite to mobile connectivity trials, with testing planned in spring 2025 and a target launch in 2026.
How Rakuten Mobile competes with Japans big three
Rakuten is still a challenger in a market led by NTT Docomo, KDDI and SoftBank. Those incumbents serve tens of millions more customers, with Docomo at nearly 91 million, KDDI around 33 million and SoftBank over 31 million. Rakuten aims to close the gap by improving coverage and keeping prices simple, while pulling users into other Rakuten services for points and perks. The company plans to install about 10,000 additional base stations in 2025 to improve quality and reduce roaming. Capital expenditure is set to rise, with management signaling around 150 billion yen in 2025 compared with a lower spend in 2024. Churn has eased as coverage improves, and ARPU is rising, but the path to full profitability will depend on sustained subscriber growth and disciplined costs in a highly competitive market.
AI is reducing costs and improving service
Mobile’s cost structure is changing as Rakuten applies software and automation. The company’s Triple 20 initiative seeks 20 percent gains in operational, marketing and client productivity. Online support and AI reduced customer support costs by more than 30 percent. Rakuten launched Rakuten Link AI, an AI chat service inside its communications app, so users can access generative AI without extra software or fees. Network operations are built on a cloud native and Open RAN foundation, which allows software updates to optimize capacity and energy use. Those tools help expand coverage at lower incremental cost and support the mobile unit’s push toward full year EBITDA profitability in 2025.
Internet Services and FinTech carry the load
Internet Services and FinTech again stabilized the Group. Internet Services delivered revenue of 1.28 trillion yen, up 5.8 percent year on year, and non GAAP operating income of 85.1 billion yen, up 29.8 percent. Domestic ecommerce gross merchandise sales were 5.96 trillion yen, a small decline that the company linked to the end of a travel support program and the transfer of Rakuten Payment to FinTech. Excluding those factors, the company said domestic ecommerce GMS grew by 4.6 percent. Rakuten Ichiba is deploying AI to improve search, summarize reviews and personalize recommendations, making it easier for merchants to convert traffic into sales.
The FinTech segment delivered revenue of 820.4 billion yen, up 13.1 percent year on year, and non GAAP operating income of 153.4 billion yen, up 37.9 percent. Rakuten Card’s shopping transaction value rose 13.7 percent to 24.0 trillion yen on a larger member base and higher spend per cardholder. Rakuten Bank ended the year with 16.48 million accounts, up 11.6 percent, and deposits rose to 12.0 trillion yen. Higher interest income in the second half lifted profitability. Rakuten Securities surpassed 11.93 million customer accounts and grew revenue and profit despite the move to zero commission trading for Japanese stocks. Rakuten Payment continued to gain scale and achieved full year operating profitability with tighter marketing spend. Management said the card business sees room to grow with small and midsize merchants on the Rakuten marketplace and through a partnership with Mizuho that extends reach to larger corporations.
Why a hometown tax rule change boosted shopping
Japan’s hometown tax program, known as furusato nozei, allows taxpayers to direct a portion of their taxes to a municipality of their choice in exchange for a tax deduction and local gifts. Reward points had often sweetened these donations on ecommerce platforms. A government ban on earning reward points from such donations took effect, which prompted a rush to donate before the rule change. Rakuten said that wave lifted its internet businesses late in the year. The episode highlights how policy shifts can alter shopping behavior and influence marketplace activity in a short window.
Balance sheet, funding and debt management
Rakuten highlighted that it achieved self funding at the Group level in 2024, covering mobile capex and interest payments through cash flow from FinTech, EBITDA from Internet Services, working capital actions, and financing at the mobile unit. The sale and leaseback of mobile network assets in the third quarter added liquidity without new parent level borrowing. The company also refinanced undated subordinated bonds and then repurchased a portion early in 2025, while managing the maturity profile of other obligations. These moves aim to lower funding costs over time and reduce exposure to swings in the yen and interest rates. Management has also pointed to technical hedging effects as a driver of short term net income volatility, separate from the underlying performance of the businesses.
What investors are watching in 2025
The next milestones are clear. Rakuten Mobile is targeting full year EBITDA profitability in 2025, building on the first positive month in December 2024. Subscriber growth remains a core goal, with management signaling a target of roughly 10 million lines by year end 2025. The company expects improved coverage as it adds base stations and continues to refine network software on its Open RAN platform. Execution on capex, churn control and ARPU growth will determine whether mobile can continue narrowing losses while competing against entrenched incumbents.
AI is a key theme for the Group. In 2024, Rakuten delivered dozens of AI tools across its ecosystem, including Rakuten AI for Business, which packages templates and solutions for merchants, and productivity tools integrated into ecommerce and communications. Partnerships are extending reach, such as efforts to bring Rakuten AI to PCs with a large hardware partner in Japan. Investors are watching whether these initiatives can lift customer engagement, cut costs and expand margins across segments, not only in mobile but also in ecommerce and financial services. The market has responded positively at times to signs of stronger operating performance, including a double digit share price gain following an update in 2025 that emphasized revenue growth, improving EBITDA and progress in mobile.
Key Points
- Nine month 2024 net loss was 151.2 billion yen, the seventh straight nine month loss, while sales rose 10.5 percent to a record for the period.
- Rakuten returned to operating profit for the first time in six years during the January to September span, helped by ecommerce and FinTech strength.
- Full year 2024 revenue reached a record 2.3 trillion yen, up 10 percent year on year, with non GAAP operating income of 7.0 billion yen and IFRS operating income of 53.0 billion yen.
- Full year net income stayed negative, in the low 160 billion yen range, reflecting financing costs, depreciation and hedging impacts.
- Rakuten Mobile posted its first month of EBITDA profitability in December 2024, recorded 8.3 million subscribers at year end, and saw ARPU rise to 2,856 yen in the fourth quarter.
- Mobile segment revenue increased 20.9 percent in 2024 and losses narrowed, but the unit still posted a large non GAAP operating loss.
- Internet Services revenue was 1.28 trillion yen and non GAAP operating income 85.1 billion yen, with AI features boosting the shopping experience.
- FinTech delivered 820.4 billion yen in revenue and 153.4 billion yen in non GAAP operating income, with strong gains at Rakuten Card, Bank, Securities and Payment.
- Rakuten said it achieved self funding in 2024, refinanced undated subordinated bonds, and repurchased about 40 billion yen of those bonds in early 2025.
- Priorities for 2025 include full year mobile EBITDA profitability, a push toward about 10 million mobile lines, continued AI deployment and disciplined funding.
