Click here to close now.


Microsoft Cloud Authors: Jayaram Krishnaswamy, Elizabeth White, Andreas Grabner, Jim Kaskade, Pat Romanski

News Feed Item

Rakuten Reports Consolidated Financial Results for the Nine Months Ended September 30, 2012

Rakuten, Inc. (JASDAQ:4755) today announced consolidated financial reports for the nine months ended September 30, 2012. The Rakuten Group for the first three quarters achieved solid growth with consolidated net sales of ¥309,625 million (up 14.5% year on year), operating profit of ¥53,819 million (up 11.4% year on year), and ordinary profit of ¥53,200 million (up 13.4% year on year). All three results are record highs for the first three quarters of a fiscal year. Net income for the period was ¥28,994 million, on the other hand the ¥19,201 million net loss from the same period of the previous fiscal year was recorded.

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, 2012

In the world economy during the first three quarters of the current fiscal year (January 1, 2012 – September 30, 2012), the European debt crisis was prolonged and growth in newly developing regions tapered off, which have brought about a rise in uncertainty for the world outlook. In Japan, domestic demand showed resilience, driven by such forces as earthquake restoration demands, but a slowdown of the international economy loomed in the background, so conditions continue to deserve close watch.

Meanwhile, the worldwide spread of the Internet and the developing shift in social foundations across the world means that the Internet continues to be a major engine for worldwide economic growth, as documented in a recent white paper on information and communications.* In particular, the rapid diffusion of smartphones is contributing to the structural expansion of the Internet market. Boosted by the strong trends of these environmental changes, the Internet shopping market continues its steady growth in the future, both in Japan and overseas.

At Rakuten, we seek to leverage the growth potential of the Internet as a driving force for raising corporate value. We are doing this through vigorous steps to take Rakuten Ichiba's BtoBtoC marketplace model to the world and service enhancements for smartphone and tablet devices to spur further growth. We also aim to strengthen our competitiveness by improving delivery quality, from measures such as reinforcing our logistics infrastructure. In the Internet Finance business segment, we are aggressively promoting the business centering on Rakuten Card, which has notable synergies with Internet Services.

(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 fiscal year, the customer shift to e-commerce for daily consumption continued to move forward owing to an enhanced product lineup, promotion of mobile Internet usage, expanded next-day deliveries, and other initiatives in our core Rakuten Ichiba service. Efforts to elevate Rakuten Ichiba's usability for both users and merchants contributed to firm growth in unique buyers and number of orders to sustain the segment's high performance with a 15.2% year-on-year rise in domestic e-commerce gross merchandise sales. In Travel services, we added a 13.5% year-on-year increase to gross transaction volume. Dynamic Package had solid sales and upgraded its single payment service for corporate hotel reservations in pursuit of a more diversified earnings base.

In its overseas ventures, the segment aided Rakuten's business expansion by focusing on marketplace-model businesses and rolling out initiatives including points programs that have proven successful in Japan. During the first quarter, we made Canadian-based Kobo Inc., a worldwide e-book operator, into a consolidated subsidiary. Kobo is spreading its e-book service throughout the world and opened its Japan service in July of this year.

As a result, net sales for the segment rose to ¥192,196 million, a 24.9% year-on-year increase, while segment operating income was down 0.8% year on year to ¥44,813 million due to our continued advance investments, mainly in overseas businesses.

< Internet Finance >

In credit card and related services, the Internet Finance segment increased its credit card membership during the first three quarters, which led to increased shopping transaction value and prompted a healthy rise in revolving shopping balances, resulting in higher commission income and a pronounced growth in its profit. Banking services benefited from its effective marketing programs to Rakuten members and solid growth in loan balances to achieve increased interest income from loans. In securities services, although stock trading volume decreased by the ongoing global depressed stock market, the number of new comprehensive accounts increased. In our aim to enrich our financial service offerings, we announced an agreement in the third quarter to include AIRIO Life Insurance Co., Ltd. ("AIRIO Life") as a consolidated subsidiary.

As a result of the above, the Internet Finance segment had ¥110,328 million in net sales, a 3.1% increase from the previous fiscal year. Segment operating profit was ¥15,546 million; a 94.2% year-on-year increase due in part to last year's recording of a ¥4,264 million allowance for loss on interest repayment taken in advance of the re-organization of the credit card business.

< Others >

During the first three quarters, operating profit in the Others segment firmed up, despite lower telecommunications sales stemming from the shift to a new business model emphasizing new, high-growth ventures such as cloud services while moving away from a traditional landline operator providing bypass services. The professional sports division lifted net sales through year-on-year revenue increases in both advertising and tickets.

As a result of the above, net sales for the segment were ¥25,817 million, a 3.0% year-on-year decrease, while segment operating profit grew 29.5% year on year to ¥1,787 million.

* Source:   Heisei 24 Nen Joho Tsushin ni Kansuru Genjo Hokoku [Fiscal 2012 Information and Communications Status Report] (published by the Ministry of Internal Affairs and Communications, July 17, 2012)

(3) Qualitative Information about Consolidated Business Forecasts

In the year ending December 31, 2012, 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, we expect unsettled market conditions to persist, but nevertheless anticipate sustained earnings growth created from synergies within the Rakuten Group. We will also continue to make strategic allocations of corporate resources and active investments in high-growth areas such as e-books in order to open up more mid- and long-term income opportunities. While making these advance investments, Rakuten intends to surpass its current financial results in the fiscal year ending December 31, 2012.

In addition to our activities in the rapidly changing environment of Internet-related business in Japan and overseas, Rakuten, Inc. and its group companies are also involved in the securities business and other finance-related business activities, with the result that our business performance is affected by financial market trends and other factors. For these reasons, it is impossible to predict financial results, and no forecasts are included in this report.

(4) Other Information

(a) Changes in Recognition Timing of the Reserve for Points

The former accounting procedure for the Rakuten Super Points program treated regular points by recognizing a reserve for points at an amount corresponding to the balance of points available for customer use at the end of the period and treated limited-time points as an expense in the period used. Under the new policy, the projected value of points granted for both regular and limited-time points will be recognized in the reserve for points at the time of transaction.

Points granted and used have both grown recently as point programs play an increasingly important role each year as marketing tools. In response to these conditions, the Rakuten Group has constructed a point campaign management system and developed an internal management structure in order to gain timely understanding of campaign effects. In the first quarter accounting period, we have been able to promptly calculate the estimated value of granted points from campaigns at the time of generation for both regular and limited-time points. We are thus able to gauge and to manage the point balances in the important Rakuten Super Points marketing tool. At the same time, we have adopted a uniform accounting procedure for the Rakuten Super Points program. This method accounts for points in the reserve for points by using the projected value of point grants, and recognition timing will be based on the transaction that caused the points to be generated.

The change in accounting policy is applied retroactively, and quarterly and annual financial statements for the previous year are presented after retrospective application.

As a result, the amounts for operating profit and ordinary profit for the first three quarters of the previous fiscal year are each ¥130 million higher and loss before income taxes and minority interests for it is ¥130 million smaller than before retrospective application, and the reserve for points at the end of the previous fiscal year is ¥5,290 million higher. In addition, reflecting the cumulative effect in net assets at the beginning of the previous fiscal year reduces retained earnings at that time by ¥2,812 million.

(b) Application of the Accounting Standard for Net Income per Share

Starting in the first quarter of the current fiscal year, we are applying the Accounting Standard for Earnings per Share (Accounting Standards Board of Japan [ASBJ], Statement No. 2, revised June 30, 2010) and the Guidance on Accounting Standard for Earnings per Share (ASBJ Guidance No. 4, revised June 30, 2010).

According to this change, the calculation of diluted net income per share for stock options whose right to exercise is established after a fixed period of work service sets the value of receipts on the assumption that funds are paid in when rights are exercised and has changed to a method that includes the future service-related portion furnished by the company.

For the stock split conducted during the three months ended September 30, 2012, net income per share and net income per diluted share were calculated under the assumption that the stock split took effect at the start of the previous fiscal year.

(c) Application of the Accounting Standards for Accounting Changes and Error Corrections

As a result of accounting changes and corrections to prior period errors after the beginning of the first quarter financial reporting period, we have applied the Accounting Standards for Accounting Changes and Error Corrections (ASBJ Statement No. 24, December 4, 2009) and the Guidance on Accounting Standards for Accounting Changes and Error Corrections (ASBJ Guidance No. 24, December 4, 2009).

(d) Other

(1) Significant changes in the scope of consolidation: Yes
Increase: Kobo Inc.
(2) Adoption of simplified or specific accounting treatments: No
(3) Changes in accounting policies and presentation of the financial statements
(major items that provide the basis for preparing financial statements)
Changes due to amendment of accounting standards: Yes
Other changes: Yes
Changes in the accounting estimate: No
Modified re-disclosure: No
(4) Number of shares issued (Common stock)
1.Common stock (including treasury stock)
1,320,332,500 shares (As of September 30, 2012)
1,319,457,800 shares (As of December 31, 2011)
2.Treasury stock
6,007,996 shares (As of September 30, 2012)
6,007,900 shares (As of December 31, 2011)
3.Average number of shares issued for the nine months ended September 30
1,313,854,321 shares (January 1 – September 30, 2012)
1,312,691,247 shares (January 1 – September 30, 2011)
(Note)   Rakuten, Inc. made a 100-for-1 stock split regarding shares of its common stock on July 1, 2012. Total shares issued and treasury stock as of December 31, 2011 and September 30, 2012, and average number of shares during the nine months ended September 30, 2011 and 2012 are calculated under the assumption that the stock split took effect at the start of the previous fiscal year.

The above information was originally prepared and published by the Company in Japanese as it contains timely disclosure materials to be submitted to the Osaka Securities 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 generally accepted accounting principles in Japan.

*The full report is available at:

About Rakuten
Rakuten, Inc. (JASDAQ:4755), is one of the world's leading Internet service companies, providing a variety of consumer- and business-focused services including e-commerce, e-reading, travel, banking, securities, credit card, e-money, portal and media, online marketing and professional sports. Selected by Forbes as the World's 7th Most Innovative Companies of 2012, Rakuten is expanding globally and currently has operations throughout the Americas, Europe, Asia and Oceania. Founded in 1997, Rakuten is headquartered in Tokyo, with over 10,000 staff worldwide. For more information, visit

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
Nowadays, a large number of sensors and devices are connected to the network. Leading-edge IoT technologies integrate various types of sensor data to create a new value for several business decision scenarios. The transparent cloud is a model of a new IoT emergence service platform. Many service providers store and access various types of sensor data in order to create and find out new business values by integrating such data.
There are so many tools and techniques for data analytics that even for a data scientist the choices, possible systems, and even the types of data can be daunting. In his session at @ThingsExpo, Chris Harrold, Global CTO for Big Data Solutions for EMC Corporation, will show how to perform a simple, but meaningful analysis of social sentiment data using freely available tools that take only minutes to download and install. Participants will get the download information, scripts, and complete end-to-end walkthrough of the analysis from start to finish. Participants will also be given the pract...
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome,” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in high-performance, high-efficiency server, storage technology and green computing, will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and Embedded Systems worldwide. Supermi...
WebRTC services have already permeated corporate communications in the form of videoconferencing solutions. However, WebRTC has the potential of going beyond and catalyzing a new class of services providing more than calls with capabilities such as mass-scale real-time media broadcasting, enriched and augmented video, person-to-machine and machine-to-machine communications. In his session at @ThingsExpo, Luis Lopez, CEO of Kurento, will introduce the technologies required for implementing these ideas and some early experiments performed in the Kurento open source software community in areas ...
Electric power utilities face relentless pressure on their financial performance, and reducing distribution grid losses is one of the last untapped opportunities to meet their business goals. Combining IoT-enabled sensors and cloud-based data analytics, utilities now are able to find, quantify and reduce losses faster – and with a smaller IT footprint. Solutions exist using Internet-enabled sensors deployed temporarily at strategic locations within the distribution grid to measure actual line loads.
“In the past year we've seen a lot of stabilization of WebRTC. You can now use it in production with a far greater degree of certainty. A lot of the real developments in the past year have been in things like the data channel, which will enable a whole new type of application," explained Peter Dunkley, Technical Director at Acision, in this interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The Internet of Everything is re-shaping technology trends–moving away from “request/response” architecture to an “always-on” Streaming Web where data is in constant motion and secure, reliable communication is an absolute necessity. As more and more THINGS go online, the challenges that developers will need to address will only increase exponentially. In his session at @ThingsExpo, Todd Greene, Founder & CEO of PubNub, will explore the current state of IoT connectivity and review key trends and technology requirements that will drive the Internet of Things from hype to reality.
There will be 20 billion IoT devices connected to the Internet soon. What if we could control these devices with our voice, mind, or gestures? What if we could teach these devices how to talk to each other? What if these devices could learn how to interact with us (and each other) to make our lives better? What if Jarvis was real? How can I gain these super powers? In his session at 17th Cloud Expo, Chris Matthieu, co-founder and CTO of Octoblu, will show you!
Today’s connected world is moving from devices towards things, what this means is that by using increasingly low cost sensors embedded in devices we can create many new use cases. These span across use cases in cities, vehicles, home, offices, factories, retail environments, worksites, health, logistics, and health. These use cases rely on ubiquitous connectivity and generate massive amounts of data at scale. These technologies enable new business opportunities, ways to optimize and automate, along with new ways to engage with users.
Through WebRTC, audio and video communications are being embedded more easily than ever into applications, helping carriers, enterprises and independent software vendors deliver greater functionality to their end users. With today’s business world increasingly focused on outcomes, users’ growing calls for ease of use, and businesses craving smarter, tighter integration, what’s the next step in delivering a richer, more immersive experience? That richer, more fully integrated experience comes about through a Communications Platform as a Service which allows for messaging, screen sharing, video...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal an...
SYS-CON Events announced today that Sandy Carter, IBM General Manager Cloud Ecosystem and Developers, and a Social Business Evangelist, will keynote at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA.
WebRTC converts the entire network into a ubiquitous communications cloud thereby connecting anytime, anywhere through any point. In his session at WebRTC Summit,, Mark Castleman, EIR at Bell Labs and Head of Future X Labs, will discuss how the transformational nature of communications is achieved through the democratizing force of WebRTC. WebRTC is doing for voice what HTML did for web content.
As a company adopts a DevOps approach to software development, what are key things that both the Dev and Ops side of the business must keep in mind to ensure effective continuous delivery? In his session at DevOps Summit, Mark Hydar, Head of DevOps, Ericsson TV Platforms, will share best practices and provide helpful tips for Ops teams to adopt an open line of communication with the development side of the house to ensure success between the two sides.
The Internet of Things (IoT) is growing rapidly by extending current technologies, products and networks. By 2020, Cisco estimates there will be 50 billion connected devices. Gartner has forecast revenues of over $300 billion, just to IoT suppliers. Now is the time to figure out how you’ll make money – not just create innovative products. With hundreds of new products and companies jumping into the IoT fray every month, there’s no shortage of innovation. Despite this, McKinsey/VisionMobile data shows "less than 10 percent of IoT developers are making enough to support a reasonably sized team....
The IoT market is on track to hit $7.1 trillion in 2020. The reality is that only a handful of companies are ready for this massive demand. There are a lot of barriers, paint points, traps, and hidden roadblocks. How can we deal with these issues and challenges? The paradigm has changed. Old-style ad-hoc trial-and-error ways will certainly lead you to the dead end. What is mandatory is an overarching and adaptive approach to effectively handle the rapid changes and exponential growth.
Today air travel is a minefield of delays, hassles and customer disappointment. Airlines struggle to revitalize the experience. GE and M2Mi will demonstrate practical examples of how IoT solutions are helping airlines bring back personalization, reduce trip time and improve reliability. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Dr. Sarah Cooper, M2Mi's VP Business Development and Engineering, will explore the IoT cloud-based platform technologies driving this change including privacy controls, data transparency and integration of real time context w...
Developing software for the Internet of Things (IoT) comes with its own set of challenges. Security, privacy, and unified standards are a few key issues. In addition, each IoT product is comprised of at least three separate application components: the software embedded in the device, the backend big-data service, and the mobile application for the end user's controls. Each component is developed by a different team, using different technologies and practices, and deployed to a different stack/target - this makes the integration of these separate pipelines and the coordination of software upd...
The IoT is upon us, but today’s databases, built on 30-year-old math, require multiple platforms to create a single solution. Data demands of the IoT require Big Data systems that can handle ingest, transactions and analytics concurrently adapting to varied situations as they occur, with speed at scale. In his session at @ThingsExpo, Chad Jones, chief strategy officer at Deep Information Sciences, will look differently at IoT data so enterprises can fully leverage their IoT potential. He’ll share tips on how to speed up business initiatives, harness Big Data and remain one step ahead by apply...