[Company analysis] Rakuten Inc. (楽天)

「Rakuten Inc. (楽天)」is an IT company that develops Internet services. From its establishment, this company focused on EC shopping. Currently, financial related profits(online stock sales and credit cards) account for half of the total operating profit, which is close to that of online financial companies. They also offer various online services such as "Rakuten Ichiba", "Rakuten Travel" and "Infoseek". The number of consolidated employees is approximately 17,214.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Rakuten Inc.
Company name (Japanese)	楽天
Date of establishment	Friday, February 7, 1997
Headquarters location	〒158-0094 東京都世田谷区玉川一丁目14番1号 楽天クリムゾンハウス
Capital	205,924
Consolidated sales	1,101,480
Consolidated operating profit	170,425
Consolidated total assets	7,345,002
Consolidated capital	776,207
Capital adequacy ratio	10.6%
Consolidated number of employees	17,214

 

 

 

2. Summary and Features

 
「Rakuten」is a company founded in 1997 by Mikitani Hiroshi(三木谷 浩史). This company was established under the name of「MDM」, and they started the Internet shopping mall business with 6 employees. And in the following year, this company started the "Rakuten Auction(楽天オークション)" and changed the company name to "Rakuten".

In 2000, this company was listed on the Tokyo Stock Exchange, and they continued to launch new businesses such as "Rakuten Travel", "Rakuten Books" and "Rakuten Super Point". 「Rakuten」has expanded their business by purchasing the search site「Infoseek」and actively conducting M & A with「DLJ」which is the predecessor of 「Rakuten Securities」. As of 2017, Rakuten has already provided over 70 diverse services, which is the largest level in the Japanese IT industry.

 

However, it was relatively late in global expansion. Since opening「Rakuten Market」in Taiwan in 2008, they have continued M & A to support Rakuten's financial business such as「Rakuten Bank」and「Rakuten Insurance」, while purchasing and investing in EC sites around the world. In order to promote such globalization, this company started to use English as a common language from 2012 with a two-year preparation period. So, the current official language of「Rakuten」is English.

The strength of「Rakuten」is, the have business structure that can maintain around 10% of stable operating profit margin. In addition, they are aggressively promoting new businesses based on this solidity, which leads to the growth of Rakuten. As for the competitiveness of the fields called new businesses in particular, the EC business is No.2, the MVNO business is No.1, the bank business is No.2, and the credit card business is No.1 in Japan. And all of them are expected to continue to grow.

In fact, sales of「Rakuten」are increasing every year. The biggest contributors to this are the "EC business" and 「Rakuten Card」. In particular, in the past,「Rakuten Card」had a high initial investment cost, so it was once evaluated as a risk. But now it generate stable profits and significantly contributed to the Rakuten Group.

 

 

 

3. Major Business

 

■ Japanese domestic EC business
Services such as "Rakuten Market(楽天市場)", "Rakuma(ラクマ)", and "Rakuten Direct(楽天Direct)". Sales are also increasing each year. In the Japanese domestic market, it is the second largest after "Amazon".

■ Communication & sports
Businesses related to MVNO services such as "Rakuten Mobile", "Viber (free phone / message app)", "Tohoku Rakuten Golden Eagles", and "Vissel Kobe". The core business is still "Rakuten Mobile" and has the top share in the Japanese MVNO business.

■ Other Internet services
Businesses such as "Rakuten Travel", "Rakuten Ad Solutions Business", and "Rakuten Wedding". Among these, "Rakuten Travel" has the most presence, and as of 2017, it had the Japanese travel market share of 16% and was the second largest in the industry.

■ Fine Tech Business
Financial business such as "Rakuten Card", "Rakuten Bank", "Rakuten Pay", "Rakuten Securities", "Rakuten Life". Of these, "Rakuten Card" and "Rakuten Bank" are the core businesses. At present, they acheived the top market share in credit card business surpassing「Mitsubishi UFJ Financial Group」and「Sumitomo Mitsui Financial Group」.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		781,916	944,474	1,101,480
Consolidated operating profit		78,512	149,344	170,425
Consolidated total assets		4,604,672	6,184,299	7,345,002
Consolidated net assets		682,490	683,408	776,207
Breakdown of sales	Japan domestic EC business	311,200	390,900	426,800
	Communication & Sports	67,500	90,000	111,000
	Other Internet related service	181,900	199,500	250,600
	FinTech	296,100	333,200	410,800
	Adjustments	-74,700	-69,000	-97,700