Earnings Call: Q2 2021

Aug 10, 2021

Welcome to Rakuten Group's 2021 Second Quarter Q2 Financial Results. We recently made a huge leap forward by taking our mobile business global with a technology that has been recognized Finishing. We're now set to build out Europe's 1st fully virtualized Open RAN network. FinTech. At the same time, our Japan mobile business is acting as an entry point for new customers into our unique ecosystem, consisting of other core businesses such as e Commerce and Fintech. In our Q2, we saw an increasing number of customers sign up for our mobile service, Finance. This as a result of a powerful marketing point program combined with data and AI. Overall, we delivered another quarter of double digit growth in consolidated revenue Finance. Despite the high hurdle of accelerated growth we experienced last year, we continue to invest in our mobile business, Financing in a consolidated loss, but the investment is backed by a sound financial strategy that balances investment with long term growth, and we continue to have solid options for funding. For the details, we have all of Rakuten's top leaders here to share the latest. Financial. But first, please welcome our CEO, Miki Mikitani. Thank you for joining Q2 2021 Financial Results Conference. I'd like to touch upon the key highlights of 5th. First of all, Finance. Rakuten diversified ecosystem enable us to make a solid growth even under this very difficult condition. 5.2% and outpacing industry. And also, our FinTech in general are doing very, very well Fund. And especially our credit card shopping transaction value has grown plus 34%, Finance. And we are having more than 20% market share for credit card transactions. And we also made Finance. As for Rakuten Mobile, we have what we Financial. We are trying to get 3 birds with 1 stone. 1 is a standalone business, which is Finance, which is can be a very, very profitable and very sizable business. And we came up with very aggressive, attractive price plan. Finance. And we are also trying to nurture the our ecosystem through mobile subscription, Finance. And third is expansion of Rakuten communication platform by setting what we have developed for Japanese mobile connectivity Finance. As you can see on this chart, Financial. Our customer acquisition is doing very well. We are about to reach Finance. The 5,000,000 subscribers. As you know, Rakuten Card became the biggest credit card company in Japan, Finance. But we are outpacing by 4x. And we are very, very confident not only we become 4th Finance. As for the price plan, we came up with a very aggressive plan, up to 1 gigabyte, totally free and maximum Finance. Its maximum you pay is yen 2980 pretax 4 months. And With regard to quality, we have really evaluated by 3rd party independent research companies. And we are we evaluated as good as our competitors in Japan. Once they join Financing. Our subscribers started to use and consume a lot more data than before, 2.3 50000000. The reason why we are so confident about our growth as a mobile service Finance. Our sales site development is much faster than our competitors. Our engineers, Finance. As you know, Our point program is the most popular point program in Japan. As you can see, Point Program. And if you go to see the synergy between mobile subscription and e commerce, Financial. We see like 62.9% of Rakuten Mobile subscribers use Rakuten Ichiba or e Finance. Commerce shopping versus others are like maximum 26.7%. Will be UCC communication platform called RakutenRIC. And as a matter of fact, not only nurturing Finance. The synergy among the Rakuten existing users, Rakuten Mobile has became one of the most important Finance. The impact of 5th. The e commerce uplift is significant. So again, we are proving the synergy between Finance. And let's move on to the 3rd part, which is very, very exciting Finance. The Finance. As you have already heard, we already announced one very big project Finance. This is the first Finance. I think this is really the opening the gate Financing. Also, we announced acquisition of the AltioStar. Finance. We used to have 60% over 60% of our deal star, but we have decided to Finance. We acquired 100% of this very important virtualized radio access network software company by 100% Financing. And the synergy between us and our ToyoStar is going to be very, very Finance. We know that by adopting the fully virtualized contentized platform, Finance. The MNOs can reduce their initial capital investment by about 40%, and we believe Financial. 5th. So we are talking about significant business opportunity through Rakuten Communication Platform. Financial. We are making significant GMS growth for our E Commerce Business in Japan. We are targeting to reach 5,000,000,000,000 yen of GNS Financial Results. And our 2 years CAGR of the shopping EC GMS Finishing. Last year, we had an extremely strong specialty demand Financial Results. So we are using 2 years CAGR as our indication of the growth. Finance. And our the quality of our service is improving significantly. NAPS Financial. Our next question is from the previous year. Financial. For 2020, it was about €129,000,000,000 and growing 15.7%. Finance. But this Q2, we are growing about 26.2 percent with JPY 38,100,000,000 of Financial. We believe we will be able to reach JPY 200,000,000,000 of advertisement revenue in the very near future. Financial. Growing very, very nicely. Rakuten card member has reached 23,000,000. Rakuten bank accounts has reached 11,000,000. Fight. We are in the midst of still very difficult pandemic situation. We have shown plus 34% YY Growth. And you can see the acceleration of Rakuten Bank. Deposit balance Finance. As for Rakuten Securities, you can see the chart. We are growing much faster Finance. And in terms of number of accounts, we will become probably the biggest Financial. Also, our insurance business, Finance. Rakuten Life Insurance and Rakuten General Insurance is making very, very stable and steady growth with plus 34 5.2% and +26.2%, respectively. Lastly, I would like to touch upon our overseas business expansion. Finance. Rakuten Reward Business growing very, very nicely. In this chart, you see that maybe Finance. We are seeing the negative growth. But as a matter of fact, this is because of the travel industry. Financial. And excluding travel industry, we are growing very, very nicely. Finance. And our content business started to contribute to our bottom line Finance. And especially, Rakuten Viber has started to make meaningful profit. So we are Financial. So that's it from myself. I hope you will enjoy the rest of the presentation. Thank you very much. Domestic e commerce image showed double digit growth in the 2nd quarter Financing. Despite the added impact of last year's stay at home demand, the trend of shopping e commerce GMS remain unchanged and Finance and has expanded from the previous year. Here are the result of revenue and operating income. Many businesses Finishing on Rakuten Ichiba performed well. And in the logistic business, operating losses were reduced as a result of improvement activities. Financial. Here is a waterfall chart of operating income. The marketplace type business of Rakuten Ichiba and Rakuten Charcoal as well as the logistics business all showed an improvement. The continuous growth of Rakuten Ichiba is a result of efforts The Rakuten Ichibo users' demographic comprising our most loyal user is expanding year after year, and the growth ratio is accelerating. Financing. The expansion of e commerce users, not limited to only Financial Results. The number of users in each business steadily increased and not only is the user of 5th. Our commerce business provides e commerce services that cover various items in Finance. We have been working on our logistics strategy since the 2017 delivery crisis in Japan. Measures such Financial Results. The number of each of the merchants that have introduced these measures have reached about 90% of the overall total. Going forward, Finance. We all continue to build our own logistic network, a key component of ensuring sustainable growth Finishing. The Rakuten Ichiba's net promoter score improved throughout 2020 and is already trending upward even now. On July 1, 2021, we completed the establishment of Finance. JT Rakuten Logistics, a joint venture with Japan Post, and it becomes an equity method affiliate of Rakuten. We aim to build on exchange logistics platform by utilizing Japan Post Logistics Network and Latgen's strength Financing. Furthermore, with last mile delivery, we aim to improve delivery Efficiency and to reduce the cost per delivery. In addition to existing fulfillment centers, Financial. We plan to operate 3 new fulfillment centers by 2023 in Ama, Financial Results. We aim to build an efficient distribution network by transferring control of these fulfillment Finance and seamlessly incorporating them into the delivery network of Japan 5th. In addition, in the second quarter, we entered into a partnership with Daihuku, a leading material handling company. Financial. In the future, we aim to collaborate fulfillment center for earnings and work to reduce the time and Finance. Finance. In the logistics business and the strong e commerce performance, both shipment volume and the number of merchants using Rakuten Suitor Logistics Finance. This is despite high year on year hurdles arising from the stay at home trend, Financial Results, which began early last year. Next, I will share a business update on Rakuten CU Net Super, our online supermarket joint venture. Financial. Why the total sales of supermarket in 2020 was about JPY 24,000,000,000,000. Financial Results. We aim to expand the GMS of Rakuten Sei Unit Super to at least JPY 100,000,000,000 in 2025. Rakuten's unit sweeper ships from both fulfillment centers and the offline stores. Finance. GMV in the 2nd quarter increased by about 25% year on year. While shipments from stores 5th quarter. Segment from fulfillment centers have recently increased significantly by about 74% 5 year on year. Partially due to the expansion of operations at the fulfillment center in Kohoku, Kanaga Prefecture. In order to respond to growing demand, we plan to start full scale shipment at the fulfillment center in Ibaraki Financial. This will greatly expand the service area in the Kansai area. Finance. The Fintech segment achieved strong growth FinTech Genesys, Finishing. Our customer base continue to expand, and more customers use our services as Finance. With Rakuten Card as a hub, we are building a strong fintech Financial Ecosystem. We promote close use from Rakuten Card to other services and so Finance. The profit base of each fintech company can expand, building an ecosystem centered Financial. On a credit card company that provides payment service to reach many customers is very unique. No other company Financial. The pace of expansion of our customer base is accelerating. Finance. This is due to the progress of the shift to online and the effect of our fintech ecosystem. Finance. At the core of our ecosystem, Rakuten Card Shopping GTV increased by 5th year on year, driving fintech business performance. As a result, our market share of Shopping GTV expanded to 21.1 percent as of May 2021. Financial. With the spread of cashless payment, customers can now have a second Rakuten card as of June. Finishing. Finance. Rakuten Card is already widely used as our main card. With this measure, we aim to take Financial. Finance. Banks continue to face a difficult business environment due to the Bank of Japan's negative interest rate policy Finance and the impact of the pandemic. But Rakuten Bank secured higher sales and profits by significantly increasing service revenues Finance. In addition to the tailwind brought on Financing. By consumers shifting online, Rakuten Bank has significantly increased its number of customers by continuously making its services more 5th consecutive quarter. After reaching 10,000,000 accounts in January, a first Finance. I think 11,000,000 on July 4. We added 1,000,000 accounts in the shortest amount of time in Rakuten Bank's Fiscal Year's history, roughly 6 months. The balance of deposit also exceeded JPY 6,000,000,000,000 in June. After surpassing JPY 5,000,000,000,000 in December last year, the number of accounts has grown. The amount of deposited money being moved Financial Management. The balance of deposit has increased by JPY 1,000,000,000,000 in about 5th 6 months. The acquisition of payroll accounts is an extremely important factor in measuring the usage of Rakuten Financial. The expectation of these payroll accounts has increased even further with the number of payroll accounts increasing by 65% year on Financial. Customers are taking note of these benefits and spreading the word, and Rakuten Bank's popularity is growing as a result. Rakuten Finance. Rakuten Bank will continue to increase the number of customer accounts, which, when used as the Here's the 2nd quarter results for Rakuten Securities. Finance. You can see that revenue grew by double digit year on year despite a decline in overall trading volume of both Finance. We have succeeded in attracting investment to beginners through Financial. The number of new account is steadily growing, hitting 6 Financial. At the end of June and closing in on the number one industry position. Finance. Rakuten Securities is working to expand its asset building services in order to cultivate a wider range of customers. Finance. Thanks to synergies with the Rakuten Ecosystem, the number of investment trust account Finance. And the monthly saving amount increased significantly to Finance. As a new initiative for beginners who are new to asset building, Finance. We have started offering RakRak Investment, a advisory service. This service can propose an optimal Financial. Point investment, Financial. Finance. This lowers several potential hurdles standing in the way of investment for beginners. Finance. Meanwhile, for active traders, we have started overlink real time spreadsheet as a new feature Finishing. It's now possible to import investment information and place orders Financing. System trading can be done without any programming, allowing for easy customized Transactions. Rakuten Securities will continue with its customer oriented approach, striving to be the most popular online securities Here is the insurance business earnings result. Rakuten Life Insurance revenue Financial Results. General Insurance continued to optimize insurance underwriting, so overall revenue was decreased. Finance. However, we made operating income healthy growth plus 22% year on year. There are two factors leading to increasing profit. Financial. Our core existing with COVID strategy. As for DX, we have added new function to our 5th year. Today, I show you just part of new function. Okay. I've created an insurance plan 5. Thank you, Aria. As shown here, voice commands can be used for a variety Financial. And I introduced transformational achievement. Comprehensive insurance center is seamlessly deploying marketing, Financial and system across 3 insurance companies. As a result, new sales have increased 1.7x, marketing efficiency Financing. Fiscal Year. The cumulative number of cars Financial. And with initiatives like partnership with multiple supermarket chains across Financial. Based on the long history of accumulated Finance and Technology. We are able to provide safe and secure services to both users and affiliated retailers. Finance. Rakuten Eddy's expertise has also been applied to Rakuten's online e money called Rakuten Cash. Financing. While ensuring tight security of transactions, we have released cutting edge services such as Financing. Interchangeable balance management between ADI and Rakuten Financial. This will make Rakuten Cash available for use at 5,000,000 online and offline locations, Finance, including a variety of Rakuten Services. By positioning Rakuten Cash as a strategic hub, Financial. In addition, in the near future, we plan to release a new user interface for the Rakuten payer that will offer Financial. Our options to cater to diverse user needs. Cross use will become easier through the addition of function icons at the Identification. Please look forward to the evolution of the app to convenient and useful functions such as Finance. Rakuten Bank balance confirmation. Rakuten Payment will continue to work to improve user Finance. Technology at the world's largest mobile related trade fair, the Mobile World Congress. The global awards 5th. Our widely recognized as the most prestigious awards in the mobile industry and show Finance. Rakuten Mobile's network scored 926 Financing. Out of a maximum of 1,000 for overall network quality, the results show that Rakuten Mobile's network 5.5%. The cumulative number of applications exceeded 4,400,000 at the end of the second quarter. Fin. Despite a decline from April when we saw last minute demand at the end of the 1 year free campaign, customer acquisition is Financial. Let's take a closer look at the customer acquisition situation. Finance. The Ministry of Internal Affairs and Communications conducted a survey for users who transitioned to new rate plans Finance. Announced and started by each company after this winter. Except for migration between plans in the same company group, Fin. More than half of the target people chose Rakuten Unlimited 6 as a migration destination plan. You can see that it is Finishing. NNP customers tend to have overwhelmingly 5.5% higher data consumption, ARPU and LTV and lower churn rates than customers creating new phone numbers. 5G. The population coverage of the Rakuten Mobile 4 gs network exceeded 90% as of June. Due to the shortage of semiconductors amidst the pandemic, the 96% population coverage target, Finishing. However, considering that the population coverage rate has already exceeded 96% in terms of base station sites Financing. Where contracts have been concluded, the network build out is not a major concern. There is no impact on the base 5th. Here are the earnings results of Rakuten Mobile in the 2nd quarter. Fin. On the sales side, following the end of the 1 year free campaign, we are starting to see revenue as some users started paying service fees. Fin. On the other hand, transition from Rakuten MVNO to Unlimited 6 is progressing and work to decrease revenues Finance decreased due to seasonal factors. In terms of costs, network related costs and roaming costs increased Financial. Due to the large number of base station build outs and the increase in the number of subscribers, but the cost for point grants Finance. In the future, revenues from RCP will also be expected. Finance. We will continue to invest in mobile and fund the investment through various means, Finishing event to share with you. We are starting the 2nd phase of our journey at Rakuten, and we will introduce our new entity named Symphony. During the last three years, which we called Phase 1, we created the world's first cloud native, affordable and unlimited mobile data to Finishing. In less than a year of commercial operation, we were ranked in the top tier of the mobile industry. Now Provider, and we will achieve that by driving customer success with agile product development and industry delivery. Fight. We learn faster than anyone else in the industry. We use Rakuten Mobile as our living lab and learn new improvements every day. Some of the key numbers to support our learning agility are: we introduced 10 to 15 new network features per month Flight. We write 5 automation scripts per day. We have over 2,000 software developers running all our experiences into Code, and we are training 1500 people in cloud, a new technology on a weekly basis. While we are executing our agility, 5 unique business opportunities: 1, unified cloud, world only cloud architecture that can support telco grade real 5th. 2, network functions from our ecosystem partners, solutions optimized and integrated 5th. 3, intelligent operations, our leading edge automation portfolio based on Rakuten 5th, 4, digital experience, our BSS and marketplace solutions to offer best of experience to operators and revolutionize 5, Internet and Ecosystem Services, our DNA from Rakuten Group, which enable us to offer all new monetization 5th year. We are excited about the opportunity that full integration of Altice Star into Symphony will 5th year. Altios Star brings phenomenal engineering capabilities and a global footprint that will help us reach our customers. Fin. Rakuten Symphony will define the telco landscape with its unique approach. Broad consolidated application portfolio, Financial Efficiency, Automation Everywhere Efficiency Productivity Through Automation. We started to see the early sign of success. We are in the Finance Talks with several clients in U. S, Europe and Middle East. Our ambition, vision and unique capabilities Finishing. Nothing but a large scale client win Financial Results. Welcome to Rakuten Group's 2021 Second Quarter Financial Results. We are selected as the prime network design, development and deployment Finance Partner for 1 and 1 in Germany. There's a multiyear contract in one of the most competitive markets of Europe, and 1 and 1 selected Finishing. I'm inviting all of you to join us in Phase 2 of our journey by taking the experience from Rakuten Mobile More than a year has passed since the pandemic began. Finance. Rakuten continued to enjoy a high growth rate, responding to changes in people's lifestyles. Financial. Finance. Financial. The percentage of users who use 2 or more services exceeded 50%, and this number continued 5th. Mobile is expected to do a driver that will further accelerate the growth of our Fiscal System. Compare with their cardholder acquisition base of Rakuten Card, one of the main businesses of 5.5% range of new Rakuten Ecosystem users among mobile subscriber has gradually increased to a 5. Cumulative total of 19%. New Rakuten Ecosystem User are customers 5th quarter. So Rakuten Mobile, which added new users to the Rakuten 5th. Here is the graph showing the Financial. The change in the membership rank of mobile subscribers before and after subscribing to Rakuten Mobile. 5.7% increase in the average gross use of services. Lastly, here is data showing changes in the average gross use before and after 5th. Within 6 months after subscribing, the average number of services crossed 5th quarter. 5th. In this way, the contribution of Rakuten Mobile to the ecosystem has already been clarified Financing. Rakuten Mobile, which provides best mobile plan for everyone, not only functions as Financial. An entry point to the Rakuten Ecosystem for those who have not used our services before, but it also encourage Our ad revenue grew steadily in the 2nd quarter. Here is a breakdown of the other revenue growth rate in the second quarter. The area on the left side of the chart Financing Rakuten's own ad inventory expanded steadily due to the strong performance of our e commerce services. Ad sales to external advertisers drove the growth of the entire business. In particular, Finance. Sales to key clients such as major consumer goods manufacturers on Rakuten Ichiba expanded tremendously. Financing, which allows us to promote sales to those users and send customers to offline stores. And by analyzing the purchase data of those Furthermore, we are cultivating our new customer base by delivering ads to Rakuten users with similar customer attributes. The more Rakuten members connect with offline service through Rakuten Pay and Rakuten Point Card, 5th quarter. Furthermore, Financial Results. It is possible to accumulate highly detailed purchase data Finishing. Currently, Fin. Rakuten Pay and other services can be used at approximately 5,000,000 locations across Japan, including offline Finance. Both of which are continuously expanding. In addition, Rakuten Pasha is being adopted by major manufacturers Financing as a sales promotion measure. And the scale of data is expanding steadily through the accumulation of around 9,000,000 receipt Finance. Going forward, the fusion of online and offline shopping is expected to progress even further. The annual cost paid by manufacturers for distribution promotion support is considered to be about 50000000, including discounts, sponsorships and rebates. By leveraging our wealth of both online and offline data, Rakuten's core mission is to empower people and society. And to date, we have 5th quarter. We would like to take this Finance. The time we spend watching TV has been overshadowed by the increasing amount of time we spend on the Internet, especially on our smartphones. This demonstrates the enormous impact the Internet smartphone have on people's behaviors. As a result, this shift also Financial by providing them with new approach to branding based on rich data. The key value proposition we can provide is customers' demand Finance. Because customers leave traces of their wants on Rakuten's e commerce services, we have a unique 5th quarter. In order to support makers and brands, this will lead to the empowerment society as a whole by helping to meet Financial Partners' Mischief Culture, we have already conducted POCs in partnership with makers 5th. We Rakuten currently operates multi data centers across several regions: 5th year. We are strengthening our IT Financial Plan in each country and furthering the establishment of a consistent security perimeter Finishing Worldwide through our own global IP backbone network. In 20 FY 21. We started building our own Rakuten data center in Japan, a new first for us. As a data center, we aim to 5. With the massive 5 gs mobile technology that Rakuten is rolling out in Japan, we expect new business opportunities to become The Rakuten Group, as part of Japan's first mass vaccination model supported by industry, Finance. Academia and government began administrating vaccination at Norvia Stadium in Kobe City on May 31 in collaboration with COVID-nineteen. With an average of 2,000 vaccination per day Approximately 10% of all vaccinations in Kobe City were done at Noye Stadium. We have successfully applied this COVID model To the Rakuten in house vaccination project, and we will further contribute to the nationwide vaccination effort by offering our expertise to local governments, companies and organizations. Rakuten is also offering vaccination opportunities at the centers Finance. Targeting small and medium sized companies and partner companies Financing Program are logistical challenges. Rakuten's vaccination centers have operated safely and provided highly 5th. Maximizing a limited number of vaccination while minimizing waste and vaccinating a large number of people. During 2 months of operation, there has been 0 incident, and the time from reception to vaccination has been reduced to 3 minutes and 30 seconds. Finance. Productivity has been steadily improving even as the Rakuten Group has expanded. Excluding our mobile, logistics 5.6 and Investment Business. Operating profit per full time employee and total cost margin grew by about 40 5th to 50% year on year. We are also striving to improve productivity in the corporate division. Financing. While working on Kaizen activities and cost reduction, the number of personnel supported by each corporate staff member increased by 11% year on year. Financial. As an initiative to improve productivity, we have been continuously improving kaizen activities with our participation of all employees. Financial. And approximately 700 examples of improvements were made available. This knowledge was shared internally Finance and made a JPY 1,700,000,000 profit contribution. In the second quarter, we worked on kaizen activities from mass vaccination operation at Noebi Stadium in Kobe. The lead time for vaccination has reduced by 10% and number of vaccinations tripled after the 1st day Finance. As you can see, the net promoter score of the Rakuten Group was negative versus the competition as of 2017 but has been continuously outperforming the competition since 2018. And the score in the 2nd quarter was up 10.4 points. Rakuten participates in many events so people can learn more about Rakuten. These activities has led to 5th. An increase in the popular place of employment ranking for new grads to 4th place this year. Also for the mid 5th. Rakuten steadily improved its ranking from 3rd to 2nd place in 2021 With the corporate slogan, walk together, Finance. Rakuten aims to create a sustainable future through corporate activities that meet our stakeholders' expectations. In order to ensure our ability to provide more than 70 leverage services, we identify our materiality, Financial Results. We have demonstrated this materiality to reflect our latest business developments and changes in stakeholder expectations. The materiality analysis resulted in the identification of 4 priority areas: growing with our employees, Finishing Global Challenges and Business Foundations. Finance. Rakuten Group Inc. Joined RE100 International Initiative Financing and set the target of adopting 100 percent renewable electricity for all its business operations Financial Results by 2025. Our road map consists in increasing our renewable electricity ratio by Finishing. 10 points every year. And in 2020, in line with this roadmap, it reached 64.8%. Regarding employee engagement, as it's still difficult to have face to face interactions in the current circumstances, Financing. Most of our initiatives are now conducted online. For example, our Rakuten Shui training is provided 5th year. In Europe, the Middle East and Africa, we provided an award winning app called Rakuten Shift Financial. In order to increase management transparency, Fin. Rakuten has hired a Board of highly independent corporate auditors who are responsible for auditing functions. The majority of this Board is Finance. Our Board of Directors includes external directors, Finance. We also report Financial Results and discuss issues and progress on sustainability activities with them on a quarterly basis. Financing. As a result of our proactive efforts and transparency, Rakuten has been selected as a constituent for all of the ESG indices listed here. Financing. Rakuten will continue to improve the quality of our governance and sustainability initiatives under the banner of our corporate slogan, Work Together, Here are our earnings result for the 2nd quarter. Finance. Revenue increased by double digit year on year due to strong growth of Rakuten Nuchiba and the fintech businesses Fund Make last year but have since started to recover. In the mobile business, non GAAP Finance. Operating losses increased due to planned investment in future growth, such as the accelerated rollout of base Financial and subscriber acquisition. At the same time, operating income, excluding our mobile logistics Finance and Investment Businesses increased significantly year on year. In terms of non GAAP operating income Finance and drove our overall business performances. Rakuten Nui Chiba achieved an increase in profit despite high year on year hurdle Financial. With regard to our other internal services, Rakuten Rewards and our sports business Finance. Two examples of businesses whose profit increased significantly. As you can see, Finance. Operating income, excluding the mobile, logistics and investment businesses, is showing strong growth, Finance. And the earnings power of Rakuten is clearly increasing. In the mobile segment, Finance. Revenue and profit decreased slightly compared to the Q1. In terms of sales, we are Starting to see the contribution from the customer who became paying user after completion of the 1 year free campaign Financial Results. And while telecom sales are increasing, we are seeing strong progress in the number of customers switching from Rakuten mvNO subscriptions, which means MVNO sales also declined slightly. In the energy businesses, Financial. In terms of costs, Financial. Depreciation costs continue to increase along with the number of base stations. Although, the amount of data used in the roaming area per subscriber has increased slightly due to the increased number of subscribers. On the other hand, in the energy business, Financial Results. The wholesale electricity price improved significantly. In the near future, with the 1 year free campaign that Financial Results and the 3 months free campaign that began this April, both coming to an end. Financial. An accelerated increase in telecom sales is expected. The Rakuten Group Financial. We'll continue to ensure through financial management that takes into consideration the balance Financial. We strengthened our capital through a third party ultimate of shares and the issuance of the Financial Reporting Bonds. As a result, equity ratio on a consolidated basis improved Finance. Next, we see the best Equity for minority investments and most recently sold our stake in the U. S. Fintech company, Upstart, with very good Returns. In addition, we will continue to select and concentrate on promising businesses while determining the right Financing. In addition to equity finance, we have demonstrated our flexibility Financing. We are implementing a variety of financing method, including bank loans, domestic and overseas Finance. We have Financial. An extremely good relationship with our banks, and we have a wide variety of financing method Financial Results. We will continue to give due consideration to financial Financial Results and exercise flexibility in our effort to raise funds. Membership value, Financing, which the Rakuten Group has set as an important KPI, increased tremendously in our e commerce related businesses due to last year's pandemic. Notably, it also increased in this second quarter despite high year on year performance hurdles. Financial. We will continue to aim for the expansion of the Rakuten Ecosystem and increase our corporate value. Financial Results. Thank you for watching our 2021 Second Quarter Financial Results video. At Rakuten, we have a number of core principles, which we use to evaluate performance. One of them is speed, from the speed in which we're building out our mobile FinTech customers. It's all in record time. This 5th quarter. We're especially proud of the speed at which we moved to help Japan accelerate the rollout of vaccines nationwide. Financial. Our team members volunteered on the front line to create an innovative model for safe and swift vaccination in the hope of expediting Japan's economic recovery. Rakuten's mission after all is to empower society through innovation. Thank you again