Earnings Call: Q1 2021

May 13, 2021

Welcome to Rakuten's 2021 First Quarter Financial Results. We're off to a strong start for the year. Our e commerce and fintech businesses delivered double digit profit year on year growth and solid retention of new users. Our advertising business also continued to outperform, seizing the momentum driven by digital transformation. And our mobile business accelerated customer acquisition and now offers the iPhone. We also received additional spectrum from the government, having globally proved the quality and capability of a fully virtualized network. Our investments in mobile increased in line with the accelerated network build out. This led to another consolidated operating loss. To ensure financial soundness, we raised capital through a third party allotment of shares and issuance of permanent subordinated bonds. We continue to take bold action for future growth. Our strategic partnership with Japan Post is an online to offline transformation that will further power the growth of Rakuten's unique ecosystem. For the details and the strategy, you'll hear from our leaders of each core business and CFO in just a moment. But first, Here's our CEO, Mickey Mictani, who will share the Group's strategy. Total domestic e commerce GMS and total shopping e commerce GMS increased steadily in the Q1, continuing the strong momentum from the previous quarter. Here is revenue and operating income. Anchored by Lakhte and Ichiba, many business performed well and in the logistics business as well. Operating income increased significantly as a result of improved profitability. Looking more closely at operating income, The marketplace type business center on Lacten Ichiban and Lacten Travel improved. While we continue to invest in the logistic business, across many industries has accelerated. With the changes driven by the pandemic, society is seeing a type of transformation which only happens once a century. Rakuten is working with merchant to improve our appeal as a platform In line with our core principle of empowerment and shopping is entertainment. In addition to accelerating digitalization, The many efforts we have made so far have been successful. We have outperformed the industry growth rate in e commerce From the start of the pandemic to the present, we continue to increase our presence in the market. The repeat user ratio of Rakuten Ichiba continues to increase and cross use of our other ECU service is also expanding significantly. Looking at this graph, We can see that the amount of spending per household and the growth rate for households using e commerce accelerated from 2019 to 2020. The proportion of household consumption spend on e commerce is also increasing. In these conditions, RAK10 ICHIPA performed well as in the previous quarter, with strong year on year growth in purchases and purchase frequency. In addition, in response to the acceleration of digitalization and the expansion of users' EC usage, The number of users of our various EC services is steadily increasing. With continuing digitalization, Demand of e commerce service is expected to grow. In order to fully leverage Lactane's strength, We will focus on building our own logistics network, which is essential to our continuous growth, while at the same time accelerating digital transformation. We will also establish a new joint venture with Japan Post to jointly operate the Logistics business. We aim to create sustainable developments through digitalization by converging the strength of Japan Post and At the end of April, we agreed with Japan Post to jointly establish a new company to be known as JP Rakuten Logistics. Our logistics business will be split off from the Rakuten Group in order to be operated by the new company. We are targeting July 1 for completion of investment by both parties into the new company and the transfer of our logistics operations. We have a total of 8 fulfillment centers in 7 locations We will open 3 new fulfillment centers in Tama, Yau and Fukuoka by 2023. We will consider these fulfillment centers under the new JP Rakuten Logistics as we create an efficient logistics platform that is seamlessly combined with Japan Post By improving customer experience to cater to diverse delivery needs, reducing leading time for deliveries, In the Q4, we are also pleased to announce that we are in the Q4 of 2018. Our new platform for the digital transformation of logistics will contribute to improving the condition of the logistics industry as a whole and realizing a sustainable society. It will not only support Rakuten Inchiva, but also open up to other delivery companies and shippers. The number of merchant and shipping volume for Rakuten Super Logistics continued to increase significantly in the Q1. The GMS growth rate of merchant using Rakuten Super Logistics is significantly more than The average GMS growth rate of GMS of all Rakuten Ichiba Stores using Rakuten Super Logistics Rakuten Group will continue to provide logistics services that contribute to merchant growth It has been over a year since the pandemic began, and while sales at the brick and mortar supermarket have stagnated, Our online supermarket business continued to grow steadily. Rakuten Sei U Net Super GMS in the first quarter grew 29.9 percent year on year. The fulfillment center in Kohoku, Kanaga Prefecture, Dedicated to handling online groceries we launched in January of this year is steadily increasing its capacity. We will also open a center in Ibaraki, Osaka Prefecture. We plan to finish preparation this year and launch Full operations in 2022. This new center will greatly expand our service area in the Kansai region. In order to provide new delivery solutions, we started trialing a supermarket product delivery service for a limited time using our automated UGV delivery robot on public roads. We aim to expand these efforts and Rakuten will The strong growth of Rakuten Card has contributed significantly to the growth of Fintech Companies As well as to the expansion of the Rakuten Group entire ecosystem, including Rakuten Ichiban. 1st, I would like to explain the performance of the Fintech segment. We achieved double digit profit growth Year on year, with the steady expansion of our customer base and the use of each Service as our user's main service. Rakuten Card shopping transaction volume continued to maintain double digit growth, Driving Business Performance. As a result of outperforming the industry, we expanded our market share, and as of February, our share exceeded 20%. In addition, The pace of membership acquisition has accelerated further, achieving an increase of 1,000,000 members in just With the progress of digital transformation during the pandemic, the spread In our FinTech business, we are building a strong ecosystem with Rakuten Card as a hub. Starting with the expansion of Rakuten Card's customer base, the number of Rakuten Bank and Rakuten Securities account has also As a result, it has led to the expansion of the asset business that can earn stable profit with a high margin. The growth of Rakuten Card also contributes to the high growth of Rakuten Ichiban. The ratio of Rakuten card payment to the total GMS of Rakuten Ichiban continues to increase and reached almost 70%. In addition, our unique marketing initiatives, which offer increased reward points when using Rakuten Card for shopping at Rakuten Ichiban On days ending with 0 over 5 led to the growth of GMS on Rakuten Ichiban. As the trend of promoting cashless payments continue, Rakuten Payment continues its effort to consistently improve customer convenience and has established a solid position in the chassis market. We are also implementing unique and advanced initiatives such as converting Crypto asset to Rakuten Cash TO Shop. Fintech will continue to contribute to the growth of the Rakuten Group by creating synergy through the variety of collaborations, in addition to the growth of each Here are Rakuten Bank's financial results for the Q1. The profits of many banks were sluggish due to the negative interest rate policy of the Bank of Japan and the influence of the pandemic. But Rakuten Bank significantly increased profit by increasing service revenue through greater numbers of payment transactions. And so, we continue to secure Higher sales and profits. The number of transactions increased by 31% year on year, And the number of payroll accounts and direct debit transactions, which are directly linked to customers' daily lives, increased by 50% and 32%, respectively, as Rakuten Bank is increasingly the main account used by customers. Increasing the usage as a main account is extremely important for us and will be the basis for Rakuten Bank's future profit expansion. In January, We reached the milestone of 10,000,000 accounts, a new record for Internet banks in Japan. Since January, the number of new accounts has been accelerating due to the strengthening of group synergies. We expect to exceed 11,000,000 accounts in the coming months. In addition, by improving customer convenience through collaboration with Fintech Companies, we have realized not only mutual business growth, but also mutual profit increase. Indeed, The expansion of the Rakuten Ecosystem has led to the growth of each business and the improvement of profits. Rakuten Bank aims to continue expanding the number of accounts and main account usage for customers, thereby accelerating business growth and contributing to the expansion of the Rakuten Ecosystem. Resulting in continuous growth in both revenue and profits. The number of new account openings accelerated even further, with As a result, the number of accounts has risen to the number 2 portion in the industry with 5,720,000 accounts. And the gap between Rakuten Securities and the industry leader is rapidly closing. As a result of industry leading measures, which allows Rakuten Point to be used for investment. Rakuten Securities has succeeded in attracting beginner investors and expanding its asset business. With the trend toward free stock commissions, expanding the asset business, which generates stable profit is an important strategy. The number of Tsumitatennis accounts has also increased, And our market share is 29%, the highest among domestic financial institutions. Tummita Tennis accounts are used by investors who desire long term asset formation. And, retail investors are only able to create 1 Tsumitate account at 1 financial institution. The number of investment trust reserve accounts set with Rakuten Card payments exceeded 1,000,000 in April. Users have chosen Rakuten card because of the high point redemption rate and the convenience of not requiring advance payment. In addition, the amount of investment trust reserves has exceeded 45,000,000,000 yen per month, the highest standard in the industry. Within the Rakuten ecosystem, we will continue to strive to be the most selected online broker for a wide range of people from general consumers Here's the earnings performance of the insurance business. Sales of life insurance and pet insurance expanded steadily, while sales of non life insurance decreased slightly year on year due to Careful selection of contracts to improve profitability. Operating income increased by JPY 1,000,000,000 year on year due to improved insurance underwriting income and cost reduction. We are now in a position to generate stable profit. After the introduction of Rakuten Points into Rakuten Insurance, online based insurance sales have increased significantly. In the Q1, Lacten General Insurance Auto Insurance and 5 year insurance, each increased by more than 100% year on year, And Rakuten Life Insurance also increased by 25% year on year. Rakuten General 1st place in Automobile Insurance Satisfaction Survey last year conducted by JD Power. This year, Black Den Life Insurance won 1st place in the Oricon customer satisfaction survey in female segment. We gained approval from customers for its affordable premium and robust coverage. In addition, Through our ongoing efforts, we have consolidated our office from 9 to 2 that were based in large cities such as Tokyo and Osaka to Nagasaki and Matsuyama. We expect This consolidation to not only reduce cost, but also improve productivity and employee skills. Going forward, we will expand our alliance with the Japan Post Group in the Insurance business as well. We will continue to create new value in the future through collaboration between the Japan Post Group and Japan Post Insurance. The Rakuten Insurance Group will continue to empower people and society so that customers can lead their daily lives Rakuten payment is working to improve customer convenience With our industry first service, point payment instant charging launched in November 2020, over the counter payment can be completed simply by presenting your Rakuten point card. This has both reduced the burden on users and affiliated stores and has further increased the level of convenience provided by Rakuten points. In the past, When trying to make payments using points, it was necessary to make up for any shortfalls in point balance With cash or other payment methods, this service instantly charges Rakuten cash on the spot and enable payment even when the user's point balance is insufficient. Strategically, it means replacing payment methods provided by businesses other than Rakuten With Rakuten Services, thus expanding Rakuten Ecosystem. In January, It became possible to make instant payments from Rakuten Bank accounts using the Rakuten Pay app. Instant payments by bank account via QR payment is one of the factors that differentiates us from other companies. This service provision makes full use of Rakuten Fintech Assets, which also contributed to the value proposition of Rakuten Bank. In addition, this February, We released the function through Rakuten Wallet that allows customers to charge Rakuten Cash with cryptocurrency such as Bitcoin and Ethereum without any handling fees. This is a cutting edge initiative that converts a customer's crypt access to Rakuten Cash, allowing it to be used for purchases at stores affiliated with Rakuten Pay and Rakuten Point Card nationwide as well as a variety of locked in services. We will continue to create services that meet the diverse needs of customers. Rakuten Mobile celebrated its 1st anniversary in April. We continued to disrupt the mobile industry and launched Rakuten Unlimited 6 Service Plan in January. With a simple fee structure that flexibly adjusts in line with customer data use, We are supporting the diverse needs of all users, and this has been very well received. As you can see, applications have accelerated since the announcement of Rakuten Unlimited 6, Even when other carriers launched new competitive service plans in mid to late March, the pace of applications for Rakuten Mobile was not impacted. In fact, the ratio of users from other carriers is increasing. As part of our business alliance with Japan Post, we plan to set up application counters for RAPT Mobile at event spaces within the nationwide network of post offices. This will also drive expansion of our service to customers in the Q1 of 2019. We are also pleased with the Q1 of 2019. We are also pleased with the and also that we will support all models of iPhone running iOS 14.4 or later. Rokde Mobile continues to offer more attractive services for all customers and is working to further expand its customer base. At the same time, we are rapidly expanding our own network area so that users can experience the benefits of unlimited data usage. As for 4 gs population coverage, we achieved our initial target of reaching 80% by March. We are on track to achieve 96% population coverage this summer. As for 5 gs, We started limited service in all prefectures in March. In April, we received additional 5 gs spectrum from the government. This will enable us to expand our 5 gs service coverage and accelerate deployment of our 5 gs service to mobile users. In the Q1, base station related costs increased in line with our aggressive base station deployment plans. Roaming costs also increased due to the rapid acceleration in customer acquisition. With the end of the 1 year free campaign period, we expect more revenues from the Q2 onward, With population coverage of 96% to be achieved this summer, base station related costs and roaming costs will be reined in. Mobile business losses are expected to decline gradually after 2021. Finally, as you can see in this graph, compared to the users' data traffic in the month following the application, The users' traffic in the 9th month has increased by more than 40%. This increase in data usage demonstrates how users are becoming more accustomed to the benefits of unlimited data. It also shows The competitiveness of Rakuten Mobile sets the stage for our ability to drive increases in average revenue per user. Roktay Mobile is strengthening 4 gs and 5 gs networks and expanding attractive services to all customer groups. By continuing to grow our subscriber base, we aim to achieve breakeven in fiscal year 2023. Our vision is turning into reality. Key innovations we introduced in our network at Japan are disrupting the global telecom industry. Examples of these innovations are complete adoption of Open RAN across 100 percent of the network the implementation of highly advanced edge network platform architecture Last but not least, full automation in our network operation resulting in significant reduction of our operational expenditures. I am very pleased with our network performance so far. However, I am more pleased with the speed of improvements. For example, we have been leading at uplink throughput experience in Japan, and now we are also leading in voice application experience, which is a testament of our network quality and resiliency for our cloud native platform architecture. However, we're not stopping there. We see further improvements in the future to achieve our aspiration goal to lead the mobile market within Japan. Our unique architecture of distributed mobile edge network will enable enhanced experiences of our customers. Those edge centers are enabling unique mobile services that serve consumers and enterprises for low latency and real time applications. Automation is usually an afterthought in traditional mobile network. However, it is in our DNA. Just last week, we were recognized as the best automated network leader in the industry across all of our network domains. Our adoption of rich communication services for basic voice and messaging is getting accolades in terms of experience and performance. More than 85% Of calls in our network are being made through Rakuten Link App. But we're not stopping there. Rakuten Link Super App is continuing to evolve, enabling richer and more immersive experience for our users. We are introducing numerous Rakuten Ecosystem Services in Rakuten Link, but we're also opening The platform to 3rd party companies. We are leading the world not only in technology architecture, but also in business model development. Our vision is to take our innovative model in Japan to the rest of the world. I am very pleased with the progress we have made introducing RCP into the telco industry. Many telcos around the world are starting to adopt our architecture. From a specific model domain, such as OSS and our end to end platform stack, The Rakuten model is becoming de facto industry reference for next generation cloud native telco networks. Rakuten continued to grow significantly in the Q1. The Rakuten ecosystem which users of the Rakuten Group is growing strongly. The percentage of the users who use 2 or more services also continue to increase steadily. With the adjunctive Rakuten Mobile, the Q1 of 2019. The Q1 of 2019 is a very strong year for the Q1 of 2019. And the Rakuten Mobile's customer base is expanding. The contribution of Rakuten Mobile to the ecosystem has gradually become apparent. This data shows the Rakuten mobile is one gateway to the ecosystem for those who never used Rakuten before. Currently nearly 20% of total Rakuten mobile Subscribers are new users of the ecosystem. You can see how over time the mobile business is capturing an increasing number of people from outside of ecosystem. Furthermore, within 6 months In this way, it can be seen that the Rakuten mobile subscriber has already become, gross use with many services in a short period of time. 65% of the total use Rakuten card, more than 30% are using Rakuten Bank, Rakuten Pay and Rakuten Securities is also used by as many as 70% of users. Hence, you can see the affinity between Rakuten Mobile and We expect that this will further accelerate the growth of each service and further expand the Rakuten Ecosystem. At Rakuten, we have a huge amount of user data generated by over 100,000,000 IDs. This data enables us to provide unique and rapidly growing ad business Ad revenue in the Q1 grew steadily mainly by the strong performance of Rakuten Ichiba driven by digitalization We strongly outperformed the growth rate of the whole Internet Ad Industry. This is a breakdown of our ad revenue growth rate in the Q1. The growth rate of Rakuten's own internal ad inventory on the left side of the chart accelerated due to our EC growth. Also, in the area of external advertisers And other inventory at the top right of the chart, LinkShare Japan, which provides affiliate oriented marketing services, performed very well. As a result, ad sales growth for external advertisers are particularly noteworthy. Specifically, our major clients, including major consumer goods manufacturers, accelerated their advertising on Rakuten Ichiba, which resulted in the expansion of our other sales. In addition, we are currently providing online sales channels and marketing solutions for public sectors, such as local governments, to support revitalization of local regions. It also contributes to the expansion of our external advertisers' revenue. In 2020, The Internet ad market remained strong while the entire ad industry was stagnant due to COVID In particular, ad spending on e commerce platforms grew significantly by 24.2% year on year Rakuten owns significant market share in this area and we will keep on leading it going forward Here are the results for the Q1. Revenue increased by double digit year on year due to strong growth at LACT NUJIBA and our Fintech Businesses. In the mobile business, depreciation expense increased Due to acceleration of base station construction, non GAAP operating income decreased. But If we exclude mobile logistics and investments, it showed a strong year on year increase. Here is a waterfall chart of non GAAP operating income trends. Domestic e commerce and fintech increased profit and drove our business performance. Rakuten Nichiva continues to enjoy a strong loyal user base, And as a result of favorable growth in purchases and purchase frequency, domestic Yixi operating income increased 19% year on year. In FinTech, profits increased by double digit As each businesses expanded their customer base and strengthened their position as their customers' main service, While overall profit declined due to upfront investment in the mobile businesses, base station construction is progressing well, And our coverage area is steadily expanding towards a population coverage rate of 96% this summer. And negative goodwill of approximately JPY 20,000,000,000 was recorded in equity method investment gains and losses. Improved by more than 10,000,000,000 yen year on year. In March 2021, we issued New Shares and dispose of Treasury Stock through a 3rd party argument. We raised JPY242,300,000,000 that is planned for use as a capital investment in the mobile businesses, in particular, the construction of base station for the future. Through our strategic alliance with Japan Post Group, We continue to promote the corporate value of the both groups. We announced on April 28 that we will jointly establish a new company in which both Japan Post and Rakuten will invest. We will continue to promote F Central Logistics Businesses Operations and further strengthen collaboration in fields such as mobile, digital transformation, fintech and e commerce. In April, We issued foreign currency denominated subordinated bonds, raising approximately JPY 320,000,000,000. The subordinated debt has a certain level of capital in terms of credit ratings, and is 100% capital In IFRS Accounting, we will continue to pursue a financial strategy with due attention to ensuring financial soundness. In addition, the Group will promote further expansion of the Rakuten Ecosystem Outside the group, through collaboration with partner companies, we have decided to transfer and consolidate our restaurant related businesses to GURUNAVI by promoting close use of services, including eating reservations, delivery and take out. We look forward to further improving the value of this business. We will continue to collaborate with Gurnavi by use of Rakuten IDs and Rakuten Points, aiming to further expand the Rakuten Ecosystem. System. Membership value, which Rakuten Group has set as an important index, is steadily expanding It was our target of JPY 10,000,000,000,000 due to the contribution of an increase in active users on the Due to the initial 1 year free campaign in the mobile businesses, the number of paying users is currently limited. While we are not yet adding mobile to the calculation of membership value, we believe that it will be central In the future, we will continue to enhance disclosure about the contribution of mobile to the Rakuten ecosystem. Thank you for watching our 2021 Q1 financial results. As we drive digital transformation through strategic partnerships in our core businesses, one thing will not change. That is our founding mission to empower society through innovation. We'll continue to walk together with all stakeholders to ensure sustainable growth of our locked in ecosystem. Please feel free to reach out with any questions. Thank you again Just welcoming everybody back. We're going to start the question and answer session. In just 3 months Rakuten took many bold initiatives to expand its unique ecosystem, aspiring to create an ecosystem premium. Now we're expecting a lot of questions from all of you and have all of our top executives here today ready to answer them. So let's get started. So next, we will answer 2 questions from investors and analysts. And you can use the Q and A form at the bottom of your screen to ask your question. And then please ask The question is only related with the other financial results. And the one person to ask 2 questions. So we already received hands. SBI Securities. Morimoto san, please unmute yourself and ask your question. SBI Securities Mori Yuki is speaking. So the Rakuten Mobile is my question. So in your presentation, and the data usage per person is about 40%. That was what you mentioned in your presentation. So the overall, the data usage is increasing or is it bipolar like that one use The large volume and why use less volume. So I think the entire level up contributes to the other profit. So what about the level of this Kono san? Sony, I would like to answer to your question. So the data use, So the data usage when you made a subscription and since then, every month, It's increasing. That's being seen in our data. Is it bipolarized? That was your second question. But All users, as time goes by, the data use is going up. And the 5 gs is expected in the future. Therefore, the data usage per subscribers would be expected to increase. That's all. Thank you very much. Thank you very much. I have another question. Again, mobile, and you will start charging. So when you start charging and then the users, the use style may change, as of today So the user for the free use means a user use less than 1 gigabyte. How many percentage of the users are under that category, less than 1 gig. What we started this new pricing plan Very in a few periods, so we don't have any solid data yet, so we cannot disclose any information today at this point in time, sorry. Having said that, very small. We expected more people go under that 1 gig data usage. However, it's much lower than our expectation. This is a good sign. It's a good result means most of the users are spending more than 1 gig. So that's what we see. Well, there are some idle user or inactive users. Those inactive users will quit our services at some at some point in time because it will incur some management cost. Therefore, I personally and I am really relieved because not so many people are using less than 1 gig. The last question here, So the price I think the ARPU may go down. So what will be the acquisition cost Per user, I think you have some device, the fee here and the I think the acquisition cost is becoming lower. What is your impression about that? And Kono would answer and explain about this. So the acquisition cost and the customer acquisition cost is your question. As for this CAC, as you just mentioned, from last year, every month, it's becoming decreased month by month because the network coverage has been spread. And also So the recognition of the Rakuten Mobile is improving. That's why we see a good growth. Thank you very much. Okay. Next from Citigroup Securities, Tsuruoka san, please. Thank you. Can you hear me? Thank you for this opportunity. I have two questions. First question Is the following. On an annual basis, mobile subscriber acquisition, Maybe in a range is okay, but if you can tell me how much it is how much you're getting new subscribers. That 1 year free plan is over and last minute subscription happened. It's been over as well. So How much how many subscribers do you expect to be able to win in 1 quarter, for example, in a range Would be acceptable if you can share with me any information. 2nd question also about mobile RCP platform. As of now, How much or how should we look at the contribution it will be making to the profit? Is it Something that is major or just limited to the technology? Or can you share with me? Okay. So first question is on new subscribers that will be acquired Per year, well, I'm not disclosing that. But after this 1 year free campaign, we have the 3 month free campaign that is still going on, but We are having steady increase in the subscribers, and the baseline is higher, much higher than in the past. 96% coverage is expected. That's population coverage in this upcoming summer. So I think things are going quite steadily there. Yes. And also, carrier aggregation, iPhone, we are already starting that. And word-of-mouth is important. When I talk with people around me, some people are not have not decided, Although they hear good things about Rakuten, so I think word-of-mouth is paying right now because a lot of people around them will tell them that Rakuten seems to be good, and Rakuten Card is now a number one credit card. So in a similar Fashion, maybe with a speed of 3x as fast. And of course, we would like to have a 3 fold speed compared to the growth of Rakuten Card in seeing the mobile adoption. So what did it take 11 years? Then onethree of that time is what I would like to see happen. RCP, kind of sales forecast or so forth? Yes. So We believe RCP is going to have a significant impact, not little impact, but a significant impact in terms of Revenue projection. So, you know, the total addressable market is a very large market, as you know, especially for 5 gs. And through looking at any analyst report, we estimate that there is about $1,000,000,000,000 that will be spent on 5 gs. And a good portion of that is the market that we're going to go after for RCP. So hopefully in the near future, we'll be able to share a little bit more specifics On what is the revenue forecast for the entire platform today Rakuten owns OSS, BSS, orchestration and the cloud and intra that we are marketing and selling to global operators. So Stay tuned. I think this is going to be a very, very large business for us. Yes. The company that we acquired is called Inoai, And RTO Star is another one. It's not a complete 100% acquisition, but it's a partial acquisition. But these two companies, To a great extent, our actually selling software to large global telcos and companies. And so with this as a starting point, software that we develop and RCP platform overall will be sold to different entities. That's what we're starting to do. And I think a good news will be able to be shared with you in the future. And in that sense, in the telecom industry of Japan, something really epoch making is to happen. That is what we're expecting. And in conjunction with that, revenue will be positively and greatly impacted. So that's the view we have in running this project. Thank you very much. And the next from Nomura Securities, Nagao Nagao from Nomura Securities. I have 2 questions, mainly for Commerce. The first question in your presentation material Page 9. So the user retention rate, So in the April or the June period, you have disclosed that. And then the 75%, it's a quite high retention rate. And then the from next April, June month, you will compare the performance under the COVID-nineteen. Can you expect any change of this user retention percentage? Or is there any trend of acceleration? So what about e commerce activity today? I would like to know that. And this is my first question. And the second question is Page 18 of your material About the fulfillment sites, enrichment enhancement and previously at Rakuten Conference And as for the logistics, you will make investment about JPY 200,000,000,000 level. And then You will be adding 3 sites, including that. What about the investment? How do you view your investment in these Takeda is speaking. To your first question, we see quite a good situation. This is not just because of COVID-nineteen. But with that COVID-nineteen, We had some new customers, and then they wanted to buy some the mask or other sanitary products. So this is an urgent need. That's why they became our customers. And actually, once they Chase the product and receive the items. And then after that, they have less opportunities to buy the items in a physical shop, and then they used the EC our EC side for the purchase. And then They have been expanding the purchase the route to other sites. So within the Rakuten Ichiba. So the cross use within the Rakuten Ichiba is increasing. And also with that, Usually, a person purchase item on a monthly basis, but now they purchase twice in a month or increasing the frequency, the purchase in a month. And then we are not just reacting to the market situation. We are introducing the new products or items in a campaign and also leveraging the super campaign so that we can raise the satisfaction level of the other customers using our EC site. And I think that is working quite well. And your second question, Commodison will answer. Thank you very much for your question. Your second question about the investment in logistics. In 2018, January, I talked about the one delivery as a concept, and then we want to enhance the fulfillment platform. Since then, as written in Page 18, so far, we have 8 sites. And then the we have that's under operation. And then 2022 or 2023, the 3 sites to be added. And then we will complete this investment the amount, the other thing by that timing. And now we have the joint venture with Japan Post, and we will transfer this to that joint venture. And then the our so we see the huge order increase than our expectation. In order to support that, this 11 site would not be sufficient enough to support those demand. And now we will have new joint venture with Japan Post. So we need to think about additional investment for that joint venture. On top of that, on those the 11 sites and the sites for the net supers, As disclosed, we have Kohoku in Kanagawa and Osaka. So we have 2 sites for the net supermarket, and then automation is an investment area for that. And then for the logistics like this, we will continue our investment. Next, From a Q and A form, there's a question submitted. I'd like to read that. Mr. Oliver Matthew? What impact will this have on your mobile business? And was it in your plan? Does it change the ability to get to breakeven in 2023? Apple has a very high The requirements for the quality of network and services, and we are happy that We got to reach to the agreement with Apple So that because 50% of the Japanese mobile users are using iPhones. So and then not only we can sell iPhones, but because of the carrier aggregation, The it is going to be much easier for iPhone users, existing iPhone users to switch from the other telecom services to Rakuten Mobile. So this is a huge impact. So we are very, very delighted And always, always, always, iPhone, the license and ability to sale iPhone directly to consumer is going to make a huge difference. So not only iPhone, but including The Apple Watch and other accessories, and I think we're going to just keep strengthening that as well. So that's a huge plus for us. And particularly, I think iPhone users tend to use more data than others, I think. So that's another contribution as well. And they will probably use more Rakuten Ecosystem Services, including shopping and so forth. So I think this is a big milestone we have achieved. Thank you, Miki. Thank you very much. So due to the time constraint, if you have any more questions, please ask to IR and PR division. And we would like to get the closing comments from Well, thank you very much for joining the SADA conference today. So the COVID-nineteen, we want to conquer this COVID-nineteen. And that's my heartfelt hope. So under such an environment that we are demonstrating the So the balance of business portfolio is contributing pretty well. And then the close to 20% Growth is something we are demonstrating today. It's not written here, but the business in the United States or Viva or Kobo, grow pretty well and contribute to our revenue and profit. So the profit making business is stable And the Fintech business is performing super well and the big investment for logistics. Now we have a partnership with Japan Post and establish joint venture with them. So the overall cost would be decreasing and increase the service level. That is possible. And in a fintech area, We can stimulate the economy. So those who are not Internet friendly would become our target customer. So the in the area of consumer finance, so probably in the online or Internet, We are number 1. Even excluding Internet, I think we have a quite a strong presence. As for mobile business, as mentioned earlier, with this we use totally new technology And including FCC of the United States, we received high evaluation. And starting from the first one of the company and expand the sales to the others. So when we do this, Then the deal size would become over JPY 100,000,000. So it's we can expect the higher revenue comparing to the conventional mobile business. So our initial target of the mobile, the Mobile service here in Japan, for the that can be either contribute to the overall business here in Japan of the Rakuten. But using the fully, the virtualized environment is proven to be worked and then has much higher service quality comparing to the conventional Technology, and we see some recognition. So All Run or the virtualization Well known today, Soracteng is a global leader, And we are about to receive that recognition, so I want you to have an expectation on our mobile business. So one of the questions, I think someone mentioned about the Sports. And I think I didn't answer to that question. Unfortunately, about our sports business, well, this year still loss making. So the state of emergency declaration is one of the thing to the finish and also the vaccination, the progress, which is very, very slow. And then we want to contribute to the government. And then this is a very rigid process to become flexible so that we can promote vaccination. So we want to the work or the do some lobbying activity to support that. Well, thank you very much for joining the conference video conference. And we made it easier for your understanding, and we will make our hard efforts, so please stay tuned with us. Thank you very much for today. Thank you very much. And that's all for Today, we want to finish the Rakuten Group's financial report financial announcement. Thank you very much for your call attendance.