Rakuten turns its first profit in six years as the mobile drag eases

After years of bleeding cash into a mobile network, Rakuten has finally clawed its way back to profit.

The Japanese internet group posted its first quarterly net income in six years, a milestone that suggests its long, expensive gamble may at last be turning a corner.

The headline number is modest but symbolically large. Net income attributable to the parent came in at ¥7.7bn, a swing of nearly ¥59bn from a year earlier, and the group recorded its first quarterly pre-tax profit in eight years alongside it.

What pulled Rakuten into the black was its older, sturdier businesses rather than the flashy one. Group revenue rose 11.6% to ¥665.5bn, and non-GAAP operating income more than doubled, driven by the twin engines of e-commerce and finance.

E-commerce remains the heart of the company. Its domestic online marketplace turned over ¥1.53tn in goods, up 5.3%, the kind of steady, high-volume trade that has anchored Rakuten since long before it ever dreamed of running a phone network.

Fintech, though, was the real standout. Revenue there jumped 27%, with operating income up 60%, powered by a sprawling ecosystem of a bank, a card business, brokerage and more, all knitted together by the loyalty points that keep Japanese customers inside Rakuten’s world.

That interlocking web is Rakuten’s version of a super-app. Much as other giants are trying to bundle services to keep users from ever leaving, Rakuten has spent two decades building the kind of all-in-one ecosystem that turns a shopper into a banking, travel and mobile customer too.

The mobile business, the source of all the pain, is finally healing. Rakuten Mobile still lost ¥33.1bn in the quarter, but that loss narrowed year on year, and subscriptions climbed to 10.75 million, a net gain of 1.78 million over twelve months.

To grasp why that matters, it helps to recall the bet. Rakuten launched its mobile carrier in 2020 to challenge Japan’s entrenched incumbents, and the cost of building a nationwide network from scratch dragged the whole group into the red for years.

The strategy always rested on cross-selling. The idea was that mobile would funnel users into the wider ecosystem, deepening the fintech and e-commerce relationships that actually make money, and the latest figures are the clearest sign yet that the flywheel is starting to spin.

Rakuten is leaning on AI to sharpen all of it. Retailers everywhere are racing to weave AI through the shopping experience, from recommendations to agents that shop on a customer’s behalf, and Rakuten’s trove of commerce and payments data is a natural place to apply it.

Its fintech arm sits in a fast-moving field, too. Payments and financial services are being reshaped by automation and AI, with rivals building agentic tools of their own, and Rakuten’s scale in Japanese finance gives it a strong base from which to compete.

The mobile market it entered is unforgiving, too. Japan’s big three carriers are deeply entrenched, and Rakuten has had to win subscribers on price while shouldering the fixed cost of a network, a combination that only works once the customer base grows large enough to spread those costs.

A note of caution is still warranted. One profitable quarter does not erase years of losses, mobile remains deep in the red, and Rakuten carries heavy debt from its network build-out that will take years to work down.

What has changed is the trajectory rather than the destination. The group is not yet safely profitable across the board, but for the first time in a long while the lines are moving the right way, with the money-making businesses growing and the loss-maker shrinking.

Even so, the direction has plainly changed. For a company that many wrote off as a cautionary tale about betting the house on telecoms, returning to profit is a real vindication of the patience, and the deep pockets, that kept the plan alive.