Hey everyone, Hirokichi here.
On August 10, 2026, Rakuten Group (TYO: 4755) announced its results for the first half (H1) of fiscal year 2026 (the six months ending June 2026), and the headline is that operating profit turned positive for the first half for the first time in seven years. For a company long associated with heavy losses from its mobile carrier investment, this is a milestone worth paying close attention to if you’re thinking about where the stock goes next. Let’s walk through the numbers and what they might mean for Rakuten’s share price going forward.
What Kind of Company Is Rakuten?
Rakuten Group operates through three main business segments.
The first is “Internet Services,” which includes the Rakuten Ichiba e-commerce marketplace, Rakuten Travel, and Rakuten’s furusato nozei (hometown tax donation) platform. This is the entry point to the broader “Rakuten Economic Zone.”
The second is “FinTech,” covering Rakuten Card, Rakuten Bank, Rakuten Securities, and Rakuten Pay. Over the past few years, this segment has quietly become the single biggest driver of the group’s overall profitability.
The third is “Mobile,” Rakuten Mobile’s carrier business. Since its full-scale entry into the mobile market in 2020, heavy network buildout costs have been the main reason behind the group’s long stretch of losses.
Looking at H1 2026 (Jan-Jun) segment revenue (before intersegment eliminations), Internet Services was the largest, FinTech followed closely behind, and Mobile accounted for roughly one-sixth of the total.
[Image: insert segment revenue composition pie chart here]
As this chart shows, Rakuten is no longer just an “e-commerce company” – FinTech has grown to nearly rival Internet Services in size. The scale of the financial business is a big part of what made this profit turnaround possible.
Stock Price and Valuation: A Surprisingly Cool Market Reaction
As of August 10, 2026, the day of the earnings release, Rakuten Group’s stock closed at 863.3 yen (source: Kabuyoho Pro). The market capitalization stood at roughly 1.64 trillion yen.
On valuation, the P/B ratio (price-to-book ratio, which shows how many times book value per share the stock is trading at) was 1.65x on a trailing basis. ROE (return on equity, a measure of how efficiently a company turns shareholders’ capital into profit) was negative 18.53%, reflecting the string of net losses up until recently. The equity ratio (the proportion of total assets funded by the company’s own capital, a gauge of financial stability) was just 3.4%, notably low compared with typical operating companies. Note that the company has not disclosed a forecast P/E ratio or dividend yield, since full-year earnings guidance in yen terms has not yet been finalized.
What’s interesting is how the market reacted. Despite the headline of the first H1 operating profit in seven years, Rakuten’s stock actually fell on the day of the earnings announcement compared to the previous close (source: Kabutan). This looks like a “sell the news” reaction, where good results were already priced in.
Earnings Check: Three Straight Years of Revenue Growth, and a Long-Awaited H1 Profit
Let’s start with the full-year trend.
[Image: insert FY2023-FY2025 performance trend chart here]
Revenue for fiscal 2023 (year ended December 2023) was 2.0713 trillion yen, with a Non-GAAP operating loss of 153.0 billion yen. In FY2024, revenue grew to 2.2792 trillion yen while Non-GAAP operating profit turned narrowly positive at just 7.0 billion yen. Then in FY2025, revenue reached a record 2.4966 trillion yen (a 29th consecutive quarter of record highs) and Non-GAAP operating profit jumped roughly 15-fold to 106.3 billion yen (source: Rakuten Group financial results). This two-year trajectory shows Rakuten’s earning power steadily improving.
Now for the H1 2026 results just announced.
[Image: insert H1 2025 vs H1 2026 comparison chart here]
Revenue for H1 2026 (Jan-Jun) came in at 1.309 trillion yen, up 12.9% year over year, while operating profit reached 50.4 billion yen – the first H1 operating profit in seven years (compared with a 6.6 billion yen operating loss in the same period last year). Pre-tax profit and net profit also turned positive for the first half for the first time in seven years. Notably, net income for the second quarter alone (April-June) came in at 7.7 billion yen, marking the first quarterly net profit in six years (source: Nikkei, Kabutan). The cumulative H1 net loss still stands at 10.9 billion yen, but that’s a sharp improvement from a 124.4 billion yen loss in the same period last year – a real sign that Rakuten may be within reach of breaking even for good.
By segment, Internet Services revenue grew 4.1% to 655.7 billion yen, FinTech grew 25.1% to 570.7 billion yen, and Mobile grew 13.3% to 252.5 billion yen – all three segments posted growth. FinTech’s growth stands out in particular. Rakuten Card’s shopping transaction volume reached 7.1 trillion yen (up 9.4% year over year), Rakuten Bank’s account count hit 18.46 million (up 8.1%), and deposits reached 13.3 trillion yen (up 13.9%) – the numbers make clear that the expanding financial business was the key driver behind this profit growth (source: Rakuten Group earnings materials).
The mobile business also has bright spots. Total mobile subscriptions reached 10.75 million lines as of the end of June 2026, up 1.78 million from a year earlier, with MNO (Rakuten’s own network) subscriptions alone reaching 9.93 million, up 1.76 million year over year. Average revenue per user (ARPU) also rose to 2,516 yen, up 42 yen from a year earlier (source: Rakuten Mobile earnings materials). Rakuten Mobile achieved its first full-year EBITDA profit since entering the carrier business in FY2025, another sign that the long loss-making phase is turning a corner.
Future Strategy: Locking In Profitability and the AI Agent Push
For full-year FY2026, Rakuten Group is guiding for high-single-digit revenue growth and aims to turn Non-GAAP operating profit, pre-tax profit, and net profit all positive for the full year, though it has not disclosed specific yen figures for that guidance. Given that operating profit, pre-tax profit, and net profit were all already positive at the H1 stage, the conditions for locking in full-year profitability appear to be falling into place.
On the mobile side, Rakuten plans roughly 200 billion yen in capital expenditure for FY2026, continuing to invest in expanding 5G coverage and improving network quality (source: BUSINESS NETWORK). As the heaviest phase of base station buildout appears to be passing, the key question going forward is how much Rakuten can grow subscribers and ARPU while keeping investment spending under control.
Another point worth watching is Rakuten’s AI agent-driven ecosystem strategy. The company has signaled plans to roll out AI agents across services like Rakuten Ichiba, Rakuten Card, and Rakuten Mobile, aiming to boost convenience and profitability across the entire Rakuten Economic Zone (source: Livedoor News). Whether Rakuten can effectively leverage the member and purchasing data it has accumulated across e-commerce and fintech will likely determine how well this strategy pays off.
On the financial side, all bonds maturing in 2026 have already been fully funded for redemption, and the USD-denominated perpetual subordinated bond issued in 2021 was fully redeemed at its first optional call date in April 2026 (source: Rakuten Group IR materials). With an equity ratio of just 3.4%, the balance sheet is still far from robust, but the company appears to be steadily working through near-term funding concerns one by one.
Outlook: Bull Case and Bear Case
Let’s start with the bullish arguments.
(1) Operating profit, pre-tax profit, and net profit all turned positive for H1 for the first time in seven years, and the company posted its first quarterly net profit in six years. The long-standing concern about Rakuten’s “chronic loss-making” structure is now backed by real numbers showing a turnaround.
(2) The mobile business achieved EBITDA profitability, and subscriptions have climbed to 10.75 million lines. With the heaviest phase of capital spending likely behind it, the investment burden could gradually ease from here.
(3) FinTech revenue grew more than 25% and is functioning as the group’s main growth engine. With a large, established customer base across Rakuten Card, Rakuten Bank, and Rakuten Securities, this financial services cluster looks set to remain a stable source of earnings.
Now the bearish arguments.
(1) The cumulative H1 net result is still a loss of 10.9 billion yen, so this isn’t a complete turnaround just yet. Full-year profitability will require further improvement in the second half.
(2) The equity ratio of 3.4% is low, which is a clear weak point on financial stability. With a sizable amount of interest-bearing debt outstanding, changes in interest rates or funding conditions remain a risk to watch.
(3) Despite the strong results, the stock actually fell on earnings day, suggesting the market may have already priced in some degree of a profit turnaround. Going forward, the focus for the stock may shift from “did it turn profitable” to “how much can that profit grow.”
Personally, I’d view the first H1 operating profit in seven years as a positive development, but I think it’s still at the stage of “climbing out of the red” rather than proof that Rakuten’s earning power has fundamentally strengthened – that will take another quarter or two to confirm. In particular, the low equity ratio is the kind of thing markets tend to scrutinize more harshly during periods of rising interest rates, so I’ll be watching how quickly the balance sheet metrics improve in the second half.
Summary
Rakuten Group’s H1 FY2026 results marked a genuine milestone: operating profit, pre-tax profit, and net profit all turned positive for the first half for the first time in seven years. Growth in the FinTech segment and improving profitability in Mobile appear to be the two pillars behind this turnaround. That said, a cumulative net loss remains, and the low equity ratio is a lingering concern. The fact that the stock fell on earnings day suggests the market’s attention is shifting from “can Rakuten turn profitable” to “how much profit can it sustain from here.” I’ll be keeping a close eye on the FinTech and Mobile numbers in the next earnings report.
I’m not rushing to a firm conclusion here – I’d rather watch how the next quarter or two play out before forming a stronger view. As always, no need to rush – slow and steady. See you in the next post!
Previous stock analysis: [Stock Analysis] SoftBank Group (TYO: 9984): Record ¥5 Trillion Profit — What’s Next for Son’s AI Bet?
日本語版はこちら → 【銘柄分析】楽天グループ(4755)が7年ぶり営業黒字！決算数字と今後の株価を徹底解説
* This article is for informational purposes only and does not recommend buying or selling any specific stock. Please make investment decisions at your own responsibility.
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