Interim report
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Rakuten The following information was originally prepared and published by the Company in Japanese as it contains timely disclosure materials to be submitted to the Tokyo Stock Exchange . This English summary translation is for your convenience only . To the extent there is any discrepancy between this English translation and the original Japanese version , please refer to the Japanese version . The following financial information was prepared based on International Financial Reporting Standards ( " IFRS " ) . Code No Consolidated Financial Reports ( IFRS ) for the six months ended June 30 , 2026 Chairman and CEO Company name Rakuten Group , Inc. 4755 Representative ( Title ) Contact person ( Title ) Scheduled Start Date of Dividend Payment Listed URL Director and Group Managing Executive Officer Scheduled Date to file Semi - Annual Securities Report August 10 , 2026 Supplementary materials for financial results : Yes Rakuten Group , Inc. August 10 , 2026 Tokyo Stock Exchange https://global.rakuten.com/corp/ ( Name ) Hiroshi Mikitani ( Name ) Eiichi Kaga Financial results information meeting held : Yes ( For institutional investors and analysts ) 1. Consolidated Results for the six months ended June 30 , 2026 ( January 1 - June 30 , 2026 ) ( 1 ) Consolidated Operating Results ( TEL ) 050-5581-6910 ( Yen amounts are rounded to the nearest million ) ( % , YoY ) Net income income tax % Millions of Yen % 25,429 Income before Revenue Operating income Six months ended June 30 , 2026 Six months ended June 30 , 2025 Millions of Yen 1,309,052 12.9 % Millions of Yen 50,440 % Millions of Yen 1,159,073 10.3 ( 6,610 ) Net income attributable to owners of the Company Comprehensive income Millions of Yen % Millions of Yen % Six months ended June 30 , 2026 Six months ended June 30 , 2025 ( 10,941 ) 87,828 ( 124,435 ) ( 95,529 ) - ( Reference ) Other important management indicators EBITDA * Six months ended Millions of Yen 224,057 % 22.4 June 30 , 2026 Six months ended 183,090 53.1 June 30 , 2025 17,883 ( 66,247 ) Basic earnings per share attributable to owners of the Company ( 101,957 ) Diluted earnings per share attributable to owners of the Company Yen Yen ( 5.03 ) ( 5.05 ) ( 57.64 ) ( 57.65 ) © Calculated by adding depreciation and amortization expenses , etc. to Non - GAAP operating income . We believe that EBITDA is a useful indicator for evaluating the cash flow generation ability of the Rakuten Group's business activities . For more information on Non - GAAP operating income , please see page 4 , " 1. Qualitative Information Concerning Interim Financial Results ( 1 ) Qualitative Information Concerning Consolidated Operating Results " . —1—
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―2― (2) Consolidated Financial Position Total assets Total equity Total equity attributable to owners of the Company Consolidated equity ratio * Ratio of total equity attributable to owners of the Company to total assets Millions of Yen Millions of Yen Millions of Yen % % As of June 30, 2026 31,135,930 1,318,216 915,291 4.2 2.9 As of December 31, 2025 28,804,400 1,354,232 992,402 4.7 3.4 * Calculated by dividing total equity by total assets. As the card business, banking business and securities business account for a large proportion of the Rakuten Group's total assets, we believe that using total capital that incorporates non-controlling interests in these businesses is useful in understanding the Rakuten Group's financial position. 2. Dividends Dividend per Share 1Q 2Q 3Q 4Q Year Yen Yen Yen Yen Yen FY2025 － 0.00 － 0.00 0.00 FY2026 － 0.00 FY2026 (Forecast) － － － Note: Dividend per share for the fiscal year ending December 31, 2026 has not been decided yet, and there are no changes to the previously disclosed dividend forecast.
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―3― 3. Estimate of Consolidated Operating Results for the fiscal year 2026 (January 1 to December 31, 2026) For the estimate of consolidated operating results for the fiscal year 2026, we aim for high single -digit growth in consolidated revenue compared to the fiscal year 2025. Regarding Non-GAAP operating income, we aim to achieve profitability again this fiscal year, and we also aim to achieve profitability in both income before income tax and net income. (For details, please see page 9, "1. Qualitative Information Concerning Interim Financial Results (3) Qualitative Information Concerning Estimate of Consolidated Operating Results".) Note: There are no changes to the previously disclosed consolidated earnings forecasts for the year ending December 31, 2026. Notes (1) Significant Change in Scope of Consolidation for the Current Period: No New: － (Company name) － Excluded: － (Company name) － (2) Changes in Accounting Policies and Changes in Accounting Estimates 1. Changes in accounting policies required by IFRS: No 2. Changes in accounting policies due to other reasons: No 3. Changes in accounting estimates: Yes Note: For details, please see page 18, "2. Condensed Interim Consolidated Financial Statements and Notes, (6) Notes to the Condensed Interim Consolidated Financial Statements (Significant Accounting Estimates and Judgments)". (3) Number of Shares Issued (Common Stock) 1. Total number of shares issued at the end of the period (including treasury stocks) 2,181,203,900 shares (As of June 30, 2026) 2,169,972,100 shares (As of December 31, 2025) 2. Number of treasury stocks at the end of the period 6,526 shares (As of June 30, 2026) 5,878 shares (As of December 31, 2025) 3. Average number of shares for the period (cumulative from the beginning of the year) 2,174,885,200 shares (January 1 – June 30, 2026) 2,158,725,046 shares (January 1 – June 30, 2025) This financial report is not subject to an audit firm's interim review. Explanation about the Appropriate Use of Earnings Forecasts, and Other Special Matters Consolidated earnings forecasts for the fiscal year ending December 31, 2026 are based on information that is available at the time of writing and involve uncertainties. Therefore, due to various changing factors, the actual performance may differ from these projections.
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―4― 1. Qualitative Information Concerning Interim Financial Results (1) Qualitative Information Concerning Consolidated Operating Results The Rakuten Group discloses consolidated operating results in terms of both its internal measures which management relies upon in making decisions (hereinafter the "Non-GAAP financial measures") and those under IFRS Accounting Standards. Non-GAAP operating income is operating income under IFRS Accounting Standards (hereinafter "IFRS operating income") after deducting unusual items and other adjustments as prescribed by the Rakuten Group. Management believes that the disclosure of Non-GAAP financial measures facilitates comparison between the Rakuten Group and peer companies in the same industry or comparison of its business results with those of prior fiscal years by stakeholders, and can provide useful information in understanding the und erlying business results of the Rakuten Group and its future outlook. Unusual items refer to one -off items that the Rakuten Group believes should be excluded for the purposes of preparing a future outlook based on certain rules. Other adjustment items are those that tend to differ depending on the standards applied, and are therefore less comparable between companies, such as share based compensation expenses and amortization of acquisition-related intangible assets. Note: For disclosure of Non-GAAP financial measures, the Rakuten Group refers to the rules specified by the U.S. Securities and Exchange Commission but does not fully comply with such rules. i) Operating Results for the six months ended June 30, 2026 (Non-GAAP basis) For the six months ended June 30, 2026, while the global economy has shown a moderate recovery, uncertainty persists due to factors such as the situation in the Middle East. Looking ahead, it is necessary to pay attention to the impact of fluctuations in financial markets among other factors. In the Japanese economy, there have been signs of recovery in personal consumption, and looking ahead, improvements in employment and income conditions, and the effects of various policies are expected to support a mod erate recovery. According to the "White Paper on Information and Communications in Japan" (Note), in Japan, which is experiencing population decline and increasingly diverse and complex regional and social challenges, it is necessary to thoroughly utilize digital technologies, including generative AI, to maintain growth potential and accelerate digital transformation (DX). The importance of digital infrastructure, which is indispensable for achieving this, is increasing. In response to this situation, the Ministry of Inter nal Affairs and Communications formulated the "Digital Infrastructure Development Plan 2030" in June 2025, aiming to promote the expansion of high-quality communication services, as well as research, development, and social implementation of Beyond 5G, thereby advancing the establishment of a digital foundation to support an AI society. Under such an environment, the Rakuten Group is actively developing and deploying services utilizing advanced technologies such as AI, leveraging the overwhelming amount and quality of data accumulated through membership and various online and offline services, improving network quality in mobile services, and acquiring users. Furthermore, by further evolving and expanding the Rakuten Ecosystem, we aim to enhance our competitiveness and provide solution services that are uniquely possible due to the accumul ation of unique data assets through various services such as Internet Services, FinTech, and Mobile, thereby evolving into an "AI Empowerment Company" and aiming to make people's lives more convenient and prosperous. In addition, with the reorganization of the FinTech business scheduled to take effect on October 1, 2026, the Rakuten Group expects to further deepen the utilization of AI in FinTech services. Amidst uncertainties about the future of the economy, such as continued inflation, and exchange rate movements etc., the Rakuten Group, with its diverse business portfolio, will maximize the synergies it can achieve as a strength, accurately grasp consumer trends and needs, and seize further growth opportunities. As a group, while working to increase revenue and reduce costs through the utilization of AI, in the Internet Services segment, we focused on acquiring new customers, nurturing loyal users, promoting cross -use primarily among mobile users, and making efforts to improve profitability in each business. As a result, the Rakuten Group achieved increased revenue and profit year-on-year. In the FinTech segment, efforts to expand the customer base and transaction value in each service and promote cross -usage between services resulted in further growth in sales and expansion in segment profit. In the Mobile segment, as a result of continuous improvement of network quality, promoting awareness of this improvement, and combined with various marketing activities, the number of subscribers increased, and segment revenue expanded. In terms of costs, while marketing expenses increased to strengthen sales promotion efforts, other costs remained at previous levels, resulting in a continued reduction in segment losses. As a result, the Rakuten Group recorded revenue of ¥1,309,052 million, a 12.9% year -on-year increase, and a Non-GAAP operating income of ¥78,334 million, a 296.6% year-on-year increase for the six months ended June 30, 2026.
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―5― Note: Source: "2025 White Paper on Information and Communications in Japan" (Ministry of Internal Affairs and Communications). (Non-GAAP) (Millions of Yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Amount Change YoY % Change YoY Revenue 1,159,073 1,309,052 149,979 12.9 % Non-GAAP Operating Income 19,751 78,334 58,583 296.6 % ii) Reconciliation of Non-GAAP Operating Income to IFRS Operating Income For the six months ended June 30, 2026, amortization of intangible assets of ¥812 million and share based compensation expenses of ¥9,060 million were excluded from Non-GAAP operating income. One-off items listed for the six months ended June 30, 2025 include a mid-term cancellation fee of ¥2,459 million, which was incurred in the domestic sports business due to the termination of a consulting agreement that had a significant impact on team operations, additional tax and delinquency charges, including those for prior years, totaling ¥4,943 million, arising from the receipt of a correction notice regarding consumption tax on funding transactions related to card receivables securitization, a loss provision of ¥1,058 million for compensation of customer transactions due to unauthorized access in the securities business, and a provision for liabilities related to a lawsuit concerning payment claims for debts of a previously sold su bsidiary, etc. Moreover, in the Condensed Interim Consolidated Statement of Income, the scheduled payment amount for additional tax and delinquency charges, including those for prior years, arising from the receipt of a correction notice regarding consumption tax on funding transactions related to card receivables securitization is included in operating expenses while other income and expenses are mainly recorded in other income and other expenses. One -off items listed for the six months ended June 30, 2026 include an impairment loss on fixed assets of ¥1,019 million, resulting from a partial withdrawal from the marketplace business in Europe, and an impairment loss, etc., on fixed assets of ¥17,000 million, resulting from a decrease in future profitabil ity due to the conversion of warehouses for internal use in the logistics business. Moreover, in the Condensed Interim Consolidated Statement of Income, these expenses are mainly recorded in other expenses. (Millions of Yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Amount Change YoY Non-GAAP Operating Income 19,751 78,334 58,583 Amortization of Intangible Assets (2,600) (812) 1,788 Share Based Compensation Expenses (8,446) (9,060) (614) One-off Items (15,315) (18,022) (2,707) IFRS Operating Income (Loss) (6,610) 50,440 57,050 iii) Operating Results for the six months ended June 30, 2026 (IFRS Accounting Standards basis) For the six months ended June 30, 2026, the Rakuten Group recorded revenue of ¥1,309,052 million, up 12.9% year-on-year, and an IFRS operating income of ¥50,440 million, compared with an IFRS operating loss of ¥6,610 million in the six months ended June 30, 2025, and a net loss attributable to owners of the Company of ¥10,941 million, compared with a net loss of ¥124,435 million in the six months ended June 30, 2025. Notably, during this interim period, both income before income tax and net income turned profitable for the first time in seven years, since the six months ended June 30, 2019.
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―6― (IFRS Accounting Standards) (Millions of Yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Amount Change YoY % Change YoY Revenue 1,159,073 1,309,052 149,979 12.9 % IFRS Operating Income (Loss) (6,610) 50,440 57,050 － % Net Loss Attributable to Owners of the Company (124,435) (10,941) 113,494 － % iv) Segment Information Business results for each segment are as follows. In terms of the IFRS Accounting Standards management approach, segment profit or loss is presented on a Non-GAAP operating income basis. Effective from the three months ended March 31, 2026, some AI-related development costs, which were not previously allocated to individual segments, have been reflected in the segment profit or loss based on the scope of responsibility and actual usage to optimize the management and performance evaluation of each segment. Accordingly, the segment information for the six months ended June 30, 2025 has been restated to reflect this change. As a result of this change, segment profit or loss for the six months ended June 30, 2025 decreased by ¥825 million in "Internet Services", ¥296 million in "FinTech", and ¥145 million in "Mobile", while "Intercompany Transactions, etc." increased by the total amount of these decreases. This change has no impact on the consolidated revenue or operating income or loss. Internet Services In domestic e-commerce, which is a core service, we focused on acquiring new customers, nurturing loyal users, and promoting cross-use primarily among mobile users. In the internet shopping mall "Rakuten Ichiba", we implemented various initiatives to improve customer convenience and satisfaction. As a result, GMS and revenue grew, and improved marketing efficiency led to an increase in profitability and profit. In the internet travel reservation service "Rakuten Travel", we achieved significant growth in both revenue and profit, driven by the continued expansion of services used by inbound tourists and steady domestic travel transaction value. Furthermore, in growth investment businesses, initiatives to improve profitability in each business proved successful, achieving a steady reduction in losses. In the international business unit, which operates overseas internet services, despite a temporary impact on revenue due to partial service closures within Open Commerce, including the U.S. online cashback service "Rakuten Rewards", we achieved profit growth through various cost control measures and the absence of business restructuring expenses recorded in the same period of the previous year. For the video streaming service "Rakuten Viki", profit growth was achieved through the synergy of plan price revis ions and various cost-reduction efforts. As evidenced by these results, we are making steady progress in balancing growth and profit generation across each of our businesses. As a result, revenue for the Internet Services segment rose to ¥655,760 million, a 4.1% year -on-year increase, while segment profit stood at ¥44,227 million, a 67.2% year-on-year increase. (Millions of Yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Amount Change YoY % Change YoY Segment Revenue 630,016 655,760 25,744 4.1 % Segment Profit (Loss) Before Considering 33,909 52,492 18,583 54.8 % Mobile Ecosystem Contribution (7,451) (8,265) (814) － % After Considering 26,458 44,227 17,769 67.2 %
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―7― FinTech In FinTech, profit increased across all major domestic services, including credit card-related services, banking services, securities services, insurance services, and payment services. In credit card -related services, we saw both revenue and profit growth as the customer base for "Rakuten Card" continued to expand and shopping transaction value grew steadily, leading to an increase in commission revenue. In banking services, the increase in managed assets due to an expanding customer base, as well as impro ved investment yields driven by the Bank of Japan's policy rate hikes, led to a significant expansion in interest income. This was further supported by improved efficiency resulting from the expansion of our business scale. In securities services, revenue and profit grew significantly, supported by the continuous expansion of our customer base and a robust stock market. In insurance services, profitability improved resulting from the strategic selection and concentration of our product portfolio. In payment services, the increase in users of "Rakuten Pay" drove growth in transaction value, and through synergies with efficient marketing initiatives, we achieved revenue and profit growth. As a result, the FinTech segment recorded ¥570,751 million in revenue, a 25.1% year-on-year increase, while segment profit stood at ¥127,708 million, a 46.9% year-on-year increase. (Millions of Yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Amount Change YoY % Change YoY Segment Revenue 456,263 570,751 114,488 25.1 % Segment Profit (Loss) Before Considering 95,893 140,598 44,705 46.6 % Mobile Ecosystem Contribution (8,933) (12,890) (3,957) － % After Considering 86,960 127,708 40,748 46.9 % Mobile In Mobile, we made steady progress in expanding revenue and reducing losses, primarily driven by "Rakuten Mobile". "Rakuten Mobile" worked on continuously improving network quality and raising awareness, while also implementing marketing initiatives promoting cross-use with various services within the Rakuten Ecosystem, such as "Rakuten Ichiba" and "Rakuten Card". As a result, the number of mobile subscriptions continued to grow, leading to revenue expansion and loss reduction. As a result, the Mobile segment recorded ¥252,541 million in revenue, a 13.3% year -on-year increase, while segment loss stood at ¥71,080 million compared to a loss of ¥88,457 million in the six months ended June 30, 2025. Going forward, we will continue capital investments to further improve network quality, as well as expanding our device lineup and strengthening corporate solution services, aiming to increase the number of subscribers and further enhance customer satisfaction. (Millions of Yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Amount Change YoY % Change YoY Segment Revenue 222,828 252,541 29,713 13.3 % Segment Profit (Loss) Before Considering (104,841) (92,235) 12,606 － % Mobile Ecosystem Contribution 16,384 21,155 4,771 29.1 % After Considering (88,457) (71,080) 17,377 － %
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―8― (2) Analysis Concerning Financial Position i) Assets, Liabilities, and Equity Assets Total assets as of June 30, 2026 amounted to ¥31,135,930 million, an increase of ¥2,331,530 million from ¥28,804,400 million at the end of the previous fiscal year. The primary factors were a decrease of ¥1,347,089 million in cash and cash equivalents, offset by an increase of ¥2,983,897 million in financial assets for securities business, and an increase of ¥550,016 million in loans for banking business. Liabilities Total liabilities as of June 30, 2026 amounted to ¥29,817,714 million, an increase of ¥2,367,546 million from ¥27,450,168 million at the end of the previous fiscal year. The primary factors were a decrease of ¥633,032 million in borrowings for banking business, offset by an increase of ¥2,937,950 million in financial liabilities for securities business. Equity Total equity as of June 30, 2026 was ¥1,318,216 million, a decrease of ¥36,016 million from ¥1,354,232 million at the end of the previous fiscal year. The primary factors were recording of ¥36,370 million in net income attributable to non-controlling interests for the six months ended June 30, 2026, an increase of ¥62,699 million in other components of equity due to an increase in the fair value of equity instruments measured at fair value through other comprehensive income and changes in foreign currency translation adjustments affected by yen depreciation, offset by a decrease of ¥80,811 million in other equity instruments and a decrease of ¥36,099 million in capital surplus both due to the transfer from other equity instruments to bonds. ii) Cash Flows Cash and cash equivalents as of June 30, 2026 stood at ¥4,490,477 million, a decrease of ¥1,347,089 million from the end of the previous fiscal year. Cash flow conditions and their main factors for the six months ended June 30, 2026 are as follows. Cash Flows from Operating Activities Cash flows from operating activities for the six months ended June 30, 2026 resulted in a cash outflow of ¥301,671 million (compared with a cash outflow of ¥133,960 million for the same period of the previous fiscal year). Main factors included a cash inflow of ¥2,937,815 million due to an increase in financial liabilities for securities business, a cash inflow of ¥392,644 million due to an increase in deposits for banking business, depreciation and amortization of ¥141,635 million, offset by a cash outflow of ¥2,983,984 million due to an increase in financial assets for securities business, a cash outflow of ¥548,028 million due to an increase in loans for banking business, a cash outflow of ¥246,000 million due to an increase in call loans for banking business. Cash Flows from Investing Activities Cash flows from investing activities for the six months ended June 30, 2026 resulted in a cash outflow of ¥82,825 million (compared with a cash outflow of ¥454,975 million for the same period of the previous fiscal year). Main factors included a cash inflow of ¥199,311 million from sales and redemption of investment securities, offset by a net cash outflow of ¥141,493 million due to purchases and sales, etc. of investment securities for banking business (a cash outflow of ¥1,005,618 million due to purchases and a cash inflow of ¥864,125 million from sales and redemption), a cash outflow of ¥84,895 million due to purchases of intangible assets, and a cash outflow of ¥59,869 million due to purchases of property, plant and equipment. Cash Flows from Financing Activities Cash flows from financing activities for the six months ended June 30, 2026 resulted in a cash outflow of ¥967,419 million (compared with a cash outflow of ¥193,070 million for the same period of the previous fiscal year). Main factors included a cash outflow of ¥586,600 million due to repayments of long-term borrowings for banking business, and a cash outflow of ¥269,796 million due to a decrease in short -term borrowings for banking business.
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―9― (3) Qualitative Information Concerning Estimate of Consolidated Operating Results Currently, for the forecast of consolidated operating results for the fiscal year ending December 31, 2026, we aim for high single-digit growth in consolidated revenue compared to the fiscal year ended December 31, 2025. Regarding Non-GAAP operating income, we aim to achieve profitability again this fiscal year, and we also aim to achieve profitability in both income before income tax and net income. The outlook for each segment is as follows: (Internet Services) In domestic internet services, including e-commerce platforms such as "Rakuten Ichiba", we will continue to focus on acquiring new customers and promoting cross-usage. Furthermore, we aim to drive growth in GMS and revenue by creating new markets through the utilization of data, agentic AI tools like AI concierge and others, and by further increasing the purchase amount of existing users. In "Rakuten Travel", we will continue to capture the expanding inbound demand and strengthen marketing initiatives to achieve growth in transaction value. In overseas internet services, we aim to achieve sustained profitability in this segment by expanding operations and revenue in services such as "Rakuten Rewards" and "Rakuten Viber", as well as by accelerating improvements in businesses currently operating at a loss. (FinTech) In credit card-related services, we aim for further growth in shopping transaction value and pursue business expansion and enhanced profit margins through strengthened group synergies and marketing initiatives. In banking services, we aim for further growth by diversifying personal loan products, promoting securitization businesses involving monetary claims and real estate held by corporations, and expanding interest income. Additionally, we aim to increase non-interest income by acquiring salary deposits and direct debit payment accounts, etc., thereby promoting the use of accounts as everyday banking tools. In securities services, we aim for further expansion of our customer base through new account acquisitions and continued growth in diversified revenue sources such as margin trading. In insurance services, we aim for further improvements in profitability by strengthening face-to-face channels for life insurance services and enhancing the product portfolio for general insurance services. In payment services, we aim to expand operations and profits by growing its customer base and continuing efficient marketing initiatives. Furthermore, we plan to reorganize the FinTech business, effective October 1, 2026, with Rakuten Bank, Ltd. as the parent company issuing shares, and Rakuten Card Co., Ltd. (credit card-related services) and Rakuten Securities Holdings, Inc. (securities services) as the subsidiary companies receiving the shares. Through this reorganization, we aim to achieve greater flexibility in capital procurement and optimization of funding costs for each service, as well as further expand our individual customer base and improve profitability through strengthened marketing collaboration and enhanced financial products across services. While we aim to increase revenue and profit in the fourth quarter by capturing the synergy effects of this reorganization, we anticipate recording reorganization-related expenses in the third quarter. At this time, the specific impact on our consolidated earnings for the current fiscal year is yet to be determined, but we will promptly announce any matters that should be disclosed as we update our full-year outlook. (Mobile) In "Rakuten Mobile", while continuing efforts to improve communication quality and raise awareness, we will implement attractive marketing initiatives leveraging the Rakuten Ecosystem to strengthen our customer base. Additionally, we will work to acquire more subscribers by making proposals to corporate clients and local governments nationwide that have business relationships with the Rakuten Group. Furthermore, we will accelerate the deployment of new 4G and 5G base stations and aim to build a network that can be used in emergencies, such as during disasters, even in areas previously outside communication range, through direct communication between smartphones and low-earth orbit satellites. Through these initiatives, we aim to establish a network superiority, accelerate the pace of subscriber acquisition, and improve the profitability of the mobile business. Meanwhile, as global efforts to revolutionize the network equipment configuration for telecommunication carriers and to promote the openness of base stations advance, Rakuten Symphony, which provides communication platforms and other solutions using innovative mobile network technologies, will advance its global expansion by increasing revenue from existing customers and aggressively pursuing new customers, thereby seizing business opportunities accurately.
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―10― 2. Condensed Interim Consolidated Financial Statements and Notes (1) Condensed Interim Consolidated Statement of Financial Position (Millions of Yen) As of December 31, 2025 As of June 30, 2026 Assets Cash and cash equivalents 5,837,566 4,490,477 Accounts receivable - trade 443,557 436,432 Financial assets for securities business 6,035,176 9,019,073 Loans for credit card business 3,662,676 3,590,447 Investment securities for banking business 2,567,328 2,723,970 Loans for banking business 5,440,459 5,990,475 Investment securities for insurance business 202,745 193,716 Derivative assets 276,706 289,811 Investment securities 491,145 371,133 Other financial assets 1,115,534 1,251,530 Investments in associates and joint ventures 27,104 27,009 Property, plant and equipment 1,068,509 1,072,814 Intangible assets 1,079,201 1,133,363 Deferred tax assets 71,912 74,005 Other assets 484,782 471,675 Total assets 28,804,400 31,135,930 Liabilities Accounts payable - trade 553,582 409,238 Deposits for banking business 12,741,293 13,139,158 Financial liabilities for securities business 6,028,009 8,965,959 Derivative liabilities 77,087 94,691 Bonds and borrowings 1,598,052 1,605,831 Borrowings for securities business 269,228 212,772 Bonds and borrowings for credit card business 810,559 718,823 Borrowings for banking business 2,891,783 2,258,751 Other financial liabilities 1,551,575 1,515,708 Income taxes payable 43,687 42,583 Provisions 390,956 423,762 Insurance contract liabilities 136,350 133,294 Employee retirement benefit liabilities 48,958 50,047 Deferred tax liabilities 79,765 51,965 Other liabilities 229,284 195,132 Total liabilities 27,450,168 29,817,714 Equity Equity attributable to owners of the Company Common stock 459,508 464,091 Capital surplus 658,458 626,476 Other equity instruments 479,661 397,320 Retained earnings (1,036,141) (971,240) Treasury stock (5) (6) Other components of equity 430,921 398,650 Total equity attributable to owners of the Company 992,402 915,291 Non-controlling interests 361,830 402,925 Total equity 1,354,232 1,318,216 Total liabilities and equity 28,804,400 31,135,930
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―11― (2) Condensed Interim Consolidated Statement of Income and Comprehensive Income Condensed Interim Consolidated Statement of Income (For the six months ended June 30, 2025 and 2026) (Millions of Yen) Six months ended June 30, 2025 (January 1 to June 30, 2025) Six months ended June 30, 2026 (January 1 to June 30, 2026) Continuing Operations Revenue 1,159,073 1,309,052 Operating expenses 1,146,581 1,229,676 Other income 5,836 3,168 Other expenses 24,938 32,104 Operating income (loss) (6,610) 50,440 Financial income 10,111 20,047 Financial expenses 64,775 51,569 Share of losses of investments in associates and joint ventures (4,973) (1,035) Income (loss) before income tax (66,247) 17,883 Income tax expenses 35,710 (7,546) Net Income (loss) (101,957) 25,429 Net Income (loss) attributable to: Owners of the Company (124,435) (10,941) Non-controlling interests 22,478 36,370 Net Income (loss) (101,957) 25,429 (Yen) Losses per share attributable to owners of the Company Basic (57.64) (5.03) Diluted (57.65) (5.05)
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―12― Condensed Quarterly Consolidated Statement of Income (For the three months ended June 30, 2025 and 2026) (Millions of Yen) Three months ended June 30, 2025 (April 1 to June 30, 2025) Three months ended June 30, 2026 (April 1 to June 30, 2026) Continuing Operations Revenue 596,369 665,469 Operating expenses 580,163 621,746 Other income 3,982 1,713 Other expenses 11,354 25,390 Operating income 8,834 20,046 Financial income 9,068 8,334 Financial expenses 32,930 27,773 Share of losses of investments in associates and joint ventures (5,380) (99) Income (loss) before income tax (20,408) 508 Income tax expenses 19,666 (26,679) Net Income (loss) (40,074) 27,187 Net Income (loss) attributable to: Owners of the Company (50,964) 7,707 Non-controlling interests 10,890 19,480 Net Income (loss) (40,074) 27,187 (Yen) Earnings (Losses) per share attributable to owners of the Company Basic (23.58) 3.54 Diluted (23.58) 3.44
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―13― Condensed Interim Consolidated Statement of Comprehensive Income (For the six months ended June 30, 2025 and 2026) (Millions of Yen) Six months ended June 30, 2025 (January 1 to June 30, 2025) Six months ended June 30, 2026 (January 1 to June 30, 2026) Net Income (loss) (101,957) 25,429 Other comprehensive income Items that will not be reclassified to net income Changes in equity instruments measured at fair value through other comprehensive income 74,801 39,519 Remeasurement of defined benefit plans (272) 194 Other comprehensive income of investment in associates and joint ventures 34 123 Total items that will not be reclassified to net income 74,563 39,836 Items that may be reclassified to net income Foreign currency translation adjustments (63,304) 27,780 Changes in debt instruments measured at fair value through other comprehensive income (4,322) (3,098) Cash flow hedges 2,301 (1,442) Changes in the difference between discount rate change on insurance contracts 727 (891) Changes in the difference between discount rate change on reinsurance contracts (850) (502) Other comprehensive income of investments in associates and joint ventures (2,687) 716 Total items that may be reclassified to net income (68,135) 22,563 Total other comprehensive income, net of tax 6,428 62,399 Comprehensive income (95,529) 87,828 Comprehensive income attributable to: Owners of the Company (117,460) 51,758 Non-controlling interests 21,931 36,070 Comprehensive income (95,529) 87,828
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―14― Condensed Quarterly Consolidated Statement of Comprehensive Income (For the three months ended June 30, 2025 and 2026) (Millions of Yen) Three months ended June 30, 2025 (April 1 to June 30, 2025) Three months ended June 30, 2026 (April 1 to June 30, 2026) Net Income (loss) (40,074) 27,187 Other comprehensive income Items that will not be reclassified to net income Changes in equity instruments measured at fair value through other comprehensive income 75,253 5,586 Remeasurement of defined benefit plans 67 (20) Other comprehensive income of investment in associates and joint ventures 29 142 Total items that will not be reclassified to net income 75,349 5,708 Items that may be reclassified to net income Foreign currency translation adjustments (23,178) 20,629 Changes in debt instruments measured at fair value through other comprehensive income (546) (219) Cash flow hedges 195 (4,878) Changes in the difference between discount rate change on insurance contracts 629 (450) Changes in the difference between discount rate change on reinsurance contracts (303) (274) Other comprehensive income of investments in associates and joint ventures (813) 548 Total items that may be reclassified to net income (24,016) 15,356 Total other comprehensive income, net of tax 51,333 21,064 Comprehensive income 11,259 48,251 Comprehensive income attributable to: Owners of the Company (3,163) 27,970 Non-controlling interests 14,422 20,281 Comprehensive income 11,259 48,251
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―15― (3) Condensed Interim Consolidated Statement of Changes in Equity (For the six months ended June 30, 2025) (Millions of Yen) Equity attributable to Owners of the Company Non- controlling Interests Total Equity Common Stock Capital Surplus Other Equity Instruments Retained Earnings Treasury Stock Other Components of Equity Total Equity attributable to Owners of the Company As of January 1, 2025 452,647 649,389 398,717 (824,700) (4) 251,819 927,868 310,646 1,238,514 Comprehensive income Net Income (loss) － － － (124,435) － － (124,435) 22,478 (101,957) Other comprehensive income, net of tax － － － － － 6,975 6,975 (547) 6,428 Total comprehensive income － － － (124,435) － 6,975 (117,460) 21,931 (95,529) Transactions with owners etc. Transfer from other equity instruments to bonds － － － － － － － － － Distributions to owners of other equity instruments － － － (13,637) － － (13,637) － (13,637) Reclassified from other components of equity to retained earnings － － － 1,499 － (1,499) － － － Acquisition of treasury stock － － － － (0) － (0) － (0) Purchase of other equity instruments by subsidiaries － － － － － － － － － Exercise of share acquisition rights 4,494 (4,494) － － － － 0 － 0 Share based compensation expenses － 8,621 － 135 － － 8,756 － 8,756 Equity transactions with non-controlling interests － (6) － － － 1 (5) 225 220 Others － － － 21 － － 21 (182) (161) Total transactions with owners etc. 4,494 4,121 － (11,982) (0) (1,498) (4,865) 43 (4,822) As of June 30, 2025 457,141 653,510 398,717 (961,117) (4) 257,296 805,543 332,620 1,138,163 (For the six months ended June 30, 2026) (Millions of Yen) Equity attributable to Owners of the Company Non- controlling Interests Total Equity Common Stock Capital Surplus Other Equity Instruments Retained Earnings Treasury Stock Other Components of Equity Total Equity attributable to Owners of the Company As of January 1, 2026 459,508 658,458 479,661 (1,036,141) (5) 430,921 992,402 361,830 1,354,232 Comprehensive income Net Income (loss) － － － (10,941) － － (10,941) 36,370 25,429 Other comprehensive income, net of tax － － － － － 62,699 62,699 (300) 62,399 Total comprehensive income － － － (10,941) － 62,699 51,758 36,070 87,828 Transactions with owners etc. Transfer from other equity instruments to bonds － (36,099) (80,811) － － － (116,910) － (116,910) Distributions to owners of other equity instruments － － － (19,516) － － (19,516) － (19,516) Reclassified from other components of equity to retained earnings － － － 94,970 － (94,970) － － － Acquisition of treasury stock － － － － (1) － (1) － (1) Purchase of other equity instruments by subsidiaries － － (1,530) － － － (1,530) － (1,530) Exercise of share acquisition rights 4,583 (4,583) － － － － 0 － 0 Share based compensation expenses － 8,699 － 415 － － 9,114 － 9,114 Equity transactions with non-controlling interests － － － － － 0 0 5,025 5,025 Others － 1 － (27) － 0 (26) (0) (26) Total transactions with owners etc. 4,583 (31,982) (82,341) 75,842 (1) (94,970) (128,869) 5,025 (123,844) As of June 30, 2026 464,091 626,476 397,320 (971,240) (6) 398,650 915,291 402,925 1,318,216
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―16― (4) Condensed Interim Consolidated Statement of Cash Flows (Millions of Yen) Six months ended June 30, 2025 (January 1 to June 30, 2025) Six months ended June 30, 2026 (January 1 to June 30, 2026) Cash flows from operating activities Income (Loss) before income tax (66,247) 17,883 Depreciation and amortization 158,687 141,635 Other loss (income) 79,199 74,004 Decrease (Increase) in operating receivables 50,340 12,785 Decrease (Increase) in loans for credit card business 167,385 72,512 Increase (Decrease) in deposits for banking business 114,324 392,644 Net decrease (increase) in call loans for banking business (94) (246,000) Decrease (Increase) in loans for banking business (143,250) (548,028) Net decrease (increase) in receivables under securities borrowing transactions 7,695 55,402 Increase (Decrease) in operating payables (131,768) (148,737) Decrease (Increase) in financial assets for securities business (370,407) (2,983,984) Increase (Decrease) in financial liabilities for securities business 157,775 2,937,815 Increase and decrease in derivative assets and liabilities 5,739 (25,738) Others (109,530) (6,734) Income tax paid (53,808) (47,130) Net cash flows from operating activities (133,960) (301,671) Cash flows from investing activities Payments in time deposits (18,172) (5,279) Proceeds from time deposits 11,991 17,159 Purchases of property, plant and equipment (38,282) (59,869) Purchases of intangible assets (75,450) (84,895) Acquisitions of investments in associates and joint ventures － (101) Purchases of investment securities for banking business (953,751) (1,005,618) Proceeds from sales and redemption of investment securities for banking business 609,970 864,125 Purchases of investment securities for insurance business (77,779) (30,200) Proceeds from sales and redemption of investment securities for insurance business 86,077 29,108 Purchases of investment securities (5,406) (5,583) Proceeds from sales and redemption of investment securities 9,433 199,311 Other payments (7,128) (5,014) Other proceeds 3,522 4,031 Net cash flows from investing activities (454,975) (82,825)
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―17― (4) Condensed Interim Consolidated Statement of Cash Flows (Continued) (Millions of Yen) Six months ended June 30, 2025 (January 1 to June 30, 2025) Six months ended June 30, 2026 (January 1 to June 30, 2026) Cash flows from financing activities Net increase (decrease) in short-term borrowings (570) － Net increase (decrease) in commercial papers 23,300 20,300 Proceeds from long-term borrowings 36,619 57,322 Repayments of long-term borrowings (78,666) (74,807) Redemption of bonds (440,172) (139,128) Net increase (decrease) in short-term borrowings for securities business 28,500 (56,500) Net increase (decrease) in short-term borrowings for credit card business (566) 41,117 Net increase (decrease) in commercial papers for credit card business 10,100 (4,400) Proceeds from long-term borrowings for credit card business 74,658 51,891 Repayments of long-term borrowings for credit card business (77,796) (79,430) Proceeds from issuance of bonds for credit card business 109,354 － Redemption of bonds for credit card business － (102,000) Net increase (decrease) in short-term borrowings for banking business 211,380 (269,796) Proceeds from long-term borrowings for banking business － 222,800 Repayments of long-term borrowings for banking business － (586,600) Distributions to owners of other equity instruments (12,258) (13,638) Capital contribution from non-controlling interests － 7,025 Proceeds from settlement of derivatives － 37,838 Repayments of lease liabilities (33,644) (35,586) Interest paid (42,854) (39,506) Others (455) (4,321) Net cash flows from financing activities (193,070) (967,419) Effect of change in exchange rates on cash and cash equivalents (9,652) 4,826 Net increase (decrease) in cash and cash equivalents (791,657) (1,347,089) Cash and cash equivalents at the beginning of the period 6,170,888 5,837,566 Cash and cash equivalents at the end of the interim period 5,379,231 4,490,477
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―18― (5) Assumptions for Going Concern For the six months ended June 30, 2026 (January 1 to June 30, 2026) No items to report. (6) Notes to the Condensed Interim Consolidated Financial Statements (Basis of Presentation) The Company's Condensed Interim Consolidated Financial Statements have been prepared in accordance with IAS 34 "Interim Financial Reporting", pursuant to Article 312 of the "Regulation on Terminology, Forms and Preparation Methods of Consolidated Financial Statements" (Ministry of Finance Ordinance No. 28 of 1976), as the Company meets the requirements of a "Specified Company Complying with Designated International Accounting Standards" as stipulated in Article 1-2(2) of the same regulation. As this summary does not contain all the information required in annual consolidated financial statements, it is advised to be used in combination with the consolidated financial statements for the fiscal year ended December 31, 2025. (Significant Changes in the Scope of Consolidation and the Scope of Equity Method Application) For the six months ended June 30, 2026 (January 1 to June 30, 2026) There were no significant changes either in the scope of consolidation or in the scope of equity method with respect to the condensed interim consolidated financial statements for the six months ended June 30, 2026, as compared with the consolidated financial statements for the fiscal year ended December 31, 2025. (Material Accounting Policies) Material accounting policies adopted by the Rakuten Group in the Condensed Interim Consolidated Financial Statements for the six months ended June 30, 2026 remain the same as those adopted in the consolidated financial statements for the previous fiscal year. In addition, income tax expenses for the six months ended June 30, 2026 are calculated based upon an estimated average annual effective tax rate. (Significant Accounting Estimates and Judgments) In preparing the Condensed Interim Consolidated Financial Statements under IFRS Accounting Standards for the six months ended June 30, 2026, the Rakuten Group uses judgments, accounting estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses. These estimates and assumptions are based on the best judgment of management, made by gathering past experience and available information and in consideration of various factors that are considered reasonable as of the closing date. However, the figures based on these estimates and assumptions by their nature may differ from actual results. Estimates and underlying assumptions are subject to continuous review. The effect of these revised estimates is recognized in the period in which the estimates are revised and future periods. Estimates and judgments that have a significant impact on the amounts in the Condensed Interim Consolidated Financial Statements for the six months ended June 30, 2026 remain the same as those for the previous fiscal year, except for the following. Changes in Accounting Estimates After a certain period of time has elapsed since the commencement of business operations, and a review of part of our capital expenditure plan, we re-evaluated the actual utilization of certain network equipment included in the Rakuten Group's machinery and equipment, etc. As a result, in the current consolidated fiscal year, we have changed the useful lives of these assets based on more reasonable estimates of their economic useful lives to better reflect actual usage. As a result of this change, Operating income and Income before income tax for the six months ended June 30, 2026 each increased by ¥17,277 million, compared with the amounts that would have been reported under the previous method.
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―19― (Segment Information) (1) General Information As a global innovation company engaged in the three main activities of Internet Services, FinTech, and Mobile, the Rakuten Group is organized into three reportable segments: "Internet Services", "FinTech", and "Mobile". Operating segments are not aggregated in determining reportable segments. For the reportable segments, separate financial information on the operational units of the Rakuten Group is available, and such financial information is subject to periodic review for the Board of Directors to decide on the distribution of management resources and evaluate performance. The "Internet Services" segment comprises businesses providing various e-commerce sites including internet shopping mall "Rakuten Ichiba", online cash-back sites, travel booking sites, portal sites, and digital content sites, along with provision of messaging services, sales of advertising, etc. on these sites, and management of professional sports teams, etc. The "FinTech" segment comprises businesses providing services related to credit cards, banking and securities over the Internet, crypto asset (virtual currency) spot transactions, life insurance, general insurance, and payment services, etc. The "Mobile" segment comprises businesses providing communication services and technologies, operating electricity supply services, and making investments related to the Mobile segment, etc. (2) Measurement of Segment Revenue and Segment Profit (Loss) by Operating Segments The accounting treatment of the reported operating segment is based on IFRS Accounting Standards, and operating segment revenue and segment profit (loss) are those before intercompany eliminations without consideration of consolidation adjustments, except for certain subsidiaries. Non-GAAP operating income, the internal measures management uses in making decisions, is calculated by adjusting the nonrecurring items and other adjustment items prescribed by the Rakuten Group from the operating income recorded in accordance with IFRS Accounting Standards. Management believes that the disclosure of Non-GAAP financial measures facilitates comparison between the Rakuten Group and peer companies in the same industry or comparison of their business results with those of prior fiscal years by stakeholders, and can provide useful information in understanding the underlying business results of the Rakuten Group and their future outlook. Nonrecurring items refer to one-off items that the Rakuten Group believes should be excluded in preparing a future outlook based on certain rules. Other adjustment items are those that tend to differ depending on the standards applied, and are therefore less comparable between companies, such as share based compensation expenses and amortization of acquisition-related intangible assets. The Rakuten Group does not allocate assets and liabilities to the operating segment information used by the chief operating decision maker. Considering the expanding mutual contribution effects between segments within the Rakuten Ecosystem, mutual contribution effects and mutual customer referral effects (hereinafter "Mobile Ecosystem Contribution") have been reflected in the segment profit and loss to allow for a more precise performance evaluation. Mobile Ecosystem Contribution The Mobile Ecosystem Contribution is calculated based on the contribution effect derived from the tendency of Rakuten Mobile MNO subscribers to use various services of the Rakuten Group more than non - subscribers, minus the customer referral effect received from each segment. This calculation has been reflected in the segment information. Mobile Ecosystem Contribution = i) Gross profit uplift effect of Rakuten Mobile MNO subscribers - ii) Customer referral effect from group companies to the mobile business Calculation Method of Uplift Effect and Customer Referral Effect between Segments i) Gross profit uplift effect of Rakuten Mobile MNO subscribers Depending on the characteristics of each business of the Rakuten Group, the monthly amount is calculated using one of the following methods. (a) The difference in the monthly average revenue per user over the past year between Rakuten Mobile MNO individual subscribers and non-subscribers in each business of the Rakuten Group × The gross
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―20― profit margin of each business for each month × The number of Rakuten Mobile MNO individual subscribers at the end of each month (b) The difference in annual usage rates in each business of the Rakuten Group between Rakuten Mobile MNO individual subscribers and non-subscribers × Monthly average revenue per user over the past year for each business × The gross profit margin of each business for each month × The number of Rakuten Mobile MNO individual subscribers at the end of each month ii) Referral effect from group companies to the mobile business Number of Rakuten Mobile MNO individual subscribers each month who signed up through group company sites × Referral cost * Target businesses for uplift effect calculation The calculation targets 18 businesses: Rakuten Ichiba, Rakuten Books, Rakuten 24, Rakuten Bic, Rakuten Kobo, Rakuten Fashion, Rakuten Travel, Rakuten Mart, Rakuten Beauty, Rakuten Pay app payments, Rakuten Pay online payments, Rakuten Edy, Rakuten Point Card, Rakuten Card, Rakuten Bank, Rakuten Securities, Rakuten Life Insurance, and Rakuten General Insurance. (3) Changes in Measurement Methods of Segment Revenue and Segment Profit (Loss) by Operating Segments Effective from the three months ended March 31, 2026, some AI-related development costs, which were not previously allocated to individual segments, have been reflected in the segment profit or loss based on the scope of responsibility and actual usage to optimize the management and performance evaluation of each segment. Accordingly, the segment information for the six months ended June 30, 2025 and the three months ended June 30, 2025 has been restated to reflect this change. This change has no impact on the consolidated revenue or operating income or loss. For the six months ended June 30, 2025 (January 1 to June 30, 2025) (Millions of Yen) Internet Services FinTech Mobile Total Segment Revenue 630,016 456,263 222,828 1,309,107 Segment Profit (Loss) Before Considering 33,909 95,893 (104,841) 24,961 Mobile Ecosystem Contribution (7,451) (8,933) 16,384 － After Considering 26,458 86,960 (88,457) 24,961 For the six months ended June 30, 2026 (January 1 to June 30, 2026) (Millions of Yen) Internet Services FinTech Mobile Total Segment Revenue 655,760 570,751 252,541 1,479,052 Segment Profit (Loss) Before Considering 52,492 140,598 (92,235) 100,855 Mobile Ecosystem Contribution (8,265) (12,890) 21,155 － After Considering 44,227 127,708 (71,080) 100,855 Note: Effective from the three months ended March 31, 2026, some AI-related development costs, which were not previously allocated to individual segments, have been reflected in the segment profit or loss based on the scope of responsibility and actual usage to optimize the management and performan ce evaluation of each segment. Accordingly, the segment information for the six months ended June 30, 2025 has been restated to reflect this change. As a result of this change, segment profit or loss for the six months ended June 30, 2025 decreased by ¥825 million in "Internet Services", ¥296 million in "FinTech", and ¥145 million in "Mobile", while "Intercompany Transactions, etc." increased by the total
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―21― amount of these decreases. This change has no impact on the consolidated revenue or operating income or loss. For the three months ended June 30, 2025 (April 1 to June 30, 2025) (Millions of Yen) Internet Services FinTech Mobile Total Segment Revenue 324,538 232,684 112,123 669,345 Segment Profit (Loss) Before Considering 17,428 47,799 (45,447) 19,780 Mobile Ecosystem Contribution (3,753) (4,582) 8,335 － After Considering 13,675 43,217 (37,112) 19,780 For the three months ended June 30, 2026 (April 1 to June 30, 2026) (Millions of Yen) Internet Services FinTech Mobile Total Segment Revenue 338,115 295,427 121,384 754,926 Segment Profit (Loss) Before Considering 27,390 75,827 (44,038) 59,179 Mobile Ecosystem Contribution (4,333) (6,651) 10,984 － After Considering 23,057 69,176 (33,054) 59,179 Note: Effective from the three months ended March 31, 2026, some AI-related development costs, which were not previously allocated to individual segments, have been reflected in the segment profit or loss based on the scope of responsibility and actual usage to optimize the management and performance evaluation of each segment. Accordingly, the segment information for the three months ended June 30, 2025 has been restated to reflect this change. As a result of this change, segment profit or loss for the three months ended June 30, 2025 decreased by ¥429 million in "Internet Services", ¥151 million in "FinTech", and ¥76 million in "Mobile", while "Intercompany Transactions, etc." increased by the total amount of these decreases. This change has no impact on the consolidated revenue or operating income or loss. The reconciliation from segment revenue to consolidated revenue is as follows: (Millions of Yen) Six months ended June 30, 2025 (January 1 to June 30, 2025) Six months ended June 30, 2026 (January 1 to June 30, 2026) Segment Revenue 1,309,107 1,479,052 Intercompany Transactions, etc. (150,034) (170,000) Consolidated Revenue 1,159,073 1,309,052 (Millions of Yen) Three months ended June 30, 2025 (April 1 to June 30, 2025) Three months ended June 30, 2026 (April 1 to June 30, 2026) Segment Revenue 669,345 754,926 Intercompany Transactions, etc. (72,976) (89,457) Consolidated Revenue 596,369 665,469
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―22― The reconciliation from segment profit (loss) to income (loss) before income tax is as follows: (Millions of Yen) Six months ended June 30, 2025 (January 1 to June 30, 2025) Six months ended June 30, 2026 (January 1 to June 30, 2026) Segment Profit (Loss) 24,961 100,855 Intercompany Transactions, etc. (5,210) (22,521) Non-GAAP Operating Income 19,751 78,334 Amortization of Intangible Assets (2,600) (812) Share Based Compensation Expenses (8,446) (9,060) One-off Items (Note) (15,315) (18,022) Operating Income (Loss) (6,610) 50,440 Financial Income and Expenses (54,664) (31,522) Share of Losses of Investments in Associates and Joint Ventures (4,973) (1,035) Income (Loss) before Income Tax (66,247) 17,883 Note: One-off items listed for the six months ended June 30, 2025 include a mid-term cancellation fee of ¥2,459 million, which was incurred in the domestic sports business due to the termination of a consulting agreement that had a significant impact on team operations, additional tax and delinquency charges, including those for prior years, totaling ¥4,943 million, arising from the receipt of a correction notice regarding consumption tax on funding transactions related to card receivables securitization, a loss provision of ¥1,058 million for compensation of customer transactions due to unauthorized access in the securities business, and a provision for liabilities related to a lawsuit concerning payment claims for debts of a previously sold subsidiary, etc. Moreover, in the Condensed Interim Consolidated Statement of Income, the scheduled payment amount for additional tax and delinquency charges, including those for prior years, arising from the receipt of a correction notice regarding consumption tax on funding transactions related to card receivables securitization is included in operating expenses while other income and expenses are mainly recorded in other income and other expenses. One-off items listed for the six months ended June 30, 2026 include an impairment loss on fixed assets of ¥1,019 million, resulting from a partial withdrawal from the marketplace business in Europe, and an impairment loss, etc., on fixed assets of ¥17,000 million, resulting from a decrease in future profitability due to the conversion of warehouses for internal use in the logistics business. Moreover, in the Condensed Interim Consolidated Statement of Income, these expenses are mainly recorded in other expenses.
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―23― (Millions of Yen) Three months ended June 30, 2025 (April 1 to June 30, 2025) Three months ended June 30, 2026 (April 1 to June 30, 2026) Segment Profit (Loss) 19,780 59,179 Intercompany Transactions, etc. 276 (17,144) Non-GAAP Operating Income 20,056 42,035 Amortization of Intangible Assets (1,235) (400) Share Based Compensation Expenses (4,064) (4,586) One-off Items (Note) (5,923) (17,003) Operating Income 8,834 20,046 Financial Income and Expenses (23,862) (19,439) Share of Losses of Investments in Associates and Joint Ventures (5,380) (99) Income (Loss) before Income Tax (20,408) 508 Note: One-off items listed for the three months ended June 30, 2025 include additional tax and delinquency charges, including those for prior years, totaling ¥4,943 million, arising from the receipt of a correction notice regarding consumption tax on funding transactions related to card receivables securitization, and a loss provision of ¥1,058 million for compensation of customer transactions due to unauthorized access in the securities business, etc. Moreover, in the Condensed Interim Consolidated Statement of Income, the scheduled payment amount for additional tax and delinquency charges, including those for prior years, arising from the receipt of a correction notice regarding consumption tax on funding transactions related to card receivables securitization, is included in operating expenses, while other income and expenses are mainly recorded in other income and other expenses. One-off items listed for the three months ended June 30, 2026 include an impairment loss, etc., on fixed assets of ¥17,000 million, resulting from a decrease in future profitability due to the conversion of warehouses for internal use in the logistics business. Moreover, in the Condensed Interim Consolidated Statement of Income, these expenses are mainly recorded in other expenses.
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―24― (Breakdown of Operating Expenses) The breakdown of operating expenses is as follows: (Millions of Yen) Six months ended June 30, 2025 (January 1 to June 30, 2025) Six months ended June 30, 2026 (January 1 to June 30, 2026) Advertising and promotion expenditures 158,687 184,107 Employee benefits expenses 187,576 196,700 Depreciation and amortization 166,278 148,938 Communication and maintenance expenses 32,143 31,706 Consignment and subcontract expenses 64,266 78,676 Allowance for doubtful accounts charged to expenses 20,205 24,754 Cost of sales of merchandise and services rendered 324,449 331,209 Interest expenses for finance business 24,968 48,816 Commission fee expenses for finance business 14,977 16,747 Insurance service expenses 23,985 23,828 Others 129,047 144,195 Total 1,146,581 1,229,676
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―25― (Other Income and Other Expenses) (1) Details The breakdown of other income and other expenses is as follows: (Millions of Yen) Six months ended June 30, 2025 (January 1 to June 30, 2025) Six months ended June 30, 2026 (January 1 to June 30, 2026) Foreign exchange gains 2,911 － Others 2,925 3,168 Total other income 5,836 3,168 Foreign exchange losses － 1,836 Losses on disposal of property, plant and equipment and intangible assets 2,305 1,468 Losses on valuation of investment securities 5,825 3,177 Impairment losses (Note 1) 4,938 20,169 Others (Note 1, 2, 3) 11,870 5,454 Total other expenses 24,938 32,104 Note 1: An impairment loss on fixed assets of ¥1,019 million, resulting from a partial withdrawal from the marketplace business in Europe, and an impairment loss, etc., on fixed assets of ¥17,000 million, resulting from a decrease in future profitability due to the conversion of warehouses for internal use in the logistics business, were included for the six months ended June 30, 2026. For details on the impairment loss in the logistics business, please refer to (2) Impairment losses. Note 2: A mid-term cancellation fee of ¥2,459 million, which was incurred in the domestic sports business due to the termination of a consulting agreement that had a significant impact on team operations, was included for the six months ended June 30, 2025. Note 3: A loss provision of ¥1,058 million for compensation of customer transactions due to unauthorized access in the securities business, and a provision for liabilities related to a lawsuit concerning payment claims for debts of a previously sold subsidiary, etc. were included for the six months ended June 30, 2025. (2) Impairment losses Logistics Business As part of its logistics business, the Company provides a service that leases a portion of its warehouse space. For the six months ended June 30, 2026, amid uncertainty over future parcel volume growth, the Company has been working to optimize warehouse investment and the utilization of warehouse space. Under these circumstances, the Company held extensive discussions with the lessees regarding future operations. Based on the results of these discussions, the Company decided to use the warehouse space internally rather than continue leasing it to third parties. Due to this conversion, it was determined that there was an indication of impairment as the future cash flows expected from these fixed assets were likely to fall below their carrying amount. As a result of this impairment indicator, an impairment test was conducted, and it was determined that the recoverable amount is expected to fall below the carrying amount, and an impairment loss of ¥15,739 million for property, plant and equipment was recognized in the Internet Services segment. The recoverable amount for these fixed assets is measured based on their value in use. However, as no future cash flows are expected, the recoverable amount has been valued at zero.
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―26― (Financial Income and Financial Expenses) The breakdown of financial income and financial expenses is as follows: (Millions of Yen) Six months ended June 30, 2025 (January 1 to June 30, 2025) Six months ended June 30, 2026 (January 1 to June 30, 2026) Gains on valuation of investment securities (Note 1) 2,814 110 Gains on valuation of derivatives (Note 2) － 17,591 Foreign exchange gains (Note 3) 5,104 － Others 2,193 2,346 Total financial income 10,111 20,047 Interest expenses (Note 3) 43,097 42,758 Losses on valuation of derivatives (Note 2, 3) 16,615 － Foreign exchange losses (Note 4) － 2,618 Others 5,063 6,193 Total financial expenses 64,775 51,569 Note 1: Gains on valuation of investment securities related to an investment in Lyft, Inc. of ¥2,660 million were recorded for the six months ended June 30, 2025. Note 2: Losses on valuation of derivatives from currency swaps related to foreign currency denominated permanent subordinated bonds of ¥9,856 million were recorded for the six months ended June 30, 2025. Gains on valuation of derivatives from currency swaps related to foreign currency denominated permanent subordinated bonds of ¥17,591 million were recorded for the six months ended June 30, 2026. Note 3: Losses on valuation of derivatives from the collar contract for the prepaid variable share forward transactions of shares of Lyft, Inc. of ¥6,759 million were recorded for the six months ended June 30, 2025. Foreign exchange gains of ¥5,104 million arising from liabilities relating to funds raised from the said contract were recorded for the six months ended June 30, 2025. Interest expenses of ¥216 million incurred from financial liabilities relating to the said contract measured at amortized cost were recorded for the six months ended June 30, 2025. Note 4: Foreign exchange losses of ¥2,618 million arising from bonds transferred from other equity instruments were recorded for the six months ended June 30, 2026.
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―27― (Notes on Significant Subsequent Events) No items to report.