Japan’s Rakuten Q1 profit jumps fourfold after $1b gain from Lyft IPO

Confetti falls as John Zimmer, co-founder and president of Lyft, center left, and Logan Green, co-founder and CEO of Lyft, center right, ring the opening bell during the company's IPO at Lyft's new service center in Los Angeles on March 29, 2019. Photographer: Kyle Grillot/Bloomberg

Japanese e-commerce firm Rakuten Inc‘s first-quarter operating profit jumped fourfold as it booked a $1 billion gain on its stake in U.S. ride-hailing company Lyft Inc.

Rakuten has grabbed investor attention with its overseas tech bets, despite modest means compared with bigger Japanese rival SoftBank Group Corp, whose founder and CEO Masayoshi Son has tapped Saudi Arabian oil money and abundant cash from SoftBank’s telco business to fund his tech investments.

Rakuten’s investments include Lyft, which listed in March, and online scrapbook company Pinterest Inc, which listed last month. It also took a stake in Dubai-based ride-hailing firm Careem, which Uber Technologies said in March it would acquire for $3.1 billion.

The tech bets have helped drive Rakuten’s shares up 56% this year, making it one of the top performers in the Nikkei 225 index.

Its operating profit rose to 113.7 billion yen ($1.04 billion) in the three months ended March from 28.1 billion yen a year earlier, Rakuten said on Friday. Without the Lyft investment gain, profit was just 3.2 bln yen.

Rakuten is under pressure on multiple fronts as it invests in areas such as logistics to bolster its core online mall business amid competition from rivals like Amazon.com Inc and SoftBank-backed Yahoo Japan Corp, while also spending on areas like financial services and telecoms.

Rakuten’s billionare founder and CEO Hiroshi Mikitani is making a big bet on becoming Japan’s fourth major mobile carrier, as it looks to break into an industry where the last successful entrant was Son’s SoftBank, which acquired Vodafone Group’s Japanese mobile business in 2006.

Mikitani, who founded Rakuten in 1997, hopes carrier services will help drive traffic to Rakuten’s other businesses including the online mall and financial services, such as credit cards, securities trading and life insurance.

The efforts are an industry talking point, with Rakuten saying it has cut the cost of building a network by using cloud-based software and commoditised hardware instead of proprietary wireless radios.

Its outlay is dwarfed by ongoing investment by the incumbent telcos.

Operating loss at Rakuten’s mobile business, set to begin carrier services later this year, swelled tenfold from a year earlier to 6.4 billion yen.

Rakuten shares closed up 2.2% ahead of the earnings release.

Also read:

Rakuten backs $114m Series C round for US mobile tech firm Altiostar

Japan’s Rakuten to harvest gains of $900m from Lyft IPO

Reuters

 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.