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Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<p>Rakuten Q2 21 results were mixed with better revenue as core businesses did well but steeper losses as mobile spending grew. The company has not changed broad guidance that peak losses will come in FY21 but roaming costs appear to be a larger issue than we thought with an impact on both margins and the timing of new user acquisition. That makes slippage in network deployment targets slightly more problematic although there should also be some offset from good results in eCommerce which grew YoY despite lapping the very strong lockdown quarter.</p>

Rakuten Q2 21 results were mixed with better revenue as core businesses did well but steeper losses as mobile spending grew. The company has not changed broad guidance that peak losses will come in FY21 but roaming costs appear to be a larger issue than we thought with an impact on both margins and the timing of new user acquisition. That makes slippage in network deployment targets slightly more problematic although there should also be some offset from good results in eCommerce which grew YoY despite lapping the very strong lockdown quarter.

Rakuten (Neutral) - Q2 21 Results Reaction: Roaming Costs Have Become a Big Deal