Rakuten 3Q25: Funding Gap Persists; Maintain U/P
Nicholas Chen - Analyst, East Asia Corporates, CreditSights
Pius Xue, CFA - Senior Analyst, CreditSights
17 November 2025
Insights into Rakuten funding gap analysis, including:
- Persistent Funding Gap Concerns: Discover how our Rakuten funding gap analysis reveals continued cash flow challenges in the non-FinTech segment through 3Q25, with YTD negative JPY 240.3 bn despite positive EBITDA improvements.
- Mobile Segment Turnaround: Learn how Rakuten’s Mobile business achieved positive EBITDA in 3Q25 (JPY 11.2 bn) for the first time, contributing to 73% YoY growth in total non-FinTech EBITDA to JPY 44.7 bn.
- Leverage Metrics Improvement: See how non-FinTech net leverage improved to 14.3x as of Sep-25 from 19.7x at YE24, though still elevated compared to management’s target of 5x by FY27.
- FY26 Capex Pressure Ahead: Gauge the impact of delayed Mobile capex from FY25 rolling into FY26, expected to worsen the funding gap despite continued EBITDA growth and improved operational efficiency.
- Perpetual Bond Value Proposition: Identify attractive yield opportunities in the 4.25% EUR PerpNC27 (8.2% YTC after FX hedging) and 5.125% $PerpNC26 (6.5% YTC), offering 262 bp and 122 bp pickup over US B-rated corporates respectively.
Executive Summary
- Decent topline performances in the Internet Services and Mobile segments pushed the non-FinTech total revenue higher in 3Q25 (+11% YoY); Non-FinTech EBITDA remained positive in 3Q25 and jumped YoY (+73% YoY), thanks to a turnaround in EBITDA for the Mobile segment; however, the non-FinTech segment continued to run a funding gap in 3Q25 (YTD: negative JPY 240.3 bn) per our calculation; meanwhile, the non-FinTech net leverage improved QoQ but still remained elevated.
- We anticipate positive EBITDA for the Mobile segment in FY25, which is expected to support non-FinTech EBITDA for FY25 and improve net leverage further; however, we expect a meaningful increase in the non-FinTech capex in FY26 due to delayed Mobile capex from FY25 (relating to its base station installations); we project the non-FinTech segment to continue running a funding gap in FY25 in the absence of further asset securitisation/alternative capital raising, and the funding gap is expected to worsen in FY26.
- The FinTech segment posted decent 3Q25 figures, thanks to continued growth in the various businesses; it remains the most profitable segment within Rakuten.
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