Softbank Group Corp. · TSE:9984
Softbank — Q1 2024 Earnings Presentation
72 slides from Softbank's earnings presentation, Aug 7, 2024
Slide 1: Earnings Results for the 3-month Period Ended June 30, 2024
Earnings Results for the 3-month Period Ended June 30, 2024 August 7, 2024
Slide 2: Disclaimers
Disclaimers This presentation provides relevant information about SoftBank Group Corp. (“SBG”) and its subsidiaries (together with SBG, the “Company”) and its affiliates (together with the Company, the “Group”) and does not constitute or form any solicitation of investment including any offer to buy
Slide 3: Market Situation
Market Situation 380 360 340 320 300 305.7 Arm 280 260 240 220 200 180 160 164.0 SBG 140 134.1 NASDAQ 127.3 S&P500 120 120.9 TOPIX 100 100 80 60 Sep 30 Jun 30 2023 2024 Market situation: Illustrated with the value of each index on Sep 30, 2023 as 100. Created by SBG based on Bloomberg 3
Slide 4: Market Situation
Market Situation 380 360 340 305.7 320 300 280 260 240 220 211.9 Arm 200 164.0 180 160 134.1 140 123.8 NASDAQ 120 127.3 122.2 S&P500 113.2 SBG 120.9 104.8 TOPIX 100 100 80 60 Sep 30 Jun 30 Aug 6 2023 2024 2024 Market situation: Illustrated with the value of each index on Sep 30, 2023 as 100. Created
Slide 5: Business Model and Risk Management of a Strategic Investment Company
Business Model and Risk Management of a Strategic Investment Company Adaptable to all environmental changes Business model: Growth of assets and business through Risk management capital recycling Growth Driving ASI Adhering to financial policy investment for ASI business 1) Maintain LTV below 25% 2)
Slide 6: Key Indicators
Key Indicators Market upheaval, our financial stability intact (Pro forma) Jun 30, 2024 Dec 31, 2023 Jun 30, 2024 (Based on share prices and the FX rate as of Aug 6, 2024) NAV (Net Asset Value) ¥19.2T ¥35.3T ¥24.9T LTV (Loan-to-Value) 11.5% 7.8% 10.9% Cash position ¥4.4T ¥4.6T ¥4.3T For details of N
Slide 7: Striving to realize ASI maintaining robust stability
Striving to realize ASI maintaining robust stability 7
Slide 8: FY2024Q1 Highlights
FY2024Q1 Highlights 1 Net loss of ¥174.3B despite ¥559.7B investment gain 2 NAV achieves record high SBG's mission is to realize ASI through strategic AI 3 investments 4 Arm performance continues to excel 5 SVF's performance turns positive 6 Low LTV and ample cash reserves enable further AI investme
Slide 9: Consolidated Results
Consolidated Results Some figures in this presentation are rounded and may not add up to the figures presented as the total. 9
Slide 10: Consolidated Results
Consolidated Results (¥ B) FY2023 FY2024 Change Q1 Q1 Net sales 1,557.5 1,701.7 +144.2 Gain/loss on -699.0 559.7 +1,258.7 investments Income before -176.2 225.7 +401.9 income tax Net income -477.6 -174.3 +303.3 Net income: Net income attributable to owners of the parent 10
Slide 11: Gain/Loss on Investments and Net Income (quarterly)
Gain/Loss on Investments and Net Income (quarterly) (¥ B) Gain/loss on investments 950.0 Net income 424.6 559.7 Investment 231.1 gain turned positive -20.4 -174.3 -477.6 -264.6 -699.0 --931.1 Q1 Q2 Q3 Q4 Q1 FY2023 FY2024 Net income: Net income attributable to owners of the parent 11
Slide 12: Gain/Loss on Investments (quarterly)
Gain/Loss on Investments (quarterly) (¥ B) Investment Business of Holding Companies Gains at both SVF Investment Others Consolidated 424.6 63.2 559.7 32.4 Business of 29.5 531.3 567.9 Holding 3.8 276.2 124.4 Companies and -169.9 -20.4 -115.3 -29.5 -40.6 SVF posted profits -689.7 -570.2 -264.6 -13.0
Slide 13: Key Indicators
Key Indicators Some figures in this presentation are rounded and may not add up to the figures presented as the total. 13
Slide 14: Key Indicators (FY2024Q1)
Key Indicators (FY2024Q1) Mar 31, 2024 Jun 30, 2024 NAV ¥27.8T ¥35.3T (Net Asset Value) ($183.6B) ($219.1B) LTV (Loan-to-Value) 8.4% 7.8% Cash position ¥4.7T ¥4.6T For details of NAV and LTV, see Appendix “Definition and Calculation Method of SBG’s NAV and LTV (as of Mar 31, 2024)” and “Definition a
Slide 15: History of NAV (Since FY1998)
History of NAV (Since FY1998) (Jun 30, 2024) ¥35.3T Pro forma (Jun 30, 2024) Based on share prices and the FX rate as of Aug 6, 2024 ¥24.9T Arm SVF1/SVF2/ LatAm Funds SoftBank Corp. T-Mobile/ Deutsche Telekom Alibaba Yahoo Japan Other 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Slide 16: Impact of Forex (FY2024Q1)
Impact of Forex (FY2024Q1) Weaker JPY increased NAV and equity (Mar 31, 2024) (Jun 30, 2024) (Aug 6, 2024) $1= ¥151.41 → ¥161.07 → ¥144.98 On NAV On accounting Equity +¥1.1T +¥2.1T Consolidated net income -¥0.4T For details of NAV, see Appendix “Definition and Calculation Method of SBG’s NAV and LTV
Slide 17: LTV
LTV Net of asset-backed finance 40% 35％ 30% 25％ 20.4% 20% 18.2% 15.0% 10% 14.5% 11.0% 10.6% 11.5% 8.4% 10.9% Lowest 8.0% 7.8% leverage ever 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 FY2021 FY2022 FY2023 FY2024 pro forma As of the end of each quarter For details of LTV, see Appendix "Definition and Calcula
Slide 18: Cash Position
Cash Position (¥ T) 6.0 5.8 5.0 4.6 5.1 5.1 4.7 4.6 Maintain high level 4.3 4.4 4.3 4.0 3.8 3.0 2.9 2.0 1.0 0.0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 FY2021 FY2022 FY2023 FY2024 pro forma As of the end of each quarter Cash position: Cash and cash equivalents + short term investments recorded as current a
Slide 19: Change in Composition of Assets Held
Change in Composition of Assets Held Equity value of holdings basis Net of asset-backed finance Jun 30, 2020 Jun 30, 2024 Others Others Alibaba T-Mobile/ T-Mobile/ 0.01% Deutsche Telekom 6% Deutsche Telekom 5% 5% 7% Alibaba SoftBank SoftBank Corp. 51% Corp. 8% Arm 14% 55% 13% 24% SVF SVF 11% Arm Com
Slide 20: Change in Regional Composition
Change in Regional Composition Equity value of holdings basis Net of asset-backed finance Jun 30, 2020 Jun 30, 2024 China North America North America Latin 13% 6% Japan China Latin 14% America 1% 10% America 2% 55% Other APAC Europe, 6% etc. 13% Other 3% APAC 15% 62% Europe, etc. Japan China-centric
Slide 21: Equity Value of Holdings: Listed Share Ratio
Equity Value of Holdings: Listed Share Ratio Equity value of holdings basis (¥ T) *() shows the proportion of the total 90% Net of asset-backed finance 6.8 Unlisted 80% (18%) 70% 8.6 (27%) 31.5 (82%) Listed 60% Listed share ratio 82% 50% 23.6 11.1 (73%) 40% (51%) 10.8 (64%) 30% due to increased 10.5
Slide 22: Initiatives to Realize ASI
Initiatives to Realize ASI SVF: SoftBank Vision Funds Segment. Includes SVF1, SVF2, and LatAm Funds Some figures in this presentation are rounded and may not add up to the figures presented as the total. 22
Slide 23: Realizing ASI to fulfill our mission
SoftBank Group’s mission is to drive the evolution of humanity Realizing ASI to fulfill our mission The 44th Annual General Meeting of Shareholders (Jun 21, 2024) 23
Slide 24: ASI
ASI Artificial Super Intelligence AI AI Chip AI Robot Datacenter Drive forward with Group-wide efforts 24
Slide 25: Unique with aspects of both an investment company and an operating company
= Strategic investment company Unique with aspects of both an investment company and an operating company 25
Slide 26: Core of ASI: Cluster of No.1 Strategy
Core of = ASI Cluster of No.1 Strategy Realizing ASI with Group-wide efforts 26
Slide 27: Graphcore
Graphcore Became a subsidiary as of Jul 11, 2024 Specialists at designing, developing and commercializing chips for AI & ML CEO Nigel Toon Establishment 2016 HQ Bristol, UK Design, develop, and Business commercialize AI chips Anticipating to collaborate with Graphcore to realize ASI 27
Slide 28: SB Energy
SB Energy Global Renewable Energy Platforms in the U.S. Solar, etc. to support AI Solar In operation In construction 2GW 1GW +Expanding 28
Slide 29: SoftBank Corp.: Building Next-generation Social Infrastructure
SoftBank Corp.: Building Next-generation Social Infrastructure Distributing AI computing infrastructure Regional Brain (Mid-scale data center) Hokkaido Data Center First opening scheduled for AI Computing FY2026 Infrastructure Brain DataCenter (Large-scale data center) HPC/AI Quantum Computing Data
Slide 30: SoftBank Group's Robotics Business
SoftBank Group’s Robotics Business Robot integrator Connecting developers who want to make the most of robots and users who want to introduce robots in an optimal way 2022 Logistics automation 2021 Serving robots 2018 2014 Cleaning robot Humanoid 30
Slide 31: SoftBank Group's Robotics Business
SoftBank Group’s Robotics Business Automated warehouse Automated warehouse Driverless forklifts Piece picking for case goods for piece goods Collaborating with investee companies to develop optimal logistics solutions 31
Slide 32: Medical AI
Medical AI 32
Slide 33: Video
Video
Slide 34: TEMPUS AI
TEMPUS AI Listed on the Nasdaq Global Select Market on Jun 14, 2024 The largest medical dataset in the industry Number of hospitals in Number of cancer Number of data cooperation in U.S. records in U.S. records in U.S. Imaging data 1M 2,000 7.7M Samples sequenced 1M hospitals DNA+RNA 0.25M Focused o
Slide 35: TEMPUS AI: Offering services
TEMPUS AI Offering 3 services Genomic Medical Data AI Insights and Testing Aggregation & Analysis Therapy Selection 35
Slide 36: SB TEMPUS
SB TEMPUS Ownership ratio ~3% Investment ¥15B Investment ¥15B Aug 1, 2024 Initiating full-scale operation Apply knowledge and technology accumulated in U.S. Genomic Testing Data analysis (clinical research) service (partial) Further advance healthcare in Japan through the utilization of medical data
Slide 37: Invested Amounts (SVF + SBG)
Invested Amounts (SVF + SBG) ($ B) 2.5 SBG 0.2 1.9 Significant 1.8 1.5 increase from the 0.9 1.2 past 2 quarters SVF 2.3 1.1 0.5 0.5 0.5 0.1 0.1 0.2 0.9 0.3 0.3 0.6 0.4 0.4 0.4 0.2 0.3 0.3 0.1 0.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY2022 FY2023 FY2024 Invested amounts by SBG: Investment by SBG and its prim
Slide 38: Divestments and Monetization
Divestments and Monetization Continued capital recycling Monetized ¥371.1B in FY2024Q1 (Main monetized assets) T-Mobile shares: Sold to Deutsche Telekom for $670M (6.7M shares) through a partial exercise of call options for T-Mobile shares by Deutsche Telekom Fortress shares: Sold to Mubadala Group
Slide 39: Arm
Some figures in this presentation are rounded and may not add up to the figures presented as the total. 39
Slide 40: Quarterly Revenue (US-GAAP)
Quarterly Revenue (US-GAAP) ($ M) License and other revenue 928 939 Royalty revenue 806 824 Revenue continues to 675 414 388 354 472 reach record high 275 Revenue above analyst 514 consensus ($903M) 470 467 400 418 Q1 Q2 Q3 Q4 Q1 (Source) Arm For details, see Arm Investor Relations website (https://
Slide 41: Quarterly Non-GAAP Operating Income (US-GAAP)
Quarterly Non-GAAP Operating Income (US-GAAP) ($ M) 448 391 Up 65% 384 361 272 YoY Q1 Q2 Q3 Q4 Q1 (Source) Arm See the end of Arm’s FYE25-Q1 Shareholder Letter for a reconciliation of Non-GAAP Operating Income FY2023 FY2024 to the most directly comparable GAAP metric. For details, see Arm Investor R
Slide 42: Guidance (US-GAAP)
Guidance (US-GAAP) FY2024Q2 FY2024 Revenue $780M - $830M $3,800M - $4,100M YoY (-3% - +3%) (+18% - +27%) Non-GAAP operating expense ~$500M ~$2,050M Non-GAAP fully diluted earnings $0.23 - $0.27 $1.45 - $1.65 per share (Source) Arm For details, see Arm Investor Relations website (https://investors.ar
Slide 43: Microsoft: Copilot+ PCs for High AI Performance integrating Arm-based chips
Microsoft: Copilot+ PCs for High AI Performance integrating Arm-based chips Copilot+ PC (Announced May 2024) ✓ Windows PCs designed for AI ✓ Powerful AI features such as image generation and live caption translation ✓ Up to 22 hours of video playback on a single charge, supporting long-hour use (Sou
Slide 44: Confident in Arm's further long-term growth
Increasing compute Chips into Armv9 contribution ecosystem datacenters 25 20 Major hyperscalers ~ % ~ M 10 companies of royalty revenue is from Armv9 based chips (up from ~20% last quarter) Developers accelerating etc. Delivers double the royalty rate software development on Arm compared to equivale
Slide 45: SVF
SVF SVF: SoftBank Vision Funds Segment. Includes SVF1, SVF2, and LatAm Funds. Some figures in this presentation are rounded and may not add up to the figures presented as the total. 45
Slide 46: SVF: Gain/Loss on Investments (quarterly)
SVF: Gain/Loss on Investments (quarterly) USD basis (SVF Segment) 34,467 ($ M) 13,567 Turned to profit 10,910 FY24Q1 FY23 FY21 Q3 4,607 Q1 12 2,869 3,549 4,087 2,285 3,768 2,969 5,554 FY23 958 FY23 785 630 715 FY21 Q1 Q2 Q3 -1,748 1,157 147 952 FY17 FY17 FY17 FY17 FY18 FY18 FY18 FY18 FY19 FY19 FY20
Slide 47: SVF: Gain/Loss on Investments (cumulative)
SVF: Gain/Loss on Investments (cumulative) USD basis (SVF Segment) 66,375 ($ M) 60,821 56,825 Cumulative investment losses 55,874 remained almost flat The information contained herein is provided solely for illustrative purposes on an SBG basis and individual investors' results may vary. Furthermore
Slide 48: SVF: Gain/Loss on Investments (FY2024Q1)
SVF: Gain/Loss on Investments (FY2024Q1) USD basis (SVF Segment) Combined SVF1 SVF2 LatAm Funds +$2,827M -$2,643M -$83M +$12M (+¥1.9B) Other investments -$89M Gain/Loss on Investments (quarterly): Quarterly gain and loss on investments at SoftBank Vision Funds segment. Before translation for the Com
Slide 49: SVF1: Cumulative Investment Return (as of Jun 30, 2024)
SVF1: Cumulative Investment Return (as of Jun 30, 2024) ($ B) 109.1 89.5 67.3 Exited 43.2 Public companies (investments before exit) 21.2 16.7 Private companies (investments 25.1 25.1 before exit) Investment cost Cumulative investment return (FV + Sale price) The information contained herein is prov
Slide 50: SVF2: Cumulative Investment Return (as of Jun 30, 2024)
SVF2: Cumulative Investment Return (as of Jun 30, 2024) ($ B) 53.0 Exited 6.7 Public companies 5.5 (investments before exit) 31.1 3.3 2.9 Private companies 40.8 (investments before exit) 24.9 Investment cost Cumulative investment return (FV + Sale price) The information contained herein is provided
Slide 51: Public Listings and Late-stage Pipeline
Public Listings and Late-stage Pipeline A strong pipeline for future public listings Public listings (since inception) Total fair value of late-stage portfolio $ 35B 51 listings Select late-stage portfolio companies & +1 listing in FY2024Q1 Exchange: HKEX Listing date: Jun 13, 2024 Gross MOIC: 1.5X
Slide 52: SVF2: New Investing Activity Last 12 Months
SVF2: New Investing Activity Last 12 Months Focusing on uncovering superior opportunities FY2024Q1 Offering an Powering generative AI AI-powered market search with LLMs, and industry Securing everything providing conversational intelligence platform Accelerating next Leveraging AI to organizations b
Slide 53: Financial Strategy
Financial Strategy 53
Slide 54: Historical Credit Ratings
Historical Credit Ratings First upgrade in 12 years JCR A Acquisition of Acquisition of Acquisition of Acquisition Listing of Listing of Japan Telecom Vodafone KK Sprint of Arm SBKK A+ Arm A A- (Stable) A- BBB+ BBB S&P BB+ BBB- BB+ BB (Stable) BB BB- Upgraded B+ in just 1 year '03 '04 '05 '06 '07 '0
Slide 55: FY2024 Financial Strategy
FY2024 Financial Strategy Steadfast financial philosophy Flexibly respond to all environmental changes Maintain LTV below 25% in normal times 1 (upper threshold of 35% even in times of emergency) Adhering to financial policy 2 Maintain at least 2-year worth of bond redemptions in cash Secure recurri
Slide 56: Newly Authorized Share Repurchase Program
Newly Authorized Share Repurchase Program Total amount (maximum) ¥500B Repurchase period: From Aug 8, 2024 to Aug 7, 2025 For details, refer to the press release dated Aug. 7, 2024, "Resolution regarding Share Repurchase” 56
Slide 57: FY2024Q1 Summary
FY2024Q1 Summary 1 Net loss of ¥174.3B despite ¥559.7B investment gain 2 NAV achieves record high SBG's mission is to realize ASI through strategic AI 3 investments 4 Arm performance continues to excel 5 SVF's performance turns positive 6 Low LTV and ample cash reserves enable further AI investments
Slide 58: Striving to realize ASI maintaining robust stability
Striving to realize ASI maintaining robust stability 58
Slide 59: Information Revolution - Happiness for Everyone
“Information Revolution －Happiness for Everyone” 59
Slide 60: SoftBank
SoftBank
Slide 61: Appendix
Appendix Some figures in this presentation are rounded and may not add up to the figures presented as the total. 61
Slide 62: Definition and Calculation Method of SBG's NAV and LTV (as of Jun 30, 2024)
Definition and Calculation Method of SBG’s NAV and LTV (as of Jun 30, 2024) 1. NAV (Net Asset Value) • NAV = Equity value of holdings - Net debt 2. Equity value of holdings (after adjustment for asset-backed financing) • Arm: the number of Arm ADSs equivalent to the number of shares held by SBG x Ar
Slide 63: Definition and Calculation Method of SBG's NAV and LTV (as of Jun 30, 2024 Pro forma)
Definition and Calculation Method of SBG’s NAV and LTV (as of Jun 30, 2024 Pro forma) 1. NAV (Net Asset Value) • NAV = Equity value of holdings - Net debt 2. Equity value of holdings (after adjustment for asset-backed financing) • Arm: the number of Arm ADSs equivalent to the number of shares held b
Slide 64: Definition and Calculation Method of SBG's NAV and LTV (as of Mar 31, 2024)
Definition and Calculation Method of SBG’s NAV and LTV (as of Mar 31, 2024) 1. NAV (Net Asset Value) • NAV = Equity value of holdings - Net debt 2. Equity value of holdings (after adjustment for asset-backed financing) • Alibaba: the number of Alibaba ADSs equivalent to the number of shares held by
Slide 65: Definition and Calculation Method of SBG's NAV and LTV (as of Dec 31, 2023)
Definition and Calculation Method of SBG’s NAV and LTV (as of Dec 31, 2023) 1. NAV (Net Asset Value) • NAV = Equity value of holdings - Net debt 2. Equity value of holdings (after adjustment for asset-backed financing) • Alibaba: the number of Alibaba ADSs equivalent to the number of shares held by
Slide 66: Monetization and Capital Allocation (FY2024Q1)
Monetization and Capital Allocation (FY2024Q1) (¥ T) Cash settlement of 4.7 Financing, repayment, collar transactions using 4.6 etc. T-Mobile shares Undrawn commitment line 0.7 0.2 0.8 Undrawn 0.3 0.5 commitment line Monetization 0.3 0.2 through sale of SVF’s investment and assets -0.8 SBG’s strateg
Slide 67: SVF: Value Changes in Portfolio (cumulative)
SVF: Value Changes c in Portfolio (cumulative) USD basis (SVF Segment) Mar 31, 2024 Jun 30, 2024 No change No change 14 co Gain 12 co Gain (3%) +$57.4B (3%) +$59.6B 114 co 116 co (24%) (24%) 349 co 352 co (73%) (73%) Loss Loss -$60.8B -$62.9B -$3.4B (477 co) The information contained herein is provi
Slide 68: SVF: Gain/Loss on Investments
SVF: Gain/Loss on Investments USD basis (SVF Segment) FY2023Q4 (Total -$389M) FY2024Q1 (Total +$12M) Markup +$2,811M (120 companies) +$5,468M (88 companies) +$179M +$788M +$468M +$1,160M +$215M +$378M +$258M +$2,637M +$1,950M +$245M (6 co) (51 co) (26 co) (13 co) (24 co) (10 co) (24 co) (16 co) (15
Slide 69: SVF1: Gain/Loss on Investments
SVF1: Gain/Loss on Investments USD basis (SVF1) FY2023Q4 (Total +$10M) FY2024Q1 (Total +$2,827M) Markup +$1,501M (19 companies) +$4,566M (17 companies) +$93M +$87M +$146M +$1,017M +$158M +$94M +$34M +$2,459M +$1,815M +$164M (1 co) (4 co) (4 co) (7 co) (3 co) (1 co) (3 co) (4 co) (8 co) (1 co) Market
Slide 70: SVF2: Gain/Loss on Investments
SVF2: Gain/Loss on Investments USD basis (SVF2) FY2023Q4 (Total -$336M) FY2024Q1 (Total -$2,643M) Markup +$915M (67 companies) +$706M (45 companies) +$86M +$564M +$225M +$5M +$35M +$266M +$137M +$178M +$82M +$43M (5 co) (32 co) (18 co) (2 co) (10 co) (6 co) (14 co) (11 co) (5 co) (9 co) Performance
Slide 71: SVF1 Public Portfolio Companies (as of Jun 30, 2024)
SVF1 Public Portfolio Companies (as of Jun 30, 2024) (a) (b) (c) = (b) - (a) (d) = (b) / (a) (a) (b) (c) = (b) - (a) (d) = (b) / (a) ($ M) Investment cost *2 Gross return*3 Gross gain (loss) *4 Investment cost *2 Gross return *3 Gross gain (loss) *4 Company Gross MOIC Company Gross MOIC to SVF1 to S
Slide 72: SVF2 Public Portfolio Companies (as of Jun 30, 2024)
SVF2 Public Portfolio Companies (as of Jun 30, 2024) (a) (b) (c) = (b) - (a) (d) = (b) / (a) (a) (b) (c) = (b) - (a) (d) = (b) / (a) ($ M) Investment cost *2 Gross return*3 Gross gain (loss) *4 Investment cost *2 Gross return *3 Gross gain (loss) *4 Company Gross MOIC Company Gross MOIC to SVF2 to S