Softbank Group Corp. · TSE:9984
Softbank — H1 FY2015 Earnings Presentation
67 slides from Softbank's earnings presentation, Nov 4, 2015
Slide 1: Earnings Results for the 6-month Period Ended September 30, 2015
Earnings Results for the 6-month Period November 4, 2015 November 4, 2015 Ended September 30, 2015
Slide 2: Disclaimer
Disclaimer This material was prepared based on information available and views held at the time it was made. Statements in this material that are not historical facts, including, without limitation, plans, forecasts and strategies are “forward-looking statements”. Forward-looking statements are by t
Slide 3: Consolidated Results
SoftBank Group Consolidated Results
Slide 4: Consolidated Results
Consolidated Results (JPY bn) FY2014 FY2015 Change YoY H1 H1 Net sales 4,021.9 4,423.8 +401.9 +10% EBITDA 1,077.1 1,316.0 +238.9 +22% EBIT 564.9 685.8 +120.8 +21% Net income 560.7 426.7 -134.0 -24% *The profit and loss of GungHo is reclassified in discontinued operations (FY2014, Apr. 1 - June 1, 20
Slide 5: Net Sales
Net Sales JPY t 4.4t +10% Consolidated 1.9 +9% Sprint FX impact Increase in product & 1.5 +6% Domestic Telco other sales Consolidated +33% Increase in sales of 0.7 Distribution from July Consolidated Brightstar mobile devices for Sprint 0.2 +23% Yahoo Japan Consolidation of ASKUL 2011 ’12 ’13 ’14 ’1
Slide 6: EBITDA
EBITDA JPY bn 1.3t +22% Consolidated 642.8 +5% Domestic Telco FX impact 508.8 +50% Sprint & cost reduction Consolidated from July +4% Yahoo Japan 104.4 9.9 +18% Distribution 2011 ’12 ’13 ’14 ’15 (FY) H1 H1 H1 H1 H1 *FY2011: Japanese-GAAP, 2012-15: IFRSs 5
Slide 7: EBIT
EBIT JPY bn 685.8 +21% Consolidated 424.7 +6% Domestic Telco One-time gain on 150.9 +63% Yahoo Japan consolidation of ASKUL (+59.4) 81.4 +26% Sprint 4.1 -33% Distribution Consolidated from July 2011 ’12 ’13 ’14 ’15 (FY) H1 H1 H1 H1 H1 *FY2011: Japanese-GAAP, 2012-15: IFRSs 6
Slide 8: Operating Assets
Business Portfolio Operating Investment Assets Assets 7
Slide 9: Business Portfolio: Operating Assets
Business Portfolio SoftBank Domestic Telco Sprint Operating Assets Yahoo Japan Others 8
Slide 10: Domestic Telco
ea OOftBank Domestic Telco
Slide 11: Domestic Telco EBIT (Operating income)
Domestic Telco EBIT (Operating income) JPY 424.7bn Continued EBIT growth Cost reduction effects Focus on new growth drivers (Broadband + OTT Services) ’11 ’12 ’13 ’14 ’15 (FY) *FY2011: Japanese-GAAP, 2012-15: IFRSs H1 H1 H1 H1 H1 *After FY2014: Domestic Telecommunications business Up to FY2013: Mobi
Slide 12: iPhone 6s / 6s Plus Sales Share
Domestic Telco iPhone 6s / 6s Plus Sales Share NTT DOCOMO 22% Sales share No.1 42% Launched on Sept. 25, good start au 37% (Source) BCN Ranking Compiled by BCN based on sales data from major electronics retail stores nationwide (Sept. 25 - Oct. 24, 2015) First numbers after the decimal point are rou
Slide 13: Newly Sold Android Units
Domestic Telco Newly Sold Android Units TM YoY 21% increase Enhance handset lineup ’13 ’14 ’15 (FY) H1 H1 H1 12
Slide 14: Customer Satisfaction Survey (J.D. Power)
Customer Satisfaction Survey Domestic Telco (J.D. Power) Japan Corporate Network Service Cloud Service <Large Enterprise> <Telecom Service Provider> No.1 No.1 Source: J.D. Power Asia Pacific japan.jdpower.com Japan Network Service Satisfaction Study 2015. This study measures the satisfaction with fi
Slide 15: ARPU
Domestic Telco ARPU JPY 4,710 4,720 Service 480 540 ARPU Diversify revenue Strengthen partnership Telecom 4,230 4,190 ARPU with Yahoo Japan FY2014 FY2015 Q1 Q2 Q3 Q4 Q1 Q2 *Main subscribers (smartphones, conventional mobile phones, tablets, etc.) 14
Slide 16: Monthly Number of Acquisitions
Domestic Telco Monthly Number of Acquisitions 180k 170k 140k 110k Reached 710k 80k cumulative subs 50k Increasing steadily Apr. 2015 May June July Aug. Sept. *SoftBank Hikari includes the data of SoftBank Air. 15
Slide 17: NETFLIX Carrier Exclusive
* Domestic Telco NETFLIX Carrier Exclusive Competitors World's leading Internet TV network Pay-channel Contents (Broadcast) FTTH Mobile + Carrier Billing Infrastructure Cable Attractive collaboration *Exclusively offering one-stop carrier billing services in Japan through subscription at storefronts
Slide 18: No.1 Network
Domestic Telco No.1 Network Smartphone Speed Test Data Connectivity (nationwide) (nation-wide major 300 stations) 98.7% 45Mbps 98.4% 42Mbps 97.6% 35Mbps 94% Source: Nikkei BP Consulting, Inc. “Nation-wide 300 stations LTE/4G Source :Agoop (As of Nov. 1, 2015) communication speed survey” downlink spe
Slide 19: Free Cash Flow
Domestic Telco Free Cash Flow JPY 180.4bn Generating FCF 68.0bn EBITDA steady CAPEX peaked out FY2014 FY2015 *IFRSs H1 H1 Excluding eliminations within SoftBank Group Corp. Excluding impact of income tax withheld related to dividend payments 18
Slide 20: Sprint
Sprint Y
Slide 21: Net Additions (Postpaid)
Net Additions (Postpaid) Marcelo’s +553k appointment Improved customer credit profiles Lower churn 2013 2014 2015 Oct. - Dec. Jan. - Mar. Apr. - June July - Sept. Oct. - Dec. Jan. - Mar. Apr. - June July - Sept. *Sprint platform *Including migrations from prepaid (199k) 20
Slide 22: Net Additions (Postpaid)
Net Additions (Postpaid) Only carrier with growth 2Q14 2Q15 2Q14 2Q15 2Q14 2Q15 2Q14 2Q15 *Sprint platform *Including migrations from prepaid (199k) 21
Slide 23: Net Additions (Postpaid phone)
Net Additions (Postpaid phone) +237k First net adds Marcelo’s in 9 quarters appointment 6 consecutive months positive (May - Oct.) 2013 2014 2015 Apr. - June July - Sept. Oct. - Dec. Jan. - Mar. Apr. - June July - Sept. Oct. - Dec. Jan. - Mar. Apr. - June July - Sept. *Sprint platform *Including mig
Slide 24: Prime Gross Additions
Prime Gross Additions Marcelo’s appointment YoY Up 10% July - Sept. July - Sept. July - Sept. *Sprint platform 2013 2014 2015 *Postpaid phones 23
Slide 25: Churn (Postpaid)
Churn (Postpaid) (%) Marcelo’s appointment 2.30% Record low in Sprint’s 20 year history Improved customer quality 1.54% and network performance 1.0% July - Sept. July - Sept. 2006 2015 *Sprint platform 24
Slide 26: Average Download Speed
Average Download Speed 66% up Improve network quality Improve user experience (Source) RootMetrics 2014 2015 *Median downlink throughput speed “Rankings based on 54 corresponding RootMetrics Metro RootScore Reports from 2H 2014 and 2H 2015 (July 1 – Oct 12, 2015) for H2 H2 mobile performance as test
Slide 27: iPhone Average Download Speed
iPhone Average Download Speed 19Mbps 13Mbps 50% faster than last gen. Improve network quality 8Mbps (Source) PC Magazine (Oct. 15, 2015) Average download speed based on total 32,000 samples 5/5c/5s 6/6 Plus 6s/6s Plus Survey period: Oct. 1-9, 2015 26
Slide 28: Adjusted EBITDA
USGAAP Adjusted EBITDA Joined $4.1bn SoftBank Group $3.2bn YoY 27% increase Bad debt expense improved Decrease in COGS due to higher ratio of leased devices *For the conventional sales of mobile devices, including the installment billing method, the cost of goods sold is recognized at the point of s
Slide 29: Operating Income
USGAAP Operating Income Joined $499mil SoftBank Group $327mil Positive Cost reduction offsets decline in operating revenue ’11 ’12 ’13 ’14 ’15 Apr. - Sept. Apr. - Sept. Apr. - Sept. Apr. - Sept. Apr. - Sept. 28
Slide 30: Net Income
USGAAP Net Income Joined SoftBank Group Continuous improvement Positive operating -$605mil -$742mil income reduced by interest expense ’11 ’12 ’13 ’14 ’15 Apr. - Sept. Apr. - Sept. Apr. - Sept. Apr. - Sept. Apr. - Sept. 29
Slide 31: Liquidity
USGAAP Liquidity $5.9bn Receivables facility 0.9 Total $3.7bn Sustain abundant revolver 2.9 availability liquidity Cash, cash equivalents, short-term 2.1 $0.7bn investments Sept. 2015 2015 2016 Note & loan maturities 30
Slide 32: Turnaround Strategy
Sprint » Turnaround Strategy
Slide 33: Turnaround Strategy
Turnaround Strategy OPEX Network Increase Financing Reduction Improvement Options 32
Slide 34: OPEX Reduction
USGAAP OPEX Reduction Sustainable run rate reduction (FY2016+) $2bn or more 33
Slide 35: Transformation
USGAAP Transformation One-time cost expected $1 1.2bn (FY2015 H2 - FY2016) 34
Slide 36: Network Improvement
Network Improvement Aim to be No.1 network 35
Slide 37: Increase Financing Options
Increase Financing Options 1 Expand network vendor financing 2 Establish handset lease co. 3 Realize securitization of various assets Improve liquidity 36
Slide 38: Turnaround Strategy
Turnaround Strategy Increase OPEX Network Financing Reduction Improvement Options $2bn Aim to be Improve or more No.1 network liquidity 37
Slide 39: Toward Sustainable Turnaround
Toward Sustainable Turnaround 38
Slide 40: Yahoo Japan
YAHOO! JAPAN
Slide 41: Net Income
Net Income JPY bn 91.3 One-time gain on consolidation of ASKUL YoY 203% increase Steady growth 30.2 (excluding one-time gain on consolidation of ASKUL) 2011 2012 2013 2014 2015 (FY) FY2011: Japanese-GAAP, FY2013 - 15: IFRSs Q2 Q2 Q2 Q2 Q2 Net income attributable to owners of the parent 40
Slide 42: Advertising Revenue
Advertising Revenue JPY bn 65.7 60.5 29.6 22.3 Display ads Growing display ads 38.2 36.1 Yahoo! Display Network 30.2 contributes Search ads 2011 2012 2013 2014 2015 (FY) Q2 Q2 Q2 Q2 Q2 FY2011: Japanese-GAAP, FY2013 - 15: IFRSs 41
Slide 43: Shopping Transaction Value (YoY growth)
Shopping Transaction Value (YoY growth) Abolish tenant fees, etc. +30% YoY 30% increase +14% New e-commerce +4% strategy successful -2% *Transaction value of Yahoo! Shopping and LOHACO. FY2013 FY2014 FY2015 *LOHACO’s transaction value is the revenue of LOHACO business, Q2 Q2 Q2 operated by ASKUL, fr
Slide 44: Scorecard
Scorecard - Need to drive broadband biz faster Domestic Telco - Manage regulatory concern - Plan for transformation initiated on network and operation side - Great momentum on mobile - Need to continue execution on shopping and new verticals 43
Slide 45: Business Portfolio: Investment Assets
Business Portfolio E-commerce Transportation Investment Games & Ads Assets FinTech 44
Slide 46: E-commerce
E-commerce 45
Slide 47: Gross Merchandise Volume
Gross Merchandise Volume JPY 30t 27t (Global) 25t 25t 20t (U.S.) 17t Enhance ecosystem 15t Mobile focus 10t 5t (Source) Created by SoftBank Group Corp. based on publicly available historical Alibaba Apr. - Sept. ’12 Apr. - Sept. ’13 Apr. - Sept. ’14 Apr. - Sept. ’15 information published by Alibaba
Slide 48: Revenue
USGAAP Revenue JPY 428.9bn 325.5bn YoY 32% increase Mobile revenue: YoY 3x increase (Source) Created by SoftBank Group Corp. based on publicly available historical July - Sept. July - Sept. July - Sept. July - Sept. July - Sept. information published by Alibaba Group Holding Limited. USD 1.00 = JPY
Slide 49: Alibaba v Chinese Growth
Alibaba v Chinese Growth USGAAP (July - Sept. 2015) +32% Exceeds GDP growth Mobile expansion is driver Monetization rate +7% increasing China GDP Alibaba Revenue (Source) Created by SoftBank Group Corp. based on publicly available historical information published by Alibaba Group Holding Limited and
Slide 50: Non-GAAP Net Income (after tax)
USGAAP Non-GAAP Net Income (after tax) Non-GAAP (Excluding the gains and losses related to share based compensation expenses, amortization of intangible assets, revaluation of investments etc.) JPY 179.0bn 131.7bn YoY 36% increase July - Sept. July - Sept. July - Sept. July - Sept. July - Sept. (Sou
Slide 51: Gross Merchandise Volume
Gross Merchandise Volume YoY 223% Indian e-commerce will be $100bn by FY2020 $3.5bn sales, 4x sales in a year Focus on category expansions; digital payments July - Sept. July - Sept. July - Sept. July - Sept. *Sales run rate of May 2015 2012 2013 2014 2015 as quoted in The Economic Times article pub
Slide 52: Retail Revenue
Retail Revenue YoY 531% Mobile commerce market expansion Strong revenue growth, new customers, growing customer spend Focus on supply chain innovation for retail products July - Sept. July - Sept. July - Sept. Retail revenues: revenue from goods delivered directly through Coupang's end-to-end fulfil
Slide 53: Transportation
Transportation 52
Slide 54: Monthly Booking Requests
Monthly Booking Requests YoY 30x Indian taxi market will be $7bn by 2020 +1mil booking requests a day (Sept. 2015) India's first cab leasing program Investment 2014 2015 Jan. Apr. July Oct. Jan. Apr. July Oct. 53
Slide 55: Quarterly Bookings
Quarterly Bookings 8x Extending regional market share 6x increase in MAUs over last year Up to 1.5mil bookings / day July - Sept. July - Sept. 2014 2015 MAU: Monthly Active Users 54
Slide 56: Rides
Rides 4x Leading on-demand taxi platform in China Significant growth headroom Continued strategic support from Alibaba and Tencent Aug. 2014 Aug. 2015 *Number of completed rides with private cars and Taxis 55
Slide 57: Games & Ads
Games & Ads Online Entertainment, Inc. INMOBr
Slide 58: Smartphone Games Growth Strategy
Smartphone Games Growth Strategy Maximize existing value Create new entertaining games Enhance global user base 57
Slide 59: KPIs: Building Global Mobile Ad Networks
KPIs 1bn +190 Quarterly Countries active users covered 100bn 200k Monthly App downloads ad impressions per day Building Global Mobile Ad Networks 58
Slide 60: FinTech
FinTech 59
Slide 61: Tech-enabled Lending Services
Tech-enabled Lending Services Borrowers Lenders Application Now: Return - Student loan refinancing - Home mortgage - Personal loans Loan Capital Next: Financially - Wealth management Banks, - Insurance responsible - Deposit products institutional consumers investors, etc. 60
Slide 62: Funded Amount
Funded Amount $2.9bn Scaled and diversified business Maintaining high credit quality $1.3bn Broad market disruption across the financial landscape $226mil $90mil 2012 2013 2014 2015 (CY) (as of Sept. 30) 61
Slide 63: Status of Investment Assets
Status of Investment Assets Excited about new portfolio investments Focused on maximizing value of portfolio companies 62
Slide 64: Business Portfolio: Operating Assets, Investment Assets
Business Portfolio Operating Investment Assets Assets 63
Slide 65: Toward Further Growth
Toward Further Growth 64
Slide 66: SoftBank
SoftBank
Slide 67: Adoption of IFRSs, Definition of terms, Trademarks
1. Adoption of IFRSs SoftBank Group Corp. adopted the International Financial Reporting Standards (IFRSs) from fiscal 2013. Figures for fiscal 2012 have also been presented in accordance with IFRSs. 2. Definition of terms etc. in this material. Free cash flow = cash flows from operating activities +